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☆ Jamie Dimon and Ray Dalio sound the alarm on soaring US government debt
▼ + stars: | 2024-05-16 | by ( Hanna Ziady | ) edition.cnn.com time to read: +4 min

London CNN —The chorus of voices warning about the dangers of record US government debt is growing louder. In the past 24 hours, JPMorgan (JPM) CEO Jamie Dimon and Ray Dalio, founder of the world’s biggest hedge fund, have weighed in with concerns about America’s debt pile. Ray Dalio, the billionaire founder of Bridgewater Associates, during a Bloomberg Television interview in New York in April 2024. Dimon acknowledged that debt-fueled government spending, including pandemic stimulus, had been one of the reasons behind robust growth in the world’s biggest economy. Debt servicing costs have also soared, on the back of higher official interest rates, leaving less money for public services.

Persons: Jamie Dimon, Ray Dalio, Dimon, you’ll, Dalio, I’m, ”, Victor J, we’ve, ” Dimon, Liz Truss Organizations: London CNN, JPMorgan, Sky News, Treasury, Financial Times, International Monetary Fund, Congressional, Office, Bridgewater Associates, Bloomberg Television, Bloomberg, Getty, Treasury Department, IMF, US, Federal Locations: Russia, New York, America, Covid, United, United Kingdom

The idea of using Russia's frozen assets is gaining new traction lately as continued allied funding for Ukraine becomes more uncertain and the U.S. Congress is in a stalemate over providing more support. Bipartisan legislation circulating in Washington called the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act would use assets confiscated from the Russian Central Bank and other sovereign assets for Ukraine. Belgium, which is holding the rotating presidency of the European Union bloc for the next six months, is now leading the talks on whether to seize Russia's assets. Belgium is also the country where most frozen Russian assets under sanctions are being held. Maria Snegovaya, a senior fellow at the Center for Strategic and International Studies, cautioned that if Ukraine's immediate needs aren't met, “no amount of seized Russian assets is unfortunately going to compensate for what may happen."

Persons: — It's, Volodymyr Zelenskyy, “ Putin, ”, ” Biden, Penny Pritzker, “, Nicholas Mulder, Vladimir Putin, Shalanda Young, ” Young, ” Sergey Aleksashenko, Treasuries —, Konstantin Malofeyev, Alexander De Croo, De Croo, Maria Snegovaya, aren't, Ellen Knickmeyer, Lisa Mascaro, Seung Min Kim, Zeke Miller, Aamer, Sam Petrequin, Jamey Keaton Organizations: WASHINGTON, Russian Central Bank, U.S ., U.S, ., ”, Ukraine, Russia, Cornell University, Washington, Russia's Central Bank, White, Management, Russian Central Banker, Russian, Justice Department, State Department, European Union, Belgian, Center for Strategic, International Studies, Associated Press Locations: United States, Ukraine, Davos, Switzerland, Ukrainian, Washington, “, America, Russia, Russian, U.S, China, Frankfurt, Belgium, Brussels

☆ Ray Dalio says US is reaching an 'inflection point' as debt starts rapidly accelerating
▼ + stars: | 2023-11-20 | by ( Aruni Soni | ) www.businessinsider.com time to read: +3 min

The US is nearing an "inflection point" as the debt pile accelerates, Ray Dalio told CNBC. AdvertisementThe US's fiscal situation is heading for an "inflection point" as government debt grows faster than income, according to billionaire investor Ray Dalio. With the government borrowing more money to just pay for debt service while spending continues unabated, the hole gets deeper and deeper, he said on a CNBC interview on Friday. AdvertisementSuch issues have also impacted foreign demand, Dalio warned, noting that 40% of US debt is sold to foreigners. We are near that inflection point."

Persons: Ray Dalio, —, it's, Torsten Sløk Organizations: CNBC, Service, Bridgewater Associates, Apollo Management

☆ 3 young millionaires share the one index fund they'd invest in — plus the early mistake that could cost investors six figures in their retirement funds
▼ + stars: | 2023-10-19 | by ( Laila Maidan | ) www.businessinsider.com time to read: +5 min

People often turn to index funds or exchange-traded funds to simplify investing while getting exposure to diverse assets. According to an expense ratio calculator, the same setup would cost $8,278 with an expense ratio of 0.04%. It was money he would decide to scatter across nine index funds to diversify his portfolio. In 2019, he started the Personal Finance Club, which offers free and paid content about index fund investing. She sticks to one fund: the Vanguard 500 Index Fund ETF (VOO), which tracks the S&P 500 and is rebalanced quarterly to include the top 500 domestic companies.

