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New Zealand counts cost of Auckland floods, more rain forecast
WELLINGTON, Jan 30 (Reuters) – Flood-ravaged Auckland is forecast to receive further heavy rain in the coming days, authorities in New Zealand’s largest city said on Monday, as insurers counted the costs of what looks likely to be the country’s most expensive weather event ever.
Four people lost their lives in flash floods and landslides that hit Auckland over the last three days amid record downpours. A state of emergency remains in place in Auckland. A state of emergency in the Waitomo region south of Auckland was lifted.
Flights in and out of Auckland Airport are still experiencing delays and cancellations, beaches around the city of 1.6 million are closed and all Auckland schools will remain closed until Feb. 7.
“There has been very significant damage across Auckland,” New Zealand Prime Minister Chris Hipkins told state-owned television station TVNZ on Monday. “Obviously there were a number of homes damaged by flooding but also extensive earth movements.”
Currently, around 350 people were in need of emergency accommodation, he added.
LOOMING CLOUDS
Metservice is forecasting further heavy rains to hit the already sodden city late on Tuesday.
“We have more adverse weather coming and we need to prepare for that,” Auckland Emergency Management duty controller Rachel Kelleher told a media conference.
Fire and Emergency services received 30 callouts overnight Monday, including responding to a landslide when a carport slid down a hill.
The council has designated 69 houses as uninhabitable and has prevented people from entering them. A further 300 properties were deemed at risk, with access restricted to certain areas for short periods.
The north of New Zealand’s North Island is receiving more rain than normal due to the La Nina weather event.
The National Institute of Water and Atmospheric Research (NIWA) said Auckland has already recorded more than eight times its average January rainfall and 40% of its annual average rainfall.
INSURERS FACE HEFTY BILL
The cost of the clean up is expected to top the NZ$97 million ($63 million) bill for flooding on the West Coast in 2021 but will not be anywhere near as expensive as the estimated NZ$31 billion insured costs of two major earthquakes in Christchurch in 2010-2011, said Insurance Council of New Zealand spokesperson Christian Judge.
Insurance Australia Group’s (IAG.AX) New Zealand divisions have received over 5,000 claims so far and Suncorp Group (SUN.AX) said it received around 3,000 claims across the Vero and AA Insurance Brands. New Zealand’s Tower (TWR.NZ) said it had received around 1,900 claims.
“The number of claims is expected to rise further over the coming days, with the event still unfolding and as customers identify damage to their property,” IAG said in a statement.
Economists say the recovery and rebuild could add to inflationary pressures in New Zealand as vehicles and household goods need to be replaced and there is an increase in construction work needed to repair or rebuild houses and infrastructure damaged by the flooding.
($1 = 1.5385 New Zealand dollars)
Reporting by Lucy Craymer; Editing by Aurora Ellis and Lincoln Feast
Our Standards: The Thomson Reuters Trust Principles.
Wall Street totters after mixed earnings, trade halt glitch
NEW YORK, Jan 24 (Reuters) – Wall Street was mixed on Tuesday as a raft of mixed earnings took some wind out of the sails of the recent rally.
The session got off to an rocky start, as a spate of NYSE-listed stocks were halted at the opening bell due to an apparent technical glitch, which caused initial price confusion and prompted an investigation by the U.S. Securities and Exchange Commission (SEC).
More than 80 stocks were affected by the glitch, which caused wide swings in opening prices in stocks, including Walmart Inc (WMT.N) and Nike Inc (NKE.N).
“It looks like NYSE got on it real early,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “Now they’re trying to determine what opening trade prices were.”
“Everyone involved in trade settlements is going to have a long day today.”
All three indexes sputtered near the starting line, with little apparent momentum in either direction.
Fourth quarter earnings season is in full swing, with 72 of the companies in the S&P 500 having reported. Of those, 65% have beaten consensus, just a hair below the 66% long-term average, according to Refinitiv.
On aggregate, analysts now expect S&P 500 earnings 2.9% below the year-ago quarter, down from the 1.6% year-on-year decline seen on Jan. 1, per Refinitiv.
“Earnings don’t make a bull or bear case for the market yet, but there’s an anxiousness among investors to be long when the Fed is done raising rates,” Sroka added. “We’re hitting a ramp in the earnings cycle, and by next week we’ll have a lot more information on the direction of the market.”
Economic data showed shallower-than-expected contraction in the manufacturing and services sector in the first weeks of the year, suggesting that the Federal Reserve’s restrictive interest rates are dampening demand.
