Dual Currency Bond – Basket Village USA http://basketvillageusa.com/ Fri, 04 Jun 2021 22:22:39 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 https://basketvillageusa.com/wp-content/uploads/2021/03/basketvillageusa-icon-70x70.png Dual Currency Bond – Basket Village USA http://basketvillageusa.com/ 32 32 Growth will be: the future position of the RBI for the economy is very clear now https://basketvillageusa.com/growth-will-be-the-future-position-of-the-rbi-for-the-economy-is-very-clear-now/ https://basketvillageusa.com/growth-will-be-the-future-position-of-the-rbi-for-the-economy-is-very-clear-now/#respond Fri, 04 Jun 2021 05:47:00 +0000 https://basketvillageusa.com/growth-will-be-the-future-position-of-the-rbi-for-the-economy-is-very-clear-now/

The policy of the Reserve Bank of India (RBI) comes at a critical time when the economy is in the midst of a confused lockdown with different perspectives on growth and a direction set for inflation. The Monetary Policy Committee (MPC) has reiterated the accommodative stance in the past, and so the bottom line is that the repo rate is unlikely to be increased in the near future.

Some of the important signals provided are as follows. First, the growth outlook and here the RBI cut the forecast down to 9.5% which is now closer to what most analysts have done (CARE is 8.8-9%) . Single digit growth looks less attractive than double digit growth. In fact, the rate would decrease over the quarters sequentially. Therefore, it also supports the MPC’s view that growth is weaker than expected and therefore requires the support of the monetary authority.

The second view is on inflation, which remains unchanged at 5.1 percent for the year. This may need to be stepped up given that a major concern today has been the rise in global prices of commodities, which are not only metals but also oils – edibles and fuels. The World Bank has been talking about big increases this year, which was already seen in the WPI last month (although it is true that the low base has played its part). There is also the bet that food prices will remain stable with a good monsoon forecast.



Third, is about liquidity. This has been a major driving factor in the system with various liquidity incentives announced even in May. The RBI has kept pace with the measures announced this time around as well. A signal that needs to be raised is that the Special Long Term Repo Operation (SLTRO) has not elicited a response from the banks as only Rs 400 crore was recovered in the first auction. There is an addition of Rs 15,000 crore for high contact sectors like hotels, tourism etc which is very necessary and more likely to be successful as this segment has been shaken twice. As most would fall under the SME category, this will be helpful.

The second phase of the government securities acquisition program (GSAP 2.0) was more or less as expected, as the RBI will continue to purchase more paper to support the system. Interestingly, the government would also borrow about 1.5 trillion more rupees this time around to compensate states for GST collection deficits. Thus, the total of Rs 2.2 trillion of GSAP in the first half of the year will help support this operation.

On liquidity, the RBI seems to persevere in its dual objective. The first is to keep the system in surplus even after meeting all the requirements of the borrowers. This has been done successfully throughout the last year and this year so far given the large daily flows to reverse repo auctions. The other is to actually work on the yield curve to make sure it performs well. It also means that yields will remain low, which is in the best interest of the government as there is a large borrowing program that needs to be facilitated this year. These measures will certainly make it possible to achieve this objective. The yield on 10-year bonds will therefore remain around 6%.



One point made by the RBI was to pay attention to the banks’ provision requirement and capital buffers. It might just indicate some concern about the possible increase in stressed assets this time around due to the lockdown due to Wave 2.

The market reaction has been quite stoic. There isn’t much change in the frontline indices: the currency is still around 73 and the 10-year yield barely crosses 6%.

(Madan Sabnavis is Chief Economist at CARE Ratings and author of “Hits & Misses: The Indian Banking Story”. The opinions expressed in the article are his own.)

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Redemption of securities https://basketvillageusa.com/redemption-of-securities/ https://basketvillageusa.com/redemption-of-securities/#respond Wed, 02 Jun 2021 16:22:00 +0000 https://basketvillageusa.com/redemption-of-securities/

DB ETC plc

COMPANY ANNOUNCEMENT

Immediate release June 02, 2021

DB ETC plc (the Issuer)

(Incorporated and registered in Jersey under the companies (Jersey)

Law 1991 (as amended) with registration number 103781)

Re: ETC share buyback announcement

The Issuer has agreed to repurchase the ETC Notes for the following Series, as indicated in the table below.

Series

Number of Securities to be bought back

Transaction date

Settlement date

IS IN:

Series 10 – Xtrackers Physical Silver ETC (EUR)

7,000

May 28, 2021

June 02, 2021

DE000A1E0HS6

Series 02 – Xtrackers Physical Gold EUR Hedged ETC

205,000

May 28, 2021

June 02, 2021

DE000A1EK0G3

Series 01 – Physical Gold Xtrackers ETC

20,000

May 28, 2021

June 02, 2021

GB00B5840F36

Following the redemption of ETC Notes described above, the total number of ETC DB ETC plc Notes outstanding in relation to this Series will be:

Series 10 – Xtrackers Physical Silver ETC (EUR)

4 743 293

Series 02 – Xtrackers Physical Gold EUR Hedged ETC

19 451 870

Series 01 – Physical Gold Xtrackers ETC

5,605,159

Issuer name

LEI

DB ETC plc

549300SNVSPBXF55RX28

Requests to:

TMG.ETC@db.com

DB ETC plc

View the source version on businesswire.com: https://www.businesswire.com/news/home/20210602005845/en/

Contacts

Deutsche Bank AG


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Media Advisory – Premier’s Itinerary for Wednesday, June 2, 2021 https://basketvillageusa.com/media-advisory-premiers-itinerary-for-wednesday-june-2-2021/ https://basketvillageusa.com/media-advisory-premiers-itinerary-for-wednesday-june-2-2021/#respond Tue, 01 Jun 2021 22:50:00 +0000 https://basketvillageusa.com/media-advisory-premiers-itinerary-for-wednesday-june-2-2021/

