Connect with us

Top Stories

SEC Chairman Gary Gensler toasted by Senators



SEC Advances Research on "Simplifying" Trading With Online Brokers, Says Gary Gensler

Gary Gensler, former chairman of the Commodity Futures Trading Commission, testifies during a hearing of the US Senate Banking Committee on Systemic Risk and Market Surveillance on Capitol Hill on May 22, 2012 in Washington.

Jonathan Ernst | Reuters

WASHINGTON – Securities and Exchange Commission Chairman Gary Gensler assured lawmakers on Tuesday that major Wall Street regulators are working overtime to create a set of rules to monitor volatile cryptocurrency markets while balancing the interests of American innovators. .

Gensler told the Senate Banking Committee that he and his team are trying to protect investors through better regulation of thousands of new digital assets and coins, as well as monitoring the more familiar bitcoin and ether markets.

The SEC chief noted the enormity of the task, telling Senator Catherine Cortez Masto, D-Nev, that the regulator could use “too many people” to assess 6,000 new digital “projects” and determine if they are all qualified as titles. under US law.

“Currently, we do not have adequate investor protection in crypto finance, issuance, trading or lending,” Gensler said in prepared remarks. “Frankly, right now it’s more like the Wild West or the old world ‘buyer beware’ that existed before the securities laws came into effect.”

Nonetheless, some lawmakers have pressured Gensler to step up, arguing that opaque definitions and an uncertain market not only lead to runaway speculation, but also stifle innovation.

Pat Tommy, a Republican from Pennsylvania and a prominent member of the committee, pointed out to Gensler at the hearing whether stablecoins meet the definition of a security because investors don’t necessarily expect to profit from it. these assets.

Stablecoins are a type of cryptocurrency that is pegged one by one to the dollar or other traditional currencies and as such are less volatile than their peers in the asset class.

“My whole point, I think we need some clarity on that,” Tommy said. “I think you should disclose it publicly. … And we certainly shouldn’t take any enforcement action against anyone without first providing clarification. “

But as Toomi and his Republican allies worried about the SEC’s ability to stifle innovation without a set of public guidelines, Democrats attempted to point out the largely speculative risk in the cryptocurrency market.

Learn more about CNBC’s political coverage:

Senator Mark Warner, D-VA, jokingly criticized Gensler for putting only a “savage” in his description of the cryptocurrency industry as the “Wild West” of financial regulation.

“As someone who shares some of your concerns about crypto, I will admit that you only put ‘wild’ in front of ‘west’ as opposed to two,” he joked. “As someone who has managed to make good financial results through innovation, I am totally in it. But we need some advice. We need direction.

“I would pick two ‘savages’ in terms of the details of this area, as well as some innovation,” he said.

Controversial practice under investigation

Lawmakers responded to Gensler’s questions about the SEC’s ongoing analysis of Order Flow Payment, a controversial practice that online brokerage houses like Robinhood Markets use to make money.

Companies like Robinhood sell their clients’ trades to market makers like Citadel Securities who execute buy and sell orders. Market makers make a profit by pocketing the difference between the price of buying shares in the open market and selling them to Robinhood customers.

This means that market makers are incentivized to increase the price they offer Robinhood customers. And given Citadel’s dominant market share, some regulators are concerned that investors may not get the best deals, as online brokers have an incentive to have good relationships with the companies that buy their trading volume.

“UK, Canada and Australia are banned,” Gensler told reporters after the hearing. “We are looking at the whole structure of the market.

What the retail public pays, Gensler said, “doesn’t necessarily have order-by-order competition,” meaning that trading orders are only bought by certain market makers known as “wholesalers.” . and to fight with them is not done. Lowest price promise.

Robinhood’s general counsel on Monday said he believed the SEC would end up “concluding that paying for order flow is undoubtedly a surprisingly good thing for retail investors and they’re not going to restrict it.” . “

diversity and climate

Democrats and Republicans respectively praised Gensler on the SEC’s decision to approve the Nasdaq rule requiring diversity on the boards of directors of companies listed with the stock exchange operator and the increased efforts to demand disclosure of the business climate. pass.

