Bitcoin's latest rally is another fear-of-missing-out moment as the prospect of a friendly U.S. administration supercharges the cryptocurrency. There is reason to be wary.
There are many factors pushing Bitcoin higher -- the start of options trading on exchange-traded funds holding the crypto, buying by corporate investors such as MicroStrategy -- and, above all, the prospect of a supportive regulatory regime under President-elect Donald Trump.
Right now, everything points to further gains. Crypto skeptic Gary Gensler will step down as chair of the Securities and Exchange Commission just as Trump takes office. His replacement will almost certainly be someone with a pro-crypto stance.
That could unleash new buying. Charles Schwab's incoming CEO Rick Wurster signaled on Thursday that the brokerage will offer spot crypto trading when the regulations change. Bitcoin is the crypto with the name recognition to benefit.
So why not dive in? Well, even if you don't agree with Warren Buffett's assessment of Bitcoin as "rat poison squared," it remains a speculative asset. Those who buy now will be doing so at around $100,000 -- you're unlikely to get rich coming in at those levels. Few of Trump's policies are likely to change the fact that latecomers to the crypto party risk being on the wrong end of a bubble popping.
Bitcoin's remarkable resilience is partly due to believers in the token whose rallying cry is HODL -- or hold on for dear life -- during downturns. As Trump brings crypto into the mainstream, that base will be diluted and any rush to sell could become more extreme. The thrill of the climb isn't worth the stress of the drop.
-- Adam Clark
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Trump Names Bondi New Pick for Attorney General
President-elect Donald Trump picked Pam Bondi, the Florida attorney-general, to be his AG nominee, just hours after his first candidate, former Rep. Matt Gaetz, withdrew from consideration amid concern his nomination had become a distraction in a sharply divided Senate. At the same time, the House's razor-thin Republican majority could be challenging for Trump's early agenda.
-- Gaetz dropping out underscores that Trump's preferred nominees need
Senate approval, and Gaetz faced an uphill fight after criminal
accusations of sex trafficking and sex with a minor. He denied wrongdoing,
but the House ethics committee was set to release a report on the
allegations before his nomination.
-- Bondi is a former Florida state attorney general with nearly 20 years as
a prosecutor. Trump has nominated other controversial choices that could
draw more scrutiny now that Gaetz's controversial nomination has ended.
Robert F. Kennedy Jr., a vaccine skeptic nominated for Health and Human
Services, could be one such candidate, analysts said.
-- Trump will get to appoint a new securities industry regulator as Gary
Gensler said he would step down in January as Chair of the Securities and
Exchange Commission. Federal Communications Commission Chair Jessica
Rosenworcel is also resigning on Jan. 20.
-- In addition, House Republicans could have fewer than the 218 seats needed
to make up a full majority in the 435-member House during the first 100
days of Trump's administration, potentially complicating his early
legislative agenda. The GOP will temporarily have a 217-seat majority
until special elections to fill vacancies.
What's Next: If a stopgap funding bill that expires in December gets extended until early 2025, it will need to be re-approved, as will the law to lift the debt ceiling. Trump's plans to fund mass migrant deportations, enact new trade tariffs, and extend his 2017 tax cuts will likely be intensely debated.
-- Matt Peterson, Joe Light, and Liz Moyer
***
DOJ Wants a Google Breakup, But Outcome Uncertain
The Justice Department wants a federal judge to force Alphabet to sell its web browser Chrome to end its monopoly in online search, among other proposed remedies, after the court called the tech giant a monopolist. But the ultimate outcome and timeline of a break up are unclear.
-- Kent Walker, Alphabet and Google's chief legal officer, said the
"staggering" proposal goes well beyond the court's decision and would
break numerous Google products. Google said the government is pushing a
"radical interventionist agenda" that will harm America's global
technical leadership.
-- The Justice Department wants to end Google's "traffic acquisition"
payments to be the default search engine on mobile devices such as
Apple's iPhone and its own Pixel smartphones. It also wants Google to
share its data on search, ads, and users with rivals like Microsoft, and
create a new panel to oversee Google's compliance.
