Low Fee Hedge Fund ETF Gives Investors A Bear-Market Refuge With 22% Return This Year

With both stocks and bonds falling sharply this year, investors becoming discouraged by a standard 60/40 portfolio are beginning to pile into one three-year-old ETF that has served as an effective hedge for this year’s bear market.

New York-based Dynamic Beta Investments’ managed futures strategy ETF has gained 22% this year, far outperforming the S&P 500 Index’s 10% decline and the Bloomberg U.S. Aggregate Bond Index’s 10% drop. Managed futures funds are actively managed portfolios of futures contracts for assets ranging from stock indexes to commodities like oil and gold. Dynamic Beta’s fund aims to replicate managed futures strategies at 20 other hedge funds and investment firms and charges a mere 0.85% in management fees.

Dynamic Beta’s founder and co-managing member Andrew Beer, who runs the firm with a Paris-based partner Mathias Mamou-Mani, boasts that a podcast recently dubbed him the “Jack Bogle of hedge funds.” “No one has figured out how to pick which hedge fund’s going to do well, just like they haven’t figured out how to pick which stock is going to do well,” Beer says.

“The most reliable way to outperform is by cutting fees.” Most managed futures hedge funds charge limited partners 20% in performance fees based on profits and 2% administration fees per year. Managed futures funds have largely fallen out of favor in the last decade, lagging behind stocks during the bull market following the Great Recession. Societe Generale’s CTA index tracking the 20 largest such funds at firms like Clifford Asness’ AQR and Systematica Investments has gained more than 7% in a year only once since 2010.

But when the stock market plunged in years like 2002 and 2008, the index returned double digits. Many of these hedge funds are out of reach for retail investors, with high account minimums and management and performance fees that eat away at returns. Beer contends that Dynamic Beta’s ETF, trading under the ticker DBMF, can come close to replicating their portfolios for a fraction of the cost.

Dynamic Beta’s model analyzes daily data on returns for the 20 funds in the managed futures index and maps it to the market’s daily fluctuations to approximate how long or short the hedge funds are in futures contracts for various stock indexes, bonds, currencies and commodities. The ETF rebalances every Monday based exclusively on this algorithm. It’s grown from $65 million to $418 million in assets this year, with heavy inflows through June and July.

The biggest driver of DBMF’s gains this year has been its heavy short position on the Japanese yen, which has declined 14% against the dollar in 2022. The fund is also short the euro, short U.S. Treasuries and short the S&P 500 and international stocks. Its only long position is in crude oil. DBMF’s portfolio is simple, with just 10 futures contracts included, but that macro picture can replicate 90% or more of the pre-fee returns of leading hedge funds, Beer says.

“We’re not trying to say these guys have X amount in pork bellies and copy that. We’re basically saying, what are the big trades?” Beer says. “You don’t need to pay somebody 4% or 5% to do the big trades. We’ll do it and we’ll do it efficiently.” Beer started his career out of Harvard Business School in 1994 in the traditional hedge fund world, landing a job working for Seth Klarman’s Baupost Group.

In the early 2000s, he tried his hand at branching out on his own, cofounding two small hedge funds: commodity trading firm Pinnacle Asset Management and China-focused Apex Capital Management. After a few years, he started the venture that would become Dynamic Beta in 2007 as Belenos Capital Management. Its initial fund did well in the recession, but growth was slow for the first decade while its assets were housed in managed accounts with higher minimums.

It didn’t help marketing that managed futures flopped for the next several years. In 2018, French firm iM Global Partner bought a 50% stake in Dynamic Beta. IMGP scours the world for unique asset managers to partner with and was looking for a footprint in the “liquid alternatives” space. With their help, Beer and his staff launched the managed futures ETF in May 2019, and an equity long-short ETF came next in December of that year, aiming to replicate the gross returns of 40 equity hedge funds.

That fund hasn’t generated as much traction, with just $16 million in assets, and it’s down 1.6% this year. With three UCITS products–effectively mutual funds which are based in the European Union–as well, Dynamic Beta now manages $1.2 billion altogether. There are no other managed-futures ETFs close to the size of DBMF, though the firm does have competition in the broader hedge-fund-replication sector.

New York Life subsidiary Index IQ offers a hedge multi-strategy tracker ETF (QAI), down 7% this year, which seeks to replicate a variety of tactics. It has 0.75% management fees and $730 million in assets. Beer is hopeful that any of Dynamic Beta’s products could scale to become multi-billion dollar funds as investment advisors look beyond traditional stock-and-bond allocations.

“We believe that there are thousands or tens of thousands of RIAs who are now looking at the collapse in 60/40 portfolios and saying, I need something to add to this,” Beer says. “The next step is to get a big following in the wirehouses and the Morgan Stanleys and Merrill Lynches of the world.”

I’m a reporter on Forbes’ money team covering investing trends and Wall Street’s difference-makers. I’ve reported on the world’s billionaires for Forbes’ wealth team and was previously an

Source: Low Fee Hedge Fund ETF Gives Investors A Bear-Market Refuge With 22% Return This Year

Critics by Benzinga.com. Benzinga

Among the certainties on Wall Street are the following: Hedge funds usually carry high fees while exchange-traded funds usually carry low fees.

Some ETFs grant investors exposure to hedge fund strategies or stocks held by hedge funds without the punitive often found in the hedge fund space. For example, the Goldman Sachs Hedge Industry VIP ETF (NYSE: GVIP), which debuted in November, gives investors hedge fund-esque access at a somewhat reasonable fee.

Finding A VIP In GVIP

“GVIP’s 10.7 percent gain year to date through May 4 was ahead of the S&P 500’s 7.4 percent,” said CFRA Research Director of ETF & Mutual Fund Research Todd Rosenbluth in a note out Monday. “While constructed from the bottom up, information technology (32 percent of assets) and consumer discretionary (27 percent) stocks are most prominently held. Consumer staples (4 percent) and industrials (4 percent) stocks were underweighted relative to the S&P 500. There are currently 19 stocks that were now in the ETF at the end of 2016.”

GVIP follows the Goldman Sachs Hedge Fund VIP Index and holds the 50 stocks that appear most frequently in 13F filing as top hedge fund holdings. GVIP charges 0.45 percent year, or $45 on a $10,000 investment. That is nearly double the average fee for U.S.-listed ETFs, but still cheap compared to a direct hedge fund investment.

Going With The GURU

The Global X Guru Index ETF (NYSE: GURU) is one of the seasoned names among hedge fund ETFs, having debuted nearly five years ago. The ETF follows the Solactive Guru Index. GURU holds stocks that are deemed to be “high conviction” hedge fund ideas.

GURU, “with approximately $60 million in assets, but down from a year earlier is a more established way individuals can invest in stocks held by hedge funds. GURU launched in 2012 and is comprised of the top US listed equity positions reported on Form 13F by a select group of hedge funds that the index provider Solactive deems as having moderate turnover rates and other characteristics,” said Rosenbluth.

CFRA has Market-Weight ratings on GURU and GVIP. GURU charges 0.75 percent per year, or $75 on a $10,000 stake.