The Dow Jones Industrial Average (.DJI) rose 60.69 points, or 0.18%, to 33,690.25, the S&P 500 (.SPX) lost 5.36 points, or 0.13%, to 4,014.45 and the Nasdaq Composite (.IXIC) dropped 28.39 points, or 0.25%, to 11,336.03.
Among the 11 major sectors of the S&P 500, industrials was down the most.
Intercontinental Exchange Inc (ICE.N), owner of the New York Stock Exchange, dropped 2.5% as SEC investigators searched for the cause of Tuesday’s opening bell confusion.
Alphabet Inc (GOOGL.O) shares dipped 1.8% after the Justice Department filed a lawsuit against Google for abusing its dominance of the digital advertising business.
Johnson & Johnson’s (JNJ.N) profit guidance came in above analyst expectations. Even so, its stock softened 0.3%.
Industrial conglomerates 3M Co (MMM.N) and General Electric Co (GE.N) both provided underwhelming forward guidance due to inflationary headwinds.
3M’s shares were off 5.1% while General Electric’s were modestly lower.
Aerospace/defense companies Lockheed Martin Corp (LMT.N) and Raytheon Technologies Corp (RTX.N) were a study in contrasts, with the former issuing a disappointing profit forecast and the latter beating estimates on solid travel demand.
Lockheed Martin and Raytheon were up 1.5% and 2.5%, respectively.
Railroad operator Union Pacific Corp missed profit estimates as labor shortages and severe weather delayed shipments. Its shares shed 2.7%.
Microsoft Corp (MSFT.O) is due to report after the bell.
Advancing issues outnumbered declining ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored decliners.
The S&P 500 posted 27 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 69 new highs and 21 new lows.
Reporting by Stephen Culp; Additional reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru; Editing by Aurora Ellis
Our Standards: The Thomson Reuters Trust Principles.
Ship insurers to cancel war cover for Russia, Ukraine from Jan. 1
LONDON, Dec 28 (Reuters) – Ship insurers said they are cancelling war risk cover across Russia, Ukraine and Belarus, following an exit from the region by reinsurers in the face of steep losses.
Reinsurers, who insure the insurers, typically renew their 12-month contracts with insurance clients on Jan. 1, giving them the first opportunity to scale back exposure since the war in Ukraine started, after being hit this year by losses related to the conflict and from Hurricane Ian in Florida.
P&I (protection and indemnity) clubs American, North, UK and West are no longer able to offer war risk cover for some liabilities in the region from Jan. 1, they said in recent notices on their websites. The clubs are among the biggest P&I insurers who cover around 90% of the world’s ocean-going ships.
UK P&I Club said on Dec. 23 that the issue had arisen because of a lack of availability of reinsurance for reinsurers, also known as retrocession.
“The Club’s reinsurers are no longer able to secure reinsurance for war risk exposure to Russian, Ukrainian or Belarus territorial risks,” it said.
American P&I said on Dec. 23 that it had received a “notice of cancellation” for the region from its war risk reinsurers and was cancelling its own insurance as a result.
Ships typically have P&I insurance, which covers third-party liability claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
The withdrawal of cover for Ukraine and Russia applies to some but not all types of policy offered by the P&I clubs, three P&I insurance sources said.
“This is being driven by reinsurance,” said Stephen Rebair, deputy global director, underwriting at North, adding that reinsurers were limiting their exposure to the region and “those exclusions have to be passed down the line”.
The exclusions will make it harder for charterers to find insurance, increase prices and may mean some ships sail uninsured, industry sources say.
Providers of reinsurance and retrocession include global players Hannover Re (HNRGn.DE), Munich Re (MUVGn.DE) and Swiss Re (SRENH.S), as well as syndicates in the Lloyd’s of London (SOLYD.UL) market. The firms all declined to comment.
Reuters reported earlier this month that a proposed contract clause being circulated by reinsurers excluded war-related claims for both planes and ships in Ukraine, Russia and Belarus.
The Japanese government has urged insurers to take on additional risks to continue providing marine war insurance for liquefied natural gas (LNG) shippers in Russian waters, a senior official at the industry ministry said this week.
Reporting by Carolyn Cohn and Jonathan Saul in London
Editing by Muralikumar Anantharaman and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
Insurers shun FTX-linked crypto firms as contagion risk mounts
Dec 19 (Reuters) – Insurers are denying or limiting coverage to clients with exposure to bankrupt crypto exchange FTX, leaving digital currency traders and exchanges uninsured for any losses from hacks, theft or lawsuits, several market participants said.
