HI Market View Commentary 07-08-2024
Let’s talk tax deferred accounts
IRA, ROTH, 401K, Solo 401K, Defined Benefit Plans
https://www.irs.gov/retirement-plans/traditional-iras
A traditional IRA is a way to save for retirement that gives you tax advantages.
- Contributionsyou make to a traditional IRA may be fully or partially deductible, depending on your filing status and income, and
- Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until you take a distribution(withdrawal) from your IRA.
See IRA Resources for links to videos and other information on IRAs.
Publication 590-A and Publication 590-B explain the details of IRAs including:
- Setting up an IRA
- Contributing to an IRA
- Transferring money or property to and from an IRA
- Handling an inherited IRA
- Receiving distributions (making withdrawals) from an IRA
- Taking a credit for contributions to an IRA
- A comparison of traditional and Roth IRAs
Page Last Reviewed or Updated: 01-Dec-2023
https://www.usgoldbureau.com/content/faq
https://www.forbes.com/advisor/retirement/precious-metal-ira-gold-silver/
Precious Metal IRA: How To Invest For Retirement With Gold And Silver
Personal Finance Writer
Editor
Updated: Mar 1, 2024, 4:02pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Getty
When the stock market gets rough, some investors seek out safe-haven investments like precious metals. While gold, silver and palladium are subject to their own forms of volatility, many believe them to be superior long-term investment choices for retaining and growing value.
You can’t hold physical precious metal in a regular individual retirement account (IRA). However, there are specially designed precious metal IRAs that let you invest for retirement using gold, palladium, silver and other valuable metals.
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What Is a Precious Metal IRA?
A precious metal IRA is a special form of self-directed IRA. This is a special type of individual retirement account that allows you to invest in a broad variety of unconventional assets, including precious metals, real estate and even cryptocurrency.
Conventional IRAs typically do not allow you to directly own these kinds of assets. Note that self-directed precious metal IRAs have the same contribution limits as regular IRAs.
According to Kelli Click, president of the STRATA Trust Company, a self-directed IRA custodian that specializes in gold and other metals, precious metals IRAs are an avenue some people use as part of their retirement plan because gold, silver and palladium have historically grown in value over the very long term.
“Adding gold or precious metals to your retirement account may help protect your wealth in several ways, including reducing your potential investment volatility and risk, serving as a hedge in the event of an economic downtown and providing a tax-efficient shelter for potential gains,” she says.
How Does a Precious Metal IRA Work?
Precious metal IRAs require you to choose a custodian in addition to the company that manages your IRA. The custodian is responsible for holding the physical precious metals in a secure storage facility. Note that you are not allowed to keep precious metals owned in a this type of IRA at home.
Once you have settled on a precious metals IRA provider, chosen a custodian and funded your account, you can choose the type and amount of metals you want to invest in. Typically the account provider will offer plenty of assistance and advice on the best options based on your goals.
The custodian purchases precious metals on your behalf and stores them in a secure depository. The metals are typically held in a segregated account, which means your metals are kept separate from other investors’ metals.
It’s important to note that there are IRS regulations that govern precious metal IRAs, such as restrictions on the types of metals you can own and how they are stored. It’s important to choose a reputable custodian who guides you through the process and ensures that your account meets IRS regulations.
What Precious Metals Can You Invest in for Retirement?
With precious metal IRAs, you can invest in gold, silver, platinum or palladium. That said, you can’t invest in just any gold, silver, platinum or palladium. The IRS has specific standards your precious metals have to meet:
- Gold must be 99.5% pure
- Silver must be 99.9% pure
- Platinum must be 99.95% pure
- Palladium must be 99.95% pure
Products that meet these criteria include Canadian Maple Leaf coins, Australian Koala bullion coins and PAMP Suisse bars. The IRS also allows American Eagle coins, despite the fact that they do not meet the 99.5% purity standard for gold.
You cannot currently hold rare or collectible coins, Swiss Francs, British Sovereigns and German Marks in a self-directed IRA. Check out our list of the best gold IRAs for more.
How Much of Your IRA Should Include Precious Metals?
If you decide to invest in a precious metals IRA, you should do so conservatively. Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals.
The experts cite this low figure for a number of reasons. First, well-designed portfolios are diversified, which means they don’t take on unnecessary risk by investing strictly in one asset or type of asset. In other words, no trustworthy financial advisor would recommend that you invest all of your assets in precious metals.
Second, while gold and other metals have historically held their value over the long term, they may lag the performance of other asset classes, such as stocks, especially when considering reinvested dividend growth. Those looking to continue growing their retirement funds, then, may shortchange themselves if they own too many precious metals.
Finally, keep in mind that these “safe haven” metals may not even be that safe. While investors flock to them in times of trouble, they have been just as volatile as stocks historically. And though prices rise when the market struggles, they tend to fall once stocks recover. Investments like high-quality bonds or Treasury Inflation-Protected Securities (TIPS), then, may be better options for those seeking security and inflation hedging.
That said, if you want to include physical precious metals in your IRA, you have a few options.
Special Considerations for Precious Metal IRAs
Because they involve the purchase and storage of valuable physical metals, you have to consider a few extra things when thinking about precious metal IRAs.
Perhaps the most important is that precious metal IRAs are more expensive than other investment options, according to Drew Feutz, a certified financial planner with Market Street Wealth Management Advisors.
“A precious metal IRA will have more fees than a normal IRA, including setup fees, transaction fees, custodial fees and physical asset storage fees,” he warns.
You can’t avoid most of those fees either. For example, you are not allowed to store precious metals you’ve invested in your IRA in your own home, according to IRS rules. If you do, you risk additional taxes and penalties.
How to Open a Precious Metal IRA
Opening a self-directed IRA and investing in precious metals is slightly more complicated than opening a traditional IRA or Roth IRA. Here’s what you’ll need to do:
1. Select a Self-Directed IRA Custodian
Your self-directed IRA is held by a custodian. Custodians can be banks, trust companies or other entities approved by the Internal Revenue Service (IRS). Self-directed IRA custodians enable investors to invest in alternative assets, including precious metals and real estate.
