ReportWire

Tag: credit

  • Wells Fargo, once a mortgage giant, shrinks home-lending business

    Wells Fargo, once a mortgage giant, shrinks home-lending business

    [ad_1]

    Wells Fargo said late Tuesday it was shrinking its home-mortgage business, aiming to serve its own bank customers as well as people in “minority communities.”

    Wells Fargo
    WFC,
    -0.07%
    also said it was exiting the correspondent business, in which a bank serves as a third-party intermediary in transactions, and that it plans to reduce the size of its loan-servicing portfolio.

    The stock edged lower in the extended session after ending the regular trading day down less than 0.1%.

    “These plans continue the work the company has advanced over the past three years to simplify this business,” Wells Fargo said in a statement.

    Mortgage is “an important relationship product,” hence the decision to continue to be a lender to Wells Fargo bank customers as well as minority home buyers, Kleber Santos, chief executive of consumer lending, said.

    “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” Santos said.

    “As the largest bank lender to Black and Hispanic families for the last decade, we remain deeply committed to advancing racial equity in homeownership.”

    Wells Fargo was once among the top mortgage lenders in the U.S.

    Late last month, the Consumer Financial Protection Bureau ordered it to pay $3.7 billion relating to alleged mismanagement of auto loans, mortgages and deposit accounts. The bank did not admit wrongdoing as part of the settlement.

    Shares of Wells Fargo have lost about 24% in the past 12 months, compared with losses of around 16% for the S&P 500 index.
    SPX,
    +0.70%

    [ad_2]

    Source link

  • ‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns

    ‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns

    [ad_1]

    The Federal Reserve is likely to raise interest rates more than the markets now expect, says Ricardo Reis, an economist at the London School of Economics.

    “Markets are going to get rocked,” Reis told MarketWatch on the sidelines of the American Economic Association annual meeting in New Orleans.

    “All the risks are on the upside. A rate of 5.5% is the minimum,” he added.

    Last month the Fed raised the top end of its benchmark rate range to 4.5%. The central bank penciled in a 5.25% terminal rate.

    Investors who trade in the fed-funds futures market now expect the Fed to stop raising when rates get to 5%.

    Reis thinks the central bank will ultimately move rates higher.

    The Fed is burned by failing to recognize the persistent upward move of inflation in 2021, he said.

    “So I think they are biased toward over-tightening,” he said. “Either legitimately or because they are worried about fixing their past mistake, there are going to be tighter than you think.”

    The economy is at a turning point and the Fed does face some “tough calls,” Reis said.

    The key going forward is the path of wages.

    Workers need to have their wages go up because their paychecks have not kept up with inflation.

    So the Fed is going to have to gauge if the rise in wages is too much, just right or too little, he said.

    If wages don’t rise much, inflation can quickly return to the Fed’s 2% target, he said.

    If wages rise in line with productivity, the Fed won’t have to raise too much and inflation will come down to 2% in a few years.

    This will be difficult because productivity is an economic variable that is hard to measure.

    If wages spike, this would probably cause companies to continue raising prices, kicking off a wage-price spiral, Reis warned.

    The Fed might overreact to the rise in wages, he said.

    There is a scenario where rates go up “much more,” Reis said. But there is a range — it could be “much much more” or “much more” or “just more.”

    Reis said that he was sympathetic to the idea that raising the unemployment rate to 5.5% was not a terrible outcome if it means a return to low inflation.

    The unemployment rate hit 3.5% in December.

    Stocks
    DJIA,
    +2.13%
     
    SPX,
    +2.28%
    moved sharply higher Friday when the government reported relatively slow increase in wages in December. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.562%
    fell to 3.56%.

     

    [ad_2]

    Source link

  • CES 2023: AMD, Nvidia, auto applications get the hype, but analysts say this one chip maker ruled

    CES 2023: AMD, Nvidia, auto applications get the hype, but analysts say this one chip maker ruled

    [ad_1]

    As CES 2023 draws to a close, much of the attention in the chip world was lauded on companies like Advanced Micro Devices Inc. and Nvidia Corp. but a lower profile chip maker appears better positioned coming out of the convention.

    Morgan Stanley analyst Joseph Moore said there’s still a lot of caution about overall chip demand especially with softness in China, but autos appear to be one of the strong themes of CES 2023, he said.

    “The areas that have been weak remain somewhat weaker – notably memory, semi cap, and generally PC and cloud builds – while the markets that have been strong (such as automotive and industrial) remain strong but with lead times clearly starting to normalize, which likely points to longer term revenue pressures particularly in a weaker economy,” Moore said.

    “Still, the longer term themes remain positive, especially for autos (which is increasingly the focus of CES),around themes such as EVs, ADAS and autonomous.”

    Such was the case when Nvidia Corp.
    NVDA,
    +4.16%
     said on Tuesday it was partnering with Hon Hai Technology Group
    2317,
    +0.41%
     , or Foxconn, best known for being the manufacturer of Apple Inc.’s
    AAPL,
    +3.68%
    iPhone, to make electric vehicles that use Nvidia’s Drive Orin chips and sensors, and bringing its GeForce Now streaming video game service to autos made by Hyundai Motor Group
    005380,
    +0.31%    ,
    BYD
    1211,
    -2.60%    ,
    and Swedish EV maker Polestar.

    “We generally think that Nvidia numbers are likely OK from here, though there was some caution on sell through in China for gaming, and a clear awareness that while the company’s position within cloud is very good, that pressure in cloud budgets leads to somewhat lower visibility,” Moore said. “But we would say that generally we think that they are past the worst of the pressures in their business, in contrast to most of the semiconductor group where there are still likely numbers cuts ahead.”

    Meanwhile, Advanced Micro Devices Inc.
    AMD,
    +2.62%
    used the CES keynote to introduce the Instinct MI300 chip as “world’s first data-center integrated CPU + GPU.” The  combined central processing unit and graphics processing unit meant for AI inference, the months-long process where data centers spend millions of dollars a year on electricity to train and develop artificial intelligence. AMD Chief Executive and Chair Lisa Su said the MI300 can reduce the time it takes for an inference modeling process from months to weeks.

    But one chip maker that doesn’t get a lot of attention appeared to emerge from CES best positioned for the year: ON Semiconductor Corp.
    ON,
    +4.57%    ,
    which focuses on electric vehicles and advanced driver assistance systems as primary growth drivers, leveraging its legacy position in auto chips.

    “Most notably, the company’s push into [Silicon Carbide] remains on track, and expect to still exit the year at a run-rate where the majority of crystal driving the business is internally sourced,” Moore said. “The company remains confident that demand in the EV space will far outpace supply for a long time and have thus shifted their focus over to execution on the production side.”

    Citi Research analyst Christopher Danley lauded ON as being the most bullish chip maker of CES 2023.

    “ON remains on track to triple Silicon Carbide revenue YoY from roughly $300 million in 2022 to $1.0 billion in 2023,” Danley said. “The company stated it is sold out through 2023.”

    But ON aside, Danley said everyone at CES is “nervous” about “cracks” in data-center demand, “and they should be.”

    “There was a tone of nervousness on the data center outlook with many execs and investors cautious and talking about ‘uncertainty’ in data center outlooks from both hyperscalers and enterprise customers,” Danley said. “We continue to believe data center correction will happen given a multitude of datapoints and leading indicators.”

    Back in early December, Danley said his checks “indicate order rates from the data center end market are fading with downside from the enterprise end market (roughly 40% of the data center end market) and Facebook,” which is owned by parent company Meta Platforms Inc.
    META,
    +2.43%
    “We continue to expect a correction in the data center end market in 1H23,” Danley said.

    That said, Danley said his top pick was and continue to believe a correction there is inevitable. We remain cautious on semis until all end markets and companies correct and our top pick remains chip maker Analog Devices Inc.
    ADI,
    +3.65%

    Back to autos: Ambarella Inc.
    AMBA,
    +6.77%
    on Thursday, Ambarella said it was partnering with Continental AG
    CON,
    +2.32%
    to develop hardware and software for assisted driving using AI with the ultimate goal of an autonomous driving system. The companies hope to have systems in production in 2026.

    Moore said Ambarella’s tech “continues to impress,” and said the Continental partnership will provide software revenue that’s shared but with the larger portion going to Continental.

    At CES 2023, “the companies are showing a full L2+ ADAS implementation for a 10-camera system running on a single chip, which per AMBA was only using 8% of the compute value of the chip.”

    [ad_2]

    Source link

  • I am 60 and plan to retire in March. I have $113K in my 401(k) and no other savings, but I will get an early retirement package of 9 months salary. Should I get a pro to help me? 

    I am 60 and plan to retire in March. I have $113K in my 401(k) and no other savings, but I will get an early retirement package of 9 months salary. Should I get a pro to help me? 

    [ad_1]

    Question: I am accepting an early retirement offer from my long-term employer of 24 years. In March of 2023, I will retire and receive nine months of salary as well as my benefits. During this time I will be looking for another job that’s 30 or 40 hours per week. I would like to do this in order to invest some of the stipend I will be receiving. I have approximately $113,000 in a 401(k) that I will also be looking to invest. I have no other savings or checking, and I am 60 years old. I need advice as to whether it would benefit me to hire a financial advisor outside of the one I have with a large investment company through my current employer. (Looking for a financial adviser too? This tool can help match you with an adviser who might meet your needs.)

    Answer:  While it may benefit you to work with a financial adviser outside of your employer, that’s not always the case. “It really depends on what the employer-adviser costs, what their fiduciary obligations may or may not be and how well-credentialed they are. If they’re low cost, act as a fiduciary, have a preeminent planning designation, then it may be a great fit, but if not, you may wish to find an adviser elsewhere,” says certified financial planner Philip Mock at 1522 Financial. 

    Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.

    For his part, certified financial planner Joe Favorito at Landmark Wealth Management says he recommends meeting with the current adviser and going over your situation along with your longer term goals to see if they’re competent and have done a good job up to this point. “If they aren’t, and you’re looking elsewhere, then I would suggest using whoever you choose exclusively because you want your financial plans to be one cohesive strategy and having two competing advisers can sometimes create more problems than you can solve,” says Favorito. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

    No matter which adviser you choose — or if you go it alone — you have a number of things you will want to consider here. “I’d want to know what your net monthly expenses will be in retirement in today’s dollars, whether you have any pensions expected in the future, and if not, what Social Security will look like at 67 and 70. I’d also want to know when you’d like to have the choice to quit working, but all of these questions come with assumptions, and my biggest concern is that you haven’t saved enough to quit working when you’d like,” says certified financial planner Adam Koos at Libertas Wealth Management. 

    Indeed, Koos says there are two possible scenarios here. “My guess is that either you’re going to need to save as much as you can between now and full retirement, or I would hope that you’re a relatively frugal individual. Case in point, if your Social Security comes out to $3,500 per month and your total retirement savings grows to $150,000 between now and retirement at 65, you can only expect a $500 per month gross check from your retirement portfolio, which puts your monthly gross retirement income at around $4,000 per month,” says Koos.

    The good news here is that that may be enough for you, and you plan to keep working and earning money that you can use to boost your retirement funds. And if you decide to go the financial adviser route, that person can help you invest your earnings and come up with a solid plan to ensure a smooth retirement. Make sure that whoever you work with has the ability to handle — or knows someone they can recommend — not just the investment advice, but all the other issues that become paramount as you get closer to your senior years. “This means estate planning, insurance planning and tax planning,” says Favorito.

    Something else to consider: Advisers say you should plan to have some liquid emergency savings on hand. “Your question about not having any other savings means you’re definitely in need of an emergency fund,” says Mock. Pros advise having between 3 and 6 months of living expenses in an emergency fund, regardless of whether you’re approaching retirement.

    You should also think about when you will take Social Security. If you retire at full retirement age (66 if you’re born between 1943 and 1954 and 67 if you’re born between 1955 and 1960), you’ll receive the maximum benefit. It’s best to delay taking Social Security as long as possible because benefits are increased by a percentage each month you delay starting after your full retirement age.

    If you can’t find a job you like because of a looming recession, it may make sense to enter the gig economy and work wherever you can to earn extra money. 

    Looking for a new adviser? Consider checking out professional planners using the National Association of Professional Financial Advisors (NAPFA) online tool since hiring a personal financial planner is highly recommended in your case, as the individual helping with your retirement plan at work likely doesn’t have the capabilities, license or legal ability to provide the kind of advice you’re going to need. (Looking for a financial adviser? This tool can help match you with an adviser who might meet your needs.)

    Questions edited for brevity and clarity.

    Have an issue with your financial adviser or looking for a new one? Email picks@marketwatch.com.

    The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks, and have not been reviewed or endorsed by our commercial partners.

    [ad_2]

    Source link

  • No Fed official expects an interest-rate cut to be appropriate this year, meeting minutes show

    No Fed official expects an interest-rate cut to be appropriate this year, meeting minutes show

    [ad_1]

    None of the 19 top Federal Reserve officials expect it will be appropriate to cut interest rates this year, according to the minutes of the central bank’s December policy meeting, which were released Wednesday.

    Fed officials welcomed recent inflation data that showed reductions in the monthly pace of price increases but wanted to see a lot more evidence of progress to be convinced inflation was on a sustained downward path, the minutes indicated.

    Investors who trade in the federal funds futures market expect the Fed to start reducing interest rates this summer.

    Fed officials said that if markets start to ease financial conditions, especially if driven by a misperception of how the Fed was responding to the data, that “would complicate” the Fed effort to restore price stability.

    Officials downshifted to a 50-basis-point rate increase at the Dec. 13-14 meeting, after four straight moves of 75 basis points. That puts their benchmark rate in a range between 4.25% to 4.5%. A number of Fed officials said it was important to stress that raising rates at a slower pace was not a sign of any “weakening” in the Fed’s resolve to bring inflation down to 2% or a judgement that inflation was already on a downward path.

    Seventeen of 19 Fed officials said they expected rates to rise above 5% this year. Officials penciled in the high end of the interest-rate range at 5.25%, with seven officials penciling in even higher rates.

    This is well above market-based measures of Fed policy-rate expectations.

    Earlier on Wednesday. Minneapolis Fed President Neel Kashkari said he would like to see the Fed hike interest rates to 5.4% before pausing.

    Read: Fed’s Kashkari backs more rate hikes at next few meetings

    Investors see the high end of the Fed’s interest-rate range hitting 5.25% this summer and then retreating.

    Fed officials said upside risks to inflation remained a “key factor” in shaping policy.

    The market expects the Fed to downshift to a 25-basis-point hike at their next meeting, slated for Jan. 31- Feb.1.

    Officials said they are trying to balance two risks — doing too little and adding fuel to inflation and raising rates too high and and lead to an “unnecessary reduction” in economic activity.

    Stocks
    SPX,
    +0.75%
     
    DJIA,
    +0.40%
    were higher on Wednesday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.687%
    slipped to 3.7%.

    [ad_2]

    Source link

  • I retired at 50, went back to work at 53, and then a medical issue left me jobless: ‘There’s no such thing as a safe amount of money’

    I retired at 50, went back to work at 53, and then a medical issue left me jobless: ‘There’s no such thing as a safe amount of money’

    [ad_1]

    I had always said I was going to retire when I was 50. I had worked and saved since I was 16. Retiring without Medicare and Social Security is a scary thing. I wound up retiring then going back to work. At 53, I took a part-time job with a decent salary for the hours but I was sooooo bored. And then life rang my bell. 

    I had major medical problems. So major that when I was able to return to work they let me go because they didn’t think I could keep up with the workflow. They were probably right. Nobody else felt comfortable enough with my health issues to hire me. I applied for disability but was denied. I appealed and got my rejection to the appeal while I was in ICU. I appealed again and I was denied because they didn’t think anything changed from my original application.

    I am assuming you can imagine what my savings is now. I took early retirement, with the penalty, because I needed income. $4,000 a month wouldn’t have put a dent in my prescriptions.

    Everybody needs to know there’s no such thing as a safe amount of money set aside for retirement. Life happens and in the blink of an eye your whole life and everything you worked for can be gone. 

    See: I’m 68, my husband is terminally ill, and his $3 million estate will go to his son. I want to spend the rest of my days traveling – will I have enough money?

    Dear reader, 

    I normally only feature letters with questions for this column, but your note was just so important for other readers that I had to respond — and let others see what you’ve shared. 

    I’m so very sorry that you experienced this. Wanting to retire early isn’t inherently wrong — so many people wish to do it, especially after decades of working. But without the proper planning, it could lead to despair, especially if an emergency occurs.

    “Retiring early is a dream for many people,” said Landon Tan, a certified financial planner. “But those years of not working diminish your chance of a successful retirement more than almost any other metric we toggle when making financial plans.” 

    Retiring early means there are more years you need to be able to financially cover, and that requires money — a lot of it. When planning to retire early, those extra years need to be considered — at the forefront of retirement, but also in the back end if you live longer than anticipated. 

    “Today’s retirees are expecting their accumulated assets to work for them for 10-20 years longer than before,” said Glenn Downing, a certified financial planner and founder of CameronDowning. “Centenarians are no longer uncommon. For that to happen successfully, there needs to be more assets — simple as that.” Anyone should prepare to live longer than expected so their money does not outlast them, which can feel daunting. 

    Those missing years may also affect your Social Security benefits, which so many elderly Americans rely on for most of their retirement income. People retiring early should have a clear picture of what to expect from Social Security in the future, and how their plans may impact those expectations.  

    Leaving the workforce also means possibly losing out on participating in a group health plan, and I think we can say with certainty the pandemic has shown just how crucial health insurance can be in dire times. 

    You’re absolutely right: Retiring before Medicare is scary. Healthcare is expensive even without an emergency. Not everyone considers this expense when they’re dreaming about calling it quits in their 50s, but if they don’t have proper insurance lined up when they retire they could be blowing through their retirement budget quickly — or putting themselves in a very dangerous situation. Those years can feel long when Medicare eligibility only begins at age 65 for most Americans. And it also doesn’t take into consideration long-term care, which is an entirely other expense. Think nursing homes, home health aides and necessary medical equipment for daily activities.  

    Don’t miss: Retiring early this year? Look through Affordable Care Act plans now before the deadline Saturday

    Knowing how much is enough to have saved for retirement is very difficult. There is no such thing as one “safe” number before you retire, but there are a few guidelines one can follow to find security in old age. 

    Part of that equation comes down to personal circumstance: how much you typically spent in your pre-retirement life, how much you anticipate spending in retirement, various financial factors like taxes and cost of housing and utilities, and so on. And as you have experienced — and considerately reminding others — major unexpected emergencies can absolutely derail any sort of financial security. 

    Another factor is what is available to you in your older years. I’ll get to that in a moment in hopes it may help you or others in similar situations. 

    Retirees tend to focus on short-term changes, which can cause them to be unprepared for what the future holds, a recent survey found. Many retirees just deal with these emergencies as they come, according to research from the Society of Actuaries. The organization found more than seven in 10 retirees have thought about how their lives will change in the following decades, but only 27% feel financially prepared for it. 

    More than half of the retirees in the survey said they could not afford more than $25,000 for an unexpected emergency without jeopardizing their retirement security. More than half of Black respondents and Latino respondents said they couldn’t afford to spend $10,000 for a financial shock. 

