Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

The Reserve Bank on Thursday proposed to create a <keyword id="22711172" type="General" weightage="20" keywordseo="public-repository" source="keywords">public repository</keyword> of <keyword id="21305551" type="General" weightage="100" keywordseo="digital-lending-apps" source="keywords">digital lending apps</keyword> in a bid to address the problems arising from mushrooming <keyword id="22711171" type="General" weightage="20" keywordseo="unauthorised-players" source="keywords">unauthorised players</keyword> in the segment. In another significant move, the central bank proposed to introduce a facility of "<keyword id="22710839" type="General" weightage="20" keywordseo="Delegated-Payments" source="keywords">Delegated Payments</keyword>" in UPI to enable an individual to allow another individual to make <keyword id="19957378" type="General" weightage="20" keywordseo="UPI-transactions" source="keywords">UPI transactions</keyword>. In a <keyword id="13144094" type="General" weightage="20" keywordseo="post-monetary-policy-review" source="Orion">post-monetary policy review</keyword> address, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> <keyword id="20595794" type="General" weightage="20" keywordseo="Governor-Shaktikanta-Das" source="keywords">Governor Shaktikanta Das</keyword> said the central bank has taken several measures for the orderly development of the <keyword id="12577431" type="General" weightage="20" keywordseo="digital-lending-ecosystem" source="Orion">digital lending ecosystem</keyword> in India. In a bid to address the problems arising from unauthorised digital lending apps (DLAs), he said the RBI proposes to create a public repository of DLAs deployed by its regulated entities. "The regulated entities (REs) will report and update information about their DLAs in this repository. This measure will help the consumers to identify the unauthorised lending apps," Das said. On introduction of 'Delegated Payments' through UPI, the Governor said the facility would enable an individual (primary user) to allow another individual (secondary user) to make UPI transactions up to a limit from the primary user's bank account without the need for the secondary user to have a separate bank account linked to UPI. This, he added, will further deepen the reach and usage of digital payments. The central bank also announced an increase in the transaction limit for tax payments through UPI to Rs 5 lakh. Currently, the transaction limit for UPI is Rs 1 lakh, except for certain categories of payments which have higher transaction limits. "It has now been decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction. This will further ease tax payments by consumers through UPI," Das said. The Governor also announced measures to speed up cheque payment which will benefit both the payer and the payee. At present, cheque clearing through Cheque Truncation System (CTS), operates in a batch-processing mode and has a clearing cycle of up to two working days. "It is proposed to reduce the clearing cycle by introducing continuous clearing with 'on-realisation-settlement' in CTS," Das said. This means that cheques will be cleared within a few hours on the day of presentation.

RBI to set up public repository of digital lending apps to check unauthorised players

The technology platform for providing "<keyword id="22918315" type="General" weightage="20" keywordseo="frictionless-credit" source="keywords">frictionless credit</keyword>" launched by the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword>) last year as a pilot project will soon be introduced nationwide soon, said Reserve Banks of India Governor, <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> on Monday. This technology platform will be named "<keyword id="22918314" type="General" weightage="20" keywordseo="Unified-Lending-Interface" source="keywords">Unified Lending Interface</keyword> (ULI)", Das said while speaking in Bengaluru at the event of the Global Conference on Digital Public Infrastructure and Emerging Technologies. Governor Das said "Just like <keyword id="19900911" type="General" weightage="20" keywordseo="UPI" source="keywords">UPI</keyword> transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India. The 'new trinity' of JAM-UPI-ULI will be a revolutionary step forward in India's <keyword id="20018890" type="General" weightage="20" keywordseo="digital-infrastructure" source="keywords">digital infrastructure</keyword> journey." The ULI platform facilitates a seamless and consent-based flow of digital information, including even land records of various states, from multiple data service providers to lenders. The technology platform introduced last year as a pilot projects cuts down the time taken for credit appraisal, especially for small and rural borrowers. Das stated that the ULI architecture has common and standardised APIs, designed for a 'plug and play' approach to ensure digital access to information from diverse sources. "This reduces the complexity of multiple technical integrations. It enables borrowers to get the benefit of seamless delivery of credit, and quicker turnaround time without requiring extensive documentation. By digitising access to customer's financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers," the RBI governor stated. Showing confidence in the newly launched ULI, Das said, "Just like UPI transformed the payments ecosystem, "we expect that ULI will play a similar role in transforming the lending space in India." Speaking about the success of Unified Payment Interface (UPI) Das said, "The current ecosystem of digital payments in India offers a bouquet of simple, safe, and secure options for instant or quick transfer of funds, both large and small value, for businesses and individuals." Das further stated stated that the apex bank is consistently trying to secure the financial system in the country. "We are constantly working on devising policies, approaches, systems and platforms that will make our financial sector stronger, nimble and customer-centric," Das said. Additionally, Das also highlighted that the central bank is constantly working on devising policies, systems, and platforms that will make the financial sector stronger, nimble and customer-centric. Das said that over the last decade, the traditional banking system has undergone an unprecedented technological transformation. By all indications, this process is likely to become even more intense in the coming years, he said. On the country's experience in DPI, he said, "DPI has enabled India to achieve in less than a decade levels of financial inclusion that would have otherwise taken several decades or even more" He also emphasised that UPI system has the potential to evolve into a cheaper and quicker alternative to available channels of cross-border remittances. The Governor also stressed that financial institutions should be abundantly mindful of associated risks of Artificial Intelligence.

After UPI, RBI set to launch Unified Lending Interface (ULI) for friction-less credit

