Ahead of a potential meeting between President Trump and Chinese leader Xi Jinping, Beijing dropped a bombshell: China was further restricting access to the supplies that American companies need for computer chips, cars and other technology. The move gives China leverage ahead of expected trade talks with Washington.
Here’s what to know.
Copyright ©2025 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Stu Woo
Source link
OTTAWA—Canada’s banking regulator said the watchdog would issue proposals in the coming months to ease capital-buffer requirements amid the abrupt change in the geopolitical dynamics fueled by President Trump’s tariff policy.
Peter Routledge, the head of the Office of the Superintendent of Financial Institutions, said domestic lenders “argue that the shift before us demands more intelligent risk-taking, risk-taking to help economies shift their economic model to the world emerging.”
Copyright ©2025 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Paul Vieira
Source link
OTTAWA—The Bank of Canada’s No. 2 official endorsed a competition shakeup in the highly concentrated financial-services industry, saying the country’s banking sector is an oligopoly and changes could help lift Canada’s prolonged productivity slump.
Carolyn Rogers, the central bank’s senior deputy governor, on Thursday said Canadian authorities have done a stellar job in regulating banks by ensuring they have enough capital to survive shocks such as the 2008-09 financial crisis and the Covid-19 pandemic. “It would also be hard to argue, on any objective measure, that Canada’s banking system is anything other than an oligopoly,” Rogers told a blue-chip Toronto audience.
Copyright ©2025 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Paul Vieira
Source link
Fifth Third Buys Comerica for $10.9B in Year’s Biggest Bank Deal. Which Firms Might Be Next.
Small businesses in sectors like software and manufacturing are panicking over the expiration of a critical tax deduction that they say could lead to mass layoffs and business closures, unless Congress acts quickly to amend the law.
“This is a life-and-death scenario for small software companies,” Michelle Hansen, co-founder of the geocoding company Geocodio, told MarketWatch.
The tax change that Hansen and other software executives are taking issue with was signed into law by President Trump in 2017, as part of a larger tax overhaul that slashed the top corporate tax rate from 35% to 21%.
But in order to satisfy Senate budget rules and pass the law with only Republican votes, the bill could not increase the budget deficit over a 10-year window.
So lawmakers included a provision that, beginning in 2022, drastically reduced how much research-and-development spending a business could deduct from their annual revenue to determine taxable income.
The change penalizes certain industries like software and information technology — where engineer salaries are often classified as R&D expenses — as well as manufacturing and pharmaceuticals
IHE.
IntervalZero CEO Jeff Hibbard, whose Massachusetts-based company designs and sells software for installation on precision machines like semiconductor manufacturers, told MarketWatch that he has had to tap into company savings for the past several years in order to avoid laying off engineers.
He said that his firm brings in about $9 million in revenue annually with expenses of $8 million — but 60% of those expenses come in the form of engineer salaries, which can only be deducted from taxable income over a five-year period because the IRS treats it as R&D.
He said that after taxes consumed all his profits in 2022, he had to pay an additional $800,000 to Uncle Sam, and an additional $600,000 for the 2023 tax year.
“We’ve had to do a hiring freeze and postpone projects” in a cutthroat industry where technology progresses rapidly, Hibbard said. “We’ve been in existence for 15 years. For the first 14, we always hired additional people. Now we have a hiring and salary freeze.”
The House of Representatives voted last week 357-70 to restore full expensing for R&D as part of a $79 billion tax package that boosted the child tax credit and extended other business tax breaks.
The bill now heads to the Senate, which already has its hands full debating immigration and national-security issues, and analysts say election-year politics could thwart its passage in 2024.
Henrietta Treyz, director of economic-policy research at Veda Partners, gave just a 10% chance of the bill passing the Senate in a recent note to clients.