Related links:

ETF platform targets asset managers planning crypto launches Financial News

In the last 4 hours
10:42
09:43
In the last 6 hours
08:47
Earlier today
02:37
01:05
23:57 Wed, 17 Aug
23:57 Wed, 17 Aug
23:44 Wed, 17 Aug
21:26 Wed, 17 Aug
21:26 Wed, 17 Aug
20:44 Wed, 17 Aug
20:31 Wed, 17 Aug
19:34 Wed, 17 Aug
19:34 Wed, 17 Aug
19:34 Wed, 17 Aug
19:03 Wed, 17 Aug
18:22 Wed, 17 Aug
18:21 Wed, 17 Aug
16:46 Wed, 17 Aug
16:37 Wed, 17 Aug
16:06 Wed, 17 Aug
16:06 Wed, 17 Aug
16:06 Wed, 17 Aug
14:23 Wed, 17 Aug
13:23 Wed, 17 Aug
12:18 Wed, 17 Aug
07:30 Wed, 17 Aug
06:41 Wed, 17 Aug
03:37 Wed, 17 Aug
03:23 Wed, 17 Aug
03:13 Wed, 17 Aug
02:41 Wed, 17 Aug
00:24 Wed, 17 Aug

More Remote Working Apps:

https://givvy-numbers.app.link/qNDZMGGbhsb  Givvy Mobile Lottery

https://quintexcapital.com/?ref=arminham     Quintex Capital

https://www.genesis-mining.com/a/2535466   Genesis Mining

https://www.bybit.com/en-US/invite?ref=ALEXP  Bybit Crypto Trade

 http://www.bevtraders.com/?ref=arminham   BevTraders

https://www.litefinance.com/?uid=929237543  LiteTrading

https://cashbox.money/r/6ded936cbc264c7e9add5dd5565bb31a   Cash Box Money

https://alpariforex.org/fa/registration/?cpa_partner_id=13687690   Alpari Forex Trading

