Finance

Barclays CEO C.S. Venkatakrishnan said the bank “continued to manage credit well, remained disciplined on costs and maintained a strong capital position” against a “mixed market backdrop.”
Analysts polled by Reuters had produced a consensus forecast of £1.18 billion, down from £1.33 billion in the second quarter and £1.51 billion for the same period in 2022.

A view of the Canary Wharf financial district of London.
Prisma by Dukas | Universal Images Group | Getty Images

LONDON — Barclays shares retreated on Tuesday as investors assessed the prospect of cost-cutting charges, pressure on domestic interest margins and weak performance in formerly strong divisions.
The bank reported a net profit of £1.27 billion ($1.56 billion) for the third quarter, slightly ahead of expectations as strong results in its consumer and credit card businesses compensated for weakening investment bank revenues.

Analysts polled by Reuters had produced a consensus forecast of £1.18 billion, down from £1.33 billion in the second quarter and £1.51 billion for the same period in 2022.
Here are other highlights for the quarter:

CET1 ratio, a measure of banks’ financial strength, stood at 14%, up from 13.8% in the previous quarter.
Return on tangible equity (RoTE) was 11%, with the bank targeting upwards of 10% for 2023.
Group total operating expenses were down 4% year-on-year to £3.9 billion as inflation, business growth and investments were offset by “efficiency savings and lower litigation and conduct charges.”

Barclays CEO C.S. Venkatakrishnan said the bank “continued to manage credit well, remained disciplined on costs and maintained a strong capital position” against a “mixed market backdrop.”
“We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the Group.”
Barclays will set out its capital allocation priorities and revised financial targets in an investor update alongside its full-year earnings, he added.

Barclays’ corporate and investment bank (CIB) saw income decrease by 6% to £3.1 billion, with the bank citing reduced client activity in global markets and investment banking fees.
Revenue in the traditionally robust fixed income, currency and commodities trading division dropped 13% as market volatility moderated, dampening trading volumes.
This was mostly offset by a 9% revenue increase in its consumer, cards and payments (CC&P) business to £1.4 billion, reflecting higher balances on U.S. cards and a transfer of the wealth management and investments (WM&I) division from Barclays U.K.
The bank did not announce any new returns of capital to shareholders after July’s £750 million share buyback announcement.
Cost cutting charges ahead
Barclays hinted at substantial cost cutting that will be announced later in the year, mentioning in its earnings report that the group is “evaluating actions to reduce structural costs to help drive future returns, which may result in material additional charges in Q423.”
The cost-income ratio in the third quarter was 63%, but the bank has set a medium-term target of below 60%.
Notably, Barclays cut its net interest margin forecast for the U.K. bank to a range of 3.05% to 3.1%, down from previous guidance of around 3.15%.
The bank had warned in its second-quarter earnings that it expects to earn less interest in its U.K. division, with net interest margins in its domestic bank under pressure because of increased competition for savers’ deposits amid a difficult period for household finances in the U.K.
The bank’s shares slipped by as much as 6.5% by 09:16 a.m. in London, as market participants balked at the prospect of cost actions and margin pressure.
“Net interest margin is the metric the banks are judged on so it is not a surprise to see Barclays heavily punished for downgrading guidance here even if profit for the third quarter was ahead of guidance,” said Danni Hewson, head of financial analysis at stockbroker AJ Bell.
“It’s never a particularly palatable message for shareholders to hear a business is going to be less profitable. While the banks were seen as beneficiaries of higher interest rates, and perhaps were for a time, the competitive and regulatory pressures to match increases in the cost of borrowing with rates offered for cash on deposits mean this benefit has not proved long lasting.”
A ‘mixed set of results’
John Moore, senior investment manager at RBC Brewin Dolphin, said that, despite beating expectations at a headline level, Barclays had produced a “real mixed set of results” that reflected an “increasingly challenging backdrop.”
“Sentiment has generally soured, on the back of U.S. regional banks struggling with lower than expected net interest margins and issues such as the well-publicised problems of Metro Bank,” Moore said in an email Tuesday.
“Market conditions have also not been great for Barclays’ investment banking division, with deal activity relatively low. That said, its other banking operations are largely resilient – particularly its consumer and credit card business – and, with capital to invest, Barclays could be a beneficiary as some of its smaller peers struggle in the current environment.” More

