Fed Cuts Rates In Much-Anticipated Move
Federal Reserve Chair Jerome Powell introduced the term "recalibration" to explain the Fed's decision to cut interest rates by half a percentage point, a rare move not prompted by immediate economic weakness. This policy shift aims to maintain a strong labor market while adjusting from a previous focus on inflation. While financial markets initially reacted with uncertainty, they later rallied as investors accepted Powell’s reassurances that the move wasn’t signaling an imminent recession. Analysts anticipate further rate cuts depending on labor market conditions, but the Fed remains committed to a flexible, data-driven approach.
Boeing Machinist Strike Continues
Boeing is grappling with a major strike by 33,000 machinists, halting most aircraft production and costing the company an estimated $50 million daily. Workers rejected Boeing's latest offer, which included a 25% wage increase over four years, as they seek closer to 40%, along with annual bonuses and pension restoration. Boeing and the union have expressed disappointment with stalled negotiations, with temporary furloughs affecting tens of thousands of staff. The strike is part of a broader trend of labor disputes, as industries like aerospace face a tight labor market and competition for skilled workers.
Luxury Brand Sales Concerns
European luxury stocks declined sharply as analysts warned of weakening demand, particularly from high-spending Chinese consumers. Brands like Hugo Boss, Burberry, LVMH, and Kering were downgraded by Bank of America, citing a slowdown in consumer spending following post-COVID peaks. The report highlighted that after declines in U.S., Korean, European, and Japanese markets, the fading support from Chinese consumers leaves the sector under pressure, with a projected 1% revenue decline in 2024. Additionally, concerns over potential Chinese tariffs in response to EU measures on Chinese EVs are adding to the uncertainty facing luxury brands.
