Reserve Asset – Local Collectors Post Fri, 24 Sep 2021 01:00:00 +0000 en-US hourly 1 Reserve Asset – Local Collectors Post 32 32 Bitcoin will really drain the swamp Fri, 24 Sep 2021 01:00:00 +0000

The oft-cited phrase might actually mean something if the motivations behind the policy change.

“Same Ditto, but different Ditto”

While Trump recently popularized the phrase “drain the swamp,” his execution and his point of view were wrong.

Politicians in the United States have been viewed negatively for at least the past few decades. The problem is, our people have become so numb to this way of thinking that nothing is being done to rectify the situation. Nihilism has been co-opted down to the legislative level.

In your discussions with your family, friends and peers, is it common to characterize our political leaders as liars willing to do or say whatever it takes to get your vote? It’s common among my peers; I imagine it is no different for you. Why is it?

Consider for a moment the incentives for an individual to run for political office. What are the advantages ? Well, there is the glaring evidence: you can choose what happens with the legislation that you feel is necessary or justified, with the input of your constituents (if you want to take their views into account). But there are also second-rate benefits, such as pensions that are guaranteed after the end of their term. Or my favorite: vote on policy (like the most recent infrastructure bill) and more specifically on how the state (referring to the entire US federal government) spends and allocates acquired funds either through tax revenues or through money printing.

M1 silver stock

Since 2008, we have seen a multitude of currency impressions. This is documented here by the Fed as the M1 money supply. The Fed itself explains that the definition of what M1 is can be arbitrarily changed. All this to fund activities ranging from bailout of bankers in 2008 (and then not suing a single individual who was really responsible) to printing almost 40% of the circulating supply of dollars ever created to fund. an economic shutdown in a (futile) attempt to prevent the spread of the virus. This is without considering the plethora of systemic issues within our infrastructure, including, but not limited to: civil rights, public health, health care, student loans, social security, pensions and then there is the funding of what many call America’s “eternal war”. ”Declare that we have been since our victory over Nazi Germany (and, really, for the life of our country).

It is for these reasons that I propose; politics and government are inextricably intertwined with the Federal Reserve. The Fed has slowly become the sole lender of recourse to the United States and to prop up the petrodollar. And what’s worse is that this bank account can manifest dollars out of nothing effortlessly.

Repair the incentive mechanism

Drain the swamp. Via Yves Moret on Unsplash

Trump had the right idea: “drain the swamp”. You can’t imagine how much it pains me to say this because, as a human being, I find it deplorable. But that shouldn’t prevent anyone from agreeing with any individual’s point of view. Unfortunately, he didn’t have the foresight or the clarity of mind to see one important fact: if we don’t change the structure of the incentives, it doesn’t matter who we replace the current leadership with.

Also: if we don’t fix the money, the problems of today will just manifest themselves again in the future.

This problem must be faced today. We need a better currency today. No revolution, be it cultural or conflictual, in today’s environment will accomplish anything if we don’t fix the incentive problem.

This problem is not only within the Federal Reserve, it is also due to the lobbying relationships in Washington that I mentioned in my previous article. This relationship allows external parties to instigate, question, and pressure politicians to affect legislation that may benefit particular entities or industries (perhaps for a small fee or a pot. -of-wine, we can deduce).

Our world continues to show how badly we need bitcoin the asset and Bitcoin the network.

Our leaders continue to show how much we need money that is not theirs.

In addition, our executives and those closest to the printer continue to show not only their incompetence when it comes to money management, but also their stubbornness in admitting that the music is slowing down and that the number of chairs to claim is scarce.

If the United States of America does not take meaningful steps to: 1.) embrace humility and recognize the need to learn more about this world-changing asset, 2.) take action on efforts to learn from reputable and knowledgeable members of the Bitcoin community, and, last but not least, 3.) consider that our world could possibly be a better place with monetary assets and policies that are not plagued by human greed or fallibility.

It’s not that bitcoin is a fantastic risk-reward investment, it’s that Bitcoin is a fundamental necessity.

This is a guest article by Mike Hobart. The opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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BUSD: A Case Study For Stablecoin Compliance And Security Thu, 23 Sep 2021 21:20:20 +0000

Stablecoins have emerged as big players in the crypto market this year, driven by user demand for flexible liquidity in times of fiat money. These currencies are defined as a type of digital currency that can be pegged to or backed by underlying real-world assets. These assets can be anything from fiat currency, commodities like gold or silver, or even some other cryptocurrency. As the name suggests, stablecoins are designed to have a value that remains (rather) stable like silver, unlike the volatility common in cryptocurrency trading today.

To further illustrate this scenario, a typical fiat backed stablecoin might involve the token issuer holding 100,000 tokens, each worth $ 1. Token holders can trade these coins just like any other cryptocurrency. The main difference is that the holder can also exchange the coins for an equivalent amount in USD at any time. Since the USD is fairly stable, users don’t have to worry about their money losing value overnight. As a result, according to CoinMarketCap, there are currently $ 120 billion in stablecoins in circulation.