https://dealcheck.io?fp_ref=armin16   Dealcheck Real Estate Evaluator

https://jvz8.com/c/202927/369164  prime stocks

 https://jvz1.com/c/202927/373449  forrk   

https://jvz3.com/c/202927/194909  keysearch  

 https://jvz4.com/c/202927/296191  gluten free   

https://jvz1.com/c/202927/286851  diet fitness diabetes  

https://jvz8.com/c/202927/213027  writing job  

 https://jvz6.com/c/202927/108695  postradamus

https://jvz1.com/c/202927/372094  stoodaio

 https://jvz4.com/c/202927/358049  profile mate  

 https://jvz6.com/c/202927/279944  senuke  

 https://jvz8.com/c/202927/54245   asin   

https://jvz8.com/c/202927/370227  appimize

 https://jvz8.com/c/202927/376524  super backdrop

 https://jvz6.com/c/202927/302715  audiencetoolkit

 https://jvz1.com/c/202927/375487  4brandcommercial

https://jvz2.com/c/202927/375358  talkingfaces

 https://jvz6.com/c/202927/375706  socifeed

 https://jvz2.com/c/202927/184902  gaming jobs

 https://jvz6.com/c/202927/88118   backlinkindexer

 https://jvz1.com/c/202927/376361  powrsuite  

https://jvz3.com/c/202927/370472  tubeserp  

https://jvz4.com/c/202927/343405  PR Rage  

https://jvz6.com/c/202927/371547  design beast  

https://jvz3.com/c/202927/376879  commission smasher

 https://jvz2.com/c/202927/376925  MT4Code System

https://jvz6.com/c/202927/375959  viral dash

https://jvz1.com/c/202927/376527  coursova

 https://jvz4.com/c/202927/144349  fanpage

https://jvz1.com/c/202927/376877  forex expert  

https://jvz6.com/c/202927/374258  appointomatic

https://jvz2.com/c/202927/377003  woocommerce

https://jvz6.com/c/202927/377005  domainname

 https://jvz8.com/c/202927/376842  maxslides

https://jvz8.com/c/202927/376381  ada leadz

https://jvz2.com/c/202927/333637  eyeslick

https://jvz1.com/c/202927/376986  creaitecontentcreator

https://jvz4.com/c/202927/376095  vidcentric

https://jvz1.com/c/202927/374965  studioninja

https://jvz6.com/c/202927/374934  marketingblocks

https://jvz3.com/c/202927/372682  clipsreel  

https://jvz2.com/c/202927/372916  VideoEnginePro

https://jvz1.com/c/202927/144577  BarclaysForexExpert

https://jvz8.com/c/202927/370806  Clientfinda

https://jvz3.com/c/202927/375550  Talkingfaces

https://jvz1.com/c/202927/370769  IMSyndicator

https://jvz6.com/c/202927/283867  SqribbleEbook

https://jvz8.com/c/202927/376524  superbackdrop

https://jvz8.com/c/202927/376849  VirtualReel

https://jvz2.com/c/202927/369837  MarketPresso

https://jvz1.com/c/202927/342854  voiceBuddy

https://jvz6.com/c/202927/377211  tubeTargeter

https://jvz6.com/c/202927/377557  InstantWebsiteBundle

https://jvz6.com/c/202927/368736  soronity

https://jvz2.com/c/202927/337292  DFY Suite 3.0 Agency+ information

https://jvz8.com/c/202927/291061  VideoRobot Enterprise

https://jvz8.com/c/202927/327447  Klippyo Kreators

https://jvz8.com/c/202927/324615  ChatterPal Commercial

https://jvz8.com/c/202927/299907  WP GDPR Fix Elite Unltd Sites

https://jvz8.com/c/202927/328172  EngagerMate

https://jvz3.com/c/202927/342585  VidSnatcher Commercial

https://jvz3.com/c/202927/292919  myMailIt

https://jvz3.com/c/202927/320972  Storymate Luxury Edition

https://jvz2.com/c/202927/320466  iTraffic X – Platinum Edition

https://jvz2.com/c/202927/330783  Content Gorilla One-time

https://jvz2.com/c/202927/301402  Push Button Traffic 3.0 – Brand New

https://jvz2.com/c/202927/321987  SociCake Commercial

https://jvz2.com/c/202927/289944  The Internet Marketing

 https://jvz2.com/c/202927/297271  Designa Suite License

https://jvz2.com/c/202927/310335  XFUNNELS FE Commercial 

https://jvz2.com/c/202927/291955  ShopABot

https://jvz2.com/c/202927/312692  Inboxr

https://jvz2.com/c/202927/343635  MediaCloudPro 2.0 – Agency

 https://jvz2.com/c/202927/353558  MyTrafficJacker 2.0 Pro+

https://jvz2.com/c/202927/365061  AIWA Commercial

https://jvz2.com/c/202927/357201  Toon Video Maker Premium

https://jvz2.com/c/202927/351754  Steven Alvey’s Signature Series

https://jvz2.com/c/202927/344541  Fade To Black

https://jvz2.com/c/202927/290487  Adsense Machine

https://jvz2.com/c/202927/315596  Diddly Pay’s DLCM DFY Club

https://jvz2.com/c/202927/355249  CourseReel Professional

https://jvz2.com/c/202927/309649  SociJam System

https://jvz2.com/c/202927/263380  360Apps Certification

 https://jvz2.com/c/202927/359468  LocalAgencyBox

https://jvz2.com/c/202927/377557  Instant Website Bundle                                        

https://jvz2.com/c/202927/377194  GMB Magic Content

https://jvz2.com/c/202927/376962  PlayerNeos VR

https://jvz8.com/c/202927/381812/  BrandElevate Bundle information

https://jvz4.com/c/202927/381807/ BrandElevate Ultimate

https://jvz2.com/c/202927/381556/ WowBackgraounds Plus

https://jvz4.com/c/202927/381689/  Your3DPal Ultimate

https://jvz2.com/c/202927/380877/  BigAudio Club Fast Pass

https://jvz3.com/c/202927/379998/ Podcast Masterclass

https://jvz3.com/c/202927/366537/  VideoGameSuite Exclusive

https://jvz8.com/c/202927/381148/ AffiliateMatic

https://jvzoo.com/c/202927/381179  YTSuite Advanced

https://jvz1.com/c/202927/381749/  Xinemax 2.0 Commercial

https://jvzoo.com/c/202927/382455  Living An Intentional Life

https://jvzoo.com/c/202927/381812  BrandElevate Bundle

https://jvzoo.com/c/202927/381935 Ezy MultiStores

https://jvz2.com/c/202927/381194/  DFY Suite 4.0 Agency

https://jvzoo.com/c/202927/381761  ReVideo

https://jvz4.com/c/202927/381976/  AppOwls Bundle

https://jvz8.com/c/202927/381950/  TrafficForU

https://jvz3.com/c/202927/381615/  WOW Backgrounds 2.0

https://jvz4.com/c/202927/381560   ALL-in-One HD Stock Bundle

https://jvz6.com/c/202927/382326/   Viddeyo Bundle

https://jvz8.com/c/202927/381617/  The Forex Joustar

https://jvz3.com/c/202927/383751/ ADA Web Accessibility Compliance 

https://jvz3.com/c/202927/383942/  10 Bold Actions In Positive Life & Work

https://jvz3.com/c/202927/383706/  Adtivate Agency

https://jvz1.com/c/202927/384099/   My Passive Income Blueprints

https://jvz3.com/c/202927/329145/  Content Tool Kit

https://jvz6.com/c/202927/382663/    ReviewReel

https://jvz3.com/c/202927/383865/     QR Verse Bundle

https://jvz4.com/c/202927/379307/    VIADZ Ad Template

https://jvz2.com/c/202927/383051/    EngageYard Ad Creator

https://jvz4.com/c/202927/381011/   Videevolve

https://jvz4.com/c/202927/383751/  Local Leader Bundle

https://jvz8.com/c/202927/383119/   Tonai Voice Content

https://jvz2.com/c/202927/383848/   Vocalic Commercial

https://jvz3.com/c/202927/383483/  Dropshiply Store Creator

https://jvz6.com/c/202927/384025/  Levidio Royal Podcasting

https://jvz6.com/c/202927/383094/  Develop Self Empowerment

https://jvz1.com/c/202927/379223/   Hostley Domain Creator

https://jvz6.com/c/202927/383447/   Mech Forex Robot

https://jvz4.com/c/202927/383177/   Motion Kingdom Studio

https://jvz8.com/c/202927/144577/   Forex Blizz Trading

https://jvz3.com/c/202927/382851/  AdRaven

https://jvz2.com/c/202927/383307/   Animaxime V2

https://jvz8.com/c/202927/375692/  Promovidz Promotion Videos

https://jvz3.com/c/202927/381148/  AffiliateMatic

https://jvz4.com/c/202927/379051/  CanvaKitz Business Templates

https://jvz1.com/c/202927/383113/  Agencyscale Business Agency

https://jvz3.com/c/202927/347847/  Pitchdeck Professional Presentations

https://jvz2.com/c/202927/381179/   YTSuite YouTube Ads Campaigns

https://jvz8.com/c/202927/382455/     Living an International Life

https://jvz1.com/c/202927/188236/    Galactic Dimension backgrounds

https://jvz6.com/c/202927/381749/    Xinemax Hollywood Creator

https://jvz3.com/c/202927/381194/   DFY Suite 4.0 Agency

https://jvz4.com/c/202927/381231/    Appowls Mobile Apps

https://jvz1.com/c/202927/381935/   Ezy Multi Stores

https://jvz3.com/c/202927/381950/  TrafficForU

https://jvz2.com/c/202927/381556/  WOW Backgrounds

https://jvz2.com/c/202927/381685/   Your 3DPal

https://jvz6.com/c/202927/381617/   Forex Joustar

https://jvz2.com/c/202927/381129/   Ultrafunnels A.I

https://jvz3.com/c/202927/128215/   DUX Forex Signals

https://jvz3.com/c/202927/381003/   Trendio Keyword Content

https://jvz1.com/c/202927/381439/  FX Goldminer

https://jvz2.com/c/202927/380937/  Linkomatic

https://jvz2.com/c/202927/378775/  Pixal 2.022

https://jvz1.com/c/202927/379983/   VidVoicer

https://jvz6.com/c/202927/380087/   Big Audio Club

https://jvz1.com/c/202927/379995/  Podcast Advantage

https://jvz8.com/c/202927/380159/  Reputor

https://jvz6.com/c/202927/379863/  TubePal

https://jvz4.com/c/202927/380543/  Local Sites

https://jvz1.com/c/202927/369500/   PodKastr Commercial

https://jvz6.com/c/202927/351606/ Insta Keyword

https://jvz1.com/c/202927/376325/   Facedrip

https://jvz8.com/c/202927/374505/  7 Minutes Kit

https://jvz6.com/c/202927/383057/  Aweber Crash Course

https://jvz3.com/c/202927/46987/   WP Simulator

https://jvz8.com/c/202927/379995/  Podcast Advantage

https://jvz2.com/c/202927/380692/  Boost Optimism

https://jvz1.com/c/202927/36517/   PlanB Muscle Growth

https://jvz6.com/c/202927/379480/  TV Boss Fire

https://jvz1.com/c/202927/379455/  Webprimo Website Builder

https://jvz2.com/c/202927/379339/  LocalCentric

https://jvz4.com/c/202927/378683/  WebCop

https://jvz3.com/c/202927/384619/  Agency Client Finder

https://jvz8.com/c/202927/384625/  Power Reviews

https://jvz8.com/c/202927/380933/   Survai