“This year’s effort to pass a tax package has been more robust than the effort we saw in 2022 and 2023,” she wrote. Treyz added, however, that “the competing need to pass border reform and Ukraine/Israel aid, and general dysfunction in Washington keep us pessimistic that we’ll see a bipartisan economic-stimulus package come out of Congress this year.”
On top of Republicans not wanting to give President Joe Biden a victory that would provide tax relief for businesses and families, Senate Republicans could decide to drag their feet on the bill in the hope that they’ll retake the chamber next year and can play a bigger role in the process, according to Owen Tedford, policy analyst at Beacon Policy Advisors.
“The critical member to watch is Senator Mike Crapo [of Idaho], the top Republican on the Senate Finance Committee,” Tedford wrote. “Crapo has not outright opposed the bill but has raised policy concerns and has expressed a desire to have a chance to amend it.”
Political considerations may be dictating the bill’s fate in Washington — but some business owners fear they don’t have the wherewithal to wait until next year for the problem to be fixed.
Benjamin Bengfort, co-founder and CEO of Iowa-based software firm Rotational Labs, told MarketWatch that he had to lay off workers last year after his 2022 tax bill rose by 438%.
He noted that even demand for his products has taken a hit because of the change in the law, because his services can count as an R&D expense for his customers, too.
“So it is [between] a rock and a hard place for us, no matter how you look at it,” Bengfort said. “This is an existential threat for software engineering companies.”
Andrew Keshner contributed.
As the U.S. Federal Reserve’s three-year reign in the headlines potentially comes to an end, an analysis of this year’s market themes can offer valuable insights for predicting trends and ensuring attractive returns in 2024.
Beyond the central bank’s actions, pivotal factors shaping the investment landscape this year include fiscal policies, election outcomes, interest rates and earnings prospects.
Throughout 2023, a prominent theme emerged: that equities are influenced by factors beyond monetary policy. That trend is likely to persist.
A decline in interest rates could significantly increase the relative valuations of equities while simultaneously reducing interest expenses, potentially transforming market dynamics. Contrary to consensus estimates, 2023 brought a more robust earnings rebound, leaving analysts optimistic about 2024.
The 2024 U.S. presidential election, meanwhile, introduces a new element of uncertainty with the potential to cast a shadow over the market during much of the coming year.
Anticipating a choppy first half of the year due to sluggish economic growth, we see a better opportunity for cyclicals and small-cap stocks to rebound in the latter part of the year. As uncertainty around the election and recession fears dissipate, a broad rally that includes previously ignored cyclicals and small-caps should help propel the S&P 500
SPX
higher.
Broader macroeconomic conditions support mid-single-digit growth in earnings per share throughout 2024. Factors such as moderate economic expansion, controlled inflation and stable interest rates are expected to provide a conducive environment for companies, enabling them to sustain and potentially improve their earnings performance. We estimate EPS growth of 6.5%. This projected growth aligns with the broader market sentiment indicating a steady upward trajectory in earnings for the upcoming year, fostering investor confidence and supporting valuation expectations across various sectors.
“ If the economy has not been in recession at the time of the first rate cut but enters one within a year, the Dow enters a bear market.”
When it comes to U.S. stock-market performance around rate cuts, the phase of the economic cycle matters. When there has been no recession, lower rates have juiced the markets, with the Dow Jones Industrial Average
DJIA
rallying by an average of 23.8% one year later.
If the economy has not been in recession at the time of the first cut but enters one within a year, the Dow has entered a bear market every time, declining by an average of 4.9% one year later. Our base case is a soft landing, but history shows how critical avoiding recession is for the bull market as the Fed prepares to ease policy.
This past year has posed a hurdle for small-cap stocks due to the absence of a driving force. These stocks typically perform better as the economy emerges from a recession. While they are currently undervalued, their earnings growth has been notably lacking. If concerns about a recession diminish, a normal yield curve could serve as a potential catalyst for small-cap stocks.
