The anticipation of a Federal Reserve rate hike in July is widespread, but what lies ahead remains uncertain. Currently, the probability of another hike in September stands at 25%, marking an increase from 21% just a week ago, according to CME’s FedWatch tool.
A Discrepancy between Markets and the Fed
There exists a disparity between market sentiments and the Federal Reserve’s outlook regarding the trajectory and duration of interest rate increases. However, this discrepancy narrowed slightly on Thursday as investors reluctantly acknowledged the necessity for further tightening. This acknowledgment came in the wake of strong jobs data, including private payrolls that exceeded expectations and almost doubled forecasted figures. Consequently, the Dow and the S&P 500 experienced their most significant declines since May.
The Potential for More Rate Hikes
Given the recurring instances of robust economic data, particularly in the labor sector, there is a possibility that the Fed may underestimate the extent to which additional rate hikes are required. While the central bank signaled two more increases in 2023, there is little likelihood of halting the tightening process if the economy continues to exhibit strength. However, next week’s consumer price index reading will provide a crucial update on the ongoing battle with inflation.
Drawing Lessons from Abroad
Investors hopeful that rate hikes will cease once inflation reaches its target rate would do well to examine Switzerland’s experience. In June, Switzerland’s inflation fell below the Swiss National Bank’s 2% target. Nevertheless, the central bank believes that further tightening measures are necessary to sustain this achievement.
Implications for Stocks
The strong labor data casts doubt upon the Fed’s projection of an impending recession in 2023. Nonetheless, this development is ultimately unfavorable for stocks due to its potential impact on interest rates.
Looking Ahead
Unless there are significant shifts in the data, the probability of a September rate hike is likely to increase in the forthcoming weeks.
—Callum Keown
Yellen Criticizes China Over Chip Measures on Beijing Trip
Treasury Secretary Janet Yellen has expressed concerns about China’s actions against U.S. businesses during her visit to Beijing. As part of her efforts to enhance communication with China, Yellen plans to discuss these concerns with her Chinese counterparts.
Troubled by Punitive Actions
In a roundtable discussion with U.S. business leaders operating in China, Yellen voiced her unease regarding the punitive actions taken against U.S. firms in recent months.
Escalating Dispute
The ongoing trade dispute between the world’s two largest economies intensified in the lead-up to Yellen’s visit. China announced new export controls on metals, specifically targeting gallium and germanium, which play a crucial role in semiconductor production.
Call for Avoiding Decoupling
Despite China’s implementation of export controls, President Xi Jinping made remarks suggesting that countries should strive to avoid decoupling and the closure of global supply chains.
What’s Next:
In the coming days, Janet Yellen faces a challenging task of finding a balance between advocating for U.S. business interests and improving relations with China. It is crucial to avoid further damage in the ongoing tech cold war between these two superpowers. While both sides have been making positive statements, their actions continue to escalate tensions.
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Uber, DoorDash Fight New York’s Minimum Wage Rules
The battle between the app-based delivery platforms DoorDash, Uber Eats’ Uber Technologies, and Grubhub and New York City has escalated as they filed a lawsuit to challenge a groundbreaking law. This law aims to establish minimum wages for app-based food-delivery workers. According to the law, these companies will be required to pay their delivery workers a minimum of $17.96 per hour, starting on July 12th.
A Landmark Decision: FDA Fully Approves Biogen’s Alzheimer’s Drug
The U.S. Food and Drug Administration (FDA) has made a groundbreaking decision by granting full approval to Leqembi, an Alzheimer’s drug developed collaboratively by Japan-based Eisai and U.S.-based Biogen. This monumental move paves the way for millions of patients to finally have access to a medicine that has proven efficient in slowing down the progression of the disease.
Fair Pay for Delivery Workers
New York City is taking a stand, fighting for fair pay for delivery workers. The law mandates that these workers must receive either 50 cents per minute spent on a trip or the standard hourly rate for the time they actively spend on the delivery app. Tips are not included in this calculation. It is important to note that by 2025, the pay rate will increase to $19.96 per hour. However, over 60,000 delivery workers in the city currently earn an average of $7.09 per hour, a figure that falls far short of what they truly deserve for their hard work. The New York City Department of Consumer and Worker Protection expresses their disappointment with platforms like Uber for not agreeing to these fair pay standards.
