FED: Pending Interest Rate Decision

The Federal Reserve will decide on interest rates at 2:00 EST today. Fed officials have raised interest rates from 5.25% to 5.5%, the highest level in 22 years. The Federal Reserve's favored measure of inflation, the Personal Consumption Expenditures price index, saw a modest decrease in September. Excluding the volatile food and energy prices, the core index increased by 3.7% over the 12-month period ending in September, a slight drop from the 3.8% growth observed in August. There's a possibility for the Fed to curb inflation without significantly boosting unemployment, a situation often referred to as a soft landing.

Last week, the economy experienced an unforeseen boost, with the gross domestic product – a comprehensive indicator of the nation's produced goods and services – growing at an annualized rate of 4.9% from July to September. This represents the most significant increase since 2021.

Surprisingly, the labor market remains robust. The demand for workers consistently surpasses job availability, layoffs are minimal, and the rate of job additions in the economy remains strong.

Currently, the central bank is navigating a tightrope, weighing the potential of inflation to surge again against the possibility that its measures might inadvertently harm the economy.

🎯 GRIT TAKE: 

We believe that the Federal Reserve will…upgrade to VIP to read the full GRIT take. Click below!

VERDICT: Real Estate Giants Liable for Commission Inflation

In a major verdict, a Missouri jury delivered a significant judgment against the real estate sector, determining that the National Association of Realtors had conspired to keep brokerage commissions elevated. The jury's decision resulted in almost $1.8 billion in damages, shedding light on the broader debates over real estate agent compensation. Traditionally, home sellers are typically charged a commission of 5% to 6% of the sale price, which is then divided between their agent and the buyer's representative. Although this recent ruling doesn't immediately impact the Justice Department's position, it's noteworthy that the DOJ has also recently intervened in a related Massachusetts case, indicating its active interest in the traditional commission structure.

On Tuesday, Zillow's shares experienced a 6.9% decrease, marking the most significant slump since June 2022. Although the company doesn't directly derive its income from commissions, its primary operation involves offering marketing services to agents representing buyers. From its high in February 2021, during the height of the pandemic-driven housing surge, the stock has plummeted over 80%.

WEBROKE: Filing for Bankruptcy

WeWork is filing for bankruptcy as early as next week. Their financial journey is nothing short of a roller coaster. Established in New York in 2010 during a significant uptick in startup ventures, its valuation skyrocketed to a staggering $47 billion. However, the company faced headwinds, notably from a botched IPO endeavor and the pandemic's strain on its co-working business model. With Adam Neumann at its helm, WeWork saw impressive financial growth, often doubling its revenue annually. At its pinnacle, it was amongst the nation's highest-valued startups, boasting office locations globally.

On Monday, the firm reached a forbearance understanding with its lenders, set to conclude in seven days.

This agreement allows the firm additional "time to continue in the positive conversations with our key financial stakeholders and engage with them to implement our ongoing strategic efforts to enhance our capital structure," stated a WeWork representative.

Headlines You Need To Know: 🎙

• LinkedIn’s new chatbot wants to help you get a job

• Microsoft starts selling its copilot software

• Druckenmiller has a massive bullish bet

• Private sector payrolls rose 113,000

• World’s safest market becomes a magnet for big investors

• Aston Martin shares sink after lackluster quarter

• Microsoft begins selling AI tool, Copilot

• AMD beat earnings and issued weaker guidance

• Toyota raises profit forecast driven by weak currency

PETS.COM: Bezo’s Famous Mistake

Jeff Bezos is one of the most outstanding entrepreneurs ever and has built an empire with Amazon. But he made one big investing mistake that almost ruined everything. During the internet craze of the early 2000s, pets.com was founded. It was coined as the Amazon of pet products. The company had a horrible business model but a genius marketing team along with a great domain name. They were one of five companies that sold pet products online. Jeff Bezos ended up taking notice, and Amazon made a massive investment into the company and eventually owned more than 50% of the company. Pets.com made an initial public offering in 2001 and was traded on the stock market. The IPO was hyped up, and people bought the stock like crazy.

However, after a few months, investors started to realize that pets.com had a horrible business model, couldn’t ship their products, and was making no money. The stock started to crash, and eventually, the company went bankrupt. Amazon lost its entire investment, and its shareholders heavily criticized Jeff Bezos. At the time, Amazon was still not profitable, and investors thought Bezos was being reckless with Amazon’s money. Today, if you search pets.com, you will get redirected to Pet Smart.

Chart of the Day

Net worth by family structure

Double-income families with no kids have the highest net worth.

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.