Bloomberg

Australian Central Bank maintains policy as bond target looms

(Bloomberg) – Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast. Australia’s central bank has maintained its policy parameters as it prepares to decide to expand its yield target and quantitative easing programs, with a Covid-19 foreclosure complicating the outlook. The Reserve Bank of Australia kept the cash rate and the three-year yield target at 0.10% in Sydney on Tuesday, as expected. It will make a decision in July on whether to extend the yield target and undertake further quantitative easing. A weeklong shutdown in the nation’s second largest city adds a layer of uncertainty to the outlook. “Despite the strong recovery in the economy and jobs, inflation and wage pressures are moderate,” Governor Philip Lowe said. “The Board of Directors is committed to maintaining very favorable monetary conditions to support a return to full employment in Australia and inflation on target.” The Australian dollar fell slightly, trading at 77.41 cents US at 2:53 pm in Sydney against just 77.62 cents. The case for Lowe’s continued April 2024 bond as target maturity has firmed against a backdrop of strong recruitment, trust and investment plans. This was reinforced by the fact that the government kept the fiscal tap open in the May budget as it joins the RBA in an attempt to bring down unemployment to revive wage growth and inflation. “Progress in reducing unemployment has been faster than expected,” Lowe said in his statement. . “There are reports of labor shortages in parts of the economy.” Risks Ahead Yet the RBA can be encouraged to err on the side of caution if the Melbourne outbreak worsens and to expand its two bond programs to maintain maximum support for the economy. The possibility of large virus outbreaks is a continuing source of significant uncertainty, although this is expected to diminish as more of the population is vaccinated, ”Lowe said. “The Board of Directors continues to give high priority to the return to full employment. Globally, central banks are beginning to move away from emergency monetary parameters. The Reserve Bank of New Zealand surprised markets last week with projections of its official cash rate rising in the second half of next year. Returning to Australia, economists predicted Wednesday before the data that gross domestic product rose 1.5% in the first three months of the year from the previous quarter, and rose 0.6% per compared to the previous year. Treasury Secretary Steven Kennedy, in testimony to a parliamentary panel earlier today, said partial data showed about 56,000 workers lost their jobs in the four weeks after the subsidy ended. Government JobKeeper salary which expired on March 28. He said strong jobs data and forward-looking indicators “continue to give us confidence that the job market has the underlying strength to absorb workers leaving the JobKeeper payment.” EconomyLowe Tests estimates that Australia’s unemployment rate will need to drop to nearly 4% before leading to economy-wide wage increases. It was 5.5% in April and the governor expects wage growth to increase at a rate faster than 3% – more than double the current rate – to bring inflation back to target sustainably. from 2 to 3% of the central bank. reiterated that “it is unlikely that it will be before 2024 at the earliest. (Updates with other governor’s comments throughout.) More stories like this are available at bloomberg.com Subscribe now to stay ahead with the most important source of business news. reliable. © 2021 Bloomberg LP


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China tries to curb yuan recovery as exports weaken https://basketvillageusa.com/china-tries-to-curb-yuan-recovery-as-exports-weaken/ https://basketvillageusa.com/china-tries-to-curb-yuan-recovery-as-exports-weaken/#respond Tue, 01 Jun 2021 17:53:00 +0000 https://basketvillageusa.com/china-tries-to-curb-yuan-recovery-as-exports-weaken/

BEIJING – China has started working to curb the yuan’s post-coronavirus recovery as upward pressure on the currency begins to reduce exports, a crucial engine of economic growth.

The People’s Bank of China announced Monday that it will increase the share of foreign currency deposits that banks with branches in the country must reserve from 5% to 7% from June 15. This is the first increase in the exchange rate. reserve requirements since 2007.

The move represents a shift from the central bank’s wait-and-see stance on the currency, a sign that Beijing is seeing the downsides of a strong yuan starting to outweigh the benefits of some degree of isolation from the upside. commodity prices.

China’s foreign currency deposits totaled around $ 1 trillion at the end of April, according to the PBOC, which means an additional $ 20 billion should be set aside. This move aims to drain liquidity from this market, increase yields and less incentive for investors to sell foreign currencies to buy yuan.

The policy change was announced shortly after the yuan hit a three-year high in the 6.35 range against the dollar on Monday night. The currency weakened 0.3% in three hours.

The currency had risen 13% during the year from its lowest level in May 2020, as China’s relatively rapid return to economic normality after the coronavirus outbreak boosted bond yields relative to other economies. Net capital inflows peaked in seven years in the first quarter of 2021.

A stronger yuan weighed on export demand, a key driver of China’s economic growth. © Reuters

The PBOC had insisted on remaining standing despite the rally. Just a week before the policy change, on May 23, Deputy Governor Liu Guoqiang said the bank would keep the exchange rate “basically stable at a reasonable and balanced level.”

A strong currency, according to opinion, helps dampen import price inflation – a particularly important point amid this year’s widespread rise in international commodity markets.

Official manufacturing purchasing managers index data for May released on Monday showed both commodity and producer prices rising. But the former has grown much faster, leading to the larger gap between the two metrics in comparable data going back to 2016 and suggesting that costs are rising faster than manufacturers’ ability to pass them on to customers.

“There are significant negative impacts, such as pressure on profits, for small businesses, where price competition is particularly intense,” said Yoshino Tamai of Mizuho Research & Technologies in Japan.

The State Council, China’s highest administrative authority, said last week that it would not tolerate hoarding or price hikes by big business.

