Breakfast on Wall Street: The Five Rings

The Five Rings

The Paris 2024 Olympics begin today, with a high-security opening ceremony. Tens of thousands of officers and soldiers have been deployed for the river opening along the Seine, with a flotilla of boats set to carry athletes representing 206 countries and territories. There have already been security incidents ahead of the big show, with arson attacks disrupting France’s high-speed rail system and many train lines being cancelled along the network.

Business angle: The Games will present a huge opportunity for U.S. companies associated with the Olympic Partnership Program, such as Airbnb (ABNB), Coca-Cola (KO), Intel (INTC), Procter & Gamble (PG) and Visa (V). Last time around, U.S. sponsors shied away from the spotlight at the 2022 Beijing Winter Olympics, facing pressure over abuses related to China’s Uighur minority, as well as other human rights issues and authoritarian control. The U.S. government even boycotted the event, barring diplomatic personnel, prompting many companies to keep their Olympic-themed advertising low-key.

The audience opportunities are significant, with billions of people globally, which would create a “catalyst for sports and sportswear and greater awareness across a wide range of categories,” according to Bernstein analysts. For the host country, it can also provide greater visibility for tourism and foreign investment, as well as a chance to make major infrastructure projects a reality, even as more and more countries have abstained. In fact, the IOC had only two candidate cities (Paris and Los Angeles) left for the last Olympics and ended up awarding both cities spots in 2024 and 2028.

The economy: The cost of the Games has risen in recent years as new sports have been added, requiring new venues and housing to accommodate the athletes. Dream stadiums have been built in host cities, while many transportation and development upgrades have also been abandoned, despite promises to use existing facilities and avoid exorbitant construction costs. “There has never been an Olympic Games that has been profitable,” noted Robert Barney, director of the International Olympic Studies Centre at the University of Western Ontario. “If you factor in all the costs and revenues, including federal, municipal, provincial or state grants, there has always been a debt to repay somewhere.”

Compatible with cryptocurrencies

Former President Donald Trump, who once called bitcoin (BTC-USD) a scam, is expected to show his support for the cryptocurrency industry this weekend as he headlines the world’s largest bitcoin conference. Trump, along with his running mate JD Vance, have made repeated promises of lighter regulation of cryptocurrencies, in contrast to the Biden administration’s crackdown that has upended the industry. Their campaign has even raised more than $4 million in cryptocurrency donations so far. Crypto sentiment improved in July, partly benefiting from the “Trump Trade,” with bitcoin surging another 5% this morning at $67,200. (9 comments)

Gain speed

US GDP grew at an annualized rate of 2.8% in the second quarter, beating the consensus estimate of +2.0% and accelerating from the 1.4% growth in the first quarter. The new data highlighted resilient consumption and solid economic growth, while reflecting increased business spending in the face of concerns. The initial GDP estimate also suggests that inflation is continuing to decline, albeit slowly. Investors will get confirmation of this today as the Fed’s preferred inflation gauge provides a better picture of underlying price pressures and trends. (107 comments)

AI Analysts

JPMorgan Chase (JPM) has reportedly given its wealth and asset management employees access to an internal generative AI product that can work as one of their own. The large, ChatGPT-like language model, called LLM Suite, can help employees write, generate ideas, and summarize documents. “Think of LLM Suite as a research analyst that can offer insights, solutions, and advice on a topic,” JPMorgan said in an internal memo. CEO Jamie Dimon previously said the bank’s use of AI could “reduce some job categories or roles, but it could also create others.” (6 comments)