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’

M. Shafik Gabr Joins CFS Distinguished Advisory Board

FOR IMMEDIATE RELEASE

THE CENTER FOR FINANCIAL STABILITY
APPOINTS M. SHAFIK GABR TO DISTINGUISHED ADVISORY BOARD

(New York, New York – December 10, 2020)

The Center for Financial Stability (“CFS”), today, announces the appointment of M. Shafik Gabr to its distinguished Advisory Board.

Mr. Gabr is a renowned leader in international business, innovation, investment and one of the world’s premier collectors of Orientalist art, and an accomplished philanthropist.

During his career, Mr. Gabr established over 25 companies plus three investment holding companies including ARTOC Group for Investment and Development which, established in 1971, is a multidisciplined investment holding company with businesses in infrastructure, automotive, engineering, construction and real estate, over the past three years focusing on investment in technology and artificial intelligence.

“I am pleased to join such a distinguished institution as the Center for Financial Stability,” Shafik Gabr said. “I have much respect and admiration for Chairman Bill Rhodes and the ten years of accomplishments and innovations at the CFS.”

William R. Rhodes, the Chairman of the Advisory Board stated, “Shafik’s experiences in finance, international affairs, and the Middle East represent welcome additions and complements to our senior distinguished Advisory Board.” He added that “a shifting landscape in the Mid-East, United States, and the world more broadly requires effective dialog and intellectual engagement – areas where Shafik has so actively and effectively led over the years.”

“Shafik’s ‘East-West: The Art of Dialogue’ is inspirational. His knowledge of the investment and policy landscape is extraordinary. We are thrilled and honored to have him on the CFS Board,” said Lawrence Goodman, President and Founder of the Center for Financial Stability.

Mr. Gabr is the Chairman and a founding member of Egypt’s International Economic Forum, member of the International Business Council of the World Economic Forum, and Board Member of Stanhope Capital. Mr. Gabr is Member of the Metropolitan Museum’s International Council and serves on the Advisory Board of The Middle East Institute and the Global Advisory Council of the Mayo Clinic.

Mr. Gabr was previously the Chairman of COMESA (Common Market for East and South Africa) Business Council and a member of the Executive Board of the International Chamber of Commerce (Paris), and served on the advisory boards of Zurich Financial Services and The Paul H. Nitze School of Advanced International Studies (SAIS). Furthermore, Mr. Gabr was a founder of the American Chamber of Commerce in Egypt in 1982, serving as its first Egyptian President from 1995 until 1997. He was a Founding Member of the Wilson Global Advisory Council.

Mr. Gabr ranks among Arabian Business and The Middle East magazines 2012 “Most Influential Arabs” and “Our Top 50 Arabs”. In 2009 Mr. Gabr was presented with the Foreign Policy Association’s (FPA) award for Corporate Responsibility. In June 2014 Mr. Gabr was awarded the Meridian Global Citizen Award and in November 2014 the Middle East Institute’s Visionary Award. In March 2015 Mr. Gabr received the American University in Cairo’s Global Impact Award in New York. In May 2016 Mr. Gabr was awarded the College of Mount Saint Vincent’s Saint Vincent de Paul Award and the Drew University’s Peacebuilder Award. In September 2017 Gabr received the Policy Direction and Leadership Award from the London Center for Policy Research.

Through the Shafik Gabr Social Development Foundation, Mr. Gabr is helping to improve elementary-school education in Egypt, introducing students to arts and culture and promoting sports and physical fitness for youth. In the area of higher education, Mr. Gabr is a major supporter of the American University in Cairo. The Foundation also developed a free medical-care system by providing “Medical Caravans”, for residents of underprivileged areas of Greater Cairo. The Foundation has established its first Medical and Social Development Center in Mokattam, Cairo, offering free medical and health services. In 2012 Mr. Gabr established in the US the Shafik Gabr Foundation which supports educational and medical initiatives plus launched in November 2012 the ‘East-West: The Art of Dialogue’ initiative (see www.eastwestdialogue.org) promoting exchanges between the US and Egypt with the purpose of cultural dialogue and bridge building.