The central bank’s change in approach this week was boosted by signs that a stronger yuan is starting to affect exports. In May PMI data, the new export orders index fell below the expansion or recession line of 50.

Exports are a key part of China’s “dual circulation” strategy of China’s latest five-year plan, which calls for cultivating domestic demand while remaining economically engaged abroad. A collapse of the latter category could cripple efforts to establish this new economic framework.

It is not yet known whether the PBOC’s decision will actually limit the appreciation of the yuan. The currency remained high on Monday at around 6.36 to 6.38 against the dollar.

“The upward pressure on the yuan will not weaken unless the United States begins to reduce its quantitative easing and the spread between US and Chinese interest rates narrows,” Takamoto said. Suzuki of the Chinese branch of the Japanese trading house Marubeni.

But the fact that the PBOC is moving to counter the rally can be significant in itself.

If the yuan continues to appreciate, it could cross the 6.25 per dollar threshold for the first time since August 2015, when the central bank unexpectedly devalued the currency.

The bank has recently put more emphasis on allowing market forces to move the yuan as part of its efforts to internationalize the currency. What it will do if the yuan climbs to uncomfortable levels remains to be seen.


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An uncomfortable truth https://basketvillageusa.com/an-uncomfortable-truth/ https://basketvillageusa.com/an-uncomfortable-truth/#respond Mon, 31 May 2021 18:11:06 +0000 https://basketvillageusa.com/an-uncomfortable-truth/

  • “In 2017,” Reuters recalls, “Deutsche Bank was fined nearly $ 700 million for authorizing money laundering. The fines stemmed from a scheme of artificial transactions between Moscow, London and New York. York which officials said had been used to launder $ 10 billion outside of Russia. “
  • Citigroup, HSBC, Wells Fargo and Barclays were all involved in the 2015 FIFA corruption case.
  • It appears that four major banks – JPMorgan, Bank of America, Citigroup and Deutsche Bank AG – have helped Danske Bank Estonia carry out a $ 234 billion money laundering program involving Russian and European customers in the ‘Is.
  • The telegraph reports that “the largest bank in Europe, BNP-Paribas, has been accused of” laundering “tens of millions of euros of public money in France for the family of the late Gabonese leader Omar Bongo”.
  • JPMorgan paid a fine of $ 2.6 billion for a “decades-long role as [Madoff’s] principal banker, accomplice “of the fraud, according to a statement of the trustee Irving Picard.
  • According to the United Nations Office on Drugs and Crime, questionable banking transactions reach up to $ 2 trillion per year …

Ray Dalio heads Bridgewater Associates, the largest hedge fund in history. Founded in 1975, this juggernaut manages $ 140 billion. This figure includes investments from the Teacher Retirement System of Texas, the Singapore sovereign wealth fund and the IMF.

Last week, Dalio briefly made headlines for saying he would rather own Bitcoin than bonds.

Bitcoin> Bonds

Dalio’s statement seems innocent enough at first glance. I mean, who wants to own bonds when rates have to go down for bond prices to go up?

Buy bonds now, with rates around the world at all-time lows, and there doesn’t seem to be much chance for these bond prices to appreciate. I don’t know about you, but I’m not a fan of investments where the chances of making money are so low.

Of course, there are also risks with Bitcoin. There is no way to truly establish a value for a digital currency. And we’ve heard rumors from various types of US governments that they don’t really like Bitcoin. Treasury Secretary Yellen went so far as to say that she would like to “reduce” the use of Bitcoin.

Obviously, much of a government’s power stems from its ability to control its currency. And much of a government’s ability to fund itself comes from the sale of bonds. Threats to this dual mandate will not be viewed kindly.

But why is Dalio ringing this bitcoin discussion right now?

An uncomfortable truth

One of the biggest draws of Bitcoin is encryption. Owning bitcoins and transacting with Bitcoin is completely anonymous. You lose your “account number” and your Bitcoin is gone. There is no way to get it back. Surprisingly, this is the case with 20% of all Bitcoin. It is reported that $ 140 billion worth of Bitcoin is completely and permanently inaccessible because the owners forgot their passwords.

I was told that I should burn my password into a stainless steel strip so that I never lose any Bitcoin that I may or may not own.

Everyone knows that this level of anonymity attracts some unsavory guys. At the bottom you have Chinese nationals who are using bitcoin to take their money out of China and this government. I’m sure the same goes for the Russian oligarchs.

In the middle, there are those who use Bitcoin to pay for a host of illegal dark web stuff.

At the top, there will certainly be drug cartels and the world’s biggest criminals who will convert ill-gotten loot into Bitcoin so that it never falls into the “wrong” hands.

In the world of finance, cash is cash and no one wants to dig too deep if there are fees to be collected to facilitate its movement across the world.

Banks will turn a blind eye every time. And if you think hedge funds are perfectly clean, well, the uncomfortable truth is that money makes the world go round, and no one digs too deep to make sure it’s all about the money. “clean”.

Till next time,

British Ryle

basic follow@BritonRyle on Twitter

21-year veteran in the newsletter industry, Briton Ryle is the editor of the income equity newsletter The Wealth Advisory, which focuses on dividend growth stocks and premium REITs. Briton also operates the Real Income Trader advisory service, where its readers receive regular cash payments using a low risk covered call option strategy. He is also the editor of the electronic newsletter Wealth Daily. To learn more about the Briton, click here.

