☕ On the homefront

Fed cuts rates as it ponders its independence... November 08, 2024 [View Online]( | [Sign Up]( | [Shop]( [Morning Brew]( Presented By [The Points Guy]( Good morning. When trying to analyze the US election results, it’s worth zooming out to other elections from around the world this year. There’s been a [clear and unprecedented pattern]( according to the Financial Times: Following the Democrats’ loss on Tuesday, the incumbents in every single one of the 10 major countries tracked by the ParlGov research project—including Japan, the UK, France, and now the US—suffered defeats in elections held in 2024. That hasn’t happened before in records going back nearly 120 years. —Cassandra Cassidy, Matty Merritt, Molly Liebergall, Adam Epstein, Neal Freyman MARKETS Nasdaq 19,269.46 +1.51% S&P 5,973.10 +0.74% Dow 43,729.34 -0.00% 10-Year 4.341% -8.0 bps Bitcoin $76,633.01 +0.68% Trump Media $27.70 -22.97% Data is provided by *Stock data as of market close, cryptocurrency data as of 4:00pm ET. [Here's what these numbers mean.]( - Markets: Stocks kept up their post-election rally, [boosted]( by the Fed cutting interest rates again. After Trump Media skyrocketed in response to Donald Trump’s victory earlier this week, it crashed back down to Earth yesterday as the initial euphoria perhaps gave way to the reality that the company’s fundamentals remain dubious.  ECONOMY [Fed cuts rates as it ponders its independence]( [Jerome Powell and Donald Trump]( Anna Kim, Photos: Brendan Smialowski, Anna Moneymaker/Getty Images Federal Reserve Chair Jerome Powell has been under pressure before, but the events of this week might have him sweating through his crisp collared shirts. The central bank cut interest rates at its meeting yesterday by a quarter point, to a range of 4.5%–4.75%, in response to cooling inflation. But the real action came at the press conference after the meeting. Powell [replied]( to reporters’ questions about his future amid speculation that President-elect Trump might try to sack him, saying the president does not have the power to fire or demote him. “Not permitted under the law,” Powell said. He also remained expectedly noncommittal about the Fed’s plans for more rate cuts. Business as usual? Economists predicted this cut would kick off a season of cuts, one in December and more in 2025. But those plans were thrown into flux after the election, as investors now [predict]( that Trump’s proposed policy plans—namely tax cuts, tariffs, and deportations—may increase the inflation that Powell and his team managed to tame. The White House is not the Fed Trump and the Fed didn’t have a starry-eyed relationship in Trump’s last term—he called Powell, whom he appointed, an “enemy” and criticized the agency for not cutting rates. Financial policymakers typically view elections as [data points]( but don’t allow the outcome to impact their decisions. What the president can’t do: Bring down rates. Interest rates are set by the Fed, which was granted independence from Congress in 1951 so that central bankers could make hard decisions for the long-term health of the economy, even if it hurts politicians by frustrating consumers. What the president can do: Appoint new people to lead the agency. Powell’s term ends in May 2026, at which point Trump will likely select someone else to take charge. (The Fed Chair needs Senate approval.) Zoom out: The Fed is independent for a reason. The last time a president got too involved, it was Richard Nixon, and economists blame his insistence on keeping rates low for the Great Inflation of the 1970s.—CC Presented By The Points Guy [Watch your back points]( [The Points Guy]( A piece of proposed congressional legislation is taking aim at credit card points, miles, and cash back. It’s called the Credit Card Competition Act, and if passed, it would fundamentally change the way [our credit card system]( works. Here’s how: - Credit card issuers would likely [cut back on the rewards programs]( they offer to cardholders. - Retailers could select cheaper, unproven payment networks that could put personal information at risk. - Large retailers could pocket billions in potential savings, while consumers and small businesses would be at risk of losing beloved points, miles, and other benefits. Visit The Points Guy to [learn more about this bill]( and how to protect your points. WORLD [Tour de headlines](#) [President Joe Biden]Andrew Harnik/Getty Images President Biden promised a “peaceful and orderly transition.” [In an address]( from the White House, Biden said he spoke with President-elect Trump and assured a peaceful transition of power because “that’s what the