article_text
stringlengths 294
32.8k
⌀ | topic
stringlengths 3
42
|
|---|---|
For years, a high-ranking accountant at the Trump Organization was the point man for ensuring that tweaked numbers padded Donald Trump’s wealth on paper.
But when he appeared on the witness stand at the former president’s bank fraud trial last week, the accountant’s supposed finance expertise suddenly vanished into thin air.
Jeffrey McConney, who recently retired as the company’s controller, has spent recent years facing close legal scrutiny.
In 2017, state investigators questioned him over the way Trump misused his charity, which was eventually dissolved. Manhattan District Attorney Alvin Bragg used McConney’s testimony to convict the Trump Organization of tax fraud last year. And now, New York Attorney General Letitia James’ attorneys are trying to use McConney to prove that the Trump family committed bank fraud and should have their real estate empire revoked of its business licenses and potentially stripped of its assets.
Now, McConney is in a precarious position, because the attorney general’s law enforcement effort also targets him directly. Alongside his former boss, he is a defendant in James’ $250 million lawsuit, given that the accountant was the one who routinely tallied up the estimated values of dozens of Trump properties—many of which were deliberately pumped up.
McConney’s deep familiarity with the Trump Organization and its business strategies made it all the more astounding when, on Friday, Trump’s defense lawyers suddenly took the stance that McConney actually doesn’t know what he’s talking about.
The shocking moment happened when Andrew Amer, special litigation counsel for the attorney general, asked McConney about the way company documents seemed to fake the rent a high-end grocery chain paid at Trump’s building at 40 Wall Street in Manhattan.
“Can we agree, Mr. McConney, that by adding the income from the lease from Dean & DeLuca into your valuation that you double-counted the Dean & DeLuca income in your valuation?” Amer asked.
“Objection, Your Honor,” interjected defense lawyer Jesus Suarez. “Mr. McConney is not a valuation expert. He’s not offered as a valuation expert.”
New York Supreme Court Justice Arthur F. Engoron quickly overruled that objection, but the ridiculous dichotomy was not lost on those in the courtroom.
The idea that the Trump Organization’s long-time bean counter would be oblivious to the inner workings of real estate valuations seemed implausible, given that documents presented at trial showed that he was the key conduit to getting those very valuations compiled into Trump’s annual statements of financial condition.
That paperwork, which was signed off by outside accountants at the firm MazarsUSA, was the reason that financial institutions like Deutsche Bank and Ladder Capital extended hundreds of millions of dollars in loans to Trump. Those funds allowed his company to seal several marquee deals, including the purchase of the Doral golf course in South Florida and the acquisition of the Old Post Office in downtown Washington, which briefly became a Trump hotel.
The inherently contradictory nature of Trump lawyers’ stance on McConney underscored the sharp contrast on display at the ongoing bank fraud trial, where James is trying to bolster a case the judge has already decided has merit while Trump lawyers combat the very premise of the investigation. When investigators point to spreadsheets, the defense either shrugs, appears confused, or claims vastly inflated values are mere differences of opinion.
For days, state investigators have been laying out how the Trump Organization fudged its numbers before turning the books over to its outside accountant Donald Bender at MazarsUSA. There, the firm would sign off on Trump’s personal financial statements and give them the aura of authenticity. It was McConney’s job to prepare the spreadsheets that listed properties, associated bank account totals, and estimated values.
With him on the stand, the AG’s office reviewed the way McConney gathered real estate development valuations as part of his regular job as the company controller. They repeatedly pointed out how he appeared to use omissions to trick Mazars and throw them off the scent of any impropriety.
Take, for example, Trump Park Avenue, a residential building located in an ultra high-end area east of Manhattan’s Central Park. When McConney put together the numbers for the 32-story condo building, his original spreadsheet listed all the units, along with their offering prices and market values.
But McConney admitted to intentionally deleting that last column before sending it over to Mazars—ensuring the outside firm could only see the pie-in-the-sky prices Trump requested, not the market values that reflected what someone would actually pay for those luxury condos.
That sleight of hand added roughly $57 million to Trump’s wealth on paper, math that McConney acknowledged in court.
Then there’s the forested estate in upstate New York called Seven Springs, a failed development project that doubles as Trump’s Bruce Wayne-esque mansion just north of Gotham. Once again, McConney played a central role in fudging the numbers by acting as if seven additional mansions had been greenlit for construction, adding a whopping $161 million to the total value.
And once again, McConney copped to those calculations on the witness stand.
“Were you operating under the assumption when doing this valuation in these two years that approvals had been obtained, all necessarily approvals had been obtained for these seven homes in Bedford?” Amer asked him.
“Looking at this now, yes,” McConney responded.
Some of the dodgy math appeared to come from Eric Trump, one of the former president’s sons, who has long served on the Trump Organization’s leadership team. McConney testified that, after a telephone conversation with the Trump company executive in 2013, another section of Seven Springs jumped in value on paper from $25 million to $101 million—even though they couldn’t actually sell the property they claimed to have.
“And he also, by the way, told you that the project was put on hold, right?” Amer asked.
“Yes,” McConney said.
“But you’re still accounting for the profit from those 71 mid-rise units that were put on hold, as if it’s immediately realized as of June 30, 2013, correct?” Amer asked.
“Yes,” McConney responded.
At times, the ex-controller demurred, pointing out that, in fact, there was another department that was really in charge of coming up with asset values. But investigators kept displaying spreadsheets and emails that either bore McConney’s name or were created by him, highlighting his key role in making sure these numbers got in front of the right people to secure those bank loans.
On the stand, the accountant claimed to be oblivious to the basic facts about yet another dubious deal of Trump’s with regard to the Seven Springs property, even though it was his job as the company’s controller to oversee the Trump Organization’s books.
This one dealt with the way Trump eventually cut his losses at Seven Springs: by creating a conservation easement on the property, essentially giving up development rights by dedicating the land for natural preservation, in exchange for a tax break.
Though Trump stretched out the tax write-off beyond belief by inflating the land value there, McConney claimed he didn’t even understand what was going on.
“What’s being donated are the development rights, correct?” Amer asked.
“I’ll take your word for that,” McConney responded.
At the trial last week, McConney revealed that he recently retired from the Trump Organization and received just over half of his $500,000 severance package. The detail raised questions about his testimony that were reminiscent of the deal that his direct boss, Allen Weisselberg, got while he was testifying at the company’s criminal tax fraud trial last year.
Although the judge in the current civil trial has already determined that the Trumps, McConney, and Weisselberg engaged in bank fraud and that business licenses should be revoked, the Attorney General still has a long way to go before she can declare total victory. The trial is set to continue until the end of December
|
Banking & Finance
|
The founders of cryptocurrency exchanges face a mountain of regulatory challenges and billions in personal losses. Binance CEO Changpeng Zhao personally lost $12 billion this year as trading volumes on Binance declined, according to a Bloomberg report Friday. Meanwhile, the Winklevoss twins’ Gemini sued their former partner, Genesis. Running a cryptocurrency exchange in 2023 continues to be an absolute mess.
Customers are trading a lot less cryptocurrency than they used to, and that’s the main issue dipping into Zhao’s wallet. Binance’s trading volumes fell more than 30% this year, according to data from The Block. However, it’s a problem for every crypto exchange, as volumes industry-wide have fallen 90% off their peak in May 2021.
Binance did not immediately respond to Gizmodo’s request for comment.
Apart from crypto trading in a slump, Gemini sued its former partner Genesis to claim $1.6 billion worth of Grayscale Bitcoin Trust shares, according to CoinDesk Friday. The legal action comes one week after Attorney General Letitia James sued both Gemini and Genesis for defrauding New Yorkers. Genesis is currently working to pay off creditors from its bankruptcy filing in January.
“For the past 12 months, Genesis has been trying funnel this value away from Earn users to other creditors,” said Gemini in a press release on X. “With this value, every Earn User can be made whole.”
Legal problems, low volumes, and personal losses are the norm for crypto exchanges these days. Binance is facing a slew of regulatory challenges including a lawsuit from the Future Commodity Trading Commission that the exchange called “incendiary.” On top of their lawsuit, the Winklevoss twins have lost more than $4 billion between the two of them in the collapse of cryptocurrency, according to Forbes.
The crash of FTX erased any credibility in the crypto market. However, it is possible that increased regulation could restore faith in the cryptocurrency system. There is speculation that the SEC approving a Bitcoin ETF will prop up the price of Bitcoin.
|
Crypto Trading & Speculation
|
Three U.S. senators on a panel that oversees Social Security have called on the Social Security Administration to address a news report saying that, in violation of agency policy, people’s benefits were reduced or suspended because they received covid-19 relief payments.
The lawmakers, who include Senate Finance Committee Chairman Ron Wyden (D-Ore.), sent a letter to acting SSA Commissioner Kilolo Kijakazi on Wednesday saying they were “deeply concerned” and wanted answers to a list of questions within 30 days.
In 2020 and 2021, to counter the economic fallout of the covid pandemic, the government distributed relief payments to eligible Americans totaling as much as $3,200 per person. The payments typically arrived automatically in mailboxes or bank accounts.
But, as KFF Health News and Cox Media Group reported this week, some recipients say the payments had an unintended consequence: They led the Social Security Administration to claw back other federal benefits, including monthly support payments for people who are poor and either disabled or at least 65.
The covid relief, known as stimulus or economic impact payments, left some recipients with more money in the bank than the $2,000 asset limit for individuals receiving benefits through a Social Security program called Supplemental Security Income. As a result, the Social Security Administration has sent some people notices alleging they were overpaid and demanding they repay the government, according to people affected.
In some cases, the agency has cut off SSI payments.
That wasn’t supposed to happen. According to the agency’s rules, the covid payments, also known as EIPs, do not count toward the asset limit.
“[W]e are concerned by recent reporting that SSI beneficiaries have received overpayment notices because of the EIPs, even though SSA determined that EIPs would never be counted toward eligibility for SSI,” the senators wrote to Kijakazi.
The letter cited the news report by CMG and KFF Health News.
Signing along with Wyden were Democrats Sherrod Brown of Ohio, who chairs the Senate Subcommittee on Social Security, Pensions, and Family Policy, and Bob Casey of Pennsylvania, a member of that subcommittee and chair of the Senate Special Committee on Aging.
“We sent it because … it’s not right that Social Security made a mistake, and the beneficiary shouldn’t have to pay for that mistake,” Brown said Thursday in an interview with CMG’s WHIO-TV in Dayton.
“We’re not going to drop this until they back off,” Brown said, referring to the agency.
The senators asked Kijakazi about the scope of the problem, including the number of people who had benefits reduced or suspended because of covid payments, the number who had benefits reinstated with or without an appeal, and the outcomes of appeals. They also asked what the agency has been doing about the issue.
“As you know, SSI benefits, while modest, have a substantial impact in the lives of the people who rely on them,” the senators wrote. “Benefit suspensions and overpayment notices — regardless of the cause — can have a profound negative impact in their lives.”
“Further,” they wrote, “losing SSI eligibility risks a lengthy and bureaucratic process to restore eligibility and also risks beneficiaries’ access to Medicaid coverage.”
Nicole Tiggemann, a spokesperson for the Social Security Administration, did not respond to a request for comment.
The covid-related Social Security clawbacks are part of a larger picture. As KFF Health News and CMG reported last month, many Americans have been struggling with demands that they repay benefits the Social Security Administration says they never should have received. The collection efforts can cover years of payments and reach tens of thousands of dollars or more.
In some cases, the alleged overpayments are the result of beneficiaries failing to comply with requirements. In others, they are the result of errors by the government.
The same day the senators sent their letter to Kijakazi, the agency chief was being questioned on overpayments at a hearing convened by a House panel.
Kijakazi revealed that about 1 million people have received overpayment notices from the agency in each of the last two fiscal years.
She told the panel that Social Security employees “work assiduously to pay the right person the right amount at the right time,” and that the agency was conducting a “top-to-bottom” review of its handling of overpayments.
Solving the larger problem may require legislation, Brown said, adding he would try to change the law this year “if that’s what’s necessary to get Social Security to do it right.”
John Bedell of CMG’s WHIO-TV in Dayton, Ohio, contributed to this report.
Do you have an experience with Social Security overpayments you’d like to share? Click here to contact our reporting team.
|
Inflation
|
Michael M. Santiago/Getty Images
toggle caption
A jury took less than five hours to convict former FTX CEO Sam Bankman-Fried of fraud and money laundering.
Michael M. Santiago/Getty Images
A jury took less than five hours to convict former FTX CEO Sam Bankman-Fried of fraud and money laundering.
Michael M. Santiago/Getty Images
Last November, Jake Thacker discovered more than $200,000 of his crypto and cash had gone missing. He'd been counting on it to pay off debts, and to pay taxes on stock he'd sold.
One year later, Thacker's money is still nowhere to be found.
Thacker was caught up in the collapse of cryptocurrency exchange FTX, unable to withdraw what he had stored on the site.
"I went in, looked at where some of my account balances were, it didn't seem to be right," Thacker told NPR at the time. "Everything was frozen, there were all kinds of error issues. I was definitely in freak-out mode."
Before the company filed for bankruptcy, he sent e-mails, made phone calls, and consulted a lawyer. Concern gave way to panic, and then resignation.
"I mean, it irrevocably changed my life," Thacker now says.
Earlier this month, a New York City jury convicted FTX's founder, Sam Bankman-Fried, of fraud and money laundering.
The former crypto mogul, who spent billions of dollars of FTX customer money on high-end real estate and speculative investments, could spend the rest of his life in prison after he's sentenced early next year.
But to Thacker, that's cold comfort.
Like thousands of Bankman-Fried's victims, he has spent the last year trying to recover what he had on FTX. It hasn't been easy. Or fruitful.
Bankruptcy proceedings continue in Delaware, and Thacker has tried to follow them from Portland, Oregon, where he lives.
But it's hard to get a handle on what the high-paid lawyers are haggling over, and Thacker fears that the longer this process drags on, the less he will get back.
"We're just, kind of, in the passenger seat, waiting to hear," he says. "We can file a claim, but who knows when they'll get to it, and who knows what the pot will be when they do get to it."
Job loss, bankruptcy and loneliness
FTX's implosion marked the start of an agonizing period for Thacker. A few weeks later, he lost his job at a tech company and filed for bankruptcy.
"I had no way to pay for anything," he says. "So, that was really kind of the only recourse that I had."
Thacker says his personal relationships have suffered. Many of his friends couldn't understand what he was going through.
Customer claims were due in September. According to Jared Ellias, a professor of bankruptcy law at Harvard University, the FTX debtors are expected to update the court on where things stand next month.
"They've been looking to see what are all the assets they have," he says. "And they also have been looking to see, of the assets they have, you know, what can they turn into green dollars."
So far, they have recovered more than $7 billion, which Ellias says is "pretty good" given the vastness of Bankman-Fried's crypto empire and its spotty recordkeeping.
Thacker says he's gotten no official communication about where his claim stands, and he is no longer following the process as closely as he did at the beginning.
"I check in from time to time, and poke around here and there, but it's not really a healthy preoccupation for me," he says. "It's just more stress and anxiety."
Hope after a guilty verdict
Thacker paid attention to Bankman-Fried's monthlong trial, though. He felt surprised — and satisfied — after the jury delivered its guilty verdict.
"I thought to myself, 'Wow, the justice system actually did work in this instance,'" he says. "And you know, the guilty parties got their comeuppance."
Three of Bankman-Fried's co-conspirators — deputies at FTX and its sister trading firm, Alameda Research — pleaded guilty to separate criminal charges. They had testified against him as cooperating witnesses.
The trial's outcome was "a big win," Thacker says. But for him and other FTX customers who lost billions of dollars in total, it does nothing to make them whole. Their money is still missing.
"At the end of the day, I'm hopeful I will survive all of this, and come out better for it on the back end," he says.
Thacker has a new job, at another tech startup. He's offloaded the crypto assets he had on other exchanges, including Binance, Coinbase and Kraken. He wants to move on, but he's still waiting.
|
Crypto Trading & Speculation
|
Sainsbury's has cut the price of its own-brand butter and bread after criticism over high supermarket prices.
The supermarket is reducing its salted and unsalted butter from £1.99 to £1.89 for 250g packets from Tuesday.
Wholesale food prices have been falling globally, but UK food inflation is at its highest for 45 years.
The move by Sainsbury's comes after criticism of supermarkets for not passing on wholesale price falls quickly enough.
Inflation was expected to fall below 10% last month, but soaring food prices meant it fell by less than expected.
Last month the Office for National Statistics - which measures the rate of prices increases - told the BBC you would expect to see global food price falls reflected in supermarkets "but we're not there yet".
And in March, the union Unite accused some retailers of "fuelling inflation by excessive profiteering".
In April industry body the British Retail Consortium said there is a three to nine-month lag to see wholesale price falls reflected in shops, and promised prices would come down over the next few months.
Tesco, Asda, Morrison, Aldi and Lidl have been approached for comment.
Sainsbury's said it was cutting the price of its some of its own-brand bread to 75p from 85p.
The supermarket said it was able to lower some of its bread and butter prices due to wholesale prices beginning to fall.
"Whenever we are paying less for the products we buy from our suppliers, we will pass those savings on to customers," the UK's second-largest supermarket chain said.
The war in Ukraine has driven up food prices around the world, but the UK has also faced its own problems too - from Brexit red tape to labour shortages.
However, as commodity prices have started to fall, supermarkets have started to cut prices on some products - but not others.
Some of the earliest price falls have been in milk, with Aldi, Lidl and Asda recently following Sainsbury's and Tesco in cutting the price of milk by at least 5p.
How can I save money on my food shop?
- Keep track of what you have
- Head for the reduced section first
- Make better use of your freezer
- Make food last longer by understanding packaging
- Make use of local experts
Last summer, butter brand Lurpak said it had put prices up so dairy farmers would get a fair deal.
Some shoppers had expressed shock at rapidly rising prices, with a 750g tub of Lurpak priced at £7.25 in Sainsbury's in July 2022.
Farmers have been under pressure as milk prices have dropped, with one dairy farmer in Shropshire recently saying he is on a "knife-edge".
Sainsbury's said its price drop would not have an impact on how much it paid farmers.
|
Inflation
|
- The Consumer Financial Protection Bureau fined Bank of America $150 million for charging customers so-called junk fees, among other violations.
- President Joe Biden has said his administration would crack down on junk fees — including those from banks as well as hotels, airlines and other service providers.
- And yet, when one fee goes down another pops up, says Bankrate's Ted Rossman, in "a game of whack-a-mole."
Another bank is in hot water for so-called "junk fees."
The Consumer Financial Protection Bureau on Tuesday ordered Bank of America to pay more than $100 million to its customers and $150 million in penalties for double-dipping on fees, among other violations.
The bank charged multiple $35 overdraft fees for the same transactions and generated substantial additional revenue as a result, according to the agency.
"These practices are illegal and undermine customer trust," CFPB Director Rohit Chopra said in a statement.
Junk fees are additional, often hidden, charges that can come from a range of lenders. They are not typically included in the initial price of a transaction but are tacked on at the time of payment.
"Consumers are encountering these 'surprise' charges more often than they might expect, in everything from concert ticket surcharges to airline seat selection fees, credit card late fees, bank overdraft fees, hotel resort fees and more," according to Ted Rossman, senior industry analyst at Bankrate.
Yet even if these fees were capped or even banned entirely, it's unlikely that consumers would save money as a result, he said.
"Overdraft fees are a good example of a 'game of whack-a-mole' when it comes to fees," Rossman said.
When many financial institutions lowered their overdraft and non-sufficient funds fees or eliminated them altogether, the average overdraft fee fell while ATM surcharges jumped to a record high, Bankrate found.
In most cases, even with more transparency, the all-in cost to consumers would likely remain the same, according to Rossman.
"Junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did," Biden said in his State of the Union address earlier this year. "They add up to hundreds of dollars a month."
Biden also called on Congress to pass the Junk Fee Prevention Act, which will reduce unexpected charges, such as airline booking fees; service fees for concert tickets; early termination fees for TV, phone and internet services; "resort fees" at hotels; and "excessive" credit card late fees.
The consumer watchdog proposed a new rule prohibiting banks from charging surprise overdraft fees on debit transactions and reducing typical late fees from roughly $30 to $8, saving consumers as much as $9 billion a year, according to the White House.
"Despite recent progress in addressing overdraft fees, the job is far from complete," Nadine Chabrier, the Center for Responsible Lending's senior policy counsel, said in a statement.
"The Consumer Financial Protection Bureau took a big step by banning surprise overdraft fees," she said. "We are encouraged that the consumer bureau announced it will take additional steps, and we urge the bureau to place strong limits on the size and frequency of these fees."
The average overdraft fee costs $29.80, Bankrate's research found, while the average nonsufficient funds fee is $26.58.
Some banking interest groups countered that offerings such as overdraft protection provide a much-needed safety net.
"The president's use of the term 'junk fee' is overly broad and ignores the needs of low-income and middle-income consumers who depend on these services to resolve short-term financial difficulties," Jim Nussle, president and CEO of the Credit Union National Association, said in a statement.
"It does not consider the costs involved in providing needed financial services that consumers depend on."
Without the option of overdraft protection, "people are more likely to turn to predatory lenders, hurting the same people the administration seeks to help," Nussle said.
|
Banking & Finance
|
Protean eGov Technologies IPO Subscription: Day 1 Live Updates
The IPO has been subscribed 0.21 times or 21% as of 10:51 a.m. on Monday.
Protean eGov Technologies Ltd.'s initial public offering will open on Nov. 6, and close on Nov. 8.
The IT-enabled solutions provider is offering 61.9 lakh shares via an offer for sale only.
The selling shareholders comprise 360 One Special Opportunities Fund, HDFC Bank Ltd., Axis Bank Ltd., Deutsche Bank AG, Union Bank of India, NSE Investments and Unit Trust of India.
Protean eGov Technologies Ltd. has raised Rs 143.5 crore from anchor investors ahead of its initial public offering.
The IT-enabled solutions provider allotted 18.12 lakh shares at Rs 792 apiece to 18 anchor investors.
The marquee investors include SBI Life Insurance Co., Aditya Birla Sun Life Insurance Co., Baroda BNP Paribas Fund, Unifi Capital-backed BCAD Fund, and ACM Global Fund, all of which subscribed to 14.43% each, among others.
Two domestic mutual funds have applied through a total of nine schemes, the company said in an exchange filing. They have collectively netted 21.4% of the anchor portion of Rs 30.7 crore.
IPO Details
Issue opens: Nov. 6.
Issue closes: Nov. 8.
Fresh issue size: Not applicable.
Offer for sale size: Rs 72.3 crore.
Total issue size: Rs 490 crore.
Price band: Rs 752-792 per share.
Lot size: 18 shares.
Face value: Rs 10 per share.
Listing: BSE.
The company has not undertaken any pre-IPO placement.
The shareholding pattern does not change for the company after the offer.
Business
Protean eGov Technologies was originally set up as a depository in 1995 and created a systemically important national infrastructure for capital markets. The company operates in the e-governance sector and has so far managed 19 projects across seven ministries, to establish public digital infrastructure.
Some of their key interventions include modernising digital tax infrastructure with PAN issuance, and projects like Tax Information Networking and Online Tax Accounting Systems. They also created tech infrastructure as a Central Recordkeeping Agency for the Atal Pension Yojana.
The company has also supported open digital building blocks, such as Open Network for Digital Commerce, for use cases across e-commerce, mobility, healthcare, agriculture, and education.
Subscription Status: Day 1
The IPO has been subscribed 0.21 times or 21% as of 10:51 a.m. on Monday.
Institutional investors: Zero
Non-institutional investors: 0.23 times or 23%
Retail investors: 0.33 times or 33%
Employee Reserved: 0.11 times or 11%
|
Stocks Trading & Speculation
|
Searching for a new mortgage is time consuming when you have a demanding job, a new baby to care for and a Victorian home to renovate.
"Last time we looked properly, [the repayment] had pretty much doubled to £850 or £900 a month," says Ian Thackray. "It's terrifying quite honestly."
Ian's five-year fixed rate deal expires at the end of the year and the blacksmith and his partner, who is currently on maternity leave, find themselves, like so many others, in a "very difficult" situation.
They have been paying £450 a month for their terraced home in Blandford Forum, Dorset.
From August, when his partner returns to work, they need to factor in a monthly childcare bill of £600, and with Ian being self-employed, his wages fluctuate.
"There have been times on my way home from work when I've looked at the ads for Aldi, Lidl and Tesco and at £14 an hour, it's really tempting. If I have to give up being a blacksmith, then I will," the 39-year-old says.
The craftsman is not alone. Many are facing similar financial dilemmas as they contemplate rising mortgage costs.
The Bank of England has been steadily raising interest rates for the last year and a half, as it tries to tackle soaring prices.
After figures last week showed inflation not coming down as quickly as expected, many now predict the central bank will continue to raise rates from their current level of 4.5% to as high as 5.5%.
That in turn had an immediate impact on the mortgage market. Lenders began raising their rates. According to financial data firm Moneyfacts, the average two-year fixed-rate mortgage is now 5.49% and the average five-year fixed is currently 5.17%.
And within a week hundreds of mortgage deals were removed from the market as lenders reassessed their offers.
"Carnage" is how Craig Fish from Lodestone brokers in London described the situation.
"I'm currently on hold to NatWest - 30 minutes and counting - to discuss a possible new mortgage as they have just announced they are withdrawing rates at 10.30pm tonight. Do the lenders think the future is this uncertain?" he said earlier this week.
Jo Wilder, 28, works for Cardiff Council and pays £700 a month for a studio apartment she has been renting for the past 18 months. She now wants to buy her own home - a process that is taking longer than she hopes, as she watches rates rise.
Despite having a healthy 20% deposit and a mortgage in principle, she says there are "not really any properties on the market".
Repayments on a three-year fixed-rate deal at 4.5% would be between £500 and £600 but she is worried about interest rates going up.
"It's not ideal. I'm just going to have to wait it out and hope rates come down. It really is very stressful," she says.
Jo had hoped getting her own place would mean a drop in monthly outgoings but with rising food prices she no longer thinks that will be the case.
"It is disheartening," she adds. "The way things are going I think it is actually going to be the same price, which is pretty daunting to be honest."
'A nightmare'
In Bedfordshire, Anthony Jones and his wife have a 14-month-old daughter - they want to upsize and have been trying to sell since last August.
The couple's five-year fixed deal has ended and they are now on a tracker mortgage, leaving them £200 worse off a month, at a little over £1,200.
"It's a bit of a nightmare," says Anthony. "We're looking at upsizing and all of a sudden are having to question the affordability of it."
The 33-year-old says when they first put their house on the market there had been "a lot of interest initially, then all of a sudden we had people saying 'our mortgage offer has been pulled' and 'we can't afford it anymore'."
The couple have reduced the asking price from £300,000 to £275,000, but say they cannot accept less because otherwise they will not have the deposit for their second home.
"Our daughter has grown so quickly, we need a garden and bigger bedrooms and more storage. The lack of space is even causing arguments between me and my partner," says Anthony.
What happens if I miss a mortgage payment?
- A shortfall equivalent to two or more months' repayments means you are officially in arrears
- Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period
- Any arrangement you come to will be reflected on your credit file - affecting your ability to borrow money in the future
The upheaval for people going through the application process comes as Bank of England figures this week showed a decline in the number of mortgages being approved.
The number of net mortgage approvals for house purchases fell to 48,700 in April from 51,500 in March.
Mortgage broker London & Country is now seeing a trend for people fixing for one or two years, rather than the previous most popular five-year term, on the basis that interest rates will have fallen by the time they come to look for their next deal.
Spokesman David Hollingworth says people who are refinancing should start searching for a new product six months before the end of their current deal.
Some may want to consider taking out new mortgages over a longer term - something a lot of first-time buyers do to "give themselves breathing space", he says.
If it is a struggle to meet payments on an existing mortgage there is also the option of extending the term, but Mr Hollingworth says this is "not a move to be taken lightly because it will significantly increase the overall interest bill, by tens of thousands of pounds".
|
Real Estate & Housing
|
Mint, the budgeting app owned by Intuit, is shutting down. Intuit announced on Tuesday that Mint will get absorbed into Intuit’s other service, Credit Karma, when it officially goes away on January 1st, 2024 (via Bloomberg). But it’s still not clear whether Credit Karma will get the budgeting features that Mint is known for.
Intuit first acquired Mint in 2009, an app that has offered a free way for users to track their budgets, manage expenses, negotiate bills, and keep tabs on subscriptions. Now, Intuit is inviting users to Credit Karma, a service that the company acquired in 2020. While Credit Karma offers similar features, like credit score checks, information on how to build credit, and credit monitoring, it still doesn’t come with the same budget tracking tool that many people specifically use Mint for, and it’s not clear whether Credit Karma will ever adopt it.
On a support page on Credit Karma’s website, Intuit says “the new experience in Credit Karma does not offer the ability to set monthly and category budgets,” adding that the app instead “offers a simplified way for you to build awareness of your spending, and track your savings.” Intuit says it still plans on adding ways to view transactions, track spending, and aggregate financial accounts. The Verge reached out to Intuit for more information about the features coming to Credit Karma but didn’t immediately hear back.
Earlier this year, Credit Karma added one of Mint’s key features: the ability for users to track their net worth. Intuit says Mint users can transfer their accounts by logging into Credit Karma from the Mint app. From then on, Intuit says users will no longer be able to access their Mint profiles. Users can also download and delete their Mint data if they don’t want to move to Credit Karma.
This change seems to have been in the works for quite some time now, as Mint users across Reddit have seen prompts to migrate to Credit Karma over the past few weeks. Mint had 3.6 million monthly active users as of 2021, Bloomberg reports, but the app’s development has slowed down considerably in recent years, with the last major updates being new categorization features and the ability to connect the Apple Card to Mint.
|
Consumer & Retail
|
When Silicon Valley Bank collapsed in March, a flurry of startups rushed to step in to help fill a gap in the startup and venture capital community.
One of those startups, Mercury, in particular found itself in the position of trying to meet a sudden surge of demand amidst the panic.
“The craziest time was the first five days,” recalls CEO and co-founder Immad Akhund. “It started Wednesday night — where it was very stressful and not just from Mercury’s perspective, but all of Silicon Valley was holding their breath. People were worried about what was going to happen next.”
Akhund says he spent most of his time those first few days on calls and responding to direct messages from existing and potentially new customers.
“People were very stressed and saying ‘I need a bank account now,’” he says. “Every question had this urgency.”
In response, Mercury — working with partner banks Choice Financial Group and Evolve Bank & Trust — upped its FDIC insurance, first from $1 million to $3 million and then to $5 million. It also released a new product called Vault, so people could park their cash beyond those amounts into U.S. government treasury bills.
Still, one of the questions that kept coming up, according to Akhund, was, “If SVB is failing, why is Mercury safe?” The question was fair, in his view, considering that Mercury itself is a startup.
In the first few days after the collapse, the company saw more than $2 billion in deposits. And in all of March, Mercury saw nearly 8,700 new customers depositing funds into its accounts.
“It was by far our biggest month we’ve had at mercury, a huge inflow,” Akhund recalls. “We tried to prioritize people coming from SVB and even built some tools so they could connect to SVB accounts.”
But it wasn’t a short-term boom, something that Akhund was worried about.
The company claims that 95% of its net new customers have stayed with Mercury nearly 90 days out from the SVB crisis and that those deposits have held steady. Also, that new customer growth has continued even after the SVB crisis has settled, with the company having doubled new signups per month since April — leading to 17,000 total new customers depositing funds from April to June, a figure that Akhund shared with TechCrunch exclusively. Today, its total customer base includes more than 100,000 businesses such as including Deel, On Deck, Linear, Sprig and Forage. This means that Mercury’s customer base grew from 76,000 to 100,000 in a matter of months in the wake of SVB’s collapse.
That surge of customers has contributed to the company’s annualized revenue run rate growing 4x year-over-year from May 2022 to May 2023, he added. Overall, in 2022, Akhund said that Mercury processed $50 billion in transactions. In the first half of 2023 alone, the company has processed more than $42 billion in transactions. Mercury also, he said, has been profitable for the last 12 months.
Further, according to data obtained from Kruze Consulting, more than 30% of Kruze’s clients now have a Mercury account, up from 17% at the end of February — the highest share of any neobank or bank, according to Mercury.
While Mercury is open to any U.S. business, its focus is on startups and e-commerce companies, which make up 70% of its customer base. Startups in particular, Mercury touts, have unique needs that many claim big banks are unable to adequately meet.
“We were already growing and we saw an approximately 20% jump because of what happened with SBV,” Akhund said. “It’s obviously kind of been an inflection point, and we’ve kind of sped up after this.”
Since its 2017 inception, Mercury has raised over $163 million in funding from investors such as Andreessen Horowitz, Coatue and CRV as well as angel investors, athletes, entertainers and customers. Its last round was a $120 million Series B that was announced in July of 2021.
I dug into all these details and much more with Akhund on Equity Podcast, which you can listen to here.
Want more fintech news in your inbox? Sign up for The Interchange here.
Got a news tip or inside information about a topic we covered? We’d love to hear from you. You can reach me at [email protected]. Or you can drop us a note at [email protected]. Happy to respect anonymity requests.
|
Banking & Finance
|
The liquidator of bankrupt crypto exchange FTX is trying to retrieve nearly $4 billion for creditors—from another bankrupt crypto firm. After a hearing on June 15, a court in the Southern District of New York will decide whether to let FTX pursue Genesis Global Capital (GGC), a crypto lender, over payments said to have been made shortly before the exchange’s collapse amid allegations of fraud.GGC, which filed for bankruptcy in January after being caught in the blowback from FTX’s implosion, only has about $5 billion in assets. If the court allows FTX to go ahead, a zero-sum legal battle will ensue. “If all the FTX claims are legitimate,” explains Ram Ahluwalia, CEO of wealth management firm Lumida Wealth, “the recoveries for Genesis creditors will be very low.”The impending legal battle underscores how tightly connected major crypto players had become before trouble started brewing in the markets a year ago. First, the collapse of FTX helped pull down other crypto companies, leaving many people out of pocket. Now creditors have to wait through the slow and painful unraveling of the various businesses’ intertwined estates.FTX, now under the management of Enron liquidator John Ray III, did not respond to a request for comment, nor did GGC or its parent company, Digital Currency Group.The basis of FTX’s claim against GGC are provisions in US bankruptcy laws designed to ensure that everyone owed money by a failed business receives a fair share. The law gives liquidators a right to recall any payments made by a stricken company in the 90 days prior to the bankruptcy, to avoid a scenario where creditors who pull their money out quickest get the biggest share of the pot.GGC and FTX’s business relationship was substantial. The former provided Alameda Research, FTX’s sister company, with large loans—at one point amounting to nearly $8 billion—to fund its capital-intensive crypto bets, while GGC used FTX for its own crypto trading activity. The court motion filed by FTX’s liquidator describes GGC as “one of the main feeder funds” to FTX and therefore “instrumental to its fraudulent business model.”To fund its loans, GGC borrowed from individuals and institutions that owned large quantities of crypto, who received a cut of the profits in return. But this arrangement, combined with its close ties to FTX, made GGC triply vulnerable to trouble at the exchange.Not only did GGC have $175 million locked up on the FTX platform at the time of the bankruptcy, but the ensuing panic led to a surge in attempts by customers to redeem crypto from GGC. Unable to meet the influx, GGC was forced to suspend withdrawals as it sought an emergency cash injection—and ultimately, to file for bankruptcy itself. (Genesis Global Trading, the brokerage arm, remains active and solvent.)Now, GGC has to fend off FTX’s clawback claim too. The suit alleges that Alameda paid GGC $1.8 billion in loan repayments and $270 million in collateral pledges, and that the lender—and non-bankrupt affiliate GGC International Limited—withdrew $1.8 billion from FTX’s trading platform, all in the 90 days before the exchange filed for bankruptcy. FTX claims each of these transactions should be reversed.Legal experts, though, say they’re skeptical of FTX’s chances. Marc Powers, adjunct professor of law at Florida International University, who acted as counsel in the liquidation of Bernie Madoff’s infamous Ponzi scheme, says that the exchange is attempting to “jump ahead of the other creditors” in the GGC bankruptcy. “Why should the FTX bankruptcy, or FTX as a potential creditor of Genesis, be more important than any other?” he asks.The largest of those GGC creditors is Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss. The firm’s yield farming service, Gemini Earn, which allowed customers to earn interest on their crypto, fed into GGC’s loan book. When the lender filed for bankruptcy, $900 million of Gemini customers’ assets were locked inside.Gemini has already liquidated $280 million worth of collateral posted in August by GGC to make back some of the funds lost. But should FTX be successful in its clawback, the 340,000 Gemini Earn customers will be left significantly out of pocket. Gemini did not respond to a request for comment.“I don’t think the Genesis bankruptcy court will grant the motion of FTX,” Powers says. “Given the size of the claim, I think it would be extremely disruptive.”Yet in the event the motion is granted, things will get messy. There would effectively be two judges, from different jurisdictions, involved to some degree in both bankruptcies, says Powers. “That’s generally not good.”If the case proceeds, GGC will likely argue that the $1.8 billion in loan repayments were made in the ordinary course of business, which would exempt them from being recalled. There are also questions, Powers and others point out, posed by FTX’s failure to specify the dates of the withdrawals in its filing.But it’s not guaranteed that, even if the New York judge allows FTX’s claim to continue, the dispute will ever get to court. The likelihood that clawback cases make it all the way to litigation, says Alan Rosenberg, partner at law firm MRTH and member of the American Bankruptcy Institute, is low—they almost always end in settlement. And FTX can use this fact to its advantage. “The truth is, there’s an economic consideration to be taken into account when defending [against clawbacks],” says Rosenberg. “Even if you have a great defense, it’s going to cost money to litigate. So you have to make a decision as to whether it’s more cost-effective to pay an amount to get rid of the claim.”The only mercy for creditors, says Rosenberg, is that both FTX and GGC—as bankrupt entities—have a fiduciary duty to reach an agreement as quickly as possible. “Everybody’s goal is to make a distribution to creditors. The more you fight, the more it will deplete the estate,” he says. “Both parties have an interest in reaching a resolution swiftly.”Ahluwalia doesn’t share the same optimism. He says the likely result would be a protracted negotiation between the lawyers of FTX and GGC over the validity and scope of the clawback claim—all of which will be paid for on the creditors’ dime.Settling these issues will take time. But the longer the legal conflict goes on, the more money leaks from the creditors’ pot into the pockets of the law firms. “I don’t think the FTX claim is valid. I think it’s a stretch,” says Ahluwalia. “I think John Ray is billing creditors for a remote possibility. And who is making out like bandits? The lawyers.”
|
Crypto Trading & Speculation
|
Rishi Sunak watering down the UK’s climate commitments has damaged Britain’s position on the world stage for business investment, according to the former Bank of England governor Mark Carney.
In highly critical comments, Carney indicated that global companies would now think twice about locating their activities in the UK after Sunak pushed back key net zero deadlines and sanctioned new oil and gas drilling.
Speaking to Nick Macpherson, a former permanent secretary to the Treasury, at an online event, Carney said major businesses he had spoken to prioritised countries with clear environmental commitments before making investment decisions.
“In my conversations with companies around the world, their first conversation about location is: ‘Am I getting clean power?’ It doesn’t make sense to relocate without green power. You start throwing that into doubt, [and] it becomes a lot more complicated discussion.”
Citing several countries that have highlighted the availability of clean power to international businesses, the former Bank governor added: “The UK was in that camp, now it’s blurred around it.”
Sunak last month announced a U-turn on the government’s climate commitments, including a decision to push back a 2030 deadline for the sale of new petrol and diesel cars to 2035. The prime minister also kickstarted a new round of North Sea drilling, pledging to “max out” the UK’s oil and gas reserves.
Carney, who as the Bank’s governor pushed to accelerate the decarbonisation of the global economy, called the decision “disappointing and mistaken”, adding: “If you make a credible forward commitment – particularly with the market and businesses looking forward – they do most of the work for you. And then it’s less of an issue.
“There was very little weight, in my view, given to that decision. At least in any of the communication of that. And that’s a challenge,” he said..
Pushing ahead with new oil and gas drilling risked creating a “stranded asset problem” in the UK energy sector, he warned, referring to the risk that the value of fossil fuel assets could fall rapidly.
Highlighting forecasts from the International Energy Agency that global oil demand will peak this decade, Carney said: “You go back three, four years, and it was the 2030s. That’s how much things have moved. That means we are going to have the stranded asset problem in the energy sector, and it’s going to crystallise sooner than people think.”
During the online event, hosted by King’s College London and the Fairness Foundation, Carney was challenged by Macpherson, who suggested Sunak’s move brought the UK into line with the EU policy on the phasing out of internal combustion engine cars.
However, Carney suggested the impact on business investment would come from the government chopping and changing its position. “It has, exactly [moved in line with the EU]. But it’s moved – is the first thing. And the second, it’s a bit like – I didn’t get the chance to move the inflation target around.”
Carney had faced heavy criticism during his time at Threadneedle Street from rightwing Conservative MPs for failing to hit the 2% target for inflation set by parliament, as well as for “mission creep” in expanding its remit to focus on decarbonisation.
Arguing that it was a central priority for the Bank to spot financial risks from the transition away from fossil fuels, he told the event: “If the UK is really serious [about net zero], do you know which of your businesses are going to prosper and going to suffer under that scenario? That’s the question … you have to ask that question.”
|
Renewable Energy
|
Improved Forex Reserve Provided India's Policymakers Room For Manoeuvre: BIS report
India maintained forex reserve upwards of $550 billion during most of 2022.
India's improved forex reserve adequacy helped maintain investor confidence and improved policymakers' room for manoeuvre, said a report prepared by Bank for International Settlements (BIS).
India maintained forex reserve upwards of $550 billion during most of 2022.
BIS is an international financial institution which is owned by member central banks with primary goal to foster international monetary and financial cooperation.
