- The Twitter layoffs were handled terribly, says Big Tech’s Alex Kantrowitz CNBC Television
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- Latest Stock Market News: October jobs report strong, Musk to begin mass Twitter layoffs, Starbucks shares jump on record sales, inflation tops voters’ concerns | November 04, 2022 | Live Updates from Fox Business Fox Business
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Tag Archives: Stock market
Recession fears mount as stocks fall sharply
A wave of heavy selling driven by investors’ concerns that the global economy could fall into recession rocked major stock indexes around the world Friday.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq each lost more than 1.5% on Friday, with the Dow closing at its lowest level since late 2020. The S&P is down 23% since its peak in January.
As Michael George reports for “CBS Saturday Morning,” interest rate hikes aimed at cutting inflation are having a ripple effect on the economy. On Friday at the New York Stock Exchange, the president of a company called Sustainable Development Equity officiated the close of what was a terrible 486-point drop-day, preceded by a terrible week.
The market has dropped more than 5,000 points in 12 months, with more than 1,000 points lost this week. And there are more storm clouds ahead, according to UC Berkeley economist James Wilcox.
“It is very likely that we are going to have a recession, and the probability of that occurring has been rising all year really, and especially since the summer with the Fed being so aggressive about raising interest rates,” he said.
The Federal Reserve board’s trio of 2022 interest rate hikes has made borrowing harder for companies that want to grow, and for consumers — particularly those who hope to own a home. The average 30-year fixed mortgage interest rates have spiked from 3.3% to 6.7% over the past nine months thanks to the Federal Reserve board hikes.
“How much further mortgage interest rates might go up is awfully hard to know, but I think we could still see some other interest rates, auto rates, credit card interest rates, moving up, and that’ll make it more difficult for people to buy new cars or to buy more expensive cars,” said Wilcox.
In all of this, White House press secretary Karine Jean-Pierre addressed the economy on Friday.
“That is why we passed, that is why Democrats in Congress passed the Inflation Reduction Act. By the way, no Republicans supported that,” she said.
The White House also points to gas prices, which have fallen significantly over the past few months, and one part of the economiy that remains strong: the job market. Unemployment is at 3.7%.
If the Fed wants 2% inflation, we’re going to have a calamitous recession, says Clocktower’s Papic – CNBC Television
- If the Fed wants 2% inflation, we’re going to have a calamitous recession, says Clocktower’s Papic CNBC Television
- Fed Inflation Battle to Spur Greater Economic Harm Than Realized Bloomberg
- Inflation conditions ‘are morphing,’ strategist says Yahoo Finance
- Bill Clinton’s Treasury secretary says he has no idea where inflation will go. ‘Who the hell knows,’ and making predictions is a ‘fool’s game’ Fortune
- Fed rate hikes are mistake as inflation turns into deflation: Cathie Wood Markets Insider
- View Full Coverage on Google News
Dow plunges 2.5% as new COVID-19 variant stokes financial fears
Stocks fell precipitously on Friday, rattled by news of a new coronavirus variant that led several countries to impose travel restrictions.
The Dow, which plunged more than 1,000 points midday, closed 2.5% lower at 34,899 — the worst trading day of the year for the blue-chip index. The S&P 500 dropped 2.3%, its biggest retreat since February, to close at 4,594 and the tech-heavy Nasdaq lost 2.2%, closing at 15,491.
Investors were rattled by news of a COVID-19 variant detected in five African nations that could be more infectious than earlier varieties. Scientists caution that more data is needed to determine how infectious the variant is and how it holds up against vaccines. The variant, whose technical name is B.1.1.529, in recent days has been detected in Hong Kong, Israel and Belgium, according to media reports.
The World Health Organization has said the new strain, dubbed “Omicron” after the Greek letter, is a variant of concern. In a statement on Friday it noted that early evidence on the new strain “suggests an increased risk of reinfection,” it said in a statement.
“While headlines are alarming, scientists are still researching how transmissible and severe it is, and whether current vaccines are effective,” analysts with TD Securities told investors in a research note. “Further evidence of spreading cases in Europe and beyond are likely to weigh on markets, and may lead to faster lockdowns.”
