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Silvergate Stock Plummets as FTX Collapse Triggers $8.1B in Customer Withdrawals

January 6, 2023 Published by The Street

Updated at 2:26 pm EST

Silvergate Capital (SI) – Get Free Report shares plunged lower Thursday after it said the collapse of FTX lead to a rush of withdrawals at the crypto lending specialist amid what it called a “crisis of confidence across the digital asset ecosystem.”

Silvergate said in a limited update to its fourth quarter earnings that deposits from digital asset customers fell $8.1 billion over the three months ended in December, compared to third quarter levels, to around $3.8 billion, following the FTX Chapter 11 bankruptcy filing in early November.

The rush to withdraw led Silvergate to sell $5.2 billion of its digital assets at a $718 million loss to their book value in order to maintain liquidity. The lender also said it will cut around 40% of its staff, taking a charge of around $4 million along the way, in order to reduce costs.

“In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits,” said CEO Alan Lane.

Silvergate shares were marked 41.2% lower in Thursday afternoon trading following the group’s fourth quarter update to change hands at $12.93 each, a move that would lop more than $300 million from its market value.

FTX, at one time the second largest crypto platform in the world with a market value of around $32 billion, filed for Chapter 11 bankruptcy protection in early November amid a liquidity crisis triggered by the illegal use of customer deposits to back risky trades made by the group’s wholly owned hedge fund known as Alameda Research.

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JetBlue Wants to Capitalize on Southwest's Woes

January 6, 2023 Published by The Street

As soon as the Halloween candy is put away, every industry in the world starts its holiday sales, offering discounts on pretty much any consumer item you can think of.

But the people who truly live for savings (i.e., the type of people who really clean up on shows like “Extreme Couponing,”) know that the real savings occur in January when stores are trying to unload the stock that didn’t move.

The airline industry doesn’t quite operate on the same principles. While a department store will want to clear out inventory to make room for the impending Spring goods, airlines don’t have that sort of concern. Instead, the airline industry has a bit of a post-holiday slump to deal with.

It’s an understandable lull. After you’ve traveled to see your loved ones over the holidays or indulged in a holiday vacation, are you really eager to get back on a plane again a month later?

But in order to fend off the post-holiday slump and drum up some business, airlines often introduce some of their cheapest fares of the year in January, and experts such as Travel + Leisure have noted that this month is one of the best to nab a ticket.

So if there’s a city or old friend you’ve been meaning to visit, or your holidays were so packed that you didn’t actually have time to relax, JetBlue (JBLU) – Get Free Report has introduced The Big Winter Sale.

A Good Time for a JetBlue Sale

JetBlue usually runs a sale this time of year, but it may sell more tickets than it usually does because of the woes impacting its chief rival, Southwest Airlines (LUV) – Get Free Report. That airline, which is in the same value, but not the no-frills category had a holiday meltdown that led to it canceling thousands of flights.

That angered many of its passengers, which may lead them to try JetBlue. But, if they want to do so cheaply they have to remember that there are an abundance of cheap flights, but there are also several caveats.

All flights must be booked before midnight on January 11, and all flights must take place between January 17 and March 29 on Tuesday and Wednesday.

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Stocks Edge Higher, Jobs Data, Amazon, Johnson & Johnson, Walgreen – Five Things To Know

January 5, 2023 Published by The Street

Five things you need to know before the market opens on Thursday January 5:

1. — Stock Futures Flat As Fed Minutes Challenge Rate Bets

U.S. equity futures were little-changed Thursday, while the dollar held steady against its global peers, as investors sifted through details of the Federal Reserve‘s inflation debate and focused on key jobs data expected over the coming days.

Minutes from the Fed’s December policy meeting, when officials agreed their seventh rate hike of the year, indicated concern that financial markets, as well as the public, would question the central bank’s resolve to fight inflation if it were to signal softer-near term rate hikes.