2. Choose a Precious Metals Dealer
Next, select a precious metals dealer. You’ll direct the IRA custodian to send money to the dealer to purchase gold, silver, platinum or palladium.
“Before choosing a dealer and buying precious metals with your IRA funds, you’ll want to do your own research,” says Click. “Look for a dealer that belongs to industry trade groups like American Numismatic Association (ANA), Industry Council for Tangible Assets (ICTA) or Professional Numismatists Guild (PNG) to help with your search.” Your IRA custodian may also already have relationships with certain dealers, but be sure to do your own research to confirm their quality.
3. Decide What Products to Buy
You’ll need to work with the dealer to select which products to buy. One of the most common choices is American Eagle Bullion Coins issued by the U.S. Mint.
4. Choose a Depository
Precious metals invested in a self-directed IRA must be stored in an approved depository, such as the Delaware Depository. Your IRA custodian can recommend a depository, but you can select one on your own that meets the Internal Revenue Code’s requirements. Remember: You cannot store precious metals for your IRA yourself.
5. Complete the Transaction
Once you have a custodian, dealer and depository, you can complete your purchase. The IRA custodian will handle the payments, and the dealer will ship your precious metals to the depository.
How Do You Make a Withdrawal from a Precious Metal IRA?
When you take a withdrawal, you have two options:
- In-Kind Distributions. You can have the actual precious metal shipped to you after the distribution.
- Depository Purchase. You can opt for the depository to purchase the metal from you, giving you the dollar value of your investment.
In either situation, you will contact your custodian to start the transaction. Remember, though, that precious metal IRAs are subject to the same rules as normal IRAs. Your investments can appreciate in value without taxation while they’re in the account, but when you withdraw them, you may owe taxes and penalties, depending on your account type and how old you are.
By that same token, you’re required to start taking required minimum distributions (RMDs) when you turn 72. The starting age for RMDs is 73 if you reach age 72 after Dec. 31, 2022. Whenever you start RMDs, those withdrawals may become more complicated because you’ll be forced to take them in intervals matching the whole pieces of precious metal you own, and individual precious metals can retail for thousands of dollars per ounce.
This may result in you having to withdraw more value than you would if you were dealing strictly with U.S. dollars. And if you take in-kind distributions, you’ll have to sell your metals quickly or have cash available to pay the taxes you owe on the precious metals that are shipped to you.
Should You Open a Precious Metal IRA?
Precious metal IRAs may be a viable option for some investors concerned about inflation and market volatility. However, they are more expensive than some other investment options, and they may carry more risk than more traditional IRAs.
Precious metal IRAs generally only make sense, then, if you have a strong portfolio and want to diversify your investments by setting aside a small portion for physical gold, silver, platinum or palladium.
If you want easier exposure to these investments without having to open a special kind of IRA or find custodians, dealers and depositories, consider investing in securities like exchange-traded funds or mutual funds that track precious metal indexes or prices. These can offer you the kind of exposure you may want to alternative assets with less cost and risk, and you can hold them in the retirement accounts you already have.
“It’s so easy and cost effective to hold precious metals through ETFs and mutual funds that there doesn’t seem to be a compelling factor to use a precious metal IRA,” says Feutz.
In either case, remember that precious metals and precious metal funds should add just a little sparkle to your retirement funds, not become your whole investment
#1 GOLD, SILVER, COPPER will never be traded as a currency EVER again = Supply and Demand
#2 They are truly over time a really poor investment compared to the Indexes
#3 in a life or death, end of the world situation, would you exchange “life saving” items for a precious metal?
IF you feel the need for precious metal protection = GO Buy the silver, gold
Prepare = Food Storage, Generator, Have some chopped wood, Camping Gear, Water purifiers
21% Of the S&P 500 have met or beat the index over the last 3 years = 79% are spring loaded to move higher at the end of the AI bullish run!!! = CNBC
So the breakout could be Rate cuts, Worldwide rate cuts, ending of wars, election results
https://www.briefing.com/the-big-picture
The Big Picture
Last Updated: 05-Jul-24 12:51 ET | Archive
High expectations for second quarter earnings results
The second quarter has drawn to a close, but it’s not over yet for the stock market. In the coming weeks, there will be regular reminders of the second quarter when corporate America reports its earnings results for the April-June period.
Expectations are high ahead of the reports.
Some Shine on Income Statements
We can say expectations are high knowing that the S&P 500 and Nasdaq Composite are trading at record levels. You don’t get to those heights if expectations are low.
According to FactSet, the blended second quarter earnings growth rate (combined actual results with estimates for companies that have yet to report) is 8.7%. That is down slightly from the 9.0% growth rate expected at the end of the first quarter; however, it marks the highest growth rate since the first quarter of 2022.
Revenue growth is projected to be 4.4%, which will be the 15th consecutive quarter of revenue growth for the S&P 500.
With the pace of earnings growth expected to be roughly twice the pace of revenue growth, it is clear that analysts are expecting to see expense-savings efforts shine through on income statements.
The top line may just be a stronger focus this reporting period than the bottom line. The reason being is that investors will be scrutinizing the state of pricing power and whether it is waning due to weaker demand. If so, it will start to raise questions about the underlying strength of the economy and the achievability of earnings prospects in coming quarters.
Companies losing pricing power on weakening demand will presumably have to resort to cost cuts to deliver stronger earnings growth and that could very well entail job cuts.
Analysts are projecting 8.1% earnings growth for the third quarter and 17.3% earnings growth for the fourth quarter, according to FactSet, making it clear that earnings growth expectations for the back half of the year are high as well.
Size Matters
Turning back to the second quarter reporting period, expectations are highest for the mega-cap companies. That doesn’t necessarily translate into the growth rates per se for each of them, so much as it pertains to their ability to deliver not only on what is expected of them in the June quarter, but also with their guidance.
