Business of the Week: The Federal Reserve Hits the Brakes

how are you? (September 18-24)

central banks move forward

At the much-anticipated meeting of the Federal Reserve on Wednesday, policymakers announced a rate hike of three-quarters of a percentage point. They also reminded the American public that this probably won’t be the last time, predicting borrowing costs to rise from the current range of 3-3.25% to 4.4% by the end of the year. Fed Chairman Jerome H. Powell said of the high inflation that the Fed is trying to keep down with rate hikes, “I wish there was a way to hope for that, but there isn’t.” Other central banks have taken similar steps. On Thursday, the Bank of England raised its key rate by half a percentage point to its highest level since late 2008. US inflation is starting to show signs of moderation, but UK policymakers are still waiting for a peak.

Darkness on Wall Street

Investors weren’t surprised by the Fed’s action on rates. They prepared for his three-quarter increase. Instead, what surprised them most was Mr. Powell’s words of caution after the decision was announced. On Wednesday, the S&P 500 fell 1.7% and continued its decline through Friday. Investors usually analyze statements by Fed officials for clues about the central bank’s whereabouts, but lately the message has been clear enough. Wall Street pessimism has been on the rise for much of the month as Powell continues to stress that the Fed’s campaign to lower inflation and slow the economy won’t stop anytime soon and could even get more aggressive. Deepened. The market slump has troubled investors, but the Fed can take this as a sign that its efforts are paying off. Falling stock prices mean companies have more trouble raising money, which could contribute to a cooling economy.

bank executive on the hill

Last week, the presidents of seven of the nation’s largest banks appeared before the House Financial Services Committee and the Senate Banking, Housing and Urban Affairs Committee as part of Congress’ annual oversight hearings on U.S. banking institutions. . This year’s meeting came at a particularly tense time amid growing concerns about the direction of the economy and how banks will respond in a downturn. JPMorgan Chase & Co. Chief Executive Jamie Dimon told the committee that lawmakers “need to prepare for the worst.” Bank executives were also questioned about their involvement in political debates on issues such as consumer protection, diversity and access to abortion. Many Republicans have urged banks to stay out of social causes, with Senator Pat Toomey of Pennsylvania arguing that banks “always seem to lean liberally” when they do.

what’s next? (September 25th to October 1st)

competition issue

American Airlines and JetBlue appeared in court this week in an antitrust lawsuit filed by the Justice Department for conducting a “de facto merger” in the New York and Boston markets. At four major airports – Kennedy International Airport, LaGuardia Airport, Newark Liberty Airport and Logan International Airport – federal regulators have scrutinized two airlines for “every aspect” of their network plans, including routes, schedules and aircraft. claimed to be working together. By splitting the revenues they make at these airports, the two companies increase prices to customers and reduce competition, according to the complaint. The airlines claim their close ties actually increase competition from two other major airlines, Delta and United Airlines, and New York’s airport. Whether it can win could be particularly important for JetBlue, which is looking to complete its merger with Spirit Airlines amid considerable scrutiny.

Porsche goes public

Investors can start buying and trading Porsche shares on the Frankfurt Stock Exchange on Thursday as Volkswagen lists the luxury sports car brand. Volkswagen, Porsche’s parent company, is targeting a valuation of as much as $75 billion. It will be one of his biggest stock market debuts of the year, and will place him above rivals such as BMW and Mercedes his Benz. Volkswagen has already secured strong investors, including sovereign wealth funds in Qatar, Norway and Abu Dhabi, which is one of the reasons why a large initial public offering is possible. Some of the proceeds will go to Volkswagen’s transition to electric vehicles and the production of new vehicle batteries, officials said.

Other recession indicators

A slew of economic reports were released this week, providing the latest data on new home sales, durable goods orders, consumer confidence, and new insights into whether the U.S. is in, or will be, in a recession. insight may be obtained. The Federal Reserve’s hike in borrowing costs has pushed up mortgage rates and slowed the housing market. This is often the harbinger of a severe economic slowdown. It could also affect the direction of the economy if Americans are dissatisfied with the economy and hold back on buying durable goods such as cars and furniture.

what else?

TikTok has banned politicians and political parties from raising money on its platform ahead of the midterm elections. It has accused investors of misleading investors about the causes of the two crashes involved. We are loosening protocols to keep up with the country.