Here are a few of the biggest stories in the financial industry during June:
Facebook outlines plans for Libra, its new digital currency
Facebook made official what’s been speculated for months when it announced on June 18 its plans for Libra, its new cryptocurrency based on blockchain technology. Facebook expects Libra to go live in 2020 and will make the digital currency available on Messenger and WhatsApp and as a standalone app. The social media powerhouse also posted a white paper on the technology. If Facebook’s technology catches on, it could revolutionize the electronic payments and processing industry by making it as simple as a posting or sending a Facebook message. Check out these articles from Bloomberg and the Washington Post about Libra.
Investment giant Vanguard explores offering private equity funds
The Wall Street Journal (WSJ) reported on June 23 that the Vanguard Group, the index fund pioneer and investment giant, is looking into ways to offer private equity funds to clients. The talks with private equity (PE) companies are “exploratory” and a Vanguard spokesperson told the WSJ the company has “no immediate plans” to begin selling PE funds to clients. The news comes as wealth management companies look for new ways to earn new fee revenue from alternative assets and the SEC examines ways to provide retail investors access to private investments.
Defense spending drives first quarter GDP growth
The U.S. economy grew 3.1 percent during the first quarter (Q1), driven in large part by increased defense spending, Reuters reported on June 27. In comparison, GDP during the fourth quarter of 2018 increased 2.2 percent. The Q1 results were inline with a Reuters poll of economists, which forecast first quarter GDP growth would also come in at 3.1 percent. Reuter reports that excluding trade, inventories and government spending, U.S. GDP increased only 1.3 percent, which is the “slowest rise in this measure of domestic demand since the second quarter of 2013.”
Nearly Quarter of Americans Finances Worse Since Great Recession
A new study from Bankrate.com found that 23 percent of Americans (47 million people) say their overall financial situation is worse now than it was before the Great Recession began in 2007. Bankrate.com reported that 51 of respondents said their finances are better since the recession began in 2007. Here’s the link to the survey. Meanwhile, nearly 40 percent of Americans polled in a separate Bankrate.com survey say the country is already in a recession or that it will start within the next 12 months.
Here are several stories affecting the financial services industry we lighted earlier in June:
Federal Reserve indicates rate cut coming
Federal Reserve chairman Jerome H. Powell suggested that interest rates may soon be lowered — a sign that the economy might be cooling after an extended period of growth. The news sparked a rally on Wall Street.
Slowdown in job creation
Job creation slowed in May, with nonfarm payrolls up by just 75,000, according to the Labor Department. However, on the bright side, the unemployment rate remains at a 50-year low.
Beyond Meat starts strong
Shares for Beyond Meat, the vegan burger maker, have soared about 400 percent since the company’s IPO last month. Fast-food chains Burger King and White Castle have recently introduced burger options featuring plant-based patties from Beyond Meat’s competitor Impossible Foods.
Apple to discontinue iTunes
Apple has announced its legacy iTunes software will soon be discontinued, to be replaced by separate apps focusing on the various types of media that had been under the iTunes umbrella.
Barnes & Noble sold to hedge fund
Barnes & Noble, the largest bookstore chain in the United States, was sold to hedge fund Elliott Advisors for $638 million. The bookstore, founded in 1971, has been struggling in recent years to compete against Amazon.
News from our clients
First Horizon Foundation released its inaugural annual report, highlighting the extent of community impact that bank foundations are having.
Oaklyn Consulting also won a Gold Stevie Award for most innovative company. In addition, Oaklyn CEO Frank Williamson contributed a new column to Axial on family office direct investment strategies and participated in a Middle Market Growth article on private equity firms flocking to physician-run practices.