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<ul class="summary-list"><li>JPMorgan and Wells Fargo kick off bank earnings on Friday.</li><li>Expect lots of questions about how lower rates will impact business going forward.</li></ul>When Wall Street's biggest banks report earnings this week, led by JPMorgan Chase, investors will be listening closely for clues about how a changing interest-rate environment could impact business in 2025.The Federal Reserve in September cut the so-called federal funds rate by 50 basis points — <a target="_blank" href="https://markets.businessinsider.com/news/stocks/fed-interest-rate-cut-ai-stocks-nvidia-broadcom-asml-tech-2024-9?_gl=1*1ax8rwf*_ga*MzQwMzI0MDQ1LjE3MjEzMDM4ODI.*_ga_E21CV80ZCZ*MTcyODQ5MTE5OC4yOTAuMS4xNzI4NDkxMjEwLjQ4LjAuMA..">the central bank's first cut</a> in more than four years. The September 18 move took place too late to impact third-quarter results, but stock research analysts are expected to pepper executives this earnings season about what a lower interest-rate environment might mean for business going forward.Lower rates can be a mixed blessing for banks. On the one hand, the Fed's campaign to increase the cost of borrowing has contributed to an era of sky-high returns for traditional lenders like JPMorgan, which have been making more money on loans than they have been paying for deposits. But that party was never going to last forever. (Indeed, top JPMorgan exec <a target="_blank" href="https://www.ft.com/content/c11b59f6-4827-4c4e-9f24-2f075b85f665">Daniel Pinto warned last month</a> that stock analysts' so-called NII expectations were too high.)Plus, lower rates could help unleash <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-2q-earnings-david-solomon-investment-banking-forecast-2024-7">the dealmaking backlog</a> that investment bankers have been talking about since the pandemic-era M&amp;A boom started to slow in 2022. Their bonuses are counting on it.Speaking of bonuses, third-quarter results will also be closely watched on Wall Street as an indication of how well investment bankers may get paid this year.JPMorgan and Wells Fargo will kick off earnings on Friday, followed by Goldman Sachs, Citi, and Bank of America on Tuesday. Morgan Stanley will report its earnings on Wednesday. Here are the top four things to look for this bank earnings season:<h2 id="629d7158-9393-4502-a5a4-b8a898b107c5">Investment banking</h2>Investment bankers have been predicting dealmaking will return since it started slowing in 2022. But this year, there are strong signs that companies are ready to start going public and merging again.<a target="_blank" href="https://www.businessinsider.com/megamergers-deals-m-a-wall-street-comeback-2024-9">Preliminary data compiled by LSEG</a> shows 425 mergers globally so far this year valued at more than $1 billion. That's up 24% from the same period in 2023. What's more, deals valued at greater than $10 billion were recently up 39% compared with the same period last year.The number of companies going public is also soaring. 106 US companies have gone public through the third quarter, raising a total of $24.7 billion, according to IPO tracker Renaissance Capital. That's up from 71 in 2022 and 108 in 2023 and on track to beat the $27 billion raised in those two years.Third-quarter results — and commentary about 4Q dealmaking so far — will be closely watched for further signs of progress in M&amp;A, equity underwriting, and debt underwriting.<h2 id="bf745d80-abee-4488-881c-e8551a17811c">Trading</h2>At the Barclays Financial Services conference in September, big bank executives warned that trading revenues may be muted compared to 2023.Goldman Sachs CEO David Solomon described a "more challenging macro environment, particularly in the month of August," and warned that the bank's trading business "is trending down close to 10%." Solomon cited the bank's revenues for FICC, or fixed-income, currencies and commodities, saying that results were "very, very strong" in the third quarter of 2023.At the same conference, JPMorgan's president and chief operating officer, Daniel Pinto, predicted that trading revenues would be "flat to slightly up 2%." "It was a bit more challenging environment to monetize client flows, particularly in rates," he said.<h2 id="723af9a4-99cc-49fd-b909-2fc736985cbb">Lending</h2>Stock analysts will be watching what banks say about net interest income, which is how much banks earn off the difference between what they pay on deposits and what they earn on loans. When the Fed started raising rates, banks were making out like bandits because they were able to charge more for loans more quickly than they were raising rates on savings accounts.But banks have been warning that this dichotomy wouldn't last forever, and loan growth has indeed been slowing as the economy slows. Lower rates could boost lending yet again, but that could take time. In the meantime, JPMorgan's Pinto in September warned that Wall Street stock analysts' 2025 predictions for NII of between $91.5 billion and $90 billion were too high, sending the bank's stock down."I think that that number will be lower," Pinto said at the Barclays Financial Services conference. "We are not going to guide on that now, but the $90 billion is a bit too high."<h2 id="b126e3af-7e38-4ed0-b6d7-4e67905737f9">Bonuses</h2>Banks tend not to talk about bonuses on earnings calls, but how bankers will be paid will be reflected in C-Suite comments about dealing and trading generally — as well as their predictions for the rest of 2024 and into next year.In good news, compensation expert Johnson Associates sees bonuses up this year across the board, an analysis that's reflective in part of <a target="_blank" href="https://www.osc.ny.gov/press/releases/2024/10/dinapoli-wall-streets-2024-first-half-profits-232b-were-793-higher-last-year">Wall Street's earnings results</a> so far this year. See here for the compensation expert's views on bonuses for debt underwriting, equity underwriting, sales and trading, and more.<div type="image" title="Wall Street bonus predictions" height="630" width="1950" msid="114096916" hostid="261" sizebytes="88820"></div>

