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Janet Yellen’s Final Jackson Hole Speech as Head of the Fed?

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This year’s Jackson Hole summit has an ‘end of an era feel’ to it, as Janet Yellen sets to deliver possibly her final speech as central bank chief.

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Yellen Takes the Stage

Janet Yellen is set to speak on financial stability at 10:00 a.m. ET. Although the speech isn’t expected to generate much news, it will spark plenty of discussion concerning Yellen’s future at the all-powerful Fed. With Yellen’s four-year term set to expire in February, there’s plenty of speculation that President Donald Trump is looking to replace her.

Gary Cohn is reportedly the top candidate to take the chair. The current director of the National Economic Council is said to offer a less technocratic approach to monetary policy. Of course, the main concern is that a new chairperson would fundamentally alter the way the Fed does policy. This is a major concern for investors, who have only recently begun to see through the central bank’s opaque box of decision-making.

When Yellen Took the Chair

Yellen took over as head of the Federal Reserve in 2014, replacing Ben Bernanke. Under Yellen, the Fed ended its massive bond-purchasing program and began the slow process of normalizing interest rates. But inflation remains below target and monetary policy conditions are looser today than they were when the Fed first hiked rates in 2015.

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At the same time, unemployment has fallen to 17-year lows, as the economy continues to churn out new jobs at a steady pace. Wages are rising faster than inflation and the broader economy has not faced recession since 2009.

Trumponomics

The Trump administration has fueled hopes of faster economic growth through a cocktail of policies that include tax cuts, deregulation and infrastructure spending. That optimism has been reflected in the price of equities, with the so-called Trump reflation trade igniting a fresh bull market on Wall Street. If the economy is set to grow as Trump says it will, there probably isn’t enough room at the top for a policy dove like Yellen.

But the Fed isn’t buying what Trump is selling – at least, not yet. The central bank has maintained a subdued outlook on economic growth over the next three years. This is unlikely to change next month when the Federal Open Market Committee (FOMC) reveals its latest projections.

The Trump administration’s first full budget assumes its policies will kickstart an era of growth not seen since 2005. Budget documents in May revealed expectations for 3% GDP growth in calendar year 2021.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 353 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Trump Blocks U.S. Purchases of Venezuela’s State-Backed Cryptocurrency

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U.S. President Donald Trump has issued an executive order prohibiting Americans from purchasing the Petro, Venezuela’s state-backed cryptocurrency. The order is part of a broader initiative to pressure the socialist government of Nicolas Maduro over its handling of Venezuela’s social and economic collapse.

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Trump Issues Ban

Executed on Monday, the executive decision bans transactions with the U.S. involving “any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018.”

The order applies to U.S. citizens, permanent residents and all others residing in the country.

Venezuela launched a national cryptocurrency in February as part of a campaign to boost foreign reserves and restructure a collapsing economy. Venezuela’s economic downturn has spiralled into a full-fledged humanitarian crisis with massive food shortages and hyperinflation. This has prompted an outflow of Venezuelans to neighboring countries.

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Maduro’s government claims that the Petro is backed by domestic energy reserves, with its price pegged to one barrel of Venezuelan oil. The president’s office has called the token sale a resounding success with billions raised to date. Last month, the government reported to have sold $735 million worth of Petro tokens on day one of the presale. As of last week, a total of $5 billion had been raised.

U.S. Steps Up Pressure

In January, the U.S. Treasury Department warned investors against participating in the Petro presale amid Washington’s ongoing effort to restrict the Maduro regime’s access to capital. In August, President Trump prohibited U.S. residents from trading new debt issued by the Venezuelan government. He also warned the Maduro regime that a military option was on the table.

Without U.S. capital flowing into Petro, the Venezuelan government loses out on a huge chunk of the speculative market. According to some analysts, interest in the token is likely to be much smaller than it was initially.

U.S. Vice President Mike Pence will deliver a fresh warning to the Maduro administration on Wednesday in a speech to the Organization of American States.

“The Vice President will call on all members to increase pressure on the Maduro regime to restore the country’s democracy and address the humanitarian crisis unfolding in Venezuela,” the Vice President’s spokeswoman, Alyssa Farah, said in a statement.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 353 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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BOE’s Carney Comments on the Evolving Threat of Crypto-Assets Ahead of G20

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The growth and widespread adoption of cryptocurrencies does not pose a risk to global financial stability, but could do so in the future unless proper regulation is enforced, according to Mark Carney, who heads the G20’s Financial Stability Board. The remarks come on the eve of the G20’s first ministerial meetings in Buenos Aires.

