Asian markets were on the rise ahead of the commencement of trading in London. Better than expected news on US inflation triggered a bounce in the main indices stateside and raised hopes that the Federal Reserve’s recent hawkish stance might moderate through the remainder of this year, particularly if crude oil prices keep receding. However, the Asian bounce might have been tempered by news that China has implemented yet another regional lockdown in a bid to stall infection rates and eventually eradicate the virus.
Elsewhere news emerges that Elon Musk has offloaded another sizeable chuck of Tesla’s (US:TSLA) issued share capital. The latest sale, worth in the region of $6.9bn (£5.7bn), was taken ahead of October’s trial linked to the aborted deal to buy Twitter (US:TWTR). It’s conceivable that Musk may be compelled to go through with the acquisition, hence the recent share sale, although if the court finds in his favour he has pledged to increase his 15 per cent Tesla holding.
More ructions in crypto-world, as a group of US senators led by Illinois representative Dick Durbin have raised concerns over Fidelity Investment's plan to offer bitcoin as an investment option for its 401(k) managed retirement accounts. It comes after the Senate Judiciary Committee, Senate Banking Committee and House Financial Services Committee held separate hearings on various aspects of the crypto industry. Durbin and his fellow senators have written to senior management at Fidelity, expressing dismay over the asset manager’s decision to offer workers the option to invest in an “untested, highly volatile asset”.
It’s probable that the decision by Fidelity was a long time in the making. And the move might seem a little reckless given recent price history. The critique from Capitol Hill comes as crypto exchange Coinbase Global (US:COIN) revealed that quarterly revenues and trading volumes had slumped, the latter down by 30 per cent on an already faltering first quarter. That translated into a net earnings loss of $1.1bn, compared with the $1.6bn net profit it made in the middle of the crypto boom. The company has been forced to lay off workers, and trim costs elsewhere, to say nothing of the heavy paper losses that many of Coinbase’s clientele are sitting on. Perhaps Fidelity knows something that has eluded the senators, but it is difficult to imagine why anyone would want to risk their retirement plans on this basis. It would be interesting to find out what future generations will think about our current dalliance with crypto assets (if that’s the appropriate expression). Will it draw comparison with the speculative frenzy over tulips in 17th century Holland, or will it be a case of Bernie Madoff writ large?
