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Banks Around The World Face Significant Profits Pressure For The Foreseeable Future

Numerous indicators in the U.S. and around the world are signaling a slowing economy at best and a near-term recession at worst.  The slowing global economy, along with low interest rates, ongoing trade tensions, and intensifying Brexit uncertainty will weigh on banks’ profitability for the foreseeable future.  In the US, whatever benefits banks derived from Trump’s tax reform, if any, are long gone.

Global Macroeconomic Outlook for the G-20

Moody’s Global Macroeconomic Outlook, August 2019

Last week’s announcement from Coalition that American and European investment banks’ capital markets and advisory’s revenues hit a thirteen-year low is likely to be the beginning of more challenges to come.  Even before that announcement, Moody’s Investor Services had changed its positive outlook on global investment banks to stable precisely due to slower economic growth and lower interest rates.

Today In: Money

Drivers of Moody’s Stable Outlook for Global Investment Banks

Moody’s Investors Services

As a recession comes closer, bank risk managers, investors, regulators, and rating agencies will be monitoring banks’ loan impairments carefully.  According to the Fitch Ratings’ Large European Banks Quarterly Credit Tracker – 2Q19, released last week, “The economic slow down in Europe has not resulted in material new impaired loans yet, but the substantially weakened economic outlook has increased the likelihood of an at  least modest increase in impaired loans.”

Impaired Loans/Gross Loans

Fitch Ratings, Large European Banks Quarterly Credit Tracker

Banks’ high holdings of leveraged loans and below investment grade bonds and securitizations, especially those that are less liquid and harder to value, will also weigh on their earnings as the global economy slowdown intensifies.  Fitch Ratings’ recent ‘U.S. Leveraged Loan Default Insight’ shows that its “Top Loans and Tier 2 Loans of Concern combined total jumped to $94.1 billion from $74.5 billion in July. The Top Loans of Concern amount ($40.9 billion) is the largest since March 2017, with six names added to the list and nearly all bid below 70 in the secondary market.”  Unfortunately, underwriting continues to deteriorate. The Federal Reserve Senior Loan Officer Survey showed a modest loosening of lending standards on corporate loans for the second consecutive quarter.

Leveraged Loans of Concern Amount Outstanding

Fitch U.S. Leveraged Loan Default Index.

A slowing economy and low interest rate environment are outside of bank managers’ control. Yet, cost efficiency, is something that banks can influence; it needs to improve for banks to be more profitable.  European banks’ median/cost income ratio, for example, is 66%. “The sector’s structural cost inefficiency will eventually have to be addressed given the persistently weak rate and revenue outlook. Improving cost efficiency faster and developing fee-generating businesses are crucial to sustain profitability in 2H19 and beyond.”

Cost Efficiency

Fitch Ratings, Large European Banks Quarterly Credit Tracker

Global investment banks will also have to be very attentive to what changes need to be made to their business models. While there will be demand for their advisory and distribution services, the demand will slow down in what is likely an upcoming recession.

Capital Markets Revenue Relative to Total Revenue, 2018

Source: Moody’s Investors

Moreover, as banks continue to lay-off front office professionals, some top latent to effect deals well will be lost.  Volatility from Trump’s multiple front trade wars and Brexit will put a lot of pressure on banks with capital market activities.

Aggregate capital markets revenue first-half 2009-19 (USD billions)

Moody’s Investor Services

Banks in emerging markets are also under profit pressure.  Many of the banks in Latin America already have a negative outlook by ratings agencies, particularly due to a slowdown in Mexico and recessionary pressures in Brazil. Asian banks are particularly sensitive to US-Chinese trade tensions.

Emerging Markets: Median GDP Growth by Region

Fitch Ratings

More than ever, to increase profitability, bank executives will need to find ways to diversify their revenue streams in all parts of their banks, commercial, investment bank, asset management as well as in custody and clearing services.  Banks need to be profitable to be liquid and to be well capitalized to sustain unexpected losses. What worries me is that a slowing global economy, coupled with increasing deregulation in the US, such as the recent gutting of the Volcker Rule, will embolden banks to chase yield even more and take excessive risks that could imperil depositors and taxpayers.  More than ever, investors, bank regulators, and rating agencies should remain vigilant so as to spare ordinary citizens the pain of when banks run into trouble.

