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New SEC Boss Wants More Crypto Oversight to Protect Investors

It’s become a parlor game in Washington, on Wall Street, and in Silicon Valley to figure out where U.S. Securities and Exchange Commission Chair Gary Gensler stands on cryptocurrencies. Industry lobbyists tune in when he testifies before Congress. Lawyers parse his speeches. Goldman Sachs Group Inc. wealth advisers recently boasted in a research report about looking for clues in 29 hours of the Blockchain and Money course he developed at the Massachusetts Institute of Technology.

That’s an arduous but perhaps not novel undertaking, since videos of the classes have garnered millions of views online, something that amazes even Gensler. In his first extensive interview about the digital money craze, Gensler signaled that his deep interest in the subject doesn’t mean he’s simpatico with the hands-off oversight approach that many enthusiasts would like to see.

Policymakers have struggled with how to respond to the mostly unregulated $1.6 trillion market, which has seen explosive growth and wild price swings. Gensler is contemplating a robust oversight regime, centered on establishing safeguards for the millions of investors who’ve been stocking their portfolios with tokens. “While I’m neutral on the technology, even intrigued—I spent three years teaching it, leaning into it—I’m not neutral about investor protection,” says Gensler, who on Tuesday will give a speech about crypto at the Aspen Security Forum.

“If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.” Gensler has asked Congress to pass a law that could give the agency the legal authority to monitor crypto exchanges, but he says the SEC’s powers are already broad. There’s been much discussion over the years about which kinds of digital assets fall under the SEC’s purview.

Some such as Bitcoin that act like currencies are considered commodities, not securities. But there are thousands of other coins, and Gensler believes most are unregistered securities that must comply with SEC rules. Broadly he noted that technology has sparked economic progress throughout human history, and he sees a similar boost from digital assets. That may only come, however, with strong and thoughtful regulation.

As an analogy, he says the automobile industry didn’t fully take off until governments laid out driving rules. Speed limits and traffic lights provided public safety but also helped cars become mainstream. “It’s only with bringing things inside—and sort of clearly within our public policy goals—that a technology has a chance of broader adoption,” he says.

Hester Peirce, a Republican commissioner on the SEC known for her advocacy of light-touch regulation of digital assets, says she’s eager to work with Gensler. “A lot people just want more clarity,” she says. “I come from a perspective that people should have the maximum freedom to engage in transactions they want to engage in voluntarily. Society needs to have that discussion about what is the right regulatory framework.”

Gensler didn’t give a timeline for any SEC action. He has a to-do list that includes 49 non-crypto policy reviews that could slow progress on cryptocurrencies. Many are high-profile and time-consuming efforts, like responding to the GameStop Corp. trading frenzy and the blow-up of the Archegos family office. The SEC is also working to impose new rules that would require companies to disclose carbon emissions and other environmental risks, a Biden administration priority.

Nor would Gensler comment on the potential for approving a Bitcoin exchange-traded fund, a decision that many in the crypto world are eagerly awaiting, because it would provide an easy on-ramp for investors. A Bitcoin ETF would invest in the cryptocurrency and then trade its shares on the stock market. So far the SEC has balked at permitting such funds, citing concerns about the risk of fraud and manipulation in the Bitcoin market.

Gensler has spoken positively about the ETFs during his days at MIT, giving advocates hope that he’s a supporter. Peirce says it’s “high time” the SEC approved a crypto ETF. Behind the scenes, Gensler has pushed the agency’s staff members to take a look at an array of potential policy changes. He says there are at least seven SEC initiatives looking at different crypto issues: initial coin offerings, trading venues, lending platforms, decentralized finance, stable value coins, custody, and ETFs and other coin funds. “I’ve asked the staff to use all of our authorities anywhere we can,” he says.

Gensler says he thinks regulating crypto exchanges is perhaps the easiest way for the government to get a quick handle on digital token trading. But he’s also concerned about new ways people are getting into crypto, such as peer-to-peer lending on so-called decentralized finance, or DeFi, platforms. If firms are advertising a specific interest-rate return on a crypto asset, Gensler says, that could bring the loans under SEC oversight. Platforms that pool digital assets could be seen as akin to mutual funds, potentially allowing the SEC to regulate them.

Gensler was chair of the Commodity Futures Trading Commission (CFTC) during the Obama administration, where he was responsible for bringing federal oversight to the huge market for derivatives known as swaps after the financial crisis. Patrick McCarty, who teaches a class on cryptocurrencies at Georgetown University’s law school, says Gensler’s understanding of digital assets means he will give the industry a “fair hearing,” though he will likely disappoint many proponents.

“When the crypto people say they want legal certainty, they don’t mean that—they want to be unregulated,” McCarty says. “That’s never been Gary’s point of view.” Christine Trent Parker, who focuses on crypto assets as a law partner at Reed Smith in New York, says that although new SEC rules would bring more certainty to the industry, they also could divide the policing of the market more starkly—with the CFTC focused on markets linked to virtual currencies such as Bitcoin and the SEC handling much of the rest.

“Right now the lines are fuzzy because we have speeches and enforcement and court orders,” instead of bright-line regulation, she says. “If the SEC has sort of a broad framework that pulls in all of the other digital assets, then you have this bifurcated marketplace.” Others have argued that new token developers need some regulatory flexibility to encourage innovation.

Gensler also sits on the Treasury-led Financial Stability Oversight Council and the President’s Working Group on Financial Markets, which recently held a meeting on the impact of stablecoins. These are crypto tokens that are supposed to be backed by traditional currencies such as the U.S. dollar, and they’ve become a huge part of the crypto trading system. Regulators worry about what could happen if some stablecoin didn’t turn out to be worth what it was supposed to be—prompting an exodus akin to a run on a bank or a money-market fund.

Gensler’s views on the panels carry weight, people who follow the issue note, because unlike, say, the Treasury secretary or Federal Reserve chairman, he has real crypto cred. His understanding of blockchain and digital assets comes largely from the several years he spent at MIT. Along with creating the cryptocurrency course, he’s been a frequent guest at industry conferences—sometimes speaking 30 to 50 times a year—mixing with deep thinkers and entrepreneurs.

He quotes writings of Satoshi Nakamoto, the pseudonymous creator of Bitcoin, from memory and knew some of the core developers of the digital currency. The 63-year-old former Goldman Sachs partner traveled an unlikely path to becoming one of the government’s foremost cryptocurrency experts. It started in 2017, when as chief financial officer of Hillary Clinton’s failed presidential campaign he had the lonely job of closing up shop, paying off the final bills, and deciding what to do with the abandoned computers and office supplies.

Like many of his shell-shocked former colleagues, Gensler was looking for something to do—and somewhere to sit out Donald Trump’s presidency. The answer came from economist Simon Johnson, an MIT professor who encouraged Gensler to come to Cambridge, Mass., and teach. Looking to nurture a long-held interest in the intersection of technology and finance, Gensler jumped at the opportunity.

Although he didn’t know much about digital tokens, he connected with people who were part of the university’s burgeoning Digital Currency Initiative and even audited a course in crypto programming. When he suggested MIT teach more about finance and digital money, he was given the job. Little did he know that in a few years he’d have a chance to put his academic studies to real-world use. “Life sometimes is a bit of serendipity,’’ he says.

By: Robert Schmidt

Source: Will Government Regulate Crypto? SEC Chair Gary Gensler on Bitcoin and Oversight – Bloomberg

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Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

business News, Retail/sales

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The first week of earnings season wraps up with major indices closely tracking the bond market in Wall Street’s version of “follow the leader.” Earnings absolutely matter, but right now the Fed’s policies are maybe a bigger influence. In the short-term the Fed is still the girl everyone wants to dance with.

Lately, you can almost guess where stocks are going just by checking the 10-year Treasury yield, which often moves on perceptions of what the Fed might have up its sleeve. The yield bounced back from lows this morning to around 1.32%, and stock indices climbed a bit in pre-market trading. That was a switch from yesterday when yields fell and stocks followed suit. Still, yields are down about six basis points since Monday, and stocks are also facing a losing week.

