Finance

Traders on the floor of the New York Stock Exchange.Source: NYSEWall Street investors believe inexpensive and economically sensitive stocks will retake the lead in the market in the second half of 2021, according to a new CNBC survey. As a part of CNBC’s Quarterly Report, we polled about 100 chief investment officers, equity strategists, portfolio managers and CNBC contributors who manage money about where they stood on the markets for the rest of 2021. The survey was conducted from June 23 to June 30.Nearly 70% of the respondents said value stocks will do better than their growth counterparts in the next quarter.Zoom In IconArrows pointing outwardsAfter an impressive rebound from pandemic lows, the rally in value shares took a pause as the Federal Reserve’s hawkish policy pivot and inflationary pressures made investors reassess the outlook for economic growth. The Russell 1000 Value Index fell 1.3% in June, trailing its growth counterpart by more than 7 percentage points as tech stocks outperform with bond yields stabilizing.Investor could be betting on a rotation back into value on the belief that the case for economic recovery remains intact and should result in rising yields again in the coming months. Nearly half of the survey respondents said the 10-year Treasury yield will top 2% by the end of the year. The benchmark rate last traded around 1.46% after hitting a high of 1.75% in March.On the sector level, the majority of investors (67%) believe financials will be a winning trade for the rest of 2021. The S&P 500 financials sector is the second best performer this year, up 24.5% year to date.Zoom In IconArrows pointing outwardsMajor banks are boosting their dividends following the Federal Reserve’s stress test where all 23 banks passed. The central bank said the industry is “well above” required capital levels in a hypothetical economic downturn. Morgan Stanley said it will double its quarterly dividend. JPMorgan Chase boosted its dividend by 11% to $1 per share. Bank of America said its dividend would rise 17% to 21 cents. Goldman Sachs said it planned on boosting its dividend by 60% to $2 per share.Inflation the biggest riskWhen asked what poses the biggest risk to the market, more than 40% of the respondents said inflation, while 27% said a resurgence in Covid new cases, 21% said the Fed tapering and 9% believe it’s rampant retail speculation.Zoom In IconArrows pointing outwardsInflation remains the hottest debate topic on Wall Street as its staying power could make or break a stock market at record highs halfway through 2021. The Fed is shrugging off recent hot inflation readings, sticking with the view that any price pressure during the historic economic rebound will be transitory.The central bank’s preferred measure — the core price index for personal consumption expenditures — rose 3.4% in May year over year, the fastest increase since the early 1990s.Mohamed El-Erian, chief economic advisor at Allianz recently warned that the Fed is underestimating inflation and risking that the U.S. could fall into another recession.Zoom In IconArrows pointing outwardsTo hedge against inflation, more than half of the survey respondents said their favorite trade is oil. Prices of commodities tend to move in lockstep with inflation.U.S. West Texas Intermediate crude on Thursday broke above $75 and hit its highest level since October 2018. The WTI has climbed more than 50% in 2021 as demand rebounded from the pandemic. The S&P 500 energy sector has been the biggest winner this year with a 43% gain.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

HONG KONG is where China meets the outside world. The territory has long been a training ground for mainland Chinese bankers hoping to take on the planet. But recently it is Wall Street banks that are being schooled in Chinese practices. As companies from the mainland have come to dominate initial public offerings (IPOs) and bond issuances in the territory, so too have mainland methods crept into the underwriting process behind the deals.Western banks have decried the shift, claiming it hampers price discovery. Global investors are also up in arms about what they say are inflated stock and bond offerings. Hong Kong’s Securities and Futures Commission (SFC) is attempting to address the clash. It has released a consultation paper that proposes codifying Western norms. The results of the consultation are expected in coming weeks and could add a new set of rules to the SFC’s existing code of conduct for bankers. Whatever the outcome, it is sure to stir controversy.The process of bringing an IPO or bond to investors is generally defined by many unwritten practices shaped by the market where the deal is underwritten. Hong Kong’s investment-banking culture borrowed heavily from the Eurobond market that developed in London in the 1970s and 1980s. Companies issuing securities have usually appointed a lead bank among the syndicate of institutions underwriting the deal at an early