Transcript Market Update - Sites at Lafayette

Lafayette College Investment
Club
September 5, 2014
Overview
1. Introductions
2. Career Services
3. What is the Investment Club?
4. Market Update (What You Missed This Summer…)
5. Why JOIN?
Introductions
Name
Year
Major
Position
Previous Experience
Club Involvement
Career Services
What Is the Investment Club?
• Independently run equity based student portfolio of over $500K
Purpose:
• Provide students the opportunity to get involved and excited about
financial industry
• Engage members through pitches, market analysis, and other
informational presentations
Opportunities
• Market Updates
• Financial Analysis
• Industry Insight
• Networking
Networking
Market Update
•
WHAT A BLEEPING SUMMER!
•
WHAT ’S GOING ON THIS WEEK?
ECB Negative Interest Rates
• Historical move for a big central
WHY would they do it?
bank
• From zero-interest-rate policy (ZIRP)
to NIRP
Stimulate economic growth
• Cheap medium term loans for
lending to Eurozone businesses
• As expected the US dollar
strengthened by 1.5% against the
Euro a few hours later
June
ECB Negative Interest Rates
>>>>> FAST FORWARD A FEW
MONTHS
• Further lowered deposit rates -0.2%
• Other programs to produce more
economic stimulus (eg: ABS purchase
program)
US GDP Growth Numbers
• GDP expanded at 4.2% rate in
second quarter
• Personal consumption, private
investments, exports, and
government spending
• Some economists believe these
results are nothing too impressive
• Year GDP could possible reach just
a 2% growth because of Q1
decline.
June
Summer Unemployment Rates
• July employment report was modestly disappointing, with payrolls
rising 209,000 compared to expectations of 230,000
•
Unemployment rate went from 6.1% in June to a small rise to 6.2%
in July, as participation increased
• Recent date shows that participation rate is starting to increase as a
strong labor market draws candidates back to the job hunt
• FED believes that “there remains significant underutilization of
labor resources”
July
Rough Summer for International
Markets
Argentina
BES (Portugal)
• Faced default to bondholders for
the second time in 13 years
• Bank files for bankruptcy protection
• Argentine stocks plunged as
expected
• No repercussions but raised
concerns about Emerging Market
Economies and investing
• Hidden, under the table dealings led
to huge losses
• Resolved and split into two banks:
good, bad
July-August
Geopolitical Risk Rises for Global
Investors
• Jan 2014 – political crises have
rocked the news
• Crises have had minimal lasting
impact on markets
• Underestimated risks and volatility
(due to abundant liquidity)
• 28% of investors identified
geopolitics as the biggest risk,
compared to 14% in June
What Happened This Week
•The dollar has climbed as the Fed gets closer to raising rates, helped by the
possible further loosening of monetary policy by European and Japanese
central banks
•Consumer prices in the euro zone dropped to 5 year lows
•Dollar General raised its offer for Family Dollar – contemplating a hostile bid
•Goldman Sachs loaned Portuguese bank Espirito Santo $835 million after near
collapse
•Barclays is selling its Spanish retail-bank unit for $1 billion
•Tesla Motors has selected the state of Nevada to house its new $5 billion dollar
“gigafactory”
•The S&P continues to hover around the 2,000 mark
Why JOIN?
Next Meeting
September 12th
12:15
Simon Basement