Above the Fold

Fed Funds Rate vs. Mortgage Rate

The Federal Reserve (the Fed) cut the short-term federal funds rate to a range of between 1.75% and 2%, with three of the 10 voting bank presidents dissenting. Two regional presidents opted for a smaller cut, while one saw a larger cut needed. That vote for a deeper reduction was a new development compared to July’s voting. 

It’s also important to note the Federal Open Market Committee also reduced the interest rate paid to banks on deposit reserves held at the Fed by 0.30%. This greater than expected cut should reduce banks’ desire to hold that money at the Central Bank and increase their lending in other money markets. The New York Fed also injected an additional $75 billion (through repurchase agreements or “repos”) into money markets yesterday, following a $53 billion infusion on Tuesday — all in an effort to increase liquidity and reduce short-term interest rates that were soaring to 10% earlier in the week. 

Put simply, the mortgage and money markets are demanding the Fed do more to keep rates low; this is why mortgage rates have been creeping higher despite a federal funds rate on the decline. We may see more easing actions by the Fed in the coming months to keep its interest rate targets and money markets stable. 

Three Things

1. WeWork Struggles With SideGigs – The soon to be public WeWork is trying all it can to become more than a one-trick pony. Unfortunately (profitable), diversification has been difficult thus far as the company spent at least $164 million on businesses outside its core, but generated only $124 million from all its ventures. The company has postponed its IPO.
2. The Latest Alternative Investment: Reruns – As media titans jockey for dominance in the new world of streaming, the rights to classic TV series are worth billions. Shows like Seinfeld, Big Bang Theory, The Office and Friends are being shuffled and traded like commodities as the streaming space gets even more crowded. Apple, Walt Disney, WarnerMedia and Comcast are set to join the fray this fall. 
3. Amazon Goes Lossless – Audiophiles rejoice! Amazon is introducing a high-resolution iteration of its popular music service that will offer CD or better quality sound that Apple Music, Spotify and others still haven’t matched. The service will cost $12.99 a month for Prime members and offer an expansive 50-million-track library to start. 

Did You Know?

Weird Weight Facts – Our bodies are host to a diverse army of bacteria, even beyond our digestive system. The average human body contains trillions of tiny microorganisms, which actually outnumber human cells 10 to 1. The average weight of total foreign microbes is around 1% to 3% of our total weight, or about 2 to 6 pounds for a 200-pound male.   

And if you think that’s creepy, the total weight of all the ants on our planet is greater than the combined weight of all Earth’s humans — even though the average human weighs a million times more than the typical ant.