Harvard Law School Forum publishes CFS analysis of Robinhood and GameStop

The Harvard Law School Forum on Corporate Governance published CFS analysis of Robinhood and GameStop.

Events surrounding GameStop and Robinhood signal future issues that financial market participants are destined to confront and regulators are eager to confront.

Steven Lofchie, Robin L. Lumsdaine, John D. Feldmann, Diane Glossman, Jack Malvey, Yubo Wang, and I,

1) examine essential issues as well as
2) propose next steps.

As these are complex and multipronged issues, we look forward to any comments you might have.

To view the full article:
https://corpgov.law.harvard.edu/2021/02/23/robinhood-and-gamestop-essential-issues-and-next-steps-for-regulators-and-investors/


The Future of Risk Management

CFS special counselor David X Martin and David R. Koenig, founder of the Directors and Chief Risk Officers group (DCRO) opine on “The Future of Risk Management.”  Risk management and crisis prevention are longstanding core objectives and activities at CFS.

David and David offer perspective on how boards and organizations can foster a positive embrace of risk taking. Topics include:

– Translating the new risks
– Resiliency planning
– Risk any unanticipated impact of efficiency
– Forward facing techniques
– Professionalizing risk management
– The future of risk governance at the board level

To view the full article:
http://www.CenterforFinancialStability.org/research/Risk_Future_022221.pdf

Bubbles, Quantities and Short Sales podcast

My friend and former Salomon Brothers colleague, Larry Bernstein hosts an engaging “What Happens Next?” weekly podcast.

We spoke about bubbles, monetary quantities and short sales – covering:

– future implications for financial markets… why it’s a bubble and
– public policy, regulatory risks, and what to do.

To listen to the podcast:
https://www.whathappensnextin6minutes.com/sessions/gamestop-and-antitrust/#goodman

To view the remarks:
http://www.centerforfinancialstability.org/research/Bubbles_Shorts_021721.pdf

FRED Publishes 100+ Years of CFS/Johns Hopkins Data on the Fed’s Balance Sheet

The Federal Reserve Bank of St. Louis FRED database, the premier source for free U.S. financial data, now includes data of the Federal Reserve System’s weekly balance sheet back to the Fed’s beginning in 1914. The data come from a paper and data set I compiled with five students of CFS Special Counselor Steve Hanke.

The students — Cecilia Bao, Andrew Chen, Nicholas Fries, Justin Gibson, and Emma Paine — were undergraduates who have all since graduated from Johns Hopkins University. As part of their work for Hanke’s course Research in Applied Economics, they wrote papers dividing the Fed’s history into three periods, with each paper using the corresponding data. I served as an adviser and outside reader. We then combined the data into one big data set.

Previously, some monthly balance sheet data from the Fed’s early years were digitized, along with full data from recent years. Full weekly data from the beginning, integrated with recent data, were however unavailable in any readily usable form. The students put in many hours digitizing the data, a task that any of thousands of professional economists could have done over the last 30 or even 50 years but none were enterprising enough to do.

Here is the announcement from FRED about the data set and here are the data series. For the original papers, see Chen and Gibson, Bao and Paine, Fries, and our joint paper. For the data from the joint paper, see here.

Thanks To A New Way Of Counting Money… This Is The Best Outlook For GDP In Years

My friend and former colleague, Raul Elizalde wrote a thoughtful piece for Forbes – “This Is The Best Outlook For GDP In Years, And We Know It Thanks To A New Way Of Counting Money.”

Raul nicely frames CFS Divisia and key issues in plain and direct language. He then offers his perspective on financial markets by incorporating CFS Divisia.

Raul is the founder, president, and CIO at Path Financial.

To view the full article:
https://www.forbes.com/sites/raulelizalde/2021/02/10/this-is-the-best-outlook-for-gdp-in-years-and-we-know-it-thanks-to-a-new-way-of-counting-money/?sh=b3a4983122c2

Robinhood and GameStop: Essential issues and next steps for regulators and investors

The hullabaloo surrounding the run up in the price of GameStop (GME) and the activities of Robinhood have generated front page news, calls for action, and allegations of wrongdoing.

However, lost in the headlines and struggles between good and bad or big and little is the issue of greatest concern to all – financial stability.

A group of Center for Financial Stability (CFS) experts
1) examine essential issues as well as
2) propose next steps.

As these are complex and multipronged challenges, we look forward to any comments you might have.

To view the full article:
www.CenterforFinancialStability.org/research/GME_Robinhood_020421.pdf

CFS Monetary Measures for December 2020

Today we release CFS monetary and financial measures for December 2020.  CFS Divisia M4, which is the broadest and most important measure of money, grew by 28.9% in December 2020 on a year-over-year basis versus 27.7% in November.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Dec20.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM <GO>
2) ECST T DIVMM4IY <GO>
3) ECST <GO> –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY <GO> –> From source list on left, select ‘Center for Financial Stability’

Today’s WSJ: “Corporate Debt ‘Relief’ Is an Economic Dud”

Today, The Wall Street Journal published an op-ed titled “Corporate Debt ‘Relief’ Is an Economic Dud.

CFS Board Member and former FDIC Chair Sheila Bair and I note how:

Conservatives accuse progressives of wanting to destroy capitalism. Yet a greater threat than Bernie Sanders is the prospect of serial market bailouts by monetary authorities.

The creation of the corporate facilities last March marked the first time in history that the Fed would buy corporate debt. The plan went far beyond previous quantitative easing.

– There is not much evidence that all of that cash went toward creating and preserving jobs in the U.S.
– Corporate facilities merely intensified the damage that monetary interventions had already dealt to U.S. capital allocation.

Capitalism doesn’t work unless capital costs something and markets don’t work unless they are allowed to rise and fall.  Corporate facilities should not become part of the Fed’s standard tool kit. Let them die.

We look forward to any comments you might have.

To view the full article:
https://www.wsj.com/articles/corporate-debt-relief-is-an-economic-dud-11609975810?st=3v9nhfz6u4los6q&reflink=desktopwebshare_permalink

Rhodes on Global Policymakers and the Macro View

As 2021 approaches, remarks by CFS Advisory Board Chairman William R. Rhodes are essential for the year ahead.

As part of the Foreign Policy Association’s (FPA) Great Decisions series, Bill addresses:

  • Views on the world economy,
  • Implications from the recent G20 meetings,
  • Effects of the COVID-19 pandemic on the economies of the emerging markets,
  • Thoughts on the policies of the incoming Biden administration,
  • Climate change and green finance,
  • The Venezuelan political and economic tragedy and
  • Views on the Chinese economy.

View the interview at https://www.youtube.com/watch?v=DkjUYVSxLEc&authuser=0

With best wishes for a strong, healthy, and joyous New Year,
Larry

CFS Monetary Measures for November 2020

Today we release CFS monetary and financial measures for November 2020. CFS Divisia M4, which is the broadest and most important measure of money, grew by 27.7% in November 2020 on a year-over-year basis versus 28.1% in October.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Nov20.pdf

For more information about the CFS Divisia indices and the data in Excel:
http://www.centerforfinancialstability.org/amfm_data.php

Bloomberg terminal users can access our monetary and financial statistics by any of the four options:

1) ALLX DIVM
2) ECST T DIVMM4IY
3) ECST –> ‘Monetary Sector’ –> ‘Money Supply’ –> Change Source in top right to ‘Center for Financial Stability’
4) ECST S US MONEY SUPPLY –> From source list on left, select ‘Center for Financial Stability’