Legal Battles and Concerns
Uber, DoorDash, and Grubhub have filed lawsuits against New York City pertaining to two separate issues. Firstly, they are challenging a limit on commission fees that they can collect from restaurants using their platforms. Secondly, they are fighting a rule that requires them to share customer data with these restaurants. Both of these lawsuits are ongoing. In addition, Uber has voiced concerns about potential irreparable harm resulting from the newly-imposed law on payment for delivery workers. They fear losing goodwill with couriers and customers, as well as significant nonrecoverable costs. Similarly, app platforms argue that this legislation could lead to higher prices for consumers and limit their ability to hire.
Looking Ahead
These legal battles and disputes are far from over. The outcome of the ongoing lawsuits against New York City will undoubtedly shape the future of the gig economy and the rights of workers in the industry. The delivery platforms argue that since gig workers are often simultaneously active on multiple apps, it is possible that they may be paid for the same hours by different platforms. Meanwhile, DoorDash and Grubhub’s joint lawsuit warns of potential financial damages that may be irreparable.
The fight for fair pay, transparency, and reasonable commission fees continues to be a priority in the evolving landscape of the gig economy.
—Janet H. Cho
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FDA Gives Biogen’s Alzheimer’s Drug Full Approval
In a significant development, the U.S. Food and Drug Administration (FDA) has officially granted full approval to Leqembi, an Alzheimer’s drug jointly developed by Eisai and Biogen. With this major decision, countless patients will finally gain access to a medication that effectively slows down the progression of this debilitating disease.
Federal Approval Expands Access to Alzheimer’s Treatment
The recent federal approval of a new Alzheimer’s treatment represents a major milestone in improving accessibility for patients. With Medicare now covering the $26,500 annual cost of the treatment, eligible enrollees will have greater access to care. However, in order to qualify for coverage, patients must agree to report data to a registry, as per The Wall Street Journal.
Alzheimer’s affects approximately six million people in the U.S., and most of them are eligible for Medicare. Eisai, the pharmaceutical company behind the treatment, has projected global sales of up to $7 billion by 2030. The drug is administered through a bi-monthly intravenous infusion.
While clinical trials for the drug, known as Leqembi, have shown promising results in slowing the progression of Alzheimer’s, it is important to note that it cannot stop or reverse the disease. After 18 months of treatment, Leqembi was found to slow memory declines by approximately 27% and reduce the presence of beta-amyloid plaques in the brain.
This full approval marks a significant step forward in the partnership between Eisai and Biogen. Aduhelm, another anti-amyloid treatment developed by these pharmaceutical companies, received conditional approval from the FDA in 2021. However, Medicare did not provide routine coverage for it.
What’s Next?
The way Medicare covers Leqembi may influence how private insurers approach coverage for this treatment. Aetna, for example, has stated that it will take into consideration the updated labeling provided by the FDA before deciding on coverage options, as reported by The Journal.
Note: The article ends here and transitions to a different topic about retailers preparing to compete with Amazon during the back-to-school shopping season.
Retailers Gear Up for Prime Day and Competing Sales Events
Prime Day, the highly anticipated shopping extravaganza, is set to take place on July 11 and 12. In response, major retailers such as Walmart, Target, and Best Buy are hosting their own sales events to attract shoppers. Walmart has scheduled its Walmart Plus Week from July 10 through 13, Target’s Circle Week will run from July 9 through 15, and Best Buy’s Black Friday in July will be held from July 10 through 12.
Increasing Discounts to Entice Shoppers
Retail earnings reports have revealed that consumers are being cautious about their discretionary purchases, especially expensive ones that may require financing at higher interest rates. Even though there has been some improvement in recent weeks, persistent high inflation continues to affect the finances of many consumers who are struggling to make ends meet. In response to this trend, retailers are escalating their discounts to entice shoppers and boost sales.
Slow Recovery and Promising Signs
Despite a slow start to the year, weekly visits to major retail chains are gradually approaching pre-pandemic levels, according to analytics firm Placer.ai. While the numbers still lag behind last year’s figures, they have been steadily climbing after experiencing significant drop-offs earlier in the year. This is an encouraging sign for the retail industry.
Beauty and Self-Care Thrives Amidst Challenges
Among the various sectors, beauty and self-care stands out as the only category recording positive growth in visits over the past seven weeks. Meanwhile, pet stores, office supplies, and home-improvement retailers continue to face challenges, with their traffic hovering around 8% below 2022 numbers, as reported by Placer.ai.