"Several members noted that the development of deeper and more liquid FX markets in the past facilitated efficient price discovery during 2022 and reduced the need for FX interventions or capital flow measures (CFMs) (including China, Indonesia and Malaysia)," the report said.
In addition, minimum hedging requirements on corporates' net liability exposure in the past helped build firms' resilience and also mitigated the need for (or intensity of) an ex-post policy response in 2022, the report titled 'Inflation, external financial conditions and macro-financial stability frameworks in Asia-Pacific' said.
"In a similar vein, improved FX reserve adequacy helped maintain investor confidence and improved policymakers" room for manoeuvre (eg. in India),' it said.
India announced several measures to liberalise capital flows in July 2022 while taking steps to ensure overall macroeconomic and financial stability to stem decline in forex reserve.
During 2022, it said, many regional economies saw the use of FX-related macroprudential measures or other CFMs.
A selection of these measures included increasing the limit for external commercial borrowing and relaxing restrictions on foreign investment in debt markets (India), having in place limits on domestic currency lending or borrowing by non-residents without an underlying trade or investment (Thailand) and limits on foreign investment in certain sectors (Vietnam), it said.
Observing that several central banks noted the use of communication policy, the report said regular communication as part of the monetary policy process helped keep inflation expectations anchored in India and Malaysia.
Effective policy communication helped anchor inflation expectations and thus assisted in maintaining stability, it said.
In India, it said, apart from forward guidance, communications were also used to explain the rationale for the measures being taken by the RBI, while also seeking to inspire confidence and optimism for the general public during the Covid pandemic.
While a flexible exchange rate was generally seen as a shock absorber for external price shocks, some authorities used FX interventions to minimise the risk of excessive exchange rate movements (especially depreciations) and thus dampen the pass-through to inflation (eg. the Philippines and Vietnam), it said.
Relatedly, exchange rate intervention also helped anchor expectations and facilitated the overarching objective of maintaining macroeconomic stability and market confidence (eg. in India), it added.
|
Forex Trading & Speculation
|
- Home Depot echoed federal data on Tuesday that indicates inflation is cooling.
- With its comments, Home Depot gave fresh hope for consumers and the broader economy.
- Other retailers reporting this week, including Walmart and Target, have gotten hurt as consumers pay more for necessities and have less to spend in other areas.
"I think the most important observation we've made is that the worst of the inflationary environment is behind us," Chief Financial Officer Richard McPhail said on an earnings call.
Shares of the retailer rose by nearly 6% in midday trading after the company beat quarterly earnings expectations, driving a rally for the Dow Jones Industrial Average. The company's comments also came as federal data on Tuesday morning showed that inflation was flat in October from the prior month.
Home Depot kicked off a much-anticipated week of retail earnings that includes other household names, such as Walmart, Target and Macy's. All of the retailers have struggled with consumers who have become more selective about spending, particularly on pricier and discretionary items, as they pay more for necessities like groceries.
Home Depot is no exception. For multiple quarters, its customers have bought fewer big-ticket items and taken on smaller, less expensive projects.
Yet with its comments on Tuesday, Home Depot gave fresh hope that consumers and the broader economy could soon see relief. In the short term, cooling inflation reduces sales numbers for retailers, including Home Depot. Yet long term, if prices level off or even start to drop, it can free up extra money that shoppers can spend elsewhere.
Plus, cooling inflation could speed along the end of interest rate hikes by the Federal Reserve. The central bank has been trying to tame decades-high price increases without tipping the economy into a recession.
Still, Michael Baker, a retail analyst for D.A. Davidson, said relief won't come soon enough for the holiday season. He expects modest sales growth for retailers.
"Less inflation can invite back in some discretionary spending, but that's offset by the fact it's generally a pretty soft spending environment," he said.
At Home Depot, McPhail has described 2023 as "a year of moderation" after the boom in home improvement during the Covid pandemic. The retailer predicts a drop in sales from last year.
Yet the normalization of other trends has brought predictability for the business and customers, he said.
"Some prices are settling at levels higher than 2022," McPhail said. "Others are settling lower. But we're seeing some stabilization there."
Appliances, which sometimes requires months-long wait times, are back in stock. Those healthier inventory levels have lifted sales in the category, said Billy Bastek, executive vice president of merchandising, on the earnings call.
Yet some factors that drive inflation are beyond retailers' control and influence consumers' decisions, too.
Just take the cost of painting a living room, CEO Ted Decker said on the earnings call. He said Home Depot remains focused on offering low prices. But, he added, it's backed off on the kinds of promotions that don't make a difference.
He said cutting the price of paint by $10 doesn't put a dent in the bigger cost: Paying the painters.
|
Inflation
|
Some retailers are telling consumers not to bother sending back goods they want to return for a refund because of how costly processing, repackaging and trying to resell merchandise can be. Instead they're saying keep it, and we'll refund you anyway.
For example, if you ordered an inexpensive yoga mat or kitchen spatula for a few dollars from a large online retailer that wasn't what you expected, they may give you your money back without bothering to collect the goods.
Fifty-nine percent of companies said they offer "keep it" services for returns that aren't worth collecting, according to goTRG, a returns logistics company
Of those retailers, 27% deemed items priced up to $20 as eligible for their keep-it policy.
Indeed, for businesses, the expenses associated with accepting the return of a product can sometimes exceed an item's resale value.
"It can be as expensive as 75% of the value of the unit, or 100% or above," goTRG CEO Sender Shamiss, told CBS MoneyWatch. "Shipping costs eats up huge amount of the value of the good, so companies determine what it costs to take product back and if they're underwater they say, 'Keep it.'"
Boils down to cost of shipping
Amazon.com is among the large online retailers that occasionally offer so-called returnless refunds.
"We offer this on a small number of returns as a convenience and to help keep prices low for customers," Amazon Spokesperson Maria Boschetti told CBS MoneyWatch.
Some of the costs associated with accepting returns include carefully inspecting items to determine if they can be resold as new. Sometimes, when they're not in resale condition, they're donated to charity.
In addition, home decor and furniture purveyor Wayfair and pet food company Chewy.com have similar policies in place, according to goTRG. Experts say that from an economics standpoint, keep-it policies make sense for companies that ship items that are heavy or bulky and therefore expensive to ship.
"It comes down to the price of the item, its size and bulkiness and the cost of the shipping," said Adam Pressman, partner and managing director in the retail practice at AlixPartners, a consulting firm. "In general terms, people have tried to return big bags of dog food to online pet companies and they say, 'Don't worry about making the return, we'll give you our money back,'" Pressman said.
Strict measures against fraud
Most companies that offer these policies have sophisticated algorithms that they use to determine if a customer is acting in good faith and likely to be loyal to the brand to deter shoppers from taking advantage of keep-it options, according to Shamiss of goTRG.
"They take into account how long the customer been with them, how many purchases they have refunded to determine if it's an account that could defraud them," he said.
Amazon employs strict measures to ensure customers who simply don't want to pay for low-cost items don't take advantage of its keep-it policy.
"We take fraud very seriously and when bad actors attempt to evade our controls; we take action and work with law enforcement to hold them accountable," Boschetti added.
Additionally, retailers typically refrain from advertising returnless refund policies, so as not to encourage reckless consumer behavior.
"We don't expect to see the stated policy as of right now," Pressman said. "It's more something at the company's discretion to meet the right economics and experience."
for more features.
|
Consumer & Retail
|
Ambuja Cements Q2 Results Review -Reclaiming Market Share With 140 Mtpa Target: Yes Securities
Under new management, Ambuja Cements targets to reach 140 million tonner per annum by FY28E to regain the lost market share.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Ambuja Cements Ltd. reported a healthy performance, where revenue grew by 8% YoY aided by +13% YoY volume growth which got offset by 4% YoY net sales realisation decline in Q2 FY24. Power cost/tonne declined by 40% YoY resulted in 16% YoY total cost/te reduction translates in Ebitda of Rs 1018/tonne to Rs 7.7 billion (+154% YoY) in Q2 FY24.
On account of higher other income, profit after tax exceeded expectations by 26% reaching Rs 6.4 billion in Q2 FY24 against Rs 1.5 billion in Q2 FY23. Ambuja Cements narrowed the efficiency gap with its peers by adopting cost-effective measures. Management has aspirational target of +Rs 1400/tonne of Ebitda by improving the efficiencies with a fresh set of investments in-
augmenting waste heat recovery system and renewable energy capacities,
Ramping up alternative fuel and raw material usage,
upgrading equipment and debottlenecking for kiln efficiencies,
Higher trade and premium sales,
Reduction in lead distance/logistic cost.
Under new management, Ambuja Cements targets to reach 140 million tonner per annum by FY28E to regain the lost market share. In this endeavor, Ambuja Cements plans to add 14 mtpa grinding unit and 12.75 mtpa clinker units with a capex outlay of ~Rs 70 billion (65% Ambuja Cements standalone).
Also, Sanghi industries Ltd. acquisition at enterprise value of Rs 50 billion ($100/tonnee) has a 6.1 mtpa cement/ 6.5 mtpa clinker capacity with 1000 mt of limestone reserve and its future expansion. This strategic move will increase the console capacity to 101 mtpa (45.5 mtpa standalone and excluding group capacity) by FY26E.
As a result, incremental volume from new capacities is expected from FY25E onwards, while standalone cement volume should grow at 10% compound annual growth rate over FY24- 26E complimented by master supply agreement.
The promoter group committed to infuse Rs 200 billion towards subscribing share warrants, of which Rs 50 billion has been received and the rest is expected to exercise on or before April 2024.
We valued Ambuja Cements on SOTP based valuation with a standalone entity valued at 14 times EV/Ebitda and Ambuja Cements' stake in ACC Ld. at 10 times EV/Ebitda on FY26E by adding Rs 40 billion net cash and Sanghi Industries at Rs 50 billion EV. Thus, we arrived at target price of Rs 487 with a 'Buy' rating.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
|
India Business & Economics
|
Holzmann Sees Case For ECB Rate Hike If No Surprises Turn Up
“We’re not yet in the clear when it comes to inflation,” Holzmann said.
(Bloomberg) -- The European Central Bank hasn’t defeated inflation and probably needs to raise interest rates again in September, according to Governing Council member Robert Holzmann.
Chiming in with hawkish colleagues who are also pushing for another hike in borrowing costs, the Austrian governor said in an interview that the economy isn’t in danger of a recession, and tight labor markets mean labor unions may clinch large wage increases.
“We’re not yet in the clear when it comes to inflation,” Holzmann said, adding that he’ll be watching all incoming information to assess the risks to prices. “If there aren’t any big surprises, I see a case for pushing on with rate increases without taking a pause.”
The remarks in the Austrian mountain village of Alpbach feed into an intensifying debate on one of the most suspenseful decisions since the ECB started raising rates in July last year, as officials judge whether the economy is weakening enough to suppress inflation, or if they need to deliver another hike.
Holzmann has long been one of the most hawkish policymakers. Colleagues of a similar persuation from Germany and Latvia — Joachim Nagel and Martins Kazaks — signaled in Bloomberg TV interviews last week in Jackson Hole, Wyoming, that they’re leaning toward another increase too.
Portugal’s Mario Centeno, a more dovish official, countered that emerging downside risks warrant caution. But Holzmann reckons this isn’t a moment to hesitate.
“It’s better to achieve a peak rate faster, which also means we can eventually start going lower earlier,” he said. “It’s more difficult for markets to digest a stop-and-go rate path.”
He added that the ECB continues to be “somewhat behind the curve” in fighting inflation. Asked if that means rate increases could continue beyond September, he said “once we’ve reached 4%, then we’ll discuss again.”
Speaking alongside Holzmann at a panel in Alpbach on Monday, Nagel refused to elaborate on his most recent remarks about possibly favoring another hike.
“I won’t give any signal here on what we will do in September,” he said. “We will wait for the numbers. This is what we agreed at our July meeting.”
Nagel, who is the president of the Bundesbank, added that when the ECB has finished raising rates, it may need to keep them high to fully feed through to the economy.
“It might then be necessary to stay at this plateau for a while to see what might be the impact of what we did,” he said.
President Christine Lagarde, in a key speech at Jackson Hole on Friday, avoided sending any messages on the ECB’s upcoming decision — even though she recognized that inflation remains undefeated in the eurozone.
Updated consumer-price figures for August will be released on Thursday, while a final assessment of the region’s economic performance in the second quarter will be available one week later.
“The economy isn’t doing as well as we had hoped but at the same time, the slowdown isn’t so gigantic that we need to talk about falling into a recession,” Holzmann said. “We’re looking at a stagnating economy.”
Against that backdrop, the ECB should consider speeding up the unwinding of its balance sheet, he added. While bonds purchased under an older program are currently allowed to roll off, reinvestments under its pandemic program — PEPP — are expected to run at least through the end of 2024.
“I’m a big advocate of starting the debate on ending PEPP reinvestments sooner than currently envisaged,” Holzmann said. “I appreciate its ability to address financial market tensions, but it’s time to step up” quantitative tightening.
(Updates with Nagel in 12th paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Interest Rates
|
Walmart Looks To Source Toys, Shoes, Bicycles From India In Boost For Exports
The move underscores India's growing strength in the toys industry, especially since India was a net importer of toys until a few years ago.
Walmart Inc. is looking to source toys, shoes and bicycles from India, as part of its endeavour to increase its exports from India to $10 billion annually by 2027.
The US-based retailer also wants to develop new suppliers in categories such as food, pharmaceuticals, consumables, health and wellness, and apparel and home textiles, a company spokesperson told PTI.
Officials from the Bentonville-headquartered firm recently held a virtual meeting with several domestic toy manufacturers here.
The company informed toy makers about their requirements and expected quality standards as it is directly engaging with the domestic toy makers for sourcing.
The move is significant and highlights India's growing strength in the toy industry, especially since India was a net importer of toys until a few years ago. Global retailers such as IKEA are already sourcing toys from India for their international operations.
"Walmart's growth in sourcing from India includes expanding working with existing suppliers and helping develop new suppliers in categories such as food, pharm, consumables, health and wellness along with apparel and home textiles," the Walmart spokesperson said. "We are also exploring opportunities in toys, shoes, and bicycles."
In December 2020, Walmart committed to triple its exports of goods from India to $10 billion each year by 2027, providing a significant boost to micro-, small- and medium-sized enterprises (MSMEs) here.
"The expansion in sourcing will include helping develop hundreds of new suppliers in categories such as food, pharmaceuticals, consumables, health & wellness and general merchandise, along with apparel, homeware and other key Indian export categories," it had said.
Earlier this month, Walmart Inc. President and CEO Doug McMillon reaffirmed its commitment during his visit to India and said that India's unique ecosystem of suppliers will help the company in achieving its goal of exporting goods worth $10 billion from the country annually by 2027.
Addressing Indian suppliers, Doug McMillon has reaffirmed the roadmap for strengthening partnerships with Indian communities, expanding opportunities for Indian businesses and fostering transformative and innovative solutions for retail from India to the world.
McMillon had also met Prime Minister Narendra Modi and tweeted, "Thank you Prime Minister @narendramodi for a great conversation. We are working toward exporting USD 10B per year from India by 2027 and are committed to strengthening logistics, skill development & supply chains to make India a global export leader in toys, seafood & other goods."
"The visit with Prime Minister @narendramodi reinforces the shared value we bring working alongside India. Together, we'll continue to support the country's manufacturing growth and create opportunity," McMillon was quoted as saying in a tweet by Walmart Inc.
The Department for Promotion of Industry and Internal Trade (DPIIT), which is taking a series of steps to promote domestic manufacturing of toys, is also helping Indian manufacturers tie up with the global players to meet their compliance provisions and increase exports from India.
When asked about the issue, Manu Gupta, promotor of Playgro Toys India and Chairman of Toy Association of India, said a US-based retailer has approached the industry to procure toys in three main categories, including ride-on and outdoor toys and mechanical and electrical toys, worth $400 million.
He said DPIIT officials are helping the industry engage with these world players and get orders.
The country's toy exports were worth Rs 1,017 crore in April-December 2022-23. In 2021-22, the exports stood at Rs 2,601 crore. During April-December 2013-14, the shipments were at Rs 167 crore. Overall toy imports reduced by 70% to Rs 870 crore in 2021-22.
In February 2020, import duty on toys was raised from 20% to 60% and now, it has increased to 70% this year, with an aim to discourage imports.
The government is also considering rolling out a fiscal incentive scheme -- PLI (production-linked incentive) -- for toys.
In 2020, the government issued a Toys (Quality Control) Order. As per the order, toys have to conform to the requirements of relevant Indian standards and bear the standard mark under a licence. It is applicable to both domestic as well as foreign manufacturers who intend to export their toys to India.
The QCO has been issued to ensure that consumers, who are children only below the age of 14 years, are not exposed to sub-standard goods/ goods containing toxic material/toys containing toxic material.
|
Asia Business & Economics
|
When Aretha Franklin died intestate—without a legal will—in 2018, she joined a surprisingly long list of prominent people, including Prince, who did the same. By not preparing an estate plan, she complicated the task of settling her affairs for her survivors. While your estate may not be as large or complex as a famous singer's, it's just as important to have a plan in place in the event of your death.
Key Takeaways
- Account for all of your assets and wishes to ensure that your plan is executed smoothly after your death.
- Keep written lists (and inform your estate administrator of the location of those lists) so that none of your assets or wishes are neglected.
- Designate beneficiaries on your retirement accounts to ensure that the money passes smoothly to your heirs.
Estate Planning: 16 Things To Do Before You Die
What Is Estate Planning?
Estate planning is putting your affairs in order so that your loved ones are taken care of if you die or are incapacitated. A will is an essential piece of the plan. So are lists of your assets and obligations, with details of all open accounts. Make sure you record your beneficiaries on your retirement and investment accounts so there's no delay in transferring the money.
Which Legal Documents Do I Need?
First and foremost, everybody needs a will. No matter how modest your assets are, you'll want them to get into the right hands with no unnecessary delay or expense.
Beyond that, consider one or both of the following, depending on your circumstances:
- A trust. This is a legal contract that will allow an individual you name (the "trustee) to manage and oversee the assets you bequeath for the benefit of the people you name. If you have dependent children or elderly family members who are unable to fully manage their own affairs, a trust will help them. Very wealthy people often have them, in part so that they can manage their assets for multiple generations.
- Power of attorney. This document grants a trusted person you name (your "agent") to act on your behalf if you become incapacitated. This permission can be as broad or as limited as you choose. For example, it can cover medical decisions or financial decisions, or both.
An Estate Planning Checklist
Estate planning goes well beyond drafting a will. Thorough planning means accounting for all of your assets and ensuring that they transfer as smoothly as possible to the people or entities you wish to receive them.
You need a plan, and you must make sure that your intended heirs have all of the information they need to carry it out.
Not sure how to get started? Follow this checklist, and you'll have covered all of your bases.
1. Itemize Your Inventory
To start, go through your home inside and outside, and make a list of all valuable items. Examples include the home itself, televisions and computers, jewelry, collectibles, vehicles, art and antiques, lawn equipment, and power tools.
As you go, you might add notes if you come across something that you want to leave to a particular person.
Don't forget possessions of mainly sentimental value like family pictures. Make a note of possessions you want to donate to a favorite charity.
You might take pictures to shortcut the project and avoid confusion.
The list may be a good deal longer than you expected.
2. Document Your Non-Physical Assets
Add your financial assets and entitlements to the list, with enough specifics that they can be claimed by your heirs.
Include the account numbers and specify the location of any physical documents you have in your possession. List contact information for the firms holding these non-physical possessions.
If it makes it easier, attach a recent statement or another paper document that indicates the critical information like account number, company, and contact information.
3. Assemble a List of Debts
Make a separate list for all of your open credit cards and other obligations. This could include auto loans, mortgages, home equity lines of credit (HELOCs), and any other debts or open lines of credit you have.
Note the account numbers, the location of signed agreements, and the contact information of the companies holding the debt.
Include all your credit cards, noting which ones you use regularly and which ones are sitting in a drawer unused.
This is another chore that can be made easier by attaching a recent statement or other document that lists the critical account information.
It's generally a good practice to run a free credit report on yourself at least once a year. This will also identify any credit cards you may have forgotten you have.
4. Make a List of Memberships
If you belong to any organizations such as AARP, The American Legion, a veteran's association, a professional accreditation association, or a college alumni group, make a list of them.
In some cases, these organizations may offer accidental life insurance benefits (at no cost) for their members, and your beneficiaries may be eligible to collect.
Include any other charitable organizations that you support. You can let your beneficiaries know which charitable organizations or causes are close to your heart and to which you might like donations to go in your memory.
Make a note of any automatic donations you make regularly to a charitable organization so that your heirs can cancel them or take them on.
5. Make Copies of Your Lists
When your lists are complete, date and sign them and make at least three copies. The original should be given to your estate administrator (more on that below).
The second copy should be given to your spouse or other main beneficiary and placed in a safe deposit box.
Keep the last copy for yourself in a safe place. And don't forget to tell a couple of your family members where it is. Don't make them tear up the floorboards looking for it.
6. Review Your Retirement Accounts
Accounts and policies that have designated beneficiaries will pass directly to those people or entities upon your death.
Be aware that it doesn't matter how you direct that these accounts or policies be distributed in your will or trust. If there's a conflict, the beneficiary designations associated with the retirement account will take precedence.
Check your online account or contact your employer's customer service team or plan administrator for a current listing of your beneficiary selections for each account. Review them to make sure they're current. This is especially important if you have divorced and remarried.
7. Update Your Insurance
As with retirement accounts, life insurance and annuities will pass directly to your named beneficiaries. If you have life insurance, make sure your beneficiaries are up to date and listed correctly.
In terms of timing, this might be the most critical part of your estate plan. Your heirs will need immediate access to some of your assets for their daily needs as well as to plan for your funeral.
8. Authorize 'Transfer on Death' Designations
Depending on your state's laws, your heirs might have to go through a probate court procedure before your assets are distributed. Probate is always required if a person dies intestate.
This process, in which your assets are distributed per court instruction, can be costly and time-consuming.
Many assets, such as bank savings, CD accounts, and individual brokerage accounts, are unnecessarily probated every day. If you hold these accounts, they can be set up—or amended—to have a transfer on death (TOD) designation, which allows the beneficiaries to receive the assets without going through the probate process.
Contact your custodian or bank to set this up on your accounts.
9. Choose a Responsible Estate Administrator
Your estate administrator or executor will be in charge of administering your will when you die. It is important that you select an individual who is responsible and competent to make decisions.
Your spouse is not necessarily the best choice. Think about how the emotions related to your death will affect this person's decision-making ability.
If you foresee any issues, consider other qualified individuals. You might name a close friend or another family member who you trust to act impartially on your behalf.
10. Draft Your Will
Everyone over the age of 18 should have a will. It is the rulebook for the distribution of your assets, and it could prevent havoc among your heirs.
It's best done as soon as you have prepared all of the documentation described above. Your list of assets will make it easier to decide who gets what.
A will can also name a guardian for your minor children and designate who should care for your pets. You can leave assets to charitable organizations through your will, too.
Wills are relatively inexpensive estate-planning documents to compose; many attorneys can help you craft a will for less than $1,000, depending on the complexity of your assets and your geographic location.
Make sure that you sign and date your will in front of two non-related witnesses, who should also sign the document. Then have it notarized.
Finally, make sure other people know the location of the document so they may access it when needed.
11. Regularly Review Your Documents
Review your will for updates at least once every two years and after any major life-changing events like a marriage, divorce, or the birth of a child. Life is constantly changing, and your assets and wishes are likely to change from year to year, too.
12. Copy Your Administrator
Once your will is finalized, signed, witnessed, and notarized, make sure that your estate administrator gets a copy.
The original should be kept in your home or in your attorney's office, You should also keep a copy in a safe place at home.
Only the original will—the "wet signature" document, in estate-planning lingo—can be filed for probate.
13. Visit an Estate Attorney or a Financial Planner
You may think that you've covered all your bases, but it's a good idea to consult with a professional on a full investment and insurance plan. And if it's been a while, you may want to revisit your plan.
As you get older, your needs may change, such as figuring out if you need long-term care insurance and protecting your estate from a large tax bill or lengthy court processes.
Professionals are up on changes in legislation and income or estate tax laws, which could impact your bequests.
14. Simplify Your Finances
If you've changed jobs over the years, you may have several 401(k) retirement plans still open with past employers or even several different IRA accounts. You may want to consider consolidating these accounts into one individual IRA.
Consolidating accounts allows for better investment choices, lower costs, a larger selection of investments, less paperwork, and easier management for both you and your heirs.
15. Complete Other Important Documents
Consider setting up both financial and medical powers of attorney so that people you trust will be there handling your affairs should you become incapacitated.
You can also write a letter of instruction to leave step-by-step instructions as well as spell out your personal wishes for things like your funeral or what to do with your digital assets like social media accounts.
If you're married, each spouse should create a separate will, with plans for the surviving spouse.
Finally, make sure that all the concerned individuals have copies of these documents.
16. Take Advantage of College Funding Accounts
You may want to set up 529 college savings plans for your grandchildren as part of your estate plan.
In these plans, savings grow tax-free, and many states offer tax deductions for the person contributing the funds.
What Are the Most Common Estate Planning Mistakes?
The biggest and, sadly, the most common, estate planning mistake is not doing it at all. Your loved ones will be thrown into chaos if you die without a will in place and a comprehensive list of your assets and liabilities.
It is equally important to plan for the possibility that you will become incapacitated. It's crucial to have a power of attorney, healthcare proxy, and living will in place.
Other common mistakes, according to the site Trust & Will, include:
- Failing to communicate. Talk to your loved ones about your estate plan. Tell them what you've decided and why. Make sure they know the practical facts, like who your attorney is and where the will is stored.
- Naming only one beneficiary. You may expect to leave everything to your spouse or a child. But you need a secondary beneficiary, just in case.
- Forgetting your digital footprint. Tell your heirs how you want them to handle your LinkedIn account, Facebook account, email, and any other website where you have a presence.
- Not updating. Review your plan once a year to make sure it still reflects your wishes and covers all the bases.
What Are the Essential Documents in an Estate Plan?
Number one is the will of course. Beyond that, the essential documents in an estate plan include:
- An inventory of your physical assets.
- A list of all of your financial accounts.
- A list of all of your debts and open credit accounts.
- A clear identification of your life insurance account with contact details.
Beyond those pieces of paper, go to your online accounts or contact their customer service departments to make sure your beneficiary designations are in place.
What Are the Risks of Not Having an Estate Plan?
If you don't have a will or your intentions or unclear for any other reasons, your estate will wind up in probate court.
That means that a probate judge will determine what should be done with your assets, based on your state's laws.
Moreover, if you die without leaving clear documentation of your assets and where they are, your surviving family members will be hard-pressed to locate and claim the money and possessions you want them to have.
In short, not having a will and not documenting your assets leaves a big mess for your heirs.
The Bottom Line
Procrastination is the biggest enemy of estate planning.
While none of us likes to think about dying, improper or no planning can lead to family disputes, assets getting into the wrong hands, long court litigation, and excess money paid in estate taxes.
So pick a time to get started. To quote Benjamin Franklin, “By failing to prepare, you are preparing to fail.”
|
Personal Finance & Financial Education
|
Amazon’s Prime Day sales reached a record high this year, bringing in 6.1% more revenue than during its two-day event a year ago. Shoppers spent a total of $12.7 billion, with $6.3 billion spent on the second day alone as greater discounts became available, Reuters reported.
The event, which started at 3 a.m. ET on July 11 and continued through July 12, quickly became the largest sales day Amazon has ever experienced, with more than 375 million items purchased worldwide, the company reported in a blog post. According to Amazon, it was the highest-volume day in the company’s history.
“The first day of Prime Day was the largest sales day in Amazon’s history, and Prime members saved more this year than any other Prime Day event,” Doug Herrington, CEO of Amazon Stores, said in the post.
Amazon Labor Union president Christian Smalls said people should feel guilty about shopping on Prime Day because of the crush of extra work it brings on Amazon warehouse workers.
“I’m encouraging all Prime users to have a guilty conscience. If you’re shopping on Prime, also help donate to our efforts because this is a grassroots, worker-led movement,” Smalls said at a conference Tuesday.
Despite the expansive sales Amazon garnered this year, the reality still fell below expectations, according to Adobe Digital Insights’ forecast, which had projected online sales would grow by 9.5%, bringing in 13.1 billion instead of the $12.7 billion spent.
“Last year we saw discounts in the mid-single digits... (this year) we have them in the higher single digits, almost a bit into the double digits,” Vivek Pandya, lead analyst at Adobe Digital Insights, told Reuters.
However, Pandya told Reuters that Amazon saw a rise in purchases of back-to-school items including office supplies and stationery. “The numbers came in the range that we anticipated,” he said, clarifying that appliance sales jumped 52%, apparel sales increased 24%, and stationery and office supplies increased by 76% compared to the average sales per day in June.
Amazon launched Prime Day in 2015 in commemoration of its 20th anniversary and has grown in popularity each year, bringing in higher sales and an increased number of items purchased.
In its first year running, Amazon reported 34.4 million items were purchased, far surpassing Black Friday purchases from the previous year. Sales continued to rise to 250 million items sold worldwide in 2021 and more than 300 million last year.
|
Consumer & Retail
|
SEBI Details How Zee Promoters Goenka And Chandra Diverted Funds
SEBI, in its confirmatory order, shows the modus operandi employed by promoters in diverting funds from Zee Entertainment.
The Securities and Exchange Board of India, in a confirmatory order on Monday, barred Zee Entertainment's promoters Subhash Chandra and Punit Goenka from holding managerial and board positions.
The regulator has barred the father-son duo from holding key managerial or board positions in four Zee entities, namely Zee Entertainment Enterprises Ltd., Zee Media Corp., Zee Studios Ltd., and Zee Akaash News Pvt.
The bar also extends to any entity that's formed pursuant to the merger or demerger of any of these entities. This should be seen in light of the recent NCLT approval to the Zee-Sony merger. According to the scheme, Goenka is to be the managing director of the merged entity for five years.
The SEBI order from this week confirms the regulator's findings of its interim order of June 12.
To do so, SEBI has examined whether the evidence put forward by Chandra and Goenka warranted a modification of its interim findings, specifically:
Whether the Letter of Credit issued by Chandra was made in a personal capacity or as the Chairman of Zee.
Were the transactions undertaken by Zee with seven associate companies genuine, as argued by the parties?
Chandra's LoC
To recap, in its interim order, SEBI had highlighted that Chandra had issued a Letter of Comfort to Yes Bank Ltd. in September 2018 for loans availed by certain associate companies. Later, on the strength of this LoC, Yes Bank had adjusted Zee's fixed deposit of Rs 200 crore for meeting the obligations of the seven entities who had taken the loans.
This was done without the knowledge of the company's board, in violation of the Listing Regulations, the interim order had concluded.
During the personal hearings, Chandra submitted that the LoC was given in his personal capacity as it was not on the letterhead of Zee.
SEBI has dismissed this argument in its confirmatory order.
It has pointed out that the letter mentioned Zee Entertainment. Also, it said, a fixed deposit to the tune of Rs 200 crore was made by Zee the very next day after the LoC. This gives credence to the fact that the letter was issued by Chandra not in his personal capacity but as the Chairman of Essel Group and Zee, the order said.
"Creation of the fixed deposit by Zee was seemingly effective discharge of Chandra's obligation to “ensure” that a fixed deposit of Rs 200 crore would be placed by Essel Group with Yes Bank." - SEBI's confirmatory order
Also, it has questioned why no effective steps were taken by Zee against Yes Bank, if in fact the company believed that the LoC was given by Chandra in his personal capacity.
The Question Of Evidence
The second issue before the regulator was the genuineness of the transactions undertaken between Zee and the seven associate entities. The interim order had noted that the seven associate entities that had borrowed from Yes Bank never repaid Zee. In fact, Zee's own funds were routed via several layered transactions to show that the repayment was done.
Like in its interim findings, SEBI's confirmatory order, too, relies on bank statements to prove that the transactions weren't genuine.
Chandra and Goenka, during the personal hearings, submitted that the transactions undertaken by Zee with related parties were purely commercial in nature, and to assume otherwise would be unjust. They also contested the regulator's reliance on bank statements. They argued that bank statements by themselves can never lead to a conclusion that transfer of money is pursuant to a sham transaction or on account of circuitous transactions.
In its confirmatory order, the regulator has agreed with this argument saying per se a bank statement cannot lead to conclusion of a sham transaction. But it goes on to point out that an entry in the bank statement shows that a particular transaction has taken place in the account of the holder.
"It is only when the digital footprint of the said transaction is traced along with the attending circumstances and the entities involved in the transactions, one can determine whether it was part of a circular transaction or not."- SEBI's confirmatory order
The Fund Diversion
After a thorough examination of the statements, SEBI has unraveled several layers of transactions through which the promoters diverted Zee's funds.
The pattern involved was almost the same for all the seven associate entities, SEBI has shown:
At first, Zee, its subsidiary, or any other listed company of the group transferred its funds to a related party or parties with whom it has business relationships.
The recipient transferred identical funds to conduit entities within a day or two. For a few days, these funds are transferred between these conduit entities before ultimately reaching Sprit Infrapower and Multiventures Pvt., a promoter entity of Zee; or Churu Enterprises, an entity owned by Punit Goenka and his mother Sushila Goenka.
These entities finally transferred funds identical to those they received from conduit entities to associate entities.
In the final leg of the transactions, an amount identical to the ones received from the promoter entities is transferred back to Zee, completing the cycle of fraudulent transactions.
All these associate entities had negligible balances prior to the receipt of funds from promoter entities. In five out of six instances, the money received from Spirit Infrapower or Churu was transferred to Zee within 7 to 27 minutes, SEBI said.
In all instances, where Spirit Infrapower transferred funds to associate entities, the money originated from Churu Enterprises on the same day. This prima facie, according to SEBI, establishes an orchestration of fund movement, as all of these can't be mere coincidences.
To illustrate, SEBI has shown the pattern by looking at the funds returned by Essel Green Mobility Ltd. The company, a related party of Zee, owed Rs 17.1 crore to Zee on account of appropriations made by Yes Bank. The money was duly returned to Zee on Sept. 27, 2019.
The fund trail demonstrates, according to the regulator's order, that Essel Green Mobility received an identical sum from Pan India Infraprojects a few minutes prior to the repayment. The trail also demonstrates that Pan India received the money from Spirit Infrapower, a promoter entity of Zee.
Spirit Infrapower, in turn, received these funds from Zee or other entities of Zee, including Zee Akaash News.
Thus, considering that these transactions could be part of a scheme to divert Zee's funds, the market regulator has prima facie found Goenka and Chandra in violation of its Listing Regulations as well as the Unfair Trade Practices regulations.
It has ordered further investigation into the matter, which has to be completed within eight months.
|
Stocks Trading & Speculation
|
Tata Technologies Mops Up Rs 791 Crore From Anchor Investors Ahead Of IPO
The engineering services company allotted 1.58 crore shares at Rs 500 apiece to 67 anchor investors.
Tata Technologies Ltd. has raised Rs 791 crore from anchor investors ahead of its initial public offering.
The engineering services company allotted 1.58 crore shares at Rs 500 apiece to 67 anchor investors.
The marquee investors include Fidelity International, Nippon Life India, BNP Paribas, SBI Mutual Fund, HSBC, Kotak, DSP, Motilal Oswal, Edelweiss, and Goldman Sachs, among others.
SBI Multi Asset Allocation Fund secured 4.30% of the allocation, the highest in the list.
Seventeen domestic mutual funds have applied through a total of 39 schemes, the company said in an exchange filing. They have collectively netted 44.88% of the anchor portion of Rs 354 crore.
ICICI Prudential, Aditya Birla Sun Life, Axis Mutual Fund, Franklin India, Edelweiss, Sundaram MF and Nippon Life India are among the key investors.
Citigroup Global Markets India Pvt., JM Financial Ltd., and BofA Securities India Ltd. were the book-running lead managers for the offer.
About Tata Technologies IPO
Tata Technologies will launch its initial public offering, the first from Tata4, on Nov. 22. The three-day issue is priced in the range of Rs 475–500 per share.
The public issue is expected to fetch Rs 3,042 crore at the upper end of the price band. The IPO consists of an offer-for-sale component of 6.08 crore equity shares by promoters, investors, and other selling shareholders. It has no fresh issue.
Founded in 1994, Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to original equipment manufacturers and their Tier-I suppliers. The company is primarily focused on the automotive industry and is currently engaged with seven out of the top 10 automotive ER&D spenders and five of the top 10 prominent new energy ER&D spenders.
|
Stocks Trading & Speculation
|
ECB Hawk Klaas Knot Pushes Back on Bets for a September Hike
European Central Bank Governing Council member Klaas Knot said monetary tightening beyond next week’s meeting is anything but guaranteed.
(Bloomberg) -- European Central Bank Governing Council member Klaas Knot said monetary tightening beyond next week’s meeting is anything but guaranteed — suggesting officials could soon pause their unprecedented campaign of interest-rate hikes.
“For July I think it is a necessity, for anything beyond July it would at most be a possibility but by no means a certainty,” the traditionally hawkish Dutch central bank head told Bloomberg TV. “From July onward I think we have to carefully watch what the data tells us on the distribution of risks surrounding the baseline.”
The remarks signal that market and analyst expectations for two more quarter-point increases in the deposit rate, to 4%, may be overblown. Government bonds extended gains, and the euro retreated from the strongest level against the dollar in almost one and a half years, as traders pared rate-hike bets after Knot spoke.
The yield on 10-year German securities fell as much as 7 basis points to 2.41%, a two-week low. The common currency was trading little changed at $1.1243 as of 10:05 a.m. in London, after rising as much as 0.4% earlier in the session.
“The market has been too convinced of a terminal rate of 4% after the June meeting and is now starting to realise that there is considerable uncertainty for September,” said Theophile Legrand, a strategist at Natixis. “If the hawks also start to talk about uncertainty, the terminal rate at 3.75% is a real possibility.”
This month’s policy announcement from the ECB may contain more clues on where borrowing costs are headed. While some members of the Governing Council have said hikes may need to persist into the fall to bring down underlying inflation, others worry about the 20-nation euro-zone economy, which is battling to exit recession.
What Bloomberg Economics Says...
“Knot wants to see decisive evidence that underlying inflation is coming down. We see signs of progress on some measures, but this is unlikely to be reflected in the core reading before the September policy meeting. Combined with concerns over the strength of wage growth, a terminal rate of 4% still looks most likely.”
—Jamie Rush, Chief European Economist
The situation is not dissimilar in the US, where the Federal Reserve is also expected to lift rates next week, though moves after that are less certain. The task for the Bank of England is clearer with inflation overshooting estimates. Markets even see the potential for a 50 basis-point rate move at the next meeting in August.
In the euro area, headline inflation has been retreating, but underlying pressures have proved stubborn. Knot said the latter measure may now be leveling out.
“It looks as if underlying inflation has plateaued,” he said Tuesday in Gandhinagar, India, where he’s attending a meeting of Group of Twenty finance chiefs. “But in the coming months we would then want to see a bit more decisive evidence on it actively coming down.”
Also speaking to Bloomberg in India, Bank of Italy Governor Ignazio Visco — a more dovish voice who’s urged caution on further rate hikes — said price gains may come down more quickly than the ECB projected last month.
Knot called the view that inflation may ease to the 2% target in 2024, rather than 2025 as the ECB currently forecasts, “optimistic.”
One question is how quickly the effects of the tightening enacted during the past year is feeding through to the economy. Bank of France Governor Francois Villeroy de Galhau said Tuesday that patience may be needed in awaiting that impact.
“I’m completely confident that monetary-policy transmission is happening, but it’s probably happening a bit more slowly than at other times,” he said in Paris.
Echoing comments Monday from fellow hawk Joachim Nagel, who heads Germany’s Bundesbank, Knot stressed that it’s “impossible to say” how to vote after next week as there are a lot of relevant data points still to come.
“So far we’ve mainly been preoccupied with the risk of inflation persistence,” he said. “But it is of course true the more and more hikes you get our of door so to speak, this balance of risks is gradually shifting and also the risks of perhaps doing too much needs to be paid more attention to.”
--With assistance from Constantine Courcoulas, James Hirai and William Horobin.
(Updates with markets, Bloomberg Economics, Villeroy starting in third paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Interest Rates
|
Sam Bankman-Fried ‘Lied To The World’ As He Built Crypto Empire, Prosecutors Say
Sam Bankman-Fried lied to the world as he built his cryptocurrency empire at FTX, telling only his friends and girlfriend the truth about what was happening, prosecutors said on the first day of a historic fraud trial.
(Bloomberg) -- Sam Bankman-Fried “lied to the world” as he built his cryptocurrency empire at FTX, telling only his friends and girlfriend the truth about what was happening, prosecutors said on the first day of a historic fraud trial.
Nathan Rehn, an assistant US attorney, painted a picture of the 31-year-old as a calculated criminal who used investor deposits at FTX as a personal bank account before the company collapsed into bankruptcy a year ago. He said that only Bankman-Fried’s small inner circle knew that he was taking customer money to fund his lifestyle.
“He had wealth, he had power, he had influence, but all of that was built on lies,” Rehn told jurors in federal court in Manhattan Wednesday. “He was committing a massive fraud, and taking billions of dollars from thousands of victims.”
Prosecutors included several references to former Alameda Research co-chief executive officer Caroline Ellison in their opening statements, as one of the individuals that knew what was going on behind the scenes. Ellison, Bankman-Fried’s former girlfriend, is the government’s star witness after reaching a cooperation deal last year. Gary Wang, former FTX chief technology officer and Nishad Singh, FTX’s former engineering director, are also expected to take the stand as cooperating witnesses.
The case, which the government has labeled one of the biggest financial crimes in the country’s history, will explore how an awkward 20-something from California came to run and allegedly ruin one of the largest crypto exchanges in the world. The MIT graduate faces a maximum prison term of 20 years for each of the five most serious charges against him.
