Finance

Stock futures declined in overnight trading Monday after Wall Street wrapped up a tumultuous month with steep losses as investors grappled with the Federal Reserve’s policy shift.
Futures on the Dow Jones Industrial Average dipped 80 points. S&P 500 futures and Nasdaq 100 futures both traded 0.3% lower.

While stocks pulled off a tech-driven rally Monday, major averages still suffered a brutal month marked by wild price swings. The S&P 500 and the Nasdaq Composite posted their worst months since March 2020 at the depth of the pandemic, down 5.3% and 8.9%, respectively. It was also the S&P 500’s biggest January decline since 2009. The blue-chip Dow declined 3.3% for the month.
January’s sell-off came as the central bank signaled its readiness to tighten monetary policy, including raising interest rates multiple times this year, to tame inflation that has shot up to the highest level in nearly four decades. Investors flocked out of growth-oriented technology shares, which are particularly sensitive to rising rates.
Volatility exploded during the month as investors deciphered the Fed’s messaging on its policy pivot. At one point last week, the S&P 500 dipped into correction territory on an intraday basis, briefly down 10% from its record high. The recent comeback pushed the large-cap benchmark 6.3% below its peak. Meanwhile, the tech-heavy Nasdaq is still in a correction, last down 12% from its all-time high.

Still, many Wall Street strategists are reminding investors that corrections are normal in bull markets. Since 1950, there have been 33 S&P 500 corrections of 10% or more since 1950, and the median episode has lasted about five months, according to Goldman Sachs.
“The latest decline is a normal market correction that does not signal a recession or the end of this bull market,” said Chris Haverland, global equity strategist at Wells Fargo. “We continue to believe that economic growth and corporate earnings will be solid this year, and that the Fed will not be overly aggressive in dialing back monetary policy.”

Stock picks and investing trends from CNBC Pro:

This week a flurry of key companies are expected to report earnings, which could set the tone for the month of February. Exxon Mobil is slated to post numbers before the bell on Tuesday, while Alphabet, General Motors, Starbucks, AMD and PayPal will report after the bell.
So far, of the 172 companies in the S&P 500 that have reported earnings to date, 78.5% topped analysts’ estimates, according to Refinitiv.
“We still anticipate solid, albeit more modest, gains for markets this year, alongside more normal pullbacks, especially given the transition in monetary policy,” Keith Lerner, chief market strategist at Truist, said in a note.