 

 

Source: Banks Around The World Face Significant Profits Pressure For The Foreseeable Future

We Ranked the Top 10 Richest Banks in the World Right Now!

• Read the full article here: http://www.alux.com/richest-banks-in-…

When you’re thinking about money and wealth is hard not to include in that equation Banks. Someone said: Money makes the world go round” and banks, well, that’s where money likes to hang out. Every Aluxer we’ve met has close relations to at least one bank which makes it possible for us to enjoy life to the fullest. #2 *** HSBC Holdings is previously known as The Hong Kong and Shanghai Banking Corporation which was founded in 1865 in Hong Kong. However, in 1991-1992, after acquiring Midland Bank The Hong Kong and Shanghai Banking Corporation moved it’s headquarters to London because it was much better from a financial and strategic point of view.

This is the moment when the bank kind of re-branded itself and became HSBC Holdings the bank that you know today. With that said, we’d like you to enjoy our latest video on: the top ten richest banks in the world. Here we’re answering questions like; • Which is the richest bank in the world?! • How much money do the top banks have?! • Is Bank of America the richest bank in the world?! • Who owns the richest bank in the world? • How much money does the richest bank have?! Say Hello on: https://www.instagram.com/aluxcom/ https://twitter.com/aluxcom https://www.facebook.com/EALUXE – SUBSCRIBE to ALUX: https://goo.gl/KPRQT8 WATCH MORE VIDEOS ON ALUX.COM! Most Expensive Things: https://goo.gl/09XcYJ Luxury Cars: https://goo.gl/eOUgfS Becoming a Billionaire: https://goo.gl/rRLgJI World’s Richest: https://goo.gl/m6emkX Inspiring People: https://goo.gl/KxqTdL Travel the World: https://goo.gl/g5BGmm Dark Luxury: https://goo.gl/20ZsSt Celebrity Videos: https://goo.gl/0cs6sx Businesses & Brands: https://goo.gl/otHsTB — Alux.com is the largest community of luxury & fine living enthusiasts in the world. We are the #1 online resource for ranking the most expensive things in the world and frequently refferenced in publications such as Forbes, USAToday, Wikipedia and many more, as the GO-TO destination for luxury content! Our website: https://www.alux.com is the largest social network for people who are passionate about LUXURY! Join today!

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3 Funds To Buy On This Pullback (7.7% Dividends, 200% Payout Growth)

Forget the trade war noise. Here’s the only thing you need to know: if you’d bulked up your stock holdings on any of the dips we’ve seen in the last four years, you’d be a lot richer today.

The reason for the market’s “one step back, two steps ahead” pattern is simple: despite the interest rate- and trade-driven terror, corporate profits and sales are rising (as are workers’ wages), and unemployment is low.

In other words, the US economy is solid—and it’s stayed solid through every short-term crisis of the last few years. So now we have another pullback that’s given us another chance to amplify our upside.

But what to buy?

You can easily get into the market with an index fund like the S&P 500 ETF , but there’s a problem: we want to have a nice stash of dividend cash to drop into stocks on the next pullback, and with SPY, your payouts are tiny, with just a 1.9% dividend yield.

Today In: Money

This is where closed-end funds (CEFs) come in.

With an average yield of 7.4%, CEFs are much bigger income producers than the index, and three CEFs are particularly appealing right now, with overhyped fears making them unusually cheap.

Let me explain.

Because CEFs’ market prices can deviate from the value of the holdings in their portfolios (called the portfolio’s net asset value, or NAV), CEFs can trade at wide discounts to their NAV—even if the funds have a long history of strong performance.

That’s exactly what we’re seeing in the three funds I’m going to show you now.

Bargain CEF Pick No. 1: Buy Like Buffett (But With 209% Payout Growth)

Let’s start with the Boulder Growth & Income Fund (BIF), whose 3.9% yield is more than double that of the average S&P 500 stock, even though it’s actually on the small side for a CEF. Plus, BIF pays out special dividends every once in a while and has been aggressively increasing its regular quarterly payout, too!

A 200% dividend-growth rate isn’t something you see every day, but BIF can do it because it focuses on stocks whose bargain valuations set them up to outperform over the long haul. It then returns those gains to you in cash.

To get that type of performance, it follows the teachings of the master—Warren Buffett.

