A couple of days ago political things started to happen in all 50 states which were moving this forward. They planned to eliminate the Deep State within the next few days.
The Emergency Broadcast System (EBS), or Emergency Alert System (EAS), or Emergency Warning System (EWS) will be activated to expose all the corruption that was going on in our government.
The BRICS Summit in South AfricaTues. 22 Aug. through Thurs. 24 Aug.included 93 member countries that were gold backed in their own currency and wanted to be part of BRICS.
The gold backed USN was being traded digitally and should be out publicly two days prior to the BRICS Summit (by Sun. 20 Aug.)
Bond Holders were still waiting for notification to receive access to their funds.
Iraq could publish their new Dinar Rate on Wed. 16 Aug. or Sat. 19 Aug.
Tier4b (Us, the Internet Group) should be notified to set foreign currency exchange and Zim redemption appointments prior to the BRICS Summit.
Despite a series of high-profile regionalbank failures, tech sector layoffs and fears of a recession, the U.S.Federal Reserveremains staunchly committed to hiking the policy interest rate, which sets the interest rate at which commercial banks can lend and borrow from one another.
On May 3, Fed Chair Jerome Powell once again announced a 25-basis-point rate hike, as inflationis still a long way from the Fed's 2% long-term target rate. This latest rate hike came despite the failure of First Republic Bank, the latest victim in the ongoing banking crisis, and news that U.S. gross domestic product growth slumped from January to March.
For now, only time will tell if the Fed's spate of rate hikes will achieve the desired "soft landing" of taming inflation without inducing a recession. Regardless, many investors anticipate market volatility to remain elevated as participants price in the effects of the ongoing rate hikes.
"The purpose of rate hikes is to slow down economic growth and control inflation," says Wes Moss, managing partner and chief investment strategist at Capital Investment Advisors. "When the economy is growing too fast and inflation is rising like in 2021 and 2022, the Federal Reserve increases rates to discourage borrowing and spending, which helps slow down economic growth and stabilize prices."
However, despite their stabilizing effect on the economy's long-term prospects, rising interest rates can often hurt many investments.
"Warren Buffett once compared interest rates to gravity when it comes to asset prices," Moss says. "Increasing interest rates makes the cost of capital more expensive and current cash flows more important, which pull asset prices downward."
For an example of this, consider all the high-flying pandemic-era growth stocks, many of which have fallen significantly from their all-time highs. "In general, the most interest-rate-sensitive sectors are tech, communications and real estate," says Derek Horstmeyer, professor of finance at the George Mason University School of Business. "When the Fed raises interest rates, these sectors usually fall the most."
Also significantly impacted by rising rates are fixed-income assets such as bonds. When interest rates rise, bond prices fall to make their yields more competitive with current rates. This is governed by duration, a measure of interest rate risk. Broadly speaking, longer-maturity bonds with greater durations have been the most sensitive to rate hikes and thus were one of the biggest losers throughout 2022.
That being said, investing during a hiking cycle doesn't mean just incurring losses. There are assets that have historically proven resilient to rate hikes, or even benefited from them. To access these assets, investors can buy exchange-traded funds, or ETFs, that provide transparent and cost-effective exposure.
Here's a look at seven of the best ETFs to buy when interest rates rise:
ETF
EXPENSE RATIO
iShares 0-5 Year High Yield Corporate Bond ETF (ticker: SHYG)
iShares 0-5 Year High Yield Corporate Bond ETF (SHYG)
"Now that rates are rising, ETFs like SHYG could be extremely attractive," says Christopher Manske, president at Manske Wealth Management."Because bond prices tend to go down when interest rates go up, this means ETFs like SHYG have been beat up a bit recently." For investors who don't mind greater credit risk, a high-yield bond ETF like SHYG pays a higher yield to maturity of 8.2% right now.
Even if interest rates continue to rise, ETFs like SHYG will be well insulated. Right now, this ETF only has an effective duration of 2.4 years. All else being equal, a 1-percentage-point increase in rates will result in a 2.4% loss for SHYG. "The ETF's short maturity means the managers are replacing maturing bonds with new, lower-cost ones as rates rise, while investors collect a great interest rate along the way," Manske says.
"If an asset's value is tied to interest rate movements, then rate hikes will benefit that asset," Manske says. "A floating-rate bond fund is an excellent example of this, but the problem is that everyone already knows this."
Still, in the event that inflation remains high and interest rates continue at the pace seen during the 1980s, then floating-rate bond ETFs like FLOT could offer protection.
