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Liquidity crunch: the impacts for crypto

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8:00 p.m. ▪
9
min read ▪ by
Laetitia B.

The performance of the first half of 2023 was quite supported by cash. Also, the good news for June was the completed agreement on the debt ceiling limit. This was increased until 2025, which subsequently reassured a certain number of operators on the financial markets. It is not the agreement itself on the cap limit that is good to follow but rather the impacts of a liquidity tightening on bitcoin and the crypto market for the second half of the year.

What is liquidity?

Since the financial crisis in 2008, financial markets have become increasingly addicted to liquidity. As population growth is rather weak, we must rely on the growth of the debt to reboost growth. This is why since 2008 there has been a big change in terms of liquidity. To save the US economy and relaunch growth, we had to start injecting liquidity into the financial system. It is more commonly known as money printing.

Moreover, it was also during the same period that bitcoin appeared. This is why I support the fact that bitcoin is a counter-offensive against central bank interventions.

As a general rule, when we talk about liquidity, we are talking about bank reserves. There is a whole mechanism in parallel with the central bank. This is why we also speak of the FED’s net liquidity. It is made up of the FED balance sheet, the repo market (RRP) and also the TGA treasury account. The calculation is made in the following form: Balance sheet – (TGA + RRP).

  • The Treasury account is the State account. He uses it to fund expenses. It is funded by bond issues but also by taxes received.
  • Repo market is a market where financial institutions transact with each other.
  • The Fed’s balance sheet includes its assets and liabilities.

The impacts of liquidity in 2022-2023

Following the problems that arose in March 2023 with US regional banks, we had significant intervention from the US central bank. This intervention increased the net liquidity in the system. We can see on the graph below the level of liquidity which has increased. This fueled and supported all movements in the financial markets for the first half.

cash, drop, bitcoin
Source: Tradingview

In another dynamic, the fall in liquidity during 2022 also supported the bearish movement (liquidity downtrend).

cash, drop, bitcoin
Source: Tradingview

When we study the relationship between the two, we can see a strong correlation.

Why is there a risk for the crypto market?

The risk would be to have another fall in liquidity in the coming months following the agreement made to increase the limit of the debt ceiling. First of all, it is good to specify that the agreement was completed under several conditions. Here are some of those conditions:

  • Raising the debt ceiling for 2 years
  • Cap non-military spending for the next 2 years
  • Recover some unspent covid 19 relief funds
  • Cut IRS funding
  • Boost student loan repayments

When the limit of the ceiling was reached in January 2023, the treasury account had to draw from its capital in order to ensure the responsibilities of the State. This process has been good for the financial markets because it means that this money has been returned to the economy for public spending.

cash, drop, bitcoin
Source: Tradingview

But the account was almost completely emptied during the first half. Hence the urgency of an agreement to increase the ceiling until 2025. As we can now issue bonds and treasury bills, the account will be reconstituted thanks to the issues. Projections on the amount are around 500-600 trillion. This increase in the treasury account could reduce the FED’s net liquidity. This would be the case if we do not compensate by an increase in the balance sheet or a fall in the repo market in parallel.

Initially, you have to be aware that the crypto market remains a fairly volatile asset class. Therefore, moves can be quite attractive on the upside but can also create some scares on the downside. Here is an example of the level of bitcoin drawdowns:

Source: Cryptoslate

There are several ways to deal with this. First, excessive leverage effects should be avoided to limit losses. Of course, you also have to invest only the money you don’t need. The other most common practice to get through periods of volatility is the DCA (Dollar cost average). This process makes it possible to average the price by investing small fixed sums over different periods. This avoids putting a single sum and facing a big loss if the volatility is high.

While remaining in the crypto industry, there are also stablecoins that some operators can use to protect themselves during tougher times. However, stablecoins are not necessarily risk-free investments (see the experience with LUNA and TerraUSD).

Can cash flow into treasuries at the expense of stablecoins?

With the very rapid rise in central bank rates, there has been strong interest in shifting cash to treasury bills. We can see on the graph the shift from liquidity to treasury bills:

These products are precisely short-term bonds (less than one year). They currently offer over 5% risk-free return. This return is also higher than the inflation rate of 4.1%. As macroeconomic conditions are still quite uncertain, getting a 5% return is very attractive. As a result, traders are going to be more likely to shift their liquidity to treasuries than to stablecoins.

After the pandemic, we faced the emergence of stablecoins. They offered incentive rates of several levels. And during this same period, the banks offered rates close to 0%. Consequently, there has been a strong craze for storing liquidity on stablecoins. But now, we have treasury bills that offer rates over 5%, which attracts cash and those looking for security.

