Pre IPO Swap 8/6/2019 -- New York, NY -- Pre IPO Swap has partnered with disruptive firm Transparent Business to tackle one of the biggest problems in Government and the Enterprise: Fraud and Overbilling. As the world transforms from bricks and mortar to online and virtual, fraud and overbilling is a growing problem with few solutions, until now. Transparent Business tackles this problem in a unique way, by installing a cloud based tool that monitors electronic activity in a non-invasive manner (they aren't recording all of your data, don't worry). It's low cost and can prevent multi-million dollar overbilling situations.
Here's a description of their product: Transparent Business makes every minute of computer-based work automatically verifiable. Save your state tens of millions of dollars by simply requiring state contractors to provide transparent verification of billable hours. The state will know the exact status and cost of every project and task, at any moment. Before Transparent Business, state auditors have had no tools to verify the accuracy of invoices based on billable hours. Many invoices for professional time have been paid based on the “honor system”, with some contractors “robbing the state blind”. Transparent Business gives state managers real-time information about the work performed for the state by programmers, architects, engineers, and other professionals, but does not intrude on their privacy. The tool is controlled by the worker, who can start and pause it whenever they wish, so only billable activity is documented. Transparent Business boosts productivity of billable time 15-40% by eliminating time wasters from the billing. We preclude contractors from billing the state for the time spent engaged in non-project related activity such as online shopping, playing computer games, chatting with friends, updating social profiles, watching funny videos, sending out resumes or even working for another client. The savings would come to the state at no cost to taxpayers, as contractors will bear the modest cost of complying, just like they have always absorbed other accounting costs. There’s also no risk, as Transparent Business is available from ADP, the largest payroll processing company and a component of NASDAQ and S&P. The proposed transparency requirement is not vendor-specific.
Their business plan is to create legislation that will mandate use of this product in Government, and not only in US. The best part about Transparent Business is the active management and dialogue of CEO Alex Konanykhin, as displayed in his last email update, pasted here:
Last week, two shareholders independently of each other asked me why we are doing so much public relations, which made me realize that I had failed to articulate that as a part of our strategy to increase value of your stock, we are working on developing a recognizable, respected and valuable brand name.
Brand power is the main reason most companies chose Salesforce.com over competitors with better and less expensive CRM solutions, and Silvina and I like to make TransparentBusiness similarly synonymous with the category of Business Transparency, globally. The value of some brands goes into tens of billions of dollars. We are far from getting into those numbers, needless to say, but we have already made important first steps in making TransparentBusiness brand valuable. Anyone who googles us will find many mentions of our company, in publications around the world. Quite a few executives already tell us, “yes, of course I’ve heard of TransparentBusiness”, which is a big difference from the days where we had to start every meeting by explaining who we are and what we do. As we are just in our second round of financing, we seek the most cost-effective ways to boost value of our brand. Our objective is to assure that every $100K invested into brand development would increase the brand value of TransparentBusiness by at least a million dollars. Most of this work falls on Silvina’s shoulders. As another step in this direction, Silvina gave an interview to EFE, the world’s forth largest wire service. The report was distributed by EFE this past Saturday and has already been published in a number of publications internationally, including Hoy, La Vanguardia, El Confidencial and El Diario. More placements are expected throughout this week.
If you are an institution or Qualified Purchaser that is interested in Transparent Business see this page Transparent Business.
It was almost ten years ago that we first profiled the most important trading desk in the world: not one situated in any of the (increasingly empty) massive trading floors of the world's commercial banks located in either the financial district, midtown or Connecticut, but the one inside the 9th floor of 33 Liberty Street, the home New York Fed, the one which is also known in trader folklore as the "Plunge Protection Team."
Mr. Sack, 39 years old, is an economist who runs the markets group at the Federal Reserve Bank of New York.The group runs the Fed's trading, making it the bridge between the marble corridors of the Federal Reserve in Washington and the bustling trading floors of Wall Street.
