Due to the Holiday Season, the weekly newsletter will resume on December 29th with its "Year in Review" edition
The Federal Reserve Hikes Rates Again, Experts Predict a Crude Oil Rebound and Indian Tech VC Slows in this week's edition...
Take a Lap Around the Industry
United Airlines Ranked the Second Best Airline in the World (Insider)
Sam Bankman-Fried Faces Eight Criminal Charges, Engaged in Fraud for Years (NYT)
SEC Prepares to Vote on Stock Market Rule Changes (Reuters)
U.S. Companies Cut Back on Stock Buy Backs (Bloomberg)
Federal Reserve Eases Off the Brakes, Provides Clarity on Rate Peak
Yesterday the Federal Reserve continued to hike the FED Funds Rate, raising it an additional 50 basis points and establishing a benchmark target range of 4.25% to 4.5%. Economists estimate that the upper end of the range will top out at 4.9%, according to a recent survey conducted by Bloomberg. The results eluding to a belief that the FED will continue to pull back rate hikes with two 25-point raises in February and March before pausing. The rate hike comes on the heels of a better than expected inflation report that led many to believe that the worst inflation is behind us. However, a pull back in rising prices may take longer than expected, forcing the FED's hand into adding more rate hikes. Many officials believe there is an ever-decreasing chance of a "soft landing", a scenario where inflation retreats to the target rate and causes minimal economic pain for people.
"I think there will be that idea coming out of the new projections that the Fed is ready to tolerate some more economic pain in order to restore price stability..."
Lydia Boussour, EY
Private Funding Pulse Check
Thornton Capital has participated in a $13M Series B funding round for BehaVR, a digital therapeutics company tackling anxiety-related challenges and disorders
Bondaval, a "smart credit" tool that provides credit teams frictionless access to more capital efficient solutions, has finalized on a $15M Series A round led in part by Talis Capital
The Büll Family Office, Abacon Capital, engaged in a $63M Series A funding round in Customcells, one of the leading companies in the development and series production of special lithium-ion battery cells
First Fellow Partners took part in a $5.3M Seed deal with The Upright Project, a platform enabling investors and customers to quantify the net impact of companies
The IEA Foresees a Bright Beginning to 2023 for Crude Oil
According to a recent report from the International Energy Agency (IEA), Russian oil production throughout 2022 has exceeded previous estimates. In November, oil exports from Moscow rose to a seven-month daily high of 8.1 million barrels. The strong output increased pressures on OPEC+, a group made up of 23 nations including Saudi Arabia, prompting the group to go back on its original promise of a two million barrel cut daily. The IEA predicts that Russian production will eventually decline due to increased European sanctions, expecting output to fall from 11.2 to 9.6 million barrels per day. For this reason, economists forecast that crude oil prices may be poised for a rebound beginning in the new year.
"While lower oil prices come as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remains to be seen...restriction levels in the country remain high, the stage is now set for a progressive reopening in 2023..."
International Energy Agency (IEA)
India Tech Startups Face Prolonged Funding Downtrend
While the Indian stock market continues to exceed previous highs, the country's private market cannot say the same, especially throughout the technology sector. As shown in the graph below, many "loss-making startups" raised capital in 2021 at inflated valuations. Their recently raised cash, along with cutting staff and abandoning projects has allowed these companies to remain operational. These companies now find themselves in a more difficult situation, handcuffed by a bleak capital funding environment. According to Tracxn Technologies, Indian startups raised $25.5B in 2022 compared to $41.3B last year. The longer term outlook remains strong for India venture capital, however remains heavily reliant on a U.S. technology rebound.
"[Pankaj Makkar] remains relatively sanguine on the long run: He notes that a couple of profitable tech firms successfully going public—or listed loss-making firms turning profitable—can go a long way to turning sentiment around."
Pankaj Makkar, Bertelsmann India Investments
Deloitte Survey Finds CFO Confidence Declines for a Third Quarter
According to a newly completed Deloitte survey titled "CFO Signals", net CFO optimism has fallen to -21, the lowest level since Q2 2020. The survey included 126 CFOs from the U.S., Canada and Mexico, who revealed that 41% were "more pessimistic" compared to 20% who were "more optimistic". Additionally, the survey concluded that geopolitical stability was the highest reported external risk at 54%, followed by inflation (41%) and regulation (29%). When asked about what factors CFOs expect to be the largest hurdles for companies, the economy, rising costs and purchasing power came in at 37%, 18% and 13% respectively.
"The share of CFOs who indicated they thought it was a good time for risk-taking also came in at a low, similar to but slightly higher than in the second quarter of 2020. In this year’s fourth quarter, 29% said they favored taking more risks, just 2% higher than the 27% in 2020’s Q2, according to the survey. Last quarter, the proportion who favored risk-taking saw an increase."
Hightower Bellevue has finalized an agreement to merge with Sovereign Wealth Advisors, adding $350M and bringing Hightower's total to nearly $1B (FAIQ)
$285M Private Wealth Group, Harbor Lighthouse, converts from LaSalle St. Securities to LPL Financial (FP)
Edelman Financial Engines has announced the acquisition of Erman Retirement Advisory, an RIA with $210M in assets and more than 200 clients (Yahoo)
Written by:
Andrew Popp | Data Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