Although stablecoins have become an opportunity to reduce volatility, various segments of the crypto industry have raised questions about their centralized nature. Since there is no way for the issuer to prove the number of supporting funds, a 1: 1 peg of major stablecoins to their supporting assets, such as the US dollar and other fiat currencies, may not mean much, especially without proper regulation. That said, their potential is still evident in many everyday use cases.

To help prove their use, Binance launched BUSD with Paxos in 2019. A major driving force behind this release was to ensure that every unit of the stablecoin was backed by US dollars and compliant with regulatory and public standards.

A question of reservations

To give users peace of mind and give more credibility to questions about reserves, BUSD’s USD assets are held in FDIC insured banks. In a Paxos reserves report, 96% of BUSD’s total market cap is backed by cash reserves and other cash equivalents, and US Treasuries back 4%.

To further secure these numbers, BUSD continues to be one of the few stable coins to provide a monthly audited report of their reserves. Therefore, any BUSD holder can verify at any time that the supply of BUSD tokens is consistent with the USD held and managed by Paxos.

More information on Busd here

The combination of audits and additional measures to verify the ownership of BUSD assets is increasingly crucial to address one of the main concerns raised by the industry today.

Maintain compliance

The second main concern for stablecoins today is the current regulatory vacuum, which many argue offers little protection for investors, especially in fraudulent activity. To address this issue, BUSD continues to adhere to the strictest compliance standards of the New York State Department of Financial Services (NYDFS). Having a regulator has allowed BUSD to become “greenlisted” by regulators, making it pre-approved for custody and trading by existing virtual currency licenses.

Paxos, their stablecoin issuer, is also regulated by the same body, which guarantees:

  • The value of each stablecoin token is directly linked to the US dollar, and the amount of “reserve” funds is at least equal to the number of stablecoins in circulation.
  • Regulators oversee the creation and maintenance of reserves backed by stablecoins.
  • Reserves are held in the safest forms of assets (i.e. treasury bills, insured bank accounts).
  • Reserves are fully segregated from company assets and are held safe from bankruptcy in accordance with New York banking law.

This level of regulatory oversight helps maintain consumer confidence in an asset that operates in a largely unregulated industry.

Stablecoins in action

Stablecoins offer several additional advantages to regular cryptocurrencies in the right situation. This often involves mitigating the effects of market instability, managing recurring transactions and laying the foundations for decentralized finance (DeFi).

Manage market instability

Cryptocurrency prices are known to fluctuate widely based on popular opinion or private business decisions. Traders can then decide to trade their falling cryptocurrency for an asset or fiat-backed stablecoin in order to protect the value of their digital currency holdings. As a safe haven, investors can reduce risk by leaving their holdings in a more stable investment vehicle.

Daily Transactions

Like other fiat currencies, stablecoins can be used for everyday transactions such as buying a coffee or transferring money to a family member abroad. Charges can be lower than a transaction through the banking system, occur more quickly, and ensure that the recipient gets fair value for the transaction.

Building DeFi Foundations

Finally, stablecoins are essential for continued growth in the world of decentralization by providing the foundation. BUSD is used on Binance Smart Chain (BSC) and Ethereum (ETH) for several different functions, one of the main ones being lending. As part of the loan, users can oversize an existing digital asset with stable coins to ensure a consistent market price, thus preventing any fluctuation caused by the underlying collateral.

BUSD: A case study for stablecoin compliance and security

Loans are just one example of how stablecoins can provide the stability needed for blockchain to continue to grow as an infrastructure, and for cryptocurrencies to play the role of traditional currency as a medium. ‘exchange.

In search of compliance

With the increase in use cases for stablecoins, many believe that the financial industry will be the area that suffers if companies fail to address these concerns.

For these reasons, BUSD continues to operate with an emphasis on compliance. This can preserve the confidence that users and regulators have in stablecoins and open up more opportunities for the public and private sectors. As more and more stakeholders accept the stablecoins of trust, many believe that opportunities for growth will follow closely behind.

In a recent virtual press conference, Binance CEO Changpeng “CZ” Zhao said, “Our opinion is that it’s great that regulators are stepping in… to reach 10%, 20%, 80%, 99 %. [crypto] adoption.”

Disclaimer. Cointelegraph does not endorse any content or product on this page. While our aim is to provide you with all the important information we may obtain, readers should do their own research before taking any business related action and take full responsibility for their decisions, and this article cannot no longer be considered as investment advice.

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Asian Stocks, Wall Street Holds Profits After Federal Reserve Statement | Associated press | Thu, 23 Sep 2021 02:16:47 +0000

Thursday’s Asian share is reported by the Federal Reserve Later this year, we may start easing special measures to support the economy.

Shares rose in Hong Kong, Shanghai, Australia and Taiwan, but fell in South Korea and Malaysia. US futures were higher. The market has closed in Tokyo.

The US central bank has indicated that it could start raising its key rates by the end of next year, earlier than expected three months ago. He added that if the economy continues to improve, it is likely to start slowing the pace of monthly bond purchases “immediately”. The Fed is buying bonds throughout the pandemic to keep long-term interest rates low.

The market was reassured after Evergrande, one of the largest private real estate developers in China. He said he planned to pay on Thursday. This may have allayed concerns about heavily indebted Chinese real estate developers and the potential ripple effects of possible defaults.

