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Why investors are no longer rewarding earnings beats, according to Goldman Sachs
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Tag: Financial Investment Services
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Interactive Brokers Logs Higher Profit, Revenue as Trading Volume Climbs
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Interactive Brokers Group IBKR -1.79%decrease; red down pointing triangle
The online brokerage platform said Thursday that client trading volumes in stocks and options climbed 67% and 27%, respectively, in the quarter. Futures volume, meanwhile, decreased 7%. Customer accounts increased by 32% to 4.1 million, with customer equity up 40% to $757.5 billion.
Copyright ©2025 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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Oaktree Capital calls commercial real estate ‘most acute area of risk’ right now
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Distressed-debt giant Oaktree Capital sees big opportunities in credit unfolding over the next few years as a wall of debt comes due.
Oaktree’s incoming co-chief executives Armen Panossian, head of performing credit, and Bob O’Leary, portfolio manager for global opportunities, see a roughly $13 trillion market that will be ripe for the picking.
Within that realm is high-yield bonds, BBB-rated bonds, leveraged loans and private credit — four areas of the market that have only mushroomed from their nearly $3 trillion size right before the 2007-2008 global financial crisis.
“Clearly, the most acute area of risk right now is commercial real estate,” the co-CEOs said in a Wednesday client note. “That’s because the maturity wall is already upon us and it’s not going to abate for several years.”
More than $1 trillion of commercial real-estate loans are set to come due in 2024 and 2025, according to the Mortgage Bankers Association.
A retreat in the benchmark 10-year Treasury yield
BX:TMUBMUSD10Y,
to about 4.1% on Wednesday from a 5% peak in October, has provided some relief even though many borrowers likely will still struggle to refinance.Related: Commercial real estate a top threat to financial system in 2024, U.S. regulators say
“There’s a need for capital, especially for office properties where there are vacancies, rental growth hasn’t materialized, or the rate of borrowing has gone up materially over the last three years. This capital may or may not be readily available, and for certain types of office properties, it absolutely isn’t available,” the Oaktree team said.
With that backdrop, the firm expects to dust off its playbook from the financial crisis and acquire portfolios of commercial real-estate loans from banks, but also plans to participate in “credit-risk transfer” deals that help lenders reduce exposure.
Oaktree also sees opportunities brewing in private credit, as well as in high-yield and leveraged loans, where “several hundred” of the estimated 1,500 companies that have issued such debt are likely “to be just fine” even if defaults rise, they said.
Another area to watch will be the roughly $26 trillion Treasury market, where Oaktree has some concerns “about where the 10-year Treasury yield goes from here” — given not only the U.S. budget deficit and the deluge of supply that investors face, but also how foreign buyers, once the “largest owners in prior years, may be tapped out.”
Related: Here are two reasons why the 10-year Treasury yield is back above 4%
U.S. stocks
SPXCOMP
fell Wednesday after strong retail-sales data for December pointed to a resilient U.S. economy, despite the Federal Reserve having kept its policy rate at a 22-year high since July.[ad_2]
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SEC weighing ‘additional measures’ after hacked post on bitcoin ETF approval
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The Securities and Exchange Commission on Friday said that a social-media post on X falsely stating that it had approved spot bitcoin exchange-traded funds was created after an “unauthorized party” obtained control over the phone number connected with the agency’s account on the platform.
The markets regulator said its staff would “continue to assess whether additional remedial measures are warranted” in the wake of the breach, which occurred Tuesday and raised questions about cybersecurity at both the agency and the social-media platform, formerly known as Twitter.
The agency said it was coordinating with law enforcement on the matter, including with the FBI and the Department of Homeland Security.
“Commission staff are still assessing the impacts of this incident on the agency, investors, and the marketplace but recognize that those impacts include concerns about the security of the SEC’s social media accounts,” the SEC said in a statement.
The confusion began on Tuesday afternoon, when the hacked post appeared on the SEC’s X account.
“Today the SEC grants approval for #Bitcoin ETFs for listing on registered national securities exchanges,” the post read. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”
A second post appeared two minutes later that simply read “$BTC,” the SEC noted in its statement. The unauthorized user soon deleted that second post, but also liked two other posts by non-SEC accounts, according to the agency. The price of bitcoin
BTCUSD,
-0.71%
rose sharply in the wake of the posts, before soon pulling back.In response to the hack, SEC staff posted on the official X account of SEC Chair Gary Gensler announcing that the agency’s main account had been compromised, and that it had not yet approved any spot bitcoin exchange-traded products. Staff then deleted the initial unauthorized post, un-liked the liked posts and used the official SEC account to make a new post clarifying the situation, the agency said Friday.
