TRADING SCANDAL FORCES FED'S HAND - Change in Personal Investment Rules Coming

Guest Writer, October 23 2021

Yesterday, the Federal Reserve announced changes to its rules regulating its officials' personal investment practices.

The changes come after recent scandals over some members' trading practices raised eyebrows and produced a firestorm of criticism.

By Dave Allen for Discount Gold & Silver

Yesterday, the Federal Reserve announced changes to its rules regulating its officials' personal investment practices.

The changes come after recent scandals over some members' trading practices raised eyebrows and produced a firestorm of criticism.

Axios’ Ivana Saric observes that the rule revamp is the postscript to the biggest scandal to hit the Fed in recent memory. 

A few weeks ago, we learned that two senior Fed officials — Dallas Fed president Robert Kaplan and Boston Fed prez Eric Rosengren — owned, and in Kaplan’s case, actively traded assets affected by policies they helped to shape.

One of those policies is the Fed’s unprecedented support of U.S. equity and Treasury markets — through its monthly purchase of $120 billion in government bonds.

Those purchases reinforced a massive financial market boom over the past year and continue to prop up overpriced securities in the DJIA, S&P 500 and NASDAQ to this day.

Background

All of the 12 regional Fed bank heads released financial disclosures for 2020 — but two raised eyebrows: Kaplan and Rosengren.

Kaplan made several million-dollar stock trades plus other investments, while Rosengren invested in REIT-like assets.

We were told at the time that their activity didn't violate Fed ethics rules; lawyers at the respective regional banks review officials’ disclosures.

A Fed spokesperson said additional rules specific to Fed officials are “stricter than those that apply to Congress and other agencies.”

Fed officials and senior staff are subject to a “blackout period” – i.e., they can’t do any trading 10 days ahead of policy meetings through midnight of the final meeting day.

They also can't own bank stocks and are restricted in how much government securities they can own. For instance, they can own Treasury bonds as long as holdings aren’t valued above $50,000, per a conduct guide, last updated in 2017.

But while Powell, as Fed chair, is required to report transactions above a certain threshold within 30 days — like other top government officials — Fed bank presidents don’t have to do that.

Soon after the public outcry, Kaplan and Rosengren said they would dump their individual stock holdings (by September 30th) — and wouldn’t trade stocks while in their posts to avoid “even the appearance of any conflict of interest.”

In that vein, the Fed’s conduct guide already cautions officials to “avoid any dealings … that might convey even an appearance of conflict between their personal interests, the interests of the [Fed], and the public interest.”

Those are just some of the rules that Powell said are "not adequate." He directed Board staf...

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FED CHAIR?

Guest Writer, October 20 2021

Everyone — from Vegas casinos to online startups DraftKings and PredictIt — is accepting bets for who will be the Fed’s next chair.

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POST-MORTEM ON JOBS REPORT, DEBT CEILING, STAGFLATION AND GOLD

Guest Writer, October 16 2021

Wednesday’s article listed a handful of reasons why the coming months could be opportunistic for gold. Add one more to that list… 

Investors are beginning to worry about stagflation — a combination of lower growth and higher inflation — which hasn't been a thing since the early 1980s.

But too big to fail Goldman Sachs reported today that "stagflation" was the most common word in client conversations last week as equity market volatility remains elevated.

This week, their clients are focused on the risks posed to growth by supply chain challenges and rising energy costs.

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THE REBOUND HAS STALLED - Gold Is Positioning Itself to Take Off

Guest Writer, October 13 2021

Don’t look now, but the economic recovery, rebound or whatever you want to call it has stalled.

It’s not exactly drowning in quicksand (at least not yet), but it’s definitely mired in pools of thickening sludge.

The U.S. reported disappointing job growth for the second straight month and for the third time in six months.

Just 194,000 nonfarm jobs were added to what has got to be characterized as an restless economy in September — a significantly slower pace than the 366,000 number a month earlier. 

