This is the End of the Experiment: What the Central Banks Know That You Don’t – Lynette Zang
Manage episode 355252168 series 3378373
“I think there’s going to be a crisis this year. I don’t think there’s going to be a soft landing, I don’t think there is a disinflation. I think there’s going to be a hard landing,” warns Lynette Zang, chief market analyst for ITM Trading. Zang tells our Daniela Cambone, “We’re in the middle of that transition from LIBOR — that interest-rate benchmark —in the U.S., SOFR. And they’re getting some pushbacks particularly from [collateralized loan obligations] and I don’t think they can make the transition.” Zang explains. She continues by saying that “there are 610 trillion notional value contracts that have to be converted and even with their mathematical fixes, they cannot get the SOFR to show interest rates the same as the LIBOR. That impacts all the contracts that still have LIBOR embedded in it.” But how could this actually impact everyday people’s life? She further says that it will make the generated income from bonds or other contract-based debt instruments much smaller. “Student loans, credit cards, mortgage statements, car loan. All of the sudden, they look different.” Zang also shared that she saw the central bank digital currencies ("CBDCs") are becoming more prevalent worldwide and that China has demonstrated its leadership in “showing us the way of getting adoption of the CBDC and how to control a society.” In terms of crypto, Zang said bitcoin will remain popular because Wall Street has embraced cryptocurriences more recently. But she said she would not hold value in it.