Finance

Tesla CEO Elon Musk speaks during the official opening of the new Tesla electric car manufacturing plant on March 22, 2022 near Gruenheide, Germany.
Christian Marquardt | Getty Images

Check out the companies making headlines in premarket trading Wednesday.
Tesla, Twitter – The electric vehicle maker slid 1.5% after CEO Elon Musk reversed course on his Twitter purchase, proposing once again to take over the social media company for $54.20 per share. He had previously tried to back out of buying the company, but Twitter sued him to go through with the purchase. Twitter shares dipped slightly after rallying on the news Tuesday.

Automakers – Ford rose 1.5% after Morgan Stanley upgraded the stock to overweight from equal weight, citing a potential buying opportunity after the stock’s recent decline. General Motors, meanwhile, dipped 1.8% after the firm lowered its price target on the stock.
Morgan Stanley, Goldman Sachs – Shares of the two banks slid 1.4% and 1.6%, respectively, after Atlantic Equities downgraded both stocks due to the potential of declining investment banking volume.
Airbnb – The online travel platform was up 0.8%, outperforming the broader market, after Bernstein initiated coverage of the stock with an outperform rating and a price target that implies upside of about 30% from Tuesday’s close.
Cruise lines – The major cruise lines dipped after surging during Tuesday trading, when Norwegian Cruise Line said it would drop Covid-19 testing, masking and vaccination requirements. The stock was down 2% on Wednesday, while Carnival and Royal Caribbean lost 2.3% and 1.9%, respectively.
Bionano Genomics – Shares jumped 11.3% after the company published a study on using optical genome mapping to investigate liver cancer.