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Assessing the Risk of Crypto-Assets

In a Mar. 18 letter to G20 central bankers and finance ministers, Carney gave a low-risk assessment of cryptocurrencies on the basis that the new asset class was small relative to the global financial system.

“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time,” Carney said. “This is in part because they are small relative to the financial system.”

The crypto-asset market peaked at more than $830 billion earlier this year, which was still less than 1% of global GDP, Carney said. This pales in comparison to credit default swaps, which had a notional value that was 100% of global GDP prior to the 2008 financial crisis.

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Carney continued:

“Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited.”

Ending Crypto “Anarchy”

In addition to his role at the FSB, Carney serves as Governor of the Bank of England (BOE). In that capacity, he has called for new measures that will contain crypto “anarchy.” In his letter to the G-20 on Sunday, he explains why:

“Wider use and greater interconnectedness could, if it occurred without material improvements in conduct, market integrity and cyber resilience, pose financial stability risks through confidence effects.”

The BOE Governor has called for cryptocurrencies to be governed by the same standards that currently guide the rest of the financial system.

Though Carney has joined the chorus of policymakers calling for more regulation, few have actually developed actionable guidelines that will help traders and exchanges stay on the right side of the law. At this point, the “right side” appears to be an arbitrary line that is shifting constantly.

U.S. officials have opined recently that we could be a long ways away from an overarching framework for cryptos because regulators are still evaluating them. The U.S. is considered a bellwether for global regulation; measures adopted here could impact how other countries approach crypto-assets.

Lawmakers from Germany and France are expected to present the G20 with a new proposal to regulate cryptocurrencies. Economy chiefs from both countries have expressed concern that crypto-assets pose serious risks for investors.

G20 meetings will continue all year long, with over 45 gatherings planned in Argentina. The final event will be held on Nov. 30 and Dec. 1.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 353 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Stock Futures Point to a Grim Start to Wednesday Trading after Trump Adviser Resigns

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If the futures markets are any indication, Wednesday is shaping up to be a grim day on Wall Street. Stock futures were down across the board overnight  after President Trump’s top economic adviser resigned over a trade policy dispute.

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Cohn Quits

White House economic adviser Gary Cohn announced his formal resignation Tuesday evening, fueling fears that the Trump administration would follow through on its plan to impose stiff tariffs on steel and aluminum imports. Cohn had warned against pursuing any policy that could ignite a trade war with U.S. allies.

The White House  said the dispute over tariffs wasn’t the only reason for Cohn’s resignation, but didn’t specify what other issues Cohn had with the administration’s policies.

Cohn, who previously served as the president and COO of Goldman Sachs, supported business-friendly policies that may have clashed with the president’s hardline approach to trade and other issues.

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As Hacked reported earlier, President Trump could be pushing for tariffs as a negotiation tactic for securing a more favorable NAFTA deal. Trump has offered Canada and Mexico exclusion from the tariffs in exchange for an expedited NAFTA deal. Canada is the top exporter of steel and aluminum to the U.S.

Trump tweeted Tuesday night that the search for the next economic adviser was already underway.

Several Republican leaders have come out against the proposed tariffs, including House Speaker Paul Ryan and Senate leader Mitch McConnell. Congressman Mark Meadows, who heads the ultra-conservative Freedom Caucus, has also urged the president to rethink his decision.

Stock Futures Signal Rocky Day Ahead

Equity markets were down sharply in overnight trade, with Dow Jones futures pointing to a decline of 300 points or more at the open. At press time, Dow Jones mini futures for March settlement were down 341 points.

S&P 500 mini futures contracts fell 28 points. Nasdaq 100 minis also plunged 67.50 points.

The SPDR S&P 500 ETF Trust was down 1.5% at the time of writing.

U.S. stocks finished mostly higher in regular trade on Tuesday, with the S&P 500 and Nasdaq sitting in positive territory month-on-month.

Cohn’s resignation is likely to be very significant for the markets on Wednesday. Investors are generally opposed to tariffs since they have the potential to slow international trade flows and ignite enmity among nations.

The European Union (EU) has already warned it will retaliate if Washington moves forward with the proposed plan. Brussels has said it will impose retaliatory tariffs worth up to $3.5 billion targeting American-made motorcycles, whiskey and apparel.

In response, Trump criticized the EU for being “impossible” to worth with, adding that “they’ll like us better and they’ll respect us more” once tariffs have been implemented.

In addition to trade concerns, economic data will be top of mind for investors in the latter half of the week. On Wednesday, payrolls processor ADP Inc. will report on private-sector job creation for the month of February. Two days later, the Department of Labor will issue its official nonfarm payrolls report for the same month.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 353 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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