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🎙"What's great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest."
"You can be watching TV and see Coca-Cola, and you know that the president drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking." - See who said it and why it matters at the bottom.
Illustration: Aïda Amer/Axios
What was going to be a very simple and straightforward policy meeting for the Fed this afternoon has been significantly complicated by the outbreak of the Wuhan coronavirus, fresh geopolitical tensions and an inverted yield curve.
Why it matters: The Fed has flooded the market with cash since September with its ongoing repo market injections and bond-buying program, helping boost market confidence and asset prices. A shift in tone away from ample accommodation could send the market on a downward spiral.
What's happening: Investors bought the dip on Tuesday following Monday's market selloff, as many asset managers remain bullish, betting that the coronavirus outbreak turns out to be a blip on the radar for U.S. and global growth.
Watch this space: The Fed is unlikely to create a permanent or longstanding cash facility for the repo market, Reinhart says, despite the expectation and repeated calls for one from repo market traders and primary dealers who do business directly with the central bank.
Apple reported record quarterly revenue and profits well-above estimates and its own forecasts thanks to better-than-expected iPhone and services sales. (Axios)
Starbucks is temporarily closing more than half of its 4,300 stores in China as a result of the coronavirus outbreak. (NPR)
The White House told airline executives it is considering suspending all U.S. flights to and from China as the number of confirmed cases rose to near 6,000, already surpassing the SARS pandemic. (CNBC)
Match Group CEO Mandy Ginsberg announced she will be leaving her role at the company, the owner of online dating sites including Match and Tinder. (Axios)
The Congressional Budget Office expects the U.S. budget deficit will top $1 trillion in fiscal year 2020, the first trillion-dollar deficit in history not caused by the Great Recession.
Why it matters: The deficit is rising at a time of exceptionally low unemployment and solid economic growth, rather than during a crisis, which is typically when spending elevates.
Details: CBO projects real economic growth of 2.2% this year and an average of 1.7% through 2030.
Don't sleep: The deficits in the latest projections are $160 billion higher through 2029 than in CBO’s prior baseline, the Committee for a Responsible Federal Budget (CRFB) points out.
What they're saying: "Every year we set a new post-war record for debt as a share of the economy, every year the Congressional Budget Office warns that debt is rising unsustainably, and every year our largest trust funds get closer to depleting their reserves," CRFB president Maya MacGuineas says in a statement.
Orders for U.S. durable goods — long-lasting items like sheet metal or motors — rose 2.4% in December, but 90% of that increase was from government defense purchases. Excluding that category, orders fell 2.5%.
Why it matters: Business investment was the missing leg in the table for much of last year as the U.S.-China trade war and other geopolitical uncertainties like Brexit kept many companies from investment spending, forcing consumers to hold up the economy alone.
The Richmond Fed's January manufacturing survey recorded its highest reading in almost a year and a half on Tuesday.
The big picture: Each of the Fed's regional manufacturing indexes has beaten expectations this month, suggesting a rebound in the sector may be coming after a very difficult 2019, as experts have predicted.
Hotels and airlines are now using artificial intelligence software to re-price tickets and stays, sometimes dozens of times a day, the New York Times reports.
Why it matters: More often than not this is resulting in higher prices for consumers as great deals are removed from travel websites and replaced by higher prices when the AI software notices increasing demand.
How it works: "Traditionally, hotels and airlines priced their offerings depending on peak demand periods, past sales data and the number of current reservations." Per NYT...
"Now, changes in travel pricing are being made much more frequently. The practice, called 'hyperdynamic pricing,' is poised for significant growth, said Angela Zutavern, a managing director at the technology consulting firm AlixPartners."
Go deeper: In the Race for Cheap Airfare, It’s You vs. the Machine (NYT)
The U.S. Treasury yield curve between 3 months and 10 years inverted on Monday, as it has before every recession in the past 50 years. Inversion has been a false signal just once in that time.
What it means: When yields on short-dated Treasury notes (typically 3-month bills to 2-year notes) climb above longer-dated ones, it signals short-term borrowing costs are more expensive than longer-term loan costs.
Timing: The yield curve has inverted six to 24 months before every U.S. recession and it typically reverts to normal before the recession comes.
Artist Andy Warhol wrote about Coke in his 1975 book, "The Philosophy of Andy Warhol." Coca-Cola was incorporated as a business in Atlanta on Jan. 29, 1892.