Sovereign Wealth Funds (SWFs) are investment vehicles owned by countries. These funds can act as investment accounts or development tools, or both. The concept of a sovereign wealth fund is to grow current funds for the benefit of future generations.

These funds have several potential uses and countries use them differently. Some countries use SWFs to invest their economic or trade surpluses (What a concept!). This allows for the future stabilization of the economy in times of financial stress. It can also reduce the dependency on a singular commodity. If a country is an oil rich state, it makes a lot of sense for the country to invest a portion of its petroleum proceeds into a SWF for diversification away from oil in order to reduce economic shocks. Some countries use SWFs as public benefit pension funds.

SWFs often provide a source of funding for multinational firms engaged in global investment and trade, contributing to economic development and job creation. SWFs can also be used to further geopolitical agendas.

With income tax time upon us, I want to remind all of our clients and readers that we have a great tool for keeping your financial information digitally in one safe, secure place. It’s called Your Financial Life and it’s free gift from Halbert Wealth Management.

The idea is to have all of your financial information (account numbers, custodians, contact info, etc.) in one digital place for easy access. When there are changes to any of your financial information, you can easily update your record to keep it current.

Just days after his inauguration, President Donald Trump famously said, “With oil prices going down, I'll demand that interest rates drop immediately." And at a White House event following these comments, Trump said, "I think I know interest rates much better than they do, and I think I know it certainly much better than the one who's primarily in charge of making that decision," apparently referring to Federal Reserve Chairman Jerome Powell.

But in an about face, Trump in comments to reporters earlier this month said that the central bank was right to keep interest rates unchanged at its last policy meeting on January 29. "I'm not surprised," he told reporters. "I think holding the rates at this point was the right thing to do."

Also, newly confirmed Treasury Secretary Scott Bessent said the president no longer plans to pressure the Federal Reserve to lower its short-term federal funds interest rate. Instead, what he and the president want is to bring down longer-term borrowing costs, such as home mortgage rates, via a decrease in 10-year Treasury yields.

Today we take a look at the importance of Treasury yields, why President Trump has changed his tune and what measures the newly formed administration can take to ease long-term interest rates.

DeepSeek R1 has caused an uproar in AI land. ‘Bigly’ as the president would say. It was a flaming salvo out of the dark that took the US AI titans Nvidia, Open AI, Microsoft, Google Meta and Amazon by surprise. Or did it?

The United States is experiencing a period of rapid growth in electricity demand, which is expected to continue for at least the next decade. This growth is driven by economic development and expanded electric use in various sectors. Electric vehicles, tech manufacturing and the expansion of data centers to power AI applications are major factors in the growth of electricity demand.

To support this, the US electricity grid is undergoing significant upgrades and modernization efforts. This is driven by factors like aging infrastructure, increasing demand, the need to integrate more renewable energy sources, and the desire to enhance resilience against extreme weather events. The Biden Administration allocated $1.5 billion towards four major transmission upgrades, and another $5 billion loan guarantee for a massive Midwestern power line project.

But as we survey the energy landscape in early 2025, a compelling case for nuclear expansion is emerging. With electricity demand projected to surge 9% by 2028 and potentially triple in the coming decades, we're facing a critical decision point for America's energy future.

This installment is the last in my series on alternative investments. While this series has been nowhere near exhaustive on the subject, it has highlighted a few of the more common investment types in the alternatives arena. You can read the previous issue on private credit funds here and the original overview on alternative investments here.

A few months ago I stumbled on a briefing by the Cato Institute that proposed a mammoth move by the Federal government that at the time I thought could never happen. No, it has nothing to do with Greenland becoming the 51st state. (Although I can agree with some of the arguments made to purchase it!)

It has to do with what Bloomberg calls a “stodgy 87-year-old company” – Fannie Mae and its corporate relative Freddie Mac. These two companies guarantee roughly 70% of US home mortgages.

The report proposed that these two government-sponsored enterprises (GSEs) be privatized by sending the corporations into receivership. The sale out of receivership would require Congressional approval, but it would effectively remove $8 trillion of liabilities from the government’s balance sheet. This plan was originally proposed by the Trump administration during his first term. Now that plan has resurfaced after some of his top allies have renewed the call to privatize the two mortgage backers.

Private credit funds are debt-like, non-publicly traded instruments provided by non-bank entities, such as private credit funds or business development companies (BDCs) to fund private businesses. These funds typically engage in direct lending to private companies at above market rates.

I’m sure you’ve noticed, as I have, the dramatic increase in scams of all types. Scammers try to contact you by phone, text, online chats and many social media platforms. They always have the same goal – to get your personal information or money. And the scammers are using sophisticated technology like Artificial Intelligence to enhance their tried-and-true methods.

Experian reports that over $1 trillion was lost to scammers in 2024. To put that amount into perspective, that’s roughly the value of these three corporate titans: Tesla, Berkshire Hathaway and Meta (Facebook).

Personally, I know several folks who have fallen for scams. Their personal information was used to open phony credit cards which ran up thousands of dollars in charges. Some have lost tens of thousands of dollars through bank fraud or by sending scammers multiple gift cards thinking they were helping a relative.

We thought it would be good to start the new year with some solid education to help you avoid getting ripped off by these fraudulent schemes.

I have been a baseball fan since I was a kid in California. During the baseball season I would snag my grandfather’s copy of the Oakland Tribune to read the box scores from the night before. And as the season waned toward the playoffs, it was doubly important to check the standings. I needed to see if my team was in first place or how hard they had to fight to get there.

Baseball fans have probably guessed that my team is the “Swingin’ A’s” – or better known as the Oakland Athletics.

I waited a little longer this week to send out our usual Tuesday E-Letter until now so I could report whether the Federal Reserve cut interest rates. We know now that they have.

So let’s take a “box score” look today at where the economy stands and what Jerome Powell and the Fed think 2025 holds in store.