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It is hard not to feel a sense of foreboding. As the Federal Reserve has tightened policy, asset prices have plunged. Stocks, as measured by the Wilshire 5000 all-cap index, have shed $12trn of market capitalisation since January. Another $7trn has been wiped off bonds, which have lost 14% of their value. Some $2trn of crypto market-cap has vanished over the past year. House prices adjust more slowly, but are falling. Mortgage rates have hit 7%, up from 3% last year. And this is all in America—one of the world’s strongest economies.Rising rates will slow the American economy and should break the back of inflation. But what else will they break? Since the Federal Reserve raised rates again on September 22nd, global markets have been in turmoil. When the British government announced unfunded tax cuts a day later, fire-sales by pension funds caused the yield on government bonds (or “gilts”) to spiral out of control. Contagion then spread to the American Treasury market, which is as volatile and illiquid as it was at the start of covid-19. The cost to insure against the default of Credit Suisse, a global bank, has risen sharply. These ructions indicate the world is entering a new phase, in which financial markets no longer just reflect the pain of adjusting to the new economic context—pricing in higher rates and lower growth—but now also spread pain of their own. The most catastrophic pain is felt when financial institutions fail. There are two ways they do so: illiquidity or insolvency. Tighter monetary policy is likely to prompt or reveal both. It is illiquidity that comes first—and it has well and truly arrived. Take the British pension funds. They use a strategy called “liability-driven investing” to hedge against interest-rate moves. When rates shot up they faced margin calls, which they met by selling gilts. But yields moved so fast that this became a fire-sale, with prices spiralling downwards. The Bank of England had to step in to buy bonds. No one else was willing. Credit costs are rising quickly, as would be expected in these circumstances. Betsy Graseck of Morgan Stanley, a bank, highlights how abrupt the shift has been: “In the most recent senior-loan-officers survey every single question they asked bankers about financial conditions flipped to tightening, all at once. I have never seen that before.” Yet the real problem is when credit is unavailable—no matter the price. British traders report there were “no bids” for gilts in the days after the government announced its plans. Measures of liquidity in the Treasury market have deteriorated, too. “We are seeing what happened in March 2020 again. The same Treasury bonds are trading at different prices, bid-ask spreads are widening,” says Darrell Duffie of Stanford University. Strategists at Bank of America describe their index of credit stress as “borderline critical” .Equity markets have been just as turbulent, but they have at least continued to function. “You might not have liked the price you were seeing,” says Tal Cohen of Nasdaq, a stock exchange, “but you were always seeing a price.” He has yet to witness “demand destruction”, the thinning out of the order book when buyers and sellers begin to pull their orders en masse. This is despite the fact that the Bank of America’s strategists think markets have fallen to levels at which accumulated losses may be forcing funds to sell assets to raise cash, accelerating the sell-off. Regardless, illiquidity in credit markets is enough of a problem. It can morph into a total lack of lending. Last week British banks rushed to pull mortgages from their proverbial shelves. If this dynamic gets out of hand it can typically be solved by central banks stepping in and operating as a lender of last resort, as the Bank of England did. The risk of doing so is not trivial, however. Such an intervention employs quantitative easing, buying securities using central-bank money—the path used by central banks to ease monetary policy. Thus it might undermine faith in central bankers’ commitment to fighting inflation. Market-watchers now wonder whether all this pressure will lead to insolvencies, which happen when the value of an institution’s assets falls below its liabilities. It is the fate which befell insurers, including AIG, and banks, including Lehman Brothers, in 2008. Homeowners across America defaulted on their loans, meaning mortgage-backed securities, assets the firms had bought, were no longer worth anything close to that for which they had been purchased. Insolvency is fatal, and only resolvable by bankruptcy or bail-outs. No time for crammingThe current tension is the first big test of a new-look financial system. Regulators have sought to make systemically important institutions—as Lehman Brothers surely would have been designated—too safe to fail. They have done this by compelling firms designated as such to follow stringent capital, liquidity and risk-taking rules, as well as by stress-testing them in hypothetical economic breakdowns. Regulators have also tried to reduce opacity and counterparty risk—the channels through which fears about Lehman morphed into suspicion of the entire banking system. The result is that there are layers of protection around the financial system’s most important institutions. At the heart of markets are clearing houses, which settle trades in stocks and derivatives between their members (mostly big banks). To join a clearing house a member must post an “initial margin” in case of default; that margin can climb if markets move. The system is stress-tested against the default of even the clearing houses’ largest members, such as JPMorgan Chase or Citigroup. The banks, which stand between the clearing houses and other financial institutions, such as pension funds, hedge funds and insurance firms, are also in better shape than they were heading into the financial crisis. The issues that precipitated the failure of Lehman Brothers were that the firm did not have enough capital (at times leading up to its demise it held capital worth just 3% of assets), it had taken on too much borrowing (holding debt worth 30 times its equity), its business model was dubious (making enormous bets on the American housing market), and it had taken on vast amounts of risk. Today there are 30 global banks designated as systemically important by regulators, some 28 of which are included in the kbw Nasdaq Global Bank Index, which tracks bank stocks. These 28 banks hold 13% of their assets as capital, and have debt worth five times their equity. But they do not get an entirely clean bill of health: some business models look fragile. On average the banks returned 9% profit on their equity last quarter, but the worst (other than Credit Suisse) returned just 4%. It is hard to assess, from the outside, whether any have taken huge risks. “American banks are unequivocally much stronger,” says a bank boss. Few are making such statements about European banks, and certainly nobody is about Credit Suisse. The firm had a return on equity of minus 14% last quarter, its share price has tumbled and its market capitalisation is now just $12bn. Yet even Credit Suisse is not near a Lehman-style collapse. It holds 14% of its assets as capital and has debt worth only six times its equity. Although Credit Suisse credit-default swaps, which act like insurance against default, have leapt, they still suggest the chance of default is in the low to mid-single digits.Big banks therefore head into the new era fortified. But the regulation that has strengthened their defences has also diminished their role. High capital demands make it hard for them to compete. Because banks must add risk weights to all kinds of assets, they now hold only the boring stuff. Leverage ratios constrain their size, even in the gilt markets. By contrast, financial institutions that are not systemically important are unencumbered by these rules. The impact can be seen on balance sheets. In 2010, just after the financial crisis, banks held $115trn of financial assets. Other financial institutions, such as pension funds, insurers and alternative asset managers, held roughly the same amount. In the years since, the non-banks’ slice has grown. By the end of 2020 they held assets worth $227trn, a quarter more than the banks. Similarly, the share of American mortgages that came from banks was around 80% before the financial crisis. Today only around half of mortgages emerge from banks, and most of these are sold on to investors.The flight of riskThus the dodgy stuff is probably in other institutions. Which ones? In 2007 problems started in real estate. This time Americans hold far less mortgage debt, but the sheer pace of price growth in residential housing suggests some buyers will face difficulties. Indeed, three-quarters of those who bought in the past two years regret their decision. Other forms of real estate are also vulnerable. Firms are downsizing their offices to adapt to working from home, posing problems for highly leveraged commercial developers. Charles Bendit of Taconic Partners, a developer in New York, notes that lots have opted for floating-rate debt, meaning their debt-servicing costs have already doubled. Michael Burry, who shot to fame in 2008 after shorting mortgage-backed securities, is concerned by unsecured consumer finance given the growth of “buy-now-pay-later” providers and the ease with which consumers have been able to tap credit-card lines. Goldman Sachs, a bank, ventured into consumer credit in 2019, helping to launch the Apple card. It now has a default rate of 3% over the past six months, unusually high even for sub-prime consumer lending. Ms Graseck of Morgan Stanley points out that, because this is an interest rate-shock driven cycle, trouble will probably first arrive in the loans that reprice to higher rates quickly: “Floating rate debt, like credit cards, is immediate, then commercial real estate, autos and eventually mortgages.”One of the fastest-growing parts of private credit has been that offered to software-service firms, notes Seth Bernstein, the boss of Alliance Bernstein, an asset manager. “These have been fantastic cash machines, because they have subscription models,” he explains. The cash flows they provide have been used to secure financing, meaning many firms are now highly leveraged. They have also never been tested in a downturn. Mr Bernstein compares the situation to the securitisation of housing debt, in that there is very little information or data available about the debt. It is companies more broadly that appear most at risk. They owe debts worth 80% of GDP, compared with 65% in 2007. A third of American corporate debt is rated BBB, More