The communications services sector, which houses Alphabet (GOOG) and Meta Platforms (META), is expected to deliver 18.7% earnings growth. The information technology sector, which is where Apple (AAPL), Microsoft (MSFT), and NVIDIA (NVDA) reside, is expected to deliver 15.7% earnings growth. And the consumer discretionary sector, home to Amazon.com (AMZN) and Tesla (TSLA), is expected to deliver 7.3% earnings growth.
The health care sector, which is where Eli Lilly (LLY) is in residence, is expected to deliver 16.8% growth.
Strikingly, both the utilities sector and the energy sector are expected to deliver 10.6% and 10.2% earnings growth, respectively, which is ahead of the consumer discretionary sector. Their combined market weight of 5.85%, however, doesn’t come close to the 10.1% weighting of the consumer discretionary sector; moreover, the $2.72 trillion combined market value of those two sectors, which include 53 companies, is 5.6% less than the market value of Amazon.com and Tesla — just two companies — combined.
Size matters in a market-cap weighted index.
The stocks mentioned in this space account for 37.5% of the market value of the S&P 500. They will move the market — and they have moved the market, which is why their results and guidance will be integral in driving investor sentiment.
What It All Means
The banks will get things going on the reporting front. JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), and BNY Mellon (BK) will all post their results before the open on July 12.
True to form, one shouldn’t expect any specific EPS guidance from them. What will register more is their qualitative assessment of loan demand and loan quality and the provisions they are taking (or not taking) for loan losses.
After their reports, the spigot will open in the back half of July to include results from all other sectors. The second quarter reporting period will then start winding down and will be largely complete by the middle of August.
That is when the stock market will say good-bye to the second quarter, but it will be saying hello to the earnings estimate trend throughout the reporting period.
Currently, the forward 12-month EPS estimate stands at $260.28, according to FactSet, versus $249.96 at the end of the first quarter. At its current price, the market-cap weighted S&P 500 trades at 21.3x forward 12-month estimates, which is a 19% premium to its 10-year average (17.9x).
The corresponding PEG rate, or price-to-earnings growth rate, is 1.28, which is actually lower than the 1.41 PEG rate for the equal-weighted S&P 500, which trades at 15.9x forward twelve-month earnings. The lower PEG rate for the market-cap weighted S&P 500 has been planted by the stronger earnings growth prospects for the mega-cap companies.
It is a reminder of how important these companies are in driving earnings expectations, which drive the index. Those expectations are high and for good reason. They are not to be messed with or a pretty-looking price trend for the market-cap weighted S&P 500 would be upended.
—Patrick J. O’Hare, Briefing.com
(Editor’s Note: The next installment of The Big Picture will be published the week of July 15.)
Earnings dates:
AAPL 08/01 est
BA 07/31 BMO
BABA 08/08 BMO
BAC 07/16 BMO
BIDU 08/27 est
DG 08/29 est
DIS 08/07 est
F 07/24 AMC
GM 07/23 BMO
GOOGL 07/23 est
JCI 08/01 est
JPM 07/12 est
KO 07/23 BMO
LMT 07/23 BMO
META 07/31 AMC
MU 09/25 est
MRO 05/01 AMC
O 08/05 AMC
SQ 08/01 AMC
TGT 08/21 BMO
UAA 08/09 est
V 07/23 AMC
VZ 07/22 BMO
ZION 07/22 AMO
Where will our markets end this week?
Higher
DJIA – Bullish
SPX – Bullish and Over-Bought
COMP – Bullish and Over-Bought
Where Will the SPX end July 2024?
07-08-2024 -2.00%
07-01-2024 -2.00%
7
Earnings:
Mon:
Tues:
Wed:
Thur: DAL, PEP
Fri: C, BK, FAST, JPM, WFC
Econ Reports:
Mon: Consumer Credit,
Tue
Wed: MBA, Wholesale Inventories,
Thur: Initial Claims, Continuing Claims, CPI, Core CPI, Treasury Budget
Fri: PPI, Core PPI, Michigan Sentiment
How am I looking to trade?
Mostly letting stocks run = very little protection in place – AAPL $125, BAC $40, F $13
www.myhurleyinvestment.com = Blogsite
info@hurleyinvestments.com = Email
Questions???
‘Inside Out 2’ is the first movie of 2024 to top $1B at global box office
By Eva Rothenberg, CNN | Posted – June 30, 2024 at 4:47 p.m.
“Inside Out 2” has become the fastest-ever animated film to surpass $1 billion globally, shooting past the box office milestone this weekend, just 19 days after its release. (Pixar via CNN Newsource)
NEW YORK — “Inside Out 2” has become the fastest-ever animated film to surpass $1 billion globally, shooting past the box office milestone this weekend, just 19 days after its release.
“We’re absolutely thrilled to have reached this phenomenal milestone in record time, and it once again proves that global audiences will come out for a great movie,” Tony Chambers, Disney’s executive vice president of theatrical distribution, said Sunday in a news release. “The film’s remarkable success is a testament not only to the incredible creativity of the Pixar team but an example of moviegoing at its very best.”
The resounding success of “Inside Out 2” has jolted a sluggish 2024 box office. Until the film’s release on June 16, domestic sales had been lagging more than 25% behind 2023’s performance, according to Comscore data.
“Over the past few weeks, we’ve seen the year-to-date, year-over-year domestic box office revenue deficit shrink from 27% to 19% and that’s due in large part to the amazing and much welcome performance of ‘Inside Out 2,’ a film that has adjusted the mood of the movie industry in just a few short weeks,” said Paul Dergarabedian, senior media analyst at Comscore.
The movie is the highest grossing film of the year, and the first to pass $1 billion since “Barbie,” which came out last July. It also joins the ranks of eight other Disney and Pixar movies grossing more than a $1 billion, including “The Incredibles 2,” “Finding Dory,” both “Frozen” movies and the final two “Toy Story” installments.
