🍋 75bps of Pain
Good Morning! Workers are slowly returning to the office as New York City experienced record post-Covid subway activity on Tuesday. Walmart is adding 40,000 jobs ahead of an anticipated busy holiday season while Meta and Google are cutting jobs — just don’t mention layoffs. Google co-founder Larry Page is winding down his flying car startup Kittyhawk. And Robert Sarver, owner of the Phoenix Suns and Mercury, will sell the teams after a damning harassment report.
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1. Story of the Day: 75bps of Pain
Wall Street received the news it had been bracing for all week as Federal Reserve Chairman Jerome Powell announced another interest rate hike - this time three-quarters of a point - in Fed's fight to control inflation.
The Fed’s announcement comes on the heels of CPI data for August; after a four-decade-high of 9.1% in June, inflation cooled, but not enough. While the Fed had anticipated previous rate hikes reducing inflation by now, the reality is that reduced inflation is yet to come.
While many worry that increasing interest rates could lead to a recession (or already has), inflation nevertheless presents a slew of issues for the economy. The Fed is betting that the lesser of two evils is to go all-in combating inflation despite the cost.
The stock market responded poorly to the news; S&P 500 fell 1.7%. CEO confidence remains shaky, and interest rates will furthermore impact all Americans, in the shape of credit card debt, mortgages, and other loans. The housing market, already lagging behind post-pandemic highs, is likely to suffer even more as a result of the rate hikes.
Short Squeez Takeaway: Jerome Powell has his hands full as he seeks to balance rampant inflation and rising interest rates. Experts believe Powell must play a steady hand as he balances the two for a soft landing - while some economic pain is inevitable, a recession nevertheless isn’t. What’s likely, though, is that the rest of 2022 will continue to spell a rocky time for the markets as the Fed seeks to combat inflation.
2. Markets Rundown
Stocks and crypto tumbled after Federal Reserve announced a 75bps increase.
Movers & Shakers
- (+) Coty ($COTY) +3% after expected doubling of skincare sales by 2025.
- (–) Aurora Cannabis ($ACB) -7% after disappointing earnings.
- (–) Chemours ($CC) -8% after lowering full-year guidance.
- Naveris, a biotechnology company focused on early cancer detection, raised $51 million
- Pie Insurance, an insurance provider for small businesses, raised $315 million
- Innovafeed, a biotech company focused on insect-breeding, raised $250 million
- Therabody, a manufacturer of wellness massage devices, raised $165 million
- Opto Investments, a platform for wealth managers, raised $145 million
- Vista Equity offers to acquire software security firm KnowBe4 for $3.9 billion
3. Top Reads
- How the economy today is a classic tale of two cities (YF)
- 2-year treasury rate hits 4% for first time since 2007 (CNBC)
- The Fed’s credibility is still on the line (CNN)
- Bank CEOs head to Washington for annual Congressional testimony (Axios)
- Why layoffs may be on the horizon in the U.S. (CNBC)
- The staying power of quiet quitting (Axios)
- Ford has bad news for car buyers and the economy (The Street)
- Home sales dropped 20% in August from a year ago (CNN)
- Here’s what the Fed’s “tough love” message means to you (CNBC)
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4. Book of the Day: Happier Hour
Our most precious resource isn’t money. It’s time. We are allotted just twenty-four hours a day, and we live in a culture that keeps us feeling “time poor” —like we never have enough.
Since we can’t add more hours to the day, how can we experience our lives as richer? Is it possible to spend our days so they aren’t just full, but are fulfilling?
Based on her wildly popular MBA class at UCLA, Professor Cassie Holmes demonstrates how to immediately improve our lives by changing how we perceive and invest our time. Happier Hour provides empirically based insights and easy-to-implement tools that will allow you to:
- Optimally spend your hours and feel confident in those choices
- Sidestep distractions
- Create and savor moments of joy
- Design your schedule with purpose
- Look back on your years without regrets
Enlivened by Holmes’s upbeat narrative and groundbreaking research, Happier Hour teaches you how small changes can have an enormous impact, helping you feel less overwhelmed, more present, and more satisfied with your life overall. It all starts by transforming just one hour into a happier hour.
“This time, like all times, is a very good one, if we know what to do with it.”
5. Short Squeez Picks
- 11 phrases to help you sound more confident
- The single greatest medical breakthrough of all time?
- Greatness doesn’t just require practice but also opportunity
- Warren Buffet says your overall happiness in life comes down to four simple words
- 3 common thinking traps and how to avoid them, according to a Yale psychologist
- How a single sentence can save an imploding relationship
6. Daily Visual: High Rates Crush Lending in 2022
Mortgage lending, by volume
7. Daily Acumen: Do Less
“Do less but do better.
Any energy that goes into what doesn't matter comes at the expense of what does.
With a little extra time, you can raise the standard from good enough to great.
Narrow the focus. Raise the standard. And set yourself apart.”
Source: FS Blog
8. Crypto Corner
- States faster than the feds to regulate cryptocurrency
- High-stakes crypto lending looks here to stay
- Binance CEO sees positive progress for crypto regulation despite long process
- Disgraced crypto founder says he’s not on the run - but nobody knows where he is
- How blurring the line between crypto and Tradfi could redefine global finance
- Why are there so many scammers in crypto?
9. Memes of the Day
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