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Yesterday, stocks bounced back after a challenging week, with investors reacting positively to economic data, including Thursday’s robust GDP report and the Fed’s preferred inflation measure, which came in lower than expected. Big Tech stocks returned to positive territory, and 3M, known for supplying office essentials, achieved its largest single-day gain on record after posting better-than-expected quarterly results and resolving legal issues.

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Economy

A Fed Rate is Finally on the View

While Federal Reserve officials are unlikely to change interest rates in the coming week, their meeting is expected to be one of the most significant in a while.

At each of their four meetings this year, interest-rate cuts have been a topic for future consideration. However, this time, inflation and labor-market developments may allow officials to signal that a cut is very possible at their next meeting in September.

Consequently, this week’s meeting, concluding on Wednesday, could resolve the trade-off that Chair Jerome Powell has been considering between the risks of cutting rates too soon and waiting too long, potentially favoring earlier action.

One reason officials are not expected to deliver a cut this time, despite the growing case for one, is that it would likely mark the first reduction in a sequence to recalibrate rates lower. Officials, who have previously been caught off guard by inflation, want more evidence that it is genuinely cooling before crossing the rate-cut threshold.

Sports

Paris Olympics Open

The Olympics officially began yesterday with a grand and elegant ceremony centered around the majestic River Seine, marking the first time in history that the Games' opening ceremony took place outside a stadium.

A flotilla of 85 boats transported 6,800 athletes to the finale site at the Trocadéro. There, the Olympic flag was accidentally raised upside down, and French President Emmanuel Macron declared the Games open, followed by the Olympic cauldron being lifted in a hot-air balloon. The 3.7-mile route along the Seine showcased the city's architecture while thousands of Parisians and tourists enjoyed the spectacle from the embankments.

On land, the ceremony featured meticulously choreographed tributes to French culture and history:

A Lady Gaga impersonator performed a cabaret act, and French-Malian pop star Aya Nakamura performed with the orchestra of the French Republican Guard. Céline Dion concluded the event by singing from the Eiffel Tower in her first performance since 2020. Appearances included a beheaded Marie Antoinette and Joan of Arc on a silver horse, while the Minions humorously dropped the "Mona Lisa" into the Seine, which was purportedly cleaned up. The event continued under pouring rain, drenching many participants and spectators.

In addition to the river waves, transportation chaos added to the day's turbulence. France awoke to major disruptions after an arson attack on high-speed rail service affected 800,000 passengers, including athletes traveling to Paris. Unknown perpetrators set signaling cables ablaze at various stations, suspending or delaying train service on three long-distance lines, though rail employees thwarted a fourth attack.

Additionally, a regional airport on the border with Switzerland was evacuated due to a bomb threat.

International

2 Drug Cartels arrested after airplane Ruse

According to the Washington Post, the US arrested two leaders of one of Mexico’s most powerful drug cartels after one allegedly tricked the other into boarding a private plane bound for the States.

Authorities reported the capture of Ismael “El Mayo” Zambada, believed to be a co-founder of the Sinaloa cartel alongside the notorious kingpin Joaquín “El Chapo” Guzmán Loera, who is already in US custody. They also arrested El Chapo’s son, Joaquín Guzmán López.

The Sinaloa cartel is considered the top supplier of fentanyl to the US and is credited with establishing the fentanyl trade.

Here’s what we know about the arrests:

• Both men boarded a private plane in Mexico. Guzmán López convinced Zambada to board under the guise of inspecting investment properties. However, the plane's actual destination was the US. Guzmán had been cooperating with US authorities to surrender both himself and Zambada.

• Mexican officials were unaware of the covert operation until the two were already in custody.

Zooming out, the arrests are part of a US crackdown on fentanyl amid a widespread addiction epidemic. However, experts suggest that these arrests are unlikely to significantly impact the flow of the drug into the country, as many other unknown players are poised to continue the booming drug trade.