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Tag: Advice

  • 5 Detrimental Things Parents Should Not Say to Their Adult Children

    5 Detrimental Things Parents Should Not Say to Their Adult Children

    As sad as it can be, our parents can say really hurtful things to us. Since our parents are also sinful, fallen human beings, they are capable of getting caught up in frustration, anger, and selfishness, saying things that can damage our hearts and perspectives on who we are. Whether intentional or not, many things can be detrimental to us, even as adults. If you are a parent or soon-to-be parent, it is important to know what not to say. 

    1. “You’re Not Good Enough”

    One detrimental thing parents shouldn’t ever say to their adult children is, “You’re not good enough.” This simple statement can cause a myriad of negative emotions to storm out through our hearts. While this statement shouldn’t be said by anyone to anyone, it is commonly spoken to adult children by their parents. Maybe a parent’s child didn’t finish college, had a high school pregnancy, or got mixed up in drugs. In the parent’s eyes, their kid made too many mistakes, caused too much hurt, and will never be good enough.

    While this is sad, it is all too common. If your parents have told you you’re not good enough, know they are wrong. You are good enough, and you are dearly loved by the Creator of the world. Your parents have no right telling you something so terrible because you are, in fact, enough because of Jesus. Everyone is enough, and everyone is loved by the Lord. Even if our parents can’t see it, that doesn’t mean it’s not true.

    You are good enough just as you are. Despite your past, you are enough because of Jesus. Many people will try to keep us in a state of self-hate with the mean things they say to us, but we don’t have to listen to them. Often, they are speaking from a place of unresolved hurt and bitterness. I understand it is hurtful when parents say mean things to you, but don’t let it dictate how you see yourself. Even when our fathers and mothers forsake us, the Lord will receive us (Psalm 27:10). 

    If you are a parent and you have told your child they are not good enough, know that this may cause a permanent rift between you and your child. You need to apologize and seek out ways to help your child know they are good enough. However, it might be that your child will no longer trust you with their feelings and not listen to what you have to say because you have hurt them. If this is the case, allow your child to mourn the hurt you have inflicted, give them time, and continue to share the love you have for them. 

    We live in flawed bodies, which means trust, once broken, can take time, patience, and grace to restore. 

    2. “I Wish You Were More Like Your Sister/Brother”

    A third detrimental thing parents should not say to their adult children is, “I wish you were more like your sister/brother.” While my mother never directly told me she wished I was like my sisters, the message was conveyed by other means. Remarks such as “Why can’t you do as well as your sister?” or “Why can’t you pay attention like your sister?” were common in my life. By always being compared to my two older sisters, I was never going to win.

    Since this happened, it made me hate who I was. Deep inside, I felt as though I needed to be more like my sisters, and then my mom would like me. Turns out, I can’t be like my sisters because they are their own unique individuals, and I’m my own unique me. I’m sorry my mother couldn’t understand this, but her remarks about wanting me to be more like my sisters caused self-hatred to develop in my soul. Even as adults, we can be hurt by these words.

    If you have been told to be more like your sister or brother, know that you’re not alone. My heart goes out to you, and I want you to know that you are uniquely you for a reason. There is no one like you on the entire planet. God doesn’t make mistakes, and He certainly didn’t make a mistake when He created you. He loves you, and there are many others who love you too. 

    3. “Why Aren’t You Married Yet?”

    A third detrimental thing parents shouldn’t say to their adult children is, “Why aren’t you married yet?” Another harmful question is, “So when are you going to have my grandchildren?” These can be hurtful remarks for many reasons. It could be your child isn’t ready for marriage, doesn’t want to get married, wants to get married but hasn’t found anyone yet, or recently went through a bad breakup. If your child is married but hasn’t had children, consider the financial, mental, emotional, and even biological roadblocks that might hinder or slow down this process. Since a myriad of things could cause why your adult child isn’t married or starting a family, these aren’t things that need to be commented on. Instead of making comments such as these, ask your child about their weekend, an upcoming vacation, or a book they’ve been reading.

    The very question of “Why aren’t you married yet?” is insensitive and hurtful. If your parents have asked you that question and you felt deeply hurt, know that you’re not alone. You might have felt hurt for one of the reasons I listed above or maybe you felt hurt because of another reason. Know that your reason is valid and that your parents shouldn’t have asked you this question. Whether you want to get married or not, this can be a hurtful question that can leave you wondering if your parents even care about your feelings. 

    4. “You Look Terrible! Maybe You Should Lose Some Weight”

    A fourth detrimental thing parents shouldn’t say to their adult children is, “You look terrible! You should lose weight/gain weight/get out more/etc.!” This is probably one of the worst things you can say to your adult children because it implies that their physical appearance weighs heavier than other aspects of their life. Whether your child lost or gained weight, don’t make imperative statements regarding how they look. 

    Instead, consider asking questions about how your child is feeling and doing regarding work, relationships, and church. Often, how we treat our bodies reflects how our souls feel. As a parent, you should understand your child and give them the same respect you would give anyone else, placing their spiritual, mental, and emotional well-being above their physical appearance. Would you want someone commenting if you had weight gain? Lost too much weight? Or looked like you hadn’t slept in weeks? Most of us would say no. As the old saying goes, “think before you speak,” especially regarding your adult children.  

    5. “I Regret You”

    A fifth detrimental thing parents shouldn’t say to their adult children is, “I regret you.” This is extremely hurtful on many irreecoverable levels. Often, this statement might be exchanged in the heat of an argument when people are saying things they truly don’t mean. If you are a parent to adult children, remember to always watch your words, even when you are angry—even when you have a right to be angry. Even a careless word spoken in anger can do horrible damage to your child. Watch your words when you are angry, and if you are upset, give yourself some time to simmer down before starting a conversation on the same topic.

    Children, adults or youth, don’t want to hear that their parents regret them. That’s almost the same as saying, “I hate you.” It is best to watch our words and refrain from saying anything that can be hurtful. If your parents have told you they regret you, rest in knowing that your Heavenly Father loves you, and He never regrets you. He wants to have a relationship with you and surround you with His love. If you are a parent who has told your child you regret them, understand that they might not be open to restarting a relationship with you. It might be that they permanently separate themselves from you. You can try to open the conversation up again. However, you must know that your child may not want to speak to you anymore because of the hurt and pain. 

    Respect their healing process. Love them through prayer; understand them from a healthy distance. Through God’s grace, ask for a chance at restoration. Our God is truly a God of second chances. 

    Photo Credit: ©Getty Images/evgenyatamanenko

    Vivian Bricker loves Jesus, studying the Word of God, and helping others in their walk with Christ. She has earned a Bachelor of Arts and Master’s degree in Christian Ministry with a deep academic emphasis in theology. Her favorite things to do are spending time with her family and friends, reading, and spending time outside. When she is not writing, she is embarking on other adventures.

    Vivian Bricker

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  • How to Become a Trusted Advisor to Clients and Drive Faster Decision-Making | Entrepreneur

    How to Become a Trusted Advisor to Clients and Drive Faster Decision-Making | Entrepreneur

    Opinions expressed by Entrepreneur contributors are their own.