https://jvz2.com/c/202927/378775/  Pixal

https://jvz3.com/c/202927/383937/  Webinarkit

https://jvz2.com/c/202927/384700/  YoDrive

https://jvz4.com/c/202927/353373/  Rewriter

https://jvz1.com/c/202927/384630/  Appoint B Agency

https://jvz1.com/c/202927/267113/   Sunday Freebie

https://jvz2.com/c/202927/384573/  EBook Agency

https://jvz2.com/c/202927/75989/  Ejaculation Total

https://jvz3.com/c/202927/359081/  Quit Smoking

https://jvz2.com/c/202927/353694/  Mobi First

https://jvz3.com/c/202927/378143/   Syndranker

https://jvz6.com/c/202927/378359/    VidMingo

https://jvz6.com/c/202927/384848/     Heal Your Emptiness

https://jvz6.com/c/202927/384381/     RSI SEO

https://jvz4.com/c/202927/382333/   Facebook Cash Machin

https://jvz3.com/c/202927/184902/   Video Games

https://jvz2.com/c/202927/383555/  KoinCart

https://jvz2.com/c/202927/358870/  Diabetes Guide

https://jvz4.com/c/202927/353334/  Fitness Nutrition Guide

https://jvz8.com/c/202927/366872/  Organic Life Guide

https://jvz8.com/c/202927/367353/   Human Synthesys Studio

https://jvz8.com/c/202927/384653/   9 figure Success

https://jvz8.com/c/202927/383809/   Crypto Kit

https://jvz2.com/c/202927/366972/   AdzHero

https://jvz1.com/c/202927/385046/   Stackable Picture

https://jvz8.com/c/202927/25069/   Forex Atlatian

https://jvz6.com/c/202927/132677/  Forex Scouts

https://jvz6.com/c/202927/378113/   Crypto Rocket

https://jvz4.com/c/202927/377665/   PigMoney Method

https://jvz8.com/c/202927/374345/   Crypto Underworld

https://jvz3.com/c/202927/372305/  XBrain Forex

https://jvz6.com/c/202927/385213/  Pixivid

https://jvz2.com/c/202927/383888/   Seniors Income

https://jvz4.com/c/202927/381768/    FaceSwap

https://jvz4.com/c/202927/383111/   AgencyScale

https://jvz4.com/c/202927/382796/   Ad Raven

https://jvz2.com/c/202927/324492/   Graphic Alta

https://jvz4.com/c/202927/382425/  Art Of Living

https://jvz8.com/c/202927/377815/  Credit Repair

https://jvz6.com/c/202927/381337/  DFY Content Club

https://jvz6.com/c/202927/381689/  3D Pal Toons

https://jvz6.com/c/202927/380385/  Movid Animation

https://jvz8.com/c/202927/379244/  Extreme Adz

https://jvz6.com/c/202927/379020  Live Your Truth

https://jvz3.com/c/202927/47481/  Forex Blue Stark

https://jvz2.com/c/202927/144621/  Forex Mastery

https://jvz2.com/c/202927/144621/  Forex Mastery

https://jvz6.com/c/202927/95037/  Forex Hybrid Scalper

https://jvz4.com/c/202927/384759/  CourseAlly eLearning

https://jvz2.com/c/202927/385180/   EZ Local Appointment

https://jvz2.com/c/202927/380197/  Mat1 Simple Funnel

https://jvz4.com/c/202927/373207/  Photokit

 

How The Yield Curve Forecasts Recession Risks

The yield curve predicts U.S. recessions remarkably well. In March, the yield curve hinted at a U.S. recession. Today, the inversion is broadening as the Fed hikes rates. A U.S. recession may coming. Here’s how the yield curve works and why it matters to financial markets.

Economists aren’t prized for their forecasting skills. The yield curve, on the other hand, has a strong track record in calling recessions. The term structure of interest rates, which is the difference between short and long-bond yields, forecasts recessions relatively accurately. The yield curve has got a recession forecast wrong just once in the past 40 years according to Nicholas Burgess of Oxford University. That’s impressive.

The yield curve is also a leading indicator of recessions since it calls recessions up to 18 months before they occur. So, the yield curve is historically among the best tools for forecasting a recession. When the yield curve inverts, you should worry. Unfortunately, now’s the time to worry. Worse, if the Fed stays on course, that inversion will increase in depth and breadth.

The yield curve does provide a mass of information, changing minute by minute. That can be confusing, so the New York Fed researched how best to interpret it in this paper. They found that the spread between three-month and ten-year yields was most predictive of recessions, though it’s a pretty close call.

Ideally, in the researchers’ view, the spread should have a negative monthly average to predict a recession rather than just a temporary dip. It also appears that deeper inversion may make the signal more powerful. Not everyone agrees with that view entirely, but most take the view that short rates rising above long rates does not bode well for the U.S. economy and deeper and longer inversion can make the signal more robust.

 Recent research from the U.S. Treasury finds that foreign yield curves have forecasting power too for U.S. recessions, so if other yield curves are inverted that can reinforce the signal from the U.S. yield curve being inverted.

Currently, the Canadian yield curve shows some inversion, but yield curves in Japan and Europe are generally not inverted. However, many central banks are expected to raise rates. That would raise the short end of the curve, creating inversion given the term structure of interest rates is quite flat globally. So the international picture may worsen.

Like any good forecast there’s also two clear reasons why the yield curve works. Knowing this is helpful. It means the forecast is less likely to be the result of accidental number crunching.

First when short term yields rise above longer term yields, that’s a big signal to banks. With an inverted yield curve, banks can make more profits from short-term lending, than from longer-term lending. That’s unusual. It can mean pulling back on financing bigger, longer term projects such as new factories and other big investment projects. That sort of pull-back in investments that help economic growth is exactly what we see in many recessions.

Secondly, the Fed raising rates is generally what pushes up shorter term interest rates. They often do this late in the economic cycle, when the economy may be starting to overheat. If we’re late in the economic cycle, that too can mean a recession is not far off. That’s exactly what’s happening now. High inflation and very low unemployment may be signs the U.S. economy is stretched currently.

Of course, we’re currently seeing one of the most aggressive patterns of rate hikes from the Fed in decades. Interestingly, the Fed knows about the yield curve’s forecasting power too. There’s a chance they ease off on hikes precisely because of the yield curve’s inversion. They don’t want a recession either. However, for the time being rampant inflation appears the more pressing concern for the Fed. It’s not an easy call, but the Fed may tolerate a recession to tame inflation.

You can see the latest U.S. Treasury yield curve data here. Currently it’s inverted from six-month out to ten-year maturities. That’s relatively broad inversion, and a bad sign for growth. In terms of the positives, the yield curve is fairly flat right now, not deeply inverted. Plus that all-important metric of 10-year less 3-month maturities is not inverted at the time of writing.

However, we can be reasonably confident inversion at the short end is coming soon if the Fed continues to hike short term rates as planned. Markets currently see the Fed raising rates around 2% over the rest of 2022, that’s almost certainly going create inversion of the yield curve when comparing three month to ten year yields. Of course, this assumes the long-end of rates doesn’t move up much, but unless long-term inflation fears really take hold, that seems unlikely.

That the yield curve is signaling recession is unsurprising. Other metrics agree. There’s a long list including: the current bear market in stocks; increasing talk about recessions; concerns about corporate earnings; early signs of weakness in housing; a softening jobs markets; together with the observation that U.S. economic growth was negative Q1. All signaling a pending recession. A recession may even already be here.

However, as an investor, it is important to remember that much of this may be priced in to markets. The very reason for weak stock returns over 2022 so far, may be the markets starting to adjust to a coming recession, or at least a reasonably mild one.

The severity of any future recession is important. Recession conjures up memories of the Great Financial Crisis of 2007-8 and the pandemic recession of 2020. As the two most recent recessions, that’s understandable. Remember though, those were both unusually severe recessions. So even if a recession is on the horizon, it may not be quite so disruptive as the two most recent ones.

Lastly, as of right now, the key metric of three-month yields hasn’t inverted below the 10-year yield. Many suspect that is the most robust recession flag. There’s still some hope we could dodge the bullet. However, if the Fed remain on their current aggressive rate trajectory, we may see that invert in later this year.

Simon is the author of Digital Wealth and Strategic Project Portfolio Management. He has previously served as Chief Investment Officer at Moola

Source: How The Yield Curve Forecasts Recession Risks

Related contents:

White House Changing Definition of Recession, Will Take New ‘Holistic’ Look at the Situation Independent Journal Review

12:09 Sun, 24 JulUS Economy Business (US) Economy
Europe’s central bank raises rates Arkansas Democrat-Gazette