Predictions for Major Retailers
According to Placer.ai, Best Buy is expected to experience a significant boost in traffic during Prime Day and its associated sales events. The success of Best Buy’s Father’s Day sale, which saw a surge in traffic, indicates that shoppers are receptive to the retailer’s promotions. Walmart has also been enjoying strong recent traffic, while Target’s growth has been more modest in comparison.
Rare Rembrandt Portraits Sold for $14.3 Million
A recent auction at Christie’s Old Masters in London showcased a pair of extraordinary Rembrandt portraits that fetched a staggering $14.3 million, exceeding all expectations.
An Unexpected Discovery
These rare portraits, standing at only about eight inches in height, depicted Jan Willemsz. van der Pluym, a successful plumber, and his wife Jaapgen Carels. Painted by the renowned artist Rembrandt Harmenszoon van Rijn in 1635, these bust-length oil-on-panel depictions had remained hidden in a private collection within a U.K. family since 1824. Their true origins as Rembrandt masterpieces were only brought to light following a thorough investigation and scientific analysis at the prestigious Rijksmuseum in the Netherlands. Remarkably, these are among the smallest portraits ever created by the artist.
Exceptional Sales at Christie’s
Christie’s Old Masters auction saw a remarkable sales total of nearly $68.8 million, achieving three artist records. However, out of the 40 lots available, only 70% found buyers. Notably, the auction featured an extraordinary oil painting entitled Artist’s Studio with a Seamstress, previously unknown and attributed to the 17th-century Flemish artist Michael Sweerts. Surpassing all estimates, it fetched an astonishing $16.1 million.
Other Noteworthy Sales
An additional auction held by Sotheby’s also unveiled noteworthy works. Among them was Saint Sebastian tended by two angels, which had recently been identified as a Peter Paul Rubens original through extensive research and X-ray analysis. This captivating piece sold for $6.2 million. Another notable sale was William Hogarth’s satirical masterpiece Taste in High Life (or Taste à-la-Mode), which set a record by selling for an impressive $3 million.
What’s Next at Christie’s
The excitement of Christie’s summer auction season in London continues with an upcoming sale featuring rare books and manuscripts. Notably, one of the highlights will be a copy of the influential 13th-century philosopher and theologian Thomas Aquinas’ Summa theologica, Prima secundae. Stay tuned for more information on this highly anticipated event.
This Week’s News Quiz
Question 1
Meta Platforms, the parent company of Facebook and Instagram, recently launched a microblogging app to rival Twitter. What is the name of this app?
a. PartyLine b. Quitter c. Threads d. MySpace
Question 2
Walt Disney’s Indiana Jones and the Dial of Destiny, the latest installment in the action/adventure series starring Harrison Ford, dominated the box office during its debut over the holiday weekend. How much money did it earn domestically?
a. $82 million b. $86 million c. $90 million d. $94 million
Question 3
Treasury Secretary Janet Yellen is currently in China for a meeting with counterparts from the People’s Republic amidst escalating tensions between the U.S. and China. What recent actions by the U.S. and China could be a major topic of discussion?
a. The White House is considering an executive order that would restrict American companies from investing in China’s chips, artificial intelligence, and quantum computing. b. The U.S. has imposed limits on the transfer of chips, computing products, and computing services to Chinese companies, while China has prohibited Chinese companies from purchasing products from American memory chip maker Micron Technology. c. Beijing has implemented export controls on metals gallium and germanium, which are crucial to the semiconductor industry, effective from August 1st. d. All of the above
Question 4
JetBlue has terminated its partnership with American Airlines in the Northeast following a court order. JetBlue will now shift its focus to which of the following acquisitions?
Top Airlines
In the world of aviation, several airlines have gained recognition for their exceptional services. Let’s take a look at a few notable names:
Republic Airways
Frontier Airlines
Spirit Airlines
Alaska Airlines
Tesla’s Impressive Second Quarter
Tesla, the renowned electric vehicle manufacturer spearheaded by Elon Musk, has exceeded expectations with its second-quarter deliveries. The company has achieved a remarkable sales milestone. Can you guess the exact number of vehicles delivered?
a. 446,140
b. 466,140
c. 486,140
d. 506,140
Answers:
- Option c
- Option a
- Option d
- Option c
- Option b