Poshmark Inc. signage outside the Nasdaq MarketSite during the company’s initial public offering (IPO) in New York, U.S., on Thursday, Jan. 14, 2021.
Michael Nagle | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Twitter — Shares of Twitter surged 22.24% after a report that Elon Musk plans to go through with the acquisition of the company at $54.20 per share, the originally agreed-upon price. Trading of the company’s stock was halted pending news around midday Tuesday.

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Rivian — Shares of the electric vehicle maker shot up 13.83% after the company said Monday that third-quarter production jumped 67% compared to the prior quarter. The company remains on track to meet the production goal it set in March after halving previous estimates due to global supply chain issues.
Poshmark — Shares of the online retail site surged 13% midday after the company struck a deal with South Korean internet giant Naver to be acquired for about $1.2 billion. The merger could help Naver deepen its reach in online retail and allow Poshmark expand internationally.
Illumina — The biotech stock jumped more than 9.52% after SVB Securities upgraded Illumina to outperform from market perform, citing the potential of new sequencing innovations called the NovaSeq X Series to drive upside in 2024 and beyond, according to FactSet’s StreetAccount.
Travel stocks — Shares of airline and cruise line stocks surged Tuesday and were among leaders in the S&P 500. These stocks are volatile and sensitive to big swings in markets overall. Norwegian Cruise Line jumped 16.8%. Royal Caribbean and Carnival gained 16.7% and 13.2%, respectively. Delta Air Lines and American Airlines each advanced more than 8%.
Gilead Sciences — Shares of the biopharma stock gained 4.8% after JPMorgan Chase upgraded Gilead Sciences to overweight. The bank said investors are undervaluing its growth potential and the stock could rally nearly 30%

Domino’s Pizza — Shares of the pizza chain rose 4.5% after UBS upgraded the stock to buy from neutral. The investment firm said that Domino’s should see demand hold up even if consumer spending weakens overall.
Credit Suisse — Shares of Credit Suisse jumped 12.2% after whiplashing in Monday trading following a report over the weekend that said the bank was assuring major investors of its financial well-being amid concerns.
Tesla — Shares of electric vehicle maker Tesla rose 2.9% Tuesday, rebounding from a sharp loss in Monday’s session after announcing disappointing third-quarter delivery numbers. Tesla’s stock slumped 8% Monday, its largest drop since June 3.
Rocket Pharmaceuticals — Shares of Rocket Pharmaceuticals jumped 11% after the company announced plans for a $100 million stock offering. The plan gives underwriters a 30-day opportunity to purchase up to $15 million worth of additional shares.
General Motors — Shares of automaker General Motors gained 8.9% after the company announced sales rose 24% in the third quarter, rebounding from 2021 when supply chain issues hindered production.
Ford Motor — The Detroit automaker rallied 7.7% after reporting a 16% increase in third-quarter sales compared with a year earlier, despite September sales declining more than expected. Ford said new vehicle demand “remains strong.” 
— CNBC’s Michelle Fox, Alex Harring, Tanaya Macheel, Sarah Min, Jesse Pound and Samantha Subin contributed reporting.

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Job openings fell to 10.1 million in August, a 1.1 million decline from July, according to the U.S. Department of Labor JOLTS report issued Tuesday.
However, job openings and voluntary job quitting remain high by historical standards while layoffs are low.
While the labor market appears to be cooling as the Fed continues to raise interest rates, workers still have bargaining power, economists said.

Hinterhaus Productions | Getty Images

There are signs the hot job market is cooling — but workers still have bargaining power for now, according to labor economists.
Job openings, a barometer of employers’ demand for workers, saw a near-record monthly decline in August. Openings fell by 1.1 million to 10.1 million, according to U.S. Department of Labor data issued Tuesday — a monthly decrease eclipsed only by April 2020, in the early days of the coronavirus pandemic, when they fell by roughly 1.2 million.

