Everything you need to know about central bank policy around the world over the coming months



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World's Richest Lose $117 Billion in One-Day Market Meltdown

The wealthiest 500 people on Earth lost 2.1% of their collective net worth on Monday as U.S. stocks plunged in their biggest drop this year.

Twenty-one members of the Bloomberg Billionaires Index lost $1 billion or more as investors reacted to stepped-up tensions between the U.S. and China. Amazon.com Inc. founder Jeff Bezos declined the most, shedding $3.4 billion as shares of the online retailer tumbled. But he’s still the richest person on the planet with $110 billion.

The loss is an abrupt reversal for the world’s richest, who up until today had experienced steady gains.

Other forces have also eroded fortunes in recent weeks. Hong Kong’s elite are feeling the pain from nine weeks of protests that have jammed the financial hub’s streets, weighed on growth and battered local stock prices. The net worth of the 10 richest tycoons who derive their fortunes from Hong Kong-listed companies has tumbled $19 billion since July 23.

Even after today’s losses, the 500 individuals on the index control almost $5.4 trillion, an 11% increase from Jan. 1.

Rich Rout
The world's wealthiest people lost $117 billion in Monday's market plunge

Jeff Bezos-3.4B
Bernard Arnault-3.2
Mark Zuckerberg-2.8
Mukesh Ambani-2.4
Bill Gates-2

https://www.bloomberg.com/news/articles ... t-meltdown

Central Bank Interest Rate ahead
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SNB Sight Deposits Jump Most in 2 Years, Suggesting Intervention

The Swiss National Bank’s sight deposits jumped the most in more than two years last week, a sign it intervened to weaken the franc.

The amount of cash commercial banks hold with the central bank increased almost 2.8 billion francs ($2.87 billion) to 586 billion francs, according to the data, which economists scrutinize closely. Early last week, the Swiss currency appreciated to its strongest against the euro since 2017.

The Swiss franc continued to gain, appreciating 0.1% to 1.0885 per euro on Monday. The currency has advanced more than 4% in the last three months and is now trading near the strongest level since 2017, posing a headache to the central bank.

The SNB declined to comment on the change in sight deposits.

Concerns about the economic impact of the U.S.-China trade dispute and the prospect of more European Central Bank easing have put pressure on the franc. It has appreciated about 5% against the euro since April, blasting through the 1.10 per euro mark.

The SNB has an ultra-low benchmark interest rate of -0.75% plus and has pledged to use currency market interventions, if needed, to stem pressure on the franc.

https://www.swissinfo.ch/eng/snb-sight- ... n/45155528

Japan's Pension Fund Warns of Global Investing Losses

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(Bloomberg) -- Global markets have become so synchronized that money managers risk losing on every front, according to Hiromichi Mizuno, chief investment officer of the world’s largest pension fund.

Japan’s $1.5 trillion Government Pension Investment Fund lost money in equities, fixed-income and currency positions in the last three months of 2018, Mizuno pointed out on Tuesday in Sacramento, California.

“Conventional wisdom of portfolio diversification is when we lose money in equity we make a profit in fixed income,” Mizuno told the board of the California Public Employees’ Retirement System, the largest U.S. pension. “But we lost in every single asset classes and lost in the currency translation as well. It never happened in the past.”

The Japan system’s annualized returns were 3.03% from fiscal 2001 to 2018, compared with a more than 6% annual average for Calpers, which has an annual target of 7%. More than half of GPIF’s portfolio was in domestic stocks and bonds as of March 31. Many Japanese bonds carry negative yields, while the country’s stocks have been falling since a high in January 2018.

Read more about GPIF’s results that quarter

The benchmark Topix index of shares tumbled 18% in the last quarter of 2018, and is up 0.2% this year.

GPIF is seeking uncorrelated returns by pushing into private investments, which can make up as much as 5% of its portfolio. Mizuno said it’s becoming an increasingly crowded trade. Alternative investments accounted for 0.35% of GPIF’s total assets as of the end of June, up from 0.26% at the end of March, according to its latest performance report.

“Everybody is trying to increase the private assets, or like a private investment, because obviously it’s not all correlated to the public market,” he said.

https://www.investing.com/news/economy/ ... es-1959936

Exclusive: Fake-branded bars slip dirty gold into world markets

LONDON (Reuters) - A forgery crisis is quietly roiling the world’s gold industry.

Gold bars fraudulently stamped with the logos of major refineries are being inserted into the global market to launder smuggled or illegal gold, refining and banking executives tell Reuters. The fakes are hard to detect, making them an ideal fund-runner for narcotics dealers or warlords.