The new Nasdaq rule, which is set to face legal challenges, requires boards of directors to meet gender and racial diversity requirements or to explain in writing why they haven’t.

John Kennedy, a Republican senator from Louisiana.

Andrew Harrer | Bloomberg | Getty Images

The Nasdaq’s goal for most American businesses is to have at least one female director in addition to another board member who identifies as a racial minority or a member of the LGBTQ community.

Senator John Kennedy, R-La. offered perhaps the most direct criticism of the SEC’s decision to endorse the Nasdaq’s move.

“Do you see yourself as the father of the people and businesses you regulate? Kennedy asked Gensler. “Why do you impose your personal preferences in terms of culture and society on companies, and therefore on their customers and employees? Like climate change and the Second Amendment.

“I’m sure you have personal feelings about abortion,” Kennedy continued. “Do you have a plan to impose these values ​​on businesses? “

“I guess I don’t do that,” Gensler replied. “I think what I’m trying to do is say, if investors want information on climate risk… that’s what he’s saying.”


Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Top Stories

Crypto sounds a wake-up call – and a tax opportunity – for investors



Crypto sounds a wake-up call - and a tax opportunity - for investors

Detail of the statue of Satoshi Nakamoto, the pseudonym used by the inventor of bitcoin in Budapest, Hungary.

Janos Kumar | Getty Images News | Getty Images

The price of popular cryptocurrencies like bitcoin and ethereum fell on Friday after Chinese authorities stepped up the crackdown, essentially banning crypto.

Government intervention, while important, does not mean investors should run for the hills, financial advisers say. But it’s another reminder that crypto holdings are subject to wild price swings, he said.

“I wouldn’t call it the end of the world,” said Leon Labrecque, accountant and chartered financial planner at Sequoia Financial Group, based in Akron, Ohio. “It’s just a wake-up call.”

“You have to recognize that this is a volatile asset and all the ups and downs go hand in hand,” he said.

More from Personal Finance:
How a lump sum investment compares to a spread over time
The cancellation of the student loan is still pending
Evidence that ending excessive unemployment drove people to work is lacking

This volatility opens up tax planning opportunities that could be available for a few more months, the advisers said, based on the Democrats’ final agreement on federal tax law.

By 3 p.m. ET on Friday, the price of bitcoin had fallen 6% to around $ 42,000. Ether, the second largest digital currency, fell more than 8% to almost $ 2,890.

Investors are stunned after the People’s Bank of China declared all crypto-related activities illegal. For example, these activities include trading services and foreign exchange transactions. This is the latest step in a nationwide crackdown on digital currencies.

The notice said the ban on bitcoin and other cryptocurrencies could be of concern to current and potential investors, as the government restricts the pool of buyers from a significant portion of the world’s population. And other governments will also be implementing additional rules, he said.

But for long-term prices, it may not make much of a difference. The daily drop in the cost of crypto, which may seem significant at the time, could be part of a long-term correction of course towards an average value, advisers said.

“Will government regulations cause major volatility in crypto?” Yes, ”said Wayne Wilbanks, Managing Director and Chief Investment Officer at Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia. “Will this make crypto obsolete?” No.

“I don’t think Chinese regulations, or even US regulations, make a big difference in the long run,” he said.

Bitcoin, for example, is still up around 40% despite Friday’s drop. (However, it remains close to the April high of $ 63,000.)

Volatility has been a signature of cryptocurrencies to date. For example, prices have skyrocketed this year following a tweet from Tesla co-founder and crypto enthusiast Elon Musk.

Advisors generally advise investors to allocate a small portion of their portfolio (which they would be entitled to lose) because of risk.

tax benefit

According to Jeffrey Levine, accountant and planning director at Buckingham Wealth Partners in Long Island, New York, investors can use recent volatility in their favor.

Stock, crypto, and other investors are able to “reap” investment losses for tax benefits. Basically, they can sell a losing investment (eg, bitcoin) and use the loss to wipe out the gains from a winning investment elsewhere in their portfolio.

This “harvest of tax losses” reduces (or eliminates) the capital gains tax, which is due on the appreciable value of the investment sold.

