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THE HEADLINES
KRYPTO-CURRENCY
Uncle Sam has no intention of making it easy for Facebook to launch its cryptocurrency …
Government officials, led by Treasury Secretary Steven Mnuchin have aired their grievances and fully intend to make Zuck’s life a living hell. Mnuchin himself expressed serious concerns that the currency will be used by terrorist and criminal organizations. Because if you want to kill anything in the US, just drop the “T” word.
(F)utility
Head of digital projects at Facebook David Marcus appeared in front of the Senate Banking Committee to provide a written testimony asserting the master plan to roll out the digital product. A key goal of Libra is to become a “utility,” not an investment, like other cryptocurrencies.
The idea is that users can buy into the currency and set up payments through the social network. Marcus mentioned that this would help communities in unbanked and underbanked parts of the world who would now have access to buy and sell goods. Can’t third world countries just trade shells until they figure out fiat currency like the rest of us?
The company doesn’t expect to make money on Libra, or the digital wallet Calibra … upon its release. However, more users adopting the product will lead to higher FB engagement and ad revenue down the road.
Marcus assured regulators that Facebook would not launch the currency until it has met all the regulations of its governing country … Switzerland. Yes, the preferred banking system of Jordan Belfort.
MONEY IN THE BANK
“Are you not entertained?” – Mike Corbat, probably.
Citigroup’s second quarter was … wait for it … better than expected, due in large part to its consumer banking performance. On Monday, the bank said its second-quarter net income was up 7% compared to Q2 2018 and profits hit $4.8B vs. $4.5B during the same period last year.
The firm saw a 3% growth in global consumer banking revenue, given the better-than-expected performance of all three of its geographical areas. Citi’s income was also bolstered by a gain stemming from its investment in the firm Tradeweb, an electronic platform which was taken public in April raising $1.1B.
But it’s not all rainmakers and deal closers at Citi, as the bank saw its fixed income markets group suffer a 4% decline in revenue, while equity markets revenue dropped 9%.
How’s that compare?
We’re not sure yet … but we can pretty much assume it will be better than WF. Citi is the first of the US big banks to post its quarterly results, and its stronger than expected earnings show that the industry’s outlook might not be as dire as expected. JPMorgan, Wells Fargo, and Bank of America are scheduled to post their results later this week.
WE’RE JUST TALKING
USAA must have taken the Charles Schwab commercials seriously, as the insurance company has been talking to Chuck about selling its brokerage and wealth management operations. With roughly $100B in assets up for grabs, this deal would be a nice addition to Charles Schwab’s $3.5T under management.
The red, white and blue-blooded San Antonio-based company, which has historically provided home, auto, and life insurance as well as online banking and investment options to military families, would narrow its focus to strictly insurance. In what’s shaping up to potentially be a busy July, USAA recently closed its deal with Victory Capital for the sale of its asset management business for $850M.
It’s a small world
Following Goldman’s acquisition of United Capital in May, the $2B Schwab-USAA tie-up would be the latest in a trend of large wealth advisers acquiring smaller firms in an attempt to diversify into wealth and fund management.
OG, low fee firms such as Schwab and E*Trade have benefited from a long bull run, but are facing stiff competition from zero-fee startups like Robinhood which are capturing younger investors business. F*cking millennials.
IN OTHER NEWS
iStockphoto
- Peter Thiel, the eccentric Trump-supporting founder of PayPal and Palantir went scorched earth on Google. Coming just short of calling CEO Sundar Pichai a communist, Thiel warned that Google is “seemingly treasonous,” having recently agreed to work closely with China in an attempt to get its search engine on the other side of the Great Firewall, and not renewing a contract that gave the US Department of Defense access to Google’s AI tools. For what it’s worth, Thiel was speaking at a conservative conference.
- “Well, now your back’s gonna hurt, ’cause you just pulled landscaping duty.” – Jeffrey Commerce to disgruntled Amazon workers. Just as Prime Day began heating up, approximately 75 fulfillment workers walked out of an Amazon warehouse in Minneapolis in protest of the company’s practices … which feature a nationwide $15 minimum wage. Although this is the first major Prime Day walkout in the US, the practice is nothing new in Europe. Some 2k employees walked off the job today in Germany.
- Scott Minerd was the guy in high school who told the whole chess team that he was in talks with the homecoming queen to land an OTPHJ after the big game on Friday night. On Monday the CIO of Guggenheim claimed that he has been in talks about taking a seat on the Federal Reserve Board of Governors. Of, course POTUS has signaled he plans to give the nod to Judy Shelton and Christopher Waller.
- Bloomberg Terminal subscribers will now be able to access Dow Jones news content including the Wall Street Journal, MarketWatch, the Dow Jones Newswires, and most importantly … the New York Post. And all for the low, introductory cost of $22,000 annually. The Terminal will now curate DJ content alongside the NYT, WaPo and more.
- New design, who dis? Jack Dorsey and his stupid nose ring rolled out a new look Twitter yesterday. This marks the first time since launch that Twitter has rebuilt its website from the ground up … and it looks remarkably unchanged to the untrained eye. Still, some (read: TechCrunch reporters) report a cleaner, easier to use interface that will usher in a new era for Twitter. Or something like that.
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