Archives February 2025

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

US bond yields, crypto lead losses 

The Australian dollar and other risk-sensitive currencies were weaker overnight as growth concerns around the US economy continued to weigh.

The US economy has been the clear leader over the last three years but a recent slowdown in key data has sparked fears the US might be facing a slowdown.

In markets, the shift has been most notable in US bond markets, with the US ten-year bond yield dropping from 4.63% to 4.30% in just two weeks.

Cryptocurrency markets have also tumbled with Bitcoin falling from USD106k to USD88k over the last month.

US shares have been less affected with the S&P 500 down only 3.3% from the recent highs but the so-called Magnificent Seven index of leading tech stocks is down 12.4%. since mid-December.

In FX markets, the AUD/USD fell 0.1% as it extended losses from last week’s two-month highs.

The NZD/USD fell 0.2%. The USD/SGD gained 0.2% while USD/CNH was flat.

ECB minutes to test EUR ceiling

This Thursday, the minutes of the most recent European Central Bank meeting will be released.

The January ECB meeting went very smoothly; as anticipated, the guidance remained intact, and the deposit rate was lowered by 25 basis points.

Madam Lagarde did note that the ECB Governing Council thought the neutral rate was slightly higher than pre-pandemic.

After the early-February headline-driven whipsaw, EUR/USD faces resistance around the 1.053 Dec 78.6% retrace, 1.0533 Jan 27 high, and 1.0552 Sep 38.2% retrace.

Following the impulsive decline from the high of 1.1214 on September 25, the Nov-Feb price action now appears to be a possible base pattern, potentially leading to further EUR/USD gains.

In the AUD/EUR, the euro strength could see the AUD/EUR fall below 0.6000. For EUR/SGD wise, it will need to break the 50-day EMA of 1.4069 to be on an upward trend.

BOT hold can’t save fragile THB

We anticipate that the Bank of Thailand will maintain its policy rate at 2.25% today. Since the Bank of Thailand stated that it wishes to maintain the small policy space. In Asia, we expected the BOT will maintain its policy rate at 2.25% today. Any effectiveness of a cut could be diminished during the period of uncertainty and while the MPC continues to assess global policy uncertainty, which is likely to take some time.

However, we anticipate that the BOT will sound dovish in its policy statement by highlighting negative risks to the economic forecast and reiterating its guidance that it is prepared to alter its policy, if needed, which was absent from the last two MPC statements.

In December, we anticipate dissenting votes for a 25bps cut from a unanimous “on hold” conclusion.

We predict a cut in April, but all of these variables should be viewed as dovish outcomes that pave the way for one. USD/THB is currently at its two-month low. The next key resistance for USDTHB to resume its upward trend will be to break the 50-day EMA of 33.95 and 200-day EMA of 34

Global bond yields slide on slowdown worries

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 24 February – 1 March  

All times AEDT

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Updated on February 26th, 2025 by Bob Ciura
Spreadsheet data updated daily

We recommend long-term investors focus on high-quality dividend stocks. To that end, we view the Dividend Aristocrats as among the best dividend stocks to buy-and-hold for the long run.

The Dividend Aristocrats have a long history of outperforming the market when it comes to risk-adjusted returns. There are currently 69 Dividend Aristocrats.

You can download an Excel spreadsheet of all 69 Dividend Aristocrats (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

This article begins with an overview of the Dividend Aristocrats list. Then, we list our top 10 Dividend Aristocrats you’ve never heard of.

The list is comprised of 10 Dividend Aristocrats, all of which have raised their dividends for over 25 years in a row, and are included in the S&P 500 Index.

In addition, these 10 Dividend Aristocrats tend to get much less coverage in the financial media, and have smaller followings than the largest Dividend Aristocrats.

Table of Contents

Dividend Aristocrats Overview

The requirements to be a Dividend Aristocrat are:

• Be in the S&P 500
• Have 25+ consecutive years of dividend increases
• Meet certain minimum size & liquidity requirements

All Dividend Aristocrats are high-quality businesses based on their long dividend histories. A company cannot pay rising dividends for 25+ years without having a strong and durable competitive advantage.

But not all Dividend Aristocrats make equally good investments today. That’s where the spreadsheet in this article comes into play. You can use the Dividend Aristocrats spreadsheet to quickly find quality dividend investment ideas.

The list of all 69 Dividend Aristocrats is valuable because it gives you a concise list of all S&P 500 stocks with 25+ consecutive years of dividend increases (that also meet certain minimum size and liquidity requirements).

A sector breakdown of the Dividend Aristocrats Index is shown below:

The top 2 sectors by weight in the Dividend Aristocrats are Industrials and Consumer Staples. The Dividend Aristocrats Index is tilted toward Consumer Staples and Industrials relative to the S&P 500.

These 2 sectors make up over 40% of the Dividend Aristocrats Index, but less than 20% of the S&P 500.

