Economists Predict Fed to Aggressively Hike Rates to 5%
Following yesterday's 75-point basis hike, the Fed cemented its stance to combat rising costs and return levels to their 2% target rate. In a survey of 40 economists conducted by Bloomberg, three-quarters of responses estimated that the Fed would err on the side of over tightening rather than run the risk of not doing enough. In addition, economists revealed a broad consensus that the U.S. will experience an extended recession in the next 24 months. With the announcement of the hike yesterday, the combined 375 basis point increase since March represents the steepest and most aggressive rise since the 1980s, during a time when Paul Volcker was combating "sky-high inflation".
"Monetary-policy lags are still underestimated...The full effect of current tightening may not be felt until mid-2023. By then, it could be too late. The risk of a policy mistake is high."
Thomas Costerg, Pictet Wealth Management
Private Funding Pulse Check
Knollwood Investment has participated in a Series A funding round for Invygo, a monthly car rental app whose funding totaled $10M
CloudPay, a modern payroll platform, has finalized on a $50M Venture follow-on round that was led by Olayan Single-Family Office
Callais Capital Management engaged in a Series B investment with Resilia, a SaaS solution that assists non-profits, totaling $35M
Grosvenor Estate took part in a $70M Series C deal with Ostara, a company that provides phosphate management solutions aiming to improve crop yield and water sources
Reopening Talks Prompts Chinese Equities Year-End Push
As we enter the final two months of the year, Asia markets have grossly underperformed the rest of the world, especially in the case of China. After a peak and subsequent selloff in February of last year, Chinese and Hong Kong equities have lost a combined $6 trillion. Over recent weeks, Asia markets have begun to mount a significant turnaround. Trading desks and global investors point to a dramatic shift in President Xi Jinping's "Covid Zero Policy" as the driving factor for a reopening China, spurring a dramatic reversal of sentiment. Social media posts hint at a committee forming to assess alternative policies, though the possibility of a material change remains unknown. The aggressive Covid policy has so far stifled any economic momentum and even hampered employment and output.
"It just shows that there is a lot of pent up demand for Chinese equities, which have been beaten to death in the last six months...[the market] could stage a massive rally if Beijing does announce a gradual reopening..."
Manish Bhargava, Straits Investment Holdings
Oak Hill Advisors LP Makes a $1.8B Bet on Forest-Carbon Offsets
According to multiple reports, New York-based Oak Hill Advisors has completed a purchase of roughly 1.7M acres of forest land across the United States, with a price tag of $1.8B. Following the purchase from the Forestland Group, Oak Hill becomes one of the 10 largest U.S. timberland owners. The deal comes on the heels of a broad-scale effort to offset greenhouse-gas emissions by "throttling back" logging of forestry land to comply with California's regulated cap-and-trade system. In this manner, Oak Hill is "scrubbing carbon" from their environmental balance sheet they maintain for investors and public relations. Critics of the movement state that the "offsets are merely theoretical", due to portions of the acquired land coming from too rugged areas that would not be logged anyway. Additionally, fewer harvests result in increased demand for logging elsewhere.
"Ultimately, creating a balance sheet of these assets should be valuable because everyone else has it on the liability side..."
Adam Kertzner, Oak Hill Advisors LP
Asia-Based Family Offices Look to Alternative Assets for Safety
Despite recent market turmoil, Asia-based family offices have been aggressively opening and adding to their cryptocurrency positions. Despite some of the largest coins losing roughly 70% since the beginning of this year, private investors believe these assets can serve as an uncorrelated asset to broader markets in addition to an inflation hedge. A survey of 30 family offices published by KPMG China and crypto group Aspen Digital found that 92% of respondents were actively interested in the asset class, of that number 58% were already invested and 34% planned on doing so. In addition to cryptocurrency interest, the survey revealed that art collections are a particular alternative asset class of interest, emphasizing the longing for places to hide while markets remain volatile.
"All [my] friends with family offices are saying they have shifted...into other things like having an art portfolio...and cryptocurrencies as well...[adding that the property sector had been] really stagnant."
Newfold Digital, a Jacksonville, FL-based web and commerce technology provider for investment firms has announced a strategic acquisition of MarkMonitor, an industry-leading enterprise-level provider of domain management solutions (Cision)
Aristotle Capital Management, LLC and Pacific Life Insurance Company have mutually agreed on the planned acquisition of Pacific Life's third-party credit asset management firm, representing $20.7B in AUM and over 50 professionals (BW)
Mercer Advisors has acquired Mark D. Cunningham, a wealth management firm operating from Bellaire, TX, with assets under management of roughly $360M (PE Hub)
Written by:
Andrew Popp | Data 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.