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HAVING ALL but ruled out engaging militarily with Russia, directly at least, were it to invade Ukraine, the West’s main weapons are economic. This week America and Britain vowed measures on a scale that has never been seen before. “The mother of all sanctions”, was how Bob Menendez, chairman of the US Senate’s foreign-relations committee, described the package assembled by the chamber. President Joe Biden says Vladimir Putin, his Russian counterpart, has “never seen sanctions like the ones I promised”. For sanctions to work, though, Western allies will need to show unity, and be willing to shoulder economic pain themselves. History suggests that this may be their greatest challenge.The expectation is that America’s Senate will approve its package in the coming days, after Mr Menendez said at the weekend that negotiators were “on the one-yard line”. He and colleagues say some of the sanctions being drafted could be implemented before any invasion, in response to activities Russia has already undertaken, such as cyber-attacks and “false flag” operations designed to destabilise Ukraine from within.According to American officials, the administration’s sanctions would target figures and companies in or close to Mr Putin’s inner circle as well as the relatives they sometimes use as proxies for owning assets—though the officials have declined to name any. This group is said to be wider, and closer to Mr Putin, than that targeted after Russia annexed Crimea in 2014. The aim would be to cut targets off from the international financial system and go after money they have parked in the West, greatly complicating their business dealings.Britain is working most closely with America. On January 31st its foreign secretary, Liz Truss, officially announced a new sanctions law, which she hopes to have in place by February 10th. The goal is to widen the group of oligarchs and other Putin cronies who can be penalised. Since 2015 Britian has sanctioned 180 Russian individuals and 48 entities, mostly for interfering in Ukraine after the annexation. The new lot, Ms Truss promised, can be slapped on anyone “providing strategic support” to Mr Putin’s regime. Not naming potential targets was, she said, designed to maximise unease among the president’s backers.Britain’s stance is closely watched because rich Russians have strong financial and social ties to the country, owning mansions and football clubs and sending their children to the country’s elite schools. London is a key capital-raising centre for oligarchs and their companies. A spokesman for Mr Putin suggested that Ms Truss’s announcement “demonstrate[s] London’s great unpredictability” and would undermine its “investment attractiveness”.The measures against Russia’s economic upper class are expected to form part of a broader package of sanctions and export controls focused on finance, energy and technology, should conflict erupt. America is looking at targeting big Russian state-linked banks, including Sberbank, a savings giant, and the development bank VEB, which Mr Putin has used to finance some of his favourite projects. The Biden administration also wants to keep open the option, resisted by some European countries, of excluding Russian banks from SWIFT, the interbank messaging system used to make cross-border transfers. Restrictions on the secondary trading of Russian sovereign debt are on the table, too.In energy, the talk in Washington is of broadening sanctions to target not just production but investment, too. One way would be to restrict capital-raising by Russian oil-and-gas giants in centres like New York and London. America has also threatened to prevent the opening of Nord Stream 2, a new pipeline that would send Russian gas to western Europe.Technology is arguably America’s most powerful lever. It has already restricted exports of various cutting-edge technologies and devices that fall under the State Department’s “munitions list”, which covers the arms trade. It could go further and block more exports of high-tech gear on the Commerce Department’s “entity list”. This would restrict Russia’s access not only to microchips and other items used by its defence and aviation sectors, but also to parts used in many phones and appliances, inconveniencing Russia’s consumers as much as its weapons-makers.The last economy of any size to be hit with broad sanctions was Iran, which was targeted by America and its allies with “maximum-pressure” sanctions in 2018 over its nuclear programme. Punishing Russia poses a far more daunting challenge, because its economy is more internationally connected than the Islamic Republic’s. For sanctions to be effective, they will have to cause pain to the West itself.The most obvious blowback would be in energy. Europe relies on Russia for more than a third of its imported natural gas. America and some of its European allies are reportedly talking to Qatar and other suppliers of liquefied natural gas about how they can help make up any shortfall, should Russia cut supplies. Some large European lenders also have close ties to Russia. Among the most exposed are Société Générale of France, UniCredit of Italy and Raiffeisen of Austria. The European Central Bank has reportedly asked the most heavily exposed of the 115 large euro-zone banks it supervises to provide details of how they would navigate various sanctions scenarios.Another concern is “asymmetric” retaliation from Russia, namely cyber-attacks. Cyber-experts in the American government recently warned those tasked with defending the country’s critical infrastructure, from energy networks to water-supply and transport systems, to “adopt a heightened state of awareness” against Russian state-sponsored attacks.These risks leave some of America’s European allies feeling queasy. Germany has closer economic ties to Russia than any other Western power, and therefore more to lose from tough penalties. It gets over half of its imported gas from Russia and has wobbled on sanctioning Nord Stream 2 (though many think it will end up agreeing to do so). It is also cool on the idea of cutting Russia out of SWIFT.Even Britain’s commitment is uncertain. Its governments have a history of failing to match rhetoric with action when it comes to financial sanctions and curbing dirty money. Campaigners have called on it for years to use its leverage as a major financial centre more effectively. Its Crimea-related sanctions of 2014-15 contained scant restrictions on Russian firms and tycoons raising capital through London-based banks and markets. And it declined to follow America’s lead in sanctioning some of the most powerful commercial and financial figures in Mr Putin’s circle, such as Igor Sechin, the CEO of Rosneft, a Russian oil-and-gas firm.The other big question is how much even severe sanctions would hurt the Russian economy. Mr Putin’s officials have gone to great lengths to sanction-proof it. Central-bank reserves have been beefed up to more than $600bn; the share in dollars has fallen steadily in recent years, to 16%. Only a fifth of Russia’s sovereign bonds are held by foreigners, following a drive to domesticate ownership. The National Wealth Fund, which collects surplus oil and gas revenue, has been squirrelling away money and now holds around $180bn, more than double what it had five years ago.Nevertheless, insulating the economy fully is impossible. Russian officials have boasted of riding out the Crimea-related sanctions relatively comfortably. Yet a study by Anders Aslund and Maria Snegovaya of the Atlantic Council suggests the sanctions may have taken more than 2.5 percentage points off average annual Russian GDP growth since they were imposed. The sanctions Mr Biden is contemplating could therefore cause intense pain, if he can get his allies on board. All of our recent coverage of the Ukraine crisis can be found here.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