As it stands, the Fed is prepared to endure “below trend growth” in order to ease inflationary pressures, adding policymakers would need to see it “substantially more evidence of progress to be confident that inflation was on a sustained downward path.”

The hawkish commentary boosted bets on another 50 basis point rate hike next month, with the odds rising to 35.8% from around 27.2% last week, but had little impact on either the U.S. dollar or Treasury bond yields as markets continue to forecast slowing CPI pressures over the coming months.

Benchmark 10-year Treasury note yields were marked little-changed from last night’s levels at 3.716% while 2-year notes added 2 basis points to trade at 4.395%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.03% lower at 104.212.

The CBOE’s VIX volatility gauge was pegged at 22.16 points in the overnight session, after falling 3.23%, suggesting daily moves for the S&P 500 of around 53 points over the next 30 days, the highest since mid-December.

Overnight trading was mixed, with Asia’s MSCI ex-Japan index rising 0.78% into the close of trading following news that China’s border with Hong Kong would be opened after nearly three years lifted stocks on the mainline, while Europe’s Stoxx 600 slipped 0.02% following last night’s paring of gains on Wall Street.

On Wall Street, traders are likely to focus on the ADP jobs report at 8:15 am EST as well as official weekly jobless claims data at 8:30 am EST and the ISM services survey for December around 90 minutes later.

Heading into the start of the trading day, futures tied to the S&P 500 are priced for a modest 3 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 20 point bump. The tech-focused Nasdaq is looking at a 16 point advance.

2. — Jobs Data In Focus As Fed Highlights Wage Growth

The Federal Reserve emphasized the strength of the labor market as playing an important role in its inflation fight, according to minutes from its December policy meeting, putting the coming round of jobs data in sharp focus for traders on Wall Street.

The minutes indicated that Fed governors are seeing “tentative signs that labor market balances are improving”, but noted “large imbalances between labor supply and labor demand, as indicated by the still-large number of job openings and elevated nominal wage growth ”

JOLTs data for the month of November, published yesterday, indicated around 10.45 million open positions, a level that could feed in to wage growth over the coming months.

Investors will see data on private job creation today with payroll processing group ADP’s National Employment report at 8:15 am EST, followed by weekly jobless claims data shortly after.

Friday’s December non-farm payroll report is likely to show that employers added a net 200,000 new jobs to the economy last month, the slowest since May of 2021. Headline unemployment is expected to hold at 3.7%, while average hourly earnings are forecast to slow modestly to an annualized rate of 5.0%.

3. — Amazon Confirms 18,000 Layoffs As Big Tech Sheds More Jobs

Amazon (AMZN) – Get Free Report shares moved higher in pre-market trading after CEO Andy Jassy confirmed the tech and online retail giant is preparing a bigger-than-expected series of layoffs and job cuts.

The Wall Street Journal had said Amazon will cull as many as 17,000 from its global workforce, including upper management positions, over the coming weeks, a figure that is significantly higher than the 10,000 job reduction tally reported in November. Jassy said the tally would rise to around 18,000, with notifications to begin on January 18.

Amazon, the second-largest U.S. employer behind Walmart, with a global workforce of around 1.6 million, said its job cuts review had been “more difficult given the uncertain economy and that we’ve hired rapidly over the last several years”, a view echoed by Salesforce (CRM) – Get Free Report CEO Marc Benioff when he detailed headcount reductions at the enterprise software group yesterday.

Amazon shares were marked 2.44% higher in pre-market trading to indicate an opening bell price of $87.20 each.

4. — Johnson & Johnson Plans IPO For Consumer Health Care Division

Johnson & Johnson (JNJ) – Get Free Report shares edged lower in pre-market trading after the group unveiled plans to list its consumer healthcare division as a stand-alone company with around $15 billion in annual sales.

