Treasury bills – Westie Lovers http://westielovers.com/ Tue, 20 Sep 2022 08:00:24 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://westielovers.com/wp-content/uploads/2021/03/cropped-icon-32x32.png Treasury bills – Westie Lovers http://westielovers.com/ 32 32 Members of Congress shouldn’t play the market https://westielovers.com/members-of-congress-shouldnt-play-the-market/ Tue, 20 Sep 2022 08:00:24 +0000 https://westielovers.com/members-of-congress-shouldnt-play-the-market/ If ever there was a time to try to restore trust in government, this is it. And there’s no better place to start than in the halls of Congress – where members are privy to a wealth of valuable information long before the public. Think about the pre-pandemic period, government purchases of pharmaceuticals, and new […]]]>

If ever there was a time to try to restore trust in government, this is it.

And there’s no better place to start than in the halls of Congress – where members are privy to a wealth of valuable information long before the public. Think about the pre-pandemic period, government purchases of pharmaceuticals, and new Department of Defense contracts, to name a few possibilities.

Finally, House Speaker Nancy Pelosi pledged to introduce a compromise bill to prevent members of Congress — and their immediate family members — from trading individual stocks while in office. The bill, crafted from a number of proposals that have surfaced over the year, could also expand the ban on stock trading to include senior congressional staffers, who , after all, are also privy to this same level of insider information.

Pelosi’s commitment to House action on the bill before the end of the month follows a New York Times report that found that at least 97 members of Congress or their immediate family members ( typically spouses) traded shares or commodities closely related to lawmakers’ committee missions. So close, in fact, that they risked a conflict of interest.

Now, true insider trading is prohibited by the STOCK (Stop Trading on Congressional Knowledge) Act of 2012, which was supposed to prohibit members and employees of Congress from using “any nonpublic information derived from the position of individual…or obtained in the exercise of the functions of the individual”. , for personal benefit.

But proving that has been a tricky business.

Under the disclosure provisions of that earlier law, we know that Senator Richard Burr, then Chairman of the Senate Intelligence Committee, before the pandemic really hit the United States, sold up to 1.7 million dollars in stocks before the market takes a colossal hit. The North Carolina Republican privately told a group of voters gathered in Washington on February 13, 2020 that the coming health threat “is more aggressive in its transmission than anything we have seen in recent history.”

A Justice Department investigation cleared him of insider trading charges in January 2021.

The Times report found two members of the Massachusetts delegation among those trading stocks with potential conflicts. Rep. Katherine Clark’s husband, the fourth-highest-ranking Democrat in the House, The Times reported, has made a number of stock trades involving health care companies, including two Hologic stock purchases in late 2020 or so. one week before the company award. a $119 million COVID-19 testing contract with the Departments of Health and Human Services and Defense. The shares were sold a few days after the announcement of the contract. Clark’s office said neither she nor her husband trade their retirement accounts directly — and she favors a congressional ban.

Representative Bill Keating, a member of the House Armed Services Committee, said he traded between $22,000 and $155,000 worth of stocks and bonds in companies under contract with the military. Keating says the picks were made by an investment firm and he also favors a stock trading ban.

The shape of the current legislation is still a work in progress — currently the subject of negotiation led by House Administration Committee Chair Zoe Lofgren of California.

But an earlier bipartisan framework paves the way for the ban on stock trading and provisions allowing lawmakers to assign or place their assets in a blind trust. This would allow covered individuals to “diversify those investments by placing them in broadly distributed, diversified mutual or exchange-traded funds, or U.S. Treasury bills, notes, or bonds.”

It also calls for better enforcement mechanisms and “sufficient penalties to ensure member compliance.”

“With members of Congress from both parties flouting basic financial conflict of interest laws and appearing to take personal advantage of their positions of public trust, Americans understandably wonder if their government is working on their behalf,” wrote Citizens for Responsibility. and Ethics in Washington in a letter to lawmakers last week calling for the adoption of something resembling the “framework” proposal.

The House clearly got the message. The Senate, however, works at a somewhat more leisurely pace. Sen. Jeff Merkley of Oregon, a supporter of a stock trading ban, said last week he expected no action before the midterm elections. Senator Elizabeth Warren, who introduced a stock trading ban bill last February with fellow Republicans Steve Daines of Montana and Marsha Blackburn of Tennessee, told the Globe editorial board she was still seeking additional GOP supporters.

“Every day that we delay passing meaningful restrictions on stock trading among members of Congress is a day that further erodes the credibility of this body,” she told Business Insider.

Public confidence in Congress — always a cellar dweller in Gallup polls — hit a new low this summer, dropping from its already abysmal 12% in 2021 to 7% this year.

Whether members of Congress are guilty of real or perceived conflicts is almost irrelevant. The question has become one of restoring public trust in a branch of government that desperately needs to face its own demons and emerge from the swamp of Washington.


Editorials represent the opinions of the Editorial Board of The Boston Globe. Follow us on Twitter at @GlobeOpinion.

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Issuance of commercial papers increases by around 60% on the month to reach Rs 1.51 lakh cr in August https://westielovers.com/issuance-of-commercial-papers-increases-by-around-60-on-the-month-to-reach-rs-1-51-lakh-cr-in-august/ Thu, 15 Sep 2022 07:54:27 +0000 https://westielovers.com/issuance-of-commercial-papers-increases-by-around-60-on-the-month-to-reach-rs-1-51-lakh-cr-in-august/ Bombay: Funds raised through commercial paper rose sharply by around 60% month-on-month to Rs 1.51 lakh crore in August due to large issuances by some companies. This was even after rates on these instruments rose more than 25 basis points throughout the month. According to the Prime database, companies raised Rs 1.51 lakh crore in […]]]>

Bombay: Funds raised through commercial paper rose sharply by around 60% month-on-month to Rs 1.51 lakh crore in August due to large issuances by some companies. This was even after rates on these instruments rose more than 25 basis points throughout the month.