Insurers were already reluctant to underwrite asset and directors and officers (D&O) protection policies for crypto companies because of scant market regulation and the volatile prices of Bitcoin and other cryptocurrencies.
Now, the collapse of FTX last month has amplified concerns.
Specialists in the Lloyd’s of London (SOLYD.UL) and Bermuda insurance markets are requiring more transparency from crypto companies about their exposure to FTX. The insurers are also proposing broad policy exclusions for any claims arising from the company’s collapse.
Kyle Nichols, president of broker Hugh Wood Canada Ltd, said insurers were requiring clients to fill out a questionnaire asking whether they invested in FTX, or had assets on the exchange.
Lloyd’s of London broker Superscript is giving clients that dealt with FTX a mandatory questionnaire to outline the percentage of their exposure, said Ben Davis, lead for digital assets at Superscript.
“Let’s say the client has 40% of their total assets at FTX that they can’t access, that is either going to be a decline or we’re going to put on an exclusion that limits cover for any claims arising out of their funds held on FTX,” he said.
The exclusions denying payout for any claims arising out of the FTX bankruptcy are found in insurance policies that cover the protection of digital assets and for personal liabilities of directors and officers of companies that deal in crypto, five insurance sources told Reuters. A couple of insurers have been pushing for a broad exclusion to policies for anything related to FTX, a broker said.
Exclusions may act as a failsafe for insurers, and will make it even more difficult for companies that are seeking coverage, insurers and brokers said.
Bermuda-based crypto insurer Relm, which previously has provided coverage to entities linked to FTX, takes an even stricter approach.
“If we have to include a crypto exclusion or a regulatory exclusion, we’re just not going to offer the coverage,” said Relm co-founder Joe Ziolkowski.
D&O QUESTION
Now, one of the most pressing questions is whether insurers will cover D&O policies at other companies that had dealings with FTX, given the problems facing exchange’s leadership, Ziolkowski said.
U.S. prosecutors say former FTX Chief Executive Officer Sam Bankman-Fried engaged in a scheme to defraud FTX’s customers by misappropriating their deposits to pay for expenses and debts and to make investments on behalf of his crypto hedge fund, Alameda Research LLC.
A lawyer for Bankman-Fried said on Tuesday his client is considering all of his legal options.
D&O policies, which are used to pay legal costs, do not always pay out in cases of fraud.
Insurance sources would not name their clients or potential clients that could be affected by policy changes, citing confidentiality. Crypto firms with financial exposure to FTX include Binance, a crypto exchange, and Genesis, a crypto lender, neither of which responded to e-mails seeking comment.
While the least risky parts of the crypto market, such as companies that own cold wallets storing assets on platforms not connected to the internet, may get cover for up to $1 billion, a D&O insurance policyholder’s cover may now be limited to tens of millions of dollars for the rest of the market, Ziolkowski said.
The FTX collapse will also likely lead to a rise in insurance rates, especially in the U.S. D&O market, insurers said. The rates are already high because of the perceived risks and lack of historical data on cryptocurrency insurance losses.
A typical crime bond — used to protect against losses resulting from a criminal act — would cost $30,000 to $40,000 per $1 million of coverage for a digital assets trader. That compares with a cost of about $5,000 per $1 million for a traditional securities trader, Hugh Wood Canada’s Nichols said.
Reporting by Noor Zainab Hussain in Bengaluru and Carolyn Cohn in London; Editing by Lananh Nguyen and Anna Driver
Our Standards: The Thomson Reuters Trust Principles.
U.S. House to vote to block rail strike despite labor objections
WASHINGTON/LOS ANGELES, Nov 29 (Reuters) – The U.S. House of Representatives was set to vote Wednesday to block a rail strike that could potentially happen as early as Dec. 9, after President Joe Biden warned of dire economic consequences and massive job losses.
House Speaker Nancy Pelosi said lawmakers will vote Wednesday to impose a tentative contract deal struck in September on a dozen unions representing 115,000 workers.
Pelosi said the House would vote separately on Wednesday on a proposal to give seven days of paid sick leave to railroad employees.
“I don’t like going against the ability of unions to strike but weighing the equities, we must avoid a strike,” she said Tuesday after a meeting with Biden.