11:31 Fri, 22 JulEuropean Central Bank Business (US) Interest Rates

More Remote Working Apps:

https://quintexcapital.com/?ref=arminham     Quintex Capital

https://www.genesis-mining.com/a/2535466   Genesis Mining

 http://www.bevtraders.com/?ref=arminham   BevTraders

https://www.litefinance.com/?uid=929237543  LiteTrading

https://alpariforex.org/fa/registration/?cpa_partner_id=13687690   Alpari Forex Trading

https://dealcheck.io?fp_ref=armin16   Dealcheck Real Estate Evaluator

https://jvz8.com/c/202927/369164  prime stocks

 https://jvz1.com/c/202927/373449  forrk   

https://jvz3.com/c/202927/194909  keysearch  

 https://jvz4.com/c/202927/296191  gluten free   

https://jvz1.com/c/202927/286851  diet fitness diabetes  

https://jvz8.com/c/202927/213027  writing job  

 https://jvz6.com/c/202927/108695  postradamus

https://jvz1.com/c/202927/372094  stoodaio

 https://jvz4.com/c/202927/358049  profile mate  

 https://jvz6.com/c/202927/279944  senuke  

 https://jvz8.com/c/202927/54245   asin   

https://jvz8.com/c/202927/370227  appimize

 https://jvz8.com/c/202927/376524  super backdrop

 https://jvz6.com/c/202927/302715  audiencetoolkit

 https://jvz1.com/c/202927/375487  4brandcommercial

https://jvz2.com/c/202927/375358  talkingfaces

 https://jvz6.com/c/202927/375706  socifeed

 https://jvz2.com/c/202927/184902  gaming jobs

 https://jvz6.com/c/202927/88118   backlinkindexer

 https://jvz1.com/c/202927/376361  powrsuite  

https://jvz3.com/c/202927/370472  tubeserp  

https://jvz4.com/c/202927/343405  PR Rage  

https://jvz6.com/c/202927/371547  design beast  

https://jvz3.com/c/202927/376879  commission smasher

 https://jvz2.com/c/202927/376925  MT4Code System

https://jvz6.com/c/202927/375959  viral dash

https://jvz1.com/c/202927/376527  coursova

 https://jvz4.com/c/202927/144349  fanpage

https://jvz1.com/c/202927/376877  forex expert  

https://jvz6.com/c/202927/374258  appointomatic

https://jvz2.com/c/202927/377003  woocommerce

https://jvz6.com/c/202927/377005  domainname

 https://jvz8.com/c/202927/376842  maxslides

https://jvz8.com/c/202927/376381  ada leadz

https://jvz2.com/c/202927/333637  eyeslick

https://jvz1.com/c/202927/376986  creaitecontentcreator

https://jvz4.com/c/202927/376095  vidcentric

https://jvz1.com/c/202927/374965  studioninja

https://jvz6.com/c/202927/374934  marketingblocks

https://jvz3.com/c/202927/372682  clipsreel  

https://jvz2.com/c/202927/372916  VideoEnginePro

https://jvz1.com/c/202927/144577  BarclaysForexExpert

https://jvz8.com/c/202927/370806  Clientfinda

https://jvz3.com/c/202927/375550  Talkingfaces

https://jvz1.com/c/202927/370769  IMSyndicator

https://jvz6.com/c/202927/283867  SqribbleEbook

https://jvz8.com/c/202927/376524  superbackdrop

https://jvz8.com/c/202927/376849  VirtualReel

https://jvz2.com/c/202927/369837  MarketPresso

https://jvz1.com/c/202927/342854  voiceBuddy

https://jvz6.com/c/202927/377211  tubeTargeter

https://jvz6.com/c/202927/377557  InstantWebsiteBundle

https://jvz6.com/c/202927/368736  soronity

https://jvz2.com/c/202927/337292  DFY Suite 3.0 Agency+ information

https://jvz8.com/c/202927/291061  VideoRobot Enterprise

https://jvz8.com/c/202927/327447  Klippyo Kreators

https://jvz8.com/c/202927/324615  ChatterPal Commercial

https://jvz8.com/c/202927/299907  WP GDPR Fix Elite Unltd Sites

https://jvz8.com/c/202927/328172  EngagerMate

https://jvz3.com/c/202927/342585  VidSnatcher Commercial

https://jvz3.com/c/202927/292919  myMailIt

https://jvz3.com/c/202927/320972  Storymate Luxury Edition

https://jvz2.com/c/202927/320466  iTraffic X – Platinum Edition

https://jvz2.com/c/202927/330783  Content Gorilla One-time

https://jvz2.com/c/202927/301402  Push Button Traffic 3.0 – Brand New

https://jvz2.com/c/202927/321987  SociCake Commercial

https://jvz2.com/c/202927/289944  The Internet Marketing

 https://jvz2.com/c/202927/297271  Designa Suite License

https://jvz2.com/c/202927/310335  XFUNNELS FE Commercial 

https://jvz2.com/c/202927/291955  ShopABot

https://jvz2.com/c/202927/312692  Inboxr

https://jvz2.com/c/202927/343635  MediaCloudPro 2.0 – Agency

 https://jvz2.com/c/202927/353558  MyTrafficJacker 2.0 Pro+

https://jvz2.com/c/202927/365061  AIWA Commercial

https://jvz2.com/c/202927/357201  Toon Video Maker Premium

https://jvz2.com/c/202927/351754  Steven Alvey’s Signature Series

https://jvz2.com/c/202927/344541  Fade To Black

https://jvz2.com/c/202927/290487  Adsense Machine

https://jvz2.com/c/202927/315596  Diddly Pay’s DLCM DFY Club

https://jvz2.com/c/202927/355249  CourseReel Professional

https://jvz2.com/c/202927/309649  SociJam System

https://jvz2.com/c/202927/263380  360Apps Certification

 https://jvz2.com/c/202927/359468  LocalAgencyBox

https://jvz2.com/c/202927/377557  Instant Website Bundle

https://jvz2.com/c/202927/377194  GMB Magic Content

https://jvz2.com/c/202927/376962  PlayerNeos VR

https://jvz8.com/c/202927/381812/  BrandElevate Bundle information

https://jvz4.com/c/202927/381807/ BrandElevate Ultimate

https://jvz2.com/c/202927/381556/ WowBackgraounds Plus

https://jvz4.com/c/202927/381689/  Your3DPal Ultimate

https://jvz2.com/c/202927/380877/  BigAudio Club Fast Pass

https://jvz3.com/c/202927/379998/ Podcast Masterclass

https://jvz3.com/c/202927/366537/  VideoGameSuite Exclusive

https://jvz8.com/c/202927/381148/ AffiliateMatic

https://jvzoo.com/c/202927/381179  YTSuite Advanced

https://jvz1.com/c/202927/381749/  Xinemax 2.0 Commercial

https://jvzoo.com/c/202927/382455  Living An Intentional Life

https://jvzoo.com/c/202927/381812  BrandElevate Bundle

https://jvzoo.com/c/202927/381935 Ezy MultiStores

https://jvz2.com/c/202927/381194/  DFY Suite 4.0 Agency

https://jvzoo.com/c/202927/381761  ReVideo

https://jvz4.com/c/202927/381976/  AppOwls Bundle

https://jvz8.com/c/202927/381950/  TrafficForU

https://jvz3.com/c/202927/381615/  WOW Backgrounds 2.0

https://jvz4.com/c/202927/381560   ALL-in-One HD Stock Bundle

https://jvz6.com/c/202927/382326/   Viddeyo Bundle

https://jvz8.com/c/202927/381617/  The Forex Joustar

https://jvz3.com/c/202927/383751/ ADA Web Accessibility Compliance 

https://jvz3.com/c/202927/383942/  10 Bold Actions In Positive Life & Work

https://jvz3.com/c/202927/383706/  Adtivate Agency

https://jvz1.com/c/202927/384099/   My Passive Income Blueprints

https://jvz3.com/c/202927/329145/  Content Tool Kit

https://jvz6.com/c/202927/382663/    ReviewReel

https://jvz3.com/c/202927/383865/     QR Verse Bundle

https://jvz4.com/c/202927/379307/    VIADZ Ad Template

https://jvz2.com/c/202927/383051/    EngageYard Ad Creator

https://jvz4.com/c/202927/381011/   Videevolve

https://jvz4.com/c/202927/383751/  Local Leader Bundle

https://jvz8.com/c/202927/383119/   Tonai Voice Content

https://jvz2.com/c/202927/383848/   Vocalic Commercial

https://jvz3.com/c/202927/383483/  Dropshiply Store Creator

https://jvz6.com/c/202927/384025/  Levidio Royal Podcasting

https://jvz6.com/c/202927/383094/  Develop Self Empowerment

https://jvz1.com/c/202927/379223/   Hostley Domain Creator

https://jvz6.com/c/202927/383447/   Mech Forex Robot

https://jvz4.com/c/202927/383177/   Motion Kingdom Studio

https://jvz8.com/c/202927/144577/   Forex Blizz Trading

