Here’s a Market update from LOM Financial for the latest Global Market Performance:
Markets rebounded sharply last week with the MSCI World Index gaining 3.40% while the S&P500 rose 4.91%. The bond markets were mainly flat on the week.
The Federal Reserve
The Federal Reserves’ role is to balance unemployment with inflation. It achieves that goal by controlling the cost at which banks can borrow money and by buying companies stocks and bonds in the open market (known as quantitative easing). By lowering interest rates and buying up shares of companies in the open market, they prop up the economy. When they believe the economy is overheating (e.g., almost everyone that wants a job has one and prices of goods are rising), they try to cool things down by raising the interest rates and reducing their balance sheet. The latter is important because an overheated economy would be more likely to engage in risk-taking behaviors and unchecked inflation can erode our ability to save and plan over the long-term.
The new Fed Chair, Jerome Powell, inherited an environment with historically low interest rates and a strong economy. He has been on record expressing concern that the low rates were creating a bond market bubble (declining interest rates increase the price of existing bonds). At the beginning of the year, the aggressive schedule of four rate hikes appeared unlikely. As the impact of the tax cuts appeared to stimulate the economy while the effects of an uncertain quantity of tariffs were yet to be felt, the Fed felt comfortable enough to raise rates.
Markets got spooked in October, when Mr. Powell implied that we were “a long way” from neutral, a rate level that would neither heat up or cool down the economy. That uncertainty, along with other risks like a trade war escalation and a potential hard Brexit, weighed down markets.
In a televised meeting at the Economic Club of New York on Wednesday, Powell was quoted as saying we are now “just below neutral.” I believe this implies the band would be 3-7% (since the historical average is close to 5%). Markets took this as good news, rallying sharply into the second half of the week.
Continue reading HERE.
Retirement plan – one of the most important long term investments everyone should build. For more retirement and financial advice, read on Forbes:
Retirement is the #1 financial worry with 65% of Americans worried about it and a majority thinking about it 4 times per week. The core problem is uncertainty – people have no idea how much they need, because we have created a system around building assets instead of income.
We spend our lives saving up a big pile of money in an effort to secure our future against a bewildering set of future risks including market returns, inflation, healthcare and longevity. This is spurred on by the vast majority of players in the financial services industry who want us to save as much as possible and/or “invest” in often complex, opaque and expensive products since their income is based on a percent of your assets (AUM) or on transaction fees where the price is not clearly marked.
An average 401(k) investor who pays 1% investment fees on a portfolio earning 4% will lose about 33% of their returns to those fees over a 20 year period. Put another way if you have $1M, then $400K in returns are lost to fees over 20 years (fees that go to your fund provider, broker or financial advisor).
I’ve talked with hundreds of our users who are planning for retirement, most of whom have $500,000 to a few million saved and they are all worried about whether they have enough and how they will generate retirement income and manage healthcare.
Continue reading HERE.
Spot gold was up 0.2 percent at $1,239.86 per ounce. Meanwhile, Spot palladium rose 0.1 percent to $1,245.00 per ounce. Here’s the latest update from CNBC :
Gold edged higher on Thursday as growing risk aversion weighed on the dollar, while palladium held ground at a premium to the bullion.
Spot gold was up 0.2 percent at $1,239.86 per ounce, as of 0429 GMT, while U.S. gold futures were 0.2 percent higher at $1,244.9 per ounce.
“Markets are trying to consolidate, trying to push up higher for now,” said Benjamin Lu, a commodities analyst with Phillip Futures.
A balance between a host of factors such as a rate hike by the U.S. Federal Reserve in December, uncertainty about trade tensions between Washington and Beijing, and a flattening yield curve has helped create a premium for the bullion, Lu added.
Fed policymakers will gather at a Dec. 18-19 meeting, at which the central bank is widely expected to raise interest rates.
“Although a rate hike is already priced in, markets will be closely watching the meeting for clues on rate hike timings in 2019,” said Lukman Otunuga, a research analyst at FXTM, adding that: “if the meeting echoes a similar message to (Chairman Jerome) Powell’s dovish shift, gold has the potential to shine into 2019.”
The dollar declined against the safe-haven yen as a spike in risk aversion pressured equities and U.S. Treasury yields. The spread between the two-year and five-year Treasury yields inverted this week and the two-year/10-year spread was at its flattest in more than a decade amid a sharp fall in long-term rates.
Continue reading HERE.
