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MAY 18, 2023

TETHER ACQUIRES BITCOIN

The cryptocurrency company, Tether, has announced that it will use up to 15% of its operating profits to buy Bitcoin to diversify and strengthen its reserves. The amount of Bitcoin purchased will not exceed Tether’s shareholder capital cushion, which currently sits at over $2.4 billion. As a decentralized and widely adopted cryptocurrency, Bitcoin is seen as an attractive choice for investment, and this is not the first time a stablecoin company has bought Bitcoin as Luna Foundation Guard – the nonprofit behind the failed TerraUSD stablecoin, bought about $3 billion in Bitcoin and other cryptocurrencies to bolster its reserves. Bitcoin currently stands over its $27,000 asset.

TURMOIL SEEMS TO BE OVER

Shares of PacWest Bancorp and Western Alliance Bancorp, have continued the rising trend, boosting investor hopes that the worst of the regional banking turmoil has passed. PacWest Bancorp recorded a 22% surge last week and has added a further increase of 7.2%. Likewise, Western Alliance Bancorp has also increased by 7.2% and is looking to continue its recent surge of 27% after reporting strong deposit growth.

SHOPPERS STILL SPENDING

Walmart exceeded expectations in its fiscal first quarter, with its grocery business unit performing exceptionally well, compensating for the weaker sales in clothing and electronics. Despite concerns of economic strain on consumers, Walmart experienced strong shopper spending throughout this period, possibly reflecting an increase in consumer confidence. As a result, Walmart raised its full-year forecast, predicting a 3.5% rise in consolidated net sales and adjusted earnings per share of $6.10 to $6.20.

PROGRESS BUT STILL OUTSTANDING DIFFERENCES

As the debt ceiling negotiations continue, leaders from both sides are assuring Americans that default on the debt will not occur. House Speaker Kevin McCarthy and President Joe Biden both emphasized the importance of reaching a deal, with Biden stating that every leader in the room understands the consequences of a failure. While negotiations are making progress and both sides are hopeful for a successful outcome, there are still outstanding differences that need to be resolved, such as whether to impose work requirements or discuss tax implications.

GOLD PRICE FALLS

The price of gold has dropped after signs emerged that there might be a deal to raise the U.S. debt ceiling, reducing its appeal as a safe haven investment. This came alongside decreasing expectations of early interest rate cuts in the U.S., making gold less attractive as a non-yielding asset. Consequently, spot gold fell by 0.3% to $1,976.09 per ounce, and U.S. gold futures were also down 0.3% at $1,979.50.

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