by Samuel Mbaki | Jun 6, 2023 | Banking
- According to predictions by Morgan Stanley, top European stocks may lose their value in summer by over 10%.
- The drop is most likely to happen owing to the continued decline in economic growth and deteriorating liquidity in the European Zone.
Morgan Stanley expects a significant price fall in top European stocks
Morgan Stanley has predicted that the top European stocks may fall by over 10% this summer as a harsh economic season grapples the Euro Zone. Morgan Stanley has already cut its sector rating on financial to neutral in favour of Pharmaceuticals.
According to Morgan Stanley, European companies have held up better than others in the rest of the world in 2023 despite facing more challenging economic times. However, they haven’t gone unimpacted as their profits this year are set to decline to 6%, which is still higher than the estimated 10%.
“We still expect a down cycle from the second half of 2023 onwards due to declining margins and slowing economic growth (which we believe is only just beginning),” said Graham Secker, head of European equity strategy at Morgan Stanley.
Keep watching Fintech Express for updates on Macro-Finance and other fintech-related developments.
by Samuel Mbaki | Jun 6, 2023 | Technology
- Apple Vision Pro headset revealed at the WWDC on June 5 and dubbed the first special computer edging out VR, AR and metaverses.
- The device will be rolled out in the U.S. in 2024 before shipping to other nations.
- This innovation has sparked a debate on social media on whether it’s the next technological step away from metaverse and virtual reality.
Apple Vision Pro headset challenges Metaverse’s continuity
Apple has released its newest product, the Apple Vision Pro headset, a virtual and augmented reality-powered device that challenges the highly hyped virtual existence “metaverse”. The searches of the word Metaverse and developments towards it have been slowing down and causing considerable losses to several companies like Meta.
This innovation had massive hype in 2021 when there was a bull cycle, but it died down as virtual and augmented reality competition set in. In the launch of the new Apple Vision Pro headset at WWDC on June 5, 2023, the word metaverse was omitted in the whole presentation.
The company has dubbed the product its first “spatial computer”, moving further away from the metaverse. It has indicated that it will launch it in the U.S. near 2024, bearing a hefty retail price tag of $3,499, after which it will roll out to other countries.
Comparatively, Meta and Microsoft have both released their headsets which are used in generally the same purpose. However, instead of focusing on the terms “AR”, “VR”, and “Metaverse”, Apple has decided to go with “Spatial Computing.”
Additionally, the Apple Vision Pro headset has the capabilities of both AR and VR, as it can even create the full experience of immersive environments. An excerpt from the official announcement reads:
“Featuring visionOS, the world’s first spatial operating system, Vision Pro lets users interact with digital content in a way that feels like it is physically present in their space.”
Though the product is distanced from buzzwords, it has received a generally high reception from social media, with people believing that it could be another step toward the future of technology.
Keep watching Fintech Express for more updates on Tech and Fin-Tech-related stories.
by Samuel Mbaki | Jun 6, 2023 | Cryptocurrencies
Key Points
- CFTC, Coinbase and Robinhood have been called up to testify in the U.S. Congress on June 6 regarding a newly proposed crypto regulation bill
- The trio will send its representatives to share the organization’s views on the bill that could see some digital assets classified as commodities.
CFTC, Coinbase and Robinhood join Capitol Hill in talks about crypto regulation
The United States Commodities regulator, CFTC, has been called upon by Congress to witness and contribute to talks and reviews about a newly tabled crypto regulation bill. The bill will possibly see some crypto and digital assets get classified as commodities, which will fall under the CFTC’s jurisdiction.
The regulator will be accompanied by two more crypto organizations, Coinbase and Robinhood, which will serve as industry representatives and must testify.
“Tomorrow I have the honor of testifying on Capitol Hill before the House Committee on Agriculture to share Coinbase’s views on the Digital Asset Market Structure Discussion Draft […] released last week,” said Coinbase Chief Legal Office Paul Grewal in a statement on June 5.
Other witnesses in the proceedings will be former CFTC Chair Chris Giancarlo, former CFTC commissioner Dan Berkvitz and FIAconnect founder Walt Lukken. The developments come when an uproar regarding crypto regulation in the U.S. continues as the SEC keeps going after crypto organizations.
