🔥Inflation is red-hot, just like a fire

Good afternoon! Today we will be covering a $95 billion aid package that passed the senate, the red-hot inflation and a $26 billion acquisition in shale oil.

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GOVERNMENT
🏛️U.S. Senate Passes $95 billion Aid Package for Ukraine, Israel and Taiwan

The Democratic-led U.S. Senate has passed a $95.34 billion military aid package for Ukraine, Israel, and Taiwan, marking a significant move for national security. The bill faces uncertainty in the Republican-controlled House of Representatives, with Speaker Mike Johnson raising concerns about border security provisions.

The Senate's 70-29 vote surpassed the 60-vote threshold, emphasizing bipartisan support. Senate Majority Leader Chuck Schumer urged the House to act swiftly, emphasizing the bill's impact on national security and Western democracy. The aid package includes $60 billion for Ukraine, $14 billion for Israel, and $4.83 billion for partners in the Indo-Pacific, including Taiwan, to counter Chinese aggression.

The legislation also allocates $9.15 billion for humanitarian assistance in conflict zones, including Gaza, the West Bank, and Ukraine. The House's response is uncertain, with potential challenges in navigating border security provisions.

Ukrainian President Volodymyr Zelensky welcomed the bill, emphasizing its role in bringing peace and global stability. The legislation's rocky path reflects broader challenges in navigating bipartisan support for key security measures.

ECONOMY
🔥Inflation is red hot

U.S. consumer prices saw a higher-than-expected increase in January, primarily fueled by a surge in rental housing costs, leading to a 0.3% rise in the CPI. Notably, shelter, encompassing rents, contributed to over two-thirds of the CPI increase.

The annual CPI growth stood at 3.1%, moderating from the peak of 9.1% in June 2022. The Federal Reserve, however, maintains its stance on initiating interest rate cuts in the first half of 2024. While the overall inflation trend is slowing, the January spike doesn't alter expectations for the Federal Reserve's rate-cutting strategy.

Analysts emphasize that the rise was partly driven by segments less relevant to the Fed's preferred core Personal Consumption Expenditures (PCE) measure. Critics argue that January often witnesses seasonal inflation spikes, and forward indicators suggest a potential easing in the coming months.

The core CPI, excluding volatile food and energy components, increased by 0.4%, the most significant advance since May. The Federal Reserve awaits concrete evidence of sustained inflation moderation before considering rate adjustments. The CPI data led financial markets to shift interest rate-cut expectations from May to June.

M&A
🛢Diamondback Energy acquires Endeavor for $26 Billion

U.S. oil producer Diamondback Energy has unveiled a $26 billion cash-and-stock deal to acquire privately held rival Endeavor Energy Partners, marking another significant consolidation in the top U.S. shale oilfield, the Permian Basin.

The merged entity, set to be the third-largest oil and gas producer in the Permian, aims to pump 816,000 barrels of oil and gas per day, competing with industry giants Exxon Mobil and Chevron. Diamondback's shares surged nearly 10%, reaching $166.93 in morning trading.

The deal, structured with $8 billion in cash and approximately 117.3 million shares of Diamondback common stock, positions the company as the only pure-play Permian oil producer outside of Pioneer. The transaction is expected to close in Q4, with Diamondback shareholders holding a 60.5% stake in the combined entity.

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