    “The world can change around you really quickly, and you need to be prepared for the change and to deal with change,” said Anna Rappaport, a member of the Society of Actuaries Research Institute’s Aging and Retirement Program. Americans didn’t often plan for the shocks life could bring before the pandemic, and that hasn’t necessarily changed since, she said.  “The shocks were there before and the landscape just changed a little.” 

    Check out MarketWatch’s column “Retirement Hacks” for actionable pieces of advice for your own retirement savings journey 

    But you’re not alone. Many people have fallen into hard times before and during retirement, pandemic or no pandemic. You may already be exhausting all avenues, but this one retiree shared the steps he took when he lost his job at 58. He searched for another job for 18 months before taking one with a 40% pay cut, and had to live a lot leaner until he officially retired at age 64. That lifestyle included taking in a roommate, buying some household items at the dollar store and extreme meal planning. Here’s what he says about his retirement now. 

    If your medical condition allows, could you take on some part-time work, or find some ways to make money while working from home? Or could you possibly downsize where you live or take in a roommate? 

    I know you didn’t ask for any suggestions and I’m sure you’re already doing as much as you can to live comfortably, but there are plenty of resources you might want to consider if you haven’t already. 

    Have you explored any government benefits, such as assistance in costs for housing, heating or groceries? There are many federal and state programs available for seniors with needs for financial assistance — not just Supplemental Security Insurance and Medicaid, though of course those are the most prominently known. 

    AARP created a list of resources, broken up by state, and has its own services, such as helping people get back to work in their 50s and beyond. GoFundMe also has a list for financial assistance for older Americans. It includes options for housing, food, medicine and getting back into the workforce. States, and sometimes even individual cities, have departments and offices dedicated to aging issues, which you may want to try calling as well. There is help out there, even if it may not feel easy to find.  

    I wish you the best. 

    Readers: Do you have suggestions for this reader? Add them in the comments below.

    Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

    [ad_2]

    Source link

  • Sam Bankman-Fried Likely to Plead Not Guilty to Fraud Charges

    Sam Bankman-Fried Likely to Plead Not Guilty to Fraud Charges

    [ad_1]

    FTX founder Sam Bankman-Fried.


    David Dee Delgado/Getty Images

    FTX founder Sam Bankman-Fried is likely to plead not guilty to fraud and other charges at his arraignment next week, according to people familiar with the matter.

    The U.S. attorney’s office for the Southern District of New York earlier this month charged Mr. Bankman-Fried with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, alleging that he oversaw one of the biggest financial frauds in American history. Mr. Bankman-Fried is likely to appear in person in New York to enter his plea on Jan. 3, one of the people said.

    Before his arrest, Mr. Bankman-Fried blamed the loss of customer funds on sloppy record-keeping and a bank-account issue that allowed Alameda Research, an affiliated trading firm, to cover large losses with money destined for FTX. His not guilty plea was widely expected.

    Mr. Bankman-Fried stands at odds with his associates—Caroline Ellison, the former chief executive of Alameda Research, and Gary Wang, FTX’s former chief technology officer—who both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with. Both are cooperating with federal investigators.

    The collapse of FTX and its sister trading firm Alameda have rattled the nascent world of crypto. Prosecutors allege that Mr. Bankman-Fried took billions of dollars of FTX.com customer money to pay the expenses and debts of his trading firm Alameda Research. Both companies filed for bankruptcy last month. Individual traders who entrusted FTX with their crypto are likely facing lengthy bankruptcy proceedings before they have a chance at seeing any of their funds back.

    Read the rest of this article in The Wall Street Journal.

    Write to editors@barrons.com

    [ad_2]

    Source link

  • These 20 stocks were the biggest losers of 2022

    These 20 stocks were the biggest losers of 2022

    [ad_1]

    This has been the year of reckoning for Big Tech stocks — even those of companies that have continued to grow sales by double digits.

    Below is a list of the 20 stocks in the S&P 500
    SPX,
    -0.72%
    that have declined the most in 2022.

    First, here’s how the 11 sectors of the benchmark index have performed this year:

    S&P 500 sector

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 31, 2021
    Energy

    		 57.8%

    		 9.6

    		 11.1
    Utilities

    		 -0.5%

    		 18.8

    		 20.4
    Consumer Staples

    		 -2.7%

    		 20.9

    		 21.8
    Healthcare

    		 -3.2%

    		 17.4

    		 17.2
    Industrials

    		 -6.7%

    		 18.0

    		 20.8
    Financials

    		 -12.1%

    		 11.7

    		 14.6
    Materials

    		 -13.4%

    		 15.6

    		 16.6
    Real Estate

    		-27.7%

    		 16.2

    		 24.2
    Information Technology

    		 -28.8%

    		 19.6

    		 28.1
    Consumer Discretionary

    		 -37.4%

    		 20.7

    		 33.2
    Communication Services

    		 -40.4%

    		 14.0

    		 20.8
    S&P 500

    		 -19.2%

    		 16.5

    		 21.4
    Source: FactSet

    The energy sector has been the only one to show a gain in 2022, and it has been a whopper, even as West Texas Intermediate crude oil
    CL.1,
    +0.41%
    has given up most of its gains from earlier in the year. Here’s why investors are still confident in the supply/demand setup for oil and energy stocks.

    Looking at the worst-performing sectors, you might wonder why the consumer discretionary and communication services sectors have fared worse than information-technology, the core tech sector. One reason is that S&P Dow Jones Indices can surprise investors with its sector choices. The consumer discretionary sector includes Tesla Inc.
    TSLA,
    +0.70%
    and Amazon.com Inc.
    AMZN,
    -1.17%    ,
    which has fallen nearly 50% this year. The communications sector includes Meta Platforms Inc.
    META,
    -1.21%    ,
    along with Match Group Inc.
    MTCH,
    +0.50%    ,
    which is down 69% for 2022, and Netflix Inc.
    NFLX,
    -0.44%    ,
    which is down 52% this year.

    There have been many reasons easy to cite for Big Tech’s decline, such as a questionable change in strategy for Facebook’s holding company, Meta, as CEO Mark Zuckerberg has put so much of the company’s resources into developing a new world that most people don’t wish to enter, at least yet. Meta’s shares were down 64% for 2022 through Dec. 29.

    You might also blame the Twitter-related antics and sales of Tesla shares by CEO Elon Musk for the 65% decline in the electric-vehicle maker’s stock this year. But Tesla had a forward price-to-earnings ratio of 120.3 at the end of 2021, while the S&P 500
    SPX,
    -0.72%
    traded for 21.4 times its weighted forward earnings estimate, according to FactSet. Those P/E ratios have now declined to 21.7 and 16.4, respectively. So Tesla no longer appears to be a very expensive stock, especially for a company that increased its vehicle deliveries by 42% in the third quarter from a year earlier.

    Analysts polled by FactSet expect Tesla’s stock to double during 2023. It nearly made this list of 20 EV stocks expected to rebound the most in 2023.

    The worst-performing S&P 500 stocks of 2022

    Here are the 20 stocks in the S&P 500 that fell the most for 2022 through the close on Dec. 29.

    Company

    		 Ticker

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 32, 2021
    Generac Holdings Inc.

    		 GNRC,
    -0.84%         		-71.4%

    		 13.7

    		 30.2
    Match Group Inc.

    		 MTCH,
    +0.50%         		-68.9%

    		 20.1

    		 48.5
    Align Technology Inc.

    		 ALGN,
    -0.52%         		-67.7%

    		 27.4

    		 48.7
    Tesla Inc.

    		 TSLA,
    +0.70%         		-65.4%

    		 21.7

    		 120.3
    SVB Financial Group

    		 SIVB,
    -0.38%         		-65.4%

    		 10.8

    		 23.0
    Catalent Inc.

    		 CTLT,
    -0.40%         		-64.6%

    		 13.0

    		 32.5
    Meta Platforms Inc. Class A

    		 META,
    -1.21%         		-64.2%

    		 14.7

    		 23.5
    Signature Bank

    		 SBNY,
    -0.34%         		-64.1%

    		 6.2

    		 18.6
    PayPal Holdings Inc.

    		 PYPL,
    -0.01%         		-62.6%

    		 14.8

    		 36.0
    V.F. Corp.

    		 VFC,
    +0.15%         		-62.5%

    		 11.9

    		 20.4
    Warner Bros. Discovery Inc. Series A

    		 WBD,
    -1.64%         		-59.9%

    		 N/A

    		 7.5
    Carnival Corp.

    		 CCL,
    -0.23%         		-59.8%

    		 38.1

    		 N/A
    Stanley Black & Decker Inc.

    		 SWK,
    -0.42%         		-59.8%

    		 17.0

    		 15.9
    Lumen Technologies Inc.

    		 LUMN,
    -1.79%         		-57.8%

    		 7.7

    		 7.8
    Zebra Technologies Corp. Class A

    		 ZBRA,
    -0.44%         		-56.7%

    		 14.5

    		 30.1
    Dish Network Corp. Class A

    		 DISH,
    -0.96%         		-56.5%

    		 8.6

    		 10.9
    Caesars Entertainment Inc.

    		 CZR,
    +0.24%         		-55.7%

    		 51.4

    		 144.5
    Lincoln National Corp.

    		 LNC,
    +0.26%         		-55.1%

    		 3.4

    		 6.2
    Advanced Micro Devices Inc.

    		 AMD,
    -0.97%         		-55.0%

    		 17.8

    		 43.1
    Seagate Technology Holdings PLC

    		 STX,
    -0.55%         		-53.1%

    		 15.0

    		 12.4
    Source: FactSet

    Click on the tickers for more information about the companies.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Another way of measuring the biggest stock-market losers of 2022

    It is one thing to have a large decline based on the share price, but that doesn’t tell the entire story. How much of a decline have investors seen in the holdings of their shares during the year? The S&P 500’s total market capitalization declined to $31.66 trillion as of Dec. 28 (the most recent figure available) from $40.36 trillion at the end of 2021, according to FactSet.