4 trends to watch this bank earnings season

<ul class="summary-list"><li>The US economy is on solid footing with cooling inflation and continued growth.</li><li>Yet, the outlook for the stock market is less clear, with analysts divided over how long the bull rally can run. </li></ul>Things are looking great for the US economy.Inflation is falling, <a target="_blank" class="" href="https://www.businessinsider.com/employee-productivity-booming-workers-jobs-ai-stock-market-gdp-2024-3">productivity is rising,</a> and the Federal Reserve is easing monetary policy, which should act as a tailwind for economic growth.Economists have shifted from arguing about a potential recession to forecasting whether a "soft landing" or "no landing" is more likely. It seems the debate is simply <a target="_blank" href="https://www.businessinsider.com/america-new-economic-supercycle-growth-inflation-stock-market-global-chaos-2024-10">about how fast the economy can grow from here.</a>But the outlook for the stock market is less clear, with major Wall Street banks still divided on whether stock prices have further room to run.Stocks are trading near record highs, with the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> on track to deliver back-to-back annual gains of more than 20%.Among the top analysts at Wall Street banks, there's some disagreement about whether all of the good news is priced in already or if the market can continue to rise beyond already lofty valuations. On the one hand, most see the gains set to continue, pushing past election uncertainty and continuing to lift stocks into 2025. However, beyond that timeline, uncertainty builds and outlooks get murky. Here's what Wall Street is saying about the prospects for the stock market heading into 2025 and beyond.<h2 id="62a39dfb-29e2-437a-b286-98b65dca264e">The Bulls</h2>A slew of Wall Street banks are chasing the record rally in the stock market this year, <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-targets-bull-market-goldman-ubs-bmo-2024-10">boosting their S&amp;P 500 year-end price targets</a> to play catch-up.Strategists at UBS <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-prediction-us-economy-no-landing-ubs-2024-10">increased their S&amp;P 500 price targets</a> in a note last week, expecting the S&amp;P 500 to hit 6,300 by June 2025 and 6,600 at the end of next year.That represents potential upside of 8% and 13%, respectively.UBS CIO head of US equities David Lefkowitz said "healthy" earnings growth will pave the way for further stock gains."Third-quarter earnings season has started on a positive note with bank management teams highlighting that consumer spending remains healthy and consistent with normal economic growth," Lefkowitz said.The bank said improving inflation, more Fed rate cuts, and accelerating investment in artificial intelligence should all help support the stock market next year.Strength begets more strength, and that's a big part of BMO strategist Brian Belski's bullish outlook for stocks into 2025.Belski <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-bmo-raises-year-end-sp500-price-target-2024-9">increased his year-end S&amp;P 500 price target to 6,100</a> from 5,600 last month, making him one of the most bullish strategists on Wall Street."We continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted," Belski said in the note.He's also encouraged by the broadening out of the stock market rally, as it's no longer concentrated in a handful of tech giants. That's healthy behavior for sustainable stock market gains, according to the note."This is a trend we expect to continue and should help to support future market gains even if the price and fundamental performance of Mag-X stocks continues to decelerate in the months ahead," Belski said.<h2 id="fc7c3d7b-c8d5-4665-bd3c-1c08a92b6ce4">The Bears</h2>The bearish strategists on Wall Street are sticking to their views even after being wrong all year. Their top worry is the potential for fewer interest rate cuts than expected and growing hype in AI that might fail to deliver.JPMorgan strategists have held firm to their bearish S&amp;P 500 year-end price target of 4,200, which represents potential downside of 28% from current levels.In a note earlier this month, JPMorgan strategist Dubravko Lakos-Bujas admitted that a recession appears off the table but said that AI investments are unlikely to pay off with lingering questions around monetization issues.Additionally, investor expectations of a Federal Reserve that is about to embark on a string of interest rate cuts could be disappointed if the economy continues to stay resilient, as it would limit the Fed's ability to cut rates, likely putting downward pressure on stock prices.Finally, JPMorgan warned in a note on Monday that third-quarter earnings have seen a flurry of estimate downgrades as sell-side analysts lower their expectations."Earnings downgrades have been significant," JPMorgan said, adding that they "appear to be worsening."Stifel strategist Barry Bannister has warned investors about <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-sp500-prediction-bubble-overvalued-stifel-outlook-2024-10">a potential plunge in the stock market in 2025.</a>Elevated valuations, unfounded expectations for more Fed rate cuts, and hype for AI that ultimately falls short of expectations could create a perfect storm for lower stock prices next year."We took a clean sheet look at the equity market and came away with the same smh (shaking my head) emoji reaction. Despite all the soft-landing and Fed rate cut optimism, the S&amp;P 500 up almost 40% y/y has simply over-shot," Bannister said.While the strategist admitted that a "mania" could take hold in the market and push stock prices even higher from here, it will ultimately end with a crescendo and then a fresh swing to the downside."Sure, we can cherry-pick with the best of them and apply the most over-valued cyclically adjusted valuation level of the past 35 years to show about 10% further upside, but that same analysis of a century of manias also returns the S&amp;P 500 in 2025 to where 2024 began (down 26% from that prospective peak)," Bannister said.<h2 id="1f44d16a-28c8-40a7-bee1-9a426c3bf02e">Somewhere in between</h2>Goldman Sachs strategist David Kostin is bullish, at least in the short term.The bank's chief stock strategist recently increased his year-end S&amp;P 500 price target to 6,000 on the prospect of further growth in corporate earnings. "The primary driver of the upward revision to our 2025 EPS estimate is greater margin expansion," Kostin said. "The macro backdrop remains conducive to modest margin expansion, with prices charged outpacing input cost growth."And yet, Kostin also argues that <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-future-returns-decade-forecast-goldman-sachs-2024-10">a golden era of stock market returns is probably over</a>. In a note over the weekend, Kostin issued his 10-year forecast for the stock market. He said that a combination of extreme market concentration and high valuations suggests the S&amp;P 500 will deliver annualized returns of just 3% over the next 10 years. That's compared to the S&amp;P 500's annualized return of about 13% over the past 10 years."Investors should be prepared for equity returns during the next decade that are towards the lower end of their typical performance distribution relative to bonds and inflation," Kostin said.Goldman also sees stocks struggling relative to other assets over the next decade. The bank says the S&amp;P 500 has about a 72% chance of trailing bond-market returns and a 33% probability of lagging inflation through 2034.His long-term view aligns with other bears who fret that the coming decade will look much worse than the last. Stifel's Bannister has also argued for a "lost decade" for the stock market.

