Elvira Nabiullina, head of the Russian central bank, has stated that the mass launch of the digital ruble will take five to seven years. This appears to contradict recent suggestions by the chairman of the State Duma Committee on the Financial Market that the launch will begin next year. No Decision Before 2025 Elvira Nabiullina, […]
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Ripple’s chief legal officer has urged the U.S. Securities and Exchange Commission (SEC) to own up to its multiple missteps in enforcement actions against the crypto industry. He referenced court rulings that criticized the SEC for “gross abuse of power,” lack of “faithful allegiance to the law,” and being “arbitrary and capricious.” Ripple’s Legal Chief […]
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COO responsibilities will be shared, GameStop said.
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A hard landing is guaranteed for the US, Morgan Stanley’s chief US economist has said.
She said the full impacts of the Federal Reserve’s tightening hadn’t been fully felt in the economy.
It could take 18 months after the last rate hike to feel the full weight of higher rates.
A hard-landing recession is certain to come for the economy, and high rates are to blame even as markets start positioning for the Federal Reserve to loosen monetary policy this year, says Ellen Zentner, Morgan Stanley’s chief US economist.
Speaking to CNBC on Monday, Zentner responded to Jamie Dimon’s recent comments on the economy, in which the JPMorgan boss warned that the chance of a soft landing was about half of the 70% to 80% odds other forecasters were predicting. He said that was because of several risks still facing the US, including the Fed’s tightening campaign, geopolitical conflict, and interest rates, which central bankers have said could remain higher for longer.
Zentner said she was expecting the US to avoid a recession this year as there was no data to support a soon-to-come downturn. But she warned that a hard landing was unavoidable.
“We will have a hard landing at some point. I guarantee you that. We’re all wondering: When does that come?” she said. “The point that Dimon makes is that there are these cumulative impacts that build over time, and we are in the camp that we haven’t yet seen all of the tightening impacts from monetary policy,” she added, referring to the impact of Fed rate hikes.
Fed officials raised interest rates a whopping 525 basis points in 18 months to tame inflation, a move that’s taken borrowing costs in the economy to their highest level since 2001.
Economists have warned that high interest rates could spark a recession as financial conditions become restrictive and that the full impact of rate hikes probably hasn’t been felt, as they typically take about 18 months to fully work their way through the economy.
Signs of stress are beginning to show in parts of the financial system. Corporate defaults soared last year to their highest level since the pandemic, according to Moody’s Analytics. Bank lending has fallen for three straight quarters, according to Fed data.
Still, signs point to the Fed keeping interest rates elevated as it keeps an eye on inflation. Consumer prices came in hotter than expected last month, with inflation rising 3.1% year-over-year in January.
Zentner predicted that inflation would probably reaccelerate over the first quarter, pointing to the 3.9% growth in core inflation last month. That reacceleration could show up in the next consumer-price-index report, which markets are expecting later this week.
“We do expect inflation reacceleration to be temporary, but that is an open question,” Zentner said, adding that markets might have to consider Fed rate cuts pushed beyond mid-year.
Investors had been pricing in ambitious rate cuts to come in 2024, but many forecasters have dialed back their expectations amid hot inflation data. Markets are now pricing in a 39% chance that the Fed could lower rates by 100 basis points or more by the end of the year, according to the CME FedWatch tool.
Read the original article on Business Insider
The National Basketball Association (NBA) should be held responsible for the alleged misconduct of its teams, according to a former official of the US Securities and Exchange Commission (SEC).
On Feb. 6, a proposed class-action lawsuit was filed against the sports organization concerning its marketing partnerships with the defunct crypto lender Voyager Digital.
The lawsuit asserts that the NBA demonstrated “gross negligence” by endorsing Voyager’s promotional agreement with the Dallas Mavericks. It further contends that the NBA should be accountable for approving Voyager’s unregistered securities.
Additionally, the plaintiffs argue that the NBA knowingly embraced the risks associated with collaborating with crypto entities like Voyager, Coinbase, and FTX.
They claim the NBA accepted “billions in promotional compensation” amidst challenges such as dwindling arena attendance and substantial television revenue losses due to the COVID-19 pandemic.
“The NBA violated their own written Crypto Currency Protocols, all solely for its own financial gain,” the lawsuit stated.
A former SEC official argued that the NBA should be made to pay if it is complicit.
John Reed Stark, the former SEC Chief of Internet Enforcement, said:
“The NBA should be held responsible for Voyager-related and other similar kinds of alleged misconduct by NBA teams.”
Stark highlighted that the NBA, being a globally renowned and financially influential entity, likely exercises some degree of oversight on how its teams engage investors and navigate risky investments.
Therefore, the organization has to justify its actions or inactions, particularly as its teams continue to promote precarious NFT ventures, questionable crypto platforms, and other financially perilous investments.