CONCLUSION

Now that the tensions have subsided around the possible default of the US debt, it is mainly what will follow that can become problematic. The impact with regard to new issues of bonds and treasury bills can be substantial and push liquidity down. As we have seen during this first half of 2023, it is liquidity that has supported the bullish movements. Consequently, all of the assets that are quite sensitive to the variation in liquidities may once again go through periods of turbulence.

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Laetitia B. avatar

Laetitia B.

After working for 7 years in a Canadian bank, including 5 years in a portfolio management team as an analyst, I left my job to devote myself fully to the financial markets. My goal here is to democratize financial market information to the Cointribune audience on different aspects, including macro analysis, technical analysis, intermarket analysis…

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Société

Elon Musk is keeping investors’ dreams of a Tesla robotaxi alive

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Tesla CEO Elon Musk is pictured during a visit at the company’s electric car plant in Gruenheide near Berlin, eastern Germany, on March 13, 2024, as employees resumed work after production had to be halted due to a suspected arson attack that caused a power outage. 

Odd Andersen | AFP | Getty Images

By just about every measure, Tesla’s first-quarter earnings report on Tuesday was dreary. The company missed estimates on the top and bottom lines. Revenue fell by 9% year over year, the worst decline since 2012. Auto sales dropped 13% from the same period in 2023. Free cash flow turned negative.

But CEO Elon Musk downplayed most of that and suggested investors focus their attention elsewhere.

Rather than dwell on quarterly financials or the massive restructuring announced last week, Musk reiterated his vision of Tesla as a company that’s building artificial intelligence software to turn existing cars into self-driving vehicles, dedicated robotaxis that will make money for their owners and a driverless transportation network.

This is the Tesla Musk is selling to Wall Street, and he’s telling anyone with doubts to stay away.

“If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,” Musk said on the earnings call. He added, “We will, and we are.”

Tesla shares soared 13% in extended trading Tuesday after the earnings report, despite the disappointing results. Some of the optimism was tied to Tesla’s announced plans to start production of new affordable electric vehicle models in “early 2025, if not late this year.”

The stock’s rally picked up steam during the earnings call as Musk veered to the future. He casually mentioned that the company’s robotaxi, which he has long said is coming, will be called the CyberCab. In a shareholder deck that Tesla published before the call, the company featured a “preview of ride-hailing in the Tesla app.”

Musk also talked up a driverless network that’s like Uber with Tesla autonomous vehicles.

“When the car is not moving,” Musk said, “there’s potential to actually run distributed inference,” through the hardware that’s in the cars.

Elon Musk needs to stop talking about robotaxis, says Requisite Capital's Bryn Talkington

Musk has been making these kinds of pronouncements for years.

In 2015, Musk told shareholders that Tesla cars would achieve “full autonomy” within three years. They didn’t. In 2016, Musk said a Tesla car would be able to make a cross-country drive without requiring any human intervention before the end of 2017. That hasn’t happened either.

And in 2019, on a call with institutional investors that would help him raise more than $2 billion, Musk said Tesla would have 1 million robotaxi-ready vehicles on the road in 2020, able to complete 100 hours of driving work per week each, making money for their owners.

The robotaxis would make Tesla a company worth $500 billion, he said at that time. Tesla’s market cap is around that mark now and even topped $1 trillion in 2021, but the company has never managed to deliver on its driverless promises.

NBC News reported recently that the company hasn’t even sought permits that would allow it to test and operate robotaxis in three states, including California and Nevada, where it employs thousands of people.

Separately, the California Department of Motor Vehicles has filed a legal complaint against Tesla, saying it engaged in false advertising and marketing concerning its driver assistance systems — Autopilot and Full Self-Driving (FSD) systems. Autopilot is the standard, and FSD costs $99 per month or $8,000 upfront. Both require human drivers at the wheel, ready to steer or brake at any time. Tesla is defending itself in court against the accusations.

‘More valuable than everything else’

On the earnings call, Musk said he believes FSD will soon be ready to expand geographically to China pending regulatory approval. He didn’t mention the California regulator’s lawsuit.

Musk said people who haven’t tried Tesla’s latest FSD updates “really don’t understand what’s going on.”

His bluster isn’t limited to cars.

At an AI Day in August 2021, Musk said Tesla would build a humanoid robot, now known as Optimus. The company didn’t have a hardware prototype to show at the time, so an actor dressed in a spandex bodysuit danced onstage in its place. In 2022, Tesla unveiled its hardware prototype of Optimus.

On Tuesday, Musk said Optimus is already capable of doing some unspecified factory tasks.