However, unlike stock market investors, what crypto investors sell can quickly redeem in the same digital currency or a similar currency. As a result, they can benefit from the tax advantage mentioned above, as well as a portfolio advantage if volatile assets regain value too soon.

House Democrats have offered to close this crypto loophole later this year as part of a campaign to reform the tax code.


Continue Reading

Top Stories

CDC director defends controversial call for Pfizer’s COVID recall



CDC director defends controversial call for Pfizer's COVID recall

Dr Rochelle Valensky, who has been chosen to serve as director of the Centers for Disease Control and Prevention, speaks at an event at the Queen Theater in Wilmington, Del. On Tuesday, December 8, 2020.

Susan Walsh | PA

CDC director Dr Rochelle Valensky insisted on Friday that she had not canceled a vaccine advisory committee by expanding agency approval of Pfizer’s COVID recall to include a proposal rejected by the panel.

In an unusual move, Valensky broke with the CDC’s advisory committee on immunization practices, which voted 9-6 Thursday against allowing vaccines in settings at high risk of transmission. Wolensky followed up on three other panel recommendations to distribute the third injection to adults with underlying health conditions and to all people 65 years of age and older. She said the final vote, which approves additional doses for teachers, health workers and other essential workers, was a “close scientific call.”

“I want to be very clear that I did not fire an advisory committee,” Valensky said during a COVID White House briefing on Friday. “I have listened to all of the deliberations of the FDA Advisory Board and listened intently to this amazing group of scientists who have deliberately and very transparently for hours on end on some of these difficult questions and the state of the science. . “

Valensky’s directive aligns closely with Wednesday’s Food and Drug Administration decision on the recall. The agency has also consulted its panel of scientific advisers in authorizing shots for a wider audience than that approved by its advisory committee on vaccines and related biologics.

“It was a tight science call,” Valensky said, noting the two-day meeting and the heated debate. With the vote divided, Valensky said, “It was my call. If I was in the room, I would have voted yes.

He sought to reassure public confidence by encouraging people to come back and listen to the committee’s deliberations. “We did it publicly, we did it transparently and we did it with some of the best scientists in the country,” she said.

President Joe Biden said the CDC’s recommendation extended the recall to nearly 60 million Americans – including teachers, health workers and supermarket workers – during a briefing Friday morning. Valensky said the broader recall standards better protect frontline workers and account for inequities in the administration of vaccines that affect people of color.

“I am also aware of the negative impact of this pandemic on racial and ethnic minority communities,” Valensky said. “Many of our frontline workers, essential workers and people in isolated environments come from communities that are already hardest hit. “

She said blocking access to boosters for these groups would only worsen inequalities in the pandemic, with black and Hispanic Covid patients dying at higher rates than whites.

According to the CDC, more than 55% of Americans have been fully immunized and more than 2.4 million people have received boosters since the agency cleared them on Aug. 13 for people with weakened immune systems.

Valensky said the agency will work to quickly assess Moderna and Johnson & Johnson’s recall data in the coming weeks.

“We intend to create several advisory committees at the CDC to consider several upcoming decisions, including Moderna, J&J, as well as pediatric vaccination,” Valensky said.


Continue Reading

Top Stories

Nike can take advantage of its poor supply chain



Nike can take advantage of its poor supply chain

A pedestrian walks past a Nike store, an American multinational sportswear brand, and its logo as seen in Hong Kong.

Budrul Chukrut | SOPA Pictures | LightRocket | Getty Images

Weaker sales forecasts, slower growth in China and a disrupted supply channel. The news from Nike’s first quarter financial results report was not good.

Shares fell more than 6% on Friday afternoon after the report. Prior to the results, stocks had already fallen nearly 9% from the all-time high of $ 174.38 reached in August.

Some analysts see an opportunity for Nike to position its business and stocks for higher growth amid the sell-off. Nike’s supply chain woes provide it with cover to accelerate its direct-to-consumer sales strategy, which has been a key driver of profitability in recent quarters.

Now, it takes about 80 days for Nike to get goods from Asia to North America – double the time it took before the pandemic. Manufacturing facilities across Vietnam are starting to reopen, but Nike has lost nearly 10 weeks of production as the pandemic comes to a halt. About 43% of its total footwear and clothing units are produced domestically.

