Finance

Football star Tom Brady, who recently came out as a bitcoin bull, acknowledged that prices have dropped since he revealed his support for the cryptocurrency publicly.The seven-time Super Bowl champion in early May changed his Twitter profile photo to include “laser eyes,” which is what many bitcoin enthusiasts do to show their “laser focus” to push prices higher. Bitcoin’s price has fallen nearly 40% to $34,665 on Monday from $56,245 on the day Brady changed his avatar, according to Coin Metrics.”Alright the laser eyes didn’t work. Anyone have any ideas?” Brady said in a twitter post on Monday.Bitcoin has experienced wild volatility amid heightened regulatory scrutiny after a solid start to the year that drove its price to an all-time high of nearly $65,000 in April. The digital coin has almost wiped out all of its triple-digit gains and turned flat on the year.Tom BradyCharles Krupa | APAt the end of May, Brady said he was a “big believer” in cryptocurrencies, confirming that he had bought digital coins.”I don’t think it’s going anywhere,” Brady said at the CoinDesk Consensus 2021 forum. “I’m still learning so much. It’s definitely something I’m going to be in for a long time.”China has stepped up efforts to stamp out crypto speculation, ordering digital currency miners to cease operations in a number of regions and urging banks and payment firms not to offer crypto-related services.Meanwhile, cryptocurrency exchange Binance has been banned from operating in the U.K. by the country’s markets regulator.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

Justin Chin | Bloomberg | Getty Images(Click here to subscribe to the new Delivering Alpha newsletter.)A previously unknown hedge fund known as White Square gripped the headlines last week after the Financial Times reported it to be the first-known casualty among those who shorted GameStop. But betting against GameStop wasn’t the death knell for White Square. In fact, its performance had recently rebounded. As White Square tells it in the letter announcing the firm’s closure: “We experienced first-hand, the shift in trend away from hedge fund investing to cheaper alternatives.” The firm noted that two investors redeemed and rediverted that capital into cheaper passive funds or private equity. White Square isn’t the first, and most certainly won’t be the last, hedge fund that fails to convince investors to pay up for its asset management. But fees are as inextricable to the hedge fund industry as short selling and leverage. The earliest-known hedge fund, developed by A.W. Jones more than 70 years ago, charged investors a 20% fee from realized gains, a novelty at the time. A management fee, amounting to 2% of total assets, was added later, popularizing the 2-and-20 structure. In recent years, average fees have shrunk. According to HFR, in the fourth quarter of 2020, hedge funds charged an average of a 1.4% management fee and 16.4% performance fee. That’s down from the 1.6% management fee and 19% performance fee that was commonplace a decade prior. Zoom In IconArrows pointing outwardsHowever, a recent Ohio State University study looks at what it calls the “effective incentive fee,” which the researchers say is closer to 50%, not the nominal 20%, as is frequently advertised. When factoring variables such as exit decisions and losers in the cross section of funds, the researchers found that limited partners in hedge funds are actually giving far more in fees as a percentage of profit. For example, if capital is redeemed from a fund experiencing losses — but one that previously generated returns and collected incentive fees — the payout to general partners as a percentage of the gross profit would be lower, the study shows. After subtracting management fees, the study concluded that limited partners were only taking home 36 cents for every dollar earned on their invested capital. Christopher Ailman, chief investment officer of the second-largest U.S. public pension fund, CalSTRS, said he believes the fee structure is “broken.” Instead of paying the conventional price for hedge fund access, he’s opting to replicate hedge funds through cheaper, passive strategies. “It’s all about the structure and the net return for us as a long-term institutional investor,” Ailman said. “And if I can get the beta of each of those underlying asset classes at a very low cost, that’s my core foundation.”For all the lamenting over hedge fund fees — a notorious complaint that dates back decades — there are still plenty of investors willing to buy in. Assets under management are near an estimated record of $3.8 trillion, according to HFR.Zoom In IconArrows pointing outwards “Hedge funds aren’t for everyone,” said Bryan Corbett, president and CEO of the Managed Futures Association, the trade group that advocates in Washington and elsewhere for the alternative investment industry. “But clearly there’s a significant portion of allocators that see it as an important part of the mix.” Corbett said that the way most agreements are structured allows for alignment between the allocator and the hedge fund (i.e. incentive fees). MFA launched an “education campaign” last week, touting the “important role hedge funds play” for Americans. It argues that pension funds, colleges and nonprofits invest in hedge funds as a way to grow wealth and protect it. Public perception of hedge funds is about as sour as it’s ever been in the wake of the GameStop short squeeze, where the industry faced myriad individual investors, looking to force significant losses among those who were bearish. “I’m not surprised to see all the young people want to take an ounce of flesh out of the hedge fund industry,” Ailman said. “I don’t think it’s going to get rid of hedge funds. But I do think that, you know, this actually is a really interesting change that we’re seeing.”  Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

In this articleUBSG-CHFABRICE COFFRINI | AFP | Getty ImagesUBS is planning to let up to two-thirds of its employees permanently combine working remotely with being in the office, in stark contrast to some Wall Street banks. A spokesperson for the Swiss investment bank said it was “committed to offering our employees the flexibility for hybrid working (a mix of working from the office and from home) where role, tasks and location allow.” “Hybrid work options will be introduced on a country-by-country basis, with timing dependent on the local pandemic situation,” they said. UBS hopes the flexibility will boost its attractiveness as an employer in the banking sector. It has not yet set a date for employees’ return to the office. Only UBS workers in roles which require them to be in the office, such as those in supervisory positions, or in trading and branch roles, will have less flexibility, the bank said. However, an internal analysis of the 72,000 UBS employees globally showed that around two-thirds are in roles that would allow them to combine working remotely and in the office.  The Swiss bank’s approach stands in contrast to some of the major Wall Street banks. Goldman Sachs, for example, asked its employees in the U.S. and U.K. to come back into the office this month. Goldman Sachs CEO David Solomon has previously called working from home an “aberration.” JPMorgan Chase also told its U.S. workers that it was aiming to get half of employees rotating through the office by July. JPMorgan CEO Jamie Dimon has said he believes that by “sometime in September, October it will look just like it did before.” Morgan Stanley CEO James Gorman has also been outspoken on the matter. “If you can go into a restaurant in New York City, you can come into the office and we want you in the office,” Gorman reportedly said. More

(Click here to subscribe to the new Delivering Alpha newsletter.)The hedge fund model has been under attack for decades, at least since the financial crisis, but assets under management continue to surpass records. Christopher Ailman oversees the nation’s second-largest public pension fund, CalSTRS, with $300 billion under management. Here he is, in conversation with Leslie Picker, on the high price of delivering alpha. The content below has been edited for length and clarity.Leslie Picker: Chris, I want to ask you point blank, in your estimation, do active managers deliver alpha?Christopher Ailman: I have been hiring active managers since the mid-1980s, and at very different funds. Now, they were all government plans so that may be a caveat I have to add. Our active managers in U.S. equities added value, and they did produce alpha, but not after fees. And that’s the critical point. I think alpha is expensive, it’s hard to find, but they price it too high. And so the net even over a year, three years, five years, even a 10-year time period, we seldom saw managers consistently add value net of fees.Picker: So, if hedge funds were to lower their fees, how low would they have to go to entice you to put more money to work in that area?Ailman: Well, I’ve said a long time ago that I think the 2-and-20 model in private equity real estate and in hedge funds is broken. And for a fund like us that’s that size, we’re not paying that classic 2-and-20. So that’s part of the key. And I’m a fan of profit-sharing, I think that an incentive for the manager and sharing in the profits makes sense. The problem is, it’s always one way. They share on the upside, they don’t get hit on the downside. And we haven’t figured out a way to create a good plan for that. Picker: Why is it that the industry hasn’t gotten as much of a pushback on the 2-and-20 model? Why is it that you seem to be having kind of a more contrarian viewpoint on that front? I’m sure people don’t like paying the 2-and-20, but they continue to do so. Ailman: I have to say, No. 1, good marketing, but it’s also the cool place to invest. People love the idea of being in a hedge fund because it sounds mysterious and awesome. Hedge funds did really well in the late 90s because they diversified away from TMT, they did well going into ’07, but the best performers were the smallest funds that could add value. When you’re a huge investor like us, we’re going to swamp their AUM and cause them to really be investing in more strategies than they want. So I