Finance

Robinhood Markets has announced that its online trading platform will resume accepting trades of GameStop and other highly volatile stocks, effective January 29. The company suspended GameStop trading on its platform January 28 following a storm of protest trades that were inspired by posts in a Reddit discussion group. Reddit members and other small investors deliberately drove GameStop’s price up in protest against institutional investors who had shorted the stock. Their actions caused the stock price to rise, potentially costing short-sellers more than $70 billion. Robinhood’s decision to halt trading GameStop and a dozen other highly active stocks caused outrage in the online community. GameStop’s price plunged 55% as short-sellers threatened legal action against Reddit members who participated in the protest investments. Another suit threatens Robinhood itself. Users claim that suspending GameStop trading constituted market manipulation in favor of large hedge funds. Robinhood announced that it would restore GameStop and the other stocks to its platform following a cash injection of more than $1 billion from investors. GameStop’s price soared 100% higher following Robinhood CEO Vlad Tenev’s tweet announcing the company’s intention. GameStop’s share price stood at $193.60 on January 29 despite the previous day’s losses. The price is up nearly 950% over its January 1 share price of $20. The White House is monitoring the crisis, according to Press Secretary Jen Psaki. Strange bedfellows Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ted Cruz (R-Texas) have united in criticizing Robinhood’s management of the crisis.Amateur investors from Reddit say they do not plan to back off. Fed up with increasing inequality, they have vowed to beat Wall Street giants at their own game.

By Julija A. January 29,2021

Roughly 900,000 Americans filed for first-time unemployment benefits during President Donald Trump’s last week in office.That grim news comes from the US Department of Labor. About 40% of American workers - nearly 70 million people - have filed for unemployment benefits since the pandemic began. Nearly four times as many Americans filed for unemployment during the first week of January as the same period a year ago. Experts say the country is losing jobs to layoffs from small and large companies that have found revenue levels dropping due to the COVID-19 pandemic. The CARES Act of 2020 extended unemployment benefits with its Pandemic Emergency Unemployment Compensation and Pandemic Unemployment Assistance programs. Those programs expired at the end of the year. At the last moment, Congress passed and President Trump signed a second relief package the last week of December. The new legislation renews extended unemployment benefits and additional support for small businesses having trouble meeting payroll. The US economy lost 140,000 jobs in the last month of 2020, suggesting that a full economic recovery is still in the future.Newly sworn President Joseph Biden has proposed a $1.9 trillion economic stimulus package to support workers and employers who have been hard hit as the coronavirus ravaged the US economy. The proposal includes direct payments of $1,400 to Americans. Republican lawmakers are expected to oppose parts of the bill because of concerns over the legislation’s effect on the national budget. President Biden’s long-term plan is to prop up the economy with the stimulus package and other programs until a national vaccination program allows businesses to resume their pre-pandemic operations. Biden has set a goal of vaccinating 100 million people in the first 100 days of his presidency.

By Julija A. January 22,2021

The new year has started with a bang, and we’re not just talking about fireworks. This financial explosion has affected mortgage rates, which have plummeted to an all-time low just days into 2021. In a report published by Freddie Mac, the mortgage enterprise revealed that mortgage rates are continuing to drop steadily. An all-time low was reached just as the new year dawned, resulting in tectonic shifts in housing purchases across the United States. Currently, the 30-year fixed-rate mortgage stands at 2.65%, a whole percentage point down from last year. The 15-year FRM is down to 2.16%, while the five-year ARM is sitting at 2.75% at the time of writing. The latter has seen the smallest drop of the bunch thanks to spikes in late November, but it continues to trend downwards. According to Freddie Mac’s data, the 30-year FRM experienced nine significant drops during 2020 alone, mostly thanks to the Federal Reserve bond-buying program. This led to an influx of $1 trillion into the mortgage market, with even more to come this year. This precarious situation has created a double-edged sword of sorts. On one hand, there’s a significant increase to demand as housing is becoming more affordable. At the same time, prices are steadily rising for the same reasons, offsetting the lower-than-ever rates. The experts from Freddie Mac predict this accelerated purchasing will lead to housing becoming much less affordable for potential buyers during this year alone. In a recent interview, Danielle Hale from Realtor.com further explained what’s actually going on with housing in America. Hale stated that, on average, listing prices in December 2020 were up 13.4% compared to the same period a year ago. Meanwhile, there were fewer than 700,000 homes for sale, which is another all-time low for housing in the US. She believes the current record low mortgage rates won’t stay so low for so long. “The future outlook for mortgage rates is likely higher thanks to a changing landscape in Washington," Hale said. This sentiment is shared by other analysts, too. Current forecasts for 2021 put the average 30-year mortgage at 2.7%, which is still below the previous annual average of 3.1%.

