The Employment Data Provides Certainty of a Rate Cut; the Question Is No Longer When but by How Much

  |   For  |  0 Comentarios

Elecciones en EE.UU. y mercados

U.S. employment figures showed a slowdown in the economy, paving the way for the much-anticipated interest rate cuts in September.

However, with an economy losing momentum in job creation but maintaining strong budgets for wages, the question is now how much the Fed will cut rates next week.

According to an analysis by alternative asset manager KKR, while the August nonfarm payroll data reflected a clear weakening of the U.S. economy, “the report did not unequivocally confirm that the Fed must ease its monetary policy by 50 basis points.”

The Global Macro team’s report, led by Henry H. McVey, acknowledges that although attention is focused on the 142,000 jobs added in August—slightly below the consensus of 165,000 but above July’s revised 89,000—the key point is that, despite downward revisions, the year-over-year growth rate was higher than in July.

Experts note that with previous months’ revisions, job growth has fallen below 125,000 every month except one since April. They add that a stagnant labor market (i.e., where hiring, layoffs, and turnover are low) means that the slowdown in labor demand will increasingly show up in weaker overall data.

The KKR report estimates that August’s employment data will not be “perceived as negatively as some had expected.”

“Although the negative revisions are notable, our overall message remains that the Fed must act aggressively, but we are not convinced that this will include 50 basis points initially, especially since financial conditions remain quite favorable. In the past, 50-basis-point cuts to start a cycle often included higher credit spreads and higher unemployment rates,” the report adds.

Employment growth in August came in slightly below expectations (142,000 versus 165,000), but the most notable elements of the report were the substantial downward revisions from previous months (-85,000 net).

From the independent advisory platform Sanctuary, an analysis by Mary Ann Bartels, shared with the firm’s clients, anticipates a 25-basis-point rate cut by the Fed.

“With employment data pointing to a slowdown in the labor market, the likelihood of a rate cut is almost assured. Mary Ann continues to expect a 25-basis-point cut by the end of this month, and this week’s inflation data—the Consumer Price Index and Producer Price Index—should confirm the direction of interest rates,” reads a summary posted by Sanctuary on LinkedIn.

Payrolls Decline, but Wages Increase

Wage budgets are growing at near-record rates, according to a new corporate survey in the U.S. conducted by The Conference Board.

The report reveals that projected salary budget increases for 2025 are expected at the fastest pace in two decades. Salary increase budgets are a good indicator of the average raise a worker receives in a given year.

On average, employers report planned wage increase budgets of 3.9%, a slight uptick from the actual 3.8% growth in 2024, according to The Conference Board’s US Salary Increase Budgets 2024-2025 report.

“Despite slower hiring and a slight rise in unemployment, elevated wages are expected to persist in 2025. A decline in labor supply is leading companies to focus on retaining their current workforce, resulting in sustained wage increases and higher real wage growth as inflation moderates,” said Dana M. Peterson, Chief Economist at The Conference Board.

The report presents comprehensive survey data from 300 compensation leaders on what companies across the economy are budgeting for annual wage increases.

Important Things I Learned in 18 Months at a Climate Finance NGO

  |   For  |  0 Comentarios

This is what I learned about our sustainable financial ecosystem, after working for 18 months at In / Flow, a climate finance NGO.

