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$1 trillion nightmare behind Wall St exodus



A significant financial exodus from Wall Street is causing New York City to hemorrhage staggering amounts of money, redirecting business opportunities to states in the southern United States, most notably Florida.

According to data compiled from 17,000 companies by Bloomberg, nearly 160 Wall Street firms have made the decision to relocate their headquarters away from New York City since the close of 2019. This shift has resulted in the transfer of almost $1 trillion in assets under management.

These firms, totaling 158 in number, moved out of New York City primarily due to concerns related to rising crime rates, high taxes, and an increasingly unaffordable cost of living. The cumulative AUM of these firms amounts to an astounding $993 billion.

Prominent among these firms is Icahn Capital Management, led by billionaire corporate raider Carl Icahn. In August 2020, the firm abandoned its luxurious Manhattan location at the General Motors Building on Fifth Avenue, opting instead for a 14-story office complex situated in a Miami suburb.

Currently managing $22.2 billion in assets, Icahn Capital Management is now located just a short distance from Carl Icahn’s residence in Indian Creek Village, Florida.

Moving south

Another noteworthy example is Elliott Management, a hedge fund led by Paul Singer, which controls a total of $59.2 billion in assets. In October 2020, the firm shifted its headquarters from Midtown Manhattan to West Palm Beach, Florida.

Cathie Wood, renowned for her bold investment in Tesla, moved her firm ARK Investment Management, which manages assets worth $24.7 billion, to St. Petersburg, Florida, in 2021.

Of the 158 companies from New York that have relocated, 56 have chosen Florida as their new base of operations. Many of the remaining firms have similarly chosen to move to warmer states such as Texas and the Carolinas.

The financial exodus from New York is not an isolated occurrence; California has also lost $1 trillion in financial assets under management to states like Florida, Texas, and other regions with a lower cost of living.

NYC economy

The departure of financial firms poses a serious threat to the city’s economy. Wall Street alone accounted for 16% of the city’s economic activity in the previous year and 7.3% of economic activity across the state, marking the highest percentage in the nation by a significant margin, as the national average is just 1.7%.

Additionally, the mass migration of financial firms has substantial tax implications for both New York City and the state. In the preceding year, financial firms contributed $5.4 billion in taxes to New York City and represented nearly a quarter of all personal income tax collections.

Tax revenue from the financial industry is anticipated to experience a significant decline, with repercussions expected for the state, which heavily relies on personal income taxes. As of 2022, New York’s share of financial industry jobs was 17.6%, a drastic reduction from the one-third share it held in 1990. The report highlights that “jobs have shifted to lower-cost regions.”

Prominent firms, including Goldman Sachs, have embraced lower-cost regions for expansion. Goldman Sachs, for instance, is investing significantly in Dallas, where the cost of living is approximately 40% cheaper than in New York.

Leaving town

Goldman Sachs is in the process of constructing a three-building campus near downtown Dallas. This $500 million, 815,000-square-foot development, scheduled to open in 2027, was made possible by $18 million in tax breaks granted by the city.

Other notable firms, including Icahn Enterprises and AllianceBernstein, have also relocated their headquarters away from New York to more cost-efficient locations.

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Moody’s downgrades China credit outlook, cites growth concerns



Moody’s Investors Service has downgraded China’s credit outlook, expressing concerns about the country’s economic growth prospects and the ongoing property market crisis.

The credit rating agency revised its outlook from stable to negative, citing a combination of factors that are putting pressure on China’s economy.

China’s economic growth has been slowing down in recent years, and Moody’s warns that this trend is expected to continue. The country faces challenges such as high debt levels, a rapidly aging population, and a declining labor force. These factors could hamper its ability to sustain robust economic growth in the future.

Additionally, the ongoing property market crisis in China is a major concern for Moody’s. The real estate sector has been a significant driver of the country’s economic growth, but it is currently experiencing a severe downturn with falling property prices and a growing number of unsold homes. This crisis has the potential to further weigh on China’s economic performance.

Moody’s decision to downgrade China’s credit outlook raises questions about the country’s ability to manage its economic challenges effectively. It also underscores the importance of addressing issues in the property market to prevent a broader economic crisis.

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Australia Post to shift to alternate-day mail delivery



In a move aimed at modernising its operations and accommodating the growing e-commerce industry, Australia Post has announced plans to reduce letter deliveries to every second day.

This significant shift is part of a broader strategy to expand its parcel business and adapt to changing consumer preferences.

Australia Post has recognized the declining demand for traditional letter services in an increasingly digital age. With more people communicating electronically and relying on email and messaging apps, the postal service has faced challenges in sustaining daily mail deliveries. By transitioning to alternate-day letter delivery, Australia Post aims to optimize its resources and focus on meeting the surging demand for parcel deliveries, driven by the booming online shopping market.

This strategic shift comes as a response to the changing landscape of postal services worldwide. Many postal agencies are diversifying their services to remain relevant and profitable. Australia Post’s move is expected to not only streamline its operations but also reduce costs associated with daily letter deliveries, ultimately benefiting both the organization and its customers.

While the change may be welcomed by those who prefer faster parcel deliveries, it raises questions about the impact on individuals and businesses reliant on daily mail services. Australia Post will need to address concerns regarding the potential delay of important correspondence and provide solutions to ensure minimal disruption for customers during this transition period.

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RBA maintains 4.35% rates as mortgage applications surge



The Reserve Bank of Australia (RBA) has decided to keep its official cash rate at 4.35%, citing concerns over the rapidly increasing number of mortgage applications.

This decision comes after several consecutive meetings where the RBA has refrained from adjusting interest rates.

The central bank’s decision to hold rates steady reflects their cautious approach to managing the current housing market boom. Mortgage applications have seen a significant surge in recent months, driven by record-low interest rates and increased demand for housing. While this has been a boon for the real estate industry, it has raised concerns about the potential for a housing bubble and financial stability.

Experts are divided on whether the RBA’s decision is the right course of action.

Some argue that maintaining low-interest rates is necessary to support economic recovery, especially in the wake of the COVID-19 pandemic. Others worry that the continued surge in mortgage applications without rate adjustments could lead to unsustainable levels of household debt.

In light of this decision, homeowners, prospective buyers, and investors will be closely watching the housing market’s trajectory and wondering how long the RBA can maintain its current stance.

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