Wall Street is divided on the future of stocks. Here are bull and bear cases from the biggest banks.

Ever since Donald Trump won the 2024 US presidential elections, bitcoin has been surging, going up over 40% in the last two weeks. Recently, the cryptocurrency soared past $97,000, having risen 8.32% in just the last 7 days, and is currently trading at $96,906.09. The overall crypto market is also buoyant, with the crypto volume jumping 10.06% over the past 24 hours to touch $198.83 billion. The markets are enthused about Bitcoin's prospects going ahead, given that Trump has hinted towards establishing a dedicated role in the White House for deliberating crypto policies. Trump has been vocally pro-crypto and had promised, during his presidential campaign, to scale back <keyword id="24085738" type="General" weightage="20" keywordseo="crypto-regulations" source="keywords">crypto regulations</keyword> and fire SEC chair Gary Gensler, who had initiated a crackdown on digital assets in the US. The crypto lobby in the US has been advocating for crypto-friendly SECs and access to banks. In a bid to do so, crypto companies have pumped in over $119 million to support pro-crypto candidates. Says Edul Patel, co-founder and CEO of Mudrex, "Market sentiment grew stronger from Bloomberg's report of Trump’s plan to establish a dedicated White House role for crypto policy. The anticipation of faster regulatory clarity coupled with BlackRock’s Bitcoin ETF options projecting a $176k price target by 2026 has driven BTC’s price to the $95K milestone and beyond." The ongoing rally is not restricted to just bitcoin but also extended to Solana and XRP, which gained 10.85% and 59.02%, respectively, over the last 7 days. But does this mean that good times are coming for <keyword id="19991358" type="General" weightage="20" keywordseo="Indian-markets" source="keywords">Indian markets</keyword> as well? Apurva Sheth, Head of Market Perspectives &amp; Research, SAMCO Securities, notes that bitcoin is a proxy for risk-taking in the markets. Bitcoin moving up means the risk appetite of investors is rising. Conversely, if it falls, then investors prefer safety." Both Nifty and Sensex have lost over 5% each over the last month. FIIs (<keyword id="19932515" type="General" weightage="20" keywordseo="foreign-institutional-investors" source="keywords">foreign institutional investors</keyword>) have also been scrambling out of Indian markets, having withdrawn Rs 1,14,445.89 crores during October 2024 and offloading Rs 34,348.30 crore so far in November. During trade today, Nifty and Sensex remained in red, with Nifty down by 0.74% and Sensex down by 0.6%. DIIs (domestic institutional investors) have been trying to keep the market afloat in both October and November, pumping in Rs 31,636.77 crore in Indian markets in November so far. Last month, DIIs infused Rs 1,07,254.68 crore in the Indian markets. According to an NSE report, by the end of the previous quarter, FPIs holding in NSE-listed companies stood at 36.3%, despite the seventh consecutive quarterly decline. Previously, FIIs holding in listed companies had hit a record high of 39.9% in December 2021. In contrast, DIIs are increasingly making headway into the Indian markets. Active Domestic Mutual Funds (DMFs) have been increasing their investments in the NSE-listed companies. Their ownership in these companies has risen from 12.4% in December 2021 to 15.7% as of September 30, 2024. Banks and insurance companies have also expanded their market share. Their ownership in NSE-listed companies has grown from 8.8% three years ago to 11% as of pr quarter.