Biden had warned Monday of a catastrophic economic impact if railroad service ground to a halt, saying up to 765,000 Americans could lose their jobs in the first two weeks of a strike.
“Congress, I think, has to act to prevent it. It’s not an easy call, but I think we have to do it. The economy is at risk,” Biden said.
Despite the close ties between unions and the Democratic Party, several labor leaders criticized Biden asking Congress to impose a contract that workers in four out of 12 unions rejected over its lack of paid sick leave.
The Brotherhood of Maintenance of Way Employes, one of four unions that voted against the contract, objected to Biden’s call to Congress to intervene, saying “the railroad is not a place to work while you’re sick. It’s dangerous…. it is unreasonable and unjust to insist a person perform critical work when they are unwell.”
There are no paid sick days under the tentative deal after unions asked for 15 and railroads settled on one personal day.
[1/2] U.S. President Joe Biden meets with congressional leaders including House Republican leader Kevin McCarthy, Senate Majority Leader Chuck Schumer, Speaker of the House Nancy Pelosi and Senate Republican leader Mitch McConnell at the White House in Washington, U.S., November 29, 2022. REUTERS/Kevin Lamarque TPX IMAGES OF THE DAY
The union push for paid sick time won support on Capitol Hill, where Senator Bernie Sanders threatened to delay the railroad bill unless he got a vote on the sick time issue.
“Guaranteeing 7 paid sick days to rail workers would cost the rail industry a grand total of $321 million a year – less than 2% of its profits,” Sanders said. “Please don’t tell me the rail industry can’t afford it. Rail companies spent $25.5 billion on stock buybacks and dividends this year.”
Regulators and shippers have accused railroads of cutting staff to improve profitability. The railroads oppose giving their workers paid sick time because they would have to hire more staff. The carriers involved include Union Pacific Corp (UNP.N), Berkshire Hathaway Inc’s (BRKa.N) BNSF, CSX Corp (CSX.O), Norfolk Southern Corp (NSC.N) and Kansas City Southern.
The measure needs a simple majority to pass the House. The bill would require a supermajority of 60 out of 100 votes to pass the Senate.
“I can’t in good conscience vote for a bill that doesn’t give rail workers the paid leave they deserve,” Representative Jamaal Bowman, a Democrat, said on Twitter.
Biden on Monday praised the proposed contract for including a 24% wage increase over five years and five annual $1,000 lump-sum payments.
House Republican Leader Kevin McCarthy also criticized the effort but said “I think it will pass, but it’s unfortunate that this is how we’re running our economy today.”
A rail traffic stoppage could freeze almost 30% of U.S. cargo shipments by weight, stoke already surging inflation and cost the American economy as much as $2 billion per day.
Brian Dodge, president of the Retail Industry Leaders Association (RILA), said the idea of a rail shutdown “is just absolutely catastrophic” after companies spent the last year and a half trying to untangle gridlock in the supply chain. “We’d be setting ourselves back down that same path and it would take just as long to untangle the next time,” he said.
The U.S. Congress has passed laws to delay or prohibit railway and airline strikes multiple times in recent decades.
Reporting by David Shepardson in Washington and Lisa Baertlein in Los Angeles Steve Holland and Doina Chiacu; Writing by Kanishka Singh in Washington; Editing by Jonathan Oatis, Heather Timmons, Lisa Shumaker and Simon Cameron-Moore
Our Standards: The Thomson Reuters Trust Principles.
China sentences tycoon Xiao Jianhua to 13 years, fines his company $8.1 billion
People walk past the building with the listed address of Tomorrow Holdings’ Beijing office, China, February 3, 2017. REUTERS/Thomas Peter
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BEIJING, Aug 19 (Reuters) – A Shanghai court on Friday sentenced Chinese-Canadian billionaire Xiao Jianhua, not seen in public since 2017, to 13 years in jail and fined his Tomorrow Holdings conglomerate 55.03 billion yuan ($8.1 billion), a record in China.
Xiao and Tomorrow Holdings were charged with illegally siphoning away public deposits, betraying the use of entrusted property, and the illegal use of funds and bribery, the Shanghai First Intermediate Court said.
It added the punishment was mitigated because both had admitted their crimes and cooperated in recovering illegal gains and in restoring losses.
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China-born Xiao, known to have links to China’s Communist Party elite, was last seen whisked away in a wheelchair from a luxury Hong Kong hotel in the early hours with his head covered, a source close to the tycoon told Reuters at the time.