Johnson & Johnson, which first unveiled the spin-off plans in November of 2021, will list the consumer healthcare division, now known as Kenvue, on the New York Stock Exchange under the ticker symbol KVUE. The new group will include brands such as Band-Aid, Baby Powder and Tylenol.

The group’s pharmaceutical and medical devices division, which recently purchased heart pump specialists Abiomed ABMD for around $16.6 billion, recorded sales of around $80 billion in 2021, according to Securities and Exchange Commission filings.

Johnson & Johnson shares were marked 0.1% lower in pre-market trading to indicate an opening bell price of $180.00 each.

5. — Walgreens Earnings On Deck With Pharmacy Sales In Focus

Walgreen Boots Alliance (WBA) – Get Free Report shares slipped lower in pre-market trading ahead of the drugstore giant’s first quarter earnings prior to the opening bell.

Analysts expect Walgreen to post an adjusted bottom line of $1.13 per share for the three months ending in November, down 33% from the same period last, with revenues slipping around 3.6% to $32.77 billion.

The group may also detail the cost of its $5.7 billion settlement with several states attorneys general, agreed in early November, linked to its role in the nation’s opioid crisis. Walgreens booked a $683 million charge to its third quarter earnings, published in July, following an opioid settlement with the state of Florida.

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Musk Will Right the Ship at Twitter in 2023: Blackstone Strategist Wien

January 5, 2023 Published by The Street

Elon Musk has made a hash out of his Twitter purchase so far.

He fired about two-thirds of the company’s staff, only to find that he needed to hire back some workers. He started, stopped, then started again a paid subscription service.

And Musk has criticized some of Twitter’s advertisers for pausing their ads. Given that advertising accounts for 90% of the company’s revenue, that criticism might not have been such a good idea.

The question of whether the Tesla chief executive can succeed in righting Twitter’s struggling finances remains open. Many experts have expressed doubts.

But the esteemed veteran investment strategist Byron Wien, now vice chairman of private-equity titan Blackstone, isn’t one of them.

Wien has released his 38^th annual list of top 10 economic, financial and political surprises for the year just begun.

He defines a “surprise” as an event that the average investor would assign only a one-out-of-three chance of taking place but that he sees a better than 50% likelihood of happening.

Wien formed the list with help from Joe Zidle, chief Investment strategist in Blackstone’s Private Wealth Solutions group.

Here are some of Wien’s most interesting picks, including one about Musk and Twitter.

“While the Fed is successful in dampening inflation, it overstays its time in restrictive territory,” Wien said. So a “mild” recession ensues and profit margins are “squeezed.”
“Despite Fed tightening, the [stock] market reaches a bottom by midyear and begins a recovery comparable to 2009,” Wien said.
“The Fed remains more hawkish than other central banks, and the U.S. dollar stays strong against major currencies, including the yen and euro,” he said. “This creates a generational opportunity for dollar-based investors to invest in Japanese and European assets.”
“The U.S. becomes not only the largest producer of oil, but also the friendliest supplier,” Wien said. “The price of oil drops primarily as a result of a global recession, but also because of increased hydraulic fracking and greater production from the Mideast and Venezuela. The price of West Texas Intermediate crude touches $50 this year [compared to $73 recently]. But there’s a $100 tick out there sometime beyond 2023, as the world [economy] recovers.”
“The bombardment, destruction and casualties in Ukraine continue for the first half of 2023,” Wien said. “In the second half, the combination of suffering and cost on both sides necessitates a ceasefire, and negotiations on a territorial split begin.”
As for Musk and Twitter, “in spite of the reluctance of advertisers to continue to support the site and the skepticism of creditors about the quality of the firm’s debt, he gets Twitter back on the path to recovery by the end of the year.”
Wien also included three also-ran picks. These are ideas Wien and Zidle don’t find as relevant or don’t see as likely as the 10 picks on the list. Here’s an also-ran selection. “Because of medical breakthroughs across the board, many people decide on a cryogenic burial, expecting to be defrosted when a cure for the disease that caused their demise is discovered,” Wien said. “Funeral homes across the country advertise that ‘it’s nice to be on ice.’”

