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<div type="image" title="For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire" height="900" width="1200" msid="114064202" hostid="261" caption="&amp;lt;p&amp;gt;For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire&amp;lt;/p&amp;gt;"></div> Once upon a time, there thrived a wild, wild land. Here, it was all about super high monetary stakes, lightning-fast trade deals, and bucketloads of money shifting hands every single second. This wilderness lured millions of individuals with the promise of super duper high returns. But, at what cost? Welcome to the unforgiving, ultra-risky wild west of <keyword id="19991165" type="General" weightage="20" keywordseo="Indian-equity-markets" source="keywords">Indian equity markets</keyword> called the <keyword id="145718" type="General" weightage="100" keywordseo="Futures-and-Options" source="Orion">futures and options</keyword>. Here, everyone seems to just fly right through the bright red-flagged warnings of financial risks to earn even a fraction of these promised returns. Most burn themselves in the process, but carry on nevertheless, as if nothing ever happened. <h2>Chasing the cloudy profits</h2>The data conclusively proves that every 9 out of 10 individuals only lost their hard-earned money in this land. But hey, what do the numbers know? Some hide their losses out of shame, some out of fear. The proponents, meanwhile, proudly boast unusually high returns on their investments, some open social media channels while others encourage their friends and family to take the plunge. Naturally, news of this unstoppable and humongous en-masse migration to the F&amp;O (futures and options) town has reached sheriff <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>, galvanising them into action. After all, it was time to put a leash on this madness and save the common man. The inhabitants of this town doubled in the last 2 years, from 51 lakh in FY22 to 96 lakh in FY24—99.8% of whom were small and mid-income traders. But profits? Well, that's a different, rather completely absent story. <h2>Que Sera Sera, much?</h2>A recent report by SEBI (Securities and Exchange Board of India) that studied profits and losses made by traders in the equity derivatives segment between FY22-24 exposed the mad mania of futures and options trading in India, especially since the pandemic. Per the report, 91.1% of individual traders, or about 73 lakh traders had only lost money trading in futures and options in FY24. Between FY 22-24, over 1 crore traders, or about 92.8% of individual traders, had lost Rs 2 lakh each. But once bitten, twice shy? Well, not in this case. More than 75% of individuals, who had only made losses trading in F&amp;O in FY22 and FY23, continued to trade vigorously in FY24 as well, without any changes in the bottom line, which remained deep in red and negative. So, then all these traders must be uber-rich, with tons of cash and not much care to spare? Nope. 76% of traders in the F&amp;O space in FY24 had an annual income of less than Rs 5 lakh. 2 years ago, their share stood at 71%. And their choice of poison? Options! In FY24, 60% of traders made losses trading in futures, but a whopping 91.5% burnt their funds trading in options. Mind you, futures are riskier than options. With futures, which require significant capital investment, the buyer and seller both are contractually bound to adhere to the pre-determined strike price of the futures or options contract, irrespective of whether the prevailing prices are higher or lower (and thus, resulting in losses for either the buyer or seller). With options, since this adherence ain't necessary, individuals end up taking debt to take highly leveraged positions while trading here. <h2>Scale of the explosion</h2>Anyone who trades even infrequently will tell you that a demat account is the mitochondria or powerhouse of the trading cell. As of August 2024, India had over 17.1 crore <keyword id="20957284" type="General" weightage="20" keywordseo="demat-accounts" source="keywords">demat accounts</keyword>, which are a prerequisite for trading in the markets. India is the 9th biggest country in the world, in terms of total demat accounts. Did you know that our demat accounts are at par with the entire population of Bangladesh? Talk about scale! Just 4 years ago, in March 2020, this number was a mere 4 crore. Naturally, the total F&amp;O turnover on both <keyword id="20004725" type="General" weightage="20" keywordseo="NSE" source="keywords" meta.keywordsubtype="org" meta.entityname="NSE" meta.hostid="261" meta.entityid="NSE">NSE</keyword> and BSE has hit the roof, and also broken it. As of October 4, 2024, the total futures and options turnover on NSE stood at a massive Rs 4,78,27,27,750.30 crore. Good luck counting the thousands! <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total Turnover (Both Futures and Options) (In Rs Crore) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2020-21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">64,36,03,951.51 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2021-22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1,69,52,33,134.47 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2022-23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3,82,23,26,468.06 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2023-24 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7,99,27,67,152.43 </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source : NSE Another metric that underlines the meteoric growth of trading in India is the collection of STT or <keyword id="20930760" type="General" weightage="20" keywordseo="Securities-Transaction-Tax" source="keywords">Securities Transaction Tax</keyword>. As of September 2024, India's STT mop-up had gone past Rs 26,000 crore. Traders have to pay STT whenever they buy or sell any security in the market. So, more trading brings in more STT, and hence, more revenue for the government, so they're not really complaining. After all, this is certainly what they'd call enviable growth. As of August 2023, our STT collection stood at about Rs 21,599 crores. And in FY20-21, India's STT collection had been Rs 16,000 crore. If only our salaries also managed to grow at this rate! <h2>So, what's happening?</h2>Two things. One, it's the big bulls who are raking in all the moolah. And it's the younger lot (those aged under 30) who are propping them up for this. In FY24, 43% of individual traders in the market were less than 30 years of age. In just one year, this number has swelled by 12 percentage points from just 31% of individual traders. But who says ageing is bad? Wrinkles and silver hair seemingly have a propensity of incurring lesser losses in the market. In FY24, only 79% of traders aged above 60 years made losses, as compared to 93% of those aged below 30. Small and mid-income traders, which make up 98% of the total trader base, witnessed average losses per person of Rs 65,000 and Rs 1.5 lakh in FY24 in futures and options, respectively. The winner here? Clearly, the big bulls, who declared an annual income of over Rs 1 crore, ended up with average profits of Rs 96,000 per person this year. <h2>What’s the sheriff up to?</h2>The government has finally swung into action, hiking the STT rate for F&amp;O during this year’s budget. Effective October 1, 2024, the STT on futures stands at 0.02%, up from 0.0125%. For options, it was upped to 0.1% versus 0.0625% previously. Small margins, but huge impact oncoming. Says Puneet Sharma- CEO and Fund Manager at Whitespace Alpha, “SEBI aims to enhance market stability while safeguarding investor interests, reflecting the regulator's intent to balance risk management with market participation”. But this might come with its own share of challenges, too. “Stricter norms around leverage, transparency, and capital adequacy could limit the ability of investors to determine their own risk appetite, thereby stifling innovation in trading strategies. Over-regulation in an environment that thrives on strategic flexibility and creativity could dampen the market’s dynamism, affecting India's competitiveness in the global derivatives landscape”, he observes. SEBI recently came out with a set of guidelines that aim to thwart <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' participation in futures and options and hinder them from taking undue risks. Here's a quick recap of what's to come for the residents of the F&amp;O town Margin Requirements: To battle the high volatility and chaos which is generally seen on expiry days(i.e the last mandated date, post which an option becomes invalid), SEBI will put in place an extreme loss margin (ELM) of 2% for all open short options on the day of expiry. Translation? Traders will need to pony up more cash upfront, leaving them with fewer funds to take on risky bets. It ain't a choice: No more of one expiry every single day! Going ahead, an exchange like BSE or NSE will just be able to offer weekly expiries, that too, only on one benchmark index, as opposed to an entire buffet it currently offers. At present, NSE offers weekly options contracts for its financial index, bank and midcap indices. But say goodbye to this, and hello to derivatives on only 1 index per exchange. Raising the bar: Effective November 30, 2024, the minimum contract value for index derivatives will be upped to Rs 15 lakh, from the present Rs 5-10 lakh. The hope is that by making it ultra-expensive to enter these trades, investors will be dissuaded from taking on risky trades. Pay upfront: Starting February 2025, those trading in options will have to pay the entire options premium upfront, even before their trades are executed. This is because options generally carry very high leverage, and paying a significant sum upfront can force traders to think twice. Invigilation Pro Max: Starting April 1 2025, to make sure that the number of positions for equity index derivatives does not slyly slip over the mandated limit, especially on expiry days when trade volumes are huge, the exchanges will have to take a minimum of 4 position snapshots randomly. The question is, will these injections of sobriety be enough to calm down the steroid-fed bull of the futures and options market in India? Well, only time and market turnover will tell! For more insights into the financial markets and business news, stay tuned to our site and social media handles. And don’t forget to subscribe to Business Insider India’s newsletters for your weekly dose of Simply Put! Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