Xiao and Tomorrow have “severely violated a financial management order” and “hurt state financial security”, the court said, with the tycoon additionally fined 6.5 million yuan for the crimes.
From 2001 to 2021, Xiao and Tomorrow gave shares, real estate, cash and other assets to government officials totalling more than 680 million yuan, to evade financial supervision and seek illegitimate benefits, the court said.
In July 2020, nine of the group’s related institutions were seized by Chinese regulators as part of a crackdown on risks posed by financial conglomerates. read more
Among the nine firms were four insurers – Tianan Property Insurance Co of China, Huaxia Life Insurance Co, Tianan Life Insurance Co and Yi’an P&C Insurance Co – as well as New Times Trust Co and New China Trust Co. The other three were Chengtong Securities, Guosheng Securities and Guosheng Futures.
The court said that from 2004, Xiao and Tomorrow controlled multiple financial institutions and internet financial platforms, including the failed Baoshang Bank, via multiple layers of indirect shareholders and anonymous ownership.
It said Xiao used the illegal gains for the acquisition of financial institutions, securities trading and overseas investment. But it acknowledged his attempts to make amends.
“Xiao Jianhua has taken commendable actions, so he was given a mitigated punishment in accordance with the law,” it said.
Asked about Xiao’s right to consular access as a Canadian citizen at a Friday briefing, Chinese foreign ministry spokesperson Wang Wenbin said Xiao was not entitled to such rights as Chinese law did not recognise dual nationality.
Canada’s foreign ministry said it was aware of media reports about the sentencing, and its officials would monitor the case and press for consular access.
“The lack of transparency in Mr. Xiao’s legal process is very concerning, as is the ongoing lack of consular access, which prevents us from being able to assess his wellbeing,” it said in a statement.
Tomorrow Holdings could not immediately be reached for comment.
($1=6.8056 Chinese yuan renminbi)
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Reporting by Tony Munroe, Ziyi Tang, Ryan Woo, Ellen Zhang, Eduardo Baptista, and Meg Shen; Editing by Stephen Coates and Clarence Fernandez
Our Standards: The Thomson Reuters Trust Principles.
Stocks Waver to Kick Off August Trading
U.S. stocks wavered Monday to start a new month of trading after finishing July with their best month since 2020.
Major indexes edged lower in early afternoon trading and spent much of the day flitting between gains and losses. The S&P 500 recently dropped 0.6%, while the Dow Jones Industrial Average fell 0.4%. The technology-focused Nasdaq Composite Index lost 0.5%.
Shares of
Boeing
rose 5.8% after the plane maker temporarily avoided a strike at three defense manufacturing plants and cleared a regulatory hurdle for resuming deliveries of its 787 Dreamliner.
U.S. stocks mounted a furious recovery in recent weeks, boosted by positive signals from earnings and expectations that the Federal Reserve may not need to raise interest rates as aggressively as once thought, spurring a rally in government bonds alongside stocks.
“The market’s beginning to price in the end of Fed tightening rather quickly, and I think it’s going to be disappointed. I think the market’s a bit ahead of itself here,” said Thomas H. MacCowatt, partner at Williams Jones Wealth Management.
Last week, officials approved another 0.75-percentage-point interest-rate increase. But traders are now betting that the size of rate increases will be smaller for the rest of the year.
“This has been a very rapid repricing of bond and equity markets,” said
Edward Park,
chief investment officer at U.K. investment firm Brooks Macdonald. “I fear, however, it might be a bit premature based on what was said out of the Federal Reserve last week.”
Mr. Park noted that Monday’s weakness in stock futures suggested investors are likely taking a breather after the S&P 500 finished Friday with a 9.1% gain for July. He added that traders are in “wait and see” mode ahead of Friday’s jobs report. Economists surveyed by The Wall Street Journal expect the U.S. economy to have added 250,000 jobs in July, down from 372,000 in June.
Strong employment is the remaining pillar propping up consumer sentiment and stopping the economy from seeing a “full-blown recession,” said Aoifinn Devitt, chief investment officer of Moneta.
“We are probably well poised for another good end to the summer. I see a lot of the negative negative news has been baked in,” Ms. Devitt said.
Investors’ expectations for a less aggressive Fed have been evident in federal-funds futures, which are used by traders to place bets on the course of interest rates. Such futures on Monday morning showed a nearly 69% probability that the Fed will raise its key interest rate by half a percentage point in September, up from just 44% last week, according to CME Group. They also are assigning a smaller probability to a 0.75-percentage-point increase compared with a week ago.
