Weekly Market News
FTX’s Venture Capital Backers Face ‘Serious Questions,’ CFTC Official Says
In a Bloomberg Television interview on Friday, CFTC Commissioner Christy Goldsmith Romero questioned the level of due diligence conducted by the Venture Capital backers of the defunct crypto exchange FTX. She also pointed to comments made by current FTX CEO John J. Ray III that described a lack of record-keeping and key controls when he was appointed.
She questioned if there were any conflicts of interest, stating,
“Were there some conflicts that prevented them from really paying attention to the due diligence and the facts that they were uncovering?”
Crypto Banks Borrow Billions from Home-Loan Banks to Plug Shortfalls
According to a Wall Street Journal report, Silvergate Capital and Signature Bank had borrowed billions of dollars from the United States Federal Home Loan Banks System (FHLB) in an attempt to mitigate the effects of a surge in withdrawals during the last quarter of 2022.
Specifically, the FHLB which is a system originally designed to support mortgage lending in the 1930s is reported to have lent at least $3.6 billion to Silvergate and almost $10 billion to Signature Bank.
Binance SWIFT Banking Partner Set to Ban USD Transfers Below $100K
Signature Bank, the SWIFT banking partner of crypto exchange Binance, is reportedly limiting itself to only processing user transactions of more than $100,000 in an effort to decrease its exposure to digital-asset markets.
“One of our fiat banking partners, Signature Bank, has advised that it will no longer support any of its crypto exchange customers with buying and selling amounts of less than 100,000 USD as of February 1, 2023. This is the case for all of their crypto exchange clients. As a result, some individual users may not be able to use SWIFT bank transfers to buy or sell crypto with/for USD for amounts less than 100,000 USD.”
January flash PMI data from major developed economies will be unveiled in the coming week for the earliest indications of economic conditions at the start of 2023. Other key data releases to watch include US Q4 GDP, core PCE and personal income and consumption data. APAC economies such as Australia, New Zealand and Singapore will also update inflation figures and South Korea and the. Philippines release Q4 GDP data. Meanwhile central bank meetings will be held in Canada and Thailand.
This week, Tesla’s earnings report due out after the close of trading on Wednesday will certainly bring attention to the core of Musk’s business empire.
And for the bull case to be recharged on Tesla stock, I fancy two things need to happen.
The first is investors have to get clear guidance from Musk on how long recent global price cuts will remain in place.
Recall Tesla cut the price of the Model 3 base version by $3,000 to $43,990 in the U.S. earlier this month. The Model 3 Performance variant saw a price cut of $9,000 to $53,990. As for the Model Y Long Range, the price was dropped $13,000 to $52,990. The Performance model was cut to $56,990, about $13,000 cheaper than the prior price.
The U.S. discounts come hot on the heels of recent price reductions in China, Japan, and South Korea as Tesla looks to reignite demand against growing competitive threats. As long as the market believes Tesla will use price drops to stoke demand, the stock is likely to stay under pressure as investors attempt to model 2023 earnings power for the electric carmaker.
Second, the market needs to hear realistic unit volume growth for Tesla and get comfortable with it.
Tesla guided investors to about 50% unit volume growth in 2022 — the actual figure was 39%. I am hearing whisper numbers for this year around 25% to 30% unit volume growth. Tesla would be wise to forecast something on the lower end of that range and set the stage for beating that guidance.