Raphael Stevens

“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC.
“Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere,” he said.

David Einhorn, President at Greenlight Capital, speaking at the 14th CNBC Delivery Alpha Investor Summit in New York City on Nov. 13th, 2024. 
Adam Jeffery | CNBC

Greenlight Capital’s David Einhorn thinks speculative behavior in the current bull market has ascended to a level beyond common sense.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in an investor letter obtained by CNBC. “Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere.”

A crypto token called “fartcoin” exploded in popularity as the recent election of Donald Trump unleashed a storm of animal spirits on Main Street. The meme coin is now edging toward a $2 billion market value, surpassing many U.S.-listed companies.
More meme coins have emerged since the inception of fartcoin. Trump launched $TRUMP, a meme coin built on the Solana platform. Its market cap over the weekend climbed past $14 billion. The coin at one point was down more than 20% over the past 24 hours, but it has since cut its losses to around 3%. Trump’s wife, Melania, also unveiled a coin.
“Nothing stops the launch of many more tradable coins,” Einhorn said. “Perhaps we are leaving the Fartcoin stage of the market and entering the Trump (and Melania) memecoin stage. It’s anyone’s guess as to what will happen next, but it feels like it’s going to be wild.”
Einhorn’s letter comes as investors drive equities higher, buoyed by expectations for lower taxes and deregulation from the second Trump administration. On Tuesday, the day after the inauguration, the Dow Jones Industrial Average rallied more than 400 points. The S&P 500 and Nasdaq Composite climbed 0.8% and 0.7%, respectively.
Shorting leveraged bitcoin ETFs
Greenlight took advantage of the craziness around crypto during the fourth quarter by betting against some popular exchage-traded funds linked indirectly to bitcoin.

The two funds the firm focused on were the T-Rex 2X Long MSTR Daily Target ETF (MSTU) and the Defiance Daily Target 2X Long MSTR ETF (MSTX). Those funds use derivatives to try to achieve two times the daily returns of MicroStrategy, a software company that has turned itself into a bitcoin treasury vehicle in recent years.
The funds have at times struggled to achieve that goal due to MicroStrategy’s volatility and little supply of the derivatives most easily used to get the leveraged returns.
The letter said Greenlight took short positions against those funds during the quarter, partially offset by owning MicroStrategy stock in an arbitrage trade that was a “material winner.”

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Rates on a 30-year fixed mortgage rose above 7% in the week ended Jan. 16, according to Freddie Mac data.
Mortgage rates were below 3% as recently as late 2021.
They are unlikely to fall below 6% until 2026, economists said. That’s partly due to investor worries tied to President Donald Trump’s policy agenda, they said.

The Good Brigade | Digitalvision | Getty Images

Mortgage rates have risen in recent months, even as the Federal Reserve has cut interest rates.
While those opposing movements may seem counterintuitive, they’re due to market forces that seem unlikely to ease much in the near term, according to economists and other finance experts.

That may leave prospective homebuyers with a tough choice. They can either delay their home purchase or forge ahead with current mortgage rates. The latter option is complicated by elevated home prices, experts said.
“If what you’re hoping or wishing for is an interest rate at 4%, or housing prices to drop 20%, I personally don’t think either one of those things is remotely likely in the near term,” said Lee Baker, a certified financial planner based in Atlanta and a member of CNBC’s Financial Advisor Council.

Mortgage rates at 7% mean a ‘dead’ market

Rates for a 30-year fixed mortgage jumped above 7% during the week ended Jan. 16, according to Freddie Mac. They’ve risen gradually since late September, when they had touched a recent low near 6%.
Current rates represent a bit of whiplash for consumers, who were paying less than 3% for a 30-year fixed mortgage as recently as November 2021, before the Fed raised borrowing costs sharply to tame high U.S. inflation.
“Anything over 7%, the market is dead,” said Mark Zandi, chief economist at Moody’s. “No one is going to buy.”

