Good Morning! OpenAI made ChatGPT available for texts and calls - you can call 1-800-CHATGPT or message the number on WhatsApp...for 15 minutes of free call time per month. Meanwhile, Grammarly bought productivity startup Coda in a deal that valued the company at $14 billion.

Barclays is expecting to increase its annual bonuses by as much as 20%, with capital markets staff most likely to reap a reward. Americans under 40 are richer than ever but are still stressed out about money.

Plus, tech giants and Wall Street are pouring millions into Trump's inauguration, and the Supreme Court agreed to hear a challenge to an impending TikTok ban set to be enforced next month. 

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_{SQUEEZ OF THE DAY}

Market Tanks After Fed Cuts

Yesterday was Fed day, and in a surprise to nobody, the Federal Reserve cut rates by 25 basis points. But the surprise for investors? The Fed seems a little bit cautious about future cuts. Powell says that he’ll need to see future progress on inflation before cutting rates again.

While investors had expected a slow and steady pace of rate cuts, Chair Jerome Powell made it very clear that we’re entering a new phase. While earlier, this year in September, the Fed projected four rate cuts, yesterday the Fed signaled just two cuts in 2025.  

Stocks tanked on the news, with the Dow Jones suffering its first 10-day losing streak since 1974. Meanwhile, the S&P 500 and Nasdaq had rough days, dropping a respective 3% and 3.6%. 

The Fed has now shaved a full percentage point off its benchmark rate since September, dropping it to its lowest level in two years -  in a range of 4.25%-4.5%.

Some investors opposed a rate cut - 63% of fund managers wanted the Fed to maintain the current rate. Inflation crept up to 2.7% in November, up from October’s CPI rating of 2.6%. And there’s concern Trump’s policies on tariffs and immigration could increase inflation, too.

Takeaway: Investors didn’t love the Fed cutting rates again, but we’ll have a moment of truth on Friday when last month’s PCE report will be released. And the worst case would be if inflation continues to rise and the Fed needs to pivot and hike rates again. It’s a balancing act - and investors are getting a little wary that they’ll get it right.

_{PRESENTED BY MODE MOBILE}

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_HEADLINES

Top Reads

• OpenAI makes ChatGPT available for phone calls and texts (CNBC)

• Grammarly is buying Coda to expand AI offerings (Axios)

• Barclays annual bonuses expected to increase as much as 20% (BB)

• Americans under 40 are richer than ever but have money woes (Axios) 

• Tech giants and Wall Street pour millions into Trump's inauguration (YF)

• U.S. Supreme Court agrees to hear challenge to TikTok ban (CNBC)

• Fed can't hold bitcoin, not seeking to change that, Powell says (YF)

• Grammarly is buying Coda to expand AI offerings (Axios)

• Nvidia stock rebounds, then falls, amid bullish analyst outlooks (YF)

• What a Nissan-Honda merger could mean for the auto industry (CNBC)

• Salesforce to double hiring for AI (CNBC)

_{CAPITAL PULSE}

Markets Rundown

Stocks Drop on Fed's Cautious Rate Outlook

U.S. equities tumbled Wednesday as the Federal Reserve delivered a 0.25% rate cut while signaling a slower pace of easing in the coming years. The Dow Jones Industrial Average extended its losing streak to a 10th day, its longest in 50 years.

All sectors declined, with consumer discretionary and real estate leading losses. Bond yields rose, with the 10-year Treasury yield climbing to 4.51%, its highest in over six months, as the Fed’s updated projections indicated fewer rate cuts ahead.

Fed Cuts Policy Rate but Signals Fewer Cuts in 2025

The FOMC lowered the target range for the fed funds rate to 4.25%–4.5%, marking the third cut of the cycle. However, updated projections slashed 2025 rate-cut expectations to two cuts from four while revising forecasts upward for economic growth and inflation.

The fed funds rate remains restrictive, approximately 1.5% above core inflation, suggesting a slower easing path ahead. The Fed may pause in January, with no meeting scheduled for February, reflecting caution as it monitors economic data closely.