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China administered 620.97 million doses of COVID-19 vaccine as of March 29 https://basketvillageusa.com/china-administered-620-97-million-doses-of-covid-19-vaccine-as-of-march-29/ https://basketvillageusa.com/china-administered-620-97-million-doses-of-covid-19-vaccine-as-of-march-29/#respond Sun, 30 May 2021 07:14:22 +0000 https://basketvillageusa.com/china-administered-620-97-million-doses-of-covid-19-vaccine-as-of-march-29/

Bloomberg

This time it’s different: apart from OPEC +, oil growth is stalling

(Bloomberg) – “This time is different” perhaps the most dangerous words in business: billions of dollars have been lost betting history won’t repeat itself. And yet, now in the oil world, it looks like it really will. For the first time in decades, oil companies are not rushing to ramp up production to chase rising oil prices as Brent crude approaches $ 70. Even in the Permian, the prolific shale basin at the center of America’s energy boom, drillers are resisting their traditional boom and bust spending cycle. The oil industry is on the ropes, coerced by Wall Street investors demanding that companies spend less on drilling and instead return more money to shareholders, and climate change activists lobbying against fossil fuels. Exxon Mobil Corp. is paradigmatic of the trend, after its humiliating defeat at the hands of a tiny activist who elbows on the board of directors. The dramatic events in the industry last week only add to what appears to be an opportunity for OPEC + producers, giving the Saudi-Russian-led coalition more leeway to bring back their own production. As non-OPEC production is not rebounding as fast as many had expected – or feared based on past experience – the cartel will likely continue to add more supply at its June 1 meeting. “Criminalization” Shareholders ask Exxon to drill less and focus on getting money back to investors. “They threw money down the borehole like crazy,” Christopher Ailman, CalSTRS chief investment officer. “We really saw this business heading for the hole, not surviving into the future, unless it changes and adapts. And now they have to do it. Exxon is unlikely to be alone. Royal Dutch Shell Plc lost a historic legal battle last week when a Dutch court asked it to significantly cut emissions by 2030, which would require less oil production. Many industry players fear a wave of lawsuits elsewhere, with Western oil majors being more immediate targets than state-owned oil companies that make up a large part of OPEC’s output. said Bob McNally, chairman of consultant Rapidan Energy Group and former White House official. While it is true that non-OPEC + production is declining after the 2020 crash – and the ultra-depressed levels of April and May of last year – it is far from a full recovery. Overall, non-OPEC + production will increase this year by 620,000 barrels per day, less than half of the 1.3 million barrels per day that it fell in 2020. Supply growth forecast for the rest of this year “falls short of matching” the expected increase in demand, according to the International Energy Agency. Beyond 2021, oil production is expected to increase in a handful of countries, including the United States, Brazil, Canada and new oil producer Guyana. But production will decline elsewhere, from the UK to Colombia, Malaysia and Argentina. As non-OPEC + production grows less than global demand for oil, the cartel will control the market, executives and traders said. It’s a major break with the past, when oil companies reacted to rising prices by rushing to invest again, boosting non-OPEC production and leaving Saudi-led ministers Abdulaziz bin Salman a much more difficult balancing exercise. the lack of growth in non-OPEC + oil production is not registering much in the market. After all, the coronavirus pandemic continues to restrict global demand for oil. This could be more visible later this year and into 2022. By then, the Covid-19 vaccination campaigns should bear fruit, and the world will need more oil. Iran’s expected return to the market will provide some of that, but there will likely be a need for more. When that happens, it will largely be up to OPEC to close the gap. A signal of how the recovery will be different this time around is the number of drilling operations in the United States: it is gradually increasing, but the recovery is slower than it was after the last major oil price collapse in 2008. -09. Shale companies are sticking to their pledge to return more money to shareholders through dividends. While before the pandemic, shale companies reused 70-90% of their cash flow for new drilling, they now maintain that metric at around 50%. The result is that US crude production has stabilized at around 11 million barrels per day. since July 2020. Outside the United States and Canada, the outlook is even bleaker: at the end of April, the number of oil rigs outside North America stood at 523, lower than it was yesterday. is one year old, and nearly 40% lower than the same month two years earlier, according to data from Baker Hughes Co. When Saudi Energy Minister Prince Abdulaziz predicted earlier this year that “” drilling, baby, drill “is gone forever,” that sounded like a bold call. As ministers meet this week, they might dare to hope he’s right. More stories like this are available on Bloomberg .comSubscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP


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The Fed’s Favorite Lowball Inflation Gauge is Searing, Unseen in Decades, Even Without the “Base Effect” https://basketvillageusa.com/the-feds-favorite-lowball-inflation-gauge-is-searing-unseen-in-decades-even-without-the-base-effect/ https://basketvillageusa.com/the-feds-favorite-lowball-inflation-gauge-is-searing-unseen-in-decades-even-without-the-base-effect/#respond Fri, 28 May 2021 17:57:32 +0000 https://basketvillageusa.com/the-feds-favorite-lowball-inflation-gauge-is-searing-unseen-in-decades-even-without-the-base-effect/

The majestic inflation overrun has arrived.

By Wolf Richter for WOLF STREET.

The Fed’s preferred measure of inflation, typically the lowest inflation measure provided by the US government – well below even the Consumer Price Index which already underestimates real inflation – and therefore our The lowest inflation measure, and therefore the Fed’s preferred inflation measure, was released this morning, and it was a doozie, although it was the most underdeveloped measure of inflation. estimated that the United States has so far proposed.

The personal consumption expenditure price index excluding food and energy, the core PCE index, jumped 0.7% in April from March, after jumping 0.4% in March from February, according to the Bureau of Economic Analysis today. These two months combine into an annualized core CPE inflation rate of 6.4%, meaning that if price increases continue for 12 months at the pace of the past two months, annual inflation would be 6.4%, as measured by the lower measurement. The United States has.

This is the highest two-month annualized rate since 1985. And it shows how suddenly inflation has warmed up in March and April.

