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SWFI First Read, September 21, 2015

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82% of Polled Economists Wrong on Fed Move

The Federal Reserve did not raise interest rates in September. Back in August, The Wall Street Journal surveyed economists over a 5-day span. 82% believe the Federal Reserve’s first rate increase would come in September. 13% believed the Federal Reserve would wait till December.

Kessler Topaz Meltzer & Check, LLP Pursues LifeLock Inc.

Pennsylvania-based Kessler Topaz Meltzer & Check, LLP, a law firm, has pursued a class action lawsuit against LifeLock, Inc. On July 21, 2015, shares of LifeLock fell more than 49% after the U.S. Federal Trade Commission (FTC) “asserted that LifeLock violated a 2010 settlement with the agency and 35 state attorneys general by continuing to make deceptive claims about its identity theft protection services, and by failing to take steps required to protect its users’ data.”

Mubadala Finalizes Ownership Over Piaggio Aerospace

Mubadala Development Co. is now the 100% owner of Piaggio Aerospace. Piero Ferrari sold his remaining 1.95% stake to Mubadala. Piaggio Aerospace manufactures the Avanti turboprop and the unmanned P1 HammerHead. These unmanned aerial vehicle (UAV) are also known as drones.

Possible Shortlist for GE Asset Management

General Electric (GE) has put GE Asset Management up for sale. Possible buyers include: Invesco, Franklin Templeton, Goldman Sachs, BlackRock and Ameriprise Financial Inc. A private equity firm like KKR or Carlyle Group could step in.

Ireland Strategic Investment Fund Considers Backing Alternative Ways to Finance

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Maiden Lane I Ends, Federal Reserve Aims to Shrink Balance Sheet

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The U.S. Federal Reserve’s balance sheet has been set to decline automatically since 2017, as the central bank has been liquidating funds from its US$ 4 trillion in Treasury bonds and mortgage-backed securities. As holdings matured, the Fed refrained from reinvesting them. This amounts to US$ 40 billion in monetary tightening monthly. Meanwhile, interest rates have slowly, and continuously, risen. The maturation of these Fed assets could exert upward pressure on long-term yields.

Mortgage rates, applications, and home sales have been falling, likely due to the rising rates. While rates are still historically low, U.S. President Trump has criticized the rate hikes. However, the Fed has no interest in changing course, and rates are set to continue to rise. According to Fed meeting minutes, “The Chairman suggested that the Committee would likely resume a discussion of operating frameworks in the fall.”

The size and content of the Fed balance sheet going forward will be a point of discussion for Chairman Jerome Powell. While there is no end in sight for the Fed’s plans to tighten economic policy, changing conditions may warrant further examination. With the U.S. stock market thriving, there is no indication that tightening has had a material impact on the economy. However, conventional wisdom asserts that the Fed will raise rates “until something breaks.” Market commentators have also suggested that, in the event of an emergency, the Fed will have a harder time stepping in due to the size of its balance sheet. A large part of the Fed’s monetary strategy is based around communications, and Fed-watchers have made a habit of hanging on every word. The Fed announced a shrinking balance sheet well in advance, and made gradual moves in that direction. The process has been smooth thus far. The Fed’s tightening will reach its peak, US$ 50 billion, in October. It is unclear exactly how much stimulus is still needed in the economy to reach the Fed’s 2% inflation target. The Fed’s easing policies have been criticized for the lopsided benefits they provided, more for Wall Street than Main Street. However, the easing will reduce their role in the market.

The End of Maiden Lane I

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QIA Gets a New CEO

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Sheikh Abdullah Bin Mohammed Al-Thani exited as CEO of the Qatar Investment Authority (QIA). He has been appointed as minister of state by Amiri Order No. (4) of 2018.

Mansoor bin Ebrahim Al-Mahmoud is appointed as the new CEO of QIA. He held positions in various organizations such as CEO of Qatar Development Bank and worked at Qatar Museums.

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SWFI First Read, September 19, 2018

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QIA Eyes Investment in Chinese Lender Lufax

The Qatar Investment Authority (QIA) is in talks about a possible investment into Shanghai-based Lufax, one of China’s largest online lenders. The seller of the possible stake is China’s Ping An Insurance (Group) Co. Ltd. Lufax’s official name is Shanghai Lujiazui International Financial Asset Exchange Co. Ltd.

Wealth Funds Back Hotpot Giant

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