According to the Prime database, companies raised Rs 1.51 lakh crore in August, up from Rs 94,599 crore in July. With this, fundraising in August is the highest in the current fiscal year.

Some regular issuers such as Petroleum Marketing Companies, National Bank for Agriculture and Rural Development, Export and Import Bank of India, SIDBI who usually raise funds for their fund requirements working capital and their financing needs, contributed to a strong increase in issues during the month.

“During the month of August, there was a remittance due of approximately Rs 17,870 crore to the Department of Telecommunications, Government of India from Indian telecom operators towards payment for 5G spectrum. Hence, in addition to the regular borrowing, we saw Bharti group, Reliance Jio also tapped into the commercial paper market during this period,” said Venkatakrishnan Srinivasan, Founder and Managing Partner of Rockfort Fincorp LLP, a Mumbai-based debt advisory firm.

Other issuers like Larsen & Toubro, Reliance Retails, among others, also raised funds during this period.

Meanwhile, the rates for these instruments saw a sharp rise of 20 to 25 basis points after the Reserve Bank of India (RBI) in its monetary policy raised the repo rate by 50 basis points to control inflation .

The rate on commercial paper issued by manufacturing companies maturing in three months was trading at 6.30-6.45% at the end of August, against 6.10-6.25% at the end of July.

While those on papers issued by manufacturing companies were trading at 6.10-6.30% at the end of August, against 5.90-6.10% at the end of July.

Along with this, Treasury bond yields have also seen a sharp rise since the RBI started raising rates. Yields on Treasury bills across all maturities rose more than 150 basis points.

In August monetary policy, the central bank raised the repo rate by 50 basis points to 5.40%. It was the third policy in a row where the apex bank raised rates since May this year. So far, the central bank has raised the repo rate by 140 basis points to contain inflation.

Additionally, analysts estimate the central bank will hike 35 to 50 basis points after retail price inflation in the country hit 7% in August from 6.71% in July. This comes after three months of retail price inflation in India falling from its peak.

Consumer price index inflation remained above the central bank’s upper tolerance band of 6% for the eighth consecutive month.

Going forward, on the commercial paper issuance front, experts believe that oil marketing companies and telecommunications companies are likely to exploit the market and could remain regular borrowers.

NBFCs can tap into the market to raise funds to meet the needs of their borrowers during the festive season that is about to begin. Telecom companies will raise funds as disbursements are made as a short-term measure.

“Other regular borrowers, including NBFCs, will continue to borrow funds regularly subject to liquidity availability and finer pricing compared to banks,” Srinivasan added.

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Invest with inflation. As long as the dollar is breathing, the peso should not be neglected https://westielovers.com/invest-with-inflation-as-long-as-the-dollar-is-breathing-the-peso-should-not-be-neglected/ Sat, 10 Sep 2022 19:57:45 +0000 https://westielovers.com/invest-with-inflation-as-long-as-the-dollar-is-breathing-the-peso-should-not-be-neglected/ The fiscal dollar is in a “PAX” period, flattened by momentary gains for agricultural exporters, as short-term investors focus on finding an inflation hedge in September.A front which is still far from looking cool and which is seriously eroding portfolios and purchasing power, and taking advantage of certain opportunities that the markets are opening up. […]]]>

The fiscal dollar is in a “PAX” period, flattened by momentary gains for agricultural exporters, as short-term investors focus on finding an inflation hedge in September.A front which is still far from looking cool and which is seriously eroding portfolios and purchasing power, and taking advantage of certain opportunities that the markets are opening up.

Four analysts consulted Country They offer to mix peso instruments to try to gain an advantage over the CPI – although it is not an easy task – without ever neglecting their backs, nor assuming the level of risk.

like always, The market anticipated and partly bought into the optimism generated by the soybean dollar and the promise that the sector would liquidate the equivalent of US$5,000 million, which would increase the reserves of the BCRA. Is it something fixed, like sleeping in peace? “It’s not a permanent solution, but it will have a positive impact. In other words, to save time,” explains Pedro Ciaba Serrate, Head of Research at PPI, and puts a piece of data on the table for evaluation. in terms of CCL) should be around $315, a difference of 10.4% from the current level. If soybean sales do not perform as well as expected, or if there are new stress conditions, CCL will see a rebound. There is scope.

To clarify the starting point, let’s go straight to inflation. From IOL Investonline, the broker’s head of research, Maximiliano Donzelli, warns that “for the rest of the year, advisers have adjusted their inflation forecast for this year to 90.2%”. “Given this scenario, having pesos without investment leads to a loss of purchasing power, positioning yourself in CER and Badler bonds at maturity is a good option.”

On your list are the T2X4 bond, which adjusts its capital by the CER, maturing in July 2024, and the rate differential with the TX24 bond, which is also adjusted by the CER. The IRR from now CER is +7.4% and the estimate is 97.8%. The TB23P bond is added to the adjusted Badlar rate recommendation. “Due to February 2023, it pays a coupon on a quarterly basis at +5.25% Badler rate, while managing to capture a more aggressive monetary policy from the BCRA,” explains the IOL analyst. “For a conservative profile, we prefer to keep the necessary liquidity only in pesos for face-to-face payments and thus avoid the exchange risk”, warns Ciaba Serrett. Their recommendation: “Letters that can be modulated by CER or General Investment Fund (FCI) are interesting for preserving part of the short-term liquidity”.

Tomas Ruiz Palacios, bond analyst at Consultio Financial Services, proposes in the short term to maintain two-thirds of the pesos and one-third of the dollar through the portfolio with the FCI. “A simple and effective strategy could be to invest one-third in the Consultio Multistrategia investment fund, one-third in Consultio Renta National and one-third in Consultio Balance. The first invests in negotiable bonds in pesos, that is to say, these are loans to companies that offer great protection to the investor because they have no sovereign risk; National income invests in indexable Treasury bonds whose maturity is not very distant (and therefore less risky); Although Balance Fund is our Total Return Fund, which takes a bit more risk, it has given returns of 6.5% over the past 30 days, a figure very close to inflation.