In Hong Kong, the Hang Seng index rose 2% to 24,745.96. The Shanghai Composite Index rose 0.6% to 3,651.27. The Australian S & P / ASX 200 jumped 1% to 7,368.40. South Korea’s Kospi fell 0.7% to 3,117.99.

On Wall Street, the S&P 500 rose 1%, beating four straight days of straight losses. The benchmark index initially rose 1.4% after the Federal Reserve issued a statement at 2:00 p.m. Eastern Standard Time.

Other major indices also jumped, but lost some of their upside late in the afternoon. The Dow Jones Industrial Average rose 1% to 34,258.32. The Good Equity index temporarily rose 520 points. The Nasdaq Composite Index rose 1% to 14,896.85.

Bond yields mostly increased. After the Federal Reserve’s announcement, 10-year government bond yields fluctuated up and down, but held steady at 1.31%. Yields affect the interest rates on mortgages and other consumer loans.

Analysts said the Fed’s policy update was in line with market expectations. The VIX, a measure of the volatility investors expect from the S&P 500, fell about 14% after the Fed’s statement.

Brian Jacobsen, Senior Investment Strategist at Wells Fargo Asset Management, said:

In a press conference, Federal Reserve Chairman Jerome Powell said the Fed would start cutting its monthly bond purchases as early as November if the labor market continued to improve steadily. paddy field.

Gene Goldman, chief investment officer of Cetera Financial Group, revealed that the Fed’s shift has started to raise concerns about inflation.

“Our concern is that the Fed continues to stick to the idea that this is a temporary step, but there is no evidence that it is a temporary step,” he said. he declares.

Goldman added that a wider range of markets may be subject to review as economic growth slows and inflation continues to rise. “Our concern for the economy and the market in general is the first. We are at all the summits, ”he said.

September was a difficult month for stocks. The S&P 500 is down 2.8%.

In addition to concerns about the potential change in Fed policy, investors are concerned about the increase in COVID-19 cases due to the impact of highly contagious delta mutations and rising inflation on businesses and consumers. I am.

History does not provide a good guide to how the market is reacting to the Fed’s easing support for the economy. This is mainly because it was a very rare event.

In the summer of 2013, Treasury yields soared after the Fed chairman suggested bond buying programs might start to slow. Surprised investors assumed rate hikes would continue quickly, pushing the Treasury yield from less than 2.20% to 3% in three months.

However, after the Fed announced in December that it would cut its buying, the 10-year rate did an about-face, despite the Fed’s reduced support for programs to keep interest rates low.

Share prices have remained relatively stable despite the turmoil in the bond market.

The 10-year rate fell from 1.70% in March and has been relatively stable between 1.20% and 1.30% since July. Powell has repeatedly pointed out how slow the Fed will go from cutting bond purchases to increasing interest rates.

On Wednesday, more than 80% of stocks in the S&P 500 Index rose. This is mainly due to tech stocks, banks and companies that depend on direct consumer spending. Energy stocks posted a solid gain as US crude oil prices rose 2.4%. The inventory of communications and utilities has declined.

Small stocks have performed better than the market at large. The Russell 2000 Index rose 1.5% to 2,218.56.

Netflix rose 3.1% after streaming entertainment services acquired the work of Roald Dahl, the late British writer of famous children’s books such as “Charlie and the Chocolate Factory”.

Facebook fell 4% after it said in blog posts that social networks underreported web conversions by users of Apple mobile devices by about 15% following changes in the operating system of Apple.

FedEx plunged 9.1%, the biggest drop in stocks in the S&P 500. Significantly high costs reported Even as transport demand increases. Many industries are struggling with higher costs due to a mix of labor and supply chain issues.

In another trade Thursday, benchmark U.S. crude fell 7 cents a barrel to $ 72.16 in electronic trading on the New York Mercantile Exchange. It went from $ 1.74 to $ 72.23 a barrel on Wednesday.

Brent crude, the international standard, fell 8 cents a barrel to $ 75.31.

The US dollar fell from 109.76 yen to 109.86 yen. The euro went from $ 1.1691 to $ 1.1688.

Contributed by AP Business Editors Alex Veiga, Stan Choe and Damian J. Troise.

Asian Stocks, Wall Street Holds Profits After Federal Reserve Statement | Associated press |

Source link Asian Stocks, Wall Street Holds Profits After Federal Reserve Board Statement | Associated press |

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Asset management technology news | Industry task force reports on cyber threat to market infrastructure Wed, 22 Sep 2021 15:02:26 +0000

An industry task force has released a white paper on Cyber ​​Threat Data Protection and Validation for Financial Market Infrastructure (IMF).

The working group, sponsored by the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions (IPPC-IOSCO) Specialist Group on Cyber ​​Resilience, examines how MFI firms protect and use their data and make recommendations that MFIs should consider to improve their cybersecurity.

The project includes cyber resilience specialists from The Depository Trust & Clearing Corporation (DTCC), Euroclear, the Federal Reserve Bank of New York, LCH, TMX Group and the Reserve Bank of Australia,

The task force finds that the recovery capabilities of many organizations have been designed to protect against physical, not cyber failure, and in some cases may not be effective at protecting against cyber threats.