The SEC also said that it had reached out to X for assistance Tuesday in the wake of the incident, and that agency staff believe the unauthorized access to the SEC’s account was “terminated” later in the day.
“While SEC staff is still assessing the scope of the incident, there is currently no evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts,” the agency said.
The following day, the SEC announced that it had, in fact, approved the listing and trading of spot bitcoin ETFs.
Wednesday’s move marked a breakthrough for the crypto industry, which for years has tried to get such ETFs off the ground in hopes of drawing more traditional investors to the digital-asset space.
Bitcoin was down 7.6% over a 24-period as of Friday evening.
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After Bitcoin ETFs, watch for the next most popular crypto to go the same route
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After long-awaited spot bitcoin exchange-traded funds made their debut this week, investors are now weighing the prospects of eventual approval of similar ether ETFs.
The U.S. Securities and Exchange Commission on Wednesday greenlighted 11 spot bitcoin
BTCUSD,
-1.58%
ETFs for the first time. The products, which made its debut trading on Thursday, logged a relatively strong first day.However, bitcoin fell 6.8% on Friday, leaving it with a 3.2% gain over the past seven days, according to CoinDesk data. It underperformed ether
ETHUSD,
+1.82% ,
which rose 17.6% over the past seven days while it declined 1.2% on Friday.The news about bitcoin ETFs was mostly priced in, while investors are now looking past it to a potential approval of ether ETFs, analysts said.
“I see value in having an ETH ETF,” Larry Fink, chief executive at the world’s largest asset manager BlackRock, told CNBC’s Squawk Box on Friday. BlackRock, which just launched its iShares bitcoin Trust
IBIT,
in November filed an application for a spot ether ETF.“It’s hard to know exactly what the U.S. regulators would do” about ether ETF applications, said Alonso de Gortari, chief economist at Mysten Labs, an internet infrastructure company.
However, “I would expect that once you open the door, it becomes easier and I think the industry is very excited about it,” de Gortari said. If bitcoin ETFs see an impressive institutional inflow in the coming months, it could make such products more established and set a good precedent for other crypto ETF applications, he said.
Also see: Why the debut of bitcoin ETFs could be bad news for crypto stocks, futures ETFs
The enormous competition and huge inflows into bitcoin ETFs will only boost investors’ interests in an ether ETF, according to Paul Brody, EY’s global blockchain leader. “There’s no doubt that ETH is the next big market and has immediately become a priority for financial services companies,” Brody said in emailed comments.
Compared with bitcoin, the Ethereum blockchain offers more utility and has unique advantages, noted Fadi Aboualfa, head of research at digital assets custodian Copper.
Sandy Kaul, head of digital asset and industry advisory services at Franklin Templeton, said she eventually expects the arrival of ETFs that track a basket of cryptocurrencies. Such products, instead of those based on single crypto, would dominate the space if they are approved, she said.
“Just like the S&P 500 has 500 stocks in it, right? You don’t have just one stock.” Kaul said in a phone interview. The arrival of a bitcoin ETF, is just a “baby step into really beginning to think about the future market structure of crypto,” Kaul added.
However, not everyone is that optimistic. Will McDonough, founder and chairman of Corestone Capital, said the approval of an Ethereum ETF has “a long way to go.”
SEC chairman Gary Gensler previously said bitcoin was the only cryptocurrency he was prepared to publicly label a commodity, rather than a security.
The agency also went after companies that offered crypto staking, which allows investors to earn yields by locking their coins to secure blockchains such as Ethereum. The SEC shut down crypto exchange Kraken’s staking business in the U.S. last year.
One possibility is that “companies will be able to offer an ETH ETF, but they will not be allowed to stake that ETH and earn yield,” noted EY’s Brody.
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Vanguard Won’t Offer Spot Bitcoin ETFs on Its Platform
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Updated Jan. 11, 2024 3:06 pm ET
Bitcoin’s trip to Main Street just took a detour.
Vanguard said Thursday it won’t offer the new spot bitcoin exchange-traded funds on its brokerage platform.
Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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Bitcoin is up 130% this year. Could it extend the rally in December and 2024?
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Bitcoin has extended its rally on Friday, rising to the loftiest level since May 2022, pushing its yearly gain up to over 130%, on pace to be one of the best performing assets this year.
The crypto
BTCUSD,
+1.28%
rose about 2.5% over the past 24 hours to around $38,676 Friday afternoon, as excitement about the potential approval of bitcoin exchange-traded funds continues to build. Bitcoin is still 44% down from its all-time high in 2021.Risk assets in general performed well in November, as concerns eased around several pressure points, including the surge in long-term Treasury yields and inflation, analysts at Grayscale Research wrote in a Friday note.
Despite outperforming many major assets year-to-date, bitcoin underperformed long-term Treasurys and the S&P 500 in November on a volatility-adjusted basis, gaining 9% for the month.
Bloomberg; Grayscale Investments
Sam Callahan, market analyst at Swan Bitcoin, said he expects bitcoin to trade between $36,000 and $40,000 by the end of the year, “provided that the macroeconomic environment doesn’t take a turn for the worse, and barring any significant positive development, such as the approval of a Spot Bitcoin ETF or the adoption of Bitcoin by a major corporation, sovereign-wealth fund, or nation-state.”
Despite bitcoin’s rally so far this year, December has historically been a particularly volatile month for the crypto, since it was created in 2009. It rose seven out of 13 times in December, according to Dow Jones Market Data.
In years when bitcoin gained more than 100% through November, the digital asset saw an average gain of 20% in December, rising four of the six times it occurred, according to Dow Jones Market Data.
To be sure, bitcoin has a relatively short history and was particularly volatile during its early years.
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Why do people keep suing celebrities like Ronaldo and Tom Brady over crypto losses?
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Ever since the collapse of crypto currencies last year, the lawsuits have been flying.
But a series of class-action suits targeting celebrity endorsers of crypto exchanges like FTX and Binance have been piling up in federal court in Miami, all filed by the same group of south Florida lawyers.
The latest suit names global soccer superstar Cristiano Ronaldo for allegedly promoting “the mass solicitation of investments in unregistered securities” sold by Binance, the crypto exchange that was hit with a $4 billion fine last week after pleading guilty to violating the bank secrecy act.
The suit was filed in federal court in the southern district of Florida this week and centered around Ronaldo’s role in a global marketing campaign launched in 2022 for a series of Binance NFTs — or non-fungible tokens, a form of blockchain-backed art works that were, for a brief time, wildly popular.
A representative for Ronaldo didn’t immediately respond to a message seeking comment.
The filing against Ronaldo on Monday came alongside similar class action suits naming Major League Baseball, Formula 1 racing, Mercedes Benz and the advertising giants Dentsu and Wasserman, who created much of FTX’s global promotion campaign.
Messages left with representatives for MLB, Formula 1, Mercedes Benz, Dentsu and Wasserman weren’t immediately returned.
Those suits are the latest in a series of similar class action suits starting last year against celebrity endorsers of failed crypto exchanges such as Voyager and FTX, in which customers lost billions of dollars in deposits.
Over the past 18 months, a group of south Florida lawyers led by Adam Moskowitz have brought the suits on behalf of investors who lost money in last year’s crypto collapse, against paid celebrity endorsers including Shaquille O’Neal, Mark Cuban, Tom Brady, Gisele Bundchen, Shohei Ohtani, Larry David, Steph Curry and Naomi Osaka.
“All of these celebrities were paid hundreds of millions of dollars taken directly from customer deposits,” Moskowitz said in a statement. “Some of the most famous and wealthiest groups in the world may now be held responsible for the dramatic $20 billion dollar crypto collapse and biggest financial scandals in U.S. history.”
Moskowitz, who has been joined in the suits by lawyers with the firms Mark Migdal & Hayden and Boies Schiller and Flexner, headed by famed litigator David Boies, is seeking at least $5 billion in damages from those who helped promote the crypto exchanges.
The cases from last year are ongoing and each of the celebrities named have been fighting the suits in court.
Moskowitz, who specializes in class-action lawsuits, says issues revolving around crypto first got his attention more than two years ago, before the entire market crashed, when he came to believe that the special tokens each exchange was minting amounted to an unregistered security.
