9.19.2024

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Federal Reserve Cuts Rates

The Federal Reserve announced a half-percentage-point cut in benchmark rates yesterday, at the higher end of market expectations. The decision marks the central bank's first rate cut since the early days of the COVID-19 pandemic in 2020. See how the Fed works here (w/video).

The decision to lower rates to a range of 4.75% to 5% comes amid a recent hiring slowdown, though last month's 4.2% unemployment rate remains relatively low by historical standards (see graphs). The Fed's decision also followed last week's consumer price index report, which showed inflation slowing to 2.5% year-over-year in August, approaching the Fed's 2% target. 

Despite the announcement of a higher-than-expected cut, markets closed lower on yesterday's news (S&P 500 -0.3%, Dow -0.3%, Nasdaq -0.3%). Traders appeared concerned the decision indicated the Federal Reserve sees risk of an elevated economic downturn.

Justice Department Sues Dali

The Justice Department will seek $100M in damages from the owners and operators of the Dali container ship, which destroyed Baltimore's Key Bridge and killed six workers in March. The lawsuit, which also seeks an unstated amount in punitive damages, comes alongside other state and city lawsuits, as well as an ongoing FBI criminal investigation. 

The lawsuit alleges Singaporean-based owner Grace Ocean and operator Marine Synergy Group applied insufficient, "Band-Aid" fixes to systemic power issues. In part, the lawsuit cites a power failure on Dali the day before the crash that the ship did not report to the US Coast Guard. The owners have sought to use a centuries-old maritime law to limit liability to roughly $44M. 

The 100,000-ton freighter lost power and crashed into the sole road spanning across Baltimore's harbor, cutting off a key trucking route and closing the city's port for weeks (watch timeline). The bridge is expected to cost close to $2B over four years. 

More Devices Explode in Lebanon

Hundreds of walkie-talkies and solar devices detonated across Lebanon yesterday in an apparent second round of explosions, killing at least 20 people and wounding 450 others, per Lebanese Health Ministry figures. The incident comes less than 24 hours after a suspected Israeli attack exploded 5,000 Hezbollah-owned pagers across Lebanon and Syria, killing 12 people, including a nine-year-old girl, and wounding 2,800 others.

The devices were used by members of the Iranian-backed Hezbollah group, with pagers ordered five months ago to evade Israeli surveillance. An investigation into how they exploded and their global supply chain is ongoing. The attacks come after Hezbollah and Israel have engaged in months of cross-border missile and rocket strikes, displacing 60,000 people in Israel and almost 100,000 in Lebanon. Israel has not commented on the explosions. Hezbollah's leader is set to speak today. 

Separately, the UN General Assembly voted 124-14 yesterday to pass a nonbinding resolution calling on Israel to evacuate all Palestinian territories within one year. The US opposed the measure; 43 countries abstained.

In partnership with Pendulum

'Meet this Un-Hunger Hormone'

In partnership with Pendulum

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