NEVER BEFORE has the world economy been so indebted. The stock of global debt has gone from $83trn in 2000 to around $295trn in 2021—a rate nearly double the pace of world GDP growth. Debt rose from 230% of GDP in 2000 to 320% on the eve of the pandemic, before covid-19 propelled it to the even greater height of 355% last year.Part of the reason for this explosion has been the steady decline in borrowing costs over the past two decades. In early 2000 a ten-year Treasury offered a yield of 6.5%. Today it pays 1.7%. The Federal Reserve’s effective policy rate has fallen from 6.5% to around 0.08% in that time, the most recent step down in which came during the pandemic. Benchmark rates in the euro area and Japan are sub-zero. Declines in government-bond yields and central banks’ policy rates have fed through to loan rates for private borrowers.As a result, even though global debt has rocketed over the years, the world’s interest costs, as a share of GDP, are well below their peak in the 1980s. Interest costs in America stood at 12% of GDP in 2021, for instance, compared with 27% in 1989.All this could soon change. The era of super-cheap money is ending. Central banks are battling a surge in inflation. Those in some emerging economies have been raising interest rates for some time already; Brazil’s central bank is expected to raise rates by 1.5 percentage points after a meeting on February 2nd, its third consecutive such increase. The Bank of England is likely to deliver its second interest-rate rise a day later. The central bank with the most influence on global capital flows—the Fed—has signalled that it will probably put rates up as soon as March, and investors expect four further quarter-percentage-point increases this year. Real borrowing costs for governments are rising as well. In America the yield on the five-year Treasury inflation-protected security (TIPS), which hovered around -1.7% for much of 2021, now stands at -1.2%.The scale of the global interest bill is vast. The Economist estimates that households, companies, financial firms and governments worldwide paid around $10.5trn in interest costs in 2021, equivalent to 12% of GDP. How much could it rise by as rates rise, and which borrowers are likely to be squeezed the most? To answer these questions, we examined data on the borrowing of companies, households, financial firms and governments for 58 countries. Across both the emerging and the rich world, some borrowers are far more vulnerable than others.Working out the effect of rate rises on the interest bill is not straightforward. Some debt is tied to a fixed interest rate, such that higher borrowing costs are passed through only when it is rolled over. The median maturity of government debt, for instance, is five years. Companies tend to borrow for a two-year term; households typically borrow over a longer period. Incomes change over time, affecting borrowers’ ability to afford debt payments. Borrowers could respond to higher interest costs by paying off debt, so lowering their debt-interest costs. But in aggregate, according to research by the Bank for International Settlements (BIS), a club of central banks, higher rates weaken private-sector debt-service ratios. The higher the level of debt, the bigger the effect, suggesting that the economy has only become more sensitive to rate rises.To illustrate the potential scale of the increase, we consider a scenario where the interest rates faced by firms, households and governments rise by a percentage point over the next three years. (By way of comparison, the five-year Treasury yield has risen by a percentage point since spring 2021.) We assume that this feeds through over the course of five years to government and household debt, and over two years to company borrowing. We also assume that nominal incomes rise in line with the IMF’s forecasts. As the fund’s projections assume that public debt rises at broadly similar rates, we let debt-to-GDP ratios stay flat. This implies annual budget deficits of around 5% of GDP—narrower than in the years immediately preceding the pandemic.In such a scenario, the interest bill would exceed $16trn by 2026, equivalent to 15% of projected GDP in that year. And if rates were to rise twice as quickly, say because inflation persists and forces central banks to take drastic