 Fed Chairman Jerome Powell | Andrew Harrer/Bloomberg/Getty Images The Fed announced another 0.75% interest rate increase on Wednesday as it tries to curb rising inflation. The increase brings the benchmark federal funds to between 2.25% to 2.5%. This is the second consecutive 75-basis-point hike after last month’s increase. The 12 members of the rate-setting committee unanimously voted in favor of the rate increase. More: - The cumulative rate hike for June and July is the most aggressive since the early 1980s, as the Fed aims to bring inflation rates down to its 2% target.
- In March, the Fed raised interest rates by 0.25%, the first hike in three years.
- At their June meeting, officials agreed on the need to raise its benchmark rate to over 3%, with interest-rate future market investors expecting rates to reach 3.5% at the end of the year.
- According to Fed Chair Jerome Powell, the economy is not in recession considering the “very strong labor market.”
- Last week the 30-year fixed mortgage rate averaged 5.74%, according to the Mortgage Bankers Association.
- In June, the U.S. consumer price index rose 9.1% compared to last year.
| |
The Senate approved a $280B legislation to boost the U.S. semiconductor industry and encourage scientific research. The bill, dubbed the CHIPS and Science Act of 2022, would create a $39B fund to provide direct financial assistance for the construction and expansion of semiconductor manufacturing facilities in the U.S. The bill was approved by a 64-33 vote, with 17 Republicans voting in favor of the bill. More: - Chip manufacturing companies eligible for direct financial assistance to build domestic chip factories include Intel, TSMC, GlobalFoundries, Micron Technology, and Applied Materials.
- The bill also creates an $11B fund aimed at advancing semiconductor manufacturing research and workforce training.
- An additional $2B fund will help transform semiconductor laboratory advances into military and other applications.
- The bill also includes $24B in tax credits for investments in semiconductor manufacturing.
- The bill authorizes about $170B for technology research and development across several federal agencies over the next five years.
- The bill has been in the works for over three years; House Speaker Nancy Pelosi has promised quick action on the legislation as it moves to the House.
| |
 A message from FIREWORK Holiday Commerce No Longer Starts in Q4 Christmas shopping now begins all the way in July for most buyers — especially Gen Z. According to recent Salesforce research, 42% of shoppers worldwide are planning to buy gifts earlier this year, with inflation the biggest motivator behind that trend. With Gen Z making up 30% of the population and some $360bn in spending power, Firework’s Gen Z Labs seeks to provide an interactive and engaging way for marketers to understand how to connect and convert this group when it comes to holiday shopping. Learn from the founders of leading Gen Z brands such as: - Grande Cosmetics
- That’s It Bars
- Minddbra
Watch them share their learnings and best practices for Gen Z marketing. Inside.com subscribers also get 20% any purchases made through the microsite with the code FIREWORK20. Get a headstart
| |
 Image: WSJ Spirit Airlines terminated its merger agreement with Frontier Airlines on Wednesday following months of a bidding war between Frontier Airlines and JetBlue Airways to take over the budget airline. In February, Spirit and Frontier announced plans to merge; weeks later, JetBlue submitted an unsolicited $3.6B all-cash offer to take over Spirit. More: - What followed were months of competing offers from Frontier and JetBlue as each hoped to merge with Spirit to create the fifth largest airline in the U.S., after Delta, American, United, and Southwest Airlines.
- The top four control over 75% of the U.S. airline market.
- Spirit’s board repeatedly turned down JetBlue’s increasingly sweetened offers and urged their shareholders to vote in favor of Frontier’s merger proposal.
- Spirit’s board argued the takeover bid from JetBlue would not be approved by regulators.
- JetBlue is currently facing a lawsuit from the Justice Department over its alliance with American Airlines in the Northeast.
- Spirit had postponed the shareholder vote for the Frontier deal four times; the most recent planned date was July 31.
- Spirit shares rose about 2% in after-market trading following the announcement, while Frontier’s fell about 1%.
| |
Microsoft registered a 12% YoY growth in revenue to bring the total for the quarter to $51.87B, missing analysts’ forecasts of $52.44B, in the quarter ending June 30. The period marked its slowest growth revenue since 2020. Adjusted EPS came in at $2.33 per share, below analysts’ expectation of $2.29 per share. Net income rose 2% to $16.74B. Fiscal year 2022 revenue was up 18% to $198.3B. More: - Foreign exchange losses impacted revenue by $595M, cutting earnings per share by four cents.
- The impact of the deteriorating PC market and factory shutdowns in China impacted Windows OEM revenue by $300M.
- The firm’s productivity division, including the Office suite of products, Dynamics, and LinkedIn, raked in $16.6B in revenue, while revenues from the personal computing segment, including Xbox gaming division and Bing, totaled $14.36B.
- The Seattle-headquartered company’s intelligent cloud division recorded $20.9B in revenues, registering a 20% growth but falling short of analysts’ expectations of $21.1B.
- Microsoft is partnering with Alphabet’s Google and Oracle to encourage the U.S. government to require the use of more than one cloud service in its major projects in a bid to reduce Amazon’s clout.
- Amazon had a 39% market share in the cloud-infrastructure domain in 2021, followed by Microsoft at 21%.
