Goldilocks’ Comments and Global Economic News for August 2, 2023
Good afternoon Dinar Recaps,
Goldilocks posted comments and links on the global financial system:
FACT SHEET: Biden-Harris Administration Secures Voluntary Commitments from Leading Artificial Intelligence Companies
“The Executive Branch and certain members of Congress have strongly indicated their interest in developing a federal-level approach to AI.”
The SEC is currently doing reforms with broker-dealers and investment advisers because of the adaptation to Artificial Intelligence currently in use.
AI is changing everything from predictive models to new innovative banking protocols.
FITCH DOWNGRADES U.S. LONG-TERM RATING TO AA+ FROM AAA
Things are getting awkward.
This will be a Hollywood ending.
Fitch’s recent downgrade of the US economy from AAA to AA+ took a toll on Emerging Markets, especially in the Forex Markets.
This is, by the way, a default rating possibility. Although this rating is still high, it does not give full assurances as a AAA rating did on the US being able to pay their debts.
Are we about to see a Jubilee?
It caused lower trading volumes on the Forex Market. The Forex Market builds capital. What happened was not good, and this cannot continue.
Here is where currency reforms and currency interventions come into play.
This is one of many reasons why Emerging Markets are building a financial system (BRICS) that best suits their area of the country’s needs.
Simply put. Hedge Funding raises capital. It is a multi-billion dollar set of strategies based on assets under management.
We are beginning to see exotic foreign exchange options trading. Hedge funders are turning to exotic currencies to profit from emerging market carry trades.
The carry of an asset is the return received from holding it, or the cost of holding it.
This new demand for exotic currency trades are beginning to increase the value of their continued use.
“Some examples of exotic currencies include the Turkish new lira (TRY), the Iraqi dinar (IQD), and the Thai baht (THB).”
Chances are you hold one of these or others from Emerging Markets.
Just so you know, traders are beginning to recognize these exotic currencies are about to have a real value, so they are doing options trading that will allow them to make money on them at a later date.
The U.S.’s Hopes In Iraq Have Ended With The Oil-For-Gas Deal With Iran
“On July 26, 2023, the Commodity Futures Trading Commission (“CFTC”) proposed an amendment (“Proposal”) to, among other things, expand the universe of eligible collateral for the CFTC’s initial margin (“IM”) requirements for uncleared swaps.”
Any swap, directly or indirectly, submitted to and cleared by a derivatives clearing organization is expected to be registered with the Commission.
In this case, the CFTC wants more collateral to ensure there are funds on both sides of a trade going forward for uncleared swaps. This is sometimes allowed if past agreements have been successful. This includes currency swaps.