  • Climate finance doesn’t work without relentless collaboration and innovation. Science, academia, industry, markets, and governments must continue to work together. All knowledge and skills are needed to tackle the challenges we face. The more diverse the set of minds, the greater the chances of leveraging all necessary perspectives and minimizing blind spots. It is at the intersection of these spheres that the abundance of edge effects emerges.
  • Projects, assets, and emission reduction activities abound, and the demand for green, social, and sustainable bonds and loans shows no signs of slowing down, with new investment vehicles being launched at an accelerated pace. The challenge lies in moving capital from the project to the investment. The bottleneck is at the top of the investment value chain, where project identification, due diligence, activation, and obtaining permits represent the biggest obstacle to capital deployment.
  • Financial players overwhelmingly demand the harmonization of standards and frameworks. From a global perspective, the interoperability of taxonomies at the country level—i.e., the classification of activities by industrial sector for establishing criteria—is a condition to enable ambitious and credible sustainable trade on an international scale.
  • The redistributive powers of fiscal policy and subsidies must continue to support the global transition. Policy and regulations are the cornerstone of sustainable finance. We can’t live with them, and we can’t live without them. The more adept we are at adapting our financial ecosystem to new rules of the game, the better the chances of thriving in a new world order. Policies have fallen behind lately and remain vulnerable to shifting political cycles. We must create policy frameworks that can stand the test of time.
  • Market participants who are willing to embrace the challenge must also be rewarded and see that their commitment to sustainable investment leads to growth and superior returns. A good example of this is performance-linked instruments with a step-up coupon mechanism through which issuers can access lower capital costs by meeting a target. More advantageous financing for sovereign Debt Management Offices, stronger balance sheets for corporate issuers. Everyone may need to give something up in the short term. Investors may need to grit their teeth and adopt a long-term view (as they traditionally should) and will see lower long-term embedded risk. There are trade-offs, but everyone can win from this.
  • Investment banks can play a key role in advising companies on how to balance their growth and sustainability agendas and guide the financing of ambitious and credible transition plans when needed. Debt capital markets (DCM) and corporate advisory expertise in structuring and pricing all labeled debt are essential to ensuring that credit spreads fully reflect both the financial and non-financial risks and opportunities of the projects, assets, and activities to which revenues are allocated. Banks and lenders that align will attract more business, see higher issuance volumes flowing through their DCM desks, and enable the liquidity depth sought by investors.
  • There are data challenges for standardized metrics, integrated reporting, and risk assessments. Independently verified market data are critical to the credibility of sustainable capital markets. Science-based evaluation aligned with the goal of avoiding 1.5°C exposure from the use of funds and, indeed, transition plans is the only assurance investors can rely on to ensure that the sustainability fundamentals of a bond are anchored in authentically well-informed and reliable expertise. ISO certification and accreditation provide even greater assurance for the grayest types of investments. Retroactive and programmatic certification of bonds, assets, and entities is available to support and minimize issuer efforts.
  • Index providers have stepped up by offering powerful benchmarks that define investment opportunity sets (pre-selected) for the investor community. Whether labeled as use-of-proceeds debt or thematic transition financing, index providers have designed ready-to-use indices for reference mutual fund products and active management and segregated mandates, as well as for passive replication of exposures in ETPs (exchange-traded products). Sustainable investments are now widely accessible to both retail and institutional investors.
  • Stock exchanges provide ideal venues for the launch and marketing of new sustainable issuances. The fierce competition to attract sustainable debt listings has led them to up their game by expanding the scope of their capabilities and playing a significant role in advancing the issuer-investor interaction agenda on a case-by-case basis.
  • Asset owners have the power to drive significant improvements in sustainable finance market techniques. Greening large institutional mandates held by public and corporate pension funds, insurance companies, endowments, and foundations is likely the greatest incentive we can give to other market players—including, but not limited to, asset managers—to execute their sustainable strategy. Greening institutional investment portfolios could be the fastest lever for meaningful greening. Most importantly, plan members have a duty to invest in the transition of their economy and society.
  • Environmental and social issues are deeply intertwined, and we must adopt community-based, place-based, and resilience-inducing approaches for climate solutions to be fully effective. Indigenous community participation in the issuance of social and sustainable debt (a hybrid between green and social) is key to the resilience agenda, ensuring that in the event of disaster, economies and societies can recover quickly. Investors, demand a just transition.
  • Similarly, capital must be attracted to and within emerging and frontier markets through sustainable investments in private assets, while ensuring the experience is local and community-based. Sustainable debt from emerging markets carries the same country-level risk as its conventional emerging market debt counterpart. Do not expect a price premium or risk discount to avoid disappointment. However, the Global South is home to countless green and sustainable investment opportunities that will ultimately lead to a reduction in the debt burden of emerging market sovereign and corporate issuers, driving an improvement in fundamentals and the stabilization—perhaps even the reduction—of emerging market credit spreads in the long term.
  • Concessional financing from multilateral development banks (MDBs) and development finance institutions (DFIs) plays a key role in aggregating project financing, especially in highly fragmented and opaque loan markets. Their expertise in implementing climate and social development programs is critical to a successful transition of our global economy. Inspiring institutional investors to invest in these programs will also make a difference. Supranationals are experts in infrastructure investments, and while in the past they lagged in investments, since 2008 they have multiplied sixfold, and pension funds consider them a source of returns and protection against market volatility.
  • The use of artificial intelligence (AI) is already contributing enormously to the fight against climate change and the incorporation of climate resilience into our ecosystem. Existing AI systems offer tools that predict weather, track icebergs, identify oil spills, methane leaks, and other types of pollution. In the insurance sector, AI already helps the risk assessment framework refine the calibration of the impact of natural hazards on the real economy. Private capital is especially suited to seed these early-stage climate technology solutions, as many sectors in transition require patient, determined capital.
  • Trust that markets will create a new financial instrument for every problem we face. Despite initial scrutiny over sustainability-linked bonds, it is now clear that forward-looking performance-linked structured products not only constitute a powerful tool for enabling the transition of high-emission and hard-to-abate sectors of our global economy, but they also help monitor issuers’ progress on their path to net-zero. KPI selection, scientifically proven threshold setting, and target and coupon calibration depend entirely on the sector and thus require sector-specific scientific expertise.
  • Governments and companies demonstrating leadership by phasing out fossil fuels and phasing in emission-reducing activities and projects will eventually see a favorable impact on their borrowing costs. Issuers’ ability to skillfully communicate strategically aligned transition plans to investors, as well as execute and report on their progress on the path to net-zero by 2050, could be key to weathering the transformation of our economies and societies. Securing financing through sustainability-linked and impact financial instruments can and will embed their strategies with greater credibility and help them build trust among financial market participants and other stakeholders.
  • Whether you support this trend or not, the truth is that carbon markets are developing, and banks and exchanges are arming themselves with some of the brightest minds in the field. On the Voluntary Carbon Market (VCM) front, safely structured and vetted, biodiversity impact credit (in the form of Verified Carbon Units or VCUs) could play a significant role, provided that any offsets genuinely support biodiversity conservation or nature-based solutions.

