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Business Standard
18 hours ago
- Business
- Business Standard
Best of BS Opinion: How the calm today may be masking deeper risks
You know that moment when your car hums along just fine, but one weird little light on the dashboard keeps flickering? That quiet, pulsing reminder that even though everything feels normal, something might still be off under the hood? That's how the world also feels right now, technologies are advancing, markets are steadying, systems are stabilising, but those little blinking lights? They're everywhere. Let's dive in. Take the bond market. Nir Kaissar walks us through a reality-check: people are panicking over interest rates, but zoom out and the current 4.5 per cent on 10-year Treasuries is historically normal. The bigger issue? We're just not used to it anymore after years of easy money. The machine is working but fiscal red flags like $5 trillion in potential deficits or unsustainable tax cuts are blinking. Ignore them, and we might end up stalling on the highway. Meanwhile, Mihir S Sharma cautions that with artificial intelligence, the system isn't just running, it's accelerating like a Tesla in Ludicrous Mode. But no one agrees on where it's heading. Some say AI will democratise creativity and generate jobs. Others predict mass layoffs and existential threats. Will it empower developing countries or further divide them from AI-rich superpowers? The engine is sleek, but no one can read the road signs ahead. And for Pakistan, Shekhar Gupta points out a particularly worrisome light on the regional dashboard: Field Marshal Munir. A military chief with unprecedented power, a hollowed-out civilian government, and a jailed popular rival (Imran Khan) — this isn't a hybrid regime anymore, it's a duckbilled platypus of power. Past performance, as they say in mutual fund ads, is no guarantee of future returns. But in Pakistan, past power-hungry generals have ended up disgraced, exiled, or dead. Munir, however, seems poised to act while he still can. India, beware: the system next door may look stable, but it's humming toward a potentially explosive 12 months. Then there's Devangshu Datta, who shows how GPS and drones, marvels of civilian tech, are now shaping military arsenals. From V-1 flying bombs to AI-guided kamikaze drones, our tools for convenience are doubling as tools for conflict. Precision strikes and geolocation warfare are here, whether we're ready or not. The system works brilliantly, for both Swiggy and the battlefield. Even climate scientists are leaning into geoengineering, as Kumar Abishek writes. Solar Radiation Modification might temporarily cool the Earth by bouncing sunlight back into space. It's technically feasible, increasingly funded, and yet deeply risky. The cooling may come with unintended consequences and no global playbook to manage them. The science is on, but the ethics light is blinking furiously.
Yahoo
a day ago
- Business
- Yahoo
Wall Street 2.0: What stablecoins did for the dollar, Ondo is doing to capital markets
Wall Street 2.0: What stablecoins did for the dollar, Ondo is doing to capital markets originally appeared on TheStreet. The old system still sleeps. Closes on weekends. Clears trades in days. Moves money in loops and calls it 'settlement.' A slow maze of custodians, paper trails, and batch processors dressed up as modern finance. Everyone nods. No one questions the lag. It's a scaffold of rules and rituals. Stitched together by inertia, policy, and trust in institutions that forgot how to earn it. Then stablecoins exposed the whole thing. They didn't just digitize the dollar, they outperformed it. Moved faster. Worked harder. Never closed. The result? A $230 billion asset class, foundational to crypto and leaking into TradFi like a quiet virus. A dollar that didn't need permission. Nathan Allman, founder and CEO of Ondo Finance saw it early. The Markets aren't built for a world that never closes. 'The financial system wasn't designed for the world we live in—it was stitched together over centuries,' he wrote. 'It's a patchwork of middlemen, paper trails, and private databases.' 'We have global investors, 24/7 assets, and programmable money. But the infrastructure they run on is still built around banking hours.' 'That's the disconnect we're addressing.' OUSG isn't a whitepaper. It's a pipeline. It wraps short-term U.S. Treasuries into a tokenized instrument that behaves like software. Internet-native yield. Real-time liquidity. Fully composable. It's not trying to be flashy. It just works. This isn't a concept. It's already in motion: -$1.3 billion in Treasuries tokenized between OUSG and USDY -BlackRock's BUIDL sits around $2.9b -Franklin Templeton's fund holds roughly $752b The total tokenized RWA market has surpassed $7 billion and it's no longer just theory. It's becoming standard infrastructure. 'Our approach is simple,' Allman says. 'Tokenize high-quality, yield-bearing assets. Wrap them in code. Make them programmable. Make them liquid.' 