Reserve Asset – Local Collectors Post Sun, 26 Sep 2021 14:47:58 +0000 en-US hourly 1 Reserve Asset – Local Collectors Post 32 32 Cryptocurrencies: US Regulators Rush To First Major Cryptocurrency Rules Sun, 26 Sep 2021 13:55:00 +0000

WASHINGTON: After largely standing on the sidelines for years as cryptocurrency has shifted from a digital curiosity to a volatile but widely adopted innovation, federal regulators are rushing to address potential risks for consumers and financial markets.

Their concerns only grew as new and established businesses rushed to find ways to profit from the inflow of the massive wealth held in cryptocurrency into the traditional financial system through quasi-banking services. such as accounts and interest-bearing loans.

Now the Treasury Department and other agencies are urgently moving towards an initial target for tighter regulation: a fast growing product called stablecoin.

Issued by a variety of companies that are currently only lightly regulated by a patchwork of state rules, stablecoins serve as a sort of bridge between the cryptocurrency markets and the mainstream economy.

The value of a stablecoin is ostensibly tied to the US dollar, gold, or some other stable asset. The idea is to make it easier for people with cryptocurrency – which is known for its frequent price fluctuations – to make transactions such as buying goods and services, or earning interest on their holdings. in crypto.

The use of stablecoins is increasing rapidly and regulators are increasingly concerned that they are not stable and could lead to a bank run in the digital age. This year alone, dollar-linked stablecoins such as the Tether token, USD Coin, and Pax Dollar have gone from $ 30 billion in circulation in January to around $ 125 billion in mid-September.

“It is important that the agencies act quickly to ensure that an appropriate US regulatory framework is in place,” Nellie Liang, undersecretary of the Treasury who is helping to lead the effort, said in a statement.

Pressure from the Biden administration to exert some control over stablecoins is at the forefront of what will likely be a much larger debate over the role of government in regulating cryptocurrencies – a topic of concern. growing in Washington.

“I saw a fool’s gold rush up close before the 2008 financial crisis,” Michael Hsu, the currency’s acting controller, said Tuesday. “It feels like we may be about to meet another with cryptocurrencies.”

Widely known as a vehicle for speculation, cryptocurrency is increasingly beginning to transform banking and finance and sparks discussions about whether governments should issue their own digital currencies to augment or possibly replace their traditional currencies. .

Stablecoins now underpin a growing share of cryptocurrency transactions around the world, at a time when the total value of circulating crypto tokens like Bitcoin is around $ 2,000 billion, roughly the same value. than that of all US dollars in circulation.

The regulatory push has generated a wave of lobbying from cryptocurrency executives. They have lined up in recent weeks in a series of virtual and in-person meetings with banking and financial regulators, seeking to shape the new rules while largely acknowledging that some form of federal oversight is now inevitable.

Regulators are concerned about whether stablecoin companies hold enough liquid assets to safeguard the value of the currency they issue.

In addition to cash and short-term treasury bills – which are considered safe and easy to redeem – issuers of USDT and USDC stablecoins, for example, also at least until recently hold reserve assets like debt. unsecured in businesses, which is much riskier and more difficult to turn into cash quickly, especially in times of financial crisis. This “commercial paper” is linked to other key elements of the financial system.

Treasury Department officials also want reassurance that stablecoin companies have the technical capacity to handle large increases in transactions, so that they don’t set off a chain reaction of problems if a large number of customers attempt. to cash in their assets.

Problems have already arisen. The Solana blockchain, a relatively new network that has said it has seen an “explode” number of stable transactions, suffered a 5-hour outage on September 14. The company blamed “network resource depletion” that prevented or slowed down customers from buying or selling during the crash.

Federal officials have said in interviews that they plan to use the sweeping powers created under the Dodd-Frank Act, enacted in the wake of the 2008 financial crisis, to initiate a review and potentially declare stable coins ” systemically important ”, a finding that would likely subject them to strict federal regulation.

“Regulators really start to care more when the risks to society increase,” said Jeremy D. Allaire, managing director of Circle, a payments and digital currency company that helped create USD Coin. “You can see naturally that regulators want to find ways to deal with these risks.”