https://jvz3.com/c/202927/382851/  AdRaven

https://jvz2.com/c/202927/383307/   Animaxime V2

https://jvz8.com/c/202927/375692/  Promovidz Promotion Videos

https://jvz3.com/c/202927/381148/  AffiliateMatic

https://jvz4.com/c/202927/379051/  CanvaKitz Business Templates

https://jvz1.com/c/202927/383113/  Agencyscale Business Agency

https://jvz3.com/c/202927/347847/  Pitchdeck Professional Presentations

https://jvz2.com/c/202927/381179/   YTSuite YouTube Ads Campaigns

https://jvz8.com/c/202927/382455/     Living an International Life

https://jvz1.com/c/202927/188236/    Galactic Dimension backgrounds

https://jvz6.com/c/202927/381749/    Xinemax Hollywood Creator

https://jvz3.com/c/202927/381194/   DFY Suite 4.0 Agency

https://jvz4.com/c/202927/381231/    Appowls Mobile Apps

Why Inflation Looks Likely To Stay Above The Pre-Pandemic Norm

The bad news on inflation just keeps coming. At more than 9% year on year across the rich world, it has not been this high since the 1980s—and there have never been so many “inflation surprises”, where the data have come in higher than economists’ forecasts (see chart). This, in turn, is taking a heavy toll on the economy and financial markets.

Central banks are raising interest rates and ending bond-buying schemes, crushing equities. Consumer confidence in many places is now even lower than it was in the early days of the covid-19 pandemic. “Real-time” economic indicators of everything from housing activity to manufacturing output suggest that economic growth is slowing sharply.

What consumer prices do next is therefore one of the most important questions for the global economy. Many forecasters expect that annual inflation will soon ebb, in part because of last year’s sharp increases in commodity prices falling out of the year-on-year comparison. In its latest economic projections the Federal Reserve, for instance, expects annual inflation in America (as measured by the personal-consumption-expenditure index) to fall from 5.2% at the end of this year to 2.6% by the end of 2023.

You might be forgiven for not taking these prognostications too seriously. After all, most economists failed to see the inflationary surge coming, and then wrongly predicted it would quickly fade. In a paper published in May, Jeremy Rudd of the Fed made a provocative point: “Our understanding of how the economy works—as well as our ability to predict the effects of shocks and policy actions—is in my view no better today than it was in the 1960s.” The future path of inflation is, to a great extent, shrouded in uncertainty.

Some indicators point to more price pressure to come in the near term. Alternative Macro Signals, a consultancy, runs millions of news articles through a model to construct a “news inflation pressure index”. The results, which are more timely than the official inflation figures, measure not just how frequently price pressures are mentioned, but also whether the news flow suggests that pressures are building up. In both America and the euro area the index is still miles above 50, indicating that pressures are continuing to build.

Inflation worry-warts can point to three other indicators suggesting that the rich world is unlikely to return to the pre-pandemic norm of low, stable price growth any time soon: rising wage growth, and increases in the inflation expectations of both consumers and companies. If sustained, these could together contribute to what the Bank for International Settlements, the central bank for central banks, describes in a report published on June 26th as a “tipping point”. Beyond it, warns the bis, “an inflationary psychology” could spread and become “entrenched”.

Evidence is mounting that workers are starting to bargain for higher wages. This could create another round of price increases as firms pass on these extra costs. A survey by the Bank of Spain suggests that half of collective-bargaining deals signed for 2023 contain “indexation clauses”, meaning that salaries are automatically tied to inflation, up from a fifth before the pandemic.

In Germany ig Metall, a trade union, has asked for a 7-8% pay rise for nearly 4m workers in the metals and engineering sector (it will probably get about half that). In Britain rail workers went on strike as they sought a 7% pay rise, though it is unclear whether they will succeed. All this will make wage growth hotter still. Already, a tracker for the g10 group of countries compiled by Goldman Sachs, a bank, is rising almost vertically (see chart). A measure of pay pressure from Alternative Macro Signals is similarly animated. And wage floors are rising, too.

The Netherlands is bringing forward a rise in the minimum wage; earlier this month Germany passed a bill increasing its minimum by one-fifth. On June 15th Australia’s industrial-relations agency raised the wage floor by 5.2%, more than double last year’s increase. Faster wage growth in part reflects public’s higher expectations for future inflation—the second reason to worry that inflation might prove sticky. In America expectations for average price increases in the near term are rising fast.

The average Canadian says they are braced for inflation of 7% over the next year, the highest of any rich country. Even in Japan, the land where prices only rarely change, beliefs are shifting. A year ago a survey by the central bank found that just 8% of people believed that prices would go up “significantly” over the next year (consumer prices, indeed, rose by only 2.5% in the year to April). Now, however, 20% of Japanese people reckon that will happen.

The third factor relates to companies’ expectations. Retailers’ inflation expectations are at an all-time high in a third of eu countries. A survey by the Bank of England suggests that clothing prices for Britain’s autumn and winter collections will be 7-10% higher than a year ago. The Dallas Fed does find tentative evidence that customers are less willing to tolerate price increases than before; a respondent in the rental and leasing business complained that “it is getting tougher to pass on the 20-30% price increases we have received from manufacturers.” But that merely points to a lower level of high inflation.

The big hope for lower inflation relates to the price of goods. Fast increases in the prices of cars, fridges and the like, linked in part to supply-chain snarls, drove the initial inflationary surge last year. Now there is some evidence of a reversal. The cost of shipping something from Shanghai to Los Angeles has fallen by a quarter since early March. In recent months many retailers spent big on inventories in order to ensure their shelves stayed full. Many are now cutting prices to shift stock.

In America car production is finally picking up, which could unwind some of the outrageous price increases for used vehicles seen last year. Falling goods prices could, in theory, help douse the inflationary flames in the rich world, easing the cost-of-living crisis, giving central banks breathing room and buoying financial markets. But, with enough indicators of future prices pointing the other way, the odds of that happening have lengthened. Don’t be surprised if inflation roars for a while yet.