It’s unclear how long this close tracking of yields might last, but maybe a big flood of earnings due next week could give stocks a chance to act more on fundamental corporate news instead of the back and forth in fixed income. Meanwhile, retail sales for June this morning basically blew Wall Street’s conservative estimates out of the water, and stock indices edged up in pre-market trading after the data.

Headline retail sales rose 0.6% compared with the consensus expectation for a 0.6% decline, and with automobiles stripped out, the report looked even stronger, up 1.3% vs. expectations for 0.3%. Those numbers are incredibly strong and show the difficulty analysts are having in this market. The estimates missed consumer strength by a long shot. However, it’s also possible this is a blip in the data that might get smoothed out with July’s numbers. We’ll have to wait and see.

Caution Flag Keeps Waving

Yesterday continued what feels like a “risk-off” pattern that began taking hold earlier in the week, but this time Tech got caught up in the selling, too. In fact, Tech was the second-worst performing sector of the day behind Energy, which continues to tank on ideas more crude could flow soon thanks to OPEC’s agreement.

We already saw investors embracing fixed income and “defensive” sectors starting Tuesday, and Thursday continued the trend. When your leading sectors are Utilities, Staples, Real Estate, the way they were yesterday, that really suggests the surging bond market’s message to stocks is getting read loudly and clearly.

This week’s decline in rates also isn’t necessarily happy news for Financial companies. That being said, the Financials fared pretty well yesterday, with some of them coming back after an early drop. It was an impressive performance and we’ll see if it can spill over into Friday.

Energy helped fuel the rally earlier this year, but it’s struggling under the weight of falling crude prices. Softness in crude isn’t guaranteed to last—and prices of $70 a barrel aren’t historically cheap—but crude’s inability to consistently hold $75 speaks a lot. Technically, the strength just seems to fade up there. Crude is up slightly this morning but still below $72 a barrel.

Losing Steam?

All of the FAANGs lost ground yesterday after a nice rally earlier in the week. Another key Tech name, chipmaker Nvidia (NVDA), got taken to the cleaners with a 4.4% decline despite a major analyst price target increase to $900. NVDA has been on an incredible roll most of the year.

This week’s unexpectedly strong June inflation readings might be sending some investors into “flight for safety” mode, though no investment is ever truly “safe.” Fed Chairman Jerome Powell sounded dovish in his congressional testimony Wednesday and Thursday, but even Powell admitted he hadn’t expected to see inflation move this much above the Fed’s 2% target.

Keeping things in perspective, consider that the S&P 500 Index (SPX) did power back late Thursday to close well off its lows. That’s often a sign of people “buying the dip,” as the saying goes. Dip-buying has been a feature all year, and with bond yields so low and the money supply so huge, it’s hard to argue that cash on the sidelines won’t keep being injected if stocks decline.

Two popular stocks that data show have been popular with TD Ameritrade clients are Apple (AAPL) and Microsoft (MSFT), and both of them have regularly benefited from this “dip buying” trend. Neither lost much ground yesterday, so if they start to rise today, consider whether it reflects a broader move where investors come back in after weakness. However, one day is never a trend.

Reopening stocks (the ones tied closely to the economy’s reopening like airlines and restaurants) are doing a bit better in pre-market trading today after getting hit hard yesterday.

In other corporate news today, vaccine stocks climbed after Moderna (MRNA) was added to the S&P 500. BioNTech (BNTX), which is Pfizer’s (PFE) vaccine partner, is also higher. MRNA rose 7% in pre-market trading.

Strap In: Big Earnings Week Ahead

Earnings action dies down a bit here before getting back to full speed next week. Netflix (NFLX), American Express (AXP), Johnson & Johnson (JNJ), United Airlines (UAL), AT&T (T), Verizon (VZ), American Airlines (AAL) and Coca-Cola (KO) are high-profile companies expected to open their books in the week ahead.

It could be interesting to hear from the airlines about how the global reopening is going. Delta (DAL) surprised with an earnings beat this week, but also expressed concerns about high fuel prices. While vaccine rollouts in the U.S. have helped open travel back up, other parts of the globe aren’t faring as well. And worries about the Delta variant of Covid don’t seem to be helping things.

Beyond the numbers that UAL and AAL report next week, the market may be looking for guidance from their executives about the state of global travel as a proxy for economic health. DAL said travel seems to be coming back faster than expected. Will other airlines see it the same way? Earnings are one way to possibly find out.Even with the Delta variant of Covid gaining steam, there’s no doubt that at least in the U.S, the crowds are back for sporting events.

For example, the baseball All-Star Game this week was packed. Big events like that could be good news for KO when it reports earnings. PepsiCo (PEP) already reported a nice quarter. We’ll see if KO can follow up, and whether its executives will say anything about rising producer prices nipping at the heels of consumer products companies.

Confidence Game: The 10-year Treasury yield sank below 1.3% for a while Thursday but popped back to that level by the end of the day. It’s now down sharply from highs earlier this week. Strength in fixed income—yields fall as Treasury prices climb—often suggests lack of confidence in economic growth.

Why are people apparently hesitant at this juncture? It could be as simple as a lack of catalysts with the market now at record highs. Yes, bank earnings were mostly strong, but Financial stocks were already one of the best sectors year-to-date, so good earnings might have become an excuse for some investors to take profit. Also, with earnings expectations so high in general, it takes a really big beat for a company to impress.

Covid Conundrum: Anyone watching the news lately probably sees numerous reports about how the Delta variant of Covid has taken off in the U.S. and case counts are up across almost every state. While the human toll of this virus surge is certainly nothing to dismiss, for the market it seems like a bit of an afterthought, at least so far. It could be because so many of the new cases are in less populated parts of the country, which can make it seem like a faraway issue for those of us in big cities. Or it could be because so many of us are vaccinated and feel like we have some protection.

But the other factor is numbers-related. When you hear reports on the news about Covid cases rising 50%, consider what that means. To use a baseball analogy, if a hitter raises his batting average from .050 to .100, he’s still not going to get into the lineup regularly because his average is just too low. Covid cases sank to incredibly light levels in June down near 11,000 a day, which means a 50% rise isn’t really too huge in terms of raw numbers and is less than 10% of the peaks from last winter. We’ll be keeping an eye on Covid, especially as overseas economies continue to be on lockdowns and variants could cause more problems even here. But at least for now, the market doesn’t seem too concerned.

Dull Roar: Most jobs that put you regularly on live television in front of millions of viewers require you to be entertaining. One exception to that rule is the position held by Fed Chairman Jerome Powell. It’s actually his job to be uninteresting, and he’s arguably very good at it. His testimony in front of the Senate Banking Committee on Thursday was another example, with the Fed chair staying collected even as senators from both sides of the aisle gave him their opinions on what the Fed should or shouldn’t do. The closely monitored 10-year Treasury yield stayed anchored near 1.33% as he spoke.

Even if Powell keeps up the dovishness, you can’t rule out Treasury yields perhaps starting to rise in coming months if inflation readings continue hot and investors start to lose faith in the Fed making the right call at the right time. Eventually people might start to demand higher premiums for taking on the risk of buying bonds. The Fed itself, however, could have something to say about that.

It’s been sopping up so much of the paper lately that market demand doesn’t give you the same kind of impact it might have once had. That’s an argument for bond prices continuing to show firmness and yields to stay under pressure, as we’ve seen the last few months. Powell, for his part, showed no signs of being in a hurry yesterday to lift any of the stimulus.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

Follow me on Twitter.

JJ Kinahan

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

Critics:

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term “retailer” is typically applied where a service provider fills the small orders of many individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products.

Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store’s overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel, and presentation.

In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

Retail shops occur in a diverse range of types of and in many different contexts – from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment – protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order

Stocks, U.S. Futures Dip on Delta Strain Concerns: Markets Wrap

business News, Economy/Business News, Stock Market Tools, Stock Market/Share Industry

Asian stocks dipped Tuesday amid concerns a more infectious Covid-19 strain will derail an economic recovery. Treasuries and the dollar were steady after gains.

