Economy & Capital Markets:

The Fed’s March 22nd “dot-plot” is an amalgamation of selected Regional Reserve Presidents’ economic forecasts. There was a creep up in individual Presidents’ Longer-run projects of Federal funds rate at the higher limit. Whilst the median remains at 2.5%, with a Longer run inflation median projection of 2%, this still implies QE infinity and beyond, valuation inflation and, wealth redistribution by selected bail-out of the financial sector. Whilst depositors are not compensated for inflation and risk of default by a realistic interest rate, productivity and distribution to lower income households remain inhibited.

In the short term the effect of an increase from 0.11% to 4.83% in the funds rate over the last year are yet to be reflected in the data the Fed uses to assess its forecasts. The treasury bill market is therefore projecting cuts to the funds rate by the year end.

On 24th February 2022, Russia launched a large-scale invasion of Ukraine which now appears to be faltering but the endgame remains uncertain.

On March 17th the People’s Bank of China cut the required reserve ratio to a weighted average of 7.6%, whilst refraining from strong stimulus policies. On January 29th it announced: the carbon emissions reduction facility will be extended in 2024, lending for clean and efficient coal use will last through 2023 and the transportation and logistics facility will continue through till June.

On March 22nd the ECB raised its interest rates to 3.00% for deposits, 3.50% for refinancing and 3.75% for margin lending. From March 2023 the asset purchase program portfolio will be reduced by EUR 15bn per month. For 2023 the ECB expects 1.0% real GDP growth, 6.6% unemployment rate, 5.3% inflation, 89.4% government debt to GDP and 3.3% 3m EURIBOR.

Kings’ Portfolio (Global Mega Cap Long/Short Equity Investing):

In the first quarter of 2023, the portfolio returned 4.61%. Largest contribution to performance were from a long positions in Eurocash SA (4.26%, Polish food retail/wholesale) and GBP (1.68%). Since inception: the portfolio only trails the S&P 500 by 7% cumulative performance but, with a 0.08 improved Sharp Ratio and 0.17 improved Sortino Ratio. A position in Everaz & its spin off Raspadskaya (Russian steel & coal) is suspended in London, although most of the value has already be depreciated.

Belsize Strategy (Macro & Global Futures Trading):

In May 2021, with the advancement of the firms AI abilities, this long-standing strategy that provided excellent returns during the 2007/8 financial crisis restarted. For the year 2022 performance was -2.5%. In the first quarter 2023 the portfolio returned -0.10%.

Private Equity Strategy (Illiquid Investments):

In 2021 Q2 the firm added five position (including reservations) to its first venture capital investment in 2019. Sector breakdown now stands at: 29% media & entertainment, 22% communications, 18% real estate, 18% finance and, 8% food and beverage. The technology breakdown in the portfolio consists of 60% apps, 20% hardware, 10% sharing economy and 10% e-commerce. The firm makes no positive discrimination except for the combination of good ideas and teams, however the initial investment was to a female managed business and, we have further invested in one black and two Latin managed businesses. The female managed business was found to be providing false sales reports and, was acquired for stock in a company with a larger consumer base at an unknown valuation.

Crypto Currency Strategy (Inter-day Trading):

Due to the rapid development of the firm’s proprietary AI, in June 2021 a crypto trading strategy was initiated, across 11 currencies each with a market capitalisation over $1Bn. For the year 2022 the trading performance was negative 10% although positive since inception. Unfortunately the portfolio was transferred to FTX from Binance in June due its improved facilities and tools. Whilst we await the final distribution from bankruptcy proceedings that may take several years we will maintain the investment at book value. The firm is now committed to a full decentralised financial system and will repeat our initial investment to a decentralised exchange with preferred trading in proof of stake instruments.

Artificial Intelligence & Technology Development:

The firm continues refinement of existing techniques and adoption of best practice. Human language analysis to identify non quantifiable impacts on capital markets, is in further development. The firm is developing consultancy and possibly software offerings to non-financial firms. Internally we will also apply artificial intelligence to venture capital and private equity investment opportunities.

Firm Operational Update:

Since 2015 the firm has been maintained as a Californian Registered Investment Advisor (RIA) within FINRA and SEC USA government oversight. The firm will seek to establish a US firm to provide a regulatory umbrella for existing clients. Until that time client assets will be managed on a non-professional basis, with reduced contractual liability.

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