Daniel Loria, editorial director at Box Office Pro, which collects sales and showtime data from thousands of movie theaters across the United States, projects this year will see an overall domestic box office total between $8.1 billion and $8.4 billion, down from 2023’s total of more than $9 billion, the highest since the pandemic.
But Loria notes it is still possible to close the gap further.
“The impact of the strike on the box office is clear in the first five months of the year, but June has shown us the crucial role movie theaters play in a film industry firing on all cylinders,” he said. “If the movies are there, the audience will follow. I expect to see great numbers in the second half of the year, leading into 2025 and beyond. Another surprise hit or two, and we may get a lot closer to matching that $9 billion than we all expected coming into the year.”
Millennials are ‘very ill-prepared’ to be the richest generation in history, wealth manager says
PUBLISHED SUN, JUN 30 202411:58 PM EDT
Lee Ying Shan@IN/YING-SHAN-LEE@LEEYINGSHAN
KEY POINTS
- A vast $90 trillion wealth transfer over the next 20 years will likely make millennials “the richest generation in history,” according to consultancy Knight Frank.
- “The millennials are very ill prepared [to handle this wealth],” said family wealth management expert Salvatore Buscemi.
- The millennial generation is likely to be focused on near-term goals while those that precede them are more focused on saving for milestones like family building and retirement, experts suggest.
Millennials are poised to be the wealthiest generation in history, but are they ready to handle the large inflow of money?
A vast $90 trillion wealth transfer over the next 20 years will likely make millennials “the richest generation in history,” according to estimates from global real estate consultancy Knight Frank.
It found that the so-called silent generation — those typically born between 1928 to 1945 — and baby boomers — born from 1946 and 1964 — will “hand over the reins” to millennials — those born between 1981 and 1996 — when they pass on their assets.
Millennials have been portrayed as lazy and frivolous spenders, more keen to open their purse strings for avocado toasts instead of saving for a house — so just how equipped are they in managing the seismic flow of income?
“The millennials are very ill prepared … they’re not as well prepared as the wealth creating generation,” Salvatore Buscemi, co-founder and managing partner of multi-family office Brahmin Partners told CNBC.
By the time the millennials inherit this wealth, they will be in their 40s and may not have the aptitude for starting their own business or for investing, he elaborated.
“They don’t have the skill sets earlier on to be able to do that because they never had to – they were never pushed,” he said. “And the problem is – are they going to be motivated later in life to push themselves to acquire these skill sets?” asked Buscemi, adding that human nature suggests that people are less inclined to pick up new skills as they age.
The millennial generation is likely to be focused on near-term goals while those that precede them are more focused on saving for milestones like family building and retirement, experts suggest.
Although millennials lived through the global financial crisis in 2008, they are “more distant” from the tribulations of World War II and its aftermath, which helped shape their parents’ mindset about money, a report by RBC Wealth Management noted.
Additionally, according to research by financial services company LendingClub, millennials are the most likely generation to live paycheck to paycheck, as this “sandwich generation,” needs to support both aging parents and their own children.
There is also a difference between the people who earn wealth, and those who inherit it, putting the latter at a disadvantage when it come’s to managing wealth or coping with its loss.
“People who’ve earned their wealth have a strong internal locus of control,” said clinical psychotherapist Paul Hokemeyer, adding that individuals who built their affluence are confident in their abilities and capacity to earn it again should they lose it.
Those who inherit their wealth will be more insecure. “They know they can survive in the zoo, but are unsure of their ability to survive in the jungle,” said Hokemeyer.
The psychotherapist, however, observed that millennials tend to be wiser about the power inherent in wealth, and approach money more as stewards who “use it to improve the world they feel privileged to be in.”
—CNBC’s Sam Meredith and Jessica Dickler contributed to this report.
Collapsed bitcoin exchange Mt. Gox is about to unload $9 billion of coins onto the market. Here’s what it means
PUBLISHED MON, JUL 1 20244:08 AM EDTUPDATED THU, JUL 4 20241:05 PM EDT
MacKenzie Sigalos@KENZIESIGALOS
KEY POINTS
- In a few days, bankrupt Tokyo-based bitcoin exchange, Mt. Gox, will begin paying back thousands of users roughly $9 billion worth of tokens.
- The payout comes more than 10 years after the platform went under following a series of heists that cost the exchange up to 950,000 bitcoin.
- While this is good news for victims of the hack who have spent years waiting to be made whole, the price of bitcoin slid to $59,000 in the crypto market’s second-worst weekly decline of the year.
A bitcoin exchange that collapsed 10 years ago after being hacked is set to return billions of dollars’ worth of the token to users — and it has investors worried.
In a few days, bankrupt Tokyo-based bitcoin exchange Mt. Gox will begin paying back thousands of users almost $9 billion worth of tokens. The platform went under in 2014 following a series of heists that cost it in the range of 650,000 to 950,000 bitcoins, or upward of $59 billion, at current prices.
The payout follows a protracted bankruptcy process that’s involved multiple delays and legal challenges.
On Monday, the court-appointed trustee overseeing the exchange’s bankruptcy proceedings said distributions to the firm’s roughly 20,000 creditors would begin in early July. Disbursements will be in a mix of bitcoin and bitcoin cash, an early offshoot of the original cryptocurrency.
While this is good news for victims of the hack who have spent years waiting to be made whole, the price of bitcoin slid to $59,000 last week, in the crypto market’s second-worst weekly decline of the year.
CNBC spoke to half a dozen analysts to get their take on what to expect when roughly 141,000 bitcoins — or roughly 0.7% of the total 19.7 million bitcoins outstanding — are returned to Mt. Gox victims this week.
Pressure on bitcoin could pick up
Mt. Gox — short for “Magic: The Gathering Online Exchange” — was once the largest spot bitcoin exchange globally, claiming to handle around 80% of all global dollar trades for bitcoin.
