What you need to know on Wall Street today
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Here's how the risky behavior of debt-heavy corporate giants like GE and AT&T could spark the next financial crisis
The major surge in debt issuance by US corporations through highly levered buyouts and low-interest-rate acquisitions could be a major part of the next financial crisis, according to the research firm CLSA.Excess leverage suggests that markets could be set for a "Minsky Moment," or a sudden and major collapse in asset valuations. The theory goes that stability begets instability, namely that investors take more risks when things appear to be safe and steady, thus sowing the seeds of their own demise.Advertisement
As such, rising leverage can be seen as a conduit to greater financial market instability.
If you're looking for a culprit, CLSA says, look no further than the Federal Reserve.Bridgewater, the world's largest hedge fund, crushed it in 2018
In a year when hedge fundssaw bad performance anda surge in shutdowns, a few firms managed to avoid the carnage. The world's biggest hedge fund, the $160 billion Bridgewater Associates, was one of them.Bridgewater's flagship fund, Pure Alpha, posted a 14.6% return net of fees in 2018, according to a person familiar with the firm's performance. That made the fund one of only a few to post big gains in a year when hedge funds on average were down about 6.7%, according to the HFRX Global Hedge Fund Index.Advertisement
A former TD Ameritrade exec wants to make futures trading more accessible to Main Street
The Small Exchange might sound like a humble venture, but the new trading venue has hefty goals. Mainly that it wants to make the futures market, which historically has catered to big Wall Street traders, more available to Main Street investors."The incumbent futures exchanges, their products, their functionality, the size of their products, and the nonstandardization eliminated access to the retail customer," Small Exchange CEO Donnie Roberts said in an interview with Business Insider. "They are difficult to understand."Advertisement
The exchange, which in December 2018 filed its application to become a designated contract market with the Commodity Futures Trading Commission, will initially offer five cash-settled contracts based on proprietary indices in equities, interest rates, metals, energy, and foreign exchange.
In markets news
- Reliance Retail raises another ₹1,875 crore as Silver Lake comes back with an additional investment
- India leaves borrowing calendar unchanged — sticks to its ₹12 lakh crore target for the year
- EA Play games will be available with Xbox Game Pass starting November 10
- Indians can now fly to Kenya and Bhutan under the new air bubble agreement, says Aviation Minister Puri
- Centre extends deadline for IT returns filing for 2019-20 to November 30