    Attention spans aren’t what they used to be, ranging from 20 minutes to just two seconds — which was just enough time to read that sentence. Throw in the paradox of choice, and it’s no wonder there’s so much indecision going on. One of my favorite pieces of research on this topic is the Jam Experiment. Shoppers were presented with a display of 24 different types of jams, which seemed like a great way to cater to everyone’s taste buds. But when presented with a display of only six options, shoppers were 10 times more likely to buy jam. The abundance of options attracted attention but stifled decision-making.

    That’s not to say businesses should eliminate choice. That, too, can pose a problem, as customers often research before making decisions. They know other options exist, so quickly removing so many options can leave them questioning your recommendations. Generally speaking, the businesses that win are those with teams playing more advisory roles in the relationship — the relationship isn’t about pushing a sale but enabling decision-making.

    As a customer, I certainly prefer to engage in conversations about my challenges and goals but also want someone to advise me, not sell me on some product or service. Whether B2B or B2C, customers want businesses to inform them on which direction to consider and how to get there. This can only happen once you’ve built trust based on humility, empathy and kindness. It’s all about becoming a clear expert at what you do.

    Of course, there’s a learning curve. You must first become a student of your own industry — or at least advise from an informed position. Allowing yourself to be a sponge as you’re exposed to everything associated with the industry will better equip you to share your educated point of view. Clients are looking for advisors, and the following can help you help them make better decisions:

    Related: 3 Simple Ways to Use Trust and Transparency to Foster Long-Term Success for Your Business

    1. Choose to believe you are an expert

    Most people have more expertise than they give themselves credit for, no matter their role. Let’s say you’re a project manager. That role has exposed you to different projects for different departments and stakeholders for various companies or industries. That experience provides a unique perspective for clients.

    If you need reassurance, write down what you’ve worked on over the years (tasks, projects, clients and so on). Think about the hours you’ve spent working on proposals, talking with clients, planning executions and managing projects. Seeing what you know will increase your confidence to advise and believe in what you have to offer. And that confidence will improve your job performance overall. In fact, 98% of workers surveyed by Indeed said they performed better when they felt confident. While clients might have the last say, that doesn’t take away from your expertise. Start recognizing — and being proud of — what you bring to the table.

    2. Become a genuine, active listener

    If you want to take on a more advisory role, you need to understand the client’s situation before making recommendations. That requires active listening. Consider the example of when I started running and went to the store to get a pair of running shoes. The choices felt endless. The sales associate could read the uncertainty on my face, so he approached me with one question: “New to running?” I nodded, and he posed a series of additional questions — some of which would have never crossed my mind. He even asked me to jog to see how my foot struck the ground. All that information helped him narrow down my selection to three running shoes.

    What he did applies to interactions you might have with a client. Not only are you listening to the client’s answers, but you’re also watching how they respond to what you’re asking. Research has shown that communication is 55% nonverbal, 38% vocal and only 7% words. So, ask questions, look at the client’s reactions, listen to their answers and follow up with more questions. Then, when you make a recommendation, the client knows it’s based on a true understanding of their situation.

    Related: The Art of Active Listening Requires Leaving Your Ego Behind

    3. Don’t be afraid to make recommendations

    Making recommendations to clients is one thing. Telling them what they should do is another, as it can force them into a decision. This isn’t to say your background doesn’t bring an understanding of what’ll best suit their needs. But, as an advisor, you want to keep clients in the driver’s seat. So, offer multiple options to choose from. You can do this in the form of a question, such as “What about X?” or an affirmative, such as “Perhaps we could try Y.”

    If they ask for your opinion, don’t shy away from giving it. That right there shows how well you’ve established yourself as an advisor. Tell them what you would do if you were in their position. If necessary, steer them in the best direction, proposing it as a suggestion and offering your input on the value of that option. Just make sure the final decision is in their hands.

    Related: Use These 5 Hacks to Instantly Build Rapport With Your Clients

    4. Outline a plan

    While getting a contract signed might be the final step in the process for you, it’s the first step for your client. I’m a big fan of high-level timelines, as it puts some shape and objectivity around critical steps. But don’t make the mistake of putting a signed contract at the end of the timeline. Share some key steps that will happen after project approval, so the client is aware that those steps can’t occur until an agreement or proposal is approved.

    A timeline such as this takes the pressure off you to “close the deal” and puts more of the onus on the client to get approval, so you can get on with the initiative, and the client can start seeing value.

    Taking on an advisory role puts the client front of mind, where they should be. It comes down to remembering your role in the relationship. Use your background to provide options, letting your recommendations guide the direction to making better — and faster — decisions.

    Bob Marsh

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  • What’s your retirement ‘number’? How to figure it out.

    What’s your retirement ‘number’? How to figure it out.

    There’s a lot of numbers to weigh when it comes to retirement—but what’s your number? 

    Working Americans think they need $1.1 million to retire, according to the Schroders 2023 U.S. Retirement Survey, but how does each individual really figure out what they will need in a retirement that could last decades?

    “It is very difficult for someone at 35 to have any comprehension about what life at 65 will cost,” said Robert Gilliland, managing director and senior wealth adviser with Concenture Wealth Management. “You have no comprehension what $100 will buy in 30 years. It gets easier to imagine as you get closer to retirement but you need to start planning.”

    Read: What’s the magic number for retirement savings? Americans say it’s more than $1 million, but most will fall short of that goal.

    “We have people call us on a weekly basis to ask ‘do we have enough to retire?’ Yes, but it depends on what lifestyle you want,” Gilliland said. “We sit down with them, talk about the lifestyle they’re living now and the lifestyle they want to live if working was optional.”

    Start with a budget

    In the information gathering phase, you want to start with a budget. Look at your current expenses for everything from housing, food, utilities and transportation to extras like travel, gifts, and entertainment. You can keep a simple log or use more sophisticated budgeting software, but the key to the process is honesty, said John Leonard, vice president, client adviser with Spinnaker Trust. 

    “Be honest with yourself on what you really spend. It may surprise you,” Leonard said. “And think about your goals or what lifestyle do you want to live? Do you want to travel, move to a different state? What do you want your retirement to look like?”

    By retirement, you’ve likely paid down all or most of your debt and you’re no longer saving for retirement. So that will free up those funds. There will be some reduction in expenses, such as commuting costs or clothes costs associated with work, and you’ll likely be in a different tax situation with lower earnings, said Matt Fleming, wealth adviser executive with Vanguard.

    Plan for the long haul

    Plan for retirement to last several decades and base your budget around living to age 100.

    “You don’t want to plan for the average life expectancy. You want to plan conservatively and plan for expenses through age 100,” Fleming said. 

    Next, look at what potential sources of income you might have in retirement. That includes your 401(k), IRAs, pensions, savings and Social Security, plus any additional income streams such as rental properties, annuities or inheritance. Also, this is a good time to check on your insurance policies. To figure out your Social Security benefits, use the Social Security website at SSA.gov. 

    “Get to know your inflows and outflows,” said Fleming said.

    Vanguard estimates people should expect to have 75% to 85% of their preretirement income for retirement years, Fleming said.

    Another rule of thumb is the 4% rule, but that has evolved over time and may be lower now—as low as 2.5% to 3%, according to Gilliland. The original 4% benchmark suggested that a $1 million in savings and investments would allow you to spend an inflation-adjusted $40,000 each year in retirement with minimal odds of outliving your money. 

    Read: The 4% retirement spending rule may be too high. Could you get by on 1.9%?

    Social Security questions

    As far as whether to include Social Security in your planning, it depends on your age, experts said.