SIMPLY PUT: SEBI is on a mission to take on the wild, wild west of futures and options in India. Here’s why, what, and how

<ul class="summary-list"><li><a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-inflation">Inflation's</a> downtrend may not be as straightforward as some investors think, according to Charles Schwab.</li><li>The brokerage firm pointed to elements that could push prices higher, like Trump's tariffs and tax cuts.</li></ul>The Fed's mission to lower consumer prices could soon face some snags — and there are a handful of signs investors should be watching out for to determine if prices are on the rise again, according to Charles Schwab.Strategists at the brokerage firm expect a "choppy" downward path for inflation, despite the fact that overall inflation in the US is cooling. In a new research note, the firm cited a number of pressures in the economy that could buck the disinflation trend and send prices back higher."We think inflation will continue to trend lower, but there are a few potential risks on the horizon, including Federal Reserve interest rate cuts, stronger-than-expected economic growth in recent months, and policy proposals by incoming US President Donald Trump," strategists wrote, pointing to the president-elect's plan to levy <a target="_blank" class="" href="https://www.businessinsider.com/how-trump-tariffs-will-impact-prices-technology-clothes-appliances-furniture-2024-11">tariffs</a> on US imports, <a target="_blank" class="" href="https://www.businessinsider.com/tax-cut-tariff-plan-outlook-presidential-election-scenarios-harris-trump-2024-10">cut taxes</a>, and potentially lower the supply of labor by <a target="_blank" class="" href="https://www.businessinsider.com/trump-harris-immigration-jobs-arizona-economy-mass-deportation-employment-wages-2024-10">restricting immigration</a>."<a target="_blank" class="" href="https://www.businessinsider.com/trump-tariffs-higher-inflation-fed-interest-rates-taxes-mortgage-rates-2024-11">Tariffs</a> tend to act as a one-time price increase as the costs are passed from importing companies to consumers. Similarly, tax cuts have been proposed that could provide more stimulus to an economy already growing at a healthy pace. Immigration reform could mean higher labor costs," the note added.Trump has pushed back on the notion that his economic plan is inflationary, and said he would lower prices for Americans during his second term. He levied tariffs during his first term as president without a significant inflation surge, but experts say the tariffs Trump would impose this time around are far more wide-sweeping, explaining the difference in inflation forecasts.Meanwhile, the Fed may already be facing some resistance in its goal to get <a target="_blank" class="" href="https://www.businessinsider.com/inflation-october-cpi-consumer-price-index-federal-reserve-interest-rates-2024-11">inflation</a> back down to 2%. Prices rose 2.6% year-per-year in October, in-line with what economists had expected, but hotter than the prior month's 2.4% increase, according to the Bureau of Labor Statistics."Looking forward, though, it's worth assessing potential risks to disinflation," Schwab added.Strategists flagged four things in markets that could signal if inflationary pressures in the economy are picking up:<h2 id="41d73f46-2e9d-46d7-89ba-4c38f91b2650">1. Labor costs rising</h2>Labor costs have accelerated in recent months, with unit <a target="_blank" class="" href="https://fred.stlouisfed.org/series/ULCNFB">labor costs</a> among all workers in the business sector rising to 3.4% year-over-year in the third quarter, according to Federal Reserve data.<div type="image" title="Chart showing unit labor costs" height="1240" width="1420" msid="115383807" hostid="261" sizebytes="47210"></div>Higher wages are considered <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-causes-inflation#:~:text=When%20people%20anticipate%20higher%20inflation,as%20a%20wage%2Dprice%20spiral.">inflationary</a>, as they raise costs for businesses and could lead firms to hike prices, a dynamic known as a <a target="_blank" class="" href="https://www.businessinsider.com/salary-negotiations-inflation-expectations-economy-2022-11">wage-price spiral</a>."It's too soon to say whether that uptrend will continue, but if labor supply is restricted and ends up putting upward pressure on wages, faster unit labor cost growth could unleash further momentum in inflation," Schwab strategists said.<h2 id="3bc506f7-2207-403b-a65c-f253e9941afb">2. The relationship between stocks and bonds</h2>Stocks typically move opposite to <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/bond-yield">bond yields</a>, as higher interest rate expectations priced into the bond market would be bearish for equity prices.The rolling 120-day correlation between the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> and the yield on the benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/rates/u-s--rates-10-years">10-year US Treasury</a> has ticked into positive territory, which means stocks and yields are rising in tandem due to expectations of strong economic growth.If the correlation moves back into negative territory, that could signal greater concern over inflation in the economy, strategists said.<div type="image" title="Chart showing stock and bond yield correlation" height="1241" width="1656" msid="115383805" hostid="261" sizebytes="46810"></div>"If the correlation flips back into negative territory, though, that would be consistent with inflation (again) being the main driver of downside risk for stocks," the firm wrote. "It's too soon to say that will be the case, but the risk is worth monitoring as we start to turn the corner into 2025."<h2 id="52c75ff6-d092-4b23-9c06-94ea3840e795">3. Rising Treasury yields</h2><a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-trade-us-presidential-election-dollar-treasuries-stocks-crypto-djt-2024-11">Yields</a> have been climbing ever since Trump secured his second-term in office, with the 10-year yield surpassing 4.4% the day after the vote, its highest level since early July.<div type="image" title="Chart showing 10-year US Treasury yield" height="1064" width="1283" msid="115383804" hostid="261" sizebytes="33954"></div>The increase is reflective of higher interest-rate expectations in the market, a sign that investors are concerned about future inflationary pressures."Concerns about a rebound in inflation on the back of stronger-than-expected economic growth since September, and the potential for expansive fiscal policy are the major drivers. Markets are beginning to dial back expectations for further rate cuts in response to inflation concerns," Schwab strategists said.<h2 id="1a1f6685-af6f-424d-abf4-e9e18ac4ef79">4. Economic momentum is building.</h2>The economy looks to be growing stronger than investors expected — another factor that could fuel inflation. The <a target="_blank" class="" href="https://www.businessinsider.com/citi-economic-surprise-index-2013-12">Citi Economic Surprise Index</a> has soared in recent months, climbing from a level of around -50 this summer to 40 as of November.<div type="image" title="Chart showing Citi Economic Surprise Index against 10-year yield" height="939" width="1626" msid="115383808" hostid="261" sizebytes="65916"></div>"Stronger growth suggests that the Fed may not lower short-term rates as much as anticipated just a few months ago. Adding to the shift in the view of Fed rate path is the likelihood of higher inflation under proposed policies from the incoming administration," strategists said."We expect the Federal Reserve to continue with rate cuts over the next few months if inflation continues to trend lower. However, we are assuming a slower and shallower path of rate cuts in 2025 than we did just a month ago," they continued.Expectations for <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-fed-powell-comments-rate-cut-odds-rally-2024-11">Fed rate cuts</a> have pulled back in recent weeks as traders digest Trump's election victory and ready for a new chapter in the economic narrative. The odds that the Fed will pause its rate-cutting cycle in December rising to 42%, up from 14% odds priced in a month ago, according to the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch tool</a>.

