Stocks fall as Moody's bank downgrade adds to August woes

Worries about US banks were revived after Moody's downgraded 10 small and midsize institutions, which came with a warning it could lower credit ratings for some of the nation's biggest lenders. It flagged risks in their commercial real estate portfolios, a reminder that stresses in the sector persist after the banking crisis earlier this year. 

In Europe, bank stocks tumbled after the Italian government said it will put a 40% windfall tax on lenders' profits, raising fears that other countries could do the same. 

Optimism about stocks also took a hit Tuesday when data showed a slump in Chinese imports and exports in July that was far worse than expected. Demand is weak, dimming the prospects for a rebound in the world's second-biggest economy. 

Those discouraging economic signs come as investors wait for the release of the July inflation report on Thursday, looking for a steer on whether the Federal Reserve will put its interest rate hikes on pause again. 

Meanwhile, another batch of earnings reports is rolling in and could shed more light on how corporate America is faring. Results from UPS (UPS), Eli Lilly (LLY), Restaurant Brands (QSR), and Fox Corp (FOXA) are among the highlights.

US Banks’ $118 Billion Buffer Likely Wiped Out by New Rules

Wall Street's biggest banks are preparing for new regulations that could erase more than $100 billion in excess capital built up over the past decade. Vonnie Quinn reports on Bloomberg Television.

Wall Street's king, Jamie Dimon, on the US presidency

CEO of America’s largest and most successful bank, JPMorgan Chase, Jamie Dimon heads up a globe-spanning operation worth more than $400BN. 

In this film Zanny Minton Beddoes, the editor-in-chief of The Economist, probes his public-policy ideas–from US-China relations to Bidenomics–and hears his plans for the future.

Job losses on Wall Street

Record-breaking profits at investment banks appear to be another relic of the golden age. 

Workers hired to meet roaring demand have been left twiddling their thumbs. Now they are being shown the door.

Read the full story on The Economist HERE (subscription may be required)

Tesla Stock Up 40% Since May: Why Clean-Energy Shares Are Surging

Shares of clean-energy companies are rising after an 18-month downturn. 

Companies and investors are now watching to see if the rally will help sustain them until climate-law subsidies kick in. 

WSJ climate-finance reporter Amrith Ramkumar joins host Julie Chang to explain how Tesla is leading the surge.

Michael Milken: The World's Most Evil Billionaire

This deep-dive video explores the infamous Michael Milken Junk Bond scandal. 

From his meteoric rise as the junk bond king and the collapse of Drexel Burnham Lambert, to his pardon by former President Donald Trump, we unravel the complexities behind one of Wall Street's most shocking stories.

Why the SPAC Boom Fizzled - What Went Wrong

In March 2021, special-purpose acquisition companies raised $36 billion. In July 2022, no new SPACs raised money. 

At their peak, SPACs accounted for 70% of all IPOs, with $95 billion raised. But now, the market has dried up and shares of companies that did SPAC deals have crashed. WSJ explains the decline of the IPO vehicle.

Are We Having 1929 Again? -Warren Buffett

Warren Buffett explains the 1929 market crash and shares his thoughts on how to deal with events of today.

Warren E. Buffett is an American investor, philanthropist, business tycoon, and the chairman & CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over 100 billion dollars. Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth and made truly incredible stock market returns over his career.

The Death of the SPAC Boom

SPACS, or special purpose acquisition companies, were all the rage at the start of the pandemic. These shell companies raise cash by listing on the stock market, and then seek a merger with a private company. This created a novel way for companies to list on the stock market without having to go through the traditional initial public offering process.

Now, Spacs are floundering. The FT’s Ortenca Aliaj talks with guest host Jess Smith about how the Spac investment boom collided with rising interest rates and regulatory threats, and ultimately went bust.

Check out how SPACS went bust HERE. 