Gastón Lentini, independent consultant and consultant registered with the CNV, comes to life with some recommendations for spending not only in spring but also in summer. The first thing he points out:The government’s strategy with the creation of soybean dollars seems to bring cold clothes in the short term, so a $270 dollar is a possibility we should take advantage of, both for those who plan to spend those savings at the end of the year. . And for those looking for an investment. long-term “, Let’s move on to the main question: will it continue to fall? He replies that “if there is no sharp cut in spending, it is only a matter of time before concerns and prices go back up.”

Investors are looking for alternatives such as Cedar to hold their portfolios in dollars.to print

Bonds or funds denominated in dollars that seek to replicate the official movement of the dollar are presented as a possibility for the investor because the futures contracts predict a change of 62% by March 2023, or 110% There is more than TNA,” he added. Lentini. “Of course, if this scenario occurs, CER-adjusted assets will grow even faster, and this logic leads us to recommend a higher proportion of CER-adjusted assets than those pegged to the official dollar,” he said. he. East. In the latter category, he mentions “the fixed UVA terms which are still available at some banks although the equivalent is the inability to hold that money for 90 days and the CER-adjusted FCI which offers a hedge against inflation, although it closes otherwise correct and gives us the possibility of receiving the funds in 48 hours if the conditions require it”.

For investors of all backgrounds, negotiable bonds (ON) in dollars and sowers are a good option to capture a fall in the price of the free exchange rate. IOL’s Donzeley has two more “pearls” to add: Pfizer’s CeDear and the Dow Jones ETF. “Pfizer is a company that serves the healthcare industry in the United States, an industry that has outperformed during a bear market and a slowing economy.” When it comes to the Dow Jones, it is clearly made up of 30 leading US stocks. “It is the only index composed of companies that have shown positive performance in terms of earnings generation over a significant period.”

“For medium/long term savings, the investor who can accept greater volatility in exchange for higher expected returns can access a wider menu of options by looking for vehicles with good credit quality”, offers Ciba Serret. Their recommendations: Certain corporate ONs such as Telecom 2025, Zenia 2027, CGSA 2025 and YPF 2026 (backed by agricultural exports) and provincial dollar bonds also represent an attractive option.

“From royalties and production figures, we show that the two NewQueen 2030 bonds have value, while CABA 2027 and Mendoza 2029 stand out for their satisfactory financial results”, explains the PPI expert.

Lentini offers another option. “If, due to one of the many restrictions, the investor cannot use MEP dollars to buy, I recommend taking positions in marketable bonds with short maturities and waiting to accumulate at the due date. As such, it does not violate the rules and if, for example, he chooses ON from the Arcor RCC9, it is made in the dollar at $267, although he will have to wait until July 23 to receive it.

Seeder is a great option for hedging local risk and holding a dollar portfolio. This month’s PPI portfolio for “hot” investors 40% SPY Cedeear (tracks S&P500), 25% QQQ (tracks NASDAQ), 15% EWZ (Brazil), 15% XLE (energy sector) and composed of 5%. in XLF (Financial Sector).

“If I had to come up with a specific portfolio to think about in February-March 2023, I would put 40% in the FCI CER, 20% in the FCI dollar, 15% in the Cedar of Berkshire Hathaway and 25% in the dollar. I want to deploy to curator. The FCI waits for opportunities, which usually accompanies rule changes, which we are unfortunately used to,” says Lentini.

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Global Growth Concerns Play Spoilsport Index Tanks 563 Po… https://westielovers.com/global-growth-concerns-play-spoilsport-index-tanks-563-po/ Sat, 03 Sep 2022 03:12:58 +0000 https://westielovers.com/global-growth-concerns-play-spoilsport-index-tanks-563-po/ (MENAFN- Gulf Times) Concerns over global growth over apprehensions of weaker oil demand and China’s new Covid-19 restrictions have played spoilsports in global stock exchanges, including the Qatar Stock Exchange, which has seen its key index plunge 563 points and its market capitalization erode over QR 31 billion.A sell-off across the board, notably in banks […]]]>

(MENAFN- Gulf Times)

