In US equity market volatility, the VIX index has averaged 15.4% throughout 2024, well below the 5-year average of 21.3%. In 2024 the S&P500 saw a max drawdown of 9.7%, lasting just 14 days (in early August), with a max drawdown of just 3% in Q4.

Remarkably, we’ve seen just three occurrences in 2024 where the S&P500 fell by 2% on the day.

Reviewing cross-asset volatility through 2024 we can see that the 40-day realised volatility across key markets has been universally lower than the 5-year average.

A soft run for the Aussie extended through Tuesday after investors reacted to news of weak consumption data from China, which served up another reminder of China’s macro imbalances.

It also reminds us that the Australian Dollar remains weighed down by developments in its largest trading partner, with the currency now down against all G10 peers over the course of the past month.

The NBS said Chinese industrial production remained steady at +5.4% y/y, matching expectations, but there was another underwhelming retail sales report, where a fall to 3.0% y/y in November from 4.8% in October was reported.

The consensus had anticipated a rise to 5.0%.

"Momentum from last month’s stronger Golden week driven activity was unlikely to last given weak consumer confidence. A sustained improvement in consumption hinges on the outlook for property," says Sam Hill, Head of Market Insights at Lloyds Bank.

China reported that home price declines slowed in November, with new homes reported at -6.1% y/y from -6.2% previously, while used home price deflation eased to -8.5% from -8.9%.

However, Hill points out that activity has only picked up in tier-one cities, where overcapacity is less of an issue.

"There remains a huge overhang of unsold homes (estimated at 60-80mn, around 8-10 years of sales) across the country and while property investment is falling, building is still in excess of what the economy needs. Price declines will always run into pockets of interest on the way down, but until supply and demand find some form of equilibrium the market won’t find an enduring base," says Hill.

AUD weakness comes on the day Westpac reports its measure of Australian consumer confidence fell 2% month-on-month to 92.8pts in December, suggesting that consumer mood remains pessimistic.

"Elevated domestic interest rates, combined with global outlook concerns, have weighed on consumer confidence. Financial markets appear to have interpreted this week's announcement of two new RBA members as supportive of interest rate cuts. Market pricing for a February RBA cut has edged up to around 57%, from 50% yesterday," says Joseph Capurso, an analyst at Commonwealth Bank of Australia.

Commonwealth Bank says the Aussie Dollar faces a difficult 2025 as the U.S. raises trade tariffs on China and the Aussie economy starts to slow, which should encourage the RBA to cut interest rates early in 2025.

Crypto trading has garnered widespread attention for its potential to offer high returns, but navigating the volatility of digital assets can be challenging. While many traders rely on technical analysis, there’s another powerful approach: fundamental analysis. This method helps traders evaluate the intrinsic value of cryptocurrencies, guiding decisions based on real-world factors rather than just price patterns.

In this article, we’ll break down how you can use fundamental analysis to trade crypto effectively and make informed decisions that go beyond market trends and charts.

Fundamental analysis in crypto trading involves studying the underlying factors that can influence the long-term value of a cryptocurrency. While technical analysis focuses on historical price and volume data, fundamental analysis looks at the "big picture," including the technology behind a cryptocurrency, its use case, market demand, and the broader economic factors affecting its ecosystem.

In traditional markets, fundamental analysis examines financial statements, earnings, and market conditions. In the world of crypto, however, these factors differ and focus more on:

The underlying technology: What blockchain does the cryptocurrency operate on? How secure and scalable is it?

Adoption and use cases: Is the cryptocurrency widely used, or does it solve a specific problem that could drive its future value?

Team and development: Who is behind the project? Are they reputable and do they have a history of success in the industry?

Market sentiment and regulations: How is the market perceiving the cryptocurrency? What are the regulatory landscapes in key regions?

When applying fundamental analysis to crypto, there are several factors that every trader should consider:

One of the most critical aspects of any cryptocurrency is its underlying technology. For example, Bitcoin operates on a secure, decentralized network called blockchain, which ensures transparency and immutability of transactions. Ethereum, on the other hand, provides a decentralized platform for building smart contracts and decentralized applications (DApps).

