Trump takes aim at Dodd-Frank

President Trump plans to repeal Dodd-Frank regulationsWhile Donald Trump and Johnny Depp may not appear to have much in common, they are both weighing in at different ends of the spectrum on whether or not the financial services industry requires more or less regulation. Depp is in dispute with his former managers whom he accuses of mismanaging his finances. He has filed 11 complaints and is seeking damages of more than $25 million. Trump, meanwhile, has reaffirmed this pre-election promises to loosen regulations by reversing post-financial-crisis reforms designed to discourage excessive risk-taking – including the dismantling of the Dodd-Frank law of 2010. Read more…

Are US interest rates set to rise again?

The Federal Reserve looks set to hike US interest rates in the coming monthsThe Federal Reserve looks set to hike US interest rates in the coming months

It seems increasingly likely that the Federal Reserve will impose further interest rate hikes this year, six months after it increased rates for the first time in almost ten years. At the Fed’s review in April, members voted strongly to keep interest rates unchanged, pointing to fears over the sluggish growth of US economy in Q1, Britain’s potential exit from the EU and uncertainty over China. Four hikes were forecast for 2016, but it’s a figure that’s been revised down to two in the light of flat economic conditions globally. Read more…

Negative interest rates deployed by Bank of Japan

Negative interest ratesBank of Japan introduces negative interest rates to boost economy

In a bid to shake the economy out of its stalemate, the Bank of Japan has introduced negative interest rates. In theory, the 0.1% rate should encourage lending and begin to turn the tide of deflation. In practice, because banks and other lenders will, in effect, be charged for hoarding deposits, they ought to be more inclined to lend to businesses and consumers and, in turn, promote spending and business investment. It’s the latest in a raft of initiatives designed to boost commercial confidence and support Japan’s plans to move inflation towards its 2% target. Read more…

What next for the global economy?

Global economy pulling in two directions as Federal Reserve gets ready to raise ratesGlobal economy divided as Federal Reserve gets ready to raise rates

With businesses readying themselves for an interest rate rise in December, the global economy seems to be divided. A slight rise from 0.25% to 0.5% may not seem like a sweeping gesture from the Federal Reserve but it is a game-changer, nevertheless. While Fed boss Janet Yelland feels the US economy can withstand a modest rate rise, some economists are worried that the predicted rise in US interest rates won’t necessarily be the tonic needed to increase the pace of recovery and that the Eurozone, Japan, China and BRIC countries are still far from stable. Read more…

Fed rate rise looks to be on the cards

Signs of economic recovery raise expectations of December rate hikeSigns of economic recovery raise expectations of December rate hike

The buoyancy of the US economy will be tested if the rate rise indicated by the Federal Reserve goes ahead in December. The Commerce Department recently reported that GDP grew at an annual rate of 2.1% over the July-September period, up from a previously estimated figure of 1.5%. While this may still represent a slowing in growth from the previous quarter, it is likely to influence decision-makers at the Federal Reserve as they consider their first rate rise in 9 years. Read more…

First conviction secured in Libor rigging scandal

A former derivatives trader has been convicted of fraud following rate rigging scandalFormer City trader imprisoned for his part in the Libor rate rigging scandal

Seven years after it began, the global investigation of the rate-rigging scandal that caused shockwaves across the world has resulted in its inaugural conviction. A 14-year jail sentence has been handed down to former UBS and Citigroup derivatives trader Tom Hayes after becoming the first to be found guilty by a jury of rigging the Libor interest rate. The trial, which is being held in London has resulted in a number of charges against individuals as well as $9 billion-worth of bank regulatory settlements. Read more…

 

Fed resists early interest rate rise

Low interest rates continue as the Federal Reserve eyes sustained economic recoveryRate rise ruled out

Speculation over an early rise in US interest rates has been quashed following a spring statement from the Federal Reserve. The Fed has indicated that significantly stronger economic performance would have to be demonstrated before it could agree an increase in borrowing costs, in the wake of news that growth has stalled in the first quarter of 2015. Pundits are now betting on rates staying low well into autumn, so what’s dragging the figures down? Read more…

Bill Gross takes a shot at America, but misses

Interesting read from the Washing Post written by the most important man in the bond market, Bill Gross of PIMCO: http://www.washingtonpost.com/opinions/americas-debt-is-not-its-biggest-problem/2011/08/10/gIQAgYvE7I_story.html.  He makes a good point that Washington is focused on deficits when they should be worried about demand growth.  He asserts the U.S. economy could be constrained by nearsighted politicians, entitlements and deleveraging baby boomers.  As is to be expected of an ENORMOUS bond investor, he quietly pushes his agenda of long-term interest rates slowly moving to zero.  Bill Gross’ take on the stock market hasn’t been particularly prescient.  He misses the mark by failing to note the importance of thousands of thriving corporations catering to growing demand outside our small nation relative to the globe as a whole. 
 
If we take a break as consumers along with our Western European and Japanese counterparts, it may permit emerging economies to leap ahead with infrastructure projects and education.  This can in turn raise billions of human beings’ standard of living. 
 
It would behoove the developed countries to let the emerging world catch up a little to make the race to the economic top more fun.  This is not a zero sum game.  As the competition catches up, their ascent may offset a lot of populist hatred that gets easily converted to terror by despots and dictators.