The ongoing outperformance of megacap growth stocks that we saw in 2023 might hinge on their ability to sustain superior earnings growth, validating their current valuations. Defensive sectors in the value category, meanwhile, are notably oversold and might exhibit strong performance, particularly toward the latter part of the first quarter. Should concerns about a recession dissipate, cyclical sectors within the value category could outperform, particularly if broader market conditions turn favorable in the latter half of the year.
The Fed’s enduring influence regarding the prospect of a soft landing in 2024 remains a pivotal point in the market’s focus. Considering the themes of the past year and the multifaceted influences on equities beyond monetary policy, investors are advised to navigate through uncertainties stemming from unintended fiscal shifts, upcoming elections and the impact of fluctuating interest rates. While a potentially choppy start to the year is anticipated, it could create opportunities for cyclical and small-cap stocks later in the year.
Ed Clissold is chief of U.S. strategies at Ned Davis Research.
Also read: Mortgage rates dip after Fed meeting. Freddie Mac expects rates to decline more.
More: After the Fed’s comments, grab these CD rates while you still can
Mark Zuckerberg delighted Meta shareholders and Wall Street this week with news of the social media giant’s first-ever dividend.
The IRS may also be happy, now that it’s staring at millions in taxes on the Meta stock dividends bound for Zuckerberg’s portfolio.
Zuckerberg, the CEO of Meta Platforms Inc.
META,
is poised to make $700 million in dividends yearly. He owns nearly 350 million shares, according to FactSet, and the company will start paying a quarterly dividend of 50 cents a share.
That would yield nearly $167 million in federal taxes yearly, after a qualified-dividend tax of 20% and another 3.8% tax on the investment returns of rich households, two accounting experts said.
California income taxes of 13.3% on the dividends could cost Zuckerberg another $93.1 million, said Andrew Belnap, an accounting professor at the University of Texas at Austin’s McCombs School of Business.
All in, that’s a combined $259.7 million in federal and state taxes annually on the Meta dividends, Belnap estimated.
For context, U.S. taxpayers reported over $285 billion in qualified-dividend income to the IRS though mid-November 2023, according to agency statistics. Nearly 30 million tax returns reported qualified dividends through that time.
Meta said it plans a quarterly cash dividend going forward, with the first such payment in March.
Meta shares soared 20.5% on Friday, ending with a record-high close of $474.99. The Dow Jones Industrial Average
DJIA,
S&P 500
SPX
and Nasdaq Composite
COMP
all closed higher Friday.
Meta announced the dividend payment in its earnings results Thursday, on the same week that Americans began filing their income taxes.
A look at Zuckerberg’s dividends and their tax implications offer a peek at the debate about the varying ways wages and wealth are taxed.
“Zuck is getting a major break,” said Andrew Schmidt, an accounting professor at North Carolina State University’s Poole School of Management who also crunched the numbers for MarketWatch.
Approximately $167 million “seems like a high tax bill,” he said. But if Zuckerberg received the $700 million as a straight salary, Schmidt estimated he’d be looking at a roughly $259 million tax bill on the wages after they were taxed at the top marginal rate of 37%.
Federal income tax brackets run from 10% to 37%.
Meanwhile, the IRS taxes qualified dividends and capital gains at 0%, 15% and 20%, depending on income and household status. The net investment income tax adds another 3.8% for individuals making at least $200,000 or married couples worth $250,000.
For federal and state taxes on the Meta dividends, Zuckerberg would face a combined rate of 37.1%, Belnap noted. “His tax rate on this is actually fairly high,” he said.
The gap in tax rates on income derived from wages and investments “has been a big criticism with U.S. tax policy,” Schmidt said, especially as lawmakers look for ways to come up with more tax revenue.
Regular retail investors enjoy the same preferential rates on capital gains and dividends as the top 1% of taxpayers, Schmidt added. The issue is that those dividends and stock profits are a smaller part of their income while salaries, taxed at higher rates, are a bigger proportion.