What It Takes for a Bear Market to Turn Around

As markets react to interest-rate hikes and the threat of a recession, stocks are dropping closer to bear-market territory. WSJ’s Gunjan Banerji explains what it takes to push stocks back into a bull market and why it’s hard to predict when they’ll turn around.

 

How It Happened: The 2008 Financial Crisis - Warren Buffett

Warren E. Buffett is an American investor, philanthropist, business tycoon, and the chairman & CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over 100 billion dollars. Buffett was born in Omaha, Nebraska. He developed an interest in business and investing in his youth and made truly incredible stock market returns over his career.

Robinhood’s Big Gamble

In eliminating barriers to investing in the stock market, is the app democratizing finance or encouraging risky behavior? The app gives new investors an easy way to buy and sell stocks. Its founders say that it could help reduce inequality, but critics fear that it will only reinforce the wealth gap.

Read Sheelah Kolhatkar's article in The New Yorker HERE.

Digital Payments - US still in the Dark Ages

Even though the US is home to both Silicon Valley and Wall Street, yet it has long seemed in the dark ages on digital payments.

Just consider that until 2018 card purchases still required hand signatures, 15 years after Europe switched to chip-and-pin. Then the cosy credit-card duopoly, consisting of Visa and Mastercard, works with the banks to issue cards, with the result that there has been too little competition and sky-high profit margins. 

The key to making payments more competitive in the US is to create a new network of financial plumbing: a “real-time” interbank-payment system that will permit near-instant and cheap transfers.

Read more from The Economist -Fintech comes to America at last

 

The IPO is dead! Here comes the SPAC!

Are SPACs a useful innovation, a mania, or both? The SPAC boom in part reflects a rebellion by Silicon Valley types, who have long grumbled about having to go through an IPO.

Silicon Valley has thrived by inventing new ways of doing things, from searching for information to contacting friends. So it may come as no surprise that the Valley is eagerly embracing another sort of disruption: special-purpose acquisition companies (SPACs), as an alternative to the conventional initial public offering (IPO) for startups.

Here is a selection of articles from The Economist on the SPAC.

• The Spectacular boom on Wall Street
• Why SPACs are Wall Street’s latest craze
• What the SPAC craze means for tech investing
• Amsterdam’s financial center gains an edge over continental rivals

GameStop trading frenzy being probed for misconduct

The trading frenzy that saw unexpected surges in GameStop, AMC and other stocks has now got the attention of federal regulators who are now investigating the rally for market manipulation or other misconduct, The Wall Street Journal reported on Tuesday (Feb. 11), citing sources.

More details from this PAYMNTS. com post - READ HERE

 

The GameStop Rally Explained

Why it's likely not what it seems

How Short Selling Works

Short selling lets investors bet against a stock, profiting when it falls in price, but how exactly does a short work? In this video Richard Coffin discusses the process and the risks it entails.

How the GameStop short-sellers play - Charts that Count

The FT's US finance editor Robert Armstrong looks at a company whose shares soared more than 400 per cent just two weeks ago as amateur stock traders took on Wall Street to make money from its fortunes.

 You can get more information on this story from the FT article;

"GameStop curbs put clearing houses under the spotlight"

Inside Wall Street’s WhatsApp Secret

From traders to bankers and money managers, just about everyone in finance is embracing apps like WhatsApp as an easy, and virtually untraceable, way to circumvent compliance, get around the HR police and keep bosses in the dark.

Traders’ Phones Are Becoming a Surveillance Zone

From Wall Street Journal –

“Wall Street has a message for its traders: Watch what you say.

At large banks in the U.S. and Europe, traders’ everyday activities are being recorded and monitored more often than ever before. Lately, banks and their regulators have focused on perusing the minutiae of phone conversations traders have each day with colleagues, competitors and customers.

Years ago, many traders learned to be circumspect about what they wrote in emails, texts and electronic chat rooms. But the phone until recently was a bit of a haven, a place to build rapport and negotiate details of trades.”

Read more>>