Crypto Crashed. Wall Street Won.

admin July 5, 2022

1 6 minutes read

How Wall Street’s Largest Banks Avoided Cryptocurrency Collapse

Wall Street’s largest banks and their wealthiest customers have been hit hard by the plunge in Bitcoin prices and the failure of cryptocurrency startups. Some have even succeeded in making a profit from the collapse. In the Blood Bath of the Great Cryptocurrency of 2022, Times Emily Fritter writes, Wall Street is winning.

Unlike the 2008 crisis, the fate of Wall Street and Main Street is separate. The plunge in digital asset prices has cost some private investors significant losses. Fascinated by rapid returns and astronomical wealth promises, many individuals have bought new digital currencies or invested in funds that hold these assets. This is not the case for most banks. Most banks generally do not own crypto and do not run a fund to invest in it. Also, they don’t lend much to emerging markets for new money. Big banks are not without problems. Rising interest rates and falling stock prices have limited the number of companies that want to trade, leaving bankers idle. But when it comes to cryptocurrencies, few are aware of the risks of transmission, the loss from the digital money market, which can undermine banks.

Wall street bank I wanted to enter cryptocurrencyHowever, international regulatory agencies did not allow them. Last year, the Basel Committee on Banking Supervision, which helped set capital requirements for major banks around the world, said suggestion Gives Bitcoin and other cryptocurrencies the highest possible risk weight. If a bank wanted to put those assets on its balance sheet, it had to offset the risk at least as much as cash.

US regulatory agencies have also warned banks. As a result, Wall Street was unable to participate in the bubble as it used to. That is, we have taken out loans to allow people to buy more homes and stocks, and have made it easier to buy and sell rising assets.

However, the suffering of some individuals who purchased the code still casts doubt on regulators. Jacob Willett, a 40-year-old delivery driver in Mesa, Arizona, kept his lifetime savings in the account of Celsius, a cryptocurrency lender who promised high profits. When cryptocurrency prices began to fall, Willett sought reassurance from Celsius executives that his money was safe, but gained nothing because the company frozen more than $ 8 billion in deposits. It was. “I don’t know what they did isn’t illegal,” Willett said.

African-American investors have been hit particularly hard High exposure to digital assets, Financial Times Report.. According to a survey by Ariel Investments and Charles Schwab, a quarter of black investors owned crypto investments at the beginning of the year, compared to 15% of white investors.

What’s happening

Police detain “persons of interest” after a deadly shooting at the parade on July 4. Gunshots fell from the roof to the Highland Park parade, killing six and injuring dozens. Fear of further violence, celebrations were canceled throughout the region.

The airline cancels over 1,400 US flights on holiday weekends. Airlines struggled to catch up with more than 7 million weekend travelers in the United States. In addition to the problem, there was a bug in American Airlines’ scheduling system that allowed pilots to drop planes. Southwest Airlines, American Airlines and United Airlines canceled more than one-fifth of their flights on Saturday.

Germany has posted a monthly trade deficit for the first time in 30 years. Exports are suffering as German companies raise prices to deal with the surge in energy costs caused by Russia’s move to limit the supply of natural gas and supply chain disruptions. This is the latest sign that Europe’s largest economy is being emphasized.

The Biden administration is reportedly considering reducing federal mortgage premiums. Industry insiders are asking the Federal Housing Department to save $ 50 to $ 70 a month for borrowers. According to The Wall Street Journal..House prices are at record levels and inflation is Worse the homeless..

Nuclear power gains new momentum in the United States With the challenge of meeting clean energy goals and new electricity demand, politicians from both parties are trying to extend the life of the reactor and build a new one. However, critics of the nuclear industry say waste disposal remains a challenge and repairing aging facilities is expensive.

A twist on the story of Archegos

A former employee of Arquegos, an investment company that lost more than $ 10 billion in the last few days, is suing the company, its founder Bill Hwang, and five former top executives for $ 550 million. The DealBook is the first to report a proceeding filed in a federal court in Manhattan today.

Proceedings against Arquegos: High-tech stock analyst Brendan Sullivan, who joined the company in 2014 and resigned shortly after the explosion, said he had lost $ 50 million. The strategy has failed. The proceedings are trying to force fans and others to cover employee losses. Fans have been acquitted of government proceedings this year after being charged with fraud by federal prosecutors on suspicion of misleading lenders and market manipulation. Last week, an Arquegos lawyer filed a petition from the Commodity Futures Trading Commission and the SEC to dismiss other proceedings against the company.

Fund employees were told that a postpaid plan was guaranteedThe proceedings state that it was invested in liquid stocks. According to the proceedings, neither claim was true. In addition, employees are forced to donate at least 25% of their annual bonus to the plan and declare how much to postpone it before they know the details of the bonus. “The message was very clear,” the proceedings claim. “No contributions. No bonuses.”

“Fans and these executives lied to employees as if they lied to banks.” Sullivan’s lawyer, Brown Radnick’s Michael Bow, told DealBook. DealBook contacted a lawyer Neither the fan nor the spokesman for Arquegos responded immediately in the comments.

The fund tried to discourage employee retirement, And if so, question the deferred payment of compensation, the proceedings say. According to a DealBook letter sent by Arquegos to a former employee, Sullivan, who left anyway, did not receive any money from the plan, but in January of this year, the company continued to promise the former employee to do so. I did.

Arquegos was operated like a “cult” Suit says. According to the proceedings, job interviews “revolved around research into religion and the religious development of candidates.” During her performance assessment, a Christian fan said she told her employees to “spend more time on faith.” According to the lawsuit, at the company’s retreat, employees were praised for publicly expressing their gratitude to “God, Fan, Arquegos.”

“Even liberals and most moderates don’t hear it. They don’t pay attention to it, they don’t see it, they don’t hear it. So it exists, it. I don’t know how popular and powerful they are. ”

— Professor Lewis A. Friedland studying radio at the University of Wisconsin-Madison How conservative radio promotes fraudulent election claimsFuel distrust about the outcome of the upcoming midterm elections.

Corporate profit outlook remains recession-free

If the recession is ongoing, someone forgot to talk to a stock market analyst. Wall Street analysts, usually an optimistic group, look much brighter than investors as a whole.

Companies will start reporting Q2 results next week. According to a recent report from FactSet Research, at least for now, analysts aren’t expecting the beginning of a recession in which corporate profits decline for at least two consecutive quarters. Analysts expect S & P 500 companies to report an average of 4% higher profits in the second quarter than in the year-ago quarter. Analysts expect the average revenue of S & P 500 companies to rise by just over 10% across 2022.

Analysts lowered earnings forecasts during the quarter, but only slightly. Meanwhile, economists have been competing to lower expectations in the last few months. Last week, JPMorgan Chase’s top economist halved its second-quarter US GDP growth estimate from 2.5% to just 1%. Analysts are expected to become more pessimistic when combined with the combination of labor shortages and inflation pushing up costs. For now, most of them seem to believe that companies can absorb higher costs by raising prices. But at some point, the expectation of double-digit profit growth for at least a year can disappoint investors.

Amazon and Target have seen the expected decline in profit growth the most. In May, Target reported that many of the items on the shelves did not sell as quickly as expected. In general, retailers have seen the highest decline in expectations in all sectors. Profit on so-called consumer discretionary stocks is expected to decline by just over 9% during the quarter. Consumers closing their wallets are not a good sign for the economy. But does that mean we are heading into recession? At least for now, Wall Street analysts still say no.

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