Economists had been expecting to reach at least 500,000 this time around.

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IS A PLATINUM COIN THE SOLUTION TO OUR DEBT CEILING DILEMMA? (Is a Ridiculous Solution the Answer to a Ridiculous Problem?)

Guest Writer, October 6 2021

Congress managed to avert a recurring crisis last Thursday, as it passed a short-term appropriations bill that will keep the lights on in the hallowed halls of Washington through December 3rd. 

That leaves members with the rest of what Hayes Brown calls “the to-do list from hell” — at the top of which is what to do about the debt ceiling.

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PRICES RISING AS HOLIDAY SEASON APPROACHES - Negative Real Interest Rates Good for Gold

Guest Writer, October 2 2021

Buy your holiday gifts now.

That’s the message from retail executives, who are warning that both shoppers and investors should brace for a challenging holiday season.

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BIG BUSINESS PLAYING INTO GOLD'S HANDS - Stock Buybacks Overshadow Capital Outlays

Guest Writer, September 29 2021

As Big Business continues raking in record profits so far this year, two things are popping out:

Businesses have been investing more on improvements than any point before the pandemic, according to Oxford Economics.

Yet, the Delta variant is keeping more companies cautious about how to invest the huge wad of cash they have at their disposal. 

And that’s led to corporate spending on stock buybacks outpacing capital expenditures in 2021. 

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Snippets

Bob Rinear, September 25 2021

So for the last ten + days I’ve been fighting a pretty nasty sinus infection. It’s clearing up, but much more slowly than any that I’ve had in the past. Maybe it’s age, maybe it’s more than a sinus infection? I don’t know, but it has been interesting.

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PANDEMIC AID KEPT MILLIONS OF AMERICANS OUT OF POVERTY

Guest Writer, September 18 2021

Data released by the Census Bureau this week show how the government’s stimulus programs since last March kept millions of Americans out of poverty and preserved their access to health care. 

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What Inflation?

Bob Rinear, September 15 2021

For millions of us, September 11, only has one meaning. But there’s a few people that like to celebrate a birthday on 9/11 and the birthday I’m speaking of was a woman named Mary Elizabeth Lease.

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You Know

Bob Rinear, September 11 2021

On Saturday it will be 20 years from one of the most significant events in human history. 9/11.

You know where you were. You know what you were wearing, who you were with, and what you were doing. You, like millions of others stared at your TV screen, with both wonder and fear, remorse and sadness. It couldn’t be… but…it was.

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Rolling Out

Bob Rinear, September 8 2021

I mentioned to my readers that the first few days of this week could get bumpy in the equity markets. So, seeing them come back from the Holiday weekend and send the DOW down 277 points in the first hour, that prediction was on its way to coming true.

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Labor Day and Jobs

Bob Rinear, September 4 2021

I think that of all the Holidays we celebrate throughout the year, Labor Day is the least understood.  For instance, on the 4th of July we celebrate Independence Day. Everyone sort of knows the story. Christmas, we celebrate the birth of Jesus. Memorial Day we acknowledge the fine servicemen and women who died defending our Nation. Most seem to know of all this.

But when it comes to Labor Day, I find an awful lot of folks, don’t quite know what it is they’re celebrating. So let’s take just a few minutes to remember what this is all about.

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Catching Up

Bob Rinear, September 1 2021

But I think there’s a much more sinister side to all of this in the works too. And, while I try to keep some of the more “dark” issues out of the letters, sometimes you just have to put it out there. So, what am I babbling about? Klaus and his World Economic Forum.

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BUSINESSES WORRIED ABOUT COVID RISK Ready for QE to Go and for Powell to Stay

Guest Writer, August 25 2021

As we know, sentiment — of investors, traders and plain ole households — can drive the day-to-day direction of markets as the players react to the headlines and other events.

According to Charles Schwab’s latest Active Trader Pulse survey, the pandemic is once again the leading risk factor among traders.

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