💰 5 Fact Friday: The Fed’s Flying Blind

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ECONOMY
1. A Cut, A Caveat, And A Cloud Of Uncertainty ✂️

The Fed delivered a widely expected quarter-point rate cut this week, bringing the federal funds rate down to 3.75%-4.00%.

That’s the lowest level since 2022 and marks the second cut this year. But if you were hoping for a holiday encore? Don’t get too cozy.

Here’s how the decision went down:

🙅‍♂️ Not everyone agreed. The vote wasn’t unanimous.

• One official pushed for a half-point cut

• Another said no cut at all

• That kind of split doesn’t scream “clear path ahead.”

📉 Inflation is moderating, but not great.

Headline CPI is hovering near 3.0%, which is still well above the Fed’s 2% inflation target. But Powell says once you strip out the one-time effects of tariffs, it’s more like 2.3% to 2.4%. Still, not a slam dunk.

🧑‍🏭 Labor market: low hiring, low firing.

Powell flagged a softening job market as a growing concern. In his words, the “downside risks to employment have risen.”

👓 Flying blind = cautious Fed.

With the government shutdown freezing some key economic data, Powell warned that the Fed is “driving in a fog.” The takeaway? Slower, more cautious decision-making.

📉 Markets didn’t love the ambiguity.

• Odds of a December cut fell from 90% to ~70%

• Stocks dipped, yields jumped, and the dollar got a bump

💼 Meanwhile, the Fed’s balance sheet runoff ends Dec. 1.

Since 2022, the Fed has been quietly shrinking its holdings. Down $2 trillion from peak, it’s been a slow-motion unwind known as “quantitative tightening.”

That changes next month:

• They’ll stop letting bonds roll off and

• Start reinvesting proceeds into Treasuries instead

The goal? Add a little support to markets and cool off short-term funding pressures. Some call it a smart pivot to avoid recession… others think it’s a risky move with markets near all-time highs.

Bottom line: The Fed delivered the cut everyone expected, and the uncertainty nobody wanted. A December move isn’t ruled out, but with fog on the windshield and split opinions inside the car, Powell’s message was clear: slow down, buckle up, and don’t count your rate cuts before they hatch.

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FAST FACTS
2. Qualcomm Crashes The AI Party 🧠

🤖 OpenAI inks its biggest deal yet: Microsoft now owns 27% of OpenAI’s new for‑profit arm, valued near $130B, securing access to its models through 2032. A $1T IPO may be next. [Read]

🇨🇳 Trade thaw with China: The U.S. cut fentanyl‑related tariffs in half while Beijing lifted rare‑earth export bans. Both sides called it a constructive step toward a broader deal. [Read]

💣 Debt clock spins faster: U.S. national debt just hit $38 trillion after adding $1T in only two months, the fastest pace outside the pandemic era. [Read]

💰 Social Security boost incoming: Recipients will get a 2.8% cost‑of‑living adjustment in 2026, following this year’s cooler inflation. [Read]

💾 Qualcomm enters the AI cage match: Shares jumped 13% after the chipmaker announced plans to challenge Nvidia and AMD in the data‑center market. [Read]

🥇 Gold loses its shine: The metal slid ~10% toward $4,000/oz as easing trade tensions spurred a rotation out of safe havens and into risk assets. [Read]

💳 PayPal joins ChatGPT: OpenAI will embed PayPal’s payment tech directly into chats next year, letting users shop while they prompt. PYPL stock popped 4%. [Read]

🇦🇷 Argentina’s Milei scores another win: The libertarian president’s surprise midterm victory sent the peso up 8% and bonds rallying, netting America a nearly $2B win. [Read]

PERSONAL FINANCE
3. Using Wall Street Math To Buy A House 🏠

Ever wish you could borrow like a hedge fund? There’s a strategy for that.

It’s called a box spread, and it lets you raise cash without selling your stocks. Think of it like a ‘build-your-own loan’ using options.

It’s complex. It’s powerful. And if you do it right, it can help fund a down payment for 2–3 years at a time, often cheaper than a mortgage.

