Federal Reserve officials appeared divided at their meeting earlier this month over how much farther they may need to cut interest rates, but as a group agreed this was a moment to avoid giving much concrete guidance about how US monetary policy is likely to evolve in the weeks ahead.
“Participants noted that monetary policy decisions were not on a pre-set course and were conditional on the evolution of the economy and the implications for the economic outlook … They stressed that it would be important for the (Federal Open Market) Committee to make this clear as it adjusted its policy stance,” said minutes of the Nov. 6-7 meeting, which were released on Tuesday.
TheFedcut itsbenchmark policy rateby a quarter of a percentage point to the 4.50%-4.75% range at the meeting three weeks ago, a session that followed Republican candidateDonald Trump’svictory in the Nov. 5presidential election.
Participants noted the complications of making policy right now, with “many” saying that the volatility of recent economic data made it important to try to discern underlying trends, and many also observing that the uncertainty about the neutral rate of interest made it hard to determine how much current interest rates were actually suppressing economic activity.
That left some participants noting “that the Committee could pause its easing of the policy rate and hold it at a restrictive level” if inflation remained too high, and some saying that cuts could be accelerated “if the labor market turned down or economic activity faltered.”
“Many” officials argued that doubts about the true stance of monetary policy “made it appropriate to reduce policy restraint gradually.”
After the release of the minutes, financial markets added slightly to bets on a rate cut in December, and kept intact prior bets on a slower pace of reductions next year, with just one cut priced in by the middle of the year.
Fedofficials at the meeting appeared to steer clear at this session of any discussion about the economic implications of Trump’s coming return to office, according to the minutes.
The session also followed stronger-than-expected economic data – “remarkable” is howFedChair Jerome Powell referred to it – that stoked concern monetary policy may not be restricting the economy as much as thought.
Officials since the meeting have said ongoing economic strength meant the Fed’s benchmark policy rate might already be close to the “neutral” level, where it neither stimulates nor restrains activity, an argument for fewer rate cuts approved at a slower pace in order to avoid easing policy too much and possibly rekindling inflation.
Others argue the economy was likely to slow and the job market continue to weaken, which would be a reason to continue easing financial conditions to encourage spending and investment.
While investors still expect theFedto deliver another quarter-percentage-point cut at its Dec. 17-18 meeting, the odds have slipped from greater than 80% in mid-October to about 60% currently.
A recent study, published in Proceedings of the National Academy of Sciences, has identified regions globally experiencing extreme heatwaves surpassing climate model predictions. These anomalies, spanning every continent except Antarctica, have been linked to thousands of deaths, agricultural failures, and severe wildfires in recent years, according to several reports. The research highlights the challenges in understanding and projecting the physical dynamics driving these unexpected temperature extremes, raising concerns about the adequacy of current climate models in estimating regional risks.
Heatwave Intensification and Global Hotspots
The study, led by Dr Kai Kornhuber, an adjunct scientist at Columbia Climate School and senior research scholar at the International Institute for Applied Systems Analysis, analysed data from the past 65 years. It identified areas where extreme heat is intensifying more rapidly than moderate temperatures, resulting in record-breaking maximum temperatures.
Examples include the June 2021 Pacific Northwest heatwave, where temperatures in Lytton, British Columbia, soared to 121.3 degrees Fahrenheit, causing a wildfire that decimated the town.
Regions most affected include northwestern Europe, parts of Asia such as central China, and regions in Australia, Africa, and South America, accoridng to sources. Northwestern Europe has seen the most consistent signals, with heatwaves contributing to 60,000 deaths in 2022 and 47,000 in 2023.
According to the study, summer peak temperatures in this region are increasing at twice the rate of average summer temperatures, exacerbated by the lack of widespread air conditioning.
Understanding the Underlying Mechanisms
Scientists attribute some of these extremes to disruptions in the northern hemisphere’s jet stream, which is influenced by Arctic warming. This destabilisation has created Rossby waves, trapping hot air over temperate regions.
Dr Samuel Bartusek, a co-author of the study, highlighted the interplay of factors behind the Pacific Northwest heatwave, including vegetation drying and atmospheric heat transport. However, the study acknowledges gaps in understanding, with some events described as “grey swans,” lying between predictability and randomness.
Early last month, Tesla unveiled the Cybercab, a 2 door vehicle with no steering wheel and pedals, fully reliant on the future of autonomy. Since then, they’ve put the vehicle on display at a couple Tesla showrooms, most recently at the Meatpacking District location in New York City. I went to go take a look, and I have a few thoughts.
Showroom restrictions
First things first, there’s a couple unfortunate limitations at the showroom. You can’t touch the vehicle, sit inside it, nor take a look at the trunk.