Belnap noted that California’s state tax rules don’t provide special treatment to dividends.
Zuckerberg received a $1 base salary in 2022, a figure that hasn’t changed in several years. He is now worth $142 billion, according to the Bloomberg Billionaires Index, making him the fifth-richest person in the world.
Meta did not immediately respond to a request for comment.
Taxes on the Meta dividends will not be something Zuckerberg, or any Meta shareholders big or small, need to deal with until next year’s tax season, Belnap and Schmidt observed.
But as taxpayers amass their 1099-DIV forms on dividend income, IRS figures show that it’s mostly upper-echelon taxpayers reaping the rewards on the preferential rates for qualified dividends.
Households worth at least $1 million accounted for 40% of the approximate $285.3 billion in qualified dividends reported through mid-November, according to agency figures.
For less affluent investors, “it’s usually a nice supplement, but I’d say very few people are living off dividends,” Belnap said.
The notion that the Federal Reserve will soon slow, or perhaps even end, its program of quantitative tightening is increasingly being talked about on Wall Street like a foregone conclusion.
But while investors wait to hear more on the subject from Fed Chair Jerome Powell during next week’s post-meeting press conference, they could be forgiven for asking themselves some questions.
What might an imminent taper of the Fed’s balance-sheet runoff look like? Why has it suddenly become so urgent? What might it mean for the six or so interest-rate cuts investors are expecting from the Fed this year, as well as for markets more broadly?
We aim to answer these questions below.
It wasn’t until the minutes from the Federal Reserve’s December policy meeting were published earlier this month that investors started to take the notion of the Fed declaring “mission accomplished” on QT seriously.
The minutes revealed that a number of senior Fed officials felt it was nearly time to “begin to discuss” the technical factors that would govern the Fed’s decision to slow the runoff of maturing bonds from its balance sheet.
Shortly after the minutes’ release, several senior Fed officials came forward to discuss the importance of ending the balance-sheet runoff. Dallas Fed President Lorie Logan, the first senior Fed official to expand on what was noted in the minutes, said earlier this month that the Fed should start to slow the pace of its balance-sheet shrinkage once assets locked up in the Fed’s reverse-repo facility fell below a certain level.
According to Logan, senior Fed officials had been unsettled by the drain of $2 trillion in assets from the RRP facility last year.
But there was another issue that was also likely bothering monetary policymakers heading into the Fed’s December meeting.
Sudden spikes in overnight repo rates late last year drew uncomfortable comparisons to the repo-market crisis of September 2019, which foreshadowed the end of the Fed’s previous attempt at tapering its balance sheet, according to TS Lombard’s Steve Blitz.
See: Something strange is happening in the financial plumbing under Wall Street
See: One of Wall Street’s most important lending rates will stay elevated for weeks, Barclays says
A re-run of the repo-market crisis of 2019 is what the Fed is presumably trying to avoid. Economists are so concerned the central bank might accidentally bump up against the lower bound for reserves in the banking system, that they have come up with a name for the concept: They’re calling it the “lowest comfortable level of reserves.”
According to this idea, strain in overnight-financing markets should emerge once reserves in the banking system retreat below a certain threshold. This would, in turn, likely force the central bank to scale back or even reverse quantitative tightening immediately, according to several economists.
In order to avoid such a risk, Jefferies economist Thomas Simons said in a note to clients earlier this month that he expects the Fed will announce plans to start tapering QT after its March meeting.
Across Wall Street, most economists expect the Fed will begin by tapering the pace at which Treasurys are redeemed from its balance sheet — perhaps cutting it in half to start, from $60 billion a month to $30 billion a month. Reducing the pace at which mortgage-backed securities are running off won’t matter as much until prepayments begin to climb.
Going even further, economists at Evercore ISI said in a report shared with MarketWatch earlier this week that they expect the tapering to begin around the middle of 2024 and continue potentially through 2025, until the Fed has succeeded in reducing the size of its balance sheet to about $7 trillion.