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Big Las Vegas Strip Casino Deal Canceled

January 5, 2023 Published by The Street

Nothing happens quickly or easily on the Las Vegas Strip.

If you decide to build or buy on the Strip, you have elected to compete with the giants of the casino business — Caesars Entertainment (CZR) – Get Free Report, MGM Resorts International (MGM) – Get Free Report, and Wynn Resorts (WYNN) – Get Free Report — not to mention some of the huge hotel brands.

Construction happens slowly, costs can balloon from hundreds of millions to billions, and a lot can go wrong before you even get to that phase. That’s why any announcement about new Strip projects that’s not from Caesars, MGM, or Wynn gets taken with a grain of salt.

That’s also why everyone has taken a wait-and-see attitude toward the NBA-ready arena project led by Jackie Robinson planned for a 27-acre site on the north Strip. That project has been in the works for roughly a decade with funding being announced multiple times, yet work has not begun on actually building it.

Announcing a Las Vegas Strip project is the first part of the journey, but it’s not even a guarantee that ground will be broken. Some deals — like Fontainebleau Las Vegas — linger for years (or in this case decades) but eventually, reach the finish line.

Others get a press release announcing their plans to build on the Strip and then a news story saying that something has gone wrong. That’s what’s happening with a deal with the Las Vegas Convention and Visitors Authority (LVCVA) to sell 10 acres on the southeast corner of Las Vegas and Elvis Presley boulevards, the former site of the Riviera, to Chilean real estate investor Claudio Fischer for $120 million.

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LVCVA Gets Paid, Retains Las Vegas Strip Property

The LVCVA had an agreement with Fischer on the site that’s next to the Fontainebleau and across the street from Resorts World. The Chilean billionaire, who has developed multiple casino projects, was expected to close the deal by Nov. 30, but he technically had until Dec. 15 as a final deadline.

He did not make the required payment by that date, the Las Vegas Review-Journal reported.

“The land sale to developer Claudio Fischer did not close on Dec. 15,” LVCVA CEO Steve Hill said in an emailed statement. “As a result, the LVCVA terminated the agreement, received the $7 million nonrefundable deposit, and relisted the property.”

With land prices steadily climbing on the Strip and the north Strip becoming a more desirable location, it’s possible that this broken deal becomes a blessing in disguise for the LVCVA. It’s possible, maybe even likely, that it will be able to sell the land to another buyer at a higher price.

Las Vegas Convention Center Project Still on Track

The LVCVA had planned to use the proceeds from the sale to partially fund a two-year, $600 million renovation project for the Las Vegas Convention Center’s North, Central, and South halls that is expected to begin in March.

A spokesman for the LVCVA told the Review-Journal that the construction would move forward as planned despite the sale falling through.

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How to Calculate Inflation-Adjusted Prices: Formulas & Examples

January 5, 2023 Published by The Street

Photo of a person working on financial calculations with text overlay that reads "How to Calculate Inflation-Adjusted Prices" — *Adjusting prices for inflation can show how the value of money has eroded over time.*

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What Is Inflation-Adjusted Pricing?

Inflation can erode the purchasing power of money, but adjusting prices for inflation can indicate how the value of money has changed over time. A million dollars was worth a lot a century ago, and a millionaire would likely have landed in the highest percentile of earners. Nowadays, it would take a billion to be in the top income bracket, and a million just isn’t worth what it was back then because of the rate of inflation over 100 years.

High inflation over time can severely erode the value of money. A large, sudden pick-up in prices from one year to the next, for example, would raise the costs of goods and services, but at the same time, it could benefit borrowers because of the lower value of debt. Calculating prices by adjusting for inflation can also help families with their budgets and investments, and help businesses assess the value of their inventories.