Mortgage rates need to get closer to 6% or below to “see the housing market come back to life,” he said.

The financial calculus shows why: Consumers with a 30-year, $300,000 fixed mortgage at 5% would pay about $1,610 a month in principal and interest, according to a Bankrate analysis. They’d pay about $1,996 — roughly $400 more a month — at 7%, it said.
Meanwhile, the Fed began cutting interest rates in September as inflation has throttled back. The central bank reduced its benchmark rate three times over that period, by a full percentage point.
Despite that Fed policy shift, mortgage rates are unlikely to dip back to 6% until 2026, Zandi said. There are underlying forces that “won’t go away quickly,” he said.
“It may very well be the case that mortgage rates push higher before they moderate,” Zandi said.

Why have mortgage rates increased?

The first thing to know: Mortgage rates are tied more closely to the yield on 10-year U.S. Treasury bonds than to the Fed’s benchmark interest rate, said Baker, the founder of Claris Financial Advisors.
Those Treasury yields were about 4.6% as of Tuesday, up from about 3.6% in September.
Investors who buy and sell Treasury bonds influence those yields. They appear to have risen in recent months as investors have gotten worried about the inflationary impact of President Donald Trump’s proposed policies, experts said.
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Policies like tariffs and mass deportations of immigrants are expected to increase inflation, if they come to pass, experts said. The Fed may lower borrowing costs more slowly if that happens — and potentially raise them again, experts said.
Indeed, Fed officials recently cited “upside risks” to inflation because of the potential effects of changes to trade and immigration policy.
Investors are also worried about how a large package of anticipated tax changes under the Trump administration might raise the federal deficit, Zandi said.

There are other factors influencing Treasury yields, too.
For example, the Fed has been reducing its holdings of Treasury bonds and mortgage securities via its quantitative tightening policy, while Chinese investors have “turned more circumspect” in their buying of Treasurys and Japanese investors are less interested as they can now get a return on their own bonds, Zandi said.
Mortgage rates “probably won’t fall below 6% until 2026, assuming everything goes as expected,” said Joe Seydl, senior markets economist at J.P. Morgan Private Bank.

The mortgage premium is historically high

Grace Cary | Moment | Getty Images

Lenders typically price mortgages at a premium over 10-year Treasury yields.
That premium, also known as a “spread,” was about 1.7 percentage points from 1990 to 2019, on average, Seydl said.
The current spread is about 2.4 percentage points — roughly 0.7 points higher than the historical average.
There are a few reasons for the higher spread: For example, market volatility had made lenders more conservative in their mortgage underwriting, and that conservatism was exacerbated by the regional banking “shock” in 2023, which caused a “severe tightening of lending standards,” Seydl said.
“All told, 2025 is likely to be another year where housing affordability remains severely challenged,” he said.
That higher premium is “exacerbating the housing affordability challenge” for consumers, Seydl said.
The typical homebuyer paid $406,100 for an existing home in November, up 5% from $387,800 a year earlier, according to the National Association of Realtors.

What can consumers do?

In the current housing and mortgage market, financial advisor Baker suggests consumers ask themselves: Is buying a home the right financial move for me right now? Or will I be a renter instead, at least for the foreseeable future?
Those who want to buy a home should try to put down a “significant” down payment, to reduce the size of their mortgage and help it fit more easily in their monthly budget, Baker said.