The Dividend Aristocrats Index is also significantly underweight the Information Technology sector, with a ~3.5% allocation compared with over 20% allocation within the S&P 500.

The Dividend Aristocrat Index is filled with stable industry giants with market caps above $200 billion, such as Coca-Cola (KO), ExxonMobil (XOM), and Johnson & Johnson (JNJ).

However, there are smaller Dividend Aristocrats that are worth paying attention to. The following 10 Dividend Aristocrats have strong business models, durable competitive advantages, and long-term dividend growth potential.

Dividend Aristocrat You’ve Never Heard Of: FactSet Research Systems (FDS)

FactSet Research Systems is a financial data and analytics firm founded in 1978. It provides integrated financial information and analytical tools to the investment community in the Americas, Europe, the Middle East, Africa, and Asia-Pacific.

The company provides insight and information through research, analytics, trading workflow solutions, content and technology solutions, and wealth management.

Source: Investor Presentation

On December 19th, 2024, FactSet Research Systems announced Q1 2025 results, reporting non-GAAP EPS of $4.37 for the period, beating market consensus by $0.09 while revenue rose 4.9% to $568.7 million.

FactSet Research Systems kicked off fiscal 2025 with solid, yet measured growth in Q1, reporting GAAP revenues of $568.7 million, a 4.9% year-over-year increase.

The revenue boost was driven by strong performance across its wealth management, asset owner, and institutional client segments.

Organic Annual Subscription Value (ASV), a key performance metric, rose 4.5% to $2.25 billion, reflecting sustained demand for FactSet’s financial data and analytics solutions.

FactSet has grown its earnings-per-share by an average compound growth rate of 10.3% over the last 10 years. Its investments and improved product offerings could lead to significant margin expansion in the following years.

We have increased our EPS estimate for 2025 to $17.10, matching the midpoint of the management’s guidance, but we have maintained our 8.5% annual earnings growth forecast for the next five years.

Click here to download our most recent Sure Analysis report on FDS (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Erie Indemnity (ERIE)

Erie Indemnity is an insurance company that has established itself in life insurance, auto, home, and commercial insurance. The company’s history dates to the 1920s.

Erie Indemnity reported its third quarter earnings results on October 31. Revenue totaled $999 million during the quarter, up 16% year-over-year.

Revenue growth was driven by higher management fee revenues (for policy issuance and renewal services), which rose by 19% year-over-year. Administrative services fee revenue grew 6%.

Erie Indemnity’s investment income was up substantially on a year-over-year basis during the quarter, which can be explained by tailwinds from higher interest rates.

Erie Indemnity generated GAAP earnings-per-share of $3.06 during the third quarter, which was up by 20% year-over-year.

Like other insurance companies, Erie Indemnity has a sizable float–cash that it has received through premiums that it invests. Therefore, its financial results are somewhat dependent on market rates.

We believe that Erie Indemnity should be able to grow its profits at a mid-single-digit rate over the next five years.

Growth will be driven by higher premium revenue, while further increases in investment income could have a positive impact on EPS growth as well.

Click here to download our most recent Sure Analysis report on ERIE (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Eversource Energy (ES)

Eversource Energy is a diversified holding company with subsidiaries that provide regulated electric, gas, and water distribution service in the Northeast U.S.

FactSet, Erie Indemnity, and Eversource Energy are the three new Dividend Aristocrats for 2025.

The company’s utilities serve more than 4 million customers after acquiring NStar’s Massachusetts utilities in 2012, Aquarion in 2017, and Columbia Gas in 2020.

Eversource has delivered steady growth to shareholders for many years.

Source: Investor Presentation

On February 11th, 2025, Eversource Energy released its fourth-quarter and full-year 2024 results. For the quarter, the company reported net earnings of $72.5 million, a significant improvement from a net loss of $(1,288.5) million in the same quarter of last year, which reflected the impact of the company’s exit from offshore wind investments.

The company reported earnings per share of $0.20, compared with a loss per share of $(3.68) in the prior year. For the full year 2024, Eversource reported GAAP earnings of $811.7 million, or $2.27 per share, compared with a full-year 2023 loss of $(442.2) million, or $(1.26) per share.

On a non-GAAP recurring basis, the company earned $1,634.0 million, or $4.57 per share, representing a 5.3% increase from 2023.

Click here to download our most recent Sure Analysis report on ES (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Air Products & Chemicals (ADP)

Air Products & Chemicals is one of the world’s largest producers and distributors of atmospheric and process gases, serving other businesses in the industrial, technology, energy, and materials sectors.

Air Products & Chemicals operates through three main business units: Industrial Gases – Americas, Industrial Gases EMEA, and Industrial Gases – Asia.

The company has a long track record of generating consistent growth.

Source: Investor Presentation

Air Products & Chemicals reported financial results for the fourth quarter of fiscal 2024 on November 7. The company generated revenues of $3.19 billion during the quarter, which was up 0.3% year-over-year, missing the analyst consensus estimate by $30 million.

