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- Inflation Surges, Rate Cuts Delayed
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Happy Master’s Thursday!⛳ Here is what’s buzzing in finance today… 🐝👇
👉 CPI results are in
👉 Fed minutes revealed
👉Amazon shareholder letter
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CPI: Results Are In
In March, inflation rose unexpectedly, making it unlikely that the Federal Reserve will reduce interest rates soon. The Consumer Price Index (CPI), which tracks the cost of goods and services, increased by 0.4% for the month, pushing the yearly inflation rate to 3.5%. This was more than economists had predicted. The core CPI, which doesn't include food and energy prices, also went up by 0.4%, higher than expected. Following the report, stock prices fell and bond yields rose.
Source: investing.com
Rising costs in housing and energy mainly drove this increase. Energy prices went up by 1.1%, and housing costs rose by 0.4% for the month. Food prices only increased slightly by 0.1%, but some items like eggs saw significant price jumps. On the other hand, prices for used cars dropped, and medical care services got more expensive.
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FOMC: Minutes Revealed
During their March meeting, Federal Reserve officials voiced concerns that inflation was not decreasing quickly enough. Consequently, the Committee decided to maintain its stance of not lowering rates until they were more confident inflation was reliably moving towards the 2% yearly goal.
Source: NBC
Discussions at the meeting also highlighted concerns over geopolitical instability and rising energy prices as potential inflation drivers. Conversely, a balanced job market, technological advancements, economic challenges in China, and a weakening commercial real estate sector were seen as mitigating factors. Furthermore, the possibility of halting the reduction of the Fed's balance sheet, which had seen a reduction of approximately $1.5 trillion in assets, was discussed. No specific plans were outlined for scaling back the process known as "quantitative tightening," though it was suggested that the pace of the balance sheet reduction could be halved soon.
AMAZON: Shareholder Letter
Amazon CEO Andy Jassy, in his annual letter to shareholders, committed to controlling costs while aggressively investing in new areas like artificial intelligence. Under his leadership, Amazon has become more efficient, notably with significant layoffs exceeding 27,000 employees. Despite this, Jassy is focused on identifying new growth opportunities to ensure Amazon's long-term resilience.
Source: CNBC
He emphasized the importance of developing foundational "primitive services" that can drive new projects, citing Amazon Web Services (AWS) as a prime example. Jassy believes AI represents Amazon's next key service area, with AWS playing a crucial role in the AI expansion. Recently, Amazon appointed AI expert Andrew Ng to its board and made a substantial $2.75 billion investment in AI startup Anthropic
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