Between a softening labor market and recent better-than-expected inflation data, economists considered yesterday’s interest rate cut to be as sure a bet as Giannis Antetokounmpo putting up 20+ points per game. They were right: The Federal Reserve slashed rates by a quarter point to a range of 3.75% to 4.00%—their lowest level in three years.

The real gamble is whatever the rate-setters do next. When the Fed issued this year’s first cut in September, two more seemed likely. But analysts are less confident in lucky No. 3 after Fed Chair Jerome Powell said yesterday that a December rate cut is “not a foregone conclusion, far from it.”

“If there is a high level of uncertainty, then that could be an argument in favor of caution about moving,” Powell said, referencing the lack of economic data due to the government shutdown:

• With employees at the Bureau of Labor Statistics furloughed, monthly job reports are delayed indefinitely, depriving the Fed of one of its key barometers.
• Yesterday’s decision relied on last week’s promising inflation data and some state-level metrics like unemployment claims, marking the first time a government shutdown forced the rate-setting committee to amend monetary policy without complete employment numbers.
• Come December, the Fed might be working with even less information if the shutdown persists—consumer price data isn’t being collected right now, so the next inflation report might not get published, the White House recently warned.

Another complication is that the girls are fighting. For the first time since 2019, yesterday’s decision faced dissent on both sides: One Fed official wanted to hold rates steady, and another—recent appointee Stephen Miran—wanted a bigger cut. Committee members have “strongly differing views about how to proceed in December,” Powell said, as the Fed looks to strengthen the job market without spiking inflation from its current 3% rate.

Separately…the Fed also said it would stop shrinking its $6.6 trillion balance sheet, which it started trimming three years ago to prevent the economy from overheating.—ML

Trump lowers tariffs on China, which agreed to pull back some rare earth restrictions. The developments came as the president concluded his trip to Asia with a meeting with Chinese President Xi Jinping at a military base in Busan, South Korea. President Trump told reporters on board Air Force One that he halved the 20% tariffs levied on China due to its role in fentanyl production, bringing the overall tariff rate on Chinese goods to 47% from 57%. Following the meeting, China’s commerce ministry said it would enact a one-year suspension of some rare earth export controls, but did not mention dropping its requirement for export licenses for seven kinds of rare earth minerals and the magnets made from them, which have been snarling manufacturing in the US and Europe. A comprehensive trade deal between the US and China was not announced. Earlier in the day, Trump said a trade deal between the US and South Korea was “pretty much finalized.”—HVL

Big Tech had a big earnings day. Meta, Microsoft, and Google’s parent company Alphabet all reported earnings yesterday, with investors watching to see whether their massive AI expenditures are paying off. Meta’s stock slumped in after-hours trading, despite it reporting record revenue for Q3, as it revealed expectations that AI infrastructure spending would grow significantly next year, plus a significant one-time tax hit. Microsoft unveiled plans to spend big to double its data center capacity, and it also fell in extended trading. But Alphabet’s stock rose, even though it too upped its anticipated capital expenditures. The company raked in more than $100 billion in quarterly revenue for the first time, and its cloud unit’s revenue grew 34% year over year. Amazon and Apple will announce their earnings today.—AR

Microsoft suffered a cloud outage. As if reporting earnings didn’t make for a stressful enough day at Microsoft HQ yesterday, starting at about noon ET, Microsoft’s Azure cloud computing service experienced an hourslong outage that impacted workplace productivity software Microsoft 365 and workplace distractions Xbox and Minecraft. The company said the outage—which caused disruptions to businesses globally, including Alaska Airlines and Vodafone—was likely triggered by an “inadvertent configuration change.” Azure is the second-place player with about 23% of the cloud infrastructure market. It trails Amazon Web Services (32%), which had its own major outage last week.—AR

Nvidia—the MVP of the AI frenzy—became the first company in history to reach a $5 trillion valuation yesterday.

Shares of the AI chip purveyor surged by 9% this week amid an AI conference it’s hosting in DC. While its execs rubbed elbows with Beltway bigwigs, Nvidia said it has $500 billion in chip orders and announced new collabs:

• The company inked a $1 billion deal with Nokia to supply the maker of your third-grade flip phone with chips to develop 5G and 6G capabilities.
• Nvidia said it’ll help the US Energy Department build seven new supercomputers.

It all hinges on AI not being a bubble

Nvidia’s fortunes are tied to those of the AI industry, which has been bingeing on the company’s semiconductors. If AI startups like OpenAI don’t live up to their valuations, analysts worry Nvidia could face the double whammy of fewer chip orders and the value of its stakes in these companies collapsing.

There’s risk with all that growth: Investors are profiting from Nvidia’s soaring stocks, but if Nvidia tanks, it could take the market with it. Its soaring valuation contributed to nearly a fifth of the S&P 500’s returns this year.—SK

For the price of a pretty solid used Chevy Malibu, you could soon get a very new 5-foot-6-inch humanoid robot to fold your laundry. Robotics company 1X announced preorders for Neo, which it claims is the “world’s first consumer-ready humanoid robot.”

For $20,000—or a $499 per month rental fee and a six-month commitment—the lanky robot can do simple tasks around the house, such as unloading the dishwasher and watering plants, and can answer your questions through its built-in large language model.

Unlike those sharp, metal military dogs that are always doing flips, Neo has a soft body and moves slowly. The bot can carry about 55 pounds and lasts for four hours on a single charge.

Is Neo ready to become the Rosie of your family? Well, sometimes it falls over, and it still needs a lot of human help. In fact, all of the tasks Neo performed in a test run with a reporter from the Wall Street Journal weren’t done autonomously. If you want Neo to do something complicated like clean the bathroom or vacuum, you’ll have to let a 1X employee wearing a VR headset remotely access the body (and cameras) to assist with training.

Neo is watching. 1X claims safety guardrails are in place to protect your privacy, but there’s still a camera-equipped walking, talking robot in your house.—MM

There are plenty of places people choose to sit and linger—romantic wine bars, mountain tops with killer views, the brunch table you’re waiting for—but at the moment, Starbucks isn’t one of them. Despite the chain prioritizing a cozier coffeehouse vibe to lure in customers, the share of visits to its cafes lasting more than 10 minutes has gotten more tall, not more grande, since CEO Brian Niccol took over last September. Bloomberg reports:

• More than 40% of Starbucks visits were longer than 10 minutes in 2023, per Placer.ai’s data.
• But now it’s more like 33% of visits, partially because fewer people are choosing to spend more than 30 minutes at Starbucks.

But it’s not all bad news for Niccol’s turnaround plan: Though the overall numbers haven’t shown increased staying times, the company has said stores updated to be cozier had begun to see longer stays. And other things are looking up—Starbucks reported its first global same-store sales growth in nearly two years yesterday.—AR