Persons: Michael Quan, Quan, Jeremy Schneider, Treasuries, Schneider, Vivian Tu, she's, Rich, Tu Organizations: Investment Company Institute, Vanguard FTSE, Market, Fund, Finance Club, Fidelity, Street, JPMorgan Locations: Canada, Europe, Japan, New York City

☆ The Market Is Stuck Until the Fed Is Done
▼ + stars: | 2023-09-16 | by ( Jeff Sommer | More About Jeff Sommer | ) www.nytimes.com time to read: +2 min

But the short-term interest rates the Fed controls directly have already risen sharply since early 2022 — from near zero to a range of 5.25 to 5.5 percent now. And while a rate increase may be unlikely this month, for short-term traders, the big questions remain: Is the Fed done, and when will interest rates finally decline? An Unheralded RecordFor one thing, the interest rate environment is unusual. Short-term rates — specifically, for 3-month Treasuries — are higher than those of longer duration — particularly, for 10-year Treasuries. In financial jargon, this is a classic “inverted yield curve,” and it often predicts a recession at some point in the future.

Organizations: Blue, Economic, Wolters Kluwer, Wall, Investment

☆ Wall Street is declaring victory too early — the US is still headed for a recession
▼ + stars: | 2023-08-22 | by ( William Edwards | ) www.businessinsider.com time to read: +11 min

In theory, these higher interest rates push down demand and slow inflation by forcing companies to cut prices to attract stretched-thin customers. And Americans have been spending right through the higher interest rates: Personal consumption expenditures and retail sales numbers have continued to forge upward. But eventually, this attitude will wane as people realize that the higher rates aren't a flash in the pan. The Treasury yield curve measures the different interest rates that are paid out on various bonds issued by the US government. It's the same story every time, both Kantrowitz and Rosenberg say: Investors are bad at pricing in a recession before it unfolds.

Persons: Michael Kantrowitz, Piper Sandler, Milton Friedman, Bob Doll, Doll, David Rosenberg, Rosenberg, Tom Essaye, Essaye, Granger, Kantrowitz, Jerome Powell, William Edwards Organizations: Philadelphia Fed, Bank of America, JPMorgan, Consumer, Crossmark Global Investments, BlackRock, Silicon Valley Bank, Rosenberg Research, Fed, Auto, Wall, CPI, Institute for Supply Management's, Treasury, Royal Bank of Canada Locations: Silicon, YOLO

☆ Debt ceiling crisis: How a US default would ricochet around the world
▼ + stars: | 2023-05-26 | by ( Hanna Ziady | ) edition.cnn.com time to read: +9 min

But if it does, it could make the 2008 global financial crisis feel like a walk in the park. The consequences are frightful.”The belief that America’s government will pay its creditors on time underpins the smooth functioning of the global financial system. During the 2011 standoff over raising the US debt ceiling, the S&P 500 index of leading US shares plunged more than 15%. “It’s unclear in a Treasury default crisis whether the Fed could do enough even with the types of efforts it deployed in March 2020,” Obstfeld said. “A default would be a message to investors all around the world of eroding confidence in America,” he added.

☆ Why the US needs regional banks
▼ + stars: | 2023-05-14 | by ( Allison Morrow | ) edition.cnn.com time to read: +5 min

But those mega-banks lack the dexterity and regional specialization that small businesses crave, which is partly why Corporate America and policy makers alike are worried about the continued turmoil among regional banks. In just two months, a spark of panic has turned into a conflagration that has put America’s regional banks on notice. All of those banks share a status in common as a “regional” or “sector-specific” lender. By definition, regional banks are more specialized and focused. Without raising the cap, Hockett argues, we risk letting the Wall Street banks gobble up their smaller competition when those regional lenders fail.

New York CNN —Global banks just suffered their worst week since 2008. Credit Suisse and First Republic: Two more banks wobbled but remained upright through the week. Meanwhile, First Republic bank received a $30 billion lifeline on Thursday from some of the largest banks in the United States. US-traded shares of Credit Suisse were down nearly 7% and First Republic shares plunged by about 33% on Friday. That doesn’t mean that banks taking money from the FHLB and participating in the Federal Reserve’s emergency Bank Term Lending Program, which lent out $12 billion to banks this week, are in big trouble.

☆ Stocks may crash 30% in 60 days as Americans run short of cash and investors jump ship, a markets guru says
▼ + stars: | 2023-03-09 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +3 min

US stocks could plummet as much as 30% over the next two months, Larry McDonald said. "The Bear Trap Report" founder sees higher interest rates choking demand and hammering the economy. McDonald also predicts investors will swap stocks for bonds to earn higher yields. McDonald estimated that every 1% increase in rates translates into a $50 billion rise in costs for middle-class Americans. He noted that interest rates on US auto loans are approaching 14%, and nearly 20% of those loans cost over $1,000 each month.

☆ Premarket stocks: How Wall Street reacts to the GDP data will be telling
▼ + stars: | 2023-01-26 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +5 min

New York CNN —Wall Street analysts are holding their breath and crossing their fingers this morning as they await gross domestic product numbers for the final quarter of 2022. But that could all change if a recession looms into view and the US debt ceiling standoff drags on. “That is the worry: That you get turmoil in financial markets, a big tightening in financial conditions and that adds to downward pressure on economic activity,” he said. It’s not our expectation.”The United States hit the debt ceiling last week, forcing Treasury Secretary Janet Yellen to make accounting maneuvers to avoid breaching that $31 trillion borrowing limit. They argue it unfairly targets the fast-food industry and will increase prices and force businesses to lay off workers.

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