Oil Prices Forecasted to Rise, U.S. Consumer Travel Ticks Up and Hot Inflation Data Keeps Rate Hike Chances Open in this Week's Edition...
Take a Lap Around the Industry
Banks Stuck With $1.35B in Viasat Debt, Offer Bonds at 14% (Bloomberg)
Citi Announces Sweeping Layoffs, Operational Changes to Catch Up to Rivals (NYT)
MGM Resorts Reveals Massive Data Breach, Warns of Major Business Impacts (CNBC)
Apple Avoids Raising iPhone Prices, Risking Revenue Growth (WSJ)
Saudi-Russian Output Cuts to Keep Oil Prices Elevated Throughout 2023
Saudi Arabia and Russia announced this week they will continue coordinated cuts to oil production through the end of 2023, a decision likely to keep prices elevated despite concerns over inflation. The Saudis will extend output cuts of 1M barrels per day, while Russia will persist with 300,000 barrels per day of export reductions. Together, the move takes over 1% of global supplies off the market. Crude prices have already jumped on the news, with Brent Oil topping $90 a barrel for the first time this year. The production cuts reflect the two countries' determination to keep the oil market tight to support prices, even at the risk of alienating customers and allies. For Saudi Arabia, robust oil revenue remains paramount despite potential fallout. Meanwhile, higher prices aid Russia and U.S. shale oil producers but could further complicate the central bank's inflation fight. Though the Saudis hinted cuts could end after monthly reviews, their willingness to leave substantial production capacity untapped suggests they will maintain an aggressive stance on output restraint for now.
"[The Saudis] see it as their job to keep the market tight."
Richard Bronze, Energy Aspects
Private Funding Pulse Check
Common Trust, a financing platform that assists business owners in exiting their company, has secured $2.6M in a Seed funding round led by Menlo Park, CA-based Hillspire
In a recent Series B round, Aglaé Ventures participated in a $32M investment in Certa, a no-code platform that makes it easy to manage the lifecycles of suppliers, partners and customers
Cowles Company has participated in a $20M Series A funding round for Treasury4, a platform enabling companies to unlock the power of their treasury data
James Simons' family office, Euclidean Capital, has engaged in a $55M Series A investment in Actio Biosciences, a San Diego, CA-based biotechnology company leveraging advances in genetics
American Households' Demand for Services Stymies Fed's Inflation Fight
A new consumer confidence survey from The Conference Board shows that a record number of U.S. consumers are planning foreign vacations in the next six months. This continued demand for consumer services helps explain the Federal Reserve's ongoing struggle to rein in core inflation, particularly in the non-housing service sector. Though the Fed has raised interest rates aggressively, inflation in areas like air travel, hotels, restaurants, entertainment and recreation remains stubbornly high. Households are still eager to resume pre-pandemic spending levels on experiences and services after two years of restrictions. Their persistent demand continues driving up prices in these sectors, as evidenced by the latest inflation data. With consumers showing no signs of tightening their belts, the Fed faces an uphill battle in moderating inflation through interest rate hikes alone. Rates are likely to remain elevated for some time as the Fed attempts to dampen demand across consumer services.
"The bottom line is that rates will stay higher for longer because the Fed is not succeeding with getting non-housing service sector inflation under control."
Torsten Sløk, Apollo
Hot Inflation Data Keeps Door Open for More Fed Rate Hikes
New inflation data shows prices rose more than expected in August, likely ensuring the Federal Reserve keeps rate hikes on the table for later this year despite an expected pause this month. The core consumer price index, excluding food and energy, accelerated 0.3% from July - the first increase in six months. On an annual basis, core inflation rose 4.3%, still well above the Fed's 2% target. Though Fed Chair Jerome Powell indicated in August the central bank was prepared to tighten policy further if needed, investors have been uncertain about another hike this year. The latest inflation uptick, however, makes an additional rate increase more likely before year-end as the Fed remains laser-focused on curbing stubbornly persistent core price pressures. Officials want to see compelling evidence of slowing inflation before declaring victory.
"The core CPI is a bit disappointing...This will keep the Fed on a hawkish alert and suggests a rate hike is possible in November and December."
Kathy Bostjancic, Nationwide Life Insurance Co.
Recruitment of Data Experts Ramps Up as Firms Embrace Advanced Analytics
Private equity firms are increasingly recruiting data science experts to incorporate advanced analytics and artificial intelligence into their investment processes. Both large and small firms are adding data professionals to help source deals, conduct due diligence and support portfolio companies. The variety of work and potential of profit-sharing attracts talent from consulting, tech and academia. Firms such as EQT and Two Sigma have built sizable teams, while smaller peers like Access Holdings Management and Frazier Healthcare Partners are making outsized investments in expertise relative to assets under management. The demand reflects private equity's growing appetite for machine learning and AI to gain an edge. With top talent scarce, compensation is rising sharply for this labor talent group. While smaller firms struggle to compete for talent, partnerships with universities have become an innovative way to gain support. As data science expands across private markets, analysts say expertise in these areas will soon become essential requirements.
"Over time the supply of people and demand will come into balance, but at the moment there’s still a people deficit in relation to how important this function is to the future of private equity."
Frank Remund, a CFP professional and Enrolled Agent, has joined Savvy Advisors as a principal wealth manager, bringing over 15 years of industry experience
At Savvy, Remund will leverage the firm's digital-first platform to simplify planning and dedicate more time to clients
Remund specializes in tax management, retirement planning, insurance and estate planning for customized financial plans
With the addition of Remund, Savvy Advisors now manages over $100M in assets nationally as it continues recruiting advisors (BusinessWire)
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.