FLOT indexes a portfolio of investment-grade floating-rate bonds with remaining maturities between one month and five years for a 0.15% expense ratio, which works out to $15 annually for a $10,000 investment. Currently, the ETF sports a very low duration of 0.03 years, showing its resilience to interest rate movements. Thanks to the recent rate hikes, FLOT is paying an average yield to maturity of 6%.
Another asset with a history of strong returns during rate-hiking cycles is gold, which typically exhibits a negative correlation with the U.S. dollar. "After the last interest rate hike in 2000, gold went on to rise 55.8% through early 2004," says Robert Minter, director of ETFs investment strategy at Abrdn. "The same occurred after the hike in 2006, where gold went on to rise 230.6% through late 2011."
An alternative to physical bullion that can offer spot-gold price exposure in any brokerage accountis SGOL. "SGOL is a transparent 'physical gold' ETF which buys gold bars, stores them in audited vaults and avoids futures contracts," Minter says. Investors therefore receive proportional exposure to the underlying gold bullion in exchange for a relatively low 0.17% expense ratio.
"Consumer staples companies such as food processors, grocery stores and makers of personal care products may also be more resilient to rate hikes," says Jim Penna, manager of retirement services at VectorVest Inc. "These businesses are centered around essential goods and services. This makes their margins and earnings less likely to be impacted by the higher rates."
For a straightforward way of indexing America's most prominent consumer staples companies, investors can buy XLP. "This ETF tracks the consumer staples sector of the S&P 500 index, which includes companies involved in food, household products, tobacco and other personal products," Penna says. XLP currently has 37 holdings and charges a 0.1% expense ratio.
"I also like BIL as it focuses on Treasury bills, or T-bills, with one-to-three months' maturity remaining," Penna says. "Short-term Treasurys are about as safe as you can be at this point, so it's a good place to allocate a portion of your portfolio if you have a low risk tolerance."
Thanks to the rising interest rates, BIL pays a decent yield to maturity of 5.2%.
In terms of risk, BIL is as safe as it gets. With an average duration of 0.08 years, BIL is only expected to lose 0.08% if rates rise by 1 percentage point, all else being equal. Its portfolio is held solely in U.S. government-issued T-bills, long regarded as the "risk-free" asset due to their high credit quality and virtual lack of default risk. Currently, BIL charges a 0.14% expense ratio.
"While each rate-hiking cycle is accompanied with specific characteristics and different quirks, owning blue-chip companies with strong balance sheets and consistent free cash flow that have weathered the storm during multiple economic downturns is never a bad idea," Moss says. These tend to be large-cap stocks with robust profitability that form the backbone of most indexes.
"Companies that exhibit those characteristics usually not only pay dividends but tend to grow them year after year after year," Moss says. An ETF that targets the most long-standing of these companies is NOBL, which only holds dividend aristocrats from the S&P 500. These are stocks with a history of growing dividend payments consecutively for at least 25 years. NOBL charges a 0.35% expense ratio.
"The Federal Reserve has been raising interest rates for a year now, which has created some uncertainty in the markets," says Sophoan Prak, certified financial planner at Vanguard Advisers. "However, despite rising rates and market uncertainty, investors should stay disciplined and committed to their long-term retirement strategy." This means ignoring the recent noise and staying the course.
For most investors, the current interest rate turmoil is unlikely to spell doom for a diversified, long-term portfolio. "We believe in the benefits of global diversification, and a market-weighted index ETF can provide those benefits," says Prak. To put this into play, long-term investors can buy VT, which provides exposure to over 9,000 domestic and international stocks around the world for a 0.07% expense ratio.
The revaluation of the Iraqi dinar in 2023 happened on February 7. The revaluation was approved by the Iraqi Government based on recommendations from theCentral Bank of Iraqin order to strengthen the Iraqi dinar against the US dollar. The official exchange rate was set to1,320 dinars per one US dollar, as opposed to the previous rate of 1,460 dinars per dollar.
Before December 2020, the official exchange rate for the Iraqi dinar was set to 1,182 dinars per US dollar. The Iraqi government devalued the dinar to 1,460 per US dollar in December 2020 due to the falling oil prices (oil revenue makes up almost 95% of the Iraqi government's budget) in the international market which caused a liquidity crisis, in part caused by the global pandemic.
From December 2020 until February 7, 2023, the official exchange rate had remained the same. The newest revaluation of the Iraqi dinar in 2023 came as a result of the Iraqi dinar losing over 10 percent of its value in the months leading up to the revaluation, starting with December of 2022.
