We Got a Rate Cut: It finally happened. Today, the Federal Reserve enacted its first interest rate cut since the early days of the pandemic—a not insignificant 50 basis points, landing at the high end of expectations. This brings the effective federal funds rate down to a range of 4.75-5%, the base rate for banks to borrow from the Fed and a benchmark for all other loan rates. While a cut had been largely anticipated and priced in by the markets, the significance lies in the Fed’s shift in policy from trying to cool down the economy to now aiming to support it. The Fed also signaled the potential for another 50 basis point cut by year’s end, targeting a more sustainable long-term rate of around 3%.
Rate cuts are typically seen as positive for the stock market, especially for high-growth tech companies, as lower rates boost valuations. However, it’s important to remember that the Fed is cutting rates in response to observed economic weakness. So, while this may be good for valuations in the short term, the overall economic environment needs close watching, as a potential slowdown or recession could counterbalance any benefits. Investors are hoping the Fed can manage a “soft landing,” cooling inflation without triggering a recession, but cracks are starting to appear. While this is overall a positive development, it’s not time for a victory lap just yet.
Uber and Google Work Together on Robotaxis: Uber announced this week it is expanding its partnership with Google's Waymo to offer robotaxi rides in Austin, TX, and Atlanta starting in early 2025. This follows the initial collaboration in Phoenix, AZ, which included autonomous Uber Eats deliveries. The move is seen as a significant positive for Uber, as Waymo has long been viewed as a potential competitor to Uber’s core business. The fact that both companies are expanding their partnership, rather than competing more directly, may ease concerns over Uber’s market share. In Austin and Atlanta, the robotaxi service will be limited in scope and available only through the Uber app, unlike in Waymo’s home markets of San Francisco and LA, where the service runs exclusively through Waymo’s app.
Beyond competition, this partnership signals good news for Uber's self-driving ambitions, a space it exited in 2020 due to safety concerns. Autonomous ride-sharing remains crucial to Uber's long-term strategy and profitability, as reducing the reliance on human drivers is key to lowering operational costs. While other players, like GM’s Cruise, are also in the autonomous vehicle race, Waymo has made the most progress. Initially, Uber’s deal with Cruise sparked concerns about a dwindling relationship with Waymo, but this latest development underscores the strength of Uber's network and the value it offers a partner like Waymo. While Waymo could still become a competitor, this partnership highlights Uber's ability to align with key players in the autonomous space.
United Flights Get Starlink Wi-Fi: While this may not have immediate implications for stock prices, it’s a fascinating development. United Airlines announced a groundbreaking deal with Starlink, the satellite internet service from Elon Musk’s SpaceX, to provide in-flight wireless internet on more than 2,500 of its planes. The rollout will begin next year and phase in over time. Starlink, part of SpaceX, aims to offer global internet coverage via a network of over 6,000 satellites and is already available in more than 100 countries.
SpaceX itself is an incredible story—privately owned yet revolutionizing space exploration, from regular supply shipments to the International Space Station to manned missions aboard its Falcon 9 rockets. SpaceX has essentially revitalized the U.S. space program, which had largely stalled following the end of NASA’s space shuttle era. The partnership with United highlights Starlink’s potential to transform how we think about wireless internet. While it remains niche today, continued advancements could signal the end of reliance on traditional Wi-Fi hotspots, making global connectivity more seamless. This also raises intriguing possibilities about how Musk’s other ventures—SpaceX, Tesla, Neuralink, and X—could eventually complement each other. Each is developing a large user base with a focus on intelligence and technology, setting the stage for powerful synergies in the future.
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