• What was the US GDP growth rate in Q2?
• Why are Tesla, Ford, and Stellantis stocks falling?
• What is the BOJ considering for its upcoming meeting?
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IN THE HEADLINES
US GDP Report: Latest Data Shows Economy Grew 2.8% in Q2
The US economy grew at an annualized rate of 2.8% in the second quarter, exceeding the 2% growth expected by economists and improving from the revised 1.4% growth in the first quarter. The core Personal Consumption Expenditures index rose by 2.9%, slightly above estimates but lower than the 3.7% increase in the previous quarter. This data comes as investors look forward to the Federal Reserve's next move on interest rates, with markets anticipating a rate cut by September. Neil Dutta from Renaissance Macro notes that the strong private domestic demand suggests the Fed has the flexibility to delay its decision. Read more
Tesla, Ford, and Stellantis Stocks Sink Due to Weak Profits
Following second-quarter earnings announcements, shares of major automakers have declined. Tesla's stock fell by 2.03% as a result of lower-than-expected earnings per share, auto gross margin, and free cash flow, coupled with concerns about future volume growth. GM's shares also decreased, despite strong results, due to potential industry challenges like slowing sales in China. Stellantis reported a 48% drop in first-half net profit, causing its shares to fall by 8.29%. Ford's shares plummeted 13.46% as its earnings per share missed expectations, despite surpassing revenue estimates, with increased warranty reserves being a key factor. The auto industry is grappling with high costs and stiff competition in the EV market, particularly in China, which is shifting consumer preferences towards hybrids. Read more
BOJ Poised to Raise Interest Rates in Upcoming Meeting
The Bank of Japan (BOJ) is considering an interest rate hike and plans to halve its bond purchases over the next few years, signaling a gradual shift away from its extensive monetary stimulus. Core inflation reached 2.6% in June, accompanied by strong wage growth, but weak consumption may postpone any immediate action. While most economists anticipate no rate hike in the near term, the decision remains uncertain and could occur in the coming months. Governor Kazuo Ueda has highlighted the necessity for stable inflation before implementing a rate increase. The BOJ's gradual reduction in bond purchases aims to prevent market disruptions. Read more
TradeUP TIDBITS
What Financial Impacts Can You Expect When the Fed Cuts Rates?
The Federal Reserve is expected to lower its benchmark interest rate in the coming months after holding it at a 23-year high. This reduction will have mixed effects on personal finances: borrowers may benefit from lower interest rates on variable loans and credit cards, while savers could face reduced returns on deposits. To prepare, individuals might consider moving savings to high-yield accounts, locking in current rates with longer-term CDs, delaying major purchases for potentially lower financing costs, and opting for HELOCs instead of fixed-rate home equity loans for better savings. Read the Full Article
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This week's topic is: Will lower interest rates from the Federal Reserve benefit your personal finances?
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