action, the interest bill could rise to about $20trn by 2026, nearly a fifth of GDP.The burden would not fall on all borrowers equally. Private-sector borrowers in a country tend to foot a much bigger share of the bill than the government, which can borrow more cheaply, for instance. Financial firms receive as well as pay interest. The more exposed the borrower is to rate rises, in terms of higher debt levels, the bigger the interest bill they face, and the more likely it becomes that they cut back spending in order to meet their higher debt costs, or that they fall into distress.To see which borrowers may be more strained than others, we rank the household, corporate and government sectors for our countries along two dimensions (for this exercise we exclude the financial sector, which intermediates lending). The first measure is the debt-to-income ratio, which gauges the extent to which debt is affordable. The second is the change in the ratio over the past decade, which captures the extent to which exposure to interest rates has increased over time. We then produce an overall score for each sector in each country (see table).The exercise reveals pockets of weakness. Start with governments. Lebanon, which already defaulted on some of its debt at the start of the pandemic, tops the list, with an interest bill of nearly half its revenues. Despite being a big exporter of oil, Nigeria’s paltry revenues only just cover its interest costs. Fortunately, most borrowing by emerging-market governments during the pandemic has been in their own currencies, notes Emre Tiftik of the Institute of International Finance, a bankers’ group, which may make them less exposed to flighty foreign capital.The next group of more stretched borrowers comprises households. South Korea, Norway and Switzerland have the most debt, relative to household income, in our group of countries. Mortgage debt in Sweden is particularly sizeable. House prices rose by 11% in 2021, and well over half of mortgage lending is done with variable interest rates. When rates rise, therefore, mortgage bills follow suit. Debt-to-income ratios have more than doubled in China and Russia.Companies are the third set of borrowers. Those in France and Switzerland have the most debt as a share of gross operating profit, leaving them exposed to rate rises. Among emerging markets, Chinese and Russian firms are also weighed down by their bills. Overall, our findings for the private sector are broadly consistent with an early indicator of financial stress, the credit-to-GDP gap, calculated by the BIS, which measures the degree to which borrowing exceeds its long-run trend. On this measure, the Swiss and South Korean private sectors rank among the five most indebted in the world.Our rankings help illustrate who is most exposed to rising interest rates. But they cannot predict which sectors or economies will experience trouble as interest rates rise. That is a far more complex picture, which depends among other things on the prospects for growth and the reaction of policymakers. Vulnerabilities in one part of the economy could interact with those in others, say by weakening the banking system.Picking up the tabAlthough households in rich countries are highly indebted, the interest rates they face are still low in historical terms. Debt levels in Argentina, by contrast, may not look particularly high, but eye-watering interest rates, of 35% for the private sector, mean that borrowers are experiencing an intense squeeze. Places with gloomy growth prospects will struggle. Rapid rate rises in America could hamper their recoveries, says Gene Frieda of PIMCO, a bond-fund manager. Incomes may not rise fast enough to meet interest costs.China faces a combination of threats: the property market has deflated as Evergrande, a large and heavily indebted developer, unravels. Banks have become saddled with bad household debt. But its policymakers have also responded to these risks. The resulting drag on economic growth partly explains why the People’s Bank of China is lowering interest rates, not raising them. Policymakers in the rest of the world may be moving in the opposite direction, but the vulnerability of highly indebted borrowers, and their potential to drag down the economic recovery, will nonetheless be weighing on their minds. More