    Shareholders of these companies have suffered the largest declines in market cap during 2022.

    Company

    		 Ticker

    		 2022 market capitalization change ($bil)

    		 2022 price change
    Apple Inc.

    		 AAPL,
    -0.63%         		-$851

    		 -27.0%
    Amazon.com Inc.

    		 AMZN,
    -1.17%         		-$832

    		 -49.5%
    Microsoft Corp.

    		 MSFT,
    -1.15%         		-$728

    		 -28.3%
    Tesla Inc.

    		 TSLA,
    +0.70%         		-$677

    		 -65.4%
    Meta Platforms Inc. Class A

    		 META,
    -1.21%         		-$465

    		 -64.2%
    Nvidia Corp.

    		 NVDA,
    -1.37%         		-$376

    		 -50.3%
    PayPal Holdings Inc.

    		 PYPL,
    -0.01%         		-$141

    		 -62.6%
    Netflix Inc.

    		 NFLX,
    -0.44%         		-$138

    		 -51.7%
    Walt Disney Co.

    		 DIS,
    -1.62%         		-$123

    		 -43.7%
    Salesforce Inc.

    		 CRM,
    -0.96%         		-$118

    		 -47.8%
    Source: FactSet

    So there is your surprise for today: Apple is this year’s biggest stock-market loser.

    Don’t miss: Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

    [ad_2]

    Source link

  • Surprise! CDs are back in vogue with Treasurys and I-bonds as safe havens for your cash

    Surprise! CDs are back in vogue with Treasurys and I-bonds as safe havens for your cash

    [ad_1]

    If there’s a silver lining to the current economic situation that features soaring inflation and falling stocks, it’s that savers can get more for their money.

    Even after just a few months of rising interest rates, you can find online savings accounts yielding more than 3%. But that might not be good enough anymore. 

    “Rather than being grateful for yield, that’s going to change quickly into turning your nose up at yield,” says Matt McKay, a certified financial planner and partner at Briaud Financial Advisors in College Station, Texas. 

    The Federal Reserve continued to raise rates through the end of 2022, and yields on savings products are now high enough that they look like a safe haven compared with a stock market that’s in the red this year.

    And that means certificates of deposits, or CDs, are back in the conversation — even if that comes with caveats.

    Advisers still favor Treasury bills and notes and Series I savings bonds for getting the best combination of low risk and high yield, but some are looking more seriously at CDs now. And for the everyday investor doing it on their own, CDs offer an additional boost beyond a savings account without much effort. 

    “It’s good for anyone if they have cash sitting around, if you can pick up something — CDs, T-bills, whatever — it’s good to get something,” says McKay. 

    Remember CDs? 

    If you’re under 50, you might never have invested in a CD and have no memory of how investors used to build ladders of different maturities as a cornerstone of their portfolio. 

    “With younger clients, nobody ever talks about CDs — never, never, never,” says Dennis Nolte, a certified financial planner and financial consultant at Seacoast Investment Services in Orlando, Fla.  

    For some, however, CDs never went out of style. These promissory notes from banks, which have been around in the U.S. since the 1800s, come in maturities generally from three months to five years, in exchange for interest at maturity.

    You’re locked into the time period or face surrender charges that vary, unless you choose a more flexible, lower-interest option. The laddering strategy consists of buying CDs at different maturities and then reinvesting as they each come due. 

    Over the past few years, CDs haven’t been worth it for most savers, who could get as much from a high-yield savings account without restrictions. The average five-year CD would have nabbed you nearly 12% in 1984, but now the average five-year rate is just 0.74%, according to Bankrate.com. Back in 1984, CDs were nearly 50% of deposits at FDIC-insured banks, with $1.24 trillion held in the first quarter of that year. In 2022, there’s nearly the same dollar amount, which amounts to just 6.3% of deposits.

    With rates rising, you can find better-than-average deals, closing in on 4% at some banks or brokerages. Many have a $1,000 minimum purchase, but you can find fractional offers for as little as $100. 

    CDs versus Treasurys and I-bonds

    Treasury bills and notes come in roughly the same maturities as CDs, and are yielding slightly more currently. They also have no state tax burden on gains. 

    You can buy directly at TreasuryDirect.gov, with a $100 minimum, but to sell, you have to transfer holdings to a brokerage. Or you can buy and sell through a brokerage, but your minimums may be $1,000. 

    For I-bonds, you can only buy directly at TreasuryDirect.gov, with a minimum of $25 and a maximum of $10,000 per person a year, with gifts allowed to others up to $10,000 per recipient. I-bonds are indexed for inflation, with rates that reset every six months, and today are yielding 6.89% through April 2023. The biggest caveat is that you are locked into one year, and then face a surrender penalty of three months of interest if you cash out before five years. 

    A strategy for today’s rising rates

    If you are chasing yield and have money you don’t need for a year, then I-bonds are the place for the first $10,000.

    “It makes sense to max out I-bonds before investing in CDs,” says Ken Tumin, founder of DepositAcccounts.com. 

    Just make sure you’re motivated enough to navigate a still-wonky website and keep track of the investment on your own, because it won’t align with any of your other accounts. McKay had a client who was eager to jump into I-bonds, and he was mad at first that McKay hadn’t recommended it. “But then he called to complain, saying this is terrible, it’s so difficult,” he says. 

    If you have funds beyond that for savings, consider Treasury bills or notes because the rates are higher, says Tumin. Then consider CDs. That’s what Nolte is doing with some clients, particularly older ones who have past experience with them.

    “Why not get something guaranteed? It’s maybe not keeping pace with inflation, but you’re not losing principal,” says Nolte. 

    CD rates move more slowly than other products, so even after the next rate hike, this strategy would still apply. But already Tumin sees investors ready to lock into long-term CDs, anticipating a recession and a drop in interest rates. If rates subsequently fall, and CDs lag, they would eventually end up with a price advantage over Treasury investments. Then people like McKay will be advising clients to buy in earnest.

    “That’s when CDs become most attractive — as soon as rates peak or there are cuts [in rates],” says McKay.

    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. 

    More from MarketWatch

    [ad_2]

    Source link

  • 10 Moves to Make Your Credit Score Soar in 2023

    10 Moves to Make Your Credit Score Soar in 2023

    [ad_1]

    If you want to whip your finances into shape, here’s a good goal: improving your credit score.

    A lot of goal-setting efforts fail because they’re so extreme. Think of all the bonkers weight-loss and money-saving goals that never go anywhere.

    This is different. No extreme measures are required. But there aren’t any shortcuts. Building good credit is a goal you need to commit to long term.

    How to Build Good Credit in 10 Steps

    Ready to finally prove your creditworthiness? Here’s how to build good credit in 10 steps.

    1. Stay on Top of Your Credit Reports

    About 1 in 5 credit reports contain inaccurate information. Make sure you access your reports for free at AnnualCreditReport.com, rather than one of the many websites that make you put down your credit card number to sign up for a trial. File a dispute with the bureaus if you find anything you think is inaccurate or any accounts you don’t recognize.

    Your credit reports won’t show you your credit score, but you can use a free credit-monitoring service to check your score. (No, checking your own credit doesn’t hurt your score.) Many banks and credit card companies also give you your credit scores for free.

    Pro Tip

    If the bureaus agree to remove information from your credit reports, expect to wait about 30 days until your reports are updated.

    2. Pay Your Bills. On Time. Every Single Month

    Yeah, you knew we were going to say this: Paying your bills on time is the No. 1 thing you can do to build good credit. Your payment history determines 35% of your score, more than any other credit factor.

    Set whatever bills you can to autopay for at least the minimums to avoid missing payments. You can always pay extra if you can afford it.

    A strong payment history takes time to build. If you’ve made late payments, they’ll stay on your credit reports for seven years. The good news is they do the most damage to your score in the first two years. After that, the impact starts to fade.

    3. Establish Credit, Even if You’ve Made Mistakes

    You typically need a credit card or loan to build a credit history. (Sorry, but all those on-time rent and utility payments are rarely reported to the credit bureaus, so they won’t help your score.)

    But if you have bad credit or you’re a credit newbie, getting approved for a credit card or loan is tough. Look for cards that are specifically marketed to help people start or rebuild credit. Store credit cards, which only let you make purchases at a specific retailer, can also be a good option.

    4. Open a Secured Card if You Don’t Qualify for a Regular Card

    Opening a secured credit card is one of our favorite ways to build a positive history when you can’t get approved for a regular credit card or loan. You put down a refundable deposit, and that becomes your line of credit.

    After about a year of making your payments on time, you’ll typically qualify for an unsecured line of credit. Just make sure the card issuer you choose reports your payments to the credit bureaus. Look for a card with an annual fee of no more than $35. Some secured card options we like (and no, we’re not getting paid to say this):

    • Discover It Secured
    • OpenSky Secured Visa Card
    • Platinum Secured from Capital One

    5. Ask for a Limit Increase. Pretend You Never Got It

    Increasing your credit limits helps your score because it decreases your credit utilization ratio. That’s credit score speak for the percentage of credit you’re using. The standard recommendation is to keep this number below 30%, but really, the closer to zero the better.

    If you have open credit, ask your current creditors for an increase, rather than applying for new credit. That way, you’ll avoid lowering your length of credit, which could ding your score.

