Goldman Sachs is acquiring NextCapital, a quickly growing fintech company that provides digital advice targeting corporate retirement plans. This is one of Goldman’s five largest asset management acquisitions and will aim to develop relationships with corporate employees. This will also provide a stable source of revenue which plays nicely with its more traditional trading activities. Morgan Stanley and JPMorgan are both ratcheting up acquisitions in fintech that offer better relationships with corporate employees. Next Capital is a little over eight years old and has raised $85 million in its most recent funding round.

Finsum: This could form the foundation of a relationship between many employees in the US and GS providing an avenue for future clients.

The muni market has seen sky-rocketing volatility the last ten days with the highest point since the onset of the pandemic. That volatility has hurt many investors as yields rose by over 11 basis points sending bond prices tumbling. Triggering this decline in muni bond prices was Fed Chair Powell’s hawkish turn which included tapering asset purchases and raising rates. This loss is positioning munis for their worst quarter in almost 30 years. Some muni bond issuers are pausing or flat out canceling their development in the wake of a flat out crisis.

Finsum: This could be a quarter for muni bonds which have a close pass through to the Feds target interest rate and are therefore more sensitive.

The SEC has splashed headlines recently with crypto and ESG rule changes, and they are once again widening their scope. They have proposed a new rule which would force trading firms to register as dealers and fall under oversight. Algorithm and high frequency traders woud now fall under SEC guidelines and scrutiny. Gensler believes these traders provide an important liquidity function for the US financial system and should be overseen by the SEC. The rules would not apply to those that manage less than $50 million. These requirements would put high costs on many financial market participants and might not be justified according to experts.

Finsum: These measures are to prevent a 2020 Fed step in again, but it's difficult to see if this much oversight is warranted given how much it will cost.

Bonds and equities have stood tall in the face of the many windfalls that have faced financial markets in the last month. However, even the bulls are getting worried and alternatives could provide relief and earn higher yield. Real estate via REITs are in a great position as an asset class and could perform well in the upcoming years with higher interest rates. Art is an overlooked alternative which has had high appreciation, outpacing 10 major classes since Covid according to CITI. Finally private equity has been a go to for many investors, and has seen record inflows post-covid while remaining less correlated with equities.

Finsum: The biggest draw to private equity is that fixed income is more correlated than ever with stocks and so alternatives provide a better hedge.

The boom in credit inflows to ESG might be an obvious sign environmental risk isn’t actually priced in. Coal companies have got credit ratings boosts, mortgage increases in flood zones, and a myriad of other issues. These are all signals that risks aren’t properly priced into fixed income markets according to Tom Graff of Brown Advisory. Natural disasters are becoming more frequent yet greenwashing keeps this from accurately being a factor in ESG. However, there is an advantage for investors to take advantage of mispricing, if disasters isolate countries energy independence could be underpriced in many countries around the world, the anti-Russia position.

Finsum: Fixed income regulators are could be turning a blind eye to sources of credit risk which investors might be able to exploit in the early days of greenwashing.