Shifting expectations for central-bank policy for the rest of the year have scrambled other areas of financial markets in recent days, upending some trades that have flourished this year. The U.S. dollar, for example, which has staged a prolonged rise in 2022, fell on Monday for a fourth consecutive session, with the WSJ Dollar Index losing 0.6%.
The Japanese yen, meanwhile, advanced again, rising 0.8% against the dollar. The yen’s recent rise has challenged a popular trade on Wall Street this year: betting against the Japanese currency.
In the bond market, the yield on the 10-year U.S. Treasury note traded at 2.61%, down from 2.642% Friday. The yield on the benchmark note has come down significantly from its closing high of 3.482% reached in June.
The yield on the two-year Treasury note, meanwhile, traded at 2.892%, compared with 2.897% Friday, to keep the so-called yield curve inverted. That market signal, which occurs when short-term Treasury yields trade higher than long-term yields, is often seen as a key predictor of a recession.
In individual companies, U.S.-traded shares of
Alibaba
moved 0.9% lower after the company said it would work to stay listed on the New York Stock Exchange. The Securities and Exchange Commission on Friday added Alibaba to a list of Chinese companies at risk of being delisted from the U.S. exchanges if their auditors can’t be inspected before spring 2024.
Shares of
EVO Payments
surged 23% to $33.71 after
Global Payments
said it would buy the payments-technology company and pay $34 a share in an all-cash deal. Global Payments shares rose 4.8%.
Shares of
PerkinElmer
rose 5.8% after it announced it will sell its applied, food and enterprise services business to private-equity firm New Mountain Capital for $2.45 billion in cash.
Later Monday, investors will parse earnings from companies including Diamondback Energy,
and
Activision Blizzard,
all of which report after the closing bell.
In energy markets, Brent crude fell 3.9% to $93.81 a barrel.
A trader worked on the floor of the New York Stock Exchange on Wednesday.
Photo:
BRENDAN MCDERMID/REUTERS
Overseas, the pan-continental Stoxx Europe 600 dipped 0.2%. London-traded shares of
HSBC Holdings
rose 6.1% after the global banking giant said profit rose 62% in the second quarter from a year earlier.
In Asia, indexes ended mostly higher, despite data showing Chinese manufacturing activity unexpectedly contracted in July. China’s Shanghai Composite rose 0.2% and Japan’s Nikkei 225 jumped 0.7%.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com
Corrections & Amplifications
Economists surveyed by The Wall Street Journal expect the U.S. economy to have added 250,000 jobs in July. A previous version of this article stated that economists expected that the U.S. economy added that many jobs in June. (Corrected on Aug. 1)
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Crypto pumps after Fed rate hike, Zuck pins hopes on Metaverse making hundreds of billions, and Tesla posts $64M BTC gain: Hodler’s Digest, July 24-30
Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
‘Bullish rate hike’ — Why crypto spiked in the face of bad news
Despite the U.S. Federal Reserve announcing a 75-basis-point interest rate hike on Wednesday, the crypto markets pumped significantly on the same day with the momentum continuing through the week. Quantum Economics founder and CEO Mati Greenspan jokingly called it a “bullish rate hike” and stated that investors were clearly expecting far worse. Analysts such as Swyftx’s Pav Hundal suggested the recent rally may be due to an easing of inflationary pressures around gas and goods such as corn and wheat.
Ethereum dev confirms Goerli merger date, the final update before the Merge
On Thursday, lead Ethereum developer Tim Beiko revealed that the final Goerli testnet merger ahead of Ethereum’s long-awaited Merge and switch to proof-of-stake will occur between Aug. 6-12. In what has been a long and much-delayed roadmap since late 2020, the Ethereum network is now in the final stages of completing its largest upgrade to date. The official Merge is slated for Sept. 19 but could be subject to further delays if there are issues with the Goerli testnet.
Zuckerberg unfazed about $2.8B metaverse division loss in Q2
Meta CEO Mark Zuckerberg stated that he was unfazed by the company copping a $2.8 billion loss on its Metaverse division in Q2. He highlighted that the company’s Metaverse goals will take several years to roll out, but he sees a “massive opportunity” to make hundreds of billions of dollars, or even trillions, over time as the sector matures. “I’m confident that we’re going to be glad that we played an important role in building this,” he said.
