Category: Business

Posted on

Wall Street Does the Money Dance

Share

A stellar performance by the major indices of the U.S. equity market serves as a sign of strong economic growth. The three major US equity indices; DJA, Nasdaq, and the S&P 500 finished the week with strong gains and new record highs.

The Dow Jones Industrial Average continued to gain traction, led by industrials. Aerospace giant Boeing, finished the day up 1.5 % and 4.3 % higher than the previous week. The Dow closed on Friday up 0.29 % to 22,268.34, the fourth consecutive day closing with a record high. This week, the Dow gained 2.16 %, marking the largest weekly gain since December 2016.

The Nasdaq Composite was up 0.3 % to 6,448.47, climbing back from a tough day on Thursday. For the week, the index gained 1.37 %, rebounding after a previous week of losses.

The S&P 500 surpassed the 2,500 mark for the first time. On Friday, the S&P 500 closed at 2,500.23, bringing its weekly gain to 1.56 %.  The industrial, telecommunications, and financial sectors all saw profits, while the healthcare industry lagged behind.

“The performance of the market is lifting the spirits of consumers, investors, and businesses, as well as raising confidence in U.S. equity” said Keith Knutsson of Integrale Advisors.

The positive performance comes despite lower than expected economic data released Friday morning, following a deadly terrorist attack in London and the recent North Korean missile launch over Japan. Wall Street investors are looking ahead to next week, when the Federal Reserve Board is set to meet. Economists are expecting the Fed to leave interest rates unchanged while proposing a new plan to unwind its massive balance sheet.

Posted on

U.S. Productivity Growth Q2

Share

U.S. worker productivity expanded faster than previously expected in the second quarter, signaling a slow but steady economic growth.

According to the Labor Department, nonfarm business-sector productivity, measured as the goods and services produced per hour worked, increased at a 1.5% seasonally adjusted annual rate in the second quarter, up from a 0.1% growth rate in the first. Economists had expected a 1.4% revised second-quarter growth rate from a previously reported 0.9%. Overall, output increased 4% from the first quarter, while hours worked were up at 2.5%.

“Productivity growth in the second quarter delivers an encouraging sign for longer-term growth” said Keith Knutsson of Integrale Advisors.

The cost of a unit of labor at nonfarm businesses rose 0.2% in the second quarter from an initial estimate of 0.6%. In 2017, unit labor costs are down 0.2%.

Despite the positive outlook, U.S. annual wage gains have remained stagnant at 2.5%, even though the unemployment rate has been at a 16-year low in recent months. Weak productivity gains can result from demographic factors like slowing population and labor force growth. If a downshift in productivity growth occurs, it can put serious pressure on business profits, making it difficult for employers to justify increasing wages.

It is currently unclear whether the increase in productivity signals a broader, more sustainable shift in the economy. A strong performance of productivity, such as the technology boom of the late 1990s and early 2000s, can boost household incomes and spur economic growth throughout the nation.

 

Posted on

Economic Sentiment Soars

Eurozone
Share

In August, economic sentiment in the eurozone recorded its highest level in over 10 years. This was led by rising confidence among consumers as well as companies in service and industrial sectors.

The Economic Sentiment Indicator, which tracks business and consumer confidence in Europe, jumped to 111.9 from 111.3 in the previous month. This records the highest level since the summer of 2007. Economists are predicting steady, continuous growth in the coming year.

Italy recorded the sharpest rise in economic sentiment among the Eurozone economies, followed by France and Spain, a signal that the recovery is spreading throughout the continent. The increase in confidence further promotes expectations that the eurozone will remain on a solid growth path in the second half of the year, despite a stronger euro. In addition, the European Central Bank is set to begin the reduction of its stimulus program, mimicking the actions of the U.S. Federal Reserve last week. ECB President Mario Draghi could signal for a gradual decrease as early as the bank’s next policy meeting, set on September 7th.

“Robust confidence in eurozone countries suggests that growth will accelerate through the rest of the year” said Keith Knutsson of Integrale Advisors.

The European Economic Commission said industrial companies in the euro currency bloc increased employment plans and selling-price-expectations. On the other hand, consumers’ price expectations were not affected. An improving economic outlook also prompted Moody’s to lift its growth forecasts for the eurozone to 2.1% in 2017 and 1.9% in 2018.

Posted on

Lagging capital flows: A Sign of Safer Financial Markets?

