Good Morning! Oracle's Larry Ellison briefly dethroned Jeff Bezos and became the world's second-richest person yesterday. Rate cuts are finally coming at a time when some companies could use the easy money - Tupperware filed for bankruptcy after an 80+ year history, Boeing is furloughing tens of thousands of employees, and literally every single 23andMe board member quit. Private equity drives up U.S. medical debt, and Ray Dalio named the top five forces shaping the global economy. Plus what the Fed rate cut means for your money, and why housing is everyone’s favorite investment.

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_{SQUEEZ OF THE DAY}

Happy Rate Cut Season

After years of Wall Street urging the Fed to act swiftly and cut rates, Jay Powell finally delivered. Yesterday, the Federal Reserve made its first rate cut since March 2020—and they made a statement. Powell slashed rates by half a point (50 bps), which was more aggressive than many expected—105 out of 114 economists were predicting a 25 bps cut.

If you’re wondering why we even have a Fed…their job is to set monetary policy that will keep two key factors under control - inflation and unemployment. The Fed needs to balance economic growth with inflationary pressures and job market stability. When inflation hit a 40-year high in 2022, the Fed swiftly increased interest rates. But it’s 2024, and it’s finally time to ease up a little. 

Powell’s message was generally cheerful, but he is still expecting unemployment to rise to 4.4% by year-end - higher than the current 4.2%.

While the news is generally positive - stocks fell on the news. And the half-point cut wasn’t unanimous—Fed Governor Michelle Bowman wanted a smaller, quarter-point reduction. Trump criticized the move, and other Democrats wanted even more aggressive rate cuts.

Some analysts still think the Fed reacted too slowly - inflation has been cooling for a while, and think that rising unemployment should have prompted rate cuts earlier in 2024. But Powell says the Fed isn’t catching up - they’re just ensuring ‘future economic stability’.

But still, the rate cuts are going to lower borrowing costs across the board - which will give consumers and businesses a big boost. With lower borrowing costs, some Wall Street dealmakers are hoping for an M&A pickup. 

Takeaway: While it seems like Powell may have pulled off the soft landing, analysts are a little worried about the job market now. It’s tough to control inflation without triggering a sharp rise in unemployment - and we’ve pretty much only had one soft landing in modern history (the mid-1990s). Let’s hope Powell’s rate cuts work, or we might be looking at another “Great Recession”—but hey, at least we’ll have cheap loans to cry over.

_{PRESENTED BY HEBBIA}

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Why? 

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_HEADLINES

Top Reads

• Oracle's Larry Ellison dethrones Jeff Bezos as world's second-richest (CNBC)

• Bankrupt Tupperware failed to change with the times (YF)

• Boeing furloughs tens of thousands (CNBC)

• Every single member of the board resigned from 23andMe (Fortune)

• Private equity drives up U.S. medical debt (Axios)

• Ray Dalio names the top five forces shaping the global economy (CNBC)

• What the Fed rate cut means for your money (YF)

• Mortgage rates reach new low for 2024 before Fed cut (Axios)

• Dollar stores gamble on expansion (WSJ)

• JPMorgan CEO Jamie Dimon to visit Africa in growth push (Reuters)

_{CAPITAL PULSE}

Markets Rundown

Market Commentary

U.S. stocks were volatile after the Federal Reserve announced a 0.5% rate cut, initiating a new easing cycle. While equities initially hit record highs, gains faded as investors reacted to Fed Chair Jerome Powell's indication that future cuts may not continue at the same pace.

Despite this, small-cap and cyclical stocks outperformed, supported by the rate relief. Bond yields edged higher, though they remain near year-to-date lows, as the Fed’s projections suggest a less aggressive path of rate cuts than the bond market anticipated.

Oil prices declined, offering potential economic benefits through lower gasoline prices.

The Fed’s half-point cut, the first in four years, marks a significant shift following the most aggressive tightening cycle in decades. The updated rate path suggests further gradual cuts, with the fed funds rate projected to fall to 2.9% by 2026.

The Fed remains optimistic about economic resilience, projecting only a modest rise in unemployment, pointing to a potential soft landing. As long as recession risks remain low, the bull market in stocks could continue, with cyclicals and lower-valuation stocks closing the gap with tech.

Movers & Shakers

• (+) Intuitive Machines ($LUNR) +38% after the space company secured a contract with NASA.

• (+) VF Corp ($VFC) +4% after Barclays upgraded the clothing company.

• (–) ResMed ($RMD) -5% after a downgrade by Wolfe Research.

Private Dealmaking

• Bain Capital sponsored a $706 million management buyout of Trancom

• EverBank of Jacksonville acquired Michigan’s Sterling Bank and Trust for $261 million

• Flink, a quick-commerce startup, raised $115 million 

• Nura Bio, a neurological disease biotech, raised $68 million

• Neo Medial, an AR surgery system developer, raised $68 million

• Nomic Bio, a protein profiling startup, raised $42 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

Winning Long-Term Games

The key to winning long-term games is to stop playing them as a succession of separate short-term games.

Yet, most people take the opposite approach. Here are three examples:

The manager who sees each interaction with her team as a separate game. Every time she talks to her subordinates, it’s to get things done rather than develop their skills. As a result, she fails to build the long-term assets (a competent team) she needs in order to win her long-term game (a successful career). 

The spouse who lies as a way to avoid responsibility. If lying has, say, a 1% chance of getting discovered, it’s a great short-term tactic (it succeeds 99% of the time) but a terrible long-term strategy (if you lie once a week, you have a 99.5% chance of getting caught over a decade).

The solopreneur who sends weekly emails to their mailing list and sees each as a separate game. Therefore, they consume their audience’s trust to generate more sales within a single email instead of building trust to create more sales within a few months.

These three examples show that approaching long-term games as a succession of separate short-term games is a bad strategy despite working great over short time horizons.

“You should play short-term games not to win them but to progress your long-term objectives.”

_{DAILY VISUAL}

Borrowing Money is About to Get Cheaper

_{PRESENTED BY BILL}

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_{DAILY ACUMEN}

Kindness

During World War II, British soldier Nicholas Winton saved 669 Jewish children from Nazi-occupied Czechoslovakia by organizing a series of rescue operations known as the Kindertransport.

Winton, just 29 years old, forged documents, secured funds, and convinced families in Britain to take in the children.

He worked quietly, driven by a sense of kindness that he never sought to publicize. Decades later, his heroism came to light when his wife found an old scrapbook detailing the children he had saved.

His single act of kindness sparked a legacy, proving that a compassionate choice can ripple through history, transforming countless lives. Kindness, in its quiet power, has the capacity to change the world, one life at a time.

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Short Squeez Picks

• 2 secret languages commonly spoken in intimate relationships

• How to lead like a couch

• Why housing is everyone’s favorite investment

• 3 habits that will make a difference in your life

• 5 essentials for marketing performance measurement systems

_{MEME-A-PALOOZA}

Memes of the Day