Just As Predicted

Just As Predicted

At the end of last December, I made ten predictions for 2018. Two interrelated predictions were that (a) the U.S. economy would grow at a 4.0% pace and (b) short-term interest rates would top 2.0%. Both of these trends are well underway, leading to new opportunities that we’ve not seen in years.

Ever since the 2008 financial crisis, the economic recovery progressed at an anemic rate, leaving interest income at historic lows.

That is until 2017.

Just As Predicted

With the economy improving, short-term rates going up, and public entities’ cash levels on the rise, the elements for a strong second half of 2018—and into 2019—look extremely positive.

I predict short-term rates will hit 3.0% in 2019. This will yield incredible results for those entities that are proactively managing all their cash as an asset. However, it will cost more when borrowing for gap funding or capital projects.

I cannot bang the table hard enough to get our message out: Cash is an asset and, with a stronger economy, public entities and higher Ed institutions have an incredible opportunity to put their cash to work. Done right, it can lead to hundreds of thousands—or even millions—of dollars in new revenue from everyday cash.

At three+one, our liquidity analyses and ongoing data are pure and independent. Our message has been consistent throughout: Cash should be viewed as a revenue-generating asset that will lead to significant levels of additional income to your bottom-line. Since we are not a bank, financial advisors, or registered investment advisors, we serve no other interests than those of our clients.

This growth opportunity is happening just as I had predicted. It is now incumbent on you to take the first step to take full advantage of it. If you haven’t already begun the process, now’s the time. For those who are already using cash to its fullest, you will continue to be very pleased with the increases to your bottom line this year and the next.

Are You Ready?

Are You Ready?

The marketplace is already reflecting the Federal Reserve’s anticipated moves to raise the Fed’s fund rates in the first quarter of 2018 by .25%, with two or three more rates increases likely by year-end.

Are You Ready?

Are you ready to have the earning on your cash reflect these rising rates?

As interest rates rise, the increase in interest earnings can be significant to your entity—and those you serve will be the beneficiaries. As mentioned in our past blogs, the rate of return on your cash will be 2.0% or greater by year-end. This amount can mean tens to hundreds of thousand of additional dollars to your bottom line.

My message is direct: “All cash is an asset, and it has value in the marketplace.” Its value is more than it was last year and it will continue to have greater value as interest rates rise.

At three+one, our liquidity analysis can identify all cash that is not likely evident to the naked eye. We enable you to capture all levels of cash and provide you with a time horizon that will duly match its value in the marketplace. You can then use our data with your financial providers to capture a higher yield, all within your legal, safety, and liquidity requirements.

Don’t leave any money on the table. With our help, you can ensure your entity and those it serves fully reap the benefits of a rising-rate environment.

Top 10 Predictions for 2018

Over the last several years, three+one has blogged frequently about the changing landscape of banking and the value of cash as an asset.

Last year at this time, I made a prediction of the top 10 trends for 2017. My batting average was in the same range as 2016, over 70% correct.

Top 10 Predictions for 2018

As we head into 2018, the top 10 trends I see evolving are as follows:

1. The Federal Reserve will approve three rate hikes of .25% each to reach a level of 2.00% on Fed fund rates.

2. The 30-day T-bill rate will break the 2.00% level.

3. The average bank Earnings Credit Rate (ECR) will break the 1.00% level.

4. The U.S. GDP will be on pace to reach 4.0%, and the nation’s unemployment rate will break the 3.75% level. Over two million new jobs will be created as a result of the newly approved federal tax reform legislation.

5. Continuing 2017’s trend, public entities will enjoy higher cash levels throughout 2018.

6. Under the leadership of the Federal Reserve’s new chair, Dodd-Frank regulations will be relaxed but not eliminated. The changes made will be beneficial to banks of all sizes.

7. There will be a spike in the number of community bank mergers.

8. Public entities and higher Ed institutions will issue a greater level of banking Request for Proposals (RFPs) due to greater pricing pressures, bank branch closings, and more competitive deposit-rate offerings.

9. Alternative payment options will grow, given new technology, greater restrictions placed on the usage of cash and checks, and more attention being given to digital currency and its regulation.

10. By year’s end, three+one will have helped public entities and higher Ed institutions realize upwards of $20 million in new interest income as a result of best practices in liquidity analysis and the proactive management of their cash.

At three+one we strive to help clients navigate through the changing landscape of banking and an environment of rising interest rates.