On today's episode of Asking for a Trend, Host Josh Lipton breaks down some of the top stories and trends from the trading day. Investors are all but certain...
Investors are all but certain the Federal Reserve will cut interest rates at its September meeting on Wednesday. But the question of by how much — 25 or 50 basis points — has been hotly debated. Wall Street Journal Chief Economics Commentator and Deputy Economics Editor Greg Ip lays out the case for a half-point cut, explaining,"It all starts out by looking at where rates are now," Ip says, noting that the current target rate of 5.25%-5.50% is the highest in 20 years.
My next guest is firmly in the half point cut camp and join me now, Greg IP, chief economics commentator and deputy economics editor at the Wall Street Journal.Make the case, Greg, how come?And second of all, I think there's a case for both a quarter and a half. And so I would start that process with a half a point just to bring the stance of mon policy back to something that looks a little bit more logical for the economy that we have today.So, the biggest risk, if you could have a point is that in the next few months you get new data that tells you that actually inflation isn't continuing to head down, it's actually kind of stuck here.
And if you look at the, uh, where we've been going lately, there's a AAA, more than zero possibility that the next few job market reports could be very weak and that the probability of recession will then look higher. If it surprises and it with a, with a cut of 50 basis points, that's actually going to be a big surprise to the downside as well.Is that what happened?
So there's two different things, there's the legal argument and then the actual argument on the legal side, I think it's pretty strong because they have a law passed by Congress assigned by President Biden.The reality is we don't know and neither does tiktok really because when you look at these filings that the government submitted to the court for the case that opened today, about a dozen pages of it is redacted, redacted classified information.
Well, what's also interesting, you know, you do have these, um, bold faced American investors, big names who, who, you know, are kicking the tires here, say they're interested. And, and with this goes back to your earlier question, there's no particular reason to think that the Chinese government would be willing to do so, particularly because this isn't just Bytedance saying, you know what for, for a variety of strategic reasons, we don't think we should on tiktok anymore.
Yeah, I mean, I think the big win is just a, a large customer, obviously aws by name, Intel's also mentioned that Microsoft will be doing some custom chips with them as well. And this is what I think the news is, is, is positive too in some of the stock reactions is it's not a spin out, but it's essentially as close as you can get to putting the the right kind of walls and guardrails around Intel foundry so that other customers can come in and feel comfortable knowing that they'll have capacity um way for allocation.
So be we, we've spoken to a couple analysts um on the street who cover Intel uh recently and asked them whether Gelsinger is the, is the right guy for the job.Do you, do you think he's the right leader, the right executive and has the right strategy for the chip giant?I think holistically, the the timeline and the cost to do so was uh was extremely hard, right?
And I think having somebody like Pat Gelsinger who is at his heart, a technologist and very good and has a history of solving those technology problems with Intel is the right person to get over.
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