stage in the process. The role of the banks, and the purpose of their fees, has been clear. Crucially, the lead bank can advise the company on pricing and allocating shares to investors. This helps ensure the demand for securities is genuine. The setup also brings in investors with experience in valuing securities, and keeps out speculative cash.All this has been changing, however. Today many companies, mainly ones hailing from mainland China, do not assign roles to the banks until the last possible moment, allowing for a scrum of investment banks to vie for supremacy—and fees—in the syndicate. In some recent bond deals dozens of banks have ended up on the ticket, each scrapping for a puny fee. Instead of a co-ordinated pricing process, the result is muddied price discovery.Banks knowingly take inflated orders, driving up the price of the security. In one case the SFC found that the heads of an IPO syndicate spread misleading information that overstated the demand for shares. In debt deals some banks submit “X orders” that do not disclose the identity of their clients and make it harder to assess true demand. It is these newer practices that Hong Kong’s regulators want to push back against, while acknowledging the older methods as best practice.Many global banks support the establishment of a set of standards. “We all have to be singing from the same hymn sheet,” notes one banker. Mainland institutions, though, have a different tale to tell. They say the griping from Western rivals mainly reflects sour grapes. Chinese companies have gone from issuing about $20bn in US-dollar denominated bonds in 2011, or about 1% of global issuance, to about $209bn in 2019, or 6% of the global market, according to Dealogic, a data provider. They have also made Hong Kong one of the world’s largest IPO venues for a decade. Mainland banks have shot up in the league tables for such offerings in that time. It is only natural, a banker at one such firm says, that they have greater control over market practices.The SFC is in the unenviable position of having to pick sides. Its proposed rules implicitly reject the creeping influence from mainland financial institutions and could disadvantage Chinese companies seeking to raise capital in Hong Kong and their mainland bankers, while giving Wall Street banks and global investors an edge. No wonder, then, that it only reluctantly took up the case for a code, after years of lobbying by global investment managers and banks. But there are worse imaginable scenarios for the regulator—such as one in which opacity slowly engulfs the market, and investors see little distinction between Hong Kong and the mainland. ■This article appeared in the Finance & economics section of the print edition under the headline “Culture clash” More

PICTURE THE moment of confusion in a taxi in Guiyang, a city in south-western China. Your columnist had asked the driver to go to the new district. “The new new district or the old new district?” he asked. It was, it emerged, the old new district—a place that seven years ago, on an earlier visit to Guiyang, had looked like the sort of ghost town then dominating horror stories about China’s economy, full of giant empty buildings. This time, however, the problem was the exact opposite. What was meant to be a quick jaunt turned into a traffic-clogged headache, the taxi crawling along in a sea of red tail lights. The old new district had filled in, and then some.One reason why it is good for journalists to stay in a country for a long stint is that it helps breed humility. Assumptions that once appeared iron-clad gather rust as the years roll by. That is true for most places. But it is especially so when covering something as complex as China’s economy, which your columnist had the privilege to do over the past decade.This, to be clear, is not a mea culpa for being overly gloomy. There were also times of excess optimism about China’s capacity for change. Take rebalancing. As far back as 2007 Wen Jiabao, then China’s prime minister, decried its economy as “unstable, unbalanced”—evidence, it seemed, that leaders grasped the problem and were ready to act. Yet the economy only became more unstable, culminating in a nearly epic meltdown in 2015. And it is as unbalanced as ever, with investment running far ahead of consumption. Nevertheless, it is hard to escape the conclusion that in the economic realm, China got more right than wrong over the past decade. How else to score its performance when, despite many predictions of doom, it doubled in size during that time?A common riposte is that this success is illusory—that the government has simply delayed the comedown from its debt-fuelled high. The deferral of pain is certainly part of the mix. Perhaps the safest bet in economics is that when growth slows sharply, China will unveil yet more infrastructure projects and call on banks to make still more loans. And if those projects or loans fail, officials have few qualms about orchestrating bail-outs