- Investrio
- Posts
- Fed Cuts Rates, Olive Garden’s Unlimited Breadsticks, and Bitcoin’s Next Move
Fed Cuts Rates, Olive Garden’s Unlimited Breadsticks, and Bitcoin’s Next Move
TL;DR: Unlimited Breadsticks, Baby Oil and Lower Rates
Laura Texidor
September 21, 2024
Happy Saturday y'all,
What an eventful week! We have several updates and cannot wait to share them with you soon, stay tuned.
Last week we took the stage in Miami, we didn't make it to the finals in the Startup World Cup but we met some amazing founders and got to share our story and mission of financial empowerment. 💜
Market Watch 👀
What an eventful week! The Federal Reserve announced a 50 basis point cut, bringing the target range down to 4.75% to 5% from 5.25% to 5.5%. This is the first rate cut since 2020, and it's significant because it signals the beginning of a gradual decrease in rates. The Fed plans to lower interest rates by another 50 basis points before the year ends. Market projections indicate interest rates will drop below 3% by early 2026.
We've mentioned that lower interest rates typically lead to higher stock prices and real estate values. However, I'd like to point out that these changes don't happen overnight. The Fed's forecast suggests that rates will decrease by approximately 1% per year, leading to a gradual but steady increase in property values. If you're considering purchasing a property, now might be an opportune time. Lower interest rates may signal we are near an excellent time to refinance any outstanding loans, personal credit cards, and more.
Many Americans are struggling to cover basic costs and are living paycheck to paycheck. Unfortunately, most Americans are unaware that the Federal Reserve holds significant power over the economy, even more so than the White House. The recent 'emergency move' by the Fed, typically only used during times of crisis, should be cause for deep concern. Small businesses have been losing employees for several months, and the number of job cuts continues to rise.
With the election less than 50 days away, this was the final opportunity for the Federal Reserve to influence the outcome. A 50 basis point cut is expected to provide a short-term economic boost, and the financial markets reacted positively to the announcement. This week, the S&P 500 is +1.56%, Nasdaq + 2.13%, Dow Jones +1.52%
🚨 On the radar
The Bulls Are Back - Some Wall Street analysts are excited to revise their end-of-year S&P 500 forecast. BMO's Brian Belski raised his S&P 500 price target to 6,100, indicating a 7% upside by year-end. The Fed's rate cut and favorable seasonal data support the bullish stance. Belski cites broadening market gains and a likely soft landing for the US economy as key factors to watch.
Oil Spill - P. Diddy's recent negative publicity has brought a lot of attention to Johnson & Johnson (J&J). However, the real winner in this situation has been J&J's stock, which has shown steady but moderate growth in recent years. This growth has largely been driven by the success of its pharmaceuticals and medical devices businesses. J&J has low financial risk, with significantly less debt compared to its peers. Despite this, the stock is currently trading near its estimated fair value. This makes it a stable, lower-risk investment option, but it may have limited upside potential in the near future.
Unlimited breadsticks - Darden Restaurants, the parent company of Olive Garden, has announced a partnership with Uber Eats to provide home delivery services at certain locations later this year. The company aims to expand this service to all of its U.S. locations by mid-2025. Following the announcement of the partnership with Uber, shares of Darden Restaurants, which owns Olive Garden, went up by 7%.
Summit to Billionaire - Summit Therapeutics has skyrocketed into the spotlight after its experimental lung cancer drug, ivonescimab, outperformed Merck’s Keytruda in clinical trials. The stock nearly doubled, propelling co-CEO Maky Zanganeh into billionaire status. Despite no revenue and no approved drugs, the company’s market cap hit $17 billion. While the hype is real, analysts don’t expect revenue until 2025, and the stock remains volatile as Summit continues its global trials.
💰 Crypto Corner
When Rate Cuts Meet Crypto 🚦
As the Fed cut rates this week, Bitcoin briefly hit $62K before stabilizing around $63K. Historically, rate cuts have been a sweet spot for assets like Bitcoin. Why? Because lower rates weaken the dollar and drive inflation, pushing investors to seek out stores of value like BTC. But this time, there's more to it than just a simple formula.
The Fed’s aggressive cut signals deeper concerns about the U.S. economy, and it’s likely we’ll see more cuts in the coming months. This environment is ripe for Bitcoin. With rates heading lower, cheap money could flood back into riskier assets, and Bitcoin's appeal as a hedge against fiat debasement only strengthens.
What does that mean for Bitcoin and the broader crypto market? More inflows into ETFs, rising interest in yield-generating DeFi assets, and potentially a sustained upward trend for both BTC and ETH as traditional markets look for alternatives in a low rate world.
Did you enjoy today's newsletter?
Share it with your friends!
In Abundance,
Joyce and Laura
Reply