Finance

Ray Dalio said regulators would ultimately take control of bitcoin if the cryptocurrency gains mainstream success.
“I think at the end of the day if it’s really successful, they will kill it and they will try to kill it. And I think they will kill it because they have ways of killing it,” Dalio said.
The founder of the world’s largest hedge fund Bridgewater Associates still believes bitcoin makes a good alternative to cash.

Bridgewater Associates Chairman Ray Dalio attends the China Development Forum in Beijing, China March 23, 2019.
Thomas Peter | Reuters

Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, believes regulators would ultimately take control of bitcoin if the cryptocurrency gains mainstream success.
“I think at the end of the day if it’s really successful, they will kill it and they will try to kill it. And I think they will kill it because they have ways of killing it,” Dalio told Andrew Ross Sorkin Wednesday on CNBC’s “Squawk Box” at the SALT conference in New York.

U.S. regulators have stepped up its oversight on the volatile cryptocurrency space as the wild rides in the speculative markets continued to grab attention. Securities and Exchange Commission Chairman Gary Gensler said Tuesday that Wall Street’s top regulator is working overtime to create a set of rules to protect investors through better regulation of the thousands of new digital assets and coins.
Despite some heavy bouts of volatility, bitcoin has been quite successful as of late. The crypto has more than quadrupled the last 12 months and was last around $47,500. It hit a high above $60,000 earlier this year.
“You have El Salvador taking on it and you have India and China getting rid of it. And you have the United States talking about how to regulate it and it could still be controlled,” Dalio said.
In June, El Salvador has become the first country to adopt bitcoin as legal tender. Meanwhile, India is expected to propose a law banning cryptocurrencies and penalize miners and traders. China has started cracking down the crypto markets, ordering miners to shut down their operations.
Dalio said bitcoin doesn’t have intrinsic value, meaning the asset lacks fundamental and objective worth.

“There are so many things in a historical perspective that didn’t have intrinsic value and had perceived value. And then it went hot and it became cold. It could be either way. You just have to know what it is. It could be Tulips in Holland,” Dalio said.
Still, the billionaire investor said bitcoin makes a good alternative to cash, and he owns a smaller percentage of the digital token compared to his gold exposure in the portfolio.
“I think it’s worth considering all the alternatives to cash and all the alternatives to the other financial assets. Bitcoin is a possibility. I have a certain amount of money in bitcoin,” Dalio said. “It’s an amazing accomplishment to have brought it from where that programming occurred to where it is through the test of time.”

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The company is set to announce Wednesday that it named David Hijirida as president to run day-to-day operations, according to CEO Noah Kerner.
Hijirida spent 12 years at Amazon managing areas including global payments and advertising. He was CEO of digital bank Simple Finance from 2018 until it was shuttered in May.
In the latest sign of the continuing adoption of the nascent asset class, Acorns will soon allow users to invest in crypto within diversified portfolios, Kerner said.

Acorns president David Hijirida
Courtesy: Mo Osborne | Acorns

Investing and savings app Acorns has hired a former Amazon executive and fintech CEO to lead day-to-day operations ahead of the start-up’s debut as a public company, CNBC has learned.
The company is set to announce Wednesday that it named David Hijirida as president, according to CEO Noah Kerner. Hijirida started his career in strategy roles at traditional banks, spent 12 years at Amazon managing areas including global payments and advertising, and was CEO of digital bank Simple Finance from 2018 until it was shuttered in May.

Acorns is stocking up on seasoned managers ahead of its expected public listing later this year. In May, the firm disclosed that it was merging with Pioneer Merger Corp., a special purpose acquisition company, at a $2.2 billion valuation. Last month, it named Twitter executive Rich Sullivan its new chief financial officer.
“David obviously has a great depth and breadth of financial services and technology experience,” Kerner said in a phone interview. “He’s got a really a great combination of fintech, payments, operations and also product development experience.”
The appointment of Hijirida will allow the CEO to focus on his vision for the fintech firm, including future products and branding, Kerner said. Acorns has more than 4 million paying subscribers and aims to reach 10 million by 2025, he said.