By Julija A. January 08,2021

After many delays and too much fuss, your second stimulus check is on the way. Probably. But how much will you get, and are there any catch-22 scenarios that will accompany it? Let’s bust some myths. First of all, the value of these checks could be seeing a significant bump. The stimulus package that President Donald Trump signed originally included a $600-per-person check. The president tweeted that the amount should be $2,000 per person, and the House of Representatives quickly passed a bill that increased the payment to $2,000 for each American. This is not a done deal, however. It is now up to the Senate to consider this proposition. When and whether that will happen is uncertain. The stimulus bill that Trump signed included support for local businesses, but some legislators said it would not help small companies enough to keep them afloat. On the other hand, a significant majority of the Americans who received the first stimulus check - 80% of them - said they spent it on food, and nearly the same number said they used it to pay bills. It’s evident that the average American will find a good use for the monetary boost, while businesses need a more meaningful support program. Not everyone will receive the second stimulus check at the same time. In April, payments started arriving three weeks after the deal was complete, so that’s the likely scenario for the second wave. The IRS notes that the second stimulus might lead to delays in the 2020 tax season, especially since the first round of checks made for significant delays. The holiday season can lead to even more delays. To ensure you’ll receive your funds, make sure your bank information is on file with the IRS so you can receive a quick direct deposit instead of waiting for a letter with a paper check inside. The stimulus controversy is playing out against widespread concerns. Many Americans worry that they’ll face additional taxes for this monetary support or that they won’t be eligible if they aren’t required to file tax returns. There’s good news on both fronts. If you don’t ordinarily file a tax return, you don’t have to file one to receive the stimulus payment. The stimulus also won’t see any taxation, since the IRS doesn't count these payments as income. Landlords cannot take your stimulus payment, and neither can nursing homes. What you do with the money is up to you. We’ll continue to track this developing story and notify you if and when the Senate passes the legislation. 

By Julija A. December 30,2020

Telecommunications giant Vodafone became the latest in a string of companies to ditch Facebook’s cryptocurrency project, Libra. A Vodafone spokesperson said in a statement that the company was leaving the project in order to focus its resources on M-Pesa, a mobile money platform with a presence across a number of African countries. “We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion,” the Vodafone spokesperson explained. “We remain fully committed to that goal. At the moment, we believe we can most effectively bring affordable financial services to the world’s poor by focusing on M-Pesa.”Vodafone joins payments giants Mastercard and Visa that withdrew from Libra last October following heavy scrutiny of Facebook’s embattled digital currency from American regulators and politicians.The bulk of the criticism centers on concerns over Libra’s regulatory uncertainty and the apparent risks it poses to the financial system. PayPal, eBay, Stripe, Mercado Pago, and Booking Holdings have also pulled out of the scheme, dealing a huge blow to Facebook’s vision of a global currency. But despite losing eight of its founding members, the Libra Association is projecting a positive outlook for the year ahead. “The Association is continuing the work to achieve a safe, transparent, and consumer-friendly implementation of the Libra payment system,” said the association’s head of policy and communications, Dante Disparte.

