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:

Here’s the secret to investing success this earnings season

Tesla stock higher as first Cybertruck produced

Ford cuts prices of F-150 Lightning

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Sources:

*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/

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