The NBA has yet to respond to CryptoSlate’s request for comment as of press time.
While Stark suggested potential refunds for affected investors if NBA complicity in the Voyager matter is confirmed, he also emphasized the need for the NBA to establish a robust compliance framework for team advertising partnerships. Such measures, he argued, would prevent associations with questionable crypto firms and illicit businesses like heroin manufacturers.
Federal Reserve Chair Jerome Powell holds a press conference following the release of the Fed’s interest rate policy decision at the Federal Reserve in Washington, U.S., January 31, 2024.
Evelyn Hockstein | Reuters
Fed Chairman Jerome Powell said Wednesday that the central bank would likely not be comfortable enough with the path of inflation by its next meeting in March to cut interest rates.
“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that. But that’s to be seen,” Powell said.
The statement came in a news conference after the Fed’s January meeting, where the central bank left its benchmark interest rate unchanged. Powell did say earlier in the news conference that rate cuts would likely begin at some point this year.
Stocks fell to their session lows as the Fed chief dashed hopes of traders who want the central bank to slash rates sooner, before there’s a recession. The Dow Jones Industrial Average lost 300 points at one point.
The Fed’s policy statement released earlier Wednesday included several tweaks that suggested the central bank was taking further rate hikes off the table but not yet ready to cut. Powell’s comments appeared to clarify for traders that the stance would continue for at least one more meeting.
“The Fed was badly burned in late 2021 and 2022 when they thought high inflation would be transitory, then got caught by surprise when it was higher and more persistent than expected. They want to avoid making the same mistake twice,” Comerica Bank’s chief economist, Bill Adams, said in a note Wednesday afternoon.
“The Fed will wait to pull the trigger on rate cuts until they see the whites of 2% inflation’s eyes,” Adams added.
Powell also declined to commit to a series of rate cuts once the Fed makes its first move, saying that it “would depend on the data.”
The central bank’s next two policy decision dates are scheduled for March 20 and May 1. In recent months, traders and Wall Street strategists have focused on those two meetings as likely candidates for the first rate cut, as inflation continues to fall and job growth slows.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is updated near the end of each month. There will likely be only one more PCE reading before the Fed’s March meeting, but three more before May.
There will also be three more federal jobs reports released before the May meeting, with the January report due out on Friday.
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Housing market affordability is expected to improve in 2024, Morgan Stanley’s chief US economist said.
Growth in inventory as homebuilding activity grows stronger will offset an increase in demand.
Home sales will pick up in the second half of 2024 and further into 2025, as prices see “modest” declines.
A change of fortune will be in the cards for the housing market next year, according to Morgan Stanley’s chief US economist.
Improving home affordability will thaw what has been a largely frozen housing landscape this year, according to Ellen Zentner’s recent market podcast.
“We expect home sales to be weak in the first half of next year, but activity should pick up in the second half and further into 2025, and that’s primarily because affordability will improve,” she said.
Also massaging the shift will be an increasing supply of homes next year, Zentner predicted. Inventory has been tight after the the spike in mortgage rates over the past year kept many buyers and sellers on the sidelines.
With fewer existing homes on the market, new construction has been the main source of additional supply. And Morgan Stanley expects homebuilding activity to grow stronger next year.
“Home prices should see modest declines as growth in inventory offsets the increase in demand. By 2025, with lower rates, existing home sales should rise more convincingly,” Zentner added.
It’s been a harsh year for the housing market as mortgage rates, riled up by a breathless rise in Treasury yields, touched 8% in October.
And despite the rising cost of taking out a home loan, home prices remained sky high amid the supply crunch in available dwellings.
But mortgage rates have come down recently as hopes that the Federal Reserve will soon pivot to rate cuts sent Treasury yields plunging.
Markets will see those cuts become a reality by mid-2024 as inflation continues to decelerate, allowing the Fed to keep rates steady and finally make an initial quarter-point reduction in June, according to Zentner.
That will be followed by another 25-basis-point cut in September, she added. And starting in the fourth quarter of 2024, the central bank will likely lower rates by that amount at every meeting, eventually bringing the real rate down to 0.4% by late 2025.
Other positive themes playing out next year will be improving business investment and equipment spending that will finally turn positive after two years of declines.
And while banks tightened their lending conditions this year, many companies dodged refinancing their debt at ultra-high interest rates and won’t be pummeled by increasing costs of financing in 2024.
The bad news, Zentner said, will be a slowdown in consumer spending, driven by a cooling labor market which weighs on real disposable income. Higher-for-longer rates will also put further pressure on debt servicing costs for consumers.
Meanwhile, GDP growth is also projected to slow from 2.5% this year to 1.6% in 2024 and 1.4% in 2025. While that represents a soft landing, Zentner noted growth will still be below its potential.