Although many organizations target a two-hour recovery time as their primary goal, data integrity factors often require tradeoffs between recovery speed and recovery accuracy.

In addition, a high level of interconnectivity between enterprises reinforces the potential danger posed by a compromise on data integrity.

In this context, recovery procedures after a data integrity breach require a high level of confidence in the available backup data, the paper concludes, as well as good coordination between companies within the IT ecosystem. .

Based on the task force’s analysis, the paper recommends that companies focus on three main issues.

Each MFI should identify the most feasible tools from a design perspective and focus on implementing the tools that offer the most impact and coverage.

Second, businesses should work with other businesses to identify the best catering strategies for their business.

Third, they need to analyze their legacy technology to target critical points of vulnerability and interdependence and identify areas where they can improve resilience as the technology advances.

The working group finds that in the face of a cyber attack, traditional data replication strategies run the risk of propagating corrupted data to backup databases. To meet this challenge, the working group set out to identify tools to improve data retrieval and validation.

The paper highlights the need for greater industry collaboration to drive this program, including a common focus on design principles for housing critical data sets in data bunkers and third-party sites. This includes the development of standards to assess and minimize third party risks to the ecosystem and the use of industry-wide cyberstress testing exercises overseen by an independent party.

Rachel Tyler, Executive Director of Business Resilience at DTCC and Chair of the Industry Working Group, says: “MFIs operate based on the use and trust of data, and to operate effectively, MFIs must keep their transaction data and data and application data protected and intact. Businesses need to think about how they can continue to improve data protection and validation capabilities to better defend themselves and recover from cyber threats. “

Laure Molinier, director of crisis management and disaster recovery testing at Euroclear, adds: “As part of our business resilience program, [Our] The goal is to continuously improve protection, detection, response and recovery procedures against extreme scenarios such as major data integrity issues.

“As a trusted financial market infrastructure, we must play a leading role in defining recovery protocols together with the market in scenario analyzes and joint testing.”

Rob Cairns, Chief Technology Officer at LCH, said: “Convening this working group is an important step in securing and strengthening the resilience of financial market infrastructure providers. The findings of the White Paper demonstrate the need for increased collaboration and standardization in the approach to data protection. We look forward to continuing to contribute to the discussion and action on this important issue. “

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FlexShares Launches New Range of Four Climate-Focused ESG ETFs Tue, 21 Sep 2021 20:56:28 +0000

On On Tuesday, Northern Trust Asset Management’s FlexShares® exchange-traded funds announced the launch of a new lineup of core climate-focused ESG ETFs. These funds include the FlexShares ESG & Climate US Large Cap Core Index Fund (NYSE: FEUS), the FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (NYSE: FEDM), the FlexShares ESG & Climate Investment Grade Corporate Core Index Fund (NYSE: FEIG), and the FlexShares ESG & Climate High Yield Corporate Core Index Fund (NYSE: FEHY).

The four new climate ETFs are in addition to FlexShares’ existing ESG offerings, FlexShares STOXX US ESG Select Index Fund (ESG) and FlexShares STOXX Global ESG Select Index Fund (ESGG). The new range of funds aims to help investors improve the overall ESG scores of their portfolios and reduce carbon risk while maintaining core exposure to equities and fixed income securities. The funds use the Northern Trust ESG Vector Score and a carbon risk rating to hedge ESG risks and capitalize on sustainable opportunities.

“The combination of our ESG Vector score and our carbon risk rating creates a complementary strategy to identify sustainability leaders and laggards in each sector in a consistent manner,” said Christopher Huemmer, senior investment strategist for FlexShares ETFs. “In response to increased customer demand for climate investing, we have created this new suite to deliver core investment strategies that we believe are best positioned to benefit from the ongoing transition to a low-cost economy. low carbon emission. “

The ESG Vector Score methodology developed by Northern Trust Asset Management (NTAM) seeks to identify the business issues related to ESGs most likely to impact a company’s financial performance and a portfolio’s return on investment. The rating methodology is based on a framework established by the Sustainable Accounting Standards Board (SASB) which seeks to identify industry leaders in sustainability and mitigate sustainability risks before impacting the financial statements of the business and portfolio performance.

As climate change is a major concern of many investors and regulators around the world, each basic strategy in the ESG ETF suite also includes a particular focus on carbon risk. In partnership with Institutional Shareholder Services (ISS), each company is screened using a carbon risk assessment methodology to determine its current carbon emissions, efforts to reduce its carbon footprint, and potential exposure to carbon risk. compared to other companies in its sector. Using these ratings, each strategy in the suite targets a reduction in overall carbon emissions and carbon reserves relative to its parent index, while also targeting an overall improvement in its carbon risk rating.

The launch of FlexShares’ new ESG suite coincides with the 10th anniversary of the introduction of its first ETFs in 2011. Over the past decade, FlexShares has grown into a $ 19 billion global brand committed to tackling the complex challenges of investors by providing investment solutions that go beyond conventional solutions. “off the shelf” products. Following the brand’s expansion into the European market in January this year, FlexShares’ product line consists of 33 unique ETFs in the United States and Europe. At the heart of its targeted investment solutions are four real investment objectives: capital appreciation, risk management, income generation and liquidity management.