4 signs of re-inflation investors should watch out for, Charles Schwab says

<ul class="summary-list"><li>Stocks have rallied since Trump won the election as traders expect his policies to drive growth.</li><li>But the market is confusing positive conditions from Trump's first term with current reality, a research firm said.</li></ul>The market is wrong to expect another period of outsize growth under Donald Trump, and should dial back risk as a result, BCA Research says.<a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-election-win-stock-market-today-record-high-sp500-dow-2024-11?_gl=1*ovl9fb*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTczMTkzMzI0Ny40MTcuMS4xNzMxOTM1MTQ1LjQyLjAuMA..">Stocks have rallied</a> nearly across the board since <a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">Trump</a> won the election earlier this month, with the S&amp;P 500 up nearly 2% since Election Day and stock exposure hitting an 11-year high. Traders are betting Trump's proposals for broad deregulation and corporate tax cuts will boost corporate earnings, particularly among so-called <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-election-impact-trump-win-election-financials-energy-rbc-2024-10?_gl=1*1hmjfnh*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTczMTkzMzI0Ny40MTcuMS4xNzMxOTM1MTkxLjYwLjAuMA..">Trump trades</a> like bank stocks.But the research firm says those proposed policies might not prove as big of a boost to the market as they did when Trump first entered the White House."The market is expecting Trump to enact a flurry of policies that will unleash a year of growth like 2017. But we believe the consensus is wrong," strategist Juan Correa said, pointing to a starkly different economic backdrop this time around versus at the start of his first term.When Trump entered the White House in 2017, he was met with rising inflation and the start of a hiking cycle from the Federal Reserve. This time, <a target="_blank" class="" href="https://www.businessinsider.com/stanley-druckenmiller-fed-rate-cuts-inflation-1970s-trump-election-fomc-2024-11">inflation</a> is coming down, as has rates. That makes the Fed's focus pinned on the <a target="_blank" class="" href="https://businessinsider.com/next-fed-rate-cut-forecast-jumbo-unemployment-labor-market-citi-2024-11">labor market</a>, which has started showing signs of deterioration, Correa says.Meanwhile, global growth appears to be on the downward slide. China's stimulus hasn't been enough to boost its <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-housing-property-stimulus-economic-growth-goldman-sachs-2024-10">property sector</a>, and <a target="_blank" class="" href="https://www.businessinsider.com/us-is-experiencing-factory-boom-but-finding-workers-is-difficult-2023-7">manufacturing employment</a> remains tepid with the ISM manufacturing index under 50, while in 2017 it neared 60 and was already beginning to accelerate well before Trump's win."Those betting on a 2017 scenario are doing so based on data from eight years ago," Correa said.Some investors may argue that Trump's policies could reverse those macro trends, with pro-growth and inflationary policies like he implemented in his first term, and that those might be especially possible to enact with a Republican-controlled Congress.But that is likely an overestimate, Correa says. In his mind, it isn't clear that Trump's tax cuts were actually at the heart of economic growth in 2017. He thinks that generating additional growth through government spending will be harder this time around. With such large deficits already, it's unlikely there will be such a big increase from current levels, and projections for fiscal force next year are already negative, he said.In short, traders are looking at Trump through the lens of his past term, rather than the odds stacked against him now."Investors are playing the man and not the macro. Even worse, they are playing not the man today but the man from eight years ago. As a result, several assets are overextended in our view," Correa said, pointing to small caps, the dollar and risk assets.Correa recommends positioning defensively instead, out of stocks and into bonds."We remain underweight equities and are defensively positioned. Bonds are offering outstanding value. Even in the event of a soft landing, 10-year Treasurys would return 12% from current levels over the next year," he said.