    The downside of a higher credit limit: You’ll have more money to spend that isn’t really yours. To get the biggest credit score boost from a limit increase and avoid paying more in interest, make sure you don’t add to your balance.

    Pro Tip

    Don’t believe the myth that carrying a small credit card balance helps your credit score. Paying off your balance in full each month is best for your score, plus it saves you money on interest.

    6. Prioritize Credit Card Debt Over Loans

    Tackling credit card debt helps your credit score a lot more than paying down other debts, like a student loan or mortgage. The reason? Your credit utilization ratio is determined exclusively by your lines of credit.

    Bonus: Paying off credit card debt first will typically save you money, because credit cards tend to have higher interest rates than other types of debt.

    7. Keep Your Old Accounts Active

    Provided you aren’t paying ridiculous fees, keep your credit card accounts open once you’ve paid off the balance. Credit scoring methods reward you for having a long credit history.

    Make a purchase at least once every three months on the account, as credit card companies often close inactive accounts. Then pay it off in full.

    8. Apply for New Credit Selectively

    When you apply for credit, it results in a hard inquiry, which usually drops your score by a few points. So avoid applying frequently for new credit cards, as this can signal financial distress.

    But if you’re in the market for a mortgage or loan, don’t worry about multiple inquiries. As long as you limit your shopping to a 45-day window, credit bureaus will treat it as a single inquiry, so the impact on your score will be minimal.

    9. Still Overwhelmed? A Debt Consolidation Loan Could Help

    If you’re struggling with credit card debt, consolidating your credit card debt with a debt consolidation loan could be a good option. In a nutshell, you take out a loan to wipe out your credit card balances.

    You’ll get the simplicity of a single payment, plus you’ll typically pay less interest since loan interest rates tend to be lower. (If you can’t get a loan that lowers your interest rate, this probably isn’t a good option.)

    By using a loan to pay off your credit cards, you’ll also free up credit and lower your credit utilization ratio.

    Many debt consolidation loans require a credit score of about 620. If your score falls below this threshold, work on improving your score for a few months before you apply for one.

    10. Keep Your Credit Score in Perspective

    All the credit-monitoring tools out there make it easy to obsess about your credit score. While it’s important to build good credit, look at the bigger picture. A few final thoughts:

    • Your credit score isn’t a report card on the state of your finances. It simply measures how risky of a borrower you are. Having an emergency fund, saving for retirement and earning a decent living are all important to your finances — but these are all things that don’t affect your credit score.
    • Lenders look at more than your credit score. Having a low debt-to-income ratio, decent down payment and steady paycheck all increase your odds of approval when you’re making a big purchase, even if your credit score is lackluster.
    • Don’t focus on your score if you can’t pay for necessities. If you’re struggling and you have to choose between paying your credit card vs. paying your rent, keeping food on the table or getting medical care, paying your credit card is always the lower priority. Of course, talk to your creditors if you can’t afford to pay them, as they may have options.

    Focus on your overall financial picture, and you’ll probably see your credit score improve, too. Remember, though, that while credit scores matter, you matter more.

    Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected] or chat with her in The Penny Hoarder Community.


    [ad_2]

    robin@thepennyhoarder.com (Robin Hartill, CFP®)

    Source link

  • Here are MarketWatch’s most popular Moneyist advice columns of 2022

    Here are MarketWatch’s most popular Moneyist advice columns of 2022

    [ad_1]

    What fresh shenanigans and money dilemmas enthralled readers in 2022?

    Another year of broken promises, dodgy dealings and moving letters about how to get back on one’s feet after divorce, unemployment and even a 15-year abusive relationship. 

    The most widely-read Moneyist of 2022, however, was actually one of the shortest letters from someone called ‘Surprised Sister.” The answer, as is often the case, was not so simple, nor so short.

    Here is the No. 1 Moneyist column of the year: ‘We are surprised and bewildered’: My brother passed away and left his house, cash and possessions to charity. Can his siblings contest his will?

    My response: There are times to contest a will: a parent who was being controlled by a new friend or greedy child, and/or someone who was forced to change their will when they were not of sound mind.

    But her own legal advice notwithstanding, I suggested she should accept your brother’s wishes. Feeling aggrieved that she did not inherit his estate is not enough to break his will. 

    Separate the emotions from the finance, and the answer often reveals itself. But there were others that ran the gamut from romance to stocks. They other most-read columns are an eclectic bunch:

    Here are the 5 runner-ups:

    1. I had a date with a great guy. I didn’t drink, but his wine added $36 to our bill. We split the check evenly. Should I have spoken up?

    It would be nice to offer to take the booze off the check, you were a non-drinker, would you speak up at one drink or two or three, if your date split the entire bill 50/50? 

    The financial intricacies of dating are like an onion that can be peeled ad infinitum. We’ve had plenty to chew over. Paying for one of your date’s drinks is OK, paying for two is pushing it.

    1. My father offered his 3 kids equal monetary gifts. My siblings took cash. I took stock. It’s soared in value — now they’re crying foul

    “The Other Brother” wrote that his father offered three children a choice: stocks or cash. The other two siblings took the cash. He took the cash. The stock soared. Dems are the breaks.

    Her siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it.

    1. I’m an unmarried stay-at-home mother in a 20-year relationship, but my boyfriend won’t put my name on the deed of our house. Am I unreasonable?

    They have been in a 20-year relationship and have a 10-year-old child. “Not on the Deed” said she and her partner have had several tense “discussions” about adding me to the deed.

    I told her that her contribution to your partnership is valuable, her sense of worth is valuable, and her role as a homemaker and a mother is also valuable. Yes, he should add her.

    1. My friend got us free theater tickets. When I got home, she texted me, ‘Can you get our next meal or activity?’ Am I obliged to treat her?

    Even amidst the fights over inheritances, some breaches of social and financial etiquette seem so bizarre some people might think, ‘That behavior is too outrageous to be believable.” 

    The letter writer received free theater tickets, they split the bill 50/50 even though her friend had a cocktail, and she paid $10 for parking. Is he obliged to take her out again? No-can-do.

    1. My date chose an exclusive L.A. restaurant. After dinner, he accepted my credit card — and we split a $600 bill. Shouldn’t he have paid?

    Another dating story, this time where the guy chose a fancy restaurant and, as the date wore on, things took a turn for the worst, at least in the letter writer’s eyes: She was asked to split the bill.

    What if they didn’t get along? What if he was an abortion-rights supporter and she was anti-abortion? What if he was a Republican and she was a Democrat? Or vice-versa?  Always be prepared to pay.

    Follow Quentin Fottrell on Twitter.

    You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    ‘I’m left with a $100 Bûche de Noël for 10 people — and no place to go’: My friends canceled Christmas dinner. Should I end the 30-year friendship?

    I met my wife in 2019 and we married in 2020. I put her name on the deed of my $998,000 California home. Now I want a divorce. What can I do?

    I want to meet someone rich. Is that so wrong?’ I’m 46, earn $210,000, and own a $700,000 home. I’m tired of dating ‘losers.’

    [ad_2]

    Source link

  • 5 things not to buy in 2023

    5 things not to buy in 2023

    [ad_1]

    It’s been a year of contradictions.

    The recession drum beats on, interest rates are rising, and the stock market has taken a tumble, and yet retail sales have risen 6.5% in the last 12 months, trailing a 7.1% increase in the cost of living.

    There are other reasons people should consider cutting back on spending in 2023. The personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — hit 2.4% in the third quarter from 3.4% in the prior quarter, the Bureau of Economic Analysis said.

    “There are signs that people are pulling back on certain expenditures. ”

    That is the lowest level since the Great Recession and the eighth-lowest quarterly rate on record (since 1947). Adjusted for inflation, savings are down 88% from their 2020 peak and 61% lower than before the pandemic, according to government data. The personal saving rate hit 2.4% in November vs. 2.2% in October. 

    Are people buying stocks during a bearish market, and/or have they run out of their pandemic-era savings? Whatever the reasons, more judicious investing and spending decisions seem to be the most prudent approach — especially given the uncertain economic outlook for 2023.

    There are signs that people are already pulling back on certain expenditures. Although retail sales are up on the year, they did decline 0.6% month-on-month in November to mark their biggest decline in almost a year, largely because of weak car sales.

    About those new cars: New-vehicle total sales for 2022 are projected to reach 13,687,000 units, down 8.4% on the year, according to a joint forecast from J.D. Power and LMC Automotive. MarketWatch reporter Philip van Doorn explains all the reasons why you may wish to skip buying a new car in 2023, in addition to their rising prices.

    So what else should you save your money on in 2023? MarketWatch writers give their verdict below.

    SPACs

    During the pandemic, people loved to buy special purpose acquisitions companies, known as SPACs. In 2021, 613 SPACs listed on U.S. stock exchanges through initial public offerings, according to SPAC Insider. The year before, there were 248 SPAC IPOs. There had never been more than 100 of these before in a single year. There were SPACs associated with Donald Trump and Serena Williams. There were so many, that one was called Just Another Acquisition Corp. 

    SPACs exist as a means to take private companies public, and theoretically give these shell companies a faster and less regulatory burdensome means to access public capital. The U.S. Securities and Exchange Commission warned investors last April that so-called advantages of the SPAC process, such as reduced legal liability, may not prove to be so solid if tested in court.

    The SPACs raised money even though they had no commercial operations or business, and tried to use the cash to buy something that did exist. But investors who bought SPACs that merged with private companies since 2015 have suffered losses of 37%, on average, a year after the merger, according to a recent study.  The SPAC and New Issue ETF 
    SPCX,
    +0.37%
    has slipped 12% this year. The frenzy for SPACs has predictably gone bust. But if you see one, just stay away from it.

