What I Read This Week…
The Fed cut rates by 50 basis points, recent data show uncertainty and financial stress among consumers, and Microsoft has agreed to purchase all the power from a reopened nuclear plant
Read our Deep Dive on Drug Development
Caught My Eye…
The Federal Reserve has lowered interest rates for the first time since 2020, cutting the federal funds rate by 50 basis points. This move brings the federal funds rate to a target range of 4.75% to 5%. Looking ahead, the Fed has signaled two more 25 basis point cuts in 2024, followed by further reductions of 100 basis points in 2025 and 50 basis points in 2026. The decision was driven by the Fed's increased confidence that inflation is approaching its 2% target. By reducing rates, the Fed aims to support economic growth while maintaining price stability, balancing its dual mandate of maximum employment and stable prices.
Recent data show increasing uncertainty and financial stress among American consumers. About one-third of consumers in a recent University of Michigan survey indicated they do not expect their real income to increase in the next five years. The same survey found that people feel less likely that they will retire comfortably compared to five years ago. Since 2019, the Consumer Price Index (CPI) has risen by over 20%, leading to a higher cost of living for households. Combined with higher borrowing costs and greater concerns about job security and stable employment, these factors have collectively reduced Americans' optimism about their financial situations.
Microsoft has agreed to purchase all the power from a reopened Three Mile Island nuclear plant for 20 years, aiming to secure zero-emissions electricity to power its AI operations. The plant, which shut down in 2019, is set to reopen by 2028 at an estimated cost of $1.6 billion, relying partly on tax breaks provided by the 2022 Inflation Reduction Act. Once operational, the facility will generate 835 megawatts of power for Microsoft, enough to supply 800,000 homes. This arrangement is unprecedented in two ways. First, no U.S. nuclear plant has ever resumed operations after being decommissioned, and second, never before has a single commercial customer claimed all of a nuclear plant's output. The deal still requires approval from regulators, including safety inspections from the Nuclear Regulatory Commission.
Other Reading…
Newsom Signs California Bill to Limit ‘Addictive’ Social Media Feeds for Kids (LA Times)
Perplexity in Talks with Top Brands on Ads Model (Financial Times)
Amazon's Silent Sacking (Justin Garrison)
Zoom to Cut Back on Stock-Based Compensation, Joining Salesforce, Workday (Bloomberg)
Here’s What Goes on Inside A Data Center in the Industry’s Largest Hub (Washington Post)
Biden Administration to Prepare Ban on Chinese Car Software (Bloomberg)
Meta has a Major Opportunity to Win the AI Hardware Race (The Verge)
War in the Age of AI Demands New Weaponry (Financial Times)
On X…
People still follow this guy after his SPAC scam? Fools 🤣