Finance

Europe had been moving towards the slaughterhouse for years, and by 1914 a conflict was all but inevitable—that, at least, is the argument often made in hindsight. Yet at the time, as Niall Ferguson, a historian, noted in a paper published in 2008, it did not feel that way to investors. For them, the first world war came as a shock. Until the week before it erupted, prices in the bond, currency and money markets barely budged. Then all hell broke loose. “The City has seen in a flash the meaning of war,” wrote this newspaper on August 1st 1914.Could financial markets once again be underpricing the risk of a global conflict? In the nightmare scenario, the descent into a third world war began two years ago, as Russian troops massed on the Ukrainian border. Today Israel’s battle against Hamas has the frightening potential to spill across its borders. American military support is crucial to both Ukraine and Israel, and in Iraq and Syria the superpower’s bases have come under fire, probably from proxies of Iran. Should China decide it is time to take advantage of a distracted superpower and invade Taiwan, America could all too easily end up being drawn into three wars at once. The rest of the world risks those wars interlocking and turning into something even more devastating.This scenario would of course place financial damage a long way down the list of horrors. Even so, it is part of an investor’s job to consider exactly what it would mean for their portfolio. So far the possibility of a world war has barely caused a tremor in the markets. True, they have for some time now been more seized by fear than greed. Bond prices have been turbulent, even for supposedly “risk-free” American Treasuries, and yields have been climbing for most of this year. Stock indices in America, China and Europe have fallen for three consecutive months. Yet this choppiness can all be plausibly explained by peacetime factors, including outsized government borrowing, interest-rate expectations and shareholders whose previous optimism had got the better of them.In short, it does not look anything like the panic you might expect if the odds of the world plunging into war were edging higher. The brightest conclusion is that such odds really are close to zero. A darker one is that, like the investors of 1914, today’s may soon be blindsided. History points to a third possibility: that even if investors expect a major war, there is little they can do to reliably profit from it.The easiest way to understand this is to imagine yourself in 1914, knowing that the first world war was about to arrive. You would need to place your bets quickly—within weeks, the main exchanges in London, New York and continental Europe would be closed. They would stay that way for months. Would you be able to guess how many, and which way the war might have turned by then? If you wisely judged American stocks to be a good bet, would you have managed to trade with a broker who avoided bankruptcy amid a liquidity crisis? You might have decided, again wisely, to trim positions in soon-to-be war-strained government debt. Would you have guessed that Russian bonds, which would experience a communist revolution and Bolshevik-driven default, were the ones to dump completely?War, in other words, involves a level of radical uncertainty far beyond the calculable risks to which most investors have become accustomed. This means that even previous world wars have limited lessons for later ones, since no two are alike. Mr Ferguson’s paper shows that the optimal playbook for 1914 (buy commodities and American stocks; sell European bonds, stocks and currencies) was of little use in the late 1930s. Investors in that decade did try to learn from history. Anticipating another world war, they sold continental European stocks and currencies. But this different war had different winning investments. British stocks beat American ones, and so did British government bonds.Today there is a greater and more terrible source of uncertainty, since many of the potential belligerent powers wield nuclear weapons. Yet in a sense, this has little financial relevance, since in a nuclear conflagration your portfolio’s performance would be unlikely to rank highly among your priorities. The upshot of it all? That the fog of war is even thicker for investors than it is for military generals, who at least have sight of the action. If the worst happens, future historians might marvel at the seeming insouciance of today’s investors. They will only be able to because, for them, the fog will have cleared.■Read more from Buttonwood, our columnist on financial markets: Investors are returning to hedge funds. That may be unwise (Oct 26th)Why it is time to retire Dr Copper (Oct 19th)Investors should treat analysis of bond yields with caution (Oct 12th)Also: How the Buttonwood column got its name More

The U.K. government published its response to a consultation paper issued earlier this year, which outlined recommendations on how the crypto industry should be regulated.
The government received views from crypto native and fintech companies, industry associations, traditional financial services firms, members of the public, academia, and legal and consulting firms.
The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.