The center of life in the markets group is a glass-enclosed conference room situated next to a small cluster of trading desks on the ninth floor of the New York Fed. It overflows with people for a daily 9:20 a.m. meeting run by Mr. Sack. A few stray pictures of Alan Greenspan, the former Fed chairman, still hang on pillars nearby.
The markets group grew enormously during the crisis, from about 225 employees to 400 people who monitor the markets for the Fed, manage its portfolio and run the many new trading programs it has started. The Fed holds more than 20,000 individual securities.
Of course, back then said "most important trading desk" was controlled by one Brian Sack, then only 39-year-old, who has since moved on to the far more lucrative pastures of DE Shaw. Sack was replaced in the summer of 2012, by the levitating market wizard, Simon Potter, who promptly realized that to crush the bears one simply had to crush the VIX specs, and the rest would promptly follow.
Then, in the end of May 2019, something unexpected happened: Simon Potter, arguably the most important trader in the world, manning the world's most important trading desk, unexpectedly announced his "resignation." Not only that, but Potter took with him the second most important person at the NY Fed's "Plunge Protection Team", the head of the Financial Services Group, Richard Dzina.
Simon Potter
What was odd, as we briefly noted two months ago, was the sudden and unexpected nature of this departure: it came from nowhere, and prompted some very delicate and substantial questions about continuity at the desk that has so far managed to keep the US stock market from entering a bear market since the global financial crisis over a decade ago.
Now, thanks to Bloomberg, we have a much more detailed look into what transpired at the trading desk of the "Plunge Protection Team", and what we learn is that the past year said institution which forms the bedrock of support for the US capital market has been gripped by what at times is sheer chaos.
Why? Perhaps it will not come as a surprise to anyone, that the reason for said chaos is another career economist, in this case the "new" president of the New York Fed, John Williams (no relation to the Star Wars guy).
As Bloomberg details in a "must read" report, "an unusual level of internal tension broke out in recent weeks at the fortress-like Federal Reserve Bank of New York in lower Manhattan." This was prompted by the sudden departure of the two longtime officials mentioned above, which "shook staff, sank morale and drew attention to the leadership of the New York Fed under John Williams as he enters his second year at the helm." And yes, this is the same John Williams who two weeks ago prompted a mini market tantrum following one of the most epic communication fuck ups by a central banker.
As Bloomberg writes "the story involves Simon Potter, who ran the all-important markets desk, and Richard Dzina, head of the financial services group. Both were abruptly relieved of their roles in late May by Williams. Little explanation was given, but according to current and former New York Fed employees, as well as those close to the bank, the nature of the exits, by fault or design, seemed to be a warning: fall in line."
It is not clear exactly what the two titans of US capital markets had to "fall in line" for, but two things are certain - i) Potter did not "resign", he was fired by Williams, and ii) now that an economist with zero capital markets experience is in charge, and following his termination of Potter and Dzina, the world is one step closer to collapse as a clueless PhD hack is in charge of the most important market in the world.
The economist in question is John Williams, whom Bloomberg laughably described as "a widely respected and oft-cited monetary economist who ran the San Francisco Fed for seven years" which is amusing for a regional Fed that was at the epicenter of the housing crisis (granted under Yellen, not Williams, but still), and which is best known for incinerating taxpayer funds for such profoundly insightful research reports as "why is water wet" (we jest, but a real example of their cutting edge research was whether it was still worth going to college). In any case, when Williams was appointed for the top job in New York - a Fed which has a far closer link to capital markets than any other - this "raised eyebrows from the outset. A finance-industry background has traditionally been seen as a key qualification, something he lacked."
Bingo. And what's worse, Williams - in what was likely an ego tantrum - inexplicably fired the two most important people in his inner circle who have had their pulse on the capital markets for the past decade.
The consequences were immediate, and visible to all:
Williams, who during his San Francisco Fed days often mentioned his reluctance to pay too much attention to short-term swings in the markets, came under fire on July 18 after saying in a speech that central banks should act quickly “at the first sign of economic distress.”