The Bitcoin rally does not seem to be stopping anytime soon! Does this spell good news for Indian markets?

<ul class="summary-list"><li>Investors need to be wary as sticky inflation remains a risk, Deutsche Bank says.</li><li>The firm detailed five reasons why consumer prices could stay persistently elevated.</li></ul>It's tempting to think the Federal Reserve's fight against inflation is over, given the central bank's recent rate cuts and sharpened <a target="_blank" class="" href="https://www.businessinsider.com/fed-rate-cut-explained-inflation-labor-market-conditions-outlook-recession-2024-9">focus on the labor market</a>. But it's not yet time for investors to relax, Deutsche Bank wrote on Monday.Though inflation now hovers close to the Federal Reserve's 2% target rate, it's not yet time to declare victory: prices continue to <a target="_blank" class="" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">run hotter than expected</a>, and that's happening alongside monetary easing."If inflation does return, this could have very important implications for markets," Deutsche Bank strategists said. "We saw in 2022 how there was a massive selloff across both bonds and equities."The firm detailed five reasons why inflation risks must still be monitored:First, initial interest-rate cuts have been more broader and deeper than expected on a global basis. In the US, the Federal Reserve cut the Fed funds rate by 50 basis points, citing lower headline inflation to justify its aggressive policy flip.While that much is true, history shows that easing cycles are precisely the time to be cautious over inflation, Deutsche said."If inflation does prove sticky above target today, then that could force central banks to keep monetary policy in restrictive territory for longer," the note said.Second, stimulus momentum in China and worsening geopolitics in the Middle East have triggered a notable pickup in commodity prices.Oil prices have jumped this month as investors adjust to escalating tensions between Israel and Iran. After an Iranian missile attack on Israel triggered promises of retaliation, the market has braced for a possible disruption to the region's crude output.<a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">Brent</a> crude gained sharply in early October, peaking at $80 per barrel. Deutsche noted this as a considerable high, noting that the international benchmark traded below $70 a barrel just one month prior.If Israel's response decimated Iran's oil installations, analysts expect prices to hit as much as $200 per barrel.Meanwhile, industrial metals such as <a target="_blank" href="https://markets.businessinsider.com/commodities/copper-price">copper</a> have also taken flight, after China announced a series of stimulus measures to reenergize its fleeting economy. The metal is a key component in <a target="_blank" href="https://www.reuters.com/markets/commodities/china-copper-iron-ore-stay-stimulus-believers-others-sceptical-russell-2024-10-14/">construction and manufacturing</a>, and can stand to benefit if the world's second-largest economy recovers.Third, odds of a US recession are ebbing as the economy shows signs of resilience that could keep inflation elevated."Much as the stronger news on growth is welcome, it also means that economic demand and inflation is likely to be stronger than it would otherwise have been," analysts wrote.Fourth, September's consumer price index report surprised investors last week.Not only was the inflation reading higher than estimated, core CPI ran at its fastest pace in six months, gaining 0.31%. Core CPI's three-month annualized rate moved up to 3.1%, compared to August's 2.1% print."Although that's only one report, it served as a reminder of how inflation could prove more persistent, and it were the stickier categories in the basket that were holding inflation up," Deutsche wrote. For instance, the Atlanta Fed's "sticky CPI" measure stood at its strongest in five months.Fifth, money supply growth is still accelerating.According to the bank, an increase in this measure can be read as an advance warning that inflation could stay persistently high. This was the case in the post-pandemic period, Deutsche said — though it is admittedly moving up from a low base.The firm cited the fact that in August, US M2 money supply rose 2.0% year-over-year, the highest growth rate since September 2022.

5 reasons why inflation will be stickier than expected going forward, Deutsche Bank says

<ul class="summary-list"><li>Russia's Sberbank says it is processing transactions with India smoothly, despite Western sanctions.</li><li>Sanctions prevent Sberbank from using US dollars, euros, and the SWIFT network.</li></ul>Sberbank — Russia's largest lender — has no problems processing payments with India, a top executive told <a target="_blank" class="" href="https://www.reuters.com/business/finance/russias-sberbank-says-india-business-booming-despite-western-sanctions-2024-09-03/">Reuters on Tuesday.</a>"Sberbank is a full participant in all Indian payment and interbank systems," Anatoly Popov, Sberbank's deputy CEO, told Reuters. "There are no restrictions on its operations."State-controlled Sberbank has been sanctioned by the <a target="_blank" class="" href="https://home.treasury.gov/news/press-releases/jy0608">US</a> and the <a target="_blank" class="" href="https://www.reuters.com/business/finance/new-eu-sanctions-russia-target-sberbank-commission-head-tells-paper-2022-04-16/">European Commission.</a> It cannot process transactions in the US dollar, the euro, and via the SWIFT bank messaging network.But Sberbank — which processes up to 70% of Russian exports to India — has pivoted to transactions in rubles and rupees for its trade with India. Popov told Reuters that nine out of 10 transactions involving these currencies take just a few hours to complete.This is in contrast with transactions that involve <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-all-china-banks-refuse-yuan-ruble-transfers-sanctions-2024-8">Chinese banks</a>, who are so spooked by US secondary sanctions that many of the larger banks have stopped processing payments with Russia.Popov told the news agency that business between India and Russia boomed in 2022 following sweeping sanctions over Moscow's full-scale invasion of Ukraine. The South Asian country became an "alternative" market for Russia.Reuters reported that Sberbank boosted its presence in India, expanding its staff count by 150% this year.While India has become a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-divert-oil-exports-europe-india-china-circumvent-sanctions-2023-12">top buyer of Russian oil,</a> there are fewer Indian products Russia needs.Last year, Russia acknowledged there were <a target="_blank" rel="" class="" href="https://markets.businessinsider.com/news/currencies/russia-india-ruble-rupee-sanctions-trade-imbalance-yuan-weapons-deficit-2023-5">problems with billions of Indian rupees</a> it had made from exports to India, which it needed to con. The amount has fallen since as Russian firms have managed to use the money to pay Indian exporters, <a target="_blank" rel=" nofollow" class="" href="https://www.reuters.com/markets/currencies/india-russia-central-banks-renew-talks-mechanism-expand-local-currency-trade-2024-08-14/">Reuters</a> reported last month.

