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Bernanke’s Final News Conference – Taper Down

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The key thing to remember is that quantitative easing is not ending, it’s barely being reduced. Starting in January, the Federal Reserve will taper QE to a US$ 75 billion pace. Essentially, instead of US$ 40 billion of asset purchases in mortgage-backed securities, the Fed will purchase US$ 35 billion per month. Instead of purchasing US$ 45 billion longer-term Treasury securities, the Fed will purchase US$ 40 billion per month.

Capital markets are happy with Bernanke’s taper announcement; the Dow Jones Industrial Average shot up nearly 1% within 20 minutes of the Federal Open Market Committee’s statement being released. Federal Reserve Chairman Bernanke made it clear that Yellen’s ascension had no bearing on timing of the call to taper.

When questioned on whether the Fed would use other types of means for economic stimulation, Bernanke tiptoed around the idea of favorable discount window rates to banks that could prove they were loaning money to small businesses and households. But he mostly dismissed the idea stating that he feels that tight credit is not the U.S. economy’s main problem.

The FOMC did not modify its forward guidance. The threshold of the unemployment rate for a first rate hike is well below 6.5%. However, Bernanke noted that he will not hike rates merely because unemployment hits this threshold. He wanted to stress that the federal funds rate will remain near zero “well past” this threshold. Once the target is reached, Bernanke suggested that the Fed will look more closely at other types of employment figures, notably the labor force participation rate.

CIC Sells 10% Logicor Stake to Blackstone Fund

The China Investment Corporation (CIC) is selling a 10% stake of in European warehouse firm Logicor Ltd to a real estate fund managed by The Blackstone Group. Furthermore, CIC also hired Blackstone to oversee and manage Logicor’s warehouses and logistic properties portfolio.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Fintech Affirm Raises $200 Million in Series E Led By Singapore’s GIC

Affirm Inc., a financial technology firm which provides instant loans to consumers as an alternative to credit cards for their online shopping, has raised US$ 200 million in a Series E round lead by Singapore’s GIC Private Limited, with participation from Khosla Ventures, Lightspeed Venture Partners, Spark Capital, Caffeinated Capital, and Ribbit Capital. The new infusion of capital brings the San Francisco-based company’s total funding to US$ 450 million and a reported valuation of US$ 2 billion.

The company is founded by Max Levchin, a co-founder of PayPal (part of the PayPal mafia, dubbed by the tech press). Max Levchin is also an advisory board member of the Consumer Financial Protection Bureau (CFSB) in the United States.

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CHANGE: Saudi Arabia to Re-Open Movie Theaters, PIF Inks MoU with AMC

The Saudi Arabian government is ending its 35-year ban on cinemas. Next year, the government will allow cinemas to open. This watershed moment provides opportunities for entertainment companies to invest in Saudi Arabia and the surrounding region.

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