Africa's Energy and Mineral Riches Underutilized, Says IEA (WSJ)
Futures Market Bets on Fed Rate Cuts in 2024-2025
The Federal Reserve is approaching a pivotal moment in its fight against inflation. Having sharply increased interest rates over the course of 2022, speculation is mounting that the central bank could soon take a break from further rate hikes. However, futures markets show that benchmark rates are still expected to remain above 4% into 2025. The Fed embarked on a historic tightening campaign as the economy stayed strong, repeatedly pushing back hopes for a "pivot" to cutting rates. But with inflation showing early signs of easing, economists now see high odds of a pause at the September Fed meeting. Still, most don't forecast actual rate cuts until at least spring 2024. The Fed seems intent on keeping rates restrictive for longer to ensure inflation is on a sustainable downward path. While the economy has so far defied recession predictions, risks remain until price stability returns. Overall, the Fed appears to be entering a data-dependent holding pattern, balancing high inflation against recession fears.
"Still, a move to lower the current target range of 5.25%-5.50% is unlikely to begin until about June 2024 given the expected sluggish path of inflation back to the target."
Sal Guatieri, BMO Capital Markets
Private Funding Pulse Check
D-Matrix, an artificial intelligence company using in-memory computing techniques (IMC), has secured $110M in a Series B funding round led by Boston, MA-based Archerman Capital
In a recent Seed round, Thiel Capital participated in a $3M investment in Alias Technologies, a company aiming to accelerate innovation by maximizing the value of their client's technology footprint
Thirty Five Ventures has participated in a $12M Series A funding round for SkinnyDipped, a low-sugar sweet snack producer
Bruno Rousset's family office, EVOLEM, has engaged in a $10.8M Series A investment in Teale, a Paris, France-based healthcare company leveraging technology to allow people to take care of mental health on a daily basis
Emerging Leaders Usher in Era of Ambitious Gulf Investments
The oil-rich Gulf monarchies are increasingly utilizing state-backed companies rather than sovereign wealth funds to channel international deals, reflecting a strategic shift towards economic diversification and global influence. Major corporates like the UAE's Masdar and Saudi Arabia's Maaden are being empowered by their government backers to pursue overseas acquisitions across sectors from telecom to mining. These state-run firms allow for controlling stakes and direct operational influence, unlike minority sovereign fund investments. Already this year, Gulf state-backed companies have been involved in over $50B worth of deals. The rise of these ambitious corporates aiming to become global leaders in their industries dovetails with the Gulf's focus on attracting foreign investment and technology while building new manufacturing capabilities. With strong government support, these companies are likely to play an even bigger role in global M&A activity going forward. Their overseas expansion aims to fulfill the Gulf's desire for greater international standing.
"Corporates in the Middle East, especially in Saudi Arabia and the UAE, are being empowered by their sovereign backers to go out and seek transformative transactions...This is the biggest shift that we are seeing when it comes to dealmaking in the Middle East, which is the emergence of these companies who are seeking overseas growth and keen to expand via acquisitions."
Hamza Girach, Citigroup
Student Borrowers Rush to Pay Off Loans Ahead of Interest Restart
Student loan borrowers raced to pay down their balances last month as the federal moratorium on payments and interest came to an end. The US Department of Education received $6.4B in loan repayments in August, the highest monthly amount since February 2020, according to a Goldman Sachs report. After a three-year pause, interest began accruing again on federal loans on September 1st, with payments scheduled to resume in October. The surge in repayments suggests that many borrowers with the means to do so opted to reduce their debt burden rather than waiting and allowing interest to build. With the average monthly payment around $400, the resumption of billing is expected to curb consumer spending in Q4. While some borrowers likely won't immediately resume repaying, the impending end of the moratorium spurred action among those hoping to wipe out balances. This comes after the Supreme Court invalidated President Biden's plan to forgive up to $20,000 per borrower, dashing hopes that the debt burden would be broadly alleviated.
"Over the past few weeks, payments were creeping up...People thought maybe it was a more positive sign for borrowers and consumers, maybe it meant some people were paying earlier than necessary, a good thing because that means they’re not having a hard time making payments."
Alec Phillips, Goldman Sachs
Messi Signing Drives Surge in Apple's MLS Viewership
Lionel Messi's debut with Inter Miami CF has led to a record number of sign-ups for Apple TV's MLS streaming service. The debut marked Messi's first match in Major League Soccer after his storied career in Europe. According to data from measurement firm Antenna, Apple saw 110,075 new subscriptions for its MLS Season Pass service on the day of Messi's first match. This smashes the previous daily record for the streaming package by over 100,000 subscriptions. The surge highlights the power of star athletes to drive interest and attract new viewers. Live sports rights have become increasingly valuable as more consumers cut cable and opt for streaming platforms. Tech giants like Apple are investing billions to offer exclusive streaming access to leagues like MLS, eager to use premium sports content to propel new subscriber growth. While live rights come at a steep price, the ability to leverage stars like Messi allows streamers to market their services in new ways. For Apple, its landmark MLS deal immediately got a massive boost from Messi's move stateside.
"There is only one Lionel Messi, so this was a very big moment for the sport in this country...Sports are definitely star-driven but that has never before translated into an enormous subscriber bump."
Brent McDonald, an experienced financial advisor managing over $154M in assets, has joined Cetera Advisor Networks via Convergent Financial Partners
McDonald was previously affiliated with Securities America, chosing to move to Cetera for the boutique, local feel of Convergent Financial Partners with the backing of the Cetera national network
McDonald specializes in services like small business planning, retirement planning, and estate planning, boasting more than 18 years of experience in the industry
McDonald brought his Tar Heel Wealth Management team, including partners Julie Carroll and Ken Kleva, with him to Cetera Advisor Networks (Cision)
Written by:
Andrew Popp | Sr. Research Associate
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