Let's dive straight into the top stories from this past week...
The Euro Trades in Parity with the Dollar, Signaling Global Slowdown
For the first time in nearly 20 years, the euro and the dollar traded in parity with one another, meaning the two currencies have the same worth. The euro's sharp decline comes as a result of continuous headwinds from the Ukraine War, energy disruptions and an overall slowing of Europe's major economies. The decline in the currency's value has put the European Central Bank (ECB) in a rather difficult position, needing to carefully navigate the end of their bond purchases and begin monetary tightening. However not all is bad as the majority of Europe's largest companies are expected to beat initial earnings estimates, signaling a potential recovery.
“The ECB is in a very, very difficult position. You could argue that the ECB has been rather late to the party both in terms of ending their bond purchases but also considering monetary policy tightening"
According to multiple sources, Elon Musk has withdrawn his offer to purchase social media company, Twitter. Twitter has taken action against Musk in an effort to finalize the completion of the nearly $44B takeover by filing a lawsuit earlier this week. As part of the original arrangement, the two sides agreed to pay each other a $1B breakup fee if either party was responsible for ending the deal. In the filing, Twitter cites that Musk "operated in bad faith", accusing him of attempting to misrepresent the company's actions. With both $TWTR and $TSLA stock prices dropping significantly over the past few months, this could not have come at a worse time.
Inflation Continues to Scorch, Recording Largest Gain Since 1981
This past Wednesday, the U.S. Bureau of Labor Statistics released its monthly CPI report, with the index rising 9.1% year-over-year and 1.3% from a month earlier. This month's reading comes as a bit of a surprise with economists originally expecting an 8.8% year-over-year increase. Many professionals expect the rise in food and energy costs to soon slow, pointing to an easing in raw material, wage, and transportation costs. In addition, home sales have slowed to due rising mortgage rates, however rental inflation typically lags traditional CPI inputs, leaving many to expect that rent levels will remain high.
“Rather than cooling down, inflation is heating up...While a pullback in gasoline costs in July and reported retail discounting will help tamp down the flames, the broad pressure in the core rate, led by plenty of inertia in rents, suggests inflation may not peak for a while, and might remain stubbornly high for longer than anticipated"
Deci, a deep learning development platform, has raised $25M in its Series B Round that included single-family office Square Peg Capital
Hong Kong-based Horizons Ventures has taken part in a $13.2M Series A deal with Spiderwort, a biotechnology company developing cellulose-based biomaterials
Invus Group Family Office engaged in a Venture investment with Vascular Dynamics, a platform developing new treatment options for patients underserved by conventional treatments, totaling $20M
Louis Bacon's single-family office, Moore Ventures, finalizes on a $63M Series C deal with Aurora Labs, a software quality management company
Arkin Holdings closes on a $14.5M Series A deal with Israel-based food coloring technology company, Phytolon
Former Tech Execs Launch Gen Z Targeted "Digital Family Office"
As part of a group initiative, former executives from Robinhood, Cash App and Stripe have founded Uprise, a new fintech app that aims to target the Gen Z population. Founded following a $1.4M seed round, the firm is led by Jessica Chen Riolfi, who was previously the Chief of Staff to Head of Product at Robinhood and Head of Asia for Wise. The mission is to "democratize access to private family offices [services]", delivering a personalized service offering that is reported to be 90% automated. Chen explains that in addition to expanding the platform's user base, she seeks to work with regulatory authorities to allow the offering of financial advice. In addition, Chen explains that initial financial plans will be free with the option to subscribe to more complex and personalized support.
Survey Finds 91% of Financial Advisors are Down on their Portfolios
InspereX, a fixed income product distribution and trading company, has released the results of their market expectations survey. The study covered a range of topics including client portfolio performance, market expectations, asset class positioning and more. The survey received responses from nearly 800 financial advisors, with 21% of respondents saying their portfolios were down between 15% to 24%. On a positive note, 85% of respondents said they were only down on gains in their portfolios and 69% of advisors said they are now more comfortable with volatility as a result of the recent declines. Here is what Managing Director and Head of Market-linked products at InspereX had to say about the results:
“The overwhelming majority of financial advisors we surveyed last year expected to see heightened volatility in 2022, which has seemingly helped them prepare portfolios and clients for the turbulent environment we’re experiencing today"
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