SHEUMACK GMA

From the SGMA RRA Team:     Global exchange operators are now much more than (simply) listing venues. Their demand for broad-based portfolios of corporate (issuer) services and data and analytical solutions including traditional as well as non-traditional (e.g. new asset classes) benchmarking tools seems to be permanent and insatiable.     We Are The Global Financial Services Industry And Market Structure Specialists,     Follow us at https://lnkd.in/ewcDQNAp and visit us at www.SHEUMACKCO.com....and:      YOUR SUCCESS = OUR MISSION  

THE SGMA GFM HEATMAP (Edition October 2024) GLOBAL EQUITY MARKETS (YTD 2024 performance): China. +33.4% (notable here is the ~3.3% YTD performance through 9/9 followed by ~33.5% increase since, following wide ranging stimulus measures announced on 9/24); U.S +20.6%; Japan +15.5%; Canada +15.3%; Germany +14.1%; India +13.1%; Italy +10.7%; Australia +7.4%; United Kingdom +7.1%; France +0.0%; Brazil (1.8%); South Korea (3.2%). THE FINANCIAL SERVICES INDUSTRY Among SGMA's 9 Global Financial Services Industry Sectors (which includes more than 50 SGMA Sub-sectors) the strongest YTD performers include (1) Financial Business Services and Professional Consultancy (+56.5%); (2) Electronic & Discount Brokerage (+36.9%); (3) Specialized Advisory Investment Banks (+33.3%); (4) Property & Casualty Insurance (+32.5%); (5) Commercial Finance & Leasing (+32.1%); Australian Midcap IWM (+31.6%); Institutional Market Makers (+31.6%); Midcap North American IWM (+26.6%); and Australian Integrated Depositories (+22.7%). Those who have worked with us a while know all too well that certain of the SGMA financial services industry sectors are LEADING and some are LAGGING indicators. Across the board, valuations are rich on both an historic and comparable basis. U.S. MACROECONOMIC SNAPSHOT The September employment report released on Friday (Employment Situation Summary - 2024 Q03 Results (bls.gov)) exceeded expectations, with 254,000 jobs added, 51,000 (or ~20%) more than the average monthly result of the last 12-month period and a material jump from the 159,000 added in August. The U.S. unemployment rate nudged down to 4.1% (v/s 4.2% in August). While a closer look under the hood triggered some debates as to “quality v quantity,” all major U.S. equity indices ended the day higher, with gains of ~100bps for each of the DJIA and S&P500 (^SPX), and a ~125bp and ~150bp gain by the NASDAQ and Russell 2000, respectively. Both the Dow and S&P500 came within a hair of reaching, intraday, an all-time high. So where does this leave us on valuation? ^SPX is now @ 29.6x LTM EPS and 24.1x ‘24E EPS, which compares to 16.1x (mean) and 15.0x (median) since 1870.