- In the North American public-sector, Amazon had a 47% market share, with Microsoft coming in second with 28%.
- Last year, the NSA renewed Amazon’s cloud contract, estimated to be worth $10B over the next 10 years.
| |
 A message from SQUARE Introducing the new Square Stand! This product easily turns your iPad into a powerful and professional point of sale with built-in payments. Built-in card readers mean less clutter and more reliable connectivity, and a user-friendly checkout guides customers through order confirmation, tipping and payment. Square’s point-of-sale software comes included for free, giving you the tools you need to add, edit, and sell thousands of items, analyze sales and inventory over time, manage your list of customer contacts, and more. Check out the new features: - Swiveling display with an intuitive checkout process that keeps your line moving so you never miss a sale
- Compatible with Square’s popular POS software, as well as Square’s Restaurant & Retail POS solutions, and Appointments software
- Easily accept all major forms of payment (tap, dip, and swipe)
- Get up and running in minutes - no manuals or training required
- One simple rate with no hidden fees
- Compatible with the latest iPad
New US Inside Readers exclusively get: The flexible, all-in-one solution trusted by millions of business owners with free processing on up to $1,000 in credit card transactions for the first 180 days. Afterwards, you pay the standard 2.6% + $0.10 per swipe for all major credit cards. Sign up for free
| |
Per the Wall Street Journal, Elliott Management acquired a stake in PayPal Holdings Inc. The size of Elliott's stake was not disclosed; however, confidential sources close to Bloomberg think the activist investor will eventually become one of the five largest shareholders of the firm. Elliot's addition to the board is expected to boost PayPal's cost-reduction initiatives. More: - The payments company was forced to pivot away from its growth strategy due to the impact of supply chain disruptions and high inflation on its business.
- The company began restructuring operations and laying off employees, the latter of which is expected to help save $260M.
- The company's market valuation has dropped from its peak of $350B to now hovering at $89B after its shares lost 60% of their value this year.
- Prior to Wednesday's opening, stocks surged as much as 6.5% in premarket trading.
- A revised lower profit outlook for this year in February triggered its worst one-day stock selloff.
- In the first quarter, PayPal added 2.4 million new active accounts, bringing the total to 429 million.
- It reported a decline in profits, despite higher than anticipated revenues. Elliot – with over $50B of assets under management, including stakes in AT&T and Twitter – may focus on reducing PayPal's marketing spend and introduce an efficient capital structure, according to Wolfe Research's Darrin Peller.
| |
Google’s parent Alphabet released its Q2 results on Tuesday, slightly missing analysts’ expectations on revenue and earnings. The tech giant reported total revenue of $69.7B, up 13% YoY; its slowest growth rate in 18 months. Net income came in at $16B or $1.21 a share. Alphabet noted that the stronger U.S. dollar affected YoY revenue growth by 3.7%. More: - Google Services, which includes Search, YouTube, and hardware, generated $62.8B in revenue, up 10% YoY.
- Google Search & other revenue was $40.7B, up ~14% YoY, and YouTube ads brought in $7.3B.
- Google Cloud, which includes its Workspace platforms, Google’s cloud services, and other enterprise services, earned $6.3B in revenue, up 37% YoY.
- The company’s Other Bets unit earned $193M in revenue, a $1M increase YoY.
- Google’s workforce rose 21% to 174,014 full-time employees.
- Last month the company said it will be slowing hiring and investments through 2023.
- Alphabet shares rose more than 4% in after-market trading on Tuesday. It closed at $113.06 on Wednesday, up 7.7%
- Alphabet is down ~22% YTD; it completed its 20-for-1 stock split on July 15.
| |
Quick Hits - Super Coffee, the No. 3 ranked bottled coffee brand in the U.S. behind Starbucks and Dunkin', is replacing the negatives with only positive ingredients.*
- South Korea's Financial Supervisory Service is investigating $3.1B worth of "abnormal" foreign exchange transactions at two of the country's biggest commercial banks – Woori Bank and Shinhan Bank – for possible money laundering linked to crypto investments.
- Teva Pharmaceuticals, one of the largest makers of generic opioids in the U.S., announced a $4.25B settlement in principle with about 2,500 local governments, states, and tribes over the company's role in the ongoing opioid epidemic.
- Twitter has scheduled a shareholder vote on Elon Musk's $44B takeover proposal for Sept. 13. The meeting comes as both sides prepare to go to Delaware Chancery court over Musk's attempt to terminate the takeover agreement.
- The FTC has filed an injunction to block Meta (Facebook) from buying a virtual reality company called Within, potentially thwarting Meta's metaverse ambitions. This is the first antitrust lawsuit filed by chairwoman Lina Khan against one of the tech giants.
- When you align headless CMS with a modern DAM and analytics, you can serve personalized content that keeps people coming back.*
* This is sponsored content.
| |
| |
 |  | Vanessa Omeokachie is a Researcher at Inside. Her interests include finance, tech, and startups. In her free time, she enjoys reading, hiking, attending music festivals, and traveling. Connect with her on Twitter @VanessaOmeo or through email at vanessa@inside.com |  | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford. | |
| |
| |