With the remarks coming just a day before Fed officials entered a quiet period prior to their July 30-31 policy meeting, traders immediately took his comments to mean a more-aggressive rate cut was in store. The New York Fed issued a rare clarification walking back his comments later that day, causing another sharp move in the opposite direction.
As Bloomberg adds, the "kerfuffle prompted Ward McCarthy, chief financial economist at Jefferies, to say in a July 22 note to clients that “until proven otherwise, President Williams will remain a communication liability and a probable source of market volatility." This, again, is the guy who is in charge of the world's most important trading desk!
The Williams fiasco It also caught the attention of President Donald Trump, who has been openly critical of Fed policy. He tweeted, “I like New York Fed President John Williams first statement much better than his second.”
Williams inability to communicate with markets aside, Bloomberg correctly points out that "as Williams reorganizes the leadership ranks and puts his stamp on the New York Fed, the ousters of Potter and Dzina leave the reserve bank without two of its most experienced hands."
For those readers who are unfamiliar with our historical obsession with Potter, Bloomberg gives a broad overview of his background:
Potter, who holds a Ph.D. in economics from University of Wisconsin-Madison, started at the New York Fed in 1998. As head of the markets desk, he oversaw the end of the Fed’s massive bond-buying program known as quantitative easing, as well as the unwind that began in October 2017.
Potter was also responsible for briefing policy makers on the state of financial markets at the Fed’s rate-setting meetings. He met with Powell about three weeks after he was relieved of his duties, according to the chairman’s calendar. A Fed spokesman declined to comment on the reason for the meeting or what was discussed.
Dzina, a former Army officer, began his career at the Fed as a bank examiner in 1991 before working his way up the ranks. In addition to leading the financial services group, he also managed a key network central to the U.S. payments system called Fedwire. He’s been described in conversations with those who know him as a steady hand who projected confidence and a team-first attitude. His oft-repeated credo was, “Mission First, People Always.”
So what caused the rift that led to the termination of Potter and his associate? Curiously, that's one thing that remains unknown. As Bloomberg writes, "it’s still unclear whether any specific disagreements prompted the removals. But those close to the New York Fed say Potter and Dzina, who were known for being strong-minded, did not align with Williams on issues related to managerial strategy."
In any event, there’s little doubt many were surprised by how it all went down, Bloomberg notes. What is curious is that until now at least, the market was not aware that the two stalwart guardians of the S&P500, and the heads of the PPT departed after what appears to have been a clash of egos - and styles - with the current, and supremely clueless, head of the NY Fed. The market may be in for a very rude awakening.
Ironically, Potter's termination is something right out of Trump's pinkslipping of Comey:
Williams told Potter of the decision over the phone while the latter was out of town and was scheduled to travel to Hong Kong for a speech on regulatory reform, according to people with direct knowledge of the situation, who aren’t authorized to speak publicly.
And just like at the FBI, the NY Fed appears to be turning on Williams:
Employees put questions to Williams at a town hall-style meeting in June, two weeks after the departures, expressing their frustration over the message Williams seemed to be sending, according to people familiar with the matter. Williams responded by talking about the need for a cohesive vision among the bank’s top executives, without elaborating on the specifics of the decision.
Typical econobabble - lots of SAT words, little substance, and absolutely no clue what to do when the market crashes, which at this rate may come very soon.
* * *
Fast forward to today when the NY Fed has yet to announce who will succeed Potter and Dzina on a permanent basis. In the meantime, Michael Strine, the institution’s first vice president and Williams’ second-in-command, is managing Fedwire. Traditionally, the network is overseen by the first vice president, but was instead delegated to Dzina by Williams’ predecessor, William Dudley, when Strine was promoted to the role in 2015, according to Bloomberg.
To be sure, whoever replaces Potter and Dzina will have plenty to contend with.
On Wednesday, the Fed reduced its benchmark interest rate for the first time in over a decade and signaled more cuts may be in store later this year. New York Fed staffers have also been charged with looking into a new repurchase-agreement facility to provide liquidity to the banking system as cash becomes increasingly scarce. No less important are efforts to modernize Fedwire, which suffered a rare outage this year.