When evaluating a cryptocurrency, consider the following:

Security: Is the cryptocurrency resistant to attacks? For instance, does it employ secure consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS)?

Scalability: Can the network handle increased demand as adoption grows? Cryptos like Ethereum have struggled with scalability, leading to the rise of Layer 2 solutions and other altcoins with better scaling potential.

Innovation: Are there any groundbreaking features that differentiate the cryptocurrency from others in the market? Innovations like smart contracts, DeFi, and privacy features can make a coin stand out.

A cryptocurrency's value often depends on how widely it is adopted and how useful its underlying technology is. For example, Bitcoin is primarily seen as a store of value or digital gold, while Ethereum is used for creating smart contracts and decentralized applications.

Questions to ask include:

Is the cryptocurrency solving a real-world problem?Does it have a strong, growing user base?Is it being adopted by businesses, governments, or other institutions?

Adoption can drive long-term value and stability. For example, Chainlink (LINK) gained widespread adoption by providing reliable oracle services for smart contracts.

The team behind a cryptocurrency plays a pivotal role in its success. A reputable team with a proven track record can often be a good indicator of the project’s future potential.

Check their background and whether they’ve worked on successful blockchain projects in the past.

A strong open-source community is often an indication of a cryptocurrency that is developing and evolving.

A large and engaged community can drive adoption, assist in development, and help solve problems.

Crypto markets are highly sensitive to news, rumors, and sentiment shifts. Major announcements like new partnerships, regulatory developments, or technological upgrades can significantly impact the price of a cryptocurrency.

When using fundamental analysis, consider the following:

Media and Social Media Impact: How is the cryptocurrency perceived in the media and by social influencers? Are there positive or negative sentiments surrounding it?

Regulatory Environment: The legal landscape for cryptocurrencies is constantly evolving. Are regulators in major markets like the U.S., Europe, or Asia taking a favorable stance toward the cryptocurrency, or are they imposing restrictions?

In addition to technical and adoption factors, understanding the tokenomics of a cryptocurrency is essential. Tokenomics refers to the economic model behind the coin, including:

Supply and Demand: What is the total supply of the cryptocurrency? How is it distributed?

Utility: Does the cryptocurrency have a real-world use case that creates demand for its token? For instance,

is used to pay for transaction fees on the Binance exchange.

Inflationary vs. Deflationary: Some cryptocurrencies have fixed supplies, while others may experience inflation due to continuous mining. Deflationary models can create scarcity, potentially increasing value over time.

Now that we understand the key factors involved in fundamental analysis, let's discuss how to implement them into your trading strategy:

Research Before You Invest: Always start with thorough research. Look into the technology, team, market sentiment, and tokenomics. Don’t base your decision on hype or short-term news alone.

Focus on Long-Term Potential: Fundamental analysis is about long-term value. Look for projects that are solving real problems and have sustainable growth potential.

Combine with Technical Analysis: While fundamental analysis is crucial, it’s also important to combine it with technical analysis to assess entry and exit points. This holistic approach will improve your decision-making.

Fundamental analysis is a powerful tool for crypto traders who want to look beyond short-term fluctuations and focus on long-term value. By understanding the technology, adoption, team, market sentiment, and tokenomics of a cryptocurrency, you can make informed trading decisions that have a higher chance of success.

Private transfers of resources across generations are as old as society itself. Controversies about such transfers are equally ubiquitous, featuring prominently in biblical stories and Shakespearean plots alike. In modern times, transfers of wealth raise issues as intimate as the nature of family relations and as public as the ability of the economy to generate fair outcomes. The size and distribution of intergenerational transfers have raised concerns about creating family dynasties, exacerbating trends in inequality, and limiting economic opportunity and mobility. At the same time, there are concerns that taxing transfers reduces efficiency and capital accumulation and violates the principle of horizontal equity.