Noah Kerner, CEO of Acorns.
Adam Jeffery | CNBC

While many start-ups have been able to remain private due to ample access to capital, Acorns is going public to accelerate its mission of helping people build wealth, Kerner said. That will help raise its profile with potential users, enable it to acquire targets and eventually expand outside of the U.S., he said.
Without naming specific firms, Kerner contrasted Acorn’s business model with the approach of banks and fintech players that incentivize users to spend money or trade more frequently. Free trading app Robinhood, which went public in July, has been under fire for relying on industry kickbacks called payment for order flow, a practice being examined by regulators.

Acorn’s automated investing service lets customers invest spare change from card transactions into a managed portfolio of ETFs for a monthly fee of $1 to $5.
“Everything Acorns does is about long-term saving and investing for the everyday consumer,” Kerner said. “It’s why our subscription model is so important because it decouples the business from behaviors that aren’t necessarily customer-aligned, like driving trading or driving spending or driving borrowing.”

Acorns app on a mobile phone
Source: Acorns

As a result, Acorns has been more conservative than some fintech peers who have driven rapid growth by adding capabilities including allowing the purchase of bitcoin and other digital coins. On its website, Acorns says that users currently don’t have access to cryptocurrencies because their value “can fluctuate dramatically in a day,” calling it a speculative investment.
But in the latest sign of the continuing adoption of the nascent asset class, Acorns will soon allow users to invest in crypto within diversified portfolios, Kerner said.
“We are going to let people customize their portfolios and add individual equities and crypto into a slice of their diversified portfolios, much the way a money manager would advise you to behave,” Kerner said.
It will happen within the context of educating users on the benefits of asset diversification, he said.
“We haven’t announced a launch date yet,” Kerner said, “but it’s coming.”Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns, and CNBC has a content partnership with it.

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Check out the companies making headlines before the bell:
Weber (WEBR) – The grill maker’s stock jumped 3.8% in the premarket, following its first quarterly report since going public in August. Weber’s sales rose 19% from a year earlier, and the company projected full-year sales largely above current Wall Street forecasts.

Wynn Resorts (WYNN), Las Vegas Sands (LVS) – Macau-related casino stocks tumbled in premarket trading as regulators begin a 45-day period of considering tighter regulations on Macau’s gaming industry. Officials say they want “sustained and healthy development” in the world’s biggest gambling hub, but investors are worried over the impact of potential changes. Wynn fell 4.9% in the premarket while Las Vegas Sands slid 3.9%.
Microsoft (MSFT) – Microsoft announced an 11% dividend hike, raising its quarterly payout to 62 cents per share from 56 cents, as well as announcing a $60 billion stock buyback program. Microsoft added 1.3% in the premarket.
Canadian National Railway (CNI) – Canadian National will not improve its offer to buy Kansas City Southern (KSU), according to people familiar with the situation who spoke to CNBC’s David Faber. That would clear the way for Canadian Pacific Railway (CP) to buy Kansas City Southern, after Kansas City Southern’s board declared Canadian Pacific’s latest offer as “superior.”
Regeneron Pharmaceuticals (REGN) – The drugmaker announced that the U.S. government would buy an additional 1.4 million doses of Regeneron’s Covid-19 antibody cocktail. That will bring the total number of doses purchased by the government to nearly 3 million. Regeneron rose 1.8% in premarket trading.
Yum China (YUMC) – Yum China warned that the spread of the Covid-19 delta variant would result in a 50% to 60% hit to its third-quarter profit. The restaurant operator said it had to close or limit service at more than 500 restaurants in August due to the delta variant outbreak in China. Yum China shares tumbled 4.8% in premarket action.