<div type="image" title="The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books." agency="ANI" msid="114778648" hostid="261" caption="&amp;lt;p&amp;gt;The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books.&amp;lt;/p&amp;gt;"></div> Imagine this. You have a younger sibling you’re mighty envious of. And why not? Unlike you, they seem to enjoy all the freedom and money in the world. They party like there’s no tomorrow, and here you are, stuck in a boring, ultra-disciplined but responsible routine that feels completely devoid of any independence, and mostly, funds. But of late, things are changing. This sibling is in massive trouble and just cannot escape the parent’s wrath anymore. Long story short, the party is over, and it is time to go back home. The rising defaults on this sibling’s part have now begun pulling the entire house down, thereby attracting the regulator’s ire. <h2>The Wild West of <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> and unsecured loans</h2>It's hard to ignore the issues with microfinance and unsecured loans in India. Many saw them as a small gamble and ignored the rising defaults much like the younger siblings’ tantrums, and now they find themselves in hot waters. The skyrocketing instances of non-payments aren't a micro-issue anymore and are threatening the stability of the entire banking system. In the quarter ended September 30, 2024, 5 of India’s 8 largest private sector <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> reported a steep rise in their bad loan book, mostly thanks to microfinance loans. Some banks, in a bid to strengthen their fortress against these <keyword id="142154" type="General" weightage="100" keywordseo="bad-loans" source="Orion">bad loans</keyword>, have significantly upped their provisions. For instance, IndusInd Bank set aside Rs 525 crore during July and September 2024 to battle the menace of defaults on microfinance loans, which make up about 9% of its total loan book. See, banks rely heavily on their interest income, which they earn from advancing loans. Any loan where the borrower has not paid interest to the bank or defaulted for 90 days or more becomes bad, i.e. an NPA, or non-performing asset for the bank. And who likes things going bad? Simply put, there has been a steep rise in three areas, much to the dislike of banks and MFIs (micro-finance institutions). But hey, it's mostly their doing! <ol><li>GNPA ratio (gross net performing assets): The quantum of non-performing assets a bank has in proportion to its total assets.</li><li>Provision: The amount banks set aside to take care of such NPAs.</li><li>Slippage ratio: The rate at which good girls go bad, or the speed at which good loans turn into NPAs</li></ol>But how are these plaguing the Indian banking sector? And what does the road ahead look like? We decode it for you. <h2> Microfinance: A not-so-micro-menace</h2>Microfinance loans were initially brought forth for low-income households and individuals i.e. for those who might not generally have access to traditional ways of credit, like bank loans and more. They don’t require collateral or an asset to be pledged in lieu of the loan, making it a tad bit easier for borrowers. As of June 2024, the amount of outstanding loans in the microfinance industry stood at a staggering Rs 4,20,256 crore. Of this, NBFC-MFIs accounted for 40% and banks made for 33% of these. In 2022, RBI, in a bid to inspire some competition in this space, did something radical-they did away with the ceiling on how much interest MFIs could charge their customers. Previously, MFIs could add up to 12% to their cost of acquiring funds to determine the final interest rate chargeable to the consumer. So, assuming that Bank A incurs a 5% cost to acquire funds for further loaning, A could charge up to 17% interest from the end consumer. So, interest rates were in the hands of MFIs, and boy, did they have a gala time with it. Instead of spurring some healthy competition, as RBI expected, MFIs and banks went rogue and all guns blazing, competing for the title of “Who will charge the highest interest?” Recently, RBI banned 4 microfinance institutions (MFIs), namely Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and <keyword id="20117932" type="General" weightage="20" keywordseo="navi-finserv" source="keywords">Navi Finserv</keyword> from disbursing loans effective October 21, 2024. Why? Because they were charging 14% extra interest over their original cost of funds. To maintain their loan books (and pockets), banks and NBFCs resorted to shady practices like netting off loans, which RBI has now advised MFIs against. Here, lenders allow borrowers to settle a previous outstanding loan by issuing them a new loan! As crazy as it sounds, it helped banks to report less of their total assets as NPAs, since the new credit would cover pending instalments of the borrower’s previous loan. Then there was the issue of borrowers overleveraging, i.e. taking multiple loans using different IDs from various lenders and then failing to honour any of them. The consequence? Banks and NBFCs end up with massive NPAs. Data from credit bureaus suggests that over the last quarter, there was a 17.2% rise in the number of borrowers who had 5 or more active loans at the same time. <h2>Growth &gt; Caution</h2>It's an age-old tale unfolding yet again in India’s banking sector- Icarus flew too close to the sun and eventually, fell to its death. Between April and June 2024, NBFCs microfinance portfolio jumped by 2.7%. If you see this in terms of loan sources, microfinance loans issued by banks grew by 11.2% in Q1FY25. But the same portfolio in NBFCs swelled by almost double-23.9%. While most of these loans had an average ticket size between Rs 30,000-50,000, there was a sharp spike in the number of loans that had a ticket size of Rs 80,000 or more. Data suggests that as of March 2024, more than 12% of all microfinance borrowers had over 4 or more active loans. In dating parlance, this is a classic case of borrowers going polyamorous, minus the honesty and transparency. Not the best of situations, you'd agree! <h2>Will banks and NBFCs stand up to this stress?</h2>If their results for Q2FY25 are to be believed, NBFCs are not handling the pressure all that well. Or even slightly well. Only a few banks like Bank of Baroda (BoB), ICICI, and Indian Bank were up for the battle, even witnessing a decline in their loan delinquencies. Some others, like IndusInd Bank, saw their stock dip by a massive 16.2% over the last 5 days. Its slippages in the previous quarter burgeoned from Rs 15.3 billion in Q1FY25 to Rs 17.9 billion in Q2. As a result, the bank pushed a staggeringly high amount of money to create an NPA cushion for itself. While its management has highlighted its preference for secured lending, that was hardly reflected in its actions during the quarter, where growth in unsecured personal loans remained exceptionally high at over 7% on a QoQ basis. Turns out, only 44% of customers in IndusInd Banks’ microfinance loan portfolio were exclusive to it. The rest 47% were, you guessed it right-polyamorous! 27% had borrowed from another lender as well, apart from IndusInd Bank, while 20% were those who had outstanding loans with two other lenders, apart from IndusInd Bank. IndusInd Bank’s credit card segment did not miss the NPA bus and accounted for 7-8% of its GNPAs. Canara Bank’s total slippages during the previous quarter jumped to Rs 11.1 billion, up by 24.7% QoQ, and making up for 3.6% of its total loans. As for Bandhan Bank, its gross NPA for Q2FY25 inched up on a QoQ basis, up from 4.23% in Q1, to 4.68% in the second quarter. IDFC Bank’s heavy provisioning for its NPAs marred its profits significantly, causing its PAT (profit after tax) to dip by 73% on a YoY basis. Data from ICRA Analytics suggest that the AUM (asset under management) growth in microfinance loans and unsecured (personal and business) loans by the NBFCs will moderate to 10-12% and 19-21%, respectively, in FY2025 compared to 30% and 38%, in FY2024. Says A M Karthik, Senior Vice President &amp; Co-Group Head, Financial Sector Ratings, ICRA, “As bank funds constitute a larger share in the overall funding of NBFCs, a slower credit flow from banks to the NBFCs will compress their AUM growth. The NBFCs in unsecured and digital lending businesses shall face a higher squeeze in funding compared to others, and the unsecured lending space will continue to be a source of stress in the near term.” There has been uninhibited growth in <keyword id="6051027" type="General" weightage="20" keywordseo="Unsecured-loan" source="Orion">unsecured loan</keyword>s, apart from just the microfinance segment. For instance, Axis Bank’s gross slippages jumped by Rs 4,443 crore, largely thanks to its unsecured business. The same is the case with Yes Bank, which saw 35–40% of its retail slippages emerging from the unsecured loan portfolio. <keyword id="6376194" type="General" weightage="20" keywordseo="kotak-mahindra" source="Orion">Kotak Mahindra</keyword> Bank was also quick to follow Yes Bank’s suit, with around 35%-40% of its slippages coming from credit cards. <h2>How is the road ahead?</h2>While RBI has just cracked its whip and served a warning at the moment, experts at Morgan Stanley believe that more changes (read regulatory lashes) are underway. Moreover, with both festive and wedding seasons underway in our country, unsecured lending might pick up momentum, much to the disdain of the calibrated approach banks have been taking towards it so far. But if the situation doesn't improve, RBI will not waste any time in becoming the typical tyrannical <keyword id="19897820" type="General" weightage="20" keywordseo="bollywood" source="keywords">Bollywood</keyword> headmaster who runs his dominion with an iron fist. However, that's a story for another day. Do you have a topic in mind you'd want a simpler explanation for, or insights or personal experience to share on personal finance and more? Contact us at businessinsider@timesinternet.in.

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

<ul class="summary-list"><li>Trump's victory over Harris raises questions about Republican control of the House.</li><li>Wall Street strategists are closely monitoring financial markets and potential policy impacts.</li></ul>It's fair to say that much of <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-post-election-results-bullish-trump-trade-peter-tuchman-2024-11">Wall Street didn't get enough sleep</a> on election night after being caught off guard by the speed at which results began coming in.Dominic Pappalardo, the chief multi-asset strategist at Morningstar Wealth, was home watching <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/polymarket-prediction-betting-markets-vindicated-by-trumps-strong-showing-1033958821">prediction markets</a> and how percentages were skewing state by state. He was also keeping an eye on financial markets to see if they were making directional moves.Over in London, Richard Kelly, the head of global strategy at TD Securities, was on his firm's trading floor, busy answering endless client questions on 'What about this' and 'What about that'-type scenarios."As much as we all tried to think ahead of what the different policies would be, there are always a lot more questions that come up on the day, and they all have to be much more concrete," Kelly said. "So it's just been a whirlwind."Former President <a target="_blank" class="" href="https://www.businessinsider.com/election-results-trump-harris-presidential-election-2024-11">Donald Trump's victory</a> over Vice President Kamala Harris has been called for Tuesday's election, but Wall Street is still waiting on one more key answer: <a target="_blank" class="" href="https://www.businessinsider.com/congress-balance-of-power-results-competitive-republicans-democrats-2024-11">Will Republicans take the House</a>, too? It seems increasingly likely. Yet, the result would be based on a handful of seats."Technically, we don't need to know until the first half of December legally, and these things are so close in terms of the margin of error," Kelly said. "There's some of these races where literally hundreds of ballots is the differential of Republican versus Democrat. So it's not going to be today."The small tilt in the House makes a big difference because a handful of seats are enough to create some friction on Trump policies, Kelly noted.<h2 id="e4827f7a-5ee5-4a62-aa3b-da6a8ce8b3ef">Stocks</h2>Sector rotations among stocks are slightly muddy because the overall <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/us-election-trump-stock-rally-rise-sp500-outlook-regulation-mergers-2024-11">market is up so much that everything rallied</a> with the broad market, Pappalardo said. But one noteworthy sector is financials, which performed better than the overall market into Wednesday's early trading hours. It's unsurprising since the Republicans campaigned on policies favorable to banks and financial stocks, including decreased regulation. The steepening yield curve is also positive for banks as it boosts their profit margins since they borrow on the front-end yield and lend at the back-end yield, he added.Technology is another sector the market is viewing favorably: Tech companies have been creating a lot of profit, so Trump's promised corporate tax cuts will be quite beneficial, Pappalardo said.Meanwhile, the utilities sector lagged the broader market the most as we moved into Wednesday's early trading hours. Investors moving away from defensives toward cyclicals is likely a sign that investors believe the economy is positioned for growth, Pappalardo noted.While the rallies are positive for stocks, looking ahead, Pappalardo expects things to return to normality. In other words, investors will focus on traditional fundamentals like corporate earnings and interest rate policy.<h2 id="5e50dfbb-c80b-4dee-8272-69eff4f2145f">Bonds</h2>Wednesday was a long day for Gennadiy Goldberg, the head of US rates strategy at TD Securities. He stayed up past midnight watching the yield move before passing the baton off to his colleagues in London."Once the polls started to close, the market already started to move," Goldberg said. "It took the market very little time to start penciling in higher odds of the Trump victory."The swift and strong Republican win pushed the 10-year yield up from around 4.3% to around 4.45%.The <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-a-bond#:~:text=Bonds%20are%20loans%20that%20investors,the%20principal%20investment%20at%20maturity.">bond market</a> was expressing signs of nervousness. This sector of the market is worried about who's going to pay the bill for potentially higher budget deficits. The result is a pricing-in of higher debt premiums, Goldberg said.Additionally, aggressive immigration and tariff policies could be inflationary. And if it looks like inflation pressures are either reaccelerating or just stubbornly high, it could leave the Fed nervous about cutting rates further, Goldberg said.Kelly added that the 10-year could still move higher to 4.75%, and that's where he thinks the market could get more comfortable buying.<h2 id="b628f761-842f-464c-a039-7d296873c4e9">Currencies</h2>Jayati Bharadwaj, a global FX strategist at TD Securities, was at home in front of multiple screens until about 1 a.m. as she watched <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-forex">currencies move</a> amid the strong Trump lead. Initially, she expected the results to take a few days to become clear, but she was surprised by how quickly the outcome became evident. Currency markets also reacted swiftly against the backdrop of a strengthening dollar."The Chinese renminbi, the Mexican peso, and the euro were hit particularly hard because once markets saw the election results being called, they had to start pricing in the threat of tariffs," Bharadwaj said.She expects the euro to trade even weaker relative to the dollar once Trump takes office. Right now, it's trading at $1.07; expect it to move to $1.05, she said. If the Republicans take the House, then the euro could drop below $1.05, she added.Kelly added that China has been under the microscope since Trump talked about 60% tariffs on its imports. Other countries could face 10% tariffs across the board. So, if you're highly leveraged to trade, like Europe or the UK, it could be very negative for the euro and pound. He noted that it could also be negative on the currencies of Canada and Mexico, depending on how USMCA members will be impacted.On the flip side, the yen could weaken less than other currencies relative to the US dollar. The Bank of Japan may return to rate hikes over the next few months after it had paused, Kelly said. This means watch out for further unwinding in the yen carry trade. Therefore, the next question investors have to ask is: how many long equity positions have been funded at very low Japanese rates, Kelly said.For this reason, Bharadwaj cautions traders about jumping back into any carry trades because there will be a lot of currency volatility.<h2 id="2b454727-3f51-473d-b815-35fcf1e90886">Gold</h2>One surprise is that <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/gold-price">gold hasn't weakened</a> as much as expected, Kelly said. As the dollar strengthened, he anticipated a more significant pullback. Given the uncertainty and volatility that took place the day after the elections, it might be too soon as investors digest results. However, he anticipates further weakening in gold, which is down 2% from Election Day.

Chief strategists project their outlooks on stocks, bonds, currencies, and gold amid a Trump victory 

<ul class="summary-list"><li>US bank stocks surged following Donald Trump's presidential election victory.</li><li>Markets see looser regulations and changes in oversight spurring more profits for banks. </li></ul>US bank stocks rallied on Wednesday after Donald Trump <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">cruised to victory</a> in the presidential election, with markets eyeing a better environment for dealmaking and lending to drive stronger profits. Shares of the largest US banks soared ahead of the opening bell. JPMorgan and Bank of America both rose 6%, Citi rose 8%, and Wells Fargo jumped 10%. Goldman Sachs and Morgan Stanley climbed 6% and 8%, respectively. The SPDR S&amp;P Bank exchange-traded fund climbed 8%. Investors flocked to <a target="_blank" class="" href="https://www.businessinsider.com/market-impact-presidential-election-scenarios-trump-harris-stocks-bonds-crypto-2024-10">financial stocks</a> as a popular "Trump trade" in the weeks leading up to the election, with allies of the president-elect stating that Trump planned to <a target="_blank" class="" href="https://www.reuters.com/markets/us/if-trump-wins-he-plans-free-wall-street-burdensome-regulations-2024-04-12/">unravel many of the regulations</a> imposed on the banking sector after the 2008 financial crisis.According to Gerard Cassidy, a large-cap bank analyst from RBC Capital Markets, Trump's victory is likely to see some top regulators ousted, including the heads of agencies like the Consumer Protection Bureau and the Office of the Comptroller of the Currency.More banks could also consolidate in the coming years, assuming Trump's cabinet and advisors adopt a "pro-business" stance, Cassidy speculated. Commercial lending could also pick up, potentially causing bank revenue to beat expectations next year, he added."We've been very optimistic and bullish about the bank stocks all year, and last night's win by Trump continues that bullishness," Cassidy said in an interview with <a target="_blank" class="" href="https://www.cnbc.com/video/2024/11/06/outlook-for-banks-from-a-regulatory-standpoint-is-quite-positive-says-rbcs-gerard-cassidy.html">CNBC</a> Wednesday morning. "We're going to see a real change in anti-trust, and we're going to see a change in banking regulation as well, and that's going to be positive for the banks."Leading up to the election, analysts also said they saw a fresh wave of dealmaking under Trump amid a potentially looser anti-trust stance from his administration. That could result in increased advisory revenue for big banks and help drive up profits.

Bank stocks soar after Donald Trump's election victory

<ul class="summary-list"><li>Interest rates and stock returns are expected to decline, impacting investment strategies.</li><li>Historically, stocks and bonds have alternated in performance, affecting portfolio decisions.</li></ul>A diversified investing strategy means a split between stocks and <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-a-bond">bonds</a>, at minimum. But for the better part of the last two decades, interest rates were near zero, and real returns in bonds were lacking.Still, investors added them to their portfolios because history has shown us that asset classes can zig and zag, with long <a target="_blank" class="" href="https://www.businessinsider.com/stock-and-bond-market-correlation-normal-2014-2">periods of stock market outperformance</a> relative to bonds and intervals where that dynamic flipped.The last two years were great for both asset classes. Elevated rates put the bond market back on investors' minds, while the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> had a solid 26% total return. But depending on who you ask, the future may not be as bright.Yields will be less attractive as the <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11#:~:text=The%20Fed%20cut%20interest%20rates,country%20recovered%20from%20the%20pandemic.">Fed begins its rate cuts</a> for this cycle. Meanwhile, Goldman Sachs expects stock-market returns to be muted for the coming decade. The S&amp;P 500 is predicted to see a mere 3% annualized return over the next 10 years, which could lag the 10-year Treasury at an expected 4% yield, according to a <a target="_blank" class="" href="https://www.businessinsider.com/how-to-beat-stock-market-returns-next-decade-goldman-sachs-2024-10">recent note</a> by the investment bank's chief US equity strategist David Kostin.If the bears are right, investors may be forced to take on more risk for returns. Sounds gloomy, but for bond traders like Mark Rieder, who has over two decades of experience in the sector, it could be an opportunity to dig for bargains in corporate credit.Generating alpha for a credit trader could mean beating a peer, a Bloomberg fixed income index that matches the category of bonds traded, or simply remaining in positive territory in terms of total returns when the market is down, Rieder told Business Insider."Over the past 10 years, when interest rates were very low, it was not an exciting time to be a credit analyst and a portfolio manager," Rieder said. "But it's much more interesting today, and I'm really excited about that."However, active debt investing takes a good level of skill and consistent effort to make the right credit selection, according to his new book, "Reminiscences of a Bond Operator." Like the stock-picking process, following the crowd or consensus won't result in alpha. A credit trader must conduct the same level of fundamental analysis and dig into a company's balance sheet, earnings calls, 10Qs, and 10Ks, among other things, to determine valuation."I've always believed that a good credit analyst is also a really good equity analyst because you really need to understand the capital structure of the companies that you're evaluating and all of their different needs," Rieder said. "Most companies want to have their stock price go up, and so as a credit analyst, you need to understand that so that you can understand what their motivations are."It's especially important now, as the credit space faces its own set of challenges. Like the <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/are-we-in-a-recession">business cycle</a>, credit has its booms and busts based on macro conditions and supply and demand. In a strong economic environment, corporate cash flows rise, and companies increase borrowing with favorable lending terms. But when times are tight, companies deleverage until their debt is less than their cash flow. Once that equilibrium is satisfied, more borrowing ensues, according to his book.Rieder said credit is in the boom part of the cycle. This might sound surprising, considering debt has been expensive for the better part of the last two years. But most companies were locked into low yields before rates rose, he noted. As debt turnover increases, investors need to be cautious."There's a lag impact on the increase in rates. Most companies borrow for long periods of time, five years, 10 years," Rieder said. "A lot of companies issued debt when interest rates were very low. They're now only starting to refinance that low-coupon debt. That, in turn, is what causes an impact."He doesn't expect that the Fed's cutting cycle will mitigate the crunch. The central bank can impact front-end yields, but the back end is driven by additional considerations, he noted. The 10-year rose to 4.3% shortly after the first rate cut of September, a signal that <a target="_blank" class="" href="https://www.businessinsider.com/us-election-forecast-most-accurate-economist-predicts-outcome-economic-impact-2024-10">investors were looking ahead</a> at other economic risk factors, including concerns over the government's ballooning deficit, he added. Additionally, economic conditions such as elevated credit card debt pose concerns for future corporate profits.<h2 id="101d0bc7-10c7-46f9-a758-eea160588283">Trading credit</h2>Right now, investment-grade credit spreads are tight. The yields in corporate bonds aren't much higher than in government bonds, meaning less compensation for more risk. But if we move from the boom to the bust phase, credit spreads could widen, and that could create opportunities in the credit space, he said.While spreads are tight, he prefers front-end yield or pairing trades with cheap optionality. The cost of shorting a credit index like the CDX Investment Grade 5-Year Index, a credit-default-swap index that tracks the credit risk of large US investment-grade companies, is low. And since spreads are trading at historically tight levels, it's less likely to get much lower, which could limit potential losses, he said. This position can then be paired with a trade expected to perform positively.An example he provides of a market-neutral pair trade could look like buying a corporate bond in a sector with structural tailwinds, such as a natural gas producer set to benefit from increased demand and rising energy prices, or airplane lessors who benefit from higher lease rates due to a tight aircraft supply — a situation that's unlikely to ease in the near term because of production challenges faced by manufacturers. Then, take a short position in an interest-rate future to hedge against the bond's interest-rate risk."This trade works if natural gas prices remain stable or rise, leading the energy bond to outperform the overall corporate bond market," Rieder said. "It's an excellent opportunity to capitalize on the current tight credit spread conditions and complacency in the overall credit market."Having liquidity can also give you an upper hand. As spreads widen, investors may be forced into selling higher-quality credit because they can't offload the lower-quality ones, he said."There are huge opportunities in credit if you remain liquid during dislocations," Rieder said. "Other investors are going to be looking for liquidity. They can't sell what they want to, so they sell what they can, and that can lead to opportunities to buy cheap assets."

A veteran bond operator shares an alpha-generating strategy for dropping yields and muted stock-market returns

<ul class="summary-list"><li>Inflation and higher interest rates aren't going away, veteran strategist Bill Blain says. </li><li>Blain, the principal of Wind Shift Capital, thinks global inflation is entrenched and rates can't come down much more. </li></ul>Households and companies may be breathing a sigh of relief as borrowing costs move lower, but they shouldn't get comfortable because rates and inflation are going to remain high — and that reality could spark a big drop for stocks in the next year, Wall Street veteran Bill Blain said.Blain, a longtime strategist and principal of Wind Shift Capital Advisors, said he sees a rocky 12 months ahead for the stock market. He said the Fed isn't poised to take interest rates as low as markets think, and borrowing costs could indeed rise from here. That could crimp lending, slow dealmaking, and take US and global stocks down 7%-12%, he told Business Insider in an interview."I think the crunch that we face is what happens when interest rates start to rise, and governments are not in a position to continue boosting the economy in an interest rate rising environment because they've lost the support of markets," Blain said.In the event of a credit crunch, he doubts the US will be able to dole out stimulus as it did during the pandemic, due to concerns about the overall level of debt and the inflationary impact on the economy."It's the reality that inflation is going to creep back into the global economy. Interest rates are going to have to rise," he said.<h2 id="7ebcc035-7ccc-4daa-908a-a2cb4f6ad8aa">A return to higher-for-longer</h2>Blain's forecast may sound counterintuitive to investors who have been pricing in ambitious rate cuts from the central bank. But the US economy faces too many inflationary pressures over the medium-term to warrant aggressive policy easing, Blain said.For one, the <a target="_blank" class="" href="https://www.businessinsider.com/harris-trump-fix-national-debt-how-to-invest-portfolio-protection-2024-10">federal debt</a> has swelled to a historic $35 trillion. Economists have flagged rapid government borrowing as a factor that risks <a target="_blank" class="" href="https://www.businessinsider.com/us-debt-problem-explained-deficit-gdp-inflation-economy-interest-rates-2024-4">stoking inflation</a>.Meanwhile, <a target="_blank" class="" href="https://www.businessinsider.com/rates-pandemic-lows-inflation-supply-chain-geopolitical-bofa-mensah-2024-10">supply chain issues</a> linger, and given rising geopolitical tensions, world trade looks on track to be more <a target="_blank" href="https://www.businessinsider.com/world-turning-its-back-on-globalization-2016-4">fragmented</a><a target="_blank" class="" href="https://www.businessinsider.com/world-turning-its-back-on-globalization-2016-4">,</a> which can also prop up inflation.Finally, the threat of high tariffs from former President Donald Trump would impose a tax on nearly all imported US goods that economists say would end up being <a target="_blank" class="" href="https://www.kentclarkcenter.org/wp-content/uploads/2024/09/RESULTS-2024-09-11-Survey-14.pdf">passed on to the consumer</a>. "I think inflation is going to be more ingrained, as it was in the 1970s and early '80s," Blain said. "It's going to be a very, very different economy and we just need to get used to it."Other forecasters have warned inflation could be much stickier than markets expect. Core inflation is unlikely to fall back to the Fed's 2% target, <a target="_blank" class="" href="https://www.blackrock.com/us/individual/insights/blackrock-investment-institute/weekly-commentary">BlackRock</a> strategists said in a recent note, pointing to large US budget deficits and other "mega-forces" that will propel prices higher. That means investors waiting for a return to near-zero borrowing costs to return will be in for a rude awakening. Blain thinks interest rates will hover between 4.5%-6% in the "new normal," causing interest payments to "go through the roof" when compared to pre-pandemic levels, he said.Companies could take a hit as the credit crunch plays out. Though Blain said he wasn't necessarily calling for a market crash or a wave of "zombie" firm failures, he thinks dealmaking in the private equity space could slow, while some of the most financially troubled firms risk insolvency.Meanwhile, stock prices will head back to a much more reasonable level as the speculative bubble in asset prices pops."I think there's still a massive hangover from the 2010 to 2022 era of ultra-low interest rates and easing and I think stocks are generally still priced for speculation and lower interest rates," he said of his predicted downside to the market. "I don't think there's any reason to really expect major interest rate cuts."Still, investors are feeling pretty positive about the short-term outlook for stocks and lower rates. Markets see a 95% chance the Fed will cut rates by 25 basis points at the November policy meeting, and a 72% chance that rates will be 50 basis points lower by the end of the year, according to the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch tool</a>.

Inflation isn't going anywhere, and higher rates could spark a 12% downturn for stocks in the coming year, veteran strategist says  

<ul class="summary-list"><li>According to the FT, the EU plans to raise billions to help Ukraine by the end of the year.</li><li>It comes after plans to use profits from Russia's frozen funds to help Ukraine fell short.</li></ul>The EU is preparing to provide up to $45 billion in loans to Ukraine within the next four months, according to a <a target="_blank" class="" href="https://www.ft.com/content/0684416f-58c6-4c76-ae54-140d34e30f67">report in the Financial Times</a>.The move comes after a plan to use profits from <a target="_blank" class="" href="https://www.businessinsider.com/russia-frozen-reserves-funds-us-sanctions-g7-ukraine-aid-outlook-2024-8">Russia's frozen funds </a>to help Ukraine ran into roadblocks."We will do whatever we can to support Ukraine, regardless of decisions in Washington," Josep Borrell, vice president of the European Commission, told reporters <a target="_blank" class="" href="https://www.businessinsider.com/russia-frozen-reserves-funds-us-sanctions-g7-ukraine-aid-outlook-2024-8">last month.</a> "Ukraine needs to boost their defense capacities — and they need it now."The International Monetary Fund <a target="_blank" class="" href="https://www.imf.org/en/About/FAQ/ukraine">estimated last year</a> that Ukraine faced a $38 billion gap in its finances in 2025. As such, it relies on help from the US and its Western allies to help fight off Russia's invasion.<a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/russian-frozen-assets-ukraine-war-loan-50-billion-g7-retaliation-2024-6?_gl=1*uirz7r*_ga*OTU5MjMzODYwLjE3MjE2NTc0Nzg.*_ga_E21CV80ZCZ*MTcyNjU2NjY1NS44OS4xLjE3MjY1NjcxNTUuNTEuMC4w">In June</a>, the G7 countries agreed to fuel the Ukrainian war effort with $50 billion, using interest from $300 billion worth of frozen Russian assets situated in the EU and surrounding areas.The FT report said that officials involved in the talks are now worried that Hungary would prove a hindrance to this plan.The US <a target="_blank" class="" href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/06/14/fact-sheet-the-2024-g7-summit-in-apulia-italy/#:~:text=Unlocking%20%2450%20billion%20for%20Ukraine,European%20Union%20and%20other%20jurisdictions.">had said</a> it planned to release the loan by the end of the year, but the idea came with several potential liabilities, including the possibility that the assets could be unfrozen in six months, leaving the allies in a bind regarding the loan repayment.EU law says it requires unanimous support to extend sanctions every six months, which means that a single country — like the historically pro-Russian Hungary — could derail the G7 plan entirely.The FT said Hungary's Prime Minister Viktor Orbán wants to delay a decision on the loan until after the US election in November, which would be very late for the EU to start moving on a Plan B.Alternatively, the latest plan involves extending Ukraine's standing support package, a move that will only require majority support instead of unanimity and can bypass a potential Hungarian veto.The FT said the report aimed to adopt the proposal "before the end of October " so that the loan could be released by the end of the year.As BI's Sinead Baker previously <a target="_blank" class="" href="https://www.businessinsider.com/hungary-wants-nato-membership-change-doesnt-have-to-help-ukraine-2024-5">reported</a>, Hungary has sought to limit Western and NATO support for Ukraine throughout Russia's invasion.For instance, it doesn't send weapons to Ukraine, and it spent months blocking billions in European Union funds for the country before eventually allowing it to proceed in February.The current Hungarian ambassador to the US did not immediately respond to a request for comment from BI.

The EU may be prepping to lend Ukraine up to $45 billion — with or without the US

<ul class="summary-list"><li>On Thursday, China unveiled new measures to prop up its struggling property market.</li><li>The measures include quicker credit for developers and support for renovations in urban shantytowns.</li></ul>China officials have directed a wave of stimulus measures at the country's beleaguered property market, but the effort hasn't done much to impress Wall Street experts. On Thursday, China unveiled <a target="_blank" href="https://www.businessinsider.com/china-economy-3q-gdp-growth-stock-market-stimulus-2024-10#:~:text=In%20September%2C%20China's%20new%20home,estate%20market%20remains%20%22elusive.%22">new measures</a> to prop up its flailing housing market, including quicker access to credit for developers and renovations in run-down urban areas.The government's "white list" of unfinished housing projects eligible for government financing will now receive more funds to encourage banks to increase lending to those projects, the Ministry of Housing said in a press conference.The funds will amount to 4 trillion yuan ($550 billion) by the end of the year, almost double the current quota of 2.2 trillion yuan.The Housing Ministry also unveiled plans to update the country's run-down downtown areas, or "urban villages," with a million apartment renovations planned.While the efforts appear to be a big swing attempt by Beijing to remedy an issue at the heart of its economic crisis, analysts on Wall Street have been underwhelmed. Experts from Goldman Sachs, BCA Research, and AXA Investment Managers this week struck a pessimistic tone on the potential for the new policies to revive China's property sector. Goldman Sachs analysts said the measures may slightly help real estate financing, home completions, home transactions, and prices in large cities, but they won't be enough to combat the market's structural issues."Given many structural challenges in the property sector and still-limited policy support for housing destocking, we maintain our view that there appears no quick fix for the nationwide property sector," Goldman Sachs said in a Friday note.Analysts from BCA Research echoed that view, saying the plan's details were "underwhelming."They pointed in particular to the latest aims at the country's "white list" project loans, which they say haven't been successful so far amid a fragmented property market and banks' hesitation to lend to risky projects.They also said the apartment renovation plan lacks detail and mirrors a similar program introduced in 2015, which aimed to renovate 6 million units annually for several years. The latest plan, though, provides no clear timeline.The analysts also warned the country's flailing economy could even lead to a global recession."While a step in the right direction, these stimulus measures are so far falling short of the scope and scale needed to reflate the Chinese economy. The stimulus announced should put a floor on activity sometime in 2025, but we expect it will be too little, too late to prevent a global recession," the analysts said in a Friday note.Thursday's new policies helped fuel a rally in the CSI 300 index, which climbed 3.6% on Friday. But Yingrui Wang, China economist at AXA Investment Managers, says that optimism could be short-lived as the housing stimulus lacks detail."The recent monetary easing measures initially boosted sentiment in the equity market, and today's launch of the PBoC's stock buy-back re-lending facility has fuelled renewed momentum. However, delays and a lack of detail in fiscal policy may soon temper this optimism," Wang said in a Friday note.The market rally was also helped by new growth figures, which show the economy expanded 4.6% in the third quarter, compared with the same period last year. That marks a slight slowdown from the 4.7% growth in the second quarter, but narrowly beat forecasts of 4.5% growth.The latest figure brings year-to-date growth to 4.8% — just shy of the country's annual target of "around 5%."Wang says the most recent numbers make China's growth target more likely. Up until the country's initial stimulus push, first announced at the end of last month, Wang predicted Beijing's goal looked <a target="_blank" href="https://www.businessinsider.com/china-growth-targets-axa-investment-property-sector-industrial-production-2024-9">increasingly lofty</a>.

China's attempts to save its flailing housing market haven't boosted confidence among top Wall Street analysts

<ul class="summary-list"><li>Bitcoin could hit a fresh all-time high ahead of the presidential election, Standard Chartered says.</li><li>The firm is taking its cues from MicroStrategy, a bitcoin-linked stock trading at a premium to the token. </li></ul><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> bulls have been searching for<a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-explained-cryptocurrency-record-high-interest-rates-fed-2024-3"> another all-time high</a> for more than six months. It might finally come in the next few weeks, Standard Chartered says.In new research, head of digital asset research Geoff Kendrick estimated that the token could hit $73,800 before November's US presidential election, a 12% gain from current levels.To back this, Kendrick cited a shifting pattern in how bitcoin has traded against <a target="_blank" href="https://markets.businessinsider.com/stocks/mstr-stock">MicroStrategy</a>, a firm best known for accumulating massive amounts of the token — a stockpile that recent reached <a target="_blank" class="" href="https://www.theblock.co/post/320655/microstrategy-trillion-dollar-valuation-bitcoin-bank-michael-saylor-bernstein">252,000 bitcoins</a>.As the chart below shows, after trading relatively in lockstep with bitcoin throughout 2024, MicroStrategy has broken out. Kendrick says the two fundamental factors responsible for that premium are likely to drive bitcoin higher, closing the gap over time.<div type="image" title="Chart comparing bitcoin's price to Microstrategy's net asset value multiple." height="1238" width="2000" msid="114259736" hostid="261" sizebytes="36938"></div>The first of those factors is news from last month that BNY Mellon was exempted from SAB 121, an unpopular legislation that forces dealers to list crypto on their balance sheets. Easing regulation is <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-forecast-cryptocurrency-catalyst-regulation-interest-rates-trump-2024-5">often a cited tailwind for bitcoin</a>.Second, SAB 121 exemptions go hand-in-hand with MicroStrategy's announced plan to become a "bitcoin bank," offering <a target="_blank" class="" href="https://www.theblock.co/post/320655/microstrategy-trillion-dollar-valuation-bitcoin-bank-michael-saylor-bernstein">bitcoin capital market instruments down the road</a>. Kendrick expects a future exemption could allow the firm to earn yield by lending out bitcoin."The link between these two for me is that as the broader digital asset ecosystem becomes more legitimate/accessible, MSTR's multiple goes up," Kendrick said.In Kendrick's mind, the outcome of the presidential election is secondary to these bullish forces, with both Trump and Harris victories boding well for the token."As we approach the US election ... the broader digital asset ecosystem is indeed becoming more likely to become mainstream," he wrote.Kendrick has previously expressed that both candidates should boost the asset long-term, though Kendrick says a Donald Trump presidency would be the more bullish of the two outcomes. If the Republican candidate returns to the White House, he estimates that bitcoin could surge as high as <a target="_blank" href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-record-high-trump-harris-election-crypto-regulation-2024-9">$125,000 by the end of 2024.</a>

Why bitcoin has 12% upside in the weeks before the election, Standard Chartered says

<ul class="summary-list"><li>PepsiCo and major banks like JPMorgan and Wells Fargo will kick off earnings season next week.</li><li>Investors expect S&amp;P 500 earnings growth of 4.6% as the stock market trades near record highs.</li></ul>Earnings season is fast approaching, and investors have a lot to be on the lookout for as companies report third-quarter results. <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/pep-stock">PepsiCo</a> will kick off the flurry of reports this Tuesday, followed by earnings from major banks <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> and <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/wfc-stock">Wells Fargo</a> on Friday.With the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> gaining 5% in the third quarter and trading near record highs, companies have a lot to prove."Given the growth expectations already baked into the market of course we aren't going to want to see any weakness there," Horizon Investments head of research Michael Dickson told Business Insider."We'll need to see EPS expectations exceeded by high single digits in the aggregate to keep the strong year going in my view," he added. According to data from FactSet, Wall Street analysts expect the S&amp;P 500 to see year-over-year earnings growth of 4.6%, which would mark the fifth consecutive quarter of growth.The bottoms-up earnings per share estimate for all companies within the S&amp;P 500 is $60.82 in the third quarter, according to FactSet.Tom Hainlin, an investment strategist at US Bank Wealth Management, told Business Insider that third-quarter earnings results will need to show signs of "waning inflation, moderating interest rates, and stable 2025 earnings projections" to support higher stock prices into year-end.In addition to the actual earnings figures, investors will be monitoring key themes as company executives offer guidance during earnings calls.Here are the big things Wall Street will be watching for. <h2 id="6ea1435c-35de-4b91-a190-e931a5d9858d">AI adoption</h2>There is growing concern that the massive investments being made in AI infrastructure <a target="_blank" class="" href="https://www.businessinsider.com/ai-impact-overblown-investment-tech-stocks-billions-daron-acemoglu-mit-2024-10">won't actually pay off in the form of higher revenues and profits.</a>"There's almost like a prisoner's dilemma in the market right now, and companies are feeling like they're being forced to invest hand over fist in AI technology, despite lack of revenues being generated," Gabelli Funds managing director John Belton told Business Insider.If tech companies signal that they're cutting spending on AI investments, it could lead to a major unwinding of the current tech boom, so investors will be looking for clues as to how companies are progressing in monetizing their AI investments.There's also the question of sectors other than tech where AI may be having an impact. "A big driver of future growth is going to hinge on how the applications of AI will be broadening out into other sectors such as Healthcare, Industrials, and Aerospace and Defense. These are sectors that are most likely to be phase two beneficiaries of this crucial technology beyond chip makers and data centers," Horizon Investments' Dickson said.<h2 id="ac3f2d29-9ffa-4a02-8886-d18e86e36f86">Consumer health</h2>After <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/ally-financial-stock-price-plunges-cfo-says-consumer-pressures-intensifying-2024-9">a worrying update from lending giant</a> Ally Financial in September and fears of a spending slowdown as pandemic savings dry up, investors will be keenly focused on the strength of the consumer."It will be important to keep a close eye on what the banks say about credit delinquencies and loan quality, along with the retail-focused firms and what they see in consumer spending behavior. GDP-related data shows strong trends here but more timely and granular views will be in focus," Dickson said.Hainlin said he is encouraged by continued growth in consumer spending as credit card defaults "are within normal levels" and the holiday shopping season is right around the corner.But there are some warning signs."While travel remains strong, overall experiences spending appears to have plateaued with consumers redirecting or broadening spending in other sectors. Additionally, lower-income groups are exhibiting signs of financial stress and slowing overall spending," Hainlin said.Earnings guidance from banks, retailers, and consumer discretionary companies should offer the granular views that will help investors assess what to expect from the consumer heading into year-end and in 2025. <h2 id="14095169-d8ee-47c5-81bf-dd9fe87396b8">The impact of lower interest rates</h2>With the Federal Reserve delivering <a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-report-fed-rate-cut-outlook-november-labor-market-2024-10">its first interest rate cut of the cycle at the end of last quarter,</a> investors will want to see if lower capital costs have trickled down into company results and/or their guidance.The spotlight will be on rate-sensitive sectors, like banks and utilities, as well as smaller-sized companies which tend to carry more debt, according to Dickson."It will be key to see how mid and small-cap companies respond to falling rates that we've seen over the third quarter. These firms were hurt a lot on a relative basis so if they discuss a meaningful reduction in debt service pressures that would be bullish for a broadening out in those smaller cap names," Dickson said.Lower interest rates also have <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/mortgages/average-mortgage-interest-rate">an outsized impact on the housing market,</a> and homebuilders can offer solid guidance on what they're seeing in that market."Lower mortgage rates are breathing some life back into the housing market, evidenced by a ramp up in weekly mortgage applications by almost 50% since the end of July, to the highest point since mid-2022," Hainlin said.He added: "Lower mortgage rates should push up housing demand, bring some additional inventory online, and provide a modest boost to home sales and housing-related consumer spending."

The 3 biggest themes investors are watching for as earnings season kicks off

<ul class="summary-list"><li>China's stock markets surged this week, marking the best weekly performance since late 2008.</li><li>The rally was driven by Beijing's aggressive stimulus measures to boost the struggling economy.</li></ul>China's stock markets closed sharply higher Friday, notching their best week in 16 years as investors joined the rally party.The euphoria was thanks to Beijing's big-bang stimulus announcement on Tuesday, which showed the authorities' urgent and concerted commitment to boosting its ailing economy.Since Tuesday, Chinese authorities have flooded the market with announcements of interest rate cuts, bank reserve ratio reductions, liquidity injections, and pledges to boost fiscal spending. The stimulus blitz has jolted investors into buying into the previously downtrodden market."The ante has been upped on China stimulus. Forget just monetary 'bazooka,' Beijing is mobilizing the fiscal arsenal too," wrote Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan, in a Friday note.He added that this is "as close as Beijing gets to guns blazing." And markets have reacted by swinging from "despondency to delirium."Mainland China's benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/index/csi-300">CSI 300 index</a> closed 4.5% higher on Friday, its best week since November 2008.Meanwhile, Hong Kong's <a target="_blank" class="" href="https://markets.businessinsider.com/index/hang_seng">Hang Seng Index</a> closed 3.6% higher in its best performance since 2009.<h2 id="873d4d1f-efda-4b09-8baa-171092af49d4">The stock market party overwhelmed tech systems</h2>The stock market party got too hot to handle."Due to surging trading volume, the Shanghai exchange and brokers report some trades have been delayed," Hao Hong, chief economist at Grow Investment Group, <a target="_blank" class="" href="https://x.com/HAOHONG_CFA/status/1839498669864923621">posted on X.</a>"The trading system is simply overwhelmed. There is a huge stampede of stock bulls," added Hong.The <a target="_blank" class="" href="https://www.sse.com.cn/disclosure/announcement/general/c/c_20240927_10762480.shtml">Shanghai Stock Exchange</a> said in an announcement that it was investigating the delays.The market euphoria — now into its fourth day — came despite reservations about China's aggressive stimulus that it rolled out on Tuesday — which some analysts suggested <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-stock-market-bazooka-liquidity-stimulus-sparks-panic-speculation-2024-9">panic in Beijing</a> over the state of the world's second-largest economy.China's economy has struggled to sustain its growth momentum since the pandemic ended. It is battling multiple challenges, including an epic property crisis, high youth unemployment, and deflation.While Chinese authorities have introduced support measures earlier, its stock markets couldn't sustain gains convincingly following a massive <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/china-stock-market-meltdown-brutal-year-explainer-whats-happening-2024-1">meltdown</a> at the beginning of the year — a stark contrast to the hot money flowing elsewhere like the <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-outlook-rally-sp500-recession-china-economy-interest-rates-2024-5">US, Japan, and India.</a>"Investors we spoke to generally have low conviction in the sustainability of the rally," acknowledged Bank of America analysts in a Friday note. However, the bank is more optimistic."Chinese financial regulators rarely encourage banks/financial institutions to increase leverage for the stock market but are doing so this time," the Bank of America analysts wrote, referring to Beijing's announcements of swap and re-lending facilities for stock buybacks.Furthermore, the US Federal Reserve has started cutting interest rates, which has historically benefited Chinese markets, they added.So even if Beijing's stimulus isn't enough for China's economy, a liquidity or leverage-driven market rally could still be "very powerful," they wrote.There's historical precedence, the Bank of America analysts added.The CSI 300 index more than doubled from the fourth quarter of 2014 to the first half of 2015 after Beijing used <a target="_blank" class="" href="https://www.businessinsider.com/china-mini-stimulus-2014-4">government stimulus</a> to arrest a slowdown. This preceded economic recovery that did not happen until the second half of 2016.<h2 id="a014ea6a-41e1-4a13-af63-bbc31fd09242">Top-down direction matters a lot in China</h2>Despite reservations about whether China's stimulus is enough — and if the current market rally is sustainable — it does look like Beijing is ready to do whatever it takes to revive its economy and markets.On Tuesday, <a target="_blank" class="" href="https://www.gov.cn/lianbo/fabu/202409/content_6976186.htm">People's Bank of China governor Pan Gongsheng</a> said at his stimulus announcement that authorities stand ready to inject more liquidity into the system if the support measures for swap and re-lending for share buybacks — collectively at $800 billion yuan, or $114 billion, prove successful."Indeed, while this isn't QE, moral suasion in China has somewhat more force than elsewhere. " wrote Global Data.TS Lombard economists Freya Beamish and Rory Green in a note on Thursday, referring to quantitative easing.After all, "Chinese companies live and die based on whether they are singled out as policy favorites, CEOs sometimes literally," they added.

You Searched For "lending" and got 12 results

RBI to set up public repository of digital lending apps to check unauthorised players

PTI

After UPI, RBI set to launch Unified Lending Interface (ULI) for friction-less credit

ANI

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

Ira Alok Puranik

Chief strategists project their outlooks on stocks, bonds, currencies, and gold amid a Trump victory

Laila Maidan

Bank stocks soar after Donald Trump's election victory

Jennifer Sor

A veteran bond operator shares an alpha-generating strategy for dropping yields and muted stock-market returns

Laila Maidan

Inflation isn't going anywhere, and higher rates could spark a 12% downturn for stocks in the coming year, veteran strategist says

Jennifer Sor

The EU may be prepping to lend Ukraine up to $45 billion — with or without the US

Hannah Abraham

China's attempts to save its flailing housing market haven't boosted confidence among top Wall Street analysts

Kelly Cloonan

Why bitcoin has 12% upside in the weeks before the election, Standard Chartered says

Filip De Mott

The 3 biggest themes investors are watching for as earnings season kicks off

Matthew Fox

China's stock markets are partying like it's 2008, overwhelming systems

Huileng Tan

Popular Keywords

Buying Guides