And then there is the risk of a sharp market drop lingering behind every corner, as the only thing that keeps the market propped up is the traders' explicit faith (and hope) in the Fed's ability to support it. The problem is that with Williams at the helm of the PPT, such an ability does not exist. And the moment the market realizes this is precisely when Potter will be so very desperately needed. Alas, at that very moment, Potter will be half a world away, sitting on a beach somewhere, collecting twenty zero percent...
A massive pullback in international buyers purchasing US real estate has been seen in the last several years, resulting in the softening of housing markets across South Florida,reported The Palm Beach Post.
Foreign buyers purchased a $153 billion in US homes from April 2016 to March 2017, total sales of homes to international buyers dropped to $121 billion for the year ending in March 2018, then plunged to $77.9 billion for the year ending on March 2019, the National Association of Realtors (NAR) said in its latest report.
Florida transactions involving foreign buyers fell to 36,000 in the year ending in March 2019, down from 50,000 the previous year, and 60,000 in the year ending March 2017.
"The magnitude of the decline is quite striking, implying less confidence in owning a property in the US," NAR Chief Economist Lawrence Yun said in a statement.
South Florida is a top destination for foreign buyers, accounting for 20% of the 183,100 international transactions nationwide over the past year.
Capital flight from Latin America over the past decade has driven at least a quarter of Florida's real estate market, but new trends today suggest foreigners are abandoning US markets with home prices in bubble territory.
"It takes a lot more pounds to buy an American property than it did a few years ago," said John Mike, an agent at RE/MAX Prestige Realty in Royal Palm Beach.
Mike said a stronger dollar that stated to rise in 2014 had deterred many buyers from Britain and Europe who are now increasingly buying vacation homes in Spain and the Bahamas rather than Florida.
Mike said President Trump's crackdown on immigration and a dangerous trade war with China had hampered demand. He added that international buyers "don't feel welcome" in America anymore because of President Trump's policies - so they are going elsewhere.
The exodus of foreign buyers and crashing sales explains why homes in South Florida are experiencing the most significant percentage of price cuts in some time, that has led to properties staying on the market for longer, and has tipped the overall market to buyers. All of this suggests that a top could be near.
Alternative Assets are growing strong. Perhaps it is part of the reason why Bitcoin was so popular with investors. The amount of places you can get good returns on your money are dwindling. They are there – it’s just that they are changing. Traditional markets may return enough just to stay ahead of inflation – but they also bear the risk of losing. So in the long run, traditional investing is a net loss in the opinion of many investors.
Capitalism knows no boundaries, it knows no countries, no loyalty. It only knows that it has to evolve in order to survive. Crypto is an interesting question because of the regulation involved. Basically, being pseudo-anonymous is not always a good thing. Because Crypto is unregulated (or to say differently, is not controlled by a government regulator) it provides the possibility for fraud. Just have a look at what President Trump has to say about Crypto:
This is actually a positive comment for Crypto, because there are a number of new stable coins that use the US Dollar as a management reserve. Crypto has a bad reputation due to Bitcoin, but Crypto is much more than Bitcoin, as we have seen recently in the markets.
Just because something is ‘different’ doesn’t make it ‘better’ – just because something is not mainstream doesn’t make it ‘honest.’ We all here agree that mainstream investing sucks, but do we use the same rational methodology when evaluating alternatives? Crypto has proven this is not the case. Investors lost their minds and did all the things they have been told not to do over the years.
Managers are exploring more markets – and one of those is Crypto. While Crypto is not an asset class per se, it can be. Crypto broadens the horizons of the manager, so that there are more markets to trade. And Crypto sure is volatile! That’s risky, but it’s also potentially profitable.
Also there’s a growing number of Crypto millionaires that simply feel more comfortable investing in the market where they made their money.
While the traditional fund management industry is dying – another one is being born. Just like Bitcoin came out of no where, new fund managers and strategies are going to dominate the next decade. Traditional funds like FX Concepts and others, have been closed.
Global Intel Hub is going to keep an eye out on emerging managers in the Crypto space.