Concerns over global growth over apprehensions of weaker oil demand and China’s new Covid-19 restrictions have played spoilsports in global stock exchanges, including the Qatar Stock Exchange, which has seen its key index plunge 563 points and its market capitalization erode over QR 31 billion.
A sell-off across the board, notably in banks and transport, sent Qatar’s 20-stock index down 4.1% this week, which saw Qatar Industries give its subsidiary Qatar Fertilizer the go-ahead to establish the largest blue ammonia plant in the world at an estimated cost of over $1 billion.
Foreign institutions were seen as net profit takers this week, which helped Vodafone Qatar secure Qatar’s first Central Bank license for electronic payment services.
Over 89% of constituents traded were in the red this week which saw Estithmar Holding unveil its Katara Hills hotel project.
Gulf institutions turned bearish this week, which saw Qatar record a 78% year-on-year jump in its trade surplus in July 2022.
Net purchases by national institutions have weakened considerably this week, which has seen Qatar’s producer price index climb by more than 50% year-on-year in July 2022.
Net purchases by Arab individuals also declined noticeably this week, with a total of 0.08 million Masraf Al Rayan-sponsored QATR-sponsored exchange-traded funds worth 0.24 million QR traded across 33 trades.
However, local retail investors turned net buyers this week, which saw as many as 0.24 million Doha Bank-sponsored QETFs valued at QR 3.16 million change hands in 162 transactions.
Overall trading turnover and volumes were down in the main market this week, which saw the industrial and banking sectors together make up more than 64% of total trading volume.
Market capitalization eroded by more than QR 31 billion or 4.12% to QR 733.18 billion, mostly in the large and mid cap segments this week, which saw no sovereign bond trading .
In the case of the venture capital market, trade and turnover were down this week, which saw no treasury bill trading in the main market.
The Total Return Index fell by 4.1%, the All Share Index by 3.97% and the All Islamic Index by 3.46% this week, helping Qatar’s maritime sector record strong performance in August 2022.
The banking and financial services sector index fell by 4.82%, transport (4.68%), industry (3.47%), real estate (2.89%), insurance (1.76%), consumer goods and services (1.6%) and telecom (0.13%) this week.
The main losers in the main market were Ezdan, Milaha, Qatar Islamic Bank, QNB, Mesaieed Petrochemical Holding, Qatar Industries, Commercial Bank, Qatar First Bank, Qatar National Cement, Qatar Industrial Manufacturing, Gulf International Services, Qatar Electricity and Water, Estithmar Holding. , Barwa, Mazaya Qatar, Nakilat and Gulf Warehousing. In the venture capital market, Al Faleh Educational Holding and Mekdam Holding saw their shares depreciate.
Nevertheless, Qatari German Medical Devices, Zad Holding, Ahlibank Qatar, Ooredoo and Al Meera Consumer Goods were among the main market winners this week.
Foreign funds became net sellers at QR 32.37 million against net buyers of QR 43.71 million in the week ended August 25.
Gulf establishments were net sellers of QR 24.65 million compared to net buyers of QR 7.65 million the previous week.
Net purchases by national institutions decreased significantly to QR 6.57 million from QR 106.79 million a week ago.
Net purchases by Arab individuals weakened significantly to QR 16.63 million from QR 21.84 million in the week ended August 25.
However, local retail investors became net buyers at QR 26.35 million compared to net sellers of QR 163.46 million in the previous week.
Foreign individuals were net buyers at QR 8.16 million compared to net sellers of QR 13.34 million a week ago.
Arab Institutions net profit bookings decreased significantly to QR 0.7 million from QR 2.79 million in the week ended August 25.
Total trading volume in the main market increased by 3% to 8,640.92 million shares, value by 24% to 3.67 billion QR and trades by 17% to 94,975.
In the venture capital market, trading volume decreased by 30% to 0.88 million shares, value by 26% to 6.23 million QR and transactions by 20% to 346.

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With silver rates low, “something” is up https://westielovers.com/with-silver-rates-low-something-is-up/ Mon, 29 Aug 2022 15:34:34 +0000 https://westielovers.com/with-silver-rates-low-something-is-up/ Comment We’ve all been taught to associate low money rates with stimulus, and especially high money rates with hardship. And that may be true in certain circumstances. This theoretical world of easy interpretation does not exist outside the media or the econometric models of central banks. History, even recent, invites at the very least a […]]]>

Comment

We’ve all been taught to associate low money rates with stimulus, and especially high money rates with hardship. And that may be true in certain circumstances. This theoretical world of easy interpretation does not exist outside the media or the econometric models of central banks.

History, even recent, invites at the very least a more nuanced approach.

Take, for example, the situation in December 2007 when the Federal Reserve, under its still relatively new chairman, Ben Bernanke, began to realize that subprime mortgages were not contained (because they were not of subprime). After the clear breakdown of August 9, the Federal Open Market Committee (FOMC) had simply followed its instruction manual: August (primary credit), then September (federal funds target) rate cuts, and a clear “message” for more “help”. ” in the form of even moving forward.

Over the following weeks, the chaos in the monetary world only worsened. Bernanke’s group of policymakers were forced to take actions we never imagined by a Federal Reserve regime.

The unveiling of the term auction facility (TAF) auctions announced on December 12, 2007, along with the implementation of foreign dollar swaps, was met with widespread shock and disbelief. We were always told that the most powerful monetary institution, the money printer in the world, could solve any problem with a simple stroke of a simple rate cut.

Instead, the TAF auction was initially (and continuously) overwhelmed by “American banks” with mostly German names (US-based subsidiaries of mostly German foreign parent companies). Add to this overseas flavor the obvious offshore nature of foreign dollar swaps, and if you had been paying attention you would have very quickly realized what a global dollar (eurodollar) panic this was unlike to what is taught in antiquated and outdated textbook theories.

The first of these TAF operations took place on 17 December. The next day, December 18, the effective federal funds rate (EFF; the market weightedmedian of all unsecured interbank lending taking place in the fed funds market) plunged from 4.31% to 4.16%. At that time, the FOMC’s target was 4.25%, meaning the EFF was significantly lower than officials demanded.

The following day, December 19, the EFF would lose another 18 basis points (bps), falling below 4%.

Wasn’t it just the TAF auctions that poured significant amounts ($20 billion) of cash and liquidity into these markets?

No. Leaving aside legitimate objections about what’s on the other end (bank reserves) and whether these are useful forms of money (they aren’t), the Federal Reserve has been sterilization his activities anyway. In other words, most of Bernanke’s embattled policymakers tried to redistribute funding to weaker companies (those that would bid the most for reserves).

This does not and cannot explain both the presence and persistence of low EFF before and after these auctions, indeed, from the very beginning throughout the entire monetary policy (not financial) panic.

And it wasn’t just a problem for federal funds. Repo rates such as that of the GC repo (or general guarantee, i.e. a secured or guaranteed short-term interbank funding arrangement using essentially generic US Treasury securities as collateral) would often fall much more than the ‘EFF.

On December 18, 2007, the GC repo rate was only 3.525%, a whopping 63.5 basis points lower than EFF and 72.5 basis points below the purpose of the Federal Reserve’s federal funds. Then the rate fell again on December 19. These are chaotic results, clear signs of massive disorder, despite the TAF and the Fed’s (unnecessary) foreign swaps, even if illustrated by fall monetary rates.

Transaction-based rates like EFF and GC repo do not take this into account. doesn’t occur in these markets. How could they? If, for example, a subprime borrower in fed funds (remember, unsecured) who yesterday was charged a higher rate by the market to lend because of their perceived risk profile is completely shut out of the market today, the calculated median effective rate (the effective rate) for the entire market will decline because of simple statistics.

And if the market were to decide to withhold fed funds from lending to a large number of high-risk counterparties out of general fear, their typically higher-rate trades disappear from the calculations, skewing the mean and median downward. The more illiquid the market becomes for a wider variety of borrowers, aside from just the best of the best (those paying low rates), the more lower the transaction-based rate will drop.

