What Happened Last Week:
The Federal Open Market Committee kept interest rates unchanged at 4.25% to 4.50%, as expected. It marks back-to-back meetings of unchanged rates after the committee previously had three straight meetings of reductions. In its statement, the committee said, “Uncertainty around the economic outlook has increased.” Fed officials still forecast a reduction of 50 basis points through 2025. The committee also announced it will slow the pace of monthly runoff for Treasury securities from $25 billion to $5 billion and keep its monthly redemption cap on mortgage-backed securities at $35 billion.
The Fed also updated its economic projections. For 2025, change in real GDP is expected to be 1.7% (down from 2.1% in December), the unemployment rate is expected to be 4.4% (up from 4.3%), PCE inflation is expected to be 2.7% (up from 2.5%), and core PCE inflation is expected to be 2.8% (up from 2.5%). For 2026, projections foresee change in real GDP of 1.8%, an unemployment rate of 4.3%, PCE inflation of 2.2%, and core PCE inflation of 2.2%.
Alphabet (GOOG) signed a definitive agreement to acquire cloud security firm Wiz for $32 billion in an all-cash deal. In its statement, Alphabet said, “This acquisition represents an investment by Google Cloud to accelerate two large and growing trends in the AI era: improved cloud security and the ability to use multiple clouds (multicloud).” Last year, Alphabet tried to buy Wiz for $23 billion but was turned down in part over fears of antitrust scrutiny. Instead, Wiz said it would pursue an IPO. If approved, the deal would be the largest ever for Alphabet and could be completed in 2026 where Wiz would join Google Cloud.
PepsiCo (PEP) will purchase prebiotic soda brand Poppi for approximately $1.95 billion. Additional payments could be made if certain performance milestones are met within a specific timeframe after the deal finalizes. It was not announced when the deal will close.
Existing home sales for February beat expectations (3.95 million) as it increased to 4.26 million from the upwardly revised 4.09 million (from 4.08 million). It is the second-highest reading since March 2024.
Happening this week…
On Tuesday, new home sales for February are expected to increase to 680,000 from 657,000, which was the lowest reading since October 2024.
On Thursday, the GDP growth rate (final estimate) for Q4 2024 is expected to remain at 2.3%, compared to the second estimate. The reading was a decrease from the Q3 2024 rate of 3.1%. The Q2 2024 rate was 3.0% and the Q1 2024 rate was 1.6%, which was the lowest growth since the Covid pandemic.
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- The Rockline Team
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