Bankman-Fried was expressionless as Rehn spoke, but briefly looked at the jury as the government lawyer emphasized “billions of fraud,” before turning back to stare at his laptop. The former crypto executive’s parents, a pair of Stanford University law professors, sat in the gallery behind their son.
‘Cartoon Villain’
Bankman-Fried’s lawyers said that Rehn portrayed their client as a “cartoon” villain, rather than the math nerd he truly was.
“The evidence will give you different context - that Sam works very hard, didn’t drink or party, and went to MIT,” his lawyer, Mark Cohen, said during his opening arguments. “Sam didn’t intend to defraud anyone. There was no theft.”
Cohen said that the “rise and fall” of FTX, and Alameda Research, an affiliated hedge fund, mirrored the wider crypto industry, which was battered by fast changing market conditions in 2022.
“The case in many ways is about crypto from 2017 to 2022,” Cohen said. “You will learn that crypto is not for everyone.”
Bankman-Fried is accused of taking customer funds from FTX and using it to engage in speculative trading through Alameda. Cohen said their client had “reasonably believed” that loans provided by Alameda were permitted and backed by collateral.
Cohen explained that FTX grew to have 350 employees, that a risk management team was not yet built and that Bankman-Fried and others executives made hundreds of decisions a day, which mean that “some things were overlooked.”
“Running a startup was like building a plane while you’re flying it,” he said.
John Reed Stark, a former SEC enforcement attorney and crypto critic, said on the social media platform X, formerly known as Twitter, that the prosecution’s “stockpile of cooperating prosecution witnesses is arguably unprecedented for a financial fraud trial.”
“For the past year or so, these three informants together with a legion of other informants, turncoats and whistleblowers (who are also similarly desperate to save their own skin), have been providing the prosecution with a roadmap of SBF’s alleged criminal activities,” said Stark, who now runs his own consulting company.
The company’s terms of service as well as old Bankman-Fried tweets ensuring customers that their money was safeguarded were among the examples Rehn touched upon to indicate to the jury that FTX engaged in fraud.
Rehn said that FTX misleadingly told customers that the money belonged to them, not the company. “FTX’s advertising slogan was about how customers could trust it,” he said.
He made reference to a Bankman-Fried’s tweet - “FTX has a long history of safeguarding assets and that remains true today.”
“Statements about FTX keeping customer money safe were lies,” Rehn said.
(Adds defense arguments, starting in fifth paragraph)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Crypto Trading & Speculation
|
Religare Didn't Disclose Rs 250-Crore ESOPs Issued To Rashmi Saluja In Subsidiary, Says InGovern
This takes Saluja's total options holding to Rs 480 crore in addition to her compensation, says the proxy firm.
Religare Enterprises Ltd. failed to disclose employee stock options issued to Chairperson Rashmi Saluja in its subsidiary Care Health Insurance Ltd., according to a report by InGovern.
The 2.27-crore options, representing 2.5% of the share capital and valued at over Rs 250 crore, were granted to Saluja in January 2022, the report said. The options were issued at a "deep discount" of an exercise price of Rs 45.32 per share, it said.
"It is worth noting that the company has mentioned Rs 45.62 per share as the estimated fair value of the shares of Care while in the same year, rights issue of Care shares was at a price of Rs 110 per share," InGovern said.
These ESOPs are also in contravention of the insurance regulator's laws, which "contemplate" issuance of stock options only to chief executive officers, whole-time directors and managing directors, the report said.
The holding finds no mention in Religare's annual reports. The company has yet to respond to BQ Prime's emailed queries.
InGovern alleges that the options were issued even before the outcome of the Insurance Regulatory and Development Authority's approval sought on the issue. The IRDAI also pointed out that Saluja's remuneration, after issuing ESOP, would not be in line with remuneration of other non-executive directors of CARE, it said.
The reclassification of Saluja from independent director of Religare to executive director and consequent issue of ESOPs of subsidiary Care to her as an employee of REL can be seen as a "clear mechanism to reward herself by flouting regulations and keeping shareholders of REL in dark", the report alleged.
The report underscores that Religare resolution approving the remuneration dated Sept. 23, 2022 is void on grounds of failure to disclose material facts regarding Care options issued to Saluja. Accordingly, her remuneration through the allotment of Care options is ought to be clawed back as per the provisions of the Companies Act, InGovern said.
ESOPs In REL
The report said the cumulative options—total of 1.05 crore options—allotted to Saluja in Religare are worth Rs 230 crore. This takes Saluja's total options holding worth Rs 480 crore in addition to the compensation paid by the company.
On Nov. 9, the Burman family, owners of Dabur India Ltd., flagged Saluja's "high compensation", which is in excess of Rs 150 crore. The amount is "not in line with compensation norms by any reasonable parameters", according to a Burman family spokesperson.
Religare rejected the issue stating that it is "completely false and erroneous".
|
Banking & Finance
|
“Digital transformation” among enterprises hasn’t happened with quite the gusto that people predicted it would a few years ago. But today, a startup building fintech technology — for businesses to modernize legacy financial services like payments — is announcing a decent round of funding, a sign of how change is coming, even if slowly.
Volante Technologies — whose low-code cloud payments services are currently used by some 150 major banks and other organizations providing financial services — has raised $66 million in funding. Sixth Street Growth, the growth stage division of the investment firm, led the round, with Wavecrest Growth Partners and Wells Fargo Strategic Capital also participating.
The funding is coming as a mixture of equity and some debt: the company declined to disclose to proportion, nor has it detailed its valuation. Volante has raised $116 million to date.
Volante, based out of New Jersey, will use the funding to make a push into more international services, and to sell to more mid-tier banks to complement the big names already on its customer list.
“This latest investment will further accelerate our product roadmap for our customers, particularly in global real-time payments, UK New Payments Architecture (NPA), and domestic and cross-border ISO 20022 modernization,” said Vijay Oddiraju, CEO and co-founder of Volante Technologies, in a statement. He highlighted the development of open banking-style services, where banks expose more of their APIs to interact around new services, will also be driving some of its next steps. “It will also allow us to expand the reach of our Payments as a Service offering further into the mid-tier bank segment, especially in the U.S. and Europe where FedNow Instant Payments, The Clearing House RTP, and SEPA Instant Payments, respectively, are driving the adoption of modern payments technology.”
Some of the services that Volante already covers include real-time payments, payments as a service, wire transfers in the U.S., corporate-to-bank integrations and embedded preprocessing (to speed up transaction times).
And in some regards, it is a quiet giant. Oddiraju told TechCrunch that its customers included seven of the top 10 U.S. banks two of the largest card networks, and two of the top three banks in Switzerland (a huge banking centre); and that 66% “of all US commercial deposits powered by Volante.”
The company said that its 150 customers include a number of major banks and other financial services providers, such as Citi, BNY Mellon, Goldman Sachs, the Bank of Chile, Wells Fargo, and the Italian postal service. BNY Mellon, Citi, Poste Italiane, and Visa Ventures are also among its strategic investors.
The opportunity that Volante is tackling is that legacy banks, to be more competitive with challenger fintechs, are looking to adopt newer services, either to complement some of their existing legacy products or to replace them altogether. The growth of cloud-based services has enabled many of them to do just that without touching too much of their existing infrastructure.
Volante is not the only startup that’s identified that and looking to sell into that opportunity. Others also building fintech specifically targeting legacy and incumbent providers include FintechOS, 10x, Thought Machine (as of last year, valued at over $2 billion), Temenos (publicly listed), Mambu (as of 2021 valued at over $5B per PitchBook), and many others.
What’s interesting is that this is an area that more modern payments fintechs, like Stripe, have not really approached. Not yet, at least. Stripe Treasury, its banking as a service offering, is offered to platforms and other big businesses in partnership with big banks, but up to now it has not really built out payments and other services targeting those big banks as customers.
On the other hand, the challenge that Volante and companies like it are tackling is that legacy businesses might implicitly understand the benefits of modern approaches, but budget and organizational constraints, coupled with the deprioritizing that comes with the general feeling of “if it ain’t broke, don’t fix it”, have translated to only piecemeal commitments to ripping out old infrastructure and services, and replacing them with new.
Indeed, we’ve been in the middle of a funding fallow period, but it’s very notable to me that a number of the contenders I named above have. not raised any money in more than a year, and in some cases two years.
A recent report by Accenture found that while some 86% of businesses have followed some modernization plans in part, it noted that only about 8% of companies could be classified as “reinventors” — that is, “moving to adopt a strategy of Total Enterprise Reinvention” in its words. That 86% speaks to a huge range of outcomes, however. Some projects are implemented and successful, but some projects are extremely small and yet more are introduced but abandoned. That is not an encouraging picture for further digital transformation investing.
The positive picture for Volante is that it’s building and being used by a number of big businesses already, and its focus is right-sized with that piecemeal reality: rather than taking or expecting a large platform approach, it provides individual services and functionality.
“With financial institutions increasingly prioritizing both investment in payments modernization and partnerships with fintech companies, this is an ideal time to expand Volante’s reach,” said Nari Ansari, MD at Sixth Street Growth, in a statement. “We are investing in Volante because we are confident they have a clear advantage over legacy providers and challengers and are best positioned to capitalize on the growth opportunity and further outpace their competitors.”
|
Banking & Finance
|
Reddit’s recently-announced plan to charge for API access could price out the developer of one of the most popular third-party Reddit apps. The developer of Reddit client Apollo is the alarm on the new API pricing, saying the changes would require him to spend millions of dollars to keep his app going in its current form.
Reddit announced to its API rules last month, citing the rise of AI companies using their platform to train large language models. “The Reddit corpus of data is really valuable,” Reddit CEO Steve Huffman The New York Times. “But we don’t need to give all of that value to some of the largest companies in the world for free.”
But it now seems that independent app makers will also be subject to the pricier new plans, which are set to take effect . While Reddit hasn’t officially disclosed its API pricing, Christian Selig, Apollo’s sole developer, says he would have to pay $20 million to keep his app going “as-is” under the new policies.
“50 million requests costs $12,000, a figure far more than I ever could have imagined,” he wrote in on Reddit, citing multiple conversations he’s had with Reddit representatives about the upcoming API changes. “Apollo made 7 billion requests last month, which would put it at about 1.7 million dollars per month, or 20 million US dollars per year.”
That pricing leaves Selig and Apollo, which has been widely praised for its and for providing functionality beyond Reddit’s native app, in a tough position. While the app does offer subscriptions, its current revenue isn’t enough to cover the steep API cost. He says that the average user makes about 344 API calls a day, which would require him to raise subscription prices to at least $2.50 a month (currently, he says, most subscribers pay $0.99 a month). Furthermore, that wouldn’t account for Apollo’s power users, who use the app at much higher rates, or the app’s free users. “Even keeping the existing, subscription only users I would be SUBSTANTIALLY in the red each month,” Selig tells Engadget.
In a statement, a Reddit spokesperson said that Selig was provided “pricing per 1,000 API calls, not a monthly bill,” but declined to share details. “Our pricing is based on usage levels that we measure to be as equitable as possible,” the spokesperson said. “We’ve been, and will continue, to work with third-party apps to help them improve efficiency, which can significantly impact overall cost.”
If all of this sounds oddly familiar, there are striking similarities between Reddit’s new developer rules and the drastic changes Twitter has made to its API policies under Elon Musk. In Twitter’s case, the company decided third-party client apps while simultaneously making its API extraordinarily for the and that previously depended on higher levels of access to Twitter data.
Of note, Reddit hasn’t been as outwardly hostile to developers. Selig notes that he’s had multiple calls with Reddit and that reps he’s spoken to have been “communicative and civil” about the changes. And a Reddit spokesperson suggested the company wants to keep third-party apps around.
“We’re committed to fostering a developer ecosystem around Reddit – developers and third-party apps can make Reddit better,” the spokesperson said. “Our Data API has powered thousands of applications, such as tools to make moderation easier, and utilities that help users stay up to date on their favorite topics, and games. Developers are incredibly valuable to the Reddit ecosystem, so much so that we recently updated our Developer Platform.”
Still, Selig said he’s uncertain about how he will handle the changes. “I hope it goes without saying that I don't have that kind of money,” he shared on Reddit. “This is going to require some thinking.”
|
Consumer & Retail
|
Preparing for retirement requires decades of saving and planning, yet the majority of American workers say they are already falling behind in building a nest egg for their golden years.
About 56% of surveyed workers feel they are lagging in saving for retirement, with 37% of that group describing themselves as "significantly behind," according to a new poll from YouGov for Bankrate.
Those closest to retirement age were the most likely to say they aren't prepared financially to step back from work, with 6 in 10 baby boomers and almost 7 in 10 Gen Xers feeling this way. But even younger generations feel they're not keeping up, with 49% of millennials and 42% of Gen Zers, who are 18 to 26, expressing the same concern.
Meanwhile, Americans believe they need anto retire comfortably — about $100,000 more than they pegged as the ideal nest egg last year, according to an August survey from Charles Schwab. A year of searing inflation, which has eaten into workers' savings, have pushed the bar higher for the amount people believe they'll need in retirement, according to experts.
"Amid the tumultuous developments of the past several years, including a short but severe recession and a period of high and sustained inflation, a majority of Americans say they are not where they need to be to achieve their retirement savings goals," Bankrate Senior Economic Analyst Mark Hamrick said in a statement. "Compared to our survey about a year ago, there has been no progress on this front."
1 in 5 aren't saving
Nearly half of the survey's respondents who said they had an idea of how much money they would need to retire said they didn't believe they would be able to reach that amount, the Bankrate survey found.
Even though older workers were most likely to say they are lagging in retirement readiness, about 1 in 4 baby boomers and 1 in 5 Gen Xers said they aren't socking away any money in their retirement accounts this year and hadn't saved anything in 2022 either, according to the poll.
Yet despite the impact of inflation and other headwinds, some workers are upping their retirement contributions this year. About one-quarter of workers said they're stashing more money in their retirement accounts in 2023 versus last year, the survey found.
The poll includes responses from 2,527 U.S. adults, including 1,301 people who are working full-time, part time, or temporarily unemployed. The responses, which participants submitted online, were collected between August 23-25, 2023
Social Security worries
At the same time, workers are feeling more pressure to stash more money for their retirements amid an uncertain future for Social Security, the pension plan for older and disabled Americans. According to the Social Security Trustees report,in 2033, which would result in an across-the-board benefits cut of about 25%.
Due to those projections, 72% of Americans report not factoring in Social Security benefits into their retirement income plans, while 79% say they feel similarly uneasy about the future of Medicare, a new study from insurer Allianz Life shows.
for more features.
|
Personal Finance & Financial Education
|
Americans have a specific number in mind about how much it takes to be perceived as wealthy, and it's a sizable chunk of change: an average of $2.2 million in assets.
That may seem like a pie-in-the-sky number, especially given that the median net worth of the typical family stood at about $122,000 in 2019, according to the most recent data from the Federal Reserve's Survey of Consumer Finances.
Yet the $2.2 million figure reflects a dip from a recent peak in 2020, when Americans said they'd need $2.6 million to be considered rich, according Charles Schwab. For seven consecutive years, the financial services firm has surveyed people about their views on wealth. This year's survey polled 1,000 Americans between 21 and 75 years old about their views on money.
Important yardstick
Wealth can be an important yardstick because families with greater resources can tap their assets to buy a home, start a business, invest or help their children go to college — all steps that can, in turn, lead to more financial security. But the pandemic may have caused some Americans to reassess their views on money, with the result that some may have lowered their threshold for being rich, said Rob Williams, managing director at the Schwab Center for Financial Research.
"My interpretation is that we are looking at what money will do for us a little bit more in terms of lifestyle rather than dollar amount," Williams said. "We have all been through a lot of stress, and money is important, but increasingly, it's about what money can do for us."
The survey respondents were also more likely to say experiences and relationships made them feel wealthier than actual money. For instance, about 7 in 10 said having a healthy work-life balance made them feel richer than maximizing their earnings.
About half of those surveyed said they already felt wealthy, even though their average net worth is about $560,000, or about one-quarter of what the respondents said marks the threshold for being rich in America. That gap may seem like a "paradox," but people are often aspirational when they think about wealth, Williams noted.
"There is a disconnect, and that is part of being human," he said.
Retirement gap
That "disconnect" is also reflected in findings from a Northwestern Mutual study last year about the retirement gap, or the difference between what workers believe they need in their golden years and what they've actually saved.
Americans said they'll need about, but the typical U.S. retirement account holds less than $87,000, according to the study.
"Some people might think, 'If I get to $1 million I can retire,' but it's not very meaningful," Williams noted. "It's more meaningful to say, 'When am I going to retire? Do I have money to buy a house, pay for a child's college education?'"
He added, "Putting that in a plan and saying, 'What dollar amount do I need when I retire to deliver the amount I need?' is important."
Millennials, Gen Z feel the richest
Younger generations were more likely to say they feel rich, with almost 6 in 10 millennials and 5 in 10 Gen Zers saying they felt wealthy. Baby boomers were the least likely to say they felt rich, with 4 in 10 agreeing with that statement, the study found.
"We see a lot of boomers who are getting to retirement — and that's the point when they are most worried because it's finally come," he said, noting that they are more likely after they've stopped working to feel anxious that they haven't saved enough to support themselves.
But with more years to save, younger Americans may feel more optimistic about their wealth — even though boomers, by far and away, have more wealth than any other generation. Boomers control about $73 trillion in wealth, compared with about $9 trillion for millennials, according to data from the Federal Reserve.
"Even wealthy people never feel wealthy enough when it comes to money," Williams noted. "If you think about the dollar amount, it's 'more than I have now.'"
for more features.
|
Personal Finance & Financial Education
|
Scapia Raises Rs 190 Crore Led By Binny Bansal's Fund, Elevation Capital
With the new capital, Scapia plans to grow its customer base, add more banking partners and strengthen its product suite.
Travel credit card startup Scapia, founded by Flipkart's former Senior Vice-President Anil Goteti, has raised $23 million, or about Rs 190 crore, to further scale its fintech products targeted at young travellers.
The funding round was led by Elevation Capital and Flipkart Co-Founder Binny Bansal's fund, 3STATE Ventures. The round also saw participation from its existing investors, Matrix Partners India and Tanglin Venture Partners.
"With the new capital, Scapia will continue to grow its customer base, add more banking partners, and further strengthen its product suite," it said in a statement.
Bengaluru-based Scapia had been operating in stealth mode over the last year, and it formally launched in June this year. Its primary product is a credit card and app targeted at Gen-Z and millennials.
"We continue to be big believers in transaction credit + commerce plays across large verticals such as travel, commerce and more...The company is off to a fast start and has seen strong customer love since the launch of its co-branded credit card," said Vikram Vaidyanathan, managing director, Matrix Partners India.
|
Banking & Finance
|
WASHINGTON -- President Joe Biden on Friday plans to roll out a new set of initiatives to reduce health care costs: a crackdown on scam insurance plans, new guidance to prevent surprise medical bills and an effort to reduce medical debt tied to credit cards.
Biden's remarks would build on previous initiatives to limit health care costs, with the Department of Health and Human Services releasing new estimates showing 18.7 million older adults and other Medicare beneficiaries will save an estimated $400 per year in prescription drug costs in 2025 because of the president placing a cap on out-of-pocket spending as part of last year's Inflation Reduction Act.
Gearing up for his 2024 reelection campaign as inflation remains a dominant concern for voters, the Democratic president has emphasized his policies to help families manage their expenses, as well as a spate of government incentives to encourage private sector development of electric vehicles, clean energy and advanced computer chips.
Republican lawmakers have criticized Biden's policies by saying they have spurred higher prices that hurt the well-being of families.
The administration plans to limit what it calls “junk” insurance plans, such as short-term policies that can deny basic coverage as people transition between employers and still need temporary health care coverage.
Neera Tanden, director of the White House Domestic Policy Council, highlighted the case of a man in Montana who received a $43,000 health care bill because his insurer said his cancer was a pre-existing condition.
“That’s not real insurance — that’s junk insurance,” Tanden told reporters on a phone call previewing Biden's remarks. “We will propose a rule to crack down on these plans.”
The president also will announce new guidance on medical billing stemming from 2020's “No Surprises Act.” The guidance would limit the ability of insurers that contract with hospitals to claim provided care was not “in network” and have customers pay more money. Health plans also would need to disclose “facility fees” that are increasingly charged to patients and can surface as an unexpected cost in a medical bill.
“Frankly, what they are doing is gaming the system — this is not allowed," Tanden said.
The Consumer Financial Protection Bureau and Treasury Department also are seeking information on third-party credit cards and loans that are specifically used to pay for health care. The higher costs and interest charges can discourage people in need of treatment from seeking care.
The president is expected to also highlight previous efforts to reduce health care costs, including a plan allowing Medicare to negotiate lower prices for prescription drugs and a $35 monthly price cap on insulin for people in Medicare Part B.
|
Consumer & Retail
|
By Scott Murdoch and Lewis Jackson
SYDNEY (Reuters) - Proxy advisor CGI Glass Lewis on Thursday recommended Origin Energy shareholders vote in favour of a $10.5 billion bid from a consortium led by Canada's Brookfield, despite opposition from the target's largest shareholder.
Brookfield and EIG Partners last week offered a "best and final" A$9.53 per share for Origin after raising a previous bid.
Australia's largest pension fund AustralianSuper opposes the offer and intends to use its 15% stake to vote against the deal at a Nov. 23 shareholder meeting.
Depending on the turnout, the opposition risks sinking a deal that requires 75% of shareholder votes cast to pass.
CGI Glass Lewis on Thursday backed the deal and said there was enough evidence to support an "attractive" transaction that would allow investors to cash out at a premium.
The support, which follows the deal's backing by fellow proxy advisory firm Institutional Shareholder Services (ISS) on Tuesday, is a boost for Origin and the consortium as they campaign to win over investors large and small ahead of the meeting later this month.
Origin will this weekend begin a print and online marketing push to win over shareholders, according to a source with knowledge of the matter.
CGI Glass Lewis acknowledged AustralianSuper's concern the deal potentially undervalued Origin's ability to profit from the country's transition to renewable energy, but said it was fair given the uncertainty around how the changes would play out.
"Whether or not one agrees with that point of view comes down to individual perceptions of the market and levels of risk tolerance," the proxy advisor said. "(The offer) ultimately offers investors certainty of value at a level that is within a reasonable range."
Should the deal fail, the Brookfield-led consortium said last week it had a back-up plan for an off-market takeover that would require the minimum acceptance of 50.1% of the register and give it control of Origin's board.
In that scenario, EIG would own Origin and sell the energy markets business to Brookfield, meaning remaining shareholders, including AustralianSuper, will own only its 27.5% stake in Australia Pacific LNG.
(Reporting by Scott Murdoch and Lewis Jackson; Editing by Leslie Adler and Jamie Freed)
|
Australia Business & Economics
|
Glenmark Pharma Q2 Result Review- Muted Quarter; Divestment To Strengthen Financial Standing: ICICI Securities
Glenmark has a healthy pipeline of differentiated products, which will drive 8.1% CAGR over FY23-25E in India.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Glenmark Pharmaceuticals Ltd. Q2 FY24 revenue growth of 11.6% YoY (unadjusted) was driven by launch of Rylatri in Europe (up 58.4% YoY) and rest of world market (19%). Divestment of Razel and other derma brands took a toll on India growth (up 2.8% YoY) while U.S. revenue was down 9.1% QoQ to $ 89 million.
Adjusting for forex loss of Rs 430 million, Ebitda margins stood at 15.8%. Glenmark Pharma is on track to raise Rs 56.5 billion (pre-tax and other costs) through divestment of 75% in Glenmark Lifesciences in Q3 FY24, which would be primarily used to pare gross debt of Rs 49.2 billion at end-H1 FY24.
We cut our earning per share estimates by ~6-13% for FY24/FY25 to incorporate the divestment of the life science unit. We raise our rating on the stock to 'Reduce' from 'Sell' with an unchanged target price of Rs 660, based on 13 times FY25E earning per share.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
|
Stocks Trading & Speculation
|
Whether it’s fried, baked or mashed, potatoes have traditionally been a low-cost staple food in the UK – but not any more.
A surge in costs is clobbering high street chippies, while in the supermarket, oven chips and the once humble baking potato are casualties of soaring grocery prices.
Some fish and chip shops could opt to close after the cost of 25kg sacks more than doubled to £20, said Andrew Crook, who speaks for the industry as the president of the National Federation of Fish Friers.
“People might just shut their shop due to all the other costs as well,” he said. “They were barely keeping their heads above water, so this is going to be a step too far. Some shops will close until potato prices settle down but some it may put under.”
While figures this week revealed that the steadying of energy costs after a period of big increases had brought the UK’s annual inflation rate back down to 8.7% last month, food and drink prices are still rising at the fastest pace in more than 40 years, up 19% in the 12 months to April.
Chippies buy potatoes in smaller quantities on the open market, so are more exposed to price moves than retailers and food manufacturers who secure long-term contracts.
Even before this new pressure, official data had revealed that the price of a fish supper in the UK had risen to an average of £9 – up £1.44, or almost a fifth, compared with a year earlier – with shop owners hit by rocketing costs for fish, cooking oil and the electricity that powers the fryers.
With rising energy, labour and ingredient costs affecting the whole food industry – and last year’s UK potato crop smaller than usual in part because of last summer’s drought – a snapshot of supermarket prices reveals the amount they are charging for potatoes and chips, traditionally an affordable and filling accompaniment to any meal, has jumped in one case by almost 60%.
Once a cheap family staple, a four-pack of supermarket own-label baking potatoes now costs 25p more than a year ago at 69p. This works out as a 57% price increase, based on the average price across Tesco, Sainsbury’s, Asda and Morrisons, according to the data firm Assosia.
Meanwhile, a bag of 1.2kg-1.5kg supermarket crinkle-cut oven chips is up 78p, or 49%, at £2.35. The sample also showed that the price of a 2.5kg bag of baking potatoes had risen by 28p or 18% to £1.83.
These price rises contributed to the 24.8% increase in potato prices captured by the latest Office for National Statistics data released on Wednesday.
Mark Taylor, the chair of the industry group GB Potatoes, said that in 2022 growers had faced a “perfect storm” as Brexit, Covid and the invasion of Ukraine pushed up production costs. Meanwhile, smaller crop yields in the UK and mainland Europe last year meant “there is a supply and demand equation going on as well”.
The UK is “90%-plus self-sufficient” in potatoes, added Taylor, who said that while some farmers grew crops to contract, others sold on the open market. Prices in the latter were not only being influenced by the UK but by “exceptionally strong demand elsewhere in Europe because they are very short of potatoes at the moment”.
The UK is very good at growing potatoes, which are still very affordable compared with pasta and rice, Taylor said. Pasta and rice are up by 27.7% and 14.9% respectively over the past 12 months, according to the ONS. “While we’ve seen an increase in prices on the shelves, we still do believe that potatoes are good value for money,” Taylor said.
The price of European processing potatoes, which are used to make many of the french fries eaten in the UK, is up 66% on a year ago at €420 (£365) a metric tonne, according to Mintec, the commodities data group. English maris piper and packing whites, the varieties found in supermarkets, are up 123% and 284% respectively to £380 and £365 a metric tonne.
“As supplies have decreased over the course of the season, good demand for fresh potatoes and finished products has led to buyers competing for dwindling stocks,” the Mintec analyst Harry Campbell said.
“Chipping potatoes are typically not grown on contract which means any rises in free-buy prices are fully reflected in the prices paid by the shops. This has meant that chippies have seen major increases with little to no price stability.”
The tightening of UK potato supplies meant chippies may have to source spuds from Cyprus or Spain, although that could mean paying more than £30 a sack, Crook said. “There is a [chip] shop in my town which says closed ‘until further notice’ on the window. I’m guessing that’s because of commodity prices.”
|
Inflation
|
Political party conferences are typically abuzz with ideas, with MPs, lobbyists and researchers floating their policy proposals to a receptive audience.
Many of these ideas come from fringe events organised by think tanks and pressure groups aligned with the party's political philosophy.
This year at the Conservative conference, some big themes have emerged as the party casts around for the building blocks of its manifesto ahead of the next general election.
We've picked out five that have set tongues wagging in Tory circles in Manchester.
Tax cuts
Not much at Conservative conferences can be said to be certain, except calls for lower taxes.
In the run up to the conference, senior Tory MPs on the right of the party made the case for slashing taxes to boost economic growth, putting pressure on Chancellor Jeremy Hunt to heed their demands in his Autumn Statement next month.
On day two of the conference, former Prime Minister Liz Truss turned the screw by making a speech centred on her vision of a low-tax economy.
At a packed-out fringe event, Ms Truss fired up activists by telling the Conservatives "to be the party of business again" by reducing corporate taxes and red tape.
Ms Truss said: "We must make the Conservative Party the party of business once again, by getting corporation tax back down to 19%.
"This is how we make Britain grow again. It is free businesses that will get us there, not the Treasury, not the government and not the state."
Reduce immigration
For decades now, Tory leaders from Michael Howard to Rishi Sunak have been arguing that immigration to the UK is too high and needs to be curbed.
Since David Cameron's government, the concept of net migration - the difference between those entering and leaving the UK - is the lens through which this has been debated.
But Conservative promises of getting net migration down to the tens of thousands a year have failed to materialise. In fact, migration added 606,000 to the UK's population in 2022, the highest number on record.
That's unacceptable to the New Conservatives, a group of Tory MPs elected since the Brexit referendum in 2016.
At a manifesto rally, they promoted their plan to reduce net migration by 400,000 people.
Speaking at a fringe event, former cabinet minister Sir Jacob Rees-Mogg and Tory MP Tom Hunt proposed halving the number of visas awarded to migrant workers, foreign students and their families.
The government says more than three million visas were granted in the year ending March 2023. Of those, 632,006 were study visas.
"Ultimately, we do believe that the student route has been abused by some as a backdoor to the country," Mr Hunt said.
"And we don't believe that when you finish your degree, you should hang around for two years afterwards, even if you have a job to go to."
AI regulation
The global boom in artificial intelligence has been a source of both optimism and anxiety among politicians.
Mr Sunak has been talking up the UK's AI credentials for a long time and sees the sector as a major source of economic growth.
The government hopes its AI summit in November will cement the UK as a major global player in the industry.
But there are fears about the potential economic, social and political pitfalls of the new technology, with business luminaries such as Tesla CEO Elon Musk calling for regulation.
At the Conservative conference, AI regulation was the subject of a fringe event organised by the Onward think tank.
Appearing on the panel, the minister for AI, Viscount Camrose, said regulators must be built to make sure "risks on the horizon are spotted".
"That kind of model gives us a blueprint to an agile approach to regulating AI," Viscount Camrose said.
"The key thing is going to be international engagement, and making sure that our regulation is interoperable with international regulation."
Rethink the green belt
The idea of a green belt acting as a buffer between housing developments and countryside, to stop urban sprawl, has been a sacrosanct Tory principle for decades.
But with the supply of housing struggling to keep up with growing demand across the UK, talk of redefining the green belt is no long taboo.
Somewhat bravely, one fringe event hosted by the Centre for Policy Studies asked: is our one-size-fits-all approach to the green belt still appropriate, given the scale of the housing crisis?
On the panel, the general consensus was no, it is not.
One speaker, former housing minister Brandon Lewis, said while he thought the green belt was "hugely important", it needed reforming.
"There are parts of the green belt that are not green," Mr Lewis said. "There are areas that most of us would think are brownfield."
He added: "We also need to be honest and open about the fact that the green belt, like everything over the last hundred years roughly, needs to be reviewed and changed."
An east-to-west rail line
Speculation over the future of the Birmingham-to-Manchester leg of the HS2 high speed rail line was incessant at the Conservative conference.
For days, the prime minister insisted no decision has been made, despite multiple reports to the contrary.
West Midlands Mayor Andy Street and other senior figures were pleading with the prime minister to keep the project on track.
But others in the party think HS2 is not the biggest priority.
The Northern Research Group of Tory MPs, for example, would like to government to invest in east-west connectivity, rather than the north-south HS2 line.
They want the government to put money into what they call the Charles Line (formerly Northern Powerhouse Rail), connecting the north west with the north east of England.
The Tory Mayor of Tees Valley, Ben Houchen, said the lack of rail connections in the north of England was "where the biggest problem is".
"Trying to get from Darlington in my area to Manchester airport is an absolute joke," Mr Houchen said.
"That's where we should be prioritising the money."
|
Real Estate & Housing
|
Cash Management Strategies for SMBs
When it comes to running a small business, cash management is an essential aspect that often gets overlooked. Unfortunately, many business owners don't consider the opportunity cost of suboptimal cash...
This story originally appeared on Due
When it comes to running a small business, cash management is an essential aspect that often gets overlooked. Unfortunately, many business owners don't consider the opportunity cost of suboptimal cash management practices. This is particularly true when it comes to managing your business's idle cash.
What exactly is idle cash? In this context, idle cash refers to the excess cash reserves that a business has on hand, which is not currently being utilized for operations, investments, or other immediate expenses. Idle cash can be invested (safely) so that it earns a return during the time it is not being used. Done well, idle cash management protects your funds, maintains access to liquidity, and maximizes yield return.
Holding your idle cash in an insured checking account seems like a sensible move in comparison to, say, keeping physical cash in a safe at your principal business location. But it's often better to invest it in a diversified basket of short-term, low-risk securities or to use it to pay off high-interest debt. Each — or both, more likely — can save your business money, preserve capital, and generate supplemental income.
As your business grows, the benefit of optimal cash management practices grows along with it. So does the opportunity cost of anything less.
You have three options to address the threat: do your own cash management, have your bank do it, or entrust it to a specialized cash management provider.
Option #1: Handle It Yourself
Your first option is to handle your cash management needs internally. Depending on the size of your business and your cash flow needs, this may involve doing it yourself or assigning a trusted employee.
What It Looks Like
You can internally manage your business' idle cash in several different ways. What unites each of these approaches is that you don't rely on an external service provider, like a bank or specialized cash management solution.
To decide on the best approach for your business, you need to figure out what you can afford (both in terms of time and money) and how much direct control you want over the process:
- Do it yourself. If you value control over your finances — as most business owners do — this is an appealing option when your business is small and its cash management needs are straightforward. But even then, managing and investing idle cash is going to be a time commitment, and doing it well requires expertise that you may not have. You might not be the best person for the job.
- Have your bookkeeper or accountant do it. They already manage other aspects of your finances, so why not your idle cash? Increasing your part-time bookkeeper's hours spares you the expense of hiring a new employee.
- Hire in-house expertise. As your business grows, its cash management needs become more complex. Eventually, the time needed (and potentially the expertise required) is just too much for you or an existing employee to handle. But a new hire with the requisite knowledge and skills is not cheap.
Pros of In-house Cash Management
You know your business better than a bank or third-party treasury management provider, so it makes sense that you'd want to deploy its idle cash yourself. And there are some advantages to that approach.
- Deeper knowledge of the business and alignment with ownership's preferences. As the owner, you know your risk tolerance, liquidity needs, growth plans, and so on without having to explain them to an external stakeholder. Even if you're not directly responsible for cash management, you can train the responsible employee on these preferences with an easier learning curve.
- More flexibility and control. When you handle your cash management yourself, you can adjust tactics and strategy on the fly. You can correct mistakes faster. You can make "inadvisable" decisions (like liquidating long-dated, low-yield CDs and paying the interest penalty) in service of a larger goal.
- Potential for cost savings. Allocating cash management responsibilities among existing employees is an excellent way to trim expenses without letting anyone go. The cost benefits become murkier as you grow, however.
Cons of In-house Cash Management
Doing your cash management seems like a good idea until it doesn't any longer. These are the biggest pitfalls.
- Major time commitment. Keeping your business financials straight is already a big time commitment for you or your internal finance team. Proper idle cash management is an added time cost that could have been spent focusing on operating your business. You might not be able to absorb the additional workload as easily as you think, even if you're willing to add to your headcount.
- Lack of required expertise. Small business owners or employees may not have the necessary financial expertise to manage idle cash optimally, which could lead to missed opportunities (reduced performance) or increased risk exposure. And if you do decide to hire an expert, expect to face a tight labor market and pay top dollar for a seasoned treasurer.
- Limited access. Small in-house cash management teams will likely not have access to the same tools, investments, and technologies as professional cash management options like banks or Registered Investment Advisors. This can limit the effectiveness and performance of a business's cash management strategies and potentially increase risk.
Option #2: Have the Bank Handle It
Another option for small businesses is to have your bank manage your idle cash. Many banks offer some sort of cash management service, and it can be convenient to work with an institution that you are already familiar with. However, handing over your idle cash to your bank comes with some risks that may not be apparent at first.
What It Looks Like
If your bank offers treasury management services, it can manage your idle cash, with no problem. If your bank doesn't offer treasury management services, it's probably a sign that your bank's focus is most likely not aligned with your needs, so it may be time to switch banks (even if you're not sold on bank-led cash management).
Bank-led cash management is convenient and hands-off by default, giving you back precious time and resources. Banks also traditionally have access to a wide variety of investments, including lower-risk options like government-backed securities. Bank cash management services often use advanced algorithms to quickly identify and allocate excess cash, streamlining the process compared to manual management. Banks will often provide useful insights and reporting, enabling business owners to have a more granular view of their idle cash performance.
Pros of Having a Bank Handle Your Cash Management Needs
You already have a business bank, so you could entrust your cash management needs to it. Here's why that could make sense.
- You already work with them (convenience). Inertia has its charms. If you're generally satisfied with your business bank, it makes logical sense to have them manage your cash.
- Easy access to low-risk, insured financial products. Banks have access to a variety of low-risk financial products with FDIC deposit insurance. If your risk tolerance is low, you don't need anything exotic anyway.
- In-house expertise. Cash management is a core business banking service. Even smaller regional banks have in-house experts who've been doing it for years.
Cons of Having a Bank Handle Your Cash Management Needs
Banks are convenient and seemingly safe, but they have some hidden and not-so-hidden downsides.
- Potential conflicts of interest. Banks may have conflicts of interest due to financial incentives like kickbacks or commissions for promoting specific investment products. This misalignment of interests can lead to banks prioritizing investments that benefit themselves, rather than focusing on the best investment options for your business.
- Bank fund risk. Banks typically hold clients' funds in their own bank accounts or invest it under the bank's management system. If the bank experiences financial distress or insolvency, as we've seen recently, the clients' funds could be at risk. This is unlike options that hold funds with custodial accounts, where a separate financial institution acts as a custodian to safeguard the assets.
- Limits on deposit insurance. Many banks offer no way around the FDIC's deposit insurance limits. As we saw when Silicon Valley Bank failed, this can be an existential threat to well-capitalized business clients. Because of this, many savvy U.S. SMB owners have turned to new risk-management strategies, such as partnering with 831(b) plan admins like SRA.
- Limited customization. With many banks, customization and white glove services are only provided to their largest clients, leaving many small businesses with the standard offering. While this may work for some, many businesses have their own unique growth goals, risk tolerance, and liquidity needs that would be better served by a customized portfolio for their idle cash.
Option #3: Use a Third-Party Cash Management Provider
Your third — and for many businesses, the best — option is to use an expert third-party cash management service that isn't directly associated with a bank and doesn't require you to create a new cash management role internally.
What It Looks Like
A third-party cash management service is more customized and flexible than a typical banking cash management program. Third-party cash managers are typically Registered Investment Advisors, regulated by the SEC, and have a fiduciary duty that requires them to prioritize the client's interest over their own.
Cash management services also typically offer investment options and products that are a good fit for small businesses. For example, the cash management platform Treasure offers a reserve account that's a customizable mix of diversified, risk-appropriate financial products: FDIC-insured cash accounts, money market funds, dynamically managed government-backed securities, and actively managed fixed-income mutual funds. Many business banks offer only cash accounts, sometimes just a handful, and don't allow clients to customize between different offerings.
Pros of Using a Third-Party Cash Management Provider
A third-party cash management provider won't replace your bank or accountant, but they're very good at what they do: managing your idle cash.
- Specialized expertise. Like banks, third-party cash management providers know their stuff. They're arguably even better suited to it because it's all they do; top-tier cash management providers regularly outperform bank and fund benchmarks.
- Customized strategies. Cash management services will often develop tailored portfolios for their clients based on things like growth goals, risk appetite, and upcoming cash needs. Top cash management services will also actively manage those portfolios so they can adjust strategies based on changes in the client's needs or fluctuations in the market.
- Fiduciary responsibility. Many third-party cash management services operate as registered investment advisors (RIAs) and have a fiduciary responsibility to act in their client's best interests. RIAs are strictly regulated by the SEC, and their role as fiduciaries means there is no potential for conflict of interest in their investment recommendations. This can provide additional peace of mind and protection for small businesses.
Additional Pros to Consider
- Potential for a wider range of investment and deposit account options. Leading cash management providers offer more risk-appropriate deployment options from a variety of banks and investment service firms. This means a bigger menu of higher-yield products and more investment options likely to do well in challenging market environments.
- Potential for higher ROI on deployed cash. More investment options greatly increase the likelihood of higher blended ROI on deployed cash. That means more income for your business.
- Potential for higher deposit insurance limits. Spreading your cash among multiple banks allows for greater deposit insurance coverage, reducing your exposure to black swan events like bank failures.
- Dynamic management (more flexibility). Third-party cash management providers use sophisticated algorithms to optimize deployed cash for yield, risk, and diversification. Your bank may do this as well but with a narrower menu of deployment options.
- Frees up internal resources for cash flow management. Third-party cash management providers can help your business optimize its idle cash, but it's not their job to help you earn more of it through business activity (not directly, at least) or to hold your hand through the cost-cutting process. Nonetheless, they do many hours of legwork on your behalf each month, freeing up your in-house treasurer or controller, or accountant to focus on high-ROI growth and cost-reduction opportunities.
Cons of Using a Third-Party Cash Management Provider
Before moving forward with a third-party cash management solution, see how it compares to your current banking relationship or an internal employee or team.
- Not a one-stop shop. By definition, specialized cash management providers do not offer the full suite of products found at a full-spectrum bank. You'll need to rely on other financial providers for things like managing payroll and securing loans.