In this situation, the decline in money market rates represents quite the opposite of a stimulus.

The same goes for repos: if there are not enough interbank borrowers with acceptable collateral, cash lenders will resort to much lower rates from borrowers who can post good collateral. , which most commonly means US Treasuries, also explaining the same found behavior of the GC deposit.

No matter what the Federal Reserve tried, nothing stemmed the disaster. From the beginning of August 9, 2007, until the actual end of the currency panic in March 2009, you can clearly observe (in the chart above) that there was nothing but chaos and an absolutely obvious mess, more often than not (the London Interbank Offered Rate [LIBOR] was the notable exception, for reasons I won’t go into today) presented in the form of low money rates (including treasury bills, for direct collateral purposes).

Epoch Times Photo

Epoch Times Photo

As of August 24, 2022, the GC repo rate (or broad general collateral, as it is now called) stood at 2.26%. Another high-interest figure, the Secured Overnight Funding Rate (SOFR), which encompasses a larger volume of repo funding, was pegged at 2.27%. Yields on four-week Treasuries were thought to stand at 2.29%, after being much, much lower in recent days.

All of these rates are below the Federal Reserve’s so-called “floor,” the reverse repo rate (the way the Fed claims to manage money markets has changed since 2008, no longer choosing a single target as it does). had done for decades until its great failures during the crisis), which currently stands at 2.30%. Even EFF on Aug. 24 was just 2 basis points above.

Over the past few months, SOFR, repo and Treasuries have been much further below the Fed “floor” than they are today. And when they were this low, that’s also when we experienced glaring illiquidity and chaos in global markets, as happened in mid-March and especially mid-June .

These falling money rates were not “stimulus” and had little to do with the Federal Reserve. Similar to the 2007 and 2008 terms, they describe a very different situation from the logic that “inflation is due to excessive printing of money” that is widely accepted across mainstream media (the same media who had prematurely congratulated Ben Bernanke for every gesture). Money markets are again behaving erratically in a way that does not favor anyone.

That’s not to say we should expect a repeat of 2008, or close to that degree of outright panic. On the contrary, bank failures are extremely unlikely. Disorder, chaos and general illiquidity, on the other hand, we already have that. The question now is what all this means moving forward. If these rates continue to dropwe will indeed have a good idea.

And that would be bad.

The opinions expressed in this article are the opinions of the author and do not necessarily reflect the opinions of The Epoch Times.

Jeffrey Snider

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Jeff Snider is chief strategist for Atlas Financial and co-host of the popular Eurodollar University podcast. Jeff is one of the foremost experts on the global monetary system, in particular the Eurodollar reserve currency system and its intricacies and grossly misunderstood inner workings, particularly the repo/securities lending markets.

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Argentinian assets hit by Wall Street meltdown cut bullish streak https://westielovers.com/argentinian-assets-hit-by-wall-street-meltdown-cut-bullish-streak/ Sat, 27 Aug 2022 03:40:42 +0000 https://westielovers.com/argentinian-assets-hit-by-wall-street-meltdown-cut-bullish-streak/ Stocks and bonds rise as new economy minister Sergio Massa promises better investment climate To reduce the budget deficit, strengthen the reserves of the BCRA, reduce the inflation rate and promote more trade. ,This is necessary for the rapid reduction of inflation, a situation like the one Argentina is going through. Low inflation is a […]]]>

Stocks and bonds rise as new economy minister Sergio Massa promises better investment climate To reduce the budget deficit, strengthen the reserves of the BCRA, reduce the inflation rate and promote more trade.

,This is necessary for the rapid reduction of inflation, a situation like the one Argentina is going through. Low inflation is a necessary condition for complete stabilization of the economy. But the public and external accounts must also be stabilized, so that the public debt is permanent.says the economist Martin Rapetti.

“Reducing inflation does not guarantee growth. This does not guarantee that you will grow by 4% each year. It is a necessary condition, but there is still work to be done in terms of economic growth. You have to sort the variables. “Without stabilizing it is impossible, with stabilizing it is not enough,” he said.

On Monday, the Ministry of Economy will offer Treasury securities to seek funding of some 89,000 million pesos to meet the maturity of the “ledes” bonds.

“It is known that the problems persist and many problems, from the budget deficit to the production parameters, need to be solved. A lot is pending and a solid ammunition package is needed, with tantalizing and reassuring measures for this market that is just starting to warm up.Says Gonzalo Gavina of Portfolio Personal Inversions.

S&P Merval and ADR

On the stock exchange, the Merval index fell 0.92% to 141,459.95, after marking an all-time high of 143,246.85 units after the first trades. Merval has come to rack up a 9% improvement over the last four rounds, with a consistent record at every close. In the leading panel, the biggest drop concerns Cresud (-5.5%) and the main increase concerns Alur (+1.2%).

Shares of Argentine companies listed on Wall Street closed with the most losses on Wall Street due to the collapse of major indexes. The Dow Jones fell 3%, the S&P 500 3.4% and the Nasdaq 3.9%. Globant (-6.5%), Cressud (-5.7%) and Ternium (-4.9) led the decline on the New York Stock Exchange. The biggest increase was for Banco Macro (+2%).