Citrix Systems (CTXS) – Citrix is working with advisers to consider a possible sale of the company, according to people familiar with the matter who spoke to Bloomberg. The maker of workplace software will gauge potential interest in the company over the next few weeks and could decide to remain independent. Citrix rallied 4.4% in the premarket.
Crocs (CROX) – Crocs added 1.1% in premarket trading following Tuesday’s 8.5% gain. That came after the shoe maker’s Investor Day where it projected better-than-expected full-year revenue and announced an accelerated share repurchase program.
Skillsoft (SKIL) – The provider of corporate digital learning programs jumped 4.5% in the premarket after reporting better-than-expected revenue and bookings for its latest quarter as well as raising its full-year guidance.
Just Eat Takeaway (GRUB) – The food delivery service’s stock slid 3.2% in premarket trading after Amazon (AMZN) and Deliveroo announced a partnership that will offer free food delivery in the U.K. to Amazon Prime members.
Sage Therapeutics (SAGE) – The drug maker’s shares rallied 5.7% in the premarket after the FDA granted fast-track status to the company’s experimental treatment for Huntington’s disease. Sage expects to start a phase 2 trial for the treatment before the end of 2021.
SoFi Technologies (SOFI) – The fintech company’s stock added 2.8% in premarket action after Mizuho began coverage with a “buy” rating and a $28 price target compared with Tuesday’s close of $14.50. Mizuho said SoFi is becoming a “full-fledged, super-app neo-bank” with next-generation capabilities.

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Huawei CEO Ren Zhengfei claimed at an internal meeting in early August that the company has paid its expanding workforce on time, despite pressure from the U.S., according to materials released Wednesday.
The Chinese telecommunications company claims it increased headcount by 3,000 people between the end of 2019 and 2020, amid the onset of the coronavirus pandemic.
“China has experienced economic bubbles, with young elites all rushing to do things that yield quick returns with a relatively low investment,” Ren said.

Huawei founder Ren Zhengfei attends a panel discussion at the company headquarters in Shenzhen, Guangdong province, China June 17, 2019.
Aly Song | Reuters

BEIJING – Chinese telecommunications giant Huawei said it is expanding its team of scientists even as the company has lost revenue in the wake of U.S. sanctions.
It’s a bet that doubling down on research can help China build up its own technologies, now that the U.S. under President Joe Biden’s administration is bent on competing with Beijing and kept restrictions on the Chinese company’s access to semiconductor technology from the U.S.

Huawei CEO Ren Zhengfei claimed at an internal meeting in early August that the company has paid its expanding workforce on time, despite pressure from the U.S., according to materials released Wednesday. Many Chinese companies often defer pay for employees, or force resignations without compensation packages.
“Despite US restrictions over the past two years, we have not changed our human resource policies, and everything is business as usual, like salary and bonus distribution, job grade raises, and company share distribution,” Ren said, according to an English-language transcript seen by CNBC. “There has been no chaos within the company. Instead, the company is now more united than ever, and has even attracted more talent.”

The telecommunications company claims it increased headcount by 3,000 people between the end of 2019 and 2020, amid the onset of the coronavirus pandemic. Just over half, or 53.4%, of employees are in research and development, according to Huawei.
In 2019, former President Donald Trump’s administration put Huawei on a blacklist that restricted American companies from selling technology to the Chinese company, citing national security concerns. Huawei has denied it poses such a threat.
“Due to US restrictions over the past two years, we no longer seek to use the best components to make the best products,” Ren said. “Instead, we are using scientific and reasonable methods to ensure balanced traffic across the system and are using appropriate components to make high-quality products, which has significantly improved our profitability.”

A slump in global smartphone sales has also hit Huawei’s business.
The company reported 320.4 billion yuan ($49.67 billion) in revenue during the first six months of 2021, a drop from 454 billion yuan in the same period a year ago. This year’s first half revenue was even lower than that for the first half of 2019 and 2018, prior to the pandemic and U.S. sanctions.
The two largest business segments, consumer and carrier, saw sharp year-on-year declines in the first half of 2021. The far smaller enterprise business, which Huawei has centered its growth strategy on, grew by 6.6 billion yuan.
Ren remained intent on paying up for scientists — and talked of compensation on par with an undisclosed amount for professors at China’s prestigious Tsinghua University.
“If the company hadn’t paid attention to basic science and research, engaged in deep cooperation with the world’s leading scientists, or valued those engaged in basic research over the past decade, we wouldn’t have accumulated the huge amount of theoretical, technological, and engineering knowledge necessary to overcome the difficulties created by US restrictions and blocks,” he said.