think that the assets are going to continue to grow for this area. One, because it’s an interesting place to invest, it sells, it has a good sales pitch. That doesn’t mean it’s going to produce long-term sustainable results. Picker: I want to pivot a little bit and talk to you about what the hedge fund industry has experienced this year. I mean, they were the disruptors of Wall Street three decades ago. And now, they’re really playing defense to a crop of new disruptors from retail traders, who don’t charge 2-and-20. They’re able to take as much risk as they want, because they’re only worried about their own capital, they don’t have to worry about losing CalSTRS’ capital or family offices’ capital. Do you think this will mark changes for the hedge fund industry? Are we going to look back and say this was where the sea change happened?Ailman: The answer is yes, Leslie. I think for a really brief period of time, the hedge fund industry was viewed as cool and those people were awesome. They just got tarnished, and they are despised. I’m not surprised to see all the young people want to take an ounce of flesh out of the hedge fund industry. People in their 20s and under don’t like the establishment. I was in the baby boom, we didn’t like the establishment, now we are the establishment. So I don’t think it’s going to get rid of hedge funds. But I do think that, you know, this actually a really interesting change that we’re seeing. You said it, their transaction cost is zero. They’re able to trade stocks at no cost. They’re able to do it on their phone, anywhere they are. So the efficiency and the efficacy of what they’re doing is so fast. Now, they are speculating and they are just rapid trading, so they’re not investing. But some of the different apps that have been created to force this generation to save, I think that’s huge. In prior generations, people didn’t begin to look to invest until their 40s or 50s. You’ve got an entire generation that is now saving for the first time. And yeah, they’re speculating, they’re investing in cryptocurrencies. Speculation by itself is not good and they’re going to learn some hard lessons, but they’re starting to save and that’s enormous. Now, if they can figure out how to do it for the long term and get compounding of interest, they’re going to really be a bit better off as a generation.Picker: There have been some people who’ve said that the speculative activity out there has been disruptive, and it has impacted confidence in the overall market. So do you think that this type of behavior needs to be regulated? Ailman: I would say no, not at all. The market’s going to self-correct. We saw that in the 1990s with media, telecom and technology stocks. You can go all the way back to the Dutch tulip craze in the [1600s]. You see periods of rampant speculation, exorbitant prices, ridiculous prices, the markets correct and it comes back, people learn a hard lesson. Maybe there needs to be some regulation over these communication networks and this sort of, what was clearly a crowd, herd mentality that seems to go on when you have daily trading that are five times the amount of the float of a stock. Short squeezes have been in the market all the way back to the 1930s and ’20s. So it’s a natural part of the market. This is unusual, it’s disruptive to, I’ll just say, mature people like me who like a stable market, but it’s not bad. It’s getting that young crowd engaged and active, and learning the risk tolerance. — CNBC’s Ritika Shah contributed to this article.Correction: The Dutch tulip craze happened in the 1600s. An earlier version misstated the time period. More

Take a look at some of the biggest movers in the premarket:Boeing (BA) – Boeing is not likely to receive certification for its 777X long-range aircraft until mid-to-late 2023 at the earliest. That’s according to a letter from a Federal Aviation Administration official to Boeing that was obtained by CNBC, saying there were numerous technical issues that needed to be resolved. Boeing shares fell 1.2% in the premarket.Intellia Therapeutics (NTLA) – Intellia shares surged 55.4% in the premarket after the Massachusetts-based company and partner Regeneron (REGN) announced positive results in a phase 1 study of a gene-editing treatment for a disease called transthyretin amyloidosis. Regeneron shares gained 1.6%. Two other companies involved with the same gene-editing technology also rallied in premarket trading, with CRISPR Therapeutics (CRSP) soaring 13.5% and Editas Medicine (EDIT) jumping 17.1%.Perion Network (PERI) – The advertising technology company’s shares surged 9.9% in the premarket after reporting upbeat second-quarter earnings and increasing its full-year forecast.Johnson & Johnson (JNJ) – Johnson & Johnson will pay $263 million to resolve opioid-related claims in a settlement involving both the state and Nassau and Suffolk Counties. The settlement – in which J&J does not admit or deny guilt – removes the company from an opioid trial set to begin Tuesday.Tesla (TSLA) – Tesla is virtually recalling nearly 300,000 cars to implement a software update related to assisted