- It's important to choose the right provider. When selecting a third-party cash manager, it is important to carefully vet your partner. You will want to choose a partner that is a Registered Investment Advisor, meaning they are closely regulated by the SEC and have a fiduciary duty. You also will want to make sure they hold funds in custodial accounts (most partners do) and check with them about their fee structure. In general, you should not be paying more than 50 basis points on your assets under management.
In conclusion, cash management is an essential aspect of running any business, and its importance grows as the business expands. Business owners have three options to manage their idle cash: do it in-house, have their bank do it, or entrust it to a specialized cash management provider.
Each option has its pros and cons, and business owners need to evaluate their needs and preferences before deciding. Regardless of the option chosen, suboptimal cash management practices can lead to opportunity costs, and businesses can benefit from investing idle cash in low-risk securities or paying off high-interest debt. In the end, the goal of cash management is to save the business money, preserve capital, and generate supplemental income, making it a crucial aspect of financial success.
|
Banking & Finance
|
The government has denied it plans to drop its £11.6bn aid pledge to help developing countries tackle climate change.
The Guardian reported it had seen a leaked briefing note to ministers, saying the target was set before the costs of COVID, and sticking to it would "squeeze out room for other commitments, such as humanitarian and women and girls".
But a government spokesperson said any claims the pledge was being dropped were "false".
Politics live: Tory 'jingle and mingle' lockdown party to be investigated again
Boris Johnson pledged in 2019, when he was prime minister, to double the UK's international climate finance contributions, promising it would hit at least £11.6bn between 2021-22 and 2025-26.
It forms part of the Climate Finance Delivery Plan, agreed at COP26, which aims to see £100bn spent each year internationally on helping vulnerable countries at risk of the impact of climate change.
But at the same time as making the commitment, Mr Johnson also reduced the government's spending on international aid to 0.5% of GDP, instead of the long-standing commitment of 0.7%.
Click to subscribe to ClimateCast with Tom Heap wherever you get your podcasts
The note leaked to the Guardian read: "Our commitment to double our international climate finance to £11.6bn was made in 2019, when we were still at 0.7 [% of GDP spent on international aid] and pre-COVID."
It adds that meeting it by the deadline would be a "huge challenge" because of new pressures, including help for Ukraine - which also falls into the aid budget.
Last week, former environment minister Lord Goldsmith quit his post, saying it was over the government's "apathy" to climate change and taking specific aim at Mr Sunak.
A government minister told Sky News: "Claims that the International Climate Finance pledge is being dropped are false.
"As the prime minister [Rishi Sunak] set out at COP27, the government remains committed to spending £11.6bn on international climate finance and we are delivering on that pledge."
The minister added: "We spent over £1.4bn on international climate finance over the course of the 2021-22 financial year, supporting developing countries to reduce poverty and respond to the causes and impacts of climate change.
"We will publish the latest annual figures in due course."
|
Nonprofit, Charities, & Fundraising
|
- Prices for sports tickets have surged a whopping 25.1% between October 2022 and 2023, according to closely watched data from the Bureau of Labor Statistics.
- Sports have become the latest to feel the impact of "funflation."
Dan Hornberger has been a fan of the National Football League's Philadelphia Eagles for as long as he can remember. As an adult, his office has team memorabilia lining the walls.
Last year, the devout supporter went to five home games, about an hour-and-a-half drive from his house. This year, however, Hornberger's only on track to attend two games as costs soar.
"I'm a huge fan," Hornberger, 40, said. "Ultimately, what it comes down to is just outright refusal on my part to pay those kinds of prices."
Sports prices have surged this fall, according to federal data. That's made game tickets the latest victim of "funflation," a term used by economists to explain the increasing price tags of live events as consumers hanker for the experiences they lost during the pandemic.
Admission prices for sporting events jumped 25.1% in October 2023 from the same month a year prior, according to the Bureau of Labor Statistics' consumer price index data. The category saw the highest annualized inflation rate out of the few hundred that make up the inflation gauge.
CPI as a whole rose a relatively modest 3.2% on an annualized basis. The index tracks the prices of a broad basket of items including milk, jewelry and airline fares.
"We've seen this through the entire leisure and hospitality sector," said Victor Matheson, a professor and sports economist at the College of the Holy Cross. "People are getting back to things that they enjoy doing and are willing to pay a bunch."
Part of the reason consumers may be seeing higher ticket prices for their favorite sports teams is because of the increasing use of dynamic pricing models, Matheson said. These structures allow ticket-selling platforms to fetch more or less per ticket, depending on demand for the event at any given moment.
There's also an alignment of attention-grabbing sporting events taking place this fall. Beyond the typical major-league seasons, the Formula One race in Las Vegas last week and the announcement of soccer legend Lionel Messi's move to the Inter Miami team this summer have boosted enthusiast spending.
But a large reason for the eye-popping 25.1% jump is because of how low prices were a year ago, Matheson said. Teams slashed ticket values in 2022 in a bid to win back fans who had grown accustomed to watching at home.
Sports ticket prices were 14.2% higher in October than in November 2019, a smaller gain than the entire index's 19.6% increase, a CNBC analysis of CPI data shows. Much of the upward pressure on admission costs has come this year, underscoring the role of funflation as consumers shift their attention from Taylor Swift and Beyoncé concerts to NFL and Major League Baseball games.
"We're seeing a gigantic bounce back in prices," Matheson said.
NFL and National Hockey League sales have approximately doubled in 2023 compared with the prior year, according to ticket platform StubHub. NBA sales were up nearly 60% at the start of the season compared with the last, while college football has seen an increase of around 50%.
To be sure, not every sport this year has seen the same price growth. StubHub said ticket prices across the top 10 sporting events were 15% higher in 2022 than they were in 2023.
Matheson said tamer inflation overall should help cool sector-specific growth. A return to a more normalized entertainment spending routine following the post-pandemic experience boom can also help cool demand and prices, he added.
Rodney Paul, director of the sports analytics program at Syracuse University, said interest in attending games should be somewhat stable even if the economy worsens. That's because a sizable portion of the consumer base is well-off enough to afford pro-sports tickets — which he said is essentially a luxury item — and should be able to better weather a downturn given their financial status.
But Paul said a meaningful change to the state of the economy could push fans that are less financially stable have to cut back on extraneous expenses, in turn hurting demand. Cash-strapped consumers may justify spending more than they'd like to this year by reminding themselves they didn't splurge as much or at all on game tickets during the pandemic, Matheson said.
Part of the financial stress comes from the resale market for tickets, some sports fans say. The rising price of parking and food inside of the stadium also have to be factored in to the financial calculation of fans such as Hornberger and Sara Weddington.
Weddington was able to save enough enough to attend a Kansas City Chiefs game last season, but she said it feels out of the question this year as prices have climbed. The long-time resident of the Kansas City area said she feels for people who have never gotten to see a game before recent price increases.
"To have such a monumental part of the community be so out of reach for a lot of people is really upsetting," the 23-year-old said. "Not being able to go to a game is like going to a candy store and not being able to get any candy."
Still, Paul of Syracuse University said sports have taken on a new meaning in the post-pandemic world. As people increasingly work from home, he said there's a larger need for in-person social spaces — and those who can afford it are more willing to shell out.
"There's a real craving for that kind of feeling of togetherness that the sports world brings," he said. It's "a really exciting experience that maybe is even more exciting now because people had lost it in the past."
— CNBC's Gabriel Cortes contributed to this report.
|
Inflation
|
China-Africa relations: IMF report says Chinese loans are not main debt burden in sub-Saharan region
- Beijing the largest bilateral official lender to countries in Africa but share in sub-Saharan overall sovereign debt still relatively small, according to report
- IMF is distancing itself from US ‘debt trap diplomacy’ theory along with new American narrative China’s economy is on brink of collapse, says analyst
China’s share of the total sub-Saharan Africa external public debt rose from less than 2 per cent before 2005 to about 17 per cent – or US$134 billion – in 2021, according to the IMF. The World Bank’s International Debt Report said sub-Saharan Africa’s total external debt stood at US$790 billion in 2021, a figure that more than doubled in about a decade.
But China’s share in sub-Saharan Africa’s overall sovereign debt, or public debt, was still relatively small – about 6 per cent of the total – the IMF said.
“It is noteworthy that the debt owed to China has not been the principal contributor to the region’s public debt surge in the past 15 years,” the IMF said in a side report about sub-Saharan Africa’s economic relations with China that it released early this month.
Some 60.9 per cent of the region’s public debt is now domestic commercial borrowing with higher interest rates and shorter maturity, while multilateral lenders hold 13.7 per cent of the debt.
China has denied the debt trap allegations. Instead, it has pointed the finger at multilateral financial institutions and commercial creditors which account for more than 80 per cent of sovereign debt for developing countries.
The IMF does not wade into political arguments to avoid hindering its mission of helping member countries overcome balance-of-payments issues.
The US holds an effective veto power over the IMF with 16.5 per cent of the fund’s voting power, followed by Japan at 6.14 per cent, China at 6.08 per cent and Germany at 5.31 per cent. But there has been a push from developing countries for the IMF and other multilateral institutions to be reformed.
Mark Bohlund, a senior credit research analyst at REDD Intelligence, said the solvency issues of many lower middle-income countries was mainly due to domestic debt because it accounted for the majority of interest costs for most of these countries.
On the other hand, Bohlund said, interest payments to commercial external creditors weighed on the current accounts of many countries while the relatively short repayment periods on Chinese-financed infrastructure projects was adding to low-income countries’ financial problems.
“There is a strong worry that many countries will not regain market access when US rates come down,” Bohlund said, adding that many governments had had too much market access, “both domestic and external, over the past decade”.
According to the Chinese Loans to Africa Database at Boston University’s Global Development Policy Centre, China advanced US$170 billion between 2000 and 2022.
But sub-Saharan Africa has seen a retrenchment of Chinese investment and lending since 2017.
According to the IMF, Chinese official total loan disbursements to sub-Saharan Africa have fallen precipitously, now representing about one-eighth of their peak value of 1.2 per cent of the region’s GDP in 2016.
Nevertheless, China has been a key player in recent debt restructuring and negotiations. It also contributed to the Debt Service Suspension Initiative, providing 63 per cent of suspensions in 2020 and 2021, though owning just 30 per cent of the claims.
Four countries – Zambia, Ethiopia, Chad and Ghana – applied for debt restructuring under the G20’s common framework. Zambia, which was the first country to default on its foreign debt in 2020 during the Covid-19 era, received debt relief from its bilateral lenders that agreed to restructure US$6.3 billion debt, of which US$4.1 billion is owed to China.
Aly-Khan Satchu, a sub-Saharan Africa geoeconomic analyst, said the West advanced the “debt trap” diplomacy story along with a new narrative that China’s economy was on the brink of collapse.
“I think the IMF is stating the obvious and distancing itself from this long-embedded and erroneous narrative,” Satchu said.
However, he said the emphasis on local borrowing was correct. The IMF and the World Bank promoted the theory that domestic borrowing was a silver bullet because it would deepen in-country financial and capital markets and reduce reliance on the often capricious international markets, Satchu said.
“We have now seen this creates a negative feedback loop (in a deteriorating circumstance) where local final institutions are hugely affected, like in Ghana, in any debt workout and restructuring,” Satchu said.
“Also in terms of scale, we should not discount the Eurobond markets which have turned out to be a fair-weather friend – dumping money in countries [when] the living is easy and not to be found when money becomes expensive.”
|
Africa Business & Economics
|
Trump’s legal team readies defense in NY fraud trial
Former President Trump’s legal team will mount its defense Monday in the sprawling civil fraud case targeting his business empire.
His legal team will be able to set the narrative of his business dealings and attempt to prove to a New York judge he should not have to pay hundreds of millions of dollars in financial penalties to the state for defrauding it.
Trump’s team faces an uphill battle, given that Judge Arthur Engoron found the Trump Organization and its executives — including the former president and his adult sons — liable for fraud before the trial began.
The decision, which found that New York Attorney General Letitia James (D) proved the crux of her case before presenting it at trial, stripped Trump’s business licenses and put some of his iconic properties at risk. A New York appeals court paused the cancellation of the business licenses until after it hears Trump’s case.
James’s office rested its case in chief Wednesday — a case defined by high-profile witnesses, dramatic outbursts and a winding paper trail leading to the conclusion that Trump and his business sought lower taxes and better insurance coverage by falsely inflating and deflating the value of their assets.
In cross-examinations and courtroom arguments, Trump’s team tipped its hand at what might be coming in the former president’s presentation.
At the heart of the New York attorney general’s case are Trump’s statements of financial condition, documents that detail the value of the Trump Organization’s various assets. The financial statements were sent to banks and insurers to secure loans and deals, which the attorney general says is evidence of fraud.
The former president and his counsel have argued a disclaimer clause in the documents — put there by Trump’s then-accounting firm Mazars USA — absolves the business of any wrongdoing.
The clause, which Trump also described as a “worthless statement clause,” reads: “Users of this financial statement should recognize that they might reach different conclusions about the financial condition of Donald J. Trump if they had access to a revised statement of financial condition without the above referenced exceptions to accounting principles generally accepted in the United States of America.”
Trump testified Monday that the passage holds up “in any court, except maybe in this court,” and “goes on forever.”
“Therefore, you have no case,” Trump told a state lawyer on the witness stand.
The former president brought a printed copy of the clause to his testimony Monday, which he attempted to pull from his pocket to read on the witness stand before Engoron objected to the stunt. He later posted to Truth Social the judge refused to allow him to read it “because he doesn’t want anybody to know” about the clause.
In his ruling ahead of the trial, Engoron rejected the defense’s argument about the disclaimer clause by noting another part of the passage reads, “Donald J. Trump is responsible for the preparation and fair presentation of the financial statement.”
“The Mazars disclaimers put the onus for accuracy squarely on defendants’ shoulders,” Engoron wrote in the order.
For Trump, there is no escaping the financial statements that bear his name. But his three elder children, each of whom testified as witnesses in the state’s case, sought to distance themselves from the key documents — an effort that will likely continue through the defense’s case.
Donald Trump Jr., Ivanka Trump and Eric Trump each denied any involvement in their father’s financial statements, suggesting instead they relied on accountants and other experts to make sure the numbers were correct.
Trump’s legal team has sought to shift the blame for the statements’ skewed numbers Trump and his family onto the accountants who calculated them. Ex-Trump accountant Donald Bender testified under cross-examination for nearly a full week at the start of the trial, where Trump’s lawyers sought to portray him as negligent.
At one point, Engoron jumped in and said the accountant is “not on trial here.”
“I would disagree with that,” said Chris Kise, Trump’s attorney. “His thoroughness, that he got paid millions a year to do — he was a [certified public accountant]. He has certain responsibilities.”
Engoron did not take well to the argument, accusing Trump’s team of “wasting time.”
Another argument Trump’s legal team has strongly pushed is that there was “no victim” of the business’s real estate dealings. On the witness stand, Trump reprised the familiar claim that the New York attorney general had no right to bring the case against his business because the banks did not sue him over misrepresentations.
“We’re trying to figure out, why are you doing this?” Trump testified Monday, referring to the lawsuit. “No one understands it. Well, I understand it — it’s called pol-i-tics.”
Trump and his lawyers claim the banks that worked on various real estate deals with the Trump Organization were required to do their “own due diligence” and not just rely on the representations in the financial statements provided by the business.
“Banks check the work,” Trump said on the witness stand.
An expert witness hired by the New York attorney general’s office testified earlier this month that the Trump Organization’s ballooned financial statements may have cost banks more than $168 million in interest.
However, the state’s case notably lacked witness testimony from any bank representatives who worked with the Trumps — or any evidence purporting the banks consider themselves defrauded.
A handful of Capital One and Deutsche Bank representatives could testify in the state’s rebuttal case “if necessary,” according to court filings. Among those named, the most significant is Rosemary Vrablic, who was Trump’s longtime banker in Deutsche Bank’s wealth management division.
Engoron will likely have a short fuse regarding this claim, having already chided Trump’s legal team for invoking “the time-loop in the film ‘Groundhog Day’” with its repeated arguments. The New York judge already ruled that the attorney general’s office had the power to bring the lawsuit regardless.
Donald Trump Jr. is expected to take the stand Monday as the defense’s first witness, likely setting the tone for the weeks of defense presentations to come. The trial is expected to last through mid-December.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
Real Estate & Housing
|
- In 2012, someone stole 50,000 bitcoin from the Silk Road, an illegal dark web marketplace. Over time, the value of the stolen bitcoin skyrocketed to more than $3 billion dollars and for years it remained one of the biggest mysteries in the world of cryptocurrency.
- Almost a decade after the 2012 hack, the thief made a critical mistake that allowed the IRS-CI to crack the case.
- CNBC obtained never-before-seen footage that shows how investigators linked the thief to the crypto heist.
Athens, Georgia, is home to the University of Georgia, and the police there are used to college town-type crimes: break-ins, bar fights and assorted rowdiness. That kind of thing.
But the 911 call that came in on the night of March 13, 2019, was unlike anything the Athens-Clarke County Police Department had ever encountered.
On the phone was 28-year-old Jimmy Zhong, a local party boy and Georgia alum who frequented Athens' drinking establishments. He wasn't like the other town rowdies – Zhong was also a computer expert who had an unusually robust digital home surveillance system.
Now, he was calling to report a crime: hundreds of thousands of dollars in crypto currency that he said had been stolen from his home. Thinking of all that lost money, Zhong was distressed.
"I'm having a panic attack," Zhong told the dispatcher, according to a recording obtained by CNBC.
Zhong turned down the dispatcher's offer of an ambulance, and began trying to explain the situation. "I'm an investor in bitcoin, which is like an online thing," he said.
What happened next would bring an end to a nearly decade long manhunt and solve one of the biggest crimes of the crypto era. And it also would lead to the largest seizure of cryptocurrency from an individual in the history of the Department of Justice.
Zhong's emergency call that winter evening sent investigators down a long digital trail that led back to the earliest days of bitcoin and revealed a dark truth about the universe of hackers and coders responsible for the creation of cryptocurrencies. It's a world where heroes and villains traded places and could even be the same people.
None of it would go at all the way Zhong wanted.
The 911 call didn't produce a suspect in the theft from Zhong's house. Athens police were dealing with one of their first crypto cases and unfamiliar with the shadowy underworld, and they failed to make progress in the case.
So Zhong turned to local private investigator Robin Martinelli, who owns and operates Martinelli Investigations in nearby Loganville, Georgia.
A former sheriff's deputy turned PI, Martinelli was far from an expert in crypto. She specialized in process serving, cheating spouses and custody investigations, the type of probes that once got her firm featured on an episode of "The Montel Williams Show."
Martinelli had recently undergone surgery to amputate one leg, leaving her to conduct her surveillance operations with the help of a prosthetic.
Still, she was motivated to solve Zhong's case.
"When you wake up and don't put two feet on the ground, but you still have to run a company, you got to get out there and kick ass," Martinelli told CNBC in an interview for the new documentary, "Crypto 911: Exposing a Bitcoin Billionaire."
She began by examining Zhong's robust surveillance video archive of his home. In looking at footage from the night of the crime, Martinelli spotted a slender male figure.
"We could tell that they had like a hood on – a gray hood – but then they had almost like a black ski mask," Martinelli said.
The suspect appeared to know his way around Zhong's house, which led Martinelli to believe that he was a friend or at least someone who had heard Zhong boast about his bitcoin stash. From the video, Martinelli was able to determine the suspect's height and even the size of his hands.
She said she began her investigation by putting Zhong's friends under surveillance, following them to their homes and downtown bars on Broad Street and College Avenue. She put trackers on cars and scoured social media and conducted background checks.
As she watched Zhong's bar friends come and go, Martinelli formed a low opinion of the group. She described them as "very, very casual, plastic, not really caring, maybe using Jimmy a little bit."
Martinelli said Zhong appeared resistant to her theories, especially when they began to focus on his circle of friends. Martinelli eventually settled on one suspect in particular who she believed had stolen 150 bitcoins from Jimmy. At the time, that amount of the digital currency was worth nearly $600,000.
Zhong didn't want to hear it, she said.
"He would get upset when I would kind of mention somebody would had to have known where this cash was," Martinelli said. And she understood why Zhong was so hurt by the idea that someone close to him could have betrayed him.
"Jimmy wanted to be loved," she said. "Jimmy wanted friends."
Even as Martinelli soured on the friend group, she was warming up to her client, who she perceived as an odd man in search of friends.
"Jimmy was a good guy," she said.
A lot of people around Athens felt similarly about him.
In the years before the theft, Zhong was known for throwing a lot of money around town. He was the kind of guy who would buy a round of expensive shots for the whole bar, hundreds of dollars vanishing in seconds down eager throats.
Although he lived in a modest off-campus bungalow, near student housing and the downtown college bar scene, he stayed at fancy hotels, including the Ritz Carlton, the Plaza and the Waldorf Astoria, according to court documents CNBC reviewed. He shopped at high-end stores such as Louis Vuitton, Gucci and Jimmy Choo. He drove fancy cars, including a Tesla. He bought a second home, a lake house with a dock in Gainesville, Georgia, a short drive from Athens. He stocked it with jet skis, boats, a stripper pole, and lots and lots of liquor.
His parties were epic.
Zhong was living his best life with no visible source of income. As far as anyone knew, he didn't really have a job. He told his friends that he'd gotten into bitcoin early, mining thousands of coins in the earliest days of the technology. Zhong told people he dabbled in crypto as far back as 2009, the year bitcoin was invented by the mysterious Satoshi Nakamoto and a small crew of developers tied online to the anonymous crypto creator.
Whatever Zhong was doing, he was making mountains of cash. And he was willing to splurge.
In 2018, when his beloved Georgia Bulldogs football team made the Rose Bowl, Zhong rounded up a small group of friends for a pilgrimage to Los Angeles.
"It really felt like with Jimmy, there were no limits," Stefana Masic, a Georgia alum and one of the friends on the trip, told CNBC.
Masic said not only did Zhong pay for all the tickets, but he also rented a private jet for the cross-country flight. And he gave each friend up to $10,000 for a Beverly Hills shopping spree on Rodeo Drive. They spent it on outfits, accessories and baubles to wear in the city.
"I had never flown private before, and I never stayed in such a nice Airbnb. It was cool because, you know, I got to experience a lot of things that I normally wouldn't."
As he was cheering on his team in LA, Zhong couldn't have known that a small group of agents from the IRS Criminal Investigation unit, led by officials in the same city, were painstakingly trying to solve a crime that dated back years.
What had captured the investigators' attention was a 2012 hack in which someone had stolen 50,000 bitcoins from a site on the dark web called Silk Road, according to court documents CNBC reviewed. That site was one of the earliest crypto marketplaces, where anonymous buyers and sellers exchanged all manner of illicit material. It was full of drugs, guns, pornography and other stuff people wanted to keep secret.
Over the years, the value of the bitcoin stolen by the Silk Road hacker had soared to more than $3 billion, according to court documents. Investigators could track the location of the currency on the blockchain, which is a public ledger of all transactions. But they couldn't see the identity of the new owner of the funds. So they watched and waited for years as the hacker transferred funds from account to account, peeled some away, and pushed some of it through crypto "mixers" designed to obscure the source of the money.
Finally, Chainalysis, a blockchain analytics company that was tracing the digital wallets containing the stolen Silk Road assets, saw the hacker made a tiny mistake. He transferred around $800 worth to a crypto exchange that followed established banking rules, including so-called know your customer processes, requiring real names and addresses of account holders.
The account was registered in Zhong's name. The transaction took place in September 2019, six months after Zhong's 911 call to the local police.
That alone wasn't enough to prove Zhong was the hacker. They had to be sure.
So the IRS called the Athens-Clarke County Police Department and asked for some help, according to sources at both agencies. At the time, the police investigation into Zhong's own crime report had been languishing.
"I got a call from an IRS agent," Lt. Jody Thompson, who leads the local property and financial crimes unit, told CNBC. "And he said, 'can I come by and speak to you about Jimmy?' And I was like, sure, I remember this case."
After that, Thompson joined forces with IRS-CI special agent Trevor McAleenan and Shaun MaGruder, CEO of a cyber intelligence company called BlockTrace. MaGruder's company works with the IRS as an embedded contractor and was hired for its experience untangling complicated blockchain transactions.
Together, the three investigators said they devised a plan. They would approach Zhong using a ruse, telling him they were investigating the crime that he'd called about, the one in which a thief had stolen hundreds of thousands of dollars of his bitcoin.
In reality, they were investigating Zhong for a crime they believed he had committed. A crime whose proceeds were now worth billions of dollars.
When the three men knocked on the door of his lake home in Gainesville, Zhong opened it enthusiastically, according to body camera footage CNBC exclusively obtained. He believed the police officer and the two specialists were there to help solve his crypto cold case.
"If you guys solve this for me, I will invite you out for a party," Zhong told the trio on the body camera footage.
The video shows the officers pouring on the praise. They called his front door "beautiful." They called his speakers "crazy," and they complimented his dog, Chad. They asked for a tour of the house. Body camera footage shows the men tapping on stone floors, looking in closets and checking out wood paneling. Zhong didn't know it, but they were scouring for secret compartments.
Zhong brought investigators to his basement, equipped with a full bar and a stripper pole.
"Is this your workout?" McAleenan asked Zhong.
"Nope, that's for girls," Zhong replied.
The body camera footage also shows they got a good look at Zhong's security system, asking him to explain each of its features and capabilities. Zhong is also captured showing them a metal case he said he once used to store $1 million in cash so he could impress a woman.
"Did it work?" asked Lt. Thompson.
"Nope," Zhong said.
"It never does," Thompson replied.
The law enforcement officers learned that Zhong had a flamethrower on the premises. And they saw his AR-15 rifle hanging on the wall.
MaGruder said Zhong's level of sophistication was apparent.
"He was navigating that keyboard like I've never seen someone navigate a keyboard," MaGruder said. "He didn't have to use a mouse because he knew all the hotkeys."
Playing on the ruse, the officers asked Zhong to open his laptop and explain how he came to have the bitcoin in the first place. Zhong sat on the couch next to the investigators and entered his password, asking them to turn away as he typed.
When he opened the laptop, law enforcement could see his bitcoin wallet.
"Lo and behold, he had $60 or $70 million worth of bitcoins right there next to us," MaGruder told CNBC in an interview.
The evidence was enough to convince the investigators they were on the right track. As he exited Zhong's lake house, MaGruder told CNBC he thought to himself, "This is incredible. I think we found our guy."
The first visit allowed the investigators to obtain a federal search warrant for Zhong's home, McAleenan said. McAleenan, MaGruder, and Thompson returned with an enormous team of officers on Nov. 9, 2021.
Before the officers raided the house, McAleenan had to explain to Zhong that he wasn't really trying to help him. He was trying to convict him.
"I said, Jimmy, you know me as 'Trevor.' I'm actually Trevor McAleenan. I'm a special agent with IRS Criminal Investigation, and we're here to execute a federal-approved warrant on your house," McAleenan said.
"And he kind of had this look like, 'Am I being punked?'" McAleenan added.
At that moment, another officer slid a device known as a "jiggler" into Zhong's laptop, causing the cursor to continually move and giving law enforcement access to the password-protected contents of the computer, McAleenan said.
Officers flooded into the home, cracking open every crevice in search of evidence. McAleenan said in an upstairs closet, they found a popcorn tin with a computer hidden inside that held millions of dollars worth of bitcoin.
Using sniffer dogs trained to detect electronics, McAleenan said they found a safe buried in concrete under some basement floor tile. Court documents said the safe contained precious metals, stacks of cash and physical bitcoins minted in the early years of crypto. They also found a wallet with bitcoin from the original hack of Silk Road in 2012.
Zhong was busted.
"Really late at night we were able to say we were successful," McAleenan said. "We found the evidence that we were looking for. And the house lit up. I mean, every agent on the site cheered."
As they sorted through the evidence, agents discovered something else about the unusual Mr. Zhong. He was, in crypto slang, an "original gangster," or OG.
Investigators discovered that as far back as 2009, the year bitcoin was invented, Zhong was among a small group of early coders who worked to develop and perfect the technology. He was a smaller contributor than some of the other OG players who have since become famous in the bitcoin community, McAleenan said. But investigators concluded that he made contributions to the original bitcoin code and offered ideas to the early developers on key topics like how to reduce blockchain size.
In other words, a hacker who had been involved in the development of bitcoin itself went on to become one of the biggest bitcoin thieves of all time.
"He is one of the, as we dubbed it, the original gangsters, OGs, as far as bitcoin core software developers," McAleenan said. "He had been in this space for quite a while."
The irony of Zhong's role in the history of bitcoin is emblematic of the culture that built the cryptocurrency in the first place, said Nathaniel Popper, author of "Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money."
"Everybody came to this for their own reason," Popper told CNBC. "And it was, as a result of that, a very sort of eclectic and eccentric group of people."
"Bitcoin was always shot through with irony," Popper said. "Yes, there was something ironic about a bitcoin proponent stealing bitcoin from another bitcoin proponent. But I think that was also in some ways a part of what defined bitcoin."
Zhong was charged with wire fraud. After pleading guilty, he was sentenced to one year and a day in federal prison. Zhong, now 33 years old, began his sentence at the federal prison camp in Montgomery, Alabama, on July 14, 2023.
In the end, Zhong didn't get to keep the stolen bitcoin. The U.S. government seized those assets. Officials opened a process that allowed victims of the hack to apply to get their bitcoin back, according to a forfeiture document CNBC reviewed.
Nobody came forward to claim the loot. That's not surprising, given that users of Silk Road in 2012 were largely drug dealers and their customers. The federal government simply sold off the stolen bitcoin and will keep the proceeds. Some of the revenue generated will likely be shared with the Athens-Clarke County Police Department, in recognition of the local officers' help in the case, according to the IRS-CI.
As he left the courthouse after his sentencing on April 14, CNBC attempted to question Zhong about his role in the crime. Zhong covered his head with his coat and left without saying a word.
In his statement to the judge before sentencing, Zhong said having billions in stolen bitcoin made him feel important.
Zhong's attorney, Michael Bachner, says the theft never actually damaged the U.S. government.
"The government has certainly not been hurt by Jimmy's conduct whatsoever," Bachner told CNBC. "If Jimmy had not stolen the coins and the government had in fact seized them from [Silk Road operator Ross Ulbricht] they would have sold them two years later in 2014 as they did with other coins."
At that point, the government "would have gotten $320 a coin or made somewhere about $14 million," Bachner said. "Now, as a result of Jimmy having them, the government has gotten a $3 billion profit."
Zhong asked for no jail time because he was concerned about the fate of Chad, his 13-year-old dog. Zhong has had a difficult life. On the autism spectrum, Bachner said he was severely bullied at school. And he found solace over the years in an online community where he could deploy his computing skills.
As for the original crime against Jimmy Zhong — the bitcoin theft in Athens that led him to the 911 call in March 2019 — that crime has never been solved. The perpetrator remains at large.
Zhong's dog, Chad, is staying with a friend.
|
Crypto Trading & Speculation
|
A new poll shows how shallow support is for green policies
The UK population is overwhelmingly in favour of the aim to reduce carbon emissions to Net Zero by 2050, but flips to strong opposition if the policy imposes any “additional costs on ordinary people”, according to new polling.
As Prime Minister Rishi Sunak announces his intention to expand carbon capture and increase the amount of oil and gas drilling in the North Sea, the results show a preference for the general goal of Net Zero, rather than any commitment to the policies which would be necessary to deliver it. While over 70% support the broader aim, less than half (42%) agree with the decision to ban the sale of new petrol and diesel cars after 2030.
Like what you’re reading? Get the free UnHerd daily email
Already registered? Sign in
The survey, carried out by YouGov, asked 2000 adults from across the UK how they felt about the Government’s green agenda. As well as the marginal opposition to banning petrol cars, only 42% of respondents support the phasing out of new gas boilers, which is due to begin in 2035.
The YouGov poll reveals a significant gap across party lines: even though 59% of those who voted Conservative at the last general election back the 2050 target, this figure rises to 84% among 2019 Labour supporters, and 87% among Lib Dems. For Remain and Leave voters, the proportions are 83% and 58%, respectively. Notably, Shadow frontbencher Jess Philips has criticised Sunak’s decision to distribute licences to companies seeking to extract oil and gas from the North Sea, labelling it the “wrong priority” on Monday.
Among Tory voters, only 25% are in favour of banning petrol and diesel cars, while just 26% agree with phasing out gas boilers. By contrast, the Labour support for each issue sits at 57% and 58%, with even higher figures for Lib Dem voters. There is also more openness to Net Zero policies among London residents and those belonging to higher social grades when compared to the rest of the UK population.
Support for Net Zero becomes opposition once the question of cost is introduced. Most voters believe that “policies to reduce carbon emissions should only be introduced if they do not result in additional costs for ordinary people”, while less than half as many people believe that the policies should be pursued “even if they result in some additional costs for ordinary people”. Though the gap is smaller when looking only at Labour or Lib Dem voters, in both cases there is a higher proportion in favour of policies which do not result in extra costs for Britons.
Sunak has maintained that his drilling expansion is “entirely consistent” with the Government’s Net Zero goals. After the rejection of London Mayor Sadiq Khan’s Ulez scheme played an important part in the unexpected Tory victory in this month’s Uxbridge by-election, the Prime Minister has insisted that “banning things” is “not the right approach” to hitting green targets.
|
Renewable Energy
|
On Monday morning, Bitcoin quickly spiked thousands of dollars, hitting as high as $30,000 on some cryptocurrency exchanges.
Why? Because erroneous reports about the SEC approving BlackRock's iShares Bitcoin ETF spread online. However, those reports turned out to be completely false.
“The iShares Bitcoin ETP application is still under review by the SEC," a BlackRock spokesperson said in a statement to Mashable.
As of this writing, It's unclear exactly where the false report originated. Crypto outlet Cointelegraph issued an apology as it was one of the first sources to share the incorrect information, promising an investigation into the matter.
Tweet may have been deleted
Senior ETF Analyst for Bloomberg Eric Balchunas, who shared skepticism about the reports from the beginning, appears to have first come across the news on the Bloomberg Terminal from a Bezinga Newswire via Reuters.
Tweet may have been deleted
This would be far from the first time false crypto news moved the market. For example, crypto investors have previously been duped by fake press releases about major retail chains accepting cryptocurrencies. While the reports were all debunked fairly quickly, the cryptocurrency would spike in price each time.
Bitcoin prices spiked on the news, gaining thousands of dollars and peaking around $30,000. However, as the Bitcoin ETF news was debunked, prices dropped back down to the levels they were prior to the false reports.
An approval of a Bitcoin ETF would be big news for the crypto industry. Many cryptocurrency advocates believe that it will help legitimize Bitcoin and bring investors back to the market. Cryptocurrency has struggled since last year when numerous stablecoins and crypto lending companies failed. The fall of FTX and the ongoing trial of its founder Sam Bankman-Fried continue to put a spotlight on the unsightliest aspects of crypto.
An ETF, or exchange-traded fund, is a bundle of investments that are traded on the stock market. A Bitcoin ETF would allow retail investors and others to invest in Bitcoin via the stock exchange without owning the blue-chip digital asset.
The SEC has yet to approve any Bitcoin ETF application. It's unclear if or when they will. As BlackRock stated, its application is still under review.
|
Crypto Trading & Speculation
|
Bitcoin creator Satoshi Nakamoto may or may not be businessman Craig Wright, who in 2015 founded the blockchain-tech company nChain.
But nChain's recently-departed CEO Christen Ager-Hanssen's thinks Wright is not Satoshi — and that's just the beginning. According to Forbes Ager-Hanssen went as far as "to leak emails suggesting former gambling billionaire Calvin Ayre, who has heavily backed the company doesn't believe Wright, nChain's chief scientist, is Satoshi Nakamoto.
The alleged email from Ayre begins by citing Wright's "litigation disaster"...' I have been operating under the assumption that you and Ramona have the keys and that you were simply pretending not to have them as part of some strategy that you have trapped yourself in. But now that we are looking at a situation where continuing to deny you have them ruins your life and damages your supporters, I am forced to make a tough decision... There is zero reason to continue to pretend you do not have the keys if you really have them... So either you are a moron for intentionally losing this case, or you are a moron for actually not having the keys... either way, I am not following you over the cliff...
But Ager-Hanssen also shared some thoughts of his own: I can confirm I have departed from nChain Global as its Group CEO with immediate effect after reporting several serious issues to the board of nChain Group including what I believe is a conspiracy to defraud nChain shareholders orchestrated by a significant shareholder. I also had concerns about the ultimate beneficiary shareholder and the real people behind DW Discovery fund registered in Cayman. The chairman also took instructions from shadow directors which I didn't accept.
I have also reported that I have found compelling evidence that Dr Craig Wright has manipulated documents with the aim to deceive the court he is Satoshi. I'm today myself convinced that Dr Craig Wright is NOT Satoshi and I'm persuaded he will lose all his legal battles. The board didn't take action and my job becomes clearly untenable. One of the things I recommended the Chairman of the board was to sack Dr Craig Wright.
I feel sorry for all the great people that work in the company but I don't want to be part of something I clearly don't believe in. #faketoshi
Forbes also notes an X (Twitter) account calling itself "Satoshi Nakamoto" with the handle @Satoshi has posted for the first time since 2018 — though X's community notes feature added: "This isn't the real Satoshi Nakamoto, creator of bitcoin. Its an account related to Craig Wright, who claims to be Satoshi with no material proof."
Thanks to long-time Slashdot reader UnknowingFool for sharing the news.
But nChain's recently-departed CEO Christen Ager-Hanssen's thinks Wright is not Satoshi — and that's just the beginning. According to Forbes Ager-Hanssen went as far as "to leak emails suggesting former gambling billionaire Calvin Ayre, who has heavily backed the company doesn't believe Wright, nChain's chief scientist, is Satoshi Nakamoto.
The alleged email from Ayre begins by citing Wright's "litigation disaster"...' I have been operating under the assumption that you and Ramona have the keys and that you were simply pretending not to have them as part of some strategy that you have trapped yourself in. But now that we are looking at a situation where continuing to deny you have them ruins your life and damages your supporters, I am forced to make a tough decision... There is zero reason to continue to pretend you do not have the keys if you really have them... So either you are a moron for intentionally losing this case, or you are a moron for actually not having the keys... either way, I am not following you over the cliff...
But Ager-Hanssen also shared some thoughts of his own: I can confirm I have departed from nChain Global as its Group CEO with immediate effect after reporting several serious issues to the board of nChain Group including what I believe is a conspiracy to defraud nChain shareholders orchestrated by a significant shareholder. I also had concerns about the ultimate beneficiary shareholder and the real people behind DW Discovery fund registered in Cayman. The chairman also took instructions from shadow directors which I didn't accept.
I have also reported that I have found compelling evidence that Dr Craig Wright has manipulated documents with the aim to deceive the court he is Satoshi. I'm today myself convinced that Dr Craig Wright is NOT Satoshi and I'm persuaded he will lose all his legal battles. The board didn't take action and my job becomes clearly untenable. One of the things I recommended the Chairman of the board was to sack Dr Craig Wright.
I feel sorry for all the great people that work in the company but I don't want to be part of something I clearly don't believe in. #faketoshi
Forbes also notes an X (Twitter) account calling itself "Satoshi Nakamoto" with the handle @Satoshi has posted for the first time since 2018 — though X's community notes feature added: "This isn't the real Satoshi Nakamoto, creator of bitcoin. Its an account related to Craig Wright, who claims to be Satoshi with no material proof."
Thanks to long-time Slashdot reader UnknowingFool for sharing the news.
|
Crypto Trading & Speculation
|
By Jody Godoy and Luc Cohen
(Reuters) - FTX founder Sam Bankman-Fried is set on Monday to resume testifying at his fraud trial on charges related to the cryptocurrency exchange's collapse last year. He testified before the jury for the first time on Friday.
Here are five key moments from Bankman-Fried's testimony so far.
PEOPLE GOT 'HURT'
Bankman-Fried testified that "a lot of people got hurt" in FTX's November 2022 collapse. He said he did not commit fraud, but admitted that he had made a big mistake by failing to put in place a dedicated risk-management team.
HIGH-END HOUSING AND ENDORSEMENT DEALS
Bankman-Fried testified that FTX corporate cash paid for high-end housing for employees in the Bahamas and endorsement deals. He said he borrowed from the crypto-focused Alameda Research hedge fund, which he owned, to donate to political causes and make venture investments.
"I saw no reason that I couldn't," Bankman-Fried said of borrowing from Alameda.
Prosecutors have sought to show that the funds ultimately came from FTX users.
ALAMEDA COULD USE FTX CREDIT 'TO BUY MUFFINS'
Bankman-Fried said FTX users, including Alameda, could borrow money as long their assets outweighed their liabilities.
"We didn't care if a user withdrew funds and used them to buy muffins, to pay business expenses, to invest or anything else," Bankman-Fried testified.
'NERDY' COLLEGE LIFE
Bankman-Fried sought to push back on what his lawyers have characterized as the prosecution's portrayal of him as a "cartoon" villain.
He described playing "lots of board games" when he lived in an alcohol-free, "nerdy" fraternity house at the Massachusetts Institute of Technology, where he graduated with a physics degree in 2014.
HAIRCUTS NOT A PRIORITY
Bankman-Fried, who was known for his unkempt, curly locks before opting for a more clean-cut look at trial, said on Friday he had been too "busy and lazy" to get regular haircuts.
(Reporting by Jody Godoy and Luc Cohen in New York; Editing by Noeleen Walder and Will Dunham)
|
Crypto Trading & Speculation
|
Get jet-set to go with gear from movies like Barbie, which has an arsenal of pink merch to live your best Barbiecore life, and Jurassic Park, which is celebrating 30 years with ‘90s-inspired fashion and travel accessories you can roll with. Here are current releases from retailers like BoxLunch, RSVLTS, and ShopDisney that have us excited to flaunt our fandom love.
