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Wednesday, November 16, 2022
Today’s newsletter is from Brian Sozzieditor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Read this and other market news wherever you are with Yahoo Finance app.
Trust is an essential part of investing – stocks, bonds, etc. I trusted Walmart when it announced on Tuesday that sales increased last quarter. I trusted Walmart chief financial officer John David Rainey when he spoke to me on Yahoo Finance Live about the retailer’s expectations for holiday sales. I hope that when I buy a bond, I will get back the principal with interest at some point in the future.
Unfortunately for crypto, the space is now facing a major trust deficit following the FTX implosion. The cryptocurrency exchange filed for bankruptcy last week and its CEO, Sam Bankman-Fried, stepped down. SBF, as he is known, became a crypto billionaire and industry star at the age of 29. Now, at 30, SBF has lost his fortune and admitted to loaning funds from FTX clients to Alameda Research, a trading company he co-founded.
Cryptocurrency already had a reputation for carrying more risk than traditional investments. But the FTX drama has undoubtedly cast even more doubts about digital assets.
“I mean, actually, in a way, SBF is like the Jordan Belfort of the crypto age. Instead of ‘The Wolf of Wall Street,’ they’ll do a movie called ‘King of Crypto'” , founder of Microstrategy and bitcoin bull Michael Saylor told me on Yahoo Finance Live this week.
Belfort pleaded guilty to fraud related to stock market manipulation in 1999 and spent 22 months in prison. He was then portrayed by Leonardo DiCaprio in the 2013 film “The Wolf of Wall Street”.
SBF has not been charged with a crime, but a criminal case against him is not out of the question. Federal prosecutors in Manhattan are investigating the collapse of FTX, The Wall Street Journal reported, citing unnamed sources familiar with the matter. Still, US prosecutors could run into trouble because FTX is based in the Bahamas, where SBF lives in a house with a group of friends.
How on earth can you trust an industry where a key player sets up a business overseas and then potentially faces criminal action anyway?
How can you put a penny of your hard-earned money into crypto knowing it can be gone a minute later due to the absurd actions of a wealthy person living in the Bahamas?
SBF has tweeted his apology, writing after the company’s bankruptcy filing: “Hopefully things can find a way to straighten out. Hopefully this will bring them some transparency, trust and governance. »
These words alone will not restore investor confidence in cryptocurrency, if they had any to begin with. But experts tell Yahoo Finance there are ways to gain legitimacy. Key elements needed to regain this trust include:
Strict regulations that treat crypto like securities.
Repercussions for individuals and businesses who break the new rules.
The elimination of suspicious cryptocurrencies.
Even with proper regulation and enforcement, the cryptocurrency industry will not recover from the FTX fiasco overnight. How long could it be before confidence returns?
“I think it takes years,” Liz Hoffman, Semafor’s business and finance editor, told Yahoo Finance Live.
Looks correct to me.
What to watch today
8:30 a.m. ET: Retail Sales, October (1.0% expected, 0.0% in September)
8:30 a.m. ET: Import Price Index, October (-0.4% expected, -1.2% in September)
8:30 a.m. ET: Export Price Index, October (-0.3% expected, -0.8% in September)
9:15 a.m. ET: Industrial Production (0.1% expected, 0.4% in September)
9:15 a.m. ET: Capacity utilization (80.4% expected, 80.3% in September)
10:00 a.m. ET: Business inventories, September (0.5% expected, 0.8% in September)
10:00 a.m. ET: NAHB Housing Market Index, November (36 expected, 38 in October)
4:00 p.m. ET: Long-term ICT net flows, September ($197.9 billion in August)
4:00 p.m. ET: Total TIC Net Flows, September ($275.6 billion in August)
6:00 a.m. ET: Lowe’s Companies (LOW) expected to report adjusted earnings of $3.09 per share on revenue of $23.14 billion
6:30 a.m. ET: Target (TGT) expected to report adjusted earnings of $2.15 per share on revenue of $25.98 billion
7:30 a.m. ET: TJX Companies (TJX) expected to report adjusted earnings of $0.80 per share on revenue of $12.30 billion
4:05 p.m. ET: Cisco (CSCO) expected to report adjusted earnings of $0.84 per share on revenue of $13.31 billion
4:20 p.m. ET: Nvidia (NVDA) expected to report adjusted earnings of $0.70 per share on revenue of $5.80 billion
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