-- It's unknown how the next administration's Justice Department will handle
the case. Wedbush's Dan Ives told Barron's he doesn't see a breakup in
the next few years, but instead sees business model tweaks, and expects a
much different tone from the Trump administration around Big Tech.
-- The next administration will likely appoint new people to Justice,
including potentially someone to replace Jonathan Kanter, the lead on
government cases against Google. This case originated in 2020 under the
first Trump administration and has 49 states as co-plaintiffs, many with
Republican attorneys general.
What's Next: Federal Judge Amit Mehta will decide on the penalty phase of Google's trial in April, with a final ruling due in August. Any actual enforcement could take years, and Mehta could stay any remedies during Google's planned appeal, stretching the process even longer.
-- Adam Levine, George Glover, and Janet H. Cho
***
Retail Earnings Roll Out as Industry Braces for Black Friday
Retail earnings will continue rolling out next week in the lead up to Black Friday and the heart of the holiday shopping season. Casual clothing chain Gap said it's off to a strong holiday performance, topping third quarter profit expectations and raising guidance for the full year.
-- Gap reported adjusted earnings of 72 cents a share and revenue of $3.8
billion, up 2% from one year ago. This was the fourth consecutive quarter
of sales increases as the company gains market share across all its
brands, said CEO Richard Dickson.
-- Gap sees net sales for the year rising 1.5% to 2% compared with the prior
year, in contrast with previous guidance calling for sales to be "up
slightly." Analysts are currently projecting a 0.3% sales increase. Same
store sales for its flagship Gap brand rose 3% in the third quarter.
-- But retail results have been uneven. Discount retailer Ross said business
has slowed from earlier in the year. Its lower-income consumers are still
feeling pressured, but on the positive side, Ross has been able to offer
fewer promotions and some of its costs have gone down.
-- As Starbucks struggles with slumping sales in China, management has been
exploring ways to rejuvenate growth there, noting on several occasions
that they are considering a strategic partnership. Bloomberg reported
that Starbucks is considering selling a stake to a local partner to
energize growth.
What's Next: Next week, department stores Macy's, Kohl's, and Nordstrom report earnings just days ahead of Black Friday, the unofficial start of holiday shopping season. The National Retail Federation expects 183.4 million people to shop online and in stores from Thanksgiving through Cyber Monday.
-- Sabrina Escobar, Evie Liu, and Liz Moyer
***
Former Wells Fargo Advisor Pleads Guilty to $3M Fraud
Kenneth Welsh, a former advisor for U.S. bank Wells Fargo, pleaded guilty to five counts of fraud stemming from a long-running scheme through which he misappropriated more than $3 million from five clients.
-- Prosecutors accused Welsh of defrauding clients from July 2017 through
March 2021. He would sometimes have clients sign blank forms that he
explained as necessary for "account maintenance," and used those
documents to transfer funds to accounts controlled by his relatives, they
said.
-- Welsh then used the money for personal expenses such as luxury gifts and
gambling, prosecutors said. Wells Fargo dismissed Welsh in June 2021
after learning of allegations that he had stolen funds from clients.
-- Welsh couldn't immediately be reached for comment and his attorney didn't
immediately respond to a request for comment about what he is hoping for
in a sentence.
-- The Justice Department initially filed criminal charges against Welsh in
October 2021. At the same time, the Securities and Exchange Commission
issued a civil complaint concerning the same matter. The Justice
Department terminated its original case and refiled fresh charges a year
ago, alleging the same conduct. The SEC's case against Welsh is pending.
What's Next: The maximum penalty for the five counts in Welsh's indictment is 85 years in prison, though any jail sentence imposed under a plea agreement would likely be a small fraction of that. His sentencing is scheduled for March 26, 2025.
-- Kenneth Corbin
***
Meet the Crypto Guy Who Bought a $6.2 Million Banana
(MORE TO FOLLOW) Dow Jones Newswires
November 22, 2024 07:04 ET (12:04 GMT)
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