Meir Lewis

Mkt Snap 📈 It’s July 4th and for those who live near the Long Island sound there are a thousand coves and inlets all dotted with festive boat-goers. Sloops, cutters, and schooners either lie moored in horseshoe shaped harbors or ply their way up and down the sound. Even the odd stink-pot powerboat zips across the water, but all have one commonality: they’re chock-full of Independence Day partiers with thumping JBL speakers pumping out Bruce Springsteen tunes. For those remaining on land the festivities really begin to crank up as yard games get underway. The potato sack relay race is the first to go, quickly followed by the egg toss contest. Later comes the game of musical chairs with unscrupulous youngsters nudging other rightful owners off their perch once the music stops. There’s the pie eating contest guaranteed to make all gorging participants puke, and last but certainly not least is the tug-of-war. Of course, all the while these festive bouts are taking place there’s a plethora of other revellers enjoying their day: youngsters screaming out “Marco… Polo” in the pool; puberty-stricken teenagers heaping ungodly amounts of hot dogs and macaroni salad onto their plates; mothers idling in lawn chairs, chit-chatting as they sip tumblers filled with rose; and other devilish grade schoolers either pounding their 29th Pixy Stix, or throwing firework poppers at unsuspecting elders. Perhaps the only thing more full throttle than a 4th of July bash is of course the stock market. Despite a quiet week on Wall Street, equities lit off fireworks of their own as the S&P garnered nearly a 2% pump and the Nasdaq powered 3.6% higher. Certainly, part of this week’s boost came in the form of seasonality. Investors pointed out that the 1st half of July has consistently proven to be a very strong period for the equities. The other reason of course lies in recent economic data, as a softer but not too soft climate continues to unfold. This was highlighted on Friday with the release of the US June jobs report. The report came in with a gain of 206k; ahead of the expected 190k, but still below the May report of 227k. The unemployment rate increased to 4.1%, just slightly ahead of the 4% expected, while wages came in line at 3.9% Y/Y and +0.3%M/M. Elsewhere, the ISM services number for June was viewed as very weak and the 48.8 reading was the lowest level we have seen in years. The JOLTS number was relatively neutral with the higher May numbers offset by the negative April revision, but the trend is definitely showing US labor conditions are easing. Outside of the macro numbers we also had Powell’s remarks at the Sintra conference which were viewed as dovish. All in, this slow retreat in economic activity continues to bode well for equities as rate cuts become more probable (85% now expect a Sept. cut and a total of ~48bps worth of cuts for the full year) but with economic and job activity still remaining well intact. #stockmarket #finance #economy

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A US appeals court has struck down the overreaching SEC rules that would have burdened private equity and hedge funds with unnecessary requirements. The Fifth Circuit Court of Appeals recognized that the SEC exceeded its authority by mandating detailed quarterly reports and limiting side deals. This unanimous decision is a major victory against Gary Gensler's excessive regulatory agenda, which threatens to stifle growth and innovation in the industry. The court's ruling sends a message that regulators can't bypass Congress to push their ridiculous policies. The SEC's failure to link these new rules to fraud prevention only highlights their lack of justification. It's great to see the court protect our industry from costly and intrusive regulations. This decision reaffirms that the $27 trillion private funds industry, which supports pension funds, universities, and individuals, should not be hindered by unwarranted constraints. While the SEC may consider appealing to the Supreme Court, hopefully, the courts will continue to curb such regulatory overreach.

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There is a lot of talk about the PE industry not delivering the exits they promised. PitchBook succinctly put it with the title “Behind the J-curve” in its recent in-depth analysis of distribution activity in private market funds. Another side of that story, particularly relevant for secondary buyers like us, is that many private market funds hold their assets at seemingly inflated valuations. TVPI numbers look great for most funds, but they can’t monetize their holdings anywhere near their current NAV, indicating their estimate of “fair market value” is way too optimistic. There is always a market, the price may just not be where you wish it. To a large degree, the reluctance to exit companies results from having them marked too high. Assets were aggressively written up to look good in the short-term, impressing LPs with “paper gains” to raise the next, much bigger fund. #secondaries #privatemarkets