Russia's largest bank says it has no problems transacting with India

<ul class="summary-list"><li>Donald Trump commented on the Fed after Wednesday's interest rate cut.</li><li>As a president and a candidate, Trump has continued undermining the Fed's independence.</li></ul>Interest-rate cuts are finally here, and former President Donald Trump isn't happy about it.On Wednesday, the Federal Open Market Committee <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">announced an interest-rate cut of 50 basis points</a>, the first cut Americans have received in over four years. With the pace of inflation slowing and the job market cooling over the past few months, some experts and Democratic lawmakers have been urging Fed Chair Jerome Powell to cut rates sooner rather than later to give Americans relief from high prices.But Trump feels differently — he <a target="_blank" class="" href="https://www.youtube.com/watch?v=ZlvBFsWoXtw">said</a> during a New York campaign stop on Wednesday that the rate cut "shows the economy is very bad to cut it by that much, assuming they're not just playing politics.""The economy would be very bad, or they're playing politics, one or the other," Trump said. "But it was a big cut."He's argued in the past that the Fed would only cut rates close to the election to aid Democrats, which he reiterated leading up to the central bank's announcement."They'll do the rate cut and all the political stuff tomorrow," Trump said during a Tuesday town hall in Michigan, adding that if he wins the presidential election, "we're going to get interest rates down."Notably, the president has no influence over lowering interest rates — the Federal Reserve is politically independent and is supposed to make monetary policy decisions solely based on its dual mandate of keeping inflation low and employment high.That's something Trump wants to change — The Wall Street Journal reported in April that members of Trump's team were <a target="_blank" href="https://www.businessinsider.com/trump-interest-rate-decisions-restructure-federal-reserve-jerome-powell-wsj-2024-4">creating plans to restructure the Fed</a> and allow Trump to have a say in interest-rate decisions. He later walked those comments back, saying in an August <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-08-19/trump-defends-fed-criticism-weighs-providing-aid-to-home-buyers">interview</a> with Bloomberg that he doesn't need to be "calling the shot, but it does mean that I should have a right to be able to talk about it like anybody else."Senior advisors to Trump told the Journal that those plans were not finalized.Trump has also previously accused the Fed of being political — he <a target="_blank" href="https://www.businessinsider.com/trump-interest-rate-cuts-powell-help-democrats-win-elections-inflation-2024-2">said</a> during a Fox interview in February that Powell is "going to do something to probably help the Democrats, I think, if he lowers interest rates."While Powell has not directly responded to Trump's comments, the Fed chair has repeatedly said that the Federal Reserve is an independent entity that makes decisions solely based on data and is not influenced by politics. "Our job is to support the economy on behalf of the American people, and if we get it right, this will benefit the American people significantly," Powell said during the Wednesday press conference. "It's something we all take very, very seriously. We don't put up any other filters. I think if you start doing that, I don't know where you stop."Trump sought to use his presidential power to appoint members to the Fed board who supported his unorthodox views of the central bank. Judy Shelton, a conservative economist who Trump nominated to the Board of Governors in 2019, had previously written that the Fed was "almost a rogue agency" that couldn't be trusted. Even fellow Republicans balked at her nomination, culminating in a 47-50 failed floor vote exacerbated by GOP absences related to COVID-19."In her past statements, Ms. Shelton has called for the Federal Reserve to be less independent of the political branches and has even questioned the need for a central bank," Sen. Susan Collins, a Maine Republican, said of her at the time. "This is not the right signal to send, particularly in the midst of the pandemic."Shelton was one of a series of Trump loyalists whose nominations ran aground. Former 2012 GOP presidential candidate Herman Cain and conservative commentator Stephen Moore both withdrew their respective nominations in the face of opposition. Trump was able to get former Kanas banking commissioner Michelle Bowman and economist Christopher Waller confirmed to the Fed Board.Trump has flip-flopped his views on his most important appointment to the Fed: Powell."He's strong, he's committed, he's smart," Trump said about Powell in 2017 when he nominated him to lead the Fed.In February, the former president said he would not reappoint Powell to lead the Fed. Earlier this summer, Trump told Bloomberg News that he would let Powell serve out his term. Trump's tepid support of Powell underlines just how mercurial he can be when it comes to the central bank."There are few more important positions than this, believe me, in our Government," Trump said in 2017 with Powell looking on.On that point, Trump hasn't wavered.

