Fed Cuts Rates Amid Trump Win

FED
Fed Cuts Rates Amid Trump Win

The Federal Reserve cut its key interest rate by a quarter-point, moving it to 4.6% as inflation cools and economic dynamics shift following Donald Trump’s presidential win. This rate cut, following a larger reduction in September, highlights the Fed's balance between supporting employment and controlling inflation, now close to the 2% target. Inflation dropped from a high of 9.1% in 2022 to a low of 2.4% in September, sparking optimism among consumers and investors.

Despite economic gains, the Fed faces potential political challenges as Trump has previously pressured the Fed on rate policy. Chair Jerome Powell, with one year left in his term, emphasized that Fed decisions remain independent and non-political, despite Trump’s influence over economic strategy.

Looking forward, investors are bracing for inflationary pressures under Trump’s administration, including potential tariffs and economic growth that may impact inflation rates. Analysts predict tariffs on imports could raise inflation to 2.75-3% by mid-2026, possibly limiting future Fed rate cuts. Consumer spending has remained robust, but job growth is slowing, which could alter the Fed’s approach if inflation picks up again.
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CRYPTO
Robinhood's Dan Gallagher Eyed for SEC

Robinhood’s top legal executive, Dan Gallagher, is reportedly a leading candidate to head the SEC under President-elect Donald Trump, who has vowed to dismiss current SEC Chair Gary Gensler “on day one.” Gallagher, who served as an SEC commissioner from 2011 to 2015, is currently Robinhood’s chief of legal, compliance, and corporate affairs. According to Reuters, Trump’s team is weighing Gallagher as a potential replacement for Gensler, along with other contenders like former GOP SEC commissioner Paul Atkins and Robert Stebbins, former SEC general counsel under Trump.

This move aligns with Trump’s pledge to reshape SEC leadership, especially given recent criticism from the crypto industry over Gensler’s regulatory approach. The SEC chair, appointed by the president, typically steps down with a new administration, and Gensler has previously indicated he would resign if Trump wins.

The decision process may take several weeks, with Trump set to be inaugurated on January 20, 2025.
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STOCKMARKET
Private Prisons Surge on Trump Victory

Following Donald Trump’s election win, private prison stocks surged as investors anticipate a major crackdown on immigration. Trump’s promises of stricter migration policies have boosted optimism for companies like CoreCivic and Geo Group, which profit from managing detention centers for undocumented migrants under contracts with U.S. Immigration and Customs Enforcement (ICE). CoreCivic shares jumped 29%, while Geo Group soared by 42% on Wednesday.

Trump’s approach to immigration aligns with his long-held criticisms of Democrats’ border policies, which Elon Musk has also highlighted as a key issue. Musk, a strong Trump supporter, has argued that Democrats are deliberately welcoming migrants to gain future voters, especially in battleground states. His endorsement adds to the belief that Trump’s administration will intensify deportation efforts, potentially benefiting companies managing ICE facilities.

The Trump administration’s goal to deport one million undocumented immigrants aligns with ICE’s plans, though success depends on cooperation from cities and states, which may require federal pressure.
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CHINA
China Unveils $1.4 Trillion Debt Relief

China announced a $1.4 trillion plan over five years to address hidden debt held by local governments. Starting this year, the central government will allocate around 6 trillion yuan ($840 billion) to tackle these liabilities, averaging 2 trillion yuan per year until 2026, according to Finance Minister Lan Fo’an. Additionally, Beijing will issue 800 billion yuan annually in special local government bonds, totaling 4 trillion yuan over the period. This initiative aims to reduce local debt from 14.3 trillion yuan to 2.3 trillion yuan by 2028.

The announcement followed China's National People’s Congress meeting, where officials reviewed fiscal measures, including higher debt limits for local governments to swap hidden debt. These steps add to recent fiscal support actions, including President Xi Jinping’s call for further stimulus to revive the economy and prevent a real estate collapse. Economists expect more fiscal boosts, especially with renewed trade tensions anticipated under U.S. President-elect Donald Trump’s policies.
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Meme of the day

Word of the day
Feign

To feign something (such as surprise, ignorance, or sleep) is to pretend to feel or be affected by it.

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