    — Nathan Vardi

    Crypto 

    There are two main reasons not to invest in cryptocurrency in 2023, and neither has to do with the precipitous drop in value for most of the major coins in the last year, including but not limited to bitcoin
    BTCUSD,
    -1.11%    ,
    ethereum
    ETHE,
    -2.71%
    and tether
    USDTUSD,
    -0.02%    .
    Investors have long been conditioned to buy the dip and find value where others fear to tread, and then make money on the upswing. 

    Crypto is different because there’s no correlation to long-held market theories, and buying it amounts more to speculation than to investing. That might seem semantic, but if you look at financial planning holistically, then you treat investing as an exercise in risk tolerance — and crypto is all risk. 

    Which leads to the other main reason to avoid crypto in the next year: If you do buy it, there’s really no safe way to store it. There’s no federal insurance covering exchange failures and little cyber-theft protection for individuals. That leaves you on your own, which is not a good place to be with your money.

    — Beth Pinsker

    Meta Quest headsets

    On the consumer front, if you’re really into virtual reality, there is nothing wrong with jumping on the new Meta Quest two and Meta Quest Pro headsets that were introduced in 2022 by Meta Platforms Inc. 
    META,
    -0.78%    .

    The problem is that you might feel like you bought a BlackBerry
    BB,
    -3.42%
    phone in early 2007. Apple Inc.
    AAPL,
    -1.40%
    is expected to finally show off what engineers at the Silicon Valley giant have been cooking up in a years-long project to jump into augmented and virtual reality, and consumers are expected to at least get a glimpse at Apple’s attempt this year, if not a chance to buy whatever the company produces. 

    The headsets don’t come cheap: Meta said earlier this year it was raising the price of Meta Quest 2 headsets by $100 to $399.99 (128GB) and $499.99 (256GB). The iPhone’s introduction 15 years ago changed the way people look at smartphones, and Apple’s expected jump into this field in 2023 could leave anyone who spent their money on a Meta Quest headset wishing for a new reality.

    — Jeremy Owens

    Meme stocks 

    Struggling companies with business models that appear to some to be dying and/or struggling do not generally perform well in the stock market. But during the pandemic these companies often had stocks that soared. What drove them was social media sentiment, driven on platforms like Reddit, by a swarm of retail investors. 

    There was video game retailer GameStop
    GME,
    -7.42%    ,
    movie theater chain AMC
    AMC,
    -8.43%    ,
    and smartphone dinosaur Blackberry. AMC recently announced the sale of another $110 million in stock, adding to a total that has already exceeded $2 billion since the theater chain got swept up into meme-stock madness. CEO Adam Aron wrote on Twitter that the move put the company “in a much stronger cash position.”

    GameStop recently reported its seventh consecutive quarterly loss and reiterated its goal of returning to profitability in the near term, but analysts have signaled that many challenges lie ahead. During the company’s recent third-quarter conference call, Chief Executive Officer Matt Furlong said that GameStop would be open to exploring acquisitions of a strategic asset or complimentary business if they were available “in the right price range.”

    Buying meme companies like this worked for some in a booming stock market fueled by ultra-low interest rates. But we are now in a bear market with interest rates that are elevated. Corporate fundamentals are back in vogue. So are quaint investment ideas like cashflow. More likely than not, the days of buying meme stocks are over.

    — Nathan Vardi

    Tesla cars

    In recent years, Tesla Inc.
    TSLA,
    -8.25%
    has stood alone as the best option for electric vehicles, while other manufacturers struggled to get production running. But in 2023, there should be many more types of electric cars available, at prices that are expected to trend downward as the year goes along. Teslas range in price from $46,990 for the Tesla Model 3 to $138,880 for the Tesla Model X Plaid. 

    With major manufacturers such as General Motors Co.
    GM,
    -0.73%    ,
    Ford Motor Co.
    FORD,
    -2.68%    ,
    Toyota Corp. and Volkswagen
    VOW,
    -0.77%
    VLKAF,
    -1.15%
    jumping into the fray, and young Tesla wannabes like Rivian Automotive Inc.
    RIVN,
    -7.11%    ,
    Lucid Group Inc.
    LCID,
    -7.24%
    and FIsker Inc.
    FSR,
    -6.19%
     expected to start producing cars, consumers will have many more options for EVs. 

    Meanwhile, Tesla has done little to update the Model 3 since it was introduced in 2017, and has increased prices at a level that Chief Executive Elon Musk has admitted is “embarrassing” for a company that claimed to have a goal of mass-market pricing for EVs. 

    The average price of a new EV is $64,249, while a new gas car is $48,281, according to​​ Liz Najman, a climate scientist and communications and research manager at Recurrent Auto, an EV research and analytics firm focused on the used-vehicle market. After years of not having much choice beyond Tesla for EVs, 2023 appears to be the year that changes.

    — Jeremy Owens

    [ad_2]

    Source link

  • Car repos are on the rise, thanks to record-high monthly payments, recession warnings

    Car repos are on the rise, thanks to record-high monthly payments, recession warnings

    [ad_1]

    Car repossessions have grown less common in the past two years, but those days may be over. Credit rating agency Fitch Ratings says repossession rates have nearly returned to pre-pandemic levels. Some analysts fear they could grow from there. For the lowest-credit consumers — those who make up the subprime loan market — the repossession rate is now higher than it was in 2019.

    Repossessions fell for a combination of reasons. Lenders grew more lenient with late payments, confident that the pandemic was a temporary disruption. They knew they’d likely make more money by giving people time to adjust than by seizing back cars to sell at lower prices. Government stimulus programs also helped many Americans stay afloat.

    But economic conditions have begun to change.

    High monthly payments meet recession warnings

    Skyrocketing car prices have left consumers with more debt for the same cars. According to the Consumer Financial Protection Bureau, loans that started in 2021 and 2022 have proven particularly hard to afford.

    Loans taken out in those years performed worse than earlier loans “because those consumers had to finance cars once the supply chains were jammed and the prices started to go up,” says Ryan Kelly, acting auto finance program manager for the bureau. The average monthly payment for a new car bought last month is now a shocking $762.

    “Those consumers got hit with inflation twice,” Kelly says. “First, when they had to finance a car after the prices went up, and then when they had to put gas in the car after the Russia-Ukraine conflict started.”

    The CFPB this year warned lenders not to repossess cars before the law allows it.

    Repossession firms seeing new business

    Jeremy Cross, the president of repossession firm International Recovery Systems, calls the last two years “a recipe for disaster.”

    He explains, “Over the last two years, vehicle prices were inflated because there was no new car supply.” But Americans had saved money staying at home under lockdown, and some spent it on more expensive cars.

    Now that the economy may face a downturn, those payments are proving harder to make.

    Now “the volume is picking up, and the remaining companies that are still performing repossessions are very busy,” Cross says. He thinks lenders are preparing for a new wave of repossessions in 2023 and 2024 because they’re beginning to offer his company new incentives “jockeying for position,” knowing that repossession firms will have more business than they can handle.

    See: The big question about new car prices: When will they go down?

    Cox Automotive analysts predict that long-term through 2025, repossessions will remain at or below historical norms. But between now and then, we could see a peak. (Cox Automotive is the parent company of Kelley Blue Book.)

    This story originally ran on KBB.com. 

    [ad_2]

    Source link

  • Eat, drink and be merry: Here’s where shoppers have been spending the most money this holiday season

    Eat, drink and be merry: Here’s where shoppers have been spending the most money this holiday season

    [ad_1]

    Restaurants are set to become the biggest winners of a holiday season that could turn out to be the most normalized since the onset of the pandemic.

    That’s according to a new Mastercard SpendingPulse survey released on Monday, which showed spending at dining establishments surging 15.1% over the 2021 holiday period. Total retail expenditures for the Nov. 1–to–Dec. 24 period in 2022 rose 7.6%, with in-store spending up 6.8% and online spending up 10.6%.

    Restaurant spending beat out several other categories, such as apparel, where spending was up 4.4% from 2021, and electronics and jewelry, where a respective 5.3% and 5.4% less were spent, and department stores, which saw spending rise 1%.

    “This holiday retail season looked different than years past,” said Steve Sadove, senior adviser for Mastercard and former CEO and chairman of Saks Inc. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings postpandemic.”

    Government data for November showed consumer spending was up just 0.1%, reflecting cautiousness among households and price cutting by retailers to lure those hesitant shoppers in. But the data also showed more spending on holiday recreation and travel, expected to go in the books as a busy season even if deadly winter storm may have wreaked havoc on the plans of many Americans over the Christmas weekend.

    Of course, even as some merrymakers felt confident enough to make more plans and see more friends and family this year, the virus of course continues to cause illness and death. The U.S. reported 70,000 newly diagnosed cases for the first time since September on Thursday, while 422 people died of COVID-19 on Wednesday.

    Don’t miss: As COVID cases rise, how to steer clear of viruses during the holiday season

    Also see: 4 tips for staying healthy while traveling during this ‘tripledemic’ cold and flu season

    The Mastercard SpendingPulse data measure in-store and online retail sales for all payment forms and are not inflation-adjusted.

    As for the companies that might be benefiting from that increased traffic, the year-end cheer probably won’t be enough to make a dent in what has been a difficult year with would-be consumers juggling worries over inflation, rising interest rates and a war in Europe.

    The Invesco Dynamic Leisure & Entertainment exchange-traded fund
    PEJ,
    +0.79%    ,
    whose holdings include Chipotle Mexican Grill
    CMG,
    +0.32%    ,
    McDonald’s
    MCD,
    +0.68%
    and First Watch Restaurant Group
    FWRG,
    +0.42%    ,
    has gained 6.5% to date in the fourth quarter and is down 20% for the year as of Thursday. The broad benchmark S&P 500
    SPX,
    +0.59%
    is poised for a nearly 20% loss in 2022.

