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JUNE 29, 2023

COINBASE VS SEC

Coinbase has recently issued a response to the lawsuit filed by the Securities and Exchange Commission (SEC), in which the cryptocurrency exchange is accused of offering unregistered securities through its platform. Coinbase has argued that the digital assets do not fall under the definition of securities and, therefore, should not be subject to SEC regulations. The company further explained that the tokens traded on its platform are not tied to any contracts or obligations, which distinguishes them from traditional securities. In addition, Coinbase has pointed out that the SEC’s lawsuit violates its due process rights and criticized the agency for pursuing enforcement actions instead of providing clear regulatory guidance. Coinbase has requested the court to allow it to file for judgment and proposed a 7-week schedule for further legal proceedings.

ECONOMIC GROWTH

According to a recent report from the Commerce Department, the U.S. economy experienced stronger than expected growth in the first quarter of the year. Gross domestic product (GDP) increased by 2% on an annualized basis from January to March, surpassing the previous estimate of 1.3% and exceeding the projected 1.4% by Dow Jones. This upward revision suggests that the U.S. economy is not heading towards a recession as previously anticipated. The improvement in GDP can be attributed to higher consumer spending and stronger exports than initially thought.

RATE INCREASES EXPECTED

Federal Reserve Chair Jerome Powell recently stated that the U.S. central bank may implement at least two interest-rate increases within this year to curb inflation, aiming to reach the target of 2%. Powell emphasized that consecutive rate hikes are still a possibility, with a majority of committee participants expecting more than one increase by the end of the year. Powell also highlighted the lingering uncertainty surrounding the economic outlook and the necessity of maintaining a sufficiently restrictive policy to address inflation. Additionally, Powell stressed the importance of reinforcing supervision and regulation for mid-size banks and the nonbank sector, following the failure of Silicon Valley Bank, nonetheless, Powell still considers the U.S. banking system as a whole to be strong and resilient.

BANKS’ SHARES SURGE

U.S. bank shares have experienced gains following the Federal Reserve’s stress test, which showed that banks have enough capital to withstand an economic downturn. Among the banks, Charles Schwab performed exceptionally well. Moreover, banks such as JPMorgan Chase, Wells Fargo, and Bank of America joined the upward trend as they also witnessed gains. Nevertheless, although these positive stress test results may pave the way for potential dividends and buybacks, analysts caution that the current uncertain economic climate and regulatory requirements may limit capital returns in the near future.

MORTGAGE APPLICATIONS ROSE

According to the latest survey by the Mortgage Bankers Association (MBA), mortgage applications have increased for the third consecutive week. Although the overall volume of applications is 33% lower compared to the previous year, there has been a notable increase in purchase applications, reaching the highest level since early May. Furthermore, the average mortgage rates saw minimal changes, with slight increases for 30-year fixed-rate mortgages and a dip for 15-year mortgages, while 5/1 adjustable-rate mortgages experienced a more significant increase.

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