Over the past three months – so in April, March and February – the annualized increase in core CPI inflation has been 4.9%, the highest since 1990.

The annualized PCE index eliminates the legitimate problem of the “base effect” that is now hinted at to eliminate inflation data (I discussed the base effect in early April to prepare for what was to come).

The base effect only applies to year-to-year comparisons. In March of last year, the PCE base price index fell 0.1% from February, and in April, it was down 0.4% from March. So, comparing today’s PCE index to that April drop (the lower “base”) would include the base effect.

The BEA also publishes an annualized version of the PCE price index in its quarterly GDP report. In the first quarter, this annualized PCE price index rose 3.7%. But being quarterly, it did not include the April peak.

The three-month annualized base PCE eliminates the base effect. It shows the pace of inflation over the past three months and projects what it would look like if it continued for an entire year. It was 4.9%, the highest since 1990:

On a year-over-year basis and not on an annualized basis, the core PCE jumped 3.1%, the largest increase since 1992. This includes the base effect. But that also includes another effect, in the opposite direction: the very low core PCE inflation rate last fall is dampening the current inflation surge. So this metric exaggerated the current rate of core PCE inflation due to the base effect; and that underestimated the current PCE inflation rate due to very low inflation in the fall of last year. The two effects combined probably balance each other out:

This PCE core is therefore the weakest inflation measure the United States has concocted so far. And this is the one the Fed uses as a benchmark for its “symmetrical” inflation target of 2%. The green line in the graph above indicates this 2% target.

“Symmetric” for the Fed now means that inflation can go above 2% for a while after being below 2%. The Fed did not say exactly how far the Core PCE can exceed the 2% target and for how long it can exceed it. But he said he would be “patient”.

My gut tells me that some of the crazy price increases we’ve seen recently will eventually fade, like spikes in WTF used vehicle prices and new vehicle price increases amid stories that even GM and Ford dealers sell trucks at an equal or greater price. sticker, and amid data showing that these price increases have generated record gross profits for dealers.

My gut tells me that part of this will subside, that buyers will eventually have enough, and sales will go down at those prices, and prices should go down. But they probably won’t go back to where they were, but will stay significantly higher and eventually start rising again from there.

And during that time, services are going to accelerate, like the prices of plane tickets, or rents, or health care expenses, or a million other services. This movement is now launched. Some of the price increases will be “temporary” and then give up some of the gains, before resuming their ascent, while others will take their place and rise in a mole-hit inflation game that the consumer will pay for.

Do you like reading WOLF STREET and want to support it? You use ad blockers – I fully understand why – but you want to support the site? You can make a donation. I really appreciate it. Click on the mug of beer and iced tea to find out how:

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Drone footage of aluminum and steel shingle roofs. Admire the details of each installation from a bird’s eye view.

https://www.youtube.com/watch?v=videoseries


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Another payroll week is coming https://basketvillageusa.com/another-payroll-week-is-coming/ https://basketvillageusa.com/another-payroll-week-is-coming/#respond Fri, 28 May 2021 12:00:45 +0000 https://basketvillageusa.com/another-payroll-week-is-coming/

It’s yet another week of non-farm payrolls in the United States. This indicator has always been the Indicator of the Month, but now with US inflation well above the Fed’s 2% target, it is even more important than usual as a determining factor in US monetary policy.

The Fed’s recently revised statement on long-term goals and monetary policy strategy states that after inflation has remained consistently below 2%, “an appropriate monetary policy will likely aim to achieve inflation moderately above 2%. % for a certain time”. They also said that “long-term inflation expectations well anchored at 2%” are desirable. Well, now we have both: the CPI inflation rate jumped to 4.2% year-on-year in April, while the 5-year / 5-year breakeven inflation rate (the rate of inflation that the market forecasts for the period of five years from five years) is 2.4%, or just over 2%. The Fed can now rest on its inflation target – indeed, many people fear inflation may exceed its target (although most Fed officials disagree.)

It leaves the job market to decide determining whether the Fed has met its targets under its “dual mandate” of “maximum employment and stable prices.”

We recently heard more and more from various members of the Federal Open Market Committee (FOMC) charged with setting rates that they should start “thinking about” withdrawing some of their extraordinary monetary stimulus. This follows last week’s revelation of the minutes from the April Fed meeting which “A number of participants suggested that if the economy continued to move rapidly towards the Committee’s goals, it might be appropriate, at some point in the next few meetings, to start discussing a plan to adjust the pace of growth. asset purchases. ” Since then, we have heard similar comments from a few people. For example, Vice President Quarles said on Wednesday, “If my expectations for economic growth, employment and inflation over the next few months are confirmed. . . and especially if they come in stronger than I expect. . . it will become important for the [FOMC] to begin discussing our plans to adjust the pace of asset purchases in future meetings. He also said the Fed may need to explain in more detail what exactly constitutes “substantial further progress … towards our broad and inclusive definition of maximum employment.”

Note that Quarles said: “our broad and inclusive definition of maximum employment” (emphasis added). This is part of the Fed’s new awareness of how its policies affect minorities in America, a revelation that apparently became clear when it hosted a series of 14 “Fed Listens” events across the country in 2019 “to hear how monetary policy affects people” daily life and livelihoods. As a result, the Fed has focused heavily on racism in recent months. On Wednesday, for example, the Minneapolis Fed hosts the sixth of an 11-part series on “Racism and the Economy,” this time focusing on entrepreneurship. To my knowledge, racism is not a traditional concern of central banks.

It is therefore necessary to examine not only traditional data, such as the number of job creations and the unemployment rate, but also other measures that show how “broad and inclusive” employment gains are. Such as the unemployment rate of people with different backgrounds and the participation rate of people of different races. They show that there is still “substantial” room for “further progress”.