Air Products & Chemicals was able to generate earnings-per-share of $3.56 during the fourth quarter, which was up 13% compared to the previous year’s period.

Click here to download our most recent Sure Analysis report on APD (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Fastenal Co. (FAST)

Fastenal began in 1967 when Bob Kierlin and four friends pooled together $30,000 to open the first store. The original intent was to dispense nuts and bolts via vending machine, but that idea got off the ground after 20 years.

The company went public in 1987 and today provides fasteners, tools and supplies to its customers via 1,597 public branches, 1,986 active Onsite locations and over 123,000 managed inventory devices.

Source: Investor Presentation

In mid-January, Fastenal reported (1/17/25) results for the fourth quarter of fiscal 2024. It grew its net sales 4% over the prior year’s quarter thanks to growth in Onsite locations while prices remained flat.

Earnings-per-share remained flat at $0.46, missing the analysts’ consensus by $0.02. Fastenal has missed the analysts’ estimates only twice in the last 21 quarters.

It posted record earnings-per-share in 2022 and 2023 and remained close to its record earnings last year, as an increase in Onsite locations almost offset the effect of a soft manufacturing environment.

Click here to download our most recent Sure Analysis report on FAST (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Brown & Brown (BRO)

Brown & Brown Inc. is a leading insurance brokerage firm that provides risk management solutions to both individuals and businesses, with a focus on property & casualty insurance. Brown & Brown has a notably high level of insider ownership.

Brown & Brown posted fourth quarter and full-year earnings on January 27th, 2025, and results were better than expected on both the top and bottom lines.

The company posted adjusted earnings-per-share of 86 cents for the quarter, beating estimates by nine cents. Revenue soared 15% year-over-year to $1.18 billion, besting expectations by $60 million.

Revenue was up 15.4% year-over-year, with 13.8% of that being organic revenue growth and the balance from acquisitions. Income before taxes came to $275 million, falling 23% year-over-year as margin fell from 23.2% from 34.7% of revenue.

Its competitive advantage comes from its willingness to execute small and frequent acquisitions. This growth-by-acquisition strategy gives the company an enduring opportunity to continue growing its business for the foreseeable future.

Click here to download our most recent Sure Analysis report on BRO (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: C.H. Robinson Worldwide (CHRW)

Charles Henry Robinson founded C.H. Robinson Worldwide in the early 1900s. The company is now an American Fortune 500 provider of multimodal transportation services and third-party logistics.

The company’s services are freight transportation, transportation management, brokerage, and warehousing. CHRW also offers truckload, air freight, intermodal, and ocean transportation.

On October 30st, 2024, C.H. Robinson Worldwide reported results for the third quarter for Fiscal Year (FY)2024. The company reported strong financial results for the third quarter of 2024, ending September 30.

The company achieved a significant 15.5% increase in gross profits, totaling $723.8 million, and a 58.7% rise in income from operations to $180.1 million.

Adjusted operating margin grew by 660 basis points to 24.5%, with adjusted earnings per share increasing 45.5% to $1.28. These results were driven by disciplined volume growth, improvements in operating leverage, and enhanced profitability across divisions.

Click here to download our most recent Sure Analysis report on CHRW (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Albemarle (ALB)

Albemarle is the largest producer of lithium and second largest producer of bromine in the world. The two products account for nearly two-thirds of annual sales. Albemarle produces lithium from its salt brine deposits in the U.S. and Chile.

The company has two joint ventures in Australia that also produce lithium. Albemarle’s Chile assets offer a very low-cost source of lithium. The company operates in nearly 100 countries.

On February 12th, 2025, Albemarle announced fourth quarter and full year results. For the quarter, revenue fell 48% to $1.23 billion and was $110 million less than expected.

Source: Investor Presentation

Adjusted earnings-per-share of -$1.09 compared very unfavorably to $1.85 in the prior year and was $0.42 below estimates.

For the year, revenue declined 44% to $5.4 billion while adjusted earnings-per-share was -$2.34.

Results were impacted by asset write-offs and weaker average prices for lithium. For the quarter, revenue for Energy Storage was down 63.2% to $616.8 million.

This segment was impact by weaker volumes (-10%) and lower prices (-53%). Revenues for Specialties were lower by 2.0% to $332.9 million as volume (+3%) was offset by a decrease in pricing (-5%).

Click here to download our most recent Sure Analysis report on ALB (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Nordson Corporation (NDSN)

Nordson was founded in 1954 in Amherst, Ohio by brothers Eric and Evan Nord, but the company can trace its roots back to 1909 with the U.S. Automatic Company.

Today the company has operations in over 35 countries and engineers, manufactures, and markets products used for dispensing adhesives, coatings, sealants, biomaterials, plastics, and other materials, with applications ranging from diapers and straws to cell phones and aerospace.

Source: Investor Presentation

On August 14th, 2024, Nordson increased its dividend by 15% to $0.78 per share quarterly, marking 61 years of increases.