Richmond Federal Reserve President Thomas Barkin said it’s been his experience that at least for those in the business community, interest rate increases will be welcomed.
“They’d like us to get back to at least a normal interest-rate posture and not be simulating more demand on top of normal levels,” he told CNBC’s “Closing Bell.”
He was one of several Fed speakers Monday. Kansas City Fed President Esther George suggested that a faster runoff of the balance sheet could ease the amount of rate hikes needed.

The U.S. economy is ready for interest rate increases to control rampant inflation, Richmond Federal Reserve President Thomas Barkin said Monday.
With the Fed poised to start hiking rates in March and beyond, Barkin told CNBC in a live interview that tighter monetary policy is appropriate. However, he didn’t commit to how aggressive the central bank might be.

“I’d like the Fed to get better positioned. I think we’ve got a good part of the year to get there,” he said on “Closing Bell.” “I think how fast we go just depends on how the economy develops.”
Financial markets, however, are expecting the Fed to move quickly.
Current futures pricing indicates a strong possibility of five 0.25% increases in the benchmark short-term borrowing rate. There’s even about a one-in-three chance that the Fed could hike six times, according to CME calculations through its FedWatch Tool. Bank of America economists said Friday they forecast seven increases this year.
Those expectations come with inflation running at its highest level in nearly 40 years. The Fed uses interest rates to raise the cost of money and slow the pace of the economy, which had its fastest single-year growth spurt since 1984 a year ago.
Barkin said it’s been his experience that at least for those in the business community, the rate increases will be welcomed.

“As I talk to participants in the economy, what I hear is they actually want us to do something now about inflation. They’d like us to get back to at least a normal interest-rate posture and not be simulating more demand on top of normal levels,” he said. “So, I don’t hear much resistance to that.”
He spoke the same day as two of his fellow regional presidents, Mary Daly of San Francisco and Esther George of Kansas City, also voiced support for tighter policy. Part of that tightening is interest rates. The other part deals with the Fed’s monthly bond purchases, which are set to end in March, and the holdings of those bonds, which have eclipsed $8 trillion.
Following their meeting last week, Fed officials said they expect to run down the assets on their balance sheet aggressively.
In a speech she delivered earlier in the day to The Economic Club of Indiana, George said running off the balance sheet more quickly might allow the Fed to enact fewer rate hikes.
“What we do on the balance sheet will likely affect the path of policy rates and vice versa,” George said. “For example, more aggressive action on the balance sheet could allow for a shallower path for the policy rate.”
Daly said during a Reuters forum that the Fed is “not behind the curve at all” when it comes to fighting inflation. However, she also said it’s time to start easing the throttle on the most accommodative monetary policy in the central bank’s history.
“If the economy progresses like I see it progressing, then it is clear that it can stand on its own two feet, that we do not need to be providing the same level of extraordinary … accommodation that we provided during the pandemic and have provided for the last two years,” she said.
None of the Fed officials would commit to a schedule, though many on Wall Street think each of the Fed’s seven remaining meetings this year will be “live,” or subject to policy moves.

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The Spotify app on an iPhone.
Fabian Sommer | picture alliance | Getty Images

Stock picks and investing trends from CNBC Pro:

Intuitive Surgical – Shares of Intuitive Surgical rose 4.6% after Piper Sandler on Monday upgraded the medical stock to overweight from neutral. The firm said the “recent pullback offers investors an attractive entry point into a premier medtech name.”

Align Technology — Shares of the dental company popped 6.7% in trading after Morgan Stanley initiated coverage of Align Technology as overweight. “ALGN is well positioned in the fastest-growing segment of the Dental market with its leading position in clear aligners,” the firm said. The bank gave the stock a $575 per share price target.
Kellogg — Shares of the food company ticked 3.5% lower after BMO downgraded Kellogg to market perform from outperform. The Wall Street firm said that it sees cereal “challenges” ahead.
Enphase Energy — Enphase Energy shares surged 13.4% after the company, which makes microinverters and backup energy storage for solar systems, announced an expansion of battery storage in Massachusetts.
Citrix Systems — Citrix shares fell 3.4% after reports that the cloud-computing company will be taken private in an all-cash deal worth $16.5 billion, including debt. Vista Equity Partners and an affiliate of Elliott Management are acquiring Citrix for $104 per share, according to The Wall Street Journal.
BlackBerry – BlackBerry shares added 4.4% after the communications software company announced a deal to sell its legacy patents for $600 million. The noncore patent assets include mobile devices, messaging and wireless networking. Catapult, a special purpose vehicle, was formed to acquire the BlackBerry patents.
Otis Worldwide – Shares of the elevator company rose 3.2% after Otis reported 72 cents in earnings per share for the fourth quarter, four cents ahead of estimates, according to Refinitiv. The company missed on revenue estimates but said it expected sales and operating margins to grow in 2022.
Walgreens – Walgreens shares dipped about 1.4% after Bloomberg reported the company has started the sales process for its Boots international drugstore unit. Additional buyout firms, such as Sycamore Partners, are reportedly considering bids.
— CNBC’s Leslie Joseph, Yun Li, Tanaya Macheel, Margaret Fitzgerald and Jesse Pound contributed reporting

