NEWSLETTER of August 2, 2024

The following content has been added at finexpert:

BlackRock
2024 MIDYEAR INVESTMENT OUTLOOK
The world could be undergoing a transformation akin to past technological revolutions. But the speed, size and impact of that investment is highly uncertain. We think leaning into the transformation and adapting as the outlook changes will be key. >more

Lazard
MID-YEAR OUTLOOK 2024
Key expectations include: U.S. growth and inflation to decelerate, allowing the U.S. Federal Reserve System to cut rates in the second half of 2024; A razor’s-edge U.S. election with significant economic and market implications; China’s housing challenges to persist, but with the cumulative effects of stimulus lifting growth; Eurozone disinflation to allow the European Central Bank (ECB) to ease policy materially in 2024 adding additional momentum to already-accelerating growth; Japan’s inflation normalization to persist, leading households to reassess asset allocation; and Elevated geopolitical tensions continuing to influence investor sentiment. >more

Bain & Company
M&A MIDYEAR REPORT 2024: DEALMAKERS MINE MULTIPLE SOURCES OF VALUE
The first half of 2024 brought with it a continuation of both higher interest rates and heavy regulatory scrutiny of deals, yet companies are finding ways to adapt to these conditions, showing signs of more sophisticated approaches to value creation through M&A. Deals maintained the steady pace in volume and value growth that began in the last half of last year. But look deeper into the 2024 data, and you find two main areas of activity. The energy sector moved the needle the most, making a big shift to scale consolidation deals from scope energy transition deals. The other big center of activity was the tech sector, in which companies continued to focus on growth-oriented scope deals, although not nearly at the rate seen in the 2020–2021 boom. >more

KfW Research
GERMAN PRIVATE EQUITY BAROMETER Q2 2024
Shortly before exceeding its long-term average, the business climate on the German private equity market collapses again. The business climate indicator lost 20.6 points to -23.4 balance points in the second quarter of 2024. There was already a similarly sharp slump a year ago in the second quarter of 2023. In particular, the assessment of the current business situation is significantly worse again, having improved noticeably in the previous quarter. >more

DO WOMEN RECEIVE WORSE FINANCIAL ADVICE?
Utpal Bhattacharya, Amit Kumar, Sujata Visaria, and Jing Zhao
2024
We arranged for trained undercover men and women to pose as potential clients and visit all 65 local financial advisory firms in Hong Kong. At financial planning firms, but not at securities firms, women were more likely than men to receive advice to buy only individual or only local securities. Women clients who signaled that they were highly confident, highly risk tolerant or had a domestic outlook, were especially likely to receive this suboptimal advice. Our theoretical model explains these patterns as the result of statistical discrimination interacting with advisors’ incentives. Taste-based discrimination is unlikely to explain the results. >more

INNOVATION UNDER PRESSURE
Heitor Almeida, Vyacheslav Fos, Po-Hsuan Hsu, Mathias Kronlund, and Kevin Tseng
2024
Firms become more efficient at innovation activities when they face pressure to meet EPS targets using stock repurchases. Using a regression-discontinuity framework, we find that incentives to engage in “EPS-motivated buybacks” are followed by more citations and higher values for firms’ new patents. We trace these effects to improved allocation of R&D resources and a greater focus on novel innovation. The positive effects are concentrated among ex-ante “innovation-efficient” firms that achieve better patenting outcomes after reorganizing (but not cutting) their R&D investments. Our findings illustrate that short-term earnings pressures can act through a free-cash-flow channel that motivates more efficient spending. >more