JPMorgan Chase & Co. is the latest financial firm to sell debt in the U.S. Bond Market, joining the likes of Goldman Sachs, Bank of America and Citigroup Inc.. JPMorgan is selling over $3 billion in bonds with a yield of .97 percentage points over the U.S. Treasuries and 11 year maturity. The flood in financial bonds is a result of the strong earnings posted by the financial industry in the last quarter. Goldman leads the pack with over $9 Billion in new debt issuance. However, some say JPMorgan is the most susceptible to issuance pressure from regulators with debt issuance driving leverage.

FINSUM: Don’t let balance sheet risk get anyone worried, because post 2008 leverage ratios are closely monitored and almost ensure fiscal support pending financial risk.

Goldman Sachs has a new financial product that is giving its investors a chance to bet on special purpose acquisition vehicle performance. The new product acts as a two-year bond that plays out according to SPAC performance, and gives institutional investors an income option with SPAC exposure. Goldman will take a portion of the SPAC stock itself as opposed to a fee, and will offer the option for investors to lever-up on the SPAC as well. Some are concerned about Goldman’s relationship because they are also financers and advisors of SPACs themselves, potentially posing a conflict of interest.

FiNSUM: This is one of many new products that can replace income investors’ missing-link in their portfolio, and with rates at ultra lows it’s a nice alternative to dividend stocks.

Credit rating agency Moody’s Investor Service, has issued a warning to investors that the debt poses ‘systematic risk’. The factors that Moody’s sees sourcing that risk is an opaque market, eroding lending standards and liquidity concerns. Private credit has seen a flood of inflows this year to venture capital, private equity, real estate and infrastructure as the industry is more robust to the pressures from the mainstream economy on traditional bonds and equity. However, the risks in the medium sized boutique bond market are hard to capture because they fall in regulatory limbo and could cause broader economic disruption. Finally private equity relies heavily on leverage and while that's fine for the time being, it may pose serious structural issues for the illiquid market as interest rates begin to normalize.

FINSUM: The 2008 financial crisis was primarily driven by the rise of the lesser regulated shadow banking industry. Private credit’s swell is very reminiscent of the housing bubble creation.

Headline inflation, which includes food and energy prices, rose at a staggering 4.4% annual growth at the end of September, which is the highest number posted since 1991. This isn’t necessarily the Fed’s preferred inflation metric because food and energy prices are more volatile than other areas, but even excluding those categories core inflation was at 3.1%. On top of that, personal income is down almost 1%, which makes that inflation gain even more painful. Policy makers are worried about overall economic health as stagflation becomes a real possibility with GDP coming in at just 2%, the weakest quarter since the recovery started. Treasury Secretary Yellen says that yearly inflation will remain high but she expects monthly inflation to come down as the year closes, with headline figures coming down towards the target of 2%. On the positive side, wages and salaries kept up this month, hitting 4.6% but that still poses challenges for the labor market in its own way.

FINSUM: Inflation is still posting strong gains but keep your eyes on the monthly annualized numbers to gauge if what Yellen says is accurate.

It was fun and games when GSA Capital’s Chris Taylor was investing in the crypto craze and run up in ‘doge coin’, but now GSA is all-in in strategic crypto trading. The $2.6 billion hedge fund sees profits in the early development of crypto as swelling hype and volatility will generate inefficiencies. Taylor is Cambridge-trained mathematician and will be part of the crypto research team. GSA was launched at the trading desk in Deutsche Bank, and they will continue arbitrage strategies with crypto. By shorting derivatives and going long on the spot they will continue their history of arbitrage, and further capitalize on crypto’s 40% swell already in 2021.

FINSUM: Quantitative strategies are ripe for exploiting less liquid, less developed markets like crypto.

Inflation has been a point of contention as of late, as central banks are signaling it’s driven by the supply side constraints, and others are believing this is driven by the central bank practices themselves. Goldman Sachs chimed in saying they see 2021Q4 inflation number at 4.3% but that trailing off to 2.15% by 2022. The higher inflation in the intermediate means that the economy is at a significant risk of a right hike in early 2022. Sachs places themselves on the supply side of the debate however as semiconductor manufacturing picking up and increased imports in furniture and other consumer goods will drive down prices. On the opposite end of the spectrum, Jack Dorsey took to his own platform twitter to warn of hyper-inflation which sparked its fair share of social media controversy.

FINSUM: Inflation expectations are running pretty high historically, but surveys are really a poor metric, the TIPS market for example is predicting much more stable inflation.

2001. I was in the middle of the worst bear market in my career. After nearly a decade of enormous growth, the economy was self-correcting. Panic started March of 2000, and there didn't appear to be any let up with selling....see the full story on our partner's site

Democrats are desperately looking for ways to pay for their pending spending packages and they just found a new way, taxes on unrealized capital gains. The new tax was introduced by Senator Ron Wyden on the finance committee and will only be applicable to those with over $1 billion in assets or $100 million in annual income. Dems say it's necessary to allow billionaires to just continually avoid paying taxes and accumulate capital while also raising funds. Those opposed see a slew of problems in collection and lots of ways to avoid the tax. Only about 700 Americans would necessarily qualify for the tax.

FINSUM: This is a lot of money, but the amount of oversight funds just to track down billionaires assets will be a major boon to the bottom line for the government.

Annuities are often disregarded for mental reasons. Frankly, many investors can’t stomach shelling out a large sum of money for a benefit far down the line, and that all bears out in the data, as deferred income annuities make up only 0.7% of annuity sales in 2020. But longevity annuities should be a consideration for many Americans in their portfolio, particularly for those who worry their finances won’t last. The CDC says Americans are living over 6 years older than in 1950 and that's a lot of accumulated income needed to be made up for. Longevity annuities come with a variety of benefits that integrate with your tax and 401(k) schedule.

FINSUM: The mental barriers of annuities are high but modern solutions like refund options and beneficiaries exist that can ease the traditional concerns of annuities.

Russia’s finance ministry is proposing the nations $191 billion dollar wealth fund adopt environmental, social, and governance principles in their investment selection. While this puts him inline with the Russian central bank, Russia’s Economic Minister, and the rest of the globe he might face opposition from Putin. ESG buys wouldn’t be adopted until 2024 at the earliest and would work towards the country’s 2060 goals of being carbon neutral, but currently Russia is far from those objectives. They are the world’s 4th largest greenhouse gas producer and Putin sees their energy production as key to their global powers.

FINSUM: Russia is planning to ramp up its oil and gas production in the face of the global shortage, so don’t expect them to jump all in on ESG too quickly.