Mr. Gabr holds a BA in Economics and Management from the American University in Cairo and an MA in Economics from the University of London.

CFS is an independent, nonpartisan think tank focused on financial markets – with business lines presently segmented into the future of finance, data and analytics, policy, and technology. The Center for Financial Stability was created before financial stability became widely recognized in the private sector as an essential factor in central banking and policy. CFS has successfully and consistently anticipated future financial market trends over the years with an ahead-of-their-time approach to the early identification of financial risks. CFS has developed data and analysis to improve the study of financial markets. CFS maintains a global reach with participants from over 187 of the 195 countries in the world. CFS prides itself on integrity, long-term relationships, and independence.

View the press release at http://www.centerforfinancialstability.org/news/Gabr_press_release_121020.pdf.

Just Before Bretton Woods: book and archival documents

Last year the CFS published a book by me and Gabrielle Canning called Just Before Bretton Woods: The Atlantic City Conference, June 1944. The book is the only detailed treatment of the small, secretive conference held immediately preceding Bretton Woods to hammer out the draft agreements for the International Monetary Fund and the World Bank. The Bretton Woods conference worked from the drafts to produce the final agreements establishing the two organizations. As at Bretton Woods, the leading figures at Atlantic City were John Maynard Keynes of the British delegation and Harry Dexter White of the American delegation.

We have now finally organized the background material we gathered for the book. We photographed thousands of pages of documents in the U.S. National Archives and the UK National Archives. They include not only conference material published in the book, but correspondence within and between the U.S. and British governments, which provide a detailed picture of how matters unfolded in the lead-up to the conference. We have also provided a detailed guide to the files. Our efforts should help any future researchers who want to cover some of the same ground to get a flying start, saving many hours of searching for materials.

Joyce Chang joins CFS Distinguished Advisory Board

FOR IMMEDIATE RELEASE

THE CENTER FOR FINANCIAL STABILITY
APPOINTS JOYCE CHANG TO DISTINGUISHED ADVISORY BOARD

(New York, NY – November 24, 2020) The Center for Financial Stability (“CFS”), today, announces the appointment of Joyce Chang to its distinguished Advisory Board.

Ms. Chang is the Chair of Global Research for J.P. Morgan’s Corporate and Investment Bank. J.P. Morgan’s Global Research team of over 900 professionals study all sectors in which the firm does business, including equities, fixed income, currency and commodities, emerging markets, derivatives and structured finance. She has been named as one of Top 25 Most Powerful Women in Finance by American Banker since 2012 and was included in Barron’s inaugural 2020 list of the 100 Most Influential Women in Finance. In 2014, she was inducted into the Fixed Income Analyst Society Hall of Fame.

“CFS is at the forefront of analyzing the paradigm shifts underway in global financial markets,” Joyce Chang said. “The organization has been a leader in research, providing insightful and innovative coverage of evolving financial markets dynamics, unconventional monetary policies, and a better understanding of sources of financial instability.”

William R. Rhodes, the Chairman of the Advisory Board stated, “Joyce is extremely well known internationally and is highly regarded in official and financial circles throughout the world. Her engagement will be especially meaningful for the future of our Advisory Board.”

“Joyce’s intellectual bandwidth and energy are legendary,” said Lawrence Goodman, President and Founder of the Center for Financial Stability. He added that “at a time when global risks and forces impacting markets are increasingly multipronged, we are especially delighted that she joins us now.”

Ms. Chang began her career as an Emerging Markets Strategist, where from 1997 through 2012, she held top rankings in Institutional Investor surveys for Emerging Markets research, earning 25 #1 individual rankings. She was a Managing Director at Merrill Lynch and Salomon Brothers prior to joining JPMorgan Chase & Co. in 1999.

