Tech giant Nvidia plans to inject $5 billion into competitor Intel's business.
In a significant development, the Trump administration has provided a crucial lifeline to Intel, as the tech giant prepares to co-develop chips for data centers and personal computers. Nvidia will invest $5 billion in this venture, joining forces with Intel, Microsoft, and Micron, according to Rohan Goswami's recent reports.
Meanwhile, the Federal Reserve has made an anticipated move, cutting interest rates as expected on Wednesday. However, the decision has sparked a debate among Fed officials, with a near-complete breakdown of the consensus on future cuts.
The "dot plot" - a visual representation of Fed officials' rate expectations for the end of the year and beyond - shows a stark contrast in opinions. A third of officials want to hold steady rates, while half favour two cuts of 0.25 percentage points. Two want just one cut, and one wants the equivalent of five cuts, raising concerns about an economic slowdown.
This breakdown is due to competing economic diagnoses that demand competing cures. One Fed official, presumably Trump's newest appointee, Stephen Miran, wants the equivalent of five rate cuts. On the other hand, only one official wants to raise rates, a move that could spook the markets.
Interestingly, Nvidia will not become an Intel Foundry customer as part of this deal (yet). The collaboration between Intel and Nvidia began before Trump attacked CEO Lip-Bu Tan in August, suggesting that the investment is not politically motivated.
In addition to Nvidia and SoftBank, which has invested roughly $16 billion into Intel, it remains to be seen who else will join this ambitious project. As the tech industry evolves, Intel's strategic partnerships are set to shape the future of computing.
Heather Long, a Navy Federal economist, has written extensively about the "dot plot," offering insights into the Fed's rate expectations and the challenges they face in maintaining consensus. As the economic landscape continues to shift, the Fed's decisions will undoubtedly have far-reaching implications.
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