how are you? (June 12-18)
Largest rate hike since 1994
Most of them The Federal Reserve raised the benchmark rate by three-quarters percentage points on Wednesday. This is the largest rise in central banks since 1994. In response to questions from reporters after the announcement, Fed chair Jerome H. Powell said officials “are not trying to cause a recession right now.” Nevertheless, that is what many are afraid of. If the Fed overdoes its efforts to curb inflation and curb demand, banks could put an end to a serious economic slowdown, shut down businesses and restore unemployment. And the Fed shows no signs of changing that path. Following Wednesday’s increase, next month could be followed by a similarly large increase. Powell may face tough questions about this and other Fed actions when he appears in front of members of the House and Senate this week.
Rocky Week for the Market
The S & P 500 rose slightly on Friday, but it wasn’t very comfortable for investors as it had the worst weekly performance since March 2020. It is more than 20% below the latest peak in January. When the Federal Reserve finally announced its decision, investors looked almost unsurprising and the market was fairly stable that day. However, stock prices have plummeted on Thursday and remain volatile. And it was probably an even worse week for the crypto market as prices continued to collapse and crypto companies cut staff. Bitcoin prices have fallen below $ 20,000 for the first time since late 2020. Coinbase said it will dismiss 18 percent of its employees, following cuts in other crypto companies, including Gemini and Blockfi. Celsius, an experimental crypto bank, has announced that it will suspend its withdrawal “due to extreme market conditions.”
Red cosmetic giant
Revlon, a staple of regular medicine racks since the Great Depression, filed for bankruptcy protection last week. This is a sign of changing cosmetic brand conditions and potential retailer problems. However, the company has been in a dire situation for some time. At the beginning of the pandemic, Revlon said it would cut 1,000 positions in the hope of increasing profitability. However, a few months later, he barely avoided bankruptcy by signing a contract with the debtor. But with $ 3.8 billion in debt, supply chain troubles, and fierce competition with new makeup brands, Revlon finally succumbed to pressure.
What’s next? (June 19-25)
Housing market headwinds
Real estate agents are having problems on the horizon. Last week, Redfin and Compass announced a significant reduction in staff, and leaders of both companies hinted at concerns about the economic outlook. Glenn Kelman, CEO of Redfin, told employees by email that demand was 17% lower and headcount savings could reach about 8% of the company’s workforce. He also said he was dismissing 10 percent of his employees “due to clear signs of slowing economic growth.” Another precursor to the potential downturn in the housing market is that mortgage rates soared to 5.78%, the fastest pace of last week since 1987.
Elon Musk’s vision for Twitter
Last week Elon Musk did something very standard for those who buy the company. He met the Twitter staff. Of course, the meeting was the first time in a while. Mr. Musk was supposed to be asked by employees after joining Twitter’s board in April, but those plans changed when he decided to buy the company instead. In a one-hour question-and-answer session, Musk showed the company’s vision and wanted to expand the platform to “at least a billion” Twitter users, hoping it would be pretty practical. He has repeatedly criticized the number of bot accounts on Twitter, although the acquisition of Twitter continues. This is the heart of the manual work involved in recent transactions. Experts said the meeting with his employees could help reassure potential investors if the deal was closed.
Biden considers tariff relief
Since stubborn high inflation could lead to Democratic losses in the November midterm elections, President Biden is considering reducing tariffs on Chinese products by former President Donald J. Trump. Biden said he intends to rely primarily on the Fed to curb price increases, but the president is under pressure from corporate groups, outside economists, and frustrated people. So he is considering taking action on his own. Raising tariffs could reduce overall inflation by a quarter percentage point, according to some private estimates within the White House. But this move could harm other aspects of the administration’s economic agenda and spur criticism that Mr Biden is too easy in Beijing.
Inflation FAQ
What is inflation? Inflation is the loss of purchasing power over time. So tomorrow the dollar won’t fall as much as it does today. This is usually expressed as an annual change in the prices of daily necessities and services such as food, furniture, apparel, transportation and toys.
what else?
According to federal agencies, hundreds of car accidents have occurred in the United States for more than a decade, with vehicles using advanced driver assistance technology. McDonald’s will pay a $ 1.3 billion fine and refund tax to resolve a long-standing tax dispute in France. As Russia reduces the flow of natural gas to Europe, German authorities are urging residents to save energy.