The Federal Reserve is raising borrowing costs for consumers and businesses to pump the brakes on the U.S. economy and reduce inflation. Central bank officials hope that a cooling labor market will translate to lower wage growth, which has been running at its highest pace in decades and contributes to inflation.
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Job openings started to surge in early 2021 as Covid-19 vaccines rolled out and the economy began to reopen more broadly. Workers were able to quit for other opportunities amid ample job postings and as employers competed for talent by raising pay. That job-hopping trend came to be known as the Great Resignation.
“I think this is exactly what the Fed wants to see,” Julia Pollak, chief economist at ZipRecruiter, said of the reduction in job openings. “The tension leading to this cutthroat game of musical chairs [among workers], they want that eased.
“And there are finally signs this is happening.”

There were 1.7 job openings per unemployed worker in August, down from nearly two openings per unemployed in July. Fed Chairman Jerome Powell has cited this ratio as one that officials would like to see fall as an indicator of labor market cooling.

Why the job market ‘still leans toward workers’

That said, job openings are still high by historical standards, meaning workers have ample opportunities, labor economists said. Openings hovered around 7 million before the pandemic; they peaked near 11.9 million in March 2022.
“I’d say the job market still leans toward workers,” said Daniel Zhao, lead economist at Glassdoor. “But because things are cooling off, we can’t guarantee that will continue moving forward.”
The level of voluntary quitting among workers ticked up by 100,000 people from July to August, to almost 4.2 million, according to the Labor Department’s Job Openings and Labor Turnover Survey. Quits are a gauge of worker confidence and sentiment, so the slight increase and historically high level suggest workers remain in the driver’s seat, Pollak said.

Most workers who leave their current jobs do so for employment elsewhere, economists said. They typically get a bigger pay bump than those who stay in their current roles: a 7% annual boost for job switchers in August versus 5% for job stayers, according to the Federal Reserve Bank of Atlanta.
Meanwhile, layoffs remain low and have increased only modestly as employers try to hang onto the workers they have, economists said.
Even though workers still seem to have the upper hand, they may want to proceed more cautiously going forward relative to quitting and switching jobs due to the prospect of a further moderation in the labor market, Zhao said.
“Last year, the job market was strong enough that it was easier for folks to quit without having something else lined up,” Zhao said. “I think the situation now is much softer. Anyone looking for a new job has to evaluate things on a company-by-company basis.”

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Credit Suisse shares continued to recover on Tuesday from the previous session’s low of 3.60 Swiss francs ($3.64), but were still down more than 53% on the year.
The embattled lender is embarking on a massive strategic review under a new CEO following a string of scandals and risk management failures, and will give a progress update alongside its quarterly earnings on Oct. 27.

A Swiss flag flies over a sign of Credit Suisse in Bern, Switzerland
FABRICE COFFRINI | AFP | Getty Images

Credit Suisse shares briefly sank to an all-time low on Monday while credit default swaps hit a record high, as the market’s skittishness about the Swiss bank’s future became abundantly clear.
Shares continued to recover on Tuesday from the previous session’s low of 3.60 Swiss francs ($3.64), but were still down more than 53% on the year.

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The embattled lender is embarking on a massive strategic review under a new CEO following a string of scandals and risk management failures, and will give a progress update alongside its quarterly earnings on Oct. 27.
Credit Suisse credit default swaps — derivatives that serve as a kind of insurance contract against a company defaulting on its debt — soared to a spread of more than 300 basis points Monday, well above that of the rest of the sector.
Credit Suisse CEO Ulrich Koerner last week sought to reassure staff of the Swiss bank’s “strong capital base and liquidity position” amid market concerns and a rise in credit-default swaps.
In an internal memo sent to staff last week, Koerner promised them regular updates during this “challenging period” and said Credit Suisse was “well on track” with its strategic review.
“I know it’s not easy to remain focused amid the many stories you read in the media — in particular, given the many factually inaccurate statements being made. That said, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” Koerner said.