and roll-overs.What is less appreciated is that China’s ability to engage in such engineering is itself a measure of success. The government can lean on its banks because they are enormously profitable to begin with. The telltale signs of an overdrawn economy—high inflation, rampant unemployment and corporate malaise—exist in pockets in China, but they are the exception, not the rule.This point was driven home when your columnist moved from Beijing to Shanghai in 2014. Each city has its charms, but Shanghai unquestionably offers a more flattering picture of the economy. Beijing, a showcase for political power, is blotted by the hulking headquarters of state-owned enterprises. Day trips take reporters to China’s greatest economic calamities, from overbuilt Tianjin to coal-mine carnage in Inner Mongolia. In Shanghai, which functions remarkably well for a city of 25m, reporters instead hop over to see high-tech innovators in Hangzhou, nimble exporters in Wuxi and ambitious entrepreneurs in Wenzhou. They show that even as the tenth year of Xi Jinping’s rule approaches, two of the fundamental underpinnings of China’s economic dynamism remain intact: red-blooded competition in the private sector and the restless quest of millions upon millions of ordinary people to improve their lot in life.These days, saying nice things about China’s economy comes with baggage, not least because of the Communist Party’s insistence that its growth record is proof of its superior political system. It is true that the government has had a crucial hand in the country’s development, starting with the fact that it has been “Infrastructure Week” just about every week in China since 1990.The correct response to the party’s boasting is not to deny China its success, but to insist on proper attribution. Japan, South Korea and Taiwan were its forerunners in using repressed financial systems to enable investment and in relying on exports to become more competitive. China has repeated all this, albeit at a far greater, and arguably more impressive, scale. At the same time, its sustained rapid growth of the past four decades has less to do with the wisdom of the Politburo than with the work of a brilliant Saint Lucian economist, Sir Arthur Lewis, who in the 1950s explained that shifting labour from low-value farming to higher-value industry can, if managed right, engender just such a catch-up process.And now for something completely differentThe coming decade is sure to prove more challenging. With 65% of Chinese people already in cities and the population close to peaking, Mr Lewis would point out that there is little scope for further gains from turning farmers into factory workers. Parallels between China and the Asian dynamos of yesteryear are breaking down. China is older and more indebted than they were at the same stage. Whereas most countries seek to strengthen the rule of law as they mature, Mr Xi is cultivating stronger party control.Add to that a treacherous external environment. Faced with the threat of economic decoupling from the West, it is only rational for China to pursue greater self-reliance. Thanks to its size and sophistication, it may well triumph in key sectors, from semiconductors to robotics. But the sorry history of import substitution globally should make clear that this is a sub-optimal strategy involving much waste and eventually leading to lower growth.All this is almost enough to turn you into a China bear: to predict not an almighty crash but rather an ineluctable slide towards stagnation. In conversations with analysts and investors, versions of this narrative crop up again and again. That it has become something like the consensus view is the single biggest reason why your columnist, after a long run in China, suspects that its economy will fare considerably better. ■This article appeared in the Finance & economics section of the print edition under the headline “A decade of Chinese lessons” More

I F YOU LIKE a central bank that responds to inflation surprises by—and here’s a retro touch—raising interest rates, then the Banco de México might be the one for you. On June 24th it surprised the markets by increasing its benchmark rate from 4% to 4.25%. Although it said in its statement that much of the recent rise in inflation was “transitory”, the scale and persistence of inflation was worrying enough to warrant higher interest rates.Mexico is no outlier. Brazil’s central bank has pushed up interest rates to 4.25% from a low of 2% in March. Russia has raised its main rate to 5.5% in three separate moves. These countries belong to the high-yielders, a group of biggish emerging-market economies, where interest rates are some distance from the rich-world norm of zero. All three believe a lot of today’s inflation will fade. But none is taking any chances.Scan the central banks’ statements, and a clear concern emerges: keeping expectations of inflation in check. This is in part, or even mostly, about exchange rates. Higher interest