By Ivana V. January 23,2020

Apple card users will now be able to purchase the newest iPhone models with zero-interest over a 24 month period.This Wednesday, Apple announced a new financial feature for iPhone users. In the next several months, Apple users will be able to purchase new iPhone models with zero percent interest for up to two years. Apple Card cardholders will be able to buy Apple products while avoiding traditional fees associated with credit card purchases. Moreover, the newest offer promises a 3% cashback after each iPhone purchase.This could be a starting point for a new "Apple Prime" subscription model. This model would be designed on the same principles as Amazon Prime, providing fast and free shipping."Apple Prime" would integrate a variety of existing Apple tools and features, such as Apple Music, iCloud, Apple TV+, Apple News+, and Apple Arcade in one subscription model. Apple hardware subscriptions would allow users to bundle additional Apple services such as AppleCare when purchasing Apple hardware.This comes as no surprise since Apple already provides a variety of cost-effective options. The company has already started with promotional plans for upgraded packages. For example, the existing student Music Plan now comes with Apple Music and Apple Plus features, while the monthly price stays at $5.Apple trade-ins, one of the company’s promotions which has been on the table for a while now, allows users to buy the newest model of the iPhone for a much lower price. At the official promotion of the new iPhone 11, in September 2019, Apple announced a cost-effective solution for users who already have the latest version of the iPhone. Apple emphasized that the iPhone 11 could be purchased for only $399 instead of $699 if an iPhone 8 was traded in for it. On a monthly level, the costs of purchasing would be only $17. Trading in an iPhone X for iPhone 11 Pro would bring the monthly payment down to $25.

By Milja November 02,2019

The price of Bitcoin saw a sharp drop of more than 15% in the span of an hour, reaching the lowest point since mid-June. The dramatic decline happened yesterday afternoon as the price fell from $9,352.89 to below $7,800.While analysts foresee more Bitcoin struggle in the upcoming days, a recovery is likely based on similar developments seen in 2017. Cryptocurrency trader Marvin Chebbi writes: “A break down of the descending triangle doesn’t necessarily mean the end of the bull market. We had a similar price action in June ’17 with some sort of descending triangle formation (lower highs+equal lows) that broke down, found support a bit lower, ”This is not to say everyone is taking the drastic price drop lightly. The Crypto Fear & Greed Index, a crypto-market indicator, turned red today as it dropped down to 15, indicating “Extreme Fear” following Tuesday’s collapse. Financial analyst Peter Schiff also foresees more troubles for Bitcoin, writing “Bitcoin has finally broken below the support line of the large descending triangle it has been carving out for months. This is a very a down to $4,000 or lower!”Meanwhile, reports show that investors are turning to gold, which outperformed the leading cryptocurrency today. This turn of events comes in the wake of news that President Trump has allegedly contacted Ukrainian high officials about planning an interference in the upcoming U.S. presidential elections.One of Bitcoin’s main competitors, Ethereum, on the other hand, saw one of its most successful days last week, marked by a rise of over 10%. It is too early to tell whether this marks the beginning of a trend of if it is merely a momentary rebound.

By Milja September 25,2019

After Trump’s series of tweets on Thursday about imposing a 10% tariff on another $300 billion worth of Chinese goods, Beijing responds. A Chinese Foreign Ministry spokesperson said today that China would have to take countermeasures if the U.S. goes through with its decision to levy additional taxes starting in September.Hua Chunying, a spokeswoman at the Chinese Foreign Ministry, said today at a daily press briefing in Beijing that China would not be blackmailed. She warned of retaliation if the U.S. carried out its threats to impose 10% duties on additional goods from China, starting September 1.“If America does pass these tariffs then China will have to take the necessary countermeasures to protect the country’s core and fundamental interests,” Hua said at today’s news briefing in Beijing, as Reuters reports.“We won’t accept any maximum pressure, intimidation, or blackmail. On the major issues of principle we won’t give an inch,” she said, adding that China is hopeful that the U.S. would “give up its illusions” and return to the right track of negotiations based on mutual respect and equality.Hua underlined that China does not want a trade war with the United States but is not afraid of fighting in one either.President Trump communicated his decision to slap more taxes on Chinese goods beginning next month in a series of tweets on Thursday. He justified this move by stating that China did not buy “large quantities” of agricultural products from the U.S. as it had previously agreed, and that it did not stop the sale of Fentanyl, a synthetic opioid, to the United States.Even though the latest tax increase would technically amount to $30 billion (just 0.14% of GDP), considerably less than the $62.5 billion arising from the 25% duties on $250 billion worth of Chinese imports, it might set off a psychological shift. This move would result in all goods entering the U.S. from China being subject to some form of taxation.Wang Yi, a senior Chinese diplomat, commented on the events for a Chinese TV station, saying the new tariffs are neither the correct nor constructive way of resolving the bilateral trade tensions.