These issues will likely rise in importance over the next several decades, as the U.S. comes to grips with the largest set of intergenerational wealth transfers in its history. Taxing these flows judiciously could raise revenue and improve the tax system, but transfer taxes have been eviscerated in recent years.

In this policy brief (which is based on a more extensive research project), we develop an innovative methodology that matches bequests and inheritances. We use the results to investigate the revenue and distributional effects of three options for wealth transfer taxes: reforming the estate tax; taxing capital gains at death; and converting the estate tax to an inheritance tax (paid by recipients). We conclude that inheritance taxes can raise more revenue and be more progressive than the existing estate tax. Moreover, taxing inheritances and unrealized capital gains at death would close two of the largest loopholes in the income tax.

Coverage of the impending “Great Wealth Transfer”has already entered the public discussion. Households aged 55 and older held 71% of aggregate bequeathable wealth in 2021, up from 54% in 1997, according to Survey of Consumer Finances data. Figure 1 shows wealth trajectories by age group. Households with heads aged 55-64, 65-74, and 75 and older have seen strong wealth growth relative to GDP. Households with heads aged under 40 or 40-54 had the same or less wealth in 2021 relative to GDP than they did in 1997. Much of the increase has accrued to just the wealthiest 10% of households aged 55 and older.

If the experience of earlier generations is a guide, a substantial share of the wealth held by households aged 55 or older will be held until death—especially among the very wealthiest households. It will be bequeathed to future generations in a manner that maintains family dynasties and makes the distribution of resources among the recipient generation more unequal. In 2021, the top 10% of earners received 55% of aggregate inheritances, whereas the bottom two quintiles received less than 10%.

Despite the very unequal distribution of inheritance wealth, the wealth transfer tax system—consisting of the estate, gift, and generation-skipping taxes—has been all but eviscerated over the past 50 years, including the cuts to the estate tax enacted in 2017. The share of decedents whose estate faced estate taxes has fallen from 6.5% in 1972, to 2.1% in 1997. By 2021, only one out of every 1300 people who died faced any federal estate tax, less than 0.1%. Estate tax revenues have fallen commensurately, both as a share of all revenues and as a share of GDP.

The U.S. is an outlier in the OECD, where many more countries have inheritance taxes than estate taxes. Of the 36 OECD countries, only four (Denmark, South Korea, the United States, and the United Kingdom) tax estates. Another 20 tax inheritances, all according to some combination of the relationship to the decedent and the size of inheritance received (OECD 2021). There is significant heterogeneity across countries in the wealth level that is exempt from transfer taxation, but even the highest exemption level, $1.1 million in Italy in 2007-2018, is far below the estate tax exemption in the United States. Wealth transfer taxation makes up a very small proportion of aggregate tax revenues in all countries.

Reforms to the wealth transfer tax system could reduce economic inequality and boost federal revenues. Recent years have seen substantial increases in the dispersion of a variety of economic measures including income, wealth, and life expectancy, raising concerns ranging from equality of opportunity to the future of democracy1 (Bricker et al. 2016; Saez and Zucman 2018; Smith, Zidar, and Zwick 2022; Case and Deaton 2023). Wealth transfers contribute to rising inequality as transfers in the aggregate are large, are given by the most affluent households, and are received by already-wealthy heirs (Feiveson and Sabelhaus 2018). In addition, standard budget projections imply that federal debt will rise steadily and inexorably over the next 30 years, reducing the rate of economic growth (CBO 2024, Auerbach and Gale 2024). While some adjustments will be needed on the spending side, increases in federal revenues can and should be part of the solution as well. In light of high inequality, raising tax burdens on affluent households merits special consideration, especially because the taxation of capital income has declined in recent decades.

Comparisons of the estate tax and an inheritance tax have long been a staple of economic policy analysis (Batchelder 2007). Part of the difference between the two taxes is just that there appears to be less moral outrage against taxing a large gift that someone receives than taxing the accumulated wealth of a donor. A carefully designed, nationally representative survey by economist Stefanie Stantcheva (2021) at Harvard University reports that 61% of respondents believe it is unfair to tax estates of decedents who earned their own wealth. At the same time, only 32% of respondents thought it fair that children of wealthy parents have “access to better amenities.”

