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Apr 24, 2019

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SAFE Banking Act

Reviewed by Nathan Reiff Updated Apr 24, 2019


The Secure And Fair Enforcement (SAFE) Banking Act was introduced to Congress in May of 2017 under the sponsorship of Senator Jeff Merkley (D-OR). This bill would impact the ability of federal banking regulators to intervene in the actions of a depository institution dealing with a legal cannabis business. Specifically, the act would prohibit regulators from terminating or limiting either deposit or share insurance of such a financial institution for the sole reason that it does business with a cannabis company. It would also prohibit regulators from in turn barring such institutions from offering financial services to these companies, as it would stop regulators from encouraging financial institutions to not do business with those companies.

Origins of the SAFE Banking Act

The SAFE Banking Act is a direct response to issues faced by legal cannabis companies operating in the United States. Specifically, the Act is designed to bridge a gap between those companies' legal standing in particular states and the current non-legal status of marijuana sales and usage on a federal level. A company conducting legitimate operations within a state that has moved to legalize marijuana may nonetheless face problems interacting with financial institutions like banks and lenders on account of concern among those institutions about punishment on the federal level. Practically, this may make it difficult for these companies to seek loans to help grow their businesses or launch new ones, to recover from burglaries or other negative events, and so on.
The SAFE Banking Act is designed to prohibit federal regulators from punishing financial institutions for the sole reason that they choose to provide such services to cannabis companies, their owners and their employees.
This Act did not receive a full vote in either chamber of Congress after it was first introduced in May of 2017. However, the bill is slated to be re-introduced to Congress by Sen. Merkley as well as Representatives Ed Perlmutter (D-CO) and Denny Heck (D-WA) at the end of February, 2019. In a statement, Perlmutter indicated that "thousands of employees, businesses and communities across this country...have been put at risk because they have been forced to deal in piles of cash...the SAFE Banking Act is focused solely on taking cash off the streets and making our communities safer."
The re-introduced bill will be slightly different from the earlier bill, according to draft legislation. The National Cannabis Industry Association has indicated that the revised version "adds protections for ancillary businesses providing products or services to a cannabis-related legitimate business; specifies how businesses on tribal land could qualify; and requires the Federal Financial Institution Examination Council to develop guidance to help financial institutions lawfully serve cannabis-related legitimate businesses."
In the Spring of 2019, banking lobbyists and financial institutions have been pushing for the bill's approval, according to reports. The American Bankers Association, which is a key lobby representing the $17 trillion U.S. banking industry, has testified to Congress in support of the bill, and banks including Wells Fargo, HSBC North America, Key Bank, M&T Corporation, PayPal, Prudential and Nationwide, are also reportedly supporting its passage.
The bill's sponsors are hopeful that changes in the political landscape could prove favorable for the bill in its second round of consideration. Notably, vocal anti-marijuana advocate Attorney General Jeff Sessions has been replaced by William Barr. Barr has previously indicated his reticence to punish companies following earlier guidance that suggested they would be protected from federal scrutiny.

Source: Investopedia

Bulletin | Facebook expects multibillion-dollar FTC fine, but stock still gains after earnings

