Almost Half of Investors Surveyed Expect Market Downturn, According to Latest E*Trade Study

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E*TRADE Financial Corporation today announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors. Results indicate investors are increasingly wary about what direction the market may take during the remainder of the year:

More than any other, investors choose “Dazed and Confused” as the movie title that best describes how they feel about the market today, and significantly more investors chose it this quarter over last.
Investors are more bearish than any quarter in the past two years, now at half the survey population.
Nearly half of all investors believe the U.S. equity market will experience a correction (drop of at least 10 percent) or a bear market (drop of at least 20 percent) by end of year.
“After an exceptionally long bull market, investors may be bracing for the tide to turn,” commented Michael Loewengart, VP, Investment Strategy at E*TRADE Financial.

Mr. Loewengart offered the following general insights for investors concerned about a market downturn heading into the end of the year.

Dollar-cost averaging can reduce cost basis. Dollar-cost averaging is an investment approach in which investors set a defined schedule for buying into the markets. Weaker markets allow investors to buy more shares when prices are low, and fewer when they are high, enabling investors to potentially reduce the average cost basis.
Diversification can help weather storms. Well-diversified portfolios may be better positioned for changing market conditions, as some industries and instruments tend to be particularly hard hit during market downturns.
Timing the market is difficult. While the current macro environment may paint a picture of global uncertainty, knee-jerk reactions rarely achieve the intended results. Market swings are common, and investors are wise to stay focused on the long term.

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Flexstar Technology Acquired by Neosem Holdings

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Neosem Holdings, Inc., a wholly owned subsidiary of Neosem Inc. today announced that it has completed the acquisition of Flexstar Technology, Inc. Flexstar is a leading provider of advanced test and related proprietary software solutions for the storage technology market. The Company’s innovative testing solutions are used by the world’s leading data storage system manufacturers to enable development, quality assurance and reliability testing for a variety of storage devices.

“Flexstar’s partnership with Neosem creates a global technology leader focused on SSD test technologies,” commented DH Yeom, CEO of Neosem. “Our combined technology, engineering and service offerings enhances our collective differentiation and market position. Together we are poised to take advantage of the growth and opportunities in the rapidly evolving storage technology marketplace.”

Andrew Warner, CEO of Flexstar Technology, commented, “We are excited to join the Neosem family and look forward to continuing to provide innovative, high-quality solutions and services to our customers worldwide. Bringing together two leaders in the SSD testing market will strengthen both companies and allow us to better serve our collective customer base. In addition, this transaction is highly strategic and will create new growth and innovation opportunities, as well as cost savings for both organizations.”

Flexstar will continue to operate out of its San Jose, CA, headquarters and Longmont, CO facility. Specific terms of the transaction have not been disclosed.

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Micronics Filtration Holdings Acquires United Process Control

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Vance Street Capital LLC, a Los Angeles-based private equity firm, and Micronics Filtration Holdings, Inc. a global provider of wet and dry filtration aftermarket products, today announced the acquisition of United Process Control, Inc. UPC is the fourth add-on acquisition for Micronics since December 2014. Terms of the transactions were not disclosed.

UPC is a full service provider of baghouse inspection, mechanical repair, bag change outs and aftermarket parts to customers in the power, steel, cement, chemical, and food industries across the United States. UPC will join forces with Micronics subsidiary C.P. Environmental (“CPE”), a leader in dry filtration service, maintenance, replacement bags and parts.

“With the addition of UPC, Micronics Holdings has significantly grown its dry filtration business, increasing its ability to meet the service and aftermarket needs of its customers,” said Richard Crowell, Managing Partner at Vance Street Capital.

“Working closely with portfolio companies such as Micronics to source, close and integrate strategic add-on acquisitions that allow our portfolio companies to accelerate their growth is central to our investment strategy.”

“The addition of UPC allows us to better meet our aftermarket customers’ needs for engineered and technically complex mechanical repairs to their existing dry filtration systems,” said Micronics President and CEO Rick Weiler.

“This transaction also expands our presence on the east coast and in the southern portion of the United States. Working together, I am confident we will be able to achieve significant growth while also providing our customers with outstanding service.”

 

 

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Northern Trust Survey: Investment Managers Less Confident in U.S. Outlook, See Risk in Emerging Markets

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Investment managers are less optimistic on the prospects for U.S. economic growth in the near term and more concerned about the potential impact of an emerging markets slow down on stock prices, according to a quarterly survey by Northern Trust Asset Management.

The survey of approximately 100 money managers, taken in mid-September, found a sharp drop-off in expectations for U.S. growth: only 29 per cent expect growth to accelerate over the next six months, down from the 54 per cent who expected accelerating growth in the previous quarter’s survey and the smallest portion in the past three years with that view.    

With global market volatility in August and early September as a backdrop, investment managers ranked a slow down in emerging markets as the top risk to equity markets. In the previous quarter, emerging markets had been ranked last of eight possible risks to equities. A change in U.S. monetary policy, which was ranked as the top risk to equities in the previous two quarters, fell to fourth place in the third-quarter survey.    

“On a number of measures, managers have become less confident in their outlook,” said Christopher Vella, Chief Investment Officer for Multi-Manager Solutions at Northern Trust Asset Management. “In line with their views on the U.S. economy, fewer managers expect increases in U.S. corporate revenue and housing prices than in the previous several quarters, while the number of those expecting steady or stable growth has increased.”    

After stock market volatility hit record levels during the August market sell-off, nearly 20 per cent of managers expect market volatility to decrease in the next six months, compared to just 1.4 per cent with that view in the previous survey. A majority, nearly 60 per cent, believe volatility will increase, but that is down from 74 per cent with that view in the previous survey.    

