USA finance and payments summary news: 29 june
Headlines: 29 June 2022
- Crypto hedge fund Three Arrows Capital thrown into liquidation
- California and several other states are sending stimulus checks to help residents combat inflation.
- Concerns over the housing market grow as a more financial experts predict a recession is on the horizon.
- Sharp drops on Wall Street Tuesday after poor consumer confidence report
- Dow Jones (-1.56%), S&P 500 (-2.01%) and Nasdaq (-2.98%)
- Tesla shutters Autopilot office and fires 200 hourly workers contrary to what Elon Musk previously stated to cut costs
- Bitcoin is on course for a historic low monthly close, below its 200-week moving average
- EU considers total shutdown of Russian gas pipelines to Europe, which could affect global prices
- Average US gas price $4.87 on Tuesday- where in the country is it most expensive?
- Companies like Netflix, Meta, Apple and Nike to offer travel expenses for employees' abortion costs
- Biden administration agrees to cancel $6bn in studen loan debt for 200,000 borrowers
Helpful links & Information
- What is 'shrinkflation'?
- Strategies for investing in cryptocurrency
- When will mortgage interest rates go down again?
- How does the COLA affect my Social Security retirement benefits?
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To help residents combat inflation many states and cities are offering stimulus checks.
States and cities like Chicago, Maine, Iowa and Indiana will send checks valued between $850 to $1,700 in July.
Job openings rates decreased in 12 states, increased in 6 states, and were little changed in 32 states and the District of Columbia on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Hires rates decreased in 3 states, increased in 2 states, and were little changed in 45 states and the District of Columbia. Total separations rates decreased in 9 states, increased in 5 states, and were little changed in 36 states and the District of Columbia. Nationally, the job openings rate decreased in April while hires and total separations rates showed little to no change.
Housing prices could come down by as much as ten percent in some markets that are overvalued reports Fortune according to Moody’s Analytics. Mark Zandi, the chief economist at Moody’s Analytics, told NPR that he expects prices to come down in some of the “most juiced-up markets.”
And, if “prices are 5, 10, 15% below where they are today where they’re peaking,” in two years’ time “I’d say that sounds about right to me,” he said. However, he doesn’t see a housing collapse because home prices will be bolstered by a couple fundamentals, supply and improved lending practices.
Electric vehicle prices going up due to increased costs and high demand
A record number of electric vehicles were sold last year and expectations are that 2022 will be see even more car shoppers opting for EVs. The high cost of gas, topping $5 per gallon on average nationally, has been helping to drive demand.
However, the car industry has been struggling with disrupted supply chains and a semiconductor chip shortage due to the ongoing covid-19 pandemic. This has meant low production numbers of all vehicles and higher costs.
To offset this carmakers are raising prices on all their vehicles, but even more for EVs. This is due to the cost of materials needed to make the batteries, such as lithium, cobalt and nickle, have doubled in price since the pandemic. Likewise, with demand so high manufacturers are looking to cash in on consumers keen on adopting the new technology.
Crypto winter deepens with 3AC crypto hedge fund plunged into liquidation
The "crypto winter", which has seen around two thirds of market cap disappear, claimed a new victim.
Three Arrow Capital, also known as 3AC, one of the most prominent cryptocurrency hedge funds, defaulted on a $350 million loan in the US dollar-pegged stablecoin and 15,250 bitcoin, worth about $304.5 million at today’s prices.
There are fears of contagion in the market to other companies that could be exposed to the unwinding of 3AC causing a further rout in crypto assets.
CEO pay skyrockets using model developed by Elon Musk and Tesla
Elon Musk's compensation deal in 2018 from Tesla created a model which other companies are following to jack up the sums they pay their chief executives. That deal was worth $2.3 billion composed entirely of a stock grant tied to the company’s performance. He has since taken home $60 billion worth of the world's largest electric car manufacturer's stock.
With the brakes off the accelerator to increase CEO compensation, in 2021 the median pay package was $32.1 million, up 27 percent from the year before. For the first time ever all of the 10 highest-paid executives had compensation over $100 million, with the highest average ever at $330 million. Almost all, if not all, their salary was in stock based pay.