Jeremy C. Owens

Facebook Inc. shares jumped in late trading Wednesday, even as the company said it expects to pay a multibillion-dollar fine to the Federal Trade Commission.
Facebook took a $3 billion charge in the first quarter, as it “reasonably estimated” that it will be required to pay that much as the FTC looks to punish the company for violating a consent decree on user privacy. Without that charge, Facebook would have easily topped earnings estimates, so after a brief decline in shares during after-hours trading, they jumped back up to a 4% gain.
“We estimate that the range of loss in this matter is $3 billion to $5 billion,” Facebook disclosed in its news release. “The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”
Amid a constant stream of negative headlines throughout 2018, Facebook FB, -0.65%  managed to not only stay afloat but also continue to thrive, with record profit, revenue and user numbers. In the first three months of 2019, amid talk of consequences for Chief Executive Mark Zuckerberg specifically and continuing foibles such as lax internal password storage, the social-media giant continued to defy expectations of a financial penalty for its misdeeds, according to Wednesday’s earnings report.
Opinion: Facebook crumbles around its lonely king
Facebook reported first-quarter profit of $2.43 billion, or 85 cents a share, on sales of $15.08 billion, after posting earnings of $1.69 a share on sales of $11.97 billion in the same quarter a year ago. Net income would have been $5.43 billion, or $1.89 a share, without the charge for the expected FTC fine. Analysts on average expected earnings of $1.62 a share on revenue of $14.98 billion, according to FactSet.
User numbers also continued to grow, with Facebook reporting monthly active users of 2.38 billion, up 8% from last year, and daily active users of 1.56 billion, also up 8%. Analysts on average projected that Facebook’s monthly active users would rise by about 54 million sequentially and 178 million year-over-year, to 2.37 billion, with growth in all geographies, according to FactSet. Daily active users were projected to rise to 1.56 billion, from 1.45 billion a year ago and 1.52 billion at the end of 2018.
“We had a good quarter and our business and community continue to grow,” Zuckerberg said in a statement. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”TimeFacebook Inc. Cl AJun 18Aug 18Oct 18Dec 18Feb 19Apr 19


Despite all of its problems, Facebook shares have gained more than 14% in the past year, topping the 11% growth of the S&P 500 index SPX, -0.22%  Shares ended Wednesday with a 0.7% decline at $182.58, then topped $190 a share in after-hours trading following the report. Facebook has not traded for more than $190 a share in a regular session since last July.

Source: MarketWatch

FX | Currencies Report on Wednesday 24, April 2019 | Dollar rises broadly; euro slips on German business sentiment drop

Elliot Smith

Reusable Australian Dollar AUD c 150223
John Phillips | Digital Editor | CNBC
The euro fell against the U.S. dollar on Wednesday after a surprise drop in a leading indicator for economic activity in Germany highlighted the divergence between economic data in the United States and the euro zone.
German business morale deteriorated in April, bucking expectations for a small improvement, as trade tensions hurt the industrial engine of Europe’s largest economy.
The euro fell 0.54% to $1.1164, close to the lowest it has been since early March.
The greenback, by contrast, was supported by strong U.S. housing data, the latest signal the American economy is outperforming rivals.
“The broader importance of the German data is that market participants had been hoping that the rebound in Chinese monetary conditions, in lending in China, would help to boost demand for German exports and would lift spirits in the euro zone’s core economies,” said Karl Schamotta, director of foreign exchange strategy and structured products at Cambridge Global Payments.
“We are seeing successive prints that show that Germans are not necessarily turning more positive here,” said Schamotta.
“Trade pressure and concerns about global protectionism are weighing over Europe’s overall external position and challenging its growth trajectory. We are looking at underperformance relative to the U.S. for now,” he said..
The dollar index, which measures the U.S. currency versus a basket of six major rivals, was up 0.35% at 97.98, its highest since June 2017.
Investors will watch the release on Friday of U.S. gross domestic product data for the first three months of 2019, for signs of whether the United States remains stronger than other leading economies.
On Wednesday, the Australian dollar fell 1.23% after weaker-than-expected Australian inflation numbers heightened the prospect of an interest rate cut.
The pound held at a two-month low on Wednesday, weighed down by a broad-based rally in the dollar and fading hopes of a breakthrough in Brexit talks between the British government and the opposition.
The Canadian dollar weakened to a nearly seven-week low against its U.S. counterpart, investors awaited an interest rate decision from the Bank of Canada.