rates keep domestic savings onshore in the local currency. They also entice capital from yield-starved foreigners. This is called the carry trade—and it is coming back.High interest rates are now so rare in large economies that where they occur they require explanations. Latin America has a history of inflation. It is hard to get people to trust a currency when memories of betrayal linger. A related explanation is high public debt. Brazil’s burden is nearing 100% of GDP. Fiscal incontinence in developing countries often leads to inflation. High yields are needed to compensate for that risk. But such explanations only get you so far. Though Poland has suffered an episode of hyperinflation in living memory, it is a low-yielder. Turkey’s yields are high even though its public-debt burden is well below the emerging-market average.High yields are in the end a reflection of a lack of domestic savings, says Gene Frieda of PIMCO, a fixed-income fund manager. A telltale sign is a country’s current-account balance. As a matter of accounting, a deficit means that domestic savings are not sufficient to cover investment. Foreign capital is needed and high yields are the lure. Much of emerging Asia runs a surplus on its current account and has high domestic savings—and thus low yields. Poland and the Czech Republic, both low-yielders, were able to reliably augment their domestic savings with EU grants and direct investment from Western European firms. Russia, which has high yields and a current-account surplus, looks like an exception. But the surplus reflects its ultra-conservative monetary and fiscal policies, says Mr Frieda. The net effect is to raise yields and lower GDP growth but strengthen the balance of payments. Russia’s rulers accept this to avoid being beholden to foreign capital.That brings us to the carry trade. Policymakers in emerging markets are galled by the vagaries of capital flows. But carry traders are their friends. The inflation expectations that central bankers bang on about are entwined with the exchange rate. A weakening currency can be a sign of anxiety about inflation. And in the past year, currency weakness has also been a source of emerging-market inflation, says Gabriel Sterne of Oxford Economics, a consultancy. So when a central bank raises interest rates, it is in part because it wants a stronger currency to curb import costs. This might be the quickest way to bring inflation down.For their part, carry traders like a yield curve that is steep—meaning five- or ten-year bond yields are a lot higher than short-term interest rates. A steep curve captures expectations of future rises in policy rates. Traders also hope to bet on an appreciating currency. Factors other than interest rates then come into play. One is valuation. If a currency has fallen a long way recently, it has greater scope to rise again. Another is a country’s terms of trade, the prices of its exports relative to imports. Oil exporters are in favour now because of high oil prices. Carry traders must be mindful of influences that could blow up a currency. Turkey has attractively high yields, but its erratic monetary policy creates a minefield.Brazil, Mexico and Russia are at the leading edge of a new trend. Economists at JPMorgan Chase, a bank, reckon that Chile, Colombia and Peru will soon be raising rates. South Africa will join them before the year is out. The Banco de México and company are not going to hang out a sign saying “carry traders welcome”. But they might as well put one up. The more their currencies rise, the less work they have to do. ■This article appeared in the Finance & economics section of the print edition under the headline “Carrying on” More

Oil pump under the blue sky, beam pumping unit in the oil field, oil pump and water reflectionzhengzaishuru | iStock | Getty ImagesOil prices broke above $75 a barrel on Thursday to a near three-year-high ahead of a decision from key producers on production policy for the second half of 2021.U.S. West Texas Intermediate crude for August rose 3.2%, or $2.33, to $75.82 a barrel, hitting its highest level since October 2018. The international benchmark Brent crude for September climbed 2%, or $1.49, to $76.10 per barrel.The WTI has climbed more than 50% on the year after starting 2021 at around $48.5 per barrel. Demand has increased as people take to the roads amid the economic reopening, and a rebound in goods transportation and air travel also have supported prices. Gasoline prices are jumping on the back of a post-pandemic driving spree and $75 crude prices could mean even higher prices at the pump. The current average price for a gallon of unleaded gasoline is at $3.123 per gallon, compared to $2.179 per gallon a year ago, according to AAA.Zoom In IconArrows pointing outwardsThe advance came ahead of a meeting among OPEC and non-OPEC partners, an energy alliance often referred to as OPEC+, who have been positive about improved market conditions and the outlook for fuel demand