The moves by SEC have been heavily criticized as it is classifying select crypto assets as securities without following due process. As such, economists fear innovation will bypass the U.S. and head to other nations, which may affect their economies significantly in the long term.
In a June 5 Twitter thread, Grewal gave a rundown of what his testimony will focus on.
“The U.S. is falling behind. We cannot afford to ignore crypto while other markets take advantage of our absence, developing rules and regulations that enable the industry to thrive and risk sending jobs, investment, and technological leadership overseas,” Grewal noted, adding that:
“We need a clear rulebook in the U.S. to achieve the full promise of crypto. Until rules and laws are developed that reflect the realities of this new economic system, we cannot realize the full potential of making our financial system faster, fairer, and more affordable.”
He added
“While regulation establishes clear rules for the industry, it also provides important accountability measures for potential bad actors. U.S. legislation helps good guys innovate and ensures bad guys are held accountable.”
“How we define digital assets is critical for enabling innovation. Digital assets are diverse, and if we fail to effectively draw clear definitions of which assets are securities, which are commodities, and which are neither, crypto will continue to sit in regulatory limbo.”
Keep watching Fintech Express for updates on this and other Fintech-related stories.
by Samuel Mbaki | Jun 6, 2023 | Markets
Key Points
- The crypto market has crashed following a high-value civil lawsuit by the U.S. SEC against Binance.US and CEO Changpeng Zhao.
- Binance has seen $700M withdrawals happen in the time, while Coinbase’s stocks have fallen by over 10%
- The total crypto market cap has fallen 3.6% to $1.09T in the past 24 hours.
A crypto crash occurs: Binance withdrawals top $700M, Coinbase stock falls 10%, total marketcap falls 3.6%
The Binance lawsuit has triggered a crypto crash, significantly decreasing major cryptos prices. At the moment of writing, Coinbase Stocks were down by 10%, while Binance had suffered a $700M+ in outflows. The total market cap of the crypto market had also fallen by a notable 3.6%
The U.S. SEC has sued Binance.US and its founder Changpeng Zhao under allegations that it operates as an unregistered securities exchange in the country. The lawsuit also outlines that Binance had been aware of the laws it was breaking but completely disregarded the authorities and carried ahead with the operations, citing a quote by its compliance officer in 2018 that they are knowingly running an unregulated securities exchange.
The markets reacted wildly to this information, with Binance international branch seeing outflows of $700M+ in 24 hours. Conversely, Binance.US also saw an uptick in withdrawals, recording $230M+ in 24 hours.
The complaint by the SEC argues that Binance’s BNB token, Solana (SOL), Cardano (ADA), Polygon (MATIC), Coti (COTI) and Algorand blockchains (ALGO), Filecoin network (FIL), Cosmos hub (ATOM), Sandbox platform (SAND), Axie infinity (AXS) and Decentraland (MANA) are securities.
As such, their values plummeted as the market digested the news. Metaverse coins SAND and MANA had the most significant declines, with SAND collapsing by 13% to $0.52 and MANA following closely with an 11.6% decline to $0.45. Keep watching Fintech Express to get updates on the next crypto crash and other Fintech-related developments.
by Samuel Mbaki | Jun 5, 2023 | Regulation
Key Points
- CZ, Binance International CEO has expressed dissatisfaction with the U.S. SEC after the U.S. branch of the exchange was served earlier today
- The SEC has filed a civil lawsuit against the exchange claiming that the exchange has been breaking security laws in the nation
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Binance CEO Changpeng Zhao (CZ) calls SEC out
Binance CEO Changpeng Zhao (CZ) has expressed concern with the U.S. SEC after it sued the U.S. installment of the exchange. This branch has been operating away from the international one offering lesser crypto assets to comply with the U.S. regulations.
However, the U.S. SEC seems to disagree with how its run. It has accused Binance US of providing trading services for securities such as BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI.
It has also also accused Binance of providing coin-earning programs BNB Vault and Simple Earn, and staking investment plan; in addition, the SEC accused Binance of intentionally evading US supervision. CZ has commented on the developments saying that these are acts of attack against crypto considering that the SEC has been serving other crypto exchanges like Kraken and Coinbase in arguably unreasonable way, “regulation by enforcement.”
