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You’re reading Investor Junkie’s weekly newsletter that tells you the week’s financial news in less than five minutes.
September 26, 2022
Last week’s market summary (September 19-23, 2022):
- S&P 500: -4.07%
- Dow: -3.69%
- Nasdaq: -4.15%
- Bitcoin: -1.80%
Here’s what we cover today:
We’ll break down what you need to know about each of these stories before providing a preview of this week’s upcoming economic events and revealing the recent articles that made our favorites list.
What everyone has been buzzing about
1. Schwab, Fidelity and Citadel Securities are launching a crypto exchange
Financial giants Charles Schwab, Loyalty investments, and Citadel Securities, announced that they are joining forces to launch a cryptocurrency exchange to be called EDX Markets. The release date is TBD, but Jamil Nazarali (formerly of Citadel) has been named the platform’s CEO.
This is the latest ongoing trend we’ve seen this year of major financial institutions diving into the crypto world. At the beginning of this year, we reported that Fidelity was adding Bitcoin to its 401(k) asset lineup. And in July, Schwab launched a crypto-focused thematic ETF.
The timing is curious, as 2022 has been anything but kind to crypto markets. If I were a crypto bull, I’d say this is a pretty strong sign that the titans of the financial world are expecting an eventual crypto recovery. It’s not just individual HODLers who are playing along in the crypto game…the biggest names on Wall Street are too.
Read more >> What Does HODL Mean in Crypto & Stocks?
2. Walbank? Walmart will soon offer checking accounts
According to Bloomberg report, testing for Walmart’s new checking account business (called Walmart One) will begin in a few weeks. One is rumored to target the underbanked by charging no monthly fees and providing up to $200 in free overdraft protection.
Walmart has long been working behind the scenes to develop fintech products it can market to its 1.6 million American customers. Earlier this year, it acquired One Finance and Even Responsible Finance to help it get the infrastructure it would need to build its own banking solution.
Fintech is big business. one to study predicts that from 2022 to 2030 it will grow at a CAGR of more than 26%. And the world’s largest retailer is hungry for a piece of that growing pie.
Know your options >>> The best alternatives to traditional banks in 2022
3. The Fed raised rates by 0.75% for the third time in a row
As expected by most, Fed Chairman Jerome Powell announced a Federal Reserve rate hike of 75 basis points for the third month in a row. And as before, the stock markets fell on Wednesday after the press conference and only fell further on Thursday and Friday.
Rising interest rates make everything from car loans to mortgages more expensive. But Powell said this “pain” is necessary to return inflation to its 2% target range. The FOMC is now to predict that rates could reach as high as 4.50%-4.75% in 2023 before starting to retreat in 2024.
4. The CFPB released a scathing study of the BNPL industry
In a report that was published on September 15, the Consumer Financial Protection Bureau expressed concern about the rapid growth of “Buy Now, Pay Later” companies such as Affirm, Afterpay, Klarna, PayPal and Zip.
Faced with rising costs, an increasing number of consumers have been turning to BNPLs in 2022. These companies are often marketed as ways to pay for purchases at little or no cost over time rather than all at once . But the CFPB study found that BNPLs often raise consumer risk in a number of ways.
In one of its most searing comments, the report said that the BNPL “The business model is based on data collection, and loans serve as a close substitute for credit cards.” The government watchdog promised to soon identify “guidelines or rules” for BNPLs to follow that would reduce the risk of harm to the consumer.
Translation: Get ready for a crackdown coming.
5. Twitch is taking a cut of its top streamers’ income
Twitch President Dan Clancy announced last week which would move all of its streamers to a 50/50 revenue split. While most of its content creators already share 50% of their revenue, some of their most popular streamers had been working on a “premium” deal that came with a sweeter 70/30 split.
Clancy framed the movement as an effort to increase equality, stating that “We don’t think it’s right for those on standard contracts to have different income shares.” But what he didn’t mention is that many creators had been calling for Twitch to move all accounts for the 70/30 income split. More to do this, Twitch decided to move everyone to the less generous division. Gotta love it when fighting for equality as a company means you can pocket more money for yourself.
The move comes at what many see as a vulnerable time for Twitch. Several big names in the streaming world have recently signed exclusive deals with YouTube Gaming. And TikTok live streams are gaining popularity every week. For now, Twitch (which is owned by Amazon) is still king. But his reign seems more in danger than ever; and moves like these don’t help their cause.
What to watch out for this week
Here are some of the notable economic events taking place this week:
- Tuesday, September 27: S&P Case Shiller US Home Price Index (July)
- Wednesday, September 28: Cintas Corporation (CTAS) earnings.
- Thursday, September 29: Nike (THE) earnings.
- Friday, September 30: Core PCE price index
- Friday, September 30: University of Michigan Consumer Sentiment Index
At IJ, we’re well aware that many other news teams and websites are creating great personal finance content. So each week we like to talk about some recent stories from our peers that we found interesting, eye-opening, challenging, inspiring… or just plain funny.
Here are our picks for this week:
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