Investing and Global Finance News


STS Capital Partners

In 2013, a group of accomplished finance-industry executives joined together to create STS Capital Partners.  An M&A advisor, today the investment banking firm also counsels clients on divestitures and project financing, within a wide range of industries including: construction, manufacturing and distribution, pharmaceuticals, real estate and tourism.

But it’s not just business with the firm.  Founder Rob Follows, makes time for charitable endeavors as well. One example that stands out is his climbing of mount Everest to raise funds for Altruvest Charitable Summits.  In addition, Managing Director at the firm Gayle Pearce established Abundant World Foundation – a charitable entity which “partners with visionaries who transform scarcity into abundance.”  Today, STS also takes a principal role in the support of the work undertaken there.

Recent Company Hires

Financial services firm HSBC and technology payment protocol and exchange network company Ripple Labs Inc. have made some new hires in their offices.

Olivier Herregods is joining HSBC from Credit Suisse in the capacity of European head of rates trading.  In his new position he was be the principal of flow rates for Europe, the Middle East and Africa.  He comes to HSBC with over a decade-and-a-half at the bank as well as having been OTCDerivNet director for five years.

Amir Sarhangi is leaving his position as Vice President of Products at Google to start a new job with Ripple Labs Inc. There, he will lead the company’s endeavor to create RippleNet – an international payments network. His previous executive positions include his own startup Jibe Mobile, which was acquired in 2015 by Google, at which point he joined Google.

The Best Bank?

This year’s number 1 title of World’s Best Banks ranked by Global Finance was DBS Bank.  It was a well deserved recognition given that it is “the first institution from either Singapore or Asia as a whole to receive the top honor,” using technology to make banking much more efficient in the region.

When it comes to employee satisfaction working at the bank, Morgan Stanley is currently taking the lead.  As one staff member said: “This place is good for people with children who want to go home to their wife.”  Goldman Sachs ranked number two in this survey, scoring 3.5 in tech rating and 3.8 overall.

For the average bank customer, digital banks are faring well.  According to data from Bankrate, digital banks Ally and Barclays are offering nearly 2 percent annual return – a stark difference from the “better savings yields” offered by one’s average savings account.

And when it comes to the Top 100 Banks on Twitter Q3 2018, these are the banks to look out for!

US Treasury Bonds

According to a recent article from The Associated Press, the “benchmark for most other investments” are US Treasury bonds.  It is these  which are thus regarded “among the closest approximations to a “safe” investment in the financial system.”

The problem thus is when prices for these start to drop, resulting in a jump in the bonds’ yields.  There was a recent S&P 500 drop by 3.3 percent marking its largest loss since February, hitting technology markets the most.  This, according to the article is “the latest sign that markets may be struggling to adjust to a new era, where returns are no longer juiced by the ultra-low rates that prevailed in the years following the Great Recession.” It is also indicative that the decreasing interest rates which started in the early 1980s is now finished.

What this means is four-fold:

  1. This is bad for stocks as it’s more expensive to borrow and reduce profits for companies
  2. Not good for investors as bonds are meant to be the safe part of what they are investing for their clients
  3. “biggest threat to stocks would be a burst of inflation that causes the Federal Reserve to sharply accelerate” the Fed’s rate increase.

And, according to Martin Baccardax in an article in The Street, “The U.S. Treasury sold benchmark 10-year notes at the highest auction yield since 2011 Wednesday, Treasury data indicated, but demand for the $23 billion auction fell to lowest since February, suggesting the recent rise in global fixed income markets is failing to attract investors.”

Powell on US Economy

If we are to trust Jerome Powell, Chairman of the Federal Reserve, then we will be able to believe there is a “remarkably positive outlook” for the US economy. With  unemployment at 3.9 percent and inflation at 2% which is pretty much the Fed’s goal, Powell explained:

“While these two top-line statistics do not always present an accurate picture of overall economic conditions, a wide range of data on jobs and prices supports a positive view.  In addition, many forecasters are predicting that these favorable conditions are likely to continue.”

Regarding the de-escalation of the 30-stock Dow to 356 points marking its worst decline since August 10th, along with the highest level yield of the Benchmark 10-year Treasury since 2011 to above 3.2 percent, Federated Investors Vice President, Steve Chiavarone said:

“When you move at this pace in a short amount of time, it’s natural for the market to take a breather. The level of the rates does not concern us. That said, moving more than 10 basis points in two days is a different story. Pace matters and it bears watching.”

And Marketfield Asset Management Chairman and CEO Michael Shaoul said::

“The current move higher looks to be an adjustment to several months of data that suggested that the US economy has accelerated over the course of 2018. In particular the labor market looks to have tightened considerably, and recent commentary by the FOMC suggests that this has not gone unnoticed. With nominal growth in the US finally breaking higher and the FOMC conceivably pushing the policy rate up to 3.0% by this time next year a 10 year yield above 3.50% hardly strikes us as outlandish.”

Hedge Funds Around the World: A Glance

Hedge funds and the credibility investors give them have fluctuated a lot historically.  In the last ten years, since the 2008 financial crisis occurred.  But until then it was hedge funds that dominated the fiscal market, featuring top money managers, investment levels and high fees. Such characteristics were what kept the hedge funds elite.

Much changed with what happened in 2008.  According to Value Walk, before the 2008 crisis, approximately 43% of hedge fund assets came from institutional investors.  Six years later almost 2/3 of all hedge fund assets were from international capital. It was 201 that saw the biggest plummet for the hedge fund industry since the crisis began with net outflows of around $95 billion across the quarter.

So then a situation arrived whereby hedge funds started trying to get back investors by lowering fees with a structural change moving away from the two and twenty (2% of total assets and 20% of management gains/operation fees) model.

So things stabilized for a while.  But according to billionaire hedge fund manager Ray Dalio, that might not be the case in the long term.   He said:

“We have to sell a lot of Treasury bonds, and we as Americans will not be able to buy all those treasury bonds. The Federal Reserve will have to print more money to make up for the deficit, will have to monetize more, and that’ll cause a depreciation in the value of the dollar. “Two years out is when I’m worried about. It’ll be more of a dollar crisis than a debt crisis, and I think it’ll be more of a political and social crisis.” How a government responds to a debt crisis is more important than the nature of the crisis itself, Dalio writes.“I think there should be an emergency economic powers act” allowing the President, the Fed chairman, the speaker of the House and the Senate majority leader “to do the things that are necessary,” he concluded: The time to buy is when there’s blood in the street. I think we’re getting there.”

And more caution is needed for deregulation and its consequences which could result in an even deeper recession than 2008.  According to a CNBC report:

“It was precisely the pre-2008 deregulatory agenda, including the elimination of barriers between investment and commercial banking, that led to the development of complex financial instruments, such as credit default swaps and derivative markets. This encouraged excessive risk-taking by banks and mortgage lenders. By rolling back these regulations and dismantling portions of the Dodd-Frank Act, the Trump administration is removing the safety net and creating a perfect storm that could lead to a crisis even worse than 2008.”