The balance sheet presently stands at $7.7 trillion, according to data published by the Fed. It peaked at nearly $9 trillion in April 2022.
However, one key issue may complicate the Fed’s efforts to ascertain the “LCLoR.” According to Jefferies’ Simons, the amount of banking-system reserves counted as liabilities on the Fed’s balance sheet has been more or less steady since the Fed started its latest round of balance-sheet tapering. It stood at roughly $3.3 trillion recently, according to Fed data cited by Jefferies.
Why stop at $7 trillion if bank reserves haven’t been all that heavily impacted by QT anyway? It’s probably worth noting that, whatever happens, nobody on Wall Street expects the Fed would attempt to shrink the size of its balance sheet back toward pre-crisis levels, when the amount of bonds on its balance sheet was miniscule compared to today.
Why? Because there is simply too much debt sloshing around the global financial system to justify such a withdrawal of support, according to Steven Ricchiuto, chief economist at Mizuho Americas.
“The Fed is not in a position to remove all that extra liquidity because now the system needs it just to function,” Ricchiuto said.
Because quantitative tightening is a hawkish policy stance, its rolling back should be bullish for stocks and bonds. But there are other considerations that could impact the outcome, market strategists said.
Not only would a reduction in the pace of the Fed’s monthly runoff introduce a fresh dovish tilt to the Fed’s monetary policy, but by reducing the amount of bonds it allows to roll off its balance sheet every month, the Fed would become more active in the Treasury market, said James St. Aubin, chief investment officer at Sierra Investment Management, during an interview.
There are also a few contextual factors that could impact how the equity market reacts. For example, as St. Aubin pointed out, context is equally as important as the nature of the decision itself. Should the Fed decide to end QT abruptly because the U.S. economy is sliding into a recession, then the decision could hurt stocks.
Another issue, raised by a different market strategist, is the notion that the Fed could decide to start tapering QT in lieu of cutting interest rates — or at least in lieu of cutting them as quickly as investors expect. This could buy the central bank more time to press its battle against inflation while mitigating the risks that it could hurt the economy by keeping policy uncomfortably tight for too long, economists said.
Ben Jeffery, U.S. interest-rate strategist at BMO, said in a recent note to clients that, based on Logan’s comments from earlier this month, he would lean toward this being the most likely scenario. Additionally, he said, tapering QT could potentially impact the Treasury’s refunding announcement due in May.
Jeffery calculated that the Fed tapering QT by $20 billion beginning in April would save the Treasury from issuing nearly $250 billion in bonds compared to if the Fed had continued with its balance-sheet runoff apace.
This should lead to lower Treasury yields, all else being equal. And lower long-dated Treasury yields are typically seen as beneficial for stocks, according to Callie Cox, a U.S. equity strategist at eToro.
Although, once again, the outcome for markets would likely depend on the specific context.
“Higher yields probably aren’t a good thing for stock investors these days, but in particular environments, higher yields and less Fed intervention could hint that the economy is healing,” Cox said.
JetBlue Airways Corp. and Spirit Airlines Inc. said late Friday that they have appealed a court ruling that earlier this week blocked their planned merger.
JetBlue
JBLU,
and Spirit
SAVE,
announced the appeal in a terse press release that provided no more details, adding only that the process is “consistent with the requirements of the merger agreement.”
Wall Street was split on whether the airlines would be legally obliged to appeal the Tuesday ruling, which sided with the Justice Department in saying that a merger between low-cost JetBlue and ultra-low-cost Spirit would hurt competition.
Shares of Spirit rallied 12% after hours Friday, while JetBlue shares fell nearly 2%. Analysts at JP Morgan said this week that the ruling freed JetBlue from a “costly merger.”
Earlier Friday, Spirit sought to reassure investors about its liquidity and issued an upbeat fourth-quarter revenue guidance. Spirit has amassed about $5.5 billion in debt, and is reportedly seeking advisers to help restructure it.