3 in 4 of Gen Z would rather have a better quality of life than have extra money in their banks, a report by Intuit shows.
Athima Tongloom | Moment | Getty Images

For most people, their goal is to work hard, save money and retire early. But a “soft saving” trend is emerging among younger workers, challenging the traditional way of thinking.
Soft saving refers to putting less money into the future, and using more of it for the present.

Generation Z — a generation that puts experiences before money — is leading the so-called soft saving wave, according to the Prosperity Index Study by Intuit. “Soft saving is the soft life’s answer to finances,” said the report.
A “soft life” is a lifestyle that embraces comfort and low stress, prioritizing personal growth and mental wellness.

Younger generations value a balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now.

Ryan Viktorin
Vice President, Financial Consultant at Fidelity Investments

The report found the approach to investing and personal finance by Gen Z’s — those born after 1997 — to be “softer” than previous decades.
What does that mean? It means younger investors tend to put their money in causes that reflect their personal views.
They also seek emotional connection with brands and professionals they choose to engage with, Liz Koehler, head of advisor engagement for BlackRock’s U.S. Wealth Advisory business told CNBC.

Are people saving less?

Younger workers have a desire to break free from restrictive financial constraints.
Three in four Gen Z would rather have a better quality of life than extra money in their banks, the Intuit report shows.
In fact, personal saving rates among Americans today seem to mirror the soft savings trend. 
According to the U.S. Bureau of Economic Analysis, Americans are saving less in 2023. The personal saving rate — the portion of disposable income one sets aside for savings — was significantly lower at 3.9% in August, compared to the 8.51% average in the past decade, according to data from Trading Economics which goes as far back as 1959.

One of the reasons for a drop in personal savings is the rebound from the Covid-19 pandemic, said Ryan Viktorin, vice president financial consultant at Fidelity Investments, a financial services corporation.
As Americans spent significantly lower during the pandemic in the last two to three years, people more are likely to spend a lot more now to make up for lost time, she told CNBC.
Additionally, inflation makes it harder for people to cover their expenses or save, Koehler said.
The decrease in personal saving rates also reflects a change in financial goals among workers today. 
As younger people enter the workforce, they bring in new financial priorities and are more likely to embrace a “balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now,” Viktorin said.

Retiring and savings

Retirement is the grand finale for most workers. However, more are concerned they may not be able to retire at all. 
A report by Blackrock shows that in 2023, only 53% of workers believe they are on track to retire with the lifestyle they want. A lack of retirement income, worries over market volatility and high inflation were some of the reasons cited for a lack of confidence about retirement among workers.

Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely.

Andy Reed
Head of Investor Behavior at Vanguard

Younger workers also share the same sentiments, where two in three Gen Z are not sure if they will ever have enough money to retire. 
However, this fear may not be that much of a concern for the younger generation, as most are actually looking to retire early — or to retire at all, the report by Intuit showed.
Additionally, the Transamerican Center for Retirement Studies found that almost half the working population either expects to work past the age of 65, or do not have plans to retire.
Traditionally, retiring entails leaving the workforce permanently. However, experts found that the very definition of retirement is also changing between generations.

