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New Delhi: Markets regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">Sebi</keyword> has proposed allowing Real Estate Investment Trusts (<keyword id="20186402" type="General" weightage="20" keywordseo="REITs" source="keywords">REITs</keyword>), Small and Medium REITs (SM REITs) and Infrastructure Investment Trusts (<keyword id="20186403" type="General" weightage="20" keywordseo="InvITs" source="keywords">InvITs</keyword>) to use <keyword id="21737868" type="General" weightage="20" keywordseo="interest-rate-derivatives" source="keywords">interest rate derivatives</keyword> for <keyword id="23778373" type="General" weightage="20" keywordseo="hedging-risk" source="keywords">hedging risk</keyword>. Also, the regulator has suggested approving locked-in units for REITs and InvITs to be transferred among sponsors and their groups, similar to rules for promoters in listed companies, to help sponsors manage their holdings without compromising "skin in the game". Additionally, Sebi has suggested permitting fixed deposits to be considered as cash equivalents when calculating leverage for REITs and InvITs, clarifying credit rating requirements for REIT and InvIT borrowings, and setting a timeline for filling vacancies on their boards and expanding the asset base for REITs and SM REITs. The regulator has also proposed to permit REITs to invest in liquid mutual funds. It has suggested measures to facilitate ease of doing business for REITs and InvITs, along with investors' protection. According to its consultation paper, Sebi is considering allowing REITs and InvITs to hedge against interest rate fluctuations by using derivatives like interest rate swaps. This could help stabilise cash flows, reduce risks, and protect unitholder interests, especially for long-term infrastructure projects. It is also proposed to define "Common Infrastructure" for REIT regulations. To enhance business flexibility for REITs, it has been proposed to clarify that facilities like power plants, heating/cooling systems, water treatment, and waste treatment plants -- serving one or more REIT assets -- will qualify as "common infrastructure" under REIT rules. This applies even if these facilities are not located within a single project due to their technical requirements. These facilities should supply and be used exclusively by REIT assets. For power plants, however, any excess power can be sold to the state utility/grid as per regulations, with any credits or payments going towards the benefit of REIT assets. To improve transparency, it has been proposed to amend the governance norms for quarterly reporting of InvITs. Currently, quarterly results for the investment manager and its business segments are presented to the investment manager's board, but there is no direct requirement for InvITs to report their performance. The proposed amendment would clarify that quarterly results should specifically reflect the performance of the InvITs themselves, not just the investment managers. This change aligns InvIT regulations with REIT regulations, where the focus is on the quarterly results of the REIT itself. Also, it has been suggested to align the composition of NRCs in REIT and InvIT managers with listed companies under the LODR regulations. Currently, all NRC members for REITs and InvITs must be independent directors. The proposal allows a mix of independent and non-executive directors, similar to listed companies. To enhance investors' protection, Sebi has suggested reviewing conditions for InvITs to borrow beyond the 49 per cent limit, assessing REIT investments in unlisted equity shares and outlining the roles and responsibilities of trustees for REITs, InvITs, and SM REITs. In a separate consultation paper, the regulator has proposed a regulatory framework for "restricted return InvITs" to provide infrastructure investors with predictable returns by setting limits on both upside gains and downside protection. The proposed framework for restricted return InvITs is designed to provide investors with structured returns, capped at both minimum and maximum levels to offer stability. Restricted return InvITs would include downside protection -- a minimum assured return -- and/or an upside restriction, a cap on returns -- depending on the arrangement. These investments would be limited to sophisticated investors who meet high minimum investment thresholds, with each unit priced at a minimum of Rs 500 crore and total InvIT assets of at least Rs 50,000 crore. Investors would be required to sign a waiver and undertaking form, acknowledging their understanding of the structured returns and risks involved, including the transfer of any excess returns to the sponsors. This waiver should be submitted before purchase in both primary and secondary markets, with compliance overseen by merchant bankers or brokers. The Securities and Exchange Board of India (Sebi) has sought public comments on both consultation papers by November 13.

Sebi proposes to allow InvITs, REITs, SM REITs to use interest rate derivatives for hedging risk

<ul class="summary-list"><li>The Houthis unveiled a new torpedo, nicknamed Calamity.</li><li>The weapon resembles a US sea drone the group captured years ago, analysts told BI.</li></ul>The Houthi rebels in Yemen have a new torpedo to show off — and it looks familiar.The militant group <a target="_blank" class="" href="https://x.com/MMY1444/status/1850978897510236471">published</a> <a target="_blank" class="" href="https://www.mmy.ye/327571/">videos</a> on Sunday and Monday touting its new weapon, named Al Qar'iah, or "Calamity."The Yemeni group is not known for its technical daring; and experts assessing the video saw echoes of captured US weaponry, a naval drone that was taken whole in 2018.Without assessing one in detail, it is impossible to say how the Calamity came to be.But it would be in keeping with other examples of US equipment being reverse-engineered into the arsenals of its foes, especially those tied to Iran.Martin Kelly of the UK advisory firm EOS Risk Group, said the torpedo could derive from a US REMUS 600 drone lost in 2018.Footage the group released around the time the waterborne drone was lost appears to show them seizing it, with names of Western defense companies still visible on its body.<div type="image" title="An undated video released by the Houthis forces in 2018 showed what appears to be a US REMUS 600." height="1085" width="2000" msid="114777397" hostid="261" sizebytes="53164"></div>Per Kelly, Iranian scientists could have turned a captive example into a "blueprint" for the homegrown weapon seen this week.<h2 id="9de97d0d-e63d-4226-97ea-5d5a86d7357b">Tehran's copyshop</h2>"Iran probably reverse-engineered the REMUS 600 and sent the parts back to the Houthis for construction," Kelly told BI.Iran provides significant security support to the Houthis, like weapons, training, and intelligence support, and is even its <a target="_blank" class="" href="https://www.cfr.org/in-brief/irans-support-houthis-what-know">primary provider</a>, which has allowed it to hit land and sea targets.Mohammed Albasha, a US-based Middle East security analyst, reached a similar conclusion.He told BI that Iran has a history of reverse-engineering captured US technology. He cited the Toophan missile, derived from the US BGM-71 TOW, and the Mersad air defense system from the US MIM-23 Hawk.Another significant example is the Shahed drone, derived from the US RQ-170 Sentinel. Shaheds have been used extensively by Russia in its invasion of Ukraine, the fruits of its alliance with Tehran.Iranian-provided weapons have loomed large in recent Houthi attacks on the Red Sea.The US Defense Intelligence Agency <a target="_blank" class="" href="https://www.dia.mil/News-Features/Articles/Article-View/Article/3834111/">assessed</a> in July that the Houthis used Iran-supplied weapons in more than 100 attacks.It said that the US and its allies intercepted at least 20 Iranian vessels between 2015 and 2024 carrying illicit technology like missile components, drones, and other weaponry bound for the Houthis.Experts weren't unanimous in their assessment of the drone.Farzan Sabet, a senior research associate at the Geneva Graduate Institute, saw a different possible origin.He told BI that the torpedo looked like models put on display at an <a target="_blank" class="" href="https://ar.mehrnews.com/amp/1939067/">Iranian navy exhibition</a> in Tehran in December 2023.He said other features of the torpedo didn't match the REMUS 600.He also said that it was possible that the Calamity's makers took some pointers from the captive drone without wholesale remaking its functionality.The torpedo was likely "much simpler" than any US forebear, he said.<h2 id="68d8d0e6-6ee6-423b-a515-2697e478fa33">Exploiting vulnerabilities</h2>It is yet to be seen what difference a new torpedo could make to the Houthis.The group already uses a variety of one-way attack drones, naval drones, and anti-ship missiles to target commercial ships and US warships in the Red Sea.The strikes are part of a campaign to exert pressure on Israel and the West since the beginning of the war in Gaza.Between November and June, the Houthis attacked or threatened the US Navy and other vessels over 190 times, according to the <a target="_blank" rel="" class="" href="https://www.defense.gov/News/Transcripts/Transcript/Article/3809715/deputy-pentagon-press-secretary-sabrina-singh-holds-an-off-camera-on-the-record/">Pentagon</a>.The attacks have disrupted global shipping, adding risk to a pivotal route. Freight rates doubled to nearly $4,000 per container in January and then jumped to over $5,900 in July, according to <a target="_blank" rel=" nofollow" class="" href="https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry">maritime research consultancy Drewry.</a>Rates as of this writing were roughly $3,095, compared to an average of $1,300 per trip in October last year, per Drewry's index.The US Navy and allied navies diverted significant resources to counter the Houthis and increase confidence in the route.Albasha, the analyst, said the Calamity looks too small to seriously bother a heavily armored US warship.However, even a small torpedo can do harm if it hits right."A well-placed strike can cause critical flooding, disable essential systems, or impair the ship's ability to maneuver, forcing it out of action," he said."Though unlikely to sink a warship, such attacks can render it temporarily inoperable, impacting fleet operations and morale."

A familiar-looking Houthi torpedo could be derived from captured US tech, analysts say

<keyword id="22661695" type="General" weightage="20" keywordseo="Regulatory-moves" source="Orion">Regulatory moves</keyword> discouraging <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' <keyword id="22661696" type="General" weightage="20" keywordseo="derivative-market-bets" source="Orion">derivative market bets</keyword> may help the <keyword id="59197" type="General" weightage="20" keywordseo="banking-system" source="Orion">banking system</keyword> garner the much-needed <keyword id="6496248" type="General" weightage="20" keywordseo="deposits" source="Orion">deposits</keyword>, <keyword id="46004" type="General" weightage="20" keywordseo="SBI-Chairman" source="Orion">SBI Chairman</keyword> <keyword id="1937145" type="General" weightage="20" keywordseo="Dinesh-Kumar-Khara" source="Orion">Dinesh Kumar Khara</keyword> has said. Khara said the budget announcements like the tweaks on the short-term and long-term capital gains will not lead to much gains from a deposit accretion perspective. "<keyword id="20031465" type="General" weightage="100" keywordseo="FO" source="keywords">F&amp;O</keyword> (future and options) kind of things are being discouraged for the retail (investor) by the regulator. Those who are resorting to such kind of an instrument, they might come back to the banking system," Khara told PTI over the weekend. It can be noted that concerns over losses incurred by 90 per cent of investors in the derivative trades have led to fears of household savings being blown in speculation rather than being deployed for productive purposes among policymakers. As per <keyword id="20033427" type="General" weightage="20" keywordseo="capital-markets" source="keywords">capital markets</keyword> regulator Sebi, retail investors lost Rs 52,000 crore in such activity in FY24 alone which necessitates a clampdown. Sebi has come up with a seven-point plan to reduce such trades, while some moves in the Union Budget are also targeted to reduce such activities. For the last three years, the deposit growth is unable to keep pace with credit expansion, and Khara said the money is going into alternative avenues like capital markets. He, however, stressed that the bank account is the primary avenue for parking the savings and continue to attract interest, and reminded that there was a phase of deposit growth trailing credit growth in 2011 as well witnessed by the banking system. At present, concerns are being raised about the wedge between the deposit and credit growth leading banks to go slower on granting loans, which can be be detrimental for the overall economic growth. <keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SBI" meta.hostid="153" meta.entityid="SBI">SBI</keyword>, the country's largest lender which commands over a fifth of market share, is targeting a credit growth of 15 per cent in FY25 and a deposit growth of 8 per cent, Khara said. Stating that the bank will try to get the deposit growth at 10 per cent, he made it clear that the credit growth target can be achieved even with a slower pace of deposit growth of 8 per cent due to its liquidity position. The bank chose to deploy excess deposits in the past into its investment book and is currently unwinding the same as it caters to the credit demand, Khara said. He said the bank's liquidity coverage ratio stands at 128 per cent and it has decided to keep it over 110 per cent.

Discouraging retail play in F&O may help banks garner deposits: SBI Chairman

<ul class="summary-list"><li>Stocks had a day to remember after Donald Trump won back the White House.</li><li>Market veteran David Kelly believes Wall Street is overlooking a key economic risk.</li></ul>Markets are celebrating <a target="_blank" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">Donald Trump's election as president</a>, though the leading strategist at JPMorgan's multi-trillion asset management arm is not in the mood to party.US stocks had one of their best days in years and hit new records after Trump's resounding win over Kamala Harris in Tuesday's election. The S&amp;P 500, the growth-heavy Nasdaq Composite, and the small-cap heavy Russell 2000 rocketed between 2.5% and 5.8% higher on Wednesday.That broad-based equity rally didn't include bonds, which got shelled on Wednesday. Yields, which move inversely to bond prices, vaulted higher for US Treasuries across durations.Both of those moves make sense, said David Kelly, the global strategy chief at JPMorgan Asset Management, in an interview on Wednesday."If you have a Republican sweep, then Donald Trump can push through <a target="_blank" href="https://www.businessinsider.com/tax-cut-tariff-plan-outlook-presidential-election-scenarios-harris-trump-2024-10#big--and-small-business-owners">whatever tax bill he wants to in 2025</a>, pretty much," Kelly said. "There is potential for <a target="_blank" href="https://www.crfb.org/blogs/donald-trumps-proposal-lower-corporate-tax-rate-15">significant tax cuts</a>, and we know that has such a direct impact on corporate earnings — after-tax corporate earnings — that that is, logically, very positive for the stock market."But while Wall Street might cheer those tax breaks, Kelly warned that they could lead to higher inflation, one of Democrats' liabilities in this election cycle.Corporate tax cuts could have consequences, in Kelly's view, as he said they'd cause inflation to rise alongside the US national debt burden. That would be a major headwind for bonds, and stocks might also get dragged down.<h2 id="9ce813f5-aaa4-4439-aa03-ba3a4736747d">Tariffs could be a terrible outcome for stocks</h2>If one of Kelly's highest convictions hunches is correct, this market rally is in trouble anyway.The strategy chief has been adamant that higher tariffs — <a target="_blank" href="https://www.businessinsider.com/global-reaction-donald-trump-election-victory-tariffs-trade-disputes-2024-11">one of Trump's key proposals</a> — <a target="_blank" href="https://www.businessinsider.com/economy-outlook-tariffs-trump-trade-war-slowdown-jpmorgan-david-kelly-2024-10">would cripple the US economy</a> and endanger the global economic expansion."Tariffs are not a good idea," Kelly said at a late-October press event hosted by JPMAM. "It's kind of like a nuclear threat — the whole point is, if you actually end up using it, you kind of screwed up somewhere."Most economists condemn tariffs, which are taxes on imports, because they tend to lead to higher prices and lower economic growth. Kelly has said he'd have to <a target="_blank" href="https://www.businessinsider.com/economy-outlook-tariffs-trump-trade-war-slowdown-jpmorgan-david-kelly-2024-10">increase his inflation target and slash his long-term growth outlook</a> if Trump followed through on his tariff proposals, given that they'd almost certainly prompt counter-tariffs that would hurt US exporters as well."Retaliatory tariffs hurt growth in both countries and push up inflation in both countries," Kelly recently said. "They're actually sort of the magic stagflation elixir. There are very few things that will actually give you a stagflationary impulse, which both slows growth and increases inflation."A global trade war is a frightening possibility that now seems increasingly realistic. Paraphrasing Mahatma Gandhi, Kelly said that "a tariff for a tariff will make the whole world poor."On the campaign trail, <a target="_blank" href="https://www.pbs.org/newshour/economy/trump-favors-huge-new-tariffs-how-do-they-work">Trump teased aggressive tariffs</a>: a 60% tax on Chinese goods and as much as a 20% upcharge on all other imports. When asked whether there was any chance that those proposals could be effective, the strategy chief had a simple answer that he didn't hedge."No," Kelly said. "I'm not trying to be political at all. I thought this was consensus, actually. I thought the biggest people in favor of free trade was the Republican party."Kelly later added: "I challenge anybody to show me a long-term study which shows that tariffs actually do promote stronger economic growth or stronger job growth domestically because I've never seen it."<h2 id="15c4690f-5250-4143-8288-a419b887c658">Why tariffs should be taken with a grain of salt</h2>Although Kelly is far from alone in his antipathy to tariffs, it's worth noting that most of his counterparts are much less concerned about that part of <a target="_blank" href="https://www.businessinsider.com/donald-trump-election-victory-impact-investments-costs-housing-taxes-childcare-2024-11">Trump's economic agenda</a>.One exception is Tom Orlik of Bloomberg Economics, who's firmly in Kelly's camp. The economist said at a conference his firm hosted in early October that Trump's tariffs <a target="_blank" href="https://www.businessinsider.com/election-trump-harris-economy-inflation-stock-market-volatility-risk-orlik-2024-10">would cause "seismic shocks to the US economy"</a> by throttling growth and sparking inflation.But Chris Murphy, Susquehanna's cohead of derivatives strategy and a copanelist with Orlik, reasoned that <a target="_blank" href="https://www.businessinsider.com/election-trump-harris-economy-inflation-stock-market-volatility-risk-orlik-2024-10">Trump could always back away from tariffs</a> if the market reacted poorly to his proposals. Besides, Wall Street is far from frightened right now.Sean Gallagher, the global head of Lazard's small-cap equity platform, made a similar point in a recent interview with Business Insider when asked about Trump's tariffs and Kelly's stance."Often with Trump, the rhetoric and reality are not the same," Gallagher said. He added: "I don't know if all this rhetoric is going to match what's going to actually happen."The small-cap maven described himself as a free-market aficionado who's generally opposed to tariffs, including the ones that Trump outlined during his campaign. He said he'd prefer to avoid them, and he ventured that most Americans probably feel the same way.Ultimately, Gallagher thinks there will be some tariffs, though they may be more tempered than what Trump has floated. Inflation is a key reason Trump won, and he shouldn't forget that."We have to think about all the knock-on effects of tariffs, and his economic team will have to think about that as well," Gallagher said. "Trump's going to have to be, rightly, concerned about inflation. He's been talking about it too, how inflation's been a problem."Gallagher concluded: "We don't want to reignite inflation. I don't think anybody's for that."

A top mind at JPMorgan Asset Management sounds the alarm about an obvious economic red flag after Trump's resounding win, even as US stocks soar

<ul class="summary-list"><li>Elon Musk's net worth soared by about more than $30 billion on Thursday after Tesla stock surged 22%.</li><li>Tesla's third-quarter earnings exceeded expectations, boosting the company's market value by $153 billion.</li></ul>Elon Musk added more than $30 billion to his net worth on Thursday after <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/tesla-stock-price-q3-earnings-elon-musk-profit-margins-guidance-2024-10">Tesla stock soared</a> following its <a target="_blank" class="" href="https://www.businessinsider.com/tesla-stock-tsla-earnings-call-report-live-updates-2024-10">third-quarter earnings results.</a>Shares of Tesla jumped 22% on Thursday, adding about $150 billion in market value as investors cheered the automaker's higher-than-expected gross margins, plans for a lower-cost vehicle in 2025, and Elon Musk's guidance of up to 30% growth in vehicle deliveries next year.The massive gain puts Elon Musk's total net worth at just over $270 billion, according to data from Bloomberg<a target="_blank" class="" href="https://www.bloomberg.com/billionaires/profiles/elon-r-musk/">.</a>Thursday's surge in Tesla stock solidifies Musk's position as the world's richest person, well ahead of other executives at the top of the list including Jeff Bezos and Larry Ellison. Musk's fortune is derived from his 13% stake in Tesla and about 304 million exercisable stock options from his 2018 compensation package, according to Bloomberg. Musk's entire Tesla stake is worth about $123 billion.Musk's second largest source of wealth is SpaceX. The billionaire owns about a 42% stake in the space exploration company with a total value of just over $80 billion, according to Bloomberg.Finally, Musk's ownership stakes in X, The Boring Company, Neuralink, and xAI are worth a combined $24 billion, Bloomberg estimates.

Elon Musk added over $30 billion to his net worth in a day on Tesla's post-earnings stock surge

<ul class="summary-list"><li>As fears over economic volatility and deficits grow, investors and central banks are buying gold.</li><li>Gold is often seen as a safe-haven asset among investors.</li></ul>Now is looking like a golden opportunity to <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/how-to-invest-in-gold">invest in gold</a>.For decades, the yellow metal has been considered a safe-haven asset, serving as a hedge against high inflation and economic uncertainty due to its low correlation to stocks and bonds.And there's certainly no shortage of economic uncertainty right now. The US presidential election is right around the corner, inflation concerns remain elevated, geopolitical tensions are high, and the US national debt is reaching untenable levels.Investors and central banks alike have been snatching up gold. The asset's price hit another record high earlier this week at $2,739.40 per ounce after rising over 30% this year, and some analysts are setting a price target of $3,000.Investing in gold is slightly different from putting money into stocks or bonds. Below, two gold experts share four ways investors can add gold to their portfolios.<h2 id="f6498d65-9f43-415b-a374-53643e6db3e3">4 ways to invest in gold</h2>For starters, investors can purchase the metal directly.You can buy gold coins online. You can buy gold bars at Costco. Those strip mall stores with a big "We Buy Gold" sign? You can buy gold there, too.Buying the physical commodity is a tangible way to invest in gold, but it does have some drawbacks. Jeff Muhlenkamp, portfolio manager at Muhlenkamp &amp; Company, points out that there are transaction costs when buying directly from a gold dealer. The investor also has to ensure the gold is certified regarding purity and weight. Buyers must also consider secure storage solutions and insurance for their physical assets.In general, physical gold is a less liquid way to own the asset and is quite costly. "Most of the time when people go and buy gold coins, they'll pay a big premium upfront, and they'll probably suffer a discount when they come to sell at the end," George Milling-Stanley, chief gold strategist at State Street Global Advisors, said.Investors can avoid the complications of investing in bars and coins by buying a gold ETF instead.Physical gold ETFs can be bought through a brokerage account and are directly backed by gold bullion held in bank vaults, meaning that investors don't have to worry about storage or liquidity issues. Examples include the iShares Gold Trust fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-gold-trust-us4642852044?miRedirects=1">IAU</a>) and the SPDR Gold Shares fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/spdr-gold-shares-us78463v1070?miRedirects=1">GLD</a>).Synthetic gold ETFs don't hold physical gold, investing instead in gold derivatives such as futures and options. These ETFs can be cheaper than physically backed ones since they don't need to store the metal, but they have counterparty risk, or the risk of loss from a contract participant not fulfilling their obligation. Examples include the SPDR Gold MiniShares Trust (<a target="_blank" href="https://markets.businessinsider.com/etfs/spdr-gold-minishares-us98149e3036?miRedirects=1">GLDM</a>) and the ProShares Ultra Gold fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/proshares-ultra-gold-us74347w6012?miRedirects=2">UGL</a>).For investors who want to get as close to the real thing without buying bars, physical gold ETFs tend to track changes in the price of gold more accurately than synthetic ones, Muhlenkamp said.Mining companies are another option for more indirect exposure. These can vary wildly in risk, so Milling-Stanley advises that investors approach these stocks with discretion. The multi-billion-dollar market-cap mining companies offer the most liquidity and stable business models. Smaller mining companies, known as junior miners, are in the exploration phase of looking for mineral deposits and might not be generating revenues, Muhlenkamp said.Mining stocks are less directly correlated with the price of gold than ETFs and may lag trends in gold prices by several months, Muhlenkamp said.In Milling-Stanley's opinion, investing in mining stocks instead of directly investing in gold erodes some of the metal's portfolio protection, as mining stocks behave more in line with the general equity market.This area of investment is definitely higher in risk, but if enthusiasm for gold continues to surge, more speculative mining stocks will enjoy the biggest upside, according to Muhlenkamp.Examples of mining stocks include Agnico-Eagle Mines (<a target="_blank" href="https://markets.businessinsider.com/stocks/aem-stock">AEM</a>) and Newmont Mining Corp (<a target="_blank" href="https://markets.businessinsider.com/stocks/nem-stock">NEM</a>).Gold royalty and streaming companies are yet another way to add gold to a portfolio. These companies finance gold mines and receive a percentage of the gold produced.Royalties limit the holder's exposure to the risks associated with directly investing in mines, such as exploration, development, and regulatory compliance. Royalty and streaming companies are a good way to gain exposure to junior mines but still retain liquidity, especially for investors who don't have the ability or resources to conduct due diligence, Muhlenkamp said.Examples of gold royalty companies include Franco-Nevada (<a target="_blank" href="https://markets.businessinsider.com/stocks/fnv-stock">FNV</a>) and Wheaton Precious Metals (<a target="_blank" href="https://markets.businessinsider.com/stocks/wpm-stock">WPM</a>).

4 ways to add gold to your portfolio as investors pile in and send prices to record highs  

<ul class="summary-list"><li>Investors are seeking S&amp;P 500 downside protection as rate cuts shift focus to growth concerns.</li><li>Hedging strategies include options contracts, indicating the smart money is bracing for volatility.</li></ul>Some investors are beginning to accept that what goes up must come down.Demand for downside protection on the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> is starting to build. As rate cuts begin, attention is shifting away from inflation to concerns over slumped economic growth and a stock market that looks a bit too rich.There are multiple ways to hedge: short selling, diversifying into uncorrelated assets, buying an inverse <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-an-etf#:~:text=An%20exchange%2Dtraded%20fund%20(ETF,liquid%20as%20some%20mutual%20funds.">ETF</a>, and using <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/option-chain#:~:text=An%20option%20is%20a%20contract,its%20own%20type%20of%20security.">options</a>, among others.But one approach that's beginning to pick up, with advantages in the current market environment, is hedging S&amp;P 500 downside through options contracts. It's a sign that the smart money could be beginning to get into positions early to brace for volatility or a pullback, according to Tanvir Sandhu, the chief global derivatives strategist at Bloomberg Intelligence.It's a bit of a shift from an environment where investors had just been buying the dip during market pullbacks, he added in an interview.Annually, the <a target="_blank" class="" href="https://markets.businessinsider.com/index/vix">CBOE Volatility Index</a> (VIX) — a measurement of implied volatility — gradually rises starting in the middle of summer and into October. And during election years, that pickup is more pronounced, Sandhu noted.So far, October's VIX futures, which cover the election date, have been rising over the last week even though the S&amp;P 500 remains strong. This indicates increased expectations of volatility. On average, investors have gone long on volatility leading up to an election and tend to take profits just before the event, in expectation of volatility fading quickly after, he said at a conference on Tuesday.<h2 id="a8544eb9-d926-4c96-a2a3-c60541035839">Hedging options</h2>A classic hedging strategy is buying calls on the VIX, which gives the buyer the right to purchase the index as its value rises if volatility picks up. Sandhu noted that when the VIX goes down, demand on VIX calls generally increases because there's more upside potential if it does spike.Another approach is buying puts on the S&amp;P 500, which gives the buyer the right to sell the index at a set price before the expiration date. The contract's value rises if the index falls because it allows its buyer to sell at a set price amid uncertainty.Each option has its pros and cons. The approach that works better depends on how the stock market pulls back. Traditionally, the S&amp;P 500 gradually goes up, with quick pullbacks — like an escalator-up, elevator-down scenario, Sandhu said. But more recently, we have been in an upside-down world, where it's more like an elevator up and an escalator down because investors keep buying the dip, making pullbacks more shallow, he added. This has somewhat muted volatility and changed its function.That said, to get a payout from VIX calls, you need a shock-like pullback, where the market sells off, causing the volatility index to spike. So the VIX strategy may not do as well in this type of dynamic, he noted.Even if it seems cheap to hedge since volatility is low, it can still end up being costly as contracts expire worthless. However, it also depends on your outlook over the next few months."When you buy a VIX call option, you are hedging against a tail-risk event," Sandhu said. "So let's say the Middle East scenario gets really bad, and there's a war, Brent goes above $100 a barrel. That's pretty bad for the financial markets."Meanwhile, S&amp;P 500 long-dated put options are a preferred approach for investors expecting a slower downturn because they have a lower cost of carry. You don't have a contract that expires worthless every month or so, he noted.

The smart money is bracing for a stock-market pullback with 2 options strategies. Why one works better in the current environment.

<ul class="summary-list"><li>Leading strategists generally agree that trying to trade around the election is a mistake.</li><li>But one chief economist says there's a notable exception if a certain result plays out.</li></ul>Election-year autumns are full of debates, including Tuesday night's <a target="_blank" href="https://www.businessinsider.com/jd-vance-tim-walz-vp-debate-agreement-civility-2024-10">refreshingly respectful and civil</a> vice-presidential showdown between Democrat Tim Walz and Republican JD Vance.But there isn't usually much disagreement about how to trade heading into elections.Top market strategists and economists at the Bloomberg Volatility Forum on October 1 generally agreed on one point: Investors who don't bet on the outcome of elections may be better off.The race between Kamala Harris and Donald Trump will be too close to call, according to <a target="_blank" href="https://www.270towin.com/2024-presidential-election-polls/">the latest polls</a> and <a target="_blank" href="https://puck.news/podcast_episode/nate-silver-harris-v-trump-is-the-closest-election-ive-ever-seen/">top political pundits</a>, so market veterans said investors shouldn't try to predict who will win.And even if a crystal ball told traders who'd win the White House, it may not make them money, as Nancy Davis, the founder and chief investment officer at Quadratic Capital, noted."Market timing, to me, is something really, really hard to do — because even if you know the event outcome, you don't necessarily know how liquidity is positioned or how much cash is on the sideline," Davis said, citing the aftermath of Brexit as an example.Still, investors should be mindful that one outcome — a Trump presidency that implements some of the toughest economic sanctions he campaigned on — could cripple growth and inflation, says Tom Orlik, the chief economist at Bloomberg Economics.<h2 id="839694a0-f1ec-457d-9262-aa3ac1dcb979">The market isn't freaking out about the election, but protection may still make sense</h2>Market volatility, as measured by the CBOE Volatility Index (<a target="_blank" href="https://markets.businessinsider.com/index/vix">VIX</a>), has historically been elevated in the month before US elections, said Tanvir Sandhu, the chief global derivatives strategist at Bloomberg Intelligence. The VIX usually hovers around 25 in October, Sandhu noted. For context, the volatility gauge usually stays between 10 and 20 and only rarely approaches 30.While the VIX is up 23% since late September, the so-called "fear index" is still under 20. That relatively muted volatility coincides with a strong stretch for US stocks. The S&amp;P 500 is trading near record highs after a <a target="_blank" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">larger rate cut</a> than many market participants expected.Considering the looming election and its impossible-to-predict implications, it's fair to wonder whether investors are being complacent. Traders who are feeling antsy may seek to hedge by buying <a target="_blank" href="https://www.investopedia.com/terms/p/putoption.asp">puts</a> or selling <a target="_blank" href="https://www.investopedia.com/terms/c/calloption.asp">calls</a>, especially since options premiums aren't overly pricey.Or, as Chris Murphy, the cohead of derivatives strategy at Susquehanna put it, investors may want "upside protection" so they're not caught offside if markets suddenly surge. Since volatility is in check, buying calls may pay off."We typically see a rally into year-end after the election," Murphy said. "There are opportunities there to protect yourself" from such an upswing without going all in, he added, like buying cheap calls.<h2 id="023e721c-202d-438b-8516-970d8bc4f050">One election result may cause 'seismic shocks'</h2>Partisans are convinced that this election is the most important ever, as they <a target="_blank" href="https://www.vox.com/21504729/most-important-election-bush-gore-kerry-trump">always</a> <a target="_blank" href="https://slate.com/news-and-politics/2020/11/most-important-election-of-our-lifetimes-history.html">are</a>. The market isn't convinced, judging by where the VIX is trading just a month away from election day.But Orlik of Bloomberg Economics disagrees. He foresees three plausible outcomes from next month's elections, including a potentially dangerous one.The status-quo outcome would be if Harris beats Trump and Congress remains divided. In that scenario, Orlik would expect continuity and similar economic policies as Joe Biden has had.Another positive result for investors could be if Trump wins and his second term is similar to his first, where taxes and regulations are kept at a minimum, Orlik said. He pointed out that this type of Republican presidency has historically been one of the best environments for US stocks and the economy."Implicit in the sanguine anticipation of the election from the financial markets is the baseline view that either it be continuity with Kamala Harris, or it'll be the small government," Orlik said.The third potential result is what has Orlik worried: a Trump term with "extreme" policies on <a target="_blank" href="https://www.pbs.org/newshour/economy/trump-favors-huge-new-tariffs-how-do-they-work">tariffs that he's floated</a> and deportation of undocumented immigrants."I don't think people are actually taking that possibility extremely seriously right now, but perhaps they should," Orlik said. "Because these would be seismic shocks to the US economy — an absolutely enormous impact on growth, an absolutely enormous impact on inflation, and an enormous impact on Fed policy."Tariffs are import taxes designed to make domestic goods relatively attractive while raising money for the government that issues them. However, many economists and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stock-market-international-investing-strategy-charles-schwab-2024-6">strategists hate them</a> because they can make all goods more expensive while hurting economic growth.Both Trump and Biden have implemented tariffs against rivals like China, but Orlik believes Trump's latest proposals — which include a 60% tariff on Chinese goods and a 20% tariff on all other imports — would devastate the US economy and corporations."Let's think about a world where Trump gets into power and poses a 60% tariff on China," Orlik said. "Can anyone think of a company — perhaps a company with a fairly large weight in US equity indexes that wouldn't be able to operate in a world of 60% US-China tariffs? I can think of a lot: Apple, Nvidia, Qualcomm — all of the companies big in the US equity indexes near record highs would basically not be able to operate their supply chains in a world of 60% US-China tariffs."Murphy isn't as concerned as Orlik since Trump could always backtrack on tariffs, but he still believes that investors should be on their toes heading into November 5."Trump sees the stock market tanking, and then does he go, 'I'm not doing this anymore because my stock market's tanking,' and he reverses very quickly," Murphy said. "So you have to monetize those tail hedges potentially pretty quickly, but a tail hedge like that could — in theory — be something that catches people off guard."

Beware of 'seismic shocks' to the US economy and inflation if this specific election outcome occurs, according to a top mind at Bloomberg Economics

<ul class="summary-list"><li>Americans can bet on the outcome of US elections following a legal fight. </li><li>Last month, Kalshi briefly listed bets on congressional election outcomes before the CFTC shut them down.</li></ul>Betting on US election outcomes just got legalized again, thanks to a new court order.On Wednesday, prediction market Kalshi got the go-ahead to take bets on congressional elections after a months-long legal battle with the Commodity Futures Trading Commission.That makes it one of the only options for Americans to bet on election outcomes, and the only legal one for Americans to wager large amounts of money.Kalshi, a New York-based startup, lists derivatives contracts with outcomes tied to everything from the number of tropical storms this year to the Federal Reserve's benchmark rate in November.But the wagers that put it in the crosshairs of the CFTC are tied to upcoming elections.The CFTC first challenged Kalshi's congressional election wagers back in November 2023, and a lower court ruled in favor of Kalshi in early September.That allowed Kalshi's contracts on which party will take control over the House and Senate to go live, but they lasted less than a day before the CFTC ordered a stay on trading.The commission argued that betting on congressional elections would "threaten election integrity," since some voters might be motivated to participate to sway the market in favor of their preferred candidate.But on Wednesday, a US appeals court lifted the block on Kalshi's politics-related contracts, with the judge ruling the CFTC failed to prove a threat to the integrity of the vote.Kalshi has yet to restart the trades, but a company spokesperson <a target="_blank" href="https://www.coindesk.com/policy/2024/10/02/us-election-betting-court-ends-pause-on-kalshis-congressional-contracts/">told CoinDesk</a> it would resume the contracts "very soon."The court's decision comes just five weeks before the elections, and follows years of legal battles between prediction markets and the CFTC.PredictIt, a project founded by researchers in New Zealand, has operated in the US since 2014 under a no-action letter from the CFTC, but it limits American bettors to a maximum of $850 in wagers.It also only lets up to 5,000 betters participate in each market, and has faced headwinds from the CFTC in the last two years.Offshore markets like Polymarket, on the other hand, technically ban American participants, and have escaped regulatory scrutiny as a result. But the startup is based in New York, and <a target="_blank" href="https://medium.com/@joearvis7/how-to-use-polymarket-in-the-united-states-8a891dde1a91">some have suggested</a> US users have figured out how to use VPNs to bypass the restrictions.Prediction market supporters argue that less regulation from the CFTC is key to preventing election manipulation via prediction markets."Everything kind of feeds off of everything else, and by trying to limit one aspect of it, or trying to police one aspect of it, it can often ruin the entire market function," Rutgers University statistics professor Harry Crane told Business Insider in an <a target="_blank" href="https://markets.businessinsider.com/news/stocks/trump-harris-prediction-markets-polls-presidential-election-polymarket-024-8">interview in August</a>.

Americans are able to bet on the US elections again after a legal fight

<ul class="summary-list"><li>A rare bullish signal with a perfect track record flashed in the stock market this week.</li><li>The NYSE McClellan Summation Index suggests strong underlying breadth in the stock market.</li></ul>An ultra-rare bullish signal with a perfect track record flashed in the stock market this week, suggesting another year of record highs ahead.The NYSE McClellan Summation Index completed a cycle from below 100 to above 1000, suggesting that underlying breadth in the stock market is strong, according to data from <a target="_blank" class="" href="https://sentimentrader.com/">SentimenTrader.</a>The index is derived from the McClellan Oscillator, which is a closely followed indicator that measures participation in the stock market. The tool helps traders determine the underlying strength or weakness of a market trend.According to SentimenTrader senior research analyst Dean Christians, the bullish signal is worth following."Similar improvements in market breadth resulted in a 96% win rate over the following year," Christians said in a note to clients on Tuesday.But the signal has a perfect win rate when it flashes while the stock market is at or near record highs, as it did this week."Signals within 2% of a high have never experienced a loss over the next two, six, and twelve months," Christians said.According to SentimenTrader, this rare signal has flashed only 28 times since 1962, not including this week's signal. The last time it flashed was in December 2023, and since then, the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> has surged about 20%.<div type="image" title="Chart of S&amp;P 500 with rare signal flash" height="382" width="836" msid="113744989" hostid="261" sizebytes="13188"></div>Of the 28 instances this rare signal has flashed, the S&amp;P 500 has delivered an average return of 5%, 9%, and 15% in the following three, six, and twelve months, respectively.A 15% gain from current levels would send the S&amp;P 500 to around 6,600 by this time next year, meaning many record highs are ahead if the signal plays out. "Typically, when stock indexes consolidate, as most have since July, market breadth weakens as lagging moving averages or pivot points catch up to price. However, that's not the case now, as breadth has remained firm and even improved depending on the index or exchange," Christians explained.The improvement in market breadth over the past few months is evidenced by the fact that the equal-weight S&amp;P 500 index is trading at record highs and has been up nearly 10% since July, while the mega-cap growth stocks have been about flat over the same time period.

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