Following the downturn in bitcoin’s price on Friday, the hashprice of bitcoin has declined from slightly above $119 per petahash per second to marginally over $116 per PH/s on a daily basis. Should the prices remain low leading up to the forthcoming halving event scheduled for next week, certain mining devices may only be viable […]
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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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Michael Rhodes, who is taking the CEO job at Ally Financial, was “not expected to have a long-term role” as Discover’s tie-up with Capital One looms.
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Federal Reserve Chair Jerome Powell testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Semiannual Monetary Policy Report to the Congress,” in the Dirksen Building in Washington, D.C., on March 7, 2024.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Forecasters in the CNBC Fed Survey are increasingly confident that the U.S. economy will avoid a recession and pull off a soft landing, and unlike past surveys, don’t even see growth slowing much below potential in the next couple of years.
The potential downside of the better forecast: less Fed easing with the possibility that officials at their meeting this week forecast fewer rate cuts in 2024 than they did in December.
“For now, the narrative that the U.S. economy is so fragile that it cannot survive without ultra-low rates has been debunked and discarded into the rubbish bin of history,” wrote John Donaldson, director of fixed income at the Haverford Trust Company, in response to the survey.
The March survey finds the average probability of a soft landing at 52%, up from 47% in the January survey, and the first time that it has been above 50% since the question was first asked in July. The probability of a recession in the next 12 months fell to 32%, the lowest since February 2022, and down from 39% in January and 63% in November.
“The U.S. economy continues to move toward a modest growth and modest inflation environment,” said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute. “This may take longer than initial expectations, but the trend is favorable.”
The Fed’s two-day meeting ends Wednesday, when the central bank is largely expected to keep the federal funds target rate at a range of 5.25% to 5.5%.
Forecasters in general have a bad track record of predicting recessions. The 27 respondents to this survey, among them economists, strategists and fund managers, joined other forecasters in the past year in being fairly certain a recession would hit in 2023. That turned out not to be the case. While the average recession probability is down, about 20% of respondents still say there’s an even-money chance or greater of a downturn in the next 12 months.
“The larger-than-consensus reduction in the federal funds rate in my forecast is contingent on a recession that brings inflation down,” said Robert Fry of Robert Fry Economics. He has a 60% recession probability and sees the Fed slashing rates to 3.6% by year-end from the current level of 5.38%.
Respondents still see three cuts this year, on average, which would bring the funds rate down to 4.6%. Survey respondents never became as euphoric as futures markets about rate cuts and so they haven’t had to backtrack from the six cuts that the markets priced in. Even then, there are those who believe the Fed could be more hawkish at the upcoming meeting.
Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, said, “The last two months of slightly elevated inflation readings have slammed the door on a rate cut at the moment. …There is a high probability the dot plot will include 2 rate cuts in 2024…”
In December, the last time the Fed released its official forecasts, members called for three cuts this year.
Half of respondents believe the biggest risk is that the Fed cuts too late, while 46% worry the Fed will cut too early. But continued high inflation is judged to be the biggest risk to the economic expansion.
Respondents are a bit more optimistic about rate cuts next year, with the average funds rate forecast to decline to 3.6% compared with a 3.9% forecast in September.
One notable feature of the forecast is call for a very modest economic slowdown. GDP is predicted to grow 1.6% this year, down from 2.5% last year, but far above the 0.7% forecast for 2024 made back in July. The 1.6% is just barely below what is judged to be potential growth and, the economy is seen rising a bit above that level to around 2% in 2025. While not a boom, it’s also not nearly as much of a slowdown as has been routinely predicted for the year ahead in prior surveys.
The March forecast marks the third-straight increase in the 2024 outlook. Now, GDP is not seen below 1% in any of the next four quarters, something that had been a persistent feature of the more pessimistic forecasts of the past year.
With more growth comes only modest inflation reduction this year. The Consumer Price Index is forecast to fall to 2.7%, down from the current level of 3.2%. It is expected to fall to 2.4% next year, about equal to the Fed’s 2% target for the PCE Price Index because CPI is believed to run about a half point above PCE.