The Fed's interest-rate cut put Trump even more at odds with the central bank

The <keyword id="19895371" type="General" weightage="20" keywordseo="Congress" source="keywords" meta.keywordsubtype="org" meta.entityname="Congress" meta.hostid="261" meta.entityid="Congress">Congress</keyword> party has levied fresh allegations against <keyword id="20914154" type="General" weightage="100" keywordseo="SEBI-Chairperson" source="keywords">SEBI Chairperson</keyword> <keyword id="19922107" type="General" weightage="20" keywordseo="Madhabi-Puri-Buch" source="keywords">Madhabi Puri Buch</keyword>, calling her a perfect case of the office for profit. This refers to a position that brings some financial gain, or advantage to the office holder, which in this case was Buch's position as a whole-time member of <keyword id="19901201" type="General" weightage="20" keywordseo="SEBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SEBI" meta.hostid="261" meta.entityid="SEBI">SEBI</keyword>, and then post 2022, as the regulatory body's chairperson. In a press conference in New Delhi on Monday, Pawan Khera, Chairman, Media and Publicity Department, Congress, charged Buch of receiving regular income from private lender <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> and <keyword id="47860" type="General" weightage="20" keywordseo="ICICI-Prudential" source="Orion">ICICI Prudential</keyword>, India's second largest asset management company, all while being the whole-time member and later Chairperson of the capital markets regulatory body. "She (SEBI Chairperson Madhabi Puri Buch) between 2017 and 2024 was taking regular income of Rs 16 crore 80 lakhs from ICICI Bank," alleged Pawan Khera, at the press briefing. The congress spokesperson also alleged that Buch received a total of Rs 16.80 crore between 2017-18 to 2023-24, from ICICI Bank, ICICI Prudential, <keyword id="20043663" type="General" weightage="20" keywordseo="ESOPs" source="keywords">ESOPs</keyword>, and <keyword id="19948097" type="General" weightage="20" keywordseo="TDS" source="keywords">TDS</keyword> on ESOPs. According to the Congress' allegations, in 2017-18 the SEBI chief allegedly received Rs 2.06 crore from ICICI Bank as salary and Rs 7 lakh from ICICI Prudential. In 2018-19, she received Rs 4.71 crore from ICICI Bank, Rs 2.17 lakh from ICICI Prudential. In 2019-20, Rs 1.21 crore from ICICI Bank and Rs 2.17 lakh from ICICI Prudential. In 2020-21, she was alleged of having received Rs 4.64 crore from ICICI Bank and Rs 2.17 lakh ICICI Prudential. In 2021-22, Congress asserted that the salary stopped from ICICI Bank but she continued to receive Rs 2.17 lakh from ICICI Prudential, also same year she received ESOP and TDS on ESOP from ICICI Bank. In 2022-23, she was alleged to have received Rs 4.44 lakh from ICICI Prudential, in addition to ESOP and TDS on ESOP, In 2023-24, she was alleged to have received Rs 2.17 from ICICI Prudential. The Congress further alleges that during this period, Buch also drew a salary from SEBI as a whole-time member and later as the Chairperson. Khera further added that several probes on ICICI Bank were being adjudicated during this period when Madhabi Puri Buch was receiving income from the group. He also cited unnamed reports to claim that the SEBI chief has relaxed norms for the ICICI Bank. "The person sitting at the top of the regulator is taking salaries from another entity," Khera alleged, adding it was a perfect case of "office for profit". "So we want to know why you were taking your salary from ICICI despite being a full-time member of SEBI?," Khera asked what service she as the SEBI Chairperson provided the bank when she was part of SEBI. "This is a direct violation of Section 54 of SEBI. Therefore, if Madhabi Puri Buch has any shame, she should resign from her post," Khera added. The SEBI Chief is yet to react to the charges made by the Congress in Monday's news conference. Madhabi Puri Buch was a whole-time member of SEBI from April 5, 2017 to October 4, 2021. Then on March 2, 2022, Madhabi Puri Buch became the Chairperson of SEBI. Recently, US-based short seller Hindenburg Research made allegations against her accusing her of conflict of interest. Last month, Hindenburg Research alleged that SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch had stakes in "both the obscure offshore entities used in the Admoney siphoning scandal." Hindenburg Research said it has made the new allegations based on documents provided by a whistleblower and investigations carried out by other entities. Soon after, the SEBI Chairperson and her husband, in their personal capacity, issued a detailed statement rejecting the allegations. In the joint statement released to the media they said, "In the context of allegations made in the Hindenburg Report dated August 10, 2024, against us, we would like to state that we strongly deny the baseless allegations and insinuations made in the report. The same are devoid of any truth. Our life and finances are an open book. All disclosures as required have already been furnished to SEBI over the years. We have no hesitation in disclosing any and all financial documents, including those that relate to the period when we were strictly private citizens, to any and every authority that may seek them. Further, in the interest of complete transparency, we would be issuing a detailed statement in due course." "It is unfortunate that Hindenburg Research against whom SEBI has taken an Enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same," the statement from Madhabi Buch and her husband Dhaval Buch read.