USD Coin has grown about 750 percent this year, with around $ 30 billion in circulation. It is expected to reach over $ 200 billion by the end of 2023 at its current growth rate, Allaire said.

The first step likely to be taken by the Treasury Department will be to release a report with recommendations this fall. In interviews, industry executives, lobbyists and regulators presented an overview of what they expect to see covered in these recommendations, which will form a template for potential regulations to be drafted over the course of the year. year to come.

The rules, they said, will likely dictate that reserves are always sufficiently liquid to meet redemption requests, and that the software systems handling those transactions are robust enough to avoid crashes and severe slowdowns in the face of simultaneous mass transactions. .

They predicted that there would also be requirements regarding the process of creating new stablecoins, security systems to protect privacy and data, and consumer protection measures. Separately, the Treasury Department is also preparing to impose rules aimed at preventing the use of cryptocurrency in illicit activities such as money laundering and tax evasion.

Measures have already been taken to crack down on the sector.

The world’s most popular stablecoin is USDT, issued by Hong Kong-based Tether; it currently represents more than half of the world supply of stable coins. New York state regulators in 2019 opened a Tether fraud investigation, an investigation that was settled this year with a deal banning the company from doing business with clients in New York City and ordering it regularly disclose what types of reserve assets back up its stablecoin.

Circle has already announced its intention to voluntarily shift its reserves to more liquid assets starting this month.

The new rules will create winners and losers, with some industry players better positioned than others to embrace them, who may need to change their business models to align.

Stablecoin issuer Paxos, for example, supports the decision to regulate stablecoins. But he opposes the use of powers created under the Dodd-Frank Act of 2010 which allows an entity called the Financial Stability Oversight Board – made up of the Secretary of the Treasury, the Chairman of the Federal Reserve and from 13 other leading federal and state financial regulators and financial experts – to effectively extend its reach to stablecoins by declaring stablecoins business or companies “systemically important”.

But at Circle, its chief executive said he was not opposed to the appointment.

“Large-scale, asset-backed dollar stablecoins that can be used across the entire Internet will be at this point, they will have that systemic designation,” Circle’s Mr. Allaire said.

Another option would be to create some sort of new type of bank charter for stablecoin issuers that addresses a number of regulatory concerns.

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Fight inflation with these traditional knowledge strategies Sat, 25 Sep 2021 09:01:18 +0000

  • Indraneel Karlekar is Head of Research for Principal Real Estate, which manages nearly $ 100 billion.
  • He told Insider he believes investors will continue to use real estate as a hedge against inflation.
  • He also touched on 3 other themes guiding real estate investment decisions.

American investors are increasingly concerned about inflation.

Inflation is calculated from the change in the price levels of a “market basket” of goods, the most important measure being the consumer price index (CPI). This year, the annual inflation rate exceeded 5% for the first time in more than a decade.

“Inflation in the United States has been a hot topic, especially since it has been high in recent months,” Indraneel Karlekar, managing director of Principal Real Estate, told Insider in a recent interview. “There is a lot of debate as to whether this will be transient or stay high.”

If inflation remains high, retail investors will turn to durable assets that offer inflation protection, according to Karlekar. This will make real estate an area to watch.

“Many advisers are allocating extra dollars to their clients’ portfolios to stay ahead of inflation over the next three years,” he said. “We are seeing an active rotation or rebalancing, with capital flows from retail investors turning to durable assets with inflation-hedging capabilities.”

Karlekar, a 20-year real estate veteran, heads Principal’s research and strategy unit for the industry. His employer is one of the world’s top 10 real estate companies, managing or sub-advising nearly $ 100 billion in assets.

“The search for yield has not diminished, the search for diversification has not diminished, and real estate can still be an anchor for growing your portfolio,” he told Insider. “It makes me very confident and positive about the future of this asset class.”

Insider spoke to Karlekar about how retail investors can buy durable assets like real estate to beat inflation. He also broke down three other trends to watch out for.

Beat inflation

Many retail investors have limited experience with inflation.