Source: Why inflation looks likely to stay above the pre-pandemic norm | The Economist

Related contents:

IMF chief Kristalina Georgieva says US recession would be a ‘necessary price’ to defeat… Mail Online

01:08 Sun, 26 JunIMF US Recession Japan
17:18 Sun, 26 JunBoris Johnson Tories UK Politics

More Remote Working Apps:

https://quintexcapital.com/?ref=arminham     Quintex Capital

https://www.genesis-mining.com/a/2535466   Genesis Mining

 http://www.bevtraders.com/?ref=arminham   BevTraders

https://www.litefinance.com/?uid=929237543  LiteTrading

https://jvz8.com/c/202927/369164  prime stocks

  https://jvz3.com/c/202927/361015  content gorilla

  https://jvz8.com/c/202927/366443  stock rush  

 https://jvz1.com/c/202927/373449  forrk   

https://jvz3.com/c/202927/194909  keysearch  

 https://jvz4.com/c/202927/296191  gluten free   

https://jvz1.com/c/202927/286851  diet fitness diabetes  

https://jvz8.com/c/202927/213027  writing job  

 https://jvz6.com/c/202927/108695  postradamus

https://jvz1.com/c/202927/372094  stoodaio

 https://jvz4.com/c/202927/358049  profile mate  

 https://jvz6.com/c/202927/279944  senuke  

 https://jvz8.com/c/202927/54245   asin   

https://jvz8.com/c/202927/370227  appimize

 https://jvz8.com/c/202927/376524  super backdrop

 https://jvz6.com/c/202927/302715  audiencetoolkit

 https://jvz1.com/c/202927/375487  4brandcommercial

https://jvz2.com/c/202927/375358  talkingfaces

 https://jvz6.com/c/202927/375706  socifeed

 https://jvz2.com/c/202927/184902  gaming jobs

 https://jvz6.com/c/202927/88118   backlinkindexer

 https://jvz1.com/c/202927/376361  powrsuite  

https://jvz3.com/c/202927/370472  tubeserp  

https://jvz4.com/c/202927/343405  PR Rage  

https://jvz6.com/c/202927/371547  design beast  

https://jvz3.com/c/202927/376879  commission smasher

 https://jvz2.com/c/202927/376925  MT4Code System

https://jvz6.com/c/202927/375959  viral dash

https://jvz1.com/c/202927/376527  coursova

 https://jvz4.com/c/202927/144349  fanpage

https://jvz1.com/c/202927/376877  forex expert  

https://jvz6.com/c/202927/374258  appointomatic

https://jvz2.com/c/202927/377003  woocommerce

https://jvz6.com/c/202927/377005  domainname

 https://jvz8.com/c/202927/376842  maxslides

https://jvz8.com/c/202927/376381  ada leadz

https://jvz2.com/c/202927/333637  eyeslick

https://jvz1.com/c/202927/376986  creaitecontentcreator

https://jvz4.com/c/202927/376095  vidcentric

https://jvz1.com/c/202927/374965  studioninja

https://jvz6.com/c/202927/374934  marketingblocks

https://jvz3.com/c/202927/372682  clipsreel  

https://jvz2.com/c/202927/372916  VideoEnginePro

https://jvz1.com/c/202927/144577  BarclaysForexExpert

https://jvz8.com/c/202927/370806  Clientfinda

https://jvz3.com/c/202927/375550  Talkingfaces

https://jvz1.com/c/202927/370769  IMSyndicator

https://jvz6.com/c/202927/283867  SqribbleEbook

https://jvz8.com/c/202927/376524  superbackdrop

https://jvz8.com/c/202927/376849  VirtualReel

https://jvz2.com/c/202927/369837  MarketPresso

https://jvz1.com/c/202927/342854  voiceBuddy

https://jvz6.com/c/202927/377211  tubeTargeter

https://jvz6.com/c/202927/377557  InstantWebsiteBundle

https://jvz6.com/c/202927/368736  soronity

https://jvz2.com/c/202927/337292  DFY Suite 3.0 Agency+ information

https://jvz8.com/c/202927/291061  VideoRobot Enterprise

https://jvz8.com/c/202927/327447  Klippyo Kreators

https://jvz8.com/c/202927/324615  ChatterPal Commercial

https://jvz8.com/c/202927/299907  WP GDPR Fix Elite Unltd Sites

https://jvz8.com/c/202927/328172  EngagerMate

https://jvz3.com/c/202927/342585  VidSnatcher Commercial

https://jvz3.com/c/202927/292919  myMailIt

https://jvz3.com/c/202927/320972  Storymate Luxury Edition

https://jvz2.com/c/202927/320466  iTraffic X – Platinum Edition

https://jvz2.com/c/202927/330783  Content Gorilla One-time

https://jvz2.com/c/202927/301402  Push Button Traffic 3.0 – Brand New

https://jvz2.com/c/202927/321987  SociCake Commercial https://jvz2.com/c/202927/289944  The Internet Marketing

 https://jvz2.com/c/202927/297271  Designa Suite License

https://jvz2.com/c/202927/310335  XFUNNELS FE Commercial 

https://jvz2.com/c/202927/291955  ShopABot

https://jvz2.com/c/202927/312692  Inboxr

https://jvz2.com/c/202927/343635  MediaCloudPro 2.0 – Agency

 https://jvz2.com/c/202927/353558  MyTrafficJacker 2.0 Pro+

https://jvz2.com/c/202927/365061  AIWA Commercial

https://jvz2.com/c/202927/357201  Toon Video Maker Premium

https://jvz2.com/c/202927/351754  Steven Alvey’s Signature Series

https://jvz2.com/c/202927/344541  Fade To Black

https://jvz2.com/c/202927/290487  Adsense Machine

https://jvz2.com/c/202927/315596  Diddly Pay’s DLCM DFY Club

https://jvz2.com/c/202927/355249  CourseReel Professional

https://jvz2.com/c/202927/309649  SociJam System

https://jvz2.com/c/202927/263380  360Apps Certification

 https://jvz2.com/c/202927/359468  LocalAgencyBox

https://jvz2.com/c/202927/377557  Instant Website Bundle

https://jvz2.com/c/202927/377194  GMB Magic Content

https://jvz2.com/c/202927/376962  PlayerNeos VR

https://jvz8.com/c/202927/381812/  BrandElevate Bundle information

https://jvz4.com/c/202927/381807/ BrandElevate Ultimate

https://jvz2.com/c/202927/381556/ WowBackgraounds Plus

https://jvz4.com/c/202927/381689/  Your3DPal Ultimate

https://jvz2.com/c/202927/380877/  BigAudio Club Fast Pass

https://jvz3.com/c/202927/379998/ Podcast Masterclass

https://jvz3.com/c/202927/366537/  VideoGameSuite Exclusive

https://jvz8.com/c/202927/381148/ AffiliateMatic

https://jvzoo.com/c/202927/381179  YTSuite Advanced

https://jvz1.com/c/202927/381749/  Xinemax 2.0 Commercial

https://jvzoo.com/c/202927/382455  Living An Intentional Life

https://jvzoo.com/c/202927/381812  BrandElevate Bundle

https://jvzoo.com/c/202927/381935 Ezy MultiStores

https://jvz2.com/c/202927/381194/  DFY Suite 4.0 Agency

https://jvzoo.com/c/202927/381761  ReVideo

https://jvz4.com/c/202927/381976/  AppOwls Bundle

https://jvz8.com/c/202927/381950/  TrafficForU

https://jvz3.com/c/202927/381615/  WOW Backgrounds 2.0

https://jvz4.com/c/202927/381560   ALL-in-One HD Stock Bundle

https://jvz6.com/c/202927/382326/   Viddeyo Bundle

https://jvz8.com/c/202927/381617/  The Forex Joustar

Crypto Links With Banks Pose Threat To Financial Stability, Says ECB

The crypto industry’s deepening ties to banks and asset managers will pose a risk to financial stability, the European Central Bank has warned, in the latest sign of how central banks and governments are stepping up their scrutiny of the market. The ECB said on Tuesday it had undertaken “a deep dive into cryptoasset leverage and crypto lending” and found evidence that these activities were becoming more risky, complex and interconnected with traditional institutions.

Investors have been able to handle the €1.3tn fall in the market capitalisation of unbacked cryptoassets since November 2021 without any financial stability risks being incurred,” the ECB said. “However, at this rate, a point will be reached where unbacked cryptoassets represent a risk to financial stability.” The first such warning from the ECB, published as part of its twice-yearly financial stability review, followed similar messages from US and UK authorities, which have been unnerved by a series of recent failures in the crypto market.