In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland’s leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.

Four of the executives said at least 1,000 of the bars, of a standard size known as a kilobar for their weight, have been found. That is a small share of output from the gold industry, which produces roughly 2 million to 2.5 million such bars each year. But the forgeries are sophisticated, so thousands more may have gone undetected, according to the head of Switzerland’s biggest refinery.

“The latest fake bars ... are highly professionally done,” said Michael Mesaric, the chief executive of refinery Valcambi. He said maybe a couple of thousand have been found, but the likelihood is that there are “way, way, way more still in circulation. And it still exists, and it still works.”

Fake gold bars - blocks of cheaper metal plated with gold - are relatively common in the gold industry and often easy to detect.

The counterfeits in these cases are subtler: The gold is real, and very high purity, with only the markings faked. Fake-branded bars are a relatively new way to flout global measures to block conflict minerals and prevent money-laundering. Such forgeries pose a problem for international refiners, financiers and regulators as they attempt to purge the world of illicit trade in bullion.

High gold prices have triggered a boom in informal and illegal mining since the mid-2000s. Without the stamp of a prestigious refinery, such gold would be forced into underground networks, or priced at a discount. By pirating Swiss and other major brands, metal that has been mined or processed in places that would not otherwise be legal or acceptable in the West – for example in parts of Africa, Venezuela or North Korea – can be injected into the market, channeling funds to criminals or regimes that are sanctioned.

It is not clear who is making the bars found so far, but executives and bankers told Reuters they think most originate in China, the world’s largest gold producer and importer, and have entered the market via dealers and trading houses in Hong Kong, Japan and Thailand. Once accepted by a mainstream gold dealer in these places, they can quickly spread into supply chains worldwide.

https://www.reuters.com/article/us-gold ... SKCN1VI0DD

Global Currency Trading Surges to $6.6 Trillion-A-Day Market
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(Bloomberg) -- Trading in the global foreign-exchange market has jumped to the highest-ever level at $6.6 trillion, according to the Bank for International Settlements.

The average daily trading in April was up 29% from $5.1 trillion in the same month in 2016, the BIS reported Monday in a triennial survey on the industry. The growth of FX derivatives trading, primarily swaps, outpaced the spot market and now accounts for almost half of global FX turnover.

The three years since the previous BIS survey has been marked by a slide and then strong recovery in the dollar, which remains the world’s preeminent currency. Nearly nine out of every 10 currency trades are against the greenback. As a trading center, the U.S. has fared less well, losing ground to London, which has shrugged off Brexit uncertainty to account for 43% of all activity.

“The U.S. dollar retained its dominant currency status, being on one side of 88% of all trades,” BIS said. “Currencies of emerging market economies again gained market share, reaching 25% of overall global turnover.”

The share of trading in the U.S. slipped to 17%. Along with Hong Kong, Singapore and Japan, the U.K. and U.S. facilitated more than three-quarters of the total. Mainland China saw a significant rise to become the eighth-largest center, according to BIS.


The share of trades involving the euro increased to 32%, while the yen slipped to 17% yet held its spot as the third-most actively traded. A factor for the decline in yen trading may have been reduced price swings seen in April, BIS said. A JPMorgan Volatility Index of Group-of-Seven currencies collapsed that month to its lowest since 2014.

The yuan’s slice of the market remained steady at around 4%, just behind the Swiss franc.

New traders such as XTX Markets have started to muscle their way into the ranks of the biggest currency dealers, alongside banks. It was rated the fourth biggest in an annual foreign-exchange survey from Euromoney Institutional Investor Plc. JPMorgan Chase & Co. was the largest with a 9.8% market share, with Deutsche Bank AG following at 8.4% and Citigroup Inc. with 7.9%.

While spot currency trading rose 20% to $2 trillion a day, as a share of global FX activity it fell to 30% in April, from a third in 2016 and 38% in 2013. The use of swaps, which allow an investor to borrow one currency from a counter-party while simultaneously lending a second currency to another, climbed more than a third to $3.2 trillion. The growth may reflect the greater need to hedge given growing global trade worries and political risks.

Trading of outright forwards also increased, with a large part of the rise due to non-deliverable forwards. That reflected strong activity in NDF markets for the Korean won, Indian rupee and Brazilian real, the BIS said.