About 41% of Gen Z and 44% of millennials — those who are currently between 27 and 42 years old — are significantly more likely to want to do some form of paid work during retirement.
That’s higher than the 31% of Gen X (those born between 1965 to 1980) and 21% of Baby Boomers (born between 1946 to 1964) surveyed, the report by the Transamerican Center for Retirement Studies showed. 
This increasing preference for a lifelong income, could perhaps make the act of “retiring” obsolete. 
Although younger workers don’t intend to stop working, there is still an effort to beef up their retirement savings.
Fidelity’s second quarter retirement analysis found that millennials and Gen Z’s are still major beneficiaries of the 401(k) saving plan, a retirement savings plan offered by American employers that has tax advantages for the saver.
The report revealed that in the second quarter of last year, the average 401(k) balances were up by double digits for Gen Z and millennials — Gen Z saw a 66% increase and millennials had 24.5% increase.

What are people spending more on?

Still, one question remains: where are people directing their money as they spend more and save less?
The study by Intuit found that millennials and Gen Z are more willing to spend on hobbies and make non-essential purchases compared to Gen X and boomers.
About 47% of millennials and 40% of Gen Z expressed a need to have money to pursue their passion or hobby, compared to only 32% of Gen X and 20% of boomers. 

Experts highlighted travel and entertainment as some of the non-essential experiences the younger generation is prioritizing.
Andy Reed, head of investor behavior at investment management firm Vanguard, said Gen Z’s spending on entertainment increased to 4.4% in 2022, compared to 3.3% in 2019.
In addition, Americans are “re-focused” on post-pandemic travel, a possible reason why there is a decrease in personal saving rates, said Fidelity’s Viktorin.

Soft saving is the soft life’s answer to finances.

Intuit
Prosperity Index Study

Although the younger generation is saving less, it doesn’t mean they are living paycheck to paycheck. 
In fact, “Gen Z appear to be living within their means, and their increased spending seems to reflect rising costs of essentials more than a rising taste for luxury,” Reed noted. 
“Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely,” he added. More

In some ways the covid-19 pandemic was a blip. After soaring in 2020, unemployment across the rich world quickly dropped to pre-pandemic lows. Rich countries reattained their pre-covid gdp levels in short order. And yet, more than two years after lockdowns were lifted, at least one change appears to be enduring: consumer habits across the rich world have shifted decisively, and perhaps permanently. Welcome to the age of the hermit.In the years before covid, the share of consumer spending devoted to services rose steadily upwards. As societies got richer, they demanded more in the way of luxury experiences, health care and financial planning. Then, in 2020, spending on services, from hotel stays to hair cuts, collapsed owing to lockdowns. With people spending more time at home, demand for goods jumped, with a rush for computer equipment and exercise bikes.image: The EconomistThree years on the share of spending devoted to services remains below its pre-covid level (see chart 1). Relative to its pre-covid trend, the decline is even sharper. Rich-world consumers are spending on the order of $600bn a year less on services than you might have expected in 2019. In particular, people are less interested in spending on leisure activities that generally take place outside the home, including hospitality and recreation. The money saved is being redirected to goods, ranging from durables such as chairs and fridges, to things like clothes, food and wine.In countries that spent less time in lockdown, hermit habits have not become ingrained. Spending on services in New Zealand and South Korea, for instance, is in line with its pre-covid trend. Elsewhere, though, hermit behaviour now looks pathological. In the Czech Republic, which was whacked by covid, the services share is about three percentage points below trend. America is not far off. Japan has witnessed a 50% decline in restaurant bookings for client entertainment and other business purposes. Pity the drunk salaryman staggering around Tokyo’s entertainment districts: he is now an endangered species.At first glance, the figures are hard to reconcile with the anecdotes. Isn’t it harder than ever to get a reservation at a good restaurant? And aren’t hotels full of travellers, causing prices to soar? Yet the true source of the crowding is not sky-high demand, but constrained supply. These days fewer people want to work in hospitality—in America total employment in the industry remains lower than in late 2019. And the disruption of the pandemic means that many hotels and restaurants that would have opened in 2020 and 2021 never did. The number of hotels in Britain, at around 10,000, has not grown since 2019.image: The EconomistFirms are noticing the $600bn shift. In a recent earnings call an executive at Darden Restaurants, which runs one of America’s finest restaurant chains, Olive Garden, noted that, relative to pre-covid times, “we’re probably in that 80% range in terms of traffic”. At Home Depot, which sells tools to improve your home, revenue is up by about 15% on 2019 in real terms. Investors are noticing. Goldman Sachs, a bank, tracks the share prices of companies that tend to benefit when people stay at home (such as e-commerce firms) and those that thrive when people are out and about (such as airlines). Even today, the market looks favourably upon firms that service stay-at-homers (see chart 2).Why has hermit behaviour endured? The first possible reason is that some tremulous folk remain afraid of infection, whether by covid or something else. Across the rich world people are swapping crowded public transport for the privacy of their own vehicles. In Britain, car use is in line with the pre-covid norm, whereas public-transport use is well down. People also seem less keen on up-close-and-personal services. In America spending on hairdressing and personal-grooming treatments is 20% below its pre-covid trend, while spending on cosmetics, perfumes and nail preparations is up by a quarter.The second relates to work patterns. Across the rich world people now work about one day a week at home, according to Cevat Giray Aksoy of King’s College London and colleagues. This cuts demand for the services bought when at the office, including lunches, and raises demand for do-it-yourself goods. Last year Italians spent 34% more on glassware, tableware and household utensils than in 2019.The third relates to values. The pandemic may have made people genuinely more hermit-like. According to official data from America, last year people slept about 11 minutes more than they did in 2019. They also spent less on clubs that require membership and other social activities, and more on solitary pursuits, such as gardening, magazines and pets. Meanwhile, global online searches for the “Patience”, a card game otherwise known as solitaire, are running at about twice their pre-pandemic level. Covid’s biggest legacy, it seems, has been to pull people apart. ■ More

