The Fed raised rates by 25bps and set a target range of 5.25% - 5.5%. Powell noted they will continue to be data-dependent, and they will have several months of additional data before having to decide in September. Economists, though, are forecasting that the US is done with its rate hikes, per the FT.
Today’s data showed that GDP improved in 2Q23, due to resilient consumer spend and biz investment. Earlier in the week, remember how the IMF raised its outlook for the global economy? Today’s data backs up that view.
Meta beat on its top and bottom lines due to stronger digital ads plus AI momentum, according to Bloomberg, and the co raised next quarter’s guidance. Interestingly, they are seeing users come back to Threads daily at a level greater than expected. $NFLX is restructuring its ad partnership with $MSFT for its lower-priced plan, and it cut ad prices, per Reuters. $EBAY beat on the quarter but provided a disappointing guidance, with analysts concerned about margins. Samsung is lowering memory chip production while it waits for the AI boom; the co expects 2H23 to be solid, in particular at the high-end of production.
ECB Prez Lagarde took a page out of the Powell playbook. They hiked rates by 25bps and then basically said they would be data dependent in the future. Bloomberg put out a great chart (below) of where rates have done since the start of 2023. Now folks are concerned that the BoE may overtighten, putting it at a disadvantage; Bloomberg.
Chipotle’s 2Q sales were below expectations, and their outlook for 3Q23 embedded a slowdown. The so-what is that it’s hard for fast-growing companies to stay on the treadmill at the same speed. Their results compared to those of Micky D’s, who beat consensus. The Grimace Birthday Meal was one reason given, and another was sales in China.
Volkswagen made an investment in Chinese EV co Xpeng to be able to do solid biz in China, per the FT.
While VW has to do something to stay in good graces, global investors have a more open set of choices, with many investing in EM outside of China, per Reuters.
July is set to become the hottest month on record. Copernicus blames anthropogenic climate change mostly, with a dash of El Nino. They are saying that there’s a 66% chance that the global ave temp will exceed the Paris Climate Agreement’s limit for temp increase, and there is a 98% chance it will become the hottest on record again in the next 5 years.
Regulators came out with proposed changes to banks’ capital requirements in response to this year’s crisis. The heightened requirements are expected apply to banks with at least $100 bn in assets, who will have to raise the level of capital maintained against possible losses. “Improvements in risk sensitivity and consistency introduced by the proposal are estimated to result in an aggregate 16 percent increase in common equity tier 1 capital requirements for affected bank holding companies,” the regulators stated.