On December 11th, 2024, Nordson reported fourth quarter results for the period ending October 31st, 2024. For the quarter, the company reported sales of $744 million, 4% higher compared to $719 million in Q4 2023, which was driven by a positive acquisition impact, and offset by organic decrease of 3%.

Industrial Precision saw sales decrease by 3%, while the Medical and Fluid Solutions and Advanced Technology Solutions segments had sales increases of 19% and 5%, respectively. The company generated adjusted earnings per share of $2.78, a 3% increase compared to the same prior-year quarter.

Click here to download our most recent Sure Analysis report on NDSN (preview of page 1 of 3 shown below):

Dividend Aristocrat You’ve Never Heard Of: Expeditors International of Washington (EXPD)

Expeditors is a global logistics company headquartered in Seattle, Washington. The company was founded in 1979 as a single-office ocean forwarder in Seattle.

Its services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time definite transportation services, order management, warehousing and distribution, and customized logistics solutions.

Currently, the company has over 250 locations and ~17,500 employees worldwide. In 2023, the company reported $17.1 billion in revenue. The company has increased its dividend for 29 consecutive years.

On November 5th, 2024, EXPD reported third-quarter results for Fiscal Year (FY)2024. The company reported strong third-quarter 2024 results, with earnings per share (EPS) rising 41% to $1.63, and net earnings increasing 34% to $230 million compared to Q3 2023.

Operating income grew 40% to $302 million, supported by a 37% revenue increase to $3 billion. The company achieved significant growth in airfreight tonnage (+19%) and ocean container volumes (+12%), driven by proactive freight handling amid geopolitical disruptions and holiday shipping preparation.

Click here to download our most recent Sure Analysis report on EXPD (preview of page 1 of 3 shown below):

Additional Reading

The Dividend Aristocrats are among the best dividend growth stocks to buy and hold for the long run. But the Dividend Aristocrats list is not the only way to quickly screen for stocks that regularly pay rising dividends.

We have compiled a reading list for additional dividend growth stock investing ideas:

A technical look at the S&P … the crypto pain-train rolls on … at least the 10-year Treasury yield is down … tomorrow’s big event with Keith Kaplan of TradeSmith

The S&P is about to make an exaggerated move.

Early clues suggest the direction will be “up,” but “down” is very much in play.

If the move is higher, we’re likely in for a rebound that our hypergrowth expert Luke Lango plans on buying. It could be a 3%+ surge back to all-time highs and beyond.

But if the move is lower, the S&P could fall another 3% to 5% by mid-March.

Behind this binary is the S&P’s 100-day moving average, an important technical support level

Yesterday, the S&P fell to this level, bounced slightly, and it’s sitting barely above it as I write Wednesday mid-morning.

For newer Digest readers, a moving average (MA) is a line on a price chart that shows the average price of an asset over some stated period. Moving averages provide investors and traders helpful perspective on market momentum.

These MA lines are important because they often trigger “buy” and “sell” decisions from the quantitative trading algorithms that drive so many professional portfolios these days.

So, if the S&P begins breaking either “up” or “down” from a key MA – like the 100-day MA – those quant programs are likely to amplify the move as they join in the buying or selling.

As I’ll show you below, the S&P has just bounced off its 100-day MA (the purple line) and is trying to retake its 50-day MA (in red).

(The 200-day MA is in blue. More on that shortly.)

If we pull back to get a longer timeline, you’ll see that the 100-day MA has been the strongest support “backbone” of the S&P’s climb since late 2023.

With one exception, each time the S&P has fallen to this level, the 100-day MA has served as a springboard, bouncing it higher.

Beginning with the potential for a continuation of this bounce-and-rally, let’s jump to Luke. From his Innovation Investor Daily Notes earlier this week:

Since late 2023, the S&P 500’s big technical support line has been the 100-day moving average (MA).

In that time – about 15 months – the S&P 500 has only lost its 100-day once (August 2024), and when it did, the market briefly fell below that level, only to rebound sharply within days.

That means the 100-day moving average has essentially been the “bottom” for the stock market in all of its selloffs since late 2023. And that MA is just below where we trade today…

If we [hold here] and bounce… that would be a very bullish technical signal.

That’s why, [Monday] morning, I told my team to get their Buy Lists ready.

If the S&P’s bounce fizzles and it slips below the 100-day MA, it’s likely to fall roughly 3% or 5%

Falling 3% represents a pullback to 5,800 – about halfway between the S&P’s 100- and 200-day MAs. It’s also where the S&P found support in January.

If we look at the last time the S&P lost its 100-day MA (which Luke referenced), it reversed north about halfway between these two MAs at the big, round number of 5,200.

Such big, round numbers carry extra weight with traders. That’s why I’ve flagged a similar big, round number (5,800) that’s also about halfway between these MAs.

A drop of 5% would take the S&P all the way to its 200-day MA. This hasn’t happened since October of 2023.

What clues might give us a heads-up about upcoming direction?