driving. The owners will not actually have to return the vehicles in order to receive the update.Biogen (BIIB) – House lawmakers announced an inquiry into the process that approved Biogen’s Alzheimer’s treatment as well as its pricing. Biogen told Reuters it would cooperate with any inquiries it received from lawmakers.Nvidia (NVDA) – Nvidia received support for its planned $40 billion takeover of ARM from some of the U.K. chip maker’s major customers, according to a report in the Sunday Times. The public display of support comes from Broadcom (AVGO), Marvell (MRVL) and MediaTek.MetLife (MET) – MetLife received an offer from Netherlands-based insurer NN Group for some of MetLife’s European businesses, though NN did not say which businesses were involved or how much it had offered.MicroStrategy (MSTR) – The business analytics company’s stock gained 3.3% in premarket trading, continuing to trade in sync with bitcoin. MicroStrategy has several billion dollars of the virtual currency on its books.Ocwen Financial (OCN), JOANN (JOAN) – Both stocks will be included in the small-cap Russell 2000 index as of today. Ocwen is a mortgage origination and servicing company, while JOANN is an arts and crafts retailer.NRG Energy (NRG) – The energy provider’s stock was added to the Conviction Buy list at Goldman Sachs, which also increased its price target on the stock to $57 per share from $46. The stock closed at $38.49 per share Friday, and gained 1.8% in premarket trading. More

In this articleBTC.CM=Changpeng Zhao, CEO of Binance, speaks during a TV interview in Tokyo, Japan, on Thursday, Jan. 11, 2018.Akio Kon | Bloomberg | Getty ImagesLONDON – Cryptocurrency exchange Binance has been banned from operating in the U.K. by the country’s markets regulator, in the latest sign of a growing crackdown on the crypto market around the world.Britain’s Financial Conduct Authority said Saturday that Binance Markets Limited, the U.K. division of Binance, “is not permitted to undertake any regulated activity in the U.K.”From June 30, the company — which already offers Brits crypto trading through its website — must add a notice in a prominent place in its website and apps showing U.K. users the following text:BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE U.K. Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA. (No other entity in the Binance Group holds any form of U.K. authorisation, registration or license to conduct regulated activity in the U.K.).Binance, the world’s largest crypto exchange by trading volumes, was set to launch its own digital asset marketplace in Britain. However, it was one of several crypto firms that withdrew applications to register with the FCA due to not meeting anti-money laundering requirements.”Binance Markets Limited withdrew their 5MLD application on 17 May 2021 following intensive engagement from the FCA,” a spokesperson for the FCA told CNBC. “The action taken today on Binance Markets Limited has been in train for some time.”The FCA spokesperson clarified that the scope of the ban was limited. Though Binance Markets Limited is banned from offering regulated services in Britain, non-registered firms can still interact with U.K. consumers. That means Binance could still offer Brits crypto trading through its website.A Binance spokesperson told CNBC: “The FCA U.K. notice has no direct impact on the services provided on Binance.com … Our relationship with our users has not changed.””We take a collaborative approach in working with regulators and we take our compliance obligations very seriously,” the spokesperson added. “We are actively keeping abreast of changing policies, rules and laws in this new space.””The FCA has stated that Binance is not permitted to conduct regulated activities in the U.K.,” Laith Khalaf, financial analyst at AJ Bell, said via email. “Providing access to cryptocurrencies itself is not a regulated activity, but offering derivatives is, which is presumably the activity the FCA is clamping down on.”The FCA isn’t the only regulator clamping down on the crypto industry.Japan’s Financial Services Agency warned last week that Binance was operating in the country without its permission.Meanwhile, China has stepped up efforts to stamp out crypto speculation, ordering digital currency miners to cease operations in a number of regions and urging banks and payment firms not to offer crypto-related services.Increased regulatory scrutiny has weighed on the nascent crypto market. Bitcoin had a solid start to the year, rallying to an all-time high of almost $65,000 in April. But it’s since almost halved in value, trading at $34,783 as of Monday morning.”This isn’t a step change in regulation which is going to knock the crypto craze on the head, but it is part of a growing trend of regulatory intervention in crypto markets,” Khalaf said, referring to the FCA’s restrictions on Binance.”The idea that policy makers are simply going to allow a decentralised shadow payments system to emerge without any regulatory oversight is fantastical, and if the use of cryptoassets becomes more widespread, we can expect beefed-up regulation to follow suit.” More