A mockup of Tesla Inc.’s planned humanoid robot Optimus on display during the Seoul Mobility Show in Goyang, South Korea, on Thursday, March 30, 2023. The motor show will continue through April 9. Photographer: SeongJoon Cho/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

“We may be able to sell it externally by the end of next year,” he said. “Optimus will be more valuable than everything else combined because if you’ve got a sentient humanoid robot that is able to navigate reality and do tasks at request, there is no meaningful limit to the size of the economy.”

Whether all of these capital-intensive and far-out projects belong at Tesla is a question that many investors and analysts are asking.

Musk owns a 20.5% stake in Tesla, ​​more than 715 million shares, as of March 31, according to the company’s recent proxy filing. He’s used around 238.4 million of those shares as collateral to secure personal debt. In January, he began angling for even more control of Tesla.

“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” he wrote in a post on X. “Enough to be influential, but not so much that I can’t be overturned.”

Musk created a new startup, xAI, to develop AI products to rival those from Microsoft-backed OpenAI. Before starting xAI, he was already serving as CEO of Tesla and SpaceX, and was technology chief at X, which he owns. He’s also the founder of brain computer interface company Neuralink and tunneling venture The Boring Co.

Alex Potter, an analyst at Piper Sandler, asked Musk on the earnings call if he’d “come up with any mechanism” to ensure he would have the requisite level of voting control at Tesla because, if not, “the core part of the thesis could be at risk.”

“No matter what, even if I got kidnapped by aliens tomorrow, Tesla will solve autonomy, maybe a little slower but it would solve autonomy for vehicles at least,” Musk said. “I don’t know if it would win with respect to Optimus, or with respect to future products, but there’s enough momentum for Tesla to solve autonomy, even if I disappeared, for vehicles.”

But he was quick to tell investors that the company needs him to achieve his loftiest goals.

“If we have a super sentient humanoid robot that can follow you indoors, and that you can’t escape, we’re talking Terminator-level risk yeah I’d be uncomfortable if there’s not some meaningful level of influence over how that is deployed,” he said.

Tesla profits and margins might go lower even as volumes go higher, says shareholder Ross Gerber

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Société

Biogen (BIIB) earnings Q1 2024

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A test tube is seen in front of displayed Biogen logo in this illustration taken on, December 1, 2021.

Dado Ruvic | Reuters

Biogen on Wednesday reported first-quarter profit that topped estimates as the company’s cost-cutting efforts took hold and sales of its closely watched Alzheimer’s drug, Leqembi, came in higher than expected.

Biogen and Eisai‘s Leqembi became the first drug found to slow the progression of Alzheimer’s disease to win approval in the U.S. in July. The treatment’s launch has been sluggish, but uptake appeared to accelerate in the first quarter. 

Leqembi brought in about $19 million in sales for the quarter, up from the $10 million the drug generated last year. That blows past the $11 million analysts had expected, according to estimates compiled by FactSet. 

The number of patients on the therapy increased nearly 2.5 times since the end of 2023, according to Biogen. The company added that the number of new patients who started Leqembi jumped in March, making up more than 20% of the cumulative patients now on the treatment. 

Biogen did not provide a specific number of patients using Leqembi. In February, Biogen CEO Chris Viehbacher told reporters that there were around 2,000 patients currently on Leqembi.

The company hopes the drug and other newly launched products will drive growth as it cuts costs and sees sales plummet for its multiple sclerosis therapies, some of which face generic competition.

Here’s what Biogen reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

  • Earnings per share: $3.67 adjusted vs. $3.45 expected
  • Revenue: $2.29 billion vs. $2.31 billion expected

The biotech company booked sales of $2.29 billion for the quarter, down 7% from the same period a year ago. It reported net income of $393.4 million, or $2.70 per share, for the first quarter, up from net income of $387.9 million, or $2.67 per share, for the same period a year ago. 

Adjusting for one-time items, the company reported earnings of $3.67 per share.

Biogen reiterated its full-year 2024 adjusted earnings forecast of $15 to $16 per share. Analysts surveyed by LSEG had expected full-year earnings guidance of $15.49 per share. 

The company also reiterated its 2024 sales guidance of a low- to mid-single digit percentage decline compared with last year. 

Newly launched drugs top estimates

Apart from Leqembi, investors also have their eyes on other newly launched drugs. 

That includes Skyclarys, brought in by Biogen’s acquisition of Reata Pharmaceuticals in July. That drug notched $78 million in fourth-quarter revenue.

Analysts had expected sales of $68.8 million, according to FactSet estimates. 

The FDA cleared Skyclarys last year, making it the first approved treatment for Friedreich ataxia, a rare inherited degenerative disease that can impair walking and coordination in children as young as 5. In February, European Union regulators approved Skyclarys for the treatment of Friedreich ataxia in patients ages 16 and up. 

