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Jeffrey Sweeney is an investment banker with years of experience in direct lending and corporate finance for small- to middle-market companies. He is the chairman and CEO of US Capital Partners, an innovator in small- to middle-market business lending. US Capital Partners has been providing prompt, innovative, and reliable financing solutions across the United States and abroad for more than a decade.

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Monday
Oct302017

US Capital Partners Holds Exclusive Internet of Things Investor Event in San Francisco

Internet of Things portfolio companies Discovery Sound Technology and Device Authority showcase their businesses at leading investor event at San Francisco’s iconic Bently Reserve.

SAN FRANCISCO, OCTOBER 2017 – On October 17th, US Capital Partners Inc. held a well-attended, exclusive investor reception, presentation, and networking event on the Internet of Things (IoT) at the historic Bently Reserve on 400 Sansome Street, San Francisco, CA. Entitled “Investing in Tech Companies that Leverage the Internet of Things,” the event showcased two of the firm’s exclusive IoT investment opportunities.

Access AI

US Capital Partners is a full-service private financial group headquartered in San Francisco. Through its affiliate broker dealer, US Capital Global Securities, the group provides private placement services and has wide distribution for debt and equity private placements. We believe the group’s technological innovations in finance reduce “transaction friction” and make smaller deals more efficient and practical than ever before.

The rapidly expanding IoT is a new interconnection of technology heralded as the next industrial revolution. More than half of major new business processes and systems are expected to incorporate some element of the IoT by 2020, according to Gartner.

At the event, US Capital Global Securities showcased two of its exclusive IoT portfolio companies, Device Authority Limited and Discovery Sound Technology, LLC. Device Authority’s KeyScaler™ platform provides trust for IoT devices and the IoT ecosystem, to address the challenges of securing the IoT. In our opinion, Discovery Sound Technology provides an innovative cloud-based service platform that registers and evaluates heating, ventilation, and air conditioning equipment data for predictive maintenance, real-time diagnostics, and advanced analytics.

“This event was an excellent opportunity for investors to gain a better understanding of the IoT and to meet two of our exciting IoT businesses,” said Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “The opportunity to participate in Device Authority’s $10 million preferred equity raise and Discovery Sound Technology’s $5 million preferred equity raise is now open to eligible investors through our digital investment platform, available at www.uscgs.com.”

Both Device Authority Limited and Discovery Sound Technology are early stage, selling into their respective markets, and seeking growth capital.

About US Capital Partners

Since 1998, US Capital Partners has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and M&A services. Operating with its registered investment bank affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent, and collaborates closely with its peers in professional banking and investment advisory.

To learn more, email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.

Sunday
Oct292017

Market Insight: Kämpfe nicht gegen die Zentralbank

No explanation needed if you speak German. For the rest of us, the title above says “Don’t fight the central bank (Federal Reserve in the U.S.).”

In September of 2010, multi-billion dollar hedge fund manager David Tepper explained his view on the stock market in simple terms. He said: the Fed’s intervention will make ‘Everything’ Go Up’. His logic was simple. Either the economy would grow on its own and cause assets to appreciate or the Fed would stimulate the economy with very low interest rates and positive capital flows (bond purchases called Quantitative Easing or QE) to make the economy advance and assets inflate. Either way, winner, winner, chicken dinner.

Tepper’s forecast was correct. Since his comments aired on CNBC on September 24, 2010, the S&P 500 index has climbed by 160%.

The U.S. Federal Reserve began its first round of bond purchases (QE) in November 2008. David Tepper made his “Everything’ Go Up” remarks one month before the Fed announced QE 2 involving billions of dollars of additional bond purchases. This was followed by QE 3 in September of 2013 which was labeled QE-Infinity because the program was open-ended. In October of 2014, the Fed ended QE. The Fed increased the Fed Funds rate from 0% in December 2015 by a quarter of a point.

As Tepper predicted, stocks appreciated either because of real economic growth or because of the trillions of dollars of capital injected into the financial system which eventually inflated stock prices or both. In the U.S., QE is now being unwound. But the economy is gaining speed and is expected to grow between 2.5%-3% for the next several quarters. U.S. stocks continue to rise.

In March 2015, the European Central Bank (ECB) launched its own QE program, almost seven years after the Fed. Many analysts believe the ECB will continue to ease through 2018.

Tepper already gave us the play book for Europe: “Everything’ Go Up.” 1) because of increased liquidity and/or 2) accelerated economic growth.

