Germany to create €200bn fund to support strained pension system
Plan aimed at stabilising retirement scheme as ‘baby boomer’ generation exits work force
The German government will invest billions of euros in capital markets and use the proceeds to shore up the country’s embattled pension system, according to a draft law unveiled on Tuesday.
The legislation will see the creation of a fund for investing in stocks, backed by loans taken out by the federal government, that is forecast to be worth at least €200bn by the mid-2030s.
Proceeds from the investments will be used to keep the pension system stable and ensure that payments remain at 48 per cent of an average wage until the end of the next decade while avoiding steep increases in social security contributions. Finance minister Christian Lindner said the reform amounted to a “paradigm shift” in pension provision.
The plan is designed to alleviate pressure on a pension system that is expected to come under huge strain in the next few years as a whole generation of “baby-boomers” born in the 50s and 60s enters retirement.
Already the federal government has to subsidise Germany’s statutory pension fund to the tune of €110bn a year — almost a quarter of the entire state budget.
“The system must remain fair for future generations, for those who profit as pensioners and the others who finance the system,” Lindner said. “For that reason our pension provision requires an update.”
As a first step, the government will raise €12bn in debt this year and transfer it to the new fund, which will be managed by an independent public foundation. That amount will increase by 3 per cent annually and be augmented by proceeds from the sale of state holdings.
The finance ministry forecasts the size of the fund to reach €200bn by the mid-2030s and returns on investments will enable distributions of €10bn a year to the statutory pension fund from 2036. Finance ministry officials said the hope is Germany can ultimately move in the direction of Sweden and Norway where individuals can invest in capital markets within the framework of the state pension system.
Lindner said the reform was “long overdue”.
“We should have started to exploit the opportunities of the capital markets for the statutory pension system a long time ago,” he said. “It’s not yet the sole solution for the challenge of financing pensions in the long term, but a first important step has been taken.”
Some critics have said the reform would introduce an element of “casino capitalism” into Germany’s pension provision.
Christiane Benner, head of IG Metall, Germany’s largest union, said it was a “step into the unknown”. “[It] doesn’t make old-age provision in Germany any safer,” she said. “It’s a debt-financed bet on some vague income in the future . . . [and] moves pensions closer to the risks of financial markets.”
Hubertus Heil, labour minister, dismissed the criticism. “This is money that is invested well, for the long-term,” he said. Individual pension contributions wouldn’t be used to buy stocks and shares, but “money from the state”.
However, the reform will not prevent pensions contributions from rising. According to the draft law on the new fund, these will rise in the coming years to 22.3 per cent of gross salaries, from 18.6 per cent currently. The bill says that without the new investment fund, contributions would have risen to 22.7 per cent by 2045.
Bitcoin’s Stunning Climb to New Records, Explained in Charts
Robust flows into new spot bitcoin funds are one of the primary catalysts of the rally
Bitcoin prices soared to a new record Tuesday for the first time in more than two years, a rally that has defied the expectations of analysts and investors.
The largest cryptocurrency by market value, bitcoin briefly crossed $69,000, surpassing its prior all-time high of $68,990.90 from Nov. 10, 2021, according to Dow Jones Market Data. It recently traded at about $65,100, but remains up about 54% so far this year.
The momentum has largely caught analysts and investors by surprise. Bitcoin prices crashed through much of 2022 when hedge fund Three Arrows Capital, lender Celsius and exchange FTX collapsed one after the other. By the time FTX filed for bankruptcy in November 2022, bitcoin traded just above $16,000. Prices were hovering around $23,000 a year ago and ended 2023 near $40,000.
Analysts scrambling to pinpoint a catalyst for the rally point to robust flows into the new exchange-traded funds holding bitcoin. The “spot” ETFs, which were approved by U.S. regulators in January, allow everyday investors to buy the digital asset through their brokerage accounts, without having to go to a crypto exchange or to funds that track bitcoin’s price through futures contracts.
Some crypto bulls point to bitcoin’s upcoming “halving” as another driver. The adjustment, which happens every four years, cuts in half the number of bitcoin that can be unlocked by miners. The theory is that the halving would limit the supply of bitcoin, making it more of a store of value.
These charts explain bitcoin’s rise and where it may go next:
Bitcoin’s rise has pushed the market capitalization, or the dollar value of all cryptocurrencies, past $2 trillion for the first time since late 2021. Bitcoin alone makes up half of that sum.
Its rebound over the past year has been gradual. After the failures of Silicon Valley Bank and Signature Bank sparked fears of a larger banking crisis, bitcoin crept back up toward $30,000. The token is considered by some to be a store of value independent of the financial system and therefore a safer asset in times of crisis.
Bitcoin was stuck in a relatively narrow trading range until late August when a federal appeals court ruled that the Securities and Exchange Commission had to reconsider asset manager Grayscale’s application for an ETF holding bitcoin.
