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BIG PICTURE: 𝐎𝐈𝐋 𝐈𝐒 𝐇𝐄𝐀𝐃𝐈𝐍𝐆 𝐍𝐎𝐑𝐓𝐇 𝐀𝐆𝐀𝐈𝐍??? Financial Times: There are signs that hedge funds, many of which had been betting on oil extending this year’s falls, are beginning to adjust their positioning. https://on.ft.com/4eOwO9D. UNQUOTE 𝗦𝗧𝗥𝗔𝗧𝗘𝗚𝗜𝗖 𝗧𝗛𝗢𝗨𝗚𝗛𝗧𝗦: 𝗦𝗧𝗔𝗧𝗨𝗦 𝗤𝗨𝗢 𝗢𝗡 𝗠𝗬 𝗢𝗜𝗟 𝗖𝗔𝗟𝗟 𝗙𝗢𝗥 𝟮𝟬𝟮𝟰 I still maintain status quo on my oil call that I have shared at the start of the year. $𝟗𝟏 𝐭𝐨 $𝟏𝟒𝟕/ 𝐛𝐚𝐫𝐫𝐞𝐥 𝐢𝐧 𝟐𝟎𝟐4 Premised on - geopolitical risk - depreciating dollar - supply constraints - production cuts It’s all recorded with press and media. Recorded on CNBC Arabia. Facts are in vogue. Stay on top of the markets with 善萨伊德Shan Saeed #CNBC #OPEC #Naturalgas #Productioncuts #Geopoliticalrisk #Mediaengagement #LNG #Globaleconomy #IEA #EIA #CNN #WSJ #SCMP #Chicagotribune #Hedgefunds #Inflation #GDP #Centralbanks #Recession #Yieldcurve #Debtmarket #Monetarypolicy #SaudiArabia #Russia #Qatar #USA #Dollar #NBC #CBS

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DPI, TVPI, and RVPI are key performance metrics used in private equity to evaluate fund performance: DPI (Distributions to Paid-in Capital): This measures the realized returns of a fund. It's calculated by dividing the total distributions (money returned to investors) by the total paid-in capital. A DPI of 1.0x means investors have received back their entire investment[1][4]. TVPI (Total Value to Paid-in Capital): This metric provides a comprehensive view of a fund's performance, including both realized and unrealized returns. It's calculated by dividing the sum of the fund's distributions and current net asset value by the total paid-in capital. TVPI = DPI + RVPI[1][2]. RVPI (Residual Value to Paid-in Capital): This represents the unrealized portion of a fund's returns. It's calculated by dividing the current net asset value of the fund's investments by the total paid-in capital[1][3]. These metrics evolve over a fund's lifecycle. Initially, RVPI is high and equal to TVPI, while DPI is zero. As the fund matures and exits investments, DPI increases while RVPI decreases. At the end of a fund's life, only DPI remains, representing the final return to investors[1][3]. Each metric offers unique insights: DPI shows actual cash returned, TVPI provides an overall performance measure, and RVPI indicates potential future returns. Together, they offer a comprehensive view of a fund's performance and progress[2][4]. Sources [1] LP Corner: Fund Performance Metrics – Multiples TVPI, DPI and RVPI https://lnkd.in/eQeQpnXF [2] TVPI vs. DPI: PE Performance Metrics | Allvue Systems https://lnkd.in/eSgp-pjQ [3] What to Know About TVPI - AngelList - Education Center https://lnkd.in/eKnQGfRR [4] TVPI vs. DPI: The Measures That Matter for Private Equity Investors https://lnkd.in/er9-4qga [5] Distributed to Paid-In Capital (DPI) Definition - Moonfare https://lnkd.in/ehfmEb9T

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ISM Manufacturing PMI for October was below every single regional Fed manufacturing index (when adjusted for ISM methodology)  

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Corbenic Capital lowering estimate of US Real Government Consumption Expenditures and Gross Investment growth through Q2 2025 from 2.2% to 2.0%, still well above the 1.4% long term trend growth. #usa #election2024 #fed #growth #governmentexpenditures #realgdp #recessionrisk #softlanding

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CRE Valuation Crop Cut in Sillicon Valley For Goldman, TMG Deal As KKR Shrinks Wraps The Office Asset Book With Buyers Pool An affiliate of KKR Real Estate Finance Trust is seizing the vacant 449,000-square-foot campus at 350-380 Ellis St. in Mountain View, California, home to Google's headquarters. KKR pegs the valuation of the office campus at nearly $121 million, a far cry from the $357.5 million price that the property sold for in 2021. Office values across the United States have decayed by as much as 15% since 2021, according to a CoStar analysis, with larger, trophy properties falling at a rate nearly twice that as the buyer pool for those types of buildings has dwindled. The end around asset hand off did not stop the gap in the KKR asset book offensive front line which is a $136 million dollar valuation write down and the Fed pandemic office valuations have felt the WFH effect but yet to feel the AI downsize effect.

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Empirical paper: "The simple difference between the current earnings yield on the S&P500 and the long-term real TIPS yield has significant forecasting power for excess returns." https://lnkd.in/e2k_QHWq

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QT Difficulties Bring Dislocation of Liquidity From Reverse Balance Buyback Illiquidity The perception of attractive price delusion and unproductive illiquidity traps in the system. ON RRP balances represent cash that money market funds mostly put on deposit at the Fed to earn the interest that the Fed pays on ON RRPs as part of its 4.8% policy rates. They’re excess unproductive QE liquidity that financial markets don’t know what to do with. It has form a massive buyback defensive parking lot in the Mag 7 AI PE's & MMF's. The Fed has now drained about $2 trillion in liquidity from the markets via its QT,essentially all of the drainage has come out of ON RRPs, instead of reserve balances. Reverse Repurchase Agreements (RRPs) are a type of short-term collateralized loan where the Federal Reserve (Fed) borrows cash overnight from counterparties, typically banks, (GSEs),& money market funds (MMFs), using securities from its portfolio as collateral. The Fed agrees to repurchase the securities at a higher price the next day, earning interest on the borrowed debt recorded on the Fed books as an asset. Since 2000, net corporate buybacks have accounted for 100% of the equity market’s net asset purchases—a reflection of the diminished participation from pensions, mutual funds, & individual investors. While corporate buybacks are marketed as a “return of capital,” they primarily benefit insiders & short-term traders. Their rise reflects a broader shift in corporate priorities—from investing in growth & innovation to maximizing executive compensation through financial engineering. Buybacks hit nearly 1 trillion driving the Mag 7 to running their own dark pools of liquidity that does not effect stock price. Many wonder why Jeff Bezo just sold another $6 billion shares after strong earnings or why Warren Buffet is sitting on $350 billion in short term cash and away from BofA stock & the CRE slow burn illiquidity risk? Dark pools are becoming increasingly popular as liquidity exit vehicles. Advocates for these trading venues claim they boost market liquidity while lowering risk, while critics claim their lack of transparency leaves them open to predatory practices. Buyback impact extends beyond individual companies most of the Mag 7 have their own in house liquidity dark pools. Since 2000, net corporate buybacks have accounted for 100% of the equity market’s net asset purchases—a reflection of the diminished participation from pensions, mutual funds, and individual investors.https://https://lnkd.in/enPb6EJA There are $6.5 trillion in money market funds, of which $155 billion are now on deposit at the Fed. As we know the FDIC has about 126 billion on hand in the midst of peak credit card consumer debt of $1.8 trillion at 37% rates with 1.7 saving rate when banks are paying 2% . Money market funds can currently earn 4.80% with ON RRPs, can earn a few basis points more by engaging in overnight repos in the repo market.For now let the player's play.

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Forecasts for IPOs and M&A in 2024-2025 ▪️Market Activity in the Second Half of 2024 Analyst Predictions: Optimistic Expectations: 📊 Many experts predict an increase in market activity in the second half of 2024. George Easley, Director of Outsiders Fund, believes we will see a significant flow of IPOs during this period. Cautious Forecasts: 😐 Andrew Van Nest, Managing Partner of Exceptional Capital, believes IPOs will not return in full until 2025. Compromise Opinion: 🤔 Larry Ashebrook, Managing Partner of G Squared, does not expect significant changes until the end of 2024. Companies going public are likely to set lower prices. He predicts that the window for IPOs will fully open in the fourth quarter of 2024, setting the stage for a successful IPO year in 2025. ▪️Forecasts for Mergers and Acquisitions (M&A) Increase in M&A Pace: 📈 Don Butler, Managing Director of Thomvest Ventures, expects an increase in the pace of mergers and acquisitions in 2024. The improvement in business fundamentals and startup economics in recent years has led to sustainable growth trajectories. Buyer Interest: 💼 Public companies, established corporations, and private investment firms have significant capital for acquisitions. They will be looking for startups that can strengthen their positions or complement their portfolio companies. Michael Marks, Founding Managing Partner of Celesta Capital, notes active acquisitions by companies like Broadcom, Intel, Nvidia, and AMD, which are using their research and development budgets to purchase developed companies for billions of dollars. ▪️Impact of Interest Rates Key Role of Interest Rates:💲 Venture capitalists are confident that interest rates will play a key role in determining the timing for IPOs and M&A. After years of rising interest rates, the US Federal Reserve is likely to start lowering them in 2024. Lowering interest rates will make capital less expensive, easing some market constraints. This could also make holding cash less attractive and support stock market prices, which would positively affect IPO success. It is also worth considering what the actual exit scenario might look like in 2024. While liquidity is good, many exits are likely to be forced and not necessarily at prices that companies or their investors initially hoped for. Butler said that many of these exits next year will likely be related to company closures rather than $5 billion IPOs. Investors stated that LPs are not chasing liquidity, but this is good for the market. And while investors are unsure what the exit market will look like in 2024, they are quite confident that it will be more active than in 2023.

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**The Yield Curve Dis-Inversion: A Historical Signal and Its Implications for Asset Values** Understanding the yield curve is essential for macro investors, particularly when it begins to dis-invert after a prolonged period of inversion (like right now!) This phenomenon, known as bull steepening, typically occurs in late economic cycles when nominal growth is slowing down. While much attention is often paid to the initial inversion of the yield curve, the dis-inversion that follows is arguably more critical for forecasting economic conditions and asset values. Historically, **every recession since the 1970s has been preceded by a yield curve inversion.** The inversion signals that short-term interest rates have risen above long-term rates, reflecting market expectations of slower economic growth or a potential recession. However, the period between the initial inversion and the onset of a recession can vary widely, from as little as 12 months in the early 1980s and 2000s to much longer in other instances, such as the 2008 financial crisis. The dis-inversion of the yield curve, which is currently unfolding after a 27-month inversion, is a crucial macroeconomic signal. It often indicates that the economy is entering a phase of weaker growth. This phase is marked by the unwinding of previous distortions in interest rates, with long-term rates beginning to rise relative to short-term rates. As this process unfolds, the macroeconomic lags—delays between changes in monetary policy and their impact on the economy—become more pronounced. In the current cycle, these lags are particularly long due to structural factors in the U.S. economy, such as fixed-rate mortgages and corporate borrowing practices that have insulated the private sector from higher interest rates. However, these lags have not disappeared. As the yield curve dis-inverts, the risks of an economic slowdown become more apparent, and investors should be prepared for potential impacts on asset values. In this context, the dis-inversion of the yield curve serves as a warning for investors. While the initial inversion may have signaled caution, the dis-inversion is a more direct indicator that the economy could be heading toward a period of reduced growth or even a recession. Asset values, particularly those sensitive to economic cycles, may face increased volatility as these macroeconomic shifts play out. Investors should carefully monitor these developments and consider adjusting their portfolios to manage the associated risks. **If this topic is interesting, I highly recommend signing up for Bonfire's "S'mores" newsletter which touches on economics, real estate, finance, startups, crypto, philosophy and frankly anything else I find interesting when I am creating the newsletter!**

