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Larry Summers Withdraws, Probable Boost for Equities

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Larry Summers

Larry Summers

In a letter addressed to U.S. President Barack Obama on September 15th, Lawrence “Larry” Summers withdrew his name from consideration to succeed Federal Reserve Chairman Ben Bernanke, whose term is to end on January 31st. Mr Summers served in both the Clinton and Obama administrations.

In the letter, Mr Summers cites as his reason for withdrawing an “acrimonious” confirmation process that “would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”

Money managers and economists perceive that Yellen would be more dovish than Summers.

The withdrawal comes after heated and vocal protests by senate democrats against his possible nomination. Separately, a group of 350 economists were against a nomination for Mr Summers, sending a letter to President Obama that urged him to consider Janet Yellen instead.

Economists and media outlets were more concerned with his perceived role in the most recent financial crises. They were especially critical of his high-praise of the repeal of certain provisions of the Glass-Steagall Act in 1999 and for his pre-crisis success in helping to prevent increased regulation of the derivatives markets.

Janet Yellen, a likely nominee, is professor emeritus at the University of California, Berkeley. She served as the president and CEO of the Federal Reserve Bank of San Francisco from June 14, 2004 until 2010. If nominated and confirmed, she is expected to continue policies similar to those of Ben Bernanke. This may be good news for Wall Street. A CNBC September Fed Survey taken last week revealed Wall Street professionals in a 5-to-1 margin preferred Janet Yellen over Larry Summers for the Fed post. Money managers and economists perceive that Yellen would be more dovish than Summers. A Yellen nomination would be a continuation of easy money policy, thus keeping equity markets afloat.

SWFI First Read, December 10, 2018

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IMF Bentham Opens New London Office

IMF Bentham Limited opened a new London office called IMF Litigation Funding Services Limited. The division will provide litigation finance, investment capital and strategic services for disputes in the EMEA region, which includes the United Kingdom, Europe, Middle East, and Africa.

Falck Renewables Buys Portfolio of Windfarms in France

A subsidiary of Falck Renewables acquired a portfolio of five onshore windfarms in north-eastern and western France from a fund affiliated with Glennmont Partners for €37 million. The sale was due to the fund’s divestment plan. These windfarms are located in Bois Ballay, Les Coudrays, Mazeray, Eol Team, and Noyales.

Carlos Ghosn Charged by Japanese Prosecutors

Japan government prosecutors indicted Carlos Ghosn, the former chairman of Nissan Motor, and the auto company. The indictment accuses the parties of violating Japanese financial laws by underreporting his compensation. Nissan disclosed Ghosn’s misconduct which included underreporting his compensation and using corporate funds for personal expenses.

OIF Plans to Go Defensive on Public Equities

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First Inning on Augmented Reality a Strike for SWFs

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Augmented reality (AR), which is not the same as virtual reality, is an industry that sovereign wealth capital has slowly permeated. The impressive technology has not made inroads into mainstream U.S. culture – remember Google’s efforts with Google Glasses. However, these augmented reality glasses may have industrial purposes such as in car production or logistics.

Malaysia’s Khazanah Nasional Berhad backed London-based Blippar, an augmented reality studio company. Blippar appears to be on the brink of financial collapse, according to a number of media sources. There is a dispute between investors Khazanah and Nick Candy, in which the SWF had blocked emergency fundraising. This fundraising effort would have most likely lowered Khazanah’s equity stake. In June 2018, Blippar raised an extra £20 million from investors to keep things running. David Rubin & Partners LLP was hired by Blippar as insolvency practitioners.

Magic Leap

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PREVIEW COVER: January Issue of the Sovereign Wealth Quarterly

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Here is a mockup cover of the next issue of the Sovereign Wealth Quarterly, the top publication on sovereign funds, pensions, and other institutional investors.

For advertising opportunities: https://www.swfinstitute.org/advertise/

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