    “For those close to retirement, Social Security confidence is higher. For early accumulators just starting out in their retirement savings, we have little confidence Social Security will exist in a meaningful way,” Fleming said. “It’s better to overfund your plan than underfund.”

    Social Security’s combined trust funds will become depleted in 2034, with 80% of benefits payable at that time. The issue of how to “fix” Social Security has grabbed headlines in recent months with President Biden vowing to protect Social Security and Medicare and some politicians suggesting changes to the system. 

    Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected

    “For those 45 and older, they will likely have Social Security. Generally, for those 35 and younger, we don’t talk about Social Security,” Gilliland said. “There will always be some form of Social Security. Politicians will want to be re-elected. Some form of Social Security will always be there—but how meaningful it will be, I don’t know.”

    Other factors to consider in budgeting include healthcare costs, travel expenses or helping with college tuition for grandchildren. 

    “People end up spending more in the first five to 10 years of retirement than they though they would—they’re active, traveling, involved with grandkids. They have an active lifestyle. Then spending goes down a bit until healthcare costs kick in,” Gilliland said 

    “People need to be aware and conscious of spending in this time,” Leonard said. “Put your expenses in buckets in terms of needs, wants and wishes.”

    Healthcare costs

    Weigh factors such as getting Medicare at 65, and the impact of long-term care costs and the estimated $315,000 the average couple is expected to spend on healthcare alone in retirement, according to Fidelity Investment’s 2022 report.

    Gilliland said to plan for healthcare costs to grow at about 7% a year. Family history and your own health should also shape how you budget for healthcare, he said. 

    For those who haven’t started saving for retirement—don’t wait. Start now, no matter how small. Eventually, work toward a goal of putting 12% to 15% of your pay toward retirement, said Fleming.

    “The earlier you start, the better. Stick to a plan and revisit it on an annual basis. Keep checking in and rein in your spending if you’re not on track,” Leonard said. “Be conservative and lean on the side of caution.”

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  • I’m 65 with more than $5 million saved and I can’t figure out how to spend it fast enough to avoid an RMD disaster

    I’m 65 with more than $5 million saved and I can’t figure out how to spend it fast enough to avoid an RMD disaster

    Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write me at beth.pinsker@marketwatch.com.  

    Dear Fix My Portfolio,

    I think I have an uncommon problem. I’m a 65-year-old recently retired education administrator. I think I…

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  • Free Event | May 31: Get the Answers to Your Solopreneur Challenges | Entrepreneur

    Free Event | May 31: Get the Answers to Your Solopreneur Challenges | Entrepreneur

    Running a one person business is challenging, but we’re here to help you. Tune into our video series, Solopreneur Office Hours, as our expert, Terry Rice, answers your most pressing questions.

    Running a one person business is challenging, but it doesn’t have to be confusing.

    In our new series, Office Hours for Solopreneurs with Terry Rice, you’ll get your most pressing business questions answered live while also learning from the challengees of your peers. Be sure to tune in on May 31st at 3 PM EDT as he removes all the guesswork around pricing, personal branding, selling your services and more.

    Don’t miss out—register now!

    About the Speaker:

    Terry Rice is the Business Development Expert-in-Residence at Entrepreneur and host of the podcast Launch Your Business, which provides emerging entrepreneurs with the critical guidance needed to start a business. As the founder of Terry Rice Consulting he helps entrepreneurs make more money, save time and avoid burnout. He writes a newsletter about how to build your revenue and personal brand in just 5 minutes per week.

    Entrepreneur Staff

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  • Facebook settlement: How to apply for some of Meta’s $725 million payout

    Facebook settlement: How to apply for some of Meta’s $725 million payout

    If you used Facebook between May 2007 and December 2022, the social-media giant may owe you some money.

    A California judge preliminarily approved a $725 million settlement between Facebook parent Meta Platforms
    META,
    -1.01%
    and users who say the company allowed their data to be viewed or shared by third parties, notably Cambridge Analytica, without their consent.

    The judge’s approval was a precursor to the final approval hearing, which will take place in September, but people can begin submitting claims now to potentially get a cash payment.

    Who does the Facebook settlement apply to?

    The $725 million settlement applies to anybody who was a Facebook user in the U.S. between May 24, 2007 and Dec. 22, 2022. The class-action form simply states that people who were Facebook users during that period are eligible. It does not mention any required level of activity on the account.

    It’s unclear if someone with multiple Facebook accounts would be entitled to more money than a person with a single account. To find out if you are included in the settlement group, you can email info@FacebookUserPrivacySettlement.com 

    When is the deadline to submit a claim?

    The claim form must be submitted no later than Aug. 25, 2023.

    The form can be completed online or downloaded and mailed to the settlement administrator at the following address: Facebook Consumer Privacy User Profile Litigation, c/o Settlement Administrator, 1650 Arch St., Suite 2210, Philadelphia, PA 19103.

    How much money will you get?

    As is typical with class-action lawsuits, the amount an individual will receive is dependent on a variety of factors.

    The settlement form says the payment will vary based on how many people submit claims. Additionally, administrative costs and attorneys’ fees will be deducted from the settlement fund prior to its release.

    See also: Mark Zuckerberg’s total 2022 pay rose because of the increased use of private aircraft

    “Settlement payments will be distributed as soon as possible if the Court grants Final Approval of the Settlement and after any appeals are resolved,” the claim website notes.

    How many people does this affect?

    Because Facebook has so many users and because of the 16-year time frame for this settlement, there are millions of people who could submit a claim.

    According to data compiled by Statista, total Facebook users in the U.S. numbered roughly 240 million in 2022.

    What has Meta said about the lawsuit?

    In December 2022, Meta agreed in principle to pay the settlement. At the time, a Meta spokesman said settling the class-action suit was “in the best interest of our community and shareholders.” The company added that it had revamped its privacy approach and “implemented a comprehensive privacy program.”

    Despite agreeing to pay the settlement, “Meta expressly denies any liability or wrongdoing,” according to the lawsuit website.

    Representatives for Meta didn’t immediately respond to MarketWatch’s request for comment on this story.

    See also: NPR’s CEO sayd ‘I have lost my faith in the decision-making’ at Twitter under Elon Musk

    The settlement comes as Meta is set to announce another round of layoffs this week.

    Meta shares were down 0.95% in the early afternoon on Wednesday and have gained nearly 80% year to date, compared with the S&P 500’s
    SPX,
    -0.01%
     8.11% gain in 2023.

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  • Here’s the Best Entrepreneurial Advice I’ve Ever Received | Entrepreneur

    Here’s the Best Entrepreneurial Advice I’ve Ever Received | Entrepreneur

    Opinions expressed by Entrepreneur contributors are their own.

    I’ve experienced my fair share of ups and downs as a business owner. I’ve discovered that seeking counsel from others who have already faced difficulties in entrepreneurship can be helpful. In this article, I want to share the best advice I’ve ever heard from other business owners who have successfully navigated difficult situations.

    Being an entrepreneur can be a solitary endeavor. It’s easy to get wrapped up in your thoughts and overlook the bigger picture. The importance of expert entrepreneurial guidance can’t be overstated. They have been in your shoes and can provide insightful opinions that can help you avoid frequent pitfalls and succeed.

