Lafayette College Investment Club September 5 2014 Overview

Lafayette College Investment Club September 5, 2014

Overview 1. Introductions 2. Career Services 3. What is the Investment Club? 4. Market Update (What You Missed This Summer…) 5. Why JOIN?

Introductions Name Year Major Position Previous Experience Club Involvement

Career Services

What Is the Investment Club? • Independently run equity based student portfolio of over $500 K Purpose: • Provide students the opportunity to get involved and excited about financial industry • Engage members through pitches, market analysis, and other informational presentations

Opportunities • Market Updates • Financial Analysis • Industry Insight • Networking

Networking

Market Update • WHAT A BLEEPING SUMMER! • WHAT’S GOING ON THIS WEEK?

ECB Negative Interest Rates • Historical move for a big central WHY would they do it? • From zero-interest-rate policy (ZIRP) to NIRP Stimulate economic growth bank • Cheap medium term loans for lending to Eurozone businesses • As expected the US dollar strengthened by 1. 5% against the Euro a few hours later June

ECB Negative Interest Rates >>>>> FAST FORWARD A FEW MONTHS • Further lowered deposit rates -0. 2% • Other programs to produce more economic stimulus (eg: ABS purchase program)

US GDP Growth Numbers • GDP expanded at 4. 2% rate in second quarter • Personal consumption, private investments, exports, and government spending • Some economists believe these results are nothing too impressive • Year GDP could possible reach just a 2% growth because of Q 1 decline. June

Summer Unemployment Rates • July employment report was modestly disappointing, with payrolls rising 209, 000 compared to expectations of 230, 000 • Unemployment rate went from 6. 1% in June to a small rise to 6. 2% in July, as participation increased • Recent date shows that participation rate is starting to increase as a strong labor market draws candidates back to the job hunt • FED believes that “there remains significant underutilization of labor resources” July

Rough Summer for International Markets Argentina BES (Portugal) • Faced default to bondholders for the second time in 13 years • Bank files for bankruptcy protection • Argentine stocks plunged as expected • No repercussions but raised concerns about Emerging Market Economies and investing • Hidden, under the table dealings led to huge losses • Resolved and split into two banks: good, bad July-August

Geopolitical Risk Rises for Global Investors • Jan 2014 – political crises have rocked the news • Crises have had minimal lasting impact on markets • Underestimated risks and volatility (due to abundant liquidity) • 28% of investors identified geopolitics as the biggest risk, compared to 14% in June

What Happened This Week • The dollar has climbed as the Fed gets closer to raising rates, helped by the possible further loosening of monetary policy by European and Japanese central banks • Consumer prices in the euro zone dropped to 5 year lows • Dollar General raised its offer for Family Dollar – contemplating a hostile bid • Goldman Sachs loaned Portuguese bank Espirito Santo $835 million after near collapse • Barclays is selling its Spanish retail-bank unit for $1 billion • Tesla Motors has selected the state of Nevada to house its new $5 billion dollar “gigafactory” • The S&P continues to hover around the 2, 000 mark

Why JOIN?

Next Meeting September 12 th 12: 15 Simon Basement