How to Calculate Inflation-Adjusted Prices

To find out how inflation has affected the value of money over time, calculations can be done by hand or using spreadsheets. The U.S. Bureau of Labor Statistics has a website that allows users to calculate how the buying power of money has changed over certain periods due to inflation.

An ideal way to calculate inflation-adjusted prices is by collecting data on a particular indicator, preferably a consumer price index. In the U.S., one of the most widely followed indicators is the Consumer Price Index for All Urban Consumers (CPI-U), which is used in the calculation methods demonstrated in this article. The U.S. Bureau of Labor Statistics compiles the CPI-U on a monthly basis and provides the data on its website.

Manual Calculation

Calculating inflation-adjusted prices by hand involves collecting two pieces of data from the CPI-U. The tables below show how the buying power of $2.50 for a slice of pizza has changed from one year to another year, adjusted for inflation.

Latest Price Formula

To calculate how the value of money has changed from the most recent period to an earlier period, collect the latest inflation index and divide that by the earlier inflation index, and then the price is divided by that quotient. In the table below, the new inflation index is divided by the old inflation index, and that results in a ratio. The price is then divided by the ratio to show how much money had an equivalent amount of purchasing power over time.

(New Inflation Index / Old Inflation Index) / Price

The table below shows the CPI-U data for November in 2022, 2021, 2020, 2010, and 2000. Over time, the buying power of $2.50 in November 2022 drops to $2.33 in November 2021 and to $1.46 in November 2000.


Date	CPI-U	Ratio (Base Nov. 2022)	Nov. 2022 Dollar Amount
November 2022	297.711	1	$2.50
November 2021	277.948	1.0711	$2.33
November 2020	260.229	1.1440	$2.19
November 2010	218.803	1.3606	$1.84
November 2000	174.1	1.7100	$1.46

Earliest Price Formula

On the flip side, to calculate how the value of money has changed from an earlier period to the most recent, the formula changes. The old inflation index is divided by the new inflation index, but that quotient (the ratio) is multiplied by the price.

(Old Inflation Index / New Inflation Index) * Price

In the table below, after adjusting for inflation, the purchasing power of $2.50 in November 2000 was $3.14 in November 2010 and $4.28 in November 2000. That showed money in 2000 would have bought almost two slices of pizza in 2022.


Date	CPI-U	Ratio (Base Nov. 2020)	Nov. 2020 Dollar Amount
November 2022	297.711	1.7100	$4.28
November 2021	277.948	1.5965	$3.99
November 2020	260.229	1.4947	$3.74
November 2010	218.803	1.2568	$3.14
November 2000	174.1	1.0000	$2.50

Automatic Calculation

The U.S. Bureau of Labor Statistics has a website that automatically calculates the value of a particular item from one period and shows its value in another period. That adjustment for inflation shows the buying power over time between the two periods, as shown in the screengrabs below.

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'Big Short' Investor Burry Attacks Software Giant Salesforce

January 5, 2023 Published by The Street

The software giant Salesforce’s recent revamp confirms the struggles in Silicon Valley and tech more broadly are widespread.

In a bid to cut costs, the specialist in customer-relationship-management systems (CRM) – Get Free Report on Jan. 4 disclosed a vast restructuring plan. including massive job cuts, downsizing of its office space and exits from some property markets.

The details: Salesforce will close some offices and eliminate around 10% of its estimated 56,600 employees as it looks to reduce operating costs, widen operating margins and “continue advancing the company’s ongoing commitment to profitable growth.”

Salesforce said the job cuts, as well as the broader restructuring plans, will cost between $1.4 billion and $2.1 billion, with a hit of around $1 billion expected in its fiscal fourth quarter.

“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” Chief Executive Marc Benioff wrote in a letter to employees explaining the job cuts.

“With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10 percent, mostly over the coming weeks.”