An MSCI index of Asia-Pacific shares was on track for its first decline in six days as countries in the region are struggling to contain the highly transmissible Delta variant of the virus. U.S. futures dipped after technology stocks led U.S. benchmarks to fresh records Monday. New limits on travel from Britain, which is seeing a spike in cases, dragged on cruise operators and airlines.

The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil extended a decline with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000.

Global stocks are poised to close out their fifth quarterly advance amid a worldwide vaccine rollout that powered an economic recovery and sparked concerns about increasing prices pressures and the withdrawal of stimulus measures. The recovery also drove the reflation trade as more economies reopened, though that is being hampered as some countries, especially in Asia, are falling behind in their vaccine strategies.

The U.S. is now the best place to be during the pandemic due to its fast and expansive vaccine rollout stemming what was once the world’s worst outbreak. Meanwhile, parts of the Asia-Pacific region that performed well in the ranking until now — like Singapore, Hong Kong and Australia — dropped as strict border curbs remain in place.

“The Delta variant has also emerged in our client conversations as a potential threat to reflation/inflation,” JPMorgan Chase & Co. strategists led by Marko Kolanovic said. “The economic consequences are likely to be limited given progress on vaccinations across developed market economies. It could, however, pose some risk of a delay in the recovery in countries where vaccination rates remain lower.”

Read: Asean Equities May Have Priced In Virus Setback: Taking Stock

For more market commentary, follow the MLIV blog.

Here are some events to watch in the markets this week:

OECD meets in Paris to finalize a proposal to overhaul global minimum corporate taxation Wednesday
China’s President Xi Jinping will deliver a speech as the nation marks the 100th anniversary of the founding of the Chinese Communist Party Thursday
OPEC+ ministerial meeting Thursday
ECB President Christine Lagarde speaks Friday
The U.S. jobs report is due Friday

These are some of the main moves in markets:

Stocks

S&P 500 futures dipped 0.1% as of 1:26 p.m. in Tokyo. The S&P 500 rose 0.2%
Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 1.3%
Topix index fell 1%
Australia’s S&P/ASX 200 Index dropped 0.4%
Kospi index lost 0.6%
Hang Seng Index retreated 0.8%
Shanghai Composite Index was down 1%
Euro Stoxx 50 futures were little changed

Currencies

The yen traded at 110.56 per dollar
The offshore yuan was at 6.4638 per dollar
The Bloomberg Dollar Spot Index edged up
The euro traded at $1.1913

Bonds

The yield on 10-year Treasuries held at 1.48%
Australia’s 10-year bond yield dropped five basis points to 1.53%

Commodities

West Texas Intermediate crude was at $72.56 a barrel, down 0.5%
Gold was at $1,774.24, down 0.2%

— With assistance by Rita Nazareth, Vildana Hajric, and Nancy Moran

By: Andreea Papuc

Source: Stock Market Today: Dow, S&P Live Updates for Jun. 29, 2021 – Bloomberg

Critics:

Beginning on 13 May 2019, the yield curve on U.S. Treasury securities inverted, and remained so until 11 October 2019, when it reverted to normal. Through 2019, while some economists (including Campbell Harvey and former New York Federal Reserve economist Arturo Estrella) argued that a recession in the following year was likely,other economists (including the managing director of Wells Fargo Securities Michael Schumacher and San Francisco Federal Reserve President Mary C. Daly) argued that inverted yield curves may no longer be a reliable recession predictor.

The yield curve on U.S. Treasuries would not invert again until 30 January 2020 when the World Health Organization declared the COVID-19 outbreak to be a Public Health Emergency of International Concern, four weeks after local health commission officials in Wuhan, China announced the first 27 COVID-19 cases as a viral pneumonia strain outbreak on 1 January.

The curve did not return to normal until 3 March when the Federal Open Market Committee (FOMC) lowered the federal funds rate target by 50 basis points. In noting decisions by the FOMC to cut the federal funds rate by 25 basis points three times between 31 July and 30 October 2019, on 25 February 2020, former U.S. Under Secretary of the Treasury for International Affairs Nathan Sheets suggested that the attention of the Federal Reserve to the inversion of the yield curve in the U.S. Treasuries market when setting monetary policy may be having the perverse effect of making inverted yield curves less predictive of recessions.

Post-COVID 19: Leverage 10 New Business Trends & Financial Incentives

Business Leadership/Strategies, business News, Covid19, Crisis Strategy

There’s little doubt that COVID-19 has rapidly disrupted the way that small, medium and even large businesses conduct their affairs. But, like all crises and disruptions, there is never a better opportunity for moving quickly and making a profit. It is a fact that more millionaires are made in recessions than in times of ease.

And the world was shifting to work from home (‘WFM’) before COVID hit. A survey from Global Workplace Analytics found 56% of the US tech workforce (75 million employees) have a job description perfectly compatible with remote work.

With that said, the following are 10 new business trends that can be capitalized upon. Just because things are being done differently and there is a period of disruption, does not mean that it is a complete disruptive process. Significantly, faster and more adaptive companies have been able to thrive amidst COVID, while slower organizations are suffering heavily. The following are just some of the benefits to be availed of.

Table of Contents [show]

Post-COVID 19: Leverage 10 New Business Trends

#1 – Reduced Rent

Working from home has a myriad of benefits, for both business owners and employees. Some of these will be outlined in more detail below. But, reduced rental costs are major. One of the biggest problems for all kinds of businesses is rent in urban locations. It is especially relevant for corporate outfits renting office space, which has a massive price tag. Imagine being able to completely cut all your rental costs.

Most business owners simply don’t see this. Yes, there is the issue of existing leases, but allowances have been made in the US for this, and financial help is also available. Rent is a major cost – use the funds saved from rent to foster an intimate relationship with employees who no longer meet face to face. Of course, this does apply so much with a services company such as a restaurant that needs a physical presence. But it will work for digital and certain other models.

#2 – Reduction Of Associated Costs

While rent is one of the major benefits, there are a plethora of associated costs that are also vastly reduced. If you are no longer using office space, then there is no need to pay for insurance on the premises, and no chance of having to shell out for an injury. You also have zero utilities to pay.

The cost of hiring and onboarding staff has further been drastically reduced. This is due to the fact that no longer are physical interviews possible, so more of the process will be online and automated. HR and recruitment is a very expensive process. But without a physical presence, there is less need for an HR team to settle disputes and organize activities (though HR is still certainly needed in some capacity in medium to large business models)

#3 – Mental Health As A Priority

COVID-19 has brought mental awareness to the forefront of employers and employees. This is an interesting point as it kind of works both ways. Many workers seem to experience feelings of isolation when working from home.

Their routine has been upset, and it is incredibly difficult to adapt. There are many more temptations, and it is so easy to simply leave the desk with nobody knowing, or have one too many snacks from the fridge! Many studies and prominent psychologists have alluded to mental health risks.

The fact is that people are stressed about getting the virus. According to Reuters, many COVID-19 survivors are likely to be at greater risk of developing mental illness, after a large study found 20% of those infected with the coronavirus are diagnosed with a psychiatric disorder within 90 days. Anxiety, insomnia, and depression are common.

Mental health is a vital aspect of worker productivity. And much of the existing mental health issues simply went unaddressed in the pre-covid era. However, it’s also worth mentioning that a significant proportion of workers are extremely positive about working from home and are adapting quite well, with significant mental benefits. They don’t have to commute from work, and they have more freedom around the home to do as they wish.

#4 – Faster Implementations

Due to COVID-19, many organizations rolled out initiatives very quickly due to the need for speed. Because of the crisis, business executives are overseeing a wide shift in how organizations work, spanning tactical adjustments in areas such as meeting structure and cadence, and day-to-day management, as well as enterprise-wide changes in leadership and talent management, use of technology, and innovation. In most industries, 50% of more of the leaders surveyed are considering or planning large-scale changes in various sectors. Leaders are making many of these changes swiftly by necessity.

