Weekly Market News 12-16/12
Alameda Research Secretly Funded Crypto Media Site the Block and Its CEO
Mike McCaffrey, the CEO of crypto news website ‘the Block’, reportedly financed the platform through loans from Alameda Research. From 2021 till this year, McCaffrey obtained three loans totaling $43 million.
The first loan was made in 2021 for $12 million when McCaffrey assumed the role of CEO and bought out other investors in the media organization. The second was for $15 million in January to fund day-to-day operations. The third was for $16 million earlier this year for McCaffrey to buy personal real estate in the Bahamas.
Chinese Authorities Break Up Billion-Dollar Crypto Money Laundering Ring: China News
Following an investigation into unusual money flows from construction firm Shi Mouyuan, Chinese authorities have reportedly arrested 63 people in association with a scheme that allegedly laundered 12 billion yuan ($1.7 billion). The laundering scheme operated internationally and “converted funds suspected of online pyramid schemes, fraud, gambling and other crimes into virtual digital currency.”
US Probes FTX Founder for Fraud, Examines Cash Flows to the Bahamas
U.S. prosecutors are reportedly investigating FTX founder Sam Bankman-Fried for potential fraud in his involvement in improperly transferring FTX funds to the Bahamas around the time of the firm’s bankruptcy protection filing on Nov. 11 in the U.S.
The unnamed source in the report also revealed that DOJ representatives spoke with FTX’s court-appointed overseers regarding the scope of the data they require for further inquiry. Additionally, DOJ also intends to look into any unauthorized transfers of FTX cash to Alameda Research by SBF.
Ethereum Developers Target March 2023 for Release of Staked Ether
Yesterday, Ethereum’s core developers announced their decision to prioritize the enabling of staking withdrawals via the Shanghai upgrade before implementing The Surge-related Ethereum Improvement Proposal (EIP)-4884. The tentative timeline for when they expect the Shanghai upgrade to be completed is March 2023. They also set the timeline for a second hard fork sometime in the fall of 2023 that would address proto-danksharding, also known as EIP 4844.
A highly-anticipated inflation reading and the Federal Reserve’s last policy decision of the year will serve as highlights during what should be the final week of major economic news in 2022.
On Tuesday, the closely-watched Consumer Price Index (CPI) for November may foretell how much higher rates could go in the coming year.
And on Wednesday afternoon, the Fed’s latest monetary policy decision will almost certainly deliver to investors the seventh and final interest rate increase of 2022.
The government’s retail sales report out Thursday morning will add to a consequential week on Wall Street.
All of this coming as investors look to rebound after the S&P 500 and Dow suffered their worst weekly declines since late September.
The Federal Reserve prepares another rate hike, retail and professional investors clash on Fed trades and Covid spreads rapidly in China.
Fed focus this week
Federal Reserve Chair Jerome Powell and his colleagues look set to increase benchmark rates by 50 basis points to a 4.25% to 4.5% target range on Wednesday. They’re also likely to signal another 50 basis points of tightening next year, according to economists surveyed by Bloomberg, and an expectation that once they reach that peak, they’ll stay on hold through all of 2023.
“The Fed has been pushing the message that the policy rate is likely to remain at its peak rate for a while,” said Conrad DeQuadros, senior economic adviser at Brean Capital LLC. “That is the part of the message that the market has consistently not gotten. The estimates of the degree to which inflation will come down are too optimistic.”
From Merrill Lynch:
“A relatively soft November inflation report is unlikely to affect the Fed’s decision. It has clearly telegraphed a 50bp hike in December, which would take the federal funds rate to 4.25-4.5%. The big question is where the Fed goes next. We expect another 50bp rate hike in February and then a 25bp hike in March for a terminal rate of 5.0-5.25%. We think the Fed will need to see material weakening in the labor market to stop hiking.” emphasis added
From Goldman Sachs:
“Aside from a widely expected 50bp rate hike, the main event at the December FOMC meeting is likely to be an increase in the projected peak for the funds rate in 2023. We expect the median dot to rise 50bp to a new peak of 5-5.25% … We continue to expect three 25bp hikes in 2023 to a peak of 5-5.25%, though the risks are tilted toward 50bp in February.”
Monday: Oracle (ORCL), Coupa Software (COUP), Universal Technical Institute (UTI), Daktronics (DAKT)
Tuesday: Core & Main (CNM), Photronics (PLAB), Vince Holding Corp. (VNCE)
Wednesday: Lennar (LEN), Trip.com (TCOM), REV Group (REVG), Weber (WEBR), Scorpio Tankers (STNG), Arqit Quantum (ARQQ)
Thursday: Adobe (ADBE), Jabil (JBL), Live Ventures (LIVE), Trinity Biotech (TRIB), ImmunoPrecise Antibodies (IPA)
Friday: Accenture (ACN), Darden Restaurants (DRI), Winnebago Industries (WGO)