Glad to have you with us — let’s navigate yesterday’s market drivers.
The latest ADP employment figures reveal a cooling labor market. Slower job growth now fuels expectations of a Federal Reserve rate cut anticipated at the upcoming September FOMC meeting.
How might this impact your investment strategy across different asset classes? Keep a close eye on market responses as investors adjust their portfolios in anticipation of potential monetary policy shifts.
In today’s financial recap:
Slowing job growth fuels rate cut bets
BlackRock takes control of Citi’s wealth unit
Walmart & OpenAI upskilling millions in AI
Carlyle bags $20B for second-hand PE stakes
Slowing Job Growth Fuels Rate Cut Bets
The TradeWatch: The August ADP employment report revealed private sector job growth slowed to 54,000, which falls below expectations and increases market anticipation of a Federal Reserve rate cut at the September FOMC meeting. This could potentially have market impacts across equities, bonds, and currencies as investors adjust their positions.
Unpacked:
Private sector job growth slowed significantly in August, with the ADP report showing an increase of only 54,000 jobs, signaling a potential shift in the labor market’s strength.
The weak jobs data is fueling market expectations for a Federal Reserve rate cut, with traders now pricing in a 97% chance of a cut at the September meeting, according to the CME Group’s FedWatch Tool.
Rising bets on rate cuts come as weekly jobless claims hit their highest level since June, adding to concerns about the labor market and potentially pressuring the Fed to act more aggressively.
Bottom line:
The weaker-than-expected ADP report strengthens the case for a Fed rate cut in September, potentially impacting market performance across various asset classes. Investors should closely monitor upcoming economic data and Fed communications to gauge the likely path of monetary policy and adjust their strategies accordingly.
BlackRock Takes Control of Citi’s $80B Wealth Unit
The TradeWatch: Citigroup is transferring $80 billion in client assets from its wealth management unit to BlackRock, signaling a growing trend of traditional banks turning over direct management to external asset managers, and allows a re-focused business model on more financially driven decisions which you can read about in this article.
Unpacked:
Citi’s decision to transfer $80 billion in client assets to BlackRock highlights a growing trend among big banks to partner with specialist asset managers while refocusing wealth businesses on client advice and financial planning.
Clients will continue to work with their Citi private bankers for wealth advice, asset allocation, and strategy selection, while BlackRock will manage and implement those strategies offering a potential win-win situation for both parties.
The agreement, expected to begin in Q4 2025, aligns with CEO Jane Fraser’s restructuring push to streamline operations and sharpen profitability in wealth management after years of overhauls and job cuts.
Bottom line: This move allows Citi to focus on client relationships and financial planning while BlackRock expands its asset management reach. It also signals a strategic shift in the wealth management industry, with banks increasingly collaborating with specialized asset managers to enhance services and improve profitability.
Walmart & OpenAI Upskilling Millions in AI
The TradeWatch: OpenAI is teaming up with Walmart to certify millions of workers in AI skills, marking a significant effort to equip the workforce with AI literacy and adapt to evolving job market demands.
Unpacked:
OpenAI plans to certify 10 million people in AI use by 2030 through its Academy platform, which offers resources and workshops to master AI tools.
Walmart CEO John Furner emphasized that the future of retail depends on people who can effectively use technology, with AI training for associates to shape the future of retail.
OpenAI’s CEO of Applications, Fidji Simo, stated that AI-savvy workers are more valuable, productive, and better compensated, expanding the Academy with AI certification programs available on the OpenAI Academy.
Bottom line: This collaboration demonstrates a proactive approach to preparing the workforce for an AI-driven future, ensuring that employees have the skills to leverage new technologies. By focusing on AI fluency, OpenAI and Walmart are setting a new standard for corporate investment in worker training and technological adaptation.
Carlyle Bags $20B for Second-Hand PE Stakes
The TradeWatch: Carlyle Group has secured $20 billion for second-hand private equity investments, signaling a rise in demand for liquidity in the PE secondary market due to slow deal activity; read the full story from Reuters.
Unpacked:
The investment, managed through Carlyle’s AlpInvest unit, includes $15 billion for its flagship fund and $3.2 billion in co-investment commitments.
Carlyle will allocate an additional $2 billion through private wealth vehicles, enabling affluent individuals to invest alongside the primary fund.
Bain & Company reports that deal slowdowns led to a buildup of approximately 29,000 companies, valued at $3.6 trillion, in private equity portfolios by the close of 2024.
Bottom line: This influx of capital into the second-hand PE market offers a way for investors to unlock cash, even if it means selling assets at a discount. The growth of this market, now representing 5% of global private equity assets under management, signals its increasing importance in the current financial landscape.
The Shortlist
Cheers,
— Michael & the TradeWatch.io editorial team
