Pre-September 2024 Fed Meeting

By: Thomas Rizzo

Vol. 24 No. 9

The Peak of Contractionary Monetary Policy

Today represents a shift in monetary policy as the Fed pivots from contractionary to expansionary monetary policy. In this monetary policy cycle, in an attempt to fight inflation, the Fed has raised the benchmark rate 11 times, leaving it unchanged at 5.25% – 5.50% for over a year. The circumstances that ignited this aggressive rate cycle resulted from post pandemic headline inflation climbing to over 9.1% in June 2022. Through the rate hikes mentioned previously, inflation has cooled down to 2.5% as of August 2024, which is slightly higher than the policy target of 2.0%.

Another policy target of the Fed is to maintain maximum employment. Maximum employment can be looked at as either the highest level of employment or lowest level of unemployment that the economy can sustain while maintaining a stable inflation rate. Some indicators of shifts in the labor market that the Fed closely watches include nonfarm payrolls, which as of recently have rebounded after a slump over the past several months, but that are still significantly lower than a year ago.

With the battle against inflation appearing to be won, the Fed is shifting its focus to maintaining the balance between stable prices and maximum employment as the labor market begins to show signs of weakness.

The Future of Monetary Policy

A new expansionary monetary cycle has begun, and market participants are pricing in what that is going to look like for the remainder of the year. Given some of the latest market data, market participants are pricing in a 50 basis point cut in today’s meeting, then a 25 basis point cut for the November meeting, followed by another 50 basis point cut in the December meeting. This takes the benchmark rate down from the current 5.25% – 5.50% to 4.00% – 4.25% by the end of the year.

Pre-September 2024 Fed Meeting

Key Takeaways:
  1. The Fed’s pivot from contractionary to expansionary monetary policy signals a significant shift as inflation cools down to 2.5%, close to the Fed’s 2.0% target.
  2. Market expectations suggest a 50 basis point cut today, followed by a 25 basis point cut in November and another 50 basis point cut for December.
  3. Market participants are pricing in the benchmark rate to settle at 4.00% – 4.25%, representing a 125 basis point drop from the current 5.25% – 5.50%.
  4. With inflation under control, the Fed’s focus shifts to balancing stable prices and employment as the labor market begins to show signs of weakness.

NFL Opens the 2024 Season and the Door to Private Equity

By: Brent Shockley, CFA

The 2024 NFL season kicked off Thursday night with a late touchdown overturned by replay to preserve a victory by the defending Super Bowl champion, Kansas City Chiefs, over the Baltimore Ravens. The second game of the NFL season will take place this evening in Sao Paulo, Brazil between the Green Bay Packers and the Philadelphia Eagles. The Sports Broadcasting Act of 1961 (“SBA”) was passed to preserve Friday nights for high school football and Saturdays for college football – with a catch. The Act protects high school and college football from the second weekend of September through the second weekend of December. There is a “Black Friday’ game after Thanksgiving for the second consecutive year, but the start time of 3pm eastern / 2pm central is in compliance with the SBA since it will conclude prior to 6pm eastern.

NFL Valuations

The start of the NFL season brings updated franchise valuations. The average NFL franchise value is $5.9 billion per Sportico. The top 10 NFL valuations and details are listed in the table below.

Nfl Opens The 2024 Season And The Door To Private Equity

NFL Votes to Allow Private Equity

Last week, NFL owners voted to allow private equity to acquire up to a 10% passive stake in a given franchise. The NFL is the last major professional sports league to allow private equity. The details of private equity investments in professional sports are presented in the following table.

Nfl Opens The 2024 Season And The Door To Private Equity

Allowing private equity allows more owners to monetize their investments, which has been increasing rapidly in recent years. For example, Jerry Jones purchased the Dallas Cowboys for $140 million in 1989. The total value of the Cowboys today is estimated at $10.3 billion. The Washington Commanders sold for $6 billion last year and the Denver Broncos sold for $4.65 billion in 2022.

Victory Diesel Sale Announcement

ValueScope is Pleased to Announce the Sale of Victory Diesel to Conestoga Energy Holdings


Victory Diesel Sale Announcement

ValueScope acted as the exclusive financial advisor to Victory Diesel, LLC (“Victory”), a Texas based global marketing, distribution, and terminal operating company, in connection with its sale to Conestoga Energy Holdings LLC, a leading producer and marketer of low-carbon renewable fuels with ethanol production facilities located in multiple states.

Victory is aVictory Diesel Sale Announcementn active participant in global markets; their risk management capabilities and strong counterparty relationships efficiently source numerous products. Further, Victory continuously studies market dynamics and product specifications to develop and maintain market expertise. Victory’s products and services include Agricultural Grade Urea, Technical Grade Urea, Oil & Petroleum, Oleochemicals, regulatory credits (RINs, LCFS, CCA), and transload services.

About ValueScope, Inc.

ValueScope, Inc. is a full-service valuation and litigation support firm located in Southlake, Texas. ValueScope’s team includes experienced valuation experts, management consultants, Chartered Financial Analysts, Certified Public Accountants, and PhDs.* Our experts’ have previously served as board members and executives of public and private companies/corporations. We assist clients through a broad range of expert services including business valuations, litigation support, financial reporting, tax reporting, transaction advisory, transfer pricing, and management consulting and analytics.

ValueScope’s Transaction Advisory team helps our clients make fully informed decisions and successfully execute complex transactions. Our professionals make sure that clients are positioned for the greatest possible gains. Our transaction advisory work includes sell side and buy side analysis, buy sell agreements, capital formation, and shareholder matters. We conduct comprehensive data analytics to assess value and synergies.  Our team provides deal flow to corporate clientele and private equity groups seeking middle market acquisition candidates and other recapitalizations.

*ValueScope is not a licensed CPA firm.

 

For more information, contact:

Victory Diesel Sale Announcement

Martin Hanan

PRINCIPAL
mhanan@valuescopeinc.com

 

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