Cardano founder Charles Hoskinson has commented on the matter talking about the SEC heading operation Chokepoint 2.0 which is meant to smother crypto and lead to the adoption of a state controlled CBDC. In his words, he said
“With respect to Binance, I’m reading through the SEC complaint. It’s over 130 pages, but seems like the next in a series of steps to implement chokepoint 2.0 in the United States. The end goal is a agenda based CBDC partnered with a handful of massive banks and end-to-end control over every aspect of your financial life.”
He added that the ongoing crypto attacks calls for the removal of officials who think investors do not have a right to dictate what happens with their wallets dubbing it “authoritarianism” that needs to be put to an end.
“A regulatory event is where you have a debate about compliance with a law or guidance. This event seems to be a political philosophical disagreement with the very existence of cryptocurrencies and what they represent. An unelected group of people have decided that concepts like self-sovereign identity, owning your wallet, and the freedom to control your economic agency should be removed from the masses and given to the “enlightened” few.”
Crypto industry preparing to fight back?
A highly anticipated ruling on the XRP vs SEC is set to be issued in a few months. The industry hopes for a win which could mean an easier time with SEC and the start of a defence against its unfavorable enforcements. Next on, Coinbase has started a legal process with the SEC after the authority served them saying they have been breaking securities laws in the U.S.CEO, Brian Armstrong has said that he does not believe they are in the wrong and the team will defend itself in court.
When asked about the possibility of the CEXes teaming up to fight back, CZ has said that its not arranged yet. However, that doesn’t mean it can’t happen.
Keep watching Fintech Express for updates on this story as its still developing.
by Samuel Mbaki | Jun 5, 2023 | Learn, Blockchain
- A blockchain node is a device that participates in a blockchain network by running the network’s software which helps it to validate transactions.
- Blockchain nodes usually communicate with each other to verify transactions.
- The more nodes a network has, the more it is decentralized.
What are blockchain nodes?
The question of what is a node in blockchain is best answered by visualizing a blockchain network. To be a network, it needs several intercommunicating computers/ devices that can write, upload and verify data that goes to the software behind the network. For instance, if you want to run a node for Bitcoin (CRYPTO:BTC), you can download the Bitcoin Core software on a computer and run it without discrimination.
As such, a blockchain node refers to a device or computer running a blockchain network software and communicating with others to verify data uploaded in the blockchain. Running a blockchain network’s software on different computers increases its security and enhances its decentralization.
For most blockchain networks, anyone can run a node; however, some networks are choosy and only allows select nodes to run their software and participate.
How does a blockchain node work?
The main roles of a blockchain node are broadcasting and validating transactions. Once a user submits a transaction, it’s received by a node that then broadcasts it to all other network nodes.
Once the transaction is read by all nodes and verified that the user has enough funds to satisfy it, they authorize the user to complete the transaction. Since all nodes verify a transaction in a blockchain, a transaction can only be cancelled or rejected if 51% of the available nodes confirm it to be wrong.
As such, the 51% attack can be made, but it’s not easy in a decentralized network. A decentralized network is one where different nodes are available and are not led by a single user or a block of users that can concur to Sencor select transactions. That means the higher the number of nodes, the higher the security of a blockchain against the 51% attack.
Once a node validates new transactions, it is grouped into blocks that are then added to the blockchain following the set rules of the network. After that, no node in the network is allowed to change the contents of any block, making the data recorded in the network immutable.
by Samuel Mbaki | Jun 5, 2023 | Finance
Key Points
- Saudi Arabia has pledged further voluntary oil production cuts, increasing oil prices.
- According to a statement by the energy minister, the Kingdom is set to decline its production by a million to 9 million barrels a day.
- OPEC+ contributes around 40% of the world’s oil supply and plans to increase its oil production cuts over time.
Oil prices to keep increasing as production cuts increase
Oil prices rose on June 5, 2023, following news that Saudi Arabia had decided to slash their daily production by 1 million barrels. However, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) have not changed their planned oil production cuts for the remainder of the year.
