The Week Ahead: Huge Week

1. Hottest News This Week

📣 The Federal Reserve

The Federal Reserve will announce its latest decision on interest rates this Wednesday. Following the announcement, Chair Jerome Powell will provide comments, offering insights into the Fed's future monetary policy and economic outlook. Stay tuned for updates and analysis.

📣 Jobs Report

Federal Reserve officials will closely watch Friday's employment report following last month's rise in unemployment. The report could signal whether economic conditions are favorable for a potential rate cut in September.

📣 Boeing

Boeing will release its quarterly earnings report, the first since pleading guilty to defrauding the government over two 737 Max crashes. Investors are keen to see how the company performs financially amid ongoing challenges.

2. Matt Allen’s Corner

Bowie Bonds

In the late 1990s, the legendary musician David Bowie made a groundbreaking move not in music but in finance. He introduced the world to "Bowie Bonds," a novel financial product that allowed him to turn his future music royalties into an immediate lump sum of cash. This innovative approach helped Bowie secure his financial future and opened new possibilities for other artists and investors.

The Birth of Bowie Bonds

In 1997, David Bowie collaborated with investment banker David Pullman to create Bowie Bonds. These bonds were backed by the future royalties from Bowie's pre-1990 music catalog, which included iconic songs like "Space Oddity," "Heroes," and "Let's Dance." Investors who bought these bonds gave Bowie a lump sum of $55 million upfront. In return, they would receive the future royalties from his music over the next ten years.

The concept was simple: Bowie received immediate cash without having to sell his music catalog outright. On the other hand, investors gained a new type of asset that promised regular income from music royalties. At the time, Moody rated the bonds as investment-grade, reflecting confidence in the steady revenue from Bowie's music.

How Bowie Bonds Worked

Bowie Bonds worked like other asset-backed securities. Future revenue from Bowie's music was bundled and sold as bonds. These bonds had a fixed interest rate, providing investors with a steady income stream. For Bowie, this meant he could use the $55 million to buy back the rights to his earlier music from his former manager, securing control over his work.

The Impact and Legacy

Bowie Bonds were revolutionary. They showed how intellectual property, such as music royalties, could be turned into tradable financial assets. This idea paved the way for other artists to explore similar financial arrangements, using their future earnings to secure immediate funds.

However, the music industry soon faced challenges due to the rise of digital music and piracy. The expected revenue from music royalties fell short, and the value of Bowie Bonds declined. By 2004, Moody's downgraded the bonds to junk status, highlighting the increased risk.

Despite these challenges, Bowie Bonds left a lasting impact. They demonstrated the potential of securitizing non-traditional assets like music royalties and influencing financial innovations in various fields, from film and TV royalties to sports contracts.

Cheers,

Matt Allen

3. Comin’ Up

EARNINGS AND ECONOMIC DATA

💰 Earnings:

Monday: McDonald’s, ON

Tuesday: Microsoft, Proctor & Gamble, Pfizer, BP

Wednesday: Meta, Mastercard, Boeing

Thursday: Apple, Amazon, Shell, Intel

Friday: Exon, Chevron

📈 Major Economic Events:

Monday: N/A

Tuesday: Consumer confidence

Wednesday: FOMC

Thursday: Jobless claims

Friday: Jobs Report

The author of this newsletter owns ETF’s (exchange traded funds) that may hold ownership interests in the companies discussed in this newsletter as of the published date of this newsletter.