September 26th, 2022
Last week’s market summary (September 19th-23rd, 2022):
- S&P 500: -4.07%
- Dow: -3.69%
- Nasdaq: -4.15%
- Bitcoin: -1.80%
Here's what we're covering today:
- Schwab, Fidelity, & Citadel Securities Are Launching a Crypto Exchange
- Walbank? Walmart Will Soon Offer Checking Accounts
- The Fed Raised Rates by 0.75% For the Third Time in a Row
- The CFPB Released a Scathing Study of the BNPL Industry
- Twitch Is Reducing the Revenue Cut for Its Top Streamers
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’s Been Buzzing About
1. Schwab, Fidelity, & Citadel Securities Are Launching a Crypto Exchange
Financial giants Charles Schwab, Fidelity Investments, and Citadel Securities, announced that they're joining forces to launch a cryptocurrency exchange that will be called EDX Markets. The go-live date is TBD, but Jamil Nazarali (formerly from Citadel) has been named the platform's CEO.
This is the latest in an ongoing trend we've seen this year of major financial institutions dipping their toes into the crypto world. Earlier 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 since 2022 has been anything but kind to the crypto markets. If I was a crypto bull, I'd say this is a pretty strong sign that the titans of the financial world expect an eventual crypto recovery. It's not just individuals HODLers that are the playing the long game with crypto…the biggest names on Wall Street are too.
Learn more >> What Does HODL Mean in Crypto & Stocks?
2. Walbank? Walmart Will Soon Offer Checking Accounts
According to a Bloomberg report, testing for Walmart's new checking account business (dubbed Walmart One) is slated to begin within weeks. It's rumored that One will target the underbanked by charging no monthly fees and providing up to $200 of free overdraft protection.
Walmart has long been working behind the scenes to develop fintech products that it can market to its 1.6 million U.S. customers. At the beginning of the year, it acquired One Finance and Even Responsible Finance to help it gain the infrastructure that would be necessary to build out its own banking solution.
Fintech is big business. One study predicts that from 2022-2030 it will grow by a CAGR of over 26%. And the world's largest retailer is hungry for a piece of that growing pie.
Know your options >>> 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 Chair Jerome Powell announced a Federal Reserve rate hike of 75 basis points for the third straight month. And like before, the stock markets moved lower on Wednesday after the press conference and only fell further on Thursday and Friday.
Rising interest rates are making all kinds of things more expensive, from car loans to mortgages. But Powell said that this “pain” is necessary to get inflation back to its target range of 2%. The FOMC is now predicting that rates could go as high as 4.50%-4.75% in 2023 before beginning to retreat in 2024.
4. The CFPB Released a Scathing Study of the BNPL Industry
In a report that published on September 15th, the Consumer Financial Protection Bureau voiced its concerns over the rapid growth of “Buy Now, Pay Later” companies like Affirm, Afterpay, Klarna, PayPal, and Zip.
Faced with rising costs, an increasing number of consumers have been turning to BNPLs in 2022. These companies often market themselves as low- or no-cost ways to pay for purchases over time rather than all at once. But the CFPB study found that BNPLs often elevate consumer risk in a variety of ways.
In one of its most searing comments, the report said that the BNPL “Business model relies on data collection, and loans serve as close substitute for credit cards.” The government watchdog pledged that it would soon be identifying “guidance or rules” for BNPLs to follow that would reduce the risk of consumer harm.
Translation: get ready because a crackdown is coming.
5. Twitch Is Reducing the Revenue Cut for Its Top Streamers
Twitch President Dan Clancy announced last week that it would be moving all of its streamers to a 50/50 revenue split. While most of its content creators already share 50% of their revenue, some of its most popular streamers had been working off a “premium” deal that came with a sweeter 70/30 split.
Clancy framed the move as an effort to increase equality, stating that “We don’t believe it’s right for those on standard contracts to have varied revenue shares.” But what he failed to mention was that many creators had been asking for Twitch to move all accounts to the 70/30 revenue split. Rather than do that, Twitch decided to move everyone to the less generous split. Gotta love it when fighting for equality as a company means that you get to pocket more cash for yourself.
The move comes at what many consider a vulnerable time for Twitch. Several big names in the streaming world have recently signed exclusives with YouTube Gaming. And TikTok live streams are gaining in popularity each week. For now, Twitch (which is owned by Amazon) is still king. But its reign seems more in jeopardy than ever before; and moves like these aren't helping its cause.
What To Keep Your Eye on This Week
Here are a few noteworthy economic events that are taking place this week:
- Tuesday, September 27th: S&P Case Shiller U.S. Home Price Index (July)
- Wednesday, September 28th: Cintas Corporation (CTAS) Earnings
- Thursday, September 29th: Nike (NKE) Earnings
- Friday, September 30th: Core PCE price index
- Friday, September 30th: 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 call out a few recent stories from our colleagues that we felt were interesting, eye-opening, challenging, inspiring…or just funny.
Here are our picks for this week:
- Will This Be Another ‘Lost Decade’ for the Stock Market? (Barron's)
- The Fed’s Aggressive Rate Hikes Will Hurt Poor Nations Facing Climate Catastrophe (New Republic)
- Elon Musk Made His Bid, and Now He Might Actually Have To Lie in It (The Verge)
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