Bitcoin, the world’s largest cryptocurrency, has been stealthily rising in 2023.
Chris Ratcliffe | Bloomberg | Getty Images

The U.K. government on Monday confirmed plans to regulate the cryptocurrency industry, announcing in a consultation paper that it will look to bring in formal legislation for crypto activities by 2024.
The government published its response to a consultation paper issued earlier this year, which outlined recommendations on regulating the crypto industry.

In the Monday paper, the government said it intends to bring a number of cryptoasset activities under the same regulations that govern banks and other financial services firms.
“I am very pleased to present these final proposals for cryptoasset regulation in the UK on behalf of the Government,” Andrew Griffith, the U.K. financial services minister, said in a statement.
“I look forward to our continued work with the sector in making our vision a reality for the UK as a global hub for cryptoasset technology.”
The government’s proposals include stricter rules for exchanges, custodians that store crypto on behalf of clients, and crypto lending companies.
The U.K. also proposes stricter regimes for market abuse and cryptoasset issuance and disclosures.

The government aims to introduce laws for the crypto industry before Parliament by 2024, according to the paper.
It is not immediately clear at this stage what U.K. laws on crypto will look like.
The EU set out a clear framework for digital assets with its MiCA (Markets in Crypto-Assets) regulation, including a licensing process for crypto firms.
The U.K. is further ahead in the process than other tech leading nations. Numerous bills are going through Congress, but the U.S. is far behind others when it comes to bringing about formal federal laws for the crypto industry. More

HSBC’s profit after tax came in at $6.26 billion in the three months ended September, jumping 235% compared to the $2.66 billion in the same period last year.
Profit before tax for the quarter rose by $4.5 billion to $7.7 billion, mainly due to a higher interest rate environment.
Revenue rose to $7.71 billion in the third quarter, up from $3.23 billion a year ago.

Aaron P | Bauer-Griffin | GC Images | Getty Images

HSBC’s profit after tax came in at $6.26 billion in the three months ended September, jumping 235% compared to the $2.66 billion in the same period last year.
Europe largest bank by assets also saw profit before tax for the quarter rise by $4.5 billion to $7.7 billion, mainly due to a higher interest rate environment.

However, the numbers missed expectations by economists, who were forecasting a third quarter profit after tax figure of $6.42 billion and profit before tax of $8.1 billion.
HSBC said the increase was in part due to a $2.3 billion impairment in the third quarter of 2022 relating to the planned sale of its retail banking operations in France.
Of that, $2.1 billion was reversed in the first quarter of 2023 as it became less certain that the transaction would be completed.
“We now expect to reclassify these operations to held for sale in 4Q23, at which point the impairment would be reinstated,” it said.
Revenue rose to $7.71 billion in the third quarter, up from $3.23 billion a year ago. HSBC also attributed this to the higher interest rate environment, saying that it has supported growth in net interest income in all of its global businesses.

Net interest margin — a measure of lending profitability — stood at of 1.7%, up by 19 basis points year on year and beating estimates of 1.68%.
However, NIM fell two basis points compared with the previous quarter. This reflected an increase in customers migrating their deposits to term products, particularly in Asia, HSBC said.
For the nine months ended September, profit after tax stood at $24.33 billion, compared to $11.59 billion in the first nine months of 2022.

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HSBC’s Hong Kong-listed shares rose 0.43% after the announcement.
In light of the results, the bank’s board approved a third interim dividend of 10 cents per share. HSBC also said it will initiate a further share buy-back of up to $3 billion, which is expected to “commence shortly” and be completed by its full-year results announcement on Feb. 21, 2024.
“We’re pleased to again reward our shareholders. We have now announced three share buybacks in 2023 totaling up to $7 billion, as well as three quarterly dividends which total $0.30 per share,” group CEO Noel Quinn said in the release. “This underlines the substantial distribution capacity that we have, even as we continue to invest in growth.”
The buyback is expected to have a 0.4 percentage point impact on its common equity tier 1 capital ratio, or CET1 ratio, the bank said. The CET1 ratio is a measure of the financial resilience for European banks.
Moving forward, HSBC said it plans to reduce its CET1 ratio to between 14% to 14.5%, down from the current level of 14.9%. It revealed that its dividend payout ratio is 50% for 2023 and 2024, excluding material notable items.
Correction: The headline has been updated to reflect that HSBC announced a $3 billion share buyback. More

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Suze Orman has a warning for investors relying too heavily on bonds.
The personal finance expert believes the draw of high interest rates and an aversion to risk taking are preventing too many people from taking a “lifetime opportunity” in the stock market.