The unemployment rate ticks up to 4.2%, from 3.9% now, but stays there through 2025. Mark Zandi, chief economist at Moody’s Analytics, writes, “The Federal Reserve has all but achieved its goals of full employment … and low and stable inflation. … The Fed should declare victory and begin to slowly cut short-term interest rates and wind down its QT.”
The balance sheet runoff, or QT, is now forecast to end in January, compared with November in the prior survey. The Fed is seen reducing its total reserves by about a trillion dollars to $6.7 trillion before quitting quantitative tightening and letting bank reserves decline to $2.9 trillion, from the current level of $3.6 trillion.
One-third of respondents say the bigger risk is the Fed stopping too early and leaving its balance sheet too large, 19% are worried about the Fed stopping the runoff too late and a 37% plurality say neither is much of a risk.
While a soft landing has for the first time become the bet of a majority in the survey, 58% also believe equities may be “somewhat overpriced” for that scenario. As a result, respondents see only muted gains in the S&P of 1.8% this year and 5.8% next year from the current level. Those returns are not far off or even better than what investors could receive by buying risk-free one- or two-year treasury notes, offering a persistent challenge to equities from bonds if rates remain high. The 10-year is expected to remain around 4% for this year and the next.
Economist Hugh Johnson believes markets have come too far, too fast and sees “a somewhat more difficult equity market environment in 2024 … before beginning a recovery to the upside…”
Others see a challenge to equity markets directly from the Fed. “The Fed is in no hurry to cut rates,” wrote Richard Sichel, senior investment strategist at The Philadelphia Trust Company. “Current interest rates are more normal than they have been in fifteen years. A diversified high quality stock portfolio should continue to provide good returns.”
The numbers: The U.S. budget deficit is projected this year to come in slightly smaller than last year, the Congressional Budget Office estimated Wednesday, at about $1.6 trillion versus $1.7 trillion in 2023. Longer term, however, the deficit will continue to rise, reaching $2.6 trillion in 2034.
Key details: The CBO’s projections for the 2024 deficit and for longer-term deficits are smaller than estimates made in May 2023, due to the passage by Congress in June of a bill that imposed some limits on spending.
The agency sees revenues increasing faster than spending in 2026 and 2027, causing the deficit to shrink as a percentage of the economy, but it projects that spending will rise more quickly than revenues after 2027.
By 2034, the deficit is expected to be 6.1% of gross domestic product, much larger than the 3.7% that deficits have averaged over the past 50 years, the CBO said.
Big picture: Deficits will be boosted due to factors including net interest costs and the growth of federal healthcare costs per beneficiary, the CBO said. The agency’s director said in a statement that the growth of interest costs is equal to about three-quarters of the increase in the deficit from 2024 to 2034.
The latest figures come as Washington is facing the prospect of a partial government shutdown early next month. In January, lawmakers averted a shutdown by passing a measure funding the federal government through early March, buying themselves more time to hash out a bigger funding package.
President Joe Biden, meanwhile, is set to unveil his latest budget plan on March 11. His election-year document, however, is all but certain to be blocked in the Republican-controlled House of Representatives.
Tesla stock plummeted more than 12% on Thursday after the company missed analysts’ revenue and earnings estimates in the fourth quarter and predicted “notably lower” EV sales growth this year. The drop, which took $82 billion out of Tesla’s market cap, was the worst single-day performance for shares of Elon Musk’s EV giant since the 21% plunge seen in September 2020—and analysts were quick to criticize management.
Wedbush Securities’ Dan Ives, a noted Tesla bull, said in a Thursday note that the company’s earnings call left Wall Street with “minimal answers and lots of questions and frustration yet again.”
Investors were looking for specifics regarding declining margins and the seemingly “never-ending” string of EV price cuts at Tesla, Ives said, but instead they got a “more cautious” Musk who was focused on the production of next-gen EVs as well as full-self-driving and AI investments.
“We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and fluctuating demand,” Ives wrote. “Instead we got a high level Tesla long term view with another train wreck conference call.”
