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Federal Reserve Chairman Jerome Powell speaks to an aide. Photo: Zach Gibson/Getty Images
The market got the signal loud and clear from Fed Chair Jerome Powell yesterday — an interest rate cut is coming in July. But that rate cut may push forward tensions within the central bank.
What's happening: At June's meeting, the Fed delivered the first non-unanimous rate decision of Powell's tenure, and judging by the minutes of the FOMC meeting released Wednesday, there is disagreement among members about whether a cut next month is warranted.
The intrigue: Bank of America-Merrill Lynch research analysts say they're now anticipating 3 more rate cuts this year, 1 at each of the Fed's next 3 meetings. But they're also expecting some pushback from members who have been on board with the pivot to "patience," but may not be as amenable to cuts.
Between the lines: Powell is well respected by the market and his colleagues on the Fed, but he does not hold the sway of decorated economists like his predecessors Janet Yellen, Ben Bernanke and Alan Greenspan.
The last word: The Fed's most recent dot plot showed a growing schism among FOMC voters about whether to hold rates steady or cut. For now, the expectation is that Powell's vision will win out, but he looks to be losing support, and a few dissents at July's meeting may be just the beginning.
Gold-backed ETF holdings have risen to the highest level since early 2013, with June showing the largest inflows in more than 3 years, data from the World Gold Council's June report shows.
What's happening: Investors have flocked to gold as expectations have risen for the Fed to lower interest rates, which is expected to push down the value of the dollar, and as continued global uncertainty has sent money into safe-haven assets.
What they're saying: The last time gold ETFs saw this level of inflows gold was trading for $1,600 an ounce, 14% higher than its current level, Juan Carlos Artigas, director of research at World Gold Council, tells Axios.
Despite still being illegal at the federal level, marijuana is now legal for recreational use in 11 states and Washington D.C., and it's having an impact on a number of other businesses.
Why it matters: New data from market research firm Nielsen shows states that have legalized have also seen a notable pick-up in the consumption of what Nielsen calls "munchies," creating "big opportunities for the American food and beverage market—particularly for the snack and confectionery category."
What they're saying: "Within the U.S., Nielsen data shows that sales of both salty and sweet snacks have increased over the past 52 weeks (ending April 27, 2019) with salty snacks reaching sales of $29.9 billion and sweet snacks hitting sales of $6.5 billion."
Axios' Kia Kokalitcheva and Courtenay Brown write: Powell acknowledged the risks associated with Facebook's Libra cryptocurrency, saying that any problems "would arise to systemically important levels just because of the mere size of the Facebook network."
Why it matters: Bitcoin has been around for a decade, but Facebook's plan to delve into cryptocurrency has lawmakers paying attention to the issue like never before. While Wall Street looked to Powell's testimony for confirmation of an interest rate cut this month, a big chunk of the 4-hour testimony reflected bipartisan skepticism about Big Tech.
What they're saying: Powell said the process of evaluating potential risks posed by Libra — in areas like money laundering, privacy and consumer protection — "should be a patient and careful one ... not a sprint."
What's next: Powell is back on the Hill on Thursday to testify before the Senate Banking Committee. Meantime, the head of Facebook's Libra project, David Marcus, will testify in a pair of congressional hearings next week.
The S&P 500 rose above the 3,000-point mark for the first time on Wednesday as Powell's dovish commentary before the House Financial Services Committee reassured investors an interest rate cut was on the menu for the Fed's July meeting. The index closed at 2,993, up 0.45% on the day.