Don’t subject the savings for a down payment to the whims of the stock market, he said.
“That’s not something you should gamble with in the market,” he said.
Savers can still get a roughly 4% to 5% return from a money market fund, high-yield bank savings account or certificate of deposit, for example.
Some consumers may also wish to get an adjustable rate mortgage instead of a fixed rate mortgage — an approach that may get consumers a better mortgage rate now but could saddle buyers with higher payments later due to fluctuating rates, Baker said.
“You’re taking a gamble,” Baker said.
He doesn’t recommend the approach for someone on a fixed income in retirement, for example, since it’s unlikely there’d be room in their budget to accommodate potentially higher monthly payments in the future, he said. More

Goldman Sachs is rolling out a generative AI assistant to its bankers, traders and asset managers, the first stage in the evolution of a program that will eventually take on the traits of a seasoned Goldman employee, according to Chief Information Officer Marco Argenti.
The bank has released a program called GS AI assistant to about 10,000 employees so far, with the goal that all the company’s knowledge workers will have it this year, Argenti told CNBC in an exclusive interview.
“The AI assistant becomes really like talking to another GS employee,” Argenti said.

Goldman Sachs GS AI Assistant
Courtesy: Goldman Sachs

Goldman Sachs is rolling out a generative AI assistant to its bankers, traders and asset managers, the first stage in the evolution of a program that will eventually take on the traits of a seasoned Goldman employee, according to Chief Information Officer Marco Argenti.
The bank has released a program called GS AI assistant to about 10,000 employees so far, with the goal that all the company’s knowledge workers will have it this year, Argenti told CNBC in an exclusive interview. It will initially help with tasks including summarizing or proofreading emails or translating code from one language to another.

“Think about all the tasks that you might want to complete with regards to a variety of use cases for all those professions that can be now at your fingertips,” Argenti said. The Goldman assistant is a “very simple interface that allows you to have access to the latest and greatest models.”
Goldman’s move means that, along with JPMorgan Chase and Morgan Stanley, the world’s top three investment banks have aggressively released generative AI tools to their workforce, a remarkable development since ChatGPT went viral about two years ago.
Wall Street has embraced generative artificial intelligence faster than any other disruptive technology in recent years, experts say, because of how adept large language models are in replicating aspects of human cognition.
Today it can respond to queries, write emails and summarize lengthy documents, but expectations are high that future versions will exhibit so-called agentic abilities, meaning they can perform multistep tasks with little human intervention.
In speaking with CNBC about his vision for artificial intelligence at the firm, Argenti — who joined from Amazon in 2019 — repeatedly likened the AI program to a new employee that will absorb Goldman culture over the coming years.

Initially, the tool will mostly produce answers based on Goldman data that has been fed into AI models from OpenAI’s ChatGPT, Google’s Gemini and Meta’s Llama, depending on the task, said Argenti. The bank is also looking at models from companies including Anthropic, Mistral and Cohere, he added.
“The AI assistant becomes really like talking to another GS employee,” Argenti said.

Learning the Goldman Way

“As we progress, the second step is when you’re starting to have this agentic behavior, that is, ‘I’m completing a task on behalf of a Goldman employee, and I need to take a set of steps,'” he said. “That’s where the model is going to start to do things like a Goldman employee, not only say things like a Goldman employee.”
This helps explain why companies have forbid employees from using ChatGPT for work, instead moving to create their own platforms to tap the technology. It allows firms to not only keep their information secure, but to also craft AI platforms that increasingly resemble the best examples of their own workforce.
“For the AI to have a very specific identity that reflects the tenets, the values, the knowledge and the way of thinking of the firm is extremely important,” Argenti said.
In practice, that means that just as an experienced Goldman employee would know to double-check their work with multiple data sources or use a specific algorithm for a calculation, the AI will absorb those lessons, he said.

Marco Argenti, chief information officer for Goldman Sachs, joined the bank from Amazon in 2019.
Courtesy: Goldman Sachs

But Argenti says he is most excited by the prospect of what comes later, in perhaps three to five years, as AI models increasingly blur the lines between human and machine thinking.
This stage of AI at Goldman would have the model “actually reason more and become more like the way a Goldman employee would think,” he said.
So instead of being handed a run book, which is tech industry parlance for a set of step-by-step instructions for completing tasks or responding to incidents, the AI would be able to generate detailed plans “in the way that an experienced Goldman employee would do,” Argenti said.