“Almost one in three managers is taking advantage of market volatility,” said Mark Meisel, Senior Investment Product Manager for Multi-Manager Solutions at Northern Trust Asset Management. “Thirty per cent of managers reported that have slightly increased their turnover to take advantage of market opportunities over the past quarter. At the same time, 20 per cent have reduced their foreign currency exposure due to volatility in currency markets.”    

Other findings of the third quarter survey include:    

Concern over a slowdown in China was listed as the top reason for the equity market sell-off in August and early September. Concern over the timing of a U.S. Federal Reserve interest rate increase was second, and continued weakness in the price of oil and other commodities was third.      

66% of managers expect little impact to financial markets if the Fed raises short term interest rates in 2015, because it is already priced in to markets. However, 20% believe it will lead to additional U.S. dollar appreciation and to emerging market declines.

Investment-grade corporate bonds, U.S. high yield, global high yield-ex. U.S., and floating rate loans were ranked as the most attractive segments in the current fixed income environment. Asset-backed securities, emerging market bonds (U.S. dollar) and emerging market bonds (local currency) were ranked least attractive.      

52% of managers view emerging market equities as undervalued, up from 38% with that view in the previous quarter; 49% believe European equities are undervalued, down from 52% with that view previously. Views on U.S. equities were mixed, with the largest portion, 37%, viewing the S&P 500 Index as overvalued by as much as 10%.      

Managers were most bullish on non-U.S. developed equities and U.S. small-cap, and most bearish on U.S bonds and emerging market debt.      

For its survey, Northern Trust polls investment firms that participate in its multi-manager investment programs and funds. The select group of respondents includes fixed income and equity managers across value and growth styles, with a bias toward fundamental, bottom-up stock picking strategies. The survey is conducted quarterly so that Northern Trust and participating managers can examine trends in attitudes and allocations. The full Investment Manager Survey Report and a video on survey highlights can be found on Northern Trust’s web site at www.northerntrust.com/managersurvey.    

Northern Trust Asset Management is a leading provider of multi-manager investment solutions, with more than $100 billion in assets ($61.6 billion in assets under management and approximately $38.6 billion under advisement) as of June 30, 2015, for institutional and personal clients. Northern Trust invests with more than 300 external managers worldwide, offering personal and institutional solutions that include outsourced chief investment officer (OCIO) services, alternative asset classes, single asset class solutions and emerging manager programs.

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RealtyMogul.com Finances Acquisition of Multifamily Property in Texas

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RealtyMogul.com the online marketplace for real estate investing, announced it has successfully helped finance the acquisition of the Villa France Apartments, a 134 unit Multifamily Property in Irving, Texas. A joint venture between Paladin Preferred Capital and Steve Bram serve as the sponsors of this transaction.

“We are excited to partner with Paladin Preferred Capital and Steve Bram on this acquisition,” said Jilliene Helman, CEO of RealtyMogul.com.

“The sponsor will handle all aspects of the investment including purchasing the property, overseeing renovations, and selling the property, while RealtyMogul.com investors will participate as equity stakeholders and potentially earn a share of the cash flow and asset appreciation.”

“We are pleased to have completed this successful transaction with our equity partner RealtyMogul.com,” said Steve Bram, Principal of George Smith Partners. “Our joint venture will provide significant experience and expertise for the renovation and ultimate sale of the Villa France asset. This was my third equity funding with RealtyMogul.com and every experience was flawless.”

Villa France, which is centrally located between Dallas and Fort Worth has a strong amenity package which includes a playground area, swimming pool and community barbecues. In addition, the property is well occupied and has a larger average unit size than many similar buildings in the area. While 35 per cent of the units at the property have been upgraded, the sponsor plans to complete renovations on the additional 87 units to optimize rental rates.

RealtyMogul.com raised $1.5 million of the $3.4 million in equity. The investment was well aligned with the value-add return profile sought by RealtyMogul.com investors.

 

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Four Years On, Consumers Are Winning With Debit Reform

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Four years ago today, debit-card reform took effect that brought more competition to a rigged market.

The Durbin Amendment saved consumers almost $6 billion and supported 37,500 jobs in its first full year, according to prominent economist Robert J. Shapiro, over the last four years, that would be $24 billion and 150,000 jobs.    

Until reform, just two companies – Visa and MasterCard – dominated the market for processing debit-card transactions and set the outrageously high fees their member banks charge merchants every time a customer swipes a debit card. That meant consumers paid higher prices, whether they used a debit card or not.    

But the Federal Reserve, which unveiled the rules to enforce the law four years ago, acceded to lobbying by the big banks and backed off from completely opening this closed section of our free-market economy.    

So banks still devour profits of more than 500 percent every time a customer uses a debit card. A recent study by the Richmond Federal Reserve found an astonishing 90 percent of the merchants it surveyed reported no drop in swipe fees or weren’t sure. American merchants pay among the highest swipe fees in the industrialized world.    

“The law is clearly a big first step in the right direction,” said Lyle Beckwith, senior vice president of government relations at NACS, the National Association of Convenience Stores. “But clearly the Fed hasn’t strictly followed Congress’ intent to make this market completely competitive.    

“The Fed has to consider its rules periodically, and merchants would urge it to do just that and finally make this market conform to the same conditions our free-market system imposes on every other part of our economy.”    

In fact, the Merchants Payments Coalition, which advocates for reform, says that in addition to completely opening the debit market, we should start thinking about reforming the credit-card market, too.

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