    Related: The 8 Best Pieces of Business Advice I’ve Received In The Past 6 Months

    Believe in yourself

    “Believe in yourself” was the first piece of advice I ever got. Although it seems straightforward, many business owners find it difficult. When faced with obstacles or failures, it’s simple to start doubting oneself. But if you don’t have faith in yourself, who will? I discovered that being successful as an entrepreneur requires having a strong sense of self-belief.

    Embrace failure

    Embracing failure was the second piece of great advice I received. Although it’s a normal part of the business path, failure should not be feared. In reality, failure can be a useful instrument for development and learning. I discovered that it’s critical to approach failure with a growth mentality and view it as an opportunity to grow.

    Focus on solving a problem

    Focusing on finding a solution to an issue was the third piece of advice I got. Solving issues is the key to a successful enterprise. I discovered that the cornerstone of a prosperous business is recognizing a problem and providing a solution. You can develop a service or product that customers need and want by concentrating on fixing a problem.

    Related: Advice, Tips and Tricks for New Entrepreneurs

    Build a strong team

    The fourth piece of advice I got was to assemble a solid team. Being an entrepreneur requires a team effort. It’s crucial to surround yourself with people who have a variety of abilities and viewpoints. I discovered that seeing success in any entrepreneurial endeavor requires assembling a solid team.

    Stay agile

    Maintaining agility was the fifth piece of advice I received. Being an entrepreneur necessitates adaptability and flexibility. Success depends on having the flexibility to change course rapidly and react to changing circumstances. I discovered that surviving the ups and downs of entrepreneurship requires remaining flexible and agile.

    Why this advice works

    These five bits of advice are effective because they are based on the insights of successful entrepreneurs. They have been tried and proven in the entrepreneurship trenches. These tenets are supported by data and research, which demonstrate that successful entrepreneurs are those who have confidence in themselves, accept failure, put a high emphasis on problem-solving, assemble capable teams and maintain agility.

    How to apply this advice

    To put this advice into practice, a variety of mental adjustments and doable tactics are needed. It takes a lot of self-confidence and resilience to believe in oneself. A growth mentality and a readiness to absorb lessons from errors are prerequisites for accepting failure.

    Finding a market demand and creating a special solution is necessary if you want to concentrate on solving a problem. Effective teamwork and communication skills are necessary for creating a good team. Making rapid decisions and reacting to shifting conditions are necessary for agility.

    Related: The Most Powerful Advice Entrepreneurs Ignore

    Real-life examples of entrepreneurs who have successfully applied this advice include Elon Musk, Jeff Bezos and Richard Branson. All three of these entrepreneurs embody the principles of believing in themselves, embracing failure, focusing on problem-solving, building strong teams and staying agile.

    The finest advice I’ve ever heard is to trust in yourself, accept failure, concentrate on solving an issue, assemble a good team and be flexible. By applying these pointers to your entrepreneurial endeavors, you can improve your chances of success and successfully deal with the difficulties that come with being an entrepreneur. Keep in mind that entrepreneurship is a journey, and success takes passion, attention and a desire to learn and advance.

    Candice Georgiadis

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  • Soaring oil prices: 6 things investors need to know about the surprise OPEC+ production cuts

    Soaring oil prices: 6 things investors need to know about the surprise OPEC+ production cuts

    The Organization of the Petroleum Exporting Countries and its allies said they decided Sunday to cut production in an effort to support oil-market stability, but that offers little comfort to consumers worried about inflation and an expected spike in fuel demand during the coming summer driving season.

    The surprise output reduction by the group known as OPEC+ starting in May also comes at a particularly vulnerable time for the U.S., which may not be able to quickly increase its own production.

    “The nature and timing of the decision are shocking, since prices have been only moderate pressured from the banking mini-crisis and the market is expected to tighten later this year,” said Michael Lynch, president of Strategic Energy & Economic Research.

    “OPEC+, and especially the Saudis, seem to be signaling a strong desire to punish short sellers and pre-empt possible demand weakness,” he told MarketWatch. Also, “the impact on inflation…could mean an anemic summer driving season.”

    What happened?

    OPEC and its allies, a group known as OPEC+, announced voluntary production “adjustments” on Sunday that will take effect starting in May and run through to the end of the year.

    The move was unusual, as there was no indication that any change to production would be made and OPEC+ ministers weren’t scheduled to officially hold an output decision-making meeting until June 4.

    The OPEC+ Joint Ministerial Monitoring Committee, however, did hold a meeting on Monday, as it does every two months. The committee has no ability to make decisions on production, but has the authority to request an OPEC and non-OPEC ministerial meeting at any time to address market developments.

    The JMMC had been expected to discuss a number of oil-market issues, and confirm that previously announced cuts of 2 million barrels a day would remain in effect. The committee on Monday indeed reaffirmed its commitment to that previous agreement, but also pointed out Sunday’s announcement.

    “Unlike cuts in the past that were more ‘paper cuts’ to quotas with many countries already producing below quota, these are real voluntary cuts from countries producing at or above quotas,” said Rebecca Babin, senior energy trader at CIBC Private Wealth U.S., in emailed commentary. That means this will be “far more impactful than the 2 million barrels cut” announced in October 2022.

    Saudi Arabia will take on the biggest reduction, cutting oil output by 500,000 barrels a day. Other barrel-per-day cuts include Iraq with 211,000, United Arab Emirates 144,000, Kuwait 128,000, Kazakhstan 78,000, Algeria 48,000, Oman 40,000 and Gabon 8,000. Those total 1.157 million barrels a day.

    The cuts, however, are in addition to the previous OPEC+ production cuts of 2 million barrels a day, as well as the extension of Russia’s reduction of 500,000 barrels a day in retaliation to western oil-price caps and sanctions. That brings the total output reductions to 3.657 million barrels a day.

    What prompted the cut?

    Saudi Arabia’s Ministry of Energy on Sunday, as well as the JMMC in a statement Monday, said that the cuts are a “precautionary measure aimed at supporting the stability of the oil market.”

    Some news reports and analysts have speculated that Saudi Arabia, a member of OPEC and among the world’s top oil producers, and other major oil producers made the surprise move to cut output because of recent comments made by U.S. Energy Secretary Jennifer Granholm.

    Read: Trigger for Saudi oil production move was comment that U.S. would not refill SPR this year, report says

    On March 23, Granholm said that it may take years for the U.S. to refill its Strategic Petroleum Reserve. She appeared to walk back those comments on March 28, with Reuters reporting that she said the U.S. could start buying back crude oil for the SPR late this year.

    The Biden administration last year announced the emergency sale of 180 million barrels of SPR crude to help lower gasoline prices, and has said it would refill the reserve when oil prices fell to around $70 a barrel.

    U.S. benchmark West Texas Intermediate crude oil fell below $70 a barrel to their lowest level in 15 months on March 21.

    Why was the market so surprised?

    The OPEC+ decision took the financial market by surprise.

    “If fully delivered, the announced cut would further tighten an already fundamentally tight oil market, driving the Brent benchmark towards $100 per barrel sooner than previously expected, and would push the price to around $110 per barrel this summer,” said Jorge Leon, senior vice president at Rystad Energy.

    Before the new OPEC+ cuts, Rystad Energy was anticipating the crude-oil market to be in a supply deficit to the “tune of 1.4 million” barrels a day between May and August, he said in emailed commentary. The voluntary cuts will put “upside pressure on prices from a fundamentals perspective, offering support of around $10 per barrel.”