“While we’ve seen growth across all forms of FX trading, swaps and forwards have seen particular growth,” said Matthew Hodgson, CEO and founder of Mosaic Smart Data, which provides data analytics to currency desks at banks. “The FX market has woken up.”

To contact the reporters on this story: Anooja Debnath in London at adebnath@bloomberg.net;Susanne Barton in New York at swalker33@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Neil Chatterjee, William Shaw

https://www.bnnbloomberg.ca/global-curr ... -1.1316841

hree men managed to squeeze out more than 100 million USD of gullible investors through three binary options websites in what appears to be one of the biggest binary options scams, the U.S. Securities and Exchange Commission (SEC) revealed on Thursday.

Kai Christian Petersen, Gil Beserglik, and Raz Beserglik used misleading marketing techniques and manipulative call centers, also known as boiler rooms, to convince investors to trade binary options through three websites, reads the official complaint filed in the U.S. District Court for the Central District of California.

Credit Suisse has a word to describe this sluggish economy — a ‘semi-recession’

KEY POINTS

Credit Suisse says the economy is in a “semi-recession.”

The firm said weak manufacturing data accompanied by healthy economic data elsewhere lands the economy in a middle ground.

Credit Suisse Chief U.S. Equity Strategist Jonathan Golub noted inflation, jobs data and credit performance are all still expansionary for the economy.
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Investors and economists are chasing a moving target of strong and weak economic data, making it increasingly confusing what the state of the economy really is.

Credit Suisse said weak manufacturing data accompanied by healthy economic data elsewhere lands the economy in a middle ground.

“While investors debate whether we’re entering a recession, we believe the backdrop is better described as a ‘Semi-Recession,’” said Credit Suisse Chief U.S. Equity Strategist Jonathan Golub in a note to clients Wednesday.

Tuesday’s gauge of the U.S. manufacturing sector showed the lowest reading in more than a decade in September as exports fell amid a U.S.-China trade war. The ISM U.S. manufacturing purchasing managers’ index came in at 47.8% in September, the lowest since June 2009. Any reading below 50 signals a contraction.
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Meanwhile, industrial production has been in a year-long deceleration, despite a positive reading in August. Manufacturing, which accounts for about 11% of the U.S. economy, is being hurt by a trade war between the United States and China and slowing global economic growth. The 0.6% increase in industrial production in August was the largest gain in industrial output since August 2018 and followed a 0.1% dip in July, according to the Federal Reserve.

Alongside weak manufacturing data, the yield curve is inverted on the short end, meaning the 10-year Treasury note has a lower yield than the 3-month Treasury bill. This bond market phenomena is regarded as a recessionary signal.

“Recessionary risks are clearly rising,” said Golub. “Absent a reacceleration in cyclical data, stock upside appears limited,” said Golub.

To be sure, Golub said, “recessionary indicators have weakened but do not point to a broad-based downturn.”

Weak data is offset by a strong labor market, said Golub. September’s jobs report, set to release on Friday, is expected to show 148,000 new payrolls and jobless claims continue to decline, he said.

Golub noted inflation, jobs data and credit performance are all still expansionary for the economy. While earnings and housing activity are neutral.

https://www.cnbc.com/2019/10/03/credit- ... ssion.html

Exclusive: Italy in talks with EU over Monte dei Paschi bad loan spin-off - source
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ROME/MILAN (Reuters) - Italy is in talks with the European Commission over a plan to rid state-owned Monte dei Paschi di Siena (BMPS.MI) of around two thirds of its soured loans to pave the way for a sale of the bank, a source with direct knowledge of the situation said.

Hurt by a pile of problem debts and a derivatives scandal, Monte dei Paschi was for years at the forefront of Italy’s banking crisis until a bailout in 2017 which handed the state a 68% stake in the world’s oldest lender.
Even after shedding around 30 billion euros in problem loans in recent years, Monte dei Paschi held 16 billion euros of soured debts, or 16% of total loans, at the end of June.

The source with direct knowledge of the situation said that to become a merger candidate, the bank would need to lower that ratio to around 5%, a level that has become a benchmark for lenders seeking to clean up their balance sheets.
To reach that goal, the plan under discussion would see Monte dei Paschi spin off some 10 billion euros in impaired loans into a separate company that would then be merged with state-owned bad loan manager AMCO, the source said.

Monte dei Paschi and AMCO declined to comment. The EU Commission was not immediately available for comment.

Reporting by Stefano Bernabei and Valentina Za, editing by Silvia Aloisi

https://www.reuters.com/article/us-mont ... SKBN1WI1TI