China Slows but Investors are Optimistic
What is it?
Data came in showing that the Chinese economy is not growing as fast as investors initially thought.* However, investors are optimistic that the Fed will not raise interest rates much if at all after this month.*
Last week there was modest growth in equities and bonds.* That came after lower than expected inflation data.*
Why does it matter?
“This week’s data macro calendar is light and Fed officials are in their “blackout period” ahead of their July policy meeting, leaving investors with the big question of whether last week’s market moves will continue or reverse.”*
While investor sentiment was dampened by China initially, they will now be focused on the U.S. Fed and earnings releases. Many investors are optimistic about the next year for investments. Some believe the Fed will be ready to lower interest rates in 2024. However, others are making the case that investments are overvalued with a rough road ahead.
SEC Loses Court Battle on Crypto
What is it?
“Thursday’s ruling that Ripple Labs Inc did not violate securities law by selling its XRP token on exchanges was the first major setback for the SEC in a decade of enforcement against the cryptocurrency industry.”**
The ruling stated that the distinction was made that direct sales of Ripple (XRP) are securities, while the products sold derived from XRP are not.**
“Saying most crypto tokens are securities, the SEC has cracked down on crypto trading platforms, including the top U.S. exchange Coinbase, in an effort to bring the industry under its oversight. Crypto firms have long disputed the SEC’s jurisdiction but until Thursday no court had supported that view.”**
Why does it matter?
This is the first time that the courts have supported the Crypto firms against the SEC. The Securities Exchange commission now has less ground to stand on considering these products may not be securities and thus not under the SECs control.
“Now, industry lawyers have ammunition to fight back. Crypto proponents viewed the decision as a watershed and the judge’s reasoning as a new line of defense for the likes of Coinbase, Binance, Bittrex and other exchanges targeted by the SEC on the basis they were trading securities.”**
However, the SEC may not let this decision stand.
“”The stakes are too large, especially in light of cases against Coinbase and other issuers for the SEC to let this opinion stand,” said Carol Goforth, a law professor at the University of Arkansas.”**
But if the SEC tries again and fails, the impacts could be counterproductive.
“Experts agreed that an appeal carried risks for the SEC. If the 2nd Circuit, whose rulings are binding on federal courts in New York, Connecticut and Vermont, adopts the logic in the Ripple ruling, much of the Coinbase case is ‘toast,’ said Philip Moustakis, an attorney at Seward & Kissel. It presents a substantial risk that their jurisdiction over the crypto markets will be constricted if they appeal and lose,’ he said.”**
As things stand, companies tied to cryptocurrencies could have more freedom to operate without the SEC breathing down their necks. However, the SEC will surely be back with more regulations in the future. For now, this is a good sign for companies that are fighting off the regulations that some cryptocurrencies aim to avoid.
Other articles we found interesting this week:
Current 401(k) portfolio
Our last 401(k) portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Amanda Cooper. “Global shares dip after China data; traders bet on Fed sea change”. Reuters. 7/17/2023. https://www.reuters.com/markets/global-markets-wrapup-1-pix-2023-07-17/#:~:text=LONDON%2C%20July%2017%20(Reuters),end%20to%20U.S.%20rate%20rises.
**Jody Godoy and Chris Prentice. “Crypto firms facing US SEC charges find hope in Ripple ruling, experts say”. Reuters. 7/172023. https://www.reuters.com/technology/crypto-firms-facing-us-sec-charges-find-hope-ripple-ruling-experts-say-2023-07-17/
Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.
Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”)500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/. Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.