Cathie Wood sells Coinbase shares amid insider trading allegations
Cathie Wood’s investment firm Ark Investment Management, which is one of the largest shareholders of Coinbase (COIN), reportedly dumped 1.4 million COIN shares on Tuesday. The shedding was done via three of Ark’s exchange-traded funds (ETF), and the sale was estimated to be worth around $75 million. The firm reportedly held nearly 9 million COIN shares in late June and has continually snapped up the stock since it opened at roughly $350 last April. Since then, the price has tanked heavily to sit just below $63, and Ark probably should have shorted it when Jim Cramer called it “cheap” at $248 last August.
Tesla reports $64M profit from Bitcoin sale
The Elon Musk-led electric vehicle maker Tesla posted a respectable $64 million profit after selling 75% of its BTC holdings in Q2. The gains seem notable considering the company sold during the middle of a bear market; however, what’s more important and exciting is that Musk appears to be finally losing interest in crypto and we won’t need to hear from him anymore. The firm is said to still have 10,800 BTC on its books, which is worth around $255 million at the time of writing.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $23,559.86, Ether (ETH) at $1,674.34 and XRP at $0.36. The total market cap is at $1.08 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Optimism (OP) at 75.71%, Ethereum Classic (ETC) at 58.20% and Qtum (QTUM) at 41.89%.
The top three altcoin losers of the week are Huobi Token (HT) at 9.10%, Kusama (KSM) at 8.98% and NEAR Protocol (NEAR) at 7.76%.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Most Memorable Quotations
“A lot of NFT projects are just speculation with no real tangible spine, no real true story. Having a football club to root for every week? That’s a spine that people attach themselves to.”
Preston Johnson, co-owner of Crawley Town F.C. and co-founder of WAGMI United
“Industry shouldn’t be allowed to write the rules that they want to play by.”
Sherrod Brown, U.S. senator and chair of the Senate Banking Committee
“We think it is more relevant for local projects to benefit the local economy, and not just take products to the United States to benefit traders there, for example.”
Lou Yu, head of KuCoin Labs
“Powell is particularly skilled at delivering bad news. Clearly investors were expecting worse.”
Mati Greenspan, founder and CEO of Quantum Economics
“The Metaverse is a massive opportunity for a number of reasons. I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time.”
Mark Zuckerberg, CEO of Meta
“I worry about things that are not directly related to blockchain and the Metaverse. I worry about climate change and about social fragmentation.”
Neal Stephenson, author of Snow Crash
Prediction of the Week
GameFi industry to see $2.8 billion valuation in six years
Absolute Reports published a GameFi-focused report this week estimating that the play-to-earn NFT gaming industry will be worth $2.8 billion by 2028. For it to reach the target, GameFi would need a compound annual growth rate of 20.4% over six years, given that the sector was estimated to be worth $776.9 million last year. The reasons for this lofty target, however, are locked behind a paywall.
FUD of the Week
Solana-based stablecoin NIRV drops 85% following $3.5M exploit
The algorithmic stablecoin from Solana-based adaptive yield protocol Nirvana Finance, NIRV, de-pegged by 85% this week after the protocol was hacked for $3.49 million worth of USDT. The incident was cited as a flash loan attack which resulted in the funds being siphoned from Nirvana’s treasury. Its native token, ANA, also dropped 85% as a result of the hack.
Phishing risks escalate as Celsius confirms client emails leaked
On Tuesday, beleaguered and bankrupt crypto lending firm Celsius emailed its customers, informing them that a list of their emails had been leaked by an employee of one of its business data management and messaging vendors, Customer.io. The firm has played down the incident, stating that it did not “present any high risks to [its] clients,” adding that they just wanted users to “be aware” — although Celsius also said similar things regarding users’ assets after pausing withdrawals several weeks ago.
TikTok data policy debacle: Is user’s crypto at risk?
Popular social media app TikTok is facing backlash over its far-reaching data collection policies that could extract large amounts of sensitive info from a user’s smartphone or computer. As such, crypto users are now worried about whether TikTok is capable of scraping critical data such as private wallet keys. “TikTok is not just another video app. That’s the sheep’s clothing. It harvests swaths of sensitive data that new reports show are being accessed in Beijing,” claimed U.S. Federal Communications Commissioner Brendan Carr.
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U.S. stocks push higher as Powell sees path back to 2% inflation while sustaining strong labor market
U.S. stock indexes pushed higher after a wobbly start Wednesday, leaving Wall Street potentially on to gain ground after back-to-back losses, as investors tune in to remarks by central bankers while fretting that soaring inflation is damaging the world’s biggest economy.