In fact, a third of the fund is in Berkshire Hathaway (BRK.A, BRK.B), so owning BIF is like getting Buffett’s portfolio at a big discount, as BIF trades 16.8% below its NAV. That makes it the third-most discounted CEF I track through our CEF Insider service.

Beyond Berkshire, BIF holds companies with strong cash flows that Buffett has also bought: names like JPMorgan (JPM), Cisco (CSCO) and Wells Fargo (WFC). These firms can withstand an economic slowdown because of their strong balance sheets.

Bargain CEF No. 2: A 9% Dividend Disguised as 1%

General American Investors (GAM) also goes after bargain stocks, plus the fund is a bargain itself at a 14.5% discount to NAV. GAM is what I call a “stealth yielder”: while its normal dividend (paid annually) yields about 1%, the fund gives you the bulk of your cash through a big special dividend in December.

These special payouts are a big deal: they gave GAM an annualized yield of more than 9% last year, and a similar yield is likely in November, when the fund will announce its end-of-year payout.

What about the portfolio?

GAM, like BIF, is a value-focused fund, zeroing in on firms with strong cash flows, like Microsoft (MSFT), Alphabet (GOOGL) and Republic Services (RSG). That gives it a mix of high-performing tech stocks and stable cash generators from other sectors. This balanced approach is how GAM has been returned so much cash to shareholders over the years.

Bargain CEF No. 3: A Huge 7.7% Dividend Paid Upfront

The Nuveen Tax-Advantaged Dividend Growth Fund (JTD) takes a similar approach as BIF and GAM, but its “regular” dividend yields an outsized 7.7%, so you don’t have to wait for dividend hikes or special payouts to get your big yield here.

Plus, JTD trades at a 2.3% discount that, while smaller than those of GAM and BIF, is still far too big, given what the fund does.

JTD’s diverse portfolio ranges from Honeywell International (HON) to SAP (SAP), UnitedHealth Group (UNH) and AT&T (T). It also includes some tech, such as Microsoft (MSFT). The fund’s global approach helps it find bargain-priced companies with entrenched client bases and stable revenues.

That’s why JTD has been crushing the market for a decade. And here’s the best part: only a few people know. If you look at the market-price movement for JTD, it seems pretty ho-hum.

However, add in JTD’s big payouts and the chart looks much better!

Not only has JTD soared over the last decade, it has also beaten the index, with a huge chunk of its return in cash, to boot. That means this fund shouldn’t trade at a discount at all—but the fact that it does means it’s certainly worth your attention now.

Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.5% Dividends.”

Disclosure: none

I have worked as an equity analyst for a decade, focusing on fundamental analysis of businesses and portfolio allocation strategies. My reports are widely read by analysts and portfolio managers at some of the largest hedge funds and investment banks in the world, with trillions of dollars in assets under management. Michael has been traveling the world since 1999 and has no plans to stop. So far, he’s lived in NYC, Hong Kong, London, Los Angeles, Seoul, Bangkok, Tokyo, and Kuala Lumpur. He received his Ph.D. in 2008 and continues to offer consulting services to institutional investors and ultra high net worth individuals.

Source: 3 Funds To Buy On This Pullback (7.7% Dividends, 200% Payout Growth)