Congress alleges SEBI Chairperson Madhabi Puri Buch of office for profit

<ul class="summary-list"><li>Russian banks are urging the country's central bank to boost yuan liquidity amid shortages.</li><li>But Russia's central bank is advising lenders to limit yuan-denominated loans.</li></ul>Russia's central bank and lenders are asking each other to preserve the country's stash of Chinese yuan.Last Thursday, <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/russia-economy-china-yuan-sanctions-bank-payments-trade-transfers-2024-9">Russian banks</a> complained that they've run out of the Chinese yuan and called on the Central Bank of Russia to increase liquidity through currency swaps.But Russia's central bank is passing the buck back to the country's banks.In a <a target="_blank" class="" href="https://cbr.snowball-income.com/Collection/Collection/File/50609/ORFR_2024-08.pdf">report</a> published on Friday, Russia's central bank advised lenders to limit the issuance of yuan-denominated loans.The central bank is a primary source of yuan liquidity that it provides via daily sales and one-day swaps of the currency."Part of the growth in yuan lending was due to the replacement of loans in 'toxic' currencies, but 41% of the increase came from new foreign currency loans," said the Russian central bank in the report, referring to the currencies of countries that have imposed sanctions against the country.It added that currency swap operations can only serve as a short-term mechanism to stabilize the market, but they aren't permanent funding tools.The banks called for increased central bank currency swaps because they needed to use the mechanism to cover their foreign currency lending.But yuan liquidity is so tight that Sberbank's CEO German Gref said last Thursday that his bank cannot lend in the yuan, because it has "nothing" to cover tight foreign currency positions with, per <a target="_blank" class="" href="https://www.reuters.com/markets/currencies/major-russian-lenders-say-yuan-coffers-empty-urge-central-bank-action-2024-09-05/">Reuters.</a> Sberbank is Russia's largest bank.Russian exporters can also provide liquidity through currency sales, but many <a target="_blank" href="https://www.businessinsider.com/russia-economy-all-china-banks-refuse-yuan-ruble-transfers-sanctions-2024-8">Chinese banks</a> are refusing to process payment transactions for Russian companies due to fears of US secondary sanctions.Chinese lenders are also avoiding currency trading in Russia for the same reason.The difficulties surrounding yuan liquidity in Russia highlight increasingly challenging trading conditions for the country as the West steps up sanctions.But <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-countries-national-tech-payments-systems-russia-china-india-swift-2024-8">Russia and its trade partners</a> are trying to find ways to get around the payments issue.Dmitry Birichevsky, head of the economic cooperation department of the Russian Foreign Ministry, told Russian TV that the country and its partners are discussing how to link up their bank messaging systems, <a target="_blank" class="" href="https://tass.com/politics/1839601">TASS</a> state news agency reported on Friday."Combining these systems or deciding on the basis on which [system] we will work is the most sensitive, painful issue, because this is part of the country's financial sovereignty," Birichevsky said.

Russia's central bank and lenders tell each other to resolve the country's yuan supply squeeze

<ul class="summary-list"><li>Stocks look poised for gains amid a fresh Fed easing cycle, BofA's Michael Hartnett says.</li><li>But that means investors once again exposed to risks of a tech bubble inflating anew. </li></ul>With further easing from the Federal Reserve on the horizon, the stage is set for a fresh stock market rally. That sounds like good news for investors, but with a new Fed easing cycle comes renewed risk of a bubble in parts of the market, Bank of America strategist Michael Hartnett said.On Wednesday, the central bank cut the fed funds rate by 50 basis points. The market is now pricing in 250 basis points through this year and next, which should help drive 18% earnings growth for the S&amp;P 500 by the end of 2025, according to consensus views.The growth doesn't "get much better than that for risk," Hartnett said. But it means investors will have to chase the stock market surge as bubble risks bounce back, he added.Hartnett has previously warned of the potential for a tech bubble as investment in AI has soared. In February, he said a "baby bubble" in AI is "growing up" and could drive market gains if monetary policy eases.That time has now come, with tech stocks leading indexes to rally to record highs on Thursday, a day after the Fed's rate cut. The tech-heavy Nasdaq 100 soared 2.6% as shares of Nvidia, Broadcom, ASML, and Meta all climbed by about 4%.Amid further AI investment and easing policy, Hartnett says the best way to position portfolios is with allocations to bonds and gold, which hedge against growth and inflation risks."Use risk rally to buy dips in bonds &amp; gold as recession &amp; inflation reacceleration 'tails' too unfashionable," he wrote.Hartnett has noted his bullish view on bonds before, saying back in May that he saw outsize growths for fixed income in the second half of the year. At the time, he said the 30-year Treasury was the best hedge amid weak growth.

