Investment Learning

  • September 10, 2024

Federal Reserve Chair Powell May Push for Rate Cut Amid Labor Market Concerns

According to Odaily, Federal Reserve Chair Jerome Powell is likely to seek consensus for at least a 25 basis point rate cut at the upcoming meeting later this month. However, due to recent weaknesses in the labor market, Powell and others may advocate for a more substantial rate reduction.Kathy Bostjancic, Senior Vice President and Chief Economist at Nationwide, mentioned in an email that Powell does not necessarily need unanimous agreement to initiate rate cuts at the forthcoming September meeting, but he may prefer to do so, especially for the first rate cut. Former Labor Department economist Betsey Stevenson noted on social media that consensus has traditionally been a way to prevent the politicization of the Federal Reserve. She added that if she were a member of the Federal Open Market Committee (FOMC), she would prioritize achieving consensus.Dan North, Senior Economist at Allianz Trade Americas, commented on the difficulty Powell might face in garnering consensus for a larger rate cut, stating that there would be significant opposition, which could appear unfavorable. Diane Swonk, Chief Economist at KPMG, expressed on social media that Powell might be willing to take this risk. Swonk wrote that Powell is more concerned about the labor market than his colleagues and aims for a soft landing. The question remains whether he will push for a 50 basis point rate cut and how much opposition he is willing to face to achieve this goal.

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  • September 10, 2024

SEC Maintains Stance On Crypto Custody Rule

According to Cointelegraph, the United States Securities and Exchange Commission (SEC) has reaffirmed its position on a rule that would limit crypto custody services for regulated financial firms. In a speech on September 9 at a banking conference, SEC chief accountant Paul Munter discussed the agency’s regulatory stance on accounting for crypto assets, particularly focusing on SEC Staff Accounting Bulletin No. 121 (SAB 121) and its applications.Munter stated that the SEC staff’s views on SAB 121 remain unchanged. He emphasized that, in the absence of specific mitigating facts and circumstances, the staff believes an entity should record a liability on its balance sheet to reflect its obligation to safeguard crypto assets held for others. This stance was echoed by ETF Store President Nate Geraci, who noted in a September 10 post that the SEC appears firm on SAB 121, suggesting that the agency does not want to allow regulated financial institutions to custody crypto.Introduced in March 2022, SAB 121 outlines the SEC’s accounting guidelines for institutions looking to custody crypto assets. The rule has been contentious in political circles as it effectively prevents banks and regulated financial institutions from custodying crypto assets on behalf of clients. The SEC maintains that entities with such safeguarding arrangements should record a liability on their balance sheets for digital assets.Munter acknowledged that the SEC had reviewed various accounting scenarios involving blockchain and crypto assets, noting that not all arrangements fit the proposed guidelines set out in SAB 121. For instance, bank-holding companies that safeguard crypto with bankruptcy protection may not need to record a liability on their balance sheets. Additionally, broker-dealers that facilitate crypto transactions but do not control the cryptographic keys may also not be required to record liabilities.Meanwhile, SEC Commissioner Hester Peirce has been vocally against the rule. She expressed her continued concern about the substance and process of SAB 121 in a recent post. The US House of Representatives voted to overturn the controversial SEC guidance in May, but President Biden vetoed the repeal the following month.

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  • September 10, 2024

Swiss Crypto Bank Amina Seeks VASP License in Austria

According to BlockBeats, on September 10, Franz Bergmüller, CEO of Swiss-based crypto bank Amina, announced that the company is applying for a Virtual Asset Service Provider (VASP) license from the Austrian Financial Market Authority. Bergmüller emphasized that before Amina can operate or generate revenue in Austria, a new team must be established.Bergmüller stated, 'As a bank, we are approaching breakeven, but we have deliberately decided to prioritize investment growth at this stage.' Amina, formerly known as SEBA Bank, was headquartered in Zug, Switzerland, in April 2022.

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  • September 10, 2024

SEC Imposes Record $4.7 Billion in Crypto Enforcement Actions in 2024

According to Cointelegraph, the United States Securities and Exchange Commission (SEC) has imposed nearly $4.7 billion in enforcement actions against cryptocurrency firms and executives in 2024, marking an over 3,000% increase from the previous year. This significant rise is largely attributed to a $4.47 billion settlement with Terraform Labs and its former CEO Do Kwon in June, which is the SEC's largest enforcement action to date.The SEC's 11 enforcement actions in 2024 have resulted in a 3,018% increase from the $150.3 million in fines collected in 2023, despite having 19 fewer actions against crypto firms. The total monetary enforcement amount this year surpasses the combined total from 2013 to 2023. The fines include forfeiture amounts, disgorgement, civil penalties, settlement amounts, and prejudgment interest, counted from the initiation of the enforcement action.This year's increase in fines indicates a strategic shift by the SEC towards targeting more influential cases. The report suggests that the SEC is focusing on fewer but larger fines to make high-impact enforcement actions that set precedents for the entire industry. In 2019, the SEC imposed a $1.24 billion action against social messaging network Telegram, which included $18.5 million in civil penalties and $1.2 billion in disgorgement paid back to investors. This case significantly contributed to the average fine rising nearly 2,000% year-on-year to over $70 million in 2019.From 2019 to 2023, the average fine ranged between $5 million and $35.2 million, but the Terraform Labs case has brought the 2024 average fine above $420 million. Other notable enforcement actions include those against GTV Media Group, Ripple Labs, and fraudsters John and Tina Barksdale, each exceeding $100 million. Despite these large fines, 46% of the fines imposed since 2020 have been below $1 million, while 30% fell between the $1 million and $10 million range.