Advertisement
Advertisement
Batman ‘89 x WBshop
Advertisement
Star Wars x DIFF Eyewear
Advertisement
Teenage Mutant Ninja Turtles x RSVLTS
Advertisement
Teenage Mutant Ninja Turtles x RSVLTS
Advertisement
Teenage Mutant Ninja Turtles x RSVLTS
Advertisement
Sailor Moon x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Barbie x BoxLunch
Advertisement
Jurassic Park x BoxLunch
Advertisement
Disney100
Advertisement
Disney100
Advertisement
Cool Fans
A godsend in the heat. Find it at Target.
Advertisement
Spider-Man x CASETiFY
Advertisement
Spider-Man x CASETiFY
Advertisement
Spider-Man x CASETiFY
Advertisement
Spider-Man x CASETiFY
Advertisement
Barbie x PacSun
Advertisement
Barbie x PacSun
Advertisement
Barbie x Truly Skincare
Advertisement
Jurassic Park 30th Anniversary Collection
Advertisement
Jurassic Park 30th Anniversary Collection
Advertisement
Jurassic Park 30th Anniversary Collection
Advertisement
Jurassic Park 30th Anniversary Collection
Advertisement
Jurassic Park 30th Anniversary Collection
Advertisement
Star Wars x Igloo
Advertisement
Comic-Con and Theme Park Hydration Essential
Advertisement
Marvel x Corkcicle
Advertisement
The Matrix x Corkcicle
Advertisement
Disney x Corkcicle
Advertisement
Disney x Corkcicle
Advertisement
Star Wars x Heroes & Villains
Advertisement
Star Wars x Heroes & Villains
Advertisement
Ghost Spider x Heroes & Villains
Advertisement
Dungeons & Dragons x Heroes & Villains
Advertisement
Barbie Canada Pooch x Petco
Advertisement
Barbie Canada Pooch x Petco
Advertisement
Barbie Canada Pooch x Petco
Advertisement
Barbie Canada Pooch x Petco
Advertisement
Barbie x Rue21
Advertisement
|
Consumer & Retail
|
PORTLAND, Maine -- Most Maine workers will get up to 12 weeks of paid time off for family or medical reasons as part of a supplemental budget Democratic Gov. Janet Mills signed into law on Tuesday.
The spending bill included $25 million in startup costs for the state program which allows workers — starting in 2026 — to receive paid leave to deal with illness, to care for a relative, or for the birth of a child.
Maine joins a dozen other states that have paid family and medical leave programs. The focus of legislation has been at the state level after failure to gain traction in Congress.
The program caught the attention of the White House, where press secretary Karine Jean-Pierre applauded the state’s action.
“Paid family and medical leave improves the lives of working families and strengthens our workforce and economy,” she said, adding that the Biden administration has worked to make the federal government a model by supporting federal workers in accessing needed leave.
Putting it in personal terms, Mills said that she deeply understood the need for the program — having dealt with the loss of a husband following a debilitating stroke, the realities of raising fives stepdaughters on her own and caring for her own aging parents, all while working full time.
“I know firsthand the challenges of providing care to loved ones while trying to manage all the unexpected ups and downs that are simply facts of life," she previously wrote in a newspaper op-ed.
The Democratic-led Legislature already approved a nearly $10 billion essential services budget that went into effect on July 1. That budget was approved along party lines in March, Democrats said, to prevent any late partisan attempt to use a government shutdown as a bargaining tactic.
The budgetary addendum, about $445 million dealing with extras, likely won't go into effect until late October because it failed to muster a two-thirds majority in the Legislature it would've needed to go into effect immediately.
It includes language to start the paid leave program that will be funded through a payroll tax split between workers and employers and capped at 1% of wages. Qualifying conditions include the birth or adoption of a child, a serious illness, care for a sick relative or transition from military deployment.
Businesses with fewer than 15 employees are not required to make employer contributions to the program. Companies that already offer comparable benefits can just stick with their current plans.
Key to support were several tax-related proposals including one that raised the amount of pension income that’s exempt from state income taxes from $30,000 to $35,000. Lawmakers also included money to double the pay of childcare workers, as well as funding for the governor’s proposed Dirigo Business Tax Incentive Plan, which would replace the existing Pine Tree Development Zones.
The governor initially balked at the paid leave proposal, which was opposed by the Maine State Chamber of Commerce and others in the business community, but the bill was tweaked to win her support.
“I am over the moon,” said state Sen. Mattie Daughtry, D-Brunswick, after taking a congratulatory call from the White House and attending the signing ceremony. She sponsored the bill with Rep. Kristen Cloutier, D-Lewiston.
Together, the essential services budget and supplemental budget takes spending to historic levels — about $10.3 billion — but it remains balanced and the state's rainy day fund remains at a record-high level, said Kirsten Figueroa, commissioner for the Department of Administrative and Financial Services.
___
Associated Press writer Zeke Miller in Washington, D.C., contributed to this report.
|
Workforce / Labor
|
Prices for these items rose and fell the most in June
Inflation fell to an annual rate of 3 percent in June, according to data released Wednesday by the Labor Department, giving consumers more breathing room after nearly two years of high prices.
The latest rate is still shy of the Federal Reserve’s 2-percent target. A series of aggressive interest rate hikes by the Fed has helped cool price increases across the U.S. economy over the past 12 months.
“The Central Bank has been on a campaign to rein in inflation for nearly a year and a half, pausing a beat last month to let things simmer. They’ve signaled two more rate increases before the end of the year, but this clear sign of slowed growth could be fodder for ending hikes sooner,” NerdWallet data analyst Elizabeth Renter said in a note on the latest consumer price index.
The price of these items are among those that rose and fell the most from May to June 2023.
Housing costs are driving inflation
Rising rents and housing costs was the main contributor to price growth in June, making up more than 70 percent of the total increase in inflation. Shelter prices are up 7.8 percent on the year and 0.4 percent last month alone.
Inflation metrics are still catching up to massive spike in rents and housing prices seen in the wake of the pandemic. While rents and home prices have stablized or even dropped in many regions of the country, housing costs are still far higher than many families can handle.
Airline fares and egg prices see biggest drop
The price of communication, used cars and trucks, and household furnishings and operations notably decreased in June, according to the Labor Department.
Airline fares dropped 8.1 percent last month, the biggest decrease among expenditures tracked. Fares fell 18.9 percent from June 2022, in part due to the decrease in the cost of fuel.
The price of fuel oil, which spiked after the Russian invasion of Ukraine drove up global energy and fuel prices, has dropped 36.6 percent since June 2022. Prices for fuel oil dropped 0.4 percent in June.
Egg prices also dropped precipitously. The price of eggs, which fell nearly 14 percent in May, decreased by an additional 7.3 percent in June, according to the latest Labor Department data.
Several factors contributed to sky-high egg prices in recent months, including an avian flu outbreak that spread among chickens in 2022, reducing the overall egg supply.
Sports tickets, fruit and musical instruments on the rise
Admission to sporting events rose 5.5 percent from May to June, the largest month-to-month increase among expenditures tracked by the Labor Department. Admissions were up 2.5 percent overall, with admission to movies, theaters and concerts rising 0.5 percent.
The price of fruits — excluding apples, bananas and citrus fruits — jumped 4.7 percent last month. Tomatoes, categorized as a vegetable by the Labor Department even though they have characteristics of fruit, rose 2.5 percent.
Musical instruments and accessories increased by 2.7 percent. Notably, the price of musical instruments and accessories is up 10.2 percent from June 2022.
Intercity transportation also rose by 2.7 percent in June, even as the cost of public transportation is overall down by 6.8 percent.
The cost of motor vehicle insurance, apparel, recreation and personal care drove consumer price increases in June, according to the Labor Department.
Excluding food and energy, prices rose 4.8 percent over a 12 month period and 0.2 percent in June, the smallest monthly increase since August 2021.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
Inflation
|
SEBI Simplifies Norms And Lists Procedure To Access Unclaimed Amounts In REITs, InvITs
Investors can now access up-to-date information about any unpaid distributions through their REIT and InvIT websites.
The Securities and Exchange Board of India notified a framework that allows unitholders of real estate investment trusts and infrastructure investment trusts to easily access any unclaimed amounts lying with the trust or, consequently, transferred to the Investor Protection and Education Fund.
Investors can directly approach the trust to claim such amounts, as per the new framework announced on Wednesday. This will allow investors to make their claims in a streamlined manner with minimum disruptions and is pursuant to amendments approved by the regulator in its September board meeting.
According to the framework, it shall be the duty of the manager of the trust to transfer any amount remaining unpaid to the investor to an Escrow account set up for this purpose with a scheduled commercial bank. The amount should be transferred within seven working days from the expiration of the period within which it was supposed to be paid.
A payment is supposed to be made to the investor within 15 days of the declaration of distribution. Once transferred, investors can claim the amounts as per the internal policy of the trust. It shall be the duty of the manager of the trust to formulate policies and process such claims.
Additionally, they must also appoint a nodal officer to serve as the point of contact for investors, exchanges, and other market infrastructure institutions. The person can be either a director, chief financial officer, company Secretary or compliance officer of the manager.
They should also provide details of any unpaid amount on the website and must also provide a search facility that will allow investors to verify such an amount. The information should be updated monthly, it said.
If the amount remains unclaimed for a period of seven years, the amount, along with any interest, shall be transferred to the IPEF account along with all information on unpaid amounts.
The trust should continue to display information as to the unclaimed amounts and any money transferred to the fund. It should also approach the fund about discharging any such amounts on behalf of any investor. Once a claim is verified, the fund will refund the amount to the concerned investor.
The framework will come into effect on March 1, 2024.
|
Real Estate & Housing
|
A mountain of discarded clothes in Chile has become so large it can be seen from space.
The red-rocked desert of Chile's Atacama plateau has become a dumping ground for the West's used and faulty fashion items in recent years, with everything from ski boots to Christmas sweaters ending up in landfill in the area.
The growing and increasingly toxic pile of discarded clothes reflects the leftovers of the roughly 59,000 tons of used and unsold clothing that arrives at Chile's Iquique port each year from Europe, Asia and the United States.
Whatever can't be sold across South America stays here, as it slowly decays.
These images were obtained by SkyFi, a consumer app that sees its mission as 'democratizing space' by making access to satellite imagery and technology more readily available to anyone.
'The satellite image that we ordered of the clothes pile in Chile's Atacama Desert really puts things into perspective,' a spokesperson for SkyFi said.
'The size of the pile and the pollution it's causing is visible from space, making it clear that there is a need for change in the fashion industry.'
Many of the clothing items made with synthetic fabrics, or treated with chemicals, will take as long as 200 years to biodegrade — leaving toxins in their wake like carcinogenic Azo dyes and Phthalates ued in faux leather, linked to ADHD, asthma, and diabetes.
SkyFi said that they were able to locate the dumpsite's geocoordinates with the help of activists on the communication platform, Discord.
America and the rest of the developed world's addiction to fast-fashion has escalated into a growing hundred-billion-dollar industry, according to a report by The Business Research Company.
The market size for shoddily made, briefly on-trend clothing has continued to increase from $106.42 billion to $122.98 billion in 2023, based on the market research firm's analysis.
While news media accounts of the clothing industry's rampant and fickle obsessions are often reflecting in exposes on child labor or slave wages in countries like China or Bangladesh, the end-of-cycle damage to the natural world has only recently garnered more attention.
Through northern Chile's Iquique port, the South American nation has become a hub for second-hand and unsold clothing resold across Latin America.
While merchants from Chile's capital city of Santiago buy some of the tens of thousands of tons of discarded clothes as it pours in from the developed world, at least 39,000 tons of truly unwanted items end up in the Atacama each year.
'This clothing arrives from all over the world,' Alex Carreno, an ex-employee Iquique's import area, told news agency AFP in 2021.
'What is not sold to Santiago nor sent to other countries stays in the free zone,' Carreno said, because no one wants to shoulder the sitff tariff costs required just to haul the clothes someplace else.
|
Consumer & Retail
|
It can pay to be a responsible rental property owner. For instance, if you’re always investing in your rental property and making improvements, not only will your tenants appreciate it and remain tenants longer, you can get a depreciation deduction on your taxes. Unfortunately, upon selling the property, depreciation sometimes becomes a migraine for landlords in the form of a depreciation recapture tax. You have options, however, to avoid depreciation recapture tax. Here’s how.
If you need help with taxes, a financial advisor can help you create a tax strategy.
What Is a Depreciation Recapture Tax?
The depreciation recapture tax is the difference between a rental property’s sale value and its depreciated value. This is extra income that will be taxed on your next tax return, after selling the property.
In other words, the Internal Revenue Service is “recapturing” what they see as lost taxable income. This is a tax that the IRS collects, assuming that one has sold the property for a profit. And also assuming that it has received a depreciation deduction over the years.
How to Avoid Depreciation Tax on Rental Property
If it’s important to you to avoid the depreciation recapture tax, there are several strategies you may want to adopt.
Take advantage of IRS Section 121 exclusion. This allows you to exclude up to $250,000 of the profits from the sale of your primary residence if you’re single and up to $500,000 if you’re married and filing jointly. If you live in your property for two out of the five years before you sell the property (and those years need not be consecutive), the property would be considered your primary residence. And all of those years of depreciation deductions would be forgotten.
Conduct a 1031 exchange. This is a strategy that allows you to defer paying capital gains tax on the sale of an investment property – provided you use the revenue earned to purchase another similar property. There are a lot of onerous rules to follow to profit from this strategy, but it may be worth investigating and discussing with a financial advisor.
Pass on the property to your heirs. When your children or grandchildren someday sell the property, they will not inherit a deferred depreciation recapture tax or a capital gains tax. They may create their own tax issues, of course, if they rent out the property themselves.
Sell the property at a loss. That may not be appealing, but it is a way to avoid the depreciation tax on a rental property.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Why Land Isn’t Considered a Depreciable Asset
The IRS’s policy is that a depreciation recapture tax affects doesn’t affect your land but only the property, like a house or building. Those often will go down in value unless it is maintained and improved.
In other words, the IRS treats rental property like any other business asset. That can include items like a delivery van or a desktop computer. For a residential building, the IRS allows a property owner to depreciate it over 27.5 years.
To calculate how much you can deduct each year, you divide your property’s cost basis by the useful life of the asset to get the annual amount of depreciation.
(Incidentally, that 27.5 is the federal government’s number; if you’re working out the depreciation recapture tax for your state’s taxes, you may be working with another number.)
Example of Depreciation Recapture Tax
Let’s say that you purchased a house for $300,000, and then you had tenants living there for a decade. After that, you decide to sell the property. Divided by 27.5, a rental property owner could take a depreciation deduction of $10,909 a year. (That’s $300,000 divided by 27.5.) And then 10 years later, if they sell their property for $500,000, they may have taken $109,090 in depreciation deductions.
In this case, the IRS would tax the remaining $390,910 ($500,000 minus $109,909) at a short-term or long-term capital gains rate. And that rate is anywhere from 0% to 37%.
(The percentage the rental owner receives depends on factors such as the property owner’s income and tax bracket and how long they’ve owned the property.)
The total depreciation deductions ($109,090) will be taxed at a recapture rate that can go as high as 25%.
Sometimes the deprecation recapture tax can cause a tax bill to be much higher than a property owner expected. And that’s when some people look for an escape hatch that can reduce their tax bill. Fortunately, there are some options.
The Bottom Line
For some property owners, the deprecation recapture tax will likely not cause a lot of headaches. But it may be for others, especially those in high tax brackets with valuable assets and a lot of depreciation deductions. However, before you make any rash decisions about selling your property or leaving it to your beneficiaries, it would be a good idea to discuss your next move with either a financial advisor a licensed tax professional, or both.
Tips for Calculating Your Taxes
Whether you need help with retirement planning, estate planning, tax planning or investment portfolio organization, a vetted financial advisor can help. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you don’t know whether you’re better off with the standard deduction versus itemized, you might want to read up on it and do some math. You might find that you’d save a significant amount of money one way or another. So it’s best to educate yourself before the tax return deadline.
Photo credit: ©iStock.com/Feverpitched, ©iStock.com/RapidEye, ©iStock.com/William_Potter
|
Real Estate & Housing
|
BEIJING, Oct 16 (Reuters) - Here are some initial reactions to President Xi Jinping's speech on Sunday opening the 20th congress of China's ruling Communist Party, a week-long event where he is widely expected to win a third leadership term and cement his place as the country's most powerful ruler since Mao Zedong.JOHN DELURY, PROFESSOR OF CHINESE STUDIES, YONSEI UNIVERSITY GRADUATE SCHOOL OF INTERNATIONAL STUDIES, SEOUL"While Xi's tone was unapologetic, the speech came across as less expansive than five years ago (and thankfully much shorter). Instead of confidently entering his guaranteed second term, Xi at this Congress is entering uncharted waters of a paramount rule with no set time limit."Given the economic and social strain caused by sticking to an increasingly unpopular COVID zero policy, Xi's speech might sound defensive to many Chinese citizens, insisting that the Party has their best interests in mind. The central concept of the speech seemed to be 'security', a word Xi used in myriad ways to justify not only his approach to foreign policy, but also the economy and public health.Register now for FREE unlimited access to Reuters.com"Mao Zedong promised to make people revolutionaries. Deng Xiaoping promised to make them rich. Xi is promising to keep them safe."ALFRED WU, ASSOCIATE PROFESSOR, LEE KUAN YEW SCHOOL OF PUBLIC POLICY, NATIONAL UNIVERSITY OF SINGAPORE"It is obvious that security is Xi's greatest concern. His narrative is - China faces many dangers, the country is in a war-like state, figuratively, and he is the saviour. With this narrative, he can get people to unite around him."In the past, Chinese leaders based their legitimacy on their ability to provide economic growth. Now with the economy slowing, Xi tries to shift the basis of legitimacy from economic growth to security - that he can be the one who saves and protects China."ZHIWU CHEN, PROFESSOR OF FINANCE, UNIVERSITY OF HONG KONG"One significant change is to de-emphasise economic development and economic reform."From the 14th to the 19th Party Congress, economic development was, each time, explicitly stated as the central mission for the Party, whereas this time there is no such mention; instead, the emphasis is on 'complete' and 'all-rounded' development. That is, it is not just economic development but also political, social, environmental, and cultural development that the Party will devote efforts to."BATES GILL, PROFESSOR, DEPARTMENT OF SECURITY STUDIES AND CRIMINOLOGY, MACQUARIE UNIVERSITY, SYDNEY"This speech said 'continuity' and full speed ahead. Seemed to be very little indication of adjustment to policy, even though the domestic economy and international relationships face increasing headwinds."But this was not intended as a policy speech. This was about lauding past accomplishments, exuding confidence in the Party and its chosen path, and exhorting its membership to press forward even harder. It was about extolling the Party and, by definition, his leadership, as he breaks recent precedent and looks to stay in power indefinitely.”CHARLES PARTON, FELLOW, COUNCIL OF GEOSTRATEGY, LONDON"This year's report is shorter and is very general, with no specifics in terms of policy. That would come later ... Innovation and education have always been at the top of Xi Jinping's mind, but the emphasis seems to be even greater in this report. Particularly in light of the United States' measures to limit science and technology cooperation with China, it has become a lot more important for China to produce its own science and technology."SCOTT KENNEDY, SENIOR ADVISER AND TRUSTEE CHAIR IN CHINESE BUSINESS AND ECONOMICS, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES, WASHINGTON"Xi gave an unapologetic defense of the Chinese Communist Party's current approach to everything, domestic and international ... The most significant theme was his emphasis on developing a unique 'Chinese style' to many elements of public affairs, from modernization to diplomacy to socialism."Xi wants the CCP, China and the international system to go in a very different direction than that laid out by the United States and the West over the last century."JA IAN CHONG, ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, NATIONAL UNIVERSITY OF SINGAPORE"I think the fact that nothing really new stood out is also remarkable in the sense that it fits with this idea that while there is this unstable and dangerous world outside that Xi talks about, he wants to portray China and his leadership as one that is stable."I did notice the uptake in the discussion of security, which is not surprising because on several fronts, China has much more to be concerned about today than five years ago."First, the competition with the U.S. has got more intense, then there is the uncertainty surrounding the war in Ukraine and Xi’s support for Putin. The world today looks more contentious than the world five years ago, with COVID, too, there are issues with supply chains that dovetail with U.S. efforts to limit Chinese access to technology so on the security side China has a lot more to worry about today than five years ago."Register now for FREE unlimited access to Reuters.comReporting by Martin Quin Pollard, Eduardo Baptista, Kevin Yao and Yew Lun Tian in Beijing, Ben Blanchard in Taipei, Xie Yu in Hong Kong; Editing by Tom HogueOur Standards: The Thomson Reuters Trust Principles.
|
Asia Business & Economics
|
Contributing after-tax dollars to a 401(k) might appeal to you if you’d like to be able to withdraw funds tax-free in retirement. Should you decide to leave your job you might be wondering if it’s possible to roll over an after-tax 401(k) to a Roth IRA. The good news? Yes, you can do a rollover of after-tax 401(k) money to a Roth account if you’re following IRS rules. Talking to a financial advisor can help you decide if it makes sense to roll over after-tax 401(k) funds to a Roth IRA.
What Are After-Tax 401(k) Contributions?
The IRS distinguishes between four different types of contributions that are allowed with 401(k) plans. After-tax contributions are contributions that employees make from their compensation that must be included in their income when filing a tax return. These contributions are not tax-deductible for the employee.
It’s important to be aware of what type of contributions are involved when rolling money from a 401(k) to a Roth IRA. The other types of 401(k) contributions include:
Elective salary deferrals: These contributions are made using pre-tax dollars from the employee’s compensation. It’s up to the employee to decide how much to contribute, above any minimum amount required by their employer to participate in the plan.
Designated Roth contributions: Designated Roth contributions can be included in an employee’s gross income for tax purposes, but they’re eligible for tax-free distributions in retirement. A 401(k) plan is not required to allow designated Roth contributions, but many plans give employees that option.
Catch-up contributions: Catch-up contributions are amounts that you can contribute to your 401(k), above the regular annual contribution limit. Catch-up contributions are allowed for workers aged 50 and older.
If you’ve made different types of contributions to the same 401(k), that can affect what you’ll need to do when you’re ready to roll funds over.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
What Is a Roth IRA?
A Roth IRA is a tax-advantaged individual retirement account. Roth IRAs are funded with after-tax dollars and qualified withdrawals are tax-free. Unlike a traditional IRA, your contributions are not tax-deductible.
Your ability to contribute to a Roth IRA depends on your income and tax filing status. It doesn’t matter if you’re covered by a retirement plan at work. For 2023, the maximum contribution allowed is $6,500 or $7,500 if you’re aged 50 or older.
Why contribute to a Roth IRA? It could make sense to add money to a Roth IRA if you expect to be in a higher tax bracket when you retire. Being able to take tax-free distributions wouldn’t add to your tax burden when it’s time to file your return.
How to Roll Over After-Tax 401(k) to Roth IRA
Rolling money from an after-tax 401(k) to a Roth IRA allows you to avoid creating taxable income if you’re doing a like-to-like transfer. However, the IRS has certain rules in place that govern rollovers of after-tax dollars into a Roth IRA. Your plan may also impose restrictions on when you can take money out.
Here are the options you might have when completing a rollover.
Roll over the entire amount: The simplest way to complete a rollover from an after-tax 401(k) to a Roth IRA would be to move the entire amount out of your workplace plan.
Roll over a partial amount: If your plan allows for partial withdrawals, you might be able to roll over some of the money in your 401(k) and leave the rest where it is.
Sounds simple enough but there are some special considerations to keep in mind if your plan includes both pre-tax and after-tax contributions.
If you choose the first option, then any after-tax contributions could be rolled into a Roth IRA. However, any pre-tax contributions and earnings would need to be rolled into a traditional IRA. So, you’d have two IRAs to manage going forward and once you get around to taking traditional IRA withdrawals, they’d be subject to your ordinary income tax rate.
What if your plan allows for partial withdrawals? In that scenario, you could roll over some or all of your after-tax contributions to a Roth IRA. Any pre-tax earnings associated with those contributions would still need to go into a traditional IRA under IRS rules.
Avoiding Tax Penalties With a 401(k) to Roth IRA Rollover
The IRS imposes a time limit on how long you have to complete a rollover transaction. If you’re withdrawing pre-tax contributions or earnings from a 401(k), with the intention of re-depositing the funds into an IRA, you have 60 days to do it.
If you miss the 60-day window, however, the IRS can treat the entire distribution as a taxable event. The simplest way to avoid that scenario is to request a direct rollover. With a direct rollover, your plan administrator handles the movement of funds between your 401(k) and IRA.
Keep in mind that you’ll need to open a Roth IRA if you don’t have one already. You’ll also need a traditional IRA if your rollover involves the transfer of pre-tax funds. Your financial advisor can help you find the right brokerage for opening a new IRA if you don’t have one already.
Do You Have to Roll Over 401(k) Money?
A 401(k) to Roth IRA rollover is optional, rather than mandatory. If you’re not ready to roll your retirement savings to a Roth IRA just yet, you have a few other options:
Roll the money to your new employer’s plan
Roll your savings over to a traditional IRA instead
Leave it where it is
Withdraw it
Rolling funds into your new employer’s plan may be preferable if you’d like to continue making 401(k) contributions and you’d like all of your savings in one place. On the other hand, you might decide to leave your plan where it is if you’re happy with the investment choices offered and the fees that you’re paying.
Rolling after-tax 401(k) contributions to a traditional IRA can have long-term tax consequences since withdrawals would be taxable later. However, the tax impact may be less than what you’d pay if you were to withdraw all of the money. In that case, you’d owe income tax on the withdrawal and a 10% early withdrawal penalty if you’re under age 59 ½.
The Bottom Line
Completing a rollover of after-tax 401(k) money to a Roth IRA could be a good move if you’re expecting to be in a higher tax bracket at retirement. Before making a move, it’s a good idea to get familiar with the rules for where pre-tax contributions, after-tax contributions and earnings need to go in order to avoid breaking any IRS rules.
Retirement Planning Tips
Consider talking to a financial advisor about how to handle a rollover from an after-tax 401(k) to a Roth IRA. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you need to open a new Roth IRA, it’s helpful to know what options you have. Your bank might offer Roth accounts, but you could also compare different brokerages to see what’s available. When researching Roth IRAs, consider the range of investments offered and the fees you might pay.
Photo credit: ©iStock.com/hobo_018, ©iStock.com/SrdjanPav, ©iStock.com/wutwhanfoto
The post How to Convert After-Tax Dollars From 401(k) to IRA appeared first on SmartAsset Blog.
|
Personal Finance & Financial Education
|
More Than 1 in 10 People Who Recently Lost a Job Started Their Own Business. Should You?
KEY POINTS
- Starting a business could be a rewarding opportunity, but you need to be ready financially.
- It helps to go in with savings and a solid game plan rather than wing it.
Although the U.S. labor market had a pretty solid 2022 and has remained fairly healthy in 2023, layoffs have still come into play. In fact, data from BizReport reveals that roughly 200,000 jobs were lost due to layoffs in 2022 and 2023. And for every 100 people who lost their jobs during that time, 13 started their own companies.
But should you start a small business after losing your job? You may be tempted to, but it's really important to go in prepared. So ask yourself these key questions before venturing out on your own in response to a layoff.
1. Do I have a decent chunk of money in savings?
It can take many months, if not years, for a new business to become profitable. And you'll need a way to pay your bills while you build your business up. That's why it's best to start a new business at a time when you have plenty of money in your savings account.
In fact, you may even want to tell yourself that you won't start a business until you have enough cash in the bank to cover a full year of essential living expenses. The last thing you want is to take on personal debt in the course of making a career pivot and venturing out on your own.
2. Am I really ready to be my own boss?
It's nice not having to take orders from other people. But to run a business, you need to be focused, disciplined, and willing to put in the time. And you may not be in that place. If that's the case, you're probably better off applying to work for someone else who will be tasked with running the company.
Let's say that in addition to having lost your job, you're going through some life changes. Maybe you recently had a baby or are dealing with an aging parent's health issues. These are perfectly good reasons to decide that it's not the right time to open a business you have to oversee every aspect of.
3. Do I have an actual business plan?
You may be interested in the idea of running your own company. But have you thought about what that will actually look like?
How will you sell and market your product or service? Where will your business be located? How much help will you need? And how will you pay to get your company up and running?
These are all questions you must have answers to before starting a business. If you're not at the point of having thought them through, then you may, at the very least, want to apply for some sort of temporary position while you iron out the details.
Starting a business could be a rewarding experience, and it's natural to consider doing so in the wake of a layoff. But before you dive in, ask yourself whether you're really in the right place logistically and financially. You may come to the realization that it's not the right time to start a business, and that waiting is a better choice.
Alert: highest cash back card we've seen now has 0% intro APR until nearly 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.
|
Workforce / Labor
|
In-store music makes supermarket shoppers spend more, but only on weekdays
People who grocery shop Monday to Thursday can expect in-store music to swell their shopping bill by more than 10 percent, according to new research from the University of Bath's School of Management.
With less scrutiny of purchases, people buy more products, treating themselves to additional items, or upgrading the quality of planned purchases.
By Friday, as people head into the weekend, they are already feeling less depleted and consequently music loses its power. People have more time, they feel more relaxed and in turn happier. The way they process information and make decisions on purchases changes, and music no longer impacts on shopping spend.
The traditional Monday to Friday work week is so ingrained in society that the effect is seen even for people on a different work pattern, or retired people.
"During the week people are short of time and many get their grocery shopping done after a full day at work," said Dr. Carl-Philip Ahlbom, from the University's School of Management.
"Pleasant music appears to have a mentally soothing effect which impacts the way people shop. At the weekend people are essentially happier, and so the positive power of music is less noticeable. In fact, playing music at the weekend may even mean people buy less, possibly because it's an additional stressor in an already busy environment."
In the first study to look at the impact of music on sales on different days of the week, the researchers interviewed supermarket industry executives and shoppers to gather information about consumer shopping habits and how they differ throughout the week, combined with field experiments carried out in a Swedish supermarket chain in Stockholm. They tracked purchases from 7am to 11pm, analyzing sales of approximately 150,000 shopping trips.
Playlists were developed by a professional sound design agency that specialize in music for public spaces. A background playlist featured music without vocals, described as elevator music, while a foreground playlist featured songs popular at the time of the study, with vocals. There was no distinction found between the two types of music.
"The research points to a clear uplift in sales, with high returns on the relatively modest investments required to install in-store sound systems (approximately £12,000 per store in the study)," said Professor Jens Nordfält, Co-director of the University's Retail Lab.
"For retailers this could be an attractive investment to boost weekday marketing, but clearly they will need to look to other techniques to match the effect at the weekend, when consumers are feeling more energized and less susceptible to this particular strand of subconscious marketing."
"Understanding how music influences shopping on weekdays and weekends" is published in the Journal of Marketing Research.
More information: Carl-Philip Ahlbom et al, Understanding How Music Influences Shopping on Weekdays and Weekends, Journal of Marketing Research (2022). DOI: 10.1177/00222437221150930
Journal information: Journal of Marketing Research
Provided by University of Bath
|
Consumer & Retail
|
"The staff here are pleasant, polite and helpful," says David Eggleton. "You even get celebrities who come here, so it must be good."
The "here" to which Mr Eggleton refers is neither a luxury shop nor a posh restaurant.
It is High Wycombe's household waste and recycling centre.
And Mr Eggleton, who runs ABC House Clearance, is far from alone in holding this particular civic amenity site in such high regard.
Named this year's Civic Amenity Site of the Year by Let's Recycle, a recent survey by Buckinghamshire Council found the 12-bay centre scored 100% in customer satisfaction. Why?
"It does everything well and ticks all of the boxes," says Mr Eggleton. "I'm in the trade so I use a lot of tips and this one stands out above the rest of them.
"On one occasion actor David Jason was here getting rid of an old printer and everybody rushed over to him to get their pictures taken.
"They even help people if they see people struggling with things, it is a clean site and they work in all weathers. They couldn't be more efficient.
"At other tips, they sometimes won't take furniture if it has got fabric on it and so on - so they won't take office chairs or headboards or the like.
"Here they take it all and what tips need to understand is that, if you do all types of waste, it will reduce the fly-tipping."
Jackie Ward, chief executive at South Bucks Hospice, goes one step further than Mr Eggleton.
"I do love the recycling centre," she says, "I think it is a really good site.
"I've lived in Wycombe all my life and this site has developed massively over the years. It is so efficient now and the staff are really lovely and helpful."
Unusually for a household waste and recycling centre, the High Wycombe site has a hospice shop within its grounds.
Members of the public bring useable items they no longer need to be resold to raise money for the community hospice, which employs about 20 staff, sees about 600 patients each year and runs a lymphedema clinic.
The shop here is managed by Gary Pritchard.
"The stuff that people are ready to throw away can be unbelievable," Mr Pritchard says.
More unusual items on display include a church pew complete with knee pads, a set of skis and an old (thankfully empty) military explosives box.
At the moment, the shop is seeing an influx of gardening items, including lawn mowers, furniture and pots.
"They come and go like hot cakes," Mr Pritchard says. "We need these types of sites all over the country."
Some wonder whether the reuse shop is almost too popular, with some visitors known to return up to three times a day and lay in wait for items to be delivered.
Mr Pritchard says he has occasionally has to ask such people to keep visits to a maximum of twice daily.
Brian Pearce is visiting the centre to drop off green waste and metal items and offer an old ammunition box to the hospice shop.
"It is easy to get to," he says. "Twenty years ago we had problems with the recycling of green waste - it was awful, the whole area smelled terribly. They've sorted that, you can't smell anything here now.
"The staff are very friendly and very good."
Nobody the BBC spoke with at the site raised any criticisms or concerns about the operations here.
Such praise and attention, though welcome, leaves the site's team leader and machine operator Matt Hodgson a little bemused.
"It is a good feeling," he says in response to some of the compliments paid to him and his seven-strong team.
"We all get on and we've got a good team here."
Mr Hodgson, who has worked at the centre for nearly 12 years, says putting on a smile can be a challenge at the centre's busiest times and in the depths of winter.
But they are helped along, he says, by the various regulars - particularly tradespeople - who "are friendly and like to have a little chat".
Is there a recipe for a "good" waste and recycling centre? Jilly Jordan, the council's deputy cabinet member for environment, thinks there is.
"Waste and recycling centres used to be horrible places," she says.
Making a good one, she says, starts with placement.
The numbers
- In 2022, the High Wycombe site, managed by FCC Environment, diverted 114 tonnes of waste items to the hospice shop
- The most complained about issue in the recent customer survey, completed by 2,325 visitors, concerned road signs to the the county's recycling centres - 2% said they were "not satisfied"
- Buckinghamshire's 10 waste and recycling centres deal with about 43,000 tonnes of waste each year
- About 66% of all waste delivered at the High Wycombe centre was recycled last year
Set on the outskirts of High Wycombe, the centre is almost hidden by the tall trees that surround it on three sides. Despite being on the periphery, 66% of visitors say they can reach the centre within 10 minutes.
"The staff here are amazingly friendly and care about what they do," says Ms Jordan. "There's a rhythm here and it all just works."
Asked whether she loves this particular centre, Ms Jordan's political savvy comes into play.
"Maybe love is not quite the right word. We certainly take great pride in this centre.
"They have got it right here and this is an ideal place to come for anybody wanting to know how to get a job done and get it done well."
|
Nonprofit, Charities, & Fundraising
|
End of Year Stats
Close to 3 million emergency food parcels were distributed by food banks in the Trussell Trust network in the past 12 months — the most parcels ever distributed by the network in a year.
Food banks in the Trussell Trust network saw the highest ever levels of need, even more than during the peak of the pandemic, as more people found their incomes did not cover the cost of essentials like heating and food. Between April 2022 and March 2023, the number of people that used a food bank for the first time was 760,000.
December 2022 was the busiest month on record for food banks in the Trussell Trust network, with a food parcel being distributed every 8 seconds.
2,986,203
emergency food parcels
37%
increase from the same period in 2021/22
1 million
emergency food parcels provided for children
Between 1 April 2022 and 31 March 2023, food banks in the Trussell Trust’s UK wide network distributed close to 3 million emergency food parcels to people facing hardship – this is an increase of 37% from the same period last year. More than one million of these parcels were distributed for children.
It’s time to guarantee our essentials
While the pandemic and cost of living crisis have had a major impact on food bank need, they are not the main cause. Rather, they have exposed and exacerbated a longer-term crisis: that of a weakened social security system that is unable to protect people from the most severe forms of hardship, thereby forcing more people to the doors of food banks.
Rising food bank need demonstrates more and more people are going without the essentials – we’re calling on the UK government to enshrine in law the amount needed to cover bills and essential items.
“These new statistics are extremely concerning and show that an increasing number of people are left with no option but to turn to charitable, volunteer-run organisations to get by and this is not right. The continued increase in parcel numbers over the last five years indicates that it is ongoing low levels of income and a social security system that isn’t fit for purpose that are forcing more people to access food banks, rather than just the recent cost of living crisis or the COVID-19 pandemic.
Food banks were set up to provide short-term support to people in an emergency, they are not a lasting solution to hunger and poverty, and more than three quarters of the UK population agree with us that they should not need to exist.
The staff and volunteers in our network are working tirelessly to ensure help continues to be available, but the current situation is not one they can solve alone.
For too long people have been going without because social security payments are not based on a real reflection of life’s costs and people are being pushed deeper into hardship as a result. If we are to stop this continued growth and end the need for food banks then the UK government must ensure that the standard allowance of Universal Credit is always enough to cover essential costs.”
Emma Revie
Chief Executive
Factsheets
Read our factsheets for a detailed breakdown of what this year’s statistics are telling us at a UK level and the findings for Northern Ireland, Scotland, and Wales.
Food bank Statistics for previous Financial Years with Regional Breakdown
|TOTAL||2017/18||2018/19||2019/20||2020/21||2021/22||2022/23|
|United Kingdom||1,354,362||1,606,794||1,909,388||2,579,292||2,183,625||2,986,203|
|England||1,046,776||1,236,153||1,489,537||2,128,471||1,789,656||2,460,055|
|Scotland||173,531||217,055||238,597||224,624||199,676||259,744|
|Wales||100,362||116,325||136,115||146,757||131,663||185,320|
|Northern Ireland||33,693||37,261||45,139||79,440||62,630||81,084|
|East Midlands||67,078||78,229||101,788||138,775||128,754||172,680|
|East of England||127,027||152,678||190,145||245,331||224,413||324,477|
|London||137,248||167,726||204,362||423,294||284,687||384,477|
|North East||65,177||89,479||98,520||124,494||100,334||154,403|
|North West||198,825||225,198||254,221||313,817||253,084||347,976|
|South East||128,488||155,697||199,519||305,182||259,363||349,400|
|South West||122,383||133,983||163,244||202,350||174,950||247,850|
|West Midlands||121,048||142,917||169,143||226,512||207,863||278,230|
|Yorkshire and The Humber||79,502||90,246||108,595||148,716||156,208||200,562|
|ADULTS||2017/18||2018/19||2019/20||2020/21||2021/22||2022/23|
|United Kingdom||862,563||1,021,083||1,185,237||1,583,470||1,347,746||1,846,650|
|England||660,808||779,092||917,179||1,296,501||1,100,260||1,513,487|
|Scotland||117,545||145,607||157,545||146,621||128,699||171,776|
|Wales||64,341||74,480||84,353||92,216||83,005||115,637|
|Northern Ireland||19,869||21,904||26,160||48,132||35,782||45,750|
|East Midlands||42,436||48,956||62,503||84,700||81,696||107,516|
|East of England||78,717||93,669||113,858||142,980||132,107||192,995|
|London||88,534||107,537||129,417||263,663||178,128||238,902|
|North East||41,369||56,202||62,037||78,334||63,350||95,452|
|North West||123,574||141,217||153,835||193,024||155,372||213,707|
|South East||80,448||98,124||120,729||182,041||156,257||211,528|
|South West||77,109||84,197||100,398||122,645||107,476||153,629|
|West Midlands||77,415||91,680||106,888||138,135||130,554||174,338|
|Yorkshire and The Humber||51,206||57,510||67,514||90,979||95,320||125,420|
|CHILDREN||2017/18||2018/19||2019/20||2020/21||2021/22||2022/23|
|UnitedKingdom||491,799||585,711||724,151||995,822||835,879||1,139,553|
|England||385,968||457,061||572,358||831,970||689,396||946,568|
|Scotland||55,986||71,448||81,052||78,003||70,977||87,968|
|Wales||36,021||41,845||51,762||54,541||48,658||69,683|
|Northern Ireland||13,824||15,357||18,979||31,308||26,848||35,334|
|East Midlands||24,642||29,273||39,285||54,075||47,058||65,164|
|East of England||48,310||59,009||76,287||102,351||92,306||131,482|
|London||48,714||60,189||74,945||159,631||106,559||145,575|
|North East||23,808||33,277||36,483||46,160||36,984||58,951|
|North West||75,251||83,981||100,386||120,793||97,712||134,269|
|South East||48,040||57,573||78,790||123,141||103,106||137,872|
|South West||45,274||49,786||62,846||79,705||67,474||94,221|
|West Midlands||43,633||51,237||62,255||88,377||77,309||103,892|
|Yorkshire and The Humber||28,296||32,736||41,081||57,737||60,888||75,142|
What do these stats show?
Every year we release statistics about the number of emergency food parcels food banks in our network have provided to people. We release figures for the first six months of the financial year in November, and for the full financial year at the end of April. These figures cover 1 April 2022 to 31 March 2023.
Our statistics are a measure of volume rather than unique users. The data is collected using an online system into which food banks enter data from each food bank voucher, and the number of emergency food supplies is recorded.
For example, if a family of three were referred to a food bank twice in one year, this would count as six supplies on the system because it would reflect six instances of a supply going to someone in the household. However, if a family of three were only referred to a food bank once, this would count as three supplies.
