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- Wednesday's Scoop: Drag 🌤️
Hey friend - it’s already Wednesday. Well done.
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Here’s what you need to know today…
Big Picture
Policymakers feel pretty good about the economy.
US manufacturing is still in a slump but making progress.
There are still a lot of job openings, but hiring has slowed.
The Market: ⬇️ -0.8%
S&P 500: 4,704.81
1Mo: +3% | 1Yr: +22% | 5Yr: +86%
The market continued its slump from yesterday for no significant reason. After such a big rally to end the year, it's natural for investors to take their profits.
Policymakers feel pretty good about the economy but are still not ready to say everything is fine. In the newly released minutes from the last Federal Reserve meeting, officials discussed plans to start reducing interest rates this year to make borrowing less expensive. The Fed plans to keep interest rates high to slow business activity until it’s more confident that its war against inflation is won. Inflation has been under control over the last several months, but policymakers want to see more data before committing to easing economic restrictions.
US manufacturing has been in a slump but improved a little in December. The Institute for Supply Management reported the 14th consecutive month of contracting business activity in the manufacturing sector, the longest stretch in over two decades. Manufacturing accounts for 10% of the US economy and has suffered as consumers cut back on spending on goods. The ISM indicator increased slightly in December, highlighting a pickup in factory employment and lower supply costs.
There are still a lot of job openings, but hiring has slowed significantly. The Labor Department’s Job Openings and Labor Turnover Survey showed open positions shrank to 8.8 million in November, down slightly from October and well below the peak of 12 million in March 2022. Pre-pandemic levels averaged around 7 million. There are still 1.4 open positions for every unemployed worker, down from 2:1 a year ago. Policymakers have been trying to slow the economy to bring the supply and demand for workers more into balance. Fewer openings indicate that the Federal Reserve’s policies may be working.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
💡Practice having an opinion. Build your voice. It accelerates your comprehension and comfort with these topics.
 Starbucks | Trapping Customers Starbucks faces investigation over claims that its mobile app intentionally forces users into repeat purchases and overpayment. The coffee giant has recorded $900M in revenue from unused app and gift card money over the past 5 years. |
 Xerox | Paper Cuts Xerox will lay off 15% of its workforce, roughly 3,000 people, as it aims to restructure its operations to improve efficiency and operations. The digital printing and document company plans to increase its focus on digital services. |
 Ford | Truck Problems Ford must recall more than 112,000 F-150 pickup trucks, its most profitable vehicle, due to a faulty part in the rear axle that can make the truck roll away while parked. The automaker recalled 220,000 F-150s last March. |
 General Motors | Momentum General Motors had a great year, selling the most cars since 2019 thanks to surging demand for its Buick and Chevrolet brands. Electric vehicle sales have disappointed, but GM aims to offer significant incentives to spark interest. |
 Intel | AI Ventures Intel plans to launch its artificial intelligence software division as a separate company, opening it up to outside investment to scale more quickly without raising Intel's costs. The new venture aims to make AI more affordable at scale. |
(These links only work for 24 hours while the story is live.)
Inside Scoop 🤓
Why do they call policymakers hawks and doves?
Wall Street loves its animals. You might hear about hawks and doves when people talk about the Federal Reserve. The Federal Reserve, aka the Central Bank, controls our money system. The Fed will take action to stimulate or restrict the economy to keep it running at a healthy pace.
Policy hawks will be the ones who advocate for tighter or more restrictive action. Policy doves will be the ones who advocate for looser or more supportive and stimulative action. It's all relative, so one person could see a policy action as hawkish while another sees it as dovish.
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