For the next few quarters, Nike expects consumer demand to exceed supply. This means Nike will need to be more strategic about where it ranks in running shoes and training tops. He will probably opt for his own stores rather than wholesale partners.

“As long as stocks are tight, it’s reasonable to assume that the pivot will be straightened out,” said Simeon Siegel, analyst at BMO Capital Markets. “They prioritize their channels with the first product. “

Before the Covid pandemic hit, Nike was on track to expand its direct-to-consumer sales business. It is also cutting partnerships with some wholesale retailers while growing its online business and opening Nike stores around the world. Over the past three years, Nike has removed about 50% of its wholesale junk accounts.

Nike calls the transition a “direct consumer offense,” a game of sports terminology. In fiscal 2021, Nike’s direct revenue represented approximately 39% of Nike brand sales, up from 35% the year before. Selling more goods at full price has also made a profit. Nike’s gross margin for fiscal 2021 increased to 44.8% from 43.4% in 2020.

The woes of an industry-wide supply chain could accelerate Nike’s DTC push to an even faster rate and, in turn, increase profitability.

Nike is “always in demand”

“This means Nike now has a free excuse to speed up its DTC transition and say, ‘We don’t have supplies for our wholesalers,’” Stacey Widlitz, president of SW Retail Advisors, said in an interview. “It’s a huge opportunity, because you see all these other brands doing wholesale, but they don’t have a high end line like Nike. There is always a demand for Nike.

And while Nike’s shelves may be a bit empty compared to normal times in the coming months, Widlitz doesn’t think this will definitely drive shoppers to other retailers.

“People are always going to come back for the big brands,” she said. “It’s the most blocked demand, because they’re basically saying to the consumer, ‘You can’t have this right now.’ You are creating FOMO due to a lack of supply. No headaches to take advantage of it.

During Thursday’s earnings call, Nike’s management team said it was prioritizing its direct channels.

Nike’s main partners are Foot Locker, Dick’s Sporting Goods and Nordstrom, and investors in those stocks are worried about what Nike’s problems will mean for their businesses. Foot Locker’s shares fell more than 6% on Friday, while Dick’s shares were down almost 2%. Nordstrom’s stock was almost flat.

CFO Matt Friend said the temporary disruption in the supply chain “is likely to further accelerate the transformation of the market – to Nike and our most important wholesale partners.”

“We’re going to have lean stocks,” he said. But added: “Strong brands are strengthening themselves in this environment.”

And according to City analyst Paul Lejuez, a temporary supply chain problem is a better problem than a demand problem. He doesn’t see Nike as a demand issue.

“We see these supply chain disruptions as fleeting… more [the delays] have a huge impact on the athletic shoe space, ”Lejuez said in a research note. “The biggest impact of the plant closure in Vietnam is expected to be post-holiday.”

Another way to accelerate growth

If growth slows in China, it will be even more important to strengthen Nike’s North American business. Greater China has long been Nike’s most profitable and important growth market. But in Nike’s last quarter, the region’s revenue grew at the slowest rate of any geography.

General Manager John Donahoe said Nike is playing the long game in China. Supply constraints will impact the performance of the industry in the second quarter, he said, but the company “will invest for the long term and we are confident in the long term opportunity.”

Wall Street research firm UBS said it expects Nike shares to rebound after Friday’s sell-off. UBS shares have a buy rating with a target of $ 185. As of Friday afternoon, Nike was trading at around $ 149 a share. According to FactSet, the average analyst rating for the stock is $ 184.35.

“While some uncertainty remains as to how long it will take to resolve supply chain issues and if Nike’s sales growth rate in China accelerates, we believe investor sentiment will improve. now that Nike has closed its factory in Vietnam. ” Let’s trigger the effect, ”said analyst Jay Sol. “We are confident that most investors will look to fiscal 2023 and see a rebound scenario.”

—CNBC Michael bloom contributed to this report.


Continue Reading


Ad Blocker Detected!

Please Disable Adblocker to Continue, We are able to fund this blog only with the Ads Revenue, Thanks!