Keith Kelly’s Post

Interest rates are at a 23-year high. But last week, the Federal Reserve gave its strongest signal yet on incoming rate drops. The first cut could come as early as mid-September.  Learn how FINOFR can help your institution prepare for a rate-drop market. https://lnkd.in/eXdfDe-S #lending #fintech #innovationinbanking

Courtesy of MarketWatch: "What we realized is that for most people, it was still too complicated,” Leif Abraham, Public’s co-founder and co-CEO, told MarketWatch. “It’s like, can we just simplify it for you? Basically the same as we did for the U.S. T-bills for the Treasury account, but do it for corporate bonds." "This is what led Public to launch its Bond Account, another automated account that allows people to invest across 10 corporate bonds to lock in yields higher than what Treasurys are offering. As of Tuesday, Public says, this yield is around 7.3%." Public is a Forecast Labs portfolio company. https://lnkd.in/e6m6hfuu

Our industry is transitioning from the ultra-low interest rates of the post-Great Recession era. The Federal Reserve is now addressing inflation by increasing overnight interest rates and reversing quantitative tightening, balancing its focus on both inflation and unemployment. This is leading to the following: - Industry Vulnerability: Fewer term deposits and increased money migration risk. - Abundant Deposits: Entered 2022 with more deposits than loan demand. - Market Response: Rising interest rates force bankers to reconsider deposit structuring and pricing. - Depositor Awareness: Increasing recognition of potential earnings on deposits. High-performing bankers can change the game by: - Letting inactive depositors remain undisturbed. - Efficiently engaging with curious and actively seeking depositors. This balanced approach helps banks thrive amid economic changes. Learn all of this and how to bullet proof your deposit strategy with ALM and deposit expert Neil Stanley here at Banker's college. #deposits #ALM https://lnkd.in/ghA_gsPC

For private equity market in the US, 2023 turned out to be a bad year and the pain won’t likely end until it’s clear that central banks have truly decided to stop hiking rates. US private equity firms bought or sold $871 billion in assets last year, the lowest level since 2016 and the projected rate of distributions to private equity investors was the second- smallest in a quarter century. The main factors responsible for this performance included high borrowing costs, economic uncertainty and sluggish fundraising. And as they’ve been slow to return capital to pension funds and other key investors, once-reliable clients are maxed out on the cash they’re willing to allocate to such investments. The value of IPOs also fell 60% in 2023 from their peak two years ago. In spite of the turmoil, investors are sitting on record amounts of cash which augurs increased deal-making in 2024, and lenders are increasingly interested in private equity transactions, particularly less risky purchases. Also, for the PE market to take off, the real catalyst will be an assurance that the Fed will not raise rates ay further. (Source: Bloomberg Businessweek)

Every new disappointment with regard to the number of interest rate cuts and how soon we get to them, is more than shaken off with buy-the-dips taking the market back to record levels. As long as each quarter most of the S&P 500 companies exceed expectations, this market is only going to continue going vertical - straight up. Any investment you made in crypto or equities since the GFC isn't just up, it is way-way-way up!

Carl Kaufman of our Strategic Income Fund (OSTIX) was recently quoted in a Morningstar article called, “Why Is Everyone Always Wrong About the Fed?” Carl is a good person to ask, as he and his team have avoided the guessing game by leaning into the inverted curve, overweighting short-dated bonds, and patiently waiting for the Fed to make a move. Read the article here: https://hubs.la/Q02k2yy30 #Fed #fixedincome #investing #bonds

In QuantStreet's latest piece, we discuss market performance in August and the current drivers of economic sentiment (inflation, jobs, Fed). We argue that the economy is slowing, but it's not quite as bad as some would have you believe. We also do a deep dive into the performance of asset classes in past episodes of Fed easing and discuss positioning for the month ahead. https://lnkd.in/e7FUz9wG

While the Fed’s dovish pivot may signal the worst of inflation is behind us, there are several dangers lurking in the year ahead that could bring a resurgence in inflation, upending plans for policy normalization. Nevertheless, in our view, central banks will indeed start calibrating real rates – even absent a recession – which should be supportive of risk assets. With this backdrop, UBS Hedge Fund Solutions (HFS) plans to increase exposure to fundamental equity and carry-focused credit strategies, while marginally reducing allocations to Trading, namely systematic approaches. Learn more in the HFS Q1 2024 Strategy Outlook. #shareubs #hedgefunds #alternatives #assetmanagement

Market overview 2024-01-31. The reports of the first group of "monsters" were not so optimistic to justify their high level of quotations, and the Fed's speech, although it was soothing, still pushed back the expectations of the beginning of lowering the rates from March this year to May. All this, together with the factor of the end of the month, determined the movement of the main stock indices in Wednesday's trading, reducing them within 2.3 percentage points. The main charge of selling was felt in the Technology sector, where participants preferred to reduce positions in the "Magnificent Seven". At the same time, the Dow Jones 30 blue chip index showed a much smaller decline, making it clear that large funds are not yet inclined to dramatize the situation and continue to hold positions in industrial sectors. An alarming signal came from the Financial sector, where a significant weakness of banks, primarily related to mortgage lending, is seen.

Economic Outlook: Anticipating Rate Changes in 2025 The Federal Reserve's June 2024 projections indicate a potential rate decrease in 2025. Currently, the federal funds rate median is at 5.1%, with a forecasted drop to 4.1% next year. This projected decrease could have significant implications for businesses and investors, affecting borrowing costs, investment strategies, and economic growth. Navigating Rate Changes with Confidence Understanding these changes is crucial for making informed financial decisions. At Simple Financial LLC, we specialize in guiding clients through complex financial landscapes. Whether you're optimizing your investment portfolio or strategizing your business finances, our expertise provides the clarity and direction you need. Our comprehensive consulting services (personal, family, and business) are designed to help you adapt and thrive in any economic environment. We ensure your business is well-prepared for future financial shifts. What can you do to benefit from the FOMC Projections? 1. Prepare for Lower Borrowing Costs: As interest rates are projected to decrease, plan potential investments or expansions that could benefit from reduced borrowing costs in 2025. 2. Strategize Asset Allocation: Consider reallocating your portfolio to take advantage of sectors likely to benefit from lower rates, such as real estate, dividend-paying stocks, large cap growth, and cryptocurrency. 3. Review Existing Debt: If you have variable rate loans, monitor them closely and plan for possible refinancing opportunities in 2025 to capitalize on lower rates. Don't let market uncertainties dictate your next move. Contact Simple Financial LLC today for strategic financial guidance. Together, we can build a strategy that ensures your financial stability and growth, regardless of the Fed's next move. #FinancialPlanning #InvestmentStrategy #InterestRates #FederalReserve #EconomicOutlook #BusinessConsulting #SimpleFinancial #CFOservices #BusinessGrowth For more info contact: Justin Lizama, Principal of Simple Financial 801-876-1171 jlizama@simplefinancial