Based on Credit Suisse’s weaker return on equity profile compared to its European investment banking peers, U.S. investment research company CFRA on Monday lowered its price target for the stock to 3.50 Swiss francs ($3.54) per share, down from 4.50 francs.
This reflects a price-to-book ratio of 0.2x versus a European investment bank average of 0.44x, CFRA Equity Analyst Firdaus Ibrahim said in a note Monday. CFRA also lowered its earnings-per-share forecasts to -0.30 francs from -0.20 francs for 2022, and to 0.60 francs from 0.65 francs for 2023.
A price-to-book ratio measures the market value of a company’s stock against its book value of equity, while earnings-per-share divides a company’s profit by the outstanding shares of its common stock.
“The many options rumored to be considered by CS, including exit of U.S. investment banking, creation of a ‘bad bank’ to hold risky assets, and capital raise, indicate a huge overhaul is needed to turn around the bank, in our view,” Ibrahim said.
“We believe that the negative sentiment surrounding the stock will not abate any time soon and believe its share price will continue to be under pressure. A convincing restructuring plan will help, but we remain skeptical, given its poor track record of delivering on past restructuring plans.”
Despite the general market negativity toward its stock, Credit Suisse is only the eighth-most shorted European bank, with 2.42% of its floated shares used to bet against it as of Monday, according to data analytics firm S3 Partners.
‘Still a lot of value’ in Credit Suisse
All three major credit ratings agencies — Moody’s, S&P and Fitch — now have a negative outlook on Credit Suisse, and Johann Scholtz, equity analyst at DBRS Morningstar, told CNBC Tuesday that this was likely driving the widening of CDS spreads.
He noted that Credit Suisse is a “very well capitalized bank” and that capitalization is “at worst in line with peers,” but the key danger would be a situation akin to that experienced by well-capitalized banks during the 2008 financial crisis, where customers were reluctant to deal with financial institutions for fear of a domino effect and counterparty risk.

“Banks being highly leveraged entities are exposed much more to sentiment of clients and most importantly to providers of funding, and that’s the challenge for Credit Suisse to thread that delicate path between addressing the interests of providers of, especially, wholesale funding, and then also the interests of equity investors,” Scholtz said.
“I think a lot of investors will make the point about why does the bank need to raise capital if solvency is not a concern? But it’s really to address the negative sentiment and very much the issue … in terms of the perception of counterparties.”
Scholtz dismissed the idea that a “Lehman moment” could be on the horizon for Credit Suisse, pointing to the fact that markets knew that there were “serious issues” with the Lehman Brothers balance sheet in the runup to the 2008 crisis, and that “serious writedowns” were needed.
“Whilst there is a potential for new writedowns being announced by Credit Suisse at the end of the month when they’re coming up with results, there is nothing publicly available at the moment that indicates that those writedowns will be sufficient to actually cause solvency issues for Credit Suisse,” Scholtz said.
“The other thing that is much different compared to the Great Financial Crisis – and that’s not just the case only for Credit Suisse – is that not only are their equity capital levels much higher, you’ve also seen a complete overhaul of the structure of banking capitalization, something like buy-inable debt that’s come along, also improves the outlook for the solvency of banks.”

The bank’s share price is down more than 73% over the past five years, and such a dramatic plunge has naturally led to market speculation about consolidation, while some of the market chatter ahead of the Oct. 27 announcement has focused on a possible hiving off of the troublesome investment banking business and capital markets operation.
However, he contended that there is “still a lot of value” in Credit Suisse in terms of the sum of its parts.
“Its wealth management business is still a decent business, and if you look at the kind of multiples that its peers – especially standalone wealth management peers – trade at, then you can make a very strong case for some deep value in the name,” he added.
Scholtz dismissed the notion of consolidation of Credit Suisse with domestic rival UBS on the basis that the Swiss regulator would be unlikely to greenlight it, and also suggested that a sale of the investment bank would be difficult to pull off.
“The challenge is that in the current environment, you don’t really want to be a seller if you’re Credit Suisse. The market knows you are under pressure, so to try and sell an investment banking business in the current circumstance is going to be very challenging,” he said.
“The other thing is that while it might address concerns around risk, it’s very unlikely that they’re going to sell this business for anything close to a profit, so you’re not going to raise capital by disposing of this business.”

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Mastercard will on Tuesday launch a new product called Crypto Secure that helps banks assess the risk of crime associated with crypto merchants on its network.
The service is powered by CipherTrace, a blockchain security startup Mastercard acquired last year.
Mastercard is launching the service against a backdrop of growing crime in the nascent digital asset market.

Mastercard credit cards
Roberto Machado Noa/ LightRocket via Getty Images

Mastercard will on Tuesday debut a new piece of software that helps banks identify and cut off transactions from fraud-prone crypto exchanges, the company told CNBC exclusively.
Called Crypto Secure, the system uses “sophisticated” artificial intelligence algorithms to determine the risk of crime associated with crypto exchanges on the Mastercard payment network. The system relies on data from the blockchain, a public record of crypto transactions, as well as other sources.