On Friday afternoon, the U.S. restricted travel from seven countries in Southern Africa. The United Kingdom, France and Israel have cancelled direct flights from South Africa and four surrounding nations, and the European Commission has proposed halting all air travel between its 27 member nations and southern Africa.
Investors sold off travel stocks, with Royal Caribbean Cruise Lines falling 13%, while United Airlines dropped 10%. The price of Brent crude oil also dropped sharply, losing 10% to fall to $72 a barrel.
“Sectors and countries most exposed to the pandemic (tourism, energy, etc.) have been hit hardest. We expect those patterns to persist in the near term as investors digest the implications of the new variant,” Neil Shearing, group chief economist at Capital Economics, said in a report Friday.
The extent to which the new strain is resistant to vaccines or deadlier than previous strains will determine how governments respond as well as any economic impact, Shearing noted.
However, unlike earlier strains, Omicron is coming to the fore at a time when the global economy is straining, he said. “Supply chains are already stretched. A virus-related surge in goods spending, or port closures, would exacerbate existing supply strains and add upward pressure to goods inflation,” Shearing wrote. Meanwhile, the potential of an infectious new viral strain could cause more workers to leave the labor market, he added.
“One worst-case scenario involves the entire immunization process having to start from scratch, while the most benign outcome would be the discovery that ‘Omicron’ is neither much more transmissible nor deadly than earlier variants and that existing vaccines are effective against it,” Barclays analysts said in a report.
On Friday, fears of the worst case contributed to the selloff.
“The new variant news has brought with it a sell first and ask questions later mentality,” said Ryan Detrick, chief market strategist for LPL Financial.
The Associated Press contributed reporting.
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Former Employer of Memestock King Gets Hit With $4 Million Fine
The former employer of “RoaringKitty,” the online trader who helped spark off a Reddit-fueled short squeeze on hedge funds betting against Gamestop stock, has agreed to shell out a $4 million fine.
Keith Gill, who went by RoaringKitty on YouTube and DeepFuckingValue on Reddit, was a registered securities broker who worked as a financial wellness education director at insurer Massachusetts Mutual Life Insurance Company (MassMutual) when he began promoting ailing video game retailer GameStop as a surefire rebound bet in mid-2019. Eventually, he became one of the central personalities in a coordinated run against hedge funds that had taken short positions on GameStop (like Citron Capital and Melvin Capital) that was organized on Reddit’s r/WallStreetBets board in January 2021.
The subreddit /rWallStreetBets sent Gamestop stock skyrocketing, caused huge losses for some vampiric hedge funds that had been shorting the company, shook markets enough that Congress held (useless) hearings, and made Gill a hefty chunk of wealth. The short squeeze also kicked off a wave of speculation in other “meme stocks” like AMC, causing major problems for stock-trading app Robinhood, which alienated a large number of its users by halting trades in some of the affected stocks.
The New York Times reported on Thursday that MassMutual has reached an agreement to pay a $4 million fine to resolve Massachusetts securities regulators’ claims that the company didn’t do enough to supervise Gill and his colleagues’ trades and doings online. Additionally, the state regulators claimed Gill carried out trades for three people with no connection to MassMutual without obtaining company permission. The Times wrote that the settlement reached between MassMutual and the state contains no admissions of wrongdoing but does include other additional measures, such as a compliance review and audits.
MassMutual had previously said that if it had been aware of Gill’s online activities, it would have asked him to cease them or even simply fired him. He was technically employed at the company through Jan. 28, when the GameStop fiasco was still running its course; as Gill was a licensed professional, he had obligations to notify his employer of outside activities. MassMutual was similarly obligated to monitor for any undisclosed activity by its staff, and financial firms generally aren’t supposed to allow their analysts to go around promoting various stocks when they’re not on the clock.
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The investigation was originally opened by the office of Massachusetts Secretary of the Commonwealth William F. Galvin. According to the Wall Street Journal, Galvin says state regulators concluded MassMutual didn’t have “reasonable policies and procedures in place to detect and monitor” any moonlighting workers.