The Iraqi dinar started losing value against the US dollar because the Federal Reserve Bank of New Yorkintroduced new measures to stop the flow of dollars to countries sanctioned by the US government. To digress a bit, the dollars that Iraq makes from selling crude oil go into an account at the Federal Reserve Bank of New York.
At a request from the Iraqi government, the Federal Reserve Bank of New York provides the Iraqi government with hard currency. Some of those funds are transferred to commercial banks for various official reasons. Iraq has long been accused of corruption and of funneling dollars to Iran and Syria, two countries under US sanctions.
The new measures by the Federal Reserve Bank of New York imposed stricter rules, leading to delays in the transfer of dollars. Several Iraqi banks had also been sanctioned from dealing with the US dollar. All of this had led to a shortage of the US dollar in Iraq and had caused the Iraqi dinar to lose value.
As a result of all of this, the Iraqi government had chosen to revalue the Iraqi dinar on February 7, 2023, with the intent of strengthening the dinar against the dollar. However, as of August 2023, the new policy does not appear to have been successful.
While the official rate of the dinar to the dollar is still set at 1,320:1 IQD:USD, the market rate of the dollar is higher. In mid to late July, the market rate of the dollar was approximately 1,470 dinars per dollar.
At the end of July, the value of the dinar had further fallen, to approximately 1,570 dinars to the dollar, as a result of the US Treasury Department and the Federal Reserve Bank of New York blacklisting 14 private Iraqi banks from dealing in dollars, for the same reasons the new measures were introduced by the FRBNY at the begging of 2023.
Iraqi Prime Minister Mohammed Shia' al-Sudani and central bank chief Ali al-Allaq were set to meet on Sunday, July 30, to discuss measures to stabilize the dinar against the dollar. We will keep you informed as the situation progresses.
We live in an instantaneous world, where we expect to see results from almost everything immediately, but in trading, and even more so investing, there are times when patience is required, times when doing nothing is your best option. We are in one such time now. Stocks, after a strong run up since the beginning of the year, are drifting lower. It is not a big enough move to prompt drastic action, but with the S&P 500 having retraced just over three percent from its July 27 high, it will be tempting a lot of people who took profits on the way up with a view to buying on a dip to deploy some cash. Similarly, there will be some people who have stayed fully invested and, fearful of seeing all that lovely profit dribble away, will be tempted to bank some cash.
Neither of those things are wrong per se. Putting cash to work is what investors do, so an argument can be made that from a long-term perspective, you are never wrong to do that on a pullback. On the other side of the coin, every trader has been told at some point that taking a profit is never a bad thing to do. The thing is, though, the very fact that both seem like perfectly logical actions in the current environment tells you that neither is really smart.
The problem is that there is no way of knowing at this point whether what we are seeing is just a normal consolidation that will enable another move up, or an actual trend reversal.
It could easily be the former. Inflation data of all kinds is moderating, signaling an end to rate hikes before too long and even a policy reversal and rate cuts before too long. That is what the economists at Goldman Sachs (GS) concluded in a report released yesterday, and if that is the case what we have seen so far this year is just the beginning.
But -- and it is a big but -- the full impact of rate hikes is not usually felt in the economy for at least a couple of quarters and there is still a good chance that a significant slowdown is coming before this year ends. There are certainly signs of that in slowing job growth and plenty of anecdotal evidence of cutbacks.
For now, the market is seeing that only through the lens of interest rates, making a slowdown a good thing. Anybody who traded through the boom and bust cycles of the eighties, though, as I did, will tell you to be careful what you wish for. I would like to think that the understanding of the economy and the tools available to central bankers at this point are so much better than forty years ago that this scenario can be avoided, but that is something that has yet to be proven.
“Sit on your hands” is unsatisfying advice to give, but it is also often pointless. Those who listen tend to be those who manage their accounts actively, and they are predisposed to dosomething, no matter what. If that sounds like you, then the trick at a time like this is to fool yourself. Yes, go ahead and do something, but not anything that will seriously alter your portfolio. Maybe take a small, short-term position in something that will benefit if the market does continue lower, such as an inverse leveraged ETF or, if you think a bounce is coming, try the reverse, buying a small amount of a leveraged bull product or a vey volatile stock that will exaggerate gains.
If you do that, though, understand that such positions are short-term in nature and that you are basically doing something for the sake of doing something. As things sit, it is almost impossible to have a strong view of what the next few months will bring, which is why economists and analysts at major institutions keep changing their views and why financial media is full of silly season stories like the hype around a cage fight between two nerds. When that passes for financial news, it is not a time to make any big decisions.