Bitcoin, the world’s flagship cryptocurrency, has halved in value since November and recently fell below $30,000 for the first time since last summer. The market’s most important stablecoin, tether, momentarily lost its peg to the US dollar, while its rival terraUSD all but collapsed. The crypto market itself has boomed in size in recent years, with major platforms like Binance and FTX offering a wide array of complex financial products.

The world’s biggest crypto exchanges processed almost $700bn in spot trading last month and $1.1tn in bitcoin futures, according to data collated by The Block Crypto. Recommended Gillian Tett The Goldilocks crisis may have arrived for crypto The ECB said trading volumes for cryptoassets “have at times been comparable with or even surpassed those of the New York Stock Exchange or euro area sovereign bond quarterly trading volumes”.

At the same time, some crypto exchanges are offering loans to customers to allow them to increase their exposures by as much as 125 times their initial investment, it said. But “significant informational and data shortcomings persist”, which meant “the full extent of possible contagion channels with the traditional financial system cannot be fully ascertained”. ECB president Christine Lagarde said on Dutch television at the weekend that a crypto token was “worth nothing, it is based on nothing, there is no underlying asset to act as an anchor of safety”.

Fabio Panetta, an ECB executive, recently likened the sector to a “Ponzi scheme” and called for a regulatory clampdown to avoid a “lawless frenzy of risk-taking”. Links between eurozone banks and crypto assets “have been limited so far”, the ECB said in its report on Tuesday. The central bank said some international and eurozone banks are “already trading and clearing regulated crypto derivatives, even if they do not hold an underlying cryptoasset inventory”.

It added that large payment networks had “stepped up their support of cryptoasset services” and institutional investors were “now also investing in bitcoin and cryptoassets more generally”. Noting that German institutional investment funds have been allowed to put up to a fifth of their holdings into crypto assets since last year, it said such investments had been aided by the availability of crypto-based derivatives and securities listed on exchanges.

Recommended Behind the Money podcast20 min listen A crypto vibe shift? The ECB also cited risks from decentralised finance, or DeFi, in which cryptocurrency-based software programs offer financial services without the use of intermediaries such as banks. “Crypto credit on DeFi platforms grew by a factor of 14 in 2021, while the total value locked was hovering at around €70bn until very recently, on a par with small domestic peripheral European banks,” it said.

Rehypothecation, in which collateral for a loan can be repledged against another loan, increased the chances of leverage limits being breached. As many as one in 10 EU households “may own cryptoassets”, though most had less than €5,000 invested in the sector, according to a recent ECB survey. Similarly, a Fed survey released on Monday found 12 per cent of US adults held or used cryptocurrencies in 2021. The EU is finalizing legislation, called markets in crypto assets, but the ECB said it would not come into force until 2024 at the earliest.

“Given the speed of crypto developments and the increasing risks, it is important to bring cryptoassets into the regulatory perimeter and under supervision as a matter of urgency,” it said.

Source: Crypto links with banks pose threat to financial stability, says ECB | Financial Times

Critics by Kate Rooney

Financial services firms added three times as many crypto jobs last year than in 2015, according to recent data from LinkedIn. In the first half of 2021, that pace jumped by 40%. Banks on a crypto hiring spree included Deutsche Bank, Wells Fargo, Citigroup, Capital One, Barclays, Credit Suisse, UBS, Bank of America and BNY Mellon.

The crypto boom on Wall Street coincides with more funding and hiring in the start-up world. Crypto and blockchain companies raised a record $25 billion last year, an eightfold increase from a year earlier, according to CB Insights data.

Farooq said that even with the start-up boom, JPMorgan has seen “limited attrition.” Those leaving have been people “wanting to start their own company versus wanting to leave and go do something similar.”

However, JPMorgan did lose one of its highest-profile crypto deputies last year. Christine Moy is on garden leave after departing her role as managing director and global head of crypto and metaverse at Onyx. She has yet to announce her next move.

“After over a half-decade laying the foundations for blockchain-based infrastructure across financial markets and cross-border payments, creating new businesses that have already scaled into the $USD billions at J.P. Morgan, I am looking to challenge myself further by finding new opportunities to create value and drive impact for the Web3/crypto ecosystem from a new angle,” Moy told CNBC in an email.

Other top crypto executives who left Wall Street recently expressed some frustration at how long it takes to get projects moving within a large financial institution. Mary Catherine Lader, chief operating officer at Uniswap Labs, left her job as a managing director at BlackRock last year. Her foray into crypto started as a side project within the asset management company.

“It certainly wasn’t my primary job,” Lader said. “It was kind of a hobby, as it is for so many people on Wall Street, and it definitely wasn’t something that at the time I was thinking about, because it was early stages of adoption.”

Justin Schmidt, former head of digital asset markets at Goldman Sachs, made a similar career change last year. He joined institutional crypto trading platform Talos and described the risk in a similar way, calling the decision “multidimensional.”

“Inherently, you’re taking a brand risk — Goldman is one of the storied institutions of Wall Street,” Schmidt said. “You are also taking a risk by staying someplace more traditional, and I very firmly believe that this is a generational change and there’s a generational opportunity here…..

Further contents:

US Treasury To Allow Russia Bond Payment To Go Through In Dollars

Russia says it made a $117 million bond payment — a move to avoid defaulting on its debt — and the US Treasury Department said it would allow the installment.

Russia’s finance minister told state-run media Thursday that the country fulfilled a debt obligation, and noted that it’s up to the US as to whether the payment would be allowed. The Treasury said it would let the payment go through.

Reuters reported Thursday that correspondent bank JPMorgan received the payment and made a credit to the paying agent Citigroup, which is responsible for distributing the money to investors.

Representatives from Citigroup and JPMorgan declined to comment on the matter. A report from Bloomberg said Russia’s finance ministry ordered the interest payment on Monday, ahead of its Wednesday due date.

US sanctions on doing business with Russia’s central bank and other institutions won’t block Moscow from making payments to Americans on dollar-denominated debt until just after midnight on May 25, a Treasury spokesperson told Bloomberg.

Russia earlier said if its dollar payments weren’t allowed, it would repay its foreign debt in rubles. Credit ratings agency Fitch said that could amount to a default as investors expected to be paid in dollars.

So far, the bondholders haven’t received the bond payments yet, sources told Reuters.

Russia has been teetering on its first foreign-currency bond default since 1918, during the aftermath of the Bolshevik Revolution. The $117 million interest payment on two dollar bonds was a key test for a country whose credit rating was recently slashed to junk from investment-grade.

Putin’s forces launched a full-scale attack on Ukraine last month, unleashing a wave of sanctions from the West that have largely cut off Russia from global financial markets and blocked it from accessing about half of its $640 billion in foreign currency reserves.

By:

Source: US Treasury to Allow Russia Bond Payment to Go Through in Dollars

.

Critics:

Russian Finance Minister Anton Siluanov told Russia state-run media outlet Russia Today that the country fulfilled its obligations to foreign creditors, though he added that the payments may not go through since they’re at risk of being blocked by the US.

A spokesperson for the US Treasury Department told The Post that Washington would allow the payments to go through.

Siluanov claimed the “possibility or impossibility of fulfilling our obligations in foreign currency does not depend on us.” Siluanov said the US and EU sanctions have frozen some $315 billion worth of foreign reserves.

If the US blocks the payment, Russia could try to pay in rubles, but the currency has been so devalued that the country would have no choice but to default on its debt, according to credit ratings agency Fitch.

Dmitry Peskov, the spokesperson for the Kremlin, said any default would be “entirely artificial” since Russia had the money to fulfill its debt obligations.

.

%d bloggers like this: