| | | | | | | Presented By Q.ai | | | | Axios Markets | | By Matt Phillips and Emily Peck · Jul 27, 2022 | | 👯♂️ Happy Fed day, markets addicts. Matt here. The Federal Reserve's rate hike — widely expected to be three-quarters of a percentage point — will be announced at 2pm, with chair Jerome Powell's scintillating news conference to follow. - And tomorrow, we'll get the latest reading on GDP, to see if Powell's effort to take the sting out of inflation, without pushing the country into outright recession remains a possibility. Read on, for more on the R-word.
Today's newsletter, edited by Javier E. David, is 981 words, 4 minutes. | | | | | | 1 big thing: The search for recession |  Note: Within the headline or first paragraph of articles algorithmically determined to be about the economy. Data: Signal AI; Chart: Erin Davis/Axios Visuals Many things cause Americans to think we're in a recession, including rising gas prices and falling stocks. One key component is simply the amount of recession chatter in the media, Axios' Felix Salmon writes. Why it matters: A surge in media recession stories can create self-fulfilling bad vibes, and increase the likelihood of an actual recession. Driving the news: We're in a bull market for recession explainers right now, ahead of the Federal Reserve's policy meeting today, and the release tomorrow of second-quarter gross domestic product numbers. But we're well past the peak in recession stories. By the numbers: Signal AI measured the number of economics stories with the word "recession" in either the headline or the first paragraph. (This story will definitely count.) - In the U.S., there were 6,882 such stories in the week ending July 25, down 68% from 21,576 in the week of June 13, around the time that both gas prices and mortgage rates were peaking.
- Globally, the 19,828 such stories were also down 68% from the high point reached in the week of June 20.
How it works: Repeated information is more likely to be perceived as true. The U.S. public is a bit like the dog in the famous Far Side cartoon that only notices when its name is being mentioned. - If we hear the word "recession" often enough, we're more likely to think that we're in one.
What's next: If the second-quarter GDP figure is negative, expect a massive increase in recession stories, pegged to the fact that the U.S. will have seen two successive quarters of negative prints. - If GDP growth comes in above zero, however, there are grounds for hope that the media meta-recession is beginning to ebb.
|     | | | | | | 2. Charted: Europe's energy crisis gets worse |  Note: Futures prices based on the Netherlands' Title Transfer Facility prices. Data: FactSet; Chart Axios Visuals Europe's energy crisis is worsening, with Russia cutting roughly 80% of natural gas flows to the West through its Nord Stream 1 pipeline, Matt writes. Driving the news: The latest cuts, announced by Russia's Gazprom, sent natural gas futures prices soaring to their highest level since right after Russia invaded Ukraine. The big picture: Prices in European energy markets have skyrocketed, with natural gas prices roughly 1,800% higher than they were two years ago. The bottom line: Russia is the world's largest exporter of natural gas. And its removal — either voluntarily, or because of sanctions and boycotts in response to its war in Ukraine — will leave global energy markets wildly out of balance. | | | | | | | | 3. Catch up quick | | ⬇️ Google's Q2 results avoid disaster, stock pops. (Reuters) 👋🏻 Credit Suisse names Ulrich Koerner CEO after $1.7 billon loss. (Bloomberg) 🚪Shopify to lay off 10% of workers as pandemic boom fades. (Axios Pro) 💼 Great Resignation is slowing amid high inflation. (Bloomberg) | | | | | | | | A message from Q.ai | | A 3-step guide to investing like a pro | | |  | | | | Investing doesn't have to be complicated. How it's done: - Create a Q.ai account.
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You're done! Let award-winning AI manage your portfolio. | | | | | | 4. Mood inequality |  Data: Morning Consult; Chart: Erin Davis/Axios Visuals You've heard of income inequality and wealth inequality. Well, there's also mood inequality, Emily writes. The big picture: For the lowest earning households, consumer sentiment worsened in July, according to data out this morning from the Morning Consult/Axios Inequality Index. - However, sentiment improved for those with more money, the survey showed.
- Consumer sentiment fell 2.7% in households with annual incomes of less than $50,000 a year; while confidence among those earning more than $100,000 ticked up by 1%.
What's happening: Higher earners' got a mood boost as the stock market improved in July; but for those at the bottom, inflation is making it harder to afford the basics, said Jesse Wheeler, an economic analyst at Morning Consult. - High-income Americans have more flexibility to deal with inflation. They can put off big-ticket purchases, and switch brands or shops they frequent: That doesn't cut it for those living on tight budgets with less fat to trim.
- As people stretch to afford stuff, credit card balances are going up. The share of adults with unpaid credit card balances has been steadily rising this year, especially for lower earners, according to a separate Morning Consult report.
- "Inflation's tough for everyone, but it's harder at the bottom," said Wheeler.
| | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. House eyes bid to curb "insane" overdrafts |  | | | Illustration: Sarah Grillo/Axios | | | | A bill that would limit banks' ability to charge overdraft fees is gaining ground in the House, Emily writes. The Overdraft Protection Act, introduced last year, is scheduled for a markup — the final step before legislation is advanced to the House floor this week — despite strong opposition from the industry. Why it matters: These fees, often $35 for spending or withdrawing more money than you have in your account, are a big profit center for banks — one bank CEO even named his boat Overdraft a few years ago — but a political football often kicked by legislators and consumer advocates. - They're also a massive pain for a small segment of financially strapped customers who often don't realize they're in the red.
Details: The bill, sponsored by Rep. Carolyn Maloney (D-NY) in the House would permit only one overdraft charge a month, and no more than six a year. After that, banks could either let you continue to overdraft, without a charge or cut you off. - The bill also says fees should be reasonable and proportional — for example, no $35 fee for buying a $3 cup of coffee.
Yes, but: Though advocates are hopeful the bill makes it out of committee to a House vote, its chances in the Senate are seen as limited. In complaints filed with the Consumer Financial Protection Bureau, bank customers complain about onerous fees, often for accidentally overdrawing their account — forgetting an autopay feature is turned on, or not moving funds between accounts. - "Since COVID I have probably paid $2000.00 if not more in fees," one consumer writes. "How does that not seem insane?"
Go deeper. | | | | | | | | A message from Q.ai | | Let Q.ai's AI help you build wealth | | |  | | | | You use AI every day— your phone, voice assistant and even car. Why not use it to make smarter investment decisions? Q.ai uses AI to constantly monitor and manage investment portfolios, keeping them balanced and offsetting inevitable risks. Even better: Get a $100 bonus when you deposit $100. | | | | 1 thing Matt loves: The Bakersfield Sound. And I'm not alone. My recent mention of Bakersfield's own trucker country legend Red Simpson provoked a flurry of notes from people eager to chat about Buck and Merle and other progenitors of the Californian-bred, hard-driving honky tonk sound that that arose in the 1960s in opposition to the lush, pop-friendly claptrap they were churning out in Nashville. Anyway, keep holding that tiger by the tail. |  | | Why stop here? Let's go Pro. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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