Darek Wojnar, Head of Funds and Managed Accounts for NTAM, added: “Over the past decade, we have defined our place in the ETF industry by focusing primarily on achieving specific investor goals with quantitative solutions. . Looking ahead to the next ten years, we recognize the growing importance of sustainability for these goals and the need for ESG funds that can serve as a core portfolio across all asset classes. We believe this is a key area for growth as we position the company for continued success. “

For more news, information and strategy, visit the multi-asset channel.

About FlexShares

FlexShares exchange traded funds are designed to pursue specific investment objectives through passive and active strategies. FlexShares offers differentiated ETF strategies that can improve and simplify the investment decision process for the long-term investor. Please visit our website or connect with us on our LinkedIn page.

About Northern Trust Asset Management

Northern Trust Asset Management is a global investment manager who helps investors navigate changing market environments, so they can confidently achieve their long-term goals. Trusted with US $ 1.2 trillion in investor assets as of June 30, 2021, we understand that investing ultimately serves a more important purpose and believe that investors should be compensated for the risks they take – in all market environments and any investment strategy. That’s why we combine solid capital market research, expert portfolio construction and comprehensive risk management to design innovative and effective solutions that deliver targeted investment results. As committed contributors to our communities, we consider it a great privilege to serve our investors and our communities with integrity, respect and transparency.

Northern Trust Asset Management is made up of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, KK, NT Global Advisors, Inc., 50 South Capital Advisors, LLC , Belvedere Advisors LLC and the investment staff of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset services, asset management and banking services to businesses, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 22 US states and Washington, DC, and 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2021, Northern Trust had assets under custody / administration of US $ 15.7 trillion and assets under management of US $ 1.5 trillion. For over 130 years, Northern Trust has distinguished itself as an industry leader for its exceptional service, financial expertise, integrity and innovation. Visit or follow us on Twitter @NorthernTrust.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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6 high-yield energy funds to stay ahead of inflation Tue, 21 Sep 2021 09:30:00 +0000

Closed end energy-based funds with high returns could help you beat inflation.

David McNew / Getty Images

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Wall Street suffers worst drop since May as global markets collapse Mon, 20 Sep 2021 21:03:53 +0000

Stocks faded on Monday as investors feared the governments of the world’s two largest economies – China and the United States – could act in ways that undermine the nascent global economic recovery.

The sell-off started in Asia and spread to Europe before landing in the United States, where the S&P 500 fell 1.7%, the worst one-day decline since mid-May. It would have been worse if it hadn’t been for a late rally; the index was down 2.8 percent in the afternoon.

The Chinese government’s reluctance to step in and rescue a heavily indebted real estate developer just days before a big interest payment is due has signaled to investors that Beijing could break with its long-standing policy of bailing out local stars . And in the United States, investors feared the Federal Reserve might start cutting its government bond purchases soon, which has caused stocks to rebound sharply and helped support corporate earnings since the start of the pandemic. coronavirus.

Prior to this month, Wall Street was capitalizing on a seven-month run that had pushed stocks up more than 20% as investors seemed to ignore any bad news. But there has been a clear change in the tone of the market since the September 2 peak, and it worsened on Monday due to the debt spiral of Evergrande, a large Chinese real estate company that struggled to meet its obligations, which worries investors. and around the world.

Evergrande’s woes are an important consideration for Chinese financial markets: the company owes more than $ 300 billion to various lenders, and a default on its debts would have ripple effects on the Chinese economy. Investors must have wondered what other real estate companies were likely to toughen their creditors, and whether banks and insurers lending to them could also be crippled.

“We have been asked several times in recent weeks whether ‘this’ – a likely default by Evergrande – was China’s Lehman moment,” Barclays analysts wrote in a client note on Monday, referring to the collapse of Lehman Brothers, the investment banks whose 2008 collapse was a watershed moment in the last financial crisis.

Evergrande’s fortune might have been less important to investors had it not been for the lingering unease over the state of global recovery in the event of a pandemic. The Delta variant of the coronavirus continues to be a threat to stability in many parts of the world, and investors are also nervous about a range of political issues, infrastructure spending and tax plans in the United States. exactly what China would do. do if Evergrande failed.

Senate Democrats are uniting to impose a new tax on companies that repurchase their shares, which could potentially weaken a key source of demand for shares. Democrats are also expected to focus this week on raising the federal borrowing limit. Analysts say until the cap is raised investor exuberance could be hard to come by.

But above all in the minds of investors, the Federal Reserve is expected to discuss Wednesday a timetable for slowing bond purchases aimed at supporting the US economy. Some economists expect the Fed to signal that it will start cutting bond purchases later this year. The central bank could then start raising interest rates in 2022.

On the other side of the globe, questions surrounding Evergrande also concern government policy: Investors are closely watching how Beijing is handling the company’s struggles. For decades, much of China’s growth has been driven by investment in infrastructure, including the residential real estate market, which has been funded by huge sums of borrowed money.