He first filed a lawsuit against Voyager early last year, before the exchange collapsed and the Securities and Exchange Commission began filing suits against many in the industry accusing them of dealing in unregistered securities.
“Right then what we were doing started to gain traction,” he said.
A series of favorable court rulings have allowed his cases to gain steam, he said, and has allowed to him to take the lead in such actions.
In another class action suit filed earlier this year, Moskowitz and his partners sued a group of YouTube financial influencers for their role in promoting FTX, accusing them of taking cash for uncritically singing the exchange’s praises.
Moskowitz said several of those suits have been settled but that others have continued.
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Why wealthy investors put $125 billion into this new type of private-equity fund last year
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Private-equity funds aimed at wealthy individuals continue to draw in fresh capital as the universe of alternative investments grows beyond its roots serving endowments, pension funds and other institutions, according to industry data.
Registered funds that take investments from individuals and smaller institutions rose by about $125 billion in 2022 from the previous year to total assets under management (AUM) of $425 billion, according to data from private-equity investor and data provider Hamilton Lane Inc. HLNE.
The…
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Why stocks’ Thanksgiving-week performance is important to watch
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While the U.S. trading week is shortened by the Thanksgiving holiday, it’s important to watch the stock market’s performance to see if the rally of the past month can be sustained through the year-end.
Stocks have rallied in November so far, with the S&P 500 index SPX logging a 8.6% gain month-to-date, while it’s up 18.6% so far this year, according to FactSet data.
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SEC charges crypto platform Kraken with operating as an unregistered exchange
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The Securities and Exchange Commission charged cryptocurrency trading platform Kraken with operating as an unregistered securities exchange.
The charges are the latest effort by regulators to crack down on crypto companies, some of which the SEC views as illegally selling securities without registering with the commission.
Kraken didn’t immediately…
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Soros snaps up tech stocks in Q3, but dumps some of the biggest names
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Soros Fund Management, the investment firm founded by billionaire George Soros, took new positions or bulked up on IPOs and a number of tech names during the third quarter.
But it sold off small holdings of some of the largest — like Nvidia Corp. and Microsoft Corp. — as well as electric-vehicle maker Rivian Automotive.
According to a filing on Tuesday, the firm during the third quarter bought up 325,000 shares of chip designer Arm Holdings
ARM,
+3.37% ,
which went public in September, for $17.4 million. It also bought smaller stakes in recent IPOs such as Maplebear Inc.
CART,
+1.25% ,
better known as grocery-delivery platform Instacart, and digital-marketing firm Klaviyo Inc.
KVYO,
+6.90% .
Those purchases were disclosed as investors remain cautious on new IPOs.Elsewhere, the fund took a new position, of around 41,000 shares, in Apple Inc.
AAPL,
+1.43% .
And it did so as well for Datadog Inc.
DDOG,
+4.58% ,
buying 62,000 shares during the quarter. It also bought up 574,962 shares of Splunk, and took fresh positions in Snowflake Inc.
SNOW,
+4.51%
and Taiwan Semiconductor
TSM,
+2.58% .Soros also packed on more to some of its other tech holdings. It added 125,000 shares to its stake in Uber Technologies Inc.
UBER,
+3.14% ,
boosting its position by 16.6% for a total of 878,955 shares. It also bought 42,000 more shares of another gig-economy player, DoorDash Inc.
DASH,
+4.37% ,
a 30.9% increase for 178,075 shares.While Soros boosted its stake in General Motors
GM,
+4.83% ,
it sold off its 4.2 million shares in Rivian
RIVN,
+4.39% .
The firm also sold off its positions — of roughly 10,000 shares apiece — in tech giants Microsoft
MSFT,
+0.98%
and Nvidia
NVDA,
+2.13% .Soros Fund Management also sold off its stake in Walt Disney Co.
DIS,
+1.82% .[ad_2]
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Here’s why you might not have to pay a 6% commission next time you sell a home
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Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
SCHW,
+1.64% ,
made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.
Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:
Real-estate advice from the Moneyist
MarketWatch illustration
Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:
Economic outlook
On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.
Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.
Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools
Bond-market trend switches again
The U.S. Treasury yield curve has been inverted for nearly a year.
FactSet
Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
BX:TMUBMUSD03M
having higher yields than 10-year Treasury notes
BX:TMUBMUSD10Y.There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.
As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.
In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.
In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.
For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.
Ford’s good news — in the bond market
Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.
