Skip to main content
Category

Uncategorized

Bitcoin Has Now Recovered All Its Losses Since Ftx Collapsed

By Uncategorized

The bitcoin price had held steady above $21,000 for the last two days, bringing it back above the price it was when Sam Bankman-Fried’s crypto exchange, FTX, began its decline toward bankruptcy. The bitcoin price has remained steady above $21,000 since Monday, well above its Nov. 2 price of $20,283. Bitcoin’s price has risen more than 22% in the last seven days, according to data published by CoinMarketCap. The bitcoin price fell by that same amount in less than a day, between Nov. 7 and Nov. 8, as investors tried to assess the impact of a potential FTX collapse and the prospects of a Binance-backed FTX rescue. It dipped below $16,000 several times in the following weeks.
CoinDesk first reported on irregularities at FTX’s sister hedge fund, Alameda Research, on November 2. Billions of dollars worth of cryptocurrencies began to flow out of FTX in a few days. A potential rescue deal with ChangPeng Zhao’s Binance fell apart on November 8, and FTX and Alameda declared bankruptcy on November 11. Over that period, bitcoin, long the most prominent and well-capitalized cryptocurrency, became a vessel for investor concern. The surge in price coincides with deep uncertainty in the broader industry. On Thursday, the Securities and Exchange Commission charged two crypto companies, Genesis Trading and Gemini, with offering and selling unregistered securities. There have been multiple rounds of layoffs at crypto exchanges, including Coinbase and Crypto.com. In recent months, bitcoin has experienced a substantial rally that has outpaced the gains made by other cryptocurrencies, according to data from CoinMarketCap. During the past seven days, ether prices have increased by more than 18%. Binance’s exchange token, BNB, and ripple prices have risen by 10% and over 11%, respectively. But ether competitor Solana has seen its price rise by over 44% in the last seven days, propelled partly by the minting of a dog-based non-fungible token, Bonk Inu, on Solana’s blockchain.

FTX has recovered $5 billion worth of ‘liquid’ assets, lawyers say

By Uncategorized

FTX has recovered over $5 billion in liquid assets, including cash and digital assets, according to attorneys representing FTX in Delaware bankruptcy court. The news comes after federal prosecutors announced plans to seize at least $500 million worth of FTX-connected assets as part of their ongoing prosecution of FTX co-founder Sam Bankman-Fried. It will be a welcome boon to FTX customers following the collapse of the crypto exchange in November. FTX’s new CEO, John J. Ray, previously attested that at least $8 billion of customer assets were unaccounted for in the “worst” case of corporate control he’d ever seen.
The $5 billion figure does not include any illiquid cryptocurrency assets, according to FTX attorney Adam Landis. He said the company’s holdings are so large that selling them would substantially affect the market, driving down their value. FTX’s collapse was attributed, among other things, to a failure to mark illiquid assets to market correctly. FTX executives, including Bankman-Fried and Alameda Research CEO Caroline Ellison, borrowed against the value of the FTX-issued token FTT. Alameda controlled the vast majority of FTT coins circulating, similar to a publicly traded companies float, and could not have liquidated their position at full book value.

Fed’s Esther George sees rates staying high at least into 2024

By Uncategorized

Esther George, president of the Kansas City Federal Reserve, is urging her colleagues to remain aggressive in their efforts to deal with runaway inflation as she nears the end of her 40-year central banking career. She stated on Thursday that the Fed should raise its benchmark borrowing rate to above 5% and maintain it there until substantial evidence that prices are stabilizing. “Holding that until we get evidence that inflation is actually coming down is really the message we’re trying to put out there,” she told CNBC’s Steve Liesman during a “Squawk Box” interview. “I’ll be over 5%, and I see staying there for some time, again, until we get the signal that inflation is really convincingly starting to fall back toward our 2% goal.”
At the December Fed meeting, the rate-setting Federal Open Market Committee voted to raise the fed funds rate half a percentage point to a range of 4.25%-4.5%. Minutes of the meeting released on Wednesday indicated no prospect of any rate cuts in 2023. Members expressed concern that the public might mistakenly perceive a reduction in rate hikes as a softening of the policy after a string of four straight three-quarter point hikes. Asked whether her view is that the fund’s rate should hold above 5% into 2024, George replied, “It is for me.” That statement comes a day after Minneapolis Fed President Neel Kashkari wrote that he thinks the funds’ rate should rise to 5.4% and could go even higher if inflation doesn’t come down.