'What we've seen with OUSG is that institutions want the yield of Treasuries, but they also want the speed and composability of crypto. We're giving them both.' Earlier this month, Ondo integrated PayPal's PYUSD, bridging Treasuries and a major fiat-backed stablecoin. The result? Investors can now convert between sovereign debt and digital dollars instantly, on-chain. No wires. No waiting. Just finality. 'Finance is built on conversions,' Allman said in a recent statement. 'If you can't convert between assets instantly, at scale, you don't have real liquidity—you just have accounting entries.' The ambition isn't subtle. 'What stablecoins did for the dollar, Ondo will do for capital markets.' Not a tagline. A declaration of intent. Stablecoins cracked one flaw. Dollars couldn't function online. The rest of finance never caught up—yield markets, settlement logic, compliance theater—all still trapped in a paper-era fantasy of how money's supposed to move. Ondo's rewriting the stack—liquidity without pause, compliance baked into the logic, capital that moves like it forgot friction was ever a thing. 'We're not trying to create parallel universes,' Allman says. 'We're building bridges—between legacy finance and programmable finance.' The world is catching on. The World Economic Forum, Citi, and Bank of America all estimate tokenized assets could hit $5–10 trillion by 2030 Ondo isn't projecting it. Ondo is routing it. 'We're not here to disrupt,' Allman says. 'We're here to rebuild. The rails. The flow. The logic of how capital moves.' Ondo isn't projecting it. Ondo is routing it.' Most people can't move money without a delay. They can't see all their assets in one place. They can't borrow against U.S. Treasuries unless they're already rich or plugged in. Meanwhile, the machinery is unmistakably antiquated—batch processes, blind spots, and rails built for a slower world Wall Street 2.0: What stablecoins did for the dollar, Ondo is doing to capital markets first appeared on TheStreet on May 30, 2025 This story was originally reported by TheStreet on May 30, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Flanks: Core holdings with lasting value
Álvaro Morales, chief strategy officer and co-founder at Flanks, draws from decades in global private banking to reflect on the timeless role of traditional assets in portfolio construction. He explains how equities, bonds, and cash continue to be at the core of wealth management despite innovation reshaping the instruments around them in a discussion that crosses the boundaries of technology and investment philosophy. Amid the hype surrounding tokenisation and decentralised finance, Morales brings a more grounded perspective: traditional assets like equities, bonds, and cash still hold enduring value. They remain, in his words, 'the backbone of diversification in a typical modern portfolio and I don't see this changing any time soon.' Morales sees firsthand how technology is reshaping wealth management. But even amid this digital transformation, he argues for a balanced perspective: 'Global high-net-worth investors usually hold roughly one-fifth in equities, one-fifth in bonds, and one-fifth in cash,' he explains. The remaining 40% which now includes real estate, private equity, gold, and crypto adds an additional layer of diversification, but does not displace the core. The role of innovation, Morales believes, is not to replace these foundational elements but to improve how they are accessed, analysed, and managed. 'Innovation should enhance the core, not replace it,' he notes. He points to Europe's 64 million open-banking users, a number that has quadrupled since 2020 as a sign of this transformation. Flanks taps into this trend by enabling real-time access to balance sheet data across institutions. 'Technology compresses back-office costs by roughly 30%, and managers can redeploy those savings to improve client returns,' Morales says. In his view, this is where innovation creates real value, not in the invention of new asset classes, but in making existing ones more transparent, efficient, and actionable. Even traditional assets carry hidden risks. Morales points to 2022 as a wake-up call: 'Treasuries fell 13% after a 200-basis-point rate spike their worst year on record yet many investors still do not grasp why their bond portfolios declined.' Duration risk, he emphasises, remains misunderstood. Another emerging issue is concentration. 'Index funds now hold more than half of US long-term fund assets,' Morales warns. 'Liquidity could evaporate, and a sudden exit could overwhelm the market.' In other words, simplicity has its own dangers. With interest rates rising after years of near-zero yields, fixed income is regaining its allure. 'Carry has returned,' Morales says. 'A 10-year Treasury yielding about 4.5% provides enough coupon to cushion moderate rate moves.' For today's investor, the question is no longer whether to hold bonds, but where on the yield curve to position. He recommends tools like floating-rate notes and TIPS (Treasury Inflation-Protected Securities) to better manage interest-rate and inflation risk. The pandemic era served as a critical stress test for portfolio resilience. Morales believes investors have learned three fundamental lessons: 'Keep a liquid shock absorber, favour quality over leverage, and diversify by risk drivers, not just by names.' In equities, this means blending resilient dividend payers with growth companies. In bonds, pairing short-duration investment-grade credit with inflation-linked or floating-rate paper. 