Essential workers don't consider their wages to be fair
A new study out by Payscale, a compensation management company that seeks to make sustainable fair pay a reality, found that a minority of essential workers think their are getting paid the right amount.
In a majority of the job profiles Payscale analyzed less than a third felt their pay was fair. Only among police officers and sheriffs did more than fifty percent feel they were content with what they were taking home for a hard day's work.
The report also found that transparency about pay is a vital factor in retaining workers, something that companies have been struggling with as the economy came out of the pandemic-induced recession. Workers who perceived the lowest level of transparency were 88 percent more likely to leave within the next six months than their peers who reported the most transparency on pay in their workplace.
In early June around 5.8 percent of households in the US were behind on their mortgage or rent. Compared to this time last year, this rate has fallen by around 0.4 percent from 6.2 percent.
Over the past year, the federal government has tracked an eighteen percent increase in housing prices. This is the quickest price increase seen in the market since 1991. Between 2004 and 2006, housing prices increased around ten percent of each year. However, none are seeing a collapse in the housing market on the horizon. The conditions in the market are driven by very different factors, compared to those seen in 2006-2008.
Tesla sacks 200 hourly workers from Autopilot unit
Tesla CEO Elon Musk said earlier this month that he had a "super bad feeling" about the economy and that it would be necessary to cut costs. Part of that belt tightening would be to cut staff by around 10 percent.
The head of the electric carmaker clarified that the cuts would be from salaried positions and not hourly workers, which he expected to increase. So it came as a double surprise to around 200 hourly workers whose office in San Mateo was shuttered, and instead of being transfered to another office in Palo Alto as they had been told were given a pink slip.
"It was definitely kind of numbing," one of the laid-off workers told Reuters. "Yeah, we're definitely shocked; we're definitely blindsided."
Musk in an interview this month said that "both Berlin and Austin factories are gigantic money furnaces right now."
California has become the latest state to take the action of dispensing checks. In a $17 million inflation relief package, more than 23 million Californians will receive checks in the fall.
“Millions of Californians will be receiving up to $1,050 as part of a NEW middle class tax rebate,” Gov. Newsom tweeted on Sunday.
How do COLA increases affect delayed Social Security benefits?
Each year the Social Security Adminstration (SSA) announces a cost-of-living adjustment (COLA) for benefits payments which is designed to keep them in line with inflation and price rises. However the process can be confusing, and some who decide to put off their Social Security benefits to up their monthly payments wonder if they are missing out on the increases during this time. Well, fear not!
Writing for Market Watch, Jim Blankenship explains: "Your retirement benefit will have the COLA factored into it once you apply for it, even if you wait until age 70 to apply. The COLA is applied to every year after your age 62 benefit calculation was made."
What next for the price of Bitcoin?
After a tough few months, the cryptocurrency behemoth has fallen below its 200-day rolling average for the very first time. In the past a slump in value has normally rebounded with a healthy increase. However after nearly two years of near-constant growth during the pandemic the value is continuing to fall now, raising questions about where the price is heading next.
Some will say that this is an opportunity for investors to pick up more BTC on the cheap, but will the price ever reach 2021 heights again?
Survey points to Americans tightening belts
A new survey from New Jersey-based financial institution Provident Bank suggests Americans are cutting back on nonessential purchases.
The survey of 600 adults found more than 10 percent of respondents have cut out all nonessential purchases, while more than 70 percent said they made at some changes to their travel plans.
Wall street in claws of bear market down sharply on consumer pessimism
Wall Street ended Tuesday with steep losses after dire consumer confidence report showed lowest level in almost a year and a half. Consumers' near-term expectations are the lowest in almost a decade. Investors reacted with a broad selloff on recession fears and worries about looming earnings reports.
The selloff is putting all three indexes on course to end their second straight quarter in negative territory, which would be the first time to happen since 2015. The S&P 500 is on track to have its worst percentage drop in the first half of the year since 1970.
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