Today, the European economies are expanding faster than the U.S. and foreign stocks are less expensive; still below 2007 highs.

The chart below shows manufacturing strength by country and region measured by the Purchasing Managers’ Index (PMI: >50 expansion, new orders, inventory, production, supplier deliveries and manufacturing sector employment). The strongest country is Germany (PMI 60.6) and the strongest region is the Euro Area (PMI 58.1) – see far right column of chart showing September, 2017. For the first time in ten years, all countries and regions are in expansion phases with PMI’s in excess of 50.

As we approach 2018 and consider adjusting investment allocations for the New Year, we continue to be bullish on the U.S. but recommend an overweight position to Europe and international markets generally. Wir bleiben diese Woche bullisch.


Kyler’s Report

A Nobel for Misbehaving

A couple of weeks ago, Richard Thaler won a Nobel Prize for his work in behavioral economics and finance, which looks at how emotions influence decision making.  His excellent book Misbehaving tracks a lot of the ways in which we don’t make rational choices.

For investors, it is vital to understand behavioral finance.  We will do better if we can minimize the amounts of emotional, suboptimal decisions.  As Charlie Munger puts it:

“Personally, I’ve gotten so that I now use a kind of two track analysis.  First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things – which by and large are useful but often malfunction.”

What subconscious mistakes will we make if we don’t watch out for and eradicate them? This is always an important question to ask, and I think it is even more important when you’re in an environment where investors are sanguine about prospects for risky assets.  It is during periods where things seem pretty good, money is easy to come by, and asset prices aren’t objectively cheap that investing mistakes can really hurt you.  There are plenty of investors who didn’t pay enough attention in 2007 and were ruined in 2009 as a result. 

So what kinds of mistakes should we consciously look out for?  This is where behavioral finance comes into play and the work of Thaler and a few others can help us:

We are predisposed to only factoring in new information that confirms our previous beliefs.  Have you thoroughly researched opposing viewpoints on all of the investments that you own?

Investors tend to chase performance and assume that trends will last longer than they actually do.  Do you own investments because they’ve recently gone up in price and you think the “action” can continue, or did you discount the cash flows using reasonable assumptions and determine that you should make a good rate of return based on that asset’s intrinsic value?

We usually keep owning whatever we’ve historically owned and have trouble selling those investments.  Do you like the prospects for all of your investments, or do you just own it because you’ve always owned it?

We overweight recent events in our minds more than things that happened a long time ago, and the economy has been strong for a long time.  Will your investment portfolio meet your financial goals if we enter a period of heightened volatility?

These are only a few examples of subconscious biases that we all have.  Richard Thaler’s Nobel Prize is a timely reminder that we need to understand our biases and consciously work to fight against them so that we can make good decisions and make less avoidable mistakes.


Give Us A Call Today

We invite you to give us a call at (415) 249-6337 or email us at info@uscapitalwm.com if you have questions about your account and how we can assist you in equities and fixed income.


US Capital Wealth Management Stock Market Dashboard


Delta Market Sentiment Indicator (MSI) is published weekly in Barron’s


US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.

THIS NEWSLETTER IS PROTECTED BY COPYRIGHT LAW. UNAUTHORIZED DISTRIBUTION AND/OR REPRODUCTION BY PHOTOCOPY OR ANY OTHER MEANS IS STRICTLY PROHIBITED AND PUNISHABLE BY A FINE OF UP TO $25,000.

Monday
Oct232017

Market Insights: No Drama

American culture seems to be increasingly addicted to drama. The proliferation of reality T.V. shows like Keeping Up with the Kardashians, Real Housewives, Cops, Here Comes Honey Boo Boo, Bad Girls Club, My 600-lb Life, 90 Day Fiancé, etc. is a measure of this.

At US Capital Wealth Management, we seek to keep the drama and emotions out of the investment process. Drama and emotions often inspire action which is not well thought through.

We rely on quantitative data with stable relationships to stock market activity. Weekly, we publish the status of the Delta Market Sentiment Indicator (MSI) which provides an intermediate term outlook on the stock market. We believe the Leading Economic Index (LEI) and treasury yield curve provide advance indications of recessions and potential major market declines.

We are always looking at data to evaluate the risk/reward balance of stock ownership. This week, we examine the Misery Index. The Misery Index adds the unemployment rate to inflation (core PCE deflator). High inflation and high unemployment makes investors miserable and stocks sell-off. Low inflation and low unemployment reflect a healthy investment environment and rising stock prices.