💡 The Big Idea: Borrowing Through Options

A box spread uses four options contracts to give you a lump sum of cash today, and lock in a fixed amount you’ll repay at a future date. Here’s how:

1. Pick your playground: Use SPX index options (they’re European-style, cash-settled, and super liquid).

2. Choose your expiration: Pick a date 1-3 years out. Usually, the longer the term, the higher the interest.

3. Create the 4-leg box spread: You’ll place four trades using two different strike prices (say, 4,000 and 4,500):

   1. Sell 1 call at the higher strike (4,500)

   2. Buy 1 call at the lower strike (4,000)

   3. Sell 1 put at the lower strike (4,000)

   4. Buy 1 put at the higher strike (4,500)

   5. All four contracts must have the same expiration. This combo creates a structure where no matter what the market does, your total payout is locked in — like a bond.

4. Get paid upfront: When you sell the box, your broker pays you cash immediately. That’s your “loan.”

5. Repay at expiration: When the contracts expire, you owe the difference between the two strike prices. In this case, $500 per contract times the number of contracts you sold.

It’s essentially a zero-coupon bond you create yourself. No banks. No underwriters. Just math and margin.

The interest is even baked into the spread itself. So if you received $475 per contract today and owe $500 in the future, that $25 difference is your “interest”.

⚠️ The Catch: Margin Calls

This strategy requires serious collateral, typically 2-3x the amount you plan to borrow, held in a stock or ETF portfolio.

If the market drops hard, your broker may issue a margin call. That means you’ll need to deposit more cash or assets to prove you can still repay what you owe.

Can’t cover it? Your broker will liquidate your portfolio, often at the worst possible time, right in the middle of a correction.

🎯 Pro tip: Only use a portion of your portfolio, and leave plenty of margin buffer to survive a downturn.

Bottom line: A box spread is a clever way to unlock cash from your brokerage account without selling your positions. But it’s not beginner-friendly.

It’s best for disciplined investors who understand margin, risk, and options. If that’s you, you just might have found the cheapest “mortgage” on the market.

STOCKS
4. Big Tech Takes The Earnings Stage 🎤

It was Big Tech’s turn under the earnings spotlight this week. While AI continues to be the golden ticket, not every company walked away with applause.

Here’s how five of the Magnificent Seven fared:

Meta ($META)

Revenue jumped 26% to $51B, fueled by strong ad demand and surging engagement across Instagram and Facebook. But profits nosedived thanks to a $16B one-time tax hit, sending shares down 8% after hours. Still, underlying earnings per share would’ve been $7.25, a healthy beat — if not for the accounting gut punch. Zuckerberg’s message? He is increasing AI spend because he believes the ROI is there.

Alphabet ($GOOG)

A clear winner of the week. Alphabet delivered its first-ever $100B quarter, up 16% year over year, with net income up 33%. Google Cloud revenue surged 34%, Search grew 15%, and YouTube ads climbed 15%. Management also lifted AI-related CapEx to as high as $93B, signaling that Google’s spending spree on data centers is far from over.

Microsoft ($MSFT)

A beat on paper, a shrug in the market. Revenue rose 18% to $78B, powered by a 40% jump in Azure cloud sales, but shares slipped anyway. Demand for Azure continues to exceed capacity, so Microsoft is spending like a company that knows where the puck’s going. The tech giant dropped $35B in capex last quarter (half on chips) and expects to spend even more next quarter.

Amazon ($AMZN)

Amazon delivered a stunning beat, with revenue hitting $180B and EPS coming in at $1.95. AWS revenue surged past expectations to $33B, helped by booming AI demand from customers like Anthropic and a 150% quarter-over-quarter jump in its Trainium2 chip business. Shares popped 13% on the news.

Apple ($AAPL)

Apple posted a clean beat on revenue and earnings, pulling in $102B and $1.85 per share. Despite initial reports, iPhone revenue missed the mark, due in part to supply constraints. Still, Apple’s upbeat guidance was the real star. Cook expects 10-12% revenue growth this quarter, setting Q4 up to be the largest in company history.

TRIVIA
5. Whose Wealth Has Grown The Fastest? 💸

Over the past decade, which group saw the largest percentage gain in net worth?

Pick one:

• 🟢 Bottom 50%

• 🔵 Next 40% (50% to 10%)

• 🟡 Next 9% (10% to 1%)

• 🔴 Top 1%

Think you’ve got it? Click to see the chart and check your answer.

👉 Tap to Reveal the Answer → 

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