ECMG Newsletter | March 2023
Envision Capital Management Group
ECMG is a nonprofit student-run investment fund at the Kelley School of Business.
Hello! And welcome to?Envision Capital Management Group’s monthly newsletter,?where we cover everything ECMG, including our latest updates, member and leadership spotlights, macro/market recaps, and more!
Market Recap | March 2023 ??
??Inflation and Monetary Policy: The predictions of the Fed increasing rates at a higher rate have dialed down after the banking crisis. This has brought about a great dilemma for the Fed to avoid a financial disaster while simultaneously fighting inflation, pushing Fed Chair Jerome Powell to question what takes priority soon.
The US, however, has continued to increase interest rates, with the Federal Reserve raising its key rate by 0.25 percentage points, lifting its key interest rate to 4.75%-5%.
There are also still projections that the Fed will continue with rate hikes albeit at a slower rate out of caution, with Goldman believing that officials will signal three more quarter-point rate increases by July to a range of 5.25% to 5.5%, while Barclays expects the Fed to forecast a peak rate of 5% to 5.25%.
??Labor Market: The labor market is still tight, but according to the Labor Department, the number of Americans filing new claims for unemployment benefits edged down this month, suggesting that March could be another month of solid job growth. The employment rate decreased to 3.5% from 3.6% in February, the number of unemployed people dropped slightly to 5.8 million from 5.9 in February, and total nonfarm payroll employment rose by 236,000 for the month. More than 400,000 job seekers lifted the labor force participation rate, slowly recovering as older people retired early. The rate for those in their prime working years (ages 25 to 54) jumped to 83.1 percent, finally exceeding its pre-pandemic level.
??Other News: ?
????Banking Turmoil: Silicon Valley Bank, the 16th largest bank in the US, and one of the biggest lenders to startups in the tech space, collapsed, becoming the largest bank to fail since the financial crisis of 2008. The collapse was catalyzed by poor investment decisions in long-term treasury bonds amidst several interest rate hikes and customer panic.
Signature Bank became the subsequent collapse after SVB's situation.
In an all-stock deal brokered by the Swiss government, UBS acquired Credit Suisse for $3.25 billion, about 60% less than the bank's worth.
Find a detailed timeline of the banking crisis throughout March here (Wall Street Journal):
???Asia + Europe:
Featured Report for March 2023 | Vertex Pharmaceuticals
Investment analysts Rohith Gudati , Max Xu , Rohan Desai , Robbie Lippert, Jay Kadire , and Hung-Chang Chen won our most recent round of Investment Board Presentations with their pitch of Vertex Pharmaceuticals!
They pitched this American biopharmaceutical company based on its dominant control over the Cystic Fibrosis market, its innovative method for curing Sickle-Cell Disease, and the development of non-opioid painkillers.?
Check out their full report here:
Sector Recap | Essentials
One of our Investment Groups, led by Portfolio Manager, Ian Nystedt , is watching the essentials sector while closely monitoring firms such as Procter and Gamble, Pepsi, Estee Lauder, Unilever Altria, and Colgate.
The essentials sector is not always as growth oriented as other opportunities for investment in securities. Therefore while we analyze firms for growth potential, we seek to find a certain sense of stability within this area. The essential sector is more stable in times of economic turmoil due to the relative elasticity of consumers in response to shocks and the price and quantity supplied.
Consumers look for day-to-day products from the firms we will select from, and thus they will never see such shifts as we may find in other areas such as TMT. Instead, essentials sector firms derive value from their stability and resistance to cash flow issues and potential bankruptcies.
Investment Board Presentations | March 2023
March’s Investment Board Presentation roster comprised four highly intriguing equity pitch presentations covering ECMG’s Long Equity Fund’s focus on TMT, Natural Resources, Financial Sponsors, and Essentials. Finally, we also had 2 presentations regarding different trading strategies from the technology department.
We also had presentations from our technology analysts, Bhavika Podduturi and Matt Gacek . Bhavika presented a trading strategy based on an Oscillator and Candlestick pattern strategy, while Matt presented a scalping strategy derived from ADX, RSD, and MACD.
Member Spotlights
Anika Eluri is an Analyst within our Investments Division and joined ECMG in Spring 2023!
Leadership Spotlights
Logan Milanovich , our new Director of Macro Research, is a freshman from Colorado pursuing majors in Finance and Entrepreneurship with a minor in Economics. His favorite part about ECMG until now has been meeting people passionate about the financial markets and who have helped him grow his knowledge. His interests and hobbies include skiing, snowboarding, and small businesses!
Ryan Weisman , our new Long Equity Fund Manager, is a freshman from Seattle studying Finance, Business Analytics, and History. His favorite part about ECMG has been the composition of an actual investment management experience and the culture of mentorship within the organization. In his free time, he enjoys playing ultimate frisbee, working with football data, engaging in various outdoor activities, and reading up on medieval history!
ECMG Socials ??
Our analysts from all sectors had fun catching up around Bloomington to discuss how our semesters have been and other cool things!
Final Thoughts
ECMG was also thrilled to announce one of our first corporate sponsors, Hurlow Wealth Management Group Inc., this past month. We look forward to a great partnership to help the fund and organization grow.
We are also actively monitoring an interesting macroeconomic environment filled with exciting dynamics and trends to help best position our portfolio.
We look forward to wrapping up another successful academic year at IU at the end of this upcoming month!
Thank you for reading this edition of ECMG's monthly newsletter, and be sure to catch our next one for more updates!
???This newsletter was written and designed by Savannah Wells, Will Holliday, Neena Mehta, Janhavi Joshi, Parth Patel, Ben Whiteman, Stuti Shah, Sairishitha Tamma, Raj Taylor, and Samuel Jha.