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let's cut to the chase
Scrappy
August 23, 2024
5 Things you need to know
Daddy Powell
LET’S CUT TO THE CHASE
Good news for those of you with cash on hand – Daddy Powell's getting ready to lower the interest rates. He's saying the time has come to give us all a taste of that sweet, sweet green light. So buckle up and hold onto your credit cards, because the party's just getting started!"
“The time has come for policy to adjust,” Powell said Friday at the Fed’s annual symposium in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
He added:
“While the task is not complete, we have made a good deal of progress toward that outcome. … My confidence has grown that inflation is on a sustainable path back to 2%,”
What happened?
Powell spoke, and the markets listened. When the Federal Reserve Chair drops hints about cutting interest rates, it's like Christmas morning for investors. They're all eager to see which markets are on Santa Powell's nice list.
This comes as inflation cools and concerns about the economy's long-term growth simmer in the background. Remember, the Fed's been steadfast in keeping rates high (5.25%-5.5%) until they're sure inflation is headed for that 2% target. Well, June's numbers put inflation at 2.5%, down from 5.6% in 2022.
Soft Landing?
The Chairman thinks the Fed's managed a "soft landing" – taming inflation without triggering a recession. He credits policy decisions and the economy's resilience. Now, he's eyeing the data, ready to adjust course as needed
What's Next?
Rate cuts are likely coming in 2024, possibly as early as May or June.
Expect 3-5 cuts, each around 0.25 percentage points. This puts the federal funds rate potentially at 4.25%-4.50% by year's end.
The "why" is twofold: inflation's downward trend and the desire to support growth. The fear index has been slowly dipping.
For you, this means cheaper borrowing (think mortgages, car loans, credit cards), but also lower savings rates and investment returns.
Jays Golden Touch
The annoucement had treasure chest of good news in the market today. Gold, in particular had strong rally, breaking records! Powell's hints at rate cuts sent investors scrambling for the safe-haven asset. Prices jumped over 1%, nearing an all-time high. Analysts see this trend continuing as the Fed loosens its grip.
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META:
WERE PUMPING BRAKES ON OUR OVERPRICED HEADSET
Remember this? The one that was supposed to go toe-to-toe with Apple's Vision Pro? Well, guess what? They've thrown in the towel on the whole thing, according to The Information. This headset, codenamed La Jolla, was the talk of the town just a hot second ago, with rumors of a 2027 drop date getting everyone hyped. Meta's already halted production, and it's not looking good for fans of fancy VR tech.
So, what happened? Well, it seems those MicroOLED displays just got too pricey for Meta's blood. They were trying to keep the cost under $1,000, but in reality, it wasn't looking too good. And let's be real, the whole "expensive VR" thing isn't exactly flying off the shelves right now. Apple's $3,500 Vision Pro is proof of that – it's been a hard sell, and devs just aren't biting.
And Meta's not immune to this trend. The Quest Pro, their $1,499 attempt at premium VR, was a total dud. It launched, got trashed by techies, and then...poof! Out of the spotlight faster than a HawkTuah trend. Ouch.
The VR and mixed reality scene got all abuzz when Apple jumped in, but things have cooled off fast. Meta's Reality Labs, the team behind the Quest headsets, has taken a huge hit – we're talking billions in losses.
So, what the Zuck is plan B? Well, Meta's still got the Quest 2 ($200) and Quest 3 ($500) doing their thing. And in a sign of just how bad things were for the Quest Pro, Meta axed production of that $999 headset back in 2023.
Just your regularly scheduled public service announcement: we have many prototypes in development at all times. But we don't bring all of them to production. We move forward with some, we pass on others. Decisions like this happen all the time, and stories based on chatter about one individual decision will never give the real picture.
It looks like Meta's taking a step back, retooling, and maybe realizing that all that fancy tech isn't what the people are after. At least, not in this economy.