“Some of these stocks — how do you pass them up? I mean, you have to go into them. Now, do you go into them with everything that you have? No. Do you dollar-cost average into them, and take advantage of [down] days? … Yes,” the “Women & Money” podcast host told CNBC’s “Fast Money” this week. “You’ll be making a big mistake if you park your money forever in bonds.”
Orman, who is also co-founder of emergency fintech company SecureSave, notes long-term investors should have the stomach for the stock market’s twists and turns.

‘I want to buy a stock, and I hope it goes down’

“I have some serious losers at this point. However, I don’t care,” said Orman. “I want to buy a stock, and I hope it goes down. And I hope it goes further down and down so I can accumulate more.”
She does recommend keeping some money in fixed income to mitigate risks in a volatile environment.
At the same time, she still sees a role for bonds in portfolios. She likes the three- and six-month Treasurys and is ready to start looking longer term.

“The play may start to be in long-term Treasurys. So, I’ve started to dip my toe in. Every time the 30-year [yield] crosses five percent, I buy,” said Orman.
The 30-year Treasury yield is still near 2007 highs. It traded above 5% as of Friday’s close.

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Rashad Bilal and Troy Millings created “Earn Your Leisure,” a popular podcast, in early 2019 to help spread financial literacy.
The duo, one a former financial advisor and the other a teacher, said it likely takes a seven- or eight-figure net worth to achieve “financial freedom.”
But if you try and fall short, “you’ll still probably be better [off] than you would have been” if you hadn’t tried, Bilal told CNBC.

Troy Millings, left, and Rashad Bilal, co-creators of Earn Your Leisure.
Source: Tyrell Davis

Rashad Bilal and Troy Millings are among a growing class of financial influencers who want to help people be smarter about money.
The duo — a former financial advisor and a teacher, respectively — launched the podcast “Earn Your Leisure” nearly five years ago with a mission to promote literacy around money and entrepreneurship.

About 1 in 7 people lost more than $10,000 in 2022 due to a lack of financial literacy, according to a study by the National Financial Educators Council.
“I realized there were certain things that weren’t taught inside schools — financial literacy and financial education being one of them,” Millings said of the idea to create Earn Your Leisure.
More from Personal Finance:As mortgage rates hit 8%, home ‘affordability is incredibly difficult,’ economist saysStudent loan borrowers reenter ‘a very messy system’The 10-year Treasury tops key 5% level: Here’s what that means for you
Today, Earn Your Leisure has expanded to create multiple podcasts, host live events and offer an online educational platform, EYL University. It has 1.4 million Instagram followers and another 1.4 million YouTube subscribers. Its flagship podcast has an average 3 million downloads a month, said Bilal and Millings. It’s also developing a financial literacy curriculum for high schools.
CNBC interviewed the duo — who have been friends since childhood — to talk about personal finance and financial literacy in the U.S.

This interview has been edited and condensed for clarity.

‘Investing is not just for rich and wealthy people’

Greg Iacurci: You told CNBC last year that your “purpose is financial literacy and empowerment.” When it comes to financial literacy, what’s the No. 1 mistake you see people making with their finances?
Rashad Bilal: Not understanding the importance of investing, or [not] knowing how compound interest works.
For a long period of time, investing was something that people looked at more as a luxury, not a necessity, [thinking] if you’re able to invest then you’re in the top 1%, or you have to be wealthy to even consider that.
Investing is not just for rich and wealthy people. It’s for everybody. You can start with smaller balances and dollar-cost average.
Troy Millings: The relationship with money: People don’t understand what to do with it or how to save it. These are simple concepts we’re not taught. When we don’t know what to do, we do what we know, and that’s often spending outside our means. Mistakes are made because nobody is educated.

People may have heard that investing and compound interest are important but might not know why. Can you speak to that?
Bilal: The only way to really achieve financial freedom is if your money is growing without you working for the money. How to achieve that is through investing. One dollar will only be $1 if it’s saved in the bank. But $1 can become $2 if it’s invested.
Most people understand this without even fully realizing that they understand it because they have a retirement plan. The whole point of a retirement plan is investing. You put money into a 401(k), and that money gets invested with the expectation that when you’re 65, 70 years old you’ll have a nest egg you can draw from and live off of in retirement.
The only pathway to not working forever, to having money in abundance, is to find ways to make more money with the money you currently have.