Shown below is a graph of the Misery Index from 1960 through September, 2017. Major bearish stock market periods occur when the Misery Index is rising.

The next two charts show the stock bull market run from 1982 through 2000. The Bull market was fueled by a falling Misery Index.

Since 2000, we have experienced two major bear markets. The chart below shows the relationship between the Misery Index and stock price in the 21st Century.

The Misery Index is 5.5% today. Historically, when the Misery Index has been this low, the S&P 500 P/E has ranged from about 15x to 35x with many instances of 25x and above. The all-time low of the Misery Index from 1960 through September 2017 was February 1966 at 5.28%. The all-time high was in 1975 at 18.56%.

A year ago, the Misery Index was 6.74%. The index is down roughly -18% in the past twelve months and the S&P 500 is up 21%. For now, the index is low and continues to decline which is constructive for further stock price advances. In the coming months, it will be interesting to see if the Misery Index is able to drop to new all-time lows.


Kyler’s Report

What I’m Reading This Week

In my portion of the newsletter, I will be writing weekly about whatever I’m looking at for the week. It could be about a specific company, specific industry, the macroeconomy, or something not even directly related to investing.

This week, we’ll look at the state of the US oil and gas market. Over the past couple of years, oil prices have stayed lower than recent averages largely because of expectations of continued strong US production even in the face of weak prices. The recipe for strong production has been cheap capital, productivity improvements, and pricing concessions from service providers.

Some cracks in each area are emerging. In this Bloomberg article, an analyst noted a different narrative from lenders:

“Lenders are tiring of supporting negative cash flows, particularly because of the relatively flat commodity prices,” said Harvey. “If this weariness leads lenders to stem their support by requiring more restrictive covenants or indentures that would limit negative cash flow, it would be a rude awakening for an industry that has typically put growth before positive cash flow.”

Furthermore, drilling productivity has started to decline, and drilling prices have increased across most US drilling basins. Those three important factors that led to strong production at low prices are starting to show signs of weakness, and as a result the US rig count has rolled over in the past few weeks even in the face of relatively higher oil prices:

CEOs of major drilling companies are telling investors that they should expect less growth, and stocks of some of the drilling companies tied to the hottest US shale play, the Permian Basin, have struggled as investors expect less growth.

A difficult few months doesn’t mean the end of the US energy story, but a slowdown in the biggest US shale plays does question the narrative that US production will cover any oil shortfall down the line. For any investors with energy exposure, this is a trend worth following.


Give Us A Call Today

We invite you to give us a call at (415) 249-6337 or email us at info@uscapitalwm.com if you have questions about your account and how we can assist you in equities and fixed income.


US Capital Wealth Management Stock Market Dashboard


Delta Market Sentiment Indicator (MSI) is published weekly in Barron’s


US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.

THIS NEWSLETTER IS PROTECTED BY COPYRIGHT LAW. UNAUTHORIZED DISTRIBUTION AND/OR REPRODUCTION BY PHOTOCOPY OR ANY OTHER MEANS IS STRICTLY PROHIBITED AND PUNISHABLE BY A FINE OF UP TO $25,000.

Tuesday
Oct172017

US Capital Partners Expands Its Wealth Management Division

San Francisco-based private financial group appoints additional Vice President to US Capital Wealth Management, following a year of strong business growth across multiple verticals.

SAN FRANCISCO, OCTOBER 2017 – San Francisco-based private financial group US Capital Partners Inc. announced today that Kyler Hasson, founder of Hasson Investments, has joined the group’s Wealth Management division, US Capital Wealth Management, as Vice President.

US Capital Wealth Management specializes in providing thoughtful, independent wealth management solutions to enable clients to build and protect their wealth. From $4 billion worth of deal flow reviewed each year, US Capital Wealth Management offers only the best-of-the-best investment opportunities to its clients, with a focus on personalized service and mitigation of the risks inherent in investing.

Kyler HassonPrior to US Capital Wealth Management, Mr. Hasson founded Hasson Investments, a private investment firm and registered investment adviser based in Mountain View, CA. Using a value-based, bottom-up approach, he rapidly grew the firm’s assets under management. A graduate and postgraduate of Stanford University, Mr. Hasson specializes in portfolio management and investment advisory, and works closely with clients to promote lasting financial success.

