Category: Events

Post-July 2024 Fed Meeting

FedScope, Vol. 24 No. 8

By: Thomas Rizzo

Fed Meeting Decision

During the July 31st, 2024, Fed meeting, the Federal Open Market Committee (FOMC) kept the target federal funds rate unchanged at 5.25% – 5.50%. Federal Reserve Chair Jerome Powell put the possibility of an initial September rate cut on the table. During the meeting Powell mentioned, “We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate”, after citing that greater progress towards lower inflation as well as a cooler job market no longer threaten to overheat the economy.

Monetary Policy Cycle Timeline

The Fed has kept the federal funds rate at a 23-year high of 5.25% – 5.50% since July 2023, after an aggressive series of hikes that began in March 2022. The potential close of this cycle of contractionary monetary policy comes on the back of promising economic data, providing a level of confidence that the tools that the Fed has implemented to fight inflation have worked. The economy has remained resilient, inflation has cooled, and the labor market has remained strong with subtle signs of cooling prior to the Fed meeting.

Future of Monetary Policy

Following the Fed meeting, on August 2nd, the July Jobs Report was released, indicating a weaker than expected labor market showing signs of slowed hiring with unemployment climbing to a 3 year high of 4.3%. Market participants are pricing in a 100% probability of the first rate cut occurring in September, that after the July Jobs Report is projected to be a 50 basis point cut based on market data.

Given the commentary from the July Fed meeting along with recent economic data, the conversation has changed from trying to determine when we should expect initial rate cuts, to trying to determine how many we should expect by year end. Taking a deeper dive into the probabilities below, you find that the market is fully pricing in consecutive rate cuts for each of the next 3 Fed meetings. These rate cuts may take the form of either 25 or 50 basis point cuts, cutting the federal funds target rate from a 23-year high of 5.25% – 5.50% to 4.00% – 4.25% in December.

Key Takeaways:

  1. After an aggressive series of rate hikes, the economy is showing signs of progress towards the Fed’s policy objectives.
  2. A weak July Jobs Report following the Fed meeting drove the market to price in a 50 basis point cut for the September Fed meeting.
  3. For the remainder of the year, the market has also priced in the possibility of a second 50 basis point cut in November followed by a 25 basis point cut in December.
  4. The target federal funds rate is projected to be cut from 5.25% – 5.50% to 4.00% – 4.25% in December.

Pre-July 2024 Fed Meeting

FedScope, Vol. 24 No. 7

By: Thomas Rizzo

US Economy:

  • Inflation
    • The Consumer Price Index (CPI), a key inflation gauge, rose 3.0% year over year in June, down from 3.3% in May.
  • Economic Growth:
    • Real Gross Domestic Product (GDP), increased at a 2.8% annual rate in the second quarter of 2024, which was greater than the 2.1% expected.
  • Labor Market:

Monthly job growth remains strong, unemployment has increased to 4.1% in June, and job openings have fallen slightly to 8.2 million.

    • Pre-July 2024 Fed Meeting

Looking at market data presented above, as indicated by Fed futures, market participants are pricing in a 100% probability of the first rate cut occurring in September. With rate cuts beginning in September, the door opens for the possibility of 2 rate cuts this year. Overall, in comparison to after the June 2024 Fed Meeting, market participants have been pricing in higher probabilities across the board (with exception to July) for rate cuts this year. Commentary later today for the July 31th Fed Meeting will clarify how many rate cuts we should expect for the rest of the year.

Key Takeaways:

  1. Headline inflation has cooled down to 3.0% after a hot start to the year.
  2. Economic growth has remained strong, exceeding expectations.
  3. The labor market is strong but showing signs of potentially slowing down.
  4. Market participants are pricing in initial rate cuts to begin in September.
  5. Additional Fed commentary will clarify whether we should expect only 1 or 2 rate cuts this year.

Bonjour! 2024 Summer Olympics Begin in Paris, Peacock Looks to Rebound

By: Brent Shockley, Principal


Bonjour! 2024 Summer Olympics Begin In Paris, Peacock Looks To Rebound

The 2024 Summer Olympic games officially begin today and run through Sunday, August 11th.  The opening ceremony will feature over 10,000 athletes aboard over 90 boats floating down the Seine River in Paris at 7:30pm local time and 1:30pm Eastern US time.  A few sports, such as football (soccer in the US), got an early start to their opening rounds on Wednesday, July 24th. 

A study by Oxford University found that nearly every Olympics since 1960 has gone over budget, by an average of 172%. The cost of the 2024 Paris games is expected to be approximately $10 billion, roughly 25% over its original budget.  However, this cost is well below recent Olympics.

Bonjour! 2024 Summer Olympics Begin In Paris, Peacock Looks To Rebound

The difference is largely due to event specific construction.  Unlike many host cities, 90% of the venues in the Paris Olympics are pre-existing.  The major capital expenditures include $1.6 billion for the Olympic Village, $190 million for the aquatics center, and $150 million for gymnastics and badminton. Los Angeles is utilizing a similar strategy to limit spending, along with private funding, to meet its ambitious budget of $6.8 billion for the 2028 Summer Games. 

The 2024 Olympic Games will be broadcast in the U.S. on NBC, its Peacock streaming service, and Telemundo. In 2014, NBC Universal signed an extension with the International Olympic Committee (IOC) to broadcast six Olympic games from 2021 through 2032 for $7.75 billion. NBC executives hope the 2024 Olympic games reverse the decline in Peacock subscriptions, despite recent price increases of $20 for annual plans and $2 for monthly plans. 

Peacock subscribers increased from 4 million in mid-2021 to 33.5 million during the first quarter of 2024.  However, in the second quarter of 2024, Peacock experienced its first quarterly decline losing 500,000 subscribers.  Peacock will stream weekly college football games as part of the Big Ten Conference’s new media package this fall.  In addition to Big Ten games, six Notre Dame football home games will stream on Peacock simultaneously with the linear NBC national broadcast.  Peacock will be the exclusive outlet for Notre Dame’s home game with Louisville on September 28th.  The controversial move by the NFL to grant Peacock exclusivity to a playoff game last January (featuring eventual Super Bowl champion Kansas City Chiefs) angered many football (and Taylor Swift) fans but resulted in an average of 23 million viewers, the largest live streaming event in the U.S. Peacock also has the exclusive rights to Green Bay Packers vs. the Philadelphia Eagles in Brazil on Friday, September 6th.  With these strategic additions to its streaming lineup, Peacock aims to regain momentum and attract a broader audience in the competitive streaming market.

Linkedin