An inheritance and an estate tax might also differ due to important behavioral effects. For example, if the goal of wealth transfer taxation is to reduce inequality, an inheritance tax is more effective than an estate tax because it targets large individual transfers rather than large estates, which may be divided up among several family members under an inheritance tax (Becker 2005, Fahri and Werning 2010, Piketty and Saez 2013).

Finally, a key difference between the estate tax and an inheritance tax is that the latter would cover one of the biggest omissions in the income tax: income received by gift or bequest. Taxing all income, rather than allowing different treatment of various forms of household resources, is a desideratum of good tax policy. This cannot be achieved without taxing inheritances as income.

Despite repeated claims to the contrary, there is little evidence that wealth transfer taxes reduce capital accumulation or efficiency, and they certainly can be structured in ways that take account of the special considerations raised by small businesses or family farms.

Taxing previously unrealized capital gains at the death of the asset owner is sometimes referred to as treating death as a constructive realization event. How unrealized gains are addressed at death is closely related to the taxation of estates and inheritances. About 27% of all wealth and 41% of the wealth held by the top 1% takes the form of unrealized capital gains (Bricker et al. 2020). Under current law, no income tax is ever paid on the unrealized gains that occur over the owner’s lifetime if the owner holds the asset until death. Dubbed the “Angel of Death loophole,” this provision not only loses billions of dollars in revenue but also distorts behavior—individuals are incentivized to hold capital assets for their entire lifetime to avoid taxation when that capital might be more efficiently allocated elsewhere (Kinsley 1987).

This loophole can be addressed in two ways. First, under carryover basis at death, heirs would receive the asset with the original basis and, when they sold the asset, that they would be taxed on the full capital gain rather than (under current rules) just the appreciation that occurs after they receive the bequest. This approach was created in 1976 but then repealed in 1980 before it ever went into effect. The tax code currently uses this approach for assets transferred inter vivos but not for bequests. CBO (2022) estimates that implementing carryover basis at death starting in 2023 would raise an additional $2 billion in revenue in the first year and $156.4 billion over the subsequent 10 years. Several other countries—including Australia, Austria, Mexico and Norway—use carryover basis.

Alternatively, unrealized gains could be taxed at death. The best example of this in practice is Canada, which has no estate or inheritance tax but treats death as a realization event (Canada Revenue Agency 2024, OECD 2021). To address liquidity issues, Canada exempts capital gains on principal residences and provides a lifetime deduction of 1 million Canadian dollars for qualified farm and fishing property. Relative to carrying over the basis, taxing gains at death simplifies recordkeeping because individuals do not have to keep track of the original purchase price of inherited assets once the tax is paid. This advantage has not been enough to persuade other countries to adopt a tax on unrealized gains at death, however.

Recent work shows the revenue potential for taxing unrealized gains at death. Poterba and Weisbenner (2001) and Avery, Grodzicki, and Moore (2015) estimate that a tax on unrealized gains at death without any exemption level could raise more than the current estate tax system but that the tax burden would fall more on low-wealth households than under the estate tax. Avery, Grodzicki, and Moore (2015) and Gordon, Joulfaian, and Poterba (2016) estimate that if the exemption level were set at the 2010 level, when carry-over basis existed for a year, the revenue effects of taxing gains at death would be far lower than under the current estate tax. CBO (2011) comes to the same conclusion, estimating that, relative to a counterfactual where 2010 law was extended, reinstating the estate tax in 2011 raised an additional $550 billion over 10 years.