US Federal Reserve Chairman Jerome Powell said the Northern giant’s economy will need tight monetary policy “for some time”. Before inflation is brought under control, which will mean slower growth, a weaker job market and ‘some pain’ for homes and businesses, he warns There’s no quick fix for soaring prices,

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Concerns over Fed rate hike rattle QSE as index drops 166 points; M-cap erodes QR9bn https://westielovers.com/concerns-over-fed-rate-hike-rattle-qse-as-index-drops-166-points-m-cap-erodes-qr9bn/ Mon, 22 Aug 2022 19:43:00 +0000 https://westielovers.com/concerns-over-fed-rate-hike-rattle-qse-as-index-drops-166-points-m-cap-erodes-qr9bn/ Worries over an impending sharp rate hike in the United States rattled global markets, the reverberation of which was felt on the Qatar Stock Exchange, which on Monday lost 165 key index points and QR 9 billion in market capitalization. .The transport, banking and telecommunications counters saw above-average selling pressure as Qatar’s 20-stock index plunged […]]]>

Worries over an impending sharp rate hike in the United States rattled global markets, the reverberation of which was felt on the Qatar Stock Exchange, which on Monday lost 165 key index points and QR 9 billion in market capitalization. .
The transport, banking and telecommunications counters saw above-average selling pressure as Qatar’s 20-stock index plunged 1.19% to 13,801.16 points, despite falling reached an intraday high of 13,995 points.
Local retail investors were increasingly net sellers in the market, with year-to-date gains of 18.71%.
Gulf funds were also increasingly net profit takers on the exchange, whose capitalization fell by more than QR 9 billion or 1.21% to QR 770.15 billion, mainly thanks to the segments of the mid and small caps.
The Islamic Index fell faster than other indices in the market, which saw a total of 0.07 million exchange-traded funds (sponsored by Masraf Al Rayan and Doha Bank) valued at QR 0.45 million change hands on 15 trades.
Arab individuals turned bearish in the market, which saw no sovereign bond trading.
Net purchases of national funds were seen to weaken significantly on the exchange, which saw no trading in Treasuries.
The Total Return Index fell 1.19% to 28,269.26 points, the All Share Index fell 1.2% to 4,383.49 points and the Al Rayan Islamic Index (Price) fell 1.33% to 3 014.43 points.
The index for the transport sectors fell by 2.38%, telecoms (1.93%), banks and financial services (1.38%), insurance (1.12%), real estate ( 0.95%) and industrialists (0.77%); while consumer goods and services increased by 0.18%.
Over 80% of constituents traded were in the red in the main market and included Mannai Corporation, Doha Insurance, Milaha, Aamal Company, Estithmar Holding, QNB, QIIB, Gulf International Services, QLM, Ezdan, Barwa and Ooredoo.
In the venture capital market, Al Faleh Educational Holding saw its shares depreciate.
Nevertheless, Qatari German Medical Devices, Ahlibank Qatar, Woqod, Qatar National Cement and Dlala were among the main market winners. In the junior stock market, Mekdam Holding saw its shares rise in value.
Qatari retail net sales increased significantly to QR 72.72 million from QR 46.27 million on August 21.
Net sales of Gulf institutions increased noticeably to QR 10.64 million from QR 7.59 million the previous day.
Arab individuals became net sellers at QR 5.12 million against net buyers of QR 11.33 million on Sunday.
Gulf retail investors were net sellers at QR 2.88 million against net buyers of QR 1.08 million on August 21.
Net purchases by national institutions decreased significantly to QR 27.17 million from QR 45.84 million the previous day.
However, net purchases by overseas institutions increased significantly to QR 66.09 million from QR 2.48 million on Sunday.
Foreign retail net profit bookings weakened markedly to QR 1.9 million from QR 6.87 million on August 21.
Arab funds had no major net exposure for the second consecutive day.
Total trading volume on the main market fell 9% to 203.43 million shares, while value jumped 26% to QR 774.42 million and trades jumped 31% to 18,494.
In the venture capital market, trading volumes plunged 46% to 0.28 million shares, value by 58% to 1.53 million QR and transactions by 58% to 76.

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What happens to our assets in a stagflationary environment? Will smart money eventually enter BTC? https://westielovers.com/what-happens-to-our-assets-in-a-stagflationary-environment-will-smart-money-eventually-enter-btc/ Sat, 20 Aug 2022 11:11:37 +0000 https://westielovers.com/what-happens-to-our-assets-in-a-stagflationary-environment-will-smart-money-eventually-enter-btc/ Inflation has become one of the most pressing global economic problems today. Rising prices have dramatically reduced both the overall wealth and purchasing power of much of the developed world. And while inflation is certainly one of the biggest drivers of the economic crisis, a bigger danger looms on the horizon: stagflation. Stagflation and its […]]]>

Inflation has become one of the most pressing global economic problems today. Rising prices have dramatically reduced both the overall wealth and purchasing power of much of the developed world.

And while inflation is certainly one of the biggest drivers of the economic crisis, a bigger danger looms on the horizon: stagflation.

Stagflation and its effect on the market

First coined in 1965, the term stagflation describes an economic cycle with a consistently high rate of inflation combined with high unemployment and stagnant demand in a country’s economy. The term was popularized in the 1970s when the United States entered a protracted oil crisis.

Since the 1970s, stagflation has been a recurring phenomenon in the developed world. Many economists and analysts believe that the United States is about to enter a period of stagflation in 2022, as inflation and the rising unemployment rate become increasingly difficult to control.

One of the ways to measure stagflation is to use real rates, that is, interest rates adjusted for inflation. Examining real rates shows real yield and real asset returns, revealing the real direction of the economy.

According to US Bureau of Labor Statistics, the consumer price index (CPI) recorded an inflation rate of 8.5% in July. July’s CPI posted an increase of just 1.3% from its May figures, prompting many policymakers to ignore the severity of the current inflation rate.

However, the actual rates paint a much different picture.

The 10-year US Treasury yield currently stands at 2.8%. With inflation at 8.5%, the real yield on US Treasuries is 5.7%.

In 2021, the size of the global bond market is estimated to be around $119 trillion. According to Securities and Financial Markets Industry Association (SIFMA), of which about $46 trillion comes from the US market. All SFIMA tracks of the fixed income market, which includes mortgage-backed securities (MBS), corporate bonds, municipal securities, federal agency securities, asset-backed securities (ABS) and money markets, have currently negative returns when adjusted for inflation.