“I’ve been thinking a lot about how we came to this moment. As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”

‘CRM Should Have Been Down 25%’ — Burry

The announcements were welcomed by the company’s investors. Salesforce stock gained 3.6% to $139.59 in the Jan. 4 session.

But there’s one investor who is neither convinced nor reassured. He says Salesforce should have been rolled following the announcements.

This investor is none other than the legendary Michael Burry, known for his big bet on the collapse of the American real estate market, which led to the financial crisis of 2008.

This is what he has just made known via a vicious tweet:

“CRM should have been down 25% on those job cuts.”

He went on to say that the job cuts are not a reason to add or hold Salesforce stock in your portfolio.

“Job cuts are so not the reason to own that,” he added without elaboration.

The investor, who runs the hedge fund Scion Asset Management, several months ago predicted a rout in the tech sector marked by waves of mass layoffs of white-collar workers. The news cycle has proved him correct since most tech groups are relying on job cuts to adapt to the economic downturn.

For example, Meta Platforms (META) – Get Free Report, parent of Facebook, WhatsApp and Instagram, cut 11,000 jobs in November, a first since the group was created in 2004. Amazon (AMZN) – Get Free Report has just said it would cut 18,000 jobs, much more than the initial estimate.

Burry’s criticism unsurprisingly spawned many comments on Twitter. Some commentators pointed out to him that cutting jobs is good for the software giant’s bottom line.

“They weren’t producing revenue — goes straight to net income,” commented Monolith Technologies CEO John S. Boyd. “Stock should be up.”

“Bad bet Burry. Job cuts just creates more efficiency and more profits for shareholders. I do not own any CRM but you get what I’m saying,” added another Twitter user.

But other Twitter users agreed with Burry and questioned the effectiveness of the cost-saving measures on Salesforce’s future performance.

“CRM is on the way to years of decline. Competition is catch up, along with the market declining,” one Twitter user agreed.

“What’s stunning is that these big SV companies come bumbling in with massive layoffs that will have zero impact operationally. It’s quite stunning that they just woke up post C19 & all do it at the same time. Maybe so they won’t be seen as ‘mean?'” said another Twitter user.

Burry Has a Solid Track Record

Burry generally does not and here did not respond to comments.

In the third quarter, Salesforce reported a Wall-Street-beating bottom line of $1.40 a share as demand for its workflow solutions remained solid. Revenue rose 14% year-over-year to $7.84 billion, essentially matching analysts’ estimates.

The company’s remaining performance obligation, a tally of its total deferred revenue and product backlog and a key industry metric, rose 11% to $20.9 billion.

The 2008 financial crisis, one of the biggest financial debacles in history, made Burry a legend. It made him one of the examples to follow in the defiance of standard practices in financial circles.

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Stock Market Live: Stocks End Higher With Fed Minutes, Jobs Data In Focus

January 5, 2023 Published by The Street

Updated at 4:15 pm EST

Stocks finished higher Wednesday, while the dollar and Treasury bond yields eased, as investors eyed jobs data and reacted to the release of Fed minutes amid rising market volatility levels paired with thin trading volumes.

Stocks ended lower Tuesday, however, and look vulnerable to a similar pattern today, with daily trading volumes below typical averages in the holiday-shortened week and investors taking early cues from movements in the U.S. dollar .

The CBOE’s VIX volatility gauge, meanwhile, jumped 6% in the overnight session to 23.00 points, suggesting daily moves for the S&P 500 of around 57 points over the next 30 days, the highest since mid-December, before easing to around 22.34 points in the New York session..

Benchmark 10-year Treasury note yields were marked lower and trading at 3.685% while the U.S. dollar index, which tracks the greenback against a basket of six global currencies, gave back around 0.24% to change hands at 104.27.

On Wall Street, traders are likely to focus on the release of minutes from the Fed’s December policy meeting, slated for 2:00 pm Eastern time, as well as JOLTS jobs data at 10:00 am Eastern, which showed that a larger-than-expected 10.45 million open positions went unfilled over the month of November.