Kushal Kshirsagar Joins Chicago Atlantic From BlackRock

  |   For  |  0 Comentarios

Chicago Atlantic has announced the appointment of Kushal Kshirsagar as Managing Partner of Private Wealth Solutions.

Kshirsagar joins from BlackRock and will be responsible for bringing Chicago Atlantic’s private market strategies to individual investors and their advisors, according to company information.

Previously, Kshirsagar held various roles within BlackRock’s Multi-Asset Strategies, U.S. Wealth Advisory, and iShares divisions, including portfolio manager for BlackRock’s U.S. Income Models, lead portfolio strategist for UHNW Wealth Advisory, and Head of Strategy and Business Development for iShares in Asia. Prior to BlackRock, Kshirsagar worked at UBS, Credit Suisse, and Vanguard, and earned a PhD in Finance from UNC – Chapel Hill.

“I was drawn to Chicago Atlantic’s unique combination of underwriting expertise, analytical rigor, proven track record, and entrepreneurial spirit. In a crowded market of undifferentiated private credit strategies competing in the same sponsor-backed club deals, Chicago Atlantic stands out for its sector expertise and focus on markets where there are structural reasons for capital supply shortages,” said Kshirsagar.

This Is How M&G Is Transforming to Become a More Agile and Efficient Organization

  |   For  |  0 Comentarios

M&G continues to make progress on the three strategic priorities it has set: financial strength, simplification, and growth. This was highlighted during the presentation of its first-half results, where it acknowledged “significant advances in M&G’s transformation, focusing on our strategic priorities” over the past 18 months.

“Despite a challenging market environment in the first half of the year, we have delivered another strong financial performance, with adjusted operating profit and capital generation almost matching last year’s excellent results. Our simplification agenda is advancing well, achieving cost savings of £121 million so far. We have made substantial progress across all our financial goals, and reflecting our strong track record and commitment to solid results for shareholders, we are now announcing upgrades to our capital generation and cost-saving targets,” said Andrea Rossi, Group CEO.

According to Rossi, the firm continues to drive its strategic priorities, “combining the Life and Wealth operations to accelerate our growth plan in the UK retail market. We also see growth opportunities in our international presence and in expanding our product offering,” he noted.

The Transformation of M&G

In its review of the first half of the year, the firm highlighted the good momentum in its Transformation program and noted that they are at the “midpoint” of this three-year initiative to “create a more agile and efficient organization.” To achieve this, “we continue to enhance our ability to respond to customers, reduce costs, and lead growth,” they affirmed.

According to their results, in the first half of 2024, they reduced costs by 4% compared to the same period in 2023, “more than offsetting inflationary pressures and freeing up resources to support investment in growth initiatives, thanks to the £121 million in cost savings since the program’s launch in early 2023,” they clarified.