growth following a sharp rebound in oil prices this year.OPEC+ will convene via videoconference at 2 p.m. London time.Jeff Currie, global head of commodities research at Goldman Sachs, said on CNBC’s “Worldwide Exchange” that the expected OPEC production hike of 500,000 barrels per day might not be enough to keep prices down.”During the month of June, we estimate that the market was in a 2.3 million barrel per day deficit… The bottom line, demand is surging as we head into the summer travel season, and that is against a nearly inelastic supply curve,” Currie said.Just over a year ago, WTI futures plunged into negative territory for the first time on record as the coronavirus pandemic took hold, shutting down economies worldwide. Bank of America recently said oil can climb all the way to $100 per barrel amid accelerating demand.— CNBC’s Jesse Pound contributed reporting.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

Take a look at some of the biggest movers in the premarket:Walgreens (WBA) – Walgreens shares rallied 2.8% in the premarket after the drug store operator reported quarterly profit of $1.51 per share, beating the consensus estimate of $1.17 a share. Revenue topped forecasts as well, helped by a rebound in prescription volumes. The company also raised its full-year forecast.Didi (DIDI) – Didi will be added to the FTSE global equity indexes as of July 8, following the China-based ride-hailing company’s U.S. initial public offering and Wall Street debut Wednesday. Did surged 6.9% in the premarket.CureVac (CVAC) – The German drugmaker said a final study analysis showed its Covid-19 vaccine was 48% effective, little changed from the initial 47% assessment two weeks ago. Shares plunged 12.6% in the premarket.McCormick (MKC) – McCormick beat estimates by 7 cents a share, with quarterly earnings of 69 cents per share. The condiment and spice maker also reported better-than-expected revenue and raised its full-year forecast, helped by elevated at-home demand and a rebound in the company’s commercial business. McCormick gained 1.3% in premarket trading.Atotech (ATC) – The specialty chemicals company agreed to be acquired by industrial solutions company MKS Instruments (MKSI) in a $5.1 billion cash-and-stock deal. Atotech was initially higher on the news but then fell 1% in premarket action.Micron Technology (MU) – Micron beat estimates by 16 cents a share, with quarterly earnings of $1.88 per share. The chip maker’s revenue topping Wall Street forecasts as well. Micron also gave upbeat current-quarter guidance, with a shortage of chips and strong demand keeping prices high. Separately, Micron sold a Utah semiconductor factory to Texas Instruments (TXN) for $900 million in cash. Micron fell 2.3% in the premarket.Boeing (BA) – Boeing named Brian West as chief financial officer, replacing the retiring Greg Smith. West is a former General Electric (GE) executive who was most recently CFO at financial information provider Refinitiv.GlaxoSmithKline (GSK) – Activist investor Elliott confirmed that it had taken a significant stake in GlaxoSmithKline, and urged the drugmaker to consider the sale of its consumer health-care business.Pacific Gas & Electric (PCG) – PG&E is asking California regulators for a $3.8 billion rate hike, in order to pay for improvements that would strengthen prevention against deadly fires. Investigators have blamed the utility’s equipment for starting some of the most destructive fires in the state in recent years.Nio (NIO), XPeng (XPEV) – The China-based electric vehicle makers both rose in premarket trading after reporting their latest delivery numbers. Nio delivered 8,083 electric vehicles in June, up 116% from a year earlier, while XPeng delivered 6,565 vehicles, a more than seven-fold increase. Nio jumped 3.2% in the premarket, while XPeng was up 4.7%. More

In this articleBTC.CM=Chris Ratcliffe/Bloomberg via Getty ImagesBitcoin had a solid start to 2021, hitting an all-time high of nearly $65,000 in April. But the digital coin closed out the first half of the year down about 47% from its record — and a number of looming risks could result in further pain ahead.While proponents appear to be holding onto bitcoin for now, other investors are wary about wild volatility in the market and what it means for their portfolios. With that in mind, here are five of the biggest risks facing the cryptocurrency as we enter the second half of the year.RegulationOne of the biggest risks for bitcoin right now is regulation.In recent weeks, China has clamped down on its cryptocurrency industry, shuttering energy-intensive crypto mining operations and ordering major banks and payment firms like Alipay not to do business with crypto companies.Last week, the global crypto crackdown spread to the U.K., where regulators banned leading digital currency exchange Binance from undertaking regulated activities.Simon Yu, co-founder and CEO of crypto cashback start-up StormX, told CNBC that China’s moves should be viewed as a “positive” thing for bitcoin and other cryptocurrencies like ether as it will lead to more decentralization. However, he added that “over-regulation” of crypto in the United States could be a problem.”As a country, the U.S. has too many departments regulating it from different angles — is crypto a security? A commodity? A property?” Yu said. “As of now, the U.S. hasn’t figured out how to properly regulate the industry, which oftentimes leads to decisions that are difficult for crypto to operate.”U.S. Treasury Secretary Janet Yellen and other officials have recently warned about the use of cryptocurrencies for illicit transactions.Last year, former President Donald Trump’s administration proposed an anti-money laundering rule that would require people who hold their crypto in a private digital wallet to undergo identity checks if they make transactions of $3,000 or more.”We’ve long warned that shifting investor sentiment or regulatory crackdowns could pop bubble-like crypto markets,” UBS wrote in a note this week.VolatilityAnother big risk is persistent, extreme swings in the price of bitcoin and other digital currencies.Bitcoin rallied to an all-time record of around $64,829 in April this year, on the day of crypto exchange Coinbase’s blockbuster debut. It then tumbled as low as $28,911 in June, briefly sliding below $30,000 and turning negative for the year. It’s since risen back above $34,000.Bitcoin bulls see it as a kind of “digital gold” — an asset uncorrelated to the wider marker that could provide sizable returns in times of economic turbulence. But while volatility can be good when the price of an asset is going up, it goes both ways.While you would have doubled your money if you bought bitcoin in January and cashed out in April, today those year-to-date returns would be 18%. Still, that’s above the performance of the S&P 500 index, which is up 16% since the start of the year. And over the last 12 months, bitcoin has more than tripled in price.”Limited, highly inelastic supply on single cryptos can exacerbate volatility,” says UBS. “Limited real world use and extraordinary price volatility also indicate many buyers are seeking speculative gains.”Meanwhile, the trend of traders who have made highly-leveraged bets on bitcoin getting flushed out of the market has led to intense price fluctuations this year.While continuous volatility could put off some investors, Ross Middleton, chief financial officer of decentralized finance platform DeversiFi, said that volatility in itself isn’t a barrier to institutional adoption.Volatility “can actually be a significant draw as the potential for large price movements means that funds can make significant profits with a relatively small allocation compared to the size of their overall portfolio,” he told CNBC.”The longer that Bitcoin moves sidewards in the $30-$40k range,” Middleton added, “the greater the perceived ‘base-building’ and the sooner that new capital will flow into both the asset and the wider crypto market.”Environmental concernsQuestions surrounding bitcoin’s impact on the environment could be another big headwind for the cryptocurrency.Bitcoin mining equipment requires lots of electricity to run, and bitcoin’s energy consumption has risen considerably over the years in tandem with its price.While bitcoin’s critics have long warned of its huge carbon footprint, Tesla CEO Elon Musk brought the issue back to the fore this year.Musk’s electric car firm stunned both fans and skeptics of bitcoin this year when it bought $1.5 billion worth of the digital currency and began accepting it as a method of payment. But he subsequently roiled crypto markets after deciding to halt bitcoin payments due to the currency’s “insane” energy usage and a reliance on fossil fuels.It raises some questions for asset managers who are under heightened pressure to limit their investments to ethically-conscious assets.”At the very least it may deter some investors from holding Bitcoin,” analysts at Citi wrote in a research note earlier this year, adding it could also “spur government intervention to ban mining, as seen in parts of China.”Stablecoin scrutinySo-called stablecoins, whose prices are meant to be pegged to real-world assets like the U.S. dollar, are also facing growing scrutiny.Last week, Federal Reserve Bank of Boston President Eric Rosengren said tether, a stablecoin that ranks among the world’s largest digital currencies, was a risk to the stability of the financial system.Tether maintains that each of its tokens are backed 1:1 by U.S. dollars held in a reserve, the idea being that this keeps the price stable. Crypto investors often use tether to buy cryptocurrencies, as an alternative to the greenback But some investors worry tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg.In May, the company behind tether broke down the reserves for the stablecoin, revealing that around 76% was backed by cash and cash equivalents — but just under 4% of that was actual cash, while about 65% was commercial paper, a form of short-term debt.Tether has been compared to traditional money-market funds — but without the regulation — and, with almost $60 billion worth of the tokens in circulation, has more deposits than that of many U.S. banks.There have long been concerns about whether tether is being used to manipulate bitcoin prices, with one study claiming the token was used to prop up bitcoin during key price declines in its monster 2017 rally.”Tether is a massive problem,” Carol Alexander, professor of finance at the University of Sussex, told CNBC. “Regulators seem unable to stop them so far.””Traders need tether to open accounts and trade. Or other crypto. But since most large traders are U.S.