The market is too confident about Trump, and investors should play defense instead, research firm says

<ul class="summary-list"><li>The European Commission announced additional tariffs on Chinese electric vehicle imports on Wednesday.</li><li>The tariffs follow a probe into Chinese subsidies and include up to 48.1% in duties.</li></ul>The <a target="_blank" rel=" nofollow" href="https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3231">European Commission, or EC,</a> announced it will be slapping hefty tariffs on China's electric vehicle imports — but most investors seem unfazed.On Wednesday, the <a target="_blank" href="https://www.businessinsider.com/chinese-ev-companies-hit-with-new-tariffs-in-the-eu-2024-6">EC</a> said it will impose tariffs of up to 38.1% on Chinese EV imports from next month — on top of existing 10% duties.All Chinese EV imports will be subject to additional tariffs from next month, but the commission singled out three major EV makers: BYD, Geely, and SAIC.BYD will be subject to an additional 17.4% in duties, while Geely will pay an extra 20%. State-backed SAIC will be subject to additional levies of 38.1%.On Thursday — less than a day after EC dropped its bombshell announcement — the shares of most Chinese EV automakers were up.EV giant BYD was surging as much as 8.8% in Hong Kong, while Geely gained as much as 2.4%. The shares of EV startups Nio and Li Auto were also higher.Shanghai-listed SAIC was an outlier in Thursday's Chinese stock rally, declining by as much as 3%.The unlikely rally for most Chinese EV companies appears to stem from the perception that the European Union's tariffs were "modest," as Vincent Sun, an equity analyst at Morningstar, wrote in a note on Wednesday.After all, US President Joe Biden's administration is levying a 100% tax on Chinese EVs.BYD, one of the world's largest EV makers alongside Tesla, would be less impacted by the new EU tariffs than its peers, <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-06-13/china-ev-makers-have-room-to-absorb-eu-tariffs-find-new-markets">Bloomberg Intelligence</a> analyst Joanna Chen said on Thursday."BYD will likely be able to absorb most of the burden from EU import duties, since its cars carry peer-beating profitability," said Chen.Even though the market indicates that the EU's tariff hike on Chinese EVs is manageable, Beijing is still extremely displeased."I would like to stress that the anti-subsidy probe is typical protectionism," <a target="_blank" href="https://www.fmprc.gov.cn/eng/xwfw_665399/s2510_665401/202406/t20240612_11434964.html">Chinese foreign ministry</a> spokesperson Lin Jian said of the EU's tariffs on Wednesday."To levy additional tariffs on EVs imported from China violates market economy principles and international trade rules, disrupts China-EU economic and trade cooperation and the global automotive industrial and supply chains and will eventually hurt Europe's own interests," said Lin.In recent months, <a target="_blank" rel="" href="https://www.businessinsider.com/western-countries-name-shame-china-economy-industrial-overproduction-profits-g7-2024-5">Western countries have been lining up to criticize China</a> for its barrage of cheap exports flooding the world's markets. They say China's dumping and unfair trade practices have hurt their economies.However, Beijing has consistently pushed back on the West's criticisms. Chinese authorities say the West's accusations are protectionist and aimed at containing China's economic growth.

The EU slapped massive tariff hikes on China's EV giants. Investors don't seem to care.