Tesla’s reported fourth-quarter revenue of $25.17 billion on Wednesday, well below Wall Street’s estimate for $25.64 billion, and an increase of just 3% from a year ago. At the same time, the company’s gross profit margin, which has been investors’ main focus in recent quarters amid repeated EV price cuts, sank to 17.6%, from 23.8% in the same period a year ago. Tack on the outlook for “notably lower” EV sales growth in 2024 compared to 2023, and it was a “bitter pill to swallow” for Tesla’s stockholders, Ives said.
On the call, Tesla warned that it is stuck “between two major growth phases” as it develops next-gen EVs, full-self-driving tech, and AI and robotics offerings. On that front, Musk said that it was “quite likely” that Tesla’s $25,000 entry-level EV would launch as soon as late 2025, but offered only “relatively superficial comments” about his new humanoid robot, Optimus, and full-self-driving beta testing, according to Morgan Stanley analyst Adam Jonas.
Despite the poor earnings report, Wedbush’s Ives maintained his buy-equivalent “outperform” rating on Tesla shares. He did lower his 12-month price target from $350 to $315, arguing that the potential for more EV price cuts and a lack of concrete margin and sales guidance amount to a “category 4 storm” for the company. But overall, he said he believes the long-term growth story at Tesla still remains intact and that mass-market adoption of full-self-driving technology and EVs will eventually boost the company’s earnings.
“Our near-term confidence in the story is shaken, but we remain firm on a long term bull thesis around Tesla and the broader AI story set to take hold. This is a pivotal period for Musk to get Tesla through that will help shape (or haunt) its EV future,” he wrote.
CFRA Research analyst Garrett Nelson also remains bullish. Nelson reiterated his “buy” rating for Tesla on Wednesday, arguing that the production of low-cost, mass-market EV in 2025 “could be the catalyst the stock needs.”
“While the bottom-line miss was disappointing and uncharacteristic, as the low-cost U.S. EV producer and with prices appearing to be nearing an inflection point, we see significant earnings leverage for TSLA,” he wrote.
On the other hand, Tesla’s bears came out firing this week. Gordon Johnson, founder and CEO of GLJ Research, argued in a Thursday note that Tesla’s fourth-quarter numbers show it is just a “struggling car company,” and not the high-growth AI, robotics, and green energy powerhouse that its supporters see.
Johnson maintained his “sell” rating and $23.53 price target for Tesla, which represents 87% potential downside, and argued Musk is nothing but “the world’s (most successful) sleazy used car salesman.”
This story was originally featured on Fortune.com
Investors interested in Bitcoin ETFs in the US have been transferring their 401k retirement plans to institutions offering seamless trading in a bid to obtain financial freedom.
The approval of 11 spot Bitcoin exchange-traded funds (ETFs) has received mixed reactions in the past two days. On one hand, the approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC) can be seen as a major event that opens a new era of mass adoption of Bitcoin and the web3 sector. On the other hand, the approval of spot BTC ETFs has been viewed as a violation of the law by undermining the set anti-money laundering laws. Furthermore, US SEC Chair Gary Gensler indicated that the approval of spot BTC ETFs is not an endorsement of the crypto assets.
“While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” Gensler noted.
Notably, US Senator for Massachusetts Elizabeth Warren differed with the SEC’s decision to approve spot Bitcoin ETF amid concerns over anti-money laundering. Nonetheless, the crypto community has reminded Senator Warren that the US justice system paved the way for the approval of spot BTC ETFs.
The @SECgov is wrong on the law and wrong on the policy with respect to the Bitcoin ETF decision.
If the SEC is going to let crypto burrow even deeper into our financial system, then it’s more urgent than ever that crypto follow basic anti-money laundering rules.
— Elizabeth Warren (@SenWarren) January 11, 2024
Following the approval of spot Bitcoin ETFs in the United States on Wednesday, Vanguard Group indicated that it will not facilitate their buying but only sales. As a result, investors seeking to get Bitcoin exposure to their portfolios have opted to transfer to friendly financial institutions like Fidelity Investments which supports seamless trading of spot Bitcoin ETFs.
Just transferred my 401k from Vanguard to Fidelity. It took about 15 minutes.
If you have an account with a broker currently blocking access to #bitcoin ETFs, close it and get out.