Read more about China from CNBC Pro

Ren’s comments come as the central Chinese government has been trying to resolve a shortage of workers in high-tech industries such as manufacturing. Beijing has laid out ambitious plans to build up its own technology — in semiconductors and quantum computing — over the next decade.
“China has experienced economic bubbles, with young elites all rushing to do things that yield quick returns with a relatively low investment,” Ren said.
“China still lags far behind in products like machine tools, equipment and process techniques, instruments and meters, and research into materials and catalysts. What methods can we use to conduct production experiments under such circumstances? This is a difficulty we now face.”
— CNBC’s Arjun Kharpal contributed to this report.

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FOR SUCH a small place, Singapore has exercised an outsized influence on China’s economy. The city-state proved to reformers in China that a government could open up the economy without losing control. “Society in Singapore is quite orderly,” said Deng Xiaoping, China’s paramount leader, in 1992. “They managed things very strictly. We ought to use their experience as a model and…manage things even better than they do.”Unfortunately Singapore has not managed covid-19 as strictly as China would like. A resident of China’s Fujian province, who recently returned from Singapore, tested positive earlier this month for the Delta variant. He is thought to have passed it on to his son, from whom it soon spread through his school. Fujian has now recorded 165 cases since September 10th. Exchanges between Singapore and China’s coastal provinces (the ancestral homelands for many Singaporeans) have brought many benefits. But this outbreak belongs in the other column.In response, officials in Putian (a city with a population of 3m) and Xiamen (5m) have shut schools, bars and other high-risk venues. Economists worry that if the outbreak persists, it will disrupt travel and shopping during China’s week-long holiday beginning on October 1st. That would delay the recovery from a similar outbreak that ended only last month. The cost of that scare became clearer with the release of economic data on September 15th. One casualty was retail sales, which rose nationwide by only 2.5% (in nominal terms) in August, compared with a year earlier, far weaker than expected. Based on the data so far, GDP in the third quarter is on course to shrink compared with the previous three months, suggests a “tracking” estimate by Morgan Stanley, a bank.Singapore’s strictly managed property market is another model China’s reformers often admire but have failed to emulate. But the government in Beijing is belatedly cracking down on indebted developers, imposing curbs on their borrowing, even as mortgage costs rise and potential homebuyers think twice. Property firms sold 17.6% less residential floorspace in August than a year earlier, and the price of new homes fell in ten out of 70 big cities tracked by the National Bureau of Statistics. Developers are now less willing and less able to build. Investment in real estate was only 0.3% higher in August than a year ago.China’s exports have so far proved resilient: they were 25% higher in August than a year ago. Indeed, China’s manufacturers may have gained at the expense of countries that are struggling with worse covid-19 outbreaks of their own. Moreover, for as long as inflation remains subdued, China has scope to ease monetary and fiscal policy to support growth. It may thus combine tight control of infections, property and other unruly industries with an easing of its macroeconomic stance, characterised as “micro takes, macro gives” by Goldman Sachs, another bank.The question is whether macro can give enough. Analysts at China International Capital Corporation (CICC), an investment bank, point out that China’s official fiscal deficit has been negligible so far this year. The government therefore has room to spend more in the remaining few months of the year without revising its deficit target. Sure enough, bond issuance picked up last month and the government’s deposits with banks fell. CICC reckons that China might increase spending on infrastructure at an annual rate of 5% in the last three months of the year, compared with the same period in 2019, before the pandemic.China’s rulers hope that tighter regulations will help make housing more affordable and a less dominant part of the economy. It is part of the “new development dynamic” touted by Xi Jinping, China’s ruler. But as this year wears on, China’s development pattern is beginning to look wearyingly familiar: weak consumption, strong exports and additional public investment to save the economy from past speculative excess. Whatever might be said for this growth dynamic, it is anything but new. More

U.S. stock futures were flat Tuesday night after the Dow Jones Industrial Average dropped nearly 300 points on rising investor worries about the state of the economic recovery and the next action by the Federal Reserve.
Dow Jones Industrial Average futures ticked 8 points higher, or 0.02%. S&P 500 and Nasdaq 100 futures climbed 0.05% and 0.08%, respectively.

