NEWSLETTER of August 29, 2025

The following content has been added at finexpert:

BCG
THE HIDDEN $3 TRILLION PROFIT OPPORTUNITY FOR CEOS
By learning to think like traders and hedge funds, CEOs can tap value opportunities that are currently left on the table. These hidden opportunities amount to some $3 trillion, created by pricing gaps and volatility. Specialist firms are already tapping into $1.2 trillion of the total. But there’s no reason companies can’t compete for that share. Further, an additional $1.8 trillion is up for grabs. As market and pricing data becomes more readily available, IT systems more proficient, and marketplaces increasingly easy to set up, the barrier to entry for this value extraction is lower than ever. The competition will be fierce. >more

KPMG
Q2’25 VENTURE PULSE REPORT EUROPE
VC investment in Europe dipped slightly from $16.3 billion in Q1’25 to $14.6 billion in Q2’25; deal volume fell more significantly over the same period — from 2,358 deals to 1,737 deals as VC investors in the region showed some reticence towards dealmaking given the uncertain geopolitical and trade environment. >more

Institut der deutschen Wirtschaft (IW)
LOHNSTÜCKKOSTEN IM INTERNATIONALEN VERGLEICH. KOSTENWETTBEWERBSFÄHIGKEIT DER DEUTSCHEN INDUSTRIE IN ZEITEN GROßER VERUNSICHERUNG
The above-average productivity in this country was not enough to compensate for the disadvantage of high labour costs. Between 1999 and 2024, industrial unit labour costs in Germany rose by 20 per cent – the same rate as in other countries, but less than in other eurozone countries, where the increase was 32 per cent. In the period from 2018 to 2024 alone, which was marked by multiple crises, unit labour costs in German industry rose by 18 per cent. Unit labour costs also increased by around a fifth in other countries during this period. Unlike in other countries, however, real value added declined in Germany during this phase. The reasons for this include structural problems such as the particularly strong demographic change in Germany, economic uncertainty, concerns about significantly rising social security contributions and China's technological catch-up. Added to this are disruptive developments such as the move away from combustion engines in the automotive industry. >more

Deutsche Bank Research
DIE ZUKUNFT DES NEUBAUS II. STRUKTURBRÜCHE IM WOHNUNGSBAU. KONSOLIDIERUNG SETZT SICH FORT. FERTIGTEILBAU DÜRFTE BOOMEN.
The German construction industry is consolidating. Medium-sized and larger companies are becoming increasingly important, and statistics on building contractors now show more companies than private households. As expected, the proportion of owner-occupied homes among completed projects has fallen, while the construction of large apartment buildings in urban centres is gaining in importance. We consider this to be a structural development. We expect particularly strong growth in prefabricated construction. Production in a factory hall and the high degree of prefabrication enable high capital intensity and faster adaptation of digitalisation, AI and robotics. We expect this to form the basis for significantly higher productivity growth in the construction industry and, contrary to the trend in individual construction, to lead to falling construction costs. >more

THE CRYPTOCURRENCY ELEPHANT IN THE ROOM
Ran Duchin, David H. Solomon, Jun Tu, and Xi Wang
2023
...is "should I buy any?". Under Bayesian portfolio theory, ongoing zero weights in cryptocurrency are surprisingly difficult to generate. With ten years of prior data, equity investors would need very pessimistic priors on mean returns to never buy cryptocurrency: -10.6% per month for Bitcoin, and -19.6% for a diversified cryptocurrency portfolio. Most priors that involve never purchasing cryptocurrency imply shorting it. Optimal weights are generally small, non-trivial (1-5% magnitude), frequently positive, and smooth. The certainty equivalent gains from cryptocurrency are comparable to international diversification and prominent anomaly portfolios. Costs (storage,fees) would need to exceed 21-39% annually to deter trading. >more

AMENDMENT THRESHOLDS AND VOTING RULES IN DEBT CONTRACTS
Judson Caskey, Kanyuan (Kevin) Huang, and Daniel Saavedra
2025
Most loan contracts in the US contain a provision for lender voting rules. We study the optimal voting rule that allows lenders to waive a covenant violation. When lenders have heterogeneous preferences, lenient voting rules increase the probability of waivers that allow inefficient investments. Stringent voting rules tend to allocate the marginal vote to lenders who deny waivers after false alarms so that they can renegotiate the loan to extract value from the firm, which incurs deadweight costs. In equilibrium, the optimal voting rule balances these two forces to improve contracting efficiency. We derive and empirically test comparative statics on how the optimal voting rule varies with lenders’ preferences and the borrower’s accounting properties. Our model offers a rationale for the prevalent use of voting rule clauses in syndicated loan contracts. >more