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Wage growth slowed to 1.2% in the fourth quarter of 2021 from 1.4% the previous quarter, according to U.S. Department of Labor data.
While wage growth remains well above its pre-pandemic trend, a deceleration would be unwelcome news for workers if inflation doesn’t moderate.
It also suggests businesses are starting to have an easier time filling jobs.

A Now Hiring sign hangs in front of a Winn-Dixie grocery store on Dec. 3, 2021 in Miami.
Joe Raedle | Getty Images

The rapid pace of pay increases that characterized the labor market for much of last year is showing signs of slowing down.
Wage growth among private-sector jobs slowed to 1.2% in the fourth quarter of 2021 from 1.4% in the previous quarter, according to U.S. Department of Labor data issued Friday.

That pace is still above normal; it translates to a roughly 5% annual raise for workers compared to the pre-pandemic trend of around 3%, according to Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
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The deceleration suggests businesses are starting to have an easier time finding workers — and therefore may not feel the need to bid up wages as rapidly to attract talent in 2022.
“The Q4 data hints at a slowdown,” Bunker said. “In combination with other data, it suggests the breakneck speed of wage growth we saw in summer and early fall may not be the pace we see moving forward.”
“Slowing down from 120 miles per hour to 90 miles per hour is slowing down,” he added. “But you’re still hitting 90, which is pretty quick.”

A further slowdown would be unwelcome news for workers. Inflation has been running at its fastest pace in decades, eroding the large raises workers have gotten over the past year.
If wage growth continues to decelerate while the cost of living fails to ebb, the combination would eat into paychecks even more. However, if inflation moderates in 2022 and wage growth plateaus at current levels, workers may ultimately experience a net raise, Bunker said.

Hiring getting easier?

Demand for workers surged last year as the U.S. economy emerged from its pandemic hibernation.
Job openings soared to record levels as employers’ need for workers outstripped the ready supply of labor. Millions of Americans have stayed on the sidelines of the job market, largely due to persistent pandemic health fears, care responsibilities at home and early retirements among older workers, according to economists. Other factors like elevated household savings and employee burnout also likely played a role, they said.
Employees also began quitting in record numbers — a trend that came to be known as the Great Resignation — as Americans re-evaluated their work lives and many grew confident that they could find better, higher-paying jobs elsewhere.

The recent Labor Department wage data suggests those hiring challenges for employers have somewhat eased.
“Relatively, it’s not as hard to hire as it was, say, back in September or August for some sectors,” Bunker said.
Wages have jumped the most for low-paying, in-person jobs in leisure and hospitality (hotels, restaurants, bars), and for those workers at bricks-and-mortar retail stores. Both sectors had extended pandemic-related shutdowns, Bunker said.

Pay growth among leisure and hospitality jobs slowed to 1.4% in the fourth quarter of 2021, down from 2.5% in both the third and second quarters, according to the Labor Department data.
A separate agency report, the Job Openings and Labor Turnover survey, suggests that the rate of hiring among leisure and hospitality businesses improved in November after falling for three consecutive months.
Meanwhile, pay growth may still be accelerating in some industries. Retail wage growth, for example, jumped to 2.6% in the fourth quarter from 1.6% and 0.9% in the third and second quarters, respectively, according to the new data.