The service is powered by CipherTrace, a blockchain security startup Mastercard acquired last year. Based in Menlo Park, California, CipherTrace helps businesses and government agencies investigate illicit transactions involving cryptocurrencies. Its main rivals are New York firm Chainalysis and Elliptic, which is based in London.
Mastercard is launching the service against a backdrop of growing crime in the nascent digital asset market. The amount of crypto entering wallets with known criminal connections surged to a record $14 billion last year, according to data from blockchain analytics firm Chainalysis. And 2022 has seen a spate of high-profile hacks and scams targeting crypto investors.
On the Crypto Secure platform, banks and other card issuers are shown a dashboard with color-coded ratings representing the risk of suspicious activity, with severity of risk ranging from red for “high” to green for “low.”
Crypto Secure doesn’t make a judgment call on whether to turn away a specific crypto merchant. That decision is down to the card issuers themselves.

The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks and merchants.

Ajay Bhalla
president of cyber and intelligence, Mastercard

Mastercard already uses similar technology to prevent fraud in fiat currency transactions. With Crypto Secure, it’s expanding such functionality to bitcoin and other virtual currencies.

Ajay Bhalla, Mastercard’s president of cyber and intelligence business, said the move was about ensuring its partners can “stay compliant with the complex regulatory landscape.”
“The whole digital asset market is now a pretty large, substantial market,” he told CNBC in an exclusive interview ahead of the product launch. 
“The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks and merchants.”
Compliance has become an important focus in crypto lately as more banks and payment companies enter the fray with their own services for trading and storing digital assets. Last month, Nasdaq became the latest established financial firm to join Wall Street’s embrace of crypto, launching custody services for institutional clients.

Meanwhile, governments on either side of the Atlantic are looking to implement fresh curbs on the crypto sector, which so far been mostly lacking in regulation. Last month, the Biden administration released its first-ever framework on regulation of the crypto industry in the U.S., while the European Union has approved landmark crypto laws of its own.
The payments giant is doubling down on crypto at a time when prices of digital currencies are falling and volumes have dried up. The entire market has shed roughly $2 trillion in value since the peak of a huge rally in November 2021.
Bitcoin is now worth less than $20,000 a coin — a roughly 70% plunge from its near-$69,000 all-time high — and in recent weeks has struggled to climb meaningfully above that level.
Asked about the impact of the declines in crypto prices on Mastercard’s digital asset strategy, Bhalla said the company was “focused on providing solutions to the stakeholders for the long term.”
“These are market cycles, they will come and they will go,” he said. “I think you’ve got to take the longer view that this is a big marketplace now and evolving and is probably going to be much, much bigger in the future.”
Despite the slump in digital token prices, crime in the industry has shown no signs of abating. A particularly popular method of swindling crypto investors of their funds this year has been to exploit blockchain bridges, tools used to exchange assets from one crypto network to another. Around $1.4 billion has been lost to breaches on these cross-chain bridges since the start of 2022, according to Chainalysis data.

Read more about tech and crypto from CNBC Pro

Against that backdrop, major financial services firms and crypto platforms are investing in ways of lowering the risk of ill-gotten gains being transferred through their systems. Cryptocurrencies are often criticized for their use in money laundering and other forms of illicit activity — an issue that stems in part from the pseudonymous nature of participants on blockchain networks.
But the development of new software tools has made it easier to trace crypto criminals’ ill-gotten gains. Companies are employing sophisticated data science and machine learning techniques to analyze data on public blockchains. 
Mastercard is also seeking to keep pace with its main rival Visa, which has made notable investments of its own in the crypto arena. In its first fiscal quarter of 2022, Visa said it facilitated $2.5 billion in transactions from cards linked to an account at a crypto platform.
Last year, Visa launched a crypto advisory practice to offer advice to clients on everything from rolling out crypto features to exploring non-fungible tokens.
Mastercard declined to disclose the overall dollar value of fiat-to-crypto volumes from its network of 2,400 crypto exchanges. However, Bhalla said the number of transactions the credit card giant facilitates per minute now runs into the “thousands.”

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Two years ago, Chinese President Xi Jinping formally announced the world’s second largest economy would strive for peak carbon emissions in 2030, and carbon neutrality in 2060.
While the country struggles to wean itself off coal, analysts said Beijing’s top-level emphasis on climate has fueled a policy push to try to support businesses focused on renewable energy and reducing carbon emissions.
Still, the last two years show how Chinese leaders still struggle to balance growth and economic interests with achieving climate goals, especially in an economy where coal is the dominant energy source.

China aims to reach peak carbon emissions in 2030. Pictured here is a wind farm in Chongqing in southwest China, on June 28, 2022.
Future Publishing | Future Publishing | Getty Images

BEIJING — China says it wants to be carbon neutral by 2060 — and those stated ambitions are spawning companies that could one day become global leaders in their fields.
Two years ago, Chinese President Xi Jinping formally announced the world’s second largest economy would strive for peak carbon emissions in 2030, and carbon neutrality in 2060.