When it shuttered in February 2014, bitcoin was worth around $600.
As of Monday, the world’s largest cryptocurrency is trading at about $62,000 per coin. That means users opting to be reimbursed in kind — that is, in the cryptocurrency itself, rather than the cash equivalent — have seen the value of their coins surge more than 10,000% in the last decade.
John Glover, chief investment officer of crypto lending firm Ledn, told CNBC the windfall for Mt. Gox users would likely translate to huge sales in bitcoin as investors look to lock in gains.
“Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously a managing director at Barclays. “Some will clearly choose to take the money and run,” added Glover.
James Butterfill, head of research at CoinShares, told CNBC the overhang of the nearly $9 billion of bitcoin set to be released has “long been a concern for those with bullish views on bitcoin.”
″Consequently, the market is highly sensitive to any related news. With the announcement that the Trust will begin selling in July, investors are understandably worried,” said Butterfill.
It wouldn’t be the first time bitcoin’s moved in reaction to big redemptions of funds locked up in centralized trading platforms.
Last month, crypto exchange Gemini returned more than $2 billion worth of bitcoin to users with funds that had been trapped in its Earn lending program, marking a 230% recovery after bitcoin prices more than tripled since Gemini suspended Earn withdrawals on Nov. 16.
JPMorgan analysts linked this to negative price action, saying in a research note last week that it’s “fair to assume that some of Gemini creditors, which are mostly retail customers, have taken at least partial profits in recent weeks.”
The analysts expect Mt. Gox customers to be similarly inclined to sell some of their bitcoin to profit from seismic gains for the cryptocurrency.
“Assuming most of the liquidations by Mt. Gox creditors take place in July, [this] creates a trajectory where crypto prices come under further pressure in July, but start rebounding from August onwards,” they wrote.
Separately last month, the German government sold 5,000 — worth approximately $310 million as of Monday’s prices — of a 50,000-bitcoin pile seized in connection with the movie piracy operation Movie2k.
The funds were sent to various crypto exchanges, including Coinbase, Kraken and Bitstamp, according to blockchain intelligence firm Arkham Intelligence.
Analysts say these crypto liquidations, too, have placed pressure on bitcoin’s price.
Mt. Gox customers expected to hang on to their bitcoin
Most analysts agree losses in bitcoin are likely to be contained and short-lived.
“I think that sell-off concerns relating to Mt. Gox will likely be short term,” said Lennix Lai, chief commercial officer of crypto exchange OKX.
“Many of Mt. Gox’s early users as well as creditors are long-term bitcoin enthusiasts who are less likely to sell all of their bitcoin immediately,” he said, adding previous sell-offs by law enforcement, including the Silk Road case, did not result in a sustained catastrophic price drop.
Butterfill suggested there’s enough market liquidity to cushion the blow of any possible mass market sell action.
“Bitcoin has maintained a daily trading volume of $8.74 billion on trusted exchanges this year, suggesting that liquidity is sufficient to absorb these sales over the summer months,” said Butterfill.
According to CCData research analyst Jacob Joseph, the markets are more than capable of absorbing the selling pressure.
“Moreover, a healthy part of the creditors are likely to take a 10% haircut on their holdings to receive the repayment early, and not all holdings are set to be liquidated on the open market, reducing the overall selling pressure,” he said.
Recent price moves suggest the temporary impact of the Mt. Gox repayments may already be priced in, Joseph added.
Galaxy Digital’s head of research, Alex Thorn, believes fewer coins will be distributed than people think, meaning there will be less sell pressure than the market expects.
However, he also wrote in May that, even if only 10% of the bitcoin distributed is sold, “it will have a market impact.”
“Most of the individual creditors will have their coins deposited directly into a trading account at an exchange, making it extremely easy to sell,” Thorn said.
Vijay Ayyar, head of consumer growth for Asia-Pacific at crypto exchange Gemini, said that the overall impact of the Mt. Gox disbursement is likely to be “dissipated,” given the recipients of the funds are varied.
On the one hand, there are individual holders who will get their bitcoin straight away. Then there’s the “significant amount” of bitcoin that will be disbursed out to claims funds, Ayyar said.
“Those funds would then need to distribute these out to their LPs [limited partners], hence the whole process could take a while adding a time element to the impact on price,” he told CNBC.
Macro headwinds behind bitcoin’s fall
It’s worth noting there are plenty of other reasons behind bitcoin’s recent declines.
The cryptocurrency had a stunning rally earlier this year, climbing past $70,000 on the heels of the U.S. Securities and Exchange Commission’s approval of the first spot bitcoin ETF.
But investors have remained anxious amid outflows from bitcoin ETFs and sizable market liquidations. The broader macro environment, too, has investors worried.
Earlier this month, the Federal Reserve suggested it plans to cut rates just once this year, down from the multiple reductions it had indicated previously.
Cryptocurrencies, which are inherently volatile, are particularly sensitive to changes in the interest rate environment.
CoinShares’ Butterfill said the Fed’s new rate forecast was among “the likely culprits for the recent price decline” in bitcoin.
This, along with other issues, is “likely to weigh on prices in the lower volume summer months,” Butterfill said. However, “the fundamental investment case remains very much intact,” he added.
Supreme Court rules Trump has immunity for ‘official acts,’ limits evidence and reach of special counsel’s election case
PUBLISHED MON, JUL 1 20248:28 AM EDTUPDATED MON, JUL 1 20243:05 PM EDT
Kevin Breuninger@KEVINWILLIAMB
KEY POINTS
- The Supreme Court ruled that former President Donald Trump is immune from criminal prosecution for official acts as president, limiting the evidence and scope of special counsel Jack Smith’s case.
- Trump is charged in a four-count indictment with illegally conspiring to overturn his loss to President Joe Biden in the 2020 presidential election.
- The 6-3 decision drew a scathing dissent from Justice Sonia Sotomayor, who wrote that it “effectively creates a law-free zone around the President.”