Those figures could feed into expectations for Friday’s December payroll report, as well as bets on the Fed’s next month in February, where traders are pricing in a 70.2% chance of a 25 basis point rate hike.

Investors are likely to focus on any split among policymakers with respect to future hikes amid one of the most aggressive tightening paths on record from the Fed, which raised its benchmark interest rate for the seventh time in 2022 when it last met on December 14, taking it to a range of between 4.25% to 4.5%, the highest since 2008, and said ongoing be needed in order to combat the fastest inflation in nearly four decades.

The so-called ‘Dot Plots’, which illustrate the views of the Fed’s eighteen member rate-setting committee, indicated a terminal Fed Funds rate of around 5.1% by the spring, a level that it plans to hold until the end of the year.

Data since then, however, has suggested weakness in the overall economy, while inflation continues to slow, and bond markets have been testing the Fed’s hawkish view for more than a month, with benchmark 2-year notes trading at 4.347%, well below the terminal rate projected by the December dots.

Minutes showed the Fed acknowledged the “significant” progress it had made in fighting inflation thus far, but emphasized the need to “retain flexibility and optionality when moving policy to a more restrictive stance’, suggest smaller, and potentially a slower pace of rate hikes going forward.

The Dow Jones Industrial Average finished up 133 points, or 0.40%, to 33,269, while the S&P 500 gained 0.75% and the tech-focused Nasdaq advanced 0.69%.

Microsoft (MSFT) – Get Free Report shares ended down 4.4% to $229.10 each, after analysts at UBS lowered their rating on the tech giant, citing weakness in its flagship cloud division.

Apple (AAPL) – Get Free Report, meanwhile, rebounded 1% — after closing below the $2 trillion market value threshold for the first time in nearly two years — as Wedbush analyst Dan Ives cautions that demand headwinds could challenge the stock’s near-term growth prospects.

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Try These Cures for a Holiday-Spending Hangover

January 5, 2023 Published by The Street

Americans have largely bid good riddance to the holiday season and seem focused on a clean slate in 2023.

There’s one problem with that outlook: That slate isn’t really clean until holiday debts are paid off, and for many households those debts aren’t going away anytime soon.

Exhibit A is new data showing more than a third (35%) of U.S. adults took on an average of $1,549 in credit-card debt in the last few months of 2022. Those data, included in Lending Tree’s latest holiday debt survey, are expected to take an average of five months to pay off.

“There’s never a good time to carry debt, but this is a particularly bad time with interest rates at record highs,” the Lending Tree study noted.

Cutting the Holiday-Debt Burden Down to Size

All is not lost for people who’ve accumulated holiday-spending debt. With some budget discipline and household-income creativity, there’s no reason consumers can’t chop that debt to the nub well before five months are up.

Use these tips from personal-finance experts to get your holiday debt paid off sooner rather than later.

Calculate and plan. Start by calculating how much you owe across all your household finance accounts, noting minimum payments due and interest rates to determine the best repayment plan.

“Choose between the “Avalanche Method,” in which you pay off the card with the highest interest rate first to save on fees; or the “Snowball Method,” which focuses on paying off the smallest balance first to build momentum and keep you motivated,” said Andrea Woroch, a nationally recognized consumer-finance expert. “A debt-repayment app like Debt Free can guide you through this process.”

Rebalance your budget. Slash useless spending from your budget so you can make bigger debt payments each month.

“Begin by scrutinizing monthly bills for services you don’t need or use and compare rates with competitors to see if switching would provide savings,” Woroch advised.

“For instance, a recent study found that 90% of mobile users waste money on unnecessary unlimited data plans. You could save big by switching to a lower-tiered plan or move to a cheaper online-only carrier like Mint Mobile that has plans for as little as $15 a month.”

Canceling unused subscriptions, bundling insurance policies and increasing deductibles, and unplugging unused gadgets are other ways to reduce monthly spending, Woroch added.