In the ever-evolving landscape of finance, few phenomena have captured the imagination and attention of investors like <keyword id="19899404" type="General" weightage="100" keywordseo="Bitcoin" source="keywords">Bitcoin</keyword>. Whenever new-age ‘finfluencers’ hailed the arrival of this supposedly futuristic digital gold, it came crashing down like a house of cards. And as another set of ‘experts’ prepared to write the obituary for the <keyword id="12913517" type="General" weightage="20" keywordseo="crypto-bubble" source="Orion">crypto bubble</keyword>, its rollercoaster journey usually made a thunderous comeback. But the one thing Bitcoin has not done, at least in the last one and a half decades, is become irrelevant despite repeated attacks of being a scam, a bubble, or a digital tulip mania. In fact, of late, it has taken an even more legitimised position as a ‘serious’ asset as the US Securities Exchange Commission (SEC) approved the spot bitcoin exchange-traded funds (ETFs) earlier this year. “The recent approval of Bitcoin ETFs in the US has sparked a significant rally in the <keyword id="20235438" type="General" weightage="20" keywordseo="crypto-market" source="keywords">crypto market</keyword>s worldwide. This development has been closely watched in India, where the <keyword id="2721952" type="General" weightage="20" keywordseo="crypto" source="Orion">crypto</keyword> market has been experiencing a surge in interest and activity,” says Balaji Srihari, Business Head at CoinSwitch. <cmsannotation type="cmsannotation" annotationid="Doubling before halving" comment="subhead" text="Doubling before halving">Doubling before halving</cmsannotation> Bitcoin's journey has been nothing short of extraordinary. Launched in 2009 by the enigmatic Satoshi Nakamoto, its core principles – decentralisation, security, and limited supply – resonated with a growing number of investors over the past one and a half decades. Today, Bitcoin is no longer a digital outcast, with major financial institutions like BlackRock and Goldman Sachs dipping their toes into the crypto pool. Last month, Bitcoin soared to unprecedented heights again, touching an all-time high of $73,000 or ₹60.5 Lakhs on March 13. As of April 15, the digital asset stands at ₹54.4 Lakhs — 10% below its peak value. “Institutional investors made the most of the last financial year by bolstering their presence in the crypto space through different initiatives that support Fiat integration, blockchain-based solutions, as well as funds dedicated to crypto. The launch of ETFs — made possible by advocacy initiatives — ensured that the crypto market gets a strong finish with Bitcoin prices crossing its all-time high,” explains Rajagopal Menon, VP at WazirX. So, what do retail investors need to know as Bitcoin continues to redefine the notion of modern investing? Three major factors will define the path for Bitcoin in FY 2024-25: elections across major economies, ongoing geo-political conflicts, and the upcoming halving event later this week! Read: <a href="https://www.businessinsider.in/cryptocurrency/article/fervent-bitcoin-trading-approaches-fresh-supply-crunch-heres-what-this-weeks-halving-event-implies/articleshow/109310433.cms" data-type="tilCustomLink">Fervent Bitcoin trading approaches fresh supply crunch; Here’s what this week’s ‘halving’ event implies</a> The last factor has been discussed in detail in the article above, but to cut the story short, <keyword id="20575368" type="General" weightage="20" keywordseo="bitcoin-halving" source="keywords">Bitcoin halving</keyword> involves reducing the reward miners receive for validating transactions by half. This feature is hard-coded in the base protocol to control the supply with time, and it happens once every four years — and is scheduled to take place by April 20 this year. <cmsannotation type="cmsannotation" annotationid="Renewed enthusiasm in Indian crypto market" comment="subhead" text="Renewed enthusiasm in Indian crypto market">Renewed enthusiasm in <keyword id="21308792" type="General" weightage="20" keywordseo="Indian-crypto-market" source="keywords">Indian crypto market</keyword></cmsannotation> The recent surge sparked fresh enthusiasm in the market, and investors from India were not behind. India spearheaded the G20 summit and declared a crypto regulatory framework for all nations in the group to be mandated by 2025. Despite regulatory hurdles like ultra-high taxation, Indian retail investors have been flocking to the crypto market yet again, driven by the growing involvement of institutional investors and the anticipation of Bitcoin Halving. “On Coinswitch, we are seeing our best quarter in nearly two years, with higher trades and user registrations. In the first quarter of 2024 alone, our BTC trading volume surged by 220%, outpacing even our global peers,” beamed Srihari as Coinswitch became the first crypto platform to reach 2 crore users last month. Menon also forecasts a bright future for the Indian crypto market. “The next financial year will be quite promising for crypto with Bitcoin halving ensuring a surge in prices, with demand-supply dynamics being a key lever. India will witness a greater adoption rate for virtual digital assets with increased liquidity in the market. The Web3 startup funding will also see some uptick. However, it might not be as generous as the last bull run,” he says. The sharp price surge and growing retail investor interest, however, reignited the debate about Bitcoin's true nature: revolutionary asset class or a volatile gamble? <cmsannotation type="cmsannotation" annotationid="Future remains uncertain despite positive indicators" comment="subhead" text="Future remains uncertain despite positive indicators">Future remains uncertain despite positive indicators</cmsannotation> In the past, Bitcoin halving has always been followed by a sharp upward surge due to reduced supply, but this year, many other factors are at play. However, it is worth noting that almost all such rallies also coincided with larger macroeconomic trends like the European debt crisis in 2012, the crypto world seeing the initial coin offering (ICO) boom in 2016, and the COVID-19 pandemic and unprecedented quantitative easing that followed in 2020. All these events contributed to heightened interest in Bitcoin during respective years. <div type="image" title="Bitcoin" msid="109306946" hostid="261" caption="&amp;lt;p&amp;gt;Source: CoinSwitch Research&amp;lt;/p&amp;gt;"></div> This year, macroeconomic factors like dropping inflation levels, possible continuation of the governing regime, and the rise of Bitcoin-related ETFs across the globe, point to a possible surge. “Major economies like India and the USA are headed for their respective elections, which could be pivotal for their market prospects as well as Bitcoin prices. This could lead to some turbulence in prices in the crypto market. However, with the demand-supply dynamics of Bitcoin poised to undergo a major overhaul (due to halving), prices could see a significant surge. Additionally, the Fed is expected to cut interest rates by 75 bps by the end of this year, and again in the following two years, which will boost liquidity in the market. This has usually been beneficial for crypto investors who take this as a cue for flocking to assets such as crypto,” opines Menon. But the ongoing geo-political tensions can play a huge role in determining the path forward for Bitcoin. Between January and June of 2022, the Russia-Ukraine conflict was among the major factors that led to an over 50% drop in Bitcoin prices, reinforcing a crypto winter like never before. Similarly, an escalation of the Israel-Palestine-Iran conflict could trigger a broader market panic, leading investors to flee riskier assets like Bitcoin. However, the impact of the crisis is difficult to predict. With its limited supply and growing acceptance, Bitcoin could even be seen as a hedge similar to gold that investors trust as a safe-haven asset during geopolitical tensions. In such a scenario, if traditional markets falter due to the crisis, Bitcoin could see increased demand as an alternative store of value. In a Deutsche Bank survey, 52% respondents expressed belief that cryptocurrencies will become an “important asset class and method of payment transactions” in the future, compared to 40% in September 2023. However, 33% of the respondents expect Bitcoin to fall to $20,000 — less than one-third of the current levels — while only 10% believe that the prices will cross $75,000 by the end of this year. So, with Bitcoin scaling new heights and the halving looming, should you invest? The answer is, as always, be cautious! Bitcoin's recent surge and the upcoming halving create an exciting opportunity for investors with a strong stomach for volatility. However, potential investors must always consider and understand the risks involved while investing in such volatile assets and diversify investments across different asset classes to mitigate risk. Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice. Also Read: <a href="https://www.businessinsider.in/cryptocurrency/article/fervent-bitcoin-trading-approaches-fresh-supply-crunch-heres-what-this-weeks-halving-event-implies/articleshow/109310433.cms" data-type="tilCustomLink">Fervent Bitcoin trading approaches fresh supply crunch; Here’s what this week’s ‘halving’ event implies</a> <a href="https://www.businessinsider.in/cryptocurrency/news/stocks-and-real-estate-will-crash-when-everything-bubble-pops-so-buy-gold-silver-and-bitcoin-says-robert-kiyosaki/articleshow/109197133.cms" data-type="tilCustomLink">Stocks and real estate will crash when 'everything bubble' pops, so buy gold, silver and bitcoin, says Robert Kiyosaki</a> <a href="https://www.businessinsider.in/cryptocurrency/news/to-the-moon-suddenly-the-crypto-market-is-back-to-its-bubble-era-peak-/articleshow/109064190.cms" data-type="tilCustomLink">To the moon! Suddenly the crypto market is back to its bubble-era peak.</a>

Bitcoin’s bizarre hike renewed enthusiasm last quarter! What does the future hold for investors?

