Clearlake's Feliciano Sees Slower Private Equity Growth Over Next Decade
Clearlake Capital Group co-founder José Feliciano explains why he expects slower growth in private equity over the next decade and why private credit is "well positioned" for retail investors. He speaks with Dani Burger at Bloomberg's Global Credit Forum in Los Angeles
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Yahoo
34 minutes ago
- Yahoo
Effort to strip Fed of interest paying power seen likely to bring upheaval to markets
By Michael S. Derby NEW YORK (Reuters) -A Republican senator's plan to take away the Federal Reserve's power to pay banks interest on cash they park on central bank books could cause chaos for monetary policy implementation if it were implemented, market participants said. In recent days, Senator Ted Cruz of Texas has been speaking about this power and his desire to see it ended as part of what he views as an effort to save money by the federal government. Stripping the Fed of the longstanding power would save the government $1 trillion, Cruz said in a CNBC interview last week. The senator said then that he did not know if it was likely his effort would work but that it was certainly possible. On Wednesday, Bloomberg reported that Cruz had also lobbied President Donald Trump, who has long been at odds with the Fed, as well as Republican colleagues, about his idea. 'We're agonizing trying to find a $50 billion cut here and there. This is over a trillion dollars, big dollars in savings,' Cruz told Bloomberg, saying of the payments, 'half of it is going to foreign banks, which makes no sense.' Cruz's office did not respond to a request for comment. The Fed declined to comment. Cruz's effort is being treated cautiously by Senator Tim Scott, the Republican from South Carolina who chairs the Senate Finance Committee. "While the desire to return to pre-crisis monetary policy operating procedures is understandable," the matter must be considered under normal Senate procedures, Scott said in a statement. Any move on this must start with a hearing, Scott said, adding, "this is not a decision to be rushed – it must be carefully considered and openly debated." The Fed's power to pay banks interest, granted by Congress, took effect in 2008 as the financial crisis dawned. It quickly gained prominence as part of a large-scale overhaul of the monetary policy architecture, as the Fed confronted the greatest economic downturn since the Great Depression. As it now stands, the Fed pays deposit-taking banks 4.4% for reserves. It uses another tool called the reverse repo facility to take in cash from money market funds and others, paying them 4.25%. Together, the two rates are designed to keep the federal funds rate, the central bank's main tool for influencing the economy, within the desired range. Paying financial firms for de facto loans of cash is essential for interest rate control due to the very large amount of liquidity created by bond buying stimulus efforts. During the COVID-19 pandemic, the Fed more than doubled the size of its balance sheet to a peak of $9 trillion, with asset purchases providing support to the economy beyond what the then near-zero short-term rates could deliver. If the Fed did not have the power to pay interest on deposits, the still substantial amount of liquidity sloshing around in markets would prevent it from controlling short-term rates. That said, concerns have long existed, even among some former central bankers, that paying banks money to deposit cash at the Fed is effectively a subsidy to banks. The other issue with paying interest on reserves is that it has led the Fed into an unprecedented period of loss-making. The Fed has been operating in the red because the interest rate it now has in place outstrips the income it earns off bonds it owns. Most analysts expect the loss-making to occur for some time to come. Fed losses mean that it is not handing over profits back to the Treasury, as it is required to do when it is in the green. Sums handed back to the Treasury over recent years contributed modestly to lowering deficits. Experts believe Cruz's plan would completely fail to achieve its goals and would instead cause huge upheaval in money markets. Barclays Capital economists said on Tuesday that ending the power would simply push the cash into the reverse repo facility, which means the central bank would still be paying lots of interest to financial firms, thus negating any deficit savings. J.P. Morgan strategists said in a note last week that under Cruz's plan, 'the Fed's ability to control money market rates may be compromised, complicating its efforts to guide broader financial conditions via the fed funds rate and other money market rates.'
