Harvard professor notices signs of turbulence in banking sector before SVB collapse
According to Harvard professor Kenneth Rogoff, the global banking sector has been showing signs of turbulence for quite a while. This bubble has burst, almost bringing down the entire financial system. The former chief IMF economist argues that the current crisis arose because banks have bet on loose long-term lending conditions.
Rogoff estimated that the banking sector should have suffered turmoil even before the fall of Silicon Valley Bank (SVB) in March. The ultra-low interest rates that the market had enjoyed for several years simply delayed the inevitable.
Silicon Valley Bank invested heavily in bonds that they deemed to be held to maturity. What is more, SVB had one of the highest shares of uninsured deposits. However, those bonds tumbled in value when the US Federal Reserve hiked rates. So, the bank had to sell those bonds before the maturity date. Meanwhile, SVB clients, fearing for the safety of their deposits, began to withdraw funds en masse.
Kenneth Rogoff believes that any investment strategy that involves illiquid assets can lead to serious losses. “I didn't know it would be in the US banking sector. I was thinking, I don't know, maybe Japan, Italy, which might still be yet to come. But it's a worldwide phenomenon,” he summoned. With the global tightening cycle ongoing, financial institutions have to adapt to new economic conditions, the economist stressed.
Global trade slowing markedly, Fitch says
According to Fitch Ratings, global trade is now slowing down after a rapid post-pandemic recovery in 2021-2022. In addition, the ratings agency notes a winding-up process of globalization.Analysts anticipate global trade growing by 1.9% this year, far below a 5.5% rise recorded in 2022.
12:03 2023-06-09 UTC+00
Bank of America sees mild recession in US
Bank of America (BofA) economists predict a recession in the United States by the end of 2023. BofA CEO Brian Moynihan says the American economy will be hit by a mild downturn in the second half of the year.According to the preliminary estimates of Bank of America’s research team, the United States will remain in a state of mild recession until the first quarter of 2024.
10:42 2023-06-09 UTC+00
Three-polar currency world to become reality?
According to economists, the dominance of the US dollar as the world's reserve currency has been shaken. Currently, there are no big threats to its hegemony but in the near future it could be kicked off the pedestal by two leading currencies – the yuan and the euro.
14:36 2023-06-08 UTC+00
BTC to be extremely volatile
Analysts expect Bitcoin to be highly volatile this year. However, they also do not rule out a steady rise similar to the one that took place in early 2023. At that time, Bitcoin added 60%, recouping half of its losses by the end of 2022.Bitcoin is unlikely to reach all-time highs this year due to inflation, which is declining very slowly.
14:34 2023-06-08 UTC+00
India surpasses France to become fifth-largest stock market
India is slowly but surely turning into a global leader. It has overtaken China as the world’s most populous country and is now strengthening its financial position. The Indian stock market has hit a capitalization of $3.3 trillion, becoming the fifth-largest in the world. The country is rapidly growing in all fields, and the Indian market is perhaps the most promising for foreign businesses.
13:51 2023-06-08 UTC+00
AI to entail irreversible damage to labor market?
According to Business Insider, a lot of analysts voice concerns about the growing impact of artificial intelligence on the global economy. At present, AI has been already firmly incorporated into a variety of sectors. It is likely to occupy the lion’s share of the global market in the foreseeable future.
13:43 2023-06-08 UTC+00