'Hold some cash, T-bills, or gold - assets that can be tapped when liquidity evaporates and rebalance opportunistically around volatility spikes,' he advises. Having worked across jurisdictions as diverse as the US, UK, and Latin America, Morales sees regulation not as a constraint but as a variable to manage strategically. 'Regulation shapes wrappers, not assets,' he says. 'The same corporate bond ladder might be packaged as a UCITS ETF in Europe, a 40-Act fund in the US, or a Cayman note for Latin-American families.' Firms that use technology to streamline compliance, he adds, gain a competitive edge. 'Reducing onboarding time from weeks to days is a real advantage,' Morales notes. As Chairman of the Risk and Audit Committees at Banesco USA, Morales underlines a disciplined approach to risk. 'Effective risk management relies on the first, second, and third lines of defence,' he says. 'After decades in banking, I respect risk even when it is not apparent. Risk never sleeps.' Governance is key: 'An empowered risk committee with veto power, strict rebalancing bands of ±5%, and quarterly scenario drills with external experts, those are the most important things to put in place.' Morales also reflects on his experience managing traditional asset strategies globally, including at Santander Private Banking. 'Wrappers vary with tax regimes, but the underlying assets remain the same,' he says. 'US investors gravitate toward domestic equities, UK clients pursue broad geographic diversification while retaining a home bias, and Latin-American investors prefer higher-yield sovereign and corporate bonds.' Private banks today may offer similar products, but Morales believes execution separates the best from the rest. 'Service quality, execution speed, and after-tax alpha are decisive,' he states. With data aggregation and workflow automation, firms can streamline manual tasks by up to 70% freeing advisers to focus on strategy. 'That's a big differentiator today, as the next generation of clients demands both personalisation and an 'online banking like' experience.' By consolidating data across global institutions, the platform provides clients and advisers with a 'unified 360° view' of assets and liabilities. 'This T+0 transparency allows cash drag, drift, and concentration to be flagged immediately,' Morales explains. 'Discussions shift from post-mortem reviews to real-time actions.' Flanks is also harnessing AI to do more than automate reporting. 'Our AI-powered data enrichment process gives advisors actionable insights that were previously impossible to gain when working with scattered Excel files,' says Morales. The result: better, faster decisions and potentially enhanced client returns. Morales offers pragmatic advice for future wealth managers: 'Liquidity is never free; 2022 showed that even safe-haven assets can tumble. Markets do not always rise, and black swans are real.' His approach favours process over prediction: 'Trust disciplined processes and sound knowledge over a guru's predictions. Design for the long term, execute in the short term, and monitor in real time.' Looking to the next decade, Morales remains confident in the dominance of traditional assets. 'They are pillars of the capitalist system, and I expect them to remain at or above 60% of diversified portfolios through 2040,' he says. While tokenisation may reshape infrastructure, 'equities and bonds will continue to provide the deepest, safest, and most regulated pools for income and growth.' Even in a landscape transformed by algorithms and APIs, Morales reminds us that solid fundamentals combined with smart technology remain the bedrock of enduring investment success. "Flanks: Core holdings with lasting value" was originally created and published by Private Banker International, a GlobalData owned brand. 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Business Times
a day ago
- Business
- Business Times
There's a ticking time bomb in Trump's ‘big, beautiful Bill'
THIRTY years ago, when I was a rookie reporter, a veteran writer offered me sage advice: whenever presented with a government or corporate document that is more than 100 pages long, hunt for hidden bombs. Donald Trump's thousand-page (plus) 'big, beautiful Bill' is a case in point. Since the House of Representatives passed it last week, this fiscal act has been (rightly) lambasted for many reasons: it favours the rich over the poor; cruelly cuts social safety nets; and recklessly expands the debt. Even Elon Musk is upset. But what investors should also fret about, if they care about the state of Treasuries or are a non-American entity holding US assets, is a clause buried in the bowels of this behemoth called section 899. This would enable the US Treasury to impose penalties on 'applicable persons' from 'discriminatory foreign countries' by increasing US federal income tax and withholding rates by up to 20 percentage points on their US investments, on a variable scale. It might thus be viewed as a novel 'revenge tax' (as some lawyers call it) that Trump could use to bully friends and foes alike in trade negotiations. So, at best, all this undermines prior efforts to build a collaborative global tax system via groups such as the Organisation for Economic Co-operation and Development, with its undertaxed profits rules. At worst, it makes Trump look like a feudal European king intent on using tax as a capricious tool to extract foreign tribute. Either way, it undermines the idea that America is a place of consistent investment laws – and has shocked lawyers in countries such as Canada. 