Here is some good news from Reuters for the oil and gas community:
SINGAPORE (Reuters) – Oil prices shot higher on Monday after the United States and China agreed a 90-day truce in their trade conflict and ahead of a meeting by producer club OPEC this week that is expected to result in a supply cut.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $53.38 per barrel at 0220 GMT, up $2.45 per barrel, or 4.8 percent from their last close.
International Brent crude oil futures LCOc1 were up $2.38 per barrel, or 4 percent, at $61.84 a barrel.
China and the United States agreed during the meeting of the Group of 20 (G20) leading economies in Argentina over the weekend not to impose additional trade tariffs for at least 90 days while the pair hold talks to resolve existing disputes.
The trade war between the world’s two biggest economies has weighed heavily on global trade, sparking concerns of an economic slowdown.
Continue reading HERE.
In definition, a hedge fund is a pooled fund that utilizes several strategies to manage and invest funds. It is primarily a managed fund that can invest in bonds, commodities, stocks, or even in real estate. How it differs from a mutual fund is that, with a hedge fund, anyone who wishes to invest should be accredited.
That is, their minimum annual income should fall under a specific net worth, depending on the country they are in. In the United States, for instance, you need to have at least $1 million to be a part of a hedge fund. Most important, these investors should have the crucial knowledge for investing. Unlike mutual fund investors, hedge fund investors are also known as the “sophisticated investors”.
When talking about the structure of hedge funds, one can see some similarities to mutual funds. For instance, like the latter which depends on sub-advisors to manage the funds, the former can be run by managers. However, unlike mutual funds, hedge funds cover a wider range of investment strategies and a broader list of the kinds of investment positions that they can follow.
The most commonly known hedge fund structure is called the “limited or general partnership” model. Here, the general partner takes on the responsibility to operate the funds. On the other hand, limited partners can only invest into the partnership but can only be liable for their own paid-in amounts.
Typically, the general partner uses a typical structure, the limited liability company, also known as LLC. In this case, the general partner has the responsibility to both manage and market the funds. Additionally, they can perform the important functions such as hiring fund managers as well as administering the fund’s operations.
Despite the growing tension between China and the United States because of their ongoing trade war, experts and economic analysts argue that something good could still grow from the rising spat, especially for specific countries and economies that provide agricultural and petroleum-based products.
India, for instance, is one of the countries that can enjoy the benefits of the US-China trade war, especially on their cotton export sector. How? Basically, the United States is the number one exporter in the world of products such as fiber and it mainly answers to the biggest demands of millions of Chinese consumers – and the growing dispute may change all that.
With China’s imposition of a 25-percent tax on imported goods especially on U.S. farm commodities, including tones of cotton every year, this opens up an opportunity for other suppliers, especially India, to take on the role and engage with the huge Chinese market.
In fact, several contracts between Indian suppliers and Chinese importers have already been closed, assigning the biggest advanced deals of this year, with 500,000 bales of cotton heading directly to China after the first harvest season.
The same pattern will be expected once China finalizes its plan of imposing higher tariffs for goods from the U.S., especially when it comes to agricultural products – and this is where other countries of Asia can enter the picture.
Additionally, energy experts also predict that the expensive value of the U.S. oil due to the current US-China trade war may prompt Chinese purchases to focus on other sources such as Iran. In other words, China can easily replace their American-sourced oil with a much cheaper and accessible Iranian crude oil.
Most people believe that they are already living in the future, with all the innovations and technological advancements that the modern world has to offer. However, as the influence and power of the emerging sectors rise to the pedestal, the older and less technology-based industries are slowly shrinking.
Here are the rapidly dying industries that may not be able to cope with the pace of a technology-driven future.
Record Store and Recordable Media Industry
The increasing reliance of consumers on the internet has caused several industries to crash, and one of these is the recordable media manufacturing industry. CDs, DVDs and cassette tapes used to be the compact and portable solution for music lovers worldwide, but the latest introduction of music and movie streaming services online made these once practical options a rather inconvenient and old-fashioned alternative.
In fact, recent statistics show that the shift to music streaming has caused the music industry to lose billions in revenue, primarily because of the sudden change in consumer listening behavior.
Data Recovery Service Industry
The decline of the data recovery industry has been predicted years ago when the cloud storage technology was introduced to the public. Cloud-based systems from companies like Google, Amazon, and Rackspace give private users and even companies to store digital files of their system in a secure and easily accessible online storage.
Wired Telecommunications Carrier Industry
Even your trusty landline is facing an industry decline. Ever since the world became fascinated with the wireless and cordless power of cellular phones, many have seen the imminent death of the wired telecom carriers industry not only in the U.S. but also around the world.