As one surveyed healthcare leader explained – “We were able to deploy an enterprise-wide virtual care solution in a matter of weeks, because that is all we had. This rollout had been planned for over a year, prior to this.”

Many organizations realize the value of speed during these times of flux and uncertainty. Surveyed leaders most often cite the need to react more quickly to market changes as the reason why organizations have made changes during the pandemic. This need is reported significantly more often than factors such as the need to reduce costs, increase productivity, or engage more effectively with customers. If you want to take advantage of COVID, then you need to act quickly and with precision. This is an area where a business owner can make great gains.

#5 – Leveraging Technology

For decades people have been hyping up technology. But it works and has transformed the world. With the onslaught of COVID, technology is needed more than ever. People are communicating via messaging and video applications and need virtualized areas to collaborate. Security is going to get more sophisticated, with retina and fingerprint scanners to verify entry to workspaces.

Technology can improve on speed and decision making, 2 pivotal components of any business enterprise. Many leaders view the pace of decision making as a priority for improvement, likely because many organizations find it harder to choose a path forward than to follow that path.

Communication and collaboration are 2 key areas that business leaders highlight when talking about technology. The speed at which accurate data is transferred is key. And to do this, there also has to be a clear chain of command where everybody knows their position. Superior technology can help from onboarding to payroll to learning to project execution.

#6 – Less Red Tape And Bureaucracy

With systems and management get established in a business, it’s hard to think of doing things differently. But many of these systems (and even certain staff) are surplus to requirements and make things even more difficult. In many instances, it is not the execution that is the problem. It is actually getting the sign-offs for disparate managers, all of whom have their own opinions about things. The end result is unnecessary delays.

Many business owners are finding that they operate just as efficiently, if not more so when the workers are given free rein to complete tasks on their own with only a light veneer of guidance. This runs counter to the management ethos that unless the workers are carefully managed, they will not get the work completed. A primary advantage of COVID is that it highlights what is truly necessary for a business and what was there simply nobody believed it was unnecessary before.

#7 – Sustainable Development

COVID-19 has woken the population up to the fact that sustainable development is necessary for the global economy to thrive. Sustainable development can take many forms, including:

Financial sustainability
Environmental sustainability
Social sustainability

How can a business owner take advantage of ‘sustainability’? There is a huge market for organic or fair products, perceived as those that have long-term value and a transparent ethos. Clients and investors do not put up with shady businesses any longer. They consider the social and wider consequences of where they put their money. This trend has been reflected in the socially responsible investing phenomenon and the emphasis on green products in recent months. The trend is only going to continue year on year.

#8 – Education and Upskilling

Never before has there been such a radical shift in the global economy at such a rapid pace. As a result, large segments of the workforce need to upskill and reeducate themselves. May college students find themselves in a terrible environment for their courses, and because change is coming so rapidly, it is just not possible to accurately predict what skills are most relevant.

But there is a definite upside to this. Some skills are definitely in-demand, such as mobile app development, AI, automation tools, supply chain management, consultancy businesses, and far more. It is the prime opportunity to pivot an existing business to make it more profitable.

Pivoting refers to the art of changing your core business model to adapt to current circumstances. A Startup Genome study demonstrated that businesses that pivoted once or twice enjoyed far more success than those who stuck to their guns for the long-term. You and your employees can benefit from either upskilling or ‘pivoting’ to a new model entirely.

#9 – New Productivity Mechanisms

The fact is that COVID-19 has actually accelerated both employee productivity and employee satisfaction levels. The majority of independent studies are reporting this, and it goes against many employer fears of a lazy and complacent workforce. The reasons for this are unknown, but possibly in line with the fact that workers do better when they have the time and space to get the job done.

They are also more free to do things that make them more productive and motivated, whether that is a walk in the park, a 9 AM yoga session to start the day, or simply a coffee in a local cafe. Business owners can trust their employees to work without breathing down their necks. And the need for managers might actually be reduced in a collaborative environment where workers are independent with only light-touch management.

It’s also a major benefit that employees do not have to commute an hour to and from work. This is precious mental bandwidth that can increase their productivity levels.

#10 – Direct Entrepreneurial Expansion

You can take advantage of COVID-19 in a variety of different ways. Consider the various business opportunities – hand sanitizers, masks, door deliveries, mental health, remove services, shared office spaces, the list goes on and on.

Fast-acting entrepreneurs are having a field day with all of the opportunities. Particularly, small business owners who opted for restaurant delivery fared quite well, though this option was not taken up by every outlet.

There are still many opportunities for expansion in the post covid era. Supply chains are operating differently, consumer preferences are changing, and there are multiple opportunities in niche industries including VR, AI, renewable energy, supply chain management, and far more.

Tech companies are still incredibly lucrative, according to a Startup Genome Study, with impressive job multipliers and innovations that can have incredible benefits to the wider economy. In contrast to entrepreneurs, business executives have a slightly different focus. When surveyed, business executives primarily placed an emphasis on 3 key areas:

Making good decisions more quickly.
Improving communication and collaboration.
Making greater use of technology.

The Importance of Speed

Speed is of the essence when it comes to pandemics like COVID, where the fastest acting businesses reap the rewards. As things start to solidify, it is design, patience, planning, and longer-term foresight.

There are also many ways you can directly take advantage of COVID with financial incentives. These financial incentives are outlined below. Note that some of them, such as the Paycheck Protection Program, are no longer available. Read more…

By Daniel Lewis

Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.

Relevant sites that have important financial disclosures in relation to COVID include:

Summary of Financial Relief Strategies

As a small business order, make sure that you run through all of these financial tools, preferably in the order they are written below.

SBA Paycheck Protection Program (‘PPP’)
SBA Economic Injury Disaster Program (‘EIDL’)
SBA Express Bridge Loan
SBA Debt Relief
Online Lending Options
SBA Micro Loans
Business Interruption Insurance
Other Forms of Relief (Mortgage, Lease, Unemployment Benefits, Family, Friends).

Also keep an eye out for the Pandemic Unemployment Assistance program, which is aimed specifically to help out independent contractors and small business owners who do not qualify under the existing infrastructure. The program is not operational at the time of this writing, so check in periodically through this site.

6 Trends That Will Shape The Financial Services Industry In 2021

Banking News, business News, Digital World, Economy/Business News, Financial Growth, Future Finance/Banking

Financial services industry trends contactless payments data AI BeyondCorp

Financial services in 2020 was defined by a sudden acceleration in digitization and digital engagement—pushed by the impacts of the COVID-19 pandemic. Exchanges shut down their trading floors and moved to remote trading, mobile banking transactions spiked, personal trading apps saw record transaction volumes, and call center personnel kept customer support going by working from their living rooms.

While the financial services industry was able to weather the digital tsunami and continue its operations, it has become clear that the winds of change are not transient. Financial institutions are now thinking strategically about their technical setup and questioning whether the tools that they have previously relied on are the right ones to use going forward. Here are a few major themes we’ve identified as being likely to dominate financial industry conversations and technology roadmaps in 2021:

1. Modernizing dated core systems will be imperative

2020 was a year that put the financial infrastructure to the test and challenged existing architecture planning assumptions. Many of the core systems had not been architected to address the volume and pace of change that was suddenly required, and dated core systems struggled under the added weight.

Relief programs such as the Payment Protection Program (PPP) in the U.S. saw tremendous demand, but loan document processing, manual reviews, and approvals became bottlenecks. As the credit needs of small and medium businesses surged, lenders faced challenges updating their legacy underwriting and risk management systems to meet the demands. Batch-based, fragmented, and slow-moving information and data pipelines hindered the ability to gain real-time insights and rapid response to customer needs.

As financial services rallied to overcome what economists were calling “The Great Shutdown” or “The Coronavirus Recession,” the need for modern, agile, scalable, secure, resilient technology infrastructures became abundantly clear—and the new imperative in 2021.

