The Fed Is Powerful, Except in Fighting Wealth Inequality, Ant Turning From Windfall to Nightmare for Global Investors, Abu Dhabi’s $232 Billion Mubadala Wants to Take Crack at Top 10.
The Fed Is Powerful, Except in Fighting Wealth Inequality – Bloomberg
Dimon: Without addressing the underlying economic inequality in the U.S., capitalism could soon meet its demise.
Ray Dalio, founder of Bridgewater Associates, has said the American dream “does not exist” because of forces like extreme political polarization and wealth inequality.
Marc Benioff, CEO of Salesforce.com, wrote about “horrifying inequality” and the need for a new capitalism”
But there’s only so much even the biggest hedge fund or largest U.S. bank can do to address these persistent problems.
Lawmakers have ceded much of that responsibility to the Fed, an institution that is particularly ill-equipped to address wealth inequality.
If interest rates are low, as they are now, that props up the value of stocks and other risky assets, which are disproportionately owned by high-net-worth households. If interest rates increase, as they did in 2018, then growth is strong and wealthy individuals can park more of their accumulated wealth in 10-year U.S. Treasuries and earn 3% or more for a decade, virtually free of risk. It’s a win-win.
Monetary policy cannot change the distribution of wealth, monetary policy cannot get the stimulus to the right places today — it has to be fiscal,” Rick Rieder, BlackRock’s chief investment officer.
Max Hastings: How Delusions About World War II Fed Brexit Mania – Bloomberg
Why has Britain taken this leap into the unknown?
Underpinning almost everything Britain has done since 1945 is a belief among most of its people that we are special, different, important. World War II still dominates British self-image.
Most of the British upper class despised Americans almost as much as they did Continentals.
Many in the British governing establishment hesitantly accepted the notion of joining Europe because they deluded themselves that they could dominate it.
Hugo Young once described Europe as “the graveyard where the reputations of a large [British] political class lie buried.”
Many British people, at the onset of this year of our Lord 2021, still sincerely suppose that, because we were on the winning side in 1918 and 1945, while most Continental nations were humiliated or shamed, we are superior beings.
Elon Musk (TSLA) Becomes World’s Richest Person, Passes Jeff Bezos – Bloomberg
Over the past year the South Africa-born engineer has added more than $165 billion to his fortune in what’s probably the fastest bout of wealth creation in history.
The vast majority of his net worth is tied up in equity of his companies, including Tesla — which pays no dividends — and closely held SpaceX and the Boring Company, a tunneling venture.
UK eyes return of Middle East investors in 2021
Alex James, head of private client advisory, private office commercial at Knight Frank, said with the opening of the borders between the UK, the UAE, and Bahrain in November, real estate demands from investors would increase.
A recent example of Middle Eastern investment in the UK was The London Resort. The high-profile $2.6 billion theme-park development, funded by Kuwaiti money, has proven popular in the Gulf Cooperation Council and the UK with Middle Eastern investors.
Abu Dhabi’s $232 Billion Mubadala Wants to Take Crack at Top 10 – Bloomberg
Doubling in size would turn Mubadala into the 10th largest wealth fund around 2030 and will require an annual growth rate of about 7%, Global SWF estimates.
The fund said it’s reshaping its structure to focus on four business platforms: UAE investments, disruptive investments, direct investments and real estate and infrastructure.
Mubadala is also changing the way it reports its results.
Bitcoin Hits New High, But Cryptocurrency’s Future Is Uncertain – Bloomberg
The chief global strategist of Morgan Stanley Investment Management even suggested that Bitcoin could replace the dollar as a global reserve currency.
If you hold or trade with a stablecoin, you incur several risks.
First, the stablecoin peg to the dollar may someday be broken, an old problem with pegged exchange rates”
Second, to the extent stablecoins and other crypto assets become a major part of the financial system, they will attract more regulatory interest”
Third, the formal banking sector will improve”
The dollar, euro or, for that matter, the Mexican peso are not nearly so volatile.
Ant Turning From Windfall to Nightmare for Global Investors – Bloomberg
Two months ago, global investors including Warburg Pincus, Carlyle, Temasek and GIC were on the cusp of a massive windfall from what would have been the world’s largest initial public offering.
Now, returns on the hundreds of millions of dollars they invested with Ant Group Co. are in jeopardy.
Valued at about $315 billion before its initial public offering was halted, Ant corralled investments from the world’s biggest funds.
Alex Capri, a Singapore-based research fellow at the Hinrich Foundation.
“There is nothing that the Chinese Communist Party doesn’t control and anything that does appear to be gyrating out of its orbit in any way is going to get pulled back very quickly.”