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  • September 9, 2024

Patience 'could be a virtue' in current market: Strategist

After last week's tech-heavy sell-off, many investors took the opportunity to buy the dip. Slatestone Wealth chief market strategist Kenny Polcari joins Catalysts to discuss the current state of the equity market (^DJI, ^IXIC, ^GSPC) and how investors can best position their portfolios heading into 2025. "I think you have to take a broader look at where we think the market's going over the next six or seven weeks, just because we're in that seasonally weak time in the market, August through October. I think that the August lows of 5,116 [for the S&P 500] are likely going to be tested again, which means that as a long-term investor, you just need to be a little bit cautious," Polcari tells Yahoo Finance. He points to Nvidia (NVDA) as a buying opportunity since shares are down about 25% since its June high. He does not expect the stock to rally back up to its high, but rather, he sees it as "on sale" for long-term investors. "Now, if you're worried about further downside for the broader market and you think it's going to get dragged with it, well then just sit back a little bit and wait. I think, you know, for most of the clients, that's the conversation I'm having, just about being patient, because patience, in this case, could be a virtue," he adds. Polcari argues, "We're at the very infancy stages of AI. I think Nvidia sits at the nexus of this tech revolution that's happening." He expects more volatility in the stock as the AI race continues. However, in the long term, he views Nvidia as "a core name and a core portfolio." As the consumer discretionary sector (XLY) leads the market's charge for a rebound in Tuesday's trading session, Polcari is more bullish on consumer staples (XLP): "I think we're already seeing consumers run into problems. We're seeing people live on credit cards, and discretionary is just that — it's discretionary spending. Those are wants versus needs. So I would be cautious on that sector at the moment, and I'd be more focused on the staples sector. While it's boring... I think it plays nicely in an environment where you think it's going to be a little bit of a pressure on the broader market and on the consumer." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl

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  • September 9, 2024

Goldman Sachs analyst on what Fed rate cuts mean for Big Tech

Goldman Sachs managing director Kash Rangan sits down with Brian Sozzi and Madison Mills at the Goldman Sachs 2024 Communacopia & Technology Conference to discuss the top themes in tech and the sector's overall outlook. Rangan argues that there are three important things for software companies at this juncture: interest rates, the election, and generative AI. He notes that the Federal Reserve will likely initiate a 25-basis-point cut at its September meeting, and will likely total between 325 and 350 basis points by the end of its easing cycle. Easing rates will bring down the cost of capital for businesses, and will serve as a "tailwind for existing customers to expand their deployments." "With every economic cycle, as we come out of an economic cycle, coincidentally, there's always a new tech cycle that also goes with it," Rangan tells Yahoo Finance. He explains that after the 2008 recession, tech companies came out with cloud products, which eventually became "the catalyzing force for the tech industry." He notes that for real growth, there needs to be innovation alongside economic improvement: "It's not as easy as saying lower rates are good. I mean, they're kind of the first lift. It's the primer. The next thing, it has to be followed by real innovation." Rangan adds that after the 2024 presidential election in November, there will be less uncertainty: "It's not important to nail what the new policies are going to be, but it's more important to have less uncertainty and more certainty about what those policies are," he says, which indicates companies may move forward with projects it put on the backburner during peak uncertainty. Finally, Rangan believes generative AI will be a long-term theme for the tech sector. "I am very bullish how it unfolds eventually in the long term. But if you're looking for proof points today, there's a scattering of proof points, but not enough to get conviction that this is going to be a thing in '25 or '26." Catch more Yahoo Finance coverage and interviews from the Goldman Sachs Communacopia & Technology Conference. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl

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  • September 9, 2024

North Carolina Bans Federal Reserve-Issued CBDC

According to Cointelegraph, North Carolina’s General Assembly has passed a bill prohibiting the state from implementing a United States Federal Reserve-issued central bank digital currency (CBDC). The Senate overrode a veto by Governor Roy Cooper, with a 27-17 vote on September 9, narrowly surpassing the 60% majority needed to pass House Bill 690 into law.The bill forbids North Carolina from accepting CBDCs as a form of payment and prohibits participation in future CBDC tests conducted by any Federal Reserve branch. This legislative move follows a 73-41 vote in the House to overturn Cooper’s veto in early August. Cooper’s initial veto on July 5 came after a lopsided 109-4 vote in the House and a 39-5 vote in the Senate a month earlier. The latest Senate vote saw 12 Democrats who initially supported the bill flipping to support Cooper’s veto, resulting in no Senate Democrats voting to pass the bill this time.Mitchell Askew, head analyst at Blockware Solutions, expressed his amazement at seeing CBDCs officially banned in his native state but was displeased with the Senate vote outcome. He suggested that the 12 Democrats flipping their position confirmed his hypothesis that the veto was due to partisan politics. Dan Spuller, head of industry affairs at the Blockchain Association, stated in a September 9 post that Cooper’s veto missed an opportunity to send a united message against CBDCs to the Federal Reserve.Governor Cooper’s office did not immediately respond to a request for comment on the bill’s passing. While the Federal Reserve has researched CBDCs, Chair Jerome Powell stated on July 31 that there is no significant progress on a US-issued CBDC. At a federal Senate Banking Committee hearing in March, Powell mentioned that the US was far from recommending or adopting a central bank digital currency in any form. Despite these assurances, the US House passed the CBDC Anti-Surveillance State Act in May, and a companion bill has been introduced to the Senate by Senator Ted Cruz.

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