The Supreme Court ruled Monday that Donald Trump has “presumptive immunity” for official acts he performed as president, complicating but not killing special counsel Jack Smith’s election interference case.
The court also ruled that Trump is not immune for “unofficial acts.” And “not everything the President does is official,” the majority determined.
But the decision effectively erases any chance that the high-profile criminal case against the presumptive Republican presidential nominee will head to trial before the Nov. 5 election.
The 6-3 ruling, which was opposed by the court’s three liberal justices, sends the case back to U.S. District Judge Tanya Chutkan.
“The President is not above the law,” Chief Justice John Roberts wrote for the majority.
“But Congress may not criminalize the President’s conduct in carrying out the responsibilities of the Executive Branch under the Constitution,” Roberts ruled.
That means the president is “absolutely immune from criminal prosecution for conduct within his exclusive sphere of constitutional authority,” Roberts wrote.
That covers actions such as granting pardons or removing presidentially appointed executive officers, he wrote.
The president also enjoys “at least a presumptive immunity from criminal prosecution” for acts performed “within the outer perimeter of his official responsibility,” the majority concluded.
That standard “is required to safeguard the independence and effective functioning of the Executive Branch,” the chief justice explained.
In practice, that means that the president is immune from prosecution “unless the Government can show that applying a criminal prohibition to that act would pose no ‘dangers of intrusion on the authority and functions of the Executive Branch,’” Roberts wrote.
Justice Sonia Sotomayor in a blistering dissent wrote, “this majority’s project will have disastrous consequences for the Presidency and for our democracy.”
“The relationship between the President and the people he serves has shifted irrevocably. In every use of official power, the President is now a king above the law,” she wrote.
“When he uses his official powers in any way, under the majority’s reasoning, he now will be insulated from criminal prosecution,” Sotomayor wrote.
“Orders the Navy’s Seal Team 6 to assassinate a political rival? Immune. Organizes a military coup to hold onto power? Immune. Takes a bribe in exchange for a pardon? Immune. Immune, immune, immune.”
“With fear for our democracy, I dissent,” she wrote.
Trump celebrated the ruling soon after its release Monday morning.
“BIG WIN FOR OUR CONSTITUTION AND DEMOCRACY. PROUD TO BE AN AMERICAN!” he wrote on Truth Social.
Trump is charged in a four-count indictment with illegally conspiring to overturn his loss to President Joe Biden in the 2020 presidential election.
The case in Washington, D.C., federal court has been on pause while Trump argues that he is immune from prosecution for any official acts he performed while he was president. Lawyers for Trump contended that an ex-president cannot be charged for their official acts in office unless they are impeached and convicted by Congress.
Trump was impeached in the House for inciting an insurrection on Jan. 6, 2021, when a mob of his supporters stormed the U.S. Capitol and temporarily blocked lawmakers from confirming Biden’s electoral victory. He was acquitted in the Senate, where the Constitution requires a two-thirds vote to secure a conviction.
The pause of the election case forced Chutkan to postpone Trump’s trial, which was initially set to start March 4.
Critics fumed when the high court decided to take up the immunity question, rather than let stand an appellate court ruling rejecting Trump’s immunity claims.
The Supreme Court’s intervention guaranteed months of additional delay and threatened to push any trial past the Nov. 5 election.
The election case is often considered the most serious of the four criminal indictments that have been filed against Trump while he seeks another term as president.
Fed says it’s not ready to cut rates until ‘greater confidence’ inflation is moving to 2% goal
PUBLISHED WED, JUL 3 20242:08 PM EDTUPDATED WED, JUL 3 20242:31 PM EDT
Jeff Cox@JEFF.COX.7528@JEFFCOXCNBCCOM
KEY POINTS
- Federal Reserve officials at their June meeting indicated that inflation is moving in the right direction but not quickly enough for them to lower interest rates.
- Minutes released Wednesday showed that policymakers lacked the confidence they needed to lower policy, while they generally agreed there should be no rush to cut.
Federal Reserve officials at their June meeting indicated that inflation is moving in the right direction but not quickly enough for them to lower interest rates, minutes released Wednesday showed.
“Participants affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably toward 2 percent,” the meeting summary said.
Though the minutes reflected disagreement from the 19 central bankers who took part in the discussion, with some even indicating a penchant toward raising rates if necessary, the meeting concluded with Federal Open Market Committee voters holding rates in place.
The Fed targets 2% annual inflation, a level it has been above since early in 2021. Officials at the meeting said data has improved lately, though they are want more evidence that it will continue.
Meeting participants “emphasized that they did not expect that it would be appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward the Committee’s 2 percent objective.”
At the meeting, policymakers also provided an update on economic projections and monetary policy over the next several years.
The FOMC “dot plot” showed one quarter percentage point cut by the end of 2024, down from the three indicated following the last update in March. Even though the dot plot indicated one cut this year, futures markets continue to price in two, starting in September.
Also, the committee largely left its economic projections intact, though they lowered their inflation expectations for this year.
In discussions over how they would approach monetary policy, the minutes reflected some disagreements. Some members noted the need to tighten the reins should inflation persist, while others made the case that they should be ready to respond should the economy falter or the labor market weaken.
“Several participants observed that, were inflation to persist at an elevated level or to increase further, the target range for the federal funds rate might need to be raised,” the minutes stated. “A number of participants remarked that monetary policy should stand ready to respond to unexpected economic weakness.”
The minutes do not identify individual members nor do they provide exact amounts for the number of officials expressing particular viewpoints. However, in the Fed parlance, “a number” is considered more than “several.”
The summary also noted a “vast majority” saw economic growth “gradually cooling” and that the current policy is “restrictive,” a key term as the officials contemplate how restrictive policy needs to be while bringing down inflation and not causing undue economic harm.
Since the meeting, officials have largely stuck to a cautious script stressing data dependency rather than forecasts. However, there have been indications from multiple officials, including Chair Jerome Powell, that continued encouraging readings on inflation would provide confidence that rates can be lowered.