Despite a murky macroeconomic environment and heightened fears around the health of the banking sector, the nation’s largest financial institutions all reported earnings beats for the third quarter. Some businesses performed better than others. However, none of them has been rewarded with higher stock prices — yet. As expected, money center banks like Wells Fargo (WFC) and JPMorgan (JPM) outperformed financials that lean more heavily on wealth management and investment banking such as Morgan Stanley (MS) and Goldman Sachs (GS). “A softer performance in investment banking was not a surprise, given the current dearth of mergers and acquisitions and a still-frozen market for initial public offerings,” Jeff Marks, CNBC Investing Club director of portfolio analysis, said after quarterly results from Morgan Stanley, which is one of the Club’s two bank holdings. Wells Fargo is the other. The third-quarter reporting season for major banks wrapped up this week. The banking sector is facing a myriad of obstacles right now, creating a difficult operating environment even for Wall Street’s most profitable firms. The fed funds overnight bank lending rate of 5.25%-5.5% is the highest in some 22 years. The Federal Reserve has increased the cost of borrowing 11 times since March 2022, with questions about whether one more rate hike is needed before year-end. The KBW Bank Index , a go-to stock index for the sector, has declined more than 27% since the start of the year. Wells Fargo’s decline of 2.5% in 2023 and Morgan Stanley’s 14% drop are relative outperformers. Morgan Stanley vs. Goldman Sachs MS YTD mountain Morgan Stanely YTD Morgan Stanley reported better-than-expected third-quarter results on Wednesday. For the three months ended Sept. 30, the company earned $1.38 per share on a 2% increase in revenue to $13.27 billion. The bank, however, reported weak results at its investment banking and wealth management units, sending shares down 6.8% on Wednesday and down another 2.6% on Thursday. The stock hit a 52-week low of $72.35 during Friday’s session but closed slightly higher. We think those headwinds will pass, so we bought Wednesday’s drop, picking up 75 more shares. On Friday, Marks said the Club is considering buying more future pullbacks. We’re content to be paid for our patience by an annual dividend yield of 4.6%. While investment banking has been downbeat for several quarters on fears of an economic downturn, management expressed optimism around this long-dormant part of its business. “The minute you see the Fed indicate they’ve stopped raising rates, the M & A and underwriting calendar will explode because there is enormous pent-up activity,” outgoing Morgan Stanley CEO James Gorman said Wednesday. The team also said that planned multiyear wealth management growth remains on plan. GS YTD mountain Goldman Sachs YTD As a point of comparison, outside our portfolio, Goldman Sachs on Tuesday also reported stronger-than-expected quarterly revenue and profits . Goldman, which is one of the most investment-banking-reliant firms in the sector, saw figures pale in comparison to what they once were. Third-quarter revenue dropped 20% year over year at Goldman’s asset and wealth management division. Goldman shares logged a three-session losing streak following earnings with a modest reprieve Friday. However, like Morgan Stanley, management at Goldman Sachs also forecasted improvements. “I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive. As the leader in M & A advisory and equity underwriting, a resurgence in activity will undoubtedly be a tailwind for Goldman Sachs,” CEO David Solomon said in the earnings release. Goldman Sachs’ asset and wealth management division saw Q3 revenue drop 20% year over year. Wells Fargo vs. JPMorgan WFC YTD mountain Wells Fargo (WFC) year-to-date performance On the money center side, Wells Fargo reported stellar quarterly results on Friday, Oct. 13, topping analysts’ expectations for both earnings and revenues. The stock soared 3% that day. It was up Monday and Tuesday before hitting a rough patch for the rest of the week. For the three months ended Sept. 30, the company delivered EPS of $1.39 on a 6.6% increase in Q3 revenue to $20.86 billion. Wells Fargo got a boost from better-than-expected net interest income and non-interest income, along with a decline in non-interest expenses. Expense control is a significant reason the Club favors Wells Fargo over some of the other majors. Management’s eye has been on improving efficiency for some time through cost-cutting via layoffs or optimizing certain parts of the bank’s business. Wells Fargo CFO Mike Santomassimo said in September that the firm may cut more jobs down the road on top of the roughly 40,000 jobs already slashed over the last three years. JPM YTD mountain JPMorgan Chase YTD Looking outside our portfolio for comparison, we saw JPMorgan Chase (JPM) also report solid results on Friday the 13th, beating expectations on third-quarter profit and revenue. Like Wells Fargo, the bank benefited from robust interest income, while costs for credit were lower than expected. However, CEO Jamie Dimon said the bank is “over-earning” on interest income and that its “below normal” credit costs will normalize over time. JPMorgan shares jumped 1.5% on Oct. 13 but then dropped every day this past week. (Jim Cramer’s Charitable Trust is long WFC, MS . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A combination file photo shows Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America and Goldman Sachs.

