Transfin.
HomeNewsGuidesReadsPodcastsVideosTech
  1. News
  2. Explained

Is Your Facebook Account Safe, Zebpay Shuts Down Operations et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Sep 29, 2018 2:00 PM 3 min read
Editorial

Good evening reader, 

 

While, a bleak global economy outlook in recent weeks has been driven by 'emerging market contagion' narratives, the real canary in the coal mine appears to be hidden stateside in the US bond markets.

 

Err. What? Lets explain. 

 

The US yield curve is flattening i.e. the spread between short-term and long-term interest rates is narrowing. It stands at a tight c. 22bps at the time of writing. In case this spread further narrows to zero or worse goes negative, we will have what is called an inverted yield curve, where investors ask for a higher rate of return on short term lending relative to long term - historically a red flag for an upcoming recession. 

 

In the last 50 years, almost always has an inverted yield curve given way to recession. Its not inverted yet though, so we wait perhaps. How long? Time will tell. This flattening has not gone unnoticed though - Fed chairman Mr. Powell has addressed it, perhaps unintentionally validating these bond market signals and their ramifications more than easing concerns. He doesn’t seem too worried though.

 

US mid term elections are in early November. How can we talk of a recession, right?

 

On a goofier note, Elon Musk has an argument to back his tweet. Read on to know more through today’s Top 6 Business Stories in our End Of Day Wrap Up:

 

Zebpay, one of India’s largest cryptocurrency exchanges to shut down operations.

Following RBI’s decision to ban banks and registered financial institutions from providing any service to crypto exchanges, Zebpay, one of India’s largest cryptocurrency exchanges announced the shutdown of its operations. While crypto exchanges in India have pleaded against this decision of the Central Bank, the Supreme Court is yet to rule on the matter.

 

Bandhan Bank barred from opening new branches, remuneration of MD and CEO frozen.

RBI bars Bandhan Bank from opening new branches, and freezes remuneration of MD and CEO, Chandra Shekhar Ghosh after the bank failed to comply with licensing condition which require private sector banks to bring down promoters’ shareholding to 40% within three years of starting operations.

 

Government announces INR70,000cr cut in borrowing target, confident of meeting the fiscal deficit target of 3.3% of GDP.

Following RBI steps to improve liquidity for banks, government announces INR70,000cr cut in borrowing target for the second half of the fiscal year. The announcement is likely to cool down bond yields and improve liquidity in the system. Economic Affairs Secretary Subhash Chandra Garg says that the government is confident of meeting the fiscal deficit target of 3.3% of GDP for this fiscal year. The reduction in borrowings will be matched by a reduction in buyback of government securities and enhanced flow from small savings schemes. The government has also decided to introduce retail inflation-indexed bonds during the second half of the fiscal.

 

SBI, LIC & Orix may participate in IL&FS INR4500cr rights issue.

In a major breather to the debt-ladden infra lender and engineering group IL&FS, major shareholders, LIC and Japan’s Orix Corporate, and SBI announced that they would subscribe to the proposed INR45 billion rights issue of the company. LIC, is the largest shareholder in IL&FS with a 25.34% stake. Japan’s Orix Corporate is the second-largest shareholder with a 23.54% stake. Both, would raise their ownership in the company by subscribing to the rights issue. IL&FS Financial Services (IFIN) has recently defaulted on loans of approximately INR4.4 billion.

 

Elon Musk believes that SEC securities-fraud allegation is flawed, claims that he had a verbal agreement with Saudi Arabia’s sovereign-wealth fund for Tesla buyout.

Tesla CEO, Elon Musk who was sued by the US securities regulator for securities fraud believed that he had a verbal agreement with Saudi Arabia’s sovereign-wealth fund for Tesla buyout.

 

Facebook reports security flaw affecting c. 50 million accounts.

Facebook reports one of the biggest cyber-attack in the history of the social media giant, affecting nearly 50 million accounts. It admitted that hackers would be able to access any third-party apps or websites a user logged into with Facebook. The security attack has also affected Instagram accounts, another company it owns. However, WhatsApp, also a company owned by Facebook has not be compromised, reported Facebook.

 

To receive a daily summary of the key business news and our succinct End Of Day Wrap Ups directly on your phone, subscribe to our WhatsApp feed here.