What it takes to achieve financial freedom

Troy Millings, left, and Rashad Bilal, co-creators of Earn Your Leisure.
Source: Greenleaf Multimedia

You mentioned financial freedom. How much money does someone need to be financially free?
Bilal: I think everybody is different. I think it depends on where you live. But I would say, I think you have to be in the eight-figure-net-worth range if you live in suburban or metropolitan areas. I would say around that $10 million figure would provide some level of comfort if other aspects of your life are maintained.
And what is financial freedom?
Millings: I think it’s having enough financial resources to pay for your lifestyle, your living expenses, and also allows you money to invest.
It could differ. It could be in that eight-figure range. Or it could be seven figures. It’s really about having the financial resources to do what you want and invest and create generational wealth. It needs to be something that lasts for generations.

Some people might hear that — seven or eight figures — and think, “How is that possible for me?” Do you think it’s possible for most people?
Bilal: Most people probably aren’t going to make $10 million — I’m just being honest to the question you asked. We have to be honest.
But some people will. This is why we’re big on entrepreneurship, we’re big on investing. You might not be able to accumulate $10 million in your lifetime, but you might be able to accumulate $1 million or $1.5 million. That’s still better than being 70 years old with $20,000 in your bank account.
I think the aspiration towards a certain goal, you might not be able to actually obtain that goal, but if you fall short you’ll still probably be better [off] than you would have been if you had no aspiration and didn’t follow any rules or didn’t try to invest or start a business; you live off what you have. You won’t buy a $1 million home if you only have $1,000 in your bank account. Your life will still be better financially than if you didn’t follow the pathway towards the goal.

Making it ‘cool to be educated’ about money

For the person who’s just starting out investing, how would you suggest they go about it?
Millings: When you’re young, you want to be as aggressive as possible, and when you’re older, you want to get more conservative. Risk mitigation is a huge part of that. We always tell people to start with indexes — an entire index or entire [industry] sector in an exchange-traded fund. That keeps you from having the volatility of watching a stock either appreciate — where you might get some upside — or depreciate, where the risk on the downside is far greater. 

In a recent discussion with entrepreneur and musician Sean “Diddy” Combs, you mentioned that when he met you, he said you “make it cool to be educated.” How do you go about that?
Millings: We’re authentically ourselves, so there’s a natural relatability because people see themselves in us. When people talk about finance they try to make it a language that is upspoken to the masses. Our mission was to democratize it, to make it seem like something that can be very relatable and digestible. We show up the way we are, we wear sweatshirts, we wear hoodies. We represent everybody. It doesn’t feel like it’s only for the elite or it’s only for a select crowd.
It’s the same thing in the classroom: A student has to realize this is someone I can learn from and who I want to teach me. Our audience kind of feels that way when they look at us. We’re also very vocal that we’re learning as well. We don’t know everything, and we bring people on [the show] who can educate us.

‘Having money doesn’t alleviate the problems’

For your podcasts, you’ve interviewed several famous and wealthy people — pro athletes, musicians and entertainers, for example. Are there certain things about finance that seem just as confusing for the rich and famous as for the average person?
Bilal: Yeah, I think a lot of people don’t have a full understanding of finance. It doesn’t matter how much money you make. That’s a common misconception.
Having money doesn’t alleviate the problems, it just makes the problems even worse. Understanding money or having a good understanding of money isn’t something that’s correlated with how much money you have.
Financial literacy is something I think gets metastasized on the highest level. Those are the same issues that everybody else has, it’s just everybody else doesn’t have the opportunity to lose $30 million or invest $20 million into a bad investment and then it goes belly up. If given the opportunity they probably would, it’s just they don’t have it. It’s a bigger microscope on celebrities because they’re public figures.
Is that because wealthy people and celebrities have a capacity to overspend more than the average person?
Bilal: I think it’s not so much just a spending situation. That’s a common misconception also, that they go broke because they spend money lavishly. That’s one part of it. But another major part is they’re actually trying to do the right thing, they’re just misinformed.
You see a lot of people make bad decisions when it comes to investing. They’ll invest in things that might be Ponzi schemes, bad real estate deals, they’ll be led down a bad path when it comes to financial advisors or people they trust. They think they’re doing something productive with their money but they actually are losing money because the investments aren’t fully vetted, they don’t fully understand what they’re investing in.
So I think it’s a little more complicated than just spending habits. It all comes back to not having a basic level of understanding and education when it comes to money.