Following a strategic review and in line with its commitment to operational discipline, they explained that they have decided to focus and streamline their Wealth strategy by combining Life and Wealth operations under the leadership of Clive Bolton. “With this change, we will be better focused on serving the UK retail market, complementing PruFund with life insurance solutions, reducing duplication, and improving efficiency,” they commented.

Regarding their cost reduction plan, they explained that they have raised their target from £200 million to £220 million by 2025, thanks to the progress made so far. “This target increase excludes any additional benefits arising from the streamlining of our operating model announced as part of the half-year results presentation.”

Growth and Outlook

The firm believes it is “successfully navigating a challenging macroeconomic environment.” “We have delivered strong performance while positioning the Group for sustainable long-term growth, focusing on capital-light business models in Asset Management and Life Insurance,” they emphasized.

They argue that the firm is well-positioned to face the current uncertain economic climate due to its diversified business model, international presence, attractive products and services, investment capabilities, and expertise. “The progress made in the first six months of the year supports our continued confidence in meeting our strategic priorities and financial goals, as we remain focused on transforming M&G to deliver excellent outcomes for our clients and shareholders,” they noted.

In this context, the firm reiterated that its priorities are clear: “Maintaining our financial strength, building on the progress already made in simplifying the business, and achieving profitable growth in the UK and internationally.”

Chilean Pension Funds Remain 17% Below Their Pre-Withdrawal Levels

  |   For  |  0 Comentarios

A little more than four years after the constitutional reform that authorized the first partial withdrawal of pension funds in Chile, the impact is still evident in the pension savings portfolios. According to the Pension Fund Administrators Association (AAFP), pension funds remain below the levels they had in July 2020, when the constitutional change took effect.

At the end of that month, the AFPs managed assets amounting to 214 trillion Chilean pesos (227.3 billion dollars), as stated in a press release. Since then, the system has not been able to return to that figure in any month.

Moreover, by July 2024, the accumulated AUM stood at 177.5 trillion pesos (188.1 billion dollars), which is 17% below the level of pension portfolios held four years ago, according to a study by the Ciedess research center.

In this context, the entity—created by the Chilean Chamber of Construction (CChC), one of the controllers of AFP Habitat—highlighted that the current value of pension funds is equivalent to 82.8% of what was accumulated before the withdrawals.

The deterioration is also evident in relation to the broader economy. Ciedess figures show that the resources managed by the AFPs represented 83% of Chile’s GDP in July 2020, while four years later, that figure had fallen to 62%, marking a 21 percentage point drop in relation to the local GDP.

In total, the three pension fund withdrawals amounted to 44.256 billion dollars, according to the latest data from the Pension Superintendency, involving 28.8 million payment transactions.

Since the third withdrawal window opened in 2021, there have been several attempts to authorize another withdrawal. Last week, Chile’s Chamber of Deputies’ Constitution Commission rejected the latest parliamentary motions proposing new withdrawals, adding to three previous proposals that had already been turned down by the Chilean Congress.

“It is important to clarify that the only way to recover the withdrawn pension funds managed by the AFPs is by replenishing or reintegrating these resources and adding the returns they would have generated from the moment of each withdrawal until the present. As we know, this has not happened, and therefore, the recovery of the fund’s value has not occurred,” explained Rodrigo Gutiérrez, general manager of Ciedess, in the press release.

In this regard, the executive pointed out that “while the third withdrawal included an additional contribution option for this purpose, in practice, its implementation has been almost negligible, and therefore, its intended effect has not been realized.”

UBS to Merge its Wealth Management and Private Banking Divisions in Brazil

  |   For  |  0 Comentarios

UBS is creating a new business unit, to be called GWM Brazil, which will merge the bank’s Private and Wealth Management areas, according to Bloomberg sources.

GWM Brazil will be jointly led by Luiz Borges and Rafael Gross.

Borges founded Consenso, a multi-family office acquired by the Swiss bank in 2017, while Gross led the client coverage area at Credit Suisse Brazil before the banks’ merger.

According to the report, the internal statement signed by the bank’s Head of Global Wealth Management LatAm, Marcello Chilov, states that the operation aims to “capitalize on the region’s potential and leverage the complementarities” in the businesses.

Luis Bermúdez Appointed as the New CEO of Banco Santander International

  |   For  |  0 Comentarios

Banco Santander announced to its employees the appointment of Luis Bermúdez as the new CEO of Banco Santander International, the division of International Private Banking in the U.S.

According to an internal statement from the company, the change will be made official in the coming weeks.

Bermúdez has over 20 years of experience in private banking, asset management, brokerage, and investment banking.

