topics

politics-policy

epstein-files

donald-trump

2026-midterm-elections

immigration

behind-the-curtain

race-and-equity

technology

privacy-tech-regulation

automation-and-ai

tiktok-news

big-tech

social-media

cybersecurity

economy

social-security

inflation

tariffs

federal-reserve

jobs

transportation

business

stock-market-news

retail-news

crypto

media

elon-musk

dealmaking

health

rfk-jr

drug-prices

axios-explains-abortion

public-health

world

israel

axios-explains-ukraine

iran

russia

china

energy-climate

nuclear-energy

climate-energy-policy

climate-change

extreme-weather

alternative-energy

electric-vehicles

science

emerging-tech

biomedicine

newsletters

pittsburgh

atlanta

san-diego

charlotte

boulder

washington-dc

kansas-city

dallas

denver

detroit

des-moines

austin

boston

chicago

cleveland

columbus

houston

indianapolis

miami

nashville

new-orleans

nw-arkansas

philadelphia

phoenix

portland

richmond

salt-lake-city

san-antonio

san-francisco

seattle

tampa-bay

twin-cities

raleigh

huntsville

colorado-springs

axios-local

axios-pro

axios-live

the-axios-show

National

The market is betting that the Federal Reserve won't be able to raise rates at all next year, while the Fed's projections show policymakers think they'll raise rates twice by next December.

The bottom line: Investors who play in the futures contracts market are putting their money where their mouths are in expectation that central bankers are either bluffing or deluding themselves. 

The big picture: Fed funds futures prices show investors see just a 47% chance interest rate rise from 2.25–2.50% (where they are now) to 2.50–2.75% by December 2019, according to CME Group's FedWatch tool. That would be one 25-basis-point increase, which the Fed has now done four times in 2018. 

Wall Street vs. the Fed: The future of interest rate hikes in 2019

The market is betting that the Fed won't be able to raise rates at all in 2019.

Traders work on the floor of the New York Stock Exchange (NYSE) as the Federal Reserve Board Chairman Jerome Powell holds a news conference

Traders work on the floor of the NYSE as Fed chair Jerome Powell holds a news conference. Photo: Spencer Platt/Getty Images

Business

Federal Reserve

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

For more than a year, we have reported exceedingly pessimistic forecasts about the future of jobs: Robots and automation, we've written, are likelier than not to wipe out a large portion of current U.S. employment by 2030 or so. But there are ways to both cushion the blow of automation and meet the challenge posed by China.

Driving the news: The problem isn't only that companies seem likely to automate at a faster and faster pace, but that the U.S. and other advanced economies are doing little to get prepared. Meanwhile — in a tech race against the U.S. — China is in a headlong push to deploy as much advanced robotics as it can.

1. Decide to keep humans in the mix with robots

As of now, report after report tell us not to worry — that robots will not wipe out jobs, but instead work alongside humans. If only it were so easy. In fact, there has to be an affirmative policy decision, either by government, companies or both, to develop automation as a machine-human endeavor.

The likelihood is that government will have to take the lead. "Government will have to step up, a political leader who sees a threat to his own political power," says Jeffrey Brown, head of the future of work project at the Bertelsmann Foundation.

2. Initiate aggressive, long-term job training and upskilling

Even the most optimistic forecasts urge a massive campaign to reskill tens of millions of Americans, and hundreds of millions of people around the world. Government should take the lead, but companies need to revive traditional practices of training new workers.

One option: tax incentives. "There can be a knowledge tax credit for training front-line workers," says Rob Atkinson, president of the Information Technology and Innovation Foundation. 

3. Award low-interest education loans, and forgive debt 

Education and skills training will be a core fact of life for the the next work force, the next after that, and so on. Everyone will have to up their game, and keep doing so, in everything from AI and medicine to plumbing and electric work.

Skilling and retraining has to be national policy, because the nations that don't do so will fall behind as nations. "In China, the state is leading in establishing new training centers in schools," said Paul Triolo, head of geotechnology at the Eurasia Group.

More: An entire generation of Americans is weighed down by unconscionable college debt. Figure out how to forgive it.    

4. Aggressively fund research in AI, robotics and quantum computing 

Should Washington assume a central role in the country's development of futuristic technology? Yes. Long-term, aggressive government funding and shaping will be central to both first-out invention and deployment of next-generation technologies.

"We need focused government action," says Samuel Brannen, director of risk and foresight at the Center for Strategic and International Studies. "Then suddenly we will leap past the Chinese like we did the Soviets." 

Sign up for the daily Axios Future newsletter

Go deeper: The AI crossroads: Dystopia vs. utopia

Slowing the robot apocalypse

Future

Robots

Stay informed on the innovations in emerging technology, retail, society, cities and more

Sign up for the Axios Future newsletter

Technology

World

Artificial Intelligence

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

President Trump has signed the First Step Act into law, bringing reform to federal prisons and sentencing laws influenced by the war on drugs.