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The raging debate among FOMC members about when they should start ‘thinking about’ reducing their bond purchases appears to be much more serious than the parallel debate among members of the European Central Bank’s Governing Council ( BCE). ECB President Lagarde said last week “Far too early and it is in fact pointless to discuss longer term issues”, such as reducing bond purchases. Likewise, ECB Council member Panetta noted in an interview this week that he saw no justification for the central bank to slow the pace of bond purchases in the ECB’s Pandemic Emergency Purchase Program (PEPP) at its next meeting on June 10.

Newspaper reports indicate that “some conservative central bank governors, such as Dutchman Klaas Knot, are arguing for the ECB to start reducing its emergency measures and revert to more traditional forms of stimulus”. However, I haven’t found anyone other than Knot who says that. Even Bundesbank President and uber-hawk Jens Weidmann said: “The PEPP emergency purchase program is clearly linked to the pandemic and will end when it is overcome. However, no one can reliably estimate when exactly that will be.

At the same time, the single-mandate ECB neither met its inflation target of “close to but below 2%”, nor did inflation expectations reach that level.

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So, as the Bank of Canada cuts its bond purchases, the Reserve Bank of New Zealand plans rate hikes, and the Fed is at least “thinking about” reducing its buying, no such move. is not apparent to the ECB. The forward rates reflect this; EUR rates (blue line) are expected to be the second slowest to rise over the next 2.5 years, after the JPY (green line). A diversion in monetary policy could lead again to a fall in EUR / USD.

This week: NFP, RBA, G7 finance ministers meeting, EU CPI

There’s a lot going on this week. As mentioned above, the focus will be on Friday’s US Non-Farm Payrolls (NFP). After last month’s forecast of + 1mn turned out to be extremely optimistic (the actual was + 266k), this month, economists are revising their forecasts. The median is + 675k, with forecasts ranging from + 335k to + 925k. Of course, there is plenty of time for people to revise their forecasts.

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Unemployment rate is expected to fall to 5.9% from 6.1%.

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Just looking at the results, it seems that positive surprises have a more powerful impact on the subsequent movement of the dollar than negative surprises.

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Monday is a public holiday in the United States (Memorial Day) so the ADP report, which usually comes out the Wednesday before the NFP, will be postponed until Thursday. The NFP comes out on Friday as usual though.

Reserve Bank of Australia (RBA) meeting: suspended

The only major central bank meeting this week is the RBA Tuesday. The other two central banks in commodity currencies have already started to normalize their policy: the Bank of Canada more than a month ago began to reduce its bond purchases, while the Reserve Bank of New Zealand (RBNZ) earlier this week released a forecast for its official exchange rate that incorporated a 2Q rate hike next year. Will the RBA follow? Probably not. At their May meeting, they said they would make key decisions on their yield curve control and quantitative easing programs at their July meeting. That means little to decide this week. The main focus will likely be their assessment of labor market conditions after the disappointing April Labor Force Survey (31k jobs down instead of + 20k as expected).

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In other central bank activities, the Fed publishes the Beige Book on Wednesday, as usual two weeks before the next FOMC meeting.

G7 Finance Ministers meet in London on Friday and Saturday ahead of the G7 summit June 11-13 in Cornwall, England. This follows today’s virtual meeting of finance ministers with central bank chiefs. Finance ministers are expected to agree on uniform taxation of multinationals. This would give a boost to the formal negotiations taking place at the OECD in Paris and led by the enlarged G20 group. The negotiations have two objectives: one, to set an overall minimum tax rate for multinationals, and the other, to ensure that part of their overall profits are taxed according to the location of sales. The goal is to limit the ability of companies to shift profits to low-tax jurisdictions and instead ensure that large US digital companies pay more tax in the countries where they make sales. If finance ministers reach an agreement, G7 leaders could formally accept it at the G7 summit the following week and present the plan to the 139 countries negotiating under the “inclusive framework” at the OECD.

Discussions could be important for globally active FANG + actions, such as Facebook, Apple, Amazon and Google.

Germany announces his CPI on Monday and the EU-wide CPI is published Tuesday. Germany is expected to be above 2% year-on-year, while the EU-wide figure is expected to be close to the ECB’s target of “close to but below 2%”. However, as we saw above, it’s probably not close enough to spark any thoughts of normalization from the ECB, so it might well go virtually unnoticed unless it perhaps misses the forecast, in which case it could be a negative factor for the euro.

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Finally, we get the final indices of purchasing managers (PMI) by Markit (production Tuesday, tertiary and composite Thursday) and with them, the eagerly awaited American Institute of Supply Management (ISM) PMI for the United States.

Last but not the least: June’s biggest event

The most exciting thing on the calendar for this month (not necessarily this week) has nothing to do with the forex market. This is the report of the American intelligence agencies to Congress on “unidentified aerial phenomena”. The unclassified report, compiled by the director of national intelligence and the defense secretary, aims to make public what the Pentagon knows about unidentified flying objects and data analyzed from such encounters.


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What is good for multinationals is not good for the manufacture or the country https://basketvillageusa.com/what-is-good-for-multinationals-is-not-good-for-the-manufacture-or-the-country/ https://basketvillageusa.com/what-is-good-for-multinationals-is-not-good-for-the-manufacture-or-the-country/#respond Thu, 27 May 2021 19:13:05 +0000 https://basketvillageusa.com/what-is-good-for-multinationals-is-not-good-for-the-manufacture-or-the-country/

The 1940s to 1980s were good times for American manufacturing. During this period, the United States experienced tremendous economic growth that built the middle class and launched the notion of the American Dream, where each generation expected to overtake its parents. But after 1980, the US economy began to change.