Getty Images
Ford Motor Co.’s
F,
+4.14%
credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.A stock-market warning based on history
The original Magnificent Seven.
Courtesy Everett Collection
By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
SPX
: Apple Inc.
AAPL,
-0.52% ,
Microsoft Corp.
MSFT,
+1.29% ,
Amazon.com Inc.
AMZN,
+0.38% ,
Nvidia Corp.
NVDA,
+3.45% ,
Alphabet Inc.
GOOGL,
+1.26% GOOG,
+1.39% ,
Meta Platforms Inc.
META,
+1.20%
and Tesla Inc.
TSLA,
+0.66% .
With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
SPY,
which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:Company Ticker % of SPY portfolio 2023 total return 2022 total return Total return since end of 2021 Apple Inc. AAPL,
-0.52% 7.2% 37% -26% 1% Microsoft Corp. MSFT,
+1.29% 7.1% 46% -28% 5% Amazon.com Inc. AMZN,
+0.38% 3.5% 64% -50% -17% Nvidia Corp. NVDA,
+3.45% 3.0% 198% -50% 48% Alphabet Inc. Class A GOOGL,
+1.26% 2.1% 44% -39% -12% Meta Platforms Inc. Class A META,
+1.20% 1.9% 158% -64% -8% Alphabet Inc. Class C GOOG,
+1.39% 1.8% 45% -39% -11% Berkshire Hathaway Inc. Class B BRK.B,
+0.80% 1.8% 13% 3% 17% Tesla Inc. TSLA,
+0.66% 1.7% 77% -65% -38% UnitedHealth Group Inc. UNH,
-0.98% 1.4% 2% 7% 9% Eli Lilly and Company LLY,
-2.15% 1.3% 60% 34% 115% Sources: FactSet, State Street (for SPY holdings) Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.
Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.
More from Hulbert: These dividend stocks and ETFs have healthy yields that can lift your portfolio
A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.
The MarketWatch 50
MarketWatch
The MarketWatch 50 series is back, with articles and video interviews starting this week, including:
PayPal soars after earnings report
PayPal CEO Alex Chriss.
MarketWatch/PayPal
After the market close on Wednesday, PayPal Holdings Inc.
PYPL,
+1.89%
announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.
A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook
Consumers drive mixed reactions to earnings results
Apple Inc. reported mixed quarterly results.
Mario Tama/Getty Images
Here’s more of the latest corporate financial results and reactions. First the good news:
And now the news that may not be so good:
Harsh verdict for SBF
FTX founder Sam Bankman-Fried.
AP
It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.
Here’s more reaction and coverage of the virtual-currency industry:
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Prosecutors hammer at Sam Bankman-Fried’s credibility in FTX criminal fraud trial
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Federal prosecutors on Monday sought to chip away at FTX founder Sam Bankman-Fried’s credibility, pointing to discrepancies between his public comments and actions taken behind the scenes as the company collapsed.
In a steady drumbeat of questions, Assistant U.S. Attorney Danielle Sassoon tried to paint Bankman-Fried, the 31-year-old former wunderkind of the crypto world, as someone who lied to his customers about the safety of their investments, while secretly raiding their accounts to fund his own risky investments, luxury real estate purchases, costly celebrity endorsements and political contributions.
In his second day of testimony before a jury in his criminal fraud trial in Manhattan’s federal court, Bankman-Fried repeatedly said he couldn’t remember exactly what he had said in numerous media interviews in the days and weeks after FTX had declared bankruptcy and $8 billion in customer deposits had vanished.
He also sought to distance himself from decision-making at FTX’s sister investment firm, Alameda Research, whose risky bets helped bring the crypto trading platform down.
Sassoon pointed to multiple public comments by Bankman-Fried in which he claimed FTX’s risk management protocols made it safer than other crypto currency trading platforms, while the company allowed its own investment arm, Alameda Research to make risky bets without limit.
FTX ultimately collapsed largely as a result of the billions in loans it had extended to Alameda, which prosecutors allege was done using customer money.
Federal prosecutors have alleged that Alameda was effectively granted carte blanche to use FTX customer money to make risky bets. One key element was that certain risk-management systems that FTX used to to liquidate customer accounts that had entered into negative territory were disabled for Alameda, allowing it unfettered ability to make high-risk moves.
