The Federal Reserve faces a crucial decision on Sept. 18, as the upcoming rate cut could have significant implications for both the economy and the upcoming presidential election. While some argue for a 75-basis-point cut, the market favors a 50-basis-point cut or a smaller 25-basis-point cut. The decision could influence President Trump’s re-election chances and Fed Chair Jerome Powell’s potential reappointment, adding a layer of political complexity to the economic equation.
The upcoming retail sales data for August could hold significant weight for the Federal Reserve’s interest rate decision, potentially pushing them towards a larger rate cut. With markets anticipating a rate cut, the magnitude of the reduction remains uncertain. A weak retail sales report, particularly below -1%, could influence the Fed to consider a substantial rate cut, according to Bank of America. This comes amidst a period of market uncertainty and volatility, with the Fed’s actions having a significant impact on rate-sensitive sectors such as manufacturing and housing.
A new study suggests that green financing will stimulate Europe’s economy, but highlights potential fiscal difficulties for Mediterranean countries like Italy and Spain, who could face increased austerity measures due to their high debt levels. While the study projects overall economic growth, it emphasizes the need for robust EU-level funding to address these challenges.
U.S. stock markets traded mixed on Monday, with the Nasdaq Composite falling while the Dow rose. Energy shares performed strongly, while information technology stocks lagged. The NY Empire State Manufacturing Index rose to its highest level since April 2022, indicating positive economic activity.
Alibaba Group Holding Ltd’s stock took a hit on Monday as China’s economic woes, including sluggish industrial production, retail sales, and fixed-asset investment, combined with US sanctions on advanced semiconductors, weighed heavily on the tech giant. Despite its potential to leverage AI for growth, Alibaba faces challenges in accessing the sophisticated chips required for its AI ambitions.
With inflation at its lowest level since 2021, the cannabis industry is set to benefit from potential interest rate cuts. Lower borrowing costs, easier access to financing, increased investor interest, opportunities for expansion, and stronger consumer spending are all key factors that could drive growth in the cannabis sector.
Carl Weinberg, Chief Economist at High Frequency Economics, argues that the US economy does not require a significant rate cut to continue growing. He believes the economy needs ‘care and maintenance,’ not drastic measures, as job creation and consumer spending remain strong. While Weinberg acknowledges the case for easing monetary conditions, he suggests a modest 25-basis-point cut instead of a larger 50-basis-point cut.
A new study suggests the Czech Republic could be leaving millions of euros on the table by delaying the legalization of cannabis. Researchers have calculated that a fully regulated market could generate significant economic benefits, surpassing the current prohibitionist approach.
US stocks traded mixed on Monday, with the Dow Jones Industrial Average jumping over 200 points. The NASDAQ and S&P 500, however, saw declines. Energy shares led gains, while information technology lagged. The NY Empire State Manufacturing Index rose to its highest level since April 2022, signaling potential economic strength.
The Federal Reserve is expected to cut interest rates for the first time in years this week. While a 25-basis-point cut is the more likely scenario, a more aggressive 50-basis-point cut is also being considered, driven by recent media commentary and market sentiment. Analysts, however, remain divided on the magnitude of the cut, with some forecasting a more modest 25-basis-point reduction.
