Now That Rates Are Falling, Let’s Turn to Other Matters
The New York Times
The Federal Reserve has at last cut interest rates but our columnist points out a host of concerns that could weigh on financial markets.
The Federal Reserve has started cutting interest rates at long last, and it’s a relief that financial conditions in the United States will be easing. But it’s far too early to celebrate.
The stock market has been rising anyway, with the S&P 500 closing at a new high on Thursday, one day after the Fed’s action.
Even so, there’s plenty to worry about.
Start wherever you like. Personally, I begin with broad political and geopolitical concerns, not specifically financial ones, leading with the presidential election in the United States, which is still too close to call. Then, when I can stand it, I survey tensions around the globe, from the hostilities in the Middle East to Russia’s war in Ukraine to incipient conflicts involving China in the Taiwan Strait and the South China Sea.
There’s no shortage of explicit economic and financial issues percolating within U.S. borders, either. The Fed depicted its decision to reduce the benchmark federal funds rate by half a percentage point as a prophylactic measure, aimed at heading off an unemployment spiral. The economy looks fairly strong now, but unemployment has already begun to rise and in many past cycles, slowing job growth has culminated in mass layoffs. The potential for a widening economic slowdown that becomes a full-blown recession will be with us for some time.
By beginning its rate cuts with a bang, reducing the federal funds rate by twice the quarter-point minimum with which it might have started, the Fed indicated that it was reasonably optimistic that inflation would remain subdued.
President Trump is getting little to no support so far for his call that other countries do their part to try to ease an energy crisis prompted by U.S.-Israeli attacks on Iran.
Bangladesh is taking steps to conserve electricity, which its factories need to keep stitching together the world’s clothing.
Emirates, Qatar Airways and Etihad Airways have become some of the world’s largest and most profitable thanks to their location at the center of busy travel routes.
Geography and regional rivalries have prevented Gulf countries from finding a true alternative to the strait, which the war with Iran has effectively shut down.
President Trump’s son-in-law is trying to raise $5 billion or more from foreign governments and others for his private equity firm.
A methodological change contributed to a better-than-expected inflation report, prompting questions from some economists.
Beyond its effects on oil and gas, the unfolding war in the Middle East is roiling shipping and airfreight, threatening the availability of a vast range of goods.
High-energy lasers can burn drones in the sky like a blowtorch. But they can be stymied by weather, and making them at scale will be a challenge.
Countries already walloped by a breakdown of the international trading order, war in Ukraine and chaotic U.S. policymaking are facing potentially lasting economic damage.
A Washington Post appeal for information about the military qualified as prohibited “solicitation,” according to defense officials.
The technology giant’s siding with Anthropic in its fight against the Pentagon stands out in an era when big companies have tended to keep quiet.
Drivers are paying an average of 20 percent more at the pump since the strikes on Iran began. The global oil price was higher and stocks were mixed.
Whether President Trump signaled that he may soon end the military strikes is weighing on the minds of investors, executives and others.