Week of July 29, 2022 Weekly Recap & The Week Ahead
The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance. — Ed Seykota
1. Senate Advances $280 Billion Bill Subsidizing Chip Manufacturing, Technology — the Senate voted 64 to 32 last week to advance a $280 billion package of subsidies and research funding to boost U.S. competitiveness in semiconductors and advanced technology. The package is set to give a big boost to domestic chip production, seen by the White House and leaders in both parties as critical to the U.S. supply chain and national security, as most semiconductors are imported from overseas. Shortages have also helped drive prices sharply higher for cars and other goods in recent years, and proponents say the bill will help cool consumer costs. The bill combines about $52 billion in subsidy funding to boost semiconductor production in the U.S., along with about $24 billion in advanced manufacturing tax credits that would also support the industry.
The package would authorize about $200 billion in spending, mainly for federally backed scientific research over the next decade. It would fund about $1.5 billion for next-generation wireless research and establish new long-term policies for the nation’s space program.
2. Fed Raises Interest Rates by 0.75 Percentage Point — officials agreed to a 0.75-percentage-point rate rise, which will lift their benchmark federal-funds rate to a range between 2.25% and 2.5%. The rate increase won unanimous backing from the 12-member rate-setting committee. The statement repeated language from previous meetings that said officials anticipate additional rate increases will be appropriate. “The labor market is extremely tight and inflation is much too high,” Fed Chairman Jerome Powell said at a news conference late last week.
3. U.S. GDP Fell at 0.9% Annual Rate in Second Quarter — Gross domestic product, a broad measure of the goods and services produced across the economy, fell at an inflation and seasonally adjusted annual rate of 0.9% in the second quarter, the Commerce Department said Thursday. That marked a deterioration from the 1.6% rate of contraction recorded in the first three months of 2022. The GDP report offered some discouraging signs, and underscored the challenges facing U.S. businesses, consumers and policy makers—including high inflation, weakening consumer sentiment and supply-chain volatility.
Consumer spending accounts for roughly two-thirds of total economic output, and Thursday’s report showed Americans spent at a cooler clip in the second quarter. Business investment worsened slightly. The housing sector slowed as borrowing costs rose.
The week ahead — Economic data from Econoday.com:
