Family Office & RIA Weekly Roundup | 7.11.24 | Volume 112

Volume 112

07/18/2024 (4 Min. Read)

Presidential Race Stirs Up Markets, Tech Companies Continue Layoffs and Small Cap Gains Big Support in this Week's Edition...

Take a Lap Around the Industry

• Gold Jumps to Record as Traders Ramp Up Bets on Fed Rate Pivot (Bloomberg)
• Yield-Hungry Wealth Management Clients Are Becoming a Headache for Big Banks (WSJ)
• Traders see the odds of a Fed rate cut by September at 100% (CNBC)
• Swiss Luxury Watch Market Succumbs to a Brutal China-Led Slump (Bloomberg)

Trump Assassination Attempt Fuels Market Speculation and Bitcoin Surge 

The attempted assassination of former President Donald Trump has already begun to influence financial markets, as investors speculate on the potential benefits of a second Trump term. Following the attack at Trump's rally in Butler, Pennsylvania, bitcoin prices surged by 2%, extending gains to 4% by Monday morning. Trump's public support for Bitcoin and his upcoming appearance at the Bitcoin Conference in Nashville have bolstered confidence in the cryptocurrency. Additionally, shares of Trump Media & Technology Group soared 48% in premarket trading before stabilizing at a 28% gain. Tesla's stock also rose by 4%, fueled by CEO Elon Musk's endorsement of Trump. Shares of GEO Group, a private prison operator, jumped 7%, reflecting market expectations that Trump's policies could benefit the company. With the upcoming presidential election looming, analysts predict that a Trump presidency could lead to higher inflation, interest rates, and a stronger US dollar due to increased deficit spending and restrictive immigration policies.

"Higher tariffs, restricted immigration, and the extension of the Tax Cut and Jobs Act are the three key aspects of Trump's policy agenda that traders associate with higher inflation and higher interest rates."

Thierry Wizman (Macquarie Group)

Source: Markets Insider

Private Funding Pulse Check

• Medal, a Netherlands-based video game clipping startup, has secured $13 million in funding led by Li Ka-Shing's Horizons Ventures to expand its AI capabilities
• Robert Peugeot's family office, Group FFP, has participated in a €4.2 million seed round for Syntetica, a nylon recycling startup helping to solve the pollution problem in the fashion industry
• Mantle, a San Fransisco-based company specializing in precision metal 3D printers for the tooling industry, has raised $20 million in a Series C funding round led by Schooner Capital
• Breyer Capital has participated in a $200 million funding round for Earned, a NYC-based financial services firm exclusively serving medical professionals

Source: FINTRX Data

M&A Activity Tracker

• Modern Wealth Management has acquired C&J Wealth Advisors, a Knoxville, TN-based firm managing over $250 million in assets for more than 300 clients
• C&J's Mark King joins Modern Wealth as a Managing Director and Executive Advisor, along with Scott Smith, who will serve as an Investment Specialist for the firm
• This acquisition marks Modern Wealth's ninth over the last 14 months, expanding the firm's assets to over $4 billion and helping it to establish a foothold in the Southeast
• Modern Wealth, founded just last year by Jason Gordo, Gary Roth and Mike Capelle, continues to push extensive growth, leveraging an organic growth program out of their Kansas hub to bring in young talent and develop their advisor base to better serve their clientele (WealthManagement)

Salesforce Reduces Workforce, Reflecting Industry-Wide Cost Management Trends

Salesforce Inc. has cut approximately 300 jobs this month as part of a broader effort to streamline operations and control costs, reflecting an increasing trend in the tech industry. The software giant confirmed the layoffs, emphasizing that they are a part of routine business evaluations to ensure optimal structure and growth. These recent cuts, though a small fraction of Salesforce’s 72,682-strong workforce, follow earlier reductions this year, including a 10% workforce cut at the start of 2023. The news momentarily unsettled investors, causing a brief dip in share prices. These recent cuts align with similar cost-cutting measures by other major tech companies, such as Intuit Inc., UiPath Inc., and Microsoft Corp., highlighting the industry's ongoing adjustments after years of rapid expansion. Despite all of this, Salesforce remains focused on strategic hiring in growth areas like its Data Cloud product.

"Are we getting the most from everybody in the business — if we’re not, we’re going to have to make reshaping decisions."

Brian Millham (Salesforce)

Google Pursues $23 Billion Purchase of Wiz Amid Antitrust Scrutiny

Google is in advanced negotiations to acquire cybersecurity firm Wiz for $23 billion, which is expected to close soon. Founded in 2020 by CEO Assaf Rappaport, Wiz has rapidly grown, reaching a valuation of $12 billion as recently as May of this year. Known for its comprehensive cloud security solutions, Wiz has attracted investment from notable firms such as Cyberstarts, Index Ventures, Insight Partners, and Sequoia Capital. If finalized, this acquisition would be Google's largest to date, emphasizing its strategic focus on enhancing cybersecurity amidst rising threats from nation-state and criminal actors. This potential purchase follows Google's $5.4 billion acquisition of Mandiant two years ago. However, having been sued twice on antitrust grounds, Google’s acquisition practices are under scrutiny from the Justice Department, highlighted most recently by their litigation filed in 2023. Despite these challenges, Google's ongoing discussions with Wiz indicate a renewed vigor for mergers and acquisitions.

"[Google is making a] major bet on the cyber security space to complement its flagship offering in the cloud."

Dan Ives (Wedbush)

Small-Cap Stocks Surge Amid Hopes for Interest Rate Cuts and Economic Recovery

Small-cap stocks are experiencing a significant rally, outperforming their mega-cap technology counterparts as hopes rise that potential interest rate cuts will extend economic recovery to their benefit. The Russell 2000 index, a key benchmark for small-cap stocks, climbed 1% on Tuesday to reach its highest point since January 2022. If the index increases another 1%, it will mark the fifth occurrence of such a streak since 1979, according to Bespoke Investment Group. Over the past month, the small-cap benchmark has surged over 10%, outperforming the gains of the S&P 500 by nearly triple the margins. Tom Lee of Fundstrat predicts this rally could persist for over two months, potentially delivering gains of up to 40%. This market rotation into small caps is driven by cooling inflation data and speculation that the Federal Reserve may soon cut interest rates, enhancing the appeal of small caps due to their sensitivity to economic and market fluctuations. Additionally, the "Trump trade" has emerged, with investors betting on a boost for domestic stocks, including small caps, from former President Donald Trump's potential policies if he wins in November.

"We think this move could be something like 10 weeks and as much as 40%. I think it is just starting."Tom Lee (Fundstrat)

Source: CNBC

Written by: Dylan Coffey & Patrick Galvin | Data & Research Interns