Throughout his testimony, Bankman-Fried claimed he had limited visibility as to what was happening at Alameda, which he founded and mostly owned, but which had ceased running day-to-day in 2021, when his ex-girlfriend Caroline Ellison took over as CEO.
He said he only became aware of how bad a liquidity issue Alameda faced well after a financial crisis began sweeping through the crypto industry in the summer of 2022. Bankman-Fried said he had told Ellison, who had pleaded guilty and testified against him, that she should have taken hedge positions earlier to lessen the company’s risk.
But he said he continued to believe up until just days before the companies collapsed, that both Alameda and FTX were on firmer financial footing.
“I viewed Alameda as solvent and FTX as solvent and decently liquid,” he testified. “Had that analysis come up any other way, I would have been in full on crisis mode. But in my view at the time that wasn’t the case.”
Bankman-Fried did admit that he consulted frequently with Ellison about moves that Alameda made and even signed off on several billion-dollar investments.
“I think a few billion of them were my decision,” he said when asked about several large investments made by Alameda in 2021 and 2022.
Bankman-Fried is expected back in court for further cross examination on Tuesday. The judge in the case said he expected the case may go to the jury as early as Friday.
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WSJ News Exclusive | Hedge Fund Two Sigma Is Hit by Trading Scandal
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A researcher at Two Sigma Investments adjusted the hedge fund’s investing models without authorization, the firm has told clients, leading to losses in some funds, big gains in others and fresh regulatory scrutiny.
The researcher, Jian Wu, a senior vice president at New York-based Two Sigma, was trying to boost his compensation, Two Sigma has told clients, without identifying Wu. He made changes over the past year that resulted in a total of $620 million in unexpected gains and losses, according to people close to the matter and investor letters. Two Sigma has placed Wu on administrative leave.
Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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Financial advisers make rich people richer. But is that all there is?
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In 1989, author Marsha Sinetar wrote a bestselling book, “Do What You Love, The Money Will Follow.” She urges readers to pursue a career that stokes their passion.
Many advisers take that advice. They love what they do. And the money follows: Median pay for U.S. financial advisers was $95,390 in 2022, according to the Bureau of Labor Statistics.
Lately, though, the passion is waning for some advisers. They still love the practice of wealth management — customizing financial plans, constructing client portfolios and analyzing the ever-growing menu of investment products.
They’re just not as enamored of their clients’ wealth. Reassuring wealthy retirees that they can afford to buy a second (or third) vacation home has its merits. But helping them accumulate more and more wealth rings hollow after awhile.
Steve Oniya, a Houston-based certified financial planner, works with a diverse mix of clients. He enjoys helping them achieve their goals, regardless of their net worth. “It’s more gratifying helping them get over some hurdles to get to the life that they really want,” he said. “You make more of an impact that way.”
He compares his work to a firefighter’s job. Some days, they rescue people from burning buildings. Other days, they put out a dumpster fire. Yet they’re always driven to excel and perform at a high level.
Nevertheless, if an adviser serves rich clients who hoard their money, don’t give to charity and lack perspective on what matters most in life, a day at the office can feel dispiriting. “Sometimes advisers may be passionately opposed to certain clients’ values,” Oniya said. “In those instances, end the relationship or limit the scope.”
Oniya said he does not find clients’ wealth objectionable. He sees his role as an ally who seeks to understand — and not judge — others’ beliefs and values.
“I like to stay in the neutral camp,” Oniya said. “It’s easy to empathize with another person and see they are a person who needs help just like others. We’re generally here to advise them on how to be more efficient and effective financially in attaining their goals.”
The arc of an adviser’s career comes into play as well. To build a practice, newly minted financial planners might welcome pretty much anyone with sufficient assets.
Once they establish a stable book of business, advisers may get picky in deciding whom to serve. Their onboarding process might get more rigorous in an effort to determine if they’re aligned with a potential client’s aspirations, goals and priorities.
Some advisers shift gears as they gain experience working with different types of clients. They come to realize what they like most about the job and adjust their practice — and the type of clients they serve — accordingly.
“Everyone evolves,” said Angeli Gianchandani, a professor of marketing at University of New Haven’s Pompea College of Business. “Advisers may see there’s a greater reward and opportunity helping people in a different income bracket.”
As a self-test, advisers at a career crossroads might want to ask themselves how they’d respond to two clients. The first one says, “You saved me $5 million. Now I want to save $10 million to buy a bigger yacht.”
