Category Archives: Investing

‘Old Guys In Florida’ Wonder If Cash Is Still Trash

Money-market fund returns and other cash equivalents haven’t looked this attractive since before the global financial crisis.

That has some investors rediscovering the once popular destination for parking money during times of uncertainty, especially now with equities flirting with record highs and the Federal Reserve committed to raising short-term interest rates even more. No greater authority than BlackRock Inc.’s Larry Fink pointed out during a Bloomberg Television interview that cash equivalents are an attractive place to camp out.

Whether that proves enough of an impetus remains to be seen, according to Peter Crane, who has been following the sector for decades and serves as president of Westborough, Massachusetts-based Crane Data LLC.

from FA News–likely-to-ponder-if-cash-is-still-trash-39853.html


Pressure Increases On BDs

The number of broker-dealers is decreasing as cost pressures continue to mount, according to Cerulli Associates, which released new data on Monday.

At the end of 2016, there were 1,070 broker-dealers with retail-focused advisors, 438 fewer than in 2006, a decline of 29 percent, the research organization said.

The 2008 financial crisis triggered numerous mergers and acquisitions and broker-dealers and broker-dealers have faced a decline in their return on assets, dropping from 87 basis points to 75 basis points over the five-year period ending in 2016, Cerulli said.

“While several factors caused return on assets to decline, the adoption of fee-based advice likely has had the largest impact,” the report in the latest Cerulli Edge said.

Advisors have decreased the amount of assets they assign to brokerage accounts to 31 percent of their business, and they plan to reduce that even further to 21 percent in the next two years.

The fact that markets have done well has countered some of that downward pressure. From 2011 to 2016, overall revenue for broker-dealers grew at a 4 percent annual rate.

Another factor impacting independent broker-dealers in particular is the introduction of hybrid RIA platforms by advisory firms, Cerulli says.

from FA News

UBS Investors Demand Sense Of Urgency With Rivals Closing In

In the high-stakes drama of soured loans and failed investment banking ambitions that is European finance, Sergio Ermotti has a problem others would love to have: His UBS Group AG is starting to look a little dull.

Seven years after a sweeping revamp of the bank, whose tilt toward wealth management became a blueprint for rivals, the chief executive officer is overseeing one of the most stable lenders in Europe. The stock is trading at a premium to peers, clients are adding assets and the bank reports predictable profits.

But as turnaround plans at peers such as Credit Suisse Group AG gather speed, some investors are asking whether UBS is doing enough to sustain its lead.

“People I speak to are just concerned the story has got a bit boring, a bit stale,” said Amit Goel, a bank analyst at Barclays Plc.

from FA News

As Fed Tightens, Investors Give Up Crisis-Era Rate Protection

U.S. corporate lenders are giving up safeguards that protect them from short-term interest rates falling close to zero, a step that could haunt them when the economy sours.

Almost 70 percent of loans to junk-rated companies made in the second quarter were missing a key protection known as a Libor floor, according to data compiled by Bloomberg.

from FA News–investors-give-up-crisis-era-rate-protection-39849.html

Maybe The Future Of Fund Management Isn’t So Bleak

Another week, and another consultancy firm is warning that the asset management industry faces a crisis in the coming years. I’m starting to wonder whether the apocalyptic warnings about the future of money managers underestimate the plasticity of the world of investment.

The global fund management industry enjoyed record net inflows last year, with total assets increasing by 12 percent to more than $79 trillion, according to a report released this week by the Boston Consulting Group.

from FA News–mark-gilbert-39842.html

Florida’s economy hits $1 trillion mark; it’d rank 17th in the world

Florida’s economy hit the sum of $1 trillion, meaning that if Florida were an independent country, it would be the 17th largest economy in the world, according to the Florida Chamber Foundation.

The state’s Gross Domestic Product (GDP) is higher than that of countries like Switzerland, Saudi Arabia, Argentina and the Netherlands.

“Becoming a $1 trillion economy means Florida is continuing to grow and create jobs, keeping unemployment lower than the national average, and creating economic opportunity,” said Jerry Parrish, Ph.D. Florida Chamber Foundation chief economist.

Every day about $ 2.74 billion is added to the state’s GDP, says the economist.

“This is a historic moment for Florida, reaching a record $1 trillion in GDP. By working every day to create private-sector jobs, we’ve been able to increase Florida’s GDP by more than $270 billion — 37 percent — since 2010,” said Governor Rick Scott.

“When I came into office, I made it very clear that we would get our economy back on track. Within seven-and-a-half years, private-sector businesses have created more than 1.5 million jobs, and Florida’s unemployment is at a low 3.8 percent. Florida’s growing economy is producing real results for families across our state,” he completed.

For financial consultant Claudia Vidal, this result strengthens the maxim that Florida remains one of the most attractive states for investors around the world. “Being a $ 1 trillion economy guarantees us a journey of active growth, giving people the ability to keep their jobs, which causes unemployment rates to drop substantially and in the end, this creates a land of consistent opportunity with the premise that Florida is a state envied by the rest of the nation. The difference is that now, it is not only the beautiful beaches and warm weather but a heated, pioneering and healthy economy, ” she emphasizes.

Florida raises the minimum wage to $ 8.25/h, but still one of the smallest in the country

Although it reaches the mark of $1 trillion, there is still room to grow. The increase in the minimum wage has long been pointed out by economists as an area that the Florida economy – and the national economy – must face to keep on growing. Frequently, with low unemployment, wages rise to attract talent, but the paycheck in Florida has not yet taken a competitive leap in recent years.

The chamber also launched the “Florida 2030” initiative to address problematic areas of the economy, such as the performance gap in schools and the poverty rate. Florida Chamber of Commerce press release stated:

“Consider that while achievement gaps are closing, 43 percent of 3rd graders aren’t reading at or above grade level. Also, while 1 in 14 jobs in the nation is created in Florida, our state’s 14.8 percent poverty rate includes 21.3 percent of children under age 18. While Florida is better than most states in these areas, the Florida Chamber will continue to lead reforms that create economic opportunity.”

“Florida 2030 allows communities to see how challenges and opportunities impact them and create their blueprints for how to move forward,” said Tony Carvajal, executive vice president of the Florida Chamber Foundation. “This growth in our economy is good news and reminds us of the positive impact that business, community, philanthropic and elected leaders can have on Florida when we work together toward a common goal of securing Florida’s future.”

Minimum Wage Florida

The state’s minimum wage increased 15 cents and went from $ 8.10 to $ 8.25 an hour on the first day of the year. The increase is the highest since 2012 when salary increased by 36 cents per hour and comes from a constitutional amendment approved by voters in 2004 requires that the Florida Department of Economic Opportunities annually assess the rate based on changes in the federal price index consumer.

While 18 states have raised their wages on their own, the federal minimum wage remains unchanged at $ 7.25 an hour since 2009, according to a National Employment Law Project report.

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