SEC goes after traders who executed thousands of “wash trades”

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From bankofengland.co.uk|58 min ago|1 comment

I am going to speak this evening about the state of the economy and about monetary policy as the recovery from Covid unfolds. The title of this speech, The Hard Yards, is I think a saying that originated in sailing, though I associate it more with forward play in rugby. I remember saying, around a year ago when the recovery looked rapid, that the hard yards were yet to come, and while I don’t want to claim any great prescience, it appears to be turning out that way. Nor do I have any claim to originality – Milton Friedman and Anna Schwartz wrote in their monetary history of the US that the most notable feature of the revival of the US economy after 1933 was not its rapidity but its incompletenessfootnote [1]. I, and other MPC members, have also used the analogy of a bridge to describe the role of economic policy in the age of Covid, the bridge to the other side of Covid. We are still on that bridge. The rate of recovery has slowed over recent months, and that slowing is continuing. Relative to the fourth quarter of 2019, on the latest data to July, the level of GDP was 3.5% lower. That’s around one percentage point below the level consistent with the August Monetary Policy Report. There is a crucial distinction here between growth rates and levels of activity. It is inevitable in a bounce-back that the growth rate will slow as the recovery nears its end-point. It is not though inevitable – or desirable – that the previous level is not regained. Recovery in some consumer-facing services appears to have been delayed. We had seen a recovery in activities such as eating in restaurants, but activity is levelling off, notwithstanding our contribution this evening. Consistent with the impact of supply bottlenecks and disruption, construction output fell in July, and manufacturing output stalled. Surveys and the reports of the Bank’s Agents, suggest the impact of these supply-chain issues is broadening out. Pulling this together, the recovery has slowed and the economy has been buffeted by additional shocks. The switch of demand from goods to services, as Covid has faded in terms of its economic impact, has not taken place to date on the scale expected. Meanwhile, supply bottlene tweet at 11:02am: BOE GOV. BAILEY: THE ECONOMY HAS BEEN BUFFETED BY FURTHER SHOCKS AS THE RECOVERY HAS STALLED. tweet at 11:02am: BOE GOV. BAILEY: PRICE PRESSURES, IN OUR OPINION, WILL BE TRANSITORY. tweet at 11:03am: BOE GOV. BAILEY: IF WE NEED TO RESPOND TO INFLATION, WE SHOULD USE THE BANK RATE RATHER THAN THE QE.BOE’s Bailey: We are seeing currently a much greater dispersion of wage settlements Bailey asks “What if this is the beginning of a more far-reaching structural change in the economy which alters relative pay across occupations?” He says that he’s not making predictions but the full text of the speech is all about inflation worries. Bullets: • The rate of recovery has slowed over recent months, and that slowing is continuing • Recovery in some consumer-facing services appears to have been delayed • Surveys indicate the impact of supply-chain issues is broadening out