Biogen has also partnered with Sage Therapeutics on the first pill for postpartum depression, which won FDA approval in August. But the agency declined to clear the drug for major depressive disorder, which is a far larger market. 

Biogen said that pill, called Zurzuvae, generated first-quarter sales of $12 million. Analysts had expected just $5 million in sales of that drug, FactSet said.

Multiple sclerosis drugs, other treatments

Meanwhile, Biogen’s first-quarter revenue from multiple sclerosis products fell 4% to $1.08 billion as some of its therapies face competition from cheaper generics. 

The company’s once-blockbuster drug Tecfidera, which is facing competition from a generic rival, posted revenue of $254.3 million in the first quarter, down from $274.5 million from the same period a year ago. 

Still, that came in higher than analysts’ estimate of $227.7 million, according to FactSet. 

Vumerity, an oral medication for relapsing forms of multiple sclerosis, generated $127.5 million in sales. That came in below analysts’ estimates of $137.9 million, FactSet estimates said. 

Biogen’s rare disease drugs recorded $423.9 million in sales, down from the $443.3 million in the same period a year ago. 

Spinraza, a medication used to treat a rare neuromuscular disorder called spinal muscular atrophy, recorded $341.3 million in sales. That came under analysts’ estimate of $415.1 million in revenue, according to FactSet. 

Biogen said the timing of Spinraza shipments and increased competition affected first-quarter revenue comparisons outside of the U.S.

The company’s biosimilar drugs booked $196.9 million in sales, up slightly from the $192.4 million reported during the year-earlier period. Analysts had expected sales of $192.5 million from those medicines.

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Société

MANIA, SOL et BNB en plein essor, selon les experts

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Le sentiment actuel sur le marché des cryptomonnaies est largement haussier. Il est alimenté par une combinaison de facteurs techniques et fondamentaux qui suggèrent un mouvement potentiellement important à la hausse. L’analyse indique que le marché s’aligne de manière similaire à des périodes passées où une croissance substantielle a suivi des corrections importantes. Ce schéma a renforcé la confiance des investisseurs, conduisant à des prédictions d’une expansion du marché intéressante par rapport aux niveaux actuels. Ce niveau d’optimisme est-il justifié ? Il est difficile de le dire pour le moment.

Cependant, il est clair qu’il est alimenté par une augmentation de l’intérêt tant des particuliers que des institutions, élargissant ainsi la base d’investisseurs et augmentant le flux de capitaux sur le marché. Les avancées technologiques et une plus grande clarté réglementaire contribuent également à un environnement de marché plus stable et prometteur. Dans le texte d’aujourd’hui, nous allons discuter des cryptomonnaies qui pourraient commencer à croître plus tôt que les autres.

ScapesMania : Des avantages imbattables

Le premier opère dans la niche des jeux occasionnels et se distingue de la foule. Vous voyez, il y a de nombreux projets qui n’ont pas une liste bien définie d’avantages clés. Avec ScapesMania, le projet innovant de jeux occasionnels, c’est différent. Depuis le premier jour, le projet n’a pas hésité à mettre en avant ses nombreux avantages.

Liste des principales caractéristiques

Pour vous donner un bref récapitulatif, voici les meilleures caractéristiques de ScapesMania :

  • Engagement Actif avec la Communauté. L’équipe considère clairement que la communauté est importante, c’est pourquoi elle reste en contact avec les fans à travers des réunions mensuelles AMA, des mises à jour de la communauté et des discussions ouvertes à tous.
  • Plans Ambitieux pour Élargir l’Utilité du Jeton. ScapesMania a de grands projets pour rendre le jeton utile de plus de façons, offrant aux utilisateurs de nouvelles chances de tirer le meilleur parti de leur actif numérique. L’équipe s’engage à trouver de nouvelles façons pour que les jetons créent de la valeur.
  • Audit par BlockSafu. Chez ScapesMania, la confiance et la sécurité sont très importantes. C’est pourquoi le projet a été soumis à des audits complets par des entreprises de sécurité de premier plan comme BlockSafu.
  • Mécanismes de Falaise et de Dotation pour Maintenir l’Équilibre Offre/Demande. Pour maintenir un environnement sain et s’assurer que la croissance est durable, ScapesMania utilise des mécanismes de falaise et de dotation. Cela aide à maintenir une demande élevée pour le jeton et encourage les utilisateurs à rester engagés pendant longtemps.
  • Excellente Performance le Premier Jour sur PancakeSwap. Après le succès de la prévente, ScapesMania a lancé son projet sur PancakeSwap (l’une des plus grandes bourses décentralisées). En seulement 24 heures, des jetons d’une valeur de 2,25 millions de dollars ont été échangés. Cela montre qu’il y a une forte demande pour lui et que l’intérêt des traders est plus fort que jamais.
  • Potentiel de Croissance dans la Niche des Jeux Occasionnels. Selon Statista, le secteur des jeux occasionnels devrait croître très rapidement. D’ici 2027, il devrait atteindre une valeur de 19,12 milliards de dollars. En tant que l’une des nouvelles sociétés les plus en vogue à associer la technologie blockchain aux jeux occasionnels, ScapesMania est parfaitement placée pour profiter de cette énorme expansion du marché.
  • Présence sur les Traqueurs de Cryptomonnaies. Être répertorié sur des sites bien connus comme CoinMarketCap et CoinGecko rend ScapesMania encore plus visible et digne de confiance.
  • Communauté Forte et Active. Le groupe de plus de 60 000 personnes qui compose ScapesMania est ce qui le rend génial. Les détenteurs fidèles sont une grande partie de la raison pour laquelle ce projet est un succès. Ils participent à la conception du projet, donnent leur avis, et diffusent les objectifs de ScapesMania ainsi que ses succès continus.
  • Plan Marketing Post-Cotation Solide. Grâce à des efforts publicitaires ciblés, des relations intelligentes et une couverture médiatique, ScapesMania est déterminée à rendre le projet aussi connu que possible.
  • Prévente Très Réussie. L’effort de vente a été vraiment incroyable. Le projet a rassemblé plus de 6,125 millions de dollars auprès d’un groupe passionné de soutiens. Avec plus de 18 400 personnes contribuant, le succès de la prévente montre à quel point les soutiens ont confiance et foi en ScapesMania.