PCE Inflation Gauge in Focus

Markets now turn to Friday’s personal consumption expenditures (PCE) report, the Fed's preferred inflation measure. Core PCE is expected to tick up to 2.9% annually, with a 0.2% monthly increase translating to 2.4% annualized inflation.

Shelter inflation remains elevated but continues to moderate, rising 5.0% year-over-year in October, compared to 6.0% earlier this year.

Shelter costs are expected to cool further as they align with market-based metrics like the Case-Shiller Home Price Index, which posted a 3.9% annual gain in September.

Global Markets and Commodities Reflect Fed's Impact

Global markets were mixed, with Asia's gains tempered by concerns over Japan's smaller-than-expected trade deficit.

Bond markets reacted strongly to the Fed's updated projections, lifting U.S. yields and strengthening the dollar relative to major currencies.

In commodities, both WTI oil and gold declined, reflecting tightening financial conditions and a more restrained growth outlook.

Investors now focus on incoming economic data to assess the Fed's trajectory into 2025.

Movers & Shakers

• (+) Tonix Pharmaceuticals ($TNPX) +9% after the FDA approved a new pain drug.

• (–) Amazon ($AMZN) -5% because of possible strikes as Christmas looms.

• (–) Rivian Automotive ($RIVN) -11% after a downgrade by Baird.

Private Dealmaking

• ArcLight Capital Partners bought a stake in the Gulf Coast Pipeline for $865 million

• SandboxAQ, a large quantitative models developer, raised $300 million

• Tyme Group, a Singapore digital bank, raised $250 million

• Precision Neuroscience, a brain-computer interface startup, raised $102 million

• Parafin, an embedded fintech platform, raised $100 million

• Haber, an industrial AI startup, raised $44 million

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

_{BOOK OF THE DAY}

Boom: Bubbles and the End of Stagnation

From the Moon landing to the dawning of the atomic age, the decades prior to the 1970s were characterized by the routine invention of transformative technologies at breakneck speed.

By comparison, ours is an age of stagnation. Median wage growth has slowed, inequality and income concentration are on the rise, and scientific research has become increasingly expensive and incremental.

Why are we unable to replicate the rate of progress of past decades? What can we do to reinvigorate innovation?

In Boom, Byrne Hobart and Tobias Huber take an inductive approach to the problem. In a series of case studies tracking some of the most significant breakthroughs of the past 100 years—from the Manhattan Project and the Apollo program to fracking and Bitcoin—they reverse-engineer how transformative progress arises from small groups with a unified vision, vast funding, and surprisingly poor accountability.

They conclude that financial bubbles, while often maligned as destructive and destabilizing forces, have in fact been the engine of past breakthroughs and will drive future advances. In other words: Bubbles aren’t all bad.

“A must-read for those who seek to build the future.”

_{DAILY VISUAL}

Holiday Parties Fall out of Fashion

_{PRESENTED BY CARBON FINANCE}

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_{DAILY ACUMEN}

Optimization

Optimization is the art of maximizing what you already have, like solving a puzzle with a clever shortcut that skips unnecessary steps. In a world of limited time, money, and energy, it’s a superpower—helping you stretch resources to their fullest potential.

Done well, optimization unlocks new possibilities and creates extraordinary outcomes. Done poorly, it’s a recipe for wasted effort and opportunities slipping through the cracks.

But here’s the twist: optimization isn’t always the hero. Like a student who skips showing their work, it might get the right answer but miss the deeper understanding. The real mastery lies in knowing when to lean into it, when to step back, and when to let things take their natural course. That balance is where the true advantage lies.

_{ENLIGHTENMENT}

Short Squeez Picks

• Why you should never store money in payment apps

• 10 ways to supercharge your career

• 8 ways to show quiet confidence 

• Why dating apps are no match for meeting in real life

• 3 leaders people with high emotional intelligence use

_{MEME-A-PALOOZA}

Memes of the Day