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Bahamas-based crypto exchange FTX says it has raised $400 million in a new round of funding.
The deal values the company at an eye-watering $32 billion, up from $25 billion in October 2021.
FTX has built up a war chest of funds at a time when crypto prices have sunk considerably.

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, at the Bitcoin 2021 conference in Miami, Florida, on June 5, 2021.
Eva Marie Uzcategui | Bloomberg | Getty Images

Cryptocurrency exchange FTX saw its valuation swell to $32 billion in a new funding round announced Monday, highlighting continued appetite for the sector even as investors grow wary about a sharp pullback in crypto prices.
The Bahamas-based company said Monday that it raised $400 million in a Series C financing round — its third fundraise in the last nine months.

FTX, which offers derivatives products as well as spot trading, is one of the world’s largest digital currency exchanges. Once an obscure name, the firm has become a key player in the nascent market, rivaling the likes of Coinbase and Binance.
The company doesn’t offer trading in the United States. That function is provided by FTX U.S., its sister exchange. Last week, FTX U.S. announced a $400 million investment valuing the firm at $8 billion.
FTX said all investors in the U.S. affiliate, which included Singaporean state investor Temasek, SoftBank’s Vision Fund 2 and Tiger Global, jumped aboard for its own fundraise.
Having now raised a combined $2 billion in venture funding to date, FTX has built up a war chest at a time when digital currency prices have sunk considerably. Bitcoin is down 46% from its November record of almost $69,000, while other cryptocurrencies have slumped even further.
That’s led to fears the market may be on the cusp of a more severe downturn known as “crypto winter.” The last such occurrence happened in late 2017 and early 2018, when bitcoin tanked as much as 80% from its then-record high. Bear markets are typically bad news for crypto exchanges as it means volumes tend to dry up.

“I think we’re not entering a long term crypto winter,” Sam Bankman-Fried, FTX’s CEO and co-founder, told CNBC in an interview.
“There have been changes in expectations of interest rates, and that’s been moving crypto markets. But it’s been moving markets more generally as well.”
Indeed, stocks have taken a battering in recent weeks, with the Nasdaq down 11% year-to-date as investors reevaluate tech stocks amid concerns over higher interest rates from the Federal Reserve. Coinbase, FTX’s publicly-listed rival, has seen its shares slide 46% since debuting on the Nasdaq last April.
Asked whether his company could seek an initial public offering, Bankman-Fried said “it’s something we’ve been talking about.”
“I’m not sure whether we will. I could see it happening, I could see it not happening. We don’t feel like we have any particular need to do it.”
However, he said the firm will “try and be prepared, in case it’s something that we do end up wanting to do.” Such preparations would include audited accounts and a review of possible listing options, he added.
While the crypto market has seen seismic growth over the past couple of years, regulators have become increasingly wary about digital assets, concerned about their use in scams and other illicit activity.
A large focus for FTX, Bankman-Fried said, is acquiring licenses in several countries. Its U.S. arm is now authorized to sell derivatives products such as futures and options, which allow investors to speculate on movements in the price of an asset. Bankman-Fried said FTX’s international business will be licensed across “the bulk of the Western world” by the end of this year.
The company plans to use the fresh funds to continue developing new products. FTX last year launched a marketplace for trading non-fungible tokens — the crypto world’s answer to collectible items — and is now starting to license its software to other businesses in the realms of fintech and gaming, Bankman-Fried said.
FTX said its user base grew 60% since October 2021, when it last raised money at a $25 billion valuation, while daily trading volumes rose 40% to an average of $14 billion. The company recently established a $2 billion venture fund to invest in crypto start-ups.

Who is Sam Bankman-Fried?