Make these boomers hurt
— Julian Fahrer (@Julian__Fahrer) January 11, 2024
Meanwhile, UBS Group AG (NYSE: UBS), a Zürich-based wealth management firm, has announced that it will allow access to some clients who want to trade spot Bitcoin ETFs. However, people close to the bank indicated that UBS will approve access under several conditions. One of the conditions set is that UBS cannot solicit the trades and accounts with a lower risk tolerance will not be able to buy the spot Bitcoin ETFs.
Similarly, New York-based Citigroup Inc (NYSE: C) intends to offer seamless trading services to the approved spot Bitcoin ETFs to its individual clients. Another financial firm that has already confirmed the support of spot Bitcoin ETFs trading is Charles Schwab Corp (NYSE: SCHW).
The approval of spot Bitcoin ETFs in the United States has significantly increased the crypto bullish sentiments. With Bitcoin halving less than 100 days away, crypto experts expect Bitcoin price to reach a six-figure value within the next few quarters. Moreover, the demand is rising exponentially on a limited supply of Bitcoin and other digital assets.
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Speaking on CNBC’s ETF Edge on Jan. 9, VanEck’s CEO, Jan van Eck, said he expects the spot Bitcoin ETFs to start trading on Thursday, Jan. 11.
Additionally, Steven McClurg, the Chief Investment Officer for Valkyrie, one of the other applicants in the race, told Fortune this week that he also believes Thursday will be the launch day. He said
“We’re just in a slight holding pattern. I’m in the camp where I believe that sometime after the market closes on Wednesday, the ETFs will go effective, meaning they trade on Thursday.”
Cathie Wood from Ark Invest also told ETF Edge that the recent ETF application process was “unlike previous filings” as the SEC had asked questions of the would-be issuers instead of simply rejecting applications. She went on to say the process had been very “detailed” and “technical,” indicating that there had been much more disclosure and exploration than previous ETF attempts.
Lastly, Wood stated that,
“This told us they were getting ready. Now, can we be 100% sure there will be approval this week? No, you never say 100%, but we’re feeling really good about it.”
Following a spat of filings to the SEC on Jan. 8 and today, Jan. 9, all signs now appear to point toward approval this week. Bitcoin is up 14% since its Jan. 3 low, trading at just below $47,000 as of press time.
In a related update, Grayscale’s Chief Legal Officer posted to social media that he was “dotting some i’s and crossing some t’s.”
In response to fears that the applications could be denied at the eleventh hour, Bloomberg’s Eric Balchunas commented.
“The idea that Gary would make his Staff work countless hours with 11(!) dif issuers on two dozen massive documents each well over 100 pages long full of technical jargon through the holidays just to give him cover to deny is tin foil hat stuff in my opinion. But look, we still have 5% chance of delay/denial.”
As more final S1 filings come through, Bitwise has dropped its fee to just 0.2%, making the race to the bottom closer than ever. Only Blackrcok has a comparative fee, but it is capping this rate at the first $5 billion into the fund. Even more astoundingly, Bitwise is waiving its fee entirely for the first $1 billion.
Update: Added Bitwise fee.
Used cars for sale at Lee Auto Mall on Wednesday, August 16, 2023. (Staff photo by Brianna Soukup/Portland Press Herald via Getty Images)
Brianna Soukup | Portland Press Herald | Getty Images
DETROIT — Used vehicle prices are expected to stabilize this year, after buyers of pre-owned cars and trucks got more relief in 2023 following a stretch of record prices.
Automotive data firm Cox Automotive expects wholesale prices on its Manheim Used Vehicle Value Index, which tracks prices of used vehicles sold at its U.S. wholesale auctions, will end 2024 only 0.5% higher than in December 2023. Pricing will fluctuate month to month due to selling seasonality and other factors, according to Cox.
The slight increase would compare with a 7% decline in 2023 and nearly 15% drop in 2022 from inflated prices during the coronavirus pandemic. At that time, availability of new vehicles fell to record lows due to supply chain and parts problems that interrupted vehicle production.
“2024 is looking to be less volatile than 2023, but we’ve been taught to expect the unexpected in the wholesale market,” Jeremy Robb, Cox Automotive senior director of economic and industry insights, said in a release.