Figures from the Trussell Trust cannot be used to full explain the scale of food bank use across the UK, because our figures relate to food banks in our network and not to the hundreds of independent food aid providers and community groups also providing emergency food, which have increased in number through the pandemic. There are more than 1300 food bank centres in the Trussell Trust’s UK-wide network. The Independent Food Aid Network has identified at least 1,172 independent food banks, while there are also Salvation Army food banks as well as food banks run from schools and hospitals. There are also thousands of food of other food aid providers including soup kitchens and social supermarkets.
|
Inflation
|
Kwasi Kwarteng has admitted that he has a tracker mortgage for which the payments have risen “a great deal” as a result of the economic turmoil after his mini-budget.
In an interview with GB News, the former chancellor was asked whether he felt any sympathy for those affected by the rise in mortgage rates, before letting on that he was among them.
“I’m probably revealing too much, but I’m on a tracker as well,” he said. “My bills have gone up considerably.”
Last September, Kwarteng announced a slew of unfunded tax cuts that led to a loss of market confidence in the British economy, causing the pound to slump and the cost of borrowing to rise significantly. He was sacked after 38 days in the role, and Liz Truss was forced out as prime minister soon after.
But Kwarteng’s woes have not ended there. With the Bank of England steadily putting up interest rates over the past year to curb inflation, he is one of the 1.4 million people with mortgages that track the base rate. First-time buyers and those renegotiating after a fixed-term deal has ended have also been affected by the rise in interest rates.
Asked whether he had been “screwed by his own budget” by the presenter Camilla Tominey, Kwarteng said the Bank was responsible.
“The Bank of England was in charge of inflation, and my tracker rate and other people’s tracker rates will be linked to the Bank rates, and whatever margin you have to pay,” he said.
“And the reason why interest rates have gone up so high is because we’ve totally missed the goal on inflation. We’ve misjudged inflation.”
Pressed on the amount by which his payments had increased, Kwarteng said: “A lot. I’m not going to reveal [exactly how much]. A great deal. We bought the house in 2021. It’s gone up quite a bit since then and I’m as exposed to interest rates as anyone else.”
In October 2022, the Bank’s governor, Andrew Bailey, took emergency action to quell rising bond yields by buying long-dated UK government bonds, which he predicted would add to inflation and force the Bank to keep raising interest rates.
Rising bond yields is a problem affecting most advanced economies. But City analysts said Britain was an international outlier, with the country affected by a “moron premium” as global investors lost confidence in Truss and Kwarteng’s ability to manage the economy and public finances.
|
Interest Rates
|
Mixed closings on the Emirates Stock Exchange amid limited movements and foreign purchases
The UAE stock exchanges continued their volatile performance today, Thursday, while their indices moved within a narrow path of ups and downs, amid more purchases by foreign investors.
The Dubai market index declined for the second session in a row by 0.18% to 3,992.36 points, with liquidity amounting to 601.63 million dirhams, while the main index of the Abu Dhabi market rose 0.06% at the level of 9,559.57 points, recording trades worth 1.67 billion dirhams.
In Dubai, Emaar Properties shares attracted 40% of the total market liquidity, equivalent to 238.3 million dirhams, rising 2.29% to 7.59 dirhams, according to the Arab World News Agency.
On the other hand, shares of Emirates NBD Bank fell 0.84% to 17.6 dirhams, Dubai Islamic Bank 0.18% to 5.52 dirhams, and Dubai Electricity and Water (DEWA) 0.78% to 2.53 dirhams.
In the capital market, shares of Aldar Properties companies rose 1.06% to 5.72 dirhams, Etisalat (E&) 0.21% to 19.32 dirhams, and First Abu Dhabi Bank 1.03% to 13.72 dirhams.
Energy sector shares also rose collectively, as ADNOC Distribution rose 0.8% to 3.8 dirhams, ADNOC Drilling rose 0.26% to 3.84 dirhams, ADNOC Gas rose 0.92% to 3.28 dirhams, and Dana Gas rose 0.51% to 0.792 dirhams.
Iyad Al-Bariqi, Director of Development Department at Aldar Stock and Bonds Company, said, “Most company stocks maintained their cohesion during today’s session, and moved between highs and lows at limited levels despite fluctuations in performance and in light of investors continuing to prefer short-term gains, especially in the current period before the end of the year.” “The current one.”
Al-Buraiki believed that foreign investors will continue to buy before the end of the year in light of the restructuring of positions and amid confidence in the performance of major companies as they are the main driver of stock market indices, in addition to their high financial and operational efficiency.
Foreign investments in Abu Dhabi recorded a net purchase amounting to 116.75 million dirhams, while Arabs, Gulf Arabs, and Emiratis tended to sell for a net amount of 13.6 million, 34.16 million, and 70.8 million dirhams, respectively.
Foreigners tended to buy in Dubai, with a net value of 99 million dirhams, while Arab, Gulf, and Emirati investors recorded net sales of about 8.29 million, 63.9 million, and 26.8 million dirhams, respectively.
|
Stocks Trading & Speculation
|
- U.S. Treasury Secretary Janet Yellen has become the second U.S. Cabinet member to visit China in a month, setting the stage for more high-level communication between the two countries.
- "As long as there are talks and communication between China and the U.S., the market will get used to the new normal," said UBS' Yifan Hu.
- Official statements from both the U.S. and Chinese sides indicated plans for further talks.
BEIJING — U.S. Treasury Secretary Janet Yellen has become the second U.S. Cabinet member to visit China in a month, setting the stage for more high-level communication between the two countries.
In coming days, John Kerry, special presidential envoy for climate, also plans to visit China, he told the The New York Times. The U.S. embassy in Beijing did not immediately respond to a CNBC request for comment.
The multiple trips mark a shift from early this year, when an alleged Chinese spy balloon forced U.S. Secretary of State Antony Blinken to postpone his Beijing travel plans. He did not visit until June.
Geopolitics weighed on the market earlier this year, Yifan Hu, regional chief investment officer and head of macroeconomics Asia Pacific at UBS Global Wealth Management, said Monday in a press briefing about the second-half outlook.
"As long as there are talks and communication between China and the U.S., the market will get used to the new normal," she said, noting performance will likely be less volatile. That's according to a CNBC translation of her Mandarin-language remarks.
Official statements from both the U.S. and Chinese sides indicated plans for further talks.
"Differences should not be a reason for estrangement, but rather a driver for strengthening communication and exchanges," China's Ministry of Finance said in a statement Monday about Yellen's visit. That's according to a CNBC translation of the Chinese text.
The finance ministry said that during the meetings, the Chinese side asked the U.S. to remove tariffs on Chinese goods and stop "pressuring" Chinese companies, among other items.
Increased talks aside, the bilateral relationship has not improved significantly.
Just days before Yellen arrived in China, its Commerce Ministry announced forthcoming export controls on two metals used in the manufacturing of semiconductors.
The U.S. is still mulling investment restrictions on high-end Chinese tech, Yellen confirmed in a press briefing Sunday. She said she told her Chinese counterparts that any curbs on U.S. outbound investments would be "very narrowly targeted."
Greater communication, however, can help set boundaries for government actions.
"My purpose is to make sure we don't engage in a series of unintended escalatory actions that will be harmful to our economic relationship with one another," Yellen said in an interview that aired Saturday on CBS News' "Face the Nation."
She noted the pandemic contributed to the lack of contact between U.S. and Chinese senior officials, creating "a situation where misunderstandings can develop."
"And I do think my trip has been successful in forging those relationships and creating the opportunity for a deeper set of more frequent contacts at our staff levels."
Yellen's visit this past Thursday to Sunday came about three weeks after Blinken met with Chinese President Xi Jinping in Beijing. Yellen met with people close to Xi, including recently promoted Premier Li Qiang.
"These weren't counterparts that we had seen at tons of meetings before. And so going in and being able to interact with them talk about a lot of substance was the most important thing," a senior Treasury official told reporters in a briefing at the close of Yellen's trip.
The official noted that a meeting with He Lifeng, a vice premier, lasted five hours, more than double the originally scheduled time.
He also leads China-U.S. economic and trade cooperation efforts, according to a state media report that described his meeting with Yellen as "constructive."
In all, Yellen's 10 hours of talks during her trip included meetings with Finance Minister Liu Kun and Pan Gongsheng, who was promoted this month to the role of party secretary at the People's Bank of China.
Yellen also met with former Vice Premier Liu He and former People's Bank of China Governor Yi Gang, the Treasury said.
"Simply meeting in person and for her and her counterparts to get to know each other is a substantial breakthrough in and of itself," said Scott Kennedy, senior advisor and trustee chair in Chinese business and economics, at the Washington D.C.-based think tank Center for Strategic and International Studies.
"We should expect visits in both directions by other cabinet officials in the coming months," he said. "Again, no one meeting will likely yield a breakthrough, but the process will translate into the normalization of direction communication, which itself can help support maintaining a fragile stability."
Increased high-level meetings between the U.S. and China come with about a year and a half left under the current Biden administration.
In prepared remarks to reporters at the close of her trip, Yellen noted "significant public coverage" of U.S.-China meetings over the past two years.
"My hope is that we can move to a phase in our relationship where senior-level diplomacy is simply taken as a natural element of managing one of the world's most consequential bilateral relationships."
|
Asia Business & Economics
|
Canara Bank Looking To Raise Rs 3,500 Crore Via AT-1 Bonds
The AT-1 bonds form a capital buffer for the bank and contribute to its capital strength.
Canara Bank is looking to raise Rs 3,500 crore via the issue of additional Tier-I bonds, according to a person with knowledge of the matter.
For the issue, the AT-1 bonds have a face value of Rs 1 crore each. The issue size is Rs 1,000 crore, with a greenshoe option of Rs 2,500 crore. The bidding will open on Thursday, as the person quoted above said on the condition of anonymity.
In June, the bank's board of directors approved a Rs 7,500-crore fundraising plan for the financial year, out of which Rs 3,500 crore were to be raised through AT-1 bonds and the remaining Rs 4,000 crore through Tier-II bonds.
The AT-1 bonds form a capital buffer for the bank and contribute to its capital strength. While bonds are perpetual in nature and have no maturity date, they typically have a call option at the end of 10 years.
The sentiment around these equity-like instruments had taken a hit globally when Credit Suisse wrote down its AT-1 bonds worth $17 billion earlier this year. In India, Yes Bank Ltd.'s AT-1 bonds worth Rs 8,000 crore were written off as part of its restructuring scheme following the RBI-mediated resolution in 2020.
In September, Canara Bank raised Rs 5,000 crore through the maiden issuance of long-term infrastructure bonds at a coupon rate of 7.54% per annum. However, funds raised through infrastructure bonds are not included in the calculation of the capital adequacy ratio.
In the September quarter, the public sector bank reported a 43% year-on-year rise in its net profit to Rs 3,606.1 crore. The bank's capital adequacy ratio stood at 16.20% as of Sept. 30, with CET-I at 11.58%. The net interest margin during the quarter fell 5 basis points to 3% on a sequential basis.
|
Banking & Finance
|
USCIS seeks to update regulations with proposed rulemaking to improve program efficiency and integrity
WASHINGTON – Today, the Department of Homeland Security (DHS), through U.S. Citizenship and Immigration Services (USCIS), published a Notice of Proposed Rulemaking (NPRM) that would modernize the H-1B specialty occupation worker program by streamlining eligibility requirements, improving program efficiency, providing greater benefits and flexibilities for employers and workers, and strengthening integrity measures. The H-1B program helps U.S. employers hire the employees they need to meet their business needs and remain competitive in the global marketplace, while adhering to all U.S. worker protections under the law.
“DHS continues to develop and implement regulations that increase efficiency and improve processes for employers and workers navigating the immigration system,” said Secretary of Homeland Security Alejandro N. Mayorkas. “The Biden-Harris Administration’s priority is to attract global talent, reduce undue burdens on employers, and prevent fraud and abuse in the immigration system.”
The H-1B nonimmigrant visa program allows U.S. employers to temporarily employ foreign workers in specialty occupations, defined by statute as occupations that require highly specialized knowledge and a bachelor’s or higher degree in the specific specialty, or its equivalent.
The proposed rule would change how USCIS conducts the H-1B registration selection process to reduce the possibility of misuse and fraud. Under the current process, the more registrations that are submitted on behalf of an individual, the higher chance that individual will be selected in a lottery. Under the new proposal, each unique individual who has a registration submitted on their behalf would be entered into the selection process once, regardless of the number of registrations submitted on their behalf. This would improve the chances that a legitimate registration would be selected by significantly reducing or eliminating the advantage of submitting multiple registrations for the same beneficiary solely to increase the chances of selection. Furthermore, it could also give beneficiaries more choice between legitimate job offers because each registrant who submitted a registration for a selected beneficiary would have the ability to file an H-1B petition on behalf of the beneficiary.
Among additional provisions, the proposed rule would improve the H-1B program by:
- Streamlining eligibility requirements – criteria for specialty occupation positions would be revised to reduce confusion between the public and adjudicators and to clarify that a position may allow a range of degrees, although there must be a direct relationship between the required degree field(s) and the duties of the position;
- Improving program efficiency –The proposed rule codifies that adjudicators generally should defer to a prior determination when no underlying facts have changed at time of a new filing;
- Providing greater benefits and flexibilities for employers and workers – certain exemptions to the H-1B cap would be expanded for certain nonprofit entities or governmental research organizations as well as beneficiaries who are not directly employed by a qualifying organization. DHS would also extend certain flexibilities for students on an F-1 visa when students are seeking to change their status to H-1B. Additionally, DHS would establish new H-1B eligibility requirements for rising entrepreneurs; and
- Strengthening integrity measures – in addition to changing the selection process, misuse and fraud in the H-1B registration process would be reduced by prohibiting related entities from submitting multiple registrations for the same beneficiary. The rule would also codify USCIS’ authority to conduct site visits and clarify that refusal to comply with site visits may result in denial or revocation of the petition.
The 60-day public comment period starts following publication of the NPRM in the Federal Register.
|
Workforce / Labor
|
Subscribe to Here’s the Deal, our politics
newsletter for analysis you won’t find anywhere else.
Thank you. Please check your inbox to confirm.
Anne D'Innocenzio, Associated Press
Anne D'Innocenzio, Associated Press
Leave your feedback
NEW YORK (AP) — Bed Bath & Beyond — one of the original big box retailers known for its seemingly endless offerings of sheets, towels and kitchen gadgets — filed for bankruptcy protection, following years of dismal sales and losses and numerous failed turnaround plans.
The beleaguered home goods chain made the filing Sunday in U.S. District Court in New Jersey and said it will start an orderly wind down of its operations including eventually closing its stores, while seeking a buyer for all or some of its businesses. For now, the company’s 360 Bed Bath & Beyond stores and its 120 Buy Buy Baby sites as well as its websites will remain open to serve customers.
It listed estimated assets and liabilities in the range of $1 billion to $10 billion. The move comes after the company failed to secure funds to stay afloat.
In a statement, the company, based in Union, New Jersey, said it voluntarily made the filing “to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets.” The store closings will put thousands of jobs at risk.
Bed Bath & Beyond said it secured a commitment of roughly $240 million in financing from Sixth Street Specialty Lending, Inc. to allow it to keep operating during the bankruptcy process.
“It’s the death of an icon. A lot of people have grown up with it, ” said Neil Saunders, managing director of GlobalData Retail. “It’s an institution in retailing, but unfortunately being an institution doesn’t protect you from financial woes.”
Founded in 1971, Bed Bath & Beyond had for years enjoyed its status as a big box retailer that offered a vast selection of sheets, towels and gadgets unmatched by department store rivals. It was among the first to introduce shoppers to many of today’s household items like the air fryer or single-serve coffee maker, and its 15 percent to 20 percent coupons were ubiquitous.
But for the last decade or so, Bed Bath & Beyond struggled with weak sales, largely because of its messy assortments and lagging online strategy that made it hard to compete with the likes of Target and Walmart, both of which have spruced up their home departments with higher quality sheets and beddings. Meanwhile, online players like Wayfair have lured customers with affordable and trendy furniture and home décor.
WATCH: Americans get relief from rising food and gas prices, but core inflation remains high
In late 2019, Bed Bath & Beyond tapped Target executive Mark Tritton to take the helm and turn around sales. Tritton quickly reduced coupons and started to introduce store label brands at the expense of national labels, a strategy that proved disastrous for the retailer.
And the pandemic, which happened shortly after his arrival, forced the retailer to temporarily close its stores. It was never able to use the health crisis to pivot to a successful online strategy as others had, analysts said. And while many retailers were grappling with supply chain issues a year ago, Bed Bath was among the most vulnerable, missing many of its 200 best-selling items including kitchen appliances and personal electronics, during the holiday 2021 season.
The retailer ousted Tritton in June 2022 after two back-to-back quarters of disastrous sales. In recent months, the company, under the stewardship of recently appointed president and CEO Sue Grove, went back to its original strategy of focusing on national brands, instead of pushing its own store labels. But the company has had a hard time having suppliers commit to delivering merchandise because of the retailer’s financial woes. This past holiday season, the stores were missing many key items, and it lost many customers, a problem that continued to plague the retailer through the winter and spring seasons.
The bankruptcy filing comes as the company’s shares have tumbled even more as speculation of an impending bankruptcy filing increased. Its financial performance has also deteriorated. In late March, it noted that preliminary results showed anywhere from a 40 percent to 50 percent decline in sales at stores opened at least a year for the quarter ended Feb. 25.
The company also said in a Securities and Exchange Commission filing in late March that it planned to sell $300 million worth of shares to avoid bankruptcy filing.
The home goods retailer had been issuing several warnings about a potential bankruptcy filing since early this year. In late January, it noted in a government filing it was in default of its loans and didn’t have the funds to repay what it owes. The company had said the default is forcing the company to look at various alternatives including restructuring its debt in bankruptcy court.
Bed Bath & Beyond joins a growing list of retailers that have filed for bankruptcy so far this year including party supplies chain Party City and David’s Bridal. The bankruptcy could offer a window of what’s to come in the retail industry, given the changing landscape and the increasing challenges in the U.S. economy.
READ MORE: Kmart was once a retail powerhouse. Now just a handful of stores remain in the U.S.
During the depths of the pandemic, a number of retailers filed for Chapter 11 bankruptcy including Neiman Marcus and J.C. Penney. But in 2022, there was a respite in retail bankruptcy filings as shoppers, flush with government stimulus money and a pile of savings, spent with abandon, helping to lift all types of retailers. But as credit tightens and inflation remains stubborn, shoppers have been tightening their purse strings in recent months, leaving struggling retailers like Bed Bath & Beyond more vulnerable.
Bed Bath & Beyond had been trying to turn around its business and slash costs after previous management’s new strategies worsened a sales slump. The company announced last August it would close about 150 of its namesake stores and slash its workforce by 20 percent. It also lined up more than $500 million of new financing.
Bed Bath & Beyond’s shares, which were trading at distressed levels, have also been on a turbulent run. It made a monstrous run from $5.77 to $23.08 in a little more than two weeks in August. The trading was reminiscent of last year’s meme-stock craze, when out-of-favor companies suddenly became darlings of smaller-pocketed investors.
But the stock fell back to Earth after Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc. who purchased a nearly 10 percent stake in Bed Bath & Beyond last March, sold off all his shares.
Shares were hovering close to 30 cents in the past few days. A year ago, shares were trading at around $17.
Bed Bath & Beyond said it expects to process returns and exchanges in accordance with its usual policies until May 24 for items purchased prior to Sunday. It also anticipates gift cards, gift certificates and loyalty certificates will be accepted through May 8.
The company had 32,000 employees as of Feb. 26, 2022, but that number has come down since then as the retailer has slashed jobs.
AP Writer Bruce Shipkowski in Toms River, New Jersey contributed to this report.
Support Provided By:
Learn more
|
Consumer & Retail
|
ormer prime minister Liz Truss will urge the Conservative leadership to position itself as the “party of business again” by slashing corporation tax.
Ms Truss will argue in a speech on the fringes of the Tory Party conference that high taxes on businesses must not be “normalised”, suggesting the private sector is “drowning in red tape”.
The former Tory leader will say that the best way to get the UK economy growing is to “free” the private sector.
She is expected to use her appearance at a so-called growth rally in Manchester to call for corporation tax to be lowered back to 19%, taking it down from its current 25% rate.
In recent months, the former Tory leader has being defending her record during her 49-day stint in Downing Street before the fallout from her mini-budget saw her ousted in October 2022.
Her economic Growth Plan, delivered 12 months ago by then-chancellor Kwasi Kwarteng, sent the value of the pound tumbling and mortgage rates soaring due to the market’s adverse reaction to its £45 billion of unfunded tax cuts.
We must not normalise the raiding of businesses’ coffers
During her leadership campaign last year, Ms Truss pledged to scrap the planned increase of corporation tax from 19% to 25%.
After becoming prime minister, she included the policy in the mini-budget.
She later reversed the move, however, after saying officials briefed her about a potential “market meltdown”.
Her successor, Prime Minister Rishi Sunak, allowed the rise to go ahead in April as he looked to steady the economy.
In pre-briefed comments, Ms Truss is expected to say on Monday: “We must unleash British business by cutting corporation tax.
“We can’t stand idly by while companies like AstraZeneca move operations abroad because of our huge tax burden or small businesses shut up shop because they are drowning in red tape.
“We should be hungry to attract the world’s best businesses and encouraging people to start businesses here at home. We must not normalise the raiding of businesses’ coffers.
“Ahead of this year’s autumn statement, we must make the Conservative Party the party of business once again, by getting corporation tax back down to 19%.
“This is how we make Britain grow again. It is free businesses that will get us there, not the Treasury, not the Government and not the state.
“Only free businesses can get Britain out of its 25-year economic stagnation. Only free businesses can create the economic growth and tax revenues on which our public services rely.
“So let’s give British business more freedom by easing their tax burden – freedom to flourish, to employ, to export, to research, develop and invest in the future, and to make Britain grow again.”
Dame Priti this week called the current tax burden “unsustainable” and said it should come down.
It comes after experts said the Tories will have presided over, during the time between the 2019 election and the next general election, the biggest set of tax rises since at least the Second World War.
Analysis by the Institute for Fiscal Studies (IFS) think tank said taxes will have risen to around 37% of national income, equivalent to around £3,500 more per household, even if it will not be shared equally.
In reply to Ms Truss’ comments, No 10 pointed to remarks made by Chancellor Jeremy Hunt to The Times on Saturday in which he said welfare reforms and the integration of artificial intelligence into the public sector could be the way to end the “vicious circle of ever-rising taxes”.
He has ruled out tax cuts in the autumn statement in November, but could potentially use the spring budget to announce tax reductions ahead of an election.
Register for free to continue reading
Sign up for exclusive newsletters, comment on stories, enter competitions and attend events.
|
United Kingdom Business & Economics
|
The governor of the Bank of England has accused retailers of putting further strain on households by overcharging consumers on petrol and other goods at a time when UK authorities are struggling to curb inflation.
Andrew Bailey suggested unnecessarily high fuel prices would have to be tackled in order to help bring inflation – which is above 8% – back to the Bank’s 2% target and give some relief to UK families struggling with the cost of living.
“If you look at petrol prices, some sellers of petrol have possibly been charging too much for it,” he told the BBC’s Newsround programme in an interview broadcast on Thursday. He added that action by regulators including the Competition and Markets Authority (CMA) was helping to subdue high inflation but it was fairer if possible overcharging was “tackled”.
Bailey’s comments will heap further pressure on petrol retailers, which the energy secretary, Grant Shapps, accused this week of using motorists as “cash cows” after the CMA found fuel sellers were charging more because of reduced competition since the Covid crisis.
Watchdogs including the CMA have also been working with government, and last week agreed to a series of measures aimed at protecting consumers from being ripped off.
Concerns have been growing about wider “greedflation” – whereby companies use high inflation as a cover to raise prices even further to increase profit margins. The government has now instructed regulators to crackdown on unfair price hikes across the country.
Bailey said greedflation was “having very difficult effects. So it’s important that these steps that can be taken to make things fairer, and to save money for people by doing so, are taken.”
The Bank of England has raised interest rates to 5% – the highest since 2008 – a move Bailey said was necessary to curb price inflation in general, even though it put further pressure on borrowers.
“It’s hard and I think I understand very much the difficulties that people face. Unfortunately, this is how we have to get inflation down. And what I will say is if we don’t get inflation down, if it keeps going on, it gets worse … and we’ll have to put interest rates up more,” he said.
While inflation has already started to ease, Bailey said rates were only expected to drop back down towards the 2% target the end of next year.
“We have a target that prices should rise by no more than 2%. It is above that, at about 8% at the moment. And I understand this is difficult for people who are having to make very difficult choices about what they buy what they need for their lives,” he said.
|
Inflation
|
Korea’s Kospi Stock Gauge Dips, Paring Gain On Short-Selling Ban
The Kospi Index dropped as much as 1.8% in early trading. The gauge surged 5.7% Monday, its best performance since March 2020.
(Bloomberg) -- South Korea’s benchmark stock index fell, paring its biggest jump in over three years following the nation’s move to reimpose a full ban on short-selling.
The Kospi Index dropped as much as 1.8% in early trading. The gauge surged 5.7% Monday, its best performance since March 2020, helped by apparent short-covering after the market regulator said selling of borrowed shares would be completely prohibited through June 2024.
READ: Korea Slams Banks, Hedge Funds With Pre-Election Short Sale Ban
The small-cap Kosdaq Index briefly slid 1.7% before turning higher, extending the previous day’s 7.3% jump.
Some heavily shorted electric-vehicle battery names including LG Energy Solution Ltd. that skyrocketed Monday fell back on Tuesday. Others including Ecopro BM Co. extended gains.
“We are seeing profit-taking in Kospi after a sharp rally in the previous session,” said Kim Jungyoon, a researcher at Daishin Securities Co. “Kosdaq is still seeing some short covering as some of the Kosdaq stocks that are rising are not gaining because of their fundamentals. They are battery-related stocks facing slowdown in EV demand and other negative news in the sector.”
©2023 Bloomberg L.P.
|
Stocks Trading & Speculation
|
A Bloomberg investigative reporter wrote a new book titled Number Go Up: Inside Crypto's Wild Rise and Staggering Fall. This week Bloomberg published an excerpt that begins when the reporter received a flirtatious text message from a woman named Vicky Ho for a scam that's called "pig butchering".
"Vicky's random text had found its way to pretty much exactly the wrong target. I'd been investigating the crypto bubble for more than a year..." After a day, Vicky revealed her true love language: Bitcoin price data. She started sending me charts. She told me she'd figured out how to predict market fluctuations and make quick gains of 20% or more. The screenshots she shared showed that during that week alone she'd made $18,600 on one trade, $4,320 on another and $3,600 on a third... For days, she went on chatting without asking for me to send any money. I was supposed to be the mark, but I had to work her to con me.... Vicky sent me a link to download an app called ZBXS. It looked pretty much like other crypto-exchange apps. "New safe and stable trading market," a banner read at the top. Then Vicky gave me some instructions. They involved buying one cryptocurrency using another crypto-exchange app, then transferring the crypto to ZBXS's deposit address on the blockchain, a 42-character string of letters and numbers...
People around the world really were losing huge sums of money to the con. A project finance lawyer in Boston with terminal cancer handed over $2.5 million. A divorced mother of three in St. Louis was defrauded of $5 million. And the victims I spoke to all told me they'd been told to use Tether, the same coin Vicky suggested to me. Rich Sanders, the lead investigator at CipherBlade, a crypto-tracing firm, said that at least $10 billion had been lost to crypto romance scams.
The huge sums involved weren't the most shocking part. I learned that whoever was posing as Vicky was likely a victim as well — of human trafficking. Most "pig-butchering" operations were orchestrated by Chinese gangsters based in Cambodia or Myanmar. They'd lure young people from across Southeast Asia to move abroad with the promise of well-paying jobs in customer service or online gambling. Then, when the workers arrived, they'd be held captive and forced into a criminal racket. Thousands have been tricked this way. Entire office towers are filled with floor after floor of people sending spam messages around the clock, under threat of torture or death.
With the assistance of translators, I started video chatting with people who'd escaped...
I'd heard that [southwestern Cambodia's giant building complex] Chinatown alone held as many as 6,000 captive workers like "Vicky Ho."
Two of the workers interviewed "said they'd seen workers murdered." And another worker said Tether was used specifically because "It's more safe. We are afraid people will track us... It's untraceable."
The reporter's conclusion? "It was hard to see how this slave complex could exist without cryptocurrency."
"Vicky's random text had found its way to pretty much exactly the wrong target. I'd been investigating the crypto bubble for more than a year..." After a day, Vicky revealed her true love language: Bitcoin price data. She started sending me charts. She told me she'd figured out how to predict market fluctuations and make quick gains of 20% or more. The screenshots she shared showed that during that week alone she'd made $18,600 on one trade, $4,320 on another and $3,600 on a third... For days, she went on chatting without asking for me to send any money. I was supposed to be the mark, but I had to work her to con me.... Vicky sent me a link to download an app called ZBXS. It looked pretty much like other crypto-exchange apps. "New safe and stable trading market," a banner read at the top. Then Vicky gave me some instructions. They involved buying one cryptocurrency using another crypto-exchange app, then transferring the crypto to ZBXS's deposit address on the blockchain, a 42-character string of letters and numbers...
People around the world really were losing huge sums of money to the con. A project finance lawyer in Boston with terminal cancer handed over $2.5 million. A divorced mother of three in St. Louis was defrauded of $5 million. And the victims I spoke to all told me they'd been told to use Tether, the same coin Vicky suggested to me. Rich Sanders, the lead investigator at CipherBlade, a crypto-tracing firm, said that at least $10 billion had been lost to crypto romance scams.
The huge sums involved weren't the most shocking part. I learned that whoever was posing as Vicky was likely a victim as well — of human trafficking. Most "pig-butchering" operations were orchestrated by Chinese gangsters based in Cambodia or Myanmar. They'd lure young people from across Southeast Asia to move abroad with the promise of well-paying jobs in customer service or online gambling. Then, when the workers arrived, they'd be held captive and forced into a criminal racket. Thousands have been tricked this way. Entire office towers are filled with floor after floor of people sending spam messages around the clock, under threat of torture or death.
With the assistance of translators, I started video chatting with people who'd escaped...
I'd heard that [southwestern Cambodia's giant building complex] Chinatown alone held as many as 6,000 captive workers like "Vicky Ho."
Two of the workers interviewed "said they'd seen workers murdered." And another worker said Tether was used specifically because "It's more safe. We are afraid people will track us... It's untraceable."
The reporter's conclusion? "It was hard to see how this slave complex could exist without cryptocurrency."
|
Crypto Trading & Speculation
|
My daughter needs a purple wig for school, and she needs it by this Friday. When I got the news Monday night, I had just one reliable option—Amazon—and the rancid-tapioca feeling that comes with using it. The problem isn’t just the company’s rough track record with worker safety, or its devastating effect on brick-and-mortar stores, or knowing that I was about to toss more data into its insatiable maw. Despite all that, I’m still a Prime subscriber.
Lately, though, shopping on Amazon has become an exercise in frustration. My purple-wig search started with sponsored listings from unfamiliar brands with just a small disclosure noting that they’re advertisements. The organic results eventually do show up, offering hairpieces from brands with names such as DAOTS, MorvallyDirect, and eNilecor. Scroll only a little deeper into the sea of indigo fibers, and the sponsored items resume.
What happened to Amazon? The company no longer excels at the thing it’s supposed to be best at: shopping. Its unparalleled convenience and cost helped turn it into an e-commerce juggernaut, one that now faces an antitrust lawsuit from the Federal Trade Commission over alleged anticompetitive practices. Now around every corner lies a brand you’ve never heard of, selling a product you’re not sure about. Good deals on name brands are harder to come by. Amazon’s dominance has also transformed it into a different kind of company. Along the way, the famously customer-obsessed company has lost track of what its customers actually want.
Start with the ads. At the top of the results for purple wig, I hit a block of stand-alone results, a sponsored storefront from an unfamiliar brand named BERON. That’s followed by four paid results from unidentified companies, followed by, finally, organic results. Even then, those recommendations are based in part on customer reviews, which vendors have notoriously gamed.
It’s the same mess whether you’re looking for wigs or phone accessories or spatulas or, as the FTC calls out, pens. Hunting for a product on Amazon has become unhelpful in the same way that Google search has become unhelpful, placing sponsored results at the top of the page. As The Washington Post reported last fall, the e-commerce research firm Profitero found that across 70 search terms, Amazon displayed nine sponsored ads on the first results page alone, more than twice the average at Walmart’s site.
Amazon feels less like an online Target or Best Buy than it does Big Billy’s Bargain Bin, dollar-store trinkets sold for name-brand prices. The problem isn’t that it lacks what you want, but that it offers infinite permutations of often unknowable quality. Many of the brand-name items aren’t any cheaper on Amazon than they are elsewhere.
The decline of Amazon is closely tied not just to its size but to how it has chosen to grow. Amazon is now less of a store than a mall, or maybe a sprawling bazaar. Last year, nearly 60 percent of units sold on Amazon came from third-party sellers rather than from Amazon itself. Want to set up a booth? There’s a nominal monthly fee to reserve the space. From there, though, the charges add up quickly, according to a report from the ecommerce-intelligence firm Marketplace Pulse.
Amazon takes a cut of every transaction, typically about 15 percent. For front-and-center placement, you’d better pay for one of those sponsored slots. According to the FTC, advertised products are 46 times more likely to get clicks. Call it another 15 percent of revenue. Oh, and if you want to qualify for Prime—and if you want any shot of making a sale, you do want to qualify for Prime—you’ll need to use Amazon to fulfill your orders. That’s another 20 to 35 percent off the top. All of a sudden, half of your revenue is in Amazon’s coffers.
Amazon itself has reported that all of those fees amount to a big business; the revenue generated from them has tripled since 2017, totaling $117.7 billion last year alone. But although it’s been great for Amazon, it hasn’t been great for consumers. When sellers are nickeled-and-dimed, not a lot of savings are left to pass on to you.
Amazon denies that it squeezes its third-party sellers at the expense of shoppers. “The FTC’s allegation that we somehow force sellers to use our optional services is simply not true,” David Zapolsky, Amazon’s general counsel, wrote in a lengthy response to the charges. “Sellers have choices, and many succeed in our store using other logistics services or choosing not to advertise with us.”
That is technically true, but in a world where so much of online retail runs through Amazon, choice is an illusion. Dare to offer a cheaper product elsewhere online, and Amazon might bury your listing on its platform. A heavily redacted portion of the FTC suit claims that the company “deploys a sophisticated surveillance network of web crawlers that constantly monitor the internet” for such sellers. (In his response, Zapolsky says that the FTC “has it backwards” and that the company doesn’t “highlight or promote offers that are not competitively priced.”)
Of course this is where Amazon wound up. The company spent years sacrificing profit for scale, until it had so many customers that sellers couldn’t ignore it. Now that it extracts billions each month from those sellers, it can afford to ignore those customers—or at least prioritize them less. Amazon gets paid by all of its vendors, no matter which products go in our cart.
Shoppers are not privy to any of these machinations while browsing Amazon. We can’t know which third-party sellers have been banished to the shadow realm, or how tightly their margins are squeezed. Even knowing this might not get us far, considering how entrenched Amazon is now in American life. On Monday, I went ahead and bought the Linfairy Kids Child Purple Dye Wig Halloween Costume Cosplay Wave Wig, for $19.88 plus tax. My daughter liked the curls. It’ll be here by Thursday, which is no small relief. After all, it was my only option.
|
Consumer & Retail
|
NEW YORK -- Target will close nine stores in four states, including one in East Harlem, New York and three in San Francisco, saying that theft and organized retail crime have threatened the safety of its workers and customers.
The closings, which will be effective Oct. 21, also include three stores in Portland, Oregon, and two in Seattle. Target said that it still will have a combined 150 stores open in the markets where the closures are taking place. Target will offer affected workers the opportunity to transfer to other stores.
Target described the decision as “difficult."
“We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all," Target said in a statement on Tuesday.
Before making the decision, Target said it had invested heavily in strategies to prevent and stop theft such as adding more security team workers, using third-party guard services and installing theft deterrent tools like locking up merchandise. It also has trained store leaders and security team members to protect themselves and de-escalate potential safety issues. But it noted that despite those efforts, it continued to face “fundamental challenges” to operate the stores safely — and the business performance at these locations was unsustainable.
While the store closings account for just a fraction of the 1,900 stores Target operates nationwide, the move is significant. It underscores the big challenges that retailers like Target face in reducing theft in stores as they wrestle with protecting their workers and customers while trying to serve the community, particularly low-income and minority groups who rely on the local stores for necessities.
For example, the Target store in East Harlem is located in a heavily Hispanic area, and residents have few choices to buy good quality healthy foods. In San Francisco, one of the stores slated to close is located at 13th Street and Folsom under a busy overpass with homeless tents in a largely commercial neighborhood with auto shops. In Seattle, one of the stores is located on a busy avenue near the University of Washington.
Target CEO Brian Cornell has been one of a handful of retail CEOs flagging what they described as rising theft over the past year or so. Cornell had held steadfast he didn't want to resort to closing stores even despite mounting losses. Target said in May that theft was cutting into its bottom line and it expected related losses could be $500 million more than last year, when losses from theft were estimated to be anywhere from $700 million to $800 million. So that means losses could top $1.2 billion this fiscal year.
Moreover, Cornell told analysts in August that violent incidents against workers at Target stores increased 120% for the first five months of the year compared with the same period a year ago.
“Our team continues to face an unacceptable amount of retail theft and organized retail crime,” Cornell told analysts. “Unfortunately, safety incidents associated with theft are moving in the wrong direction.”
The announcement also comes as Target is still reeling from being targeted for its LGBTQ+ support, in particular, its displays of Pride Month merchandise. In late May, ahead of Pride Month, Target pulled some items in particular regions and made other changes after encountering hostility from some customers who confronted workers and tipped over displays. Target said the moves were made to protect workers in the store.
It’s unclear how much money retailers broadly are losing due to organized retail crime -- or if the problem has substantially increased. But the issue has received more notice in the past few years as high-profile smash-and-grab retail thefts and flash mob robberies have garnered national media attention. Over the past few quarters, an increasing number of retailers including Dick's Sporting Goods and Ulta Beauty have been calling out rising theft, calling it a factor in shrinking profits.
The National Retail Federation, the nation’s largest retail trade group, said its latest security survey of roughly 177 retailers found that inventory loss -- called shrink — clocked in at an average rate of 1.6 % last year, representing $112.1 billion in losses. That's up from 1.4% the previous year.
The greatest portion of shrink — 65% — came from external theft, including products taken during organized shoplifting incidents, the trade group said Tuesday. More than two-thirds of respondents said they were seeing even more violence and aggression from perpetrators of organized retail crime compared with a year ago.
The NRF said that even though retailers continue to improve their loss-prevention measures, sometimes more drastic action must be taken. Nearly 30% of retailers surveyed reported being forced to close a specific store location, and 45% said they needed to reduce operating hours. Roughly 30% said they needed to change or reduce product selection in stores as a direct result of retail crime.
Late last year, Congress passed a bill, called the INFORM ACT, that seeks to combat sales of counterfeit goods and dangerous products by compelling online marketplaces to verify different types of information - including bank account, tax ID and contact details - for sellers who make at least 200 unique sales and earn a minimum of $5,000 in a given year.
Target said Tuesday that it's making significant investments in cyber defense to combat retail theft and fraud and has teamed up with the U.S. Department of Homeland Security's Homeland Security Investigations division to combat retail theft.
_______
Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio
|
Consumer & Retail
|
U.K. Heads For Five Years Of Lost Growth, Failure Of ‘Leveling Up’
Gross domestic output is unlikely to return to its pre-pandemic level before 2024, according to forecasts from NIESR.
(Bloomberg) -- The UK is headed for five years of lost economic growth as the government fails in its goal to “level-up” the country’s regions and reduce inequality, an influential think tank says.
Gross domestic output is unlikely to return to its pre-pandemic level before 2024, according to forecasts from the London-based National Institute of Economic and Social Research.
While output across the country will be lackluster, NIESR said, some regions will feel a sharper pinch. In London, it expects real wages will grow by up to 7% in the five years from the end of 2019 — but in the West Midlands, home to Britain’s third-largest city Birmingham, NIESR is projecting a 5% drop in inflation-adjusted pay.
The forecasts echo the Bank of England’s gloom, which said last week that GDP would remain below pre-pandemic levels “in the medium term.” Both projections will are a worrying omen for the ruling Conservative Party as it prepares for a potential general election in 2024. At the time of the last vote in 2019, then Prime Minister Boris Johnson made “leveling-up” to spread prosperity beyond London one of the key promises.
“The triple supply shocks of Brexit, Covid and the Russian invasion of Ukraine, together with the monetary tightening that has been necessary to bring inflation down, have badly affected the UK economy,” said Stephen Millard, NIESR’s deputy director for macroeconomic modeling and forecasting.
NIESR’s report chimes with Bloomberg’s own “Leveling Up Scorecard,” which shows the bulk of the UK has fallen further behind the country’s richest region of London and the South-East since 2019. It also fits with data from Reed Recruitment suggesting job openings are drying up, increasing the chances that the economy sputters to a halt or even falls into recession this year.
Addressing the UK’s growth issue “remains the key challenge facing policy makers as we approach the next election,” he added.
Growth is being constrained by the fact that the government is now continually spending more than its income, said NIESR’s director Jagjit Chadha. He said that reduces the scope for Sunak to offer tax cuts or other sweeteners to voters ahead of the election.
“Even at full employment, we’re regularly running a fiscal deficit, which implies to us that we have a structural fiscal deficit,” he said. “As the fiscal position is constrained, because the financial markets don’t want to absorb more debt relative to our lower level of income, the room for maneuver will be limited.”
Any incoming government would have to answer some “very hard questions” on how it’s going to generate growth, Chadha added.