Au-delà des avantages – Pourquoi agir maintenant ?

Lorsque vous achetez ScapesMania, ce n’est pas seulement une cryptomonnaie ; c’est un moyen d’accéder à une croissance potentielle inégalée et à une opportunité d’influencer un projet au sein d’une niche en expansion.

>>> Découvrez ScapesMania dès aujourd’hui <<<

Solana (SOL) : Vitesse et innovation pionnières sur le marché des cryptomonnaies

La deuxième cryptomonnaie sur notre liste est Solana (SOL), un projet mieux connu. Il a récemment démontré une reprise notable, portée par une activité accrue au sein de son écosystème. L’intérêt ouvert total pour les jetons Solana (SOL) a explosé, avec une hausse marquée de plus de 31 % par rapport à son point bas ce mois-ci. Cette hausse est le reflet de l’enthousiasme plus large dans la finance décentralisée (DeFi), où Solana (SOL) continue d’exceller.

Le prix de Solana (SOL) a atteint un nouveau sommet mensuel de 162,90 dollars, propulsé par de fortes performances dans son écosystème, notamment des gains importants dans des jetons comme Bonk et Solend. Le volume des transactions sur le réseau Solana (SOL) a considérablement augmenté, atteignant des milliards, ce qui souligne l’engagement robuste sur le marché et la liquidité circulant à travers les plates-formes de Solana.

La trajectoire des prix de Solana (SOL) semble extrêmement haussière, avec des indicateurs techniques comme l’indice de force relative (RSI) et l’oscillateur stochastique signalant un fort momentum haussier. La croissance substantielle du réseau en DeFi, ainsi que son nombre croissant de protocoles et d’adresses, le positionnent comme un acteur majeur dans l’espace des cryptomonnaies. À l’avenir, le jeton Solana (SOL) pourrait potentiellement atteindre plus de 200 dollars, ce qui représenterait une augmentation significative par rapport à ses niveaux actuels.

BNB Coin (BNB) : Un pilier central dans l’écosystème en expansion de Binance

Enfin, il y a BNB Coin (BNB), le jeton natif de l’écosystème Binance. Il navigue actuellement dans un environnement de marché volatile. Les récentes tensions géopolitiques ont influencé les activités de trading, mais la cryptomonnaie continue de faire preuve de résilience malgré les corrections du marché.

Malgré de légères baisses dues à des pressions de marché externes, BNB Coin (BNB) maintient sa position en tant qu’actif crucial au sein de la plateforme de trading Binance et de ses chaînes associées. Les fluctuations reflètent les sentiments plus larges du marché, mais mettent également en évidence les forces fondamentales de la cryptomonnaie alors qu’elle se remet de ces baisses.

Les perspectives pour BNB Coin (BNB) restent optimistes alors qu’il bénéficie de l’expansion continue de Binance et de l’utilité croissante de son infrastructure blockchain. Alors que le jeton navigue à travers les incertitudes actuelles du marché, son rôle essentiel dans la facilitation des transactions et des applications décentralisées sur Binance Chain constitue une base solide pour une croissance potentielle. L’avenir de BNB Coin (BNB) devrait voir la poursuite de son rôle central dans l’écosystème, ce qui pourrait conduire à une valorisation accrue à mesure que les conditions du marché se stabilisent.

