💴 All eyes on the Fed

Jerome puts on his Zoom face.... We're imagining a "raining hundreds" background. Investors have eyes on the Fed's annual Jackson Hole meeting today, which is being held virtually. Wall Street wants to know if the central bank is prepared to wind down its massive pandemic bond-buying program, which has helped economic recovery.

• Since March 2020, the Fed has added trillions to the money supply through bond-buying. It's currently dropping a whopping $120B per month on Treasury and mortgage bonds.
• How it works: The Fed buys bonds from banks, and the new cash that banks receive flows through to consumers and businesses through loans, etc.
• Why it works: All that money helped bring us ultra-low interest rates during the pandemic, which boosted spending. Think: lower rates for mortgages and biz loans.

Inflated = the new bloated... The Fed's "easy money" policy has helped the S&P 500 — a benchmark for US stocks — nearly double in value since March 2020. But as the economy swiftly recovers and prices rise (#flated), the central bank is considering reigning in its policy this year. Notes from the Fed's latest July meeting suggest the economy is closer to achieving the Fed’s inflation and employment goals.

• Unemployment was at 5.4% in July, down from 10.2% a year ago — but it's still 2% higher than the pre-pandemic rate. Job recovery has slowed, despite record openings.
• Inflation: Consumer prices are up 5.4% from last year, and the Fed's ultra-low interest rate policies aren't helping.
• GDP: While the US economy is rebounding, many economists have downgraded their estimates for yearly growth as the Delta variant surges.

Slack was added to #Salesforce… and it’s blowing up the channel. Software giant Salesforce raised its yearly earnings forecast on unexpectedly strong sales, and the stock popped 4% yesterday. Contributing to the growth:

• Slack: Salesforce bought the office chat app, which has 10M+ daily users, for a whopping $27.7B last quarter.
• #s: Slack is expected to generate just 4% of Salesforce’s revenue this year — but its sales last quarter grew faster than all of Salesforce’s major divisions.

Counting heart reactions… Slack is central to Salesforce's strategy, because the future of work is trending hybrid. Nine in 10 companies plan to combine remote and in-office work, but only a third feel prepared. Salesforce believes all businesses will need more remote capabilities. Salesforce believes its Slack-quisition will power:

• Digital HQs: Salesforce integrated Slack with its existing service, marketing, and analytics software to help businesses keep track of customers and close deals all in one digital HQ.
• Hybrid work: NBD if your vendors and clients are fully remote. Slack Connect, launched during the pandemic, allows cross-company collaboration. Usage boomed last quarter, as workers sent crucial docs and emojis to external partners.

• Shot: After the FDA's full approval of Pfizer's Covid shot, more companies are considering penalizing unvaxed employees — and Delta Air Lines already has.
• OhChip: TSMC, the world’s largest contract chip maker, is reportedly raising prices by up to 20%. That could lead to pricier tech gadgets.
• Fitch: Abercrombie shares dropped 10% yesterday after the cologne-forward retailer revealed that supply chain delays hurt quarterly sales.
• Spin: Peloton's stock dipped yesterday after the pedal powerhouse revealed its treadmill recall contributed to slowing quarterly sales growth.
• Cents: Shares of Dollar General and Dollar Tree tanked after the thrift retailers lowered earnings forecasts on surging freight costs.
• Newsy: Forbes announced plans to go public in a $630M SPAC merger, and Insider-owner Axel Springer bought news outlet Politico for $1B.

• Earnings expected from Big Lots

Authors of this Snacks own shares of: Microsoft and Delta

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