Landlines used to be the main channel for communicating, but mobile smartphones have exceeded the former’s capabilities in terms of function, cost, and connectivity.
The modern private equity industry has an interesting history that dates back to 1946 when the very first venture capital firms were founded. One of them was the American Research and Development Corporation and the other was J.H. Whitney & Company. For 35 years until the late 1970s, several small volumes of investments focused on private equity were recorded.
But private equity, despite its early success among relatively smaller firms on Wall Street, became dormant for quite some time. However, the start of the 1980s gave way to headlines of several major buyouts that catapulted the industry into the frontlines.
For one, the story of Jerome Kohlberg, Jr. and Henry Kravis’ effort to form Kohlberg Kravis Roberts (KKR) followed by their famous purchase of the RJR Nabisco through a leveraged buyout became an inspiration for a book and a film, Barbarians at the Gate.
Although it was not the first LBO in history, the RJR Nabisco buyout was one of the largest at the time and the most phenomenal. Unfortunately, the KKR investment did not fare that long and ended in a substantial failure. From 1979 through 1989, thousands of leveraged buyouts were executed, recording a total transaction value of more than $250 billion.
The pre-2008 and the post-2008 eras of the private equity posed new challenges and advantages for the industry. During the early years of the 2000s, the changes in the liberal US monetary policy coupled with stronger credit markets make a blockbuster and large-scale buyouts possible for successful equity firms.
The years following 2008, however, introduced a new environment for private equity investing. The global economic crisis and the credit crunch as the primary obstacles prevented firms from obtaining debt financing and finding more attractive investments.
As the economy began to show signs of improvement, private equity buyouts also started to emerge and began their slow return to the financial scene. At present, the private equity industry is a booming environment that has become more acceptable to the public. Many modern-day investment companies, including those offshore such as LOM Financial, have capitalized on this sector’s potential as a viable investment option for portfolio diversification. They mostly have a long history of facilitating private placements in both listed companies or as-yet to be listed companies.
The world has witnessed different stages of industrial revolutions that have shaped not only the advancements of the present but also the innovations of the future. In the forms of intelligent machines, high-tech machinery and more, humans have continued to discover, explore and create.
However, there’s one factor in these advancements that have been continuously exploited and undervalued: energy and its unlimited but most of the time limited sources. As the world’s resources dwindle and become scarce from overharvesting, will there still be left for the generations to come?
Luckily, there are emerging sustainable and futuristic energy sources that are starting to be adopted by even the most highly industrialized nations in the world.
Solar Energy, for instance, is one of the most promising candidates as a top sustainable energy source. While the current scope of this type of energy is still in its early stages, small solar projects have begun to reach residential communities in the form of solar panels and solar water heaters. Another industrial country like Germany, for instance, rewards its citizens who opt for solar energy.
Nuclear Power is a popular topic among experts who touch on discussions in finding the ultimate energy sources of the future. At present, it covers 14% of the planet’s consumption. Despite its risks, its potential as a carbon-free power source places its role as an important energy provider for the generations to come.
Human power may sound straight out of a sci-fi movie, but researchers from around the world are currently testing on a technology that has the potential to produce energy from human movement. For instance, engineers in the UK have developed a knee brace that readily collects electrons while running, walking, or even bending the knees.
The popularity of the Social Media and other online networking platforms gave rise to influential online personalities, also known as “influencers,” who use their massive followings to promote their ideas, share their skills, or even empower people to move and make a difference.
Different influencers represent specific niche, creating content for a particular demographic or social group. Having this access to a particular audience gives them the power to reach the people who actively consume their content – and this particular structure makes influencer marketing a great tool when it comes to online marketing, even for small businesses.
In fact, many companies who made it into the top have sought the help of influencers to promote their brand to their target market. Small or big enterprises have their options when choosing their influencer marketing strategy based on their budget: investing in micro-infuencers or large-scale influencers.
However, investing in influencers to promote your brand is not as simple as paying someone with an impressive number of followers to mention your product or services. The first challenge that you might encounter is how you can reach out to them. While it’s easy to talk to lesser-known influencers, their more popular counterparts with over 100,000 followers may not be as accessible.
Choosing the influencers to promote your products should also be properly considered. The most important things to keep in mind is the quality of the influencer’s content. Additionally, the ideas that they represent should also align with your brand.
Lastly, credibility and validity should also be taken into consideration and this is where research will help the most. Bots, spam, and followers from fake accounts often make up a relatively large percentage of their list so make sure to check for a “verified” icon on their profile.