2. Banking goes beyond cash with digital engagement

The role of cash in society was in flux before 2020, with contactless payments already a way of life across Europe and Asia. Even in America, which has been resistant to move away from cash, 27% of U.S. businesses reported an increase in contactless payments by customers as a result of the pandemic, according to an April 2020 survey. That trend will continue in 2021, with 74% of global consumers saying they will use contactless payment methods even after the pandemic. Globally, the contactless payment market size is expected to grow from $10.3 billion in 2020 to $18 billion by 2025, at a compound annual growth rate (CAGR) of 11.7% during the forecast period.

This trend toward contactless finances extends to banking. In 2020, 44% of retail banking customers relied on mobile apps to conduct business. Both traditional players and financial tech firms introduced new finance apps or upgraded existing ones to offer new services and programs to match consumer needs, such as benefit tracking for government-sponsored food allowances or access to early wages. As downloads of mobile apps soared, transaction volumes skyrocketed.

In 2021, as a direct response to consumers’ growing reliance on mobile payment and banking solutions, the financial services industry will likely continue to invest in modern data and analytics tools, artificial intelligence capabilities, and digital platforms.

3. Insurance becomes personal

In 2020, faced with a major health crisis, economic distress, and an uncertain future, insurance companies redefined how they did business almost overnight to provide stability, comfort, and peace of mind for their customers. For example, auto insurance providers offered discounts or refunds given decreased levels of driving. Health insurance companies adjusted their premiums to reflect reductions in non-essential surgeries.

It has become clearer than ever that the most useful products are tailored to the specific needs of the customer, and that hyper-personalization will continue to define the customer journey in 2021. Auto insurance products are more valuable when they are based on miles driven. Home insurance products are more effective when they are integrated with connected homes, so that they can prevent or minimize damage from water leaks or fires.

Building this level of personalization for customers requires a technology infrastructure that enables real-time insights from vast amounts of streaming data from a variety of data sources. Data and analytics, powered by AI, will enable personalized, contextualized interactions across the entire insurance life cycle, from sales and underwriting, to claims management and support.

4. Institutional and wholesale trading moves off trading floors

Suddenly, trading was no longer confined to corporate trading floors. While a small handful of firms positioned their traders as “essential workers” and required them to work on site, the majority of firms allowed traders work from the safety of their homes. As trading floors and exchanges worldwide emptied, the prior assumptions that all trading will happen from physical offices—over corporate networks and enterprise-operated data centers—were suddenly rendered obsolete. Operational resilience plans that counted on falling back to a secondary disaster recovery site became useless when all corporate sites shut down.

In the new world, financial architectures will decouple financial activities from physical facilities through the use of technologies like zero-trust networks that enable location-independent secure access. Operational resilience plans will be updated to include globally and regionally resilient infrastructures like cloud.

Related: The adoption of zero trust is an imperative for security modernization. Learn more about BeyondCorp Enterprise, Google’s comprehensive zero trust product offering.

5. Work-from-home must work across financial services

Throughout 2020, widespread stay-at-home restrictions challenged businesses everywhere to keep employees engaged, productive, and connected. With the pandemic, as corporate offices became unavailable overnight, the entire financial services workforce—from traders to bankers to support personnel—relied on their at-home internet connections along with existing VPN and virtual desktop infrastructure solutions to do their work. While it got the job done, internet connectivity issues, bandwidth limitations, security concerns, interoperability problems, and limitations in collaboration capabilities plagued the day-to-day experience.

It will take a reimagined work environment—one that combines immersive digital and mobile experiences with flexible hardware—to support in-person and remote workers.

Work-from-anywhere solutions need to take a comprehensive look at seamlessly enabling a heterogeneous, globally distributed workforce, including traders who need high-speed connectivity, quantitative analysts who need vast amounts of compute capacity, retail branch workers who need responsive insights platforms to serve customers, and more.

It will take a reimagined work environment—one that combines immersive digital and mobile experiences with flexible hardware—to support in-person and remote workers. New ways of hybrid working and connecting with customers will also lean heavily on helpful, integrated tools centered on the cloud to level traditional boundaries in 2021.

6. Embedded innovation is the new status quo

While 2020 was bleak from many perspectives, one of the rare positives is that it helped prove that agility and innovation, done right, is a game changer. The speed at which the financial services industry transformed to help their customers through the pandemic is the speed at which they want to continue operating. And that requires a culture of innovation that is embedded into the corporate culture of an institution.

From financial services institutions to vendors, regulators, and supervisors, 2021 is likely to be a year of deliberate cultural transformation to find new ways of working together to create safer, cheaper, more inclusive, and more equitable financial markets.

This year at Google Cloud, we will continue working with our customers across financial services to help them prepare for the future, through our technology, tools and innovation partnerships.

Keep learning: Discover the steps any organization can take to quickly adapt and achieve positive results with tighter resources. Get Google’s Guide to Innovation.

Ulku Rowe Ulku Rowe, Technical Director, Office of the CTO, Google Cloud

At the forefront of Google’s cloud and machine learning capabilities, Ulku enables the financial services industry to take advantage of Google’s technology to fuel their digital transformation. Before joining Google, Ulku was a Managing Director of Technology at J.P. Morgan Chase and Bank of America. Ulku holds an MS degree in Computer Science from the University of Illinois at Urbana-Champaign and a BS degree in Computer Engineering. She also serves on the Federal Reserve Bank of New York Fintech Advisory Group.

Source: 6 Trends That Will Shape The Financial Services Industry In 2021

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Is China’s Mysterious $15 Billion Fast Fashion Retailer Shein Ready For Stores

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Over 30? Then you had better read on. Shein may not be a household name like e-commerce giants, Alibaba BABA -0.4%, Taobao, or JD.com, but as China’s newest retail Decacorn, its mystery-shrouded low profile is matched only by a single-minded ambition to become a global fast-fashion retailer.

Founded in 2008, Nanjing-based Shein is aimed squarely at Gen Z, luring young shoppers via Instagram and TikTok influencers and a barrage of discount codes for low-cost styles – with a dress costing just half that of a Zara equivalent, according to Societe Generale – uploading new products online in their hundreds every week.

Yet beyond its teen audience, ultra-publicity shy Shein remains largely unknown. But that anonymity could all be about to change after the Pearl River-based company became a surprise potential bidder for ailing U.K. fashion group Arcadia. While it failed in that attempt, the message is clear: Shein is ready to take on Main Street.

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The story really starts at the beginning of 2012, when notoriously hard-working founder and CEO Chris Xu (sometimes known as Yangtian Xu) – an American-born graduate of Washington University – gave up his wedding dress business to acquire the domain Sheinside.com. Initially selling women’s clothing, in 2015 he renamed the company Shein, focused on overseas markets, and began snapping up fashion rivals.

The U.S is now Shein’s largest market, while it also ships to 220 countries, with websites for Europe, the Middle East, Australia, and the U.S. Rapid growth has been propelled by a series of funding rounds, most recently completion of Series E financing in 2020, which gave Shein an eye-watering valuation exceeding $15 billion. Revenues are not disclosed but are locally estimated in excess of $10 billion annually and have continued to soar throughout the pandemic, while it currently counts a number of Asian and international VCs and private equity houses among its backers. MORE FOR YOUFashion’s Nightmare Before Christmas As Debenhams Joins U.K. Carnage As GameStop Army Goes Global, U.K. Retail And Malls Among Most Shorted Dr Martens Puts Best Boot Forward With Year’s First Big IPO

Shein: Fast Fashion, Made Ultra Fast

Remember that age/awareness divide? Well, in the week starting September 27, Shein was apparently the most downloaded shopping app globally on iPhone, according to analytics platform App Annie. It ranked in the top 10 in the U.S., Brazil, Australia, the U.K., and Saudi Arabia.

To service the U.S. market, products are sent from Shein’s warehouse in Foshan, Guangdong province, to a warehouse near Los Angeles, Ca., and fulfillment can take over ten days, glacial by Amazon Prime’s AMZN +0.5% next-day delivery standards. But its affordability has ensured a loyal customer base, lured by an ever-changing roster of women’s clothing and accessories added at an average of 2,000 SKUs every day.