    Read: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter

    And: Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

     

     

    [ad_2]

    Source link

  • This company has wiped out more investor wealth in 2022 than Tesla

    This company has wiped out more investor wealth in 2022 than Tesla

    [ad_1]

    Elon Musk has been trying this week to defend Tesla’s abysmal stock performance in 2022. The electric vehicle giant has seen its stock plummet by 61% this year, making it the 11th-worst performing stock in the S&P 500 in 2022.

    “As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are *not* guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop,” Musk tweeted.

    You might expect that Tesla’s stock drop has wiped out more investor wealth than any other stock in the world this year. But you would be wrong.

    If we look at declines in market capitalization — the value of companies’ common-shares outstanding — Tesla
    TSLA,
    -1.76%
    has been the fourth worst-performing stock in the benchmark S&P 500 this year, as of 1 p.m. ET on Dec. 21:

    Company

    		 Ticker

    		 2022 market cap change ($bil)

    		 Intraday market cap on Dec. 21 ($bil)

    		 Dec. 31, 2021 market cap ($bil)

    		 2022 price change
    Amazon.com Inc.

    		 AMZN,
    +1.74%         		-$805

    		 $886

    		 $1,691

    		 -48%
    Apple Inc.

    		 AAPL,
    -0.28%         		-$753

    		 $2,160

    		 $2,913

    		 -24%
    Microsoft Corp.

    		 MSFT,
    +0.23%         		-$700

    		 $1,825

    		 $2,525

    		 -27%
    Tesla Inc.

    		 TSLA,
    -1.76%         		-$622

    		 $439

    		 $1,061

    		 -61%
    Meta Platforms Inc. Class A

    		 META,
    +0.79%         		-$466

    		 $318

    		 $784

    		 -64%
    Nvidia Corp.

    		 NVDA,
    -0.87%         		-$329

    		 $406

    		 $735

    		 -44%
    PayPal Holdings Inc.

    		 PYPL,
    +0.67%         		-$143

    		 $79

    		 $222

    		 -63%
    Netflix Inc.

    		 NFLX,
    -0.94%         		-$134

    		 $133

    		 $267

    		 -51%
    Walt Disney Co.

    		 DIS,
    +1.55%         		-$122

    		 $160

    		 $282

    		 -44%
    Salesforce Inc.

    		 CRM,
    +0.19%         		-$119

    		 $131

    		 $250

    		 -49%
    Source: FactSet

    On a percentage basis, all these stocks have performed worse than the full S&P 500, which has fallen 19%, excluding dividends.

    Amazon.com Inc.
    AMZN,
    +1.74%
    has erased more shareholder wealth than any other publicly traded company in 2022. In total, investors in Amazon have lost $804.6 billion this year. The stock is down 48% in 2022.

    Apple Inc.
    AAPL,
    -0.28%
    and Microsoft Corp.
    MSFT,
    +0.23%
    have also suffered larger market-cap declines than Tesla, by virtue of their sheer size.

    The companies have different fiscal and annual period ends, but if we look at data for the past three reported quarters and compare to the same period a year earlier, here’s how the four stack up:

    Company

    		 Ticker

    		 Change in sales for three quarters from year-earlier period

    		 Change in EPS for three quarters from year-earlier period
    Amazon.com Inc.

    		 AMZN,
    +1.74%
     

    		 10%

    		 N/A
    Apple Inc.

    		  
    AAPL,
    -0.28%         		6%

    		 2%
    Microsoft Corp.

    		  
    MSFT,
    +0.23%         		14%

    		 -2%
    Tesla Inc.

    		  
    TSLA,
    -1.76%         		58%

    		 169%
    Source: FactSet

    Amazon showed a net loss of $3 billion for the first three quarters of 2022 as the company neared the end of its extraordinary multiyear effort to build out its warehouse and fulfillment infrastructure. For the first three quarters of 2021, the company booked $19 billion in profits. When announcing Amazon’s third-quarter results CEO Andy Jassy said the company was working methodically toward “a stronger cost structure for the business moving forward.”

    The incredible growth of Amazon’s cloud business has stalled and disappointed the expectations the company had nurtured on Wall Street. The Amazon Web Services business is facing increasing competition from the likes of Microsoft and its customers are pulling back. Meanwhile, retail sales have also come in weak going into the Christmas and holiday season. 

    Amazon’s stock has declined 22% since it closed at $110.96 on Oct. 27, right before it disappointed investors not only with its third-quarter results, but with its outlook: It expects to break even during the holiday quarter. Analysts polled by FactSet had previously expected a profit of more than $5 billion.

    Tesla stands in contrast to Amazon, as you can see on the table above. Its sales grew by 58% during the first three quarters of 2022 from the year-earlier period and its earnings per share rose nearly threefold.

    This has been a year of significant declines for shares of giant tech-oriented companies, especially those that had traded at lofty price-to-earnings valuations — that group includes Amazon and Tesla. In fact, these companies have given up all their pandemic era gains int he stock market.

    But with Tesla’s results so outstanding through the first three quarters of 2022, it raises the question: How much of the drop in the electric car makers share price was tied to Musk’s actions as CEO of Twitter, which he acquired on Oct. 27 after a monthslong saga? And how much of a relief rally, if any, might there be for Tesla if Musk, as expected, steps down as Twitter CEO?

    How about some bottom-feeding?

    Here’s the same list of 10 stocks in the S&P 500 that have seen the largest declines in market cap this year, with a summary of analysts’ ratings, consensus price targets and declines in their forward price-to-earnings ratios:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 21 closing price

    		 Cons. price target

    		 Implied 12-month upside potential

    		 Forward P/E as of Dec. 20

    		 Forward P/E as of Dec. 31, 2021
    Amazon.com Inc.

    		 AMZN,
    +1.74%         		91%

    		 $85.19

    		 $134.85

    		 58%

    		 49.3

    		 64.9
    Apple Inc.

    		 AAPL,
    -0.28%         		74%

    		 $132.30

    		 $173.44

    		 31%

    		 21.4

    		 30.2
    Microsoft Corp.

    		 MSFT,
    +0.23%         		91%

    		 $241.80

    		 $293.06

    		 21%

    		 23.7

    		 34.0
    Tesla Inc.

    		 TSLA,
    -1.76%         		63%

    		 $137.80

    		 $272.64

    		 98%

    		 24.6

    		 120.3
    Meta Platforms Inc. Class A

    		 META,
    +0.79%         		63%

    		 $117.09

    		 $145.45

    		 24%

    		 14.5

    		 23.5
    Nvidia Corp.

    		 NVDA,
    -0.87%         		68%

    		 $160.85

    		 $195.72

    		 22%

    		 39.2

    		 58.0
    PayPal Holdings Inc.

    		 PYPL,
    +0.67%         		71%

    		 $68.76

    		 $104.32

    		 52%

    		 14.5

    		 36.0
    Netflix Inc.

    		 NFLX,
    -0.94%         		47%

    		 $288.19

    		 $302.89

    		 5%

    		 28.4

    		 45.6
    Walt Disney Co.

    		 DIS,
    +1.55%         		82%

    		 $87.02

    		 $119.60

    		 37%

    		 19.8

    		 34.2
    Salesforce Inc.

    		 CRM,
    +0.19%         		78%

    		 $128.45

    		 $195.18

    		 52%

    		 23.4

    		 53.5
    Source: FactSet

    A majority of analysts see a golden path ahead for 2023 for all of these stocks except for Netflix.

    For more information about any of these companies, click the tickers.

    Click here for a detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Don’t miss: 11 high-yield dividend stocks that are Wall Street’s favorites for 2023

    [ad_2]

    Source link

  • Caroline Ellison, associate of Sam Bankman-Fried, says she’s ‘truly sorry’ for stealing billions of FTX customer money

    Caroline Ellison, associate of Sam Bankman-Fried, says she’s ‘truly sorry’ for stealing billions of FTX customer money

    [ad_1]

    Caroline Ellison has apologized for stealing billions in customer deposits at crypto exchange platform FTX to make bets at Alameda Research, the hedge fund she ran.

    “‘I am truly sorry for what I did.’”


    — Caroline Ellison, former head of Alameda Research

    Ellison made her comments in front of a judge in New York federal court, as she pleaded guilty to helping Sam Bankman-Fried make away with billions in customer funds while misleading investors and lenders and playing down the risk of their crypto trading platform.

    “‘I knew that it was wrong.’”


    — Ellison

    Along with Ellison, Zixiao “Gary” Wang, a former FTX chief technology office and co-founder, 29, pleaded guilty Monday this week during separate hearings.

    Federal authorities and regulators are making the case that Wang wrote software code, at Bankman-Fried’s behest, to create backdoors into FTX’s systems that allowed Ellison’s Alameda access to customer money and prop up FTX’s own token, FTT.

    The pair each potentially face decades in prison sentences if convicted after pleading guilty to charges that included wire fraud, securities and commodities fraud in exchange for leniency.

    Both have agreed to cooperate with authorities to lay the groundwork for Bankman-Fried’s own case as the alleged brains behind of one of the biggest crypto frauds in recent memory.

    On Thursday, Bankman-Fried was released from custody on a $250 million bond, following his first appearance in a U.S., court on fraud charges.

    FTX filed for bankruptcy on Nov. 11 when Bankman-Fried was ousted from the company he co-founded in 2019.

    The collapse of FTX was, perhaps, hastened by its competitor, Binance, who announced it was unloading $500 million in FTT tokens in November due to “recent revelations that have come to light” about the company’s books. That triggered mass redemptions by depositors, which FTX couldn’t meet.