How are stock indexes trading?
-
The Dow Jones Industrial Average
DJIA,
+0.12%
was up 196 points, or 0.6%, at 31,143. -
The S&P 500
SPX,
-0.23%
traded up 15 points, or 0.4%, at 3,836. -
The Nasdaq Composite
COMP,
-0.43%
gained 42 points, or 0.4%, to 11,223.
On Tuesday, the Dow fell 491.27 points, or 1.6%. The S&P 500 fell 2% and the Nasdaq Composite dropped 3%. All three booked their worst daily percentage declines since June 16, according to Dow Jones Market Data.
What’s driving markets?
Federal Reserve Chair Jerome Powell said Wednesday at a European Central Bank forum on central banking that he sees a path back to 2% inflation while sustaining strong labor market, but warned there was “no guarantee that we can do that.”
Investors were also listening to remarks from European Central Bank President Christine Lagarde, Bank of England Gov. Andrew Bailey and Augustin Carstens, head of Bank for International Settlements, to speak at speak at the same conference.
On U.S. economic data, the first-quarter GDP was revised to show an 1.6% decline, compared with the prior 1.5% drop.
Equities were limping toward the end of a miserable first half of the year. The S&P 500 is down 19.6% so far in 2022, hit by concerns that inflation rates at multidecade highs are badly damaging household sentiment and that the Federal Reserve’s response to surging prices may tip the economy into recession.
Read: What’s next for the stock market after the worst 1st half since 1970? Here’s the history.
On Tuesday, the Conference Board’s consumer-confidence index dropped in June to a 16-month low of 98.7, with consumers’ outlook on the state of the economy at the most cautious in nearly 10 years. The news helped turn early gains for Wall Steet into heavy losses, with the Nasdaq Composite shedding 3%, leaving the tech-heavy index nursing a loss of 28% for the year to date.
“Last week, U.S. equity markets rallied on the back of the arcane logic that a U.S. recession would mean a lower terminal Fed funds rates and thus, was bullish for stocks… That premise was boosted by weak Michigan Consumer Sentiment data,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.
See: Wall Street’s favorite stock sector has potential upside of 43% as we enter the second half of 2022
On Tuesday, “even weaker U.S. Conference Board Consumer Confidence data provoked the opposite reaction, with U.S. stocks plummeting,” he added.
Wall Steet’s dive left Asian and European bourses floundering. Hong Kong’s Hang Seng
HSI,
-1.88%
fell 2% and the Nikkei 225
NIK,
-0.91%
in Japan slipped 0.9%. China’s Shanghai Composite
SHCOMP,
-1.40%
shed 1.4% after President Xi Jinping reiterated that the regime’s strict COVID-19 policy was “correct and effective.”
The comments added to worries that supply constraints in China could exacerbate global inflationary pressures. And such concerns were illustrated in Spain on Wednesday, where data showed prices rising by 10.2% in June, their fastest pace in 37 years. Europe’s Stoxx 600
SXXP,
-0.41%
fell 0.8%.
Oil prices crept higher, with WTI crude
CL.1,
+1.61%,
up 1.5% to $113.41 a barrel.
The yield on the U.S. 10-year Treasury note
TMUBMUSD10Y,
3.135%
eased 1.3 basis points to 3.167%.
Companies in focus
-
Shares of Pinterest Inc.
PINS,
-2.36%
rose 0.2% after the social-media company said co-founder Ben Silbermann is stepping down as chief executive and is being replaced by an e-commerce executive from Google. -
Bed Bath & Beyond Inc.
BBBY,
-22.21%
shares fell 18.7% after it announced disappointing fiscal first-quarter results and the ouster of its chief executive, Mark Tritton. -
General Mills Inc.
GIS,
+5.31%
shares rose 4.7% after beating quarterly expectations. The company posted fourth-quarter net income of $822.8 million, or $1.35 per share, nearly double $416.8 million, or 68 cents per share, last year. Adjusted EPS of $1.12, ahead of the FactSet consensus for $1.01 per share.
Other assets
-
The ICE U.S. Dollar Index
DXY,
+0.30%
edged down 0.01%. -
Bitcoin
BTCUSD,
-1.04%
fell 4.6% to trade near $20,120. -
August gold futures
GCQ22,
-0.12%
gained $6.30, or 0.4%, to settle at $1,827.90 an ounce.