-based, tether is the obvious choice.”‘Meme coins’ and scamsRising speculation in crypto markets could prove another risk for bitcoin. Dogecoin, a cryptocurrency that started out as a joke, surged wildly earlier this year to record highs as growing numbers of retail investors piled into digital assets in search of outsized gains.At one point, dogecoin was worth more than Ford and other major U.S. firms, thanks in no small part to support from celebrities like Musk. Its value has depreciated significantly since then.Elsewhere in the crypto market, a decentralized finance, or DeFi, token called titan crashed to zero. Self-made billionaire investor Mark Cuban was a holder.”Another concern is the number of scams that have appeared throughout the year,” StormX’s Yu said. “With certain meme coins, we’ve seen many pump and dump activities and have seen retail investors getting burned.””Whenever retail gets burned, the government steps in. And if things are over-regulated to a point, as we have seen with 2018 and ICOs (initial coin offerings), the industry as a whole could be negatively affected.” More

U.S. stock futures were steady in overnight trading on Wednesday as investors gear up for the second half of 2021.Dow futures rose about 50 points. S&P 500 futures gained 0.15% and Nasdaq 100 futures rose 0.05%.On Wednesday, the Dow Jones Industrial Average rose 210 points, helped by a 2.7% pop in Walmart. The S&P 500 registered a gain of 0.13% to close at a fresh record of 4,297.50.The Nasdaq Composite was the relative underperformer, dipping 0.2% as Facebook, Amazon, Netflix and Google-parent Alphabet closed lower.The major averages closed out a strong first half of 2021 and second quarter on Wednesday.For the year, the Dow is up 12.7%, hovering about 1.7% below its all-time high. The S&P 500 rallied 14.4% in the first half of 2021 and the technology-heavy Nasdaq Composite rose 12.5%.The S&P 500 notched its fifth positive month in a row, rising 2.2% in June. The broad index also posted its best first half since 2019.Stock picks and investing trends from CNBC Pro:Wall Street banks see oil prices spiking ‘well above’ $80 this year — here are their top stock picksTom Lee raises 2021 forecast for the S&P 500, but warns of a tumultuous July Morgan Stanley says these 6 stocks are much cheaper alternatives to Big Tech”Better news on Covid, vaccinations, re-openings, economic growth, and earnings fueled the advance.  Nearly equal gains were achieved in both quarters by a rotation in leadership allowing broad participation,” Leuthold Group chief investment strategist Jim Paulsen told CNBC.The Russell 2000 rose more than 17% in the first six months of the year amid a strong rotation into value stocks as the economy reopens from the Covid-19 pandemic.”Economic growth will likely stay strong in the balance of 2021 and the question will be how much inflation fears return, how much bond yields potentially resume their advance, and whether and how aggressively the Federal Reserve’s policy chatter becomes more hawkish,” Paulsen said.”If inflation fears do calm further and bond yields remain lower for longer, expect growth and technology stocks to continue leading the stock market higher. However, should strong economic growth aggravate inflationary worries and again force bond yields higher, correction fears may intensify, and leadership should be centered among cyclical stock sectors, smaller cap stocks and even international stocks,” he added.Strong first halves for the stock market historically bode well for the remainder of the year. Whenever there has been a double-digit gain in the first half, the Dow and S&P 500 have never ended that year with an annual decline, according to Refinitiv data going back to 1950.The latest data on weekly jobless claims will be released Thursday at 8:30 a.m. ET. Economists polled by Dow Jones are expecting initial claims for unemployment totaled 390,000 last week, after totaling 411,000 for the week ended June 19.The unemployment data comes one day ahead of Friday’s closely-watched jobs report. Economists expect 683,000 jobs were added in June, according to a Dow Jones survey.Walgreens Boots Alliance posts quarterly results before the bell on Thursday.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More