Despite a murky macroeconomic environment and heightened fears around the health of the banking sector, the nation’s largest financial institutions all reported earnings beats for the third quarter.
Some businesses performed better than others. However, none of them has been rewarded with higher stock prices — yet. More

The most popular question on Ark Invest’s website has nothing to do with investing in the U.S., according to the firm’s CEO and Chief Investment Officer Cathie Wood.
“The No. 1 question on our website as we track these questions is: Why can’t we buy your strategies in Europe?” the tech investor told CNBC’s “ETF Edge” this week.

Wood’s firm expanded its exposure to Europe last month by acquiring the Rize ETF Limited from AssetCo.
“We found this little gem of a company inside of AssetCo, which philosophically and from a DNA point-of-view, is very much like Ark,” Wood said. “They know what’s in their portfolios. They’re very focused on the future, thematically oriented. They do have a sustainable orientation, which is absolutely essential in Europe.”
She speculates 25% of total demand for Ark’s research strategies comes from Europe.
“We’re terribly impressed with the quality of their [Rise ETF] own research and due diligence,” Wood said. “We saw it during the deal, and I think we’re going to hit the ground running if the regulators approve our strategies there. And, of course, we’d like to distribute their strategies throughout the world including the US.”
Wood’s firm has around $25 billion in assets under management, according to the firm. As of Sept. 30, FactSet reports Ark’s top five holdings are Tesla, Coinbase, UiPath, Roku and Zoom Video.