Why it matters: In an era of extreme partisanship, the bill passed with overwhelming bipartisan support in both the Senate and the House. The new law will send thousands of inmates home immediately, and opens up the possibility for thousands more to reduce their sentences. 

Send up to 4,000 prisoners home by increasing the amount of time inmates can cut off of their sentences due to good behavior.

Allow inmates to serve time in house arrest or halfway homes instead of prison cells, with exceptions for high-risk inmates. 

Require that prisoners be placed within 500 miles of family.

Mandate the provision of sanitary napkins and tampons to female inmates.

Reduce the mandatory penalty from life to 25 years for a third conviction of certain drug offenses, and from 25 to 15 years for a second conviction.

Prohibit the doubling up, or "stacking," of mandatory sentences for certain gun and drug offenses.

Give judges more discretion in giving less than the mandatory minimum for certain low-level crimes.

Make the 2010 Fair Sentencing Act retroactive, which changed sentencing guidelines to treat offenses involving crack and powder cocaine equally. This could impact nearly 2,600 federal inmates, according to the Marshall Project.

The big picture: This law will only impact the 180,789 people incarcerated in federal prisons, but many of the changes reflect reforms already implemented in some states. The act's passage could also set the stage for more reform at the state and local level. 

What will change under the new criminal justice law

The law reforms federal prison systems and sentencing laws influenced by the war on drugs.

President Donald Trump speaks during the signing of the Criminal Justice Reform Bill in the Oval Office 

Politics

Criminal justice

2024 will be an election year like no other, as President Biden seeks re-election amid economic uncertainty, two wars and questions about his age. His likely foe, former President Trump, faces felony charges and vows revenge on his political enemies. Meanwhile, Americans generally are dissatisfied with those choices and are divided over immigration, race, education and more.

Politics & Policy

Capital

Axios Capital

Data: S&P 500; Chart: Harry Stevens/Axios

The stock market decline comes despite a record level of buybacks — more than $200 billion in the last quarter alone, up some 58% from a year ago.

Why it matters: It's a lot easier for companies to reduce buybacks than it is for them to reduce dividends. If and when earnings start to decline, it should be quite easy for buybacks to fall in tandem.

Buybacks are rising mainly because companies have been very cautious about raising their dividends. If you look at the level of dividends and buybacks combined, it tracks very closely with total corporate earnings, which have been growing impressively.

In 2007 and 2015, earnings fell below the amount that companies were spending on buybacks and dividends. That's no longer the case.

Buybacks on stock market hits record level

Companies have been very cautious about raising their dividends.

We seem to have come to the end of one of the most astonishing bull runs in stock-market history, and there's very little indication that Fed chair Jay Powell particularly cares. 

The bottom line: Powell will continue to make pro-forma noises about paying attention to financial markets. But he's not going to let Dow vigilantes dictate U.S. monetary policy.

From their low in March 2009 to their high in September of this year, stocks gained more than 280%. With dividends reinvested, the total return was 365%. That's 17.5% per year, annualized. 

All along the way they were helped along by unprecedentedly accommodative monetary policy, along with maybe just the tiniest dash of irrational exuberance.

Now, interest rates are returning to normal, and stocks have fallen back about 15% from their highs. Valuations remain pretty healthy — the S&P 500 is trading at about 15 times earnings — and in general the stocks that have fallen the most are also the ones which had previously risen the most. Facebook, for instance, might be down 42% from its high in July, but it's still up more than 250% over the past 6 years.

The big picture: Powell is not an economist; he's a capital-markets banker. Weirdly, that makes him less concerned about markets than his predecessors with economics PhDs. Much of financial economics is based on the efficient markets hypothesis, which says that market moves convey important information. That causes central bankers to get worried when markets fall. Bankers, by contrast, are well aware that stock valuations are largely arbitrary, and realize that volatility is normal.

It's not healthy when stocks go smoothly and steadily upwards in the face of global geopolitical chaos, as they did for the first 18 months or so of the Trump administration. 

Markets expect the economists at the Fed to cut rates (or at least stop raising them) whenever stocks decline by 10% or more. That, too, isn't healthy. The Fed has no mandate to boost the stock market, or to catch it when it falls — especially when the fall is simply a decline from frothy to sensible levels.  (I'll have more next week on stock-market valuations.)

Between the lines: Axios' Courtenay Brown asked Powell this week about the way in which the market has reacted to his speeches. Previous Fed chairs took great pains to choose their words carefully, lest the markets read something into them that wasn't there. 

Powell didn't answer Axios' question, which itself spoke volumes. He knows that the current hair-trigger market will jerk up and down on virtually any news, or none. That's not his problem. 