<ul class="summary-list"><li>A rebound in inflation risks prompting another rate hike from the Fed, Rob Arnott told Bloomberg TV.</li><li>He forecasts inflation at 3.5%-5% by the of the the year. </li></ul>Higher interest rates aren't a far-fetched prospect this year, as the risk of an inflationary rebound looms over the Federal Reserve, Rob Arnott said.The legendary investor is forecasting that inflation will be 3.5%-5% by the end of the year, he told <a target="_blank" href="https://www.youtube.com/watch?v=fSTsF1Q5QmM">Bloomberg TV</a>. The higher the number, the lower the chances of a rate-cutting cycle, he outlined."Four to five [percent inflation] is going to be seen as a real blow and would keep the Fed from cutting and might encourage them to hike again," said the Research Affiliates founder.Markets have carefully monitored inflation month-to-month, with investors eager to see the figure fall low enough to prompt a Fed policy pivot. For now, the central bank has delayed rate cuts, insisting it needs to see clear disinflation in data.But while May notched a<a target="_blank" href="https://www.businessinsider.com/cpi-inflation-may-prices-rent-gas-fed-interest-rates-2024-6"> cooler-than-expected consumer price index</a> report, a continued cooldown might not be as easy to achieve between now and the end of this year, Arnott said.That's as the inflation gauge uses last year's readings in its calculations — as it happens, inflation in the final stretch of 2023 was benign:"If it was low, abnormally low inflation during the latter months of last year, then upward pressure on inflation is more likely than downward," he explained.For its part, the Fed has said it sees just one 25-basis point rate cut this year, below the two to three cuts predicted by markets. The central bank has received <a target="_blank" href="https://www.businessinsider.com/inflation-economy-recession-outlook-fed-rate-cuts-mohamed-el-erian-2024-1">criticism for being too data-dependent</a> in its decision-making.If inflation eases further, the economy may be softening enough to justify the Fed loosening monetary policy, though Arnott is not entirely convinced the one rate cut will do much to help boost the economy."It's not clear to me it does anything other than perk up enthusiasm," he said, referring to the market's bull run, which has been egged on by the prospect of lower interest rates. He added: "I think the Fed has covered it to stimulate bubbles, but not to stimulate the economy."

What rate cut? The Fed's next move could be a hike if inflation stays stubbornly high, legendary investor says 

<keyword id="19900618" type="General" weightage="100" keywordseo="investors" source="keywords">Investors</keyword>' wealth eroded by Rs 9.51 lakh crore on Monday morning, following a <keyword id="20028816" type="General" weightage="20" keywordseo="crash" source="keywords">crash</keyword> in equity <keyword id="19990226" type="General" weightage="20" keywordseo="markets" source="keywords">markets</keyword> where the benchmark Sensex tanked over 2,400 points, mirroring a sharp plunge in global peers. The 30-share BSE benchmark tanked 2,401.49 points to 78,580.46 in early trade. Following the sharp decline in equities, the market capitalisation of BSE-listed firms dropped by Rs 9,51,771.37 crore to Rs 4,47,65,174.76 crore (USD 5.35 trillion) during the morning trade. "The global market is reeling as bears enter with a cocktail of bad news. The fear of a reverse Yen carry trade, following an interest rate hike in Japan, was the initial catalyst. This was compounded by fears of a recession in the USA after extremely poor jobs data, which spooked market sentiment," said Santosh Meena, Head of Research, Swastika Investmart Ltd. Indian equity markets are witnessing signs of the first meaningful correction in global markets after an extended bull run, he added. In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong were trading sharply lower. Japan's benchmark Nikkei 225 stock index plunged as much as 8.1 per cent early Monday, extending sell-offs that shook world markets last week as worries flared over the state of the US economy. The US markets ended significantly lower on Friday. "The rally in the global stock markets has been driven mainly by consensus expectations of a soft landing for the US economy. This expectation is now under threat with the fall in US job creation in July and the sharp rise in the US unemployment rate to 4.3 per cent. "Geopolitical tensions in the Middle East also are a contributing factor," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. From the Sensex pack, Tata Motors, Maruti, Tata Steel, Infosys, Tech Mahindra and JSW Steel were the biggest laggards. On the contrary, Hindustan Unilever, <keyword id="20026907" type="General" weightage="20" keywordseo="sun-pharma" source="keywords">Sun Pharma</keyword>, Nestle and Asian Paints were trading in the positive territory. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,310 crore on Friday, according to exchange data.

Investors become poorer by Rs 9.51 lakh crore as markets crash

The <keyword id="19949639" type="General" weightage="20" keywordseo="rupee" source="keywords">rupee</keyword> recovered from its all-time low level and appreciated 9 paise to 83.69 against the US dollar in early trade on Friday, amid a positive trend in domestic equities. <keyword id="20024982" type="General" weightage="20" keywordseo="forex-traders" source="keywords">Forex traders</keyword> said foreign fund outflows from Indian equities following the government's decision to hike the tax rate on <keyword id="20619608" type="General" weightage="20" keywordseo="capital-gains" source="keywords">capital gains</keyword> weighed on the local currency and restricted the move upwards. At the interbank foreign exchange market, the local unit opened at 83.72 against the American currency, then rose to 83.69 against the American currency, registering a rise of 9 paise from its previous close. On Thursday, the rupee dropped by 7 paise to close at an all-time low of 83.78 against the US dollar. "The rupee remains under significant pressure, hovering near all-time low levels. This strain is due to the government's recent decision to hike the tax rate on capital gains, sparking major outflows of Foreign Institutional Investments (FIIs). "However, the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) has been actively capping the downside, preventing further depreciation by maintaining the rupee at around 83.75," CR Forex Advisors MD Amit Pabari said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.30, lower by 0.05 per cent. Brent crude futures, the global oil benchmark, rose 0.18 per cent to <keyword id="19944038" type="General" weightage="20" keywordseo="USD" source="keywords">USD</keyword> 82.52 per barrel. In the domestic <keyword id="19911354" type="General" weightage="20" keywordseo="equity-market" source="keywords">equity market</keyword>, the 30-share BSE Sensex was trading 291.71 points, or 0.36 per cent higher at 80,331.51 points. The broader NSE Nifty was up 114 points, or 0.47 per cent, to 24,520.10 points. <keyword id="19932515" type="General" weightage="100" keywordseo="Foreign-Institutional-Investors" source="keywords" meta.keywordsubtype="org" meta.entityname="Foreign Institutional Investors" meta.hostid="261" meta.entityid="Foreign Institutional Investors">Foreign Institutional Investors</keyword> (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 2,605.49 crore, according to exchange data.

