Assignment 6A - Identifying Opportunities in Economic and Regulatory Trends

-  Economic Trend: Saudi Oil Attack: The Worst-Case Scenario

o   Source: https://www.foxbusiness.com/energy/saudi-oil-attack-the-worst-case-scenario

o   Potential Opportunity: This is an investment opportunity in oil due to a drone attack conducted by Iran that knocked out half of Saudi Arabia’s production. Some economists believe this can be a market to exploit; while others believe oil to fall back in price. If military conflict occur between Iran and US, this conflict could factor into a global downtown.

o   Prototypical Customer: Investors in Oil and Crude Oil Companies

o   Difficulty Level to Exploit:  This is difficult to exploit due to the level of uncertainty of oil and our future. If the prices continue to rise, one can leverage their assets by investing in crude oil. Unfortunately, there are many global factors which can diverge from this growth.

§  Why did I see the opportunity? This summer, I intern has a financial analyst for Bank of America – Merrill Lynch. With this, I analyzed many stocks in relation to the risk of investing in certain equities or commodities. Thus, I see a potential opportunity here if oil continues to prove itself positively in relation to outside factors.

-       Economic Trend: This was the work week for mortgages rates in 3 years – and it may be just the beginning

o   Source: https://www.cnbc.com/2019/09/13/mortgage-rates-had-worst-week-in-3-years.html

o   Potential Opportunity: The mortgage rates are still historically low, but their success may be coming to an end. Low mortgage rates are driven by homebuyers and thus more listings of houses on the market and refinancing. When rates drop, borrowers stall in hopes it rates drop even lower.  There is an opportunity for bankers and financial advisors to exploit customers by looking at their assets to see if this a good time to refinance, buy a house, and/or using this as an investment opportunity. In addition, home buyers can build more homes.

o   Prototypical Customer: American homebuyers, home sellers, and borrowers

o   Difficulty Level to Exploit: This is a risky market with a lot of uncertainty about the future. I believe it is more difficult to exploit this. It varies upon the homebuyers and their ability to pay for a house or renting property.

§  Why did I see the opportunity? As a Floridian, I am aware of the housing market and the ability for refinancing. People are always moving here and rebuilding in this state. In addition, the market crash of 2008 was influenced by the housing bubble in Florida. When people see an opportunity to have a return on their capital or investment, they like to exploit it.

-       Regulatory Trend: Global regulators question Facebook ok Libra cryptocurrency

o   Source: https://www.foxbusiness.com/technology/facebook-libra-global-regulators-meeting

o   Potential Opportunity: Many companies are creating cryptocurrencies with our age of technology. For example, Facebook and Libra. Global regulators are skeptical about blockchain and its use in developing these currencies. They are worrisome due to threat against the current monetary systems of each country. In addition, regulators demand a high security factor for these new currency. There is an opportunity here to create product that will preserve our monetary system with the implication of safe and secure cryptocurrencies.

o   Prototypical Customer: Global consumers using technological monetary means

o   Difficulty Level to Exploit:  If a company has the means to currently develop a cryptocurrency with high and proven security measures, there is potential to gain approval from global regulators.  In addition, the research and development needs to be thorough and abide to regulations to ensure the technology will not disrupt the current monetary systems. I believe if a company invests the time and resources to develop this product, there is a moderate level to exploit this opportunity. There will still be arises concerns.

§  Why did I see the opportunity? During my internship this summer as  a financial analyst for Bank of America – Merrill Lynch, I learned much about how technology is transforming the banking industries. With this, I help transition clients to using digital apps and other services to enhancing their capabilities as a customer. Cryptocurrencies can elevate many hardships and bring new potential in our monetary world.. Thus, I see a potential opportunity here as technology, blockchain, and cyber security increases in tandem.

-       Regulatory Trend: FDA slams vaping company Juul for illegal marketing practices, threatens fines or seizure

o   Source: https://www.cnbc.com/2019/09/09/fda-says-juul-illegally-promoted-its-e-cigarettes-as-less-harmful-than-cigarettes.html?&qsearchterm=juul

o   Potential Opportunity: Due to their illegal marketing practices, Juul has attracted customers to invest in less risk e-cigarettes. They do not have the scientific evidence to support these claims to the FDA. Therefore, there is an opportunity to create a A reduced risk e-cigarette with scientific evidence that their product does in fact pose less risk and harm

o   Prototypical Customer: Adults smokers looking to “make a switch, high schoolers, and young adults

o   Difficulty Level to Exploit: If a company has the means to currently develop a product with safe conditions, there can gain the completive advantage over Juul. The research and development needs to be thorough to abide by FDA’s regulations. I believe if a company invests the time and resources to develop this product, there is a moderate level to exploit this opportunity. There will still be arises concerns. If the company receives approval from FDA, they have the potential to succeed in the market place for cigarettes.

§  Why did I see the opportunity? As a collegiate student, I see many prototypical customers for a new product. Many of my peers Juul or use another type of e-cigarette. Despite me not being a smoker, I know there is a demand for these products; especially if one is to be proven “less risk and harm.”