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Laybuy Issues Receivership Notice Elliot Reader, Senior Vice President at investment bank, Houlihan Lokey discusses his thoughts on the future viability of BNPL: “The trajectory of the buy-now-pay-later market will be largely dependent on the level of regulation placed on the sector – a key discussion point between political parties at the moment, and a delicate balancing act between protecting consumers and providing them with access to suitable financial products. Whilst there is a recognition that regulation will happen in some form, the format of it will decide whether BNPL in its current form will remain a viable product to offer in the UK. The current delays to regulation continue to create uncertainty for the sector, and when larger banks and institutions are making decisions on where to invest – this uncertainty creates challenges. There is no doubt there is a consumer demand to service. However, 25% of UK BNPL users have been charged with late payment fees according to research by the Centre for Financial Capability, which indicates there is a need to either improve underwriting and affordability standards or educate borrowers on the potential implications and consequences of using such a product. Fulfilling this consumer demand will remain an opportunity for lenders to be serviced through some form, but until the regulation is understood, it remains to be seen whether or not BNPL will sustain its popularity.” https://lnkd.in/eJz4eYam #fintech #finance #banking #paytech #payments #fintechnews #paymentsnews

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Torn between not saying anything about the who-cares verdict yesterday in New York or ever commenting out loud about the issue of possible or imminent statehood for a certain Mideast province? city state? pile of ruin?, I thought I'd turn my attention to the NBA Finals so as to not lose all my beloved LinkedIn connections in one fell swoop. I did not see this coming. Kyrie Irving was teetering for years on irrelevancy status as he bounced around from team to team, and every time he left a franchise barely no one could stand him. Ends up in Dallas because, sure - why not, and gets paired with one of the most solid young players the league has ever seen: Luka Doncic. I do not think it is sacrilege even in Boston to compare Mr. Doncic to a certain Celtic who once wore the jersey #33. These two played different positions, mind you, but the results look pretty much the same: a ton of scoring, myriad assists, boards, defense, teamwork and, most important: wins. In the case of the afore-referenced Mr. Larry Bird, this also meant championships - three to be exact. I predicted Boston - Denver in my overview series several weeks ago. So I guess I got it half right. I picked Boston to win it all but I have since changed my mind in the interim based on what I have seen thus far in the playoffs. The Celtics have fallen into a bad, predictable trap of constantly playing to the level of their competition. This works against an Indiana Pacers team depleted by injuries. It does not work, in my view, against a Dallas squad with two future Hall of Famers and a bunch of 6'9" freak athletes who can run, defend, rebound, block shots with the best of them. I like Jayson Tatum and Jaylen Brown a lot, they are both amazing talents, and will win championships at some point. I do not think, however, they will reach the pinnacle of a championship season in 2024. Maybe next year. Predictions: Dallas in 6. Luka MVP. As for the other headaches at the top: national embarrassment; still, unlikely to be decisive in the fall. Coin flip as to who wins. You tell me who wins Cuayahoga or Dade County and then you probably have your winner. It's certainly not my call and I have no idea. Headache #2: I think you can grant statehood and neighboring countries should and must defend themselves. Not granting statehood is indefensible for too many reasons to count. We're on the wrong side of history but that does not mean we shouldn't defend our loyal allies - we should. Let me try this again: you can have statehood and defend Israel; those two ideas are not mutually exclusive. That's my thought.

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**Dedollarization of the Ruble** *Be careful what you wish for…* In the new package of U.S. sanctions, the Moscow Exchange (MOEX) and its structural subdivisions have been included in the list. What does this mean? The exchange was a platform where anyone could trade the dollar and other currencies. As a result of the imposed restrictions, the MOEX will no longer be able to conduct any operations with dollars. Additionally, they have stopped trading euros, although the package from the eurozone is only set to come out tomorrow. But it will be difficult or impossible for them to work with other currencies and even stocks because they are also under restrictions as a legal entity. Technically, they can trade on their own, but anyone working with them will automatically fall under secondary sanctions as violators of the sanctions regime. In this regard, KASE and NB have a reason to be concerned. Our exchange has a small package of shares owned by MB, and it needs to be urgently bought. Transactions with MOEX are already undesirable. Therefore, NB may need to buy this stake and resell it. NB is unlikely to fall under sanctions. What will happen to the dollar and the ruble? No one knows the exact answer. I can speculate. The value of the dollar lies in the fact that it is the world’s reserve currency. That is, regardless of the country, you can buy something on the world market anywhere (means of exchange), settle later (means of payment), and save for a while (means of accumulation). Very convenient. If you don’t have dollars but have national currencies, you are limited to the scale of bilateral trade. For example, Russia sold a lot of oil to India, but India has strict currency restrictions, and converting rupees to dollars is not so easy. As a result, Russia received a lot of rupees in its accounts in India, but these can neither be taken out nor exchanged, nor even used to buy what is needed. Foreigners cannot buy currency goods like tea for rupees without a license. As a solution, their government suggested that Russia invest rupees in Indian business. Bilateral trade is variable. Today, for example, Kazakhstan buys goods from Russia for several billion dollars more than it sells. Technically, we need rubles. And if rubles are lacking, we can always exchange dollars or tenge for rubles on KASE and settle accounts. Ideally, we don’t need their exchange very much.

