By Bilal Hafeez 17-09-2019

The “Liquification” of Private Markets is Underway (Bloomberg Markets P&L, 28 min listen)


(You can listen to the podcast by clicking here)

In this wide-ranging episode, Christopher Wolfe from First Republic Private Wealth Management talks about how equities in the US public market are now yielding lower returns, and how the low cost of money in the US has made investing in private interests a more lucrative practice. Then John Butler, TMT Analyst from Bloomberg Intelligence, argues that Elliot Management was looking for AT&T to get more focused on its strategic development after the Times Warner acquisition and the current conglomerate approach AT&T takes. Sakhila Mirza from the London Bullion Market Association explains how investors currently trade gold and other precious metal using different derivatives, as well as how these assets were priced. Finally, Rich Miller from Bloomberg News interpreted how US Presidential Candidate Elizabeth Warren’s ‘rich tax’ was using compounding interests to cause huge losses in the long run for the 1% in the United States.

Why does this matter? The current frenzy of having large sums of capital going into the private sector also implies a lack of new opportunities in the public space as well as the likelihood of excess cash going into businesses that should not be funded in the first place. The demand for a change in AT&T’s strategy did more than driving up its stock prices. It also affects how telecom giants alike would be optimizing their operation and business focuses going forward. Given the current and potential volatility in the global market, it is a reasonable move for more risk-averse investors to consider how to adjust their portfolios accordingly by changing the weight they place on precious metals. While the outcome of US Democrat presidential candidate is not yet clear, the implementation of radical tax schemes will post greater uncertainties on the capital flows between the US and the rest of the world.

 

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)