Daily Scoop 22-9-21

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Today's Scoop:Gloomy

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Big Picture

1. Interest rates are going up.

2. Policymakers are willing to spur unemployment to slow inflation.

3. Home sales declined again last month.

The Market: 

⬇️

-1.7%

S&P 500: 3,789.93

1Mo:

-8%

| 1Yr:

-14%

| 5Yr:

+51%

Markets tumbled after

the Federal Reserve announced more restrictive economic policy

.

Interest rates are going up on your savings accounts and any new or floating-rate loans. As most economists expected,

the Fed hiked baseline interest rates by 0.75%

to make borrowing more expensive and slow economic activity.

While most investors thought this might be near the end of the interest rate increases,

the Federal Reserve outlined a plan to keep raising interest rates well into next year

. The Fed's highest priority is to slow rising prices, and they expressed a willingness to cause higher unemployment if it would cool inflation.

Home sales declined for the seventh straight month

in August. The latest National Association of Realtors report indicated the lowest number of homes sold since May 2020. High mortgage rates have made homes less affordable, cooling demand and slowing the rise in prices. Some regions are seeing declining home values. This is the effect the Fed is trying to have on the broader economy -

higher rates, less borrowing and spending, and lower inflation.

Company Scoops ❤🌎💰

(Click to dig in & vote your reaction, see how others feel)

Beyond Meat

suspends chief operator after nose biting arrest

-

General Mills

hikes prices, puffs profit

-

Carnival Cruise

successfully tests sustainable biofuel

-

Salesforce

partners with WhatsApp to expand business service

-

General Motors

electrifies Hertz

(These links only work for 24 hours while the story is live)

🤓 Inside Scoop...

The

Federal Reserve

, aka the

Central Bank

, aka

The Fed

, is in charge of our whole money system. When the economy is struggling, the Fed lowers baseline

interest rates

to make it cheaper for consumers and businesses to borrow and spend. The Fed also pumps more money into the system by buying bonds with new dollars that it essentially speaks into existence. The additional cash keeps the pipes flowing as the borrowing and spending heat up, stimulating economic activity. Once the economy's strong enough to stand on its own, the Fed starts to raise interest rates and pull back some of that money to ensure the economy doesn't overheat.

Inflation

is the Fed's heat gauge. So everyone's watching whether the Fed can dial back the stimulus measures quickly enough to slow inflation and cool the economy but not so quickly that it pushes the economy into a serious recession.

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