I’ve found three of the highest dividend paying stocks that will not only protect your money but also grow it if the stock market falls. I’m also updating our 2019 stock market challenge portfolio of dividend stocks that is beating the market two-times over. Stocks are falling again and investors are scrambling trying to find safety and growth at the same time. It may seem like an impossible task but I’ve found two sectors and three dividend paying stocks that will do just that. After more than a decade as an investment analyst, I’ve put together a screen to find the best stocks no matter what the market does. I’ll reveal those three stocks I’ve found plus update you on our 2019 dividend stock portfolio, the 11 best dividend stocks I’m investing in this year. These top dividend stocks are not only producing a return twice that of the stock market but they haven’t fallen as much as the S&P 500 on the recent weakness. Not only are these stock picks producing dividend income but also protection from a stock market crash. If you haven’t seen the other videos in our 2019 challenge, I put them all in a playlist linked here. Make sure you check those out because I show you how to invest in dividend stocks and reveal how I picked the best dividend stocks of 2019. https://www.youtube.com/watch?v=pfw_Q… If you want to create your own portfolio of dividend stocks, I recommend M1 Finance. It’s the no-cost investing platform I’m using and some solid features over other investing apps like Robinhood. https://mystockmarketbasics.com/joinm… Being able to reinvest dividends without paying trading fees is important because you want to get that money working for you as fast as possible. Another feature of M1 Finance is that you can set up retirement accounts, not available on Robinhood, which is very important to avoid paying taxes every year on the dividend payouts. I start the video off with an update to the Stock Market Challenge portfolio and those 11 dividend stocks beating the market. I then tell you why the stock market is down lately and those three stock picks that could save your portfolio. 1:09 2019 Dividend Stock Market Challenge Update 2:20 11 Stocks that Pay Dividends AND Beat the Market 2:44 Why is the Stock Market Down 4:01 Best Dividend Stocks for 2019 7:52 How I Pick High-Yield Dividend Stocks 8:23 Highest Dividend Paying Stocks for Safety and Growth SUBSCRIBE to create the financial future you deserve with videos on beating debt, making more money and making your money work for you. https://peerfinance101.com/FreeMoneyV… Free Webinar – Discover how to create a personal investing plan and beat your goals in less than an hour! I’m revealing the Goals-Based Investing Strategy I developed working private wealth management in this free webinar. Step-by-step to everything you need for this simple, stress-free strategy. Reserve your spot now! https://mystockmarketbasics.com/free-… Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps. #growyourdough

How Effective CFOs Are Driving Companies to Success and Profitability

For more than 30 years, there have been articles touting the CFO as someone who “needs to be strategic: a business partner and not just a bean counter.”

Business writers still publish these articles today, but it’s time to stop. CFOs know they need to be strategic, and they know they need to operate the finance function. They don’t need an article to tell them that anymore. They do, however, need clear vision and technology to help them juggle new balls in the finance ecosystem: regulatory changes, artificial intelligence and Blockchain. Finance must add these balls to its mix while still juggling its “traditional” responsibilities of internal controls, compliance and closing the books quickly.

The future of finance is chockablock with new regulations, technologies and business models. The CFO must handle responsibilities beyond the finance function. They must also use strategic skills to transform the organization. Using the old, heavy, rigid ERP offerings will not provide the tools to nimbly break out of the “Old CFO” role.

This eBook provides a guide to the new technologies every CFO needs to succeed as well as a strategic framework for balancing traditional CFO responsibilities with their new, highly strategic ones.

By: Oracle View

 

Source: How Effective CFOs Are Driving Companies to Success and Profitability | Inc.com

Deutsche Bank Ensnared by Billion-Dollar Malaysian Fund Scandal

A multi-billion-dollar fraud scandal perpetrated by an investment arm of the Malaysian government appears to have ensnared another major global financial institution — Deutsche Bank  (DBGet Report) — which already is reeling from massive restructuring efforts.

The Wall Street Journal reported on Thursday that the Justice Department is investigating whether the German lender violated foreign corruption or anti-money-laundering laws in its work for the 1Malaysia Development Bhd. fund, which included helping the fund raise $1.2 billion in 2014 as concerns about the fund’s management and financials had begun to circulate.

Download Now: To be a profitable investor you first need to know the rules. Get Jim Cramer’s 25 Rules for Investing Special Report

The investigation comes amid a massive overhaul of the Munich-based bank announced over the weekend, which includes layoffs in the thousands and the creation of a separate entity for bad loans, debt and other problem investments and holdings that have plagued the bank since the 2008 global financial crisis.

Investigators reportedly have been assisted by former Goldman Sachs executive, Tim Leissner, the Journal said, citing people familiar with the matter. Prosecutors have been investigating similar issues at Goldman, where Leissner, a former managing director, pleaded guilty last year to helping re-direct billions of dollars from the 1MDB fund.

A state economic-development fund, 1MDB turned into a major global scandal after billions of dollars were drained from it between 2009 and 2014, leading to multiple government investigations and the downfall of former Malaysian Prime Minister Najib Razak.

The Department of Justice has said the stolen money totals at least $4.5 billion and that it was used to pay bribes to government officials, pad a slush fund controlled by the former prime minister and purchase hundreds of millions of dollars in luxury goods and real estate.

Shares of Deutsche Bank were down 0.54% at $7.36 in early trading in New York on Thursday.

