Family Office & RIA Weekly Roundup | 7.13.23 | Volume 63

Family Office & RIA Weekly Roundup?

Volume 63

07/13/2023 (4 Min. Read)

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US-China Trade Relations Decline, US GDP Contribution Heads South and Construction Spending Climbs in this Week's Edition...

Take a Lap Around the Industry

• U.S. Army Financial Counselor Faces Charges for Defrauding Gold Star Families?(CBS)
• Lucid Motors' Shares Slide Amidst Lackluster Q2 Deliveries and Production Numbers?(Reuters)
• Inflation Eased to 3% in June, Lowest Since Early 2021?(WSJ)
• Global Venture Capital Funding Slumps in First Half Despite AI Frenzy?(Reuters)

Mexico-US Trade Relations Strengthen as China Takes Backseat

Mexico has emerged as the United States' top trading partner, surpassing China, marking a significant shift in global economic dynamics. This transition signifies a move away from a sole focus on low prices and supply chain efficiency towards a more nuanced approach. The change reflects various concerns shaping today's global economic relationships, including national security, climate policy, and supply chain resiliency. The decline in trade with China has consequences for American consumers and companies, resulting in rising costs. Furthermore, deteriorating diplomatic relations between the U.S. and China raise concerns beyond economic implications. The decline in China's position is accompanied by Mexico's manufacturing ascent, driven by the "nearshoring" trend to bring work closer to the U.S. Notably, the automotive industry plays a significant role in U.S.-Mexico trade, accounting for a quarter of total manufacturing trade activity. Unlike China, trade with Mexico maintains a balanced import-export relationship, benefiting both nations through complementary production processes. While the Biden administration aims to improve relations with China, trade tensions persist due to existing tariffs imposed during the Trump era. In contrast, trade between Mexico and the U.S. faces fewer barriers under the United States-Mexico-Canada Agreement (USMCA), formerly NAFTA, fostering a seamless economic partnership.

"Today’s global economic relationships encompass a myriad of concerns, among them national security, climate policy and supply-chain resiliency..."

Luis Torres, Dallas Federal Reserve

Private Funding Pulse Check?

• Fairlyne, a "Resale-as-a-Service" for the travel industry, has recently raised $3.0M in their Seed funding round, with the participation of EVOLEM, a family office based in Lyon, France
• Eric Schmidt's Family Office, Hillspire, has invested in a $1.3B Venture funding round in?Inflection AI, a California-based multi-disciplinary AI studio
• In a recent Seed follow-on round, Bruno Rousset's Family Office participated in an investment totaling $10M in?DataGalaxy, a startup specializing in collaborative data governance, enabling rapid deployment of solutions to support regulatory compliance
• KEC Holdings has joined a $11M Series A investment round in?Gooten, a New York, NY-based "print-on-demand" solution that aims to optimize companies' eCommerce businesses

https://www.fintrx.com/

Southern States Overtake Northeast in National GDP Contribution, Marking Profound Economic Shift

In the midst of a profound economic shift in the United States, a $100B wealth migration is tilting the center of gravity of the country's economy toward the South. Stretching from Charleston, South Carolina, down to northern Florida, the region is experiencing a surge in economic activity, driven by the rise of electric-vehicle factories, battery plants, and corporate relocations. States such as Florida, Texas, Georgia, the Carolinas, and Tennessee are now contributing more to the national GDP than the traditionally dominant Northeast region. This migration of wealth and jobs has significant implications for the entire country. The Southeastern states have seen tremendous job growth, accounting for over two-thirds of all job growth in the U.S. since early 2020. The South's appeal lies in its warmer weather, lower taxes, looser regulations, and affordable housing. While this economic boom is widening the conservative tilt in some states, it hasn't slowed the migration flow. The Southern region's rising political influence is evidenced by the increase in congressional seats and the number of Southern chairs on important U.S. House committees.

"You could throw a dart anywhere at a map of the South and hit somewhere booming..."

Mark Vitner, Wells Fargo

Resilient U.S. Construction Industry Thrives Amidst Historic Rate-Hiking Cycle

U.S. construction has shown resilience during a historic rate-hiking cycle, attributed to a backlog of pandemic-delayed projects and President Biden's industrial policy programs. The Inflation Reduction Act and the CHIPS Act aim to boost domestic investment in clean-energy technology and repatriate key supply-chain production. Manufacturing construction has reached a multi-decade high, offsetting a pullback in residential construction. Spending on manufacturing construction has more than doubled in the past year, exceeding $190B in April. Manufacturing accounts for a record-high 13% of non-government construction, as the U.S. seeks to reverse long-term deindustrialization. The surge in manufacturing construction has benefited most regions of the U.S., except for New England, where spending has declined over the past year.

"The U.S. is trying to reverse, at least for certain industries, the long-term deindustrialization of its economy. Along with European countries, it’s seen a slide over several decades in the share of the workforce employed in manufacturing, as Asia took over the role of the world’s factory powerhouse."

Ben Holland & Alexandre Tanzi, Bloomberg

India Poised to Become the World's Second-Largest Economy, Surpassing the United States

Goldman Sachs predicts that India is set to become the world's second-largest economy by 2075, surpassing not only Japan and Germany but also the United States. This projection is based on several factors contributing to India's growth potential. Firstly, the country's progress in innovation and technology, coupled with higher capital investment and rising worker productivity, is driving the forecast. Additionally, India's low dependency ratio, indicating a higher proportion of working-age adults able to support dependents, offers a favorable demographic advantage. To fully harness the potential of its growing population, India needs to boost labor force participation by focusing on manufacturing capacity, service growth, and infrastructure development. The government's emphasis on infrastructure creation, supported by interest-free loan programs, aims to spur investment. India's technology industry is also expected to see significant revenue growth, and capital investment is predicted to rise, fueled by increasing savings rates, incomes, and financial sector development. However, challenges lie in increasing the labor force participation rate, especially among women, and addressing net exports' drag on growth due to the current account deficit. Despite these risks, India's domestic demand-driven economy, accounting for up to 60% of its growth, positions it favorably for future economic expansion.

"Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies..."

Santanu Sengupta, Goldman Sachs

https://www.cnbc.com/2023/07/10/india-to-become-worlds-second-largest-economy-by-2075-goldman-sachs.html

Rep Roundup: Navigating Advisor Shifts ??

• UBS undergoes leadership changes in its wealth management division following the acquisition of Credit Suisse
• Approximately 180 executives from Credit Suisse will be given roles within UBS
• Key appointments include Michael Marr as head of Global Wealth Management in Australia, Puneet Matta as leading Wealth Management in India, and Lisa Golia as Chief Operating Officer for Wealth Management in the U.S.
• UBS is expected to cut around 30% of its employees, which could amount to approximately 30,000 individuals?(Reuters)