The S&P 500 also falls into the same category. Shiller’s price-to-earnings (P/E) ratio puts the S&P index in the extremely overvalued category. The ratio shows the inflation-adjusted earnings of the S&P index for the past 10 years and is used to measure overall stock market performance. The current Shiller P/E ratio of 32.26 is considerably higher than levels recorded before the 2008 financial crisis and is comparable to the Great Depression of the late 1920s.

stagflation shiller ratio pe
Chart showing the Shiller P/E ratio from 1880 to 2022

The real estate market also found itself in difficulty. In 2020, the value of the global real estate market reached $326.5 trillion, an increase of 5% from its value in 2019 and a record high.

A growing population that is fueling a housing shortage is expected to push that number even higher this year. In the United States, interest rates have been set near zero since the 2008 financial crisis, making mortgages cheap and boosting home sales across the country.

The rise in interest rates observed since the beginning of the year should change the situation. Starting in January, the National Association of Home Builders (NAHB) housing market index saw its fastest decline of -35 in history. The decline recorded in the index was faster than in 2008 when the real estate bubble suddenly burst. It is also the longest monthly decline for the NAHB index, with August marking its 8th consecutive month of decline for the first time since 2007.

stagflation nahb index
Chart showing the US NAHB housing market index from 2001 to 2022

With nearly every segment of the market posting declines, we could see a significant number of institutions and asset managers reconsidering their portfolios. Overvalued real estate, overbought stocks and negative real return bonds are all heading for a period of stagflation that could last several years.

Large institutions, asset managers and hedge funds could all be forced to make a stark choice – stay in the market, weather the storm and risk short and long-term losses, or rebalance their portfolios with various assets that have a better chance of growing in a stagflationary market.

stagflation market size comparison
Chart comparing the value of various markets

Even if only certain institutional players decide to go the latter route, we could see an increasing amount of money flowing into Bitcoin (BTC). The crypto industry has seen unprecedented growth in institutional adoption, with non-Bitcoin assets becoming an integral part of many large investment portfolios.

However, as the largest and most liquid crypto asset, Bitcoin could be the target of the majority of these investments.

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The benchmark of the Sri Lankan rupee increases slightly; market sees lackluster trading in government securities https://westielovers.com/the-benchmark-of-the-sri-lankan-rupee-increases-slightly-market-sees-lackluster-trading-in-government-securities/ Mon, 15 Aug 2022 19:07:32 +0000 https://westielovers.com/the-benchmark-of-the-sri-lankan-rupee-increases-slightly-market-sees-lackluster-trading-in-government-securities/ ECONOMYNEXT – Sri Lanka’s sovereign rating remains at Selective Default (SD), but the country’s sovereign bonds have been downgraded to “D” after missed interest payments, said Standard and Poor’s, a rating agency. “The Sri Lankan government remains in default on certain foreign currency obligations, including international sovereign bonds (ISBs),” the S&P said. “We do not […]]]>

ECONOMYNEXT – Sri Lanka’s sovereign rating remains at Selective Default (SD), but the country’s sovereign bonds have been downgraded to “D” after missed interest payments, said Standard and Poor’s, a rating agency.

“The Sri Lankan government remains in default on certain foreign currency obligations, including international sovereign bonds (ISBs),” the S&P said.

“We do not expect the government to make the payments within 30 calendar days of their due date.

“We have downgraded the relevant bonds’ ratings to ‘D’, following missed interest payments due on June 3, June 28 and July 18, and a missed principal payment due on July 25.”

Sri Lanka continues to pay its senior creditors with money from deferred payments from the Asian Clearing Union.

Sri Lanka began borrowing heavily in foreign bond markets from 2015 after breaking its currency peg with extraordinary liquidity injections under “flexible inflation targeting and the country lost the ability to roll over maturing rupee bonds to gross funding level”.

From 2015 to 2019, the country only experienced monetary stability in 2017 and 2019, as the pegged exchange rate regime was broken by liquidity injections to target an “output gap”.

However, the targeting of the output gap led to monetary crises (balance of payments deficit) and growth fell with the fall of stabilization measures.

From 2020 to 2022, even more aggressive liquidity injections were made and taxes were also cut, indicating that there was a “persistent output gap” until all foreign exchange reserves, including borrowed reserves, are lost and the country defaults in peacetime.

The International Monetary Fund provided technical assistance to Sri Lanka to calculate the output gap and also endorsed “flexible inflation targeting”, with overnight repo injections, forward repo injections, the pure and simple purchase of bonds, despite the presence of a reserve collection anchor.

On April 12, 2022, Sri Lanka defaulted despite peace.

The full statement is reproduced below:

Sri Lanka bonds downgraded to ‘D’ after missed payments; Sovereign ratings confirmed

Insight

The Sri Lankan government remains in default on certain foreign currency obligations, including International Sovereign Bonds (ISBs).

We do not expect the government to make payments within 30 calendar days of their due date.

We downgraded the relevant bonds to ‘D’, following missed interest payments due on June 3, June 28 and July 18, and a missed principal payment due on July 25.

We confirmed our ratings ‘SD/SD’ in foreign currency and ‘CCC-/C’ in local currency on Sri Lanka. The outlook on the long-term rating in local currency is negative.

Rating Action

On August 15, 2022, S&P Global Ratings affirmed its long-term “SD” and short-term “SD” foreign currency sovereign ratings on Sri Lanka. At the same time, we confirmed our long-term “CCC-” and short-term “C” sovereign ratings in local currency. The outlook on the long-term rating in local currency remains negative.

In addition, we have downgraded to “D” from “CC” the issue ratings of the following bonds with missed coupon or principal payments:

US$650 million, 6.125% bonds due June 3, 2025.

US$1.0 billion, 6.825% bonds due July 18, 2026.

US$1.0 billion 5.875% bond due July 25, 2022.

US$500 million, 6.35% bonds due June 28, 2024.

Our assessment of transferability and convertibility at ‘CC’ is unchanged.

Outlook

Our exchange rating for Sri Lanka is “SD” (Selective Default). We do not assign an outlook to “SD” ratings because they express a condition and not a forward-looking opinion on the probability of default.