    On Monday, the front-month May WTI oil futures contract
    CLK23,
    -0.01%

    CL.1,
    -0.01%
    climbed 6.4% to trade above $80.50 a barrel ahead of the closing bell on the New York Mercantile Exchange. Global benchmark June Brent oil
    BRNM23,
    -0.18%

    BRN00,
    -0.18%
    rose $4.75, or 6.3%, to close at $80.42 a barrel on ICE Futures Europe.

    “Positioning in crude is extremely light after the recent financial market driven weakness,” said Babin. Last week’s rally was driven primarily by short covering and modest re-engagement from long buyers,” she said, adding that the long position, or bets that oil will rise in value, is “very modest, with the managed money long-short ratio at 2.5, the lowest since December 2022.”

    Large short positions held by speculative traders can make for more explosive rallies as “weak-handed” players are forced to buy futures to close out losing trades.

    Craig Golinowski, managing partner at Carbon Infrastructure Partners, also pointed out to MarketWatch that paper market for oil is “very thin.” Fewer participants and financial flows have created downside pressure on oil, he said, so OPEC is “physically managing production to maintain a tight market to ensure investment into production remains stable, regardless of the paper market for oil.”

    The energy market saw broad gains, with company shares and exchange-traded funds, including the Energy Select Sector SPDR Fund
    XLE,
    +4.53%    ,
    rallying in the wake of the OPEC+ news.

    St. Louis Federal Reserve President James Bullard on Monday said the spike in oil prices after the OPEC+ cut announcement may make the central bank’s inflation-fighting job “a little more difficult,” though it is too soon to know for sure.

    The latest spike in oil prices may “play a hand in what the Fed does next regarding its fight against inflation,” particularly if the latest jump in oil is sustained as oil at the current level “won’t be doing the inflation rate any favors,” said Tim Waterer, chief market analyst at Kohle Capital Markets.

    Read: Oil-production cuts could force Fed to raise interest rates even higher to fight inflation

    Will OPEC+ lose market share?

    In the past, OPEC+ has been concerned about the loss of oil-market share when it decides to make production cuts.

    This time, however, there is “limited threat to market share,” said CIBC Private Wealth’s Babin.

    Previously, when OPEC+ cut production, they would lose market share to U.S. shale oil producers, she said. “However, “U.S. shale producers have entered a period where growth is limited due to financial discipline.”

    Recent developments in regional banks has “likely lowered shale producers’ ability to quickly get capital to increase production,” said Babin.

    Total U.S. petroleum production stood at 12.2 million barrels a day as of the week ended March 24, down 100,000 barrels per day from a week earlier, according to data from the Energy Information Administration.

    OPEC would usually “hesitate to reduce barrels, with fears of ceding market share to U.S. shale, but the slowing of U.S. production and their dedication to a disciplined approach has alleviated the Saudi’s fear of rapid U.S. growth,” said Alex Hodes, energy analyst at StoneX.

    What are the geopolitical implications?

    Meanwhile, James Swanston, Middle East and North Africa economist at Capital Economics, in a note said the OPEC+ move was likely motivated by geopolitics and Saudi Arabia’s “shift away from the West.”

    Saudi Arabia’s ties with the U.S. are “fraying,” he said.

    Swanston also said the production decision has implications for the future of OPEC+ oil policy, as well as the “patience of members, particularly, the UAE.”

    The U.A.E. agreed to these voluntary output cuts, but it was reported last month that officials were growing impatient at the bearish OPEC+ stance and had discussed internally whether to leave the group, said Swanston.

    The Wall Street Journal: Saudi Arabia and U.A.E. Clash Over Oil, Yemen as Rift Grows

    The U.A.E. wants to “increase oil output sooner rather than later as shown by its move to bring forward its oil production capacity target from 3.1 [million barrels per day] currently to 5 million bpd by 2027,” instead of the year 2030, said Swanston.

    He said the U.A.E. had twice previously threatened to leave OPEC+ and that there was speculation that the U.A.E. was strongly against the Saudi-led decision to cut OPEC+ oil output quotas by 2 million bpd in October.

    “If the OPEC+ strategy of lower oil production persists, then tensions could escalate, and the U.A.E. could ultimately opt to leave OPEC+,” Swanston said.

    What do the cuts say about demand?

    The production cuts will take effect in May, which is “right ahead of Memorial Day and the start of U.S. driving season,” said Stacey Morris, head of energy research with VettaFi.

    Given that, “it could be another summer with painful prices at the [gasoline] pump,” she said.

    The average price for regular unleaded gasoline stood at $3.506 a gallon on Monday, up from $3.439 a week ago, but down from $4.192 a year ago, according to AAA.

    Read: The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

    Still, some traders may interpret the OPEC+ cut as a sign of weaker than expected demand for physical markets, given that OPEC+ possesses “some of the best information available in regards to the global physical oil markets,” said Rob Thummel, portfolio manager at Tortoise.

    However, “ we still expect global oil demand to accelerate throughout 2023, reaching a record high in the second half the year,” he said.

    Global oil inventories are below normal and will likely “remain below normal as higher demand and less supply deplete inventories throughout the year,” Thummel said, noting that Tortoise expects oil prices to be range bound between $85 and $95 for the year.

    Source link

  • Free Event | March 30: Solopreneur Office Hours with Terry Rice | Entrepreneur

    Free Event | March 30: Solopreneur Office Hours with Terry Rice | Entrepreneur

    Running a one person business is challenging, but we’re here to help you. Tune in as our expert, Terry Rice, answers your most pressing questions.

    Running a one person business is challenging, but it doesn’t have to be confusing.

    In our new series, Office Hours for Solopreneurs with Terry Rice, you’ll get your most pressing business questions answered live while also learning from the challengees of your peers. Be sure to tune in on March 30th at 3 PM EST as he removes all the guesswork around pricing, personal branding, selling your services and more.

    Don’t miss out—register now!

    About the Speaker:

    Terry Rice is the Business Development Expert-in-Residence at Entrepreneur and host of the podcast Launch Your Business, which provides emerging entrepreneurs with the critical guidance needed to start a business. As the founder of Terry Rice Consulting he helps entrepreneurs make more money, save time and avoid burnout. He writes a newsletter about how to build your revenue and personal brand in just 5 minutes per week.

    Source link

  • Ask Marc | Free Business Advice Session with the Co-Founder of Netflix | Entrepreneur

    Ask Marc | Free Business Advice Session with the Co-Founder of Netflix | Entrepreneur

    The co-founder and first CEO of Netflix, Marc Randolph, has a personal mission to help entrepreneurs around the world achieve their dreams. He has mentored hundreds of early-stage entrepreneurs and helped seed dozens of successful tech ventures, and now he wants to help you.

    In our livestream series Ask Marc, you have the opportunity to ask Marc Randolph any of your most pressing business questions, from big-picture problems to in-the-weeds details, including:

    • How do you start a business on a small budget?
    • What’s the best way to raise funds?
    • What are the top actions a business should take to grow revenue?
    • What is the best way to find and hire the right talent?

    This is a remarkable opportunity to ask one of the most successful and innovative business leaders anything you want! Submit your questions now then join us on March 28th at 3 p.m. EST to hear your answers live.