In the Chinese system, loans to developers are often given under the strong influence of the government, which sees building construction as a source of jobs and economic growth. As such, many lenders viewed companies like Evergrande as having an implied government guarantee, meaning that if the company couldn’t pay its debts, the government would ensure that creditors were paid off.

“The market was looking to some extent for a catalyst for a sell off,” said John Canavan, chief analyst at Oxford Economics. “The Evergrande situation is unlikely to resolve itself without China’s support and, if China does not offer that support, the question is to what extent are there spillover risks within Chinese stocks, then cascade into world markets. “

Evergrande shares plunged 10.2% in Hong Kong, as the Hang Seng index fell 3.3% to its lowest level in nearly a year.

Distrustful investors have pushed the Hong Kong-listed shares of some of China’s largest real estate developers into the red, fearing that Evergrande’s problems could affect the funding capacities of other developers in an era of heightened regulatory control. Chinese developer Sinic Holding’s shares fell 87% after regulators in one Chinese province said they would sanction some of the developers’ selling practices.

Mike Bell, a strategist at JPMorgan Asset Management in London, said the situation with Evergrande could lead to more volatility over the next month, but he was not too concerned that the company’s problems would have global consequences.

“When we look at China at the moment, we still think the earnings outlook – outside of companies like Evergrande – for the market as a whole remains very positive, ”he said.

In addition to investor worries about Evergrande’s problems and political maneuvering in Beijing and Washington, other factors have spilled over into global markets. High natural gas prices in Europe are pushing up energy bills and shutting down factories, such as those that make fertilizer, in Britain, where small energy companies are asking for government bailouts. The Stoxx Europe 600 fell 1.7%, while Britain’s FTSE 100 was down 0.9%.

Alexandra Stevenson contributed reports.

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Fed to unveil new projections with investors on alert for when rates take off By Reuters Mon, 20 Sep 2021 10:17:00 +0000

© Reuters. FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, the United States, August 22, 2018. REUTERS / Chris Wattie / File Photo

By Lindsay (NYSE 🙂 Dunsmuir

(Reuters) – U.S. Federal Reserve officials will unveil when and how often they think the economy will need an interest rate hike over the next three years when they release new forecasts at of their policy meeting on Wednesday, with investors on alert for a faster pace of tightening.

The dot plot, published quarterly, presents policy makers’ projections, on an anonymous basis, for economic growth, employment and inflation, as well as the timing of interest rate hikes.

This will show whether most stick to the recently voiced views that the Delta variant of the coronavirus, which has hurt economic activity, will have a short-lived effect on the recovery despite the current turmoil and uncertainty it faces. provokes. This week’s set of points will also include policymakers’ forecasts for 2024 for the first time.

Interest rates have been close to zero since the start of the COVID-19 pandemic, with the Fed pledging not to increase borrowing costs until the economy fully heals. According to the Fed’s new framework, this means more emphasis must be placed on achieving maximum jobs as well as its average inflation target of 2%.

Higher-than-expected inflation despite some recent moderation is testing the commitment of policymakers to this new framework and could push the median of the Fed’s forecast for an interest rate take-off to 2022 from 2023 at the June meeting.

For that to happen, only three policymakers would need to advance their projections, and a lag of just two would cause a split within the Fed over whether the take-off is scheduled for next year or later.

“We all know that dots are not promises or commitments, but it’s always the best that the market should follow in determining what the policy will be going forward,” said Roberto Perli, economist at Cornerstone Macro and former member of the Fed. “The risks are on the upside.”

The central bank is expected to use at least its next meeting on September 21-22 to signal its intention to start scaling back its massive bond purchases, also put in place in early 2020 to support the recovery in the market. the economy, in November if incoming data holds up, amid the fastest economic recovery in history after a brief recession last year.

Fed officials argue that the asset purchase program has served its purpose as demand, which it most directly affects, rebounded even as the supply of labor and goods declined. been limited.

The cut could be completed as early as mid-2022, paving the way for the Fed to raise interest rates near zero at any time thereafter.

The consensus among economists polled by Reuters is that rates will stay close to zero until 2023, but more than a quarter of those polled in the September survey predict that the Fed will hike rates next year.

If the Fed’s median interest rate projections for 2022 and 2023 remain the same, attention will be focused on 2024 as investors analyze the pace of the rate hike once the take-off begins. It will also show how many policymakers, if any, still see interest rates suspended until at least 2024. In June, five of 18 policymakers saw rates remain stable until the end of 2023.

Currently, federal funds rate futures, which track short-term interest rate expectations, predict a rate hike in 2023 and one or two more hikes in 2024, but the latest survey of primary traders , which the Fed consults for a reading on market expectations ahead of each meeting, shows three additional rate hikes.

If the Fed plans three or more hikes at this week’s meeting for 2024, “that would give a hawkish signal that could more than offset any conciliatory message about the cut,” said Michael Pierce, an economist at Capital Economics.


The extent to which policymakers change their other economic forecasts could also provide valuable information. Few people expect the Fed to change its expectations for the level at which interest rates could rise, currently estimated at 2.5%, but their forecast for US economic growth this year and inflation projections this year and next year could be revised.

