Federal prosecutors are investigating Block, the company founded by Jack Dorsey. A former employee claims Block has had major, long-standing issues with compliance, including failing to properly screen customers, process sanctioned transactions, and report suspicious activity as required by law.
These lapses have been identified by an outside consultant and were allegedly known to the company's leadership and board of directors. Block maintains it is committed to improving compliance but has disputed the severity of the allegations.
Many small banks are facing financial pressure due to risky loans and rising interest rates, leading to potential closures or financial strain. While communities may not see immediate failures, they could experience reduced investment in their areas. Individuals with deposits below $250,000 may face no direct consequences as they are protected by FDIC insurance. However, some banks may struggle to meet customer needs, slower growth, or even partake in mergers to stay afloat.
The Federal Reserve (Fed) decided not to lower interest rates at its Wednesday meeting, believing inflation remains too high. Inflation is currently 2.7%, above the Fed's target of 2%, and prices are not declining as quickly as hoped. Despite concerns about the economy slowing down, the Fed believes reducing inflation is a priority. The Fed also slightly eased its bond-buying limitations in a modest attempt to stimulate the economy.
The Federal Reserve's latest statement shows changes compared to the one released in March. It expresses more concern about ongoing inflation and supply chain disruptions. The Fed also removes language indicating that it expects inflation to be transitory, acknowledging the persistence of price increases. This suggests the Fed may consider raising interest rates sooner than previously anticipated to keep inflation in check.
Jeffrey Gundlach, an expert investor, believes the Federal Reserve (Fed) will only cut interest rates once this year. Previously, he expected multiple cuts. This change of view came after Fed Chair Jerome Powell indicated that interest rate hikes are unlikely in the near future. As a result of Powell's comments, Treasury yields declined and stock prices surged.
Rising bond yields are putting pressure on stocks, and, according to Goldman Sachs, once the 10-year Treasury yield surpasses 5%, it could spell trouble for equities. Historically, higher yields have correlated with weaker stock performance. The current yield of 4.67% suggests the market is in an "optimism phase," but as yields approach 5%, investors may shift towards bonds, leaving stocks vulnerable.