The stability is a win for potential car buyers. However, used vehicle prices are still higher than they were before the pandemic. Retail prices for consumers traditionally follow changes in wholesale prices, but they have not fallen as quickly as wholesale prices in recent years.
Cox reports the average listing price of a used vehicle was $26,091 as of last month, down 3.9% from a year earlier and 7.5% lower than the roughly $28,200 to end 2021. Average listing prices for used vehicles were less than $20,000 in 2019, according to Cox.
Used vehicle sales are expected to increase by less than 1% to 36.2 million, according to Cox Automotive. That forecast includes 19.2 million in used vehicle retail sales.
The expected used vehicle sales compare with a “pessimistic” forecast of a 1.3% increase for new cars and trucks in the U.S. this year to 15.7 million units, according to Cox.
“For the economy and the auto market, we’re in for just 1% to 2% growth, but growth beats a recession,” Jonathan Smoke, Cox Automotive chief economist, said Monday during a call. “As we enter into 2024, new supply is back to spring 2020 levels, which favors consumers and leads to lower prices.”
Meanwhile, Cox expects all-electric vehicle sales to increase and make up more than 10% of retail new car and truck sales in 2024. That would compare with 1.1 million units, or 7.4% of retail sales, sold in 2023.
The U.S. Securities and Exchange Commission (SEC) is on the verge of potentially approving several spot Bitcoin ETFs, as evidenced by the flurry of recent activities by major financial institutions. As Bloomberg’s James Seyffart highlights, the market eagerly anticipates amendments to 19b-4 filings, which is crucial for approval. These amendments are expected to address issues related to cash creation and redemption mechanisms, a vital component in the ETF approval journey.
Eleanor Terrett of Fox Business shares Seyffart’s view in light of the expected submission of amended 19b-4 filings in a closely watched development. The amendments and comments on S-1s are set to shape the potential launch dates of these ETFs. Terrett posted to X,
“Expecting some amended 19b-4 filings today as well as some eleventh hour phone calls concerning comments on S-1s and possible launch dates. The timeline for approvals still looking like next week but will all depend on how fast the SEC can read through comments and amendments made today.”
As Terrett notes, the process is now primarily about dotting the i’s and crossing the t’s.
We are waiting on decisions for applications from major players made up of Grayscale, Fidelity, Valkyrie, iShares BlackRock, Ark, VanEck, Franklin Templeton, Invesco Galaxy, WisdomTree, Global X, Hashdex, and 7RCC awaiting the SEC’s decision.
As of our last report, only VanEck, Grayscale, and Fidelity had filed Form 8-A. Since, Valkyrie and Ark filed late on Jan. 4, also signaling their readiness and progress toward launching a spot Bitcoin ETF. The filing of Form 8-A, while a critical step, does not guarantee approval but indicates the issuer’s preparedness to comply with SEC regulations.
Other recent SEC updates include Hashdex’s recent receipt of an EFFECT form for its Trust conversion, indicating the SEC’s approval for the reorganization of Hashdex Bitcoin Futures ETF into another fund on Jan. 2. However, it’s crucial to understand that this approval is separate from the approval of a spot Bitcoin ETF which is included in a related, but separate, filing.
The anticipation of the SEC’s decision is palpable, as evidenced by yesterday’s recovery in Bitcoin’s price. It saw a 6.89% increase from its Jan. 3 low, buoyed by market optimism, and has traded tumultuously between $42,600 and $44,200 throughout Jan. 5, which notably is the deadline for comments on several of the ETF applications. This increase reflects the high stakes and keen interest in approving a spot Bitcoin ETF, which would allow ETFs to directly gain exposure to Bitcoin, unlike Bitcoin futures.
Grayscale, Fidelity, Ark, VanEck, and Valkyrie are ‘on paper’ in the lead in terms of filing the required documents to launch a spot Bitcoin ETF. However, the current market consensus is that if the SEC approves the concept of a spot Bitcoin ETF, in principle, many, if not all, of the filings will be approved. The outcomes of these deliberations are eagerly awaited, with potential implications for the broader crypto market.
The crypto market is on the edge of its seat as the SEC deliberates on approving spot Bitcoin ETFs.