Disclaimer More

Signage is displayed outside of a Comerica Bank branch in Torrance, California, on March 13, 2023.
Patrick T. Fallon | AFP | Getty Images

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Regional banks selling off

Regions Financial, a Birmingham, Alabama-based lender, posted a 6.5% decline in net interest income compared with the previous quarter. The bank also expects a further drop in NII, seeing a 5% decline in the fourth quarter.
NII is the difference between interest banks earn on loans and what they pay out on deposits. As interest rates rise, lenders are pressured to pay more to keep depositors.
The Federal Reserve has hiked its key borrowing rate 11 times since March 2022 by a total of 5.25 percentage points, and the central bank recently vowed to keep rates higher for longer to combat stubbornly persistent inflation. Higher rates could lead to more losses on banks’ bond portfolios and contribute to funding pressures as institutions are forced to pay higher rates for deposits.
Dallas-based Comerica issued a similar warning as Regions, saying its NII is expected to decline between 5% and 6% in the fourth quarter. The bank reported a $106 million year-over-year decline in NII to $601 million in the third quarter.
Also feeling the pain is Cincinnati-based Fifth Third Bancorp, which forecast a similar drawdown in the quarter ahead.

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Coinbase is confident that a U.S. bitcoin exchange-traded fund will be approved by the Securities and Exchange Commission, the company’s chief legal officer, Paul Grewal, told CNBC.
He didn’t say when that’s likely to happen, and added the caveat that any decision would ultimately be up to the SEC.
But, Grewal said, it’s likely now that the SEC will approve a bitcoin ETF soon, highlighting the regulator’s failure in court to block Grayscale from converting its GBTC bitcoin fund into an ETF.

Coinbase is confident that a U.S. bitcoin exchange-traded fund will be approved by the U.S. Securities and Exchange Commission, the company’s chief legal officer, Paul Grewal, told CNBC.
“I’m quite hopeful that these [ETF] applications will be granted, if only because they should be granted under the law,” Grewal said in an interview with CNBC’s Arjun Kharpal.

The SEC was recently dealt a major court setback when a judge ruled that the regulator had no basis to deny crypto-focused asset manager Grayscale’s bid to turn its huge GBTC bitcoin fund into an ETF.
The SEC last week declined to appeal that ruling by a key deadline, likely paving the way for a bitcoin-related ETF to be approved in the coming months.
“I think that the firms that have stepped forward with robust proposals for these products and services are among some of the biggest blue chips in financial services,” Grewal added.
“So that, I think, suggests that we will see progress there in short order.”
He didn’t say when that’s likely to happen, and added the caveat that any decision would ultimately be up to the SEC.

But, Grewal said, it’s likely now that the SEC will approve a bitcoin ETF soon, highlighting the regulator’s failure in court to block Grayscale from converting its GBTC bitcoin fund into an ETF.

SAN ANSELMO, CALIFORNIA – JUNE 06: In this photo illustration, the Coinbase logo is displayed on a screen on June 06, 2023 in San Anselmo, California. The Securities And Exchange Commission has filed a lawsuit against cryptocurrency exchange Coinbase for allegedly violating securities laws by acting as an exchange, a broker and a clearing agency without registering with the Securities and Exchange Commission. (Photo Illustration by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images

“I think that, after the U.S. Court of Appeals made clear that the SEC could not reject these applications on arbitrary or capricious basis, we’re going to see the commission fulfill its responsibilities. I’m quite confident of that.”
A bitcoin ETF would give investors a way to own bitcoin without having to make a direct purchase from an exchange.
That could be more appealing to retail investors looking to gain exposure to bitcoin without having to actually own the underlying asset.
Coinbase would likely benefit from any bitcoin ETF that is ultimately approved. The company, the largest crypto exchange in the United States, is a common stock held in portfolios designed to give investors exposure to crypto.
Not all is rosy in Grayscale’s bid to turn GBTC into an ETF, however.
The asset management firm’s parent company, Digital Currency Group, along with crypto exchange Gemini and DCG subsidiary Genesis, were accused in a lawsuit from New York’s attorney general of defrauding investors of more than $1 billion.
Still, Grewal sounded a positive note on the prospect of additional bitcoin ETFs being approved — sooner rather than later.
“We think that other ETFs are going to be coming online soon enough as the SEC follows the law and is required to apply the law in a neutral way to the applications that are pending,” he said.

