This story is part of CNN Business’s Nightcap newsletter. To get it in your inbox, sign up for free here.
New York CNN store —
Welcome back to the third week of September, or as we call it in the office, the night before the night before the Fed meeting.
We’re not the only ones who pinned Wednesday’s policy announcement. Financial markets have been on a razor’s edge and have been for weeks as they await word from the central bank on how much monetary tightening to expect. Shares are down four in the past five weeks.
On Monday, Wall Street oscillated between slight gains and losses, practically on hold as investors waited for news from the silver fox himself, Mr. Federal Reserve Chairman Jerome Hayden Powell.
Here’s the deal: On Wednesday afternoon, the Fed will announce its next rate hike, which will almost certainly be three quarters of a point, aka 75 basis points, for the third consecutive month.
But there’s a not inconsiderable chance that given the persistence of inflation, the Fed will go HAM and raise rates by a full notch – something the Federal Reserve has never done. Only 16% of investors expected a full point hike on Monday, according to the CME FedWatch tool.
What happens after that? It’s everyone’s guess.
Wall Street is divided on whether the Fed will continue to hike rates aggressively in November or whether inflationary pressures will ease enough for the central bank to slow the pace somewhat, writes my colleague Paul R. La Monica.
If you raise interest rates too much, we have a recession. If you don’t raise them enough, we’ll spiral into inflation (and eventually recession). And as Paul explains, stocks are in for a volatile ride in one way or another.
One person who lands firmly in the optimistic camp is President Joe Biden. On Sunday, Biden focused on the positive, saying in an interview with CBS, “We’re going to get inflation under control.”
He touted his government’s gains in the labor market, with 10 million new jobs created since taking office, and its investments in the semiconductor industry.
I am a person in the camp of pessimists. So here are my two cents:
As I wrote here last week, many of the key drivers of inflation — supply chain congestion, the war in Ukraine, Covid lockdowns, American corporate zeal to fatten profit margins — are not what the Fed or the White House are doing can easily solve. In containing demand, the Fed can only control one side of the equation. The President can help grease the works of global supply, but he cannot unilaterally move grain out of a war zone or (better yet) end the war.
I blame FedEx for my grumpy mood.
ICYMI, the parcel courier that acts as a sort of business leader, dropped a rather dire pre-earnings warning to investors last week. The company withdrew its full-year guidance, saying a slowing economy will cause it to fall $500 million short of its revenue target.
FedEx CEO Raj Subramaniam told CNBC last week that he believes we are on the verge of a global recession that is scaring almost everyone on Wall Street and fueling a brutal sell-off. FedEx shares plunged 21% on Friday — their biggest one-day drop ever.
The FedEx fiasco could be a harbinger of more bad news to come next month when the third-quarter earnings season begins.
“Now if we see continued inflation, it will be a disgrace to this country and reduce confidence in institutions even more.”
– Robert Shiller, a Nobel Prize-winning economist at Yale University, says central banks have no choice but to hold the line when it comes to fighting inflation. In an interview with my colleague Julia Horowitz, Shiller discusses why rising prices can be so hard to fight and why the Fed might want to go all out with a full percentage point hike.
40 years ago today at 11:44 a.m., the emoji was born as a sewn-together colon, dash, and closed bracket. This is what it looked like 🙂
Long before we had 😍, 😩, and 🧐 (my personal favorite) and thousands of others, we had the analog smiley face known as the emoticon, developed by Scott Fahlman, a computer science professor at Carnegie Mellon University.
Fahlman wasn’t trying to revolt the way we communicate online; He was sick of jokes and sarcasm being misread on a school intranet bulletin.
“One person didn’t get the joke and responded with anger, hostility, and pretty soon the initial discussion was gone and everyone was arguing with everyone,” Fahlman told my colleague Jennifer Korn.
Of course, emoticons became emoji (style note: the plural of emoji is emoji), and our text conversations added a new layer of meaning. Look at that:
OK, good 😂
OK, good 😔
OK, good 🙃
OK, good 🙄
…You have the idea.
Today there are more than 3,600 emoji overseen by the non-profit Unicode Consortium.
“Having about 3,000 little pictures that you can insert with the touch of a finger is like 3,000 more punctuation marks,” said Jeremy Burge, founder of Emojipedia. “While I think we could have done without them, I don’t know why you would choose to live in a world where there are no emojis.”
Read Jennifer’s fascinating story of the humble emoji here.
Google, one of the leading technology companies of our time, just made a major oopsie when it fingered a $250,000 payment to an engineer. Problem is, the guy had never worked for Google before.
Sam Curry, a security engineer at cryptocurrency firm Yuga Labs, tweeted last week that he’s been trying to get in touch with someone at Google for more than three weeks. “Is there a way to get in touch with @Google? It’s okay if you don’t want it back.”
Unfortunately, Google wants it back. The company blamed “human error” for the error.
MY TWO CENTS: Not only should Curry be allowed to keep that money, but Google shouldn’t be allowed to reclaim it. I’m no lawyer, but I believe that’s the right and fair outcome when a trillion-dollar corporation with virtually unlimited power to control the entire internet accidentally drops its loose change.
When Citibank mistakenly transferred $900 million to a series of lenders in 2020, many of the firms that received the money refused to repay it. And at least the courts have so far sided with these companies. (Citi is appealing to try to recover the funds.)
Enjoy a nightcap? Sign up and get all of this and some other fun stuff we love about the web delivered to your inbox every night. (OK, most nights – we believe in a four-day work week here.)