By:

Source: Deutsche Bank Ensnared by Billion-Dollar Malaysian Fund Scandal – Report

SoftBank Launches New $108 Billion Vision Fund To Invest in AI

SoftBank stunned the venture capital world with its launch of the $100 billion Vision Fund in 2017 and its wide-ranging and aggressive investments. Now billionaire Masayoshi Son has announced an even larger fund with $108 billion to invest in artificial intelligence companies.

Announced on Thursday, the “SoftBank Vision Fund 2” will be the biggest tech fund in the world if it comes to fruition. “The objective of the Fund is to facilitate the continued acceleration of the AI revolution through investment in market-leading, tech-enabled growth companies,” SoftBank Group wrote in a filing with the Tokyo Stock Exchange.

SoftBank has upped its own stake in the new fund to $38 billion from the $25 billion in the original fund and has tapped leading tech companies like Apple, Microsoft and Foxconn, along with Japanese investment investment banks and Kazakhstan’s sovereign wealth fund.

One noticeable omission from the second fund is Saudi Arabia’s sovereign wealth fund, which pumped $45 billion into the first Vision Fund. SoftBank has faced criticism over its ties with Saudi Arabia and Crown Prince Mohammad Bin Salman following the grisly murder of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul.

However, SoftBank said discussions are ongoing with additional participants, so it’s possible Saudi Arabia will still participate in the second fund, while the total money raised may top $108 billion.

SoftBank used the first fund to make aggressive billion dollar investments into an eclectic range of technology companies around the world leading to some questioning the rational of the legendary investor and SoftBank founder Masayoshi Son. Uber, DoorDash, and WeWork have all been backed by the fund, European startups Improbable in the U.K. and travel booking website GetYourGuide in Germany.

The SoftBank Vision Fund, run out of an office in London’s exclusive Mayfair neighbourhood, is led by Son and Rajeev Misra, a banker who previously worked at UBS, Deutsche Bank and Merrill Lynch.

Follow me on Twitter or LinkedIn. Send me a secure tip.

I’m a Staff Writer covering tech in Europe. Previously, I was a News Editor for Business Insider Australia, and prior to that I was a Senior Technology Reporter for Business Insider UK. My writing has also appeared in The Financial Times, The Telegraph, The Guardian, Wired, The Independent, and elsewhere. I have also appeared on the BBC, Sky News, Al Jazeera, Channel 5, Reuters TV, and spoken on Russia Today and Shares Radio. In 2015, I was shortlisted for Technology Journalist of the Year by the UK Tech Awards and in 2016 I was nominated as one of the 30 young journalists to watch by MHP Communications.

Source: SoftBank Launches New $108 Billion Vision Fund To Invest in AI

U.S. Bank Regulatory Easing Is Negative For Investors And Taxpayers

Storm clouds behind the exterior of the Federal Reserve building in Washington, DC

Storm clouds behind the exterior of the Federal Reserve building in Washington, DC

In a disappointing decision, the Federal Reserve Board announced yesterday that effective this year, it will limit its use of the “qualitative objection” in Dodd-Frank’s Comprehensive Capital Analysis and Review (CCAR). Under Dodd-Frank’s Title I, banks that are designated as systemically important are required banks to design a model using stress scenarios from the Federal Reserve. In order to pass the stress test, banks need to demonstrate that they would be able to meet Basel III capital and leverage requirements even in a period of stress.  It is in the qualitative portion of CCAR, that the Federal Reserve can identify and communicate to the market if a bank is having problems with its internal controls, model risk management, information technology, risk data aggregation, and whether a bank has the ability to identify, measure, control, and monitor credit, market, liquidity and operational risks even during periods of stress.  Easing this requirement, in combination with all the changes to Dodd-Frank that have been taking place since last year, is dangerous to investors, not to mention taxpayers, especially so late in the credit cycle.

Parts of the test that each firm is subject to this year in addition to the hypothetical scenario.

Parts of the test that each firm is subject to this year in addition to the hypothetical scenario.

*All firms subject to the qualitative objection, except TD Group, will have their fourth year in the 2020 cycle. TD Group’s fourth year will be the 2019 cycle.

According to the Federal Reserve’s press release “The changes eliminate the qualitative objection for most firms due to the improvements in capital planning made by the largest firms.”  Yes, there have been improvements in capital planning precisely, because there were consequences to banks which failed the qualitative portion of CCAR. Banks were prohibited from making capital distributions until they could rectify the problems the Federal Reserve found in the CCAR exercise.  This decision essentially defangs the CCAR qualitative review of banks’ capital planning process.