Bitcoin has risen about 72% in the year to date, in a comeback by stealth for the world’s biggest digital currency after huge declines in 2022.
There’s been greater investor demand for the token in recent months, as the market reacts to prospect of the Federal Reserve ending its campaign of persistent interest rate rises, and as anticipation builds around the upcoming bitcoin “halving” event, which will see rewards to bitcoin miners reduced by half, thereby limiting the coin’s supply.
Still, trading volumes have declined, as retail investors have become uninterested in engaging in the market in light of a lack of volatility and in response to severe wounds suffered by once-large industry players like FTX, BlockFi and Three Arrows Capital.
FTX collapsed into bankruptcy last year after investors fled the platform en masse because of concerns over its liquidity. The company and its founder, Sam Bankman-Fried, are accused of defrauding investors in a multibillion-dollar scheme. Bankman-Fried is standing trial over these allegations and has pleaded not guilty.
Addressing the trial, Grewal said he was “quite encouraged and quite optimistic that a number of the bad actors in this space are being held to account through criminal trials and through aggressive regulatory actions.”
“We are quite excited that there are a number of developments we think that are just around the corner, or underway even as we speak, that will bring back investor and consumer interest in crypto,” Grewal added. More

Activision Blizzard, Electronic Arts, Japan’s Nintendo and other public gaming companies currently hold $45.1 billion in cash and cash equivalents, according venture capital firm Konvoy.
Konvoy expects Microsoft’s $69 billion Activision deal will likely lead to further mergers and acquisition activity and create a new generation of gaming companies.
Venture capital investment into video game firms slumped 64% year over year in the third quarter of 2023, according to Konvoy’s report, which was shared exclusively with CNBC.

Gamers play the video game “Star Wars Battlefront II” during the “Paris Games Week” on Oct. 31, 2017.

Publicly listed gaming companies are sitting on a $45 billion pile of cash and cash equivalents — and that could lead to greater consolidation in the $188 billion video games market, according to a new report from venture capital firm Konvoy, which was shared exclusively with CNBC.
The likes of Activision Blizzard, Electronic Arts, Singapore’s Sea, Japan’s Nintendo and Bandai Namco, South Korea’s Nexon, and China’s NetEase, currently hold $45.1 billion in cash and cash equivalents, according Konvoy, which cited these companies’ latest public reports.

Public gaming companies currently hold cash and cash equivalents of $45.1 billion, according to a report from venture capital firm Konvoy.

That would give them more than enough financial firepower to look at potential acquisition targets that could help them build out their intellectual property and products.
In particular, gaming firms are looking to keep gamers more engaged for longer with live-service games that add more content over time and paid subscription packages that offer a certain amount of free games and access to cloud gaming, or the ability to play games via the cloud rather than downloading them to their machines.
Publicly listed gaming companies had a fairly rosy year in 2023, on the whole.
The VanEck Video Gaming and eSports ETF, which seeks to track MVIS Global Video Gaming & eSports Index, has climbed 20% in the year to date, according to Konvoy. The blue-chip S&P 500 index, by contrast, has climbed close to 12% year to date.

The performance of public gaming ETFs since the start of 2023.

The Global X Video Games & Esports ETF, which aims to track a modified market-cap-weighted global index of companies in video games and esports, hasn’t performed as well, slipping 0.4% since the start of 2023.