    Entrepreneur Staff

    Source link

  • How This Entrepreneur Went Global Without VC Funding | Entrepreneur

    How This Entrepreneur Went Global Without VC Funding | Entrepreneur

    Cate Luzio is the founder and CEO of Luminary, a global professional education and networking platform focused on women across all professional journeys. “We are gender inclusive and our goal is to advance women in the workforce regardless of that professional journey.” That includes women in transition, women in entrepreneurship, women climbing the traditional corporate ladder or women in government and nonprofits, she says. “We create education, learning and development, as well connections and community to support those journeys.”

    When it came time to launch Luminary, Luzio decided to self-fund. She built a successful career in corporate investment banking, saved money for over 20-plus years, and was determined to control her own destiny. “I had the privilege to self-fund the business, and I know not everyone has that privilege; but, I think you should think long and hard about how you are going to build, grow and scale. The path to investors and external capital isn’t just one way. There are many financial instruments out there that can help a small business owner grow.”

    Luzio sat down with Jessica Abo to talk about who should consider self-funding and the three things women need to build a sustainable and profitable business. Watch the video above for the full interview.

    Jessica Abo

    Source link

  • What are CoCos and why are Credit Suisse’s now worth zero?

    What are CoCos and why are Credit Suisse’s now worth zero?

    The Swiss regulator on Sunday announced that it was writing the value of Credit Suisse’s additional Tier 1 bonds — also called AT1 bonds, or contingent convertible bonds or CoCos — down to zero, as part of the bank’s merger with UBS.

    The news has spooked investors of the AT1 market, which is valued at about $275 billion.

    For more: The $275 billion bank convertible bond market thrown into turmoil after Credit Suisse’s securities wiped out

    But what are Cocos and why should you care? Here’s what you need to know:

    CoCos, or contingent convertible capital instruments, to give them their full name, are hybrid capital instruments that are structured to absorb losses in times of stress. They were introduced after the 2008 financial crisis to help steer risk away from taxpayers and onto bondholders.

    They are bonds that automatically convert into equity—shares in the bank—when a bank’s capital falls below a certain threshold.

    If a bank is functioning normally, investors are paid a coupon, just like any bondholder. But if things go wrong, the bank can “bail in” the CoCo investor, converting debt into shares in what would then be a troubled lender.

    Also read: Saudis, Qataris and Norway to see big losses on UBS deal for Credit Suisse

    European banks liked to issue CoCos, because they are counted as additional Tier 1 capital. They’re a way for banks to improve their capital ratios, as required under rules put in place after the crisis, without issuing more shares.

    U.S. banks don’t issue CoCos—they use a different type of preferred stock to boost their Tier 1 capital. But U.S. investors have been buyers of CoCos for the extra yield they have offered. That’s risky because the instruments can be converted to low-value shares, or entirely wiped out as has now happed with those issued by Credit Suisse
    CSGN,
    -55.74%

    CS,
    -52.98%    .

     CoCos are perpetual bonds, or bonds that have no set maturity date. They can be redeemed if a bank exercises an option to do so, typically after a five-year period. But regulators may block banks from redeeming them, if the cost of issuing replacement debt is much higher. And if a bank becomes highly stressed like Credit Suisse, they can simply be written off.

    A call for Credit Suisse bondholders is expected to take place on March 22, according to law firm Quinn Emanuel Urquhart & Sullivan, which said on Monday it is exploring potential legal actions on behalf of AT1 bondholders.

    The surprise for some investors on Monday is that the Swiss move has wiped out the bondholders but not the shareholders, even though bondholders typically rank above equity holders in capital structure.

    Not the Credit Suisse CoCos, which were structured to allow for the Swiss regulatory move.

    Under the terms of the deal with UBS, Credit Suisse shareholders will be able to exchange their shares for about 0.70 francs, which is below where the stock closed Friday, but more than the bondholders will receive.

    Most of the demand for CoCos in recent years has come from private banks and retail investors, especially in Europe and Asia, along with big U.S. institutional investors who were attracted by the higher yields in the low-interest-rate environment that prevailed from the crisis until the Federal Reserve started raising interest rates last year.

    To be sure, the Credit Suisse CoCos were showing signs of stress last week as the bank became more embroiled in crisis. The bank’s 9.75% coupon CoCo bonds due June of 2028 were trading at an average price of 36 cents on the dollar last Wednesday, as MarketWatch’s Joy Wiltermuth reported.

    Now fund managers say investors are likely to avoid them, undermining their use for banks.

    “The UBS-CS deal might have avoided an immediate risk event, but the AT1 write down has added an uncertainty which could persist for weeks if not months,” said Mohit Kumar, chief financial economist in Europe at Jefferies.

    “Given the large amount of AT1s outstanding, this would also raise the prospect of losses for other investors and the ability of banks to use them as a funding source in the future,” he added.

    Source link

  • Free Event | March 16: Solopreneur Office Hours with Terry Rice | Entrepreneur

    Free Event | March 16: Solopreneur Office Hours with Terry Rice | Entrepreneur

    Running a one person business is challenging, but we’re here to help you. Tune in as our expert, Terry Rice, answers your most pressing questions.

    Running a one person business is challenging, but it doesn’t have to be confusing.

    In our new series, Office Hours for Solopreneurs with Terry Rice, you’ll get your most pressing business questions answered live while also learning from the challengees of your peers. Be sure to tune in on March 16th at 3 PM EST as he removes all the guesswork around pricing, personal branding, selling your services and more.

    Don’t miss out—register now!

    About the Speaker:

    Terry Rice is the Business Development Expert-in-Residence at Entrepreneur and host of the podcast Launch Your Business, which provides emerging entrepreneurs with the critical guidance needed to start a business. As the founder of Terry Rice Consulting he helps entrepreneurs make more money, save time and avoid burnout. He writes a newsletter about how to build your revenue and personal brand in just 5 minutes per week.

    Source link

  • What a rescue for SVB depositors means for the stock market and interest rates

    What a rescue for SVB depositors means for the stock market and interest rates

    U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.

    But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.

    Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
    SIVB,
    -60.41%
    stock and bondholders, however, will be wiped out.

    Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.

    The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.

    “The American people and American businesses can have confidence that their bank deposits will be there when they need them,” President Joe Biden said in a statement Sunday night. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” he said, adding that he will deliver additional comments Monday.

    A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.

    Futures on the Dow Jones Industrial Average
    YM00,
    +1.24%
    rose 240 points, or 0.8% following the announcement, while S&P 500 futures
    ES00,
    +1.71%
    were up 1% and Nasdaq-100 futures
    NQ00,
    +1.72%
    gained 1.3%.

    Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.

    SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.

    “In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”

    In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”

    Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading

    Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”

    Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
    SPX,
    -1.45%
    down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
    DJIA,
    -1.07%
    saw a 4.6% weekly fall, while the Nasdaq Composite
    COMP,
    -1.76%
    declined 4.7%.

    Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.

    SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.

    SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.

    See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates

    Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.

    “These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.

    By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.

    “Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”

    Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.

    Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.

    The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.

    “Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”

    Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.

    Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.

    Source link

  • What a rescue for SVB depositors means for the stock market and interest rates

    What a rescue for SVB depositors means for the stock market and interest rates

    U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.

    But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.

    Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
    SIVB,
    -60.41%
    stock and bondholders, however, will be wiped out.

    Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.

    The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.

    A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.