Shein is obsessed with identifying hot searches and trends in different countries to predict the colors, fabrics, and styles that will be popular, with an even faster cycle than Zara owner Inditex. It then promotes heavily with Instagram- and Weibo-friendly imagery, for accessible and attainable fashions across all its social platforms.

However, Shein’s ascent has not been without its problems. In July it was roundly condemned for having a swastika pendant available (an error for which it profusely apologized), while paid-for posts from celebrities and fashion influencers have elevated the brand’s image as well as slowly rebutting its low–cost, low–quality rap. The label even managed to sequester stars like Katy Perry, Lil Nas X, and Rita Ora for its May 2020 #SHEINTogether global streaming event.

The Emergence Of A Global Fashion Player

All this remember for a company that didn’t even have its own supply chain before 2014, preferring to buy directly from Guangzhou’s Shisanhang Garment Wholesale Market. However, faced with soaring demand, Xu created an in-house design team and within two years had assembled an 800-strong army dedicated to designs and prototyping for ultra-fast production. It also garnered a reputation for timely payment, something of a rarity in China, and as a result when Shein moved its supply chain operations center from Guangzhou to Panyu in 2015, almost all of the factories it worked with relocated.

In the same year, Shein entered the Middle East and sales soared, with revenues in 2016 rising to $617 million and exceeding $1.5 billion the year after.

Shein and the hundreds of factories that work with the company have coalesced in a production cluster bearing close similarities to A Coruña in north-east Spain, where Inditex’s headquarters are surrounded by its upstream and downstream suppliers. It has four R&D facilities in Nanjing, Shenzhen, Guangzhou, and Hangzhou, plus six logistics centers in Foshan, Nansha, Belgium, India, and on the East and West Coasts of the U.S. It also has seven customer service centers, based out of Los Angeles, Liege, Manila, Yiwu, and Nanjing, and employs more than 10,000 people.

Future plans are thought to include the development of new businesses in mobile payments, supply chain finance, advertising, and, of course, opening brick-and-mortar stores. Whatever happens, it’s likely to do it ultra-fast.

Follow me on Twitter or LinkedIn. Check out my website.

Mark Faithfull

I am a global retail and real estate expert who looks behind the headlines to figure out what makes consumers tick. I work as editor-in-chief for MAPIC and editor for World Retail Congress, two of the biggest annual international retail business events. I also organise, speak at, and chair conferences all over the world, with a focus on how people are changing and what that means for the retail, food & beverage, and leisure industries. And it’s complicated! Forget the tired mantra that online killed the store and remember instead that retail has always been dog-eat-dog: star names rise and fall fast, and only retailers that embrace the madness will survive. Don’t think it’s not important, your pension funds own those malls!

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10.1 Million Americans Are Still Unemployed As Rate Ticks Down To 6.3%

business News, Covid19, Employment/Recruitement, Salary/Income

The United States added just 49,000 jobs in January, according to data released by the Labor Department Friday—less than half the 100,000 added jobs economists were expecting as the pandemic continues to force layoffs in industries such as retail and hospitality despite gains in white-collar jobs.

The unemployment rate ticked down to 6.3% in January, from 6.7% in December; the metric hit a record high of 14.7% in April.

There are now 10.1 million unemployed people in the United States, compared to 10.7 million in December, the government said; job gains in professional and business services and education helped offset losses in industries including retail, healthcare, transportation, warehousing and hospitality.

Despite the decrease in unemployment, the number of permanent job losers increased to about 3.5 million in January, from 3.3 million in December—about three times prepandemic levels.

Another grim sign of a still-reeling job market, 400,000 Americans left the labor force last month, pushing the labor force participation rate slightly down to about 61.4%.

Of the 7 million people in America who want a job but are not actively seeking employment, about 4.7 million were prevented from looking for work due to the pandemic, the Labor Department said.

January’s report continues to show stark differences in unemployment by race, with minority groups such as Black Americans and Hispanics facing above-average unemployment rates of 9.2% and 8.6%, respectively.

Crucial Quote

“After contracting in December, the labor market returned to growth in January, as some economic lockdowns eased, which allowed more businesses to stay open,” James McDonald, the CEO of Los Angeles-based Hercules Investments said Friday. “While it’s encouraging to see the economy added jobs in January, we are still far away from pre-Covid-19 employment levels.” Overall, there are still 10 million less jobs than there were before the pandemic.

Big Number

17.8 million. That’s how many people were still receiving some form of government unemployment benefit last week—shockingly high compared to the 2.1 million total claims filed in the comparable week in 2020, according to weekly data released Thursday. That’s higher than the number of unemployed Americans, due to a startling number of people who’ve dropped out of the labor force because they’re no longer looking for work.

Key Background

The Congressional Budget Office said Monday that it does not expect employment will reach prepandemic levels until 2024–echoing similar estimates from economists predicting that the labor market recovery will severely lag the broader economic recovery in the years to come. Dallas Federal Reserve President Robert S. Kaplan said Thursday that the next two to three months will remain challenging for the economy even though widespread vaccination efforts should help curb some of the downside economic risks of increased Covid-19 infections.

Tangent

After an all-night session, the Senate narrowly approved a budget resolution Friday morning that will allow Democrats to move forward on President Joe Biden’s lofty $1.9 trillion stimulus proposal without any Republican backing. It’s likely the package will need to be trimmed down to satisfy some of the more conservative Democrats, but experts, including Vital Knowledge Media Founder Adam Crisafulli, still estimate the resulting bill could total as much as $1.7 trillion and hit President Biden’s desk before the current enhanced federal unemployment benefits expire on March 14. Biden’s plan extends the enhanced benefits of $400 per week through September.

What The Vaccine Won’t Solve

business News, Covid19, Economy/Business News, Economy/Recession

While the start of vaccine rollouts offer hope that the worst of the pandemic may be over, its devastating financial impact for many will be felt for a long time to come. In research spanning 18 countries from the Deloitte Consumer Industry Center, we find evidence of continued household financial distress.^[i] One in five consumers are spending more than they take in as income. During the course of the pandemic, they are twice as likely to have had their financial situation change for the worse and to indicate that they have cut back on staples like groceries and household goods.

That can lead to tough choices like dipping into savings, increasing the use of debt or prioritizing which upcoming payments will be missed. Even larger numbers of consumers are worried about this becoming their fate. Forty percent of all consumers in our study are worried about the amount of their savings and credit card balances.

Since the 2008 Great Recession the divide between more affluent consumers and lower income consumers has grown.^[i] Just as the pandemic accelerated the adoption of contactless commerce, video conferencing and home gyms, it also accelerated this bifurcation. The pandemic has created one world among high income people who can work at home and make discretionary purchases, and a second world of people who are more likely to be unemployed and/or more limited in their buying ability. While the pandemic has inconvenienced more affluent consumers, others have experienced a severe economic crisis that is likely to extend for some time.

Economists talk about the “K-shaped” recovery—to describe how different segments have experienced, and will continue to experience, the effects of the pandemic.^[ii]Our research shows that the K-shaped recession and recovery are features of many economies and a direct outcome of the pandemic’s acceleration of a long-term change in the labor force.

Globally, the chances of being unemployed were about six times higher among low income workers compared to high earners though that varies by country. The ratio is higher in the United States (nine times as likely). While in Germany, low-income workers were only four times as likely to be unemployed. The difference is likely the result of Germany’s Kurzarbiet scheme to keep workers attached to their employers (so they aren’t officially unemployed) compared to the U.S. use of unemployment insurance. Similar schemes are set-up in all Western European countries.

With the pandemic, unemployment was, in many cases, spurred on by an inability to work from home. Consistent with World Bank research that finds that “jobs more amenable to WFH are more prevalent among workers with high levels of education, in salaried employment, and among younger workers,”^[iii] high income workers in our tracker are almost twice as likely to be working at home as low income workers.^[iv]

Spending Bifurcation

Spending bifurcation is also very clear. We track spending intent on 15 categories of goods and services ranging from groceries to travel. Some of these, like housing and medicines, are essential, or non-discretionary from the point of view of the consumer. Others, like entertainment and electronics, can be more easily postponed or managed without. This is discretionary spending.