The comparisons between an estate and inheritance tax and taxation of unrealized gains at death are of current policy interest. In recent policy proposals by seven think tanks to address the long-term fiscal imbalance, all seven proposed some reform to the taxation of wealth transfers. These reforms ranged from a complete repeal of the estate and gift tax to the reversion of estate tax parameters to 2009 levels. Four of the proposals would repeal the step-up in basis of capital gains at death, and one proposal would replace the estate tax with an inheritance tax

Our work features both a new methodology to estimate inheritances and bequests and new results. Inheritances are directly observed in the SCF, and we use a method developed in an earlier paper (Feiveson and Sabelhaus 2019) to include both the inheritances that are reported as well as transfers of real property not captured in the SCF inheritance module. In addition, we construct estimates of bequests, based on estimates of household wealth from the SCF, estimates of differential mortality risk (with respect to income) from both the Social Security Administration and from work by Chetty et al. (2016), estimates of estate tax deductions from Statistics of Income data, and estimates of estate tax liability from our own calculators. There is nothing in the model or methodology that requires that (simulated) bequests closely approximate (respondent-reported) inheritances, but the two series are reasonably close in aggregate and have broadly similar size distribution, which we take as validation of the new methodology. We believe the methodology itself is a significant advance over previous work in that it allows comparisons of bequests with inheritances as a source of validation.

By linking bequests and inheritances we are able to analyze wealth transfer taxes assuming they are borne either by decedents or inheritors, unlike previous work in the literature. Thus, we can calculate the distributional effects assuming that the burden of any of the wealth transfer taxes falls on either decedents or heirs. In this paper, however, we analyze all policy options assuming that heirs bear the burden of the tax (following Batchelder 2007, Entin 2004, and Mankiw 2003). We rank households by Expanded Income (EI), a broad measure of income we have developed elsewhere. EI includes all major forms of cash and non-cash income, including estimates of unrealized capital gains, imputed income from owner-occupied housing, unreported business income, and inheritances received.

With this framework, we examine two stand-alone inheritance tax options—with a flat rate of 37% (the highest income tax rate in 2024) or 15% —and a third option, also stand-alone, to tax unrealized gains at death at a rate of 23.8% (the top rate on realized capital gains in 2024). By adjusting the exempt amounts, these options can raise the same amount of revenue as the estate tax under 2021 parameters. The exemptions are $2.81 million and $940,000 for the inheritance tax options and $2.22 million for the tax on unrealized gains. Figure 2 shows the distribution of tax burden by heir’s EI. As panels A and B show, the 37% inheritance tax is the most progressive of the options and is more progressive than the current estate tax, both because of the high rate and because of the large exemption amount that the high rate allows.

In alternative simulations, we return the estate tax to its 2001 parameters, adjusted for inflation. Remarkably, this version of the estate tax would have raised $145 billion—more than seven times as much revenue in 2021 as the actual estate tax did that year. As panels C and D show, both the estate tax and the 37% inheritance tax (with an exemption of $150,000) are quite progressive under this revenue target. Even when ranking heirs by inheritance-exclusive EI, neither impose an aggregate tax burden of more than 0.5% of EI on the bottom 90%. The 15% inheritance tax and the unrealized gains taxes are not capable of generating the same amount of revenue. We conclude that inheritance taxes can raise more revenue and be more progressive than the existing estate tax and that they have other advantages such as broadening the income tax base.

Over the next several decades, the U.S. will experience the largest flows of intergenerational transfers of wealth—in absolute and relative terms—in modern history. Taxing these flows appropriately and judiciously represents an opportunity to raise revenue, improve the vertical and horizontal equity of the tax system, bring about more equal opportunity, and reduce the role of family dynasties in the economy. The current transfer tax system, however, has been eviscerated in recent years and is ill-equipped to help society reach these goals. Despite repeated claims to the contrary, rebuilding a functional transfer tax system would not necessarily reduce capital accumulation or efficiency, and it certainly could be structured in a way that takes account of the special considerations raised by small businesses or family farms. These issues are of current interest as Congress looks for ways to close the fiscal gap. Our estimates show that thoughtful reforms to the wealth transfer tax system—including taxing unrealized capital gains at death and converting the estate tax to an inheritance tax—can raise revenue, increase progressivity, and improve the economy in other ways as well. These reforms would help impose an important backstop to collect taxes on accumulated income that is currently escaping tax free. Policymakers should take these estimates into account as they evaluate wealth transfer tax options as well as fiscal consolidation more generally.