FTX was founded almost three years ago by Bankman-Fried and fellow co-founder Gary Wang.
While Bankman-Fried may have started his career as a trader at the Wall Street firm Jane Street, the crypto boss is not your typical finance executive. He lives on a vegan diet, wears t-shirts and shorts, and is based in a sunny island country.
He does, however, share one similarity with traditional financial types: long working hours. Bankman-Fried previously said he functions on as little as four hours of sleep a night. He says he sleeps “a bit more” now, but “not a ton.”
FTX’s latest investment places it among the most valuable private crypto start-ups globally.  At just 29, Bankman-Fried is one of the richest people in crypto, having amassed a net worth of over $22 billion, according to Forbes. With his shares now worth more, that figure is likely to be even higher.
Bankman-Fried built an early fortune trading bitcoin at his quantitative trading firm Alameda Research. Bankman-Fried used arbitrage, a trading strategy where investors look to profit from a divergence in prices for the same asset across different exchanges.

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Take a look at some of the biggest movers in the premarket:
Citrix Systems (CTXS) – Citrix is near a deal to be taken private for roughly $13 billion, according to multiple media reports. The deal would see the cloud computing company acquired by Vista Equity Partners and an affiliate of Elliott Management for $104 per share. That’s below the Friday closing price for Citrix of $105.55 a share, with the stock up over the past few months on reports of takeover talks. Its shares fell 3.4% in premarket trading.

BlackBerry (BB) – The communications software company’s stock tumbled 6.1% in the premarket after it announced a deal to sell its non-core patent assets for $600 million. The patents primarily involve mobile devices, messaging and wireless networking, with patents essential to its current core business not involved in the deal. The buyer is Catapult IP innovations, a special purpose vehicle formed specifically to buy those patents.
Spotify (SPOT) – Spotify shares rose 1.5% in premarket trading after the audio streaming service took steps to address the controversy surrounding its Joe Rogan podcast, which has been accused of spreading Covid-19 misinformation. Spotify publicized its platform policies and announced the creation of a coronavirus information hub.
Otis Worldwide (OTIS) – The elevator and escalator maker reported quarterly profit of 72 cents per share, 4 cents a share above estimates. Revenue essentially came in line with forecasts. Otis also said sales growth would slow this year and forecast adjusted 2022 earnings per share at $3.20 to $3.30, compared to a consensus estimate of $3.29 a share.
Walgreens (WBA) – Walgreens has kicked off the sales process for its Boots international drug store unit, according to people with knowledge of the matter who spoke to Bloomberg. A number of buyout firms, including Sycamore Partners, are said to be mulling bids for the unit. Walgreens fell 1% in premarket action.
Marathon Petroleum (MPC) – Marathon Petroleum is down in premarket trading, following a Reuters report that the United Steelworkers Union rejected a contract offer from the energy producer. The offer would have given refinery and chemical plant workers a 4% pay increase over three years, according to people familiar with the matter. Marathon fell 1.1% in premarket trading.

Beyond Meat (BYND) – Beyond Meat was double-upgraded to “overweight” from “underweight” at Barclays, which increased its price target on the maker of plant-based meat alternatives to $80 per share from $70 a share. Barclays cites the company’s growth potential, especially in the U.S. retail market. Beyond Meat jumped 4.4% in the premarket.
Intuitive Surgical (ISRG) – Intuitive Surgical was upgraded to “overweight” from “neutral” at Piper Sandler, which cites a number of factors including valuation for the maker of surgical equipment. The stock had fallen nearly 8% on Jan. 21 following its quarterly earnings and remains at roughly the same level. Intuitive Surgical added 1.2% in premarket action.
Netflix (NFLX) – Netflix added 2.5% in the premarket after Citi upgraded the stream service’s stock to “buy” from “neutral.” Citi said that following the recent sell-off, prevailing equity values don’t reflect material subscriber growth prospects or improving subscriber economics beyond 2023.
Align Technology (ALGN), Envista (NVST) – The maker of Invisalign dental braces was rated “overweight” in new coverage at Morgan Stanley, which notes the recovery for the dental market following pandemic-related disruption and said that dental product specialists like Align, Envista, and Dentsply Sirona (XRAY) are poised to benefit. Align and Envista both gained 1.4% in the premarket, while Dentsply was little changed.

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