Ms. Chang serves on the Board of Directors of Trickle Up and Girls Inc. She is the Senior Sponsor for J.P. Morgan’s Corporate and Investment Bank Women on the Move Network, the network for employees of Asian heritage (AsPIRE) and Nonprofit Board Service. She holds an M.P.A. from Princeton and serves on its External Advisory Council for the Center for Public Policy, and has a B.A. from Columbia from where she was awarded the John Jay award for professional achievement and serves on its Board of Visitors

CFS is an independent, nonpartisan think tank focused on financial markets – with business lines presently segmented into the future of finance, data and analytics, policy, and technology. The Center for Financial Stability was created before financial stability became widely recognized in the private sector as an essential factor in central banking and policy. CFS has successfully and consistently anticipated future financial market trends over the years with an ahead-of-their-time approach to the early identification of financial risks. CFS has developed data and analysis to improve the study of financial markets. CFS maintains a global reach with participants from over 187 of the 195 countries in the world. CFS prides itself on integrity, long-term relationships, and independence.

View the press release at http://www.centerforfinancialstability.org/news/Chang_press_release_112420.pdf.

CFS Monetary Measures for October 2020

Today we release CFS monetary and financial measures for October 2020. CFS Divisia M4, which is the broadest and most important measure of money, grew by 28.3% in October 2020 on a year-over-year basis versus 29.2% in September.

For Monetary and Financial Data Release Report:
http://www.centerforfinancialstability.org/amfm/Divisia_Oct20.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’

Holzmann on “The Great Demographic Reversal”

Robert Holzmann (ECB Governing Council Member and Governor of the Austrian National Bank – OeNB) adds to the insightful comments received in response to Charles Goodhart and Manoj Pradhan’s “The Great Demographic Reversal” CFS presentation recently distributed.

Robert notes that “there is a lot to be done, but a lot can be done.”  Two referenced papers from his days as an academic are offered:

1 – His ‘three-tiered life-cycle model’ by income groups suggests that the traditional model applies only to the middle-income subset of the population (see http://centerforfinancialstability.org/research/Holzmann_3_Tiered_Life_Cycle.pdf ).

2 – A new perspective on ageing and dynamic adjustment in the dependence ratio softens the economic impact of fears from the aging bubble ahead (see http://centerforfinancialstability.org/research/Holzmann_Optimistic_Dependency.pdf).

The original message and link to previous comments as well as Charles and Manoj’s slides are below.

Best regards,
Larry


———- Forwarded message ———
From: Lawrence Goodman <lgoodman@the-cfs.org>
Date: Fri, Oct 16, 2020 at 11:53 AM
Subject: Comments on The Great Demographic Reversal…

Two comments received regarding Charles Goodhart and Manoj Pradhan’s “The Great Demographic Reversal” follow questions that surfaced during the CFS roundtable discussion.  They include 1) the role of technology and productivity as well as 2) the internationalization of the big demographic shift.

First, Hal Varian (Chief Economist, Google and Emeritus Professor, UC Berkeley) offers a paper on advancing technology and automation vis-a-vis the impact of demographic forces on the supply of labor – https://voxeu.org/article/automation-versus-procreation-aka-bots-versus-tots.

Second, David Dodge (Senior Advisor, Bennett Jones and Former President, Bank of Canada) noted…
“I have been making the same point about the aging of the baby boom generation in Canada. This big cohort were big savers in the first two decades of this century. They will become big dis-savers from 2025 to 2045.”

The original message and link to slides are below.

Best regards,
Larry


—–Original Message—–
From: Lawrence Goodman <lgoodman@the-cfs.org>
Sent: Wednesday, October 14, 2020 12:31 PM
Subject: The Great Demographic Reversal (Goodhart and Pradhan)…

Last week, we hosted a roundtable discussion with CFS Advisory Board Member Charles Goodhart and his co-author Manoj Pradhan.

The Great Demographic Reversal is superb.  It addresses head-on demographic forces that will only gain in importance over time.  The book proposes that the underlying forces of demography and globalization will shortly reverse three multi-decade global trends – it will raise inflation and interest rates, but lead to a pullback in inequality.  Charles and Manoj broadened the country-by-country demographic analysis by connecting many global threads and interactions among nations.

Please find their slides at
http://www.centerforfinancialstability.org/speeches/The_Great_Demographic_Reversal_CFS.pdf

Best regards,
Larry