#CryptoVictory #USInflation #EarningsSeason
Ripple Lab’s victory over SEC
XRP Price chart (Source: Google Finance)
What Happened?
In a significant legal victory for the cryptocurrency industry, Ripple Labs Inc has been ruled not to have violated federal securities law by selling its XRP token on public exchanges. The decision was made by U.S. District Judge Analisa Torres and marks the first win for a cryptocurrency company in a case brought by the U.S. Securities and Exchange Commission (SEC).
While the ruling is specific to this case, it sets a precedent that may provide ammunition for other crypto firms fighting against the SEC’s jurisdiction. The value of XRP surged by 75% following the announcement of the ruling.
However, in a partial victory for the SEC, Judge ruled that Ripple’s sales of XRP amounting to $728.9 million to hedge funds and sophisticated buyers were unregistered sales of securities. The ruling acknowledged that Ripple’s marketing efforts targeted institutional investors and promoted XRP as a speculative investment tied to the company’s blockchain infrastructure development.
Implications for Investors
The ruling in favor of Ripple Labs reinforces the argument that not all crypto tokens should be classified as securities subject to stringent SEC regulations. This decision may encourage other crypto firms to challenge the SEC’s jurisdiction, potentially leading to a more favorable regulatory environment for cryptocurrencies.
Additionally, the ruling prompted Coinbase, the largest U.S. crypto exchange, to announce the resumption of XRP trading on its platform. The renewed trading opportunity and the positive market sentiment following the ruling may attract increased investor interest in XRP and contribute to its ongoing growth. However, it is important for investors to remain cautious and closely monitor any potential legal developments or regulatory changes that may impact the cryptocurrency market.
US inflation cools off in June
Inflation Rate in the US (Source: TradingEconomics.com)
What happened?
In June, the United States experienced a significant decrease in inflation, with the consumer price index showing a decline from 4% in May to 3%. This drop marked the slowest rate of inflation since March 2021 and underscored the Federal Reserve’s ability to effectively tackle price pressures. Unlike other advanced economies such as the UK, where the Bank of England is struggling to control inflation at 8.7%, the US economy showcased an improved inflationary picture.
Why did it happen?
The US inflation slowdown can be attributed to the Federal Reserve’s efforts to rein in rising prices. After peaking above 9% last year, the headline rate of inflation has been gradually approaching the central bank’s 2% target. However, core inflation, which excludes volatile food and energy costs, remained more persistent
In the June data, core CPI decreased from 5.3% to 4.8%, indicating that there is still progress to be made in aligning core inflation with the desired 2% level. The Federal Reserve has already raised its benchmark interest rate from near zero to a range of 5% to 5.25% since the beginning of 2022, and while rates were kept steady at the most recent policy meeting in June, additional rate increases are anticipated before the end of the year.
What does it mean for the investors?
The decline in US inflation and the Federal Reserve’s success in managing price pressures have significant implications for investors. While the improved inflationary outlook suggests some relief, it does not eliminate the need for further rate increases by the Federal Reserve.
Investors should closely monitor the central bank’s actions, particularly with the possibility of another interest rate increase on the horizon. Additionally, the cooling of the US labor market, as indicated by slower job growth, combined with the tentative signs of inflationary pressures, makes the path forward for the Federal Reserve more uncertain after July. As a result, investors may see a scaling back of tightening expectations.
What to look out for in the Q2 earnings season
Earnings being released in the next week (Source: Earnings Whisper)
The US second quarter earnings season for stocks is set to begin on July 14th, 2023. Despite the hawkish forecast at the beginning of the year, the US stock market has seen a surprising surge of 15% since the beginning of the year, reaching a yearly high in June. The question now is whether the upcoming earnings season will continue to drive the market upward or serve as a turning point.
The first two weeks of the earnings season will feature companies such as Citigroup, JPMorgan Chase, Wells Fargo, Tesla and Netflix. Investors who invest in banks will be on the lookout for the amount of unrealized losses the banks have due to the bond holdings. Netflix will face scrutiny over its subscriber growth, while Tesla’s profitability will be a key focus, considering the previous quarter’s significant contraction in net profit margin.
The third week will highlight tech giants, with Google (Alphabet), Microsoft, Facebook (now Meta), and Snap taking the stage on July 25th. These reports will provide insights into individual business performance and broader trends in technology development and consumer behavior.
The fourth and final week of the earnings season will be marked by the performance of Apple, AMD, and Alibaba. Apple’s stock price has reached new all-time highs, but it is expected to report a slight decline in revenues and earnings. Additionally, Alibaba’s earnings report will be closely watched following major strategic moves and leadership changes.
Overall, the US Q2 earnings season will serve as a test for both individual companies and the overall market sentiment. Positive results could bolster the existing bullish momentum, while any adverse impact from the Federal Reserve’s interest rate hikes may prompt a reassessment of the prevailing optimism in the market.
| Index | Level | 1 Week | 1 Month | From Jan 1 2023 |
| S&P 500 (US Stocks) | 4,505 | +2.53% | +1.80% | +17.82% |
| Nasdaq 100 (US Tech Stocks) | 15,566 | +3.55% | +2.50% | +43.29% |
| CSI-300 (Chinese Stocks) | 3,826 | -0.72% | +0.14% | -1.60% |
| Bitcoin (in USD) | 30,327 | -0.31% | +18.66% | +82.64% |
Source: Google Finance, Bloomberg, Yahoo Finance, CNBC, Financial Times, Reuters, Business Times, CNN, Fashion United
