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AUGUST 23, 2023

CRYPTO CONVERSION COLLABORATION

Binance.US, faced with regulatory hurdles that have made it difficult to work with traditional banking partners, is teaming up with MoonPay, a crypto startup, to offer its users a solution. Through this partnership, Binance.US customers will have the ability to easily convert their cash into the stablecoin tether, which is pegged to the value of the dollar. These converted stablecoins will then be deposited into users’ Binance.US accounts for trading with other cryptocurrencies. Additionally, MoonPay will allow users to convert their crypto back into cash, with a minimum sell order value of $30. This strategic move comes as Binance.US aims to navigate the challenges imposed by regulatory scrutiny, which have led to the suspension of U.S. dollar deposits and a decline in market share for the exchange.

LOAN RATES INCREASED

According to data from the Mortgage Bankers Association, last week witnessed a surge in the interest rate for the most popular U.S. home loan to its highest point since 2000. This increase led to a substantial decline in mortgage applications, driving them to a 28-year low. Furthermore, with the average rate for a 30-year fixed-rate mortgage surging to 7.31%, driven by soaring government bond yields, the housing market is currently contending with the consequences of the Federal Reserve’s measures to curb demand and inflation, as although strength has been displayed in other sectors of the economy, the housing market has been experiencing dwindling sales and reduced affordability due to a combination of heightened rates, limited housing inventory, and decreased refinancing activity among current homeowners.

UPCOMING FUND RULES

The U.S. Securities and Exchange Commission (SEC) is on the brink of finalizing new regulations that will have a significant impact on private investment funds, collectively responsible for overseeing a massive $20 trillion in assets. The proposed rules, which were introduced in February 2022, will require these firms to provide detailed quarterly reports on fees and expenses, while also banning certain fees and lowering the bar for investors to sue fund managers. The goal is to improve transparency and protect investors, especially wealthy individuals and institutional investors like pension funds. While Democratic Senators support these changes, industry groups like Citadel LLC have voiced concerns, arguing that the SEC is overstepping its authority and that the rules could result in higher fees and fewer investment opportunities for individuals.

BOND MARKET ENTRY

In a bid to trim costs by downsizing offices and reducing its workforce, Charles Schwab Corp. has ventured into the U.S. investment-grade bond market, raising $2.35 billion through the issuance of senior unsecured notes. This move aligns with the company’s recent regulatory filing, outlining its ambitious goal of saving $500 million annually. The debt offering encompasses an 11-year fixed-to-floating rate note, featuring an interest rate that stands 1.8 percentage points higher than Treasuries. However, this strategic maneuver has provoked a 5% decline in Schwab’s shares, marking its most prolonged losing streak since 2004. This development occurs following the intricate backdrop of integrating TD Ameritrade and a prevailing trend among major U.S. banks, which are also tapping into the same debt market.

MIXED RETAIL EARNINGS

In the latest earnings updates, Foot Locker has grappled with a persistent decline in sales and reduced profitability, primarily influenced by consumer caution stemming from inflation concerns. While the company’s adjusted earnings for the period were in line with what was expected, its sales fell short, triggering a significant 30% drop in its share value. Responding to this sales setback, Foot Locker has downwardly revised its projections, now anticipating a more pronounced reduction in both overall sales and same-store sales for the fiscal year. On the other front, Abercrombie & Fitch emerged as a standout performer, surpassing expectations with robust earnings and sales figures, indicative of a robust customer engagement level and global growth momentum. The retailer’s decision to elevate its full-year forecast underscored its confidence in the appeal of its brands and products. Moreover, shifting focus to Kohl’s, the company exceeded market forecasts with its adjusted earnings per share, subsequently driving a 2.6% surge in its stock valuation. Despite slightly lower-than-expected revenue, the Kohl’s performance showcased resilience.

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