Yahoo
an hour ago
- Yahoo
Canadians' Support for Counter-Tariffs Dips, but Still Strong, as Trade War Persists
(Bloomberg) -- Canadians continue to support retaliating against US President Donald Trump's wave of tariffs, but their fervor has waned as the trade war wears on. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire Seven in 10 Canadians still favor counter-tariffs even if they increase the cost of goods imported from the US, according to a poll conducted by Nanos Research Group for Bloomberg News. That's down from almost eight in 10 in January. Sentiment has also shifted, with the percentage of those who 'somewhat support' the measures rising to 29% from 24% at the beginning of the year. Nearly 44% of respondents expressed unqualified support for retaliatory levies, down from 55%. 'Further uncertainty and new tariffs on Canadian goods by the US will reinforce appetite for a Canadian tariff response,' said Nik Nanos, the polling firm's founder. Atlantic Canada was the region that most favored counter-tariffs, with 81% expressing some form of support. The Prairies expressed the least support (67%). The Prairie provinces of Saskatchewan and Alberta recently said they would resume buying and distributing American alcohol to retailers, months after they halted purchases in response to Trump's tariffs. US booze remains banned from government-store shelves in many other provinces, including Ontario. Prime Minister Mark Carney's government scaled back its retaliatory tariffs in April, leaving about 70% of its counter-measures in place. That means Canada currently has 25% levies on about C$42 billion ($31 billion) in imports from the US, plus some tariffs on automobiles. Carney held off on retaliating further in response to Trump's doubling of tariffs on steel and aluminum last week. The prime minister has said he sees progress in trade talks between the US and Canada, but new counter-measures remain an option. Bank of Canada Governor Tiff Macklem said last week that the levies aren't yet having a significant impact on prices. 'The retaliatory tariffs put in place, that is not yet in the consumer price index data that we have,' Macklem said. 'You will see that start to come in the months ahead.' The latest Nanos survey of 1,120 Canadians was conducted by phone and online between June 1 and 3. It's considered accurate within 2.9 percentage points, 19 times out of 20. --With assistance from Erik Hertzberg. American Mid: Hampton Inn's Good-Enough Formula for World Domination New Grads Join Worst Entry-Level Job Market in Years The Spying Scandal Rocking the World of HR Software US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Trump Mulls Using Defense Powers to Fund Rare-Earth Projects
(Bloomberg) -- The Trump administration is developing a plan to use Cold War-era powers to prioritize and fund rare earth projects it deems critical to national security, people familiar with the matter said. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire Officials are discussing using the Defense Production Act to tap financing, loans and other means for rare earths element-related projects, including mining, processing and other downstream technologies to bolster the US's capability to build a domestic supply chain, the people said. A specific course of action or a timeline have yet to be finalized, the people said. MP Materials Corp., the sole domestic producer of rare earths, would be a prime beneficiary. Deputy Defense Secretary Steve Feinberg is working to line up funding for the company, people familiar with that matter said. The Nevada-based mineral processor has received millions in funding from the Defense Department. MP Materials rose as much as 17% to $29.96 at 3:45 pm in New York, the highest on an intraday level since March 14. A spokesman for MP Materials declined to comment. Representatives for the White House and the Pentagon didn't immediately respond to requests for comment. Defense Secretary Pete Hegseth in a congressional hearing this week said that MP Materials 'is a great example of a place where we can partner with industry' and that Feinberg is focused on sourcing rare earth supply. The US currently lacks the so-called mine-to-magnet capability at scale, and invoking the emergency authority will give the Defense Department and other agencies tools to speed up sourcing that severely lags China's dominance in the industry. The urgency has only increased since Beijing flexed its rare earths capacity as leverage in trade talks with Washington over the past month. Beijing's decision to block exports of rare earths focused Trump administration attention on China's dominance in processing the materials used in semiconductors, jet engines and other technology, and it's stoked a surge of interest in rapidly developing US supply chains. 'This is a wake-up call for America,' Interior Secretary and National Energy Dominance Council Chairman Doug Burgum told Bloomberg News in a June 1 interview. 'We are so exposed, right now — precariously exposed — to China's grip on not just the mining, but the processing. They're mining all over the world, but they control 85% of the processing.' An existing US stockpile is 'massively insufficient' Burgum said, adding that billions of dollars could be needed to build a bigger mineral reserve. The latest discussions come more than two months after President Donald Trump signed an executive order to boost production of critical minerals that encouraged faster permitting for mining and processing projects. White House Efforts While that order encompassed rare earths, one of the people familiar with the matter said issuing a new directive is essentially a chance for Trump to publicly message that he's countering Beijing on a US vulnerability that's inflamed trade tensions between the world's largest economies. At the National Energy Dominance Council, David Copley is leading work on the rare-earths issue and has been tasked with coordinating most efforts related to critical minerals, people familiar with the matter said. Copley, a former executive with the mining company Newmont Corp., has been receiving proposals for how the US can quickly build out its own critical minerals supply chains and lists of potential shovel-ready projects the government can quickly invest in through DPA and other funding avenues. Copley's role has taken on new prominence as a result of Elon Musk's efforts to downsize the federal bureaucracy that have led to a wave of buyouts, resignations and retirements at key federal offices working on supply chain issues. The Trump administration revived Biden-era efforts to create a domestic supply chain for rare-earth magnets after China in April clamped down on exports of the materials, Bloomberg News reported last week. As part of the effort, officials solicited proposals to bolster domestic supplies of the magnets within the next six to 12 months as pressure mounted that China's recent retaliation was putting serious pressure on the Pentagon's stockpiles, as well as the inventories of US automakers and some aerospace-related companies. --With assistance from Courtney McBride, Yvonne Yue Li and Jeran Wittenstein. (Updates to add share moves in the fourth paragraph) American Mid: Hampton Inn's Good-Enough Formula for World Domination New Grads Join Worst Entry-Level Job Market in Years The Spying Scandal Rocking the World of HR Software US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom The SEC Pinned Its Hack on a Few Hapless Day Traders. The Full Story Is Far More Troubling ©2025 Bloomberg L.P.