'Section 899 is toxic (and) a potential game-changer for foreign investment,' Larson Gross, a tax advisory group, told clients this week. Or as Neil Bass, a Canadian lawyer wrote in his own missive: 'The US just declared a tax war and it's targeting allies.' George Saravelos, an analyst at Deutsche Bank, writes in a client note: 'Section 899 challenges the open nature of US capital markets by explicitly using taxation on foreign holdings of US assets as leverage to further US economic goals.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up So will this actually become law? The only honest answer (as with so much of Trump policy-making) is 'no one knows'. Trump's bark, after all, is often worse than his bite, and the courts sometimes rein him in, as seen with tariffs this week. Known unknowns In any case, there are a host of known unknowns around section 899. The Senate might insist that this clause is watered down or removed. Or if the surcharge stays intact, there may be provisions to let affected non-American investors and companies offset this against domestic tax bills. No one exactly knows how a 'discriminatory foreign country' will be defined (although the Treasury is supposed to regularly report on that). Nor is it entirely clear what investors and companies might be hit. At first glance, the Bill only affects non-US investors and companies already subject to US tax. But, as I recently noted, the White House recently warned in an executive order that it might overturn a crucial 1984 ruling that exempted Chinese investors, among others, from a prior 30 per cent withholding tax on assets such as US Treasuries. If so, those flows might be hit by section 899 too, as analysts such as Michael McNair suggest. Another reason for uncertainty is splits among Trump's own advisers. I am told that some love the idea of imposing revenge taxes on foreigners, since it will play well with the Maga base – and a think-tank allied with vice-president JD Vance reckons that such taxes could raise US$2 trillion revenue in the next decade. And figures such as Howard Lutnick, commerce secretary, are keen to find new weapons to wield in their trade negotiations with the EU and Canada. As the law firm Davis Polk points out, the fact that those two regions – along with the UK – impose digital services taxes could make them easy targets for section 899 measures. But Scott Bessent, Treasury secretary, is likely to be wary of invoking section 899 since he does not want to scare global investors away from Treasuries. After all, he needs to sell oodles of US government bonds to fund the ever-expanding debt – and there are already hints of some capital flight. Undermining global trust Either way, the key point is that the mere presence of section 899 in this Bill – whatever ultimately happens – is likely to further undermine global trust, given that it shows that the Trump team is at least entertaining the idea of turning trade wars into capital wars, in the future. No wonder investment groups ranging from Canadian pension funds to mighty Asian institutions tell me that they are stealthily diversifying away from US assets. Or that Federal Reserve officials recently fretted about the likely damage to America's economy if its 'safe haven' investment status is undermined. As legislative bombs go, this is self-defeating. The Senate should kick it away. FINANCIAL TIMES
Bloomberg
2 days ago
- Business
- Bloomberg
Investors are Suffering from Tariff Whiplash: David Kelly
Wall Street traders cheering solid results from Nvidia Corp. had to face the harsh reality of slowing economic data and legal uncertainties around Donald Trump's trade war. The president told Federal Reserve Chair Jerome Powell he's making a mistake for not cutting rates. The S&P 500 pared most of an advance that earlier approached 1%. A federal appeals court offered Trump a temporary reprieve from a ruling threatening to throw out the bulk of his tariff agenda. Treasuries rose on bets the Fed will slash rates twice this year and after a solid $44 billion sale of seven-year notes. The dollar fell. The US economy shrank at the start of the year, restrained by weaker consumer spending and an even bigger impact from trade than initially reported. Pending sales of previously owned homes last month fell by the most since September 2022, while a rise in recurring jobless claims signaled higher unemployment. (Source: Bloomberg)