In this [email protected]@[email protected] man walks past the charging bull statue near the New York Stock Exchange.Mandel Ngan | AFP | Getty ImagesFutures contracts tied to the major U.S. stock indexes rose Sunday evening after the S&P 500 notched its best week since February, as well as a new record, on Friday.Futures tied to the S&P 500 rose 0.15% and those linked to the Dow Jones Industrial Average advanced 50 points. Nasdaq 100 futures gained 0.15%.Stocks posted their best week in months on Friday as investors grew more relaxed about inflation, seeing the current price acceleration in the U.S. not as a sustained economic threat, but as a temporary uptick.The S&P 500 ended Friday at a closing record high of 4,280.70, while the Dow rose 237.02 points and sits less than 2% from its record. While the Nasdaq Composite closed just lower on Friday, it added 2.35% for the week, its best since April 9 and is up 4.45% for the month of June.The weekly gains came even after the Commerce Department reported that its inflation indicator rose 3.4% in May, the fastest increase since the early 1990s.Spikes in the core personal consumption expenditures price index can cause heartburn for investors since the Federal Reserve likes to watch it for signs of inflation. Still, the rise actually undershot what economists polled by Dow Jones had forecast and reinforced for investors that the economy-wide price increases are likely to be transient and manageable.The next major piece of economic data is the June jobs report, which the Labor Department is scheduled to publish on Friday.Economists are expecting that nonfarm payrolls increased by 683,000 in June. While such a robust reading would top the 559,000 in May, it would still be below the 1 million some had hoped a recovering U.S. economy could post as it emerged from the Covid-19 crisis.Investors will also pore over the June report for any signs of wage inflation as employers struggle to find workers to fill job openings and pandemic-era jobless benefits taper off in some states.A massive, bipartisan infrastructure deal appeared revitalized as of Sunday evening after President Joe Biden clarified on Saturday that he doesn’t plan to veto the legislation if it comes without a separate reconciliation bill favored by Democrats.The president, flanked by a bipartisan group of senators, declared on Thursday that the group had reached a multibillion-dollar deal to improve the nation’s roads, bridges, waterways and broadband after weeks of negotiation. Democrats have been pushing for a second bill that would include funding for issues like climate change, child care, health care and education.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today. More

Wilmington Trust’s Meghan Shue is opening her playbook for the year’s second half — which starts Thursday.Her strategy includes an overexposure to cyclicals, and she favors financials, energy, commodities, materials and industrials.”We see the economic recovery continuing and being a tailwind for stocks,” the firm’s head of investment strategy told CNBC’s “Trading Nation” on Friday.Unless this week sees a dramatic sell-off, the market will start the year’s final six months around record highs.The S&P 500 just wrapped up its best week since February, closing at 4,280.70 — an all-time high. The Dow closed up 3.4% for the week, notching its best weekly performance since mid-March.The tech-heavy Nasdaq closed slightly lower on Friday. But it’s up 2.35% for the week.Shue is optimistic on the broader market, but she also predicts turbulence ahead.”We are expecting some perhaps consolidation, maybe a pullback from here,” said Shue, a CNBC contributor.Shue, who oversees $141.5 billion in assets, is neutral on growth stocks, particularly Big Tech. She views the group as a key part of a diversified portfolio. However, Shue would avoid getting too deep into the group because she expects a rising 10-year Treasury note yield to act as a headwind. According to Shue, it should reach at least 2% over the next 12 months.’It’s really important not to forget about technology'”Technology is really a long term story. So, it might have some challenges if our interest rate view pans out. But it’s such an integral part of the economy,” she noted. “It’s really important not to forget about technology even if there is perhaps some choppiness over the next few months.”Shue expects the record rally to moderate over the next six months. She sees low to mid-single percentage gains.”Every indication that we have so far in the economic data is that we are probably at or just beyond the peak pace of economic activity perhaps of this cycle,” said Shue. “We are moving into probably a deceleration phase.”Yet, Shue suggests that shouldn’t spook investors.”The deceleration may actually still be above trend growth for the U.S. and the global economy,” she said.For now, Shue is underweight consumer staples, utilities and REITS, which are considered defensive plays.”It’s been a pretty incredible run over the past 12 months, and we have clearly been bouncing off of the bottom,” Shue said.Disclaimer More