Nomi Prins

Nomi Prins

Dean Zatkowsky

“It is absolutely reckless of the Fed to relinquish its regulatory authority in such a manner, rather than retain the option of qualitative oversight, which has turned up red flags in the past,” said Nomi Prins former international investment banker. “We are after all, talking about what the banks deem a reporting burden versus necessary oversight that could detect signs of a coming credit or other form of banking related crisis from a capital or internal risk management perspective. Why take that risk on behalf of the rest of our country or the world?”

In writing about the Federal Reserve’s decision, the Wall Street Journal wrote that “Regulators dialed back a practice of publicly shaming the nation’s biggest banks through “stress test” exams, taking one of the biggest steps yet to ease scrutiny put in place after the 2008 crisis.” It is not public shaming. It is called regulators doing their job, that is, providing transparency to markets about what challenges banks may be having. Without transparency, the bank share and bond investors cannot discipline banks.

Just last month, the Federal Reserve Board announced that it would be “providing relief to less-complex firms from stress testing requirements and CCAR by effectively moving the firms to an extended stress test cycle for this year. The relief applies to firms generally with total consolidated assets between $100 billion and $250 billion.”

Christopher Wolfe

Christopher Wolfe

Fitch Ratings

Investors in bank bonds, especially, should be concerned about recent easing of bank regulations. Immediately after the Federal Reserve decision was announced yesterday, Christopher Wolfe, Head of North American Banks and Managing Director at Fitch Ratings stated that “Taken together, these regulatory announcements raising the bar for systemic risk designation and relaxed standard for qualitative objection on the CCAR stress test reinforce our view that the regulatory environment is easing, which is a negative for bank creditors.”  Fitch Rating analysts have written several reports about the easing bank regulatory environment being credit negative for investors in bank bonds and to  counterparties of banks in a wide array of financial transactions.

Dennis Kelleher

Dennis Kelleher

Better Markets

Also, a month ago, the Federal Reserve announced that it will give more information to banks about how it uses banks’ data in its model to determine whether banks are adequately capitalized in a period of stress.  In commenting on the Federal Recent decisions, Better Markets President and CEO Dennis Kelleher stated that “Stress tests and their fulsome disclosure have been one of the key mechanisms used to restore trust in those banks and regulators.  By providing more transparency to the banks in response to their complaints while reducing the transparency to the public risks snatching defeat from the jaws of victory in the Fed’s stress test regime.”

Gregg Gelzinis

Gregg Gelzinis

Center for American Progress

Gregg Gelznis, Policy Analyst at the Center for American Progress also expressed his concern about the Federal Reserve’s recent changes to the CCAR stress tests.  “While Federal Reserve Chairman Jay Powell and Vice Chairman for Supervision Randal Quarles have spoken at length about the need for increased stress testing transparency, this transparency only cuts in one direction.” He elaborated that the Federal Reserve’s decision “benefits Wall Street at the expense of the public. The Fed has advanced rules that would provide banks with more information on the stress testing scenarios and models. At the same time, they have now made the stress testing regime less transparent for the public by removing the qualitative objection—instead evaluating capital planning controls and risk management privately in the supervisory process.”

Follow me on Twitter or LinkedIn. Check out my website.

I have been dedicated to providing clients high quality financial consulting, research, and training services on Basel III, risk management, risk-based supervision

Source: U.S. Bank Regulatory Easing Is Negative For Investors And Taxpayers

Bank Of England Governor Might Open Opportunity For Ripple Tech, Says That Payments Across Borders Should Be Indistinguishable From Those Across The Street

The Governor of the Bank of England, Mark Carney, has vowed to transform the central bank in preparation for the upcoming “fourth industrial revolution.”

Speaking at the Innovate Finance Global Summit, Carney said that he would focus on encouraging innovation among fintech startup, and making climate change and Artificial Intelligence (AI) priorities.

Carney stressed on the emerging digital economy, which many developing nations are preparing for by embracing blockchain technology and decentralized systems.

The Governor of the Bank of England, Mark Carney, has vowed to transform the central bank in preparation for the upcoming “fourth industrial revolution.”