The likelihood of Spirit attracting a new merger or takeover bid is considered low without a debt restructuring. Frontier Group Holdings Inc.
ULCC,
and JetBlue competed for Spirit in 2022, with Frontier ultimately bowing out in July of that year.
Raymond James analyst Savanthi Syth said in a note earlier Friday that it was “clear to us that Spirit is pressing JetBlue to appeal the antitrust ruling, but we continue to believe the chances of success are low.”
Syth has estimated that an appeal would take some four to five months.
Shares of Spirit have lost 67% in the past 12 months, while shares of JetBlue are down 41%. The U.S. Global Jets ETF
JETS
has lost 9% in the same period. Those losses contrast with gains of 24% for the S&P 500 index
SPX.
Amazon’s $1.4 billion deal for Roomba-maker iRobot looks set to be blocked by European Union antitrust authorities. It’s only a small setback for the e-commerce giant but it’s a reminder that regulators are still skeptical over acquisitions made by big technology companies.
Continue reading this article with a Barron’s subscription.
View Options
Spirit Airlines stock was falling again Thursday as the ultra-low-cost carrier’s predicament worsened.
Continue reading this article with a Barron’s subscription.
View Options
The Securities and Exchange Commission on Friday said that a social-media post on X falsely stating that it had approved spot bitcoin exchange-traded funds was created after an “unauthorized party” obtained control over the phone number connected with the agency’s account on the platform.
The markets regulator said its staff would “continue to assess whether additional remedial measures are warranted” in the wake of the breach, which occurred Tuesday and raised questions about cybersecurity at both the agency and the social-media platform, formerly known as Twitter.
The agency said it was coordinating with law enforcement on the matter, including with the FBI and the Department of Homeland Security.
“Commission staff are still assessing the impacts of this incident on the agency, investors, and the marketplace but recognize that those impacts include concerns about the security of the SEC’s social media accounts,” the SEC said in a statement.
The confusion began on Tuesday afternoon, when the hacked post appeared on the SEC’s X account.
“Today the SEC grants approval for #Bitcoin ETFs for listing on registered national securities exchanges,” the post read. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”
A second post appeared two minutes later that simply read “$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,
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.
On Wednesday, the U.S. Securities and Exchange Commission for the first time greenlighted several exchange-traded funds investing directly in bitcoin.
But the 24 hours leading up to that approval were chaotic, to say the least.
The SEC approved the launch of 11 bitcoin
BTCUSD,
ETFs, according to a filing posted on the regulatory agency’s website. The ETFs are due to start trading on Thursday.
On Tuesday, however, the SEC’s official account on X, formerly known as Twitter, published what the agency described as an “unauthorized” post indicating that it had approved the spot bitcoin ETFs. In reality, the regulator had not approved any such ETFs as of Tuesday and its X account had been “compromised,” SEC Chair Gary Gensler said on the social-media platform. The SEC subsequently deleted the unauthorized post.
The agency found “there was unauthorized access to and activity on” the its X account by “an unknown party,” an SEC spokesperson said on Tuesday, adding that the “unauthorized access has been terminated” and that the SEC would work with law enforcement to investigate the matter.
Bitcoin’s price briefly shot 2% higher after the unauthorized tweet went out on Tuesday before soon pulling back.
Then on Wednesday, shortly before the U.S. stock market closed for the day, the SEC posted an actual approval order of bitcoin ETFs on its website — but the link was soon broken, leading to an “error 404” page. The same filing was later reposted by the SEC.
It is unclear why the first link was broken. A SEC spokesperson did not respond to an email seeking comment on the matter.
The events of the past 24 hours have proven “a bit embarrassing” for the SEC, especially as the agency has stressed that cryptocurrencies are exceptionally risky and vulnerable to market manipulation, according to Greg Magadini, director of derivatives at Amberdata.
