Interest rate cuts could come before the presidential election

What’s on deck:

But first, cool (inflate) for the summer.

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The big story

The economy and elections

Sometimes the biggest surprise is when there isn’t one at all.

Market pundits haven’t really seemed like “experts” this year, with their economic forecasts mostly missing. Nowhere is this more evident than their recent inflation estimates, which have been off target.

The two sides finally connected on Wednesday, with the April inflation report in line with experts’ expectations. THE The consumer price index increased by 3.4%a slight slowdown from the 3.5% year-over-year increase recorded in March, writes Business Insider’s Madison Hoff.

But don’t start counting your summer interest rate cuts before they’re announced. Even as investors beg for Fed policy easing, rushing things could cause problemswrites Jennifer Sor of BI.

Market analyst Ed Yardeni warned that a rate cut in June or July would create a market “meltdown.” Think of it like a sugar high: Stocks initially jump on relief, but eventually suffer a sharp decline.

The first reduction seems more likely in the fall. After all, Fed Chairman Jerome Powell hasn’t indicated he’s in a hurry.

CME’s FedWatch tool This appears to be in agreement, with interest rate traders viewing the September Fed meeting as the favored meeting for a rate cut.

This timetable means that the first rate cut will precede the US presidential election.

Powell said the election would not influence the central bank’s decision. And he has ties to both candidates: Former President Donald Trump nominated him, President Joe Biden re-nominated him. But it’s hard not to see how a first rate cut so close to the election could not have an impact.

The economy still weighs heavily on the American voter’s mind, but that’s even more true today. Inflation, housing prices and the cost of education and health care are top concerns for many voters heading into November.

On Wednesday, Biden and Trump agreed to face each other in two debates, the first arrives in June. But there is no need to wait to find out their position on these economic issues.

BI’s economics and policy team detailed Biden and Trump’s plans in eight major economic categories by analyzing their time at the White House and their campaign promises.

Even though the two countries are very far apart on certain issues (student debt), there is common ground (tax reductions for low- and middle-income households).

Yet chasms exist between the two sides’ perceptions of how their candidate has run the economy.

Take a KFF poll, which finds that 91% of Democratic voters think Biden has done more to reduce health care costs.

Meanwhile, 91% of Republicans think Trump did better during his term.

3 things about the markets

1. Roaring Kitty is back, but everything is starting to seem weird. The return of Keith Gill sparked a massive rally among meme stocks in what appeared to be a resumption of the wild short squeeze of 2021. But as stocks fall back to Earth, the random video compilations he posts This feels more like a mid-life crisis than a return to the glory days.
2. The April report cards from quant hedge funds are here. Renaissance Technologies, whose founder Jim Simons died earlier this month, saw its largest fund rise 1.8% in April. Meanwhile, other quantitative giants like Two Sigma and DE Shaw saw more modest gains. Check them all here.
3. Stocks hit a high for the year, according to Goldman Sachs. The stock market rally is over and the S&P 500 will not end 2024 above its current level, according to David Kostin, the bank’s chief U.S. equity strategist. There is currently no economic, valuation or earnings argument for a further hike, he said in an interview with Bloomberg TV.

3 things in technology

1. AI is changing the battle between Android and iPhone. Sameer Samat, Google’s head of Android, said AI represents a huge opportunity for the Android ecosystem: ultimately reinvent what smartphones can do.
2. How Google reshuffled its top ranks to get ahead in AI. Sundar Pichai, CEO redesigned its management team with a mix of long-time and established leaders to expedite decisions. He now has 18 direct reports, according to an internal organization chart seen by Business Insider.
3. AI companies are moving away from the largest and most advanced models. Microsoft, Google, Apple, and OpenAI have all recently released smaller, cheaper AI tools. They are probably betting that corporate clients prioritizing affordability over cutting-edge technology.

3 things in business

1. Finding a job is getting really weird. On the business side, AI is used to write job descriptions, assess candidate skills, and evaluate their responses. On the candidate side, people are using AI to write their resumes and apply to hundreds of jobs at once. It’s total chaos – and it’s only getting worse.
2. Netflix just solidified your Christmas plans. The streamer inked a three-year contract with the NFL to broadcast its football games, two of which will be released at Christmas this year. While the deal is a boost for the streamer, it’s also another subscription that fans will have to pay to watch games.
3. Meet the new boss of the AWS “bulldozer”. Matt Garman will become the new CEO of Amazon’s cloud division in June. THE The 18-year veteran is known for being blunt and earlier this year we completed a major organizational redesign that eliminated role overlap and redundancy.

In other news

What’s happening today

• Today’s winnings: Walmart is one of the profitable companies.

The Insider Today team: Dan DeFrancesco, associate editor and presenter, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, editor, in London. George Glover, journalist, in London.