The S&P’s Relative Strength Index (RSI) and Moving Average Convergence/Divergence Indicator (MACD) are both trading at levels from which rebounds have occurred over the last year.

The RSI has already U-turned and is headed higher. The MACD (which moves slower) hasn’t turned north yet but is inflecting, something called “bullish convergence.”

Put it altogether and we’re giving the edge to a continuation of this bounce…yet it comes with an enormous asterisk (read on for what that is) …

In the meantime, get your buy list ready…and your stop-losses identified.

Speaking of buying versus following your stop-losses…

Bitcoin and altcoins are dropping fast.

This means one of two things:

• If you’re a short-term trader who bought a couple months ago, check your stop losses and protect your capital.
• If you’re a long-term believer who’s been adding to your position over time, get some dry powder ready to deploy.

As I write, Bitcoin trades beneath $88,000. Yesterday, it notched a three-month low.

Behind the decline are two primary contributors:

• A broad “risk off” sentiment, which has gripped Wall Street recently, has disproportionately affected Bitcoin (the poster child for risk).
• A lack of short-term catalysts to get crypto investors bullish.

On that second note, here’s CNBC:

Bitcoin kicked off the year in rally mode, fueled by optimism about the positive changes the new Trump administration was expected to make for the crypto industry.

However, since the President issued his widely anticipated executive order on crypto at the end of January – the contents of which were well received by the industry despite its tamer than hoped for language on a strategic bitcoin reserve – the market has had little to look forward to.

Below, we look at Bitcoin’s chart, including its RSI and MACD indicators referenced above

Bitcoin’s RSI level (circled in red) is 28. This is officially “oversold” territory, as well as its lowest level since August.

Similarly, Bitcoin’s MACD (also circled in red) is deeply negative, signifying oversold conditions. It too is trading at its lowest level since last summer.

The silver lining is that these depressed levels heighten the odds of a mean reversion rally.

That said, you never want to try to catch a falling knife. So, if you’re looking to add to your Bitcoin position, the safer move would be to wait until there’s more obvious strength in these technical charts.

After all, the bottom could be closer to $70,000 – $75,000.

We’ll continue monitoring and will report back.

The falling 10-year Treasury yield is good news

As regular Digest readers know, the 10-year Treasury yield is single most important number in the global financial market. The higher it climbs, the more pressure it puts on most stock prices (and Bitcoin’s price) because a higher yield means a higher discount rate, which lowers the current valuation of a stock.

This week, as scared investors rotated out of stocks into bonds, all that buying pressure pushed prices higher…which drove yields lower.

Yesterday, the 10-year Treasury yield touched 4.28%, its lowest level since December. It’s only slightly higher at 4.30% as I write. And if legendary investor Louis Navellier is right, it will be heading even lower when the Fed cuts rates more than expected later this year.

From Louis’ Growth Investor Flash Alert podcast:

The 10-year Treasury yield is down under 4.3%, so that’s very bullish.

So, now everybody’s expecting at least two Fed rate cuts. You’re going to have four this year, folks, because things are so bad in Europe that the central banks there are going to be cutting at least four to five more times, in addition to the rate cuts they’ve already had this year.

In past podcasts, Louis has clarified that global central banks often move in parallel fashion. So, Louis believes outsized cuts from the ECB is likely to put pressure on the Fed to make similar cuts.

Now, as you’ll see below, this is not what Wall Street currently predicts.

The CME Group’s FedWatch Tool puts the heaviest odds (33.2%) on just two quarter-point rate cuts by December.

So, four quarter-point cuts would certainly surprise Wall Street.

The question is “would that be a good or bad surprise?”

After all, while one interpretation is bullish…

“Four quarter-point rate-cuts? Wow, this will juice the economy and take pressure off stock valuations! Time to buy stocks.”

But a second interpretation is bearish…

“Four quarter-point rate-cuts? Wow, how bad is the economy that the Fed is slashing rates 100 basis points despite the lingering threat of reinflation? Time to sell stocks.”

We’ll be watching.

Returning to that asterisk from above…

How did Nvidia earnings come in?

Depending on when you read this, Nvidia may have already reported earnings after the closing bell.

Did they beat? Is guidance bullish?

If so, coming full circle to the top of today’s Digest, we’re likely in for a continuation of the bounce off the 100-day MA tomorrow.

But if earnings disappoint, we’re likely losing the 100-day MA.

Now, even if Nvidia stumbles and the market falls in the morning, Keith Kaplan, the CEO of our corporate partner, TradeSmith, believes a melt-up is coming over the next 12 months. And that would mean a pullback tomorrow could present some fantastic buying opportunities.

From Keith:

The markets today are frothy, to be sure, but our indicators are still very much bullish.

So, I’m staying fully invested, but I’m much more regimented than I’ve ever been when it comes to investing.

As we’ve been covering here in the Digest over the last week, tomorrow evening at 8 PM Eastern, Keith is holding a live event called The Last Meltup.