Wall Street’s biggest Tesla bull still sees the stock rebounding 122% from current levels

By Uncategorized

Despite recent turmoil and concern over Elon Musk’s priorities, Morgan Stanley remains bullish on Tesla stock. In a client note, longtime Tesla advocate Adam Jonas cut his price target on the stock to $250 from $330, his new forecast calls for a 122% upside from Wednesday’s close. Tesla will extend its lead over electric-vehicle competitors, and the Inflation Reduction Act will benefit the company. Those are the reason for Jonas’ optimistic outlook.
When addressing Tesla’s 65% drop in 2022, Jonas avoided blaming CEO Elon Musk’s obsession with Twitter, something that a growing chorus of critics has pointed out as a major loss driver. He attributed it to supply outpacing demand for the first time since the COVID-19 pandemic and assorted “technical factors.” “The last two years of demand exceeding supply will be substantially inverted to supply exceeding demand,” Jonas wrote. “Within this environment, we believe players that are self-funded (non-reliant on external capital funding) with demonstrated scale and cost leadership throughout the value chain (from manufacturing to up-stream material supply) can be relative winners.” He continued: “Between a worsening macro backdrop, record-high unfavorability, and increasing competition, there are hurdles to overcome. Yet we do believe that in the face of all these pressures, Tesla will widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”

Goldman Sachs is planning to cut up to 8% of its employees in January.

By Uncategorized

According to a person with knowledge of the situation, Goldman Sachs, the storied investment bank, plans on cutting up to 8% of its employees as it girds for a tougher environment next year. The layoffs will impact every division of the bank and will likely happen in January, according to the person who declined to be identified as speaking about personnel decisions. That’s ahead of an upcoming conference for Goldman shareholders in which management is expected to present performance targets. The New York-based investment bank typically pays bonuses in January, and it’s possible the layoffs could be a way to preserve bonus dollars for remaining employees.

Wall Street is adjusting to a lower revenue environment this year after a two-year boom in deals and hiring sputtered out. Goldman was the first major firm to cut jobs in September, a relatively shallow culling that only impacted a few hundred employees. That was followed by similarly modest cuts at Citigroup and Barclays, though Morgan Stanley cut about 1600 workers last week, CNBC was the first to report. But Goldman’s upcoming decision is the most significant round of cuts on Wall Street. Michael Karp, a Wall Street recruiter, believes that other firms may be forced to follow suit in light of the ongoing subdued capital markets environment. “Many firms will have to go back to the drawing board and right-size their organizations, it’s not just Goldman,” said Karp, CEO of the Options Group. “Firms over-hired, and now they will have to over-fire, too.” The bank’s planning is ongoing through next month, and the round could be smaller than 8% when it is finalized, especially if people voluntarily leave, the person with knowledge of the situation added. But that means as many as about 4,000 employees could be impacted, as reported by Semafor earlier Friday. Those considered underperformers or working in consumer businesses that the bank is now de-emphasizing are at most risk of being terminated.

Retail sales fell 0.6% in November as consumers feel the pressure from inflation

By Uncategorized

Despite a muted level of inflation, consumers pulled back on their spending in November, according to data released Thursday by the Commerce Department. Retail sales declined by 0.6% for the month, exceeding the Dow Jones estimate of a 0.3% decline. The number is not adjusted for inflation as gauged by the Labor Department’s consumer price index, which increased by 0.1% in November and was below expectations. Measures that exclude autos and both autos and gas sales showed 0.2% declines. Stocks fell sharply following a mostly disappointing round of economic data released Thursday morning. The Dow Jones Industrial Average was off nearly 500 points in early trading.
The pullback was widespread across categories. Furniture and home furnishings stores reported a decrease of 2.6%, building materials, and garden centers reported a decrease of 2.5%, and motor vehicle and parts dealers posted a decrease of 2.3%. Even with declining gas prices, service station sales were down just 0.1%. Online sales also decreased, falling 0.9%, while bars and restaurants increased 0.9%, and food and beverage stores rose 0.8%. On a year-over-year basis, retail sales increased by 6.5%, compared with a CPI inflation rate of 7.1%. “With weak global growth and the strong dollar compounding the domestic drag from higher interest rates, we suspect this weakness is a sign of things to come,” Andrew Hunter, senior U.S. economist at Capital Economics, wrote of the retail report.

Sam Bankman-Fried’s Robinhood stake is tied up in FTX bankruptcy proceedings, CEO Tenev says

By Uncategorized

On Tuesday, Robinhood Markets CEO Vlad Tenev said he did not know what the disgraced former CEO of FTX, Sam Bankman-Fried, intends to do with his 7.6% stake in his trading app. “I’m not surprised that it’s one of the more valuable assets they have on their balance sheet because it is public company’s stock,” Tenev said on CNBC’s “Squawk Box.” “We don’t have a lot of information that you guys don’t have. We’re just watching this unfold and … it’s going to be locked up in bankruptcy proceedings, most likely for some time. And so we’re just kind of seeing how that plays out.”
In May, Bankman-Fried took a 7.6% stake in Robinhood worth $648 million in the belief that the shares “represent an attractive investment.” As FTX spiraled into bankruptcy, Bankman-Fried’s Robinhood stake became the biggest liquid line item on his balance sheet that he could potentially sell. Shares of Robinhood have fallen more than 45% this year to under $10 apiece amid shrinking revenue and declining user numbers. Tenev said he sees a pattern of foreign companies creating U.S. subsidiaries, which haven’t been scrutinized to the same degree. FTX became a Bahamas entity in July 2021. “I think that’s something that regulators should take a look at and make sure that the scrutiny is the same if not higher, if you’re offshore and operating a business that has subsidiaries that serve American customers,” Tenev said. The Robinhood CEO said he’s still bullish on cryptocurrencies despite the FTX collapse. “We still see opportunities with crypto. I think in particular customers have been looking for regulated safer options, particularly customers in the U.S.,” Tenev said. The trading app announced Tuesday it’s rolling out retirement accounts to its users with a 1% contribution match.