The world’s leading oil exporter Saudi Arabia has said that the new production plans will take effect in July. Following the release of the information on Sunday, International benchmark Brent crude futures traded a barrel at $77.34 (1.6% higher) at 11.15 a.m. London time and the Intermediate futures stood at $73.01, over 1.7% higher.
Several oil producers had revealed a combined 1.66 million barrels per day cut by the end of the year. This report shook the market a bit, but it didn’t expect Saudi Arabia to be cutting its production by a whole million barrels in a day so soon.
Whether the other countries will choose to reduce their oil production by higher than the set limit by OPEC+ remains to be seen. However, you can expect drastic changes in oil prices throughout the year. Keep watching Fintech Express for updates on this and other finance-related stories.
by Samuel Mbaki | Jun 5, 2023 | Banking
Key Points
- The IMF Managing Director Kristalina Georgieva has expressed concern with the federal reserve not pumping brakes on lending.
- Georgieva also stressed people being active in checking the world economic trends and being agile to adjust correctly as the trends change.
- Meanwhile, most global central banks are tightening their monetary policies to tame inflation rates.
IMF wants to see more federal banks pulling back from lending
In a report by CNBC, the International Monetary Fund is concerned that it is yet to see enough banks pulling back on lending, which could cause them to change course with their rate-hiking cycles.
In the report, IMF Director Kristalina Georgieva told CNBC:
“We don’t yet see a significant slowdown in lending. There is some, but not on the scale that would lead to the Fed stepping back.”
In a May report, the Federal Reserve showed a similar concern over lending and the current economic conditions. The report warned that lenders are worried about the capacity of Americans to continue borrowing, which has resulted in mid-size financial institutions in the country tightening the lending standards for households and businesses.
Fed’s loan officers added that they expect the lending issues to continue through next year as there are low economic growth forecasts already with deposit outflows increasing, which shows a reduced tolerance for risk.
Georgieva noted:
“I cannot stress enough that we are in an exceptionally uncertain environment. Therefore pay attention to trends and be agile, adjusting — should the trends change.”
She added that the positive jobs report shows that the U.S. could continue to hike rates further, which could eventually see the unemployment rate go beyond 4% or 4.5%, significantly higher than the current 3.7%.
The world economy continues declining
Georgieva’s comments come when global economies are shrinking, with a debt of over $305T being recorded. Multiple economies are also struggling with high inflation rates and increased living costs. The U.S. is just days after passing and signing the Fiscal Responsibility Act into a law that seeks to extend its debt ceiling.
The U.K. also struggles with high inflation rates following its deteriorating economy and the monumental Brexit failure. It is being tipped to follow Germany in entering a recession as its central bank continues to push interest rates higher to combat inflation, risking reversed economic growth.
The only unicorn left, the Chinese economy was tipped to resuscitate the world economy upon its reopening. However, it’s been performing dismally off late. It has also shown signs of slowing down, with its stock markets seemingly entering a bear market.
by Gary Smith | Jun 4, 2023 | Cryptocurrencies
- Texas has shown continued support for Bitcoin mining after introducing two bills to help provide incentives to miners
- One bill requires miners with a power consumption rate of over 75 megawatts to register legally while the other makes tax exemptions for miners who make use of wasted energy resources.
Bitcoin mining encouraged in Texas
Texas has introduced bills SB 1929 and HB 591 which were primarily designed to help and provide incentives to the bitcoin miners. Talking in detail, SB 1929 needed miners who had an energy capacity of over 75 megawatts to register themselves with the Public Utilities Commission of Texas.
Apart from this, these mining organizations would also need to share their data with the Electricity Reliability Council of Texas. The second bill, HB 591seeks to effect the introduction of tax exemptions for organizations that make use of wasted gas, like data centers.
The bill named SB 1751 could result in limiting the bitcoin industry’s participation in a cost-saving demand-response program that offers power credit to miners when they reduce their operations during times when there is high energy. This bill, however, is yet to be introduced, but it has been recorded and thus can be passed in the future.
Most industry experts hold the view that an increase in communication can help in being transparent regarding data that is publicly available on mining. Apart from Texas, there are other states too which are supporting bitcoin mining. For instance, Arkansas and Montana have already come out in support of Bitcoin mining.