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I subscribe to a free newsletter from Chartrr https://www.chartr.co/, which periodically publishes capital markets insights into international capital markets. The US case of declining listings is interesting, and the reasons are not what you would expect. Here is the academic paper - https://lnkd.in/ebrJv-Cw There are no academic papers on the long, medium and short-term decline in African listed companies at a time when Africa needs +USD100bn long-term capital creation each year. Big disconnect here. #investorrelations

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Corbenic Capital lowering estimate of US Labor Force growth through May 2025 from above-trend (0.9%) 1.1% to -0.8%, outside the 0.0% - 1.7% long term normal range on the low side, and the lowest rate of growth since March 2021. If there was one parameter that illustrated the real issue in the US labor market, it was this disappointing 0.5% y-o-y growth rate, last seen in October 2021, and 1.0M below our estimate for May 2024. The labor force participation rate is a major political issue in the US, and the White House is pursuing fiscal programs directed at participation. We have recently seen promising improvements and our forecast going into the report for May was for normalization of this issue. More in our Employment Situation Summary to follow. #usa #employmentsituation #laborforce #election2024 #fed #recessionrisk #softlanding #participation #fiscalpolicy

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Free Cash Flow Yield is a hard one to beat when it comes to fundamental factors. Exsuperatus Performance Indexes Offers Free Cash Flow Yield Indexes suitable for ETFs or Direct Indexing applications with our Agilis Overlay. To learn more »»   https://lnkd.in/ekSnABmp #FreeCashFlowYield #Indexing #ETF

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Chart of the day – Global Z-Score valuation implies a significant overvaluation of the global stock market My global Z-Score valuation indicator of the global stock market, based on the global equity index MSCI All Country World, is calculated as the average of the Z-Scores of four key valuation multiples: P/E, P/B, P/S and EV/EBITDA, based on the time-series since 1995. At the moment the valuation indicator value is +1.5 standard deviations. This means that the global stock market seems to be quite significantly overvalued. With that being said, +1.5 standard deviations also imply that if the global stock market valuations were to mean-revert in the upcoming period there would currently be approximately a 20% downside potential. However financial markets have also a strong historical tendency to overshoot and undershoot the historical average valuations which means that the downside potential could be even higher. Equities can for sure continue their rally into the second half of 2024. However, in my opinion, if this upward movement continues, the probability of a significant correction will be growing every other day, especially taking into account the fact that 1) the global economy growth momentum seems to be peaking right now based on global PMI indices and 2) the significant weakening of global economic data positive surprises based on the Citi Global Economic Surprise Index.

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Looking at Credit Default Swaps, the S&P rating actions overdue are: 1. Upgrade South Africa from BB- to BB 2. Upgrade Brazil from BB to BB+ 3. Downgrade Israel from A+ to BB+ 4. Upgrade India from BBB- to BBB+ 5. Upgrade Indonesia from BBB to BBB+ 6. Upgrade Greece from BBB- to BBB+ 7. Upgrade Italy from BBB to BBB+ 8. Downgrade China from A+ to BBB+ 9. Downgrade Canada from AAA to A+ 10. Upgrade Spain from A to A+ 11. Upgrade Portugal from A- to AA- 12. Downgrade the United States from AA+ to AA- 13. Downgrade South Korea from AA to AA- 14. Upgrade Japan from A+ to AA+ 15. Upgrade Ireland from AA to AA+ 16. Upgrade Belgium from AA to AA+ 17. Downgrade Australia from AAA to AA+ Apparently, politics play a significant role in ratings. #sovereigncredit #cds #sandp #rerate

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Agency Floaters - Short duration (<1 year) - Monthly reset off SOFR (1mo SOFR + 61.4bps) - 160-month old loans (~13 years) - Borrowers paying 4.90% coupon - 43% CLTV - 6.5+% to spot, 4.5+% to fwd - 105+ spread to the curve

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Current Market expectations for Fed Rate Cuts... -Sep 18, 2024: 50 bps cut to 4.75-5.00% -Nov 7, 2024: 25 bps cut to 4.50-4.75% -Dec 18, 2024: 25 bps cut to 4.25-4.50% -Jan 25, 2025: 25 bps cut to 4.00-4.25% -Mar 19, 2025: 25 bps cut to 3.75-4.00%

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