Key inflation measure that the Fed follows rose 0.2% in October, less than expected

By Uncategorized

On Thursday, the Commerce Department reported that inflation grew roughly in line with estimates in October, suggesting that price increases might stabilize, at least for the time being. The core personal consumption expenditures price index, which excludes food and energy and is favored by the Federal Reserve, rose 0.2% for the month and was up 5% from a year ago. The monthly increase was less than the 0.3% estimate by Dow Jones, while the annual growth was in line with estimates. The gains reflect a slowdown from September, which saw a 0.5% monthly increase and a 5.2% annual increase. Including food and energy, headline PCE was up 0.3% on the month and 6% every year. The monthly increase was the same as in September, while the annual gain was a step down from the 6.3% pace.
Furthermore, the department reported that personal income increased by 0.7% for the month, clearly exceeding the 0.4% estimate, and spending increased by 0.8%, as expected. In another key report, a widely followed gauge of manufacturing activity posted its lowest reading for November in two and a half years. The ISM Manufacturing Index registered a reading of 49%, representing the level of companies reporting growth. The reading was 1.2 percentage points below October and the lowest since May 2020, when the Covid pandemic first began. Declines in order backlogs and imports were the biggest drags on the index. The closely watched prices index was off 3.6 points to 43%, indicating inflation is abating, while the employment index also receded, down 1.6 points to 48.4% in contraction territory. Markets were mostly lower following the morning’s data, with the Dow Jones Industrial Average down more than 250 points in early trading while the S&P 500 and Nasdaq Composite posted smaller losses.

FTX says it could have over 1 million creditors in new bankruptcy filing

By Uncategorized

According to a new bankruptcy filing, troubled cryptocurrency exchange FTX may have more than 1 million creditors hinting at the huge impact of its collapse on crypto traders. Last week, when it filed for Chapter 11 bankruptcy protection, FTX showed that it had more than 100,000 creditors with claims in the case. But in an updated filing Tuesday, lawyers for the company said: “In fact, there could be more than one million creditors in these Chapter 11 Cases.” Typically in such cases, debtors are required to provide a list of the names and addresses of the top 20 unsecured creditors, the lawyers said. However, given the scale of its debts, the group instead intends to file a list of the 50 largest creditors on or before Friday. According to the filing, five new independent directors have been appointed at each of FTX’s main parent companies, including the former Delaware district judge, Joseph J. Farnan, who will serve as a lead independent director.

 

Over the past 72 hours, FTX has been in contact with “dozens” of U.S. and overseas regulators, the company’s lawyers wrote. These include the U.S. Attorney’s Office, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. This year has seen a spate of crypto firms, including Celsius and Voyager Digital, fail as they contend with a slump in digital asset prices and ensuing liquidity issues. In earlier bankruptcy cases, traders on these platforms have been designated “unsecured creditors,” meaning they’ll likely be at the back of a long queue of entities seeking repayment, from suppliers to employees.

Goldman Sachs CEO says he expects a ‘reopening’ in capital markets next year

By Uncategorized

David Solomon, CEO of Goldman Sachs, said Thursday that he expects capital markets to recover soon. “I think what we’re going through at the moment is a reset of valuation expectations,” he said in an interview with CNBC’s Jim Cramer. “In the coming months, we’ll see a little reopening in the capital markets when people get used to this valuation adjustment.” During the early stages of the pandemic, low-interest rates enabled newly formed companies to thrive and witness their valuations rise rapidly. Still, this year, the market for initial public offerings collapsed. U.S.-listed companies raised $4.8 billion in proceeds during the first half of 2022 compared to $155 billion in 2021, according to EY and Dealogic.

Several factors contributed to the financial meltdown, including soaring inflation, increasing interest rates, Russia’s invasion of Ukraine, and Covid lockdowns, which led investors to shift from risky, high-growth investments to safer, defense stocks While those headwinds continue to persist, Solomon says the market is adjusting to its new reality. “There’s always a backlog of companies that need to go public,” he said. “We’re three quarters into a more difficult capital markets environment. History would tell you, three, four, five, six quarters, you get that readjustment.”