Bets are the Fed adds another .75% to the interest rate figure later this month. The rate has had 2.25% added to it so far this year, over four raises. Fed Chair Jerome Powell is telegraphing raising rates until they get high enough to restrict economic activity and rein in inflation. Is it all a ruse to invoke animal spirits and not have to actually follow through?
The president of the Cleveland Fed is saying the rate will probably top 4% by next year.
One economist sees the rate hitting 3.5% by the end of this year and will start getting cut next year as we enter a small recession. Silver lining? All these raises free us from being trapped against the 0% rate line.
It’s less expensive to ship stuff via container these days. Which is good news for anyone banking on last minute holiday shopping, since it’s partly due to a slow down in volume. Of course, it could also mean a recession is coming. Or that China is shut down due to Covid Zero and not shipping anything. But let’s be positive for now, yay lower costs!
Superstar investors like SoftBank and Warren Buffet are starting to back out of China. SoftBank sold $17B in forward contracts of Alibaba (China’s Amazon), Buffet is selling off BYD stake (China’s Tesla?), and Dutch group is selling $7.6B of Tencent (TikTok’s parent company). I’m sure this won’t have any trickle down effects.
Buffet might be cashing in before a rumored executive order tackling US investment in China is signed.