    Ellison is a Stanford University graduate who grew up in the suburbs of Boston, the daughter of two MIT economists, according to the Wall Street Journal. After graduation, she worked at quantitative trading firm Jane Street, where she met fellow trader Bankman-Fried. She was rumored to be in a relationship with Bankman-Fried, who is an MIT grad, according to reports.

    [ad_2]

    Source link

  • High U.S. inflation is on the wane, PCE price gauge shows

    High U.S. inflation is on the wane, PCE price gauge shows

    [ad_1]

     

    The numbers: A key gauge of U.S. prices rose just 0.1% in November, marking the fifth month in a row in which inflation eased after peaking at a 40-year high over the summer.

    The yearly rate of inflation, meanwhile, slowed to 5.5% in November from 6.1% in the prior month, based on the personal consumption expenditures index. That’s the smallest increase since October 2021.

    Key details: The PCE index is viewed by the Federal Reserve as the best measure of inflation, especially the core gauge that strips out volatile food and energy costs.

    The core index rose 0.2% last month, matching Wall Street’s forecast.

    The increase in the core rate of inflation in the past 12 months relaxed to 4.7% from 5%. That’s also the lowest level since October 2021..

    Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their buying habits due to rising prices.

    They might substitute cheaper goods such as ground beef for more expensive ones like ribeye to keep costs down. Or buy no-name denims instead of more fashionable jeans.

    The CPI showed inflation rising at a 7.1% yearly rate in November.

    Big picture: The rate of inflation is coming down, but not fast enough for the Fed.

    The central bank is worried a prolonged bout of high inflation could spur workers to keep asking for higher and higher wages, making it harder to get prices back under control. The cost of labor is the biggest expense for most companies.

    The Fed plans to raise interest rates even higher to slow the economy enough to alleviate upward wage pressures, a strategy that’s bound to raise unemployment and potentially trigger a recession.

    Looking ahead: “The economy is moving in the right direction from the Federal Reserve’s perspective at the end of 2022, but not quickly enough,” said chief economist Gus Faucher of PNC Financial Services. “The Fed is concerned that strong wage growth will lead to persistent increases in services prices and high overall inflation.”

    Read: Inflation appears to be slowing, but the Fed isn’t turning down the heat

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.53%
    and S&P 500
    SPX,
    +0.59%
    were set to open higher in Friday trades.

    [ad_2]

    Source link

  • Scott Minerd, prominent Guggenheim Partners money manager, dies unexpectedly of heart attack

    Scott Minerd, prominent Guggenheim Partners money manager, dies unexpectedly of heart attack

    [ad_1]

    Guggenheim Partners Global Chief Investment Officer Scott Minerd has died, the company announced in a press release issued Thursday. He was 63.

    The money manager was one of the most prominent on Wall Street, known for his calls on stocks, bonds and Federal Reserve policy as well as for his muscular physique.

    Reports indicated that Minerd suffered a heart attack during a workout. He died on Wednesday afternoon.

    “We’re deeply saddened by the death of Scott Minerd and send our deepest condolences to his husband, friends and family,” said Gerard Carney, a spokesman for Guggenheim Partners.

    Minerd became CIO of Guggenheim Partners in 1999, shortly after the firm was founded. He was a frequent commentator in the media, making calls on the S&P 500
    SPX,
    -1.45%    ,
    the Dow Jones Industrial Average
    DJIA,
    -1.05%
    and Treasurys.

    Read: Guggenheim’s Minerd believes fine art, real estate will outperform stocks, sees bitcoin bottoming at $8,000

    Also see: Fed may need to pivot by early November, when ‘something breaks,’ says Guggenheim’s Scott Minerd

    He was known for his macro approach to investing and as a fixed-income expert who understood structured securities and currencies. He was employed at Merrill Lynch, Morgan Stanley and Credit Suisse First Boston in the 1980s and 1990s, working with legendary CEOs John Mack and Bob Diamond.

    In 2017, he told Bloomberg that he had “walked away from extremely large offers on Wall Street” because he had become burnt out at age 37. “I realized this wasn’t a dress rehearsal for life, this was it,” he said.

    “I have known Scott for over 30 years and we were partners much of that time,” wrote Mark Walter, CEO and a founder of Guggenheim. “Scott was a key innovator and thought leader who was instrumental in building Guggenheim Investments into the global business it is today.

    “He will be greatly missed by all. My deepest condolences are with his husband, family and loved ones,” Walter wrote.

    At his peak, Minerd could bench-press nearly 500 pounds, and he competed in the super-heavyweight and over-40 divisions of L.A. bodybuilding championships.

    The son of an insurance salesman, Minerd grew up in southwestern Pennsylvania on land where his family settled before the Revolutionary War, Bloomberg reported.

    Members of the investment community were stunned by news of Minerd’s death.

    Billionaire Bill Ackman, who runs the hedge fund Pershing Square Capital Management, described Minerd as a “brilliant man.”

    “He was also a lot of fun. I wish I had more time with him. Carpe diem,” Ackman wrote via Twitter.

    [ad_2]

    Source link

  • FTX co-founder Gary Wang, ex-Alameda CEO Caroline Ellison plead guilty to federal charges

    FTX co-founder Gary Wang, ex-Alameda CEO Caroline Ellison plead guilty to federal charges

    [ad_1]

    On the same day that that the Bahamas extradited FTX co-founder and former CEO Sam Bankman-Fried to the U.S. to face criminal charges, two former executives at FTX and Alameda Research pleaded guilty Wednesday to federal fraud charges.

    Caroline Ellison, 28, the former chief executive of Alameda Research — the crypto trading company founded by Bankman-Fried — and Zixiao (Gary) Wang, 29, co-founder of crypto platform FTX and its former chief technology officer, were charged for their roles in contributing to the crypto platform’s collapse.

    The pair each faced decades-long prison sentences if convicted, and pleaded guilty to charges that included wire fraud, securities fraud and commodities fraud in exchange for leniency. In a video Wednesday night, U.S. Attorney Damian Williams of the Southern District of New York said both were cooperating in the continuing investigation into FTX and Bankman-Fried.

    Williams added that Bankman-Fried, 30, was in FBI custody and will appear in court in “as soon as possible,” and suggested more charges in the FTX case could be forthcoming.

    “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it,” Williams said. “We are moving quickly and our patience is not eternal. … and we are far from done.”

    In a parallel action, the Securities and Exchange Commission on Wednesday also charged Ellison and Wang “for their roles in a multiyear scheme to defraud equity investors in FTX.”

    According to the SEC complaint, Ellison helped manipulate the price of FTX-issued crypto token FTT, which served as collateral for undisclosed loans from FTX customers’ assets to Alameda. In addition, the SEC alleges Bankman-Fried misled customers by falsely claiming FTX was a safe trading platform with strict risk-mitigation measures.

    The SEC claims Wang created software code to allow Alameda to divert FTX customers’ funds, and that Ellison used those funds for Alameda’s trading activity.

    “As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” SEC Chair Gary Gensler said in a statement. “We further allege that Ms. Ellison and Mr. Wang played an active role in a scheme to misuse FTX customer assets to prop up Alameda and to post collateral for margin trading. When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag. Until crypto platforms comply with time-tested securities laws, risks to investors will persist. It remains a priority of the SEC to use all of our available tools to bring the industry into compliance.”

    Bankman-Fried was arrested in the Bahamas last week after he was indicted by U.S. federal prosecutors, who allege he played a key role in the collapse of FTX, diverting billions of dollars of customer assets and defrauding investors, customers and lenders.

    [ad_2]

    Source link

  • FTX founder Sam Bankman-Fried extradited to U.S. to face criminal charges

    FTX founder Sam Bankman-Fried extradited to U.S. to face criminal charges

    [ad_1]

    NASSAU, Bahamas — Bahamian authorities said Wednesday that former FTX CEO Sam Bankman-Fried has been extradited to the United States, where he faces criminal charges related to the collapse of the cryptocurrency exchange.

    Bahamas’s attorney general’s office said that Bankman-Fried would be leaving for the United States later Wednesday, noting he had waived his right to challenge the extradition.

    Reporters on the scene witnessed Bankman-Fried leaving a Magistrate Court in Nassau in a dark SUV earlier Wednesday. The vehicle was later seen arriving at a private airfield by Nassau’s airport, from which he is expected to be flown to the United States. He is due to land in New York and will likely appear in front of a U.S. judge on Thursday.

    “The Bahamas has determined that the provisional arrest, and subsequent written consent by (Bankman-Fried) to be extradited without formal extradition proceedings satisfies the requirements of the (extradition treaty between the U.S. and the Bahamas) and our nation’s Extradition Act,” said Bahamian Attorney General Ryan Pinder, in a statement.

    Bahamian authorities arrested Bankman-Fried last week at the request of the U.S. government. U.S. prosecutors allege he played a central role in the rapid collapse of FTX and hid its problems from the public and investors. The Securities and Exchange Commission said Bankman-Fried illegally used investors’ money to buy real estate on behalf of himself and his family.

    The 30-year-old could potentially spend the rest of his life in jail.

    Bankman-Fried was denied bail Friday after a Bahamian judge ruled that he posed a flight risk. The founder and former CEO of FTX, once worth tens of billions of dollars on paper, had been held in the Bahamas’ Fox Hill prison, which has been has been cited by human rights activists as having poor sanitation and as being infested with rats and insects.

    Once he’s back in the U.S., Bankman-Fried’s attorney will be able to request that he be released on bail.

    Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second-largest cryptocurrency exchange in the world.

    He has said that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.

    At a congressional hearing last week, the new FTX CEO John Ray III, who is tasked with taking the company through bankruptcy, bluntly disputed those assertions: “We will never get all these assets back,” Ray said.

    [ad_2]

    Source link