Conclusion

Une analyse récente fait écho aux conditions actuelles du marché avec des cycles précédents ayant conduit à une croissance robuste, renforçant les prédictions d’une expansion potentielle par rapport aux niveaux actuels. Des cryptomonnaies émergentes comme ScapesMania captent une attention significative, suggérant une opportunité d’achat stratégique comme le soulignent les experts. Le lancement de cette cryptomonnaie sur des bourses renommées et son approche innovante dans le secteur indiquent des perspectives prometteuses.

Site Web : https://scapesmania.io/

Twitter : https://twitter.com/ScapesMania

Telegram : https://t.me/scapesmania

Groupe d’annonces : https://t.me/scapesmaniaAnn

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Cointribune s’efforce de communiquer aux lecteurs toutes informations utiles à disposition, mais ne saurait en garantir l’exactitude et l’exhaustivité. Nous invitons les lecteurs à se renseigner avant toute action relative à l’entreprise, ainsi qu’à assumer l’entière responsabilité de leurs décisions. Cet article ne saurait être considéré comme un conseil en investissement, une offre ou une invitation à l’achat de tous produits ou services.

L’investissement dans des actifs financiers numériques comporte des risques.

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Société

3.6 million Medicare patients could get heart health coverage

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More than 3 million people with Medicare could be eligible for coverage of Wegovy now that the blockbuster weight loss drug is also approved in the U.S. for heart health, according to an analysis released Wednesday by health policy research organization KFF.

But some eligible beneficiaries could still face out-of-pocket costs for the highly popular and expensive drug, KFF said. Certain Medicare prescription drug plans may also wait until 2025 to cover Wegovy.

Medicare’s budget could be strained as more plans cover the costs of Wegovy. The program’s prescription drug plans could spend an additional net $2.8 billion if just 10% of the eligible population, an estimated 360,000 people, use the drug for a full year, according to KFF.

Under new guidance issued in March, Medicare Part D plans can cover Wegovy for patients as long as they are obese or overweight, have a history of heart disease and are specifically prescribed the weekly injection to reduce their risk of heart attacks and strokes. The Food and Drug Administration approved Wegovy for that purpose in March.

KFF said that applies to 3.6 million, or 7%, of total beneficiaries, based on 2020 data. That group also makes up 1 in 4 of the 13.7 million Medicare patients who are obese or overweight. Those numbers may be higher based on more recent data, the nonprofit group said.

The analysis suggests that, for the first time, certain Medicare beneficiaries will be able to access Novo Nordisk‘s Wegovy without having to shoulder the total $1,300 monthly price tag alone.

Notably, Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover Wegovy and other GLP-1 drugs for weight loss alone. GLP-1s are a buzzy class of obesity and diabetes treatments that work by mimicking a hormone produced in the gut to suppress a person’s appetite and regulate their blood sugar. 

But KFF’s analysis found that Medicare beneficiaries who take Wegovy could still face monthly out-of-pocket costs of $325 to $430 if they have to pay a percentage of the drug’s list price for a month’s supply.

A new Part D cap on out-of-pocket spending would limit beneficiaries’ out-of-pocket costs to around $3,300 in 2024 and $2,000 in 2025. Still, those sums are a significant burden for those who live on modest incomes.

Some patients also may struggle to access Wegovy if Part D plans that decide to cover it implement certain requirements to control costs and ensure the drug is being used appropriately. That could include “step therapy,” which requires plan members to try other lower-cost medications or means of losing weight before using a GLP-1 such as Wegovy.

“These factors could have a dampening effect on use by Medicare beneficiaries, even among the target population,” KFF wrote in its analysis.

Some Part D plans have already announced that they will begin covering Wegovy this year, but it’s unclear how widespread coverage will be. KFF said many plans may be reluctant to expand coverage now since they can’t adjust their premiums mid-year to account for higher costs associated with use of the drug.

That means broader coverage in 2025 could be more likely, KFF added.

Medicare already covers GLP-1s and other treatments for diabetes, such as Novo Nordisk’s blockbuster Ozempic. 

Among the Medicare beneficiaries who are obese or overweight and have a history of heart disease, 1.9 million also have diabetes, according to KFF. That makes them already eligible for Medicare coverage of other GLP-1 drugs approved for that condition.

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U.S. seeks 36-month sentence for ex-Binance CEO Changpeng Zhao

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Changpeng Zhao, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris on June 16, 2022.

Benoit Tessier | Reuters

U.S. prosecutors are seeking an above-guidance sentence of 36 months for the former CEO of cryptocurrency exchange Binance on charges of enabling money laundering, according to a sentencing memorandum out late Tuesday.

