Cooling the Economy Without Crushing It

Federal Reserve Eyes

This week, the Federal Reserve Board decides on the next move in interest rates. The decision to be announced on Wednesday is almost certainly to raise the benchmark rate. The US economy has faced the worst inflation in 40 years, and rising interest rates could slow the economy and mitigate inflation. But how many problems remain.

Many on Wall Street believe the Fed is likely to raise interest rates to full percentage points.. If that happens, it would be the first time the Fed has raised interest rates so much in a single meeting since at least the 1980s. The central bank has vowed to do whatever it takes to reduce inflation, as it did under Paul Volcker in the 1980s.

But the Fed’s clear goal is to cool the economy without disrupting it. and Editorial in The Wall Street Journal yesterdayElizabeth Warren, a Massachusetts senator, wrote that the Fed’s rate hike “does not address many causes of inflation today,” including soaring energy prices. Other signs of economic stress that the Fed may prevent from rising full percentage points:

• Revenue slowdown: Many large companies report a significant slowdown in second-quarter profits in the last few weeks. Revenues from S & P 500 companies averaged 4.6% year-on-year, the lowest in a year and a half. Still, earnings were mixed and not as demanding as previously predicted, but the season is still in its infancy.

• Yield curve: The yield curve is the difference between the short-term interest rate, such as the cost of executing a two-year loan, and the long-term interest rate, such as the cost of executing a ten-year loan. Long-term rates are often higher than short-term rates. But recently, that relationship has reversed. The reverse yield curve is a problem. Banks don’t want to lend when they can make more money just by sitting on their own money. Therefore, as the Fed raises interest rates, it can generally be a problem for short-term interest rates to rise above long-term interest rates.

• Layoffs: The simple money world of Silicon Valley over the last decade has been declining, with companies firing thousands of employees. Since the beginning of the year, about 394 startups have fired employees amid a deteriorating outlook for young companies, according to Rayoffs.fyi, a crowdsourcing site that tracks layoffs for tech start-ups.

Still, some argue that there is room to raise interest rates without causing an economic crisis. Peter Berezin, global strategist at BCA Research, argues that even if the Fed raises interest rates, job vacancies and the strong reserves of most major banks should buffer the economy from the recession. In addition, the expiration of pandemic-related aid should delay the excess money injected into the US economy.

“The chances of a recession in the United States are lower than widely recognized,” Beresin wrote in a note to customers on Friday. In Europe, on the other hand, he said it was likely.

What’s happening here

Congo allows oil and gas block auctions. This is a major step in our efforts to curb global warming. With one of the largest dilapidated rainforests, the Democratic Republic of the Congo is auctioning vast amounts of land to become a “new destination for oil investment.” This is part of global change as the world recedes in the fight against climate change. Fossil fuel scramble change. By the end of this month, oil and gas blocks to be auctioned will extend to Virunga National Park, the world’s most important gorilla reserve, and tropical peatlands that store large amounts of carbon, leading to extra-atmospheric and global warming. I am contributing.

Former New York City Mayor Mike Bloomberg is proposing a review of the Democratic primary. Under his plan Fierce battle states will be more prominent In the primary election. “The greatest hope for the party’s success is to create primaries that reflect the importance of cities, diversity, ballots and swing states,” he said in an editorial at Hill yesterday.

The CEO of China Evergrande will resign after the loan has been scrutinized. Once China’s largest real estate developer, the company has struggled to repay its debtors in excess of $ 300 billion after the government forced debt-bearing real estate companies to curb borrowing. The resignation of the company’s CEO, Xia Haijun, was the latest setback for embarrassed developers who are expected to announce plans to restructure their debt.

The Senate today votes to advance a package of grants and research funding to increase chip production and US competitiveness. Extensive bipartisan bills Compete with China’s technology and manufacturing advantages.. The final passage of the $ 280 billion package is expected tomorrow or Wednesday.

Conservative media doubles as evidence from the January 6 panel builds up.. Many conservative media top personalities continue to push the more disinfected story of the January 6 attack on the Capitol, portraying Capitol police as a villain, and criminalizing political objections. Claims the existence of a plot.

Streamer begins the fight for sports rights

Apple, Amazon and Google (via YouTube) are competing to pay billions of dollars for broadcast rights The NFL Sunday night game will be streamed live on a streaming service. DirectTV, the current broadcaster of the weekly game, reportedly lost about $ 500 million a year in broadcasting the game and decided not to renew its contract with the league. Still, tech giants eager to push their streaming business into the live sports market could pay $ 2.5 billion annually for broadcast rights.

High-tech giants see live sports on the brink of turmoil, Times Trip Mickle, Kevin Draper, Benjamin Marin. Their interest is thrilling for sports leagues, but also scary for media companies that have traditionally broadcast live events. “It’s hard to compete with entities that don’t follow the same financial rules,” said Bob Eiger, former CEO and chairman of the Walt Disney Company, which manages ESPN. rice field.

Apple is considered a leading candidate.. Amazon, ESPN +, and YouTube also seem to be running, but iPhone makers are prioritizing package acquisition. According to three people familiar with the process, Apple CEO Tim Cook met with league executives and influential team owners such as the Dallas Cowboys Jerry Jones and the New England Patriots craft family. .. Apple declined to comment.

Apple and Amazon are trying to position themselves for the future without cables. According to industry-tracking investment company Moffett Nathanson, traditional pay TVs have accounted for a quarter of subscribers (about 25 million households) since 2015 as people have replaced cable packages with apps like Netflix and Hulu. I lost it.

However, the price of raw sports rights is only expected to rise. According to data from Moffett Nathanson, the largest media companies such as Disney, Comcast, Paramount and Fox are expected to spend a total of $ 24.2 billion on rights in 2024, nearly double that of 10 years ago.

And the interest in live sports is the starting point for the streaming industry. For years, many executives have agreed with Netflix CEO Reed Hastings. However, many streaming companies are rethinking as competition for subscribers intensifies, stock prices fall, and the profitability of many streaming companies remains out of reach. Daniel Cohen, head of global media rights consulting for sports agency Octagon, told The Times about the high-value NFL deal. “I don’t see the way to profitability. I see the way to victory.”

“This is a total bs. Sergei and I were friends and attended the party together last night! I’ve only seen Nicole twice in three years, both with many other people around. I saw it. There is nothing romantic about it. ”

— Elon Musk, Tweet Correspondence to The Wall Street Journal reports that he had a relationship with his longtime friend’s wife and Google co-founder Sergey Brin... The claim comes as Musk faces many business challenges, including a legal battle with Twitter.

Sell ​​your future self stock

Two entrepreneurs, Brother Daniel and Brother David Liberman, are testing a new concept. New Yorker Nathan Heller writes.. Their entity, Libermans Co., retains all income from the company, as well as any debts, assets, profits they may earn, and investments they may make or start in the next 30 years. I am.

Heller writes that so far Libermans has traded about 3% of futures and investors value it at $ 400 million. The brothers believe that the idea can be used as a way to discuss with the SEC, list on the stock market, and address economic inequality. According to a New Yorker article, the first investor to buy a stake was Samlessin, a slow venture capitalist who previously tried to get investors interested in the idea of ​​”venture capital for people.” was.

“Young people are now trying to make money by creating personal brands online and trading cryptocurrencies, NFTs, and other unregulated direct market products,” Heller wrote. “Their idea of ​​helping others move forward by selling futures on the market with Libermans is a desperate range of avatars of this era.”