On May 05, 2004, Greenhill & Co., Inc. (then: NYSE:GHL; now: NYSE:MFG) priced an IPO of common stock, becoming the first specialized advisory investment bank to transition from privately held partnership to public company. This offering of capital securities and financing transaction proved both prescient and seminal. Management was visionary and successful in persuading investors to look beyond the inherent risks of a narrowly focused business model, heightened earnings volatility and human capital concentration risk and instead support a team and business model on the cusp of a secular expansion, requiring minimal capital, and capable of producing handsome operating margins and lucrative shareholder returns. To add much-needed investor confidence in support of this evidently novel concept, management promised no share sales in the IPO by employees, employee remuneration not to exceed at 55% ratio, and a regular quarterly dividend to ensure current income sharing and alignment of interests. This IPO, and perhaps more causally GHL's solid after-market business performance, catalyzed a wave of private partnership-to-public company transitions by midsize & specialized investment banking firms, many advised, co-advised or covered in the after-market by SGMA partners. Scarcity Value, A “Pact” Honored And Wealth Creation: Getting public as a monoline specialized advisor was no small feat. Management then executed both the business plan and delivered on its promises ("the pact") to its new institutional investor partners. GHL rewarded shareholders handsomely and enabled other peers to follow it to the public market. Over the span of its public life, GHL enriched its shareholders to the tune of $664M in cumulative dividends and $1.1B of common share repurchases.  GHL-Envy And The Knock-On Effect: GHL became the envy of the securities industry and investment banking sector, fortifying the confidence of those considering a me-too strategy to become public; reassuring institutional investors who might consider lining up for similar subsequent offerings, and tempting other bankers at bulge bracket firms to take their own chances on/at an independent platform. GHL’s equity market cap, ~$540M on a fully distributed basis at the time of the IPO, peaked in 2014 at ~$3.0B.  Blazed Trail, Cleared Path, Delivered Paydirt.....Then Waited Too Long: We don’t necessarily expect the revisionists and 20/20 Experts to conclude GHL will be best remembered for waiting too long but we believe management’s steadfast determination to ride the carousel solo for so long cannot be dismissed. We believe GHL missed the biggest payoff of all by running solo beyond an essential strategic point in the corporate lifecycle we at SGMA have defined as the optimal strategic leverage fulcrum (or “OSLF”). This decision-making resulted in GHL being acquired by Mizuho Financial Group at a time of marginal strategic weakness as compared to strength. YOUR SUCCESS = OUR MISSION

From the SGMA RRA Team:     The arms race within the intensively competitive and rapidly evolving global securities & capital markets industry continues with innovation, competitive pressure, regulatory change and investment community (“buy-side”) client demands driving the development and expansion of cloud-native ecosystems and multi-asset class, multi-jurisdictional capabilities.     YOUR SUCCESS = OUR MISSION 

Today we Salute the United States Air Force 77 Years Happy Birthday and Thank You For Your Service

THE SGMA GFM HEATMAP  (Edition September 2024)     GLOBAL EQUITY MARKETS (YTD 2024 performance):  U.S. +18.0%; India +14.7%; Canada +12.5%; Germany +11.6%; Italy +10.6%; Japan +9.3%; United Kingdom +7.0%; Australia +6.7%; China +1.9%; Brazil +0.5%; France (1.0%); South Korea (3.0%). THE FINANCIAL SERVICES INDUSTRY  Among SGMA's 9 Global Financial Services Industry Sectors, the strongest YTD performers include Financial and Professional Consultancy (+44.9%); Property & Casualty Insurance (+31.7%); Australian Mid Cap IWM (+27.3%); Specialized Advisory Investment Banks (+27.0%); Institutional Securities Broker-dealers & Market Makers (+25.2%); Australian Integrated Depositories (+24.9%); Commercial Equipment Leasing (+24.8%); Lending Software (+23.5%); and Mortgage Insurance (+22.7%). U.S. MACROECONOMIC SNAPSHOT  The August employment release did not settle the recession debate crystalized earlier this summer. Despite an uptick in U.S. unemployment and recessionary signaling, the U.S. economy exhibits continued robustness (or at least resilience). 2024 GDP has been revised to 2.6% (from 2.4%) following stronger-than expected Real GDP readings in Q2 2024.  SEPTEMBER AND THE FED – WHOSE COMPANY WILL IT KEEP?  The September Fed meeting is much anticipated…and fast approaching (Wed. 09/18). A 25bp easing from 5.25-5.50% - the first easing since March 2020 - is all but fully baked in. Inflation or employment? We believe the latter may hold the advantage in driving the Fed’s decision this time ‘round: Will it stop at 25bps or go the full 50? Our FWIW moment this week: we believe the latter. As our firm’s business is global, we do keep a particularly keen eye on what’s going on both inside the United States and beyond. In forming our views, we incorporate into our thinking recent central bank action of other developed economies. So here goes: The Bank of England eased on Aug 1 by 25bps to 5.00%, its first cut since March 2020. Consensus indicates no change at its Sept. 19 meeting. The ECB eased 25bps on Sept. 1 to 3.50% (second reduction in 2024) as economic growth forecasts again were revised down. The Bank of Canada eased 25bps on Sept. 4 to 4.25%, the 3rd cut since June and the first time since the GFC that BOC has cut 3 consecutive times. Meanwhile, the RBA has maintained its Cash Rate at 4.35% since Dec. 2023 and ruled out a rate cut in 2024 (note: analysts forecast easing in 2025 to ~3.60%)….not surprising to us given the issues being faced by China, its largest customer, and notwithstanding a systemic and severe domestic housing shortage.   SOVEREIGN RATE TRACKER:  SGMA Sovereign Rates HeatMap including the 10-Year Comparative Graph is on Page 7. 