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Private equity (PE) firms, renowned for their strategic expertise and financial resources, often view high-performing family businesses with established track records as attractive investment opportunities. As Jersey Mike's Subs engages in discussions with PE firm Blackstone regarding a potential sale, it marks a significant move in the realm of family-owned businesses transitioning to new ownership structures. By acquiring such businesses, PE can leverage their operational expertise to drive growth, expand market presence, and enhance profitability. Additionally, the involvement of private equity could signal a new phase of expansion and innovation for Jersey Mike's, aligning with broader trends of consolidation and strategic acquisitions within the restaurant industry. This potential transaction underscores the evolving landscape of ownership, where partnerships between family businesses and private equity entities can unlock value and propel businesses to new heights of success and sustainability. https://lnkd.in/e4Xh3dx4 #StrategicExitAdvisors #mergers #acquisitions #Scalability #InvestmentBanking

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With the Sprott Uranium Trust's discount to NAV at a near YTD high, notable events this past month included: 1) The Department of Energy's $3.40B RFP for low-enriched #uranium . 2) Renewed M&A in the Athabasca Basin via Paladin Energy's takeout bid for Fission Uranium (fair bid, we don't envision any competing bids). Spot uranium ended the month of June -4.5%, settling at $85.50 per lb (Numerco). **Not investment advice, just opinion, observation & analysis. Pls note the disclaimer** https://lnkd.in/gYAn38_d #equityresearch #investmentbanking #nuclear #greentransition #zerocarbon #economics #mining

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Jacqueline Broers, Deputy Portfolio Manager at Utilico Emerging Markets Trust provides an insight into the portfolio's performance in April. In April, UEM'S NAV total return decreased by 0.1% in April, underperforming the MSCI EM Index which increased by 1.4% in Sterling terms. Global markets were mixed in April, S&P 500 Index was down 4.2% and showed that inflation is stickier than hoped. Moving onto EM, the Turkish Index was up 9.9%, Argentina also followed suit with the Merval Index up 9.1% as investor sentiment significantly improved, amid structural reforms from the Milei government. Hong Kong Hang Seng Index and the Shanghai Composite Index were both up 7.4% and 2.1% respectively. India's Sensex Index was also up 1.2% as the country's general election started. However, Vietnam's Ho Chi Minh Index was down 5.8%, higher U.S. interest rates has put pressure on the Vietnamese Dong. Moreover, Brazil's index was down 1.7% as U.S. rate cuts resulted in repricing of the yield curve. The were no changes in the UEM's portfolio for April. Watch here ▶ https://lnkd.in/e93xG8pY #UEM #Utilico #EmergingMarkets #China #Brazil #Vietnam #HongKong #Turkiye #Argentina #India

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Macro & Volatility Podcast #6 The information, opinions and views expressed on this podcast are for informational purposes only and are not intended as investment advice. The opinions expressed may not align with Passaic Partners' views or its client strategies. Market forecasts are speculative and should not be the sole basis for investment decisions. Consult your financial and tax advisors before making any investments.