American people deserve.” He also complimented Vice President Harris for running an “inspiring” campaign, thanked election workers, and reiterated that US elections are fair and should be trusted. Much of the speech appeared to be directed at supporters of his and Harris, acknowledging that Trump’s victory was a setback but imploring them to stay engaged. “Giving up is unforgivable,” Biden said. Updates on the Senate and House races. There’s still [more counting to do]( but control of the Senate and House of Representatives is becoming clear. The GOP is poised to retake the Senate, but Democrats picked up a small win when Sen. Jacky Rosen was declared the winner in Nevada yesterday, bringing the party’s likely total in the chamber to 47 compared to Republicans’ 53 (assuming Republican Dave McCormick’s narrow lead over incumbent Democrat Bob Casey holds in Pennsylvania). In the House, 30 races were still being tallied as of yesterday to determine which party will control the lower chamber. If the GOP were to flip the House, it would give Donald Trump full command of the government by a likely razor-thin margin. Max is adding subscribers—and cracking down on moochers. The streaming service where you can watch both The Wire and 90 Day Fiancé [increased]( its subscriber count by 7 million in Q3 to more than 110 million, outpacing Netflix in the quarter. Perhaps more pressing for binge-watchers is the news that the Warner Bros. Discovery platform plans to squelch password sharing, as Netflix and other streaming services have already done to increase revenue. On the company’s earnings call, CFO Gunnar Wiedenfels said Max will begin with “very soft messaging” in the next few months to encourage freeloaders to subscribe themselves before getting more hardcore about it in 2025 and 2026.—AE HOUSING [Why are mortgage rates still high?]( [Hand lifting top half of house and dollar signs coming out.]( Scialabba Homeowners are turning a deep shade of purple, holding their breath for mortgage rates to follow the Fed’s interest rate cuts. And even after the cut in September and yesterday’s smaller cut, the average rate for a 30-year fixed mortgage was 6.79% as of yesterday, according to Freddie Mac. That’s up from ~4%, where rates hovered in the decade before the pandemic. Mortgage rates have [risen]( 67 basis points in the last five weeks, the most in two years, according to the Mortgage Bankers Association. Wasn’t the Fed supposed to fix this? Despite how often mortgage and interest rates are discussed together, they aren’t directly linked. Economists are somewhat stumped that Fed cuts aren’t budging mortgage rates, but there are other factors at play: - Mortgage rates loosely follow the US 10-year Treasury yield, which is heavily influenced by economic expectations. - But as prediction markets leaned towards a Trump victory, it triggered a spike in the 10-year Treasury yield over concerns that his promised tax cuts and tariffs would drive up inflation. Is it a seller’s or buyer’s market? Neither. And homeowners waiting around for those lower rates to refinance better bring a book or something because economists expect, at least in the near future, that rates will likely stay the same and could even inch a little higher.—MM Together With Hear.com [Hear.com]( Hear every moment. Forget what you know about hearing aids. [Hear.com’s Horizon IX]( features a dual-processing system that separates speech from background noise so you never miss a moment. Plus, [hear.com]( is always there when you need ’em. Help is available wherever you are with their extensive network of audiologists. [Get a free online consultation](. INTERNATIONAL [The global economy’s view of Trump presidency 2]( [American flag hangs over a harbor]( Laughinghouse/Getty Images The rest of the world is getting ready to play international trade on a risky new chessboard: Goldman Sachs cut its next-year growth forecast for European countries this week, citing uncertainty around President-elect Donald Trump’s tariff plans. Trump has said he will…place a 60% to 100% levy on products from China and at least a 10% levy on everything else the US imports. Tariffs can incentivize domestic industry by making it more expensive to produce overseas, but Trump’s proposal is so hefty that economists fear international tension at best and a large-scale trade war at worst. In Europe, GDP across the 20 euro-spending countries is [projected]( to grow 0.8% next year, down from an earlier outlook of 1.1%, per Goldman Sachs. Germany could take a big hit: Cars are its top export, and the US is its biggest export market, which spells trouble for Volkswagen. In China, businesses may be more [prepared]( to adapt because Trump’s “America First” policies already led to a US–China trade war during his first term, per Bloomberg. China could try to plug losses by pushing harder into European markets. In Mexico, GDP could dip as much as 1.9% since the US is its main trading partner. On the homefront, prices would likely spike as US businesses (which have to pay US tariffs) pass higher costs onto customers. Retaliatory tariffs around the world would also hurt US companies, especially those with big European markets.