Globally, since early May, the difference in discretionary spending intent has widened. At that time, approximately 40% more high-income than low-income households planned to spend more on discretionary goods. By the beginning of January, about twice as many high-income households reported such plans.

Not only are high income households now even more willing to open their wallets for “nice to have” items, they are also a third more willing to pay for the contactless commerce and other forms of convenience accelerated by the pandemic. This differs quite a bit by country. Germany and the Netherlands lead the way by being three to four times more likely to pay for convenience respectively. And despite the importance of convenience during the pandemic, lower income households are less willing (or able) to pay for it.

How should businesses respond?

For the past few years, we have advised Retail and other consumer companies to prepare for a corresponding bifurcation between price-based value and value delivered through differentiated product or services.^[i] Indeed, priced-based mass merchants and luxury brands fared well while others struggled during the pandemic. Possibly more than ever, companies should urgently refine their focus.

Specifically, they should:

Deepen empathy for consumers and employees. Wall Street and Main Street have experienced the pandemic differently. Don’t be fooled by rising indices. Reconnect with and evaluate your investments in your customers and employees to better understand their experiences and needs.
Make trust a guiding principle. Trust in institutions overall is in decline, but it is critical to success. Eighty-five percent of customers choose trusted brands over others, compared with only 60% who select brands they don’t trust.^[v] Trust has clear impact on financial performance.^[vi] Investing in and continuously building mutual trust with consumers can help ensure they come along with you on the journey, even when inevitable shocks occur.
Become more granular in your consumer observations. The standard, historical data relied on pre-pandemic may not capture new consumer realities. Decisions made based on old data models can easily go wrong. While continuing to rely on judgment and instinct, leaders should also get creative in seeking new forms of outside-in real-time consumer, marketplace, competitive, and economic data to inform decisions.
Become more precise in your value propositions. Adjust how you segment consumers, prioritize channels, establish product portfolios, position your brands, and deploy service models in ways designed to address your chosen strategy and explicitly avoids getting caught in the shrinking middle.
Be agile with your channels. The shift to digital was already happening, but COVID accelerated consumer adoption. Companies that invested heavily in their digital commerce, services, and offerings pre-pandemic (e.g., mass merchants) shifted faster between channels and fared better than those that did not. Recently, half of consumer company executives said they will be increasingly reliant on online and omnichannel strategies.^[vii]

Other contributors to this piece: Steve Rogers, executive director, Deloitte Insights Consumer Industry, Deloitte LLP and Danny Bachman, US Economic Forecaster, Deloitte

[i] The Great Retail Bifurcation, Deloitte Insights

[ii] See Eric Morath, Theo Francis, and Justin, “The covid recovery carves deep divide between haves and have-nots,” Wall Street Journal, October 5 2020.

[iii] Maho Hatayma, Mariana Viollaz and Hernan Winkler, “Who can really work from home,” World Bank blogs, May 28, 2020.

[iv] Deloitte Global State of the Consumer Tracker [i] The Great Retail Bifurcation, Deloitte Insights and “The consumer products bifurcation,” Deloitte Insights

[v] Deloitte Consulting LLP, Deloitte HX TrustID^TM survey, May 2020.

[vi] Stephen M. R. Covey and Donald R. Conant, “The connection between employee trust and financial performance,” Harvard Business Review, July 18, 2018.

[vii] Deloitte 2021 Consumer Products Outlook

Leon Pieters is the Consumer Industry leader for Deloitte Global, where he is responsible for overseeing globally four consumer sectors: Automotive; Consumer Products; Retail, Wholesale & Distribution (RWD); and Transportation, Hospitality & Services (THS). Leon is charged with setting the overall strategic direction and go-to-market strategy for the practice.

Anthony Waelter

Anthony is a partner in Risk & Financial Advisory within Deloitte & Touche LLP. He currently serves as both the US Consumer Industry Leader and Advisory Consumer Industry Leader. Previously, he led Advisory’s Finance Transformation practice and is a former member of Deloitte’s cross-business Finance Transformation leadership team. With nearly 30 years providing finance transformation services to multinational clients in the consumer products, manufacturing, transportation, retail and distribution sectors, he focuses on assisting clients with transformational projects involving the development and/or evaluation of finance operations and programs designed to improve financial integrity, compliance and operational effectiveness and efficiency.

Yahoo Finance

Dr. Cedric Dark, Assistant Professor at Baylor College of Medicine & Board Member with Doctors for America joins Yahoo Finance’s Kristin Myers to break down the latest coronavirus developments as the U.K. authorizes emergency use of the Pfizer, BioNTech vaccine. For 2020 election results please visit: Election results: https://www.yahoo.com/elections Subscribe to Yahoo Finance: https://yhoo.it/2fGu5Bb

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America’s Best And Worst Banks 2021

Banking News, Banking Tech, business News, Economy/Business News, Future Finance/Banking

For America’s biggest banks, the past twelve months have been one of the biggest tests of their resilience in history. The Coronavirus pandemic all but shuttered the U.S. economy for months, spurring enormous shifts in business and consumer habits. Lenders big and small, from America’s four megabanks to small regional firms, have passed their test with flying colors.

Despite some of the sharpest drops in gross domestic product and employment ever witnessed, banks were able to serve their customers and remain profitable. In 2020, there were just four bank failures in the U.S., despite the extraordinary economic circumstances. Only about 5% of banks nationwide were unprofitable, according to data from the Federal Deposit Insurance Corporation, and about 53% of banks reported annual increases in profits in 2020.

The pristine shape is thanks to effective emergency measures implemented by Washington that thawed corporate and mortgage credit markets, offered stimulus and small business aid to Main Street, and allowed for widespread forbearance. These factors helped firms play their role as the financial cog that lubricates the American economy.

Corporations used low rates to issue and refinance debt at record rates in 2020, creating a cash cushion. Homeowners did the same, taking advantage of near-record-low interest rates to purchase homes or cut their interest costs. Technology also played a big role as the banking industry undergoes a digital transformation. Consumers could handle their finances on mobile apps during quarantine, instead of at temporarily closed bank branches, and digital change is helping to bolster profitability.

Not only did the stellar performance help the economy through the pandemic, it has positioned the United States for an enormous economic boom as Americans are inoculated from Covid-19 and the economy reopens in full. Millennials are entering the housing market in droves, industries like software and technology are growing rapidly, and businesses will soon be on the offensive in areas like travel, entertainment and retail.

Click here to see the full list of America’s Best Banks.

There are more than 5,000 banks and savings institutions in the U.S., but assets are increasingly concentrated at the top. The 100 largest have $16.4 trillion in assets, representing over 80% of total U.S. bank assets. Asset quality and profitability vary wildly among those institutions. With that in mind, Forbes examined the financial data to gauge America’s Best and Worst Banks.

Born out of the financial crisis of the late 2000s, this is the twelfth year Forbes enlisted S&P Global Market Intelligence for data regarding the growth, credit quality and profitability of the 100 largest publicly-traded banks and thrifts by assets. The ten metrics used in the rankings are based on regulatory filings through September 30. The data is courtesy of S&P, but the rankings are done solely by Forbes.

Metrics include return on average tangible common equity, return on average assets, net interest margin, efficiency ratio and net charge-offs as a percentage of total loans. Forbes also factored in nonperforming assets as a percentage of assets, CET1 ratio, risk-based capital ratio and reserves as a percentage of nonperforming assets. The final component is operating revenue growth. We excluded banks where the top-level parent is based outside the U.S.

