00:00 Julie Hyman
I’m Julie Hyman. Let’s get to the three things you need to know today.
00:04 Julie Hyman
First up, the US and China reach a trade truce. President Trump and Xi Jinping met in South Korea. They agreed to a one-year trade truce. As part of that agreement, the US will cut fentanyl related tariffs in half and pause restrictions on blacklisted Chinese firms. China in return will restart soybean purchases and resume rare Earth shipments. Key wins for US farmers and industry.
00:26 Julie Hyman
The stock market reaction to the truce, relatively muted. Part of that is due to investors’ focus on big tech earnings. Meta, Microsoft and Alphabet, they all reported after the bell.
00:35 Julie Hyman
Alphabet shares, the only ones that are jumping amid a surge in demand for its cloud and AI services. It’s a sign its CAPEX spending is paying off, but that isn’t the case for Meta and Microsoft.
00:48 Julie Hyman
Meta pledged to spend aggressively on AI next year, what the CFO said would be a notably larger amount than the $72 billion planned for 2025, but returns on those investments still aren’t clear.
00:56 Julie Hyman
Meanwhile, Microsoft’s CFO says they can’t meet current demand for AI and other services even after spending tens of billions in recent quarters and they plan to keep on doing that.
01:06 Julie Hyman
And investors are also closely watching the Fed. While the Central Bank delivered another quarter rate uh rate cut this year, Federal Reserve chair Powell issued a warning.
01:20 Speaker A
A further reduction in the policy rate at the December meeting is not a foregone conclusion.
01:28 Speaker A
Far from it. Policy is not on a preset course.
01:34 Julie Hyman
Well, Powell made it clear that the primary concern for some is a cooling job market. Others inside the Fed are warning about persistent inflation.
01:43 Julie Hyman
Further clouding the Fed’s outlook, of course, the data blackout amid the US government shutdown.