Call your credit card company and ask for an APR reduction. Believe it or not, if you do this, there’s a good chance that you’ll be approved.

“That way, you can save money on interest, and more of your monthly payment will go toward the principal balance,” said Leslie Tayne, founder and personal-finance expert at Tayne Law Group.

Go zero balance. If your credit is in good shape, consider taking advantage of a 0% APR balance-transfer offer.

“This allows you to consolidate your high-interest credit card debt by transferring it to a new card with a temporary 0% APR,” Tayne said. “That way, 100% of your payments go toward the principal balance during this introductory period, which may last anywhere from six to 18 months.”

The key is to pay off the balance before the intro period is up. “You want to avoid taking on any new debt,” Tayne added. “It requires some discipline, but can help you pay off your debt more aggressively.”

Leverage your tax refund. If you’ve racked up debt during the holidays and you’re expecting a refund this tax season, consider putting a portion, or all, of your refund toward paying down debt.

“That will help you jump-start your debt-repayment strategy and could help limit the amount of interest you accrue,” said Courtney Alev, a Credit Karma consumer financial advocate.

Don’t forget to make your holiday returns. Making returns often falls to the bottom of most people’s to-do lists.

“Don’t let that happen this holiday season,” Alev said. “Instead, make sure to return any gifts you don’t end up giving or no longer want and put that extra cash toward saving and/or paying down debt. Remember: If you wait too long, you may miss the return window, which could result in a loss of savings.”

Contact your lender. If you’re unable to make payments toward your bills, reach out to your lender to see about making a repayment plan that works for you.

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Stock Market Live: Stocks Slide As Hawkish Fed Minutes, Jobs Data, Rekindle Inflation Concerns

January 5, 2023 Published by The Street

Updated at 8:50 am EST

U.S. equity futures moved lower Thursday, while the dollar bumped higher against its global peers, as investors sifted through details of the Federal Reserve‘s inflation debate and focused on stronger-than-expected jobs data that has rekindled inflation concerns.

The Fed also emphasized the strength of the labor market as playing an important role in its inflation fight, according to minutes from its December policy meeting, putting the coming round of jobs data in sharp focus for traders on Wall Street.

JOLTs data for the month of November, published yesterday, indicated around 10.45 million open positions, a level that could feed in to wage growth over the coming months, although the Challenger job cuts report for December, published Thursday, said layoffs rose 129% from last year to 76,800.

Tech has lead the way in staff reductions, with Amazon (AMZN) – Get Free Report confirming plans to cut 18,000 jobs from its 1.6 million global workforce amid what it called an “uncertain and difficult” global economy.

ADP’s national employment report, however, showed private sector hiring accelerated to 245,000 in December, while weekly jobless claims for the period ending on December 31 fell by 20,000 to 204,000.

The hawkish Fed minutes, as well as the strong jobs data, boosted bets on another 50 basis point rate hike next month, with the odds rising to 44% from around 27.2% last week.

Benchmark 10-year Treasury note yields were marked 5 basis points higher from last night’s levels at 3.754% while 2-year notes added 7basis points to trade at 4.449%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.48% lower at 104.746.

Heading into the start of the trading day, futures tied to the S&P 500 are priced for a 20 point opening bell pullback while those linked to the Dow Jones Industrial Average are set for a 155 point decline. The tech-focused Nasdaq is looking at a 75 point dip.

The CBOE’s VIX volatility gauge was pegged at 22.40 points in the New York session, suggesting daily moves for the S&P 500 of around 55 points over the next 30 days, the highest since mid-December.

In terms of individual stocks, Walgreens Boots Alliance (WBA) – Get Free Report, a Dow component, fell 3.6% after it posted better-than-expected first quarter earnings, while lifting its full-year sales forecast, but booked a $6.5 billion charged linked to opioid settlements.

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