    Futures on the Dow Jones Industrial Average
    YM00,
    +0.93%
    rose 240 points, or 0.8% following the announcement, while S&P 500 futures
    ES00,
    +1.28%
    were up 1% and Nasdaq-100 futures
    NQ00,
    +1.18%
    gained 1.3%.

    Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.

    SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.

    “In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”

    In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”

    Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading

    Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”

    Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
    SPX,
    -1.45%
    down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
    DJIA,
    -1.07%
    saw a 4.6% weekly fall, while the Nasdaq Composite
    COMP,
    -1.76%
    declined 4.7%.

    Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.

    SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.

    SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.

    See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates

    Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.

    “These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.

    By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.

    “Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”

    Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.

    Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.

    The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.

    “Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”

    Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.

    Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.

    Source link

  • SVB collapse means more stock-market volatility: What investors need to know

    SVB collapse means more stock-market volatility: What investors need to know

    It’s all eyes on federal banking regulators as investors sift through the aftermath of last week’s market-rattling collapse of Silicon Valley Bank.

    The name of the game — and the key to a near-term market bounce — could be a deal that makes depositors at Silicon Valley Bank, or SVB, whole, analysts said. And efforts by regulators appeared to be focused on soothing worries over the ability of companies to access uninsured deposits — most such deposits exceed the FDIC’s $250,000 cap — in order to prevent runs similar to the event that capsized SVB from occurring elsewhere.

    “If a deal gets struck tonight that doesn’t haircut depositors, the market is going to rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview Sunday afternoon.

    Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.

    SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp., which was conducting an auction of the bank Sunday afternoon, according to news reports.

    See: U.S. and U.K. regulators consider ways to help SVB depositors, FDIC auctioning assets – reports

    “We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Treasury Secretary Janet Yellen said in a Sunday morning interview on “Face the Nation” on CBS, while ruling out a bailout that would rescue bondholders and shareholders of SVB parent SVB Financial Group SIVB.

    “We are concerned about depositors and are focused on trying to meet their needs,” she said.

    Continued uncertainty could leave a “sell first, ask questions later” dynamic in effect Monday.

    “In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”

    Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading

    Knapp warned that market turmoil with significant potential downside for stocks could ensue if depositors are forced to take a haircut, likely sparking runs at other institutions. A deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”

    Muscle memory, meanwhile, was in effect at the end of last week. Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
    SPX,
    -1.45%
    down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains.

    The Dow Jones Industrial Average
    DJIA,
    -1.07%
    saw a 4.6% weekly fall, while the Nasdaq Composite
    COMP,
    -1.76%
    declined 4.7%. Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.

    SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.

    See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates

    SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.

    Analysts and economists largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system.

    Also see: 20 banks that are sitting on huge potential securities losses—as was SVB

    Instead, SVB appears to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.

    “I’ll stick my neck out and suggest that markets are vastly overreacting,” he said.

    Implications for the Fed’s monetary policy path also loom large. Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated.

    Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.

    Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.

    The market reaction wasn’t unusual, said Michael Kramer of Mott Capital Management, in a Sunday note, and should reverse once the situation around SVB calms down.

    Powell said incoming economic data would determine the size of the Fed’s next rate move. The market reaction to a stronger-than-expected rise in February nonfarm payrolls, which was tempered by a slowdown in wage growth and a rise in the unemployment rate, was clouded by the tumult around SVB.

    “I think they will raise rates by at least 25 basis points and signal that more rate hikes are coming,” Kramer said. “If they were to pause rate hikes unexpectedly, it would send a warning message that they are seeing something of grave concern, causing a significant change in their policy path, and that would not be bullish for stocks.”

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  • Outsmarting Elon: The Dangers of Emulating Elon Musk’s Productivity Advice | Entrepreneur

    Outsmarting Elon: The Dangers of Emulating Elon Musk’s Productivity Advice | Entrepreneur

    There’s a lot we can learn from Elon Musk, but productivity advice isn’t one of them. Here’s why.

    Ben Angel

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  • 3 Lessons for Creative Entrepreneurs

    3 Lessons for Creative Entrepreneurs

    Opinions expressed by Entrepreneur contributors are their own.

    When people say, “Well, everyone has to start somewhere,” they’re usually not referring to drop-outs like me. I was a pretty rebellious kid, to be honest, and at age 16, I’d managed to flunk most of my classes — all but art and technology — so, I dropped out. You could say I wasn’t exactly setting myself up for success, but what 16-year-old doesn’t like a good challenge?

    One thing I knew was that I wanted to use my art skills, so I set my sights on becoming a designer and applied to graphic design school. But my low grades and lack of detectable academic skills did me no favors, and my application was rejected. Irritated, I got a job working at a creative production agency as a tea boy (yes, it’s exactly what it sounds like). It didn’t take me long to realize that if I made the tea badly enough, my colleagues wouldn’t request it as often. I’d then have more time to figure out how to make myself actually useful at the company.

    But the biggest challenge I faced at the agency was not the tea kettle; it was my family. I was the son of one of the agency’s three owners, which meant I had to do twice as much work to gain acceptance from my fellow employees. But it soon became clear that it wasn’t working. Two weeks into my tenure, my older brother, who’d been at the agency for a few years, pulled me aside. “Everybody hates you,” he said.

    That stung. I couldn’t believe it. I was hurt, angry and more than a little embarrassed. But that harsh slap of reality motivated me to prove myself over the next 20 years by consistently searching for ways to make myself valuable to the organization. By the time I was named CEO some two decades later, I’d worked in nearly every position. Along the way, I learned lessons that would end up being incredibly useful to me as CEO. And I only could have learned them by slowly moving up the ranks and working in all corners of the business.

    Here are three lessons I’d like to pass along to any inspiring entrepreneur:

    1. Don’t believe what you see in the movies

    Entrepreneurship is not for the faint of heart: New problems, scary unknowns and intriguing (but distracting) opportunities will challenge you every day. And you’ll second-guess yourself every step of the way while others rely on you to make decisions. People will rely on you to make the right decisions — and they expect you to do it with a degree of confidence, whether you have any or not!

    Movies love to depict entrepreneurs with automatic access to lavish parties, luxury cars and a golden ticket to Silicon Valley. In this case, life doesn’t imitate art. Entrepreneurship includes many struggles. And if you’re lucky, and your company begins to grow, your struggles grow as well.

    In fact, you can compare entrepreneurship to parenting. Some of the most difficult, challenging and stressful moments in life involve raising a child. The bigger the child, the bigger the mess, right? It often feels like an uphill battle trying to keep the house clean. But parenting is also magic. It includes some of the most moving and memorable moments of your life. Parents and entrepreneurs often find themselves in high-pressure situations, managing unique personalities and getting zero credit. But these facts hold true for both:

    Despite the difficulties, you can achieve success with persistence. As Benjamin Franklin once said, “Energy and persistence conquer all things.”

    Related: 4 Success Secrets for Creative Entrepreneurs

    2. Passion supports persistence

    As an entrepreneur, you need passion to succeed. It inspires your business plans and sets you apart from the competition. Your passion attracts the right customers and employees, and perhaps most importantly, gives you the motivation to deliver on your mission.

    If you want to give everything to something, you have to do what you love. Otherwise, you’ll burn out, get frustrated and be tempted to throw in the towel. To identify your purpose, ask yourself:

    • What was I put on this earth to do?

