Beyond the Arches #32: The economy and investment world is front and center this week. Finance-focused startups can be smart plays for any economic climate.
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This summer’s “will they or won’t they” suspense hasn’t been in a Netflix series or reality show. Rather, investors and consumers alike have been closely following the Fed and its impending decision to drop interest rates for the first time in two years. The chart-topping rates have been a source of speculation and frustration for analysts navigating the investment market and consumers whose finances rely on rates for big-ticket purchases like homes and vehicles.
This week, investors’ attention turned to Jackson Hole, Wyoming, for the annual meeting of the Federal Reserve. Although we don’t yet have specifics, investors and consumers were pleased to learn that at least one modest interest rate cut would come in September. American consumers and investors have labored under the highest benchmark rates in 23 years, meant to stem rampant inflation that reached 7.1 percent over the last two years.
During his keynote speech, Federal Reserve Chair Jerome Powell provided an optimistic overview of the economy, stating, “The time has come for policy to adjust.” Beyond that information, the details of what some analysts called a declaration of victory over inflation are not yet specific. Powell remarked that “the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Some analysts, including Goldman Sachs, are optimistic about the economy despite the rate uncertainty. The analyst lowered its probability profile for an impending recession to 20 percent from 25 percent, citing recent unemployment claims and retail reports. Earlier concerns about a U.S. recession and its effects on global economies have cooled with the release of more recent data.
The Nasdaq and S&P 500 also struck a hopeful tone, rising after weeks of volatility. The gains were enough to pull the Nasdaq out of correction territory. And although the 11-day dip into correction numbers was brief, it was notable.
How to invest in finance startups
The modern financial markets rely on a complex ecosystem of software and apps to connect consumers and institutions to their financial markets and data. The startup space, recognizing the interconnection of finance and technology, continues to provide better access to wealth-building tools for consumers and data tools for institutional investors. Here are some startups to consider for diversifying into this important sector:
- OVE: Biometrics and finance move closer to a streamlined access and security experience for consumers. OVE brings customers one step closer to the future with the first fingerprint-driven “touch and go” payment service, providing safe and fast cloud-based payments that can integrate with any point of sale. Customers can set up a verified profile through the OVE app and use it to pay at any POS terminal with the Touch & Pay device.
- Sweater: Access to private market investment opportunities has traditionally been restricted to accredited investors. With Sweater, millions of retail investors can access private market funds and high-performing asset classes to build wealth through a safe and seamless fintech platform. Sweater opens up a world of private market funds to non-institutional investors before these investments hit the public markets.
On Our Radar This Week
- The changing climate delivered an unexpected sight for heat-ravaged California, as a rare dusting of late-summer snow blanketed parts of the state. Measurable snow covered parts of Lake Tahoe on Saturday, with accumulations of about 0.15 inches reported in National Weather Service data. Other areas, including Reno, Nevada, experienced an unusual frost advisory in response to the unexpected weather pattern, in stark contrast to other areas of the country still experiencing record-breaking heat.
- There is renewed war activity in the Middle East as Israel and Hezbollah traded fire in a notable escalation of tensions within the region. Despite the brief intensification of attacks, both sides are withholding further action as both sides evaluate potential responses. On the other regional front, Israel is continuing negotiations with Hamas to forge a cease-fire in Gaza and secure the release of hostages held since the conflict began in October of 2023.
- With COVID-19 infections surging in 27 states, the FDA approved updated Pfizer and Moderna vaccines this week to combat the KP.2 strain currently circulating. KP.2 is an omicron subvariant related to the highly contagious JN.1 strain that circulated early in 2024. The CDC recommends an updated shot for everyone six months or older. The updated vaccine is available to those six months to eleven years of age under an emergency authorization.
Macro Bites
- Nvidia Q2 earnings report debuted this week. The chipmaker’s success with AI chips makes this the most talked-about report of earnings season.
- Canada ordered an end to the 17-hour rail lockout, ordering binding arbitration for the strike by two of Canada’s largest rail freight carriers.
- Labor board confirms Amazon drivers are employees. The finding is a win for California workers asserting the right to negotiations under union representation.
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Highlights:
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