In regular trading Tuesday, the Dow fell 292.06 points, or 0.8%, to 34,577.57, retreating after it snapped a five-day losing streak on Monday. The S&P 500 lost 0.6% to finish at 4,443.05 and the Nasdaq Composite slipped 0.5% to 15,037.76.
The Dow, S&P and the small-cap Russell 2000 have now traded in the red for six of the last seven days. Tuesday marked the fifth straight day of losses for the Nasdaq. September has historically been a down month for the markets, which have seen an average decline of 0.56% in the month since 1945, according to CFRA. And after eight months of straight gains, strategists say a major pullback could be imminent.
The S&P 500 has continued to move higher throughout the year, dipping below the 50-day moving average only once, according to Fundstrat. Mike Wilson, chief investment officer at Morgan Stanley, told CNBC’s “Fast Money” that could be just the beginning.
“The midcycle transition always ends with a correction in the index,” he said of the S&P 500. “Maybe it’ll be this week, maybe a month from now. I don’t think we’ll get done with this year, however, with that 50-day moving average holding up throughout the year because that’s the pattern we typically see in this part of the recovery phase.”
On Tuesday the Labor Department released data before the bell showing a smaller-than-expected rise in U.S. inflation for the month of August. Consumer prices rose 5.3% from a year ago and 0.3% from July. Stripping out food and energy, the consumer price index was up just 0.1% for the month.

Initially, markets rallied but turned back down after the market open as uncertainty about the timing of the Federal Reserve’s tapering of asset purchases settled in.
“The Federal Reserve will probably delay slowing its purchase of Treasury and mortgage-backed securities despite slight indications that the price increase in durable goods is transitory, as illustrated by the reduction in used car prices,” said Dawit Kebede, senior economist at Credit Union National Association. “This is because we are far from maximum employment,” one of the Fed’s two goals of its dual mandate.
While the data was cooler than expected, inflation is still running hot, according to Brad McMillan, chief investment officer for Commonwealth Financial Network.
“We will likely see inflation run hot for at least the rest of the year and quite possibly into 2022,” he said. “But we do see the change in trend, which shows that the change in basis is taking effect and that the economy is healing.”
Stocks tied to the economic recovery edged lower Tuesday. United Airlines fell 2.1% and Bank of America lost 2.6%. General Electric closed 3.9% lower.
Casino stocks took a big hit as the government of Macau looks to increase regulatory scrutiny over casinos and Chinese health authorities reported a Covid-19 outbreak. Las Vegas Sands fell 9.7%, Wynn Resorts dropped 10.8% and MGM resorts lost 3.9%.
Apple shares closed almost 1% lower after the company introduced the iPhone 13 at its annual product unveiling event.
Wednesday is the final day of the SALT Conference in New York City. In terms of economic data, U.S. import and export prices and mortgage applications data are scheduled to be released Wednesday.

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House Democrats’ proposed tax reforms would raise levies for $1 million households by about 11% on average in 2023, according to the Joint Committee on Taxation. They’d give a tax cut to low- and mid-income households.
Higher taxes for corporations and wealthy individuals would raise more than $2 trillion over a decade. The revenues would fund climate-mitigation measures and an expansion of the U.S. safety net.

Drew Angerer | Getty Images News | Getty Images

Households earning $1 million or more would see their taxes rise by almost 11%, on average, in 2023 due to reforms proposed by House Democrats, according to Joint Committee on Taxation estimates published Tuesday.
They’d pay an extra $96,000 that year, and their average tax rate would increase to 37.3% from 30.2%, according to the projections.

Meanwhile, Democrats’ policies would give an average tax cut to all households with incomes less than $200,000.
For example, those with $20,000 to $30,000 of income would get an 87% reduction in their federal taxes in 2023, amounting to more than $18,700 of tax savings, according to the Committee estimates.

“The president campaigned on ‘No one under $400,000 gets a tax increase,'” according to James Hines Jr., an economics professor at the University of Michigan and research director at its Office of Tax Policy Research. “This has tightly constrained every policy decision [Democrats] have made. They want to be able to say they lived up to that promise.”
As is customary, the Joint Committee on Taxation doesn’t break down tax impacts using a $400,000 income demarcation.
However, they do so for the $200,000 to $500,000 income group. This cohort would see its tax bill rise slightly — by 0.3%, or $2,900 — in 2023, according to the estimates.