Rupee recovers from all-time low, rises 9 paise to 83.69/USD in early trade

<ul class="summary-list"><li>US stocks edged higher on Monday, with the S&amp;P 500 and Dow Jones testing record highs.</li><li>Investors await key economic data this week, including consumer confidence, revised GDP growth, and the PCE Index.</li></ul>US stocks rose on Monday, with the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> and <a target="_blank" class="" href="https://markets.businessinsider.com/index/dow_jones">Dow Jones Industrial Average</a> testing record highs as investors prepare for fresh economic data this week.Investors will get consumer confidence data on Tuesday, another revision to second-quarter GDP growth on Thursday, and fresh inflation data on Friday with the release of the personal consumption expenditures index. The Federal Reserve's preferred inflation gauge is expected to show prices increased 2.2% last month, edging closer to the central bank's 2% target. Investors will also be digesting a lot of Fed speak during the week, with 13 speeches planned from various Fed Presidents and Governors. The chatter comes just a few days after the Fed cut interest rates by 50 basis points at the end of its policy meeting last Wednesday. In a note and an interview with CNBC on Monday, Minneapolis Fed President Neel Kashkari defended the 50 basis point rate cut, which is notable given that Kashkari was talking about the potential for further rate hikes just a few months ago.Kashkari has long been viewed as a "hawk" over the past two years as the Fed embarked on an aggressive rate hike cycle to tame inflation.But he now has shifted his view to more dovish, arguing that the Fed should cut interest rates by another 50 basis points before the end of the year."The balance of risks has shifted away from higher inflation and toward the risk of a further weakening of the labor market, warranting a lower federal funds rate," Kashkari wrote.Kashkari's dot-plot projections show the long-run fed funds rate at around 2.9%, which is higher than the 2.5% he forecasted in March.Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Monday:<ul><li><a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 5,711.94, up 0.16% </li><li><a target="_blank" href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 42,090.55, up 0.06% (+27.19 points)</li><li><a target="_blank" href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq composite</a>: 17,976.22, up 0.16% </li></ul>Here's what else is going on:<ul><li><a target="_blank" class="" href="https://markets.businessinsider.com/news/bonds/jd-vance-bond-market-death-spiral-interest-rates-us-debt-2024-9">JD Vance is worried about a potential 'death spiral' in the bond market, according to a recent interview.</a></li><li><a target="_blank" class="" href="https://www.businessinsider.com/baby-boomers-recession-us-economy-housing-market-stocks-selloff-spending-2024-9">Baby boomer's massive wealth in the stock and housing markets presents a risk to the economy.</a></li><li><a target="_blank" class="" href="https://www.businessinsider.com/rent-housing-affordability-swing-state-voters-apartments-presidential-race-redfin-2024-9">Housing affordability could be a key issue for swing state voters in November, according to Redfin.</a></li></ul>In commodities, bonds, and crypto:<ul><li><a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">West Texas Intermediate</a> crude oil increased 0.13% to $71.09 a barrel. <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude</a>, the international benchmark, was up 0.01% to $74.50 a barrel.</li><li><a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price">Gold</a> was up 0.30% to $2,654.10 an ounce.</li><li>The 10-year Treasury yield was higher by 2 basis points at 3.767%.</li><li><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> was down 0.47% to $63,288.</li></ul>

Stock market today: Indexes extend gains as investors gear up for fresh economic data

<ul class="summary-list"><li>Both Trump and Harris are proposing policies that defy economic reality, Howard Marks wrote.</li><li>Trump's tariff and tax plans ignore the potential costs associated with them, the billionaire investor said.</li></ul>The presidential election is running on promises that just don't hold up, according to billionaire investor Howard Marks."Like me, you've undoubtedly noticed that politicians ranging from former President Trump and Vice President Harris to down-ballot candidates are back to making promises that ignore economic reality," Marks wrote in his <a target="_blank" href="https://www.oaktreecapital.com/insights/memo/shall-we-repeal-the-laws-of-economics">latest memo</a>.These proposals either disregard the costs that come with them or show a failed understanding of the problem they hope to address, the Oaktree Capital founder wrote.Marks emphasized that he was neither dismissing nor promoting either candidate, and took aim at policy ideas on both sides of the aisle.<h2 id="d3caa353-6fb1-4806-bb6f-b551a0e1c2fc">Donald Trump: Tariffs and taxes</h2>In Trump's case, plans for higher tariffs on virtually all US imports are equivalent to a price hike on average American consumers, Marks said.Trump has frequently disregarded this <a target="_blank" href="https://www.businessinsider.com/trump-tariff-trade-policy-barrier-income-tax-rate-hikes-krugman-2024-7#:~:text=Trump%27s%20wide%2Dreaching%20tariff%20plan,%25%2C%20Nobel%2Dwinning%20economist%20says&amp;text=Trump%27s%20proposed%20tariffs%20would%20benefit,%2Dtax%20income%2C%20he%20said">argument as a false alarm</a>, despite warnings of a tariff-led <a target="_blank" href="https://www.businessinsider.com/trumps-tariff-outlook-trade-policy-income-tax-consequences-fiscal-crisis-2024-7">US economic shock</a>. Instead, the former president has emphasized that 10% across-the-board duties would correct trade inequalities and bring back domestic production, <a target="_blank" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">with no risk of inflation</a>.Marks agreed that tariffs might stimulate US output, but higher taxes on foreign goods discourage low-cost imports. As these disappear, consumers should prepare for higher prices. One think tank estimated that these could amount to an additional <a target="_blank" href="https://www.businessinsider.com/trump-10-tariff-proposal-cost-households-1500-extra-presidential-election-2024-3">$1,500 cost on households</a> a year.The billionaire investor also scrutinized Trump's tax proposals.If elected, he has vowed to extend the expiring 2017 tax cut, keeping the corporate tax rate at 21%. But Marks warned that this will increase the national deficit by $5.8 trillion in the next decade, or $4.1 trillion if the cut leads to a stimulative impact.In recent years, scrutiny has mounted over US overspending and the rise of federal debt. Marks noted that annual interest on national debt now exceeds the defense budget — and will eventually need to be addressed."The truth is, deficits encourage the economic growth that most people enjoy, and spending more than the government takes in permits officials to give away 'free stuff,' thereby gaining votes," he said. "But doing this perpetually requires ignoring the laws of economics, running up debts in the apparent belief that they'll never have to be paid. Can it go on without end? We'll see, but I would think not."<h2 id="10164c8d-4177-48cd-8562-3dd9ee36ceea">Kamala Harris: Price gouging and housing</h2>Marks' primary criticism aimed at Harris' anti-price gouging policy.Gouging happens when corporations lift prices for their benefit, taking advantage of supply-demand imbalances — such as during a natural disaster or in a pandemic.While Harris has voiced a desire to tackle grocery inflation, Marks isn't convinced that price hikes have stemmed from bad intent on the part of corporations."There's nothing wrong with trying to bring down the cost of necessities. However, the best way to do this is to encourage additions to supply. Another way is to not overstimulate demand by injecting excessive liquidity into the economy," he said. "Mandating lower prices is generally the least effective way to get them."Economists have generally been split on whether Harris' gouging <a target="_blank" href="https://www.businessinsider.com/kamala-harris-economic-plan-price-controls-gouging-food-inflation-election-2024-8">policy amounts to price controls</a>, though proponents say this is misleading.Marks also considered Harris' proposal for <a target="_blank" href="https://www.businessinsider.com/how-kamala-harris-plans-to-build-3-million-new-homes-2024-8">$25,000 in downpayment assistance to first-time homebuyers.</a> Since the pandemic, the housing market has become increasingly <a target="_blank" href="https://www.businessinsider.com/california-demographia-housing-markets-affordability-crisis-home-prices-selling-sunset-2024-6">unaffordable</a>, with prospective buyers facing low supply and high costs."Certainly, it's hard these days for young people to come up with the cash needed to become homeowners," Marks wrote. "The problem here is that giving a million would-be buyers $25,000 each, or $25 billion in all, would almost certainly result in an immediate increase in home prices, eliminating much of the hoped-for benefit from the program."