Economists have downgraded their gross domestic product estimates for the current quarter, citing weak motor vehicle sales as inventory shortages persist and a recent spate of COVID-19 infections fueled by the variant Coronavirus Delta, although data released last Thursday showed retail sales in the United States. sales unexpectedly increased in August.

Inflation estimates could prove trickier. Fed Chairman Jerome Powell, who is still waiting to see whether he will be reappointed for a second term by US President Joe Biden, has firmly maintained the view that higher-than-expected inflation is transitory, although he and others have admitted it could linger longer than this year amid persistent supply constraints.

Last week, Labor Department data showed underlying consumer prices rose at their slowest pace in six months in August, suggesting inflation was likely to have peaked.

Some other Fed officials are more alarmed, and several have raised the possibility that higher inflation will persist and cause inflation expectations to rise as a reason to quickly cut asset purchases to allow time for rate hikes. faster if necessary.

If the median projections show, for example, an additional rate hike in 2023 compared to current forecasts and point to an earlier take-off date, Powell’s likely reiteration in his post-meeting press conference that the cut doesn’t is not related to rate hike decisions, could fall flat.

“The board has drifted in a hawkish direction,” said Tim Duy, economist at SGH Macro Advisors and professor of economics at the University of Oregon, who expects the dots to show that the Most policymakers now believe that a rate hike in 2022 will be appropriate, given rising concerns about inflationary pressures. “Doves are now limited.”

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Central banks tiptoe to massive unwinding of economic stimulus Sun, 19 Sep 2021 09:38:00 +0000

To taper or not to taper? That’s the question central bankers face as they debate when they should reverse the massive economic support measures they deployed last year to prevent a pandemic-induced Great Depression.

“The withdrawal of monetary and budgetary support is inevitable. The key issue is timing, ”said Eva Sun-Wai, fund manager at M&G Investments.

As the US Federal Reserve (Fed) and other central banks hold meetings this week, here are some key questions regarding their monetary policies:

What measures are in place?

The Fed, the European Central Bank (ECB) and their counterparts in Japan, Britain and elsewhere cut interest rates and launched massive asset purchase programs last year to avert economic catastrophe .

The goal of the programs is to keep the economy booming by making borrowing money less costly for individuals, businesses and governments.

The Fed, which begins a two-day policy meeting on Tuesday, cut rates to zero at the start of the pandemic in March 2020.

To provide liquidity to the world’s largest economy, it buys at least $ 80 billion a month in Treasury debt and at least $ 40 billion in agency mortgage-backed securities.

The ECB has a € 1.85 trillion Pandemic Emergency Purchase Program (PEPP), allowing the bank to purchase financial market assets such as bonds, raising their price and lower interest.

The ECB has kept the rate on its main refinancing operations at zero.

Why no rush to get out?

Inflation has skyrocketed around the world, raising market expectations that central banks will tighten money supply to drive down prices and keep economies from overheating.

Central banks in Brazil, Russia, Mexico, South Korea, the Czech Republic and Iceland have raised interest rates this year.

But the Fed, the ECB and the Bank of England (BoE), which is also meeting this week, have so far all held their own.

Fed, ECB and BoE officials have insisted that inflation is only temporary and a consequence of price recovery after declines at the height of the pandemic last year.

Policymakers want to avoid hurting economic recovery by withdrawing too much support too quickly.

What are they saying?

Markets have reacted to all economic indicators – from inflation to unemployment to consumer spending – in a guessing game as to whether they will force central banks to adjust their policies sooner or later than expected.

Bank officials, for their part, carefully weigh their words.

Fed chief Jerome Powell said in August that the central bank could “start slowing down the pace of asset purchases this year,” but he has remained low-key on the timing.

The ECB went further this month, deciding to slow the pace of its monthly bond purchases, but it did not change the size of the program or its March 2022 end date.

“It’s far from a ‘total cone’,” said Andrew Kenningham, chief economist for Europe at Capital Economics.

The head of the ECB, Christine Lagarde, was herself clear: “The lady does not shrink,” she said.

Markets are waiting for a clearer signal from the ECB in December.

Have central banks succeeded?

The global economy is recovering as individuals, businesses and governments have taken advantage of ultra-low interest rates.

Governments, meanwhile, have injected $ 16 trillion into fiscal stimulus programs around the world, according to figures from the International Monetary Fund.

“We have learned a lot from previous crises and the management of the COVID-19 crisis has been almost perfect from an economic standpoint,” said Vincent Juvyns of JPMorgan Asset Management.

“The recovery is clear and massive and we have not experienced mass unemployment or a wave of bankruptcies,” he said.

Rating agency S&P Global said the default rate in Europe is expected to decline in the near term, “particularly if the policy withdrawal goes in an orderly fashion, as expected.”

What are the negative effects?

Critics say ultra-accommodative monetary policies only worsen inequality by inflating the prices of financial assets and raising real estate prices.

The ECB is defending its actions by citing studies by affiliate researchers saying its policies have helped curb unemployment, giving a boost to lower-income households who have also become homeowners thanks to lower rates.

A report by the Organization for Economic Co-operation and Development (OECD) in September expressed concerns about the potential negative side effects that extending easy money policies could have on the prices of financial and real estate assets.