NIESR’s outlook for inflation in the UK — which is currently almost four times its target at 7.9% — is slightly higher than the BOE’s. It expects the consumer price index measure to be rising at an annual rate of 5.2% by the end of this year, compared to the Bank’s 4.9%, and to fall back to 3.9% by the end of 2024.
While the BOE’s forecasts pencil in inflation falling back to the 2% target by the second quarter of 2025, NIESR thinks CPI will still average 2.3% across 2025 as a whole.
There was some good news for households struggling with the cost of living. NIESR thinks nominal earnings will grow by 6% in 2023 and 2024. That, combined with falling inflation, would mean a rise in living standards, with real income growth of about 1.4% over the medium term.
But the broader economy’s tepid pace of growth is one of the factors feeding a gap between the rich and poor, NIESR said.
It predicted little real wage growth for low-income households, which also will have to shoulder higher levels of debt as food, energy and housing costs remain historically high.
By 2024, the UK’s poorest households could be facing a shortfall in their disposable incomes of 17% relative to 2019, compared to 5% for the richest households, the think-tank predicted.
“Falling real wages, combined with persistent inflation, are hitting the low-income households hardest,” said Adrian Pabst, NIESR’s deputy director of public policy. “For some of the poorest in society, coping with low or no real wage growth and persistent inflation has involved new debt to pay for permanently higher housing, energy and food costs.”
Read more:
- Sunak Set to Fight UK Election Against a Bleak Economic Backdrop
- Why the UK’s Wealth Gap Is Widening: Leveling Up Scorecard
- England’s Falling Job Advertisements Ring a Recession Alarm
--With assistance from Andrew Atkinson.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Inflation
|
(Bloomberg) -- Binance.US and the US Securities and Exchange Commission reached an agreement that avoids a total asset freeze at the cryptocurrency trading platform while the regulator’s suit against it proceeds.
Most Read from Bloomberg
Under the pact announced Saturday, Binance Holdings, BAM Management US, BAM Trading Services and founder Changpeng “CZ” Zhao will repatriate Binance.US customer assets. Binance.US is prohibited from spending corporate assets other than to cover the costs of running its business and US customers are permitted to redeem from the platform, according to the order filed by US judge Amy Berman Jackson in Washington federal court.
Read the court order here
The decision by the judge finalized an agreement struck between the parties to protect billions of dollars in customer funds without shutting the exchange down. The SEC had originally sought a total asset freeze at Binance.US, the trading platform owned by Binance Holdings Ltd. co-founder Zhao. Binance.US, which is fighting the SEC’s suit and says customer assets are safe, argued that blocking the flow of all funds would cripple its business and hurt customers.
Binance.US on Saturday said it was “pleased” that the disagreement over the SEC’s request was resolved on mutually acceptable terms, though it maintains that the call for a freeze was “entirely unwarranted,” according to a spokesperson.
“User funds have been and always will be safe and secure on all Binance-affiliated platforms,” the spokesperson said.
In its June 5 lawsuit, the SEC accused Binance and Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules. It also asked for the repatriation of crypto belonging to US customers — a request made only when there is a risk assets may be lost or concealed.
Among the allegations in the lawsuit, the SEC claims Binance improperly moved billions of dollars of customer funds to a bank account for an entity controlled by Zhao. Those funds were transferred to a third party and then appeared to be used to purchase and sell crypto, according to the complaint.
Read more: Binance Money Trail Reveals $70 Billion Flowing Through Banks
In a memorandum, the SEC said “Zhao and Binance have a pattern and practice of commingling customer funds” as well as “moving funds outside of the US and/or on the blockchain where they are outside of this court’s reach.”
The memorandum said Binance.US customer assets total over $2.2 billion and described Zhao as “a foreign national who has made overt his views that he is not subject to the jurisdiction of this court.”
--With assistance from Olga Kharif.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
|
Crypto Trading & Speculation
|
A bloc of 48 nations have developed the Crypto-Asset Reporting Framework (CARF), aimed at standardizing reporting requirements for crypto assets to address concerns related to money laundering and tax evasion. It's set to be implemented by 2027. The Register reports: Developed by the Organisation for Economic Co-operation and Development (OECD), the CARF was developed under the 168-member Global Forum on Transparency and Exchange of Information for Tax Purposes, with the G20 and the Organisation for Economic Co-operation and Development looking on approvingly and lending a hand. As the name implies, that Forum is all about sharing data so that each nation's tax authorities have the information they need to understand money movements and make sure they can see what they're allowed to tax. The Forum and the legislative instruments it has fostered include reporting requirements that ensure relevant information is collected by those who facilitate transactions and will be shared.
CARF brings similar reporting requirements to crypto assets. Note the term "crypto assets." That's important, because cryptocurrency is not the only blockchain-based instrument that worries authorities. Some, like non-fungible tokens, rely on the same "greater fool" theory that pumped up cryptocurrency prices, and can attract - ahem - interesting investors. But others are far less contentious or speculative, and instead aim to speed transaction processing. Stablecoins, for example, are often suggested as a means for faster and cheaper cross-border transactions than is possible with dominant transaction processing services. Tokenized assets can also be more easily integrated into applications to ease automated money movements.
That speed and flexibility is increasingly appreciated. But unless transactions made with those instruments can be observed, the potential for their use to evade tax authorities is high. CARF's use of the term "crypto assets" therefore signals an effort to cover the weird world of cryptocurrencies and the emerging classes of classier tokenized assets. The Framework was signed off in March 2023, and in the time since OECD members and other interested nations have been dotting the Is and crossing the Ts to prepare for its implementation. The Framework can be found here.
CARF brings similar reporting requirements to crypto assets. Note the term "crypto assets." That's important, because cryptocurrency is not the only blockchain-based instrument that worries authorities. Some, like non-fungible tokens, rely on the same "greater fool" theory that pumped up cryptocurrency prices, and can attract - ahem - interesting investors. But others are far less contentious or speculative, and instead aim to speed transaction processing. Stablecoins, for example, are often suggested as a means for faster and cheaper cross-border transactions than is possible with dominant transaction processing services. Tokenized assets can also be more easily integrated into applications to ease automated money movements.
That speed and flexibility is increasingly appreciated. But unless transactions made with those instruments can be observed, the potential for their use to evade tax authorities is high. CARF's use of the term "crypto assets" therefore signals an effort to cover the weird world of cryptocurrencies and the emerging classes of classier tokenized assets. The Framework was signed off in March 2023, and in the time since OECD members and other interested nations have been dotting the Is and crossing the Ts to prepare for its implementation. The Framework can be found here.
|
Crypto Trading & Speculation
|
Last weekend, an auction held at his Florida home saw the item, described as "a one of a kind Trump Glock from the 45th President of the United States Donald J. Trump," go up for bidding during a charity event. Pictures circulating on social media show the gun being presented at the auction, with news website Meidas Touch saying that bidding for the item began at $10,000.
However, the transaction could land the former U.S. president in considerable trouble, given that federal law prohibits those under indictment from transacting firearms. Trump is embroiled in active legal proceedings, having testified at a civil trial over the New York investigation into financial fraud at the Trump Organization. The former president has denied all wrongdoing and repeatedly said that the ongoing federal and civil cases against him are part of a political witch hunt.
The Bureau of Alcohol, Tobacco, Firearms and Explosives outlines that as part of the Gun Control Act, it is unlawful for "any person under indictment for a crime punishable by imprisonment for a term exceeding one year to ship, transport, or receive firearms or ammunition."
It means Trump, or anyone involved in the sale of the firearm, could potentially face prison time for violating the law. The person who purchased the weapon could also be legally liable for assisting lawbreaking, given that Trump's indictment and trial have been heavily publicized.
In the short video on Meidas Touch, an auctioneer is heard taking bids for Trump's gun starting at $10,000: "Do you have a license for that? I didn't think so. Alright. This gun is an absolute little gun. Who will do $10,000 for it? Come on. It's worth every dime. Somebody give me 10." A Mar-a-Lago guest replies: "Here"
Meidas Touch says that Trump was present at the auction last weekend, with video stills and pictures of him smiling and socializing being published in its report. Newsweek is unable to verify this independently at this time and has contacted Donald Trump's team via email for comment.
Dave Aronberg, the state attorney for Palm Beach County, Florida, told Meidas Touch that Trump could land himself in even more legal jeopardy if the gun can be proved to belong to the former president. Aronberg said: "Trump will be in legal jeopardy if the gun actually was his and he knew it would be auctioned off. The fact that Trump attended the event is evidence that he knew of the sale.
"Trump will probably say, however, that the gun wasn't really his, and that the event organizers just used his name and mugshot to raise money for the charity," Aronberg added.
The gun was auctioned off, with proceeds going to Forever Family Rescue Foundation, an animal welfare and rescue charity. "These unanswered questions could lead to a criminal investigation, and prosecutors could ask the court to decide whether this violates Trump's pre-trial release. At present, there's not enough to establish wrongdoing, but this could become yet another headache for the former president," Aronberg said.
The incident isn't the first time that Trump has come under fire for allegedly trading firearms while indicted. In September, his campaign team released a now-deleted social-media post of Trump expressing interest in buying a gun at Palmetto State Armory, a gun store in Summerville, South Carolina.
A prosecutor's filing said that the post "showed the defendant holding a Glock pistol with the defendant's likeness etched into it. The defendant stated, 'I've got to buy one,' and posed for pictures." The filing added Trump spokesperson Steven Cheung posted the video with a caption that read: "President Trump purchases a @GLOCKInc in South Carolina!" His campaign later retracted the video and associated claim.
"The defendant either purchased a gun in violation of the law and his conditions of release, or seeks to benefit from his supporters' mistaken belief that he did so," the court filing read. "It would be a separate federal crime, and thus a violation of the defendant's conditions of release, for him to purchase a gun while this felony indictment is pending."
Cheung previously told Newsweek that Trump did not purchase the gun. He wrote in a statement: "President Trump did not purchase or take possession of the firearm. He simply indicated that he wanted one."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
fairness meter
About the writer
...
To read how Newsweek uses AI as a newsroom tool, Click here.
|
Nonprofit, Charities, & Fundraising
|
India Has Met 40% Capex Target, On Track To Meet Fiscal Deficit Aim, Says Official
The government is also on the lookout for a better greemium, backed by the strength of green investments that are lined up.
The government’s aggregate receipts and expenditures are on track and in line with budgetary estimates, raising hope of meeting the fiscal deficit target, according to an Indian official with knowledge of the matter.
India’s fiscal deficit target is set at 5.9% of the gross domestic product for the current financial year.
The government aims to spend Rs 45 lakh crore this fiscal, with Rs 10 lakh crore outlined for capital expenditure, a 33% increase from the last fiscal. Revenue receipts for 2023–24 are pegged at Rs 26 lakh crore.
Around 40% of the planned capital expenditure has been frontloaded as of early September, the above-mentioned official said on the condition of anonymity. As of July, the capex came up to Rs 3.17 lakh crore or around 32% of the Rs 10 lakh crore target.
In order to finance a fiscal deficit of Rs 17.87 lakh crore, or 5.9% of the GDP, the government’s gross borrowings were announced at Rs 15.4 lakh crore. It released its October–March borrowing calendar for the fiscal on Tuesday, aiming to raise the balance of Rs 6.55 lakh crore through dated securities. As much as Rs 8.88 lakh crore worth of borrowings were announced for the period ranging from April to September.
Net borrowings for the second half are likely to be around Rs 3.7 lakh crore, the official said.
Better 'Greemium'
The government is also on the lookout for a better "greemium" on its green securities this fiscal, backed by the strength of green investments lined up, the official said.
It plans to raise Rs 20,000 crore through sovereign green bonds in the fiscal, with the maiden issue last year raising Rs 16,000 crore.
Treasury Bills
The government looks to raise Rs 7,000 crore from the issue of 91-day Treasury bills, Rs 8,000 crore from 182-day Treasury bills, and Rs 9,000 crore from 364-day Treasury bills, according to the Treasury bill auction calendar released for the December quarter.
The lower issue of 91-day Treasury bills is aimed at having predictability over the redemption levels in the last quarter and keeping gross borrowing levels in check, the above-mentioned official said.
|
Interest Rates
|
A 10-year-old girl spent more than £2,500 on the gaming site Roblox after changing the password on her family's iPad tablet without her mum realising.
Georgina Munday, from Denbighshire is now warning parents to "be vigilant".
Tesco Bank initially refused a refund but reconsidered and apologised after BBC Radio Four consumer affairs show, You and Yours took up the case.
Roblox says it has "a robust policy" from unauthorised payments and Apple says pre-purchase alerts can be set up.
Roblox allows users to create their own games but also offers in app purchases to upgrade the user's avatar with things like clothes or accessories and offers some pay to play games.
Georgina Munday, 44, who lives in Dyserth, said her daughter, Primrose, who has autism, had been playing on her tablet for longer recently, because she is currently off school after struggling in mainstream education.
She initially thought someone had hacked Primrose's account but it soon became clear that the 10-year-old had managed to change the password to allow payments.
"We'd just seen hundreds of transactions, these payment confirmations, so then the panic set in - oh my gosh, whose card is this on?"
Primrose had managed to spend more than £2,500 on the site but most were small transactions of around £20.
For about a week, Georgina, who is a nurse, was in back and forth contact with Apple and her bank, Tesco Bank, trying to secure a refund but both refused - she said it was "a horrendous time".
"It was a really stressful time. I am not working at the minute, I am looking after my daughter. The last few months have been quite stressful, so maybe we have had our eye off the ball. I just thought I would have to pay it off in instalments over the next few years.
"I rang up Tesco Bank and they said, because it was my daughter, they couldn't do anything about it. So I tried Apple again - they just read me their terms and conditions. So that's when I contacted the BBC, You and Yours, consumer programme."
Within a day, Georgina said that Tesco Bank contacted her to say they would refund the full amount.
"I cried - it was just a relief, a weight off my shoulders."
Apple points out there are ways that accounts can be set up to alert a parent before a child wants to make a purchase.
It added that parents and guardians should not disclose passwords or enable FaceID and TouchID for their children and Ask to Buy should be set up so purchases need approval before going through.
Screen time being turned on will also enable parents to stop in-app purchases, it added.
Tesco Bank said: "We've carried out a further review of this case and have now agreed with Ms Munday that we'll refund her the full amount.
"We apologise to Ms Munday that this wasn't arranged for her when she first contacted us, and we've therefore also organised an additional payment to her as a gesture of goodwill."
Georgina said she does not feel happy to let her daughter play the game anymore.
"She knew what she was doing, she changed the password but I don't think she understood the enormity of it."
Georgina said parents need to "be vigilant" and know what their children are playing.
"Children are one step ahead of parents these days. We thought this Roblox game was quite innocent, it looks very basic. It's a whole world out there on this Roblox that we knew nothing about."
Roblox said: "Roblox has a robust policy for processing refund requests where there may have been unauthorised payments from a person's account.
"This process is detailed in our help centre here.
"Parents also have access to a suite of Parental Controls that can be used to determine how much their children can spend, and set spend notifications to increase visibility over their children's spending on Roblox."
- You can hear more on this story on You and Yours on BBC Radio Four at 12:00 BST on Monday or on BBC Sounds.
|
Consumer & Retail
|
Rishi Sunak has said he is “not bothered” by Labour’s criticism of his wealthy family’s tax arrangements and thinks the UK has “moved beyond” judging people on their money, as a new estimate said the UK prime minister’s fortune had fallen to around £500m.
Sunak, who is the wealthiest British prime minister ever on account of his wife’s shareholdings, said he did not pay attention to Labour’s personal attacks on his finances.
The new Sunday Times rich list estimated his family’s wealth had dropped by £200m in the past year because of a fall in the price of his wife’s shareholding.
It said Sunak, a former hedge fund manager, and his wife, Akshata Murty, had an estimated worth of about £529m, a fall from £730m in 2022.
Murty owns a small stake in Infosys, a $64bn (£52bn) Indian IT firm co-founded by her billionaire father. The value of that stake has fallen, driving the drop in the couple’s fortunes.
However, Sunak said people were not bothered by his wealth when reporters asked him if he gets upset by personal attacks on his family, such as Keir Starmer criticising him at prime minister’s questions for his wife’s non-dom tax status.
Labour has also accused Sunak of being out of touch with ordinary people because of his family wealth. One attack advert asks: “Do you think it’s right to raise taxes for working people when your family has benefited from a tax loophole? Rishi Sunak does.”
Speaking on the plane to the G7 summit in Japan, Sunak said: “I haven’t really actually focused on it or seen all of it. The bits at PMQs I probably hear but the rest of it I don’t. These things generally don’t worry me. I don’t think most people sitting at home actually are much bothered about these things either.
“What they care about is what am I doing for them to make their lives better. As I talked a lot about last summer, I think we’ve moved beyond judging people by what’s in their bank account.”
He added: “These things don’t bother me.”
Murty was at the centre of a political storm last year after it emerged she had potentially avoided up to £20m in UK tax by being non-domiciled, and paid £30,000 a year to keep the status.
With Sunak’s position under increasing threat, Murty bowed to pressure to say she would pay UK taxes on all income in future, after saying she realised many people felt her tax arrangements were not “compatible with my husband’s job as chancellor”. She added that she appreciated the “British sense of fairness”.
The couple first entered the Sunday Times rich list last year when Sunak was chancellor in Boris Johnson’s government, making him the first frontline politician to be named in the annual ranking since its inception in 1989.
When asked during the Tory leadership contest in August how he could relate to the public during a cost of living crisis, given that he was richer than the queen, Sunak said people should not hold his wealth against him.
“I think in our country, we judge people not by their bank account, we judge them by their character and their actions. And yes, I’m really fortunate to be in the situation I’m in now, but I wasn’t born like this,” Sunak told a leadership hustings event in Darlington.
|
United Kingdom Business & Economics
|
Cryptocurrency prices plunged as investors liquidated more than $1 billion worth of digital coins on Thursday after it was reported that Elon Musk’s SpaceX sold off its Bitcoin holdings.
On Thursday, Bitcoin fell 7.2% in its biggest one-day drop since November 2022 when top exchange FTX collapsed. Bitcoin then slipped to a two-month low of $26,172 during Asian trading hours on Friday, its lowest since June 1.
Analysts said cryptocurrencies also appeared to be getting hit as rising interest rates slammed riskier assets across the board including stocks. By early Friday morning Eastern time, Bitcoin was changing hands at $26,441, down 0.8% on the day.
Ether, the second biggest cryptocurrency, was steady at $1,685.20, having also dropped sharply on Thursday.
SpaceX, which is owned by crypto enthusiast Musk, wrote down the value of its Bitcoin holdings by $373 million in the past two years before selling them off, according to The Wall Street Journal, which cited internal financial documents from the privately owned rocket-launching company.
Musk’s electric car maker, Tesla, sold 75% of its Bitcoin holdings last year — another move perceived as a vote of no confidence from the tech mogul who in years past has touted the meme coin Dogecoin.
The SpaceX report was the “immediate catalyst” for bitcoin’s sell-off, Ben Laidler, global markets strategist at eToro, told Reuters.
“The broader driver is that crypto assets are not immune to the deepening risk-off selling pressure seen across all asset classes,” Laidler said.
Joseph Edwards, head of research at Enigma Securities, attributed the bitcoin price move to low volatility and a lack of enthusiasm from retail investors.
After a pandemic era boom that saw the value of Bitcoin skyrocket past $60,000, cryptocurrency has been mired in a slump.
At the height of its wealth, the cumulative worth of digital coins reached nearly $3 trillion in November 2021.
As of Friday, the total market capitalization of all crypto assets including stable coins and tokens was hovering just over $1 trillion.
The crypto community has been hit with a series of legal and regulatory setbacks that have spooked investors.
FTX, which at one point was the second largest cryptocurrency exchange in the world with an estimated market capitalization of $32 billion, was thrown into bankruptcy after its founder, Sam Bankman-Fried, was alleged to have used customer deposits to cover risky bets made by his hedge fund, Alameda Research.
Bankman-Fried, who is in jail awaiting trial on fraud and money laundering charges, has pleaded not guilty.
Coinbase, the largest crypto exchange platform in the US, has been sued by the Securities and Exchange Commission for operating illegally because it failed to first register with the regulator.
The SEC has also targeted the world’s largest crypto exchange, Binance, for allegedly operating a “web of deception.”
With Post Wires
|
Crypto Trading & Speculation
|
Traders Bet BOE Is Far From Done After Surprise Half-Point Hike
The Bank of England’s unexpectedly large interest-rate hike won’t be its last this year, according to money-market pricing.
(Bloomberg) -- Traders are adding to bets that the Bank of England’s unexpectedly large interest-rate hike won’t be its last.
After the central bank defied economist and market forecasts by raising its benchmark interest rate by a half percentage point Thursday, traders quickly moved to bet on another such increase by September. Markets now see 75 basis points of tightening split over the next two meetings. Meanwhile, economists at Goldman Sachs Group Inc. revised their outlook, predicting a 50 basis-point hike in August.
The return to bigger hikes reflects concern among officials that the BOE’s tightening campaign — which began more than a year-and-a-half ago — is falling short. Inflation remains far above the central bank’s 2% target, with figures Wednesday showing consumer prices at 8.7% in May, the fourth consecutive month of faster-than-expected gains. That has the market expecting a more aggressive round of tightening, even if that puts the economy at risk.
“The BOE may have accepted that to achieve their inflation target, a recession may well be necessary,” said Jamie Niven, a fund manager at Candriam.
Certainly, a recession looks increasingly likely. Bloomberg Economics sees the UK entering a downturn if rates hit 6% — as markets already forecast — and experts are warning of a mortgage “time bomb” as those higher rates make it near impossible for households to refinance home loans.
Two-year mortgage rates have tripled to more than 6% since March 2022 but Prime Minister Rishi Sunak’s government has so far resisted calls to step in for fear of undermining the BOE.
“The UK finds itself in the worst position of major western economies,” said Joseph Little, global chief strategist at HSBC Asset Management. “A looming ‘mortgage squeeze’ and a turn in the credit cycle means that the economy now faces a recession as we head toward 2024.”
Pound Pain
That angst is evident not just in expectations for more hikes but also in the performance of the pound, which weakened following the BOE’s hike.
While higher rates would typically support the currency, fears around a hard landing saw the pound erase an initial jump, echoing a similar move after Wednesday’s inflation data. Bets in the options market are now the most bearish in almost five months versus the euro.
“It’s a classic EM style reaction,” Peter Kinsella, global head of FX strategy at UBP, said of the pound weakening and UK bond yields rising. “50 bps from the BOE reeks of pure panic.”
Policymakers led by Governor Andrew Bailey have raised rates by almost five percentage points since late 2021 and reiterated earlier guidance pointing toward higher rates in Thursday’s statement.
For Goldman Sachs economists, the half-point hike in the next meeting will be followed by a quarter-point move a month later, taking the bank rate to 5.75%. The bank’s previous forecast was for a quarter-point hike in August and a 5.5% terminal rate.
“Even if rates were to stay where they are in the next six to 12 months, that would be particularly restrictive on the UK economy,” said James Athey, investment director at Abrdn Investments, in an interview with Bloomberg TV on Thursday. “I think we will end up with a policy that will be pretty deleterious for the economy.”
--With assistance from James Hirai, Sujata Rao and Alice Atkins.
(Adds context and comments throughout.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Interest Rates
|
Banks Write-Off Rs 14.56 Lakh Crore NPAs In Last Nine Financial Years
Out of the total Rs 14,56,226 crore, written off loans of large industries and services stood at Rs 7,40,968 crore.
Banks have written off bad loans worth Rs 14.56 lakh crore in the last nine financial years starting 2014-15, Parliament was informed on Monday.
Out of the total Rs 14,56,226 crore, written off loans of large industries and services stood at Rs 7,40,968 crore.
Scheduled Commercial Banks have recovered an aggregate amount of Rs 2,04,668 crore in written-off loans, including corporate loans, since April, 2014 and up to March, 2023, Minister of State for Finance Bhagwat Karad said in a written reply to Lok Sabha.
Loans written-off during the financial year, net of recovery in written-off loans during the financial year (net write-off) in public sector banks was Rs 1.18 lakh crore in the FY18, which has declined to 0.91 lakh crore in FY22 and to Rs 0.84 lakh crore (RBI provisional data) in FY23, he said in another reply.
Net write-off loans by private sector banks stood at Rs 73,803 crore (RBI provisional data) in FY23, he said.
Net write-off as percentage of opening gross loans and advances in private sector banks was 1.25% and 1.57% in FY 2017-18 and FY23 respectively, and it was 2% and 1.12% for PSBs during the same period.
Comprehensive steps have been taken by the government and RBI to recover and to bring down NPAs, enabled by which, gross NPAs of PSBs have declined to Rs 4.28 lakh crore as on March 31, 2023 from Rs 8.96 lakh crore as on March 31, 2018, he said.
Talking about various steps taken by the government, he said, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been amended to make it more effective.
The pecuniary jurisdiction of debt recovery tribunals was increased from Rs 10 lakh to Rs 20 lakh to enable the DRTs to focus on high-value cases, resulting in higher recovery for the banks and financial institutions, the minister said.
In addition, he said, National Asset Reconstruction Company Ltd. has been set up as an asset reconstruction company with an aim to resolve stressed assets above Rs 500 crore each.
The government has also approved extending a guarantee of up to Rs 30,600 crore to back Security Receipts issued by NARCL to lending institutions for acquiring stressed loan assets, he said.
Replying to another question, Karad said the board of State Bank of India in its meeting held on June 9, 2023 had accorded approval for raising up to an amount of Rs 50,000 crore which constitutes basel III compliant AT-1 bonds up to an amount of Rs 20,000 crore, Tier-2 bonds up to an amount of Rs 10,000 crore and infrastructure bonds up to an amount of Rs 20,000 crore by the bank during FY4.
As per SBI, the purpose of raising capital bonds (AT-1 and Tier-2) is to replace the existing capital bonds which are due for call up during FY2023-24, further strengthen the capital base of the bank and support asset growth, he said.
Banks are exempted from maintaining Cash Reserve Ratio and Statutory Liquidity Ratio on long-term bonds for lending to infrastructure sector, he said, adding, the raising of long-term infrastructure bonds helps the bank in better asset liability management.
In a separate reply, he said, Pradhan Mantri Mudra Yojana was launched on April 8, 2015 and has been implemented across the country.
As on June 30, 2023, he said, more than 42.20 crore loans amounting to Rs 24.34 lakh crore have been sanctioned to borrowers under the scheme.
|
Banking & Finance
|
The home secretary is proposing new laws to restrict the use of tents by homeless people, arguing that many of them see it as a "lifestyle choice".
Suella Braverman's plan would introduce new penalties in England and Wales for homeless people whom authorities believe have rejected offers of help.
The plan was to stop "those who cause nuisance... by pitching tents in public spaces," she said.
Housing charity Shelter said: "Nobody should be punished for being homeless".
The plan is expected to be included in the King's speech on Tuesday, which sets out the government's legislative agenda and is expected to focus heavily on law and order.
Writing on X, formerly known as Twitter, Ms Braverman said: "Nobody in Britain should be living in a tent on our streets. There are options for people who don't want to be sleeping rough."
She said the government would always support those who are genuinely homeless, but added: "We cannot allow our streets to be taken over by rows of tents occupied by people, many of them from abroad, living on the streets as a lifestyle choice."
She added: "What I want to stop, and what the law-abiding majority wants us to stop, is those who cause nuisance and distress to other people by pitching tents in public spaces, aggressively begging, stealing, taking drugs, littering and blighting our communities."
Unless action is taken, she said, "British cities will go the way of places in the US like San Francisco and Los Angeles, where weak policies have led to an explosion of crime, drug taking and squalor."
According to the Financial Times, the proposals are designed to replace elements of the 1824 Vagrancy Act.
The paper reported that sources had said the plans being considered were for two clauses to be inserted in the new criminal justice bill, which applies to England and Wales. This would target tents that cause a nuisance - such as by obstructing shop doorways.
According to the report, the proposals include creating a civil offence whereby charities could be fined for handing out tents if they were deemed to have caused a nuisance.
Polly Neate, chief executive of Shelter said: "Living on the streets is not a lifestyle choice."
She added: "Homelessness happens when housing policy fails and boils down to people not being able to afford to live anywhere.
"Private rents are at an all-time high, evictions are rising and the cost of living crisis continues."
Labour's deputy leader, Angela Rayner added that the government should take responsibility for the housing crisis, rather than blame homeless people.
"A toxic mix of rising rents and a failure to end no-fault evictions are hitting vulnerable people, yet after years of delay the Tories still haven't kept their promises to act," she said.
The Liberal Democrats' home affairs spokesman, Alistair Carmichael, said it was "grim politics" to "criminalise homeless charities for simply trying to keep vulnerable people warm and dry in winter".
He added: "This policy will do nothing to stop rough sleeping and will leave vulnerable people to face the harsh weather conditions without any shelter whatsoever."
London mayor Sadiq Khan described the proposal as "deeply depressing".
"The government should be investing more in social housing, uplifting housing benefit rates and banning no-fault evictions," he wrote on X.
|
Real Estate & Housing
|
A man who relies on universal credit has described how he and his pregnant girlfriend recently spent two weeks without electricity.
Anthony Moore, from Llangollen in Denbighshire, said his income did not cover life's basics.
He gets support from the Llangollen Foodshare, a charity whose founder is calling for working-age benefits to be increased in line with inflation.
The UK government said it "prioritised those with the least".
Mr Moore, 22, is on a zero-hours contract with an employment agency.
He said he stopped being offered jobs after his mental health conditions, which include post-traumatic stress disorder (PTSD), caused him to have flashbacks in the workplace.
"I like to earn my own money, I like to be able to go out doing something and have eight hours of structure for the day," he said.
"But when I can't do that it brings me down."
Mr Moore relies on universal credit but said he and his partner, who is six months pregnant, struggle to afford food and energy bills.
"A couple of weeks ago we had to go without electric for nearly two weeks because the money was that low and we had to try and clear the debt.
"By the time we did clear the debt we still didn't have enough money to put on the electric. It was not good."
Mr Moore said he received help from the Discretionary Assistance Fund, which Welsh local authorities can use to provide emergency payments to people experiencing "extreme financial hardship".
Families 'in despair'
Steph Mitchell, founder of the Llangollen Foodshare, said she saw many families in "despair" over the cost of living crisis.
She said the "chronic stress" was "badly affecting" people's mental health.
She started the Llangollen Foodshare as a food surplus scheme four years ago, using the food that nearby supermarkets would otherwise have discarded.
Since then, she said, need had "exploded" in the area.
"A lot of people coming are working people. Some of them working several jobs, who come in saying I've never had to do this before in my life," she said.
Mum-of-four, Heidi, also gets support from the charity.
The 41-year-old cleaner recently started a part-time academic course because she wants to become a social worker.
She is struggling with debt and said her situation was "scary and frustrating" and left her feeling "inadequate as a parent".
"My children are not supposed to be in this situation and I'm trying to get to university so that I can get a decent job so that we aren't in the position we're in any longer," she said.
On Wednesday, Chancellor Jeremy Hunt will deliver the UK government's Autumn Statement, which updates MPs on the state of the economy and makes some tax and spending announcements.
One of those will be to reveal the amount by which benefits will increase next April.
The UK government normally increases benefits according to the inflation rate of the previous September, which this year was 6.7%.
But, so far, Mr Hunt has refused to commit to such an increase.
Simon Jones, of the mental health charity Mind Cymru, called on the chancellor to maintain that link.
"The decision over how to heat the house, how to feed the family, how to pay for those essentials is going to have a huge impact on people's mental health," Mr Jones said.
"Anything that doesn't bring up the level of universal credit in line with inflation really means that they're not getting the money that they need in order to survive in a lot of cases, and that adds worry and stress as well as a very practical financial gap that that people are having."
The Secretary of State for Wales, David TC Davies, said it was not appropriate for him to "start giving away things that might or might not be in the Autumn Statement".
"What I can point to," Mr Davies said, "is our record in government".
He added: "At all times we've prioritised those with the least in society and that certainly isn't going to change."
How much will universal credit increase by?
There are more than a quarter of a million households in Wales on universal credit, so the question of how much it will increase by next April is an important one for a lot people.
With some benefits there is a legal obligation on ministers to link the increases to inflation but others, like universal credit, are discretionary.
Usually, the UK government increases benefits in April by the previous September's inflation rate, which would mean an increase of 6.7% in April 2024.
But so far, ministers have not committed to this increase and the chancellor has spoken of "difficult decisions" ahead.
Some reports have suggested that he could choose the October inflation rate, which at 4.6% is considerably lower than the figure for September.
Doing this would save the treasury money, while still maintaining a link to inflation.
But with so many families still struggling with the cost of living, it would be a controversial decision.
If you've been affected by any of the issues raised in this article, information and support is available on BBC Action Line.
|
Inflation
|
ED Conducts Multi-State Raids In Money-Laundering Case Against Lucknow-Based Firm
The action is being carried out against Shine City Properties Ltd. and those linked to it in a fraud investment scheme estimated at Rs 800 crore, they said.
ED officers Friday raided 20 premises in Delhi, Uttar Pradesh and Maharashtra as part of a money laundering probe against a Lucknow-based company and its promoters who allegedly duped numerous investors by promising lucrative returns, official sources said.
The action is being carried out against Shine City Properties Ltd. and those linked to it in a fraud investment scheme estimated at Rs 800 crore, they said.
Around 20 locations in Delhi, Varanasi, Prayagraj and Lucknow in Uttar Pradesh and Mumbai in Maharashtra are being covered in the raids as part of this case being probed under the Prevention of Money Laundering Act (PMLA).
The money laundering case stems from some UP Police FIRs. It is alleged that the company, its promoters and linked accused, including Rashid Naseem, Asif Naseem, Amitabh Kumar Srivastava and Meera Srivastava, 'cheated' people by luring them to invest in various lucrative schemes floated by the company, the ED had said in October.
Assets worth more than Rs 128 crore have been attached in this case till now.
|
Banking & Finance
|
Good news ahead? In many weeks there is a flurry of economic statistics, signifying nothing. You wonder at the end of it what the message of this barrage of numbers really is.
This week promises to be different, with the publication of a potentially very important figure. Nevertheless, we must beware of economic statisticians bearing gifts. To get the right message will require some careful interpretation.
Pride of place among this week’s figures must go to the inflation numbers for October, which are due out on Wednesday. Believe it or not, I am fairly confident that we will see a drop in the CPI inflation rate from 6.7pc last month to something much lower, perhaps to about 4.7pc.
You may be surprised at both the size of the prospective drop and my comparative confidence. The explanation is that this drop will be heavily influenced by two things that we already know.
First, at the beginning of October the Ofgem price cap, which governs utility prices, was reduced by 7pc. This alone should reduce the level of the CPI by 0.3pc.
Second, in October of last year the Ofgem price cap was increased by 25pc. This alone was responsible for an increase in the CPI of 0.9pc. This large increase now drops out of the annual comparison.
Together with this year’s reduction in the cap, the effect is to lop about 1.3pc off the inflation rate. So, anticipating the inflation figure to be published this week amounts to an exercise not so much in forecasting as postcasting.
In the next few months, inflation may fall a bit further, perhaps reaching 4.5pc by the end of the year. This would have two consequences, which could be politically significant.
First, the Prime Minister’s pledge to halve inflation by the end of the year would be redeemed. (At the time he made this promise in January, inflation was running at 10.1pc.) Second, the UK would no longer be seen as an outlier in relation to other countries in the inflation stakes. We would now be pretty much back with the pack.
Yet you might suspect that what happens to inflation in any meaningful sense is not simply a matter of arithmetic. And you would be right. The figure to watch on Wednesday is not the headline inflation rate which should plunge, as argued above, but rather the so-called core rate.
This measure strips out food and energy prices and is much less volatile. Last month, the core rate disappointingly fell back only marginally from 6.2pc to 6.1pc. In Wednesday’s figures we may see it fall back further to 5.8pc.
If it falls back by much less than this, it will again be decidedly disappointing.
The Bank of England will also be closely watching what happens to the CPI for services. Last month this was running at 6.9pc. It may fall back a bit to 6.7pc. These drops in inflation would be welcome but, given that the Bank of England is aiming at an inflation rate of 2pc, these figures are still much too high.
The day before these figures are released, we will see publication of the latest labour market data. What is happening to unemployment and employment is of key interest to the Bank and other analysts.
Yet, as I pointed out here two weeks ago, the figures on these variables are currently so unreliable that whatever their apparent message, we will have to treat them with a barrel of salt.
Not so the figures on average earnings growth, released at the same time. On the three month average of year-on-year annual increases, last month pay was shown as increasing by 8.1pc.
This week there is a good chance that the figure will drop back to about 7pc. If anything like that occurs, then all those people who were arguing that a cut in interest rates cannot be that far off will become even more voluble.
But interest rate policy will still be data dependent. When it comes to forecasting inflation one year out and more, mere arithmetic falls into insignificance. What counts then is forecasting the balance between supply and demand. On that score, the broad money supply is dropping markedly. It has fallen by 4.2pc over the last year. Moreover, over this period, bank lending has contracted by 2.7pc.
At the very least, this seems consistent with definite weakness in nominal aggregate demand. Arguably, this should put us on recession alert.
Monetarists argue that it should even make us fearful of a fall into deflation, that is to say a period of falling prices.
That could readily happen if there were to be a large fall in oil and other commodity prices. But without such a fall, at a time when pay is rising at 7pc to 8pc, I think that the risk of a drop into proper underlying deflation is pretty slim.
Meanwhile, the real economy seems to be holding up well. The Q3 GDP figures showed the economy flat, rather than falling as most forecasters had expected. And the housing market has been remarkably resilient, with house prices actually rising in October by about 1pc, taking the year on year fall down to only about 3pc.
Friday’s retail sales figures will give us another gauge of the strength of spending and thereby the outlook for interest rates. There is a reasonable chance that they will show a small fall, apparently giving some real economy corroboration to the message of the money supply numbers.
As it happens, no less than six of the nine members of the Monetary Policy Committee are due to appear on panels or to make a speech this week. After the apparent disagreement last week between the Governor of the Bank and its Chief
Economist on how soon we can expect interest rates to be reduced, analysts will surely be all agog to discern some clues on interest rate prospects. They too should beware. Central bankers often speak with a forked tongue.
Roger Bootle is senior independent adviser to Capital Economics
|
Inflation
|
BRUSSELS, Nov 23 (Reuters) - Amazon (AMZN.O) is set to win unconditional EU antitrust approval for its $1.4 billion acquisition of robot vacuum maker iRobot (IRBT.O), three people familiar with the matter said on Thursday.
Antitrust enforcers around the world have stepped up scrutiny of Big Tech acquiring smaller rivals, concerned about the accumulation of troves of data by a few companies and big players leveraging their dominance into new markets.
The European Commission, which acts as the EU's competition watchdog, warned Amazon in July that the deal could reduce competition in robot vacuum cleaners and reinforce the U.S. company's dominant position as an online marketplace provider.
The Commission, which is due to decide on the deal by Feb. 14, declined to comment. Amazon did not respond immediately to a request for comment.
The deal announced in August would add iRobot's Roomba robot vacuum to U.S. online retail giant Amazon's portfolio of smart devices, includes the Alexa voice assistant, smart thermostats, security devices and wall-mounted smart displays.
The UK antitrust agency cleared the deal unconditionally after a preliminary review.
Reporting by Foo Yun Chee Editing by Mark Potter and David Goodman
Our Standards: The Thomson Reuters Trust Principles.
Read Next
- BusinessFidelity International raises $700 mln in its first China bond mutual fund
Fidelity International has garnered 5 billion yuan ($700 million) from investors for its first fixed income mutual fund in China, deepening the asset manager's involvement in the $3.8 trillion mutual fund market.
|
Consumer & Retail
|
WisdomTree is attempting to launch a spot bitcoin exchange-traded fund even though its peers have failed.
The firm filed with the U.S. Securities and Exchange Commission last week, making it its second bitcoin ETF application after an initial rejection two years ago.
However, WisdomTree's Jeremy Schwartz believes this time could be different.
"We've been able to successfully launch products in Europe," the firm's global chief investment officer said on CNBC's "ETF Edge" this week. "The European regulators have been more friendly, and they've been able to get comfortable with the mechanisms, the custodians [and] how the markets work."
The SEC rejected WisdomTree's previous applications in 2021 and 2022 on the notion they came in short to protect investors and the public interest.
Schwartz hopes the changes made in the firm's updated filing will satisfy regulators.
"Some of the new filings have these data sharing agreements, surveillance sharing, new ways of doing it," he said. "Now the question is: Will that address the SEC's concern on market manipulation? But that is one of the things I think we're all trying to address."
WisdomTree's latest launch effort comes during an increased appetite for bitcoin. As of late Friday, prices are up almost 84% so far this year.
"It's hard for me to comment too much about all the details while you're in these [filing] periods," Schwartz said when "ETF Edge" host Bob Pisani asked him why he thinks the SEC will approve the spot bitcoin ETF this time. "But I think the key is, will the exchanges share data … and [will the SEC] have more comfort than what was previously done before? I think the data sharing agreements are the key element for that."
It appears interest is climbing.
According to an SEC filing this week, Fidelity Investments is also trying to launch a spot bitcoin ETF despite its prior failures. It joins WisdomTree, BlackRock, VanEck and Invesco.
|
Crypto Trading & Speculation
|
Donald Trump set to testify in his own $250 million civil fraud trial
The outcome of the case could threaten the former president's business empire.
When Donald Trump enters court on Monday, the former president will swap his chair next to his lawyers for a seat on the witness stand -- sitting to the left of a judge he has called a wacko, feet from a clerk he has called biased, and directly across from a state attorney general he has called, without evidence, a dirty cop.
After more than a month of watching from the sidelines, Trump is set to be the star witness in his own $250 million civil fraud trial.
Sources tell ABC News that Trump spent Sunday evening in New York doing a prep session with his attorneys ahead of his testimony Monday. The sources described Trump as vacillating between fits of anger over the case and "in a good head space," ready to get his testimony over with -- with one source saying the former president “can be a good witness if he stays focused.”