New York has also imposed a moratorium on new fossil fuel-based bitcoin mines, and then there is Oregon which is striving to reduce greenhouse gas emissions from data centers and miners. Additionally, Biden’s proposed 30% tax on Bitcoin mining is most likely put on hold giving Bitcoin mining a chance to thrive in the country. keep watching Fintech Express for updates on the crypto industry and other fintech-related developments.
by Samuel Mbaki | Jun 3, 2023 | Learn
Key Points
- A tight labor market occurs when there are more job opportunities than available workers
- A tight labor market could see an inflation spike and a consequential rates hike
- Recruiting in a tight labor market doesn’t have to be that hard.
What does a tight labor market mean?
A tight labor market is a market cycle with plentiful vacant jobs and scarce workers. This usually happens when an economy grows super fast, and most employers are looking to expand their workforce.
However, a tight labor market can also occur when there is a decline in labor force participation resulting from a rise in economic inactivity. While it is generally accepted that fewer workers cause market tightness, it is also accurate that workers participating in fewer work hours could also result in a tight labor market.
The COVID-19 pandemic saw most markets tighten due to employees having to work from home. That resulted in some cutting their working hours. As such, the number of new hires started to spike till the pandemic slowed down, and the national economies were revealed to have been heavily impacted, which led to massive layoffs.
Though there are still layoffs, the U.S. is showing an increase in new hires, with an average of 341K per month for the past 12 months and positive hire reports for the past 25 months. This data comes when the U.S. economy slows down due to inflation, a debt ceiling crisis, and a banking meltdown.
These labor reports show that something happened during the COVID-19 work-from-home era that made people reconsider their work ethics and recalibrate their work-life balance toward working fewer hours. If this trend represents a permanent shift keeping the labor supply low, the country will likely face a tight labor market as its economy rebounds.
Most factors behind the formation of a tight labor market are short-term. However, structural economic changes can also be to blame. Some factors that may lead to market labor tightness include:
- Accelerated retirements
- Widening skills gap
- Geographic imbalances in the labor pool
- Too fast economic growth
- Working population decline or immigration
Consequences of a tight labor market
Tight labor markets mean that the production targets of an economy may go unmet as the available workers may not be willing to overwork to hit the set quotas. Here are some of the consequences of labor market tightness in an economy:
- This can lead to a crunch in supply chains as production is hampered by shortages due to unmet quotas.
- This can lead to increases in the relative bargaining power of working people leading to a rise in union pay demands and or an increase in production costs.
- It can lead to cost-push inflation as employers pay higher rates to hire and maintain their key staff.
- It can result in embedded inflation rates that could affect the economy adversely. As such, it directly leads to interest rate hikes to control the embedded inflation risk.
Recruiting in a tight labor market
A tight labor market is one of the hardest times to acquire a star-studded team. However, that doesn’t mean you cannot build one. Here are some tips that you can use to build a great team during seasons with labor shortages
1. Tailor the hiring process to favor candidates
Ensure that your hiring process favors candidates by aligning it with a candidate’s point of view. Throughout the process, ensure you do not lose top candidates due to adjustment and negotiation times delays.
2. Market your organization
Develop attractive landing pages for your organization and explain all perks to employees well to give you an edge over other employers.
3. Develop an employee referral program.
Give incentives to employees who refer others to your organization
4. Focus on the active and passive candidates
Improve the working environments of the present candidates and workers to ensure that they will stick with you and develop a sense of loyalty.
5. Talk about Salary early.
Negotiate salary in the initial stages of discussion to align with the worker. However, be aware of making the hiring process lengthy as the worker may get a counteroffer.
6. Always be recruiting
Keep your recruiting window open to attract top performers to your organization and increase your chances of getting more employees.
7. Be prepared for counter offers.
Be prepared that some top workers and candidates may be given counter-offers to move away from your organization. Introduce bonuses and competitive salaries/ work environments.
What to avoid when developing a star-studded team in a tight labor market
- Underpaying/ being out of touch with marketplace salaries
- Not being realistic about temp-to-perm options
- Not maintaining contact with candidates throughout the process