The Times wrote that other parts of the settlement detail how Gill conducted 1,700 trades for three other people in a manner that went against state regulations. While MassMutual denied permission for Gill to manage one of those individuals’ accounts, it didn’t catch on to the other two. Galvin’s office determined that the insurer had third-party software that should have alerted it to trades of more than $250,000 in a single security, the Journal reported, but the feature in question was turned off. Beyond that, regulators were not happy that MassMutual failed to become aware of Gill’s prolific online alter ago at any point. According to the Boston Globe, that included over 250 hours of YouTube videos with stock tips, 590 tweets related to securities, and his Reddit account.
A spokeswoman for MassMutual told the Times the company “is pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation.”
“As far as MassMutual is concerned they were obviously totally at fault for not supervising him,” Galvin told the paper. “I mean, it was beyond a small matter of negligence. It was complete and thorough.”
Friday’s jobs report will be released to a closed stock market—that’s only occurred 12 times since 1980
Good Friday is next week and markets will be closed as per usual. However, what will be unusual is that the closure of financial exchanges in the U.S., and some other parts of the world, comes as the government is slated to release a key report on employment in the middle of a pandemic.
Why is the stock market closed while federal data are being released? That is because Good Friday, this year on April 2, isn’t a federal holiday.
It’s a fairly rare occurrence for the government to release a major piece of data as market participants aren’t able to react to it.
And it is only happened 12 times since 1980, according to Dow Jones Market Data, with the last time occurring on 2015, and before that it happened on 2012 and 2010.
| Year | Dates that nonfarm-payrolls have been released on Good Friday |
| 1980 | April 4 |
| 1983 | April 1 |
| 1985 | April 5 |
| 1988 | April 1 |
| 1994 | April 1 |
| 1996 | April 5 |
| 1999 | April 2 |
| 2007 | April 6 |
| 2010 | April 2 |
| 2012 | April 6 |
| 2015 | April 3 |
| 2021 | April 2 (scheduled) |
| Source: Dow Jones Market Data |
The jobs report is arguably the granddaddy of economic reports, outside of GDP, but its significance has been amplified by the pandemic, particularly as market participants seek more evidence on the magnitude of the rebound a year into one of the worst public health crisis in a century.
The latest jobs report will come as investors are unclear about the degree to which the labor market and/or the economy could fully recover, or even overheat, potentially compelling the Federal Reserve to act quickly to tamp down out-of-check inflation, with vaccine rollouts and some $1.9 trillion in fresh fiscal aid have helping to buttress the economy.
Fed boss Jerome Powell has tried to pacify jittery markets by emphasizing that the central bank will adopt a go-slow approach to normalizing policy, which itself is forecast to be years away.
National Securities chief market strategist Art Hogan told MarketWatch that it may be a good thing that the jobs report comes as the market is closed.
“Having the weekend to digest this news and calibrate what this means for the economic expansion, that may be a good thing for the market,” Hogan said.
A year ago, U.S. nonfarm payrolls fell by 663,000 in March, while the unemployment rate jumped to a 26-year high of 8.5% from 8.1%.
The 2021 jobs report for March is expected to show a gain of 655,000 based on some estimates, after payrolls data showed that unemployment fell to 6.2% as 379,000 jobs were added in February, marking the biggest such gain in four months.
Some time to pause for financial markets may be warranted, Hogan says, because the economy still has a long way to go to achieve a healthy recovery.
“We still have maybe nine million people out of the labor force. We are going to need some blockbuster levels to get to pre-pandemic levels,” the analyst said, estimating that the economy would have to average some 750,000 jobs a month to achieve post-COVID levels.
“It would take us two years, so we really need to start ratcheting up those numbers,” he said.
On Friday, the Dow Jones Industrial Average
DJIA,
+1.39%,
the S&P 500 index
SPX,
+1.66%,
the Nasdaq Composite Index
COMP,
+1.24%
and the small-capitalization Russell 2000 index
RUT,
+1.76%
finished sharply higher, following a choppy week of trading that ended with a late-session flourish.
