Finimize - ✂️ The first (rate) cut is the deepest

The ECB delivered on cutting interest rates | The NBA edged toward a $76 billion TV rights deal |
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Hi Reader, here's what you need to know for June 7th in 3:08 minutes.

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Today's big stories

  1. The European Central Bank cut interest rates for the first time since 2019
  2. What’s ahead for the classic 60/40 portfolio, and what to do about it – Read Now
  3. The sky’s the limit for American sports, with the NBA reportedly getting close to sealing media rights deals worth $76 billion

One Small Step

One Small Step

What’s going on here?

The European Central Bank (ECB) cut its key interest rate for the first time since 2019, by 0.25%.

What does this mean?

The ECB was expected to trim rates from 4% to 3.75%, and it delivered. But investors can’t relax yet: the key for markets is how many cuts there’ll be and when – and that all depends on inflation. Now, energy and food had been driving prices higher, but they’ve been calming down lately. Problem is, wages have picked up recently – and because that means folk have money to spend, those increases are feeding back into inflation. The ECB doesn’t seem overly confident, either, revising its inflation forecasts to land above its 2% target for this year and next. Remember, inflation increasing could lead to rates staying higher for longer. No wonder the central bank wouldn’t commit to any particular path, saying decisions will be made meeting-by-meeting based on the latest data.

Why should I care?

Zooming out: The circle of life.

Interest rate cuts can really bolster an economy: they make borrowing cheaper, encouraging businesses, consumers, and governments to spend more money. It also helps that companies can afford to hire more staff, lining the wallets of workers. All that spending spurs on the economy and companies’ profit – which, in turn, makes stocks more appealing to investors.

The bigger picture: Domino effect.

The lower interest rates are, the less folk earn by sticking cash in a savings account. That pushes them toward riskier assets with the possibility of higher returns, like stocks. And right now, it looks like we’re heading in that direction: Switzerland and Canada have already cut rates, and the UK and US are expected to follow suit later this year. So as central banks keep trimming away, the effect could show up in the stock market.

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Analyst Take

Here’s What To Expect From The 60/40 Portfolio Over The Next Ten Years

Here’s What To Expect From The 60/40 Portfolio Over The Next Ten Years
Photo of Stéphane Renevier, CFA

Stéphane Renevier, CFA, Analyst

For decades, the growth and inflation landscape was pretty perfect for the classic 60/40 portfolio – but since the pandemic, it’s just not been the same.

And with US stock valuations leaving little room for error and the economic picture still a bit of a question mark, you might be wondering what kind of returns you can expect for the strategy over the next ten years.

So I’ve taken a close look at what’s next and the moves you might want to consider now.

That’s today’s Insight: what’s next for the 60/40 and what to do about it.

Read or listen to the Insight here

AI vs. wealth managers

AI is transforming the finance and wealth industries.

Internally, the tech is changing the way companies work, making them more sophisticated and efficient. And yet at the same time, it’s giving them competition.

See, increasingly capable tools are empowering investors to self-manage their money, instead of paying someone else to do it for them.

The options are endless: robo-advisors, quantitative trading models, risk-management systems, and natural language processing (NLP) systems, to name just a few.

Discover how AI could help you invest with our free guide.

Find Out More

Three-Pointer

Three-Pointer

What’s going on here?

The National Basketball Association (NBA) looked set to score three deals with major TV networks, leaving old-time partner Warner Bros. Discovery on the bench.

What does this mean?

The NBA hasn’t had to negotiate TV contracts for over ten years: multi-decade partnerships with Warner and ESPN brought dribbles and hoops into stateside living rooms. But now the league is back in the game, as they say. NBC said it'd shell out an average of $2.5 billion a year for the rights to show around 100 games each season – half of which would be exclusively available on its streaming service Peacock. Amazon’s bid is for a $1.8 billion-a-year deal, while Disney’s ESPN would cough up $2.6 billion each year. That means the NBA would be raking in nearly $7 billion a year from media revenue alone – more than double last year’s number.

Why should I care?

Zooming out: It’s drafting season.

Now, Warner could still match a rival offer if it wants to keep that partnership alive. After all, its “TNT” network has relied on basketball for ratings and revenue since 1988. Problem is, the studio's reportedly $40 billion in debt. So with legacy partnerships turning to dust, new deals like the NBA’s are changing the media industry’s pecking order – and setting the scene for major mergers down the line.

The bigger picture: It’s a high-stakes game.

American sports are big business: the National Football League (NFL) scored the boardroom equivalent of a touchdown last year, doubling its takings in a media rights deal worth about $10 billion annually. Of course, that’s a pricey fee for a network, but sports content is a surefire way to bring in viewers. Plus, at the end of the day, streaming companies know they can jack up subscription fees to cover more costs – so long as they have the right live games to back it up.

You might also like: How to invest in sports.

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💬 Quote of the day

"Science is magic that works."

— Kurt Vonnegut (an American writer and humorist)
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Your cheat sheet for choosing a trading platform

There are nearly as many trading platforms as there are stocks nowadays.

So it’s tough to weed through them all – but if you want to find a platform with the sharpest tools, the best benefits, and the fewest hidden fees or fine print, you’ll need to plow through one by one.

Or not.

Our guide to finding the right trading platform details the components that you’ll want to look for, the factors that can set you up for an optimum experience, and any red flags to be aware of.

Think of it as your cheat sheet for vetting platforms, so you can streamline your search. Or if you want an even easier route, we included an overview of IG’s platform – you might just find it sticks.

Read The Guide

🎯 On Our Radar

1. A league of her own. The story of Martha Gellhorn, the only woman to report on the D-day landings.

2. Crypto can be the Wild West of the finance world. Here's how to spot the next big (legit) crypto project.*

3. Thirst quenchers. Summer is in full swing, so here are 25 great cocktails to make.

4. AI might be savvy, but it's far from infallible. If you want to invest with the tech, make sure you do it right.**

5. A decade in review. Wild, surprising, scary: pivotal moments from the last ten years.

See Streetbeat's disclosures. **

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