NEWSLETTER of August 30, 2024

The following content has been added at finexpert:

Citi
FAMILY OFFICE INVESTMENT REPORT Q2 2024
During the second quarter of 2024, our family office clients continued to allocate more to Equities but also to Hedge Funds. There has also been a modest renewal of interest in Fixed Income. We explore these moves and what they may be thinking. >more

Alvarez & Marsal
THE A&M DISTRESS ALERT: JULY 2024
The A&M Distress Alert assesses performance and balance sheet robustness of European businesses, aiming to identify those that are in financial distress or may soon be heading in that direction. The latest alert finds last year, and recent months have not brought European companies the relief that many had hoped. With the expected rate cutting cycle proceeding at a historically low pace and the “last mile” of inflation proving tricky to tame, the same operational and liquidity challenges that plagued businesses in the aftermath of the pandemic increasingly appear today. >more

Alvarez & Marsal
SHAREHOLDER ACTIVISM IN EUROPE: 2024 INTERIM OUTLOOK
Our latest A&M Activist Alert (AAA) 2024 Interim Outlook report provides insights into the current activist trends across Europe and key predictions for the remainder of 2024 and into 2025. We also provide an analysis of how corporates “rise to the challenge” when peers in their sector are targeted by activists. In the first half of 2024, there have been 88 activist campaigns across the region, marking a 16% decrease compared to the same period last year. This lower level of activist campaigning has also contributed to a 30% reduction in the number of shareholder resolutions proposed during European AGMs. >more

KfW Research
KFW-KONJUNKTURKOMPASS AUGUST 2024
With real wages rising noticeably and the growing purchasing power of private households, the conditions for a consumption-driven recovery remain intact. However, the recovery will start later and be somewhat weaker than expected in the spring. KfW Research is therefore revising its economic forecast for Germany downwards by 0.2 percentage points to 0.1% in 2024 and 1.0% in 2025. The German inflation rate (HICP) will be 2.6% in 2024 and 2.3% in 2025. GDP in the eurozone is expected to grow by 0.8% this year and by 1.3% next year. >more

Goldman Sachs
HOW INVESTABLE IS EUROPE?
Just as Europe emerged from two years of stagnation, recent weak survey data, increased political risk in light of the European Parliament and French election outcomes and, more crucially, the prospect of heightened trade and security risks depending on the US election outcome — all on top of daunting structural issues — have put the region’s outlook back in question. Just how significant Europe’s cyclical, political, and structural challenges are — and what that means for Europe’s investability. >more

HOW DO SUPPLY SHOCKS TO INFLATION GENERALIZE? EVIDENCE FROM THE PANDEMIC ERA IN EUROPE
Viral V. Acharya, Matteo Crosignani, Tim Eisert, and Christian Eufinger
2023
We document how the interaction of supply-chain pressures, heightened household inflation expectations, and firm pricing power contributed to the pandemic-era surge in consumer price inflation in the euro area. Initially, supply-chain pressures increased inflation through a cost-push channel and raised inflation expectations. Subsequently, the cost-push channel intensified as firms with high pricing power increased product markups in sectors witnessing high demand. Eventually, even though supply-chain pressures eased, these firms were able to further increase markups due to the stickiness of inflation expectations. The resulting persistent impact on inflation suggests supply-side impulses can generalize into broad-based inflation via an interaction of household expectations and firm pricing power. >more

NON-FINANCIAL LIABILITIES AND EFFECTIVE CORPORATE RESTRUCTURING
Bo Becker, and Jens Josephson
2024
Many countries’ insolvency systems focus on restructuring financial liabilities, and ignore operational liabilities such as leases and long-term supplier contracts. We model insolvency procedures with and without operational restructuring options. Such options avoid excessive liquidation of firms with significant non-financial obligations. Ex-ante, this option should increase debt capacity, especially in industries with inputs supplied under executory contract. We test this hypothesis around the introduction of a new law in Israel which facilitated the rejection of contracts, and by comparing capital structures for industries with high lease obligations between the U.S. and other countries. Empirical results confirm that operating restructuring is a key aspect of insolvency. >more