The memorandum, which was filed with the court for the western district of Washington, states that Zhao should serve a higher sentence that suggested under advisory guidelines to “reflect the gravity of his crimes.”

Under advisory guidelines, Zhao’s sentencing would come in at a range of 12 to 18 months in prison.

“A custodial sentence of 36 months—twice the high end of the Guidelines range—would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing,” U.S. prosecutors said.

Zhao is accused of wilfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and of effectively allowing Binance to process transactions involving proceeds of unlawful activity, including transactions between Americans and individuals in sanctions jurisdictions.

Binance has separately been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over the alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.

This crypto cycle is different from past ones, Binance CEO says

The U.S., which separately accuses Binance and Zhao of violating the U.S. Bank Secrecy Act and sanctions on Iran, ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine.

Zhao stepped down as Binance’s CEO in November last year after reaching this plea and was replaced by the former Abu Dhabi markets regulator’s chief, Richard Teng.

Zhao was not immediately available for comment when contacted via social media platform X. Binance has yet to return a request for comment when contacted by CNBC.

‘Unprecedented scale’ of financial crime

Prosecutors say that Zhao violated U.S. law on an “unprecedented scale,” and that he had a “deliberate disregard” for Binance’s legal responsibilities.

In the memorandum of Tuesday, prosecutors said that, under Zhao’s control, Binance operated on a “Wild West” model.

“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” the memorandum stated.

“But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”

Zhao’s official sentencing is expected to take place on April 30.

New Binance CEO: Building a robust compliance program after an immature past
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Standard Chartered Faces £1.5 Billion UK Claim in Iran Sanction Case

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Standard Chartered Plc is facing about £1.5 billion ($1.9 billion) worth of investor claims at a London trial over allegations it systematically breached Iranian sanctions to win new business.

A London judge ruled on Friday [April 19] that the trial, that will also probe accusations of bribery, should be split into two parts with the first scheduled for October 2026.

The bank was sued by hundreds of investors over the claims of widespread misconduct, which has so far cost the bank more than $1.7 billion in penalties. The lender is facing the claim after it told watchdogs that it processed hundreds of millions of dollars in clearing transactions between 2008 and 2014 through its Dubai offices on behalf of Iranian entities.

The case over alleged lack of shareholder disclosure is “without merit” and the bank “will continue to vigorously defend the claim,” a spokesperson for the bank said in an emailed statement. “We consider that the bank fully complied with its reporting and disclosure obligations throughout the relevant period.”

The ruling follows a decision last year when the court had refused the bank’s request to strike out claims that the alleged sanctions violations and bribery was more systematic and extensive than it had previously admitted to US regulators in 2019. Earlier this year, the bank won permission to appeal the decision, which will be heard in May.

The plan, known to high-level officials as “Project Green,” allowed for an internal department in Dubai to “create fraudulent records” to disguise Iranian-connected clients.

Photograph: Standard Chartered headquarters in London. Photo credit: Jason Alden/Bloomberg

Copyright 2024 Bloomberg.

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Jury Awards $80M to 3 Former Zurich NA Employees for Wrongful Termination

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Zurich North America was ordered by a California jury to pay three former employees a total of about $80.2 million to end a wrongful termination case earlier this month.

Melinda Brantley, Nicholas Lardie, and Daniel Koos worked as claims examiners in Zurich’s Rancho Cordova branch but were fired late in 2017 over the use of “off the record” paid time off—utilized by then manager Chris Omen as an employee incentive, according to the Bohm Law Group, who represented the plaintiffs.

During the trial in Sacramenta, California, Omen testified the days, also nicknamed “Omen Days,” were doled to deserving employees with his boss’s knowledge and encouragement since it was “a way to offer better compensation without impacting increasing operational expense,” said information from the Bohm firm. The performance incentive was offered without reducing PTO.

However, soon after Omen was fired over a state audit failure, the practice of “Omen Days” was investigated and Zurich claimed the employees stole time from the company. Given what Zurich supervisors called the “gravity of this offense,” Brantley, Lardie and Koos were terminated.

The jury sided with the former Zurich employees, awarding each of them more than $26 million including $25 million each in punitive damages. Other damages were awarded for economic harm, non-economic harm, and reputation.

In an emailed statement, Zurich North America said it is “disappointed by the recent jury verdict,” and that the company is “committed to maintaining a culture of fairness, equity and integrity in all our business practices and interactions with employees.”

“We will pursue all available legal options, including appeal,” Zurich said.

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China’s Xiaomi is selling so many electric cars it’s closer to breaking even

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The Xiaomi SU7 on display at the Mobile World Congress 2024.