The economic changes began after economist Milton Friedman said: “The greatest responsibility of an entity lies in the satisfaction of shareholders.” The Business Roundtable translated its commentary into shareholder value, or the idea that the purpose of a business enterprise is to generate economic returns for its owners, period.

Over the past 40 years, the search by multinational corporations (MNCs) for low labor costs and short-term profits has become the driving force that has led the US manufacturing sector to slowly outsource. During this period, the financial sector picked up the economy and manufacturing declined, and multinationals came under enormous financial pressure to invest in projects with the best short-term returns, while corporations investments in factories and equipment have become a lower priority.

In 2001, the United States allowed China to enter the WTO, and multinationals began building factories in China to sell to the growing Chinese middle class as well as export to the United States. The government made a deal with China, but China ignored the deal and exploited the US uses mercantilism and our government chose not to enforce our trade deals. As investment in factories in China and Asia increased, multinationals accelerated the outsourcing of jobs and production, and our trade deficit began to widen. Since 1998, according to the Economic Policy Institute, America has lost 5 million manufacturing jobs and 80,000 manufacturing companies.

After 1980, the new model for American manufacturers was to perform R&D, design and marketing, and to outsource the manufacture of the product to low-cost countries. Economists, academics and multinationals enthusiastically embraced the free trade model because they believed that “it was more beneficial to let market forces steer you towards your comparative advantage”. This model became a China-centric model, creating jobs in China and deindustrializing the United States. The result was that multinationals fueled China’s industrialization at the expense of American manufacturing. Multinationals have created an economy that pits shareholder value and short-term profit against wages. employees, communities and manufacturing.

The media still tout the low 3.5% unemployment rate in 2019 and record stock market growth as indicators of a booming economy. But when you look at the longer term picture, it’s a different story. America grew from 4.6% GDP growth in 1970 to 1.91% GDP growth in 2009. Trade deficits fell from $ 130 billion in 1980 to $ 681 billion in 2020. According to the Bureau of Labor Statistics, the manufacturing sector has lost 7.5 million jobs since 1980. The following The chart shows that as corporate profits increased, corporate tax revenues decreased, resulting in worsened the federal deficit.

During this period, our trading partners have resorted to currency manipulation to gain a price advantage, making their exports cheaper and our exports more expensive. Our government was complicit in the problem because Democrats and Republicans supported the multinational program of short-term profit and outsourcing, and ignored both the manipulation of the currency and the value of the dollar. President Biden recently said he would “take aggressive trade enforcement action against China or any other country seeking to undermine American manufacturing through unfair trade practices, including currency manipulation, anti-competitive dumping, abuses public enterprises or unfair subsidies.

Biden had the opportunity to take aggressive action against currency manipulation when the Trump administration declared currency manipulators in Taiwan, Vietnam, Switzerland and China. But its Treasury Secretary Janet Yellen has removed three countries from the list of manipulators, and it looks like the new administration will do nothing against currency manipulation or the dollar’s value. Like all previous administrations, it looks like the government will favor the financial goals of multinationals, which totally contradicts what Biden has said publicly about manufacturing and job creation.

The role of Wall Street

Wall Street likes a strong dollar and accepts currency manipulation primarily because an overvalued dollar keeps import prices low and fuels the profits of large importers like Apple, Amazon, Costco, and Walmart. To finance the trade deficit, Wall Street bond traders are also making money by negotiating sales of stocks and bonds purchased by our competitors to keep the dollar high. In his article, “The Rise of Wall Street and the Fall of US Investment, Oren Cass argues that Wall Street is bleeding industry investment to fund speculation and short-term profits.

Two hundred and fifty-four Chinese companies that are part of the Chinese “Made in China 25” plan are striving to dominate emerging industries such as artificial intelligence, clean energy, semiconductors, biotechnology, cloud computing, etc. They are all part of a new scholarship. called the Scientific and Technological Innovation Council (STAR ​​Market), which accumulates capital to finance the growth of these companies and make the Chinese Made in China 2025 plan a success.

China no longer needs to list its companies on the US stock exchange to acquire venture capital – Wall Street comes to them and invests in the new Star market. The Coalition for a Prosperous America recently said, “The United States is funding China’s rise and growing. It is a free market and capital is the freest of all, and will seek out where it is easiest to make returns. This begs the question: how can we compete with China if Wall Street is allowed to invest in its growth?

Advanced technology

To manufacture in China, multinationals had to sign technology transfer agreements that ultimately gave our technologies to our competitors. There are 50 high tech industries that are vital to the US economy because they are our best way to maintain a competitive advantage over foreign competitors. However, America has had trade deficits in advanced technologies since 2002, and we are losing these technologies almost as quickly as they are invented because multinationals want to manufacture them in low labor cost countries.

The irony is that outsourcing to foreign countries is not a good long term strategy, as the foreign supplier will end up mastering the technology and dominating the market, as has happened in the semiconductor industry. conductors. When companies lose control of manufacturing and the market, they will come back to the US government to be bailed out like Intel and the chip industry are doing now.

The McKinsey Global Institute has been a consultant to multinationals for decades. The Coalition for a Prosperous American, in an April 2021 commentary, described McKinsey as historically touting “open and free markets, great corporate power, and an evolving supply chain in Asia where the workforce was abundant and the regulations were not ”. But now McKinsey has changed her mind to say that the United States is facing “a present or never to regain capacity and market share.” There is also a growing sense that its frayed social fabric will not be mended without more middle class jobs and attention to the places that have been left behind.

I think McKinsey has reached a watershed moment where they see what’s going to happen to our economy unless we make real changes. Perhaps the semiconductor industry (now in need of a $ 50 billion bailout) has provided a lesson in what will happen to other declining US industries and their multinationals.