To be sure, it will be hard to say how robust trading action might be on the Monday after Good Friday, because a number of global exchanges will be closed in observance of Easter Monday.
YouTube, Reddit User ‘Roaring Kitty’ Gets Sued for Securities Fraud Over GameStop Short Squeeze
Keith Gill, also known as “Roaring Kitty” on Twitter/YouTube and “DeepFuckingValue” on Reddit, is facing a proposed class action lawsuit for his role in the massive GameStop short squeeze orchestrated by Reddit’s r/WallStreetBets board, Bloomberg reported on Wednesday.
According to Bloomberg, the suit was filed by Hagens Berman Sobol Shapiro, a securities class action firm, on behalf of Washington state’s Christian Iovin, who sold $200,000 in call options on GameStop stock when it was worth below $100 a share. This proved to be a very bad bet, as users on r/WallStreetBet launched an organized effort to pump GameStop and other poorly-performing stocks, like AMC and BlackBerry, with nostalgia value that ultimately was quite successful. As major Wall Street sharks quickly got clued into and joined the Reddit-driven effort, shares in GameStop spiked to $483, spelling disaster for traders short-selling the company’s stock. Iovin was forced to buy back his calls at inflated rates as a result, according to the suit. GameStop now stands at $46 per share, still significantly higher at the beginning of 2021, when it was trading in the $19 range.
Gill was one of the leading proponents of the rush on GameStop on his social media accounts, and according to CNBC, posted to Reddit that he made at least $7.8 million on the company’s stock. The suit accuses him of not being some layman, but a licensed securities broker that deliberately manipulated the price of the company’s stock to get rich quick.
“Gill’s deceitful and manipulative conduct not only violated numerous industry regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares,” the class action proposal said, according to Bloomberg. “He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill’s act and bought GameStop stock during the market frenzy at greatly inflated prices.”
According to the New York Times, the class action proposal cites Gill’s multiple broker licenses and also names MassMutual’s brokerage arm—where Gill worked until a few weeks ago, and which the plaintiffs claim failed to properly rein in his market activities. Times also noted that securities regulators in the state of Massachusetts are looking into whether his posts potentially violated the law or industry rules. (The Securities and Exchange Commission has issued vague threats to everyone involved involved in the speculative frenzy, including stock-trading app Robinhood, but hasn’t actually carried them out.)
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Gill is strenuously fighting claims he was trying to manipulate the market to his own benefit. The short squeeze was only possible because hedge funds like Melvin Capital had taken out greedily large short positions on GameStop, presenting an opportunity for investors to make big money if the stock rose while the hedge funds lost their shirts. The House Financial Services Committee is holding a hearing on Thursday over the whole r/WallStreetBets fiasco, with Gill scheduled to testify. Others scheduled to speak include Robinhood co-CEO Vlad Tenev, Reddit CEO and co-founder Steve Huffman, and Melvin Capital CEO Gabriel Plotkin.
In his prepared remarks to the House, Gill claimed that his position as Director of Financial Wellness Education at MassMutual had been totally unconnected to his side gig as a stock market commentator and that he had genuinely believed GameStop had “the potential to reinvent itself as the ultimate destination for gamers within the thriving $200 billion gaming industry.” Gill added that as of just a few months ago in December 2020, his YouTube and Twitter accounts had just a few hundred followers each and he did not believe he had the capability to sway markets.
“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous,” Gill wrote. “I was abundantly clear that my channel was for educational purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks checking out the channel. Whether other individual investors bought the stock was irrelevant to my thesis—my focus was on the fundamentals of the business.”
Gill added that “others will have to explain” exactly what happened with GameStop.
“Here’s the thing: I’ve had a bit of experience and even I barely understand these matters,” he wrote. “It’s alarming how little we know about the inner-workings of the market, and I am thankful that this Committee is examining what happened.”
Gill’s attorney, William Taylor, declined to comment to the Times, while MassMutual told the paper it is looking into the matter.