That led some traders to bet that such vehicles would be approved, kick-starting bitcoin’s climb.
Since January when the funds started trading, investors have plowed more than $15 billion into the nine newly launched spot bitcoin ETFs. BlackRock’s fund is responsible for more than $7 billion of that sum.
“I’ve been surprised by the volume of inflows we’ve seen,” said Alex Thorn, head of research at crypto asset manager Galaxy Digital. “Wall Street is getting involved. The ETFs are a clear marker.”
Despite the inflows, the outlook remains murky for at least one of the funds. Clients have pulled more than $8 billion from the Grayscale Bitcoin Trust, bringing its assets under management to $28 billion after bitcoin’s price appreciation.
For years, Grayscale pitched investors on buying its shares ahead of its eventual conversion to an ETF. That means some of the crypto companies that went bankrupt in 2022 are sitting on shares that will likely be sold as their bankruptcy cases move through the courts. That could lead to further outflows.
Bitcoin’s rally has coincided with a surge in riskier assets across markets. Growing optimism that the economy will stave off a recession and the Federal Reserve will soon pivot to cutting interest rates has propelled major stock indexes to repeated highs to kick off 2024. And a frenzy over artificial-intelligence technology has turbocharged the rally in recent days.
Crypto-related stocks and other tokens have been along for the ride. Shares of Coinbase Global have surged about 35% this year. Coinbase serves as the custodian for most spot bitcoin ETFs. It is also listed as the custodian on most applications by asset managers in the race to launch ether ETFs.
MicroStrategy, a software intelligence firm that has transformed itself into a bitcoin-buying entity, has jumped about 99%. The company, led by bitcoin advocate Michael Saylor, now holds 193,000 bitcoin worth more than $13 billion.
Whether the rebound has legs is an open question. Bitcoin’s history has been marked by sharp rallies and deep crashes, often with little news driving them.
One sign that the ETF excitement might not be the primary driver of the rally? Net buying of bitcoin is largely happening on one offshore exchange, said Clara Medalie, director of research at crypto-analytics firm Kaiko.
Most of the activity has occurred on Binance and started in late February, with seemingly little catalyst, she said.
“It suggests it’s probably not U.S. based,” Medalie said. “Why now and what is it tied to?”
Facebook, Instagram, Messenger Are Down in Worldwide Outage
Hundreds of thousands of users around the world have reported outages, according to Downdetector
Service on Meta Platforms’ META -1.01%decrease; red down pointing triangle Facebook, Facebook Messenger, Instagram and Threads was down Tuesday for hundreds of thousands of users around the world.
Over 500,000 users reported outages on Facebook, according to Downdetector, which tracks website outages. About 77,000 Instagram users and 12,000 Messenger users also reported outages.
The outages started to appear shortly after 10 a.m. ET, according to Downdetector. More than an hour later, outage reports started falling.
“We’re aware people are having trouble accessing our services,” Andy Stone, a Meta spokesman, said on X. “We are working on this now.”
In addition to the U.S., users in the U.K., Canada, Mexico and other countries also reported outages.
Biden administration officials said they hadn’t seen specific or credible threats attempting to disrupt Super Tuesday’s elections, but were monitoring the outages.
“We are aware of the incident and at this time we are not aware of any specific election nexus or any specific malicious cyber activity,” a senior Cybersecurity and Infrastructure Security Agency official said during a press call.
Federal officials said they were coordinating with states to address both the potential for physical or cyber threats to Tuesday’s voting, as they have during the past several election cycles.
These outages aren’t uncommon. Glitches, sometimes short and others longer, can disrupt people’s ability to conduct business or interact with friends. Meta has said it has 3.19 billion daily active people on average across its apps, including Facebook, Instagram, Messenger and WhatsApp.
Meta also reported disruptions on its advertising and developer platforms, according to the company’s status page.
Meta had an outage in 2021 that lasted about six hours that disrupted service for millions of users.
X, the social-media platform formerly known as Twitter, poked fun at the outage Tuesday.
“We know why you’re all here rn,” the company said.
X owner Elon Musk also weighed in. “If you’re reading this post, it’s because our servers are working,” he wrote on X.
STANDARD CHARTERED
UNCOOKED ALERT: Standard Chartered said to ...
Standard Chartered, the FTSE 100-listed banking group, has come under the spotlight amid a fresh round of takeover talk.
People following the situation have heard rumours Standard Chartered has attracted more takeover interest.
Some people following the situation had heard speculation the interest had come from the Gulf region in the Middle East, possibly Abu Dhabi or Saudi Arabia.
In January 2023 Bloomberg reported First Abu Dhabi Bank had hired advisors to work on a takeover of Standard Chartered but then walked away from the deal after the news agency unveiled its plans to buy the emerging markets bank.
Last week British fund managers also suggested that Standard Chartered could be a 'takeover target'.