The interests of American multinationals and the interests of the country have diverged. The transition to the new service economy has been very difficult for America’s manufacturing sector, citizens, communities and the country. Much of the blame for what happened can be attributed to American multinationals.

In August 2019, 181 CEOs signed a letter of commitment to lead their businesses not only for the benefit of their investors, but “for the benefit of all stakeholders: customers, employees, suppliers, communities and shareholders”. Jamie Dimon, CEO of Wall Street firm JP Morgan Chase, said, “The American dream is alive, but unraveling. Major employers invest in their workers and communities because they know this is the only way to be successful in the long term. These modernized principles reflect the unwavering commitment of the business community to continue to promote an economy that works for all Americans.

The only way, in my opinion, to achieve their new goals of helping employees, communities, suppliers and the country is to move away from their “shareholder-only” model and start shifting production, but up to the point. now they don’t walk their talk. Maybe the multinationals are listening to what McKinsey is saying, or maybe they are following the government bailout of the semiconductor industry and wondering if it could happen to them.

Multinationals and Wall Street now have the nation by their throats and dictate the future of industry and standard of living. What is good for them has turned out not to be good for the employees, the American industry, the communities or the country. We are at a “now or never” time.

Michael Collins is the author of The rise of inequalities and the decline of the middle class and can be reached at mpcmgt.net.


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Canadian Imperial Bank of Commerce quarterly profit exceeds expectations https://basketvillageusa.com/canadian-imperial-bank-of-commerce-quarterly-profit-exceeds-expectations/ https://basketvillageusa.com/canadian-imperial-bank-of-commerce-quarterly-profit-exceeds-expectations/#respond Thu, 27 May 2021 09:32:45 +0000 https://basketvillageusa.com/canadian-imperial-bank-of-commerce-quarterly-profit-exceeds-expectations/

Bloomberg

Investment firms bet against Cathie Wood’s best ETF as technology falters

(Bloomberg) – Cathie Wood’s recent setbacks have been a boon to some of her wealth management peers. About two dozen investment advisers, including Balyasny Asset Management and a unit of Blackstone Group Inc. bought bearish puts during the first quarter on the Arche innovation exchange-traded fund, the primary vehicle for investment of his company, according to regulatory documents. While fund managers often buy put options on ETFs to protect their portfolios against market downturns, the options are typically tied to passively managed index funds such as the SPDR S&P 500 ETF Trust. Yet tech-driven Ark Innovation has grown so rapidly – to $ 28 billion in mid-February from $ 1.9 billion at the end of 2019 – that some managers have seen in the actively managed fund. a better alternative to protect against a fall in stocks that jumped during the pandemic.Big Take: Cathie Wood’s bad spring is a jolt when the future is so bright “The Ark Innovation fund has experienced tremendous growth over the course of 2020 and early 2021, “Efrem Kamen, director of New York-based Pura Vida Investments, said in an email.” However, the level of fund flow in the ETF appeared to be extreme. of Wood’s Ark Investment Management did not respond to phone and email messages seeking comment. Ark Innovation, with ticker symbol ARKK, returned 153% last year, supported by investments such as Tesla Inc. and Zoom Video C ommunications Inc. His fortunes began to deteriorate in mid-February, as signs of inflation prompted investors to abandon tech stocks in favor of value games that would benefit from rising prices, such as banks and mining companies. The ETF has proven to be more volatile than some of the index funds that have traditionally served as a proxy for the tech industry, making it a more profitable way to bet against these stocks or hedge other holdings. ARKK fell 29% through Wednesday from its peak on February 12, while ETF Invesco QQQ, which tracks the Nasdaq 100, fell 0.7%. it was a successful strategy, ”said Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group, of the purchase of ARKK puts. Investors pay a premium to acquire put options, which in turn allow them to sell shares of a public company or ETF to another investor in the future at a fixed price. While some managers and market makers hold a mix of ARKK shares as well as puts and calls, the companies Bloomberg analyzed held such options exclusively or primarily. Deer Park Road Management Co., a Steamboat Springs, Colo.-Based company that trades in assets – and mortgage-backed securities and corporate debt, bought puts in the first quarter on 2.15 million ARKK shares, according to its quarterly 13F file with the Securities and Exchange Commission. The shares covered by the put options had a face value of nearly $ 258 million at the end of March. The put options were priced too low compared to the ETF’s past volatility, making them more attractive as a risk hedging tool, Deer Park Chief Investment Officer Scott Burg said during ‘a telephone interview. Deer Park bought them to protect against rising interest rates, he said. “As rates rise, tech stocks have been squashed,” said Burg, whose company was managing about $ 3.7 billion at the end of the year. “You could see it in the first trimester.” Read more: Cathie Wood fans tie up as ETFs FallPura Vida acquired put options on 622,500 ARKK shares with a par value of nearly $ 75 million in the first quarter, according to his file. The hedge fund’s portfolio was exposed to some of the same areas as the ETF, including genomics and telemedicine, according to Kamen. “The volatility on Ark Innovation ETF was an efficient way to hedge some of the factor risk in our portfolio,” said Kamen. Factors refer to the characteristics of a stock, such as being growth or value play. Blackstone Alternative Solutions revealed that it bought put options on 1.3 million ARKK shares in the first quarter, while Balyasny acquired offers on 436,500 shares with a par value of $ 52 million as of March 31. Other put buyers during the period included Taconic Capital Advisors, Ikarian Capital and Davidson Kempner Capital Management. make a killing here, ”said Eric Balchunas, ETF analyst for Bloomberg Intelligence. “If you’ve done a few of these trades, you’ve probably done well in the past couple of months.” More stories like this are available at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP


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