Post-rate cut bubble risks mean investors should buy bonds and gold, Bank of America says

<ul class="summary-list"><li>The meme-coin resurgence is bad news for investors banking on rate cuts, Macquarie said.</li><li>Tokens like Dogecoin, Shiba inu coin, and Dogwifhat have surged alongside bitcoin, which has gotten a boost from recent ETF approvals.</li></ul>Meme coins are back. That's not great news if you're hoping for the Fed to cut rates, Macquarie strategists say.On the back of <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-explained-cryptocurrency-record-high-interest-rates-fed-2024-3">bitcoin's monster rally</a> amid a spate of ETF approvals, tokens worth fractions of a dollar like Dogecoin, Shiba inu coin, and Dogwifhat are soaring. Dogecoin has nearly doubled, according to <a href="https://www.coingecko.com/en/categories/meme-token" target="_blank" rel="noopener">CoinGecko data</a>. Shiba inu is up 275%. And Dogwifhat is up 158% over the period."Small speculative frenzies that come out of nowhere should make it even more difficult for the Fed to sound dovish at this juncture," analysts led by Thierry Wizman wrote. "Don't expect Powell to revert to the 'dovishness' he displayed back in December."No dovish pivot means investors could be waiting longer than they like for rate cuts this year.<div type="image" title="Bitcoin's surge has given meme-coins like dogecoin a fresh impetus to rally" height="844" width="1258" msid="108243570" hostid="261" sizebytes="30582"></div>Macquarie notes that the last time meme coins took off, it was followed by the inflation explosion. Further, tokens like dogecoin have minimal correlation to the actual economy."Whereas these rallies in traditional assets can be explained by a strong economy (driven by productivity growth, say), meme coins can't, as they have little fundamental attachment," he said.Bitcoin has been racing upwards because of technical tailwinds, like the <a href="https://markets.businessinsider.com/news/etf/bitcoin-etf-blackrock-cryptocurrency-record-daily-inflow-rally-halving-crypto-2024-2">spot ETF approval</a> that arrived in January this year, or the <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-risks-cryptocurrency-drop-spot-etf-halving-april-2024-3">halving event</a> scheduled for April. On the flip side, meme coins have been shooting higher seemingly because bitcoin is."We don't think monetary policy itself is loose, but the Fed and Powell have to wonder about this nonetheless, in view of these extant 'remnants' of speculation," Wizman said.

The meme-coin resurgence is bad news for investors banking on rate cuts, Macquarie says

<ul class="summary-list"><li>The Fed looks like it's following the same path it did in 1995, according to TS Lombard.</li><li>That sets the stage for the economy to avoid a recession as it did in the 90s, the firm said.</li></ul>The Fed is following a 30-year-old playbook with its interest rate moves — and that's good news for the US economy, according to TS Lombard.The firm pointed to the central bank's <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">50 basis point cut</a> to the federal fund rate this week. That was <a target="_blank" href="https://markets.businessinsider.com/news/stocks/interest-rates-today-fed-meeting-cut-stock-market-powell-economy-2024-9">exactly what investors were looking for</a>, and it could lay the groundwork for a booming stock market and economy, according to Dario Perkins, the firm's managing director of global macro.He notes that the Fed's latest rate cut has created a parallel to what central bankers did in 1995, when Fed officials eased the Federal funds rate from a peak of 6% to around 4.75% over three years. That took interest rates back to a neutral level, stave off a recession, and ultimately spark a new economic boom. By 1998, GDP growth had accelerated from 4.4% to nearly 5%. Meanwhile, the S&amp;P 500 soared 125% by the end of the Fed's cutting cycle, according to data from the <a target="_blank" href="https://www.aier.org/article/fed-rate-cuts-are-unlikely-to-goose-the-stock-market-or-prevent-a-recession/#:~:text=Case%20%233%20%E2%80%93%20In%20April%201995,and%2Da%2Dhalf%20years.">American Institute for Economic Research</a>.Fed officials look on track to pull off the same maneuver, Perkins suggested, attributing this week's jumbo-sized rate cut to central bankers' belief that they were further away from the neutral rate than they were several decades ago."Our view is that this cutting cycle will probably play out like Greenspan's mid-course 're-calibration' of policy in the mid-1990s," Perkins said in a note on Wednesday. "Even if the US labour market deteriorates more than we expect and the Fed falls behind the curve, there is no real threat of a deep recession."Stocks soared a day after the big rate cut. Despite wobbling in the hours after the Fed's rate move, the major indexes hit fresh records in Thursday trades. "We think the soft landing is still very much in play," Perkins added. "And while the danger of the Fed falling behind the curve is real, we think the repercussions would be manageable. It is hard to foresee anything worse than a mild recession," he later wrote.Some forecasters are still wary of the Fed's latest policy move due to concerns that cutting interest rates too quickly could ignite a fresh bout of inflation. The market, though, has mostly shrugged off that risk, with <a target="_blank" class="" href="https://fred.stlouisfed.org/series/EXPINF1YR">one-year forward inflation expectations</a> remaining just above 2% in September, according to Cleveland Fed data.

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