Share

With gross cross-border capital flows totaling 65 percent less than in 2007, the global financial crisis is continuing to shape the global financial system; large European and US banks have retrenched from foreign markets. Investors should be aware that these facts don’t symbolize a detrimental future for financial globalization. Despite inherent risks, the slow recovery from pre-crisis conditions signals towards an increasingly stable and risk-sensitive opportunity for financial globalization. Measurements in the volatility of foreign direct investment reveal a larger share in global equity than before the crisis. Overall, current financial and capital accounts imbalances have decreased – dropping from 2.5 percent of world GDP in 2007 to 1.7 percent in 2016.

One of the major factors towards the retreat of gross cross-border capital flows are the Eurozone banks.  The total of foreign loans and other claims in 2016 were down by $7.3 trillion (45%) since the crisis. Close to half of the retreat in investment occurred at the hands of intra-Eurozone borrowing, with interbank showing the largest decline. This retrenchment reveals that global banks are reappraising country risk. Domestic policies aimed at promoting internal investments, and new regulations complexifying foreign operations result in the current market developments.

Blockchain, new digital platforms and machine learning will create new systems for cross-border capital flows and further broaden participation. Keith Knutsson of Integrale Advisors argues, “New technologies most definitely increase transaction speeds and reduce cost barriers to transact across borders, but the challenges arise through the methods regulators will employ to monitor and manage a new financial age.”

Indeed, central banks of developed countries have been increasingly prevalent in capital markets, providing both capital as well as liquidity through unconventional policies. Assets of the European, Japanese, English and US central banks have nearly tripled since 2007, reaching $13.4 trillion in 2016. Central banks were forced to intervene in the money and financial markets to ensure liquidity.

Posted on

Real Estate Programs: How the Universities of the USA stack up

Share

The unpleasant working hours and the grim atmosphere in the Finance industry has caused many gifted students to jump ship into the sector of real estate and Entrepreneurship. Firms like Google and Facebook have long taken over major banks as dream employers while real estate offers a myriad of job opportunities.

Yet compared to (investment) banking and consulting, recruitment for jobs in the real estate sector is less structured. Large companies in this sector don’t focus their recruitment like tech firms and investment banks at prestigious campuses with set amounts of students hired per year, rather revolving it through personal connections.

This approach seems logical, as many of the skills for real estate jobs for hedge funds or private equity firms require skills like those used in Finance: analysis, pricing, logic. A major difference are people skills.

With such similarities, and current development in job prospects, real estate programs and business programs carry many similarities. It is therefore vital to evaluate both: undergraduate business programs and real estate programs to judge among the most exceptional programs in the nation.

The rank of each program is usually measured through various metrics, as the methodology of Forbes, Princeton Review, and the US News & World Report suggest. Unfortunately, many of these rankings are geared towards prospective students with wellness in mind, emphasizing various metrics that are of little importance for recruiters and businesses.

“It is always important to keep in mind the different interests of the parties involved; the characteristics of a university that stand out to a student are not necessarily aligned with those of a recruiter” said Keith Knutsson of Integrale Advisors.

For example, the Forbes ranking bases 50% on the happiness and debt level of students, and an additional 7.5% on students’ graduation rates.

The Princeton Review bases its ratings “on surveys of 137,000 students at the 382 schools,” with each survey covering 80 questions. The questions cover a student’s opinion on:

  • school’s academics/administration,
  • life at their college
  • their fellow students
  • themselves

While this approach certainly creates results with large samples, the qualitative nature of the questions, unreliable nature of peoples’ opinion, and lack of relevant information make it difficult to take such results as a serious metric for program rankings.

The US News & World Report on the other hand arrives at its results for Undergraduate Business rankings by surveying “deans and senior faculty members at each undergraduate business program accredited by the Association to Advance Collegiate Schools of Business.” The opinion of those surveyed is assessed, creating the ranking seen on the website.

Additionally, those same respondents nominate the ten best programs in business specialty areas like accounting, marketing finance, and real estate. Those programs that received the most mentions in each area appear on the site ranked in descending order by number of mentions.