“We haven’t really had a period of sustained inflation since the 1970s,” Karlekar told Insider. “A lot of people face a very strange environment – they’re not used to 5% inflation, they’re used to 2%.”

Retail investors should turn to durable assets if inflation remains high, according to Karlekar. A sustainable asset refers to a resource with fundamental value, usually commodities, energy or real estate. These assets tend to lose less value than others during periods of sustained inflation.

“Investors are increasingly turning to assets that can increase income beyond inflation, or at least equalize inflation,” Karlekar said. “Real estate makes a lot more sense than fixed income because bonds are a softer asset. “

Fixed income securities tend to suffer the most when price pressures intensify, as inflation erodes returns over time.

Karlekar told Insider that investing in properties with shorter leases gives investors even more protection against inflation.

“The types of leases that offer the most protection are the shortest leases,” he said. “Come to think of it, owning a hotel is the best hedge against inflation because you can set up overnight leases.”

Karlekar particularly likes structural real estate as a way to protect a portfolio. It goes beyond conventional residential or commercial office real estate and instead focuses on assets that are more isolated from broader macroeconomic trends.

“We’re seeing a lot of interest in structural real estate strategies, where there’s a lot of structural growth,” Karlekar told Insider. “Data centers are very hot right now, just like industrial warehouses, cold storage is a little more niche but is becoming more and more attractive.”

“What is common to the latter are their powerful structural drivers,” he added. “They are not dependent on cycles of economic growth.”

Themes to watch

Karlekar said

Federal Reserve
monetary policy will affect the real estate market. The Dow Jones Industrial Average jumped 338 points on Wednesday after the Fed said it would start cutting stimulus “soon”. This could include an increase in interest rates.

“We have all benefited from extraordinary largesse from the central bank over the past two years, and that has led to this very strong asset recovery that we have seen over the past 18 months,” he told Insider .

When interest rates rise, the cost of borrowing increases, which means mortgages become more expensive. This has an impact on home buyers and sellers.

“A lot of retail investors have been used to low rates for a long time, and many are heading into an age where they have to throw away their savings,” Karlekar said. “Investors are now positioning themselves for higher interest rates.”

“When rates go up there will be more volatility,” he added. “This means that many investors are adding more real estate to their portfolios.”

Principal’s research team also noted that retail investors are increasingly turning to private goods. These are investments that are not listed or traded on a stock exchange, including infrastructure, insurance, private equity, and real estate.

“The pandemic catalyzed a pre-existing trend,” Karlekar told Insider. “There has been an increasing use of private vehicles, and real estate occupies a very important place.”

One of the ways for investors to buy these alternatives is to

(real estate investment company), an investment vehicle that finances or owns income-generating properties. Karlekar said non-traded REITs, which are marked on a quarterly basis rather than traded daily, were particularly on the rise.

“Retail investors want to have access to small pieces of these investment strategies,” he told Insider. “Non-traded REITs offer very stable returns to investors and they are becoming an important part of the real estate universe in Europe and the United States. “

Finally, the ESG The megatrend of analyzing a business based on environmental, social and corporate governance factors has an impact on real estate, Karlekar said.

“The ESG phenomenon has been given wings by the pandemic, especially the social aspect,” he said. “Investors are striving to incorporate ESG into their real estate strategies, which means building solar panels, reducing new development, securing more equitable housing opportunities and investing in disadvantaged areas. “

“It’s now very much embedded in the way real estate investors view the world,” Karlekar added. “I would say all of these global trends are here to stay.”

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Business This Week | The Economist Fri, 24 Sep 2021 18:19:32 +0000

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A global shortage of natural gas supplies continued to shake the markets. Prices have skyrocketed in recent weeks, especially in Europe, following a convergence of unfavorable factors, such as surging demand in Asia coinciding with tight stocks of liquefied natural gas. In Europe, some governments are stepping in to ease the pressure on spiraling household bills. The International Energy Agency stressed that Russia’s gas exports to Europe are below their 2019 level and urged it to “do more to increase the availability of gas.”