“I am extremely pleased to welcome Kyler to the firm’s rapidly expanding Wealth Management division,” said Jeffrey Sweeney, Chairman and CEO at US Capital Partners. “Clients at US Capital Wealth Management gain access to expert wealth advisory with customized portfolio construction and management. Our experienced investment advisors focus primarily on risk-adjusted rates of return with careful attention to portfolio downside protection. Kyler is a valuable addition to the team”

Commenting on his new role, Mr. Hasson said, “I am excited to join US Capital Wealth Management and to have the opportunity to work with such an experienced team of investment professionals. The division’s wealth management capabilities, coupled with easy access for clients to the entire group’s professionals and innovative enterprise-based finance products, is a benefit that resonates strongly with clients. I look forward to supporting the division’s continued expansion.”

About US Capital Partners

Since 1998, US Capital Partners Inc. has been committed to providing small and lower middle market businesses and investors with sophisticated debt, equity, and investment opportunities usually available only to larger middle market companies and institutional investors. The firm manages direct investment funds and provides wealth management and M&A services. Operating with its registered investment bank affiliate, US Capital Global Securities, LLC, the firm acts as a licensed placement agent, and collaborates closely with its peers in professional banking and investment advisory.

To learn more, email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.

Monday
Oct162017

Market Insights: High Anxiety

Should we be scared? It is October. The Wall Street Crash of 1929 (kick-off to The Depression) began in October. Black Monday was in October 1987. In October of 1997, there was a stock market crash caused by economic crisis in Asia. The start of the Great Recession began in October 2007.

The stock market keeps moving steadily higher. When some investors look down, they feel high anxiety. We keep hearing the length of the current economic expansion is pushing up against previous historic records. Could we be teed-up for another October collapse?

Sharp stock market pull-backs of -5%, -10% and -20% occur frequently during bull markets and are to be expected. Typically, the stock market recovers in a matter of months from a run-of-the-mill decline. What we worry about is not so much a normal market correction, but an extended bear market drawdown that requires years to recover from.

Extended bear markets occur during recessions. If you would like to avoid a major bear market, first check to see if there is a recession likely in the intermediate term and second, reduce equity exposure.

Last week, we published an updated Leading Economic Index (LEI) chart that includes data through August 2017. For the past twelve months, the LEI has been consistently positive. From the LEI standpoint, there is no sign of a recession.

Historically, the LEI shows significant deterioration months before a recession. Shown below is the most recent example of the LEI providing ample warning before the 2007-2009 recession.

The treasury yield spread between the 10-year and the 2-year rate is also a reliable early indicator of impending recession. Although the spread between the 10 and 2-year is tightening, it is nowhere near inverted.

The chart above is the history of this relationship since 2006. Another way to look at the spread is to compare the yield curves on a single day. In the chart below on February 23, 2006, the 2-year was 4.72%, above the 10-year rate of 4.56% - inverted. Today, the 2-year is 1.47%, below the 10-year rate of 2.33% - not inverted, steep. Prior to recessions, we have seen inversions.

Again, market corrections are a normal part of bull markets. We could see a consolidation or correction in October, we may not. What we are not afraid of at this time is the beginning of a major bear market. Pullbacks should be bought.



Give Us A Call Today

We invite you to give us a call at (415) 249-6337 or email us at info@uscapitalwm.com if you have questions about your account and how we can assist you.


US Capital Wealth Management Stock Market Dashboard


Delta Market Sentiment Indicator (MSI) is published weekly in Barron’s


US Capital Partners

Pursuant to the provisions of Rule 206(4)-1 of the Investment Advisors Act of 1940, we advise all readers to recognize that they should not assume that recommendations made in the future will be profitable or will equal the performance of past recommendations. This publication is not a solicitation to buy or offer to sell any of the securities listed or reviewed herein. The contents of this letter have been compiled from original and published sources believed to be reliable, but are not guaranteed as to accuracy or completeness. Nicholas Atkeson and Andrew Houghton are also principals of US Capital Wealth Management, a registered investment advisor. Clients of US Capital Wealth Management and individuals associated with US Capital Wealth Management may have positions in and may from time to time make purchases or sales of securities mentioned herein.

THIS NEWSLETTER IS PROTECTED BY COPYRIGHT LAW. UNAUTHORIZED DISTRIBUTION AND/OR REPRODUCTION BY PHOTOCOPY OR ANY OTHER MEANS IS STRICTLY PROHIBITED AND PUNISHABLE BY A FINE OF UP TO $25,000.