It seems there’s some relatability there for everyday people.
Bilal: For sure. Look at crypto, for example. If you look at [the cryptocurrency] dogecoin, a lot of people made misinformed decisions. They thought they were doing something productive. They didn’t go into it with the intention of losing money. In their brain it was like, ‘This is an opportunity to turn $5,000 into $20,000.’ And they potentially lost all of their money.
It’s the same thing [with celebrities]. It’s just played out on bigger levels. More

JPMorgan Chase CEO Jamie Dimon will begin to sell one million shares of the bank he runs next year, the company said.
The plan sparked concern that Dimon, who is 67 years old, could be contemplating retirement.
A spokesperson for the New York-based bank said the move wasn’t related to succession planning, and that Dimon has “no current plans” for another sale.

JPMorgan Chase CEO Jamie Dimon will begin to sell one million shares of the bank he runs next year, the company said Friday in a filing.
The plan sparked concern that Dimon, 67, could be contemplating retirement. Dimon is arguably the country’s top banker. He has led JPMorgan since 2005, helping build it into the biggest and most profitable American bank. His stewardship included navigating JPMorgan through two banking crises, helping stabilize the industry by acquiring failed banks.

Before now, Dimon has never sold shares of JPMorgan except for technical reasons such as exercising options. He has also spent his own money snapping up JPMorgan shares in the past.
Shares of the bank slipped 3.6%, worse than the 2.3% decline of the KBW Bank Index.
“This is a reminder that the CEO is getting closer to retirement,” Wells Fargo analyst Mike Mayo said in a note. Dimon may transition from his current role in about three and a half years, if prior statements prove accurate, Mayo added.
A spokesperson for the New York-based bank said the move wasn’t related to succession planning, and that Dimon has “no current plans” for another sale, though his needs could change over time.
Here is the bank’s statement:

Chairman & CEO Jamie Dimon confirmed today that he and his family plan to sell a portion of their holdings of JPMorgan stock for financial diversification and tax-planning purposes. Starting in 2024 they currently intend to sell 1 million shares, subject to the terms of a stock trading plan. This is Mr. Dimon’s first such stock sale during his tenure at the company.
Mr. Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant. He and his family currently hold approximately 8.6 million shares, and in addition he continues to have unvested Performance Share Units relating to 561,793 shares and Stock Appreciation Rights relating to 1,500,000 shares, subject to the terms and conditions of each grant.
Mr. Dimon will use stock trading plans to sell his shares, in accordance with guidelines specified under Rule 10b5-1 of the Securities and Exchange Act of 1934.

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X owner Elon Musk is attempting to create a future in which X users can use the platform for their entire financial lives, according to a report from The Verge.
Musk told his employees that the plan is to roll out the feature in 2024, per the report.
Linda Yaccarino, CEO of X, also said that it is a “full opportunity” in the next calendar year, The Verge reported.

Elon Musk, CEO of SpaceX and Tesla and owner of X, formerly Twitter, attends a U.S. Senate bipartisan Artificial Intelligence (AI) Insight Forum at the U.S. Capitol in Washington, D.C., on Sept. 13, 2023.
Stefani Reynolds | AFP | Getty Images

X owner Elon Musk is attempting to create a future in which X users can use the platform for their entire financial lives, according to a report from The Verge.
Musk told employees in a meeting Thursday that the plan is to roll out the feature in 2024, said The Verge’s report, which also quoted CEO Linda Yaccarino as saying that it is a “full opportunity” in the next calendar year.