New York Attorney General Letitia James plans to call Trump as the state's second-to-last witness, setting up a dramatic confrontation in a case that could threaten the former president's business empire.
"Trump can try to hide his wrongdoings behind taunts and threats, but we will not be bullied out of uncovering the truth," James said on social media Sunday.
Sources tell ABC News that once it's the defense's turn to present its case, some of members of the Trump family could return to the stand, including the former president himself.
James alleges that Trump and his adult sons relied on false statements of financial condition to conduct a decade of business, enriching themselves through better loan terms, favorable insurance policies, and a reputation bolstered by Trump's reputed high net worth. In order to maintain that reputation, Trump instructed his executives to falsify records to inflate the value of his namesake buildings and other assets, according to James.
Trump has denied all wrongdoing and has called James a "dirty cop" whose case is a form of "election interference."
The judge overseeing the case has been partially convinced by the state's arguments, finding in a partial summary judgment on the eve of the trial that Trump and his adult sons are liable for using "false and misleading" statements to conduct business -- leaving the trial to determine additional actions and what penalty, if any, the defendants should receive.
Trump has appealed that ruling and criticized both James and Judge Arthur Engoron as politically motivated.
Trump returns to the stand
When Trump is sworn in ahead of his testimony Monday morning, it will be the second time he has taken the stand in this case.
During a courtroom visit two weeks ago to watch the testimony of his former lawyer Michael Cohen, Trump was unexpectedly summoned to the witness stand to face questions from Judge Engoron about a statement Trump made that the judge believed was directed at his clerk and thus violated a limited gag order the judge has imposed prohibiting all parties from making public comments about his staff.
"This judge is a very partisan judge, with a person who's very partisan sitting alongside of him, perhaps even much more partisan than he is," Trump said in the courtroom hallway that morning. While Trump maintained he was referring to Michael Cohen -- who sat next to the judge on the witness stand -- Engoron was unconvinced and decided to personally question the former president.
Trump appeared unfazed and comfortable in the witness box, offering generally terse answers -- but took one clear jab at the judge's clerk.
"I think she is very biased against us. I think we made that clear. We put up a picture and you didn't want that up," Trump said on the witness stand, referring to his social media post that prompted the initial gag order.
The judge ultimately found that Trump's testimony was "not credible," writing in a decision that the former president's testimony rang "hollow and untrue." He also fined Trump $10,000 for the statement.
Trump also sat for two depositions with the attorney general's office during the course of the AG's probe in 2022 and 2023.
During the first deposition, in August 2022 -- before James filed her lawsuit -- the former president invoked his Fifth Amendment rights over 400 times.
Trump took a different approach during his second deposition in April 2023, offering lengthy answers, speaking over his lawyers, and pontificating on unrelated topics such as how he prevented a "nuclear holocaust" as president, according to a transcript of the deposition that was subsequently released by the AG's office.
"Chris, we're going to be here until midnight if your client answers every question with an eight-minute speech," state attorney Kevin Wallace, who will also be questioning Trump in court, said to Trump's lawyer.
Often volunteering more information than required, Trump argued that his brand value was likely worth $10 billion and complained about how his presidency and subsequent investigations soured banks' impression of him.
He spoke in superlatives about his holdings, saying, "We have the Mona Lisa of properties."
Trump underplayed the significance of his own financial statements during his deposition, arguing that a so-called "worthless" disclaimer included in each statement of financial condition -- which warned lenders that the valuations required judgment and that they should do their own analysis -- insulated him from liability.
"Many lawyers have come to me and said, 'You have the greatest worthless clause I've ever seen,'" Trump said.
In his pretrial ruling, Engoron expressed skepticism at Trump's belief that the "worthless" disclaimers render the financial statements insignificant.
"Defendants' reliance on these 'worthless' disclaimers is worthless," Engoron wrote.
Trump acknowledged in his deposition that he would "look at" his annual financial statement -- which he said contained "guesstimates" -- but did not spend much time reviewing the document, which sits at the center of the attorney general's case.
"They would give me a statement. I would certainly look at it. But I had not a lot to do with it. I just didn't consider it important because of the worthless clause," Trump said in his deposition.
Trump sons testify
Trump's appearance on the witness stand follows three days of testimony from his sons Eric Trump and Donald Trump Jr., who largely denied being involved in the preparation of the financial statements and have denied all wrongdoing.
"Before even having a day in court I'm apparently guilty of fraud for relying on my accountants to do -- wait for it -- accounting," Trump Jr. said outside court on Thursday.
Despite his increased involvement in his family's firm once his father became president in 2016, Eric Trump testified that he relied on experts when certifying his father's finances.
Eric Trump's appearance on the stand also spurred defense counsel's additional criticism of Judge Engoron's law clerk, who Trump's attorneys called biased and distracting due to the manner in which she confers with the judge during proceedings.
"I do feel like truly that I'm fighting two adversaries," Trump attorney Chris Kise said during a heated exchange about the clerk on Friday.
In response, Engoron -- who told attorneys "I have an absolute, unfettered right to get advice from my principal law clerk" -- expanded the case's limited gag order to also cover attorneys, barring Trump's lawyers from objecting to communications between him and his clerk.
Trump's empire at risk?
Over the first five weeks of the trial, the state's witnesses have attempted to insulate the former president from the actions alleged in the attorney general's complaint. His sons said Trump's financial statements were compiled by accountants and lawyers, and his top deputies within the Trump Organization testified that Trump was largely uninvolved in their preparation.
Michael Cohen, Trump's former lawyer and self-described "fixer," offered the strongest testimony against the former president.
"I was tasked by Mr. Trump to increase the total assets based upon a number that he arbitrarily elected," Cohen said, though he struggled to offer specific details or evidence to prove that such meetings occurred.
Trump's lawyers hammered at Cohen on cross-examination for two days, eliciting what they described as perjury and saying that his credibility was irreparably damaged. Defense attorney Clifford Robert unsuccessfully moved for a directed verdict after the testimony, arguing that "the government's key witness has fallen flat on his face."
Judge Engoron denied the motion, saying that even without Cohen's testimony, "There's enough evidence to fill this courtroom."
Engoron will ultimately decide what penalties, if any, Trump and his adult sons will face. The judge has already canceled Trump's business certificates in New York -- a penalty that has temporarily been paused while Trump appeals. The New York attorney general has also asked that Engoron penalize Trump $250 million, bar him and his children from leading companies in New York, and prevent Trump from purchasing commercial property or taking out loans for five years.
Those penalties could not only hit Trump's checkbook, but also cast a shadow on the company and brand that Trump has acknowledged allowed him to ascend to the presidency.
"I became president because of the brand, OK?" Trump said during his deposition. "I became president. I think it's the hottest brand in the world."
|
Banking & Finance
|
- The U.K. government published its response to a consultation paper issued earlier this year, which outlined recommendations on how the crypto industry should be regulated.
- The government received views from crypto native and fintech companies, industry associations, traditional financial services firms, members of the public, academia, and legal and consulting firms.
- The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.
The U.K. government on Monday confirmed plans to regulate the cryptocurrency industry, announcing in a consultation paper that it will look to bring in formal legislation for crypto activities by 2024.
The government published its response to a consultation paper issued earlier this year, which outlined recommendations on regulating the crypto industry.
In the Monday paper, the government said it intends to bring a number of cryptoasset activities under the same regulations that govern banks and other financial services firms.
"I am very pleased to present these final proposals for cryptoasset regulation in the UK on behalf of the Government," Andrew Griffith, the U.K. financial services minister, said in a statement.
"I look forward to our continued work with the sector in making our vision a reality for the UK as a global hub for cryptoasset technology."
The government's proposals include stricter rules for exchanges, custodians that store crypto on behalf of clients, and crypto lending companies.
The U.K. also proposes stricter regimes for market abuse and cryptoasset issuance and disclosures.
The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.
It is not immediately clear at this stage what U.K. laws on crypto will look like.
The EU set out a clear framework for digital assets with its MiCA (Markets in Crypto-Assets) regulation, including a licensing process for crypto firms.
The U.K. is further ahead in the process than other tech leading nations. Numerous bills are going through Congress, but the U.S. is far behind others when it comes to bringing about formal federal laws for the crypto industry.
|
Crypto Trading & Speculation
|
Each year, fields of flowers spring to life in row after row of vibrant, carefully-coordinated colors. This annual bloom attracts hundreds of thousands of tourists who come to tiptoe through the tulips, posing for photos that some friends assume required a passport. "They think I went all the way to the Netherlands," said one visitor. "I'm like, no, I just took a quick flight up to Washington!"
Washington's Skagit Valley, in the northwest corner of the state, is home to the annual Tulip Festival, a celebration of a flower best known for being grown nearly 5,000 miles away.
"The area is much like Holland – climate-wise, is extremely similar," said Brent Roozen. "They have the North Sea, we have the Puget Sound. So, we never get too hot, too cold, which produces really big, vibrant, beautiful tulips."
Brent comes from a long line of tulip growers; his family runs Roozengaarde, the largest display of tulips in the area, planting tens of millions of bulbs every year.
Brent's grandfather, Bill Roozen and grandmother, Helen, emigrated from the Netherlands to the Pacific Northwest in 1947. Helen recalled in 1989, "We went farther west and more farther west and all the big lights disappeared … And I thought, 'Oh my gosh, don't tell me, if I'm going to live on a farm, I could have stayed in Holland and lived on a farm!"
But the Roozens planted roots in Washington. Ten children and 36 grandchildren later, the small flower farm they purchased has blossomed into quite a family business, with relatives working everywhere from the gift shop to the corner office. Today, their Washington Bulb Company is the largest grower of tulips in the country.
And, as popular as the display garden is, most of the action happens out of sight. From the greenhouse side of the business, boxes of bulbs and bunches of flowers are shipped out all across the country, servicing small local florists and big supermarket chains.
The tulip trade kicks into high gear in spring. "Mother's Day is by large our biggest shipping holiday for tulips," said Brent Roozen. "It's not even close."
Leading up to Mother's Day, the Roozens ship out more than 3 million cut flowers a week, including plenty to customers who are cutting it close. "It's a huge spike at the very last minute," said Brent.
"That makes me feel better. Everyone else is doing that, too?" asked Knighton.
"Trust me: I wish you didn't, but everyone does it, so you are not alone!"
The tulip symbolizes new life – you'll see plenty of mothers-to-be posing for pictures in the fields. But to ensure the best bulbs for next year, growers generally have to "top" their outdoor tulips before Mother's Day. Richard Roozen demonstrated: "You want to leave as much green on the plant as possible, and you just bend. So, all the energy is now going to the bulb for growth. It allows the bulb to grow bigger in size. Bigger bulbs mean a bigger bloom next spring."
With tulips, it's all about planning ahead. And for those of you who might not be the best at planning ahead, well, there's always tomorrow.
Knighton asked, "Is there an after-Mother's Day spike for the people who forgot?"
"We noticed maybe the order total is maybe a little bit higher for those after Mother's Day ones, where it's like, 'Hey, I better throw in an extra bunch or two here because I'm making up for it now,'" said Brent.
For more info:
- Skagit Valley Tulip Festival, Washington
- Washington Bulb Company / Roozengaarde, Mount Vernon, Wash. (tulips.com)
Story produced by Dustin Stephens. Editor: George Pozderec.
for more features.
|
Agriculture
|
Some supermarkets have begun to drop customer limits on certain fresh fruit and vegetables as supply issues begin to ease.
Asda confirmed it had removed its limit of three on cucumbers, lettuce, salad bags, broccoli, cauliflower and raspberries - but has left restrictions of three on tomatoes and peppers.
The supermarket said availability had improved as expected, and supplies of tomatoes and peppers were also expected to return to normal within a couple of weeks.
Morrisons also removed its restriction on cucumbers, but kept its limit of two items per customer on tomatoes, lettuce and peppers.
Read more:
Tesco approaches chair candidates as Allan nears the checkout
Flood damage in Britain would be reduced if world hits climate pledges - study
Shoppers began to share their frustration about shortages of tomatoes around 20 February, with supermarkets responding to say a combination of bad weather and related transport problems in north Africa and Europe were causing significant supply problems.
The shortage soon began affecting other products, leaving shelves without a number of fresh produce items such as cucumbers, peppers and lettuces.
Tesco, Aldi and Lidl limited the purchase of peppers, tomatoes and cucumbers to three items per person.
Sky News has contacted Tesco, Aldi, and Lidl for comment.
Unusually cold night-time temperatures affected tomato ripening in Morocco in January, with growers and suppliers also having to contend with heavy rain, flooding and cancelled ferries - all of which affected the volume of fruit reaching Britain.
Supplies from Britain's other major winter source, Spain, were also badly affected by weather, with issues compounded by ferry cancellations due to bad weather.
Producers locally also reported having to cut back on their use of greenhouses due to higher electricity prices.
Shortages could be 'tip of the iceberg'
Environment Secretary Theresa Coffey suggested British consumers should eat more turnips instead of imported food when asked about the shortages, leading to mocking headlines like: "Let them eat turnips".
The National Farmers' Union (NFU) warned shortages could become more common if the government does not secure domestic supplies.
"We will always rely on imports to some degree for produce we can't grow here, or to ensure diversity of supply," NFU deputy president Tom Bradshaw told Sky News.
But "as global volatility increases, it's imperative the government focuses on building resilient domestic food supply chains", he added.
|
Consumer & Retail
|
(Reuters) - British sports and fashion group Frasers said on Thursday it will seek to buy SportScheck's business and assets out of administration after the German sporting goods retailer filed for insolvency.
Frasers had agreed to purchase SportScheck in October for an undisclosed price from debt-addled Austrian property empire Signa Retail Department Store Holding to expand its presence in Germany, but had not yet closed the deal.
Signa on Wednesday filed for self-administered reorganisation proceedings, and media reports followed on Thursday that SportScheck would also file for insolvency.
Frasers confirmed SportScheck's administration in its statement and said it exercised its rights under its agreement with Signa to withdraw from the deal.
However, the London-listed group said it intends to work with SportScheck's appointed administrator to purchase its business and assets.
"While Frasers is disappointed by the insolvency of SportScheck, it continues to believe that SportScheck is an attractive asset in one of Europe's most important markets for Sports," the company said.
(Reporting by Sri Hari N S and Pushkala Aripaka in Bengaluru; Editing by Krishna Chandra Eluri)
|
Consumer & Retail
|
Mish Designs Limited Allotment Finalised: Where And How To Check Allotment Status?
As per the latest update, the allotment of shares has now been finalised.
Mish Designs, a company offering its shares to the public for the first time through an Initial Public Offering (IPO), recently completed its IPO subscription process. The IPO involved selling 8 lakh new shares at a fixed price of Rs 122 per share, raising a total of Rs 9.76 crores. The IPO was open for subscription from October 31, to November 2.
Investors had to buy a minimum of 1,000 shares, which means they needed to invest at least Rs 122,000. High-net-worth individuals (HNI) had to invest in 2 lots of 2,000 shares, totaling Rs 244,000.
The IPO was quite popular, with investors subscribing for a total of 135.43 times the number of shares available. Retail investors, those investing smaller amounts, were particularly enthusiastic, with their subscription reaching 166.74 times the available shares.
As per the latest update, the allotment of shares has now been finalised.
Where To Check Mish Designs IPO Allotment Status?
Investors can check the allotment status of Mish Designs IPO on the official website of the registrar, Kfin Technologies Limited and on the BSE website.
How To Check Mish Designs IPO Allotment Status On Kfin Technology Website?
Visit the KFINTECH website https://ris.kfintech.com/ipostatus/
Click on any of the links displayed to view IPO Allotment Status.
Choose "Mish Designs Limited" from the drop-down list.
Choose one of the three options: Application number, Demat Account number, or PAN ID.
Enter your application number or PAN or DPID.
Complete the 'captcha'.
Click "Submit" button.
View your allotment details.
Download/print the allotment status for your records.
How To Check Mish Designs IPO Allotment Status On BSE Website
Go to the official BSE website here : bseindia.com/investors/appli_check.aspx
Select the issue type as 'Equity.'
Choose "Mish Designs Limited" from the dropdown menu.
Enter your application number or PAN (Permanent Account Number).
Complete the 'Captcha' for verification.
Click on the "Search" button to view your allotment status.
Download or print the allotment status for your records.
Mish Designs IPO Listing Date
Mish Designs Limited is set to be listed on BSE SME with a tentative listing date fixed for Friday, November 10.
*This is a tentative date and is subject to change.
Mish Designs IPO Timeline (Tentative Schedule)
IPO Open Date: October 31
IPO Close Date: November 2
Basis of Allotment: November 4 (finalised)
Initiation of Refunds: November 8
Credit of Shares to Demat: November 9
Listing Date: November 10
Mish Designs IPO Issue Details
Total issue size: Rs 9.76 crores
Face value: Rs 10 per share
Fresh issue size: 8,00,000 shares
Shares for fresh issue: 8,00,000 shares
Price per share: Rs 122
Lot size: 1,000 shares
About Mish Designs IPO Limited
Mish Designs Limited, incorporated in November 2017, is a company engaged in processing fabrics into garments under the brand name "MISH" and "CURVES BY MISH" in India. The company also exports its products to the United Arab Emirates under the brand name "ZOEY." Mish Designs offers a wide collection of over 1000 trendy designs in the category of women's wear, including dresses, tops, co-ords, t-shirts, trousers, and palazzos. The company's competitive strengths include an online presence through various platforms, cost-effective production, timely order fulfillment, and an experienced management team and promoters.
|
Stocks Trading & Speculation
|
The U.S. Securities and Exchange Commission (SEC) said it is suing Richard Schueler, known online as Richard Heart and his three crypto projects, Hex, PulseChain and PulseX, for conducting unregistered offerings of “crypto asset securities.”
The unregistered offerings raised more than $1 billion in crypto from investors, the agency stated.
Heart and PulseChain also were charged with fraud “for misappropriating at least $12 million of offering proceeds to purchase luxury goods including sports cars, watches, and a 555-carat black diamond known as ‘The Enigma’ – reportedly the largest black diamond in the world.”
PulseChain launched in May, and PulseX is the exchange on its blockchain that allows users to exchange other tokens on its network, according to its website.
The two entities were off to a rocky start due to their connection to Hex and some community members’ concerns about its fundamentals. Hex has been around since 2019 and doesn’t have a stellar reputation because many market players view it as a scam due to its advertisements as the first “blockchain certificate of deposit.” It claimed that users who stake its token could mine new coins with high APYs and deposits are worth “trillions of dollars” and are “worth more than gold, credit card companies and cash.” 🙄
With that said, Hex claims it’s not a scam, and even has a page on its website dedicated to clarifying itself.
The SEC echoed that Heart allegedly created the “staking” feature for HEX tokens, which he claimed would provide yields as high as 38%, the agency stated. The complaint further alleges that Heart “attempted to evade securities laws by calling on investors to ‘sacrifice’ (instead of ‘invest’) their crypto assets in exchange for PLS and PLSX tokens.”
From December 2019 to November 2020, Heart and Hex allegedly offered and sold HEX tokens in an unregistered offering, bringing in over 2.3 million ether, worth about $4,271,468,000 at present value, the SEC stated.
The SEC also alleged that between July 2021 and March 2022, Heart created two additional unregistered crypto tokens, PLS and PLSX, that raised hundreds of millions in crypto to support PulseChain and PulseX, respectively.
The price of the HEX, PLS and PLSX tokens fell 24%, 25% and 42%, respectively, on Monday after news of the SEC’s complaint.
In recent months, the SEC has ramped up efforts to crack down on the crypto industry, going after companies big and small for alleged securities violations, fraud, and other activities. As the agency continues to scrutinize the space, we could well see other firms facing lawsuits in the coming months.
All in all, the SEC’s issue is with companies treating crypto assets as securities, something that the industry and other government regulatory bodies don’t agree on.
Earlier this month, a federal court ruled that the XRP token, used for the Ripple blockchain, is not a security when sold to the broader public, but could be considered as one for institutional sales. The SEC had alleged in its case that Ripple and two executives had raised $1.3 billion in an alleged “unregistered, ongoing digital asset securities offering.”
Stu Alderoty, chief legal officer of Ripple Labs, told me on TechCrunch’s Chain Reaction podcast that the ruling could potentially provide clarity for other pending lawsuits. “I think our case and the decision rendered by our judge will provide comfort to other judges that the SEC is just misguided.”
But, he said, the question that policymakers and lawyers should be asking is, “What’s the best regulatory framework that we can create that protects the integrity of the market?”
|
Crypto Trading & Speculation
|
Labour has received around £1.5 million from green entrepreneur Dale Vince, who also supports the Just Stop Oil campaign group.
The only people that benefit from Keir Starmer’s energy policy are dictators and autocrats like Vladimir Putin
Mr Sunak said: “It does appear that these kind of eco-zealots at Just Stop Oil are writing Keir Starmer’s energy policy and, not content with disrupting our summer and cherished sporting events, they are essentially leading us into an energy surrender.
“My view is we should focus on energy security, not weakness and dependency which seems to be the Labour Party’s policy.”
A Labour government would stop issuing new licences for oil and gas production in the UK – a move which has prompted fury from both the industry and unions and was branded “completely bizarre” by Mr Sunak.
Speaking to reporters during his trip to Washington, the Prime Minister said: “They are putting ideology ahead of jobs, ahead of investment, and ahead of our energy security – I think that is wrong and it’s not the right policy for the UK.
“It’s a completely bizarre policy which says ‘we won’t ban oil and gas, we’ll just ban British oil and gas’.
“The only people that benefit from Keir Starmer’s energy policy are dictators and autocrats like Vladimir Putin.”
Keir has been outspoken in his condemnation of Just Stop Oil who he believes have put lives and livelihoods at risk. The idea that they have influenced our policy is for the birds
Sir Keir has stressed that “oil and gas are going to be part of the mix for decades to come, into the 2050s”.
Labour is expected to set out full details of its green energy plan next week.
Mr Vince, founder of green energy firm Ecotricity, has donated about £1.5 million to Labour over the past decade.
He has also donated to Just Stop Oil but denied any connection between the two, saying he gives money to “people in the world trying to do something good”.
A spokeswoman for the Labour leader’s office said: “Keir has been outspoken in his condemnation of Just Stop Oil who he believes have put lives and livelihoods at risk.
“The idea that they have influenced our policy is for the birds.
“The modern Labour Party doesn’t bow to fringe lobbies or extremists – every position we take and everything we do is firmly focused on providing security and opportunity for hard-working Brits.”
Register for free to continue reading
Sign up for exclusive newsletters, comment on stories, enter competitions and attend events.
|
Energy & Natural Resources
|
About 100 people were turned away from a food voucher scheme in Gwynedd due to high demand.
The Porthi Dre project in Caernarfon received £9,000 by the Welsh government and used it to buy vouchers, which were expected to last for three weeks.
However, the money only lasted for one and half of the 200 people who came to the final session were turned away.
One councillor involved in the scheme said he feared poverty would "become the norm".
Dewi Jones said telling people there were no more vouchers available last week was "one of the worst things I've had to do".
He added: "The demand is much, much higher than what we can deal with.
"For me, it should be the government's number one priority," he said.
"There are rising levels of poverty and at times I am questioning whether the government want to do something about it or are happy to just accept the current situation."Â
Porthi Dre - which means feeding the town in Welsh - planned to distribute the Tesco vouchers, worth between £15 and £45, in 15 sessions across three weeks, but demand was so great the vouchers only lasted for one week and five sessions.
Lorna Billinghurst received £30 vouchers for her household through the scheme, and said they made a big difference.
"Everything's going up, isn't it?" Ms Billinghurst said, "where do they expect us to find money for food?"
One of their other projects is a weekly session where people can pay £3 to fill a bag with meat, tins, fruit and vegetables with a value higher than the asking price.
Myra Jones, 66, used the scheme and said it was "really handy".
"Gas and electricity prices have soared, and by then end of the week you have little money left, so something like this for £3 is really worth it," she said.
"I don't think I could carry on as I do, to be honest with you - it's a lot of help for me."
The UK government said it had delivered £1,200 of direct support to households last year and its energy price guarantee was saving the typical household about £900 this winter.
The Welsh government said it was spending more than £1.6bn to support people during the cost-of-living crisis and have provided almost £15m to foodbanks.
|
Nonprofit, Charities, & Fundraising
|
- The U.S. fell to fourth place worldwide in a study of "financial inclusion" in 42 markets.
- Financial inclusion means having access to useful and affordable financial products.
- Consumer sentiment in the U.S. is down across financial systems and employers.
"Financial inclusion," defined as individuals and businesses having access to useful and affordable financial products, has declined in the U.S., according to new industry research.
The U.S. fell to fourth place, from second, this year in the second annual Global Financial Inclusion Index compiled by the Centre for Economics and Business Research in London and Des Moines, Iowa-based Principal Financial Group. Singapore continued to hold the top spot.
Singapore is followed by Hong Kong, Switzerland, the U.S. and Sweden in the 2023 rankings, according to the research, which examined 42 markets worldwide. Singapore's small size, with a population of just six million people, helps it in the ranking, but it is also boosted by its commitment to financial literacy, financial technology adoption and employer support.
More from Personal Finance:
Consumer watchdog future may be on the line at Supreme Court
Social Security's trust funds are running dry. 4 things to know
How student loan bills resuming for 40 million impacts economy
A country's employers, financial systems and governments are the pillars for what makes a system inclusive, which, in turn, affects consumer sentiment.
Consumer sentiment in the U.S. is down across financial systems and employers but is especially pronounced when it comes to the government. The percentage of people who feel the government acts in a way that helps them feel financially included declined to 50% in 2023, from 72% in 2022. Political polarization, evident in developments such as the recent threat of a federal shutdown, make matters worse.
"It creates uncertainty and causes people to delay decisions that they might otherwise make about purchase around savings, and you don't want to paralyze people's decision-making around financial security," Dan Houston, Principal Financial Group Chair and CEO, told CNBC in an exclusive interview.
|
Banking & Finance
|
- Binance's native coin tumbled this week along with several other cryptocurrencies after SEC Chair Gary Gensler made clear he's deepening his crackdown on the industry.
- The SEC sued Coinbase and Binance, accusing both of selling unregistered securities, among other charges."
- "We don't need more digital currency," Gensler said in an interview with CNBC.
Crypto investors took the hint. Four of the 10 most valuable coins plunged in value by at least 15% this week, according to CoinMarketCap, a selloff sparked by the lawsuits and Gensler's interview with CNBC on Tuesday, in which he said "we don't need more digital currency."
In alleging that Coinbase was acting as an unregistered broker and exchange, the SEC said that at least 13 crypto assets available to the company's customers were considered "crypto asset securities." They include Solana's SOL token, Cardano's ADA token, Polygon's MATIC coin and Protocol Labs' Filecoin token (FIL).
Trading app Robinhood followed on Friday by announcing that, starting June 27, it will no longer support trading of coins from Cardano, Polygon and Solana. The company said "no other coins are affected." Also on Friday, Crypto.com said it will shut down its U.S. institutional exchange.
"No other coins are affected and your crypto is still safe on Robinhood," the company said in a post.
Cardano's coin, the seventh-most valuable cryptocurrency, according to CoinMarketCap, tumbled 20% in the past week. Solana, ranked ninth, dropped 18%. Polygon, ranked 10th, also slid 18%. Filecoin, which is further down the list, dropped 19%. Binance's BNB token, ranked fourth, fell 16%.
Gensler, who was appointed to head the SEC by President Biden in 2021, has spent much of the past year going after crypto firms and exchanges for effectively selling highly-speculative and risky securities dressed up as something else.
From high-profile fraud cases involving Sam Bankman-Fried's FTX and Do Kwon's Terraform Labs to dozens of charges involving coin offerings and alleged false marketing, Gensler has made the once-burgeoning crypto industry his primary takedown target.
"The investing public has the benefit of U.S. securities laws," Gensler said in an interview with CNBC's "Squawk on the Street" on Tuesday. "Crypto should be no different, and these platforms, these intermediaries need to come into compliance."
Gensler's TV appearance came after the SEC sued Coinbase and said the company should be "permanently restrained and enjoined" from "operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency."
Shares of Coinbase, the only major crypto exchange that's publicly traded in the U.S., sank 18% this week. Coinbase legal chief Paul Grewal told CNBC in a statement that the SEC's approach to enforcement without laying out clear rules is "hurting America's economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance."
A day earlier, in its lawsuit against Binance, the SEC alleged that the company and founder Changpeng Zhao comingled billions of dollars worth of user funds and sent them to a European company controlled by Zhao.
While Binance claims no official headquarters and does most of its business overseas, the SEC's complaint cited a senior executive allegedly telling a compliance officer that the company was operating as a "[f---ing] unlicensed securities exchange in the USA bro."
In a blog post, Binance said it was "disappointed" in the SEC's suit and said it had "engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations."
Others named in the SEC lawsuit also weighed in after this week's charges landed.
The Cardano Foundation, which works to advance use of its namesake technology, said in a tweet that it disagrees with the labeling of its ADA coin as a security and "we look forward to the continued engagement with regulators and policymakers to achieve legal clarity and certainty on these matters."
Protocol Labs, the developer of Filecoin, said in a series of tweets on Thursday that the token is critical to the operation of its distributed storage network. It's how people buy storage from providers, and Protocol says the cost is much less than what users would pay Amazon Web Services or Google Cloud.
"Filecoin is a cryptocurrency-powered global storage network preserving humanity's most important information, not a security," Protocol Labs tweeted.
In its 101-page complaint against Coinbase, the SEC made clear that regardless of whether these tokens have some level of utility, they can easily be purchased on the app by people who have no interest beyond investing. And Coinbase generates revenue by executing those trades.
"Coinbase makes these crypto assets available for trading," the SEC said, "without restricting transactions to those who might acquire or treat the asset as anything other than as an investment."
|
Crypto Trading & Speculation
|
The U.S. index fund pioneer Vanguard has cut the worth of its holding in the Indian ride-hailing startup Ola by nearly two thirds since original investment, and Neuberger Berman has slashed the worth of its Pharmeasy shares by more than 90%, according to an analysis of the funds’ filings.
Vanguard cut the worth of its shares in Ani Technologies, Ola’s holding firm, by 63.7% at August closure, it disclosed in its annual report. The asset manager marked down the holding of its Ola shares to $18.75 million, from the $51.7 million purchase price years ago, the filings showed.
The cut in worth of Ola shares’ by Vanguard implies a reduction in the ride-hailing startup’s valuation to approximately $2.65 billion, down from $7.3 billion at the close of 2021. (Vanguard had valued its Ola’s shares at about $33.8 million at the end of February this year and $25 million at the end of May.)
Ola, founded over a decade ago, has raised more than $3.9 billion over the years, according to Crunchbase, PitchBook and Tracxn. It was valued at $3.5 billion in an equity financing round in early 2017.
Ola declined to comment.
Neuberger Berman, on the other hand, valued its holding of Pharmeasy shares, which it purchased in October 2021 for $8.8 million, at $823,432 as of the end of August, it revealed in a disclosure.
The adjustment asserts a valuation of about $550 million to Pharmeasy, a startup that was valued at $5.6 billion in the second half of 2021 and has raised over $1.5 billion against equity and in debt to date, according to Tracxn.
“Individual detractors included India’s API Holdings, the largest Indian online digital healthcare platform, which declined in value on news that the firm may offer more equity at a lower price,” Neuberger Berman wrote in its annual report.
API Holdings, the parent firm of Pharmeasy, recently raised $420 million via rights issue that rocked the startup’s valuation to below $600 million amid deadlines to repay debt to Goldman Sachs.
“Every single shareholder stood up and supported us, believed in our vision and saw value in what the team at API is building,” wrote Dhaval Shah, co-founder of API Holdings, in a LinkedIn post last week.
Pharmeasy didn’t respond to a request for comment.
|
Stocks Trading & Speculation
|
The National Rifle Association is bleeding money and members, according to a financial audit obtained by CREW. Last year, the organization saw its worst fundraising totals in more than a decade, fueled by member dues that have fallen to lows not seen since the early 2000s. The fall has been so swift that the gun organization’s income from its members has been halved in just six years, while its legal fees have remained stratospheric.
According to the audit, which was filed with the Secretary of State’s office in North Carolina, the NRA raised more than $213 million in 2022, with more than $83 million coming from dues-paying members. The totals mark a 52 percent drop in overall revenue and a nearly 59 percent drop in membership dues since 2016, adjusting for inflation. A CREW analysis of NRA dues going back to 2004 could not find a single year where dues ever went below $100 million, in inflation-adjusted terms.
Compounding the NRA’s dire financial situation is the organization’s persistent legal battles that continue to cost millions. The audit shows a nearly $12.4 million settlement payment, linked to a legal battle the NRA fought with its former PR firm. In all, the NRA spent nearly $43.8 million on administrative “legal, audit, and taxes,” which is down from the nearly $46.8 million it spent in 2021, but still far higher than the $4.3 million it spent on the same costs in 2017, when its overall revenue was more than $319 million. Put another way, legal expenses went from about 1 percent of the NRA’s overall spending in 2017, to about 20 percent in 2021 and 2022, while its total revenue dropped by nearly 42 percent over the same period.
And the gun-rights organization’s legal troubles aren’t over. It is still fighting a lawsuit filed by New York Attorney General Letitia James in a case from 2020 alleging that senior leadership diverted millions of dollars away from the organization’s core mission, using the funds for personal benefit and to give sweetheart contracts to colleagues and family. In another case, the NRA is fighting a 2018 suit against a New York official who pushed banks and insurers to cease business relations with the NRA. The case—which NRA chief Wayne LaPierre told members in 2019 might lead to the organization shutting down “very soon”—was tossed by a federal appeals court in 2022, in favor of the New York official. The NRA appealed the case to the Supreme Court this year.
In a more mysterious development, the NRA also revived its dispute with its former PR firm, to which it already paid a $12 million settlement. This time the case is unfolding entirely in secret in Texas.
All of this takes place against a backdrop of intense internal turmoil at the organization. Some of the highest-ranking officials have resigned or been suspended, and some faced legal action. Meanwhile, staff has dwindled and core programs have been slashed. Yet, ironically, as the organization flounders, a conservative super-majority on the Supreme Court is handing the NRA more victories, thanks to three justices installed by the president the NRA helped elect, back when it was flush with cash.
|
Nonprofit, Charities, & Fundraising
|
Yield Uncertainty Will Persist Even If The Fed Is Done Raising Rates
(Bloomberg Opinion) -- A simple logic has played out in markets this month. Price movements point to an anticipation that the Federal Reserve is done raising interest rates and will now start cutting in early 2024, thereby pushing down market-determined yields as it continues to ease policy throughout the year; and that all this will bode well for the economy and virtually all financial assets.
Not so fast, unfortunately, for all of us who hope for greater certainty and less yield volatility.
There are multiple other plausible scenarios for the trajectory of interest rates, though the drivers of uncertainty will shift notably away from the Fed. Whatever outcome eventually unfolds will be critical for the well-being of households, businesses, and investors.
The market’s expectation of both “peak rates” now and rate cuts early next year has been driven by recent data and certain Fed communications. A variety of economic and price indicators suggest an increasing likelihood of a soft landing, with activity gradually cooling and inflation falling further. Meanwhile, the only Fed commentary that truly resonates with the markets, from Chair Jerome Powell, has hinted strongly that the most influential central bank in the world is done with its aggressive hiking cycle, and that its next policy move will be a downward one.
Unsurprisingly, market rates have fallen sharply in response. For instance, since the beginning of November, the yield on the benchmark 10-year US Treasury bond has declined by 44 basis points, and the five-year yield has dropped by 35 basis points. The two-year yield, which is more sensitive to Fed expectations, is 16 basis points lower.
This widespread move in yields has been accompanied by a substantial drop in oil prices, which has also driven stocks higher. The S&P 500 has climbed about 4.5% this month, while the Nasdaq 100 is up 6%. This combination of lower yields, falling oil prices and surging stocks has fueled hopes that inflation can further moderate without substantial damage to business investment, consumer spending and economic activity.
While these developments are positive, there is an important caveat. The path from here may not be as straightforward as the consensus suggests, particularly in confidently predicting rate cuts alongside ever lower inflation and robust economic growth.
It is certainly possible that a soft landing in the US will enable the Fed to commence interest rate cuts early next year. However, there are other equally plausible outcomes with a higher cumulative probability.
What is clear in my mind is that Fed policy per se will have less of a deterministic impact on market yields, especially compared to 2022 and 2023, unless the central bank were to make another policy mistake.
Market developments last year were mostly about incorporating the impact of one of the most concentrated rate-hiking cycles in decades as the Fed sought to correct for its protracted mis-characterization of inflation as “transitory.” In 2023, markets adapted to the notion that higher Fed interest rates may persist for longer than was initially anticipated. In 2024, with the central bank having most likely reached peak rates, the drivers of yields will shift away from monetary policy and toward government bond issuance and economic developments.
In such a paradigm shift, rates could decrease because the economy slows more than currently anticipated due to the lagged effects of aggressive policy tightening, the depletion of pandemic-related savings and various external challenges. At the same time, the downward pressure on yields from sharp disinflation could be counteracted by the government’s need to attract buyers to the substantially larger volume of bond issuance required to finance a sizable fiscal deficit and refinance maturing debt at significantly higher market rates.
It is also conceivable that the surprisingly resilient domestic economy may again prove strong enough to withstand the latest set of headwinds. In this scenario, core (rather than headline) inflation pressures might persist longer than initially expected — as acknowledged by the Australian central bank earlier this week — with the markets worrying about a restart to the Fed’s hiking cycle (though the hurdle for this would be quite high).
In summary, frustrating as it is for many of us seeking clarity, there is a range of possible reasons why policy rates may decline in 2024, and their economic and market implications can vary significantly. Conversely, there are also reasons why rates may remain elevated for most of next year. All this while acknowledging that the main driver of the level of yields and their volatility in the recent past — the Fed — is likely to see its influence wane.
As much as we hope for a definitive answer with a Fed most likely at peak rates, the uncertainty that has repeatedly led the US economy to defy consensus forecasts is far from dissipated. The same can be said of the impact of past monetary policy actions, where unanswered questions remain about the lagged effects of the hiking cycle and the equilibrium interest rate level. As a result, investors would be wise to maintain flexibility and an open mindset.The tortuous journey of the consensus view on the economy over the last 16 months, shifting from a soft to a hard landing, and then back again via a no landing and a crash landing, should serve as a valuable reminder of the importance of humility in the face of substantial economic and policy uncertainty.
More From Bloomberg Opinion:
- The Fed Pivot Turbulent Treasuries Need: Mohamed A. El-Erian
- Fed Needs to Forget About Inflation and Focus on Jobs: Conor Sen
- Treasury Bond Bears Look Ready to Hibernate: Jonathan Levin
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”
©2023 Bloomberg L.P.
|
Interest Rates
|
Crypto Billionaires' Wealth Crushed by SEC After Big 2023 Bounce
It was a great year for crypto billionaires — until this week.
(Bloomberg) -- It was a great year for crypto billionaires — until this week.
The Securities and Exchange Commission’s crackdown on Binance Holdings Ltd. and Coinbase Global Inc. — the largest crypto platforms in the world and the US, respectively — has upended the optimism that crept back into digital-asset markets after the miserable “crypto winter” of 2022.
Binance Chief Executive Officer Changpeng Zhao, known as CZ, has seen his wealth shrink by $1.4 billion to $26 billion over the past two days, while Coinbase CEO Brian Armstrong’s net worth has slumped by $361 million to $2.2 billion, according to the Bloomberg Billionaires Index. The SEC sued both companies for breaking securities rules, sending shares of several crypto-linked companies and tokens slumping.
Read More: SEC’s Coinbase Lawsuit Heralds Deepening US Crypto Crackdown
It was yet another reversal in the fortunes of crypto’s wealthiest founders. Their combined net worth plunged in 2022, which was a year of high-profile blowups ranging from the algorithmic stablecoin TerraUSD to hedge fund Three Arrows Capital to Sam Bankman-Fried’s FTX.
But their fortunes soared by $15.4 billion this year through Friday as the price of Bitcoin and other digital assets rebounded. Zhao’s fortune surged by 117% before this week’s drop, while Armstrong’s jumped by 61%. By comparison, the other billionaires on Bloomberg’s wealth index were up a combined 9%.
Underpinning Bitcoin’s partial comeback this year were expectations that the US banking crisis that erupted in March would force the Federal Reserve to hit pause on rate increases. That allowed Bitcoin bulls to raise the case that the token stands to gain from lower real interest rates, and that it offers shelter from turmoil in traditional finance.
That may not matter if US regulators make it harder for the industry to operate and for Americans to trade.
In a lawsuit filed Monday, the SEC alleged Binance and Zhao misled investors and regulators, mishandled customer funds and broke securities rules. Zhao, 46, co-founded the exchange in 2017 and grew it into a global giant. His personal net worth grew too, reaching a high of $96.9 billion in January 2022.
Read More: Binance’s Regulatory Woes Pave Path for CEO’s Heir Apparent
The SEC then sued Coinbase on Tuesday, sending its stock down 12%. In the 101-page complaint, the SEC didn’t accuse Armstrong of any wrongdoing, but alleged that the company evaded SEC rules by letting users trade tokens that were actually unregistered securities.
Read more: What the Coinbase CEO Said When Asked If It Lists Securities
Armstrong owns 16% of the company he started through a number of trusts and direct holdings. He’s also a frequent seller of Coinbase stock and has unloaded about $27 million worth so far this year. His co-founder Fred Ehrsam, now a venture capitalist at crypto-focused firm Paradigm, also saw his net worth drop to $1.1 billion. Ehrsam’s Paradigm funds bought Coinbase shares worth $50 million last month.
--With assistance from Jack Witzig.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
|
Crypto Trading & Speculation
|
Subsets and Splits
List Unique Topics
Simple retrieval of unique topics from the dataset, useful for basic exploration but lacks deeper insights.