To be carbon neutral means the amount of carbon dioxide emitted by the whole country will be offset in other ways. It also means there shouldn’t?/won’t? be any increase in greenhouse emissions in China after 2030.
While the country struggles to wean itself off coal, analysts said Beijing’s top-level emphasis on climate has fueled a policy push to try to support businesses focused on renewable energy and reducing carbon emissions.
“China’s already a leader in so many parts of the decarbonization effort,” said Norman Waite, energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).
“They’re either leading or right in the pack with everybody else in the efforts to decarbonize. It’s not a one- or two-company effort. This is a bunch of companies who are pressing forward,” he said.

Overseas expansion

Electric cars and batteries have been an obvious growth area, with Chinese EV makers expanding their businesses beyond China.

Chinese electric car giant and battery maker BYD launched passenger cars for Europe in late September, while start-up Nio is set to hold its European launch event in Berlin in early October.
Technologies to store and transmit power generated via renewable sources are another area that analysts are watching.

“More of the Chinese companies are getting to the size in China that they start to go out as well and establish partnerships abroad” in energy storage, said Johan Annell, partner at Asia Perspective, a consulting firm that works primarily with Northern European companies operating in East and Southeast Asia.
In energy efficiency, equipment for heating and cooling, Annell said, “you’re also getting a lot of Chinese companies going out and starting to win business, particularly in the countries surrounding China” — such as Mongolia and Kazakhstan.

Emerging leader in offshore wind?

The offshore wind sector is another field that could see an emerging Chinese leader.
Offshore wind is a renewable energy that uses turbines in coastal waters — many of which can be installed near the world’s largest urban centers, IEEFA’s Waite said in a September report.

China’s leaders also recognize that, in the long term, China’s development will not be economically sustainable – and hence politically and socially sustainable – until it is also environmentally so.

Cory Combs
Trivium China

Mingyang Smart Energy, already a leader in offshore wind power in China, “appears poised to disrupt international, non-Chinese markets at a vulnerable time for established competitors,” Waite said. He noted the company can tackle overseas markets with its strong balance sheet, large production capacity and potentially aggressive pricing power.
The industry’s three global players — Siemens Gamesa Renewable Energy, Denmark’s Vestas Wind System and General Electric — “are racking up losses, and only Vestas is doing so without the further stress of an imminent restructuring,” he said.
Vestas said it doesn’t comment on its competitors, and the two other companies did not respond to CNBC’s request for comment.

In December, Mingyang signed a memorandum of understanding to build a factory in the U.K. and explore options for entering the local British market.The company’s other projects or contracts include partners in Italy, Japan and Vietnam, Waite said.
The U.K. and the rest of Europe are each expected to add about 10 gigawatts of offshore wind power in the next three years, according to IEEFA Research.
In the following five years, that capacity is set to triple in the U.K., and increase by five-fold in the European mainland to about 60 gigawatts, the report said.

‘New infrastructure investment’

For Chinese companies, aligning with the country’s carbon neutrality theme fits well with Beijing’s other directives — for improving innovation, moving into higher-end industrial manufacturing and boosting non-traditional infrastructure investment, said Bruce Pang, chief economist and head of research for Greater China at JLL.
“If you are a rational agency of the local government, your actions under the rationale will be focused [on projects] under the name of new infrastructure investment,” he said.

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National security is another factor driving China’s focus on developing energy sources.
“Energy security is given more of a priority because of the economic challenges and the socioeconomic challenges,” said Seungjoo Ro, CLSA’s head of ESG research, sustainability and corporate governance research.
Ro pointed out that there are still 38 years to go in China’s carbon neutral roadmap, and it’s still not entirely clear how investors can measure potential share price returns based solely on climate-related measures right now. 

Not an easy road ahead

In practice, some $22 trillion are required to achieve China’s ambitious carbon goals, according to a report from the World Economic Forum and Oliver Wyman.
“To achieve its ambitious carbon peak and carbon neutrality goals, China needs to close an annual funding gap of about RMB1.1 trillion ($170 billion),” the summer report pointed out. “It can only do so if it manages to develop far more sophisticated green financing schemes.”
And if Chinese companies want to play a role in global efforts to reach environment goals, some differences between local standards need to be resolved with international ones, said Kelly Tian, financial services-focused principal at Oliver Wyman.
The last two years show how Chinese leaders still struggle to balance growth and economic interests with achieving climate goals, especially in an economy where coal is the dominant energy source.
Overenthusiastic measures to force local areas to cut carbon emissions last year resulted in a power shortage that disrupted factory production.