“When I say payments, I actually mean someone’s entire financial life,” Musk said in the meeting, according to The Verge’s article, citing audio it obtained. “If it involves money. It’ll be on our platform. Money or securities or whatever. So, it’s not just like send $20 to my friend. I’m talking about, like, you won’t need a bank account.”
X is working on securing money transmission licenses across the U.S., The Verge reported. The company already has licenses for money transmission or money services in nine states, according to the Nationwide Mortgage Licensing System.
Musk’s desire to expand X’s financial component falls in line with his previously laid-out ambition to make X “the everything app,” announced when he rebranded the platform in July. More

Chinese tech giant Huawei reported revenue figures Friday that showed only a 1% increase in the third quarter from a year ago, according to CNBC calculations.
The three-month period ending in September saw Huawei launch a new smartphone that helped the company grow its sales in China, versus Apple’s sales decline, according to Counterpoint Research.
Huawei said revenue for the first three quarters of the year rose by 2.4% to 456.6 billion yuan — the highest for the period since 2020.

Visitors line up in front of the Huawei flagship store on Nanjing East Road, one of the city’s main commercial and tourist area, in Shanghai, China, on Sept. 30, 2023.
Bloomberg | Bloomberg | Getty Images

BEIJING — Chinese tech giant Huawei reported revenue figures Friday that showed only a 1% increase in the third quarter from a year ago, according to CNBC calculations.
That’s despite the company’s release of a popular new smartphone in late August and growing sales within its electric car venture.

Huawei said revenue for the first three quarters of the year rose by 2.4% year-on-year to 456.6 billion yuan ($62.33 billion) — the highest for the period since 2020. U.S. sanctions on the Chinese telco maker started in 2019.
Despite those restrictions on Huawei’s ability to access high-end tech, reviews indicated the company’s new Mate 60 Pro smartphone offers download speeds associated with 5G — thanks to an advanced semiconductor chip.

Huawei quietly launched the phone in China in late August, and declined to share more during a seasonal product launch event in late September.
More than 1.6 million Mate 60 series devices were sold during the first six weeks of sales, according to Counterpoint Research.
The research firm estimated that the majority, about 75%, of units sold were Pro models — that’s about 1.2 million units sold.

Apple, which launched its iPhone 15 in September, is expected to sell 10 million units of the new phone in China this year, for an expected total of 45.5 million iPhone sales in the country, according to Shanghai-based CINNO Research estimates.

The U.S. company saw smartphone sales fall by 10% in the third quarter from a year ago, while Huawei’s sales surged by 37%, Counterpoint Research said Thursday.

Electric car brand

Huawei has also built up a presence in China’s fast-growing new energy vehicle market, which includes hybrid and battery-powered cars.
The company sells its operating system and components, such as for driver-assist tech, to car manufacturers.
In December 2021, Huawei launched its own car brand Aito in collaboration with manufacturer Seres.
Orders for Aito’s latest M7 topped 60,000 as of Oct. 16, just about a month after its release, according to a social media post from Richard Yu, who heads Huawei’s car-related and consumer business.
On Wednesday, Aito said pre-orders for its forthcoming M9 SUV had topped 15,000.

Profit margin increase

Huawei is not publicly traded and did not break out revenue by business segment in its latest update.
The telecommunications giant said it recorded partial gains from the sale of certain businesses, but did not specify which ones.
Huawei said its net profit margin for the first three quarters of the year was 16%. That’s up from a profit margin of 15% reported for the first half of the year, when revenue grew by 3.1% to 310.9 billion yuan.
Third-quarter revenue was 145.7 billion yuan, up by 1% from the 144.2 billion yuan in the year-ago period, CNBC calculations of Huawei figures showed.
Huawei continued its efforts to expand its patent licensing business during the third quarter with Xiaomi and Ericsson deals, which covered 5G connectivity.
The telecommunications giant has rolled out 5G-based business applications in mining, ports and manufacturing, but it was unclear from Friday’s release how much revenue, if any, they generated for the company in the third quarter.
Huawei also pressed ahead in international markets by expanding its cloud business to Saudi Arabia in September. The company said this week it opened a research lab in Finland for testing health and fitness wearables.
The U.S. has maintained the Chinese telecommunications giant is a national security risk due to alleged links to the Chinese Communist Party and the country’s military. Huawei has repeatedly denied the existence of any such risk.
— CNBC’s Arjun Kharpal contributed to this report. More