CVB Financial, the parent company of Citizens Business Bank, was the top-rated bank in America for a second consecutive year, The Ontario, California-based small business lender was in the top-20 across every metric Forbes tracked, and it shone brightest in its efficiency ratio (39.%), operating revenue growth (41.5%) and posted a negative net charge off ratio. The median bank on Forbes’ list, by contrast, had a 57% efficiency ratio, posted operating growth of just 5.4%, and experienced a charge off rate of 0.17% of average loans. CVB, founded in 1974 and with over $13 billion in assets and over 50 branches across the state of California, has been profitable for 174 consecutive quarters, though a long streak of rising profitability was temporarily broken.

Smaller banks, and those focused on commercial lending, continued to dominate the top levels of the Forbes Best Banks list. Just one bank inside the top-20 had more than $100 billion in assets.

Houston-based Prosperity Bancshares ranked at #2, rising six spots from our 2020 list, thanks to its surging growth. Operating revenue rose 54% in 2020, and the lender performed well in efficiency and capitalization. Rounding out the top-5 were Kalispell, Montana-based Glacier Bancorp, Colorado Springs-based Central Bancorp and Conway, Arkansas-based Home BancShares. Average assets in our Top-5 was just $20 billion.

In the top-10 were McKinney, Tx-based Independent Bank Group, #6, DeWitt, NY-based Community Bank System, #7, Bank of New York Mellon, #8, Santa Clara, CA-based SVB Financial Group, #9, and Wilmington, DE-based WSFS Financial. Bank of New York Mellon was one of our biggest risers, gaining 44 spots, and outperforming on loan quality.

For the first time ever, the Big Four of U.S. banking—JPMorgan Chase, Bank of America, Citigroup and Wells Fargo—saw their combined assets exceed $10 trillion, or more than half the U.S. total. None of these banks finished in our Top-50, generally falling due to below-average growth as they set aside massive provisions to deal with the pandemic and were hit by plunging interest rates. JPMorgan Chase ranked highest at #51, dropping eight spots. Citigroup gained 10 spots to place at #65. Bank of America and Wells Fargo both slid, placing at #74 and #98, respectively.

JPMorgan, led by CEO Jamie Dimon, ended 2020 on a high note, reporting a record $12 billion profit as it released reserves built up to handle Covid-19 related economic stress. Despite the extraordinary circumstances, the lender saw average loans and its capital position rise to end the year, and it reported a surge in bank deposits. During 2020, the bank raised over $2 trillion of credit and capital for its clients, spanning ordinary U.S. households to the biggest corporations on the planet.

“In general, the banks have so much capital, so much liquidity and so much capability,” Dimon recently told investors in a December conference, weeks before the bank reported record annual revenues. While Dimon remains concerned about the pandemic as vaccines are distributed, and sees a varied recovery for consumers and businesses, he added of the banking industry, “I think we’re coming out of this looking great.”

Wells Fargo continued to fall in Forbes’ rankings in the wake of a 2016 fake accounts scandal that has cost the bank billions of dollars and led to dramatic change atop the lender. Wells dropped twelve spots in 2019, placing #98, due to a pronounced slump in revenues as the Federal Reserve limits its asset growth.

Over the past 12-months, JPMorgan’s stock has fallen 0.4%, making it the best performer among big banks, which all saw their stocks drop and underperform the S&P 500 Index. Citigroup shares have shed 19%, while Banks of America dropped 7%. Once more, Wells Fargo was the big laggard, falling by a third in value over the past year.

Rounding out the top-100 was Texas Capital Bancshares, #99, and CIT Group, #100.

New York-based business lender CIT Group is in the process of acquiring family-controlled First Citizens Bancshares, which ranked #62. The merger that will create a new diversified consumer and business lender with over $100 billion in combined assets, and a large presence in booming Sun Belt markets like Florida, Georgia and Tennessee. The merger comes a year after the combination of SunTrust and BB&T, which created $499 billion in assets Truist Financial, #48, which created a dominant lender in the Mid-Atlantic and Southeast.

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Antoine Gara

I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

Clark Howard: Save More, Spend Less

Some of the biggest banks in the country were also ranked with some of the worst customer service in a recent survey. Clark tells you who ranks the worst, and which banks are the best.

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JPMorgan Says Bitcoin Could Surge to $146,000 in Long Term

Bitcoin Study/Strategy, Bitcoin Survey/Research, business News, Economy/Business News

JPMorgan Chase & Co. sees Bitcoin as a future competitor of gold as an asset class, with the long-term potential to reach $146,000, Bloomberg reports.

Why It Matters: It would be quite the climb for Bitcoin, which rallied to a record $34,000 before retreating a bit on Monday. But it’s a long way off, if anything. Private investment in Bitcoin would have to grow at a multiple of nearly five to match the investment in gold via ETFs or bars and coins.

But a healthy future for Bitcoin depends on its volatility coming down to gold’s level, encouraging more institutional investment.

A group of strategists led by Nikolaos Panigirtzoglou said this could be a “multiyear process.”

Key Numbers (From CoinMarketCap):

Bitcoin’s Market Capitalization: $592 Billion
Bitcoin’s Circulating Supply: 18,600,000 Tokens
Bitcoin’s Current Price (9:00 a.m. ET): $31,701.10

As prices continue to improve and volatility appears to stabilize, more institutions and noted investors are getting involved or expressing interest. But a heated debate over Bitcoin remains:

“While some argue that the cryptocurrency offers a hedge against dollar weakness and inflation risk in a world awash with fiscal and monetary stimulus, others say retail investors and trend-following quant funds are pumping up an unsustainable bubble.”

The Future, For Now: JPMorgan anticipates headwinds for the digital currency, with indicators “like a buildup of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential froth.”

Bitcoin rose 1.7% to $31,567 as of 10:31 a.m. in London. The wider Bloomberg Galaxy Crypto Index added 0.9%. On Monday, Bitcoin slid as much as 17%, the biggest drop since March, after breaching $34,000 for the first time over the weekend. The swings are a reminder of the famed volatility of the largest cryptocurrency, whose price has more than quadrupled over the past year.

Bitcoin has the potential to reach $146,000 in the long term as it competes with gold as an asset class, according to JPMorgan Chase & Co. Bitcoin’s market capitalization of around $575 billion would have to rise by 4.6 times — for a theoretical price of $146,000 — to match the total private sector investment in gold via exchange-traded funds or bars and coins, strategists led by Nikolaos Panigirtzoglou wrote in a note. But that outlook depends on the volatility of Bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.

“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” the strategists wrote Monday. However, “a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process, according to Bloomberg. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

More institutions and noted investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating funds into Bitcoin or have said they’re open to doing so. While some argue that the cryptocurrency offers a hedge against dollar weakness and inflation risk in a world awash with fiscal and monetary stimulus, others say retail investors and trend-following quant funds are pumping up an unsustainable bubble.

For now, JPMorgan sees headwinds for the largest cryptocurrency, with indicators like a buildup of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential froth. “The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year,” the strategists wrote. “While we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000-$100,000, we believe that such price levels would prove unsustainable.”

Analyst Read: $FUBO

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#bitcoin #gold #bitcoinpricetarget Yahoo Finance’s Dan Roberts weighs in on JPMorgan’s bullish note on bitcoin. For 2020 election results please visit: Election results: https://www.yahoo.com/elections Subscribe to Yahoo Finance: https://yhoo.it/2fGu5Bb About Yahoo Finance: At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life. About Yahoo Finance Premium: With a subscription to Yahoo Finance Premium, get the tools you need to invest with confidence. Discover new opportunities with expert research and investment ideas backed by technical and fundamental analysis. Optimize your trades with advanced portfolio insights, fundamental analysis, enhanced charting, and more. To learn more about Yahoo Finance Premium please visit: https://yhoo.it/33jXYBp Connect with Yahoo Finance: Get the latest news: https://yhoo.it/2fGu5Bb Find Yahoo Finance on Facebook: http://bit.ly/2A9u5Zq Follow Yahoo Finance on Twitter: http://bit.ly/2LMgloP Follow Yahoo Finance on Instagram: http://bit.ly/2LOpNYz Follow Cashay.com Follow Yahoo Finance Premium on Twitter: https://bit.ly/3hhcnmV

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