—ML STAT [Prime number: $15m for a domain](#) [ChatGPT logo]Anna Kim What’s ~$15 million between billionaire pals? HubSpot co-founder and CTO Dharmesh Shah posted on X that he recently [sold the Chat.com domain]( which he bought for $15.5 million last year, to OpenAI. Now, if you go to Chat.com, it redirects you to ChatGPT, which The Verge notes aligns with OpenAI’s effort to rebrand the generative AI chatbot as more approachable. Shah did not disclose precisely how much he made on the sale but hinted that the sum was largely paid in the form of OpenAI stock, as he’s known CEO Sam Altman for a long time and “doesn’t like profiting off of people he considers friends.” When Shah bought Chat.com last year, it was reportedly one of the most lucrative domain sales of all time. Whatever the price, it’s a drop in the bucket for the AI giant valued at $157 billion.—AE QUIZ [Friday news quiz]( [New Friday quiz image]( Getting a 5/5 on the Brew’s Weekly News Quiz has been compared to when your favorite song comes on at a wedding just as you’re getting back from the bathroom. It’s that satisfying. [Ace the quiz](. NEWS [What else is brewing](#) - [California Gov. Gavin Newsom]( called to convene a special session to “Trump-proof” the state’s policies on reproductive rights and climate change before the president-elect takes office in January. - [Sales of dystopian books]( like The Handmaid’s Tale are surging after Trump’s victory, The Guardian reported. - [The FDA]( proposed banning oral phenylephrine, an ingredient in popular decongestants like Mucinex, because scientists believe it’s ineffective. - [Roblox]( added safety features designed to stop kids under 13 from accessing social hangouts and experiences that make them susceptible to grooming and explicit content. - [Raygun]( the Australian breaker who went viral this summer for just kinda flailing around at the Paris Olympics, announced that she is retiring from competition. RECS [Friday to-do list] Bake: Bread tastes better when it comes out of the oven in a colorful [loaf pan]( Watch: Two hours of music guru Rick Rubin [talking about famous songs]( he produced. Preserve: Here’s [how to store cheese correctly]( to maximize your Gouda’s lifespan. Translate: A dictionary of [Ikea product names](. Don’t think twice: Bob Dylan fans are trying to parse the folk legend’s [mysterious presence on X](. Join the waitlist: Plan your spending, pay off your debts, and get a bird’s-eye view of your journey to financial independence with the 2025 Wealth Planner. [Save 25%]( by joining the waitlist. Extra, extra: The Washington Post’s [election sale]( is here. Get award-winning journalism for just [50 cents/week]( for the first year and $12 every four weeks after that. Cancel anytime.* Nothing trivial: Morning Brew Daily’s [trivia night with Bonobos]( is in the books, and everyone’s trivia chops were on full display. [Check out some highlights]( *A message from our sponsor. **This is a product recommendation from our writers. When you buy through this link, Morning Brew may earn a commission. GAMES [The puzzle section](#) Jigsaw: Lace up those sneakers and [complete this puzzle]( of a stunning photo taken during last Sunday’s NYC Marathon. Friday puzzle What is the only country that can be typed using letters from just one row on a QWERTY keyboard? SHARE THE BREW [Share Morning Brew]( with your friends, acquire free Brew swag, and then acquire more friends as a result of your fresh Brew swag. We’re saying we’ll give you free stuff and more friends if you share a link. One link. Your referral count: 0 [Click to Share]( Or copy & paste your referral link to others: [morningbrew.com/daily/r/?kid=a905682a]( ANSWER Answer: Peru ([Source]( Word of the Day Today’s Word of the Day is: squelch, meaning “completely suppress.” Thanks to Philippa from New Zealand for the crushing suggestion. Submit another [Word of the Day here](. Written by [Adam Epstein]( [Neal Freyman]( [Cassandra Cassidy]( [Matty Merritt]( and [Molly Liebergall]( Was this email forwarded to you? Sign up [here](. 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