China ended up adding coal production capacity this year, helping the country stave off similar power shortages, despite extreme dry and hot weather in parts of the country, said Cory Combs, associate director at research and consulting firm Trivium China, in a September report published by Asia Society Policy Institute.
Even if the carbon directives come from the top leadership, Combs said there’s still tension between short-term and longer-term economic interests that will likely last through the coming decade.
Reducing that tension will help China reduce carbon emissions, he said. “But China’s leaders also recognize that, in the long term, China’s development will not be economically sustainable – and hence politically and socially sustainable – until it is also environmentally so.”
China’s state-run media has promoted environmental improvements across the country. And after years of some of the worst air pollution in the world, conditions in Beijing have improved so much in the last year that locals can frequently see far-off mountains and stars from the center of the city.

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A Tesla electric vehicle at a supercharger station in Hawthorne, California, on Aug. 9, 2022.
Patrick T. Fallon | AFP | Getty Images

Check out the companies making the biggest moves midday Monday:
Credit Suisse — Shares of Credit Suisse rose 2.3%, reversing an earlier slump that sent the stock to a record low, after the bank over the weekend made a series of calls to calm investor fears about its financial health. In addition, the cost to insure the bank’s debt against default jumped to a new high.

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Goldman Sachs upgrades Wells Fargo to buy, says it’s an ‘underappreciated earnings growth story’

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Tesla — Tesla shares dropped 8.61% after the electric vehicle maker said it delivered 343,000 vehicles in the third quarter, less than analysts expected. However, Wall Street analysts were divided over the report.
Peloton — Peloton shares rose more than 7.79% after the exercise-equipment company announced it will put bikes in all 5,400 Hilton-branded hotels in the U.S. Peloton is trying to engineer a turnaround and also said last week that its bikes, treadmills and other hardware would be sold in Dick’s Sporting Goods locations.
Roblox — Shares of the gaming platform gained 1.59%. Roblox fell earlier in the day after MoffettNathanson initiated coverage with an underperform rating. The Wall Street firm said it’s too soon to tell whether Roblox will ever meet its metaverse ambitions.
Viasat — Viasat jumped nearly 27% on Monday after striking a deal with L3Harris to sell its tactical data links business. The deal is for just under $2 billion, the companies announced. Viasat said it would use the cash to reduce its leverage and increase liquidity.
Wells Fargo — Wells Fargo’s stock gained 3.38% after Goldman Sachs upgraded the bank to a buy rating from neutral and said investors are underappreciating its potential.

Livent — The lithium company recovered from an earlier drop, ending the day flat, after Bank of America downgraded the stock to underperform from neutral, citing “limited upside.”
DocuSign — DocuSign slid 1.01% after being downgraded by Morgan Stanley to underweight from equal weight, citing pricing pressure.
Myovant Sciences — The biopharmaceutical company jumped 36% after it rejected a bid by Sumitovant Biopharma, its largest shareholder, to buy the shares it doesn’t already own for $22.75 per share. Myovant, which said the offer significantly undervalues the company, said it is open to considering any improved proposal.
Box — Box’s stock rallied 9% after Morgan Stanley boosted its price target, implying the cloud storage company could surge 39% from Friday’s close. The firm also upgraded the stock to overweight from equal weight, citing solid macro positioning, strong execution and a more favorable competitive landscape.
Freshpet — Shares of Freshpet rose 9% after Barron’s reported the pet-food maker has hired bankers to explore a potential sale.
LogicBio Therapeutics — Shares of the clinical-stage genetic company skyrocketed more than 637.61% after it announced it was being acquired by AstraZeneca for $2.07 per share. That price tag is a whopping 666% increase from LogicBio’s closing price of 27 cents per share on Friday.
InterDigital — InterDigital’s stock rallied 18.28% after the research and development company raised its guidance for third-quarter 2022 total revenue a range of $112 million to $115 million, up from $96 million to $100 million.
Fluor Corp. — Fluor rose more than 8.84% ion Monday. Earlier in the day, the company announced it was awarded two reimbursable engineering, procurement and construction management contracts by BASF for work in China.
Stanley Black & Decker — The tool maker’s stock jumped more than 5% after The Wall Street Journal reported that the company has eliminated about 1,000 jobs in an effort to cut about $200 million in costs.
Energy stocks — Oil prices jumped Monday, pushing energy stocks higher. Marathon Oil rallied 10.58%. APA Corp. and Devon Energy gained about 9% each. Diamondback Energy, Halliburton and ConocoPhillips were all up more than 7%.
— CNBC’s Alex Harring, Samantha Subin, Carmen Reinicke, Yun Li, Tanaya Macheel and Jesse Pound contributed reporting.

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