He’ll be explaining why he sees stocks moving higher over the coming months, as well as a suite of investment tools we’ve profiled this week that have helped Keith be “much more regimented,” as he just noted.

As to the possibility of a melt-up, TradeSmith uses algorithms to spot repeating patterns in decades worth of stock market data. And today, it’s flagging a rare pattern that hasn’t been seen in 30 years.

It’s only been seen twice before going back to 1900 – in 1966 and 1925. And it signals a type of melt-up that creates hyper-exaggerated gains (though brutal losses when the fireworks are over).

The last time this happened, you could have made 9,731% from a leading software company… 28,894% from a robotic visionary… 70,626% from an internet services company… and 91,863% from a consumer electronics stock.

But on the other side of those gains was a market freefall that you wanted to avoid.

Keith will cover all this tomorrow, illustrating how to benefit from the ride up while sidestepping the worst of the elevator shaft down.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

The changing dynamics of the asset management industry

The asset and wealth management industry is facing a transformative moment. Despite an 12% increase in global assets under management (AUM) to $120 trillion, the profitability and revenue gains have not kept pace. The revenue needle barely moved in 2023, while profits fell 8.1%. Asset managers are feeling a financial squeeze, facing downward pressure on fees. Retail investors, in particular, pay an average of 50% higher fees than institutional investors, sparking a push towards cost-effectiveness. But cutting costs isn’t enough: they must also expand their client base and prepare for an unprecedented generational wealth transfer as baby boomers pass down wealth to millennials and gen Z, whose collective wealth could reach nearly $84 trillion over the coming decades.

This transfer presents a significant opportunity but also a challenge. Millennials and gen Z, often digital-first and values-driven, expect a modern, mobile-friendly approach to managing wealth. They value transparency, ease of use, and personalization, putting pressure on asset managers to adopt new technologies and pivot from traditional relationship models. Technology has become the cornerstone of any strategy to attract and retain these younger generations, enabling firms to provide the digital experiences, data-driven personalization, and socially responsible investment options they expect. Without a tech-enabled approach, firms risk losing relevance and market share as these emerging generations assume greater financial power.

A demanding customer base

Capturing the attention and loyalty of Millennials and Gen Z is no easy feat. This generation of investors seeks control, transparency, and flexibility — characteristics that often require a more agile digital infrastructure than what many legacy asset management firms currently offer.

Tech creates sticky customers for asset managers

To address these challenges, asset and wealth managers are leaning heavily on technology. They are building tech stacks with advanced analytics, predictive tools, and digital customer relationship management (CRM) systems that enhance the client experience from onboarding to daily portfolio management. Here’s how these tools are reshaping the industry:

The time to pivot is now

The asset and wealth management sector remains healthy, with continued growth projected. However, firms must evolve to fully capture the opportunities presented by generational wealth transfer. By embracing technology-led initiatives, asset managers can appeal to younger investors while navigating the constraints of fee pressures and regulatory demands. Firms that adopt a broad, holistic technology strategy — one that spans the client lifecycle, from onboarding to portfolio personalization — are better equipped to meet the expectations of millennials and Gen Z. This will ensure a long-term foundation for growth, relevance, and client loyalty in the age of digital-first wealth management.

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Numerous conflicts plague today’s world, making economic sanctions a valuable tool for dealing with potential threats such as terrorism, illicit trade and human rights abuses. Complying with these sanctions poses many challenges for international companies. However, digital payments and blockchain innovations — such as stablecoins, the increasingly popular decentralized digital asset — have shown promise for navigating the potentially sticky landscape of sanctions compliance.

Sanctions are legal measures that governments impose against specific individuals, entities or countries to curb activities ranging from war and terrorism to money laundering and human rights violations. They are typically enacted by the United Nations, the European Union or the US.

Sanctions aren’t always as clear-cut as banning the sale of weapons to known terrorist organizations. They can apply to many types of transactions, like supply mergers and acquisitions, joint ventures or advisory services. Enforcing these policies is critical to international security. Companies must be careful to comply to avoid significant legal and financial consequences from engaging with an entity cited on any of the ever-changing watchlists.

Sanctions compliance is particularly important in the context of payments. Financial institutions and payment processors play a pivotal role in executing transactions, and it’s essential that these entities do not facilitate transfers to sanctioned parties.

Understanding sanctions compliance

Definition and importance of sanctions compliance

Sanctions compliance refers to the process of adhering to economic sanctions imposed by governments or international organizations on specific countries, entities or individuals. These sanctions restrict or prohibit certain activities, such as trade, investment or financial transactions, to achieve foreign policy or national security goals.

For businesses and financial institutions, avoiding the violation of these restrictions — sanctions compliance — is crucial. Noncompliance can result in significant fines, reputational damage and legal consequences, which demands that companies have robust compliance programs in place.

History and evolution of sanctions compliance

The concept of sanctions compliance has evolved significantly over time.