By Ivana V. August 02,2019

Amazon shares dropped by 2% following Thursday’s release of the second-quarter earnings report, which shows the company exceeded sales forecasts but missed profits estimates.The results show significant investments into infrastructure aimed at providing faster delivery are starting to pay off, boosting sales at the expense of lower profit margins, even as revenues surpassed analysts’ expectations.As a consequence, Amazon stocks traded around 2% lower, at the price of about $1973.82 in yesterday’s after-hours trading session.The world’s largest e-commerce company announced its sales in the second quarter amounted to $63.4 billion, with revenue rising 20% compared with the same period last year, topping the 17% growth rate Amazon posted in April. Amazon attributes these numbers to earlier investments in faster shipping, which has generated more orders.“Customers are responding to Prime’s move to one-day delivery — we’ve received a lot of positive feedback and seen accelerating sales growth,” said Jeff Bezos, Amazon founder and Chief Executive Officer. “Free one-day delivery is now available to Prime members on more than 10 million items, and we’re just getting started. A big thank you to the team for continuing to make life easier for customers.”Making such quick delivery times to compete with rivals like Walmart, who offer 2-day shipping without membership fees have cost Amazon $800 million in warehouse infrastructure investments in the three months ending in June.According to Chief Financial Officer Brian Olsavsk, the company will continue to make such investments in the future, aiming to provide next-day delivery for all of the 100 million products available to Prime members. “Right now we are seeing an increasing and ramping cost penalty, and that’s what’s built into the Q3 guidance,” Olsavsky said in a call with reporters. All that spending on faster deliveries has affected Amazon’s profit margins, resulting in the lowest net income since the second quarter of last year - $2.6 billion. The company’s third-quarter operating income predictions also remain below analysts’ estimates of $4.4 billion, ranging between $2.1 and $3.1 billion.“Second quarter′s results were negatively impacted by margin compression in North America due to the investments in next-day Prime delivery, which we continue to believe is an example of short-term pain for long-term gain,” Moody’s Amazon Analyst Charlie O’Shea said in an email statement, reported by CNBC.Operating guidance for the third quarter expects sales to grow further, between 17% and 24% compared with the same period of 2018, and amount to anywhere between $66.0 billion and $70.0 billion.

By Ivana V. July 26,2019

Following Wednesday’s report of a $408 million loss in the second quarter and the news of its longtime Chief Technology Officer JB Straubel leaving the company, Tesla stocks dropped by 11%.According to the latest filing with the Securities and Exchange Commission, the Silicon Valley carmaker experienced a loss of $408 million in the period between April and June, despite delivering a record number of cars during that time. Tesla also announced JB Straubel, who had helped Elon Musk launch the company and who had been acting as the CTO for the past 16 years is stepping down. “I’d like to thank JB for his fundamental role in creating and enabling Tesla,” CEO Elon Musk said on a call with analysts Wednesday evening. “If we hadn’t had lunch in 2003, Tesla wouldn’t exist, basically.” The electric car manufacturer reported a second-quarter adjusted loss of $1.12 per share, exceeding analysts’ predictions of an adjusted loss of 35 cents a share. However, this is an improvement compared to June 2018, when Tesla had reported a loss of $3.06 per share.Hours after the Tesla Second Quarter 2019 Update was published, the car company stocks went down by 11%, matching the gains the stock made earlier this month after a strong second-quarter vehicle deliveries report.Tesla delivered 95,356 vehicles and produced another 87,048 in the quarter ending on June 2019, surpassing its previous quarterly records of ~91,000 deliveries and ~86,600 units built in the final quarter of 2018. This quarter’s record number of vehicles delivered was driven principally by increased sales of Model 3 compact car, which was the best-selling electric car in the world in 2018. Its popularity allowed Tesla to make record back-to-back profits for the first time in the company’s history. In a letter to shareholders, CEO Elon Musk repeated previous guidance that Tesla would deliver a total of 360,000 to 400,000 vehicles this year. Even though that projection seemed far fetched after the Q1 reports when Tesla achieved only 63,000 vehicle deliveries, Musk remains determined to achieve this aim.“We are working to increase our deliveries sequentially and annually, with some expected fluctuations from seasonality,” Musk said in the letter. “This is consistent with our previous guidance of 360,000 to 400,000 vehicle deliveries this year.”To attain the ambitious goal of delivering a minimum of 360,000 vehicles by the end of 2019, Tesla will have to keep output on records levels in the following two quarters. In the first half of the year, the electric car producer made more than 158,000 vehicle deliveries.The shareholder letter also informed of the progress on Tesla’s next vehicle, the Model Y. After wavering between producing the compact SUV in Nevada or California, the decision had been made to manufacture it in California. The production began last quarter. Tesla is also making progress on launching a Gigafactory in Shanghai, China by the end of the year.“We remain on track to launch local production of the Model 3 in China by the end of the year and Model Y in Fremont by fall of 2020. We are also accelerating our European Gigafactory efforts and are hoping to finalize a location choice in the coming quarters,” Musk wrote in a letter to shareholders.