Dion's thought bubble: Powell speaks much more frankly and in simpler terms than Yellen or Bernanke or Greenspan. Unlike Yellen and especially Bernanke, Powell doesn't feel like he needs to go back and clean it up after he's said it and the market took things the wrong way. 

Go deeper: Why the Fed was right to hike.

Trump's Fed chair isn't listening to the markets, or Trump

He's not going to let Dow vigilantes dictate U.S. monetary policy.

Audio going in one ear of Fed chair Jerome Powell and out the other

President Trump is attacking the Fed and picking trade fights with a China that faces slowing economic growth, the EU is a political and economic mess, and Japan is near another recession, if it's not already in one.

The big picture: The Fed is the only central bank that could realistically help the stock market. The market goes up (like on November 28) and goes down (like on Wednesday) according to its optimism or pessimism about whether the Fed will stop raising rates.

Global central banks mostly can't come to the rescue.

The European Central Bank has negative interest rates, and says it's going to tighten next year. Same for Japan. 

The bottom line: A U.S. recession isn't imminent, but with all the bad news around the world, it's hard to see why U.S. stocks should be moving higher. The only bid in the market comes from whatever hope remains that Powell will ride in on a white horse to save the day. After all, that's what the Fed has generally done in the past.

Almost everything going on in the world is bad for the economy

The Fed is the only central bank that could realistically help

Wall Street

Wjla-9 00 Am - 10 00 Am-9 12 10 Am - 9 12 37 Am-2018-12-23

President Trump's incoming acting chief of staff says Mexico won't "exactly" pay for the wall, clarified that Trump "now" knows he can't fire the Fed chair and predicted the partial government shutdown will last into 2019.

The big picture: Mick Mulvaney is attempting to clarify the Trump administration's messaging from the White House's hectic statements that led up to what is now partial government shutdown.  

1) The wall: Mulvaney admits on ABC's "This Week" that Mexico won't pay for the wall, a promise Trump made on the campaign trail. "Technically, you and I both know that [the process for paying for the wall] cannot work exactly like that. I can't spend any money at the Office of Management and Budget, the Department of Homeland Security can't spend money from Mexico. We have to get it from the Treasury."

2) The Fed: Mulvaney spoke with Treasury Secretary Steven Mnuchin last night and Trump "now realizes" that he "does not have the ability" to fire Federal Reserve chairman Jerome Powell.

3) The partial government shutdown will likely extend into 2019. Trump stands by funding $5 billion for the wall and “refuses to go along to get along," Mulvaney said on "Fox News Sunday." 

4) On the resignation of Jim Mattis: "The president had known for quite some time now that Sec. Mattis and he did not share some of the same philosophies," Mulvaney said.

5) Past comments: Mulvaney said he and the president have joked about his comments from 2016, when he called Trump a "terrible human being." "The president knows that I've been fighting with him to fight for ordinary Americans. He likes having me around. I like working for him," Mulvaney said. 

Mulvaney in 2015: “To say ‘build the darn fence’ and have that be the end of an immigration discussion is absurd and almost childish for someone inning for president to take that simplistic a view."

Mulvaney in 2016: “Yes, I’m supporting Donald Trump. I am doing so as enthusiastically as I can given the fact that I think he is a terrible human being. But the choice on the other side is just as bad.”

 Go deeper: Pre-Christmas Trump: Rebuked, rampaging

Trump's next chief of staff does cleanup duty for his boss

Trump was said to be frustrated with the Mulvaney's past critiques of him.

Mick Mulvaney

Axios AM

The day after a New York Times editorial suggested President Trump is having a breakdown, White House correspondents Peter Baker and Maggie Haberman go deep inside the West Wing as he approaches two years.

Driving the news: "In recent days, Mr. Trump has asked aides whether he can fire Jerome H. Powell, the Fed chairman he appointed, telling advisers that Mr. Powell will 'turn me into Hoover,' a reference to the Great Depression-era president."

"I’m doing great, but it’s a war every day," Trump has said to aides as he scanned headlines. "Why is it like this?"

"He regularly curses at [his staff], some say."

"Even his humor can be abrasive. When Larry Kudlow, his economics adviser, returned after a heart attack this year, the president ribbed him in front of aides. 'Larry, you’re here six weeks and you had a heart attack?' Others laughed uncomfortably."

Trump fears being turned into Hoover

"He feels he does not have a friend in the White House."

Axios

Sunday's top stories

Wall Street vs. the Fed: The future of interest rate hikes in 2019

Slowing the robot apocalypse

What will change under the new criminal justice law

Buybacks on stock market hits record level

Trump's Fed chair isn't listening to the markets, or Trump

Almost everything going on in the world is bad for the economy

Trump's next chief of staff does cleanup duty for his boss

Trump fears being turned into Hoover

How Reid Hoffman sees the future

Trump's Bill Clinton defense

Chinese stocks are outperforming U.S. markets

Russia isn't taking 2019 off

One of El Niño's key ingredients is missing