He joined Santander in 2005 in Madrid as a Fund Manager, where he stayed until 2010, reaching the position of CIO, Chief of Staff in Madrid. In 2010, he moved to Brazil, where he spent a year before arriving in Miami, according to his LinkedIn profile.

Bermúdez currently holds the position of Global Head of Business Development for Santander Private Banking, based in Miami.

Vanguard Reduces the Minimum Amount Required to Access Its Investment Platform, Digital Advisor

  |   For  |  0 Comentarios

Vanguard has announced a reduction in the minimum investment amount for its automated investment platform, Digital Advisor, lowering it from $3,000 to $1,001. In doing so, the asset manager aims to expand access to its digital advisory service for investors interested in managing their financial goals online.

Vanguard Digital Advisor, launched in 2020, offers a fully digital financial planning and investment advisory service, providing “personalized, convenient, and low-cost” advice. According to the company, the platform helps clients identify their retirement and non-retirement goals, then designs and manages customized, diversified, and tax-efficient investment portfolios to achieve them. As of June 30, 2024, Digital Advisor manages more than $19 billion in assets.

“Lowering the investment minimum for Vanguard Digital Advisor is an important step in our effort to expand investor access to advice and empower them earlier in their financial journey. We believe that advice strengthens investors’ ability to manage their personal finance and investment needs and can lead to better investment outcomes,” explained Brian Concannon, Head of Vanguard Digital Advisor.

This decision follows a period of accelerated growth and innovation for Digital Advisor, as Vanguard has significantly invested in the customer experience on the platform. Specific improvements include personalized coaching to reach financial goals, a wider selection of portfolios, greater tax efficiency, and the ability to create financial plans as a couple.

“Advice is fundamental to our mission of giving investors the best chance of investment success. We understand that our investors’ needs are constantly changing, and we are committed to continuously evolving and innovating our advice offerings to ensure that clients have the tools, guidance, and most importantly, the access they need to achieve their financial goals,” added Doug Mento, Head of Vanguard Advice.

Adcap Grupo Financiero Appoints Ariel Rivero and Juan Martín Longhi as Co-Heads of International Sales & Trading

  |   For  |  0 Comentarios

Adcap Grupo Financiero has announced the appointment of Ariel Rivero and Juan Martín Longhi, with over 20 years of combined experience in the financial sector, as the new Co-Heads of International Sales & Trading. According to the firm, this new team will aim to boost Adcap’s growth in global markets, with a strong focus on customer service.

Both professionals have extensive careers. Ariel Rivero, who holds an Executive MBA from IAE, has worked at renowned financial institutions and brokerage firms (ALYCs), excelling on the international trading desk. Regarding his new role, he commented, “I’m pleased with this recognition and the opportunity to continue growing. We hope to take Adcap to the next level and guide the next generation. It’s a great pleasure to share this position with Juan, who is not only an excellent professional but also a friend for many years.”

On the other hand, Juan Martín Longhi has an outstanding track record at the PUENTE trading desk and served as Executive Director of the Sales & Trading area at TPCG Valores. “I’m excited about this new challenge and taking on this role with Ariel, who is an excellent professional. We will develop all the tools needed for Adcap’s Sales & Trading business to grow in volume and improve the service for our clients,” Longhi noted.

Regarding both appointments, Agustín Honig, Managing Partner of Adcap Grupo Financiero, highlighted their importance to the company: “We are very proud to announce the promotion of Ariel Rivero and Juan Martín Longhi as Co-Heads of International Sales & Trading. Both have demonstrated exceptional commitment and leadership over the years at Adcap. I am confident that under their joint leadership, we will continue to expand our presence in global markets and provide top-tier service to our international clients.”

The Tax Annual Summit Returns to Uruguay

  |   For  |  0 Comentarios

Registrations and the agenda for the 2024 Tax Annual Summit are now available.

Titled “Shaping the Future of Taxation and Privacy,” the conference, which will bring together tax experts, will take place on November 21 at the Celebra building in Zonamerica, Uruguay. The event is organized by The 1841 Foundation.

The agenda includes keynote speakers such as Axel Kaiser, lawyer and president of Fundación para el Progreso; Dan Mitchell, president of the Center for Freedom and Prosperity; and María Eugenia Talerico, former vice president of Argentina’s Financial Information Unit.

The link to purchase tickets is:https://www.eventbrite.com/e/2024-tax-annual-summit-by-the-1841-foundation-tickets-998572195317?aff=FundsSociety