Speaking at the Innovate Finance Global Summit, Carney said that he would focus on encouraging innovation among fintech startup, and making climate change and Artificial Intelligence (AI) priorities.

Carney stressed on the emerging digital economy, which many developing nations are preparing for by embracing blockchain technology and decentralized systems.

The second great wave of globalisation is cresting. The Fourth Industrial Revolution is just beginning. And a new economy is emerging. That new economy requires a new finance. A new finance to serve the digital economy, a new finance to support the major transitions underway across the globe, and a new finance to increase the financial sector’s resilience.

Carney also spoke of the changing nature of the way we exchange value,

Consumers and businesses increasingly expect transactions to be settled in real time, checkout to become an historical anomaly, and payments across borders to be indistinguishable from those across the street.

Though Ripple is not mentioned by name, the kind of solutions that Ripple offers is a partial answer for the kind of upgrade that Carney speaks of. The cross-border solutions that Ripple provides has been warmly welcomed by banks across the world.

Earlier this year, the World Economic Forum released a report that showed over 40 central banks across the world were conducting research and/or implementing blockchain solutions. Certainly there is a lot to be gained by established entities adopting the technology, IMF Managing Director, Christine Lagarde, has also said that “cryptocurrencies clearly shake the world.”

Abhimanyu Krishnan
About Abhimanyu Krishnan

Abhimanyu is an engineer on paper but a writer by living. To him, the most celebratory aspect of blockchain technology is its democratic nature. While he’s hodling, he can be found reading a good book or making the local dogs howl with the sound of his guitar playing.

Source: Bank Of England Governor Might Open Opportunity For Ripple Tech, Says That Payments Across Borders Should Be Indistinguishable From Those Across The Street

Move Over Warren Buffett–For This $200 Billion Man From Japan

uncaptioned image

SoftBank Group Chairman and CEO Masayoshi Son delivers a keynote speech during the SoftBank World 2018 conference on July 19, 2018 in Tokyo, Japan. (Photo: Tomohiro Ohsumi/Getty Images)

Everybody is wondering what Warren Buffett will buy next. With more than $100 billion in cash, aspirations for another megadeal and an 89th birthday approaching, the Sage of Omaha says he’s on the prowl for big targets.

One wonders, though, if the investment world is looking in the wrong direction. The focus on Buffett, the man and the legend, is about more than nostalgia, of course. In today’s chaotic and disorienting economic climate, the next big move by this value-investment icon will turn many heads.

But 6,000 miles away from Nebraska, SoftBank’s Masayoshi Son is pioneering a new era of value investing. Whether Japan’s richest man can live up to the Buffett-of-Japan hype is anyone’s guess. The report card on the $100 billion Vision Fund he rolled out in 2016 is incomplete, at best. And that’s vital to keep in mind as Son ups his firepower to the $200 billion mark.

Before launching a second $100 billion fund, Son might want to convince the globe that his first one hit his own intended targets. Son can start by answering three questions.

One: What’s the theme here? Don’t get me wrong–Japan needs more risk-takers like Son. Prime Minister Shinzo Abe spent the last six-plus years urging ultra-conservative Japan Inc. to rekindle the innovative mojo that drove the nation to such great heights in the 1970s and 1980s. By becoming the world’s top venture capitalist, Son, 61, is showing peers in Asia’s No. 2 economy how it’s done.

Well, we hope so. His splashy investments smash the Japanese CEO mold. But they also raise questions about the grander strategy at play. SoftBank’s journey from software company in 1981 to telecom titan–gobbling up Vodafone and Sprint–has a certain Buffett-esque logic. His aggressive bets on everything from Uber to WeWork to messaging system Slack to online lender SoFi to robot-pizza-maker Zume to Fortress Investment to food-deliverer DoorDash to solar panels to AI (artificial intelligence) to indoor farms to satellite makers, though, are as scattershot as you’ll find among today’s billionaires.

Son doesn’t often swing for the fences the way Buffett does at times. Buffett’s 2016 megadeal purchase of Precision Castparts for $37 billion is a case in point. Consider Son more of a “Moneyball” player who tried to recreate the Buffett-like income streams in the aggregate. Still, investors are anxious to know how dominating the ride-sharing space, betting $3.3 billion on money-manager Fortress and overpaying for startups around the globe can gel together in profitable ways.