Britain and France imposed the first modern sanctions during World War I, in an effort to isolate Germany and its allies from the global economy. Since then, sanctions have become increasingly widespread, with the US, EU and other countries imposing their own sanctions regimes.

The rise of globalization and international trade has added layers of complexity to sanctions compliance. Companies must navigate a web of national and international regulations to avoid inadvertently violating sanctions. This evolution has made sanctions compliance a challenging but vital aspect of global business operations.

Key players in sanctions compliance

Sanctions compliance involves a range of key players, each with specific roles and responsibilities:

• Governments and international organizations: These entities impose and enforce sanctions, providing guidance on compliance requirements. They play a crucial role in shaping the regulatory landscape.
• Financial institutions: Banks, payment processors and other financial institutions are at the forefront of sanctions compliance. They are responsible for screening transactions and identifying potential sanctions risks, making their role vital in the compliance ecosystem.
• Businesses: Companies must ensure that their operations, including international trade, investment and financial transactions, comply with sanctions regulations. This requires a thorough understanding of the sanctions landscape and proactive risk management.
• Regulators: Regulatory bodies, such as the US Office of Foreign Assets Control (OFAC), enforce sanctions compliance and issue fines for noncompliance. Their scrutiny ensures that institutions adhere to the regulatory obligations.

By understanding the roles of these key players, businesses and financial institutions can better navigate the complexities of sanctions compliance and avoid the severe consequences of noncompliance.

Types of sanctions

Sanctions can take several forms, each targeting a different aspect of the sanctioned party’s activities. The most common types include:

• Comprehensive sanctions: These are typically imposed on entire countries or governments. They restrict almost all forms of trade, finance and interaction with the sanctioned country.
• Sectoral sanctions: These target specific sectors of a country’s economy, such as finance, energy or defense. They might prohibit specific types of transactions or financial dealings with particular industries within a sanctioned country.
• List-based sanctions: These sanctions are imposed on individuals, entities or organizations that are identified on official lists. They often include asset freezes and prohibitions on business dealings.
• Embargoes: These are broad restrictions that can prohibit trade, investment and financial transactions with specific countries or regions.
• Secondary sanctions: These are penalties imposed on non-US entities for doing business with countries or entities that are already under US sanctions. These can be especially challenging for companies with global operations.

Understanding the different types of sanctions is critical to managing sanctions risk, especially when conducting cross-border payments or transactions with foreign entities.

The state of sanctions compliance

Sanctions compliance has become increasingly important and complex in recent years. Financial institutions, corporations and fintech companies must carefully navigate a maze of national and international regulations to ensure they don’t inadvertently violate sanctions laws.

The impact of these regulations on business operations and compliance activities cannot be overstated. The challenges of sanctions compliance are multifaceted, ranging from the sheer volume and global reach of sanctions to the sophistication of noncompliant actors who attempt to circumvent restrictions.

The complexity is compounded by the fast-evolving landscape of digital currencies and decentralized finance, including stablecoins, offering new rails for cross-border payments while raising questions about how they fit into existing regulatory frameworks.

Sanctions compliance challenges

Sanctions compliance has become increasingly complex due to several factors.

One of the primary challenges is the sheer number of global sanctions. To identify and prevent dealings with sanctioned entities before they happen, organizations must deploy such tactics as checking transactions, customers, counterparties and business partners against sanctions lists from:

• Office of Foreign Asset Control sanctions: The US Treasury’s OFAC sanctions list is one of the most widely followed. It includes hundreds of individuals, organizations and countries that are prohibited from engaging in business with US companies.
• European Union sanctions: The EU maintains its own sanctions lists. Tracking both sets of restrictions can be difficult for companies operating in multiple regions.

Keeping track of these lists is a daunting task, as they frequently change, with new names and countries added and others removed.

A secondary challenge is the complexity of sanctions regulations. As noted by KPMG, the regulatory landscape is constantly evolving, and navigating these rules requires businesses to be proactive. The compliance burden is especially heavy for financial institutions that must check a large number of transactions against multiple sanctions lists in real time.

Another major issue is the difficulty of conducting Know Your Customer (KYC) checks in a comprehensive and accurate manner — and applying those standards to other types of business relationships, such as suppliers, advisors, lenders or joint venture partners.

Identifying sanctioned entities or individuals can be challenging due to the constantly shifting nature of the global economy. Fraudsters and other bad actors are becoming more sophisticated in their attempts to bypass sanctions, often utilizing shell companies, fake identities and cryptocurrencies to obscure the true nature of transactions.

Penalties for doing business with a sanctioned entity can range from millions to billions of dollars, depending on the severity of the violation. A robust sanctions compliance program is essential to mitigate these risks.

The role of blockchain and stablecoins in sanctions compliance

The proliferation of fintech solutions in the cross-border payments industry can be a double-edged sword when it comes to sanctions compliance.

While funds can transfer through a digital blockchain to maintain transparency and vet potential bad actors, they can also be used to facilitate undetectable transactions.

