Fed Cuts Rates, But Not The One People Watch
The Federal Reserve did indeed cut interest rates yesterday in an announcement following its Federal Open Market Committee meeting. The rate that was cut, however, wasn’t the target rate of federal funds loaned between banks overnight. It was the rate paid directly by the Fed to holders of those federal funds, the interest rate paid on excess reserves, AKA IOER. This is the only rate the Federal Reserve literally directly controls by fiat, and the point of lowering it is to encourage banks to loan out federal funds rather than hoard them at the central bank. The IOER was lowered by 5 basis points to 2.35%, and this is supposed to lower the federal funds rate which as of yesterday was trading at 2.45%, 5 basis point above the previous IOER of 2.4%. Since that isn’t supposed to happen, the Fed wants to see if lowering the IOER further will relieve pressure on the federal funds rate. Nobody knows if it actually will. Stay tuned and find out. Information available at the New York Fed.
Netflix Price Hikes Kick In
The merry month of May will see new price hikes from Netflix (NASDAQ:NFLX), while America chills, Netflix hopes. The streaming giant is trying to offset costs from its investment in original content. Price hikes were announced back in January and have been rolling out globally, but US customers will start seeing the affects this month. The premium plan is moving up to $15.99 a month from $13.99. The standard plan goes from $10.99 to $12.99, and the basic plan will be moving up from $7.99 to $8.99. Expenditures on original content are expected to be $15 billion this year, so we better see some really awesome stuff. The company is hoping that the price increases don’t attract defections to streaming competitors Disney (NYSE:DIS) and Amazon (NASDAQ:AMZN). Once again, stay tuned and find out.
Mondelez Goes to Pot
Mondelez (NASDAQ:MDLZ), the owner of Nabsico, the maker of Oreos, Chips Ahoy, and Triscuits among other scrumptious snacks, is thinking about lacing its cookies, or perhaps rather future cookie and cracker brands, with cannabis. Not the kind that makes you all contemplative and philosophical, but the kind that you don’t notice but aids in fighting inflammation and other immune issues. “Our current range of brands are family oriented and we don’t currently intend to bring any cannabis or CBD products under these brands,” said a spokesman, meaning the company probably won’t risk tainting its family-oriented product brands with cannabidiol (CBD), at least not yet. Which means they may launch new brands and a different product line so as not to confuse people and disturb customer loyalties. In any case, the FDA is examining CBD as a food additive, and the possibility of classifying it as GRAS, no pun intended, which stands for Generally Recognized As Safe.
Qualcomm Dulls After Recent Pop
Qualcomm (NASDAQ:QCOM), which jumped back up to its 2000 Nasdaq bubble highs on news of a settlement with Apple (NASDAQ:AAPL) two weeks ago, didn’t impress with a lackluster Q3 sales forecast due to weaker smartphone demand in China. Analysts were expecting $5.26B in top line revenue and only got guidance of $4.7 to $5.5B, which could still beat expectations, but the midpoint of that range is below it. Shares were down 3% in after hours trading yesterday, so we’ll see what the new day brings. Executives were also mum on Apple’s scheduled royalty payments due to the settlement.
Elon Musk’s 9 Twitter No No’s
There are 9 things that Tesla (NASDAQ:TSLA) CEO Elon Musk needs explicit permission to tweet about from his board of directors, because the first amendment to the constitution about making no laws limiting free speech was never really meant to be taken literally. The 9 things are:
- Financial condition, including but not limited to April Fool’s jokes about bankruptcy
- Mergers and acquisitions and other related corporate seesaws
- Production numbers
- New business lines or change in business
- Projections not in official guidance
- Financings and other securities-related stuff
- Nonpublic regulatory decisions
- Any event requiring an 8-K filing
- Whatever the board says not to tweet about.
Will Musk follow these restrictions? It would certainly make for good news if he doesn’t.