The first two are sort of understandable since they’re early vehicles, though even then it’s a little weird since these are the same vehicles they gave test drives in on unveil night. I don’t exactly understand why they won’t open the trunk, as it would’ve been nice to get a look at how much room it offered.
Cybercab impressions
Limitations aside, it was still really nice to get to take a look at the Cybercab. Despite sharing the same “cyber” branding as the Cybertruck, this is still a very sleek looking vehicle, and honestly one of my favorite designs from Tesla.
It’s definitely a smaller vehicle in person than you’d expect – you really need to see it in person to comprehend its size. A couple things stood out to me: legroom, display, and the color.
Though I wasn’t allowed to sit inside, the cabin seemed fairly spacious, despite the vehicles smaller size. Obviously, with it being a two seater without being a compact car, there’s a fair bit of space for additional legroom.
The display is also quite large, taking up a great portion of the dashboard. It’s not necessarily surprising, since in a theoretical world with autonomous driving, there’d be more of an opportunity to watch shows and movies while being driven to your destination.
The color is also gorgeous. It honestly suits this vehicle perfectly, and I’m not sure if it’d work as well on something like the Cybertruck or even the Model 3. It works perfectly here though, and it’s cool to see a unique color that most vehicles don’t offer.
Cool prototype, uncertain future
While it’s really cool to take a look at the Cybercab prototype, it’s still just that – a prototype. As it stands today, the Cybercab has no steering wheel or pedals, and Tesla seemingly has no plans of selling a version of the Cybercab that you can actually drive yourself.
Tesla does plan on selling this vehicle to consumers for potentially $30,000 – as soon as 2026, or rather, “before 2027.” That whole concept hinges on Full Self-Driving getting to a safe enough point where cars could be deployed en mass, without any easy way for riders to take over. Regulators would also have to be on board with it.
I do believe in Tesla’s ability to develop Full Self-Driving, but there’s also the simple fact that interventions would need to be near zero for a no-steering wheel vehicle to be safe. I just don’t think we’ll get there so soon. Even if we do, regulation is a big hurdle for Tesla to jump over – so I just can’t see Cybercab in its current form being on our streets before 2027.
On the optimistic side, Trump’s transition team has stated that they plan to make a framework for autonomous vehicles a priority in the upcoming administration. Maybe that’ll speed things up a little bit, if it comes to fruition. While on the same subject, the aforementioned $30,000 price tag for Cybercab might actually be after incentives, something that the Trump administration plans to swiftly kill off.
Gallery
With all that being said, here are the photos I took at Tesla Meatpacking District. I’d highly recommend going to see it yourself if you’re in the New York City area. We don’t know how long the Cybercab will be on display, so I’d go sooner rather than later if you can.
According to a leaked letter circulating on social media yesterday, BYD has asked its suppliers to accept price cuts in the coming year – a major signal that the Chinese EV maker is gearing up to intensify the price war in China even further, all while pushing harder into Europe and other markets.
A screenshot of an email from BYD circulated on Weibo yesterday, according to Reuters, demanding “10% price cuts from an unnamed supplier from January.”
BYD’s PR and branding director Li Yunfei responded to the leak in a Weibo post: “Annual bargaining with suppliers is a common practice in the automotive industry,” according to Bloomberg. “We put forward price reduction targets to suppliers. They’re not mandatory requirements. We can negotiate.”
In response, Volkswagen and Stellantis have teamed up with Chinese brands Xpeng and Zhejiang Leapmotor to build EVs, while EV maker HiPhi and Shanghai-based WM Motor have filed for bankruptcy, Bloomberg reports.
Leaked email from BYD signals its plan to intensify price war
Meanwhile, BYD is looking large and in charge. It’s currently ramping up production by close to 200,000 units to meet demand, and the company has hired nearly 200,000 new employees over the past three months. Earlier this year, the company led a fresh round of industry-wide price cuts, aggressively slashing prices on its best-selling models, and in turn, gained market share and pushed weaker rivals even further to the brink.
BYD is China’s best-selling car brand, having sold some 3.2 million plug-in hybrids and BEVs this year, including a record-breaking 500K million vehicles in October. Its cars account for more than one-third of the total sales of EVs and plug-in hybrids in China this year.
By the end of this year, it looks to be on track to selling an incredible 4 million units.
In the July-September quarter, BYD’s net profit rose to 11.6 billion yuan ($1.63 billion). Also, third-quarter revenue was up 24% on year $28.24 billion, which outpaced major rival Tesla’s for the first time. Tesla’s revenue for the July-September quarter reached $25.2 billion.
BYD still sells more than 90% of its vehicles in China, but it is pushing hard into Europe and other markets, despite higher tariffs. The automaker is looking to double exports to 450,000 vehicles this year.
Photo credit: BYD
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