Sam Bankman-Fried Pleads Not Guilty to Fraud Charges in New York (CNBC)
Mexico Expects Oil Conglomerate Pemex to Pay Its Debt Bill Without Assistance (Bloomberg)
Wall Street's Wrapped Up Economic Outlook for 2023
With the 2022 calendar year in the books, private investors and wealth managers are turning to Wall Street strategists on what to expect for 2023. In the report, Bloomberg News compiled more than 500 market predictions for the year, building a comprehensive report of what we can expect. The most recurring theme across the board was the looming sign of a global recession and severe economic downturn. Last year was the worst performing year for global markets since 2008, hampered by historically high inflation, Federal Reserve tightening, cryptocurrency collapses and war in Ukraine. Many Wall Street firms see an unavoidable and potentially long-lasting recession, creating an environment that puts more emphasis on accurate and timely macro research efforts. Additional common themes top of mind included unemployment, market volatility, hedging and ESG .
"With Europe and the UK in or approaching recession, China slowing sharply and the US “needing” one to bring inflation back to target, it is our belief that “Global Recession” remains our single most likely scenario – we give it a 60% probability."
BNY Mellon Investment Management
Private Funding Pulse Check
The Tan Family Office, Rumah Group, has participated in a $2.5M Seed funding round for BillionBricks, a climate tech venture that builds net-zero energy homes
Recall.ai, a technology company that provides single API access to real-time meeting data, has finalized on a $2.7M Seed round led in part by Cathexis Holdings LP
The Coller Family Office, CPT Capital, engaged in a $20M Seed funding round in Liberation Labs, a manufacturing company that commercializes novel protein fermentation
Nima Captial took part in a $60M Venture deal with Axelar, a cross-chain communication network that delivers communications for Web3, providing dApp users with increased flexibility
Fossil Fuels Near a Peak, Renewable Energy Output Expands
Coming on the heels of updated Macro Economic outlooks for 2023, the International Energy Agency (IEA) has released its annual projection of global power production. The report leads with an ominous call that the world is entering "the first global energy crisis", an inflection point where energy demand could outpace supply. Experts point to a particular area of the energy market, the power sector, as a clear signal bearer of what to expect. Taking a closer look at increases in power generation by type over the last few decades, coal-fired power output remained sporadic year-over-year, natural gas seems to have passed its peak and wind and solar outputs remain strong. Notably, the IEA predicts fossil fuel output to drop from more than 14 billion tons in 2022 to under 10 billion by 2050.
"The International Energy Agency [predicts] a set of shocks both deep and broad. It comes to a striking conclusion about what this means: Fossil fuel consumption is nearing a definitive peak. That peak is approaching even in the IEA’s conservative scenario, which maintains prevailing policy settings across the global economy and does not factor for any technological breakthroughs."
International Energy Agency (IEA)
Fintech Public Equities Broadly Underperform in 2022
Over recent years, financial-technology companies have long been rewarded and praised for their innovation across the lending, investing and payment markets. However, the past year was especially hard on the industry, with the Global X FinTech ETF falling 52%, ending 12% lower than the broader Financial Select Sector SPDR ETF. These returns come with little surprise, as many fintech companies carry large amounts of debt, meaning that increasing rates put pressure on many business models that rely on banks to back the loans made to borrowers. In addition, fintech darlings like PayPal Holdings and Shopify that largely benefitted from the "cyclical pandemic boost", wrongly doubled down that this trend would continue and ended up having to cut expenses when brick and mortar store sales made a comeback last year.
"Investors are increasingly wary of high-growth but unprofitable business models, and over the last several quarters high-growth firms across our coverage have been increasingly giving priority to profitability improvement in their actions and commentary..."
Eugene Simuni, MoffettNathanson LLC
Vanguard Group and Others Push for Increased Office Attendance
As large amounts of the work force return following the holiday break, many firms are increasing the pressure put on their employees to return to the office on a more regular basis. One company in particular, Vanguard Group, is threatening that those who fail to comply with work schedules "could face termination within weeks". On the contrary, those in favor of continuing to work from home deem "in-office work unproductive and commuting inefficient". With the job market now showing signs of a shift in strength, employees may now be losing leverage they once had during the pandemic. Many companies are now getting ahead of this trend, with new job postings explicitly defining on-site requirements.
"There’s a little bit of a tug of war going on right now...Employers are not having an easy time of it."
Prime Capital Investment Advisors acquires Stonnington Group, a Southern California-based RIA with $575M in AUM (Barron's)
Choreo LLC has completed an agreement to purchase Cherry Bekaert Wealth Management, bringing the firm's total assets to roughly $12.8B (Cision)
Lorne Park Capital Partners has announced the close of an acquisition of 80% of Promus Asset Management, a Texas-based RIA with $430M in assets (Yahoo)
Written by:
Andrew Popp | Sr. 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.