Despite those warnings, Magadini said he doesn’t expect investors to be deterred from investing in the bitcoin ETFs.
Bitcoin has actually seen lower volatility on Tuesday and Wednesday than options traders had priced in, Magadini said. The crypto was up about 0.4% over the past 24 hours to around $46,400 on Wednesday evening, according to CoinDesk data.
Investors have been pricing in $1 to $2 billion of initial flows into the bitcoin ETFs.
Read: Bitcoin in spotlight as SEC approves new ETFs, ether rallies. Here’s why.
Steven Lubka, head of private clients and family offices at Swan Bitcoin, echoed Magadini’s point, noting that the hiccups on the way to SEC approval are unlikely to impact investor interest in the funds.
“Ultimately, the SEC is not the one that launches the ETFs,” Lubka said in a call. “If anything, it shows how much attention is on these ETF products.”
Updated Jan. 10, 2024 5:56 pm ET
The U.S. Securities and Exchange Commission voted Wednesday to allow mainstream investors to buy and sell bitcoin as easily as stocks and mutual funds, a decision hailed by the industry as a game changer.
The SEC decision clears the way for the first U.S. exchange-traded funds that hold bitcoin to be sold to the public. Expectations of U.S. regulatory approval for such funds drove the price of bitcoin to the highest level in about two years. The digital currency fell to just below $46,000 late Wednesday, up from $17,000 in January 2023.
Copyright ©2024 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
DENVER (AP) — First, Colorado’s Supreme Court ruled that former President Donald Trump wasn’t eligible to run for his old job in that state. Then, Maine’s secretary of state ruled the same for her state.
Both decisions are historic. The Colorado court was the first court to apply to a presidential candidate a rarely used constitutional ban against those who “engaged in insurrection.” Maine’s secretary of state was the first top election official to unilaterally strike a presidential candidate from the ballot under that provision.
Both decisions are on hold while the legal process plays out. That means that Trump remains on the ballot in Colorado and Maine and that his political fate is now in the hands of the U.S. Supreme Court.
The Maine ruling will likely never take effect on its own. Its central impact is increasing pressure on the nation’s highest court to state clearly whether Trump remains eligible to run for president after the Jan. 6, 2021, attack on the U.S. Capitol.
After the Civil War, the U.S. ratified the 14th Amendment to guarantee rights to former slaves and more. It also included a two-sentence clause called Section 3, designed to keep former Confederates from regaining government power after the war.
“Section 3 of the 14th Amendment to the U.S. Constitution doesn’t require a criminal conviction to take effect.”
The measure reads: “No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.”
Congress did remove that disability from most Confederates in 1872, and the provision fell into disuse. But it was rediscovered after Jan. 6.
See: Nikki Haley was asked by N.H. voter to name Civil War cause. Slavery was absent from her answer.
Trump is already being prosecuted for the attempt to overturn his 2020 loss that culminated with Jan. 6, but Section 3 doesn’t require a criminal conviction to take effect. Dozens of lawsuits have been filed to disqualify Trump, claiming he engaged in insurrection on Jan. 6 and is no longer qualified to run for office.
All the suits failed until the Colorado ruling. And dozens of secretaries of state have been asked to remove him from the ballot. All said they didn’t have the authority to do so without a court order — until Maine Secretary of State Shenna Bellows’s decision.
Also: Police investigating ‘incidents’ against Colorado justices after Trump removed from state’s ballot
The Supreme Court has never ruled on Section 3. It’s likely to do so in considering appeals of the Colorado decision — the state Republican Party has already appealed, and Trump is expected to file his own shortly.
Bellows’s ruling cannot be appealed straight to the U.S. Supreme Court — it has to be appealed up the judicial chain first, starting with a trial court in Maine.
The Maine decision does force the high court’s hand, though. It was already highly likely the justices would hear the Colorado case, but Maine removes any doubt.