What is a stablecoin?

Stablecoins enable seamless global transactions without traditional banking intermediaries. This cryptocurrency is pegged to hard currencies such as the US dollar or euro, giving it a more reliable value than other cryptocurrencies, which can fluctuate drastically.

Mainly, stablecoins are used to trade other crypto assets, but they play a vital role in the cryptocurrency ecosystem as their use cases expand internationally. For example, people in countries with weak currencies can seek a steady and transferable substitute to their local money, enabling global access to the financial services industry and promoting financial inclusion.

Stablecoins transforming the financial services industry

Even if the US does not take action to regulate the use of stablecoins or blockchain technology, stablecoins are likely to grow in popularity among cross-border companies because many other jurisdictions are creating frameworks to license them, including EU, the UK, Japan, Singapore and the UAE.

According to the Brookings Institute, upcoming regulations may require stablecoin issuers to maintain reserves, capital and liquidity levels; set reporting and disclosure standards; and ensure that holders’ claims take priority over issuer debt or other claims. Additionally, stablecoin issuers may be compelled to monitor blockchains for suspicious transactions and possibly freeze the digital currency if the transaction is flagged for noncompliance with sanctions.

One such set of regulations came from the European Parliament in 2023 when it approved the Markets in Crypto-Assets (MiCA) policy following the fall of FTX. MiCA is designed to ensure a level playing field for crypto investors, and it offers some guidance on how to prevent cross-border payments from being noncompliant with international sanctions.

Ensuring sanctions compliance amid the rise of stablecoins

The emergence of stablecoins has introduced new challenges for sanctions compliance. Stablecoins facilitate quick and often anonymous cross-border transactions, which can be used to evade sanctions. This creates significant risks for sanctions compliance, as stablecoins may be exploited to circumvent restrictions or engage in illicit activities. Consequently, regulators are increasingly scrutinizing stablecoins and their interaction with sanctions.

To ensure sanctions compliance in the context of stablecoins, businesses and financial institutions must adopt a proactive approach. This includes conducting regular risk assessments, implementing effective screening and monitoring systems and providing comprehensive training to employees on compliance requirements. Additionally, staying informed about evolving regulations and collaborating with regulators can help institutions manage the risks associated with this digital currency.

By taking these steps, businesses and financial institutions can protect themselves from the risks of sanctions noncompliance and create a competitive advantage in the global marketplace. Understanding and managing the challenges posed by stablecoins is essential for maintaining robust sanctions compliance in today’s digital age.

How can stablecoins help with sanctions compliance?

In addition to providing an efficient alternative to traditional remittance systems that can be costly and slow, stablecoins offer new ways to ensure compliance. Blockchain’s transparent and immutable nature allows for real-time tracking of transactions, making it easier to trace the flow of funds and identify potential violations.

Leveraging blockchain technology in sanctions compliance can provide an additional layer of oversight, helping companies spot suspicious transactions before they occur.

According to Brookings, regulatory bodies are closely monitoring the national security risks associated with these digital assets. The transparency and traceability of blockchain transactions, coupled with regulatory frameworks, can help combat illicit activity and ensure that stablecoins are not being used to bypass sanctions.

Regulatory technology to manage regulatory obligations

What is regtech?

Looking forward, regtech — the use of technology to enhance regulatory compliance — will be pivotal in managing sanctions risks.

Regtech tools are meant to help protect against risks including market abuse, cyber attacks and fraud. Financial institutions and regulators use them to deal with complicated compliance processes.

Regulatory technology reduces risk by offering data on money-laundering activities conducted online and by monitoring online transactions in real time to identify issues or irregularities.

Regtech tools can automate many of the tasks involved in sanctions compliance, including screening, regulatory monitoring and reporting. Using AI and machine learning, these tools can process a high volume of data at incredible speeds, enabling quick analysis and insights for compliance.

These technologies can also help organizations stay up-to-date with the latest regulations.

The future of sanctions compliance

Europe’s MiCA regulations are expected to bring greater clarity and structure to the regulation of cryptocurrencies, including stablecoins. According to Boston Consulting Group, MiCA aims to provide a comprehensive regulatory framework for digital assets, ensuring that companies operating in the crypto space adhere to anti-money laundering and counter-terrorism financing regulations.

In addition to MiCA, governments worldwide are expected to continue strengthening their sanctions enforcement efforts. The use of digital assets and blockchain technology in payments will only increase, making it essential for businesses to stay ahead of the regulatory curve.

The US is particularly interesting as a new administration is settling in with a pro-crypto agenda and promises to toughen policies governing foreign trade. 

The future of sanctions compliance will undoubtedly be shaped by advancements in regtech and the tightening of regulatory frameworks like MiCA, offering both challenges and opportunities for businesses in the digital age. By building a comprehensive and effective compliance program, businesses can protect themselves from the severe consequences of noncompliance while contributing to the broader goal of global security.

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