Disruption risk

The prospects of that future — and the fact that Wall Street’s workers are helping train a technology that may make some roles obsolete, while augmenting other jobs and creating new roles altogether — may send a fresh wave of anxiety through employee ranks.
Like at Goldman, other major investment banks are on target to give generative AI tools to their entire workforces in the coming months.
More than 200,000 JPMorgan employees currently have access to in-house generative AI tools, according to a person with knowledge of that bank who declined to be identified speaking about internal matters. Roughly 40,000 Morgan Stanley employees had access to it as of late last year, the bank said in October.
Finance and technology are seen as among the industries where employees are most prone to upheaval because of generative AI, allowing companies to potentially generate billions of dollars in additional profits. Meta CEO Mark Zuckerberg told podcaster Joe Rogan earlier this month that its AI will be capable of writing code as well as mid-level software engineers this year.
Global investment banks may shed as many as 200,000 jobs in the next three to five years as the companies implement AI, according to a report from Bloomberg’s research arm. The report, based on a survey of tech executives at major banks, said that support and operations roles known as the back and middle office were most at risk.
At Goldman, however, the official stance is that AI will empower employees to do more, not necessarily result in the need for fewer humans.
“The importance of having a phenomenal human workforce is actually going to be amplified,” Argenti said.
“In my opinion, it always boils down to people,” he said. “People are going to make a difference, because people are going to be the ones that actually evolve the AI, educate the AI, empower the AI, and then take action.” More

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Richard Teng, Binance’s CEO, on Tuesday said that he sees “much clearer regulation” in the U.S. this year under the new Trump administration, adding that this will be supportive for crypto markets.
“If you look at past cycles, this year will be a year that we see a new all-time high for the crypto industry,” Teng told CNBC at the World Economic Forum in Davos, Switzerland.
Last year, bitcoin passed the $100,000 price milestone for the first time, as traders grew optimistic about the crypto industry’s prospects under a Trump administration.

The crypto market will see a new all-time high in 2025 on the back of positive regulatory movements in the U.S. under newly inaugurated President Donald Trump, the CEO of Binance told CNBC Tuesday.
Richard Teng, who took the reins from former Binance boss Changpeng Zhao last year, told CNBC’s Arjun Kharpal that he sees “much clearer regulation” happening in the U.S. this year under the new Trump administration, adding this will be supportive for crypto markets.

“If you look at past cycles, this year will be a year that we see a new all-time high for the crypto industry,” Teng said in a fireside chat at the World Economic Forum in Davos, Switzerland.
Bitcoin passed the $100,000 price milestone for the first time last year, as traders grew optimistic about the crypto industry’s prospects under a Trump administration. As of Tuesday, the token was trading near $104,000, according to CoinGecko, down 3% in the last 24 hours amid a broad slump in crypto markets.

“The narrative [around crypto] has shifted quite drastically” since last year, Teng added, noting he’s been hearing positive crypto sentiments expressed by political and corporate leaders since arriving in Davos.
In terms of new legislation, Teng said that he expects to see progress in the United States on several fronts, including token issuance, trading and asset management.
Trump isn’t the only key U.S. political figure who is “pro-crypto,” Teng said, adding: “The House of Representatives and the Senate now [are] pro-crypto, compared to the past.”

“So, legislation will be passed, you have pro-crypto regulators being appointed to key commissioner roles in the SEC and CFTC,” Binance’s CEO said.
Trump picked respected Washington lawyer Paul Atkins to lead the Securities and Exchange Commission, which has previously been aggressive in its enforcement approach to the crypto industry
Teng is also expecting Trump to give the crypto sector “certainty” and “recognition,” as well as establish a U.S. strategic bitcoin reserve — something the now-president suggested he’d do during his campaign.

Clarification: The text and headline of this story have been clarified to reflect that Binance CEO Richard Teng said the crypto market will hit a new all-time high in 2025. More