By Ivana V. July 25,2019

The second-quarter report published on Wednesday reveals that Boeing’s profits dropped by $5.6 billion in the wake of prolonged grounding of its best-selling 737 MAX jet. Boeing missed the projected sales by a wide margin in the quarter ending on June 30. The world’s largest planemaker expected to generate $20.45 billion in revenue, but it fell $5.6 billion short of those projections, earning just $15.8 billion.Boeing’s revenue this quarter is down by 35% compared to the second quarter of 2018, when the company made $24.8 billion. The aerospace company also delivered 104 fewer airplanes to customers in the second quarter of this year than during the same period last year.The aircraft manufacturer attributes the reduced profits and sales to the worldwide groundings of its flagship 737 MAX jet. An aircraft of this type crashed in Indonesia in late October 2018, followed by another crash in Ethiopia in March 2019, killing a total of 346 people. The planemaker has since cut the production of its best-selling airplane.As a consequence of these events, the company has accumulated a total backlog of $474 billion, including more than 5,500 commercial airplanes.The second-quarter financial report states an adjusted loss per share of $5.21 (GAAP) and core (non-GAAP)* loss of $5.82 per share. Boeing shares were down 1% in premarket trading on Wednesday.Since the previously issued 2019 financial outlook does not reflect the impact caused by the issues related to 737 MAX, and due to difficulty in determining the timing and conditions under which the 737 MAX fleet will return to service, the aerospace giant announced that a new outlook would be published at a future date.“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”

By Ivana V. July 24,2019

In its second-quarter earnings report, Austrian chipmaker AMS predicts a high customer demand for the upcoming quarter, causing its stocks to surge by 9%. In fact, all European chip stocks traded higher on Tuesday after AMS announced its strong sales report for the second quarter and an even brighter outlook for the third quarter. The Austrian company which produces 3D sensors for Apple’s FaceID technology and Android devices reported $415 million in revenue during the second quarter—an 8% increase compared to the first quarter. Furthermore, the company announced it expects even better results in the third quarter, predicting profits between $600 and $640 million. It attributes the expected growth to the “high volume ramps for smartphone sensing solutions while its other end markets continue their contri­bution to AMS’ overall results. ” “The results reflect the strength of AMS’ portfolio and more supportive demand trends in the consumer market,” the earning report reads. This financial statement sent the European chip stock market up, with AMS stocks trading 9% higher today compared to yesterday. Other European chip manufacturers like STMicro, Infineon Technologies, BE Semiconductor, and ASML traded between 2% and 3% higher on the back of the report. Currently, AMS stocks can be purchased for CHF 47.34 apiece. The prices of chip stocks have been unstable in recent months due to the ongoing trade disputes between the U.S. and China. On Monday, the Wall Street Journal reported that Apple is in advanced talks to buy Intel’s smartphone-modem chip business. The deal is valued at $1 billion or more in the portfolio of patents, and staff. It would mark the beginning of the iPhone maker’s control over the development of critical components for its 5G devices.

By Ivana V. July 23,2019