“Central bank interventions only make sense if they prevent a recession,” said Nicolas Veron, an economist at the Peterson Institute and the Bruegel think tank.

“If they are no longer needed to avoid a recession, they have a much more negative effect than a positive one,” he said.

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Fed Chairman Powell owned the same type of assets, leading to an ethical review of the Fed Sat, 18 Sep 2021 19:43:13 +0000

Federal Reserve Chairman Jerome Powell has been named one of the most senior officials owning and trading the same type of individual securities the Fed itself was buying during last year’s pandemic.

Powell ordered a thorough review of ethics rules governing assets and financial transactions by senior U.S. central bank officials after Fed chairmen sold millions of stock options the year last.

Now the Fed chief himself is said to have held the same type of municipal bonds that the Fed bought, according to CNBC.

According to CNBC, Powell held between $ 1.25 and $ 2.5 million in municipal bonds, a small portion of his total reported assets.

The bonds were purchased before 2019, but were held last year while the Fed bought more than $ 5 billion in munis, including one from the state of Illinois purchased by his family trust in 2016.

Federal Reserve Chairman Jerome Powell (pictured in 2021) has ordered a thorough review of the ethics rules governing financial holdings and transactions by senior U.S. central bank officials. He has now been named by CNBC as one of the top executives who owned similar municipal bonds

Last year, Robert Kaplan (pictured in 2017), chairman of the Dallas Federal Reserve, traded millions of dollars in shares in companies including Apple, Amazon and Google.

Eric Rosengren (pictured in 2019), chairman of the Boston Fed, has traded stocks and real estate investment trusts, according to financial disclosure forms

Last year, Robert Kaplan (pictured left in 2017), chairman of the Dallas Federal Reserve, traded millions of dollars in shares in companies including Apple, Amazon and Google. Eric Rosengren (pictured right in 2019), chairman of the Boston Fed, has traded stocks and real estate investment trusts, according to financial disclosure forms

Thomas Barkin (pictured in 2019), chairman of the Richmond Fed, held millions of individual corporate bonds, including shares of Coca-Cola, Pepsi, Home Depot and Eli Lilly last year, but did reported little or no business activity last year

Thomas Barkin (pictured in 2019), chairman of the Richmond Fed, held millions of individual corporate bonds, including shares of Coca-Cola, Pepsi, Home Depot and Eli Lilly last year, but did reported little or no business activity last year

In 2020, Robert Kaplan, chairman of the Dallas Federal Reserve, traded millions of dollars in stocks in companies like Apple, Amazon, and Google.

Eric Rosengren, chairman of the Boston Fed, has traded stocks and real estate investment trusts, according to financial disclosure forms.

Its holdings at the end of last year were much smaller than Kaplan’s, but included shares of Chevron, Pfizer, Phillips 66 and several real estate investment trusts.

The two pledged last week to divest the holdings after they were reported by The Wall Street Journal.

Thomas Barkin, chairman of the Richmond Fed, held millions of individual company bonds, including shares of Coca-Cola, Pepsi, Home Depot and Eli Lilly before last year, but reported little or no no commercial activity. Barkin declined to comment.

While none of the executives’ holdings or transactions appear to violate the Fed’s code of conduct, it raises questions about conflicts of interest and surveillance policies.

Comments made by regional Fed chairmen can shake up the markets and they have a role to play in the Fed’s interest rate policies.

These senior officials often have exclusive access to discussions on upcoming policy changes that could benefit or harm certain economic sectors, although they are prohibited from negotiating on this knowledge and cannot negotiate in the lead-up to meetings. from the Fed.

Kaplan and Rosengren both said last week that their transactions were permitted under the Fed’s ethics rules, and there is no indication that either broke the law.

But they also said they would sell their holdings at the end of this month and put the money into index funds, which track a wide range of stocks, or cash.

Yet the transactions took place last year when the Fed took extraordinary steps to support the U.S. economy and stabilize financial markets during the pandemic by expanding the types of assets it would buy.

Massachusetts Senator Elizabeth Warren (seen above on Capitol Hill on Tuesday) was one of many high-ranking lawmakers who demanded tighter restrictions on public officials holding stock options.

Massachusetts Senator Elizabeth Warren (seen above on Capitol Hill on Tuesday) was one of many high-ranking lawmakers who demanded tighter restrictions on public officials holding stock options.

The revelations, originally reported by The Wall Street Journal, prompted senior U.S. lawmakers – including Senator Elizabeth Warren of Massachusetts – to demand tighter restrictions on such activity.

“Because the confidence of the American people is essential for the Federal Reserve to effectively carry out our important mission, President Powell asked board staff late last week to take a fresh and comprehensive look on the rules of ethics concerning the participations and the financial activities authorized by the senior executives of the Fed. officials, ”the statement read.

“The controversy over asset trading by senior Fed staff shows why there is a need to ban the ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” the letter reads. by Warren.

Warren introduced legislation that would prohibit the holding of shares by members of Congress, Cabinet secretaries and other senior officials.

The revelation of Powell’s individual titles comes as he is under consideration for a reappointment as Fed chief.

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