That increase is likely entirely shouldered by those with more than $400,000 of income, Hines said.  

Tax policies

House Democrats proposed a slew of tax reforms on Monday aimed at corporations and wealthy households to help fund climate initiatives and a significant expansion of the U.S. safety net.
Their legislation would raise the top marginal income tax rate to 39.6% and increase the top federal rate on long-term capital gains to 25% from 20%. It would also impose a 3% surtax on households with at least $5 million of annual income, among other measures.
Corporate and individual tax provisions would raise more than $2 trillion over a decade, according to the Joint Committee on Taxation.
More from Personal Finance:Stimulus checks and unemployment benefits lowered poverty in 2020, Census saysHouse Democrats push for permanent earned income tax credit expansionHouse Democrats’ plan would close tax loophole used by crypto investors
Democrats would use some of those tax savings to preserve the expanded child tax credit created by the American Rescue Plan this year. Monthly payments of that expanded tax break started in July.
They would also fund expansions of childcare, paid leave, pre-K education and community college, public health insurance plans, green energy incentives and other household tax credits.
House Democrats’ legislation proposes a temporary expansion of the child tax credit through 2025.
At that time, some low- and mid-income households would see a slight increase in their tax bills — ranging from less than 1% to about 1.5% on average in 2027, according to the Committee — if lawmakers can’t further extend the tax break. (The extent to which the child tax credit’s expiration factors into this projected increase is unclear, however.)

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An exterior view of the Oracle Field Office at Wilson Boulevard in Arlington, Virginia, October 18, 2019.
Tom Brenner | Reuters

Check out the companies making headlines in midday trading.
Oracle – The tech company’s shares slid more than 3% after Oracle’s first-quarter revenue missed expectations. The company reported sales of $9.73 billion, which was short of the $9.77 billion analysts surveyed by Refinitiv predicted. Oracle earned $1.03 per share on an adjusted basis during the period, which was ahead of the 97 cents the Street expected.

Angi — Shares of the home services marketplace jumped more than 7% after it reported its August metrics, which showed its revenue for the month jumped 21% jump from the previous year. Angi owns Angie’s List, HomeAdvisor and HomeStars, among other brands.
Casino stocks: Shares of Las Vegas Sands and Wynn Resorts – both of which operate in Macau – slid as investors fretted about tougher regulations. The Macau government will be starting a 45-day public consultation to review the gaming industry, according to a report from Reuters. Las Vegas Sands’ shares declined over 12%, while Wynn fell more than 11%.
Fox Corp. — The media firm’s shares fell 1.8% after news that the company finalized a deal to acquire celebrity news platform TMZ from AT&T’s WarnerMedia unit. The companies did not disclose terms of the deal, but The Wall Street Journal reported that TMZ is being valued at less than $50 million.
Herbalife Nutrition — Shares of the wellness supplement company dropped 15% after Herbalife lowered its guidance for the third quarter, citing softer-than-expected sales activity. The company now expects adjusted earnings per share of $1.00 to $1.20, which is 5 cents lower on each end than prior guidance.
Southwest Airlines — Airline stocks moved lower in midday trading as economic reopening names weakened. Southwest ticked 1.5% lower and Delta Air Lines lost 1.6%. United Airlines dropped 2%. Additionally, Southwest President Tom Nealon is retiring from the carrier effective immediately.  His departure comes three months after CEO Gary Kelly announced he would retire in January and named longtime Southwest executive Bob Jordan as his successor. 

General Electric — Stocks tied to the economic reopening fell in midday trading. General Electric led industrial shares into the red, dropping 2.7%.
SeaChange International — Shares of SeaChange rose 6.5% after reporting a smaller-than-expected quarterly loss. The video management solutions company lost 3 cents per share, smaller than the 9-cent loss anticipated by analysts. Revenue also topped expectations.
— with reporting from CNBC’s Pippa Stevens, Jesse Pound, Tanaya Macheel and Hannah Miao.

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