The dollar held firm and near recent peaks on Tuesday, on the eve of an expected interest rate cut in the United States, as traders have ratcheted long-term rate assumptions higher.

The friendless euro , which is heading for a calendar-year drop of nearly 5% on the dollar, was not far from recent troughs and traded at $1.0509 in the Asia session with markets in a holding pattern ahead of the Fed decision.

The gap between U.S. and German ten-year yields is 216 basis points and has widened nearly 70 bps in three months .

The yen was steady at 154.06 per dollar, after six straight days of selling as markets have pared chances of a Japanese rate hike this week in favour of a move in January.

The Federal Reserve announces its interest rate decision on Wednesday and interest rate futures imply a 94% chance of a cut, even as services-sector activity leapt to a three-year high according to an S&P Global purchasing managers survey.

The Atlanta Fed's GDPNow indicator is running at 3.3% for the fourth quarter and the strength of the economy has been lifting yields and supporting the dollar as traders figure that the neutral setting for rates may be higher than first thought.

Fed officials' median long-run interest rate projection was 2.9% in September. Market pricing implies almost no chance of rates being that low by December next year and only a 30% of the Fed Funds rate falling below 3.75% by the end of 2025.

"I think the Fed will now be worried about a resurgence of inflation as an unknown policy mix and sticky prices create many paths for inflation to make a comeback in 2025," said Brent Donnelly, president at Spectra Markets.

"And therefore I think they will signal a very cautious approach going forward and lean on language that suggests concerns about inflation and a higher neutral rate."

Besides the Fed, the Bank of Japan, Bank of England and Norges Bank meet this week and are expected to stand pat on Thursday, while the Riksbank is seen cutting rates, perhaps by 50 basis points.

Sterling bounced on Monday as a survey of business activity pointed to price rises in Britain while labour data is due on Tuesday, with upward pressure on wages seen adding to the case for caution from the central bank. Sterling last bought $1.2680.

The Canadian dollar , squeezed by falling interest rates and the risk of U.S. tariffs, sank to a 4-1/2 year low on Monday as the sudden resignation of Finance Minister Chrystia Freeland put an unpopular government under more pressure.

The Australian and New Zealand dollars are pinned near the year's lows, though were spared any further selling on the latest weak Chinese economic indicators on Monday as markets bet that government spending will ride to the rescue.

The Aussie was last down 0.2% to $0.6356 and the kiwi slipped to $0.5769. New Zealand increased its bond issuance forecast for the next few years.

China's yuan was steady at 7.2845 per dollar, as dour expectations for Chinese economic growth pinned 10-year bond yields near record lows.

Chinese leaders agreed last week to raise the budget deficit to a record 4% of gross domestic product next year, while maintaining an economic growth target of around 5%, two people with knowledge of the matter told Reuters.

With a change of power pending, the administration intends to sell about €380 billion ($400 billion) in securities, according to a statement published Tuesday by the federal finance agency. That compares with €438.5 billion this year and a record volume of around €500 billion in 2023.

The agency plans to raise a total of €240 billion on the capital market and €126 billion on the money market, the statement said. The debt-issuance plan includes Green Federal securities of between €13 billion and €15 billion.

German bonds extended gains after the announcement, with the yield on 10-year debt falling three basis points to 2.22%.

With early elections taking place in February after the collapse of Chancellor Olaf Scholz’s three-way coalition, the issuance plan is subject to change after a new administration takes charge and adopts its 2025 budget. In the interim, government spending will be limited to legally necessary expenditures and already agreed projects.

Jörg Kukies took over as finance minster after Christian Lindner was fired by Scholz in November, when the ruling alliance failed to agree on a budget for 2025. Finance ministry officials don’t expect a regular budget until the second half of 2025 as talks to form a new governing coalition could take months.