    • What motivates me to get out of bed every morning instead of languishing under the covers and pondering life?

    • What makes me tick?

    Once you identify your purpose, take a step back and examine your career. Ask yourself: Does my career feed my purpose? Stepping into the business world means choosing a venture you believe in and feel passionate about. Find a way to tap into that purpose and drive yourself forward to achieve the best possible outcome.

    That somewhere starting point requires a vision and goals to achieve success. Where do you want to see your business in one, five and 10 years? Every day, check the alignment of your goals and your passions with your plan for the future.

    My purpose is creativity. It makes me tick, and it drives me forward in my career. In my world, it’s essential for me to understand the creative process, how people think and work. By thinking creatively, I find more solutions to problems and even challenge my own assumptions.

    Related: Remember, Persistence Pays Off. Stay Motivated With These 5 Tips.

    3. Defend, cherish and promote creativity

    Creativity is born from adversity and constraint. Growing up, I was very familiar with both. My parents played infidelity tennis through much of my childhood, fighting and tormenting each other while my brother and I could only look on. My constraint was the academic system, which crushed my spirit. It wasn’t the right fit for me, and it didn’t give me what I needed at that time.

    Adversity pushed me towards creativity to ease my anxiety and escape from my parents’ tortuous relationship. I channeled my passion for the creative process into drawing, building and creating, which also served as a rebellion against the constraints of the academic system. My creative spirit protected me and helped me thrive, despite the upheavals happening at home.

    To an extent, the creative spirit represents a higher power in humans. And while creativity doesn’t come naturally to everyone, it lives in us all. Entrepreneurs need to use the creative process to solve problems, escape troubled times and leverage that creativity in good times to develop products and innovate. I launched my company in 2011 with the mission to unlock creativity through liberating technology. That purpose hasn’t changed, and it still gets me out of bed in the morning.

    The struggles I faced in my career and personal life, along with my passion and creativity, shaped me into the leader and entrepreneur I am today. If you have the next great idea, give yourself permission to explore it, and see where it goes. Use your experiences, your purpose and your creativity, of course, to unlock your potential.

    Related: 7 Tips for Emerging Creative Entrepreneurs

    Simon Berg

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  • Why Do Rapid Tests Feel So Useless Right Now?

    Why Do Rapid Tests Feel So Useless Right Now?

    Max Hamilton found out that his roommate had been exposed to the coronavirus shortly after Thanksgiving. The dread set in, and then, so did her symptoms. Wanting to be cautious, she tested continuously, remaining masked in all common areas at home. But after three negative rapid tests in a row, she and Hamilton felt like the worst had passed. At the very least, they could chat safely across the kitchen table, right?

    Wrong. More than a week later, another test finally sprouted a second line: bright, pink, positive. Five days after that, Hamilton was testing positive as well. This was his second bout of COVID since the start of the pandemic, and he wasn’t feeling so great. Congestion and fatigue aside, he was “just very frustrated,” he told me. He felt like they had done everything right. “If we have no idea if someone has COVID, how are we supposed to avoid it?” Now he has a different take on rapid tests: They aren’t guarantees. When he and his roommate return from their Christmas and New Year’s holidays, he said, they’ll steer clear of friends who show any symptoms whatsoever.

    Hamilton and his roommate are just two of many who have been wronged by the rapid. Since the onset of Omicron, for one reason or another, false negatives seem to be popping up with greater frequency. That leaves people stuck trying to figure out when, and if, to bank on the simplest, easiest way to check one’s COVID status. At this point, even people who work in health care are throwing up their hands. Alex Meshkin, the CEO of the medical laboratory Flow Health, told me that he spent the first two years of the pandemic carefully masking in social situations and asking others to get tested before meeting with him. Then he came down with COVID shortly after visiting a friend who didn’t think that she was sick. Turns out, she’d only taken a rapid test. “That’s my wonderful personal experience,” Meshkin told me. His takeaway? “I don’t trust the antigen test at all.”

    Read: Should everyone be masking again?

    That might be a bit extreme. Rapid antigen tests still work, and we’ve known about the problem of delayed positivity for ages. In fact, the tests are about as good at picking up the SARS-CoV-2 virus now as they’ve ever been, Susan Butler-Wu, a clinical microbiologist at the University of Southern California’s Keck School of Medicine, told me. Their limit of detection––the lowest quantity of viral antigen that will register reliably as a positive result––didn’t really change as new variants emerged. At the same time, the Omicron variant and its offshoots seem to take longer, after the onset of infection, to accumulate that amount of virus in the nose, says Wilbur Lam, a professor of pediatrics and biomedical engineering at Emory University who is also one of the lead investigators assessing COVID diagnostic tests for the federal government. Lam told me that this delay, between getting sick and reaching the minimum detectable concentration of the viral antigen, could be contributing to the spate of false-negative results.

    That problem isn’t likely to be solved anytime soon. The same basic technology behind COVID rapid tests, called “lateral flow,” has been around for years; it’s even used for standard pregnancy tests, Emily Landon, an infectious-disease physician at the University of Chicago, told me. Oliver Keppler, a virology researcher at the Ludwig Maximilian University of Munich who was involved in a study comparing the performance of rapid tests between variants, says there isn’t really a way to tweak the tests so that they’ll be any more sensitive to newer variants. “Conceptually, there’s little we can do.” In the meantime, he told me, we have to accept that “in the first one or two days of infection with Omicron, on average, antigen tests are very poor.”

    Of course, Hamilton (and his roommate) would point out that the tests can fail even several days after symptoms start. That’s why he and others are feeling hesitant to trust them again. “It’s not just about the utility or accuracy of the test. It’s also about the willingness to even do the test,” Ng Qin Xiang, a resident in preventative medicine at Singapore General Hospital who was involved in a study examining the performance of rapid antigen tests, told me. “Even within my circle of friends, a lot of people, when they have respiratory symptoms, just stay home and rest,” he said. They just don’t see the point of testing.

    Read: COVID science is moving backwards

    Landon recently got COVID for the first time since the start of the pandemic. When her son came home with the virus, she decided to perform her own experiment. She kept track of her rapids, testing every 12 hours and even taking pictures for proof. Her symptoms started on a Friday night and her initial test was negative. So was Saturday morning’s. By Saturday evening, though, a faint line had begun to emerge, and the next morning—36 hours after symptom onset—the second line was dark. Her advice for those who want the most accurate result and don’t have as many tests to spare is to wait until you’ve had symptoms for two days before testing. And if you’ve been exposed, have symptoms, and only have one test? “You don’t even need to bother. You probably have COVID.”

    Zoya Qureshi

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  • How Much You Should Really Be Spending on Clothing Every Month

    How Much You Should Really Be Spending on Clothing Every Month

    We can confidently say that we spend a substantial amount of our hard-earned paycheck on clothes, but what exactly should our clothing budget be? To be quite frank, we had no idea, which is why we were excited to research this story. And just in case you’re in the dark about your spending habits as well, we thought we’d bring the matter to light with a super-simple equation.

    To get to the bottom of it, we looked to award-winning financial planner Pete Dunn. Based on his expertise, we calculated what your clothing cost per month should be based on your salary. And because we still fully condone adding a few pieces to your wardrobe each month, we included a few on-budget items that we recommend for each of the salaries listed below. Keep scrolling to get ready for your reality check.

    Kat Collings

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