Read the original article on Business Insider
Ripple chief legal officer Stuart Alderoty has expressed reservations about the recent string of legal defeats suffered by the United States Securities and Exchange Commission during Gary Gensler’s tenure. These remarks follow another setback for the SEC in the Fifth Circuit Court after Ripple’s victory in the XRP lawsuit in July 2023.
Alderoty characterized this sequence of events as a “deeply concerning trend” in which the SEC, under the leadership of Chair Gary Gensler, appears to be straying from its commitment to upholding the law. Alderoty expressed concern about the SEC’s repeated arbitrary and capricious actions in court cases, suggesting a troubling pattern under Gensler’s leadership.
Another day and another Court finds that the SEC again acted arbitrarily and capriciously. Is anyone else concerned about this very troubling pattern of the SEC flouting any faithful allegiance to law under Mr. Gensler? https://t.co/5bUgSBUOI8
— Stuart Alderoty (@s_alderoty) November 1, 2023
The Fifth Circuit Court of Appeals in the U.S. deemed the SEC’s stock buyback disclosure rule as arbitrary and lacking reasonable explanation on Oct. 31. The court has provided an opportunity for the SEC to demonstrate a thorough consideration of pertinent matters and provide a good basis for its decision. This development follows the SEC’s recent defeats in the XRP lawsuit and the Grayscale filing, which could hold significance for the crypto industry’s regulatory future.
The legal action, initiated by multiple U.S. business and trade associations, revolves around an SEC regulation mandating issuers to report daily information on share repurchases every quarter and to provide the rationale behind repurchasing their own stock.
Related: Ripple exec and XRP community back SEC commissioner’s LBRY lawsuit dissent
Judge Analisa Torres, on Oct. 25, 2023, issued an order officially dismissing charges against Ripple’s CEO Brad Garlinghouse and executive chairman Chris Larsen in the Ripple v. U.S. SEC lawsuit. Furthermore, there have been developments regarding institutional sales of XRP (XRP). Judge Torres has requested a joint scheduling brief from both parties on this issue. The Summary Judgment on July 13, 2023, was a split verdict, favoring Ripple in the case of retail XRP token sales.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), speaks to the media following talks at the Chancellery on November 29, 2022 in Berlin, Germany.
Carsten Koall | Getty Images News | Getty Images
Structural reforms in Germany are needed given the current global economic headwinds, International Monetary Fund Managing Director Kristalina Georgieva told CNBC’s Joumanna Bercetche.
“If you look at the policy decisions Germany is taking, they are around stimulating structural change. And of course, like any other country, structural reforms are a must in this more uncertain world with low gross growth prospects,” Georgieva said Wednesday.
The comments come amid discussions about whether Europe’s biggest economy is once again the “sick man of Europe,” with Germany anticipated to be the only major economy to contract in 2023.
The auto industry should be a particular focus for reform in Germany if the country wants to increase productivity, according to Georgieva.
“For Germany, this is very visible in the need to restructure the automobile sector for this economy of tomorrow,” she said.
The remarks echo those made by Hans-Werner Sinn, president emeritus at the Ifo Institute, at the Ambrosetti Forum in Italy in September. He said Germany regaining the “sick man” title “has to do with the automobile industry, which is the heart of the German industry and many things hinge on that.”
Autos and auto parts were Germany’s biggest export last year, accounting for 15.6% of the value of goods sold abroad, federal statistics office data shows. However, the sector is having a tough time, with both car production and exports weakening as consumers rein in spending amid soaring interest rates on borrowing, high inflation, and recession fears.
The IMF predicts a “mild recession” for the German economy this year, according to Georgieva, but is “fairly confident” it will come out of it as the energy price shock and inflation wane.
“Those are both one-off[s], they’re going to go away,” she said.
Electricity and gas prices hit record highs across Europe in 2022 after Russia’s invasion of Ukraine, but have since come down dramatically. The energy crisis is now “more or less solved,” according to Bundesbank President Joachim Nagel, who spoke to CNBC on the sidelines of the IMF Spring Meetings in April.
Preliminary figures for Germany showed that price rises slowed more than expected in September, with inflation — harmonized so it can be compared to other EU countries — rising 4.3% from a year before. The number was the lowest monthly figure since Russia’s full-scale invasion of Ukraine.
The IMF chief also commented on the global picture, saying the resilience of the world economy had been “remarkable.”
“We have avoided a recession that we so much feared may be coming our way this year,” Georgieva said, with labor markets fairly tight and consumer demand remaining strong in most countries. But this recovery is “slow and uneven,” she added.
The U.S. is the only large economy that has “fully recovered” from the post-pandemic economic shock, Georgieva said, while the euro zone remains 2% below its pre-Covid trend. Emerging markets and low-income countries are lagging further behind, down 4%-5% and 6% respectively, according to the IMF.
The fund describes its global growth forecast as anemic, with an average growth level of 3% over the next five years. Pre-pandemic, growth was around 3.8% over the previous decade.
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