Arjun Kharpal | CNBC

BEIJING — Chinese smartphone company Xiaomi‘s new electric vehicle is selling better than expected, putting it closer to break-even despite undercutting Tesla‘s Model 3 on price.

Xiaomi has received more than 70,000 orders for its electric SU7 sedan as of April 20, close to the company’s original full-year target for deliveries this year, CEO Lei Jun told investors Tuesday.

The company now aims to deliver 100,000 of its new EV this year, he said.

Xiaomi released the SU7 in late March with a price about $4,000 less than Tesla’s Model 3, and has started deliveries. The Chinese smartphone company is set to livestream a car update at 9:20 a.m. on Thursday, as the Beijing auto show kicks off.

“Breakeven would be realized if annual sales reach 300[k]-400k,” Citi analysts said in a report, citing the investor day. They raised their autos segment gross profit margin forecast to 6% this year, versus a 10% loss previously expected.

Why it's so hard to start an EV company

The Citi analysts raised their earnings per share forecast by 25% this year, and now expect Xiaomi to ship 100,000 cars this year, 200,000 next year and 280,000 in 2026.

For context, Tesla China sold more than 600,000 cars last year, according to the China Passenger Car Association. Li Auto, which technically sells mostly hybrids, sold 376,000 cars last year, while Nio sold just over 160,000 cars last year, the data showed.

Li Auto had a gross margin of 23.5% in the fourth quarter last year, while Nio’s gross margin was 7.5%, both up from the year-ago period.

Tesla’s gross margin has successively declined over the past five quarters to 17.4% in the first three months of this year. Gross margin figures don’t account for operating expenses.

When Xiaomi launched the SU7 last month, Lei said the company would be selling each car at a loss.

But on Tuesday, he estimated gross profit margin of around 5% to 10% for Xiaomi’s auto business, and noted that sales are greater than expected, while expressing thanks to suppliers on reducing costs.

“We are currently in discussions with supply chain partners on how to increase production capacity and further support on costs,” he said, according to a CNBC translation of a Chinese-language investor day transcript provided by the company.

Sticking to China for now

Xiaomi has invested heavily in its electric car venture as Lei has long-term ambitions to become one of the top five automakers in the world.

But for the next three years, the company plans to fully focus on the domestic market, he told investors Tuesday.

Lei pointed out that Xiaomi already does business in more than 100 countries.

“We have a foundation of global influence and Xiaomi fans,” Lei said. “When we are ready to enter the global market, it should come naturally.”

Xiaomi also has plans for its next electric car, an SUV, set to be released in the second half of 2025, Chinese business news site 36kr reported Wednesday, citing sources.

Lei declined to share details when asked about SUV plans on Tuesday.

“I think one of the reasons for the success of SU7’s launch was its confidentiality,” he added.

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Your Flight Plan to Aircraft Insurance

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This post is part of a series sponsored by IAT Insurance Group.

Before you purchase your aircraft, familiarize yourself with the types of aviation coverage available, the considerations that impact what you need and how much it will cost, along with best practices for avoiding claims and how to respond when accidents happen.

Download Free eBook

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Chubb Records 13.3% Uptick in Q1 Net Income on Underwriting

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Chubb started 2024 off with first quarter net income up 13.3%, compared to the same time a year ago, to about $2.1 billion.

The first three months of 2024 followed a year Chubb CEO Evan G. Greenberg called the “best in our company’s history.” He called the first quarter “simply excellent.”

P/C underwriting income was up 15.4% to $1.4 billion on earned premium growth and underwriting margins. Consolidated net premiums written were up 14.1% to $12.2 billion.

“The P/C underwriting environment in North America overall is quite favorable, financial lines aside, with pricing exceeding loss costs, which remained steady,” said Greenberg, in a statement. “From our large middle market business to small commercial to personal lines, and driven by both property and casualty, we saw the best rates and pricing overall that we have seen in the last four to five quarters. It was also one of the best quarters for large account casualty rates and pricing.”

The combined ratio for P/C operations was 86 compared to 86.3 last year during the same period. The combined ratio for North America P/C was 85.6 compared to 86.1.

North America Commercial P/C operations recorded a Q1 combined ratio of 85.9 compared to 83.2 a year ago. The uptick was due to catastrophe losses and lower favorable prior year development. However, in North America Personal P/C, the combined ratio improved 6.5 points to 87.4 on higher favorable prior year development. Net premiums were up 12.3% for the personal insurance operations.

Greenberg said North America operations saw record new business of $1.2 billion in Q1 and renewal retention of 84.7%.

Chubb said total pretax prior development was $207 million compared to $196 million in Q1 2023.

Pretax net investment income for the first three months of 2024 was up 25.7% to about $1.4 billion.

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Underwriting
Chubb

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