Two: Where’s Son’s General Re? One year ago, a tantalizing story swept the markets: Son might be buying a nearly $10 billion stake in Swiss Re AG. It seemed classic Buffett to stabilize Son’s broader constellation of futurist bets the way General Re helps anchor the sprawling Berkshire Hathaway. What better way to reconcile the gap between an increasingly eclectic balance sheet, a discounted SoftBank share price and Son’s global ambitions?

Those ambitions have their roots in a 2000 investment Son made in a then-little-known Chinese visionary. The $20 million Son wagered on Jack Ma helped seed Alibaba. It paid off spectacularly, too. By 2014, when Ma took his e-commerce juggernaut public, Son’s bet was worth some $50 billion. The Vision Fund aims to recreate that success in the aggregate, as many times over as possible.

Anchors are important, though. Son’s talks with Swiss Re ultimately failed. Yet it’s time to build in some Vision Fund cash-flow stability.

In 2016, here’s how Son explained his strategy: “I think I’m better than others at sniffing out things that will bear fruit in 10 or 20 years, while they’re still at the seed stage, and I’m more willing to take the risks that entails.”

Great, so long as there are ample shock absorbers for when some of those risks go awry. The need becomes greater as Son’s arsenal doubles to $200 billion.

Three: How to finesse the Saudi dilemma? A major source of Vision Fund’s seed money–$45 billion–resulted from a September 2016 meeting between Son and Muhammad bin Salman. The Saudi Arabian crown prince, you might’ve noticed, has been in a few headlines since then. None flattering, and it’s not a great look for SoftBank.

The apparent murder of dissident and Washington Post contributorJamal Khashoggi in a Saudi consulate put a cloud over Riyadh. That, coupled with a gruesome war in Yemen and locking up relatives, made MBS, as the prince is known, a less appealing business partner. In late October, a who’s-who of chieftains dropped out of MBS’s “Davos in the Desert” conference–from JPMorgan’s Jamie Dimon to HSBC’s John Flint.

Can SoftBank avoid the taint? Time will tell, but Son may have another Saudi challenge on his hands: divergent visions. So many of Son’s Vision Fund bets are in the renewable energy space. How, though, does that track?

The Saudi royal family has expressed a desire to diversify its fossil-fuel-reliant economy. And yet that effectively means replacing the industry from which Saudi royals derive their wealth. If MBS changed his mind, restoring the primacy of the petrodollar model, the source of Son’s liquidity dries up.

Perhaps Son can indeed reconcile this disconnect. There’s a great deal riding on Son’s ability to juggle–and ultimately answer–these three questions. I’m certainly rooting for him. Few visionaries are doing more, at this very moment, to empower startups with the potential to alter humankind’s trajectory.

A key Son priority, for example, is helping seismically-active nations from Japan to India replace nuclear reactors with safer renewables. If Son and his ilk succeed, future generations won’t know from petrostates, oil rigs or gas stations. Cars, airplanes, ships and indeed buildings will be powered by batteries or other clean-energy sources.

Getting there, though, requires out-of-the-box thinking and even bigger risk-taking. That’s why the trajectory of the global economy will likely owe more to Son’s moves than Buffett’s.

I am a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author

Source: Move Over Warren Buffett–For This $200 Billion Man From Japan

Australia to Overhaul Regulators After Landmark Banking Inquiry — peoples trust toronto

http://bit.ly/2UB8XjX February 4, 2019 Australia’s corporate regulators will be subjected to a new oversight body in a shake-up of the banking sector designed to combat the excessive greed and unethical practices that have engulfed some of the country’s biggest financial institutions. The Royal Commission, Australia’s most powerful type of government inquiry, also advised in its […]

via Australia to overhaul regulators after landmark banking inquiry — peoples trust toronto

Major Central Bank Institution BIS: Bitcoin Must Depart From Proof-of-Work

Bitcoin’s (BTC) problems are only solvable by departing from a proof-of-work (PoW) system, according to research published by the Bank for International Settlement (BIS) on Jan. 21. According to the paper, when in the future Bitcoin’s block rewards fall to zero — given that only a limited number of new Bitcoin will ever be created — transaction fees alone will not be able to sustain mining expenses. The argument implies that the Bitcoin network would become so slow that it would be virtually unusable, stating…….

Source: Major Central Bank Institution BIS: Bitcoin Must Depart From Proof-of-Work

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