In an appearance Tuesday in Portugal, Powell said the risks of cutting too soon and risking a resurgence in inflation against cutting too late and endangering economic growth have come more into balance. Previously, officials had stressed the importance of not backing off the inflation fight too soon.
Disney heiress, wealthy Democratic donors say they won’t finance the party until Joe Biden drops out
PUBLISHED THU, JUL 4 20246:15 PM EDTUPDATED 2 HOURS AGO
KEY POINTS
- Abigail Disney, an heiress to the Disney family fortune, plans to withhold donations to Democrats until Joe Biden drops out.
- Biden has said he has no plans to withdraw from the race.
- Gideon Stein said he’s decided to pause planned donations of $3.5 million.
President Joe Biden is facing an uprising from some his own party’s wealthy donors, including an heiress to the Disney family fortune, who say they will no longer fund the Democratic Party until Biden drops out of the presidential race following his disastrous debate performance.
Abigail Disney, granddaughter of Roy O. Disney, who co-founded The Walt Disney Co., told CNBC on Thursday that she plans to withhold donations to the party she has funded for years until Biden drops out. The president has said he has no plans to withdraw from the race, despite calls for him to do so.
“I intend to stop any contributions to the party unless and until they replace Biden at the top of the ticket. This is realism, not disrespect. Biden is a good man and has served his country admirably, but the stakes are far too high,” Abigail Disney said in a lengthy statement to CNBC. “If Biden does not step down the Democrats will lose. Of that I am absolutely certain. The consequences for the loss will be genuinely dire.”
The Democratic Party at large has been in a state of panic since Biden struggled to perform in the debate against former President Donald Trump last week. Rep. Lloyd Doggett, D-Texas, called on Biden to drop out of the race, suggesting the debate performance proved to voters that the president is incapable of taking on Trump and unable to overcome his distance in the polls.
A New York Times/Sienna College poll taken after the debate showed Biden behind Trump by 6 percentage points among likely voters.
Representatives for the Biden campaign did not return requests for comment.
Abigail Disney has been a longtime supporter of Democrats. She gave $50,000 to the Jane Fonda Climate political action committee in April, according to a Federal Election Commission filing. The PAC has given $35,000 to Democrats running for congressional seats, according to data from OpenSecrets.
Disney gave $150,000 in 2014 to Planned Parenthood Votes, a PAC affiliated with the health care nonprofit, according to OpenSecrets. That PAC this election cycle has spent more than $400,000 supporting Democrats, including $26,000 for Biden.
Disney pointed to Vice President Kamala Harris as a solid alternative to Biden, arguing she’d be able to defeat Trump.
“We have an excellent Vice President. If Democrats would tolerate any of her perceived shortcomings even one tenth as much as they have tolerated Biden’s (and let’s not kid ourselves about where race and gender figure in that inequity) and if Democrats can find a way to stop quibbling and rally around her, we can win this election by a lot,” Disney said.
And she’s not the only one pausing gifts until Biden steps down. Gideon Stein, president of the Moriah Fund, said he’s decided to pause planned donations of $3.5 million, earmarked for nonprofits and political organizations tied to the race for the White House.
“Joe Biden has been a very effective president, but unless he steps aside my family and I are pausing on more than $3 million in planned donations to nonprofits and political organizations aligned with the presidential race, with the exception of some down ballot work,” Stein said. “Virtually every major donor I’ve talked to believes that we need a new candidate in order to defeat Donald Trump.”
Karla Jurvetson, a philanthropist and major Democratic donor, hinted as recently as Tuesday in a private donor call that she agrees with the sentiment on pausing donations until Biden steps down and could end up making such move, according to a person familiar with her remarks. The person was granted anonymity in order to speak freely about a private conversation.
A spokesman for Jurvetson did not return repeated requests for comment.
Jurvetson is among the top 50 donors this cycle across the country, donating more than $5 million to Democrats, according to OpenSecrets. She’s given over $200,000 to the Biden Victory Fund this cycle, according to FEC records.
Jurvetson gave more than $30 million to Democrats in 2020, according to the data.
S&P 500 to tumble 30% as recession hits later this year, says BCA Research
PUBLISHED THU, JUN 27 20249:57 AM EDTUPDATED THU, JUN 27 202410:18 AM EDT
U.S. stocks are set to drop more than 30% as a recession hits the U.S. economy in the coming months, BCA Research predicts.
The firm said its models show the recession will come in late 2024 or early 2025.
“Going underweight [equities] today. We conservatively expect the S&P 500 to drop to 3750 during the coming recession,” Chief Global Strategist Peter Berezin wrote in a note Tuesday. That suggests 31.5% downside from Wednesday’s close.
The calculation is conservative because it assumes that S&P 500 revenue rises in line with nominal gross adjusted product, he explained.
“That may be too optimistic,” Berezin said.
BCA Research said it sees several feedback loops that will weaken the economy. Rising unemployment will cause consumers to raise precautionary savings, while borrowing will become more challenging due to tight lending standards and high interest rates.
“With little accumulated savings to draw on and credit availability becoming more constrained, many households will have little choice but to curb spending,” Berezin said. “Decreased spending will lead to less hiring. Rising unemployment will curb income growth, leading to less spending and even higher unemployment.”
Business investment will also see a similar dynamic, as weakening consumer demands cause companies to further scale back expansion plans, he noted.
Berezin doesn’t expect Federal Reserve rate cuts to prevent the recession. Absent “overwhelming evidence” of an imminent recession risk, the central bank will be reluctant to cut rates aggressively, he said. Plus, monetary policy may continue to tighten even after rate cuts begin, he said.
Getting defensive
Investors should adopt a defensive sector tilt by overweighting consumer staples, utilities and health care, Berezin advised. They should also consider overweighting materials as a hedge against a later-than-expected recession start date and the possibility of increased Chinese stimulus, he said.