Under these metrics, the real estate rankings for 2017 are as following:

  • University of Pennsylvania
  • University of Wisconsin – Madison
  • University of California – Berkeley
  • University of Georgia
  • University of Southern California
  • New York University
  • University of Texas – Austin
  • University of Florida
  • Marquette University
  • Cornell University

This mention-only ranking notably differs from the results of the overall best undergraduate business programs which are:

  • University of Pennsylvania
  • Massachusetts Institute of Technology
  • University of California – Berkeley
  • University of Michigan – Ann Arbor
  • New York University
  • Carnegie Mellon University (tied)
  • University of Texas – Austin (tied)
  • University of Virginia (tied)
  • Cornell University (tied)
  • Indiana University – Bloomington (tied)

Other methodologies such as the College Report from Payscale rank schools by the average starting pay and mid-career pay of alumni. The value behind such information is well-reasoned, but the data lacks information regarding graduate degrees and doesn’t cover a considerable portion of students. Until such data can be more comprehensive, it seems as if the US News & World Report has the most usable information for businesses and recruiters alike.

Posted on

Prosperous European Real Estate Market Leads to Growth for Alternative Assets

Share

Low interest rates imposed by the European Central Bank have made the European real estate market surge in foreign investments in recent years. The artificially low rates deem stocks risky and bonds expensive, nudging people to real estate investments instead. Additionally, momentum on real estate prices has occurred amidst quelled concerns regarding a rise in European populism, pricing in political stability and success of the Eurozone’s economic recovery.

CBRE Group analyzed investor’s preference for the European market and attributed it to widespread attractive Sharpe ratios, liquidity, transparency, and strong economic fundamentals growing rental value in the area.

In these flourishing market conditions, Germany emerges as a hotbed for real estate investments, while ongoing Brexit negotiations have seized London’s long-established place at the top.

The European real estate transaction volume has been experiencing steady demand and shortage of supply. Yet it is the new market trends are hidden within the promising industry performance; investments in alternative real estate (e.g. datacenters) are benefiting due to urbanization and changing consumer habits of e-commerce. Per the Global Alternatives Survey 2017 produced by Willis Towers Watson, investments in alternative assets have hit $6.5 trillion for the first time, with real estate managers managing the largest share of assets at 35%. While the report cautions investment strategies on debt leverage, European investment are regarded as safe for “as long as prolonged deflation can be avoided.”

Keith Knutsson from Integrale Advisors commented on the growth of alternative assets, stating that “for investors to continue locking-in alpha opportunities in a capital-filled, low supply market, new forms of alternative assets are vital.”

Posted on

Principle Valued Approach outlined by Keith Knutsson

Share

Successful real estate investment requires an enormous amount of commitment, sometime requiring more hours than the typical 40-hour work week. But, this comes easily when you are incredibly passionate. Investment management professionals must balance on the entrepreneurial tight rope, sticking to their niche market, seeking off market deals, and leveraging the full capacity of your team. Naturally, tension arises and there is a need to change gears, which requires patience.

Some of the most successful centi-millionaire family offices steward their money effectively because the approach is concise, with efficient means of implementation, and strategic. While some deals go smoothly and others feel like roller coasters, being able to maintain composure and patience while enduring the short-term calamity is key for focusing on the end-goal.

In contrast, those who fail to occupy enough valuable land, don’t envision the long-term, don’t add value, don’t optimize their operations, and are impatient. As specified by Keith Knutsson of Integrale Advisors, “the key is to identify a niche and commit, regardless of distractions.” A niche offers credibility as well as an ease of communication with a common goal in time. Intrinsically investing in your company is important because it is ultimately the driving force that sells others and convinces others that they feel comfortable putting their money with you.

Posted on

Keith Knutsson of Integrale Advisors Announces Business Scholarship

Share

The application period opened today for the Integrale Advisors Scholarship Program. This is an undergraduate scholarship for all students in the nation, providing up to $1,000 per year for four years of study for high-achieving students with financial need.

The application period will remain open until September 10, 2017.

Each scholarship is intended to cover a share of the student’s educational expenses – including tuition, living expenses, books and required fees.

“People from Integrale commit their time and ideas to encourage young people through our Young Mentor Program (YMP). Now for the first time, Integrale will assist young people by offering a scholarship to help with their academic pursuits,” said Keith Knutsson Managing Director of Integrale Advisors.

Scholars are selected based on exceptional academic ability and achievement, financial need, persistence, service to others and leadership. Students must be residing in the U.S. at the time they submit their applications. Scholarships are awarded without respect to religion, sexual orientation, gender identity, citizenship status, geographic region, race or ethnicity.

Applicants must earn a cumulative unweighted GPA of 3.2 or above and must be currently enrolled in an undergraduate or graduate program at an accredited university or other institution of higher learning in the United States. Candidates should apply through instructions on the Company’s website  http://IntegraleAdvisors.com/scholarship