Trump and Harris are pushing proposals that 'ignore economic reality,' billionaire investor Howard Marks says   

<ul class="summary-list"><li>Stocks have hit records highs this year as they've entered "Goldilocks zone," Mark Spitznagel says.</li><li>He says investors are overly confident amid immediate positive catalysts like rate cuts and disinflation.</li></ul>"Black Swan" investor Mark Spitznagel thinks that the stock market's streak of record highs is distracting from a more jarring reality that could come by year-end.In a recent <a target="_blank" class="" href="https://www.bloomberg.com/news/videos/2024-09-26/universa-s-spitznagel-says-we-re-in-a-goldilocks-zone-video?sref=LspfQlRv">interview with Bloomberg TV</a>, he said investors are currently enjoying a market that's in a "Goldilocks zone." In his mind, they're focusing too much on positive drivers like disinflation and dropping rates. That's built up overconfidence in the current market.Instead, Spitznagel says they should focus more on catalysts that have a greater lag time, and which could send markets spiraling once they hit. Still, any sort of downturn could take a while longer, he admitted."I think this is going to continue more into sort of pure euphoria before it's over," he said.Spitznagel specifically referenced the recent uninversion of the yield curve, which has historically been a reliable recession indicator."When the yield curve disinverts and then unverts, the clock starts ticking and that's when you enter black swan territory," Spitznagel <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-09-26/stock-market-s-goldilocks-zone-is-in-danger-of-an-abrupt-end">told Bloomberg</a>. "Black swans always lurk, but now we're in their territory."Spitznagel said traders should be more focused on where the market will stand next year as the Fed cuts rates. In his opinion, the Fed was wrong to hike rates so much during the most recent tightening cycle, and that the economy will be forced to deal with those effects eventually."We really need to look back to '22 and what happened there. That was a massive hike, a massive tightening that happened in the economy. Personally, I thought it was an enormous mistake at the time," he said.It's not the first time Spitznagel has raised warning signs on the economy. He has warned of a stock market crash <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-recession-debt-bubble-1929-black-swan-fund-2023-1?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">since January 2023</a>, and back in July, he said the market's yearslong rally has become the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-bubble-close-to-bursting-mark-spitznagel-black-swan-2024-7">"greatest bubble in human history,"</a> and its bursting would make for a recession.Spitznagel heads Universa Investments, a fund that hedges bets on "Black Swan" events like the 2008 stock-market crash, the 2015 flash crash, and the start of the COVID-19 pandemic in early 2020. When such events occur, Spitznagel capitalizes on the sudden dislocations.

The stock market's euphoria-driven record highs are at risk of a painful downturn, 'Black Swan' investor says

<ul class="summary-list"><li>The Fed's interest-rate hikes actually worsened inflation, said Nobel-winning economist Joseph Stiglitz.</li><li>He called for the Fed to cut rates by 50 basis points in September.</li></ul>The Federal Reserve's aggressive campaign to curb inflation may have fueled the problem instead, <a target="_blank" class="" href="https://www.cnbc.com/2024/09/06/nobel-laureate-joseph-stiglitz-wants-the-fed-to-deliver-a-big-rate-cut.html">Joseph Stiglitz told CNBC</a>.The Nobel-prize-winning economist called on the central bank to cut interest rates by 50 basis points at its approaching policy meeting. Given that rates were driven up "too far, too fast," he said, "I believe that they have contributed to the problem of inflation."So far, investors are somewhat split on what the Fed will do on September 18th. Although a majority still anticipates a 25-basis-point cut, Friday's jobs report moved odds in favor of a 50-basis-point move. The <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch Tool</a> now is now assigning a 47% probability to a half-point cut, in line with Stiglitz's urging.In recent weeks, labor data has become a linchpin for determining whether the US is creeping toward a recession.Friday's weaker-than-expected reading did not completely ease concerns, putting pressure on the Fed to ease policy quickly. The central bank does so when it needs to boost the economy.But Stiglitz, speaking ahead of the data's release, told CNBC that he would pursue deeper rate cuts regardless of Friday's report.In his view, Fed officials were correct in raising the borrowing rate during the pandemic, citing that it was a mistake to keep interest rates at ultra-low levels after the 2008 crisis.Since March 2022, the fed funds rate has climbed to a 5.25%-5.50% threshold."I thought that put the economy at risk for very little benefit, probably actually worsening inflation, ironically, because — if you looked more carefully at the sources of inflation — a big component was housing," Stiglitz noted.A key part of why the housing market keeps appreciating is a lack of homes, which will only be solved if home developers are given free rein to construct more properties, he said."Do you think raising interest rates making it more difficult for real estate developers to build more houses, homeowners to buy more houses, is going to solve the housing shortage?" Stiglitz said. "No, it's going in exactly the wrong way."In July, new home construction hit its <a target="_blank" href="https://www.businessinsider.com/housing-market-outlook-new-home-construction-builder-confidence-covid-low-2024-8">lowest level since 2020</a>, as developers have stepped back amid low demand. Builder confidence also tanked to a December bottom, though experts anticipate that falling interest rates should eventually boost sentiment.Meanwhile, homebuyers appear sidelined as they wait for interest rate cuts to ease mortgage rates. The <a target="_blank" class="" href="https://www.freddiemac.com/pmms">weekly 30-year fixed mortgage rate has now hit 6.35%</a>, a drop from the 7% highs seen in May.

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