Ian Lance, who runs the Temple Bar Investment Trust, told Trustnet that: "If a big US bank wanted to have a footprint across Asian markets, they could buy Standard Chartered and even its chief executive officer admits that its share price has been crap."
Readers should be aware that some of the takeover speculation surrounding Standard Chartered has been priced into the stock as the company's shares have risen 15pc over the last month.
To be clear, the above story is UNCOOKED. In case you don't remember I have pasted the definition of UNCOOKED below:
UNCOOKED: Market gossip as Betaville receives it. This scuttlebutt has just come in and hasn't been checked with all of Betaville's well-informed RARE sources let alone formal journalistic channels (public relations executives, bankers etc). The rumour might be total codswallop but then again there may be something in it, so it's worth airing on Betaville.
God’s True Cashmere Expands Offer, Lands at Le Bon Marché
Brad Pitt and Sat Hari’s luxury knitwear label God’s True Cashmere has landed in France with a pop-up at Le Bon Marché, and is expanding its offer.
SOFTLY DOES IT: God’s True Cashmere is all about slow fashion. The Los Angeles-based casual luxury brand, launched in 2019 by Brad Pitt and energy healer Sat Hari, is gradually growing its proposition, and its footprint. “We keep expanding, but step by step,” Hari said at the brand’s Paris presentation.
The brand has garnered a cult following for its 100 percent cashmere shirts with buttons made from healing stones placed to align with the chakras. God’s True Cashmere is available in only a handful of doors worldwide — around 30 — and according to Hari, its $2,000-plus shirts never go on sale.
In late February, the label opened a pop-up at Le Bon Marché, its first retailer in France. The installation is on the store’s second floor, near Sarah Andelman’s buzzy pop-up bookshop exhibit. The brand is hoping to prolong its collaboration with the retailer after the animation closes in April.
Initially created because Hari could not find a super-soft green shirt her friend Pitt had requested as a gift, God’s True Cashmere is also expanding beyond its core offer of shirts. New for fall were the label’s first outerwear pieces as well as a selection of loungewear and T-shirts.
A fluffy fur-like bomber jacket was made from cashmere with a contrast lining and featured a single Carmelite — a new stone for the season — inside alongside a patch featuring a mantra. There was also a waterproof transitional jacket lined with cashmere, its outer made from recycled nylon, and a loungewear ensemble with brass-backed lapis lazuli buttons.
Silas Capital Closes $150 Million in Fund for Start-ups
Silas Capital has wrapped up $150 million for a fund for start-ups in beauty, fashion, wellness and other areas.
Consumers and investors alike love a good start-up story and the emerging growth equity and venture capital firm Silas Capital is no exception — having revealed that its newest consumer growth fund, Silas Capital Partners II, has reached a hard cap of $150 million of commitments.
The company said it has been bolstered by prominent institutional investors including endowments, fund-of-funds, insurance companies, global asset managers, family offices and multinational CPG companies. With Fund II, Silas Capital will continue to focus on investments ranging from $3 million to more than $15 million in high-growth, and on what it described as “typically profitable,” consumer brands with revenue of $5 million to more than $50 million. Silas Capital defines its “emerging growth” strategy as between venture capital and private equity.
The new investors and limited partners were not immediately revealed Tuesday.
This new fund invests in a broad assortment of consumer brands including its specialty of personal care and beauty, as well as apparel, fashion, better home goods, health, wellness, food and a range of better CPG brands. As this fund was being raised, four investments were made in Makeup by Mario, Vacation Sunscreen, the sexual wellness company Hello Cake and Wonder Belly, a Silas Capital spokesperson said Tuesday. The prior portfolio invested in such companies as Bellroy, Proenza Schouler, Hatch and Boll & Branch.
In addition, Silas, which was started in 2012 by a team with e-commerce, wholesale and retail experience, aims to invest up to 10 percent of its capital into seed and early-stage brands with smaller passive checks under $500,000 through Silas Ventures, the firm’s early-stage venture platform comprised of two micro funds, Silas Ventures I & II.
In recent years the start-up rate in the U.S. has climbed to its highest level since the Great Recession, due partially to the pandemic and closures generated by an uneven economy.
In 2021 the business start-up rate, which tracks the share of all firms that are formed each year, increased 8.9 percent in 2021 — the highest share since the Great Recession. In total, more than 476,000 new start-ups were formed — nearly a 5 percent increase compared to pre-COVID-19 data, according to the U.S. Census Bureau’s Business Dynamics Statistics. Those figures signaled some optimism that the number of start-ups is expected to continue to grow at higher rates than before the pandemic, in light of the sustained, elevated level of applications that has continued through 2023, according to a report by the Economic Innovation Group. Unlike in the 2010s, when start-up rates dwindled, the 2021 report was considered to be “concrete proof that American entrepreneurship is quite likely on a new path away from the doldrums of the 2010s,” the report said.