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By Greg Ip To veterans of financial bubbles, there is plenty familiar about the present. Stock valuations are their richest since the dot-com bubble in 2000. Home prices are back to their pre-financial crisis peak. Risky companies can borrow at the lowest rates on record. Individual investors are pouring money into green energy and cryptocurrency. This boom has some legitimate explanations, from the advances in digital commerce to fiscally greased growth that will likely be the strongest since 1983. But there is one driver above all: the Federal Reserve. Easy monetary policy has regularly fueled financial booms, and it is exceptionally easy now. The Fed has kept interest rates near zero for the past year and signaled rates won t change for at least two more years. It is buying hundreds of billions of dollars of bonds. As a result, the 10-year Treasury bond yield is well below inflation that is, real yields are deeply n
What Happens to Stocks and Cryptocurrencies When the Fed Stops Raining Money?
05/08/2021 | 12:15am EDT
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By Greg Ip To veterans of financial bubbles, there is plenty familiar about the present. Stock valuations are their richest since the dot-com bubble in 2000. Home prices are back to their pre-financial crisis peak. Risky companies can borrow at the lowest rates on record. Individual investors are pouring money into green energy and cryptocurrency. This boom has some legitimate explanations, from the advances in digital commerce to fiscally greased growth that will likely be the strongest since 1983. But there is one driver above all: the Federal Reserve. Easy monetary policy has regularly fueled financial booms, and it is exceptionally easy now. The Fed has kept interest rates near zero for the past year and signaled rates won t change for at least two more years. It is buying hundreds of billions of dollars of bonds. As a result, th
Citigroup had both explored offering prime brokerage services to
Archegos Capital Management prior to the firm’s spectacular collapse, according to several sources familiar with the matter.
The near miss for the US giants underlines how eager many of the world’s top investment banks had been to get a piece of the trading activity from Archegos, the family office of former hedge-fund manager Bill Hwang.
JP Morgan and Citigroup started examining Archegos as a potential prime brokerage client last year – after lobbying by the two banks investment bankers – but progress was held up by so-called know-your-client processes demanded by risk and compliance departments, sources said, and Archegos blew up before those processes were complete. Both banks declined to comment.
Before he lost US$20 billion, Bill Hwang was the greatest trader you had never heard of Trader Bill Hwang. Photo: Bloomberg / Emile Wamsteker
Before he lost it all - all US$20 billion - Bill Hwang was the greatest trader you had never heard of.
Starting in 2013, the Korean-American investor parlayed more than US$200 million left over from his closed hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world s billionaires. There are richer men and women, of course, but their money is mostly tied up in businesses, property, complex investments, sports teams and artwork. Hwang s US$20 billion net worth was mostly liquid. And then, in two short days, it was gone.