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David Goodman, the nation's leading money manager, said the US Federal Reserve will keep raising rates as long as the economy keeps growing. Charles Schwab's $7 trillion empire built on low interest rates is beginning to crumble, and a few investment giants are losing out on Chinese pensions.

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Warning from BlackRock

A new study by BlackRock indicates that despite traders' bets that the Fed will not raise rates as a banking crisis unravels the world's markets, the Fed will keep raising interest rates.

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Inflation-linked bonds — securities that provide protection against rising prices — are the preferred investment of the world's largest money manager, who believes that markets are incorrect in thinking that rate cuts will occur soon as the economy begins to slump. As BlackRock Investment Institute strategists including Wei Li wrote in a client note, the Fed and its peers have made it clear that problems buffeting the banking sector will not halt their battle against inflation this time around.

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Schwab shows cracks

In spite of the fact that Charles Schwab has been a mainstay in the brokerage industry for half a century, it seems unlikely that the firm will be a victim of the US banking crisis that has already been ravaging the country since 2008. The company, which has been around for half a century, is not overexposed to crypto, as Silvergate is, nor is it overexposed to startups. 

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It is important to note that Schwab has a long way to go before the crisis fades away. Instead, investors are now starting to unearth risks hidden in plain sight as the crisis continues. There was an unrealized loss of $29 billion on the Westlake, Texas-based firm's balance sheet in 2016, due to the company's large amount of long-dated bonds. Meanwhile, higher interest rates are increasing the number of customers who are moving their cash out of certain Schwab accounts in an effort to boost the company's profits.

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Pensions in China

There is a growing trend in China towards ensuring that domestic banks and fund managers win a vast majority of new business in a market that may eventually grow to $2 trillion in value in the near future as Beijing ensures domestic banks and fund managers win the vast majority of new business. 

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Several foreign money managers have been excluded from pilot tests in 36 cities since China launched private pension plans last year, given their tiny asset bases. This has allowed banks like China Merchants Bank and Industrial & Commercial Bank of China to grab the majority of investors. Among the incentives banks are offering are cash incentives and free ibuprofen for new accounts as a way to cement their lead.

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Gains in stocks

Despite fears of broader contagion from the banking turmoil, European stocks advanced and the dollar traded lower as fears eased that it would spread. US futures declined.

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There were smaller gains in the Eurozone in benchmark stock indices in Spain and Hong Kong, while stocks in Japan and South Korea also climbed. Treasuries was down as well, along with German bunds and gilts. Traders were rehearsing expectations that central bank tightening is not over.