Big Tech eyes video games

Big Tech firms are also primed with plenty of cash to consider more gaming deals, according to Konvoy.
The VC firm said that the world’s biggest tech firms which includes Amazon, Microsoft, Google, Apple, Meta, Netflix, China’s Tencent, and Japan’s Sony, have a combined $229.4 billion of cash on their balance sheets to deploy on potential deals.

Josh Chapman, a partner at Konvoy, said the company expects the Microsoft-Activision deal — which saw the Redmond, Washington-based technology giant pay $69 billion for U.S. game publisher Activision Blizzard — would likely lead to further mergers and acquisition activity and create a new generation of gaming companies.
“As active gaming investors, we believe that gamers and gaming startups stand to benefit from the deal as it improves the value-proposition for gamers and leads to a vibrant M&A environment for other deals to get closed,” Chapman told CNBC in emailed comments.
Cloud gaming is a key area for Microsoft as it brings Activision into its growing portfolio of game publishers. The company is pushing its cloud gaming service, which does away with the need for traditional consoles likes its Xbox Series X or Sony’s PlayStation 5, with its Xbox Game Pass subscription product.
Chapman said this would lead to “new opportunities for emerging game developers, infrastructure companies and gaming platforms.”
Microsoft’s blockbuster acquisition of Activision Blizzard was approved by the U.K.’s Competition and Markets Authority earlier this month.
The deal, valued at $69 billion, will see Microsoft gain ownership of some of the most lucrative properties in video games, including the massive Call of Duty franchise, Candy Crush, Crash Bandicoot, Warcraft, Diablo, and Overwatch.

VC deal slump

Venture capital investment into video game firms slumped 64% year over year in the third quarter of 2023, according to Konvoy’s report.

Total venture funding into the video games industry in the third quarter of 2023 fell 9% quarter-over-quarter, to $454 million.

It’s a sign of how, despite the boost to the industry from Microsoft’s landmark deal, the boom times for the industry in 2020 and 2021 have ebbed.
Gaming startups raised a combined $454 million globally for the three months to September, down 9% quarter over quarter and more than 64% from the same three-month period a year ago.

Still, Konvoy’s Chapman anticipates the picture for gaming VCs and startups will look brighter next year, as grim venture investing conditions start to improve — however, funding for gaming firms has returned to a ” sustainable new normal” that will continue at the current pace for the next few years.
“As the global venture market rebounds we expect gaming, which was somewhat insulated from the initial impact of the economic downturn, to follow,” Chapman told CNBC. “We anticipate gaming VC funding to see a slight uptick over the next few quarters, when the industry will grow at a similar rate to before the pandemic.”
“Right now, VC deal volume and funding are comparable to pre-pandemic levels, and while we may not see the exponential growth of 2021, we’re excited to see a stable venture funding market in gaming for continued value creation in the industry.”

Tougher times

Video game publishers have been grappling with a deterioration of macroeconomic conditions, with high inflation and rising interest rates denting consumer appetite for discretionary spending.
Whereas in 2020, when consumers were flush with cash thanks to easy monetary conditions, times have gotten tougher in 2022 and 2023 as central bankers have increased interest rates in a bid to stem rising prices.
Still, the video game player base continues to increase, with a worldwide player base of 3.381 million today, according to Konvoy.
The video game market is still massive, and is projected to reach $188 billion in overall sales in 2023, according to Konvoy. That figure is up a modest 3% from the previous year, when gaming sales totaled $183 billion. But growth has accelerated slightly from 2022, when gaming sales rose only 2%.
That came after the standout year of 2021.
Gaming revenue reached $180 billion that year, climbing more than 8% from $166 billion in 2020 I assume, according to Konvoy’s research.
In 2020, the industry saw even bigger growth — more than 9% year over year. That was when pandemic lockdowns were in full swing, and people had more time to spend playing video games indoors.
Konvoy is projecting long-term growth for the games industry in the coming years, though. The firm said that it expects a compound annual growth rate of 9% in the next five years, with the industry reaching a whopping $288 billion in overall sales by 2028.
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