Dear valued client,
Following their two-day meeting on Wednesday, the Federal Reserve announced rates will remain unchanged for the time being. Chairman Jerome Powell was unusually revelatory in this statement following the decision, saying, “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point.” He added that an interest rate cut could come “as soon as the next meeting” in September. Despite this development, markets lost ground this week.
Tech giants were under the microscope this week as they reported earnings amid AI investment concerns. Microsoft revealed a significant $19 billion investment in AI infrastructure last quarter, boosting its Azure cloud business by 29%, though still below analysts’ expectations. Alphabet’s stock fell 5% after investors worried about AI spending impacting profits, with CEO Sundar Pichai acknowledging potential overspending but stressing the higher risk of underinvestment. Meta’s ad revenue grew 22% to $39.1 billion last quarter, suggesting AI investments are aiding personalized ads, yet the company raised its 2024 capital expenditure forecast to at least $37 billion. The tech-focused NASDAQ index was down 2% for the week.
Venezuela is embroiled in a political crisis following its presidential election, with both the government and the opposition claiming victory amid widespread protests. The government-controlled election authority declared President Nicolás Maduro the winner with 51% of the vote, contradicting exit polls from Edison Research, which showed opposition candidate Edmundo González winning decisively. International leaders, including Canada’s Deputy Prime Minister and the White House, have expressed serious concerns about electoral manipulation. This election, marred by repression and exclusion of opposition figures, comes amid a severe economic collapse that has driven a quarter of the population to flee the country. The ongoing turmoil, coupled with rampant inflation, hunger, and violence, suggests the exodus will only increase if Maduro remains in power.
Hamas’s political leader, Ismail Haniyeh, was assassinated in Tehran, Iran, on Wednesday. While Israel has not commented on the killing, it is assumed they are responsible for the airstrike. Just hours before Haniyeh’s death, Israel claimed to have killed a senior Hezbollah commander in Beirut. The international community is now watching how Hamas and Hezbollah will respond to these targeted strikes and what implications they will have on the ongoing Gaza cease-fire negotiations.
“Love is a treasure for which we can never pay. The only way we keep it is to give it away.” – Jim Stovall
Have a terrific weekend,
PW
