Above the Fold

Low Rate Lifespan Could Be in Jeopardy

The Federal Reserve made no changes to its current easy-money policies after a two-day meeting that ended yesterday afternoon. The majority of the 18 Federal Open Market Committee (FOMC) members still see short-term rates near zero through 2023, but an increased number of members expect rate increases in 2022 or 2023. In other words, the members are acknowledging the recovery and have even upgraded their economic projections, on average. For U.S. gross domestic product, the median estimate now sees 6.5% growth in 2021, up from their December expectation of 4.2%. Unemployment forecasts also improved to 4.5% by year’s end, from projections for 6.2% in February. Even with the increasingly bullish sentiment, the FOMC dot-plot and subsequent actions reveal continued caution.

The FOMC does see an uptick in inflation to 2.4% this year, but a moderation back to 2% in 2022. Chairman Powell was very specific about the transitory effects of inflation, but also noted that there could be an accelerated improvement in economic conditions that it may have to consider when it comes to rates and other stimulative actions. The U.S. dollar weakened during Mr. Powell’s testimony and he further went on to comfort investors by saying the public will know “well in advance” when it plans to reduce its $120 billion bond buying program. 

Three Things 

1. Can We “Wiggle” Out of Our Electrical Supply Problems? – A small startup outside of Madrid, Spain, may have just changed the game for green energy. Dubbed the “Skybrator,” the Vortex Bladeless turbine design is a three-meter-tall curved topped cylinder attached to an elastic rod. The contraption wiggles with the wind and generates electricity from the vibration. The devices aren’t meant to replace traditional wind farms, but fill in the gaps in urban areas or places where it’s not feasible to have a large, spinning blade atop a giant tower. 
2. Commodities Throw Cold Water on Cheap Money – Anyone seeking inflationary pressures should look no further than building materials. Surging demand and low rates are supporting builders’ and buyers’ appetites. The cost of lumber is the highest it’s been in history and more than double what it was a year ago. Prices of copper, granite and even bricks are all hitting record levels, while crude oil, a base ingredient for paints, shingles, drain pipes and more, is also up 80% over the last year. Building permits for residential construction are being issued at their highest rate since 2006 and the latest rounds of stimulus are both likely to support these trends for some time. 
3. Amazon Elevating Its Health Care “For All” – Amazon launched its own health care service called Amazon Care back in 2019. What started as a regional program for its Seattle-based employees will now be offered across the United States to both Amazon workers and other companies who sign up for its medical coverage. The tech giant is already moving into the pharmacy business and hopes to eventually offer in-person clinics across the nation for anyone with Amazon Care.

Did You Know?

A Big Day for Wells Fargo

On this day in 1852, Henry Wells and William G. Fargo launched their namesake business. Originally set up as a sort of holding company, its early years were spent shipping mining supplies from the East Coast to California. Later, the company would form the Overland Mail Company and merge with several Pony Express-type companies to form the nation’s premier transport line; first by stagecoach and eventually by train. In 1905, the banking arm of the company split off and merged with Nevada National Bank. The shipping business deteriorated after the U.S. Government nationalized Fargo’s shipping routes and railroads during World War I.