The other says, “You helped me pay off my student debt” or “You helped me save enough for a down payment to buy my first house.”
“You may feel more valued and appreciated as an adviser” if you pave the way for someone who lacks vast wealth to build a nest egg for the future, Gianchandani says.
Advisers who have misgivings about helping wealthy people attain greater wealth are not alone. Brooke Harrington, a sociology professor at Dartmouth College, interviewed 65 wealth managers between 2007 and 2015. About one-quarter expressed qualms about helping lower ultra-wealthy clients’ tax liabilities.
Still, another 25% did not feel such qualms. They saw their role as defending their clients from an unjust tax code.
More: Wall Street legend Byron Wien dies at 90. Here are his ’20 life lessons’
Also read: The IRS is auditing the rich. Can you fly under the radar if you’re not wealthy?
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Morgan Stanley names Ted Pick its next CEO
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Morgan Stanley said late Wednesday that Co-President Edward “Ted” Pick will become its chief executive, effective Jan. 1.
Outgoing Chief Executive James Gorman will become executive chairman, Morgan Stanley said. Pick will also join the firm’s board of directors.
“The board has unanimously determined that Ted Pick is the right person to lead Morgan Stanley and build on the success the firm has achieved under James Gorman’s exceptional leadership,” the company said in a statement.
“Ted is a strategic leader with a strong track record of building and growing our client franchise, developing and retaining talent, allocating capital with sound risk management, and carrying forward our culture and values,” it said.
Gorman had announced his intention to step down in May, setting off a “Sucession”-like run for the top job at the investment bank.
Pick’s name had been among those in the running. The executive joined Morgan Stanley in 1990, and was promoted to managing director in 2002, according to his bio on the company’s website.
Gorman became CEO in January 2010, having joined the firm in 2006.
The lack of a clear successor at Morgan Stanley has weighed on its stock lately.
The shares are down 24% in the last three months, three times the losses for the S&P 500 index
SPX
in the same period. So far this year, Morgan Stanley shares are down 16%, contrasting with an advance of about 9% for the S&P.[ad_2]
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Morgan Stanley earnings fall 10% but beat Wall Street expectations
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Morgan Stanley on Wednesday said its third-quarter profit fell 10% amid weakness in its investment banking business, but its trading and asset-management revenue rose.
Morgan Stanley
MS,
+2.03%
said profit for the three months ended Sept. 30 fell to $2.26 billion, or $1.38 a share, from $2.49 billion, or $1.47 a share, in the year-ago period.Analysts tracked by FactSet expect Morgan Stanley to earn $1.28 a share.
At the start of the quarter, analysts were expecting earnings of $1.58 a share.
Revenue fell 1% to $13.27 billion, ahead of the FactSet consensus estimate of $13.22 billion.
Morgan Stanley’s stock fell 2.8% in premarket trading on Wednesday.
Chief Executive James Gorman said the market environment was mixed.
“Our equity and fixed income businesses navigated markets well, and both wealth management and investment management producer higher revenues and profits year-over-year,” Gorman said.
Morgan Stanley’s stock fell 4.4% in the third quarter in a choppy period for bank stocks overall. Prior to Wednesday’s trades, the stock was down just under 10% in the past month, compared with 1.9% drop by the S&P 500
SPX.For the third quarter, trading revenue rose 10% in the quarter to $3.68 billion.
Asset-management revenue increased by 6% to $5.03 billion, while investment-banking revenue dropped 24% to $1.05 billion.
During the past month, 11 analysts cut their profit estimates for Morgan Stanley and only one increased their view.
UBS analyst Brennan Hawken downgraded Morgan Stanley to neutral from buy last week, cutting his price target to $84 from $110.
“Despite its successful transformation into a wealth-management-focused firm with a solid, wire house peer leading growth profile, MS is confronted with obstacles such as deposit sorting/yield seeking, intense competition for talent, and a challenging revenue environment,” Hawken said.
The average rating among 26 analysts that cover Morgan Stanley is overweight.
The bank is in the midst of a leadership transition, with Chief Executive James Gorman planning to step down by next May. Three potential successors at the bank include Andy Saperstein, who heads up wealth management; Ted Pick, who runs capital markets; and Dan Simkowitz, head of investment management.
Also read: Bank of America’s profit climbs 10%, boosted by interest rates and loans
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