The negative local currency rating outlook reflects the high risk of commercial debt repayments over the next 12 months amid Sri Lanka’s economic, external and fiscal pressures.

Downside scenario

We may downgrade local currency ratings if there are indications of non-payment or restructuring of Sri Lankan rupee-denominated bonds.

Positive scenario

We could revise the outlook to stable or raise the local currency ratings if we perceive that the likelihood of local currency government debt being excluded from any debt restructuring has increased. This could be the case if, for example, the government receives significant donor funding, giving it time to implement immediate and transformative reforms.

We would upgrade our long-term foreign currency sovereign credit rating once the government bond restructuring is complete. The rating would reflect Sri Lanka’s creditworthiness after the restructuring. Our post-restructuring ratings tend to be in the “CCC” or “B” low categories, depending on the new sovereign debt structure and its ability to sustain that debt.

Reasoning

Sri Lanka’s external public debt moratorium prevents the payment of interest and principal obligations due on the government’s ISBs. Thus, the interest payments due on June 3, June 28 and July 18 on its ISB maturing in 2024, 2025 and 2026, and the payment of the principal on its ISB of July 25, 2022, would have been affected. Following the missed payments, and given that we expect payment will not be made within 30 calendar days of the due date, we have lowered the issue ratings of these bonds to ‘D’ (default).

Overdue payments now include the following bonds:

US$1.0 billion, 5.875% bonds due 2022.

US$1.25 billion, 5.75% bonds due 2023.

US$500 million, 6.35% bonds due 2024.

US$1.5 billion, 6.85% bonds due 2025.

US$650 million, 6.125% bonds due 2025.

US$1.0 billion, 6.825% bonds due 2026.

US$1.5 billion, 6.20% bonds due 2027.

US$1.25 billion, 6.75% bonds due 2028.


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Excess liquidity Tk2 lakh cr again but banks have little on hand https://westielovers.com/excess-liquidity-tk2-lakh-cr-again-but-banks-have-little-on-hand/ Sat, 13 Aug 2022 17:05:00 +0000 https://westielovers.com/excess-liquidity-tk2-lakh-cr-again-but-banks-have-little-on-hand/ August 13, 2022, 11:05 p.m. Last modification: August 14, 2022, 00:05 Infographic: TBS “> Infographic: TBS Excess liquidity in the country’s banking sector crossed the Tk2 lakh crore mark again in June after three months as banks invested more in government bonds instead of lending to the private sector, in line with the tight policy […]]]>

August 13, 2022, 11:05 p.m.

Last modification: August 14, 2022, 00:05

Infographic: TBS

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Infographic: TBS

Excess liquidity in the country’s banking sector crossed the Tk2 lakh crore mark again in June after three months as banks invested more in government bonds instead of lending to the private sector, in line with the tight policy of the Bangladesh Bank to control inflation.

The latest data from Bangladesh Bank showed that the amount of excess liquidity in banks had risen to Tk 203,435 crore at the end of June 2022.

Excess liquidity in the banking sector had remained above Tk2 lakh crore since April 2021 and hit a record high of Tk2.31 lakh crore in August last year amid pumping of money by the bank central via the Covid-19 recovery plan. But the figure fell below Tk2 lakh crore in March this year amid severe dollar shortages at banks.

The shortage of dollars forced the banks to buy the greenback from the central bank in exchange for the local currency.

Excess liquidity is calculated after maintaining the statutory liquidity ratio (SLR) and the required cash reserve ratio (CRR).
It is mandatory for banks to maintain 4% CRR of total cash deposits and 13% SLR in non-cash form with Bangladesh Bank.

The excess amount, however, remains invested in government bonds through which the government borrows money from the banking system.

The yield on long-term government bonds crossed 8% in August this year, from below 4% a year ago, prompting banks to invest in covered bonds instead of lending to risky books.

In addition, banks are forced to invest their excess cash in treasury bills and government bonds to meet the high borrowing target of Tk 1.06 lakh crore set in the new budget for the current financial year. .

Despite excess liquidity, the overnight interest rate has remained on the rise because banks cannot immediately liquidate their bond investments. As a result, banks are borrowing from the overnight money market amid a liquidity crunch caused by the dollar crisis.

The overnight money rate climbed to 7% this month, while it was between 1% and 2% at the start of the year.

Contacted, a senior executive of a private commercial bank said that although the excess liquidity is high, in reality it is not efficient because the amount remains invested in long-term bonds which cannot be liquidated. immediately.

He said banks are now interested in investing in bonds because the Bangladesh Bank is discouraging lending amid rising inflation.

Moreover, the high rate of return prompted banks to invest in government bonds, thereby increasing excess liquidity, he said.

He said that although banks are now well positioned in terms of liquidity, they could face a crisis because the secondary bond market is not developed to sell bonds to make their excess liquidity usable.

Banks maintained an SLR of 24% in June against an 11% requirement, which meant that the excess amount remained invested in bonds, which resulted in excess liquidity, according to the Bank of the Bangladesh.

When banks buy dollars from the central bank, the local currency goes into the Bangladesh Bank vault, which reduces the liquidity of the banking system.

Bangladesh Bank mopped up Tk 10,600 crore in July this year by selling dollars to banks. In the first week of this month, the central bank sold dollars for Tk 12,700 crore to the banks causing a liquidity crunch in the banking system.

On the other hand, the soaring price of the dollar and high imports fueled inflation, prompting the Bangladesh Bank to tighten monetary flows in its new monetary policy announced in June for the current financial year.

In June, the inflation rate hit 7.56% – a nine-year high – in a volatile international market triggered by the Russian-Ukrainian war.

As part of tighter monetary flows, the private sector credit growth ceiling was reduced to 14.1% for FY23 from 14.8% set for the previous year.

The banking sector saw a sharp increase in the flow of credit to the private sector in June, supported by high import costs amid rising dollar prices.

Credit growth reached 13.66% in the month, the highest in 43 months. The rate was 12.94% in May. The rate of bank credit growth in June was close to the monetary ceiling of 14.1% set for the current fiscal year.

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