🐤 From negative to positive

🏦 Markets: Any predictions about falling interest rates are still speculative, but investors are nevertheless reacting positively to the Federal Reserve meeting that began yesterday.

All three major indexes added to Monday’s gains on the hopes that, despite stubbornly high interest rates, the central bank will take action on the interest rate front sooner rather than later.

The Dow Jones registered a 0.83% increase on Tuesday, marking its biggest single-day jump in nearly a month.

🤝 Let’s make a deal: It seems as if D.C. is always on the verge of a government shutdown, but once again this week a deal seemed to materialize just as time was running out. As a looming deadline approached, the White House and Congress reportedly reached an agreement that will provide funding throughout September. A major sticking point regarding Homeland Security funding was ironed out and the full House and Senate will be called on to vote on the budget deal before current funding expires on Saturday.

🤖 Joining the team: Every tech company is rushing to implement the latest and greatest artificial intelligence programs, and that requires attracting the brightest minds available to take on such projects. Microsoft’s latest move involved hiring Mustafa Suleyman to lead a team that oversees the company’s consumer-focused slate of AI products (like Bing, Edge, and Copilot). Suleyman co-founded the DeepMind project in 2010 and Google acquired the brand four years later, giving him a big influence in that company’s AI program.

🏅 Keep your distance: The Summer Olympics are right around the corner, and new rules have recently been announced regarding the July 26 opening ceremony in Paris. According to an update by the International Olympic Committee, athletes from Russia and Belarus, who have been allowed to compete but not under the flags of their respective countries, will not have a place in the ceremony. They will only be able to watch from a spot near the River Seine, where other competitors will be traveling toward the Eiffel Tower by boat.

🥤 Making a splash: While Coca-Cola has a leg up on long-time rival Pepsi on the menus of American restaurants, the underdog just scored a major victory. Subway announced this week that it has inked a 10-year deal with Pepsi to start serving its products — Mountain Dew, Aquafina, and Gatorade, to name a few — in its thousands of locations. Coke was a staple for the chain following a 15-year contract reached in 2003, but executive Doug Fry said the new deal with Pepsi is “a win-win for everyone.”

In the U.S. and across much of the world, interest rates have been soaring in response to rising inflation rates. But while investors and consumers in those countries are anxiously awaiting a return to lower rates, the Japanese economy is dealing with the opposite problem.

A bit of background

Since 2016, Japan has kept its interest rate below zero, which is an unusual strategy that hasn’t come without criticism. But the nation has implemented a number of economic strategies in the past that seemed counterintuitive on the surface only to yield results so positive that other nations adopted similar policies.

The argument for negative interest rates stems from a desire to maintain the highest possible yields on 10-year government bonds. This has allowed Japan’s central bank to intervene directly in the national economy, buying up a huge number of bonds in the process.

While those bond purchases are expected to remain at roughly the current level for the near term, an announcement this week signaled the end of a nearly decade-long experiment with sub-zero percent interest rates.

What happens next

A lot of details remain nebulous at this point, since the Bank of Japan only confirmed on Tuesday that it would be raising rates from -0.1%. But the immediate global response was an uncertain one — the Japanese yen’s exchange rate with the U.S. dollar trended downward in the wake of the announcement.

Raising rates appears to be an acknowledgment that the strategy hasn’t paid off as intended … and it’s not just the Japanese economy that will be impacted by this policy shift. With the cost of borrowing now higher, there could be less of it to go around for international investments including, among other things, buying up some of America’s soaring government debt.

When it comes to defining “the American dream,” most people include the promise of a comfortable retirement. But the ability to secure sufficient income for the golden years isn’t always as easy as it was in previous generations.

And there’s one major reason why: the death of pensions.

Shifting strategies

For decades, many employers provided pensions to workers which would guarantee a certain level of financial security later in life. But that model has increasingly been replaced by retirement accounts including the 401(k) and IRA.

While it is possible to build up these accounts to be robust enough for a healthy retirement, the onus is now on employees and, when times are tough, it can be practically impossible to set aside money for the future.

That’s why there’s a renewed interest among many workers for a return to the days of widely available pensions. But it remains to be seen whether that’s a feasible goal.

Money for nothing?

Studies and surveys show that, despite dwindling availability, American workers remain enamored with the concept of a pension.

• Private-sector pensions fell from 27 million to under 13 million between 1975 and 2019.
• Three in four workers say that trend has made it harder to achieve the American dream.
• About two-thirds believe a pension makes it easier to “achieve a secure retirement” than a 401(k)

Striking auto workers wanted (but didn’t get) a reinstated pension program last year and IBM announced a revision of its retirement program that more closely resembles a pension. But there’s little evidence of an impending comeback.

And it’s important to remember that pensions aren’t the retirement panacea some nostalgic workers think they are. Many require decades of work in order to qualify and the cost to employers often translates to lower wages and benefits for workers.

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We’ve all heard a lot about crime in recent years, whether in viral videos of brazen retail theft or promises from politicians in both parties to bring back tougher penalties for law-breakers.

And the drumbeat of that narrative has prompted a wide-ranging belief among the American people that crime is on the rise nationwide.

According to the FBI, that’s simply not the case.

Reality vs. perception

While it’s true that the pandemic era did usher in a wave of crime, caused in large part by a reduction in enforcement and prosecution due to the unparalleled public safety threat. But as law enforcement standards have slowly returned to normal over the past few years, crime states have started to do the same.

Statistics recently released by the FBI revealed a few interesting facts about the final quarter of 2023 as compared to the same three-month period in the previous year:

• Murders decreased by 13%
• Violent crime was down 6%
• Property crime fell by 4%

Putting a finer point on the results, former CIA analyst Jeff Asher asserted: “It suggests that when we get the final data in October, we will have seen likely the largest one-year decline in murder that has ever been recorded.”

Identifying the disconnect

So if crime is trending downward, why did more than three-fourths of respondents in a recent poll say they thought the rate was increasing?

Criminologist John Roman has a theory, and it involves the way our brains calculate risk. He said that communities nationwide have seen a rise in disorder over the past five years, which has skewed perceptions.

“People confuse disorder and crime, so the presence of a lot of disorder can signal to regular folks that they are in a dangerous place when they aren’t necessarily in a dangerous place,” he said.