Adidas Warns of First Annual Loss, Cuts Dividend (CNBC)
U.S. Trade Deficit Grows to Widest in Three Months (Bloomberg)
Harvard Economist Searches for the "Missing" 2.6M U.S. Workers
According to research from Harvard University’s Opportunity Insights Lab, around 2.6 million more Americans have pulled out of the labor force entirely than otherwise would have had labor force participation rates remained constant throughout the pandemic years. The data reveals the pandemic has affected low-paid workers more than high-paid ones, with employment for the poorest 25% of workers 13.5% lower than pre-pandemic levels at the end of 2021. Many of those who did lose work found higher-paying employment, while others have retired or quit due to Covid-related anxieties. However, in high-rent areas, where much of the workforce depends on spending by wealthy residents, businesses in the area such as bars, restaurants and gyms are still struggling to recover, preventing employment opportunity for low-wage workers. Policy makers are being urged to take action on labor force participation by reducing the barriers to work for caregivers, older employees and those with disabilities through measures such as childcare subsidies, paid sick and family leave and the right to work part-time.
"It is clear there are large swaths of the population who are still not employed, and these are low-wage workers who lost their jobs in precisely the places where high-income people cut back on spending so sharply a couple years ago."
Raj Chetty, Harvard University
Private Funding Pulse Check
Ocean Road Advisors has recently participated in a Series A funding round worth $60M for Volastra Therapeutics, a New York-based drug discovery and therapeutics company
SESAMm, a platform delivering artificial insights on ESG, sentiment and thematic analytics, has received a $37M Series B funding round investment in part from the Unigestion Family Investment Office
Pritzker Group has announced its $50M Series C investment in Plus One Robotics , a parcel handling platform that mitigates the persistent shortage of manual labor
Winklevoss Capital Management took part in a $25M Series A deal with Kresus, a Web3 app that offers financial services and a mobile wallet application
PE Investing Report Reveals the Asset Class Remains a Favorite
A total of 84% of ultra-high net worth investors hold private equity investments, according to a report by Campden Wealth and Titanbay. The Ultra-High Net Worth Private Equity Investing Report 2023, which was based on responses from 120 family offices and private individuals, found the main motivation for investing in private equity was enhanced long-term portfolio returns, cited by 67%. Investors are also using private equity to diversify portfolios and reduce exposure to market volatility. Healthcare and information technology were popular sectors for investment, with 70% and 67% of respondents, respectively, holding investments in those areas. Private equity portfolios generated an average net internal rate of return (IRR) of 24% in 2021, with buyouts performing particularly strongly, with an IRR of 31%. The average ultra-high net worth investor allocates 20% of their overall portfolio to private equity, but plans to increase their allocation to 23%.
"A key finding from the research was the remarkable growth in private equity investing...For many, allocations had doubled over the past two years and investors were looking to continue increasing their private markets exposure as a key driver of long-term performance. It is clear that appetite for the asset class, along with investor sophistication, is increasing at a rapid pace."
Adam Harrison, Titanbay
Inverting Treasury Yields Signal Recession Fears
Investors are reassessing their strategies after speculation that U.S. interest rates could rise up to 6%. Despite bets for a broad rally in the second half of this year, Federal Reserve Chair Jerome Powell's latest testimony has fueled expectations of a bigger hike in March, with traders pricing in peak rates of 5.6%, compared with less than 5% at the end of last year. The bond market is anticipating the growing likelihood of a recession, resulting in the largest yield inversion since the 1980s. Analysts predict a 6% target Federal Funds rate is not out of the question, an uptick from just a few weeks prior. Commodity currencies are retreating as the prospects of a U.S. recession grow, while credit markets are bracing for the fallout from the repricing of U.S. rates.
"[Given the robust job market and sticky inflation], we think there’s a reasonable chance that the Fed will have to bring the Fed Funds rate to 6%, and then keep it there for an extended period to slow the economy and get inflation down to near 2%."
Rick Rieder, BlackRock
VC Firm Raises $100M for Two New Blockchain Funds
Alpha Sigma Capital and Transform Ventures are set to raise $100M for two new funds focused on blockchain and decentralized Web 3.0 ventures. The new funds come as the cryptocurrency industry faces heightened scrutiny in the wake of the bankruptcy of crypto exchange FTX in November and the collapse of several other market players such as lender Celsius Network. The first fund, Alpha Liquid Digital Assets, was launched earlier this month and received an initial investment from Transform Ventures founder Michael Terpin of $2.65M. The second fund, called the Aegean Fund, is a closed-end fund that is still in the process of being established. The funds will be overseen by a new holding company called Alpha Transform Holdings, formed from a merger of a portion of Transform Venture's assets with Alpha Sigma's parent company. The third iteration of the internet, dubbed Web 3.0, is poised to be a focus for the new funds, tapping into a space that allows users to interact with data through artificial intelligence and machine learning.
"The real growth of blockchains and the real growth of Web 3 are starting to happen..."
Allworth Financial acquires a three-person advisory team from Indianapolis-based One To One Financial Advisors, adding $417M in AUM (Yahoo)
Apella Wealth has added Clarity Wealth Management, establishing a presence in Irvine, CA and bolstering its financial planning and asset management capabilities in the region (BW)
Clearstead Advisors, a Cleveland, OH-based RIA has purchased Avalon Trust, its second trust business added in the last few years (WM)
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.