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A sample of discussions held with clients last month: - A client working in the human capital space is exploring the feasibility of retiring in 20 years at age 55. We discussed the first draft of a financial plan with that scenario, and they are within striking distance. This will be our focus in the coming months. - Reengaged with a client household as they wrapped up the academic year and their infant enters toddlerhood with an overall portfolio review, discussing their cash holdings, and updating their household financial plan. - A client experienced an involuntary layoff in the tech/data industry, so we reviewed their resume and LinkedIn profile, and kicked off the process to rollover their previous retirement plan holdings to their Traditional IRA. - Discussed the ramifications of paying down law school loans with a focus first on higher interest portions of their debt, while balancing saving for retirement. - A client household with an educator and attorney engaged on balancing a return to Boston and reducing their higher interest debt. - A client in the pharma / life sciences space kicked off their estate planning journey and we'll be doing a summer update of their overall retirement outlook. - A client in the UX research space is re-entering the workforce after international travel / volunteer work. We reviewed their resume and LinkedIn profile. Now we're in the midst of an overall portfolio review and next steps for their vested RSUs. I appreciate the opportunity to be of service to my clients. As you can see, it's fair to say that financial advice and planning involves more than overseeing an investment portfolio.

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Investment Specialist John Swarr, CFA, ASA analyzes the U.S. CLO primary market with $200 billion in gross supply in the first half of 2024, surpassing the entire yearly volumes of 2022 and 2023. John explains what is driving the demand and offers direction for CLO managers. #CLO #CLOMarket #InvestmentInsights #FixedIncome #DebtSecurities #FinancialMarkets #FinancialAnalysis #MarketTrends #CreditMarkets #InvestmentStrategy #investing #assetmanagement #assetmanagementinsights

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PIMCO warning about the many risks we have been flagging for a long time in private credit markets, including that "40% of private credit borrowers (size weighted) are not producing enough cash flow to service all debt, taxes, and capital spending needs", adding that "if interest rates stay elevated for longer or economic growth slows, these borrowers would be more vulnerable to...higher expected losses". See below: 1. PIMCO argues private credit illiquidity premia are "unattractive" "Based on the significant deal flow we are seeing across markets, we also observe that the liquidity premium in many areas of private markets has tightened to unattractive levels – as it has in certain areas of public markets. We are also seeing deterioration in covenants that traditionally protected lenders in private credit markets... 2. By putting capital in illiquid private debt, you lose alpha opportunities "By locking up capital in private assets, an investor forgoes active opportunities to trade that capital. Alpha often comes from trades arising out of market dispersion or buying undervalued assets. The cost of providing liquidity is the net present value of these missed opportunities. Relatedly, illiquid portfolios can’t easily be rebalanced after a sell-off or a rally. Adding illiquid assets also increases the risk of not having enough liquid assets for spending needs. A liquidity premium is needed to offset the expense of protecting the portfolio against this risk." 3. PIMCO reckons private credit should pay a risk premium of at least 200bps a year over public or liquid credit "Based on these risks and associated costs, we estimate long-term illiquidity costs to be around 200 basis points (bps) a year. That includes the cost of lost alpha from active management of fixed income portfolios, the cost of the inability to rebalance portfolios, and the cost of liquidity shortfalls for unexpected liquidity needs." 4. The illiquidity premium offered by private debt has fallen to below 100bps "The liquidity premium in investment grade segments of private credit markets has tightened to less than 100 bps. We believe that level is insufficient relative to the opportunity costs associated with rebalancing, lost alpha from public fixed income, and potential costs of cash shortfalls. Additionally, many private investment grade issuers are also able to access more liquid public fixed income markets and thus are only willing to pay a small additional spread to borrow capital in private markets for certain capital structure nuances that affect credit quality. Adjusting for credit quality differences between public and private investment grade issuers, the excess spread of less than 100 bps becomes even less attractive...The spread premium for private corporate direct lending relative to broadly syndicated loans has tightened from about 400 bps three years ago to 193 bps in 2024 (see Figure 3), according to PIMCO calculations based on Lincoln and LSTA data..."

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How Trump's Debate Strategy Could Backfire Will Trump's decision to agree to the debate rules work in his favor or against him? Find out why having his microphone shut off might actually benefit him and how the moderators' bias could affect the outcome. Tune in for a lively discussion with Mark and insights on the upcoming debate. #TrumpDebateStrategy #MicrophoneOff #ModeratorBias #Debate2020 #TrumpVsBiden #PresidentialDebate #PoliticalInsights #DebateTactics #ElectionUpdates #Trump2020

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