Source: CNBC

Bonds Yields Report on Wednesday April 24, 2019 | US Treasury yields fall amid softer economic data in Europe

Thomas Franck

U.S. government debt yields followed European rates lower Wednesday after new data suggested a gloomier economic outlook amid German business leaders.
Bond yields around the world dipped after the Ifo Institute reported that confidence in German c-suites unexpectedly fell in April. The Munich-based researcher’s business climate indicator fell for a seventh month in the last eight and contradicted upbeat forecasts with a 99.2 print. April’s print was the indicator’s lowest reading since 2016.
The new data could point to persistent worries surrounding the United Kingdom’s exit from the European Union and slowing growth in general.
“The mood among German managers became slightly gloomier this month,” Ifo President Clemens Fuest said in a press release Wednesday. “March’s gentle optimism regarding the coming months has evaporated. The German economy continues to lose steam.”
At 10:36 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.52%, while the yield on the 30-year Treasury bond was also lower at 2.949%. The German 10-year bund traded at -0.014%.

U.S. Markets Overview: Treasurys chart

In the United States, the Treasury is set to sell $41 billion in 5-year notes and $20 billion in two-year floating rate notes. The Federal Reserve is one week away from its latest monetary policy decision on May 1, when it will decide whether to adjust the overnight lending rate.
Oil prices dropped on Wednesday amid signs that supply is still adequate despite the U.S. announcing a push for tighter sanctions on Iran and a plan to halt waivers that had allowed limited Iranian oil imports.

Source: CNBC

Wall Street Closing Report on Wednesday 24, April 2019 | S&P 500 slips from record close as Caterpillar and AT&T fall on earnings

Fred Imbert

Stocks slipped from record levels on Wednesday as Wall Street digested another batch of corporate earnings.
The Nasdaq Composite hit an intraday record before trading just below the flatline. The S&P 500 dipped 0.1% as the energy and communication sectors underperformed. The Dow Jones Industrial Average traded 49 points lower as Goldman Sachs fell on a report saying the Justice Department was pushing for a guilty plea in the bank’s case related to the 1MDB fund.
Caterpillar shares fell nearly 3% despite the company posting better-than-expected quarterly earnings. The industrial giant’s CFO warned of a possible slowdown in its China business, overshadowing Caterpillar’s strong report.
AT&T, meanwhile, fell more than 4% after posting first-quarter revenue numbers that disappointed investors. The company’s revenue was dragged down by weak sales in its WarnerMedia division.
Both the S&P 500 and Nasdaq posted record closing highs in the previous session, boosted by strong corporate earnings results from companies like United Technologies, Coca-Cola and Twitter on Tuesday.
The indexes reached records less than six months after a massive drop in December, which led to Wall Street’s worst year since the financial crisis. But a pivot by the Federal Reserve in monetary policy away from higher rates and the cooling of trade tensions between China and the U.S. helped stocks rally from those lows.
Technology led the comeback, rising more than 36% since Christmas Eve. Xerox is the best-performing stock in the sector since then, rising about 80%.
“Right now, it feels like there’s some FOMO [fear of missing out] going on,” said Christian Fromhertz, CEO of The Tribeca Trade Group. “That’s what’s pushing us up in this last leg.”
“I think we’re going to see a consolidation at some point,” he said. “It’s not to say we need a major pullback; I just think we need to consolidate the gains a little bit. That may happen with what comes out with some of the bigger tech names.”
New York, USA - May 8, 2018: Wall Street sign near New York Stock Exchange with flags of the United States. It is the world’s most significant financial center.
ymgerman | iStock Editorial | Getty Images
Facebook and Microsoft are among the companies set to report later on Wednesday, while Amazon is scheduled to release its results on Thursday.
Nearly 130 S&P 500 companies have reported calendar first-quarter earnings so far. Of those companies, 78% have reported better-than-forecast profits, according to Refinitiv.
“If there’s an earnings recession out there, it’s hard to see in the latest batch of earnings reports,” Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a note.
Domino’s Pizza, meanwhile rose 6% on stronger-than-forecast quarterly results. Anthem and Biogen’s earnings also beat estimates.
—CNBC’s Sam Meredith contributed to this report.

Source CNBC