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Why now is a good time to rethink monetary policy

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Since the beginning of the pandemic, concerns have been raised about the Federal Reserve’s approach to handling economic challenges.

While the Fed’s perceived political involvement has garnered attention, the more pressing issue at hand is the way it tackles inflation and interest rates using what some describe as a sledgehammer when a scalpel might be more appropriate.

Instead of implementing infrequent and substantial moves of 25, 50, or even 75 basis points, which can disrupt financial markets and investment strategies, the argument put forth is that the Fed should opt for smaller, more frequent adjustments of five or ten basis points.

The goal is to create a smoother economic landscape, as opposed to the sharp and unpredictable fluctuations that are currently experienced.

FILE PHOTO: A Wall St. sign is seen outside the New York Stock Exchange (NYSE) in the financial district in New York City, U.S.

Rate curve

The proposed ideal scenario envisions a gradual and controlled interest rate curve, consistently hovering between 3% and 4%, within a relatively narrow range.

This approach would entail a longer-term cycle, spanning 10 or 20 years, rather than the shorter two- or three-year cycles witnessed today.

By implementing minor basis-point adjustments over a few weeks, financial markets, lending practices, and the stock market would adapt in a more measured manner.

These adjustments would be small, fostering a more rational and predictable economic environment conducive to better planning.

The debate over the Fed’s approach to monetary policy is ongoing, and while the central bank continues to grapple with economic challenges, alternative strategies like the one proposed here could reshape the way it addresses these issues in the future.

Ahron Young is an award winning journalist who has covered major news events around the world. Ahron is the Managing Editor and Founder of TICKER NEWS.

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Money

AI pushes the Nasdaq to a record-breaking close

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The Nasdaq achieved a record-breaking close, surpassing its previous record high of 16,057.44, which was established on November 21, 2021.

Artificial assistance

Artificial intelligence-related technology stocks, such as Nvidia (NVDA.O) and Microsoft (MSFT.O), have greatly boosted the index.

The Nasdaq Composite has increased by almost 7.2% this year.

The tech-focused index surged 43% in 2023, and as chipmakers gained traction and confidence increased that the Fed might achieve a soft landing—that is, curb inflation without inciting a recession—stocks surged strongly by year-end.

In contrast, Nvidia increased by 1.9% on Thursday, bringing its total gain from a year ago to around 250%.

Market boom

Every S&P 500 subs sector saw a gain at the end of the month.

Analysts at Deutsche Bank report that the index has now increased for 16 of the past 18 weeks, matching the record most winning weeks last attained in 1971.

Bitcoin also moved closer to its all-time high.

The price of the virtual currency momentarily surpassed $64,000 as spot bitcoin ETFs helped drive it to heights last seen in 2021.

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Money

Disney sign off on mega merger with India’s largest conglomerate

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India’s top conglomerate Reliance Industries and Walt Disney announced the merger of their India TV and streaming media assets, forming an $8.5 billion entertainment juggernaut.

Disney, Reliance sign non-binding agreement for India’s largest media conglomerate

Reliance, led by Asia’s richest man, Mukesh Ambani, will inject $1.4 billion in the merged entity, with the company and its affiliates holding a more than 63% stake, with Disney owning the rest, the companies said in a joint statement.

Mukesh Ambani, Reliance’s multimillionaire CEO

Media rivals

With two streaming platforms and 120 TV channels, the combined company will be a formidable opponent for competitors like Netflix and Sony of Japan in the $28 billion media and entertainment market, which is expected to grow to $100 billion by the end of the decade.

Disney’s lengthy battle to stop users from leaving its collapsing Indian streaming service and the financial burden resulting from billion-dollar payments for Indian cricket rights before the deal, providing yet another illustration of how difficult it can be for Western companies to expand in India.

Ultimate alliance

“The combined entity will create a sports behemoth in India,” stated Jinesh Joshi, an analyst at Prabhudas Lilladher in India.

“This merger will give Reliance great bargaining power when it comes to negotiating advertisement contracts … For Disney, coming together with a bigger player, in terms of (financial) pockets, will give it a cash cushion,” he continued.

According to the corporations, the combined company will serve the approximately 750 million viewers in India as well as the Indian diaspora worldwide.

According to Disney CEO Bog Iger’s statement, “Reliance has a deep understanding of the Indian market and consumer,” and the acquisition will enable “us to better serve consumers with a broad portfolio of digital services, entertainment, and sports.”

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Warner Bros Discovery plans to shutdown popular NZ news network

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One of New Zealand’s two free-to-air television networks claimed it will be shutting down all newsroom operations, television news broadcasts and website from June 30, with the loss of up to 200 media jobs.

The once-thriving network, which had been a staple in the New Zealand entertainment industry, is now facing financial turmoil, sending shockwaves through the media landscape.

Warner Bros Discovery, who own the NZ news network, stated the decision comes following further attempts to reduce costs and that meant major changes including the planned shut down of the newsroom.

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