A hen situation

One of the many ripple effects of the turmoil in gas markets has been the shortage of carbon dioxide as industrial gas in Great Britain. A major producer of carbon dioxide has had to shut down factories due to soaring natural gas prices, leading to warnings from the chicken industry of a possible poultry shortage. Carbon dioxide is used to stun hens intended for slaughter.

Evergrande, one of China’s largest real estate developers, said it had “solved” the interest payment on a domestic bond amid a liquidity crunch. The heavily indebted company warned of default and reportedly defaulted on interest payments to bank creditors. Investors are watching nervously. The central bank injected liquidity into the financial system to boost confidence.

The official statement of of the Federal Reserve This week’s meeting prepared markets for the strong possibility that it will start cutting back on its purchases of pandemic program assets in November. The central bank also hinted at an interest rate hike next year.

The OECD raised its forecast for inflation in the g20 countries, partly because of higher shipping costs and energy prices. The group’s average annual inflation rate is now expected to be 3.7% this year and 3.9% in 2022. Fight against inflation that is close to 10%, from Brazil central bank raised its main policy rate for the fifth consecutive month.

The United States House of Representatives passed a bill that would expand federal power debt ceiling until December of next year to avoid a government shutdown on October 1 of this year. Democrats supported the bill and Republicans opposed it. The Senate will now have its say, amid warnings that markets will lose patience the longer a resolution is delayed.

Douyin, a Chinese video sharing app that has an international version called TIC Tac, said children under 14 in China would be limited to using it for 40 minutes a day. It is the latest move in China to tighten controls on children’s online behavior.

Shell has reached an agreement to sell its energy assets in the US Permian Basin to ConocoPhillips for $ 9.5 billion. The Anglo-Dutch energy giant is under pressure to step up the pace of carbon emission reductions. In May, a Dutch court ordered the company to meet a specific target of reducing carbon emissions by 2030 (it is appealing the decision). Shell described the sale of its Permian business as “disciplined management of capital.” Some $ 7 billion in revenue has been earmarked for “shareholder distributions.”

Universal music successfully debuted on the Euronext stock exchange in Amsterdam. Its share price jumped by a third on the first trading day, in the largest European listing this year. The music company, which counts IEM and Motown among its record companies, was split by Vivendi, although the majority shareholder of the French media conglomerate, Vincent Bolloré, retains an 18% stake.

Entain, a UK gambling company and owner of the Ladbrokes and Coral brands, said it had received a buyout approach, worth an estimated $ 25 billion, from DraftKings, an American operator of fantastic sports and betting.

Mitsubishi UFJ Financial Group, Japan’s largest lender, to sell consumer banking operations in America at we Bancorp in an $ 8 billion deal. MUFG Expanded to US retail banking when it took full control of Union Bank during the financial crisis in 2008. It will retain its merchant and investment banking activities in America, major providers of income.

In a vote of confidence for the future of office work, Google has announced that it will buy the building that serves as its hub in New York City for $ 2.1 billion, although it expects some employees to continue working remotely.

Return of the salad days

In Great Britain, a different indicator, the financial health of ready to eat– also suggested a rosy future for the office. The cafes and snacks chain, a lunchtime crowd favorite, has seen sales rebound in London’s financial district. During the pandemic, it has closed stores across Britain, but now plans to open 200 new ones by the end of 2023. However, most of them will not be in city centers, the traditional habitat of Pret, but in the suburbs and regional towns.

This article appeared in the The World This Week section of the print edition under the headline “Business This Week”

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Bitcoin will really drain the swamp Fri, 24 Sep 2021 01:00:00 +0000

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

“Same Ditto, but different Ditto”

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

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

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

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

M1 silver stock

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

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

Repair the incentive mechanism

Drain the swamp. Via Yves Moret on Unsplash

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A question of reservations

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

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

More information on Busd here

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

Maintain compliance

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

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

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

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

Stablecoins in action

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

Manage market instability

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

Daily Transactions

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

Building DeFi Foundations

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

BUSD: A case study for stablecoin compliance and security

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

In search of compliance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

About FlexShares

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

About Northern Trust Asset Management

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

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

About Northern Trust

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Alexandra Stevenson contributed reports.

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