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Business of the Week: Inflation Moderates

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After months of rising prices, there was some relief last month. New inflation data on Wednesday showed the consumer price index rose 8.5% for the year to July. This is a marked slowdown from his June, when prices rose 9.1%. Falling prices for airfare, used cars, hotel rooms and gasoline fueled the decline, with the national average for a gallon of gasoline dropping sharply since the beginning of the summer. But the inflation report is not unconditionally good news as it might seem at first. The index, which excludes volatile food and fuel costs, rose 5.9%, suggesting underlying inflationary pressures remain strong. Still, the overall slowdown pace is likely to be encouraging to Federal Reserve policymakers, who will see his July data as a step in the right direction. And it is a victory for President Biden, whose political responsibility is high inflation. However, it is unknown what happens next. Last year, after a cool summer, inflation accelerated in the fall.

As analysts expected, The Walt Disney Company has lowered its ambitious subscriber targets for Disney+, admitting it will not reach 230-260 million subscribers by 2024. I was. However, the company has released another notable subscriber benchmark. It’s about surpassing Netflix. Disney+ added more than 14 million subscribers to his subscribers in the most recent quarter, far exceeding Wall Street’s expectations and bringing Disney’s portfolio of streaming services to his 221 million subscribers. rice field. (Netflix, which continues to lose subscribers, now has about 220.7 million.) Subscriber news was just one of his highlights from last week’s Disney blockbuster earnings report. I did. Disney said profits have increased by 50%, fueled by strong demand for its theme parks. This indicates that consumer confidence remains high despite economists’ concerns that inflation is causing Americans to tighten their budgets.

Cryptocurrency companies continue to drop to new lows. Coinbase, the largest U.S. cryptocurrency exchange, reported Tuesday that its second-quarter revenue fell 63%, putting him in a loss of $1.1 billion from a year ago. The outlook for the next three months isn’t so good, the company said, predicting its user numbers — It’s down from 9.2 million and will continue to decline in the third quarter. Coinbase blamed the industry’s “fast and furious” downturn for its grim report. The company’s success relies heavily on the broader cryptocurrency market, which has plunged in recent months. Coinbase outperformed competitors in the early days of cryptocurrency, but is losing its lead as well as the industry downturn. , and did mass hiring that led to mass layoffs.

Walmart and Target will release second-quarter earnings reports this week, and both could take a hit. Last month, Walmart cut its profit outlook, citing inflation as a reason customers are buying less general merchandise. It wasn’t from more expensive electronics or clothing inventories, but from the grocery business, he said. The month before, Target said it faced similar challenges, announcing plans to remove excess inventory that had built up as a result of changing consumer habits. Target had already lowered its profit forecast in May when it released a dismal first-quarter report that saw its stock plummet. Taken together, retailers’ performance could help show whether inflation continues to hold back spending or whether the worst is behind us.

Federal Reserve policymakers will release the minutes of their July meeting on Wednesday, providing clues as to how the central bank thinks about the path to containing inflation. After two months of massive rate hikes, some economists expect the Fed to start taking a more moderate approach, opting for a 0.5 percentage point hike over next month’s additional 3/4 percentage point hike. doing. But even if inflation eased in July, the Fed probably thinks the effort isn’t over yet. Wages and rents continue to rise rapidly across the country, and the central bank is still well above its 2% inflation target.

The first six months of the year have been tough — Wall Street’s worst start to the year in half a century — and stocks are poised for their biggest gain of 2022. Recovery may seem counterintuitive given the talk about the possibility of a recession. However, investors have been buoyed by signs of moderating inflation, a booming job market and, in some cases, better-than-expected corporate earnings. They are also less and less shaken by the Fed’s policy moves, which is why they now believe the central bank will begin to ease its campaign to cool the economy, alleviating fears of a deep recession. There are many experts saying the stock is likely to rise further. Others are more cautious, warning that it’s not uncommon for markets to see short-term gains and long-term losses.

Chipotle has agreed to pay $20 million to settle a lawsuit with New York City over violations of the Labor Protection Act. His digital media company Axios has agreed to be sold to Cox Enterprises for $525 million. Johnson & Johnson said it will stop selling talc-based baby powders globally by 2023 and use cornstarch in its products instead.