Life

The Federal Reserve Raised Interest Rates By A Quarter Percentage Point

#Morning Brew
by

QUOTE OF THE DAY

“We’re here to help you folks do well” — President-elect Trump, striking a conciliatory tone as he assured several prominent tech leaders at a summit convened at Trump Tower. One notable company not in attendance: Twitter. The reason? “They aren’t big enough.” Awkward.

<Market Snapshot

  • U.S. markets finished on a downer after a volatile day of trading centered around the Fed (more on that shortly)
  • China bites back? Shares of GM (-3.77%) and Ford (-1.88%) slipped after a Chinese official warned China’s government could penalize an undisclosed U.S. automaker for monopolistic behavior
  • Rumors of a Kraft Heinz acquisition caused shares of American food and beverage giant Mondelez International to spike as much as 12% after hours. But gains fell back to 6% after the reports were refuted

The Fed Speaks

…And raising rates it is. Today’s the day, loyal readers. You’ve been reading our interest rate hike speculation for the past year, and it’s finally here. For the first time in 2016, and for only the second time in a decade, the Federal Reserve raised interest rates by a quarter percentage point, nudging rates higher to a range of 0.50% to 0.75%. What finally convinced the Fed? How ‘bout a strengthening jobs market, coupled with inflation moving towards policymakers’ 2% target. You done good, America. And if that wasn’t enough, the Fed also said that it expects three rate increases in 2017…unless Trump throws a wrench in its plans. The Fed will likely continue its wait-and-see approach before it decides how to respond to Trump’s plans for tax cuts, infrastructure spending and deregulation. But back to the present moment: it finally happened. Woo.

Another Day

…Another absolutely monumental data breach. Yahoo (-3.50% after hours) has been spending the last few months reeling from the discovery of a 2014 data breach that affected the personal information of over 500 million accounts. Yesterday, it got worse. A lot worse. Yahoo announced the discovery of another separate data breach from 2013…affecting one billion users. That’s billion with a B, aka the largest data hack we’ve ever seen. The investigation, which involves the FBI, is ongoing, as is the very real possibility of Verizon walking away from its deal to buy Yahoo. For those who forgot about the big Verizon deal, earlier this year Verizon (-1.39%) agreed to acquire Yahoo’s core internet business (e.g. Yahoo News, Finance, Sports, etc.) for $4.8 billion. Needless to say, Verizon has been reevaluating its decision in light of these developments. Big data breaches, big problems.

Amazon Takes to the Skies

…And Bezos delivers. Three years ago, Amazon’s visionary CEO announced the development of autonomous drone deliveries. Status update: the day has finally arrived. Yesterday, #AmazonPrimeAir successfully completed its first commercial drone delivery to a lucky customer in Cambridge, England. The electric-powered, fully-automated drones can deliver to your doorstep within 30 minutes, and you can see it in action right here. England is all well and good, but what about America? Well, the U.S. Federal Aviation Administration doesn’t currently allow such drones, drawing plenty of criticism that the agency is too traditionalist and not responsive to technological evolution. Waiting on you, FAA. While this isn’t the first drone delivery of all time (think Domino’s & drone pizza), the Amazon we know and love always seems to have a little something up its sleeve.

Uber Hits the Road

…And gets ticketed. If you’re not testing self-driving cars for real these days, you’re behind the curve. And Uber’s not one to be behind the curve. After starting self-driving Uber pickups in Pittsburgh in September, yesterday Uber expanded the service to its hometown of San Francisco. But not so fast—the move was quickly slammed by California regulators claiming Uber doesn’t possess the correct self-driving permits. To which Uber said, “haha, very funny California, but these rules don’t apply to us.” Translation: Uber’s self-driving cars don’t quite count as autonomous. After all, they do require a trained driver behind the wheel. Plus, Uber thinks the rules are overly strict and will slow innovation. Regulators? They politely disagree.

Other Stories

Economic Calendar

No Naps Allowed

Time for a history lesson: way back in the 1940s, Spanish dictator Francisco Franco moved the Spanish clocks forward one hour so that they would align with those of Nazi Germany (how charming). The change stuck, and in the process left one long-lasting impact on the Spanish workforce: “siesta” naps. Because of the odd time difference, Spanish workers wake up in the dark, take midday naps and go to sleep well past midnight. Labor minister Fátima Báñez is trying to end this Spanish pastime. Here are the facts:

  • Báñez is now proposing to change the country’s clocks so that they better align with sunrises and sunsets, in hopes that this will bring the workday to a close at 6 PM, ultimately ending the Spanish siesta.
  • What does the typical work schedule of a Spaniard look like, anyway? Work from 8 AM to 1:30 PM, then nap and lunch, then get back to work from 5 PM until 8 PM. The odd schedule has kept Spanish productivity behind that of other countries.
  • A major result of this lagging productivity: high unemployment. Spanish unemployment is currently higher than 19%, making it the second highest in Europe. The good news? Well, comparatively good news: that number was 25% three years ago. Hopefully turning back the clocks and cutting naptime will continue this trend.

Interview Question of the Day

Two friends were betting. One said to the other: “the coin will be flipped 20 times. Each time the coin lands on heads, I will give you $2. Each time it lands on tails, you will give me $3.” After flipping the coin 20 times, not a single penny was exchanged among them. How many times did the coin land on heads? (Answer)

Business Person of the Day

Yesterday, Exxon Mobil named Darren Woods to be its next chairman and CEO, replacing Rex Tillerson, who is planning to become Trump’s U.S. Secretary of State. While the spotlight isn’t on Woods in light of the Tillerson and Trump news, he’ll inherit a drilling and refining powerhouse that’s been slumping for the past two years. Good luck, Mr. Woods.

Food for Thought

Google’s most popular searches from 2016 are officially in! After all the year’s national events, news topics and other attention-grabbing phenomena, the winner goes to…”Powerball.” Yes, this was in reference to the insane $1.56 billion jackpot that three ticket holders won in early 2016. As for the rest of the top ten list:

  1. Powerball
  2. Prince
  3. Hurricane Matthew
  4. Pokémon Go
  5. Slither.io
  6. Olympics
  7. David Bowie
  8. Trump
  9. Election
  10. Hillary Clinton

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