From the SGMA RRA Team: Within the global asset and wealth management industry, the ~$5TN managed accounts market grew ~15% in 2023 and is forecast by certain industry analysts to reach ~$8TN by 2027. The Bank Of New York Mellon (NYSE: BK), d/b/a BNY, is an integrated global financial institution; the 20th largest North American BHC and 40th globally; America’s oldest bank and the first company listed on the NYSE, and; the world’s largest custodial bank and securities services provider with ~$50 TN of total AUC and / or AUA and more than ~$2.0 TN of total client AUM. Recently, BNY announced its intention to acquire Archer, a tech-enabled provider of managed account solutions. Here's our SGMA Midweek TCA providing a brief overview of the two parties, the transaction and their strategic thesis. YOUR SUCCESS = OUR MISSION

September 11, 2024 TODAY we remember and honor all who went to work on a clear September morning 23 years ago and did not make it home to their family.     WE PAY tribute to all our colleagues and others in the Twin Towers and The Pentagon who courageously escaped in the face of imminent danger.     WE HONOR the heroes who made the ultimate sacrifice in their valiant, selfless efforts to save others including the passengers aboard Flight 93 in the skies above Pennsylvania and those who paid the ultimate price years later.     WE PAUSE to pray for the continued strength and faith of all who lost loved ones.     WE GIVE thanks to the members of our Armed Forces and our Allies for their service in the months and years following September 11, 2001 and for reminding us that the price of freedom is sometimes high.    IN THESE PRECIOUS MOMENTS of tribute, remembrance and reflection today, and with their guiding spirit, we find inspiration, humility, strength, resolve and determination.    God Bless. SHEUMACK GMA

What It Means To Be Global Today The North American Capital Markets Opportunity Compelling And A Must-Have Fee Pool North America is a must-have market for banks aspiring to be a global player. North America’s capital markets represent the world’s largest and most efficient capital raising and risk transfer platform – an unmatched new issuance environment, unrivalled secondary market liquidity pools enabling risk transfer and the largest fee pool in each asset class and product type. Our markets have grown AND evolved, with 30-years of accelerated market structure evolution having permanently changed the playing field. Yesterday’s business model is a relic. Yesterday's playbook is no longer relevant. While market structure evolution has leveled the global economic playing field, including democratizing access, it also has altered the rules of engagement. So, what is the upshot? 1. If scale is the goal, an exclusively organic strategy is virtually impossible in today’s marketplace. A “build it” strategy is prohibitive, in terms of both cost and time with a lower assigned probability of success than ever before. 2. Fee pools are increasingly important, cross-border service an imperative. 3. To establish a Top-20 market position, investing in and or partnering with a scaled incumbent may be the smartest and most efficient path to global scale. 4. In an era characterized by a growing field of comers, aspirational 2nd and 3rd tier domestic banks need to play both offense AND defense. 5. For banks seeking a bona fide global brand and reputation we believe a meaningful North American presence, league table position and share of the available fee pool is no longer a nice-to-have but a must-have. The SGMA RRA Team is pleased to share this Edition 34 of our CEO Dimensions Series. Consider this, then let's have a discussion. YOUR SUCCESS = OUR MISSION