Trump lost Colorado in 2020, and he doesn’t need to win it again to garner an Electoral College majority next year. But he won one of Maine’s four Electoral College votes in 2020 by winning the state’s 2nd Congressional District, so Bellows’s decision would have a direct impact on his odds next November.
Until the high court rules, any state could adopt its own standard on whether Trump, or anyone else, can be on the ballot. That’s the sort of legal chaos the court is supposed to prevent.
Trump’s lawyers have several arguments against the push to disqualify him. First, it’s not clear Section 3 applies to the president — an early draft mentioned the office, but it was taken out, and the language “an officer of the United States” elsewhere in the Constitution doesn’t mean the president, they contend.
Second, even if it does apply to the presidency, they say, this is a “political” question best decided by voters, not unelected judges. Third, if judges do want to get involved, the lawyers assert, they’re violating Trump’s rights to a fair legal procedure by flatly ruling he’s ineligible without some sort of fact-finding process like a lengthy criminal trial. Fourth, they argue, Jan. 6 wasn’t an insurrection under the meaning of Section 3 — it was more like a riot. Finally, even if it was an insurrection, they say, Trump wasn’t involved in it — he was merely using his free speech rights.
Of course, the lawyers who want to disqualify Trump have arguments, too.
The main one is that the case is actually very simple: Jan. 6 was an insurrection, Trump incited it, and he’s disqualified.
The attack of Jan. 6, 2021, occurred nearly three years ago, but the challenges weren’t “ripe,” to use the legal term, until Trump petitioned to get onto state ballots this fall.
But the length of time also gets at another issue — no one has really wanted to rule on the merits of the case. Most judges have dismissed the lawsuits because of technical issues, including that courts don’t have the authority to tell parties whom to put on their primary ballots. Secretaries of state have dodged, too, usually telling those who ask them to ban Trump that they don’t have the authority to do so unless ordered by a court.
No one can dodge anymore. Legal experts have cautioned that, if the Supreme Court doesn’t clearly resolve the issue, it could lead to chaos in November — or in January 2025, if Trump wins the election. Imagine, they say, if the high court ducks the issue or says it’s not a decision for the courts to make, and Democrats win a narrow majority in Congress. Would they seat Trump or declare he’s ineligible under Section 3?
Maine has an unusual process in which a secretary of state is required to hold a public hearing on challenges to politicians’ spots on the ballot and then issue a ruling. Multiple groups of Maine voters, including a bipartisan clutch of former state lawmakers, filed such a challenge, triggering Bellows’s decision.
Bellows is a Democrat and the former head of the Maine chapter of the American Civil Liberties Union. Trump’s attorneys asked her to recuse herself from the case, citing social-media posts calling Jan. 6 an “insurrection” and bemoaning Trump’s acquittal in his impeachment trial over the attack.
She refused, saying she wasn’t ruling based on personal opinions. But the precedent she sets is notable, critics say. In theory, election officials in every state could decide a candidate is ineligible based on a novel legal theory about Section 3 and end their candidacies.
Conservatives argue that Section 3 could apply to Vice President Kamala Harris, for example — it was used to block from office even those who donated small sums to individual Confederates. Couldn’t it be used against Harris, they say, because she raised money for those arrested in the unrest after the murder of George Floyd by Minneapolis police in 2020?
Bellows is a Democrat, and all the justices on the Colorado Supreme Court were appointed by Democrats. Six of the 9 U.S. Supreme Court justices were appointed by Republicans, three by Trump himself.
But courts don’t always split on predictable partisan lines. The Colorado ruling was 4-3 — so three Democratic appointees disagreed with barring Trump. Several prominent legal conservatives have championed the use of Section 3 against the former president.
Now we’ll see how the high court handles it.
Read on:
Trump’s name can appear on ballot in Michigan, says state’s top court
Georgia election workers sue Rudy Giuliani again, seek to bar him from repeating lies about them
Trump’s Republican rivals rally to his defense after Colorado ballot ruling