The Federal Reserve’s FOMC Statement may have had the look of a stalemate but the language was crafted such that there are two important implications. The first is both sides of the dual mandate (inflation & unemployment) are in the Fed’s view now at target. The outlook for inflation was changed from “expected” to “will rise to 2 percent.” The Federal Reserve has high conviction inflation will be at target by removing from the Statement “transitory effects of declines in energy and import prices
As Donald Trump was sworn in as the 45th President of the United States, there were two notable points in his inaugural speech. The first point is President Trump took a firm stance against the political establishment. His message was conveyed such there will be a power transfer from government back to the private sector. By ending state control, “carnage” as President Trump described it, would end effectively. That may imply government intervention in private markets is now something of the pa
We expect that 2017 is setting up to be a year of heightened activity in Advanced technology, leading to a robust IPO market in 2017. A decade of repressive regulations, costs and other aftershocks of the dual crises(2000-02 & 08/09) have created a pressure valve set to burst. The mountain of regulations have kept fast growing private companies private longer and the money followed. Venture Capital, and in particular, late stage capital(growth funds) have allowed the companies plentiful access
Credit risk premiums recently narrowed to their tightest levels since late 2007. There are a few risks emerging at the horizon that may alter valuation of corporate bonds. These risks can be put into three categories: 1) macro risks, 2) cross border holdings and 3) non-repatriated earnings and corporate tax reform. In the Minutes of the Federal Reserve released this week, there was a discussion how to respond when the economy with an already tight labor market could face additional fiscal stimu
We are big fans of using all tools available to derive insights for our investment views. In particular, alternative datasets are increasingly valuable, available and differentiated. The advent of Artificial Intelligence on the Investment court has changed how things are done quite a bit. The various A.I. techniques are finding their way into the top trading and research desks of investment managers and advisors. From Natural Language Processing(NLP), to Machine Vision, Deep Learning and others
The Entrepreneurial Lifecycle: As the New Year turns. I wanted to touch base on the lifecycle that we all go through and how to optimize the benefits of working with an Advisory firm like Intellectus Partners. There is a difference between investment management and Wealth Management. There is an even bigger difference in advising Entrepreneurs and execs in high growth companies and non-entrepreneurs regarding their finances. Most often clients come to Intellectus Partners at or near an exit an
The leading behavioral investment mistake By Thomas Oberlechner, Chief Science Officer, TheHintBox!,Inc, a related company Biography: Thomas Oberlechner, Ph.D. Dr. Oberlechner is Chief Scientist at TheHintBox!,Inc, a related company to Intellectus Partners. He is also founder and partner of FinPsy LLC, a San Francisco based behavioral consultancy. He helps decision-makers in finance and investment integrate state-of-the art behavioral expertise into their decisions, products, and organization
The slope of the yield curve informs about the future state of the economy. Post the great recession, the yield curve hasn’t tracked always the “normal” cycle shown in Figure 1. There are two reasons why this is the case and what it means for core fixed income investing. Figure 1: U.S. Treasury and Japanese Yield Curve Compared Source: Bloomberg, monthly data. T-= years before the cycle peak of economic growth, T+ = years post peak and into recession. The first reason is to compare the slop
One possible effect stemming from the Brexit and U.S. elections outcome could have significant consequences: central banks relinquish their independence. There are academic proposals that call for central banks to maintain “operational independence” but give up political independence. There has been rhetoric during and post campaigns that argue for a change of central bank influence, different board and Chairman appointments and even a call to return to the gold standard. Politically motivated c
What are the possible outcomes from the expected and stated tax policies of the new Trump administration? Pragmatism v. Idealogy: What are the likely economic impacts? Two years without gridlock? Given that the deck is now stacked for conservatives in that they control the White House, House of representatives and the Senate ...and likely soon the Supreme Court, expect a whirlwind first two years. Here are some of our thoughts with assists from a few of our sell side coverage friends at some
Since the U.S. elections, the dollar has surged by 5 percent while emerging market currencies fell by double. When the value of the dollar spikes, global GDP on average has contracted by 2 percentage points in the past, and eventually dip into recession territory (see Figure 1). Currently, markets are in the “first inning” of a periods of rising rates, surging dollar and contracting global GDP. This combination could have two profound effects: dollar shortage and Fed balance sheet contraction.
As Q3 Earnings season winds down, we provide a quick update on how the various sectors fared on Sales and EPS results. 91% of S&P 500 companies have already reported, so at this point we have a pretty good indication of how things are going to settle out. Overall, the quarter was pretty impressive with 55% of companies beating Sales estimates and 76% of companies beating Earnings estimates. The standouts on both Sales and Earnings were Technology and Financials, with 91% of Tech companies beati
As has been his unique habit, Warren Buffet's Berkshire Hathaway has taken an aggressive stake in an industry. Berkshire has filed their Q3 2016 13F filing today and among them was a particularly outstanding item. He has acquired large stakes in an airline, no make that "ALL" four major airline companies, or, the entire industry. Warren Buffet has acquired stakes ranging from $300mm to $1bb in value in each of the legacy carriers, American Air, Delta and United Continental. He also took a stake
Youth unemployment, debt burdens, current account imbalances and deflation remain at the heart of a struggling Eurozone economy. These factors may again play a role as Europe enters 2017 with elections in the Netherlands (March), France (April) and Germany (September) stacked up like a domino. The European political system, where decisions are made by unelected officials, may spark confidence votes in national parliaments or referendums in individual countries. The linkage between sovereign risk
The stunning victory by President elect Donald Trump may be out of the playbook of the “democratic domino theory.” Empirical research (Leeson/Dean) found across 130 countries between 1850 and 2000 that “democratic dominoes” catch around 11 percent of their average geographic neighbors’ changes in democracy. In the context of the outcome of Brexit and the Trump win, political movements in rural areas most prone to global trade, emulate each other’s victories by a substantial voter turnout. Curre