On the other hand, investors should underweight consumer discretionary stocks, real estate and financials, he said.
The call on tech stocks is a bit more difficult, he said.
“We are inclined to maintain a modest underweight to IT on the assumption that the sector will falter if a weakening economy dampens sentiment towards richly priced AI stocks,” Berezin said. “However, in order to maintain at least some benchmark exposure to tech, we have a neutral view on communication services (Alphabet and Meta together account for 46% of the market capitalization of that sector).”
Tech has been fueling the S&P 500 to new heights throughout the first half of the year, prompting concerns about the breadth of the rally and raising questions about how strong the economy truly is.
While BCA’s view is a departure from the average market strategist on Wall Street, it is notable that many of them have not raised estimates even as the S&P 500 approaches the average target. Based on a CNBC Pro survey, the average market strategist sees the broad-based index hitting 5,401. The lowest view, held by JPMorgan’s Dubravko Lakos-Bujas, predicts the market will pull back to 4,200.
https://finance.yahoo.com/news/semiconductor-stock-better-artificial-intelligence-210000080.html
Is This Semiconductor Stock a Better Artificial Intelligence (AI) Buy Than Nvidia Right Now?
Harsh Chauhan, The Motley Fool
Fri, Jul 5, 2024, 3:00 PM MDT
In This Article:
Nvidia (NASDAQ: NVDA) has played a pioneering role in the proliferation of artificial intelligence (AI) technology with the help of its graphics processing units (GPUs), which are being deployed in data centers to train large language models (LLMs) such as ChatGPT, leading to tremendous growth in the company’s revenue and earnings.
As a result, shares of Nvidia have set the market on fire in the past year, nearly tripling in value. This explains why Nvidia stock is now trading at an expensive 72 times trailing earnings. However, there is another company that is witnessing a terrific jump in revenue and earnings thanks to the growing adoption of AI, and it is much cheaper than Nvidia.
Micron Technology (NASDAQ: MU) released its fiscal 2024 third-quarter results (for the three months ended May 30) on June 26, and the company reported a big jump in revenue and earnings. Let’s see how AI is supercharging Micron’s growth and check if it is a better AI stock to buy right now over Nvidia.
Micron Technology is stepping on the gas
Micron’s fiscal Q3 revenue increased an impressive 81% year over year to $6.8 billion. More importantly, its non-GAAP (generally accepted accounting principles) net income for the quarter came in at $0.62 per share, as compared to a loss of $1.43 per share in the same quarter last year. The memory specialist’s guidance indicates that its growth is set to accelerate.
More specifically, Micron is expecting $7.6 billion in revenue in the current quarter, at the midpoint of its guidance range. That would be a 90% increase over its top line in the same period last year, which means that it is set to grow at a faster pace in the current quarter. The midpoint of the company’s earnings guidance of $1.08 also points toward a major turnaround from a loss of $1.07 per share in the year-ago period.
Micron’s robust growth can be attributed to healthy demand for memory chips from multiple areas such as smartphones, personal computers (PCs), and data centers, all of which are getting an AI-powered boost.
For instance, in the data center business, Micron sold $100 million worth of high-bandwidth memory (HBM) chips last quarter. These HBM chips are used in AI graphics cards to provide greater bandwidth and computing power. The good part is that Micron is expecting its HBM revenue to increase from “several hundred million dollars” in the current fiscal year to “multiple billions of dollars in revenue” in fiscal 2025.
HBM will be a long-term growth driver for Micron, thanks to healthy demand for AI graphics cards. Additionally, Micron’s data center storage business is also getting a boost thanks to growing demand for AI training and inference, which has led to an increase in demand for solid-state drives (SSDs). This, again, presents a secular growth opportunity for Micron, as the global data center SSD market is expected to generate $133 billion in revenue in 2032, as compared to $37 billion last year.
Meanwhile, AI is also set to drive stronger demand for memory chips in the smartphone and PC markets. On its latest earnings conference call, Micron management pointed out that AI-enabled PCs are expected to “have 40% to 80% more DRAM content than today’s average PC.” The company adds that these PCs are likely to be equipped with bigger storage capacities as well.
As for smartphones, Micron says that AI-enabled smartphones this year are carrying 50% to 100% more dynamic random access memory (DRAM) compared to last year’s flagship phones. Thanks to these catalysts, it won’t be surprising to see the global memory market’s revenue indeed increasing to $321 billion in 2030 from $193 billion last year, per Fairfield Market Research.
All this explains why analysts are forecasting Micron to grow at a terrific pace in the coming years, even outpacing Nvidia’s estimated growth.
Buying this memory stock over Nvidia looks like a no-brainer
Micron finished its previous fiscal year with revenue of $15.5 billion. It is expected to finish the current fiscal year with $25 billion in revenue, which would be a 61% increase over the prior year. Nvidia’s top line, on the other hand, is expected to jump from $60.9 billion in the previous fiscal year to $120 billion in the current one. So Nvidia is expected to clock faster growth than Micron this year.
However, as the chart indicates, Micron’s revenue could jump another 50% in the next fiscal year, which would be well ahead of Nvidia’s forecasted growth.
MU Revenue Estimates for Next Fiscal Year Chart
What’s more, Micron’s earnings are expected to grow at a much faster pace than Nvidia’s over the next couple of fiscal years.
MU EPS Estimates for Current Fiscal Year Chart
Given that Micron Technology is trading at just 19 times forward earnings, which is a massive discount to Nvidia’s forward earnings multiple of 48, it looks like a no-brainer AI stock to buy right now, as it is not just significantly cheaper, but also has the potential to outperform its illustrious peer.
Should you invest $1,000 in Micron Technology right now?
Before you buy stock in Micron Technology, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Micron Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Is This Semiconductor Stock a Better Artificial Intelligence (AI) Buy Than Nvidia Right Now? was originally published by The Motley Fool
HI Financial Services Mid-Week 06-24-2014