CNN Business/Clare Duffy
Former Morgan Stanley financial adviser charged with stealing $6 million from clients
Former Morgan Stanley financial adviser Michael Carter was charged with fraud Monday for allegedly stealing around $6 million from investors over a period of 12 years.
Carter, 47, allegedly stole from victims including an elderly investment advisory client who had been saving a college fund for her grandchildren and from people he knew “through familial ties and friendship,” according to a complaint brought by the Securities and Exchange Commission. The complaint alleges he used the money to fund an expensive lifestyle that included a luxury car and large home mortgage.
Carter has not yet entered a plea in response to the SEC’s charges. Federal criminal charges were also leveled against Carter, to which he pleaded guilty on Monday, according to a release from the District Court of Maryland.
“For over 12 years, Michael Carter perpetrated a brazen scheme that defrauded victim account holders whose investments he was supposed to protect,” US Attorney for the District of Maryland Robert Hur said in the release. “When his fraud was discovered, Carter repaid some victims by taking money from other victim accounts.”
Yahoo Finance/Brian Sozzi
Has the stock market lost its mind?
A contentious presidential election right around the bend. A major health pandemic continuing to roil the globe and keep economic growth under severe pressure. Major companies telling investors this earnings season that things are far from great — or getting better at all.
And yet in the face of all this negativity and brutal reality, the good ole stock market has galloped like a one-year-old stud back to pre-COVID-19 pandemic highs this week. It begs the question — has the stock market truly lost its darn mind? I mean sure, we have helicopter money from the Federal Reserve that encourages aggressive risk-taking by investors, but is Tesla really worth $300 billion even in such a care-free trading environment?
Not many strategists on Wall Street will come right out and say “yes” in response to that aforementioned question for fear of losing business or credibility in the media. But in reading between the lines of RBC’s head of U.S. strategy Lori Calvasina’s new note to clients out Tuesday — she thinks she comes the closest to calling BS on this rip-your-face-off-rally that has shocked most folks.
“Valuations are frightening, with one of our models now above tech bubble highs,” Calvasina writes.
Analysts warn of ‘double edged sword’ in China market rally as investors indulge in frenzied, risky trading
China’s recent stock market rally is raising fears that it’s being driven by retail investors indulging in leverage-fueled risky trading which caused a spectacular crash back in 2015.
Analysts say they are monitoring levels of margin trading, or the practice of borrowing money from brokerages to trade.
That comes as mainland Chinese markets surged in early July. In the first two weeks of this month, the Shanghai composite rocketed 14%. The CSI 300 index jumped more than 20%, and the Shenzhen composite soared 17%.
That rally drove the China Securities Regulatory Commission to issue a warning to investors to stay away from lenders that are illegally providing financing for margin trading. Margin trading comes with risks as investors are using borrowed money, and therefore any losses in the investments will be magnified as traders would need to pay back the interest as well.
Fox Business/Jonathan Garber
Gold, silver prices surge to highest levels in years
Precious metals rallied to their highest levels in years on Tuesday as a fresh economic stimulus in Europe and a weak U.S. dollar boosted prices.
Spot gold rose $24.50 to $1,840.40 an ounce, its highest level since Sept. 9, 2011, while silver gained $1.34, hitting a more than 6-year high of $21.46 an ounce. At the same time, the U.S. dollar index slid 0.54 percent and neared its lowest point in two years.
Tuesday’s price surge reflected “what happened in Europe,” George Gero, managing director at RBC Global Wealth Management and a member of the COMEX board of directors, told FOX Business after European Union leaders agreed on a 1.8 trillion euro ($2.06 trillion) spending package to bolster the region’s economy in the wake of COVID-19.
Precious metals have had a banner year in 2020 as the lockdowns ordered to slow the spread of COVID-19 led to drastic action from policymakers, devaluing currencies and prompting investors to turn to precious metals as a safer store of value.
Market Watch/ Shawn Langlois
Why you might want to consider ditching your 401(k) plan
“The claim that a frog placed in slowly warming water will die without trying to escape is factually incorrect, but too useful a metaphor to discard. We have been slowly raising the temperatures on 401(k)s for 40 years, and we’re nearing the point that they no longer make sense for workers.”
That’s Aaron Brown, author and former managing director at AQR Capital Management, explaining in an op-ed for Bloomberg News why retirement savers might want to reconsider their 401(k)s.
And, no, it isn’t because, as Donald Trump warned earlier this month, your nest egg could “disintegrate and disappear” if Joe Biden wins the presidency.
Let’s get back to the frog metaphor.
“I don’t know which is worse, if the worker frog jumps out and thereby exacerbates the middle-class retirement savings problem,” he wrote, “or if the worker frog stays in and finds its retirement plan eroded by unexpected effects of fees and taxes. So let’s turn off the heat and add some cold water.”
Brown explained that the tax advantage enjoyed by those investing in 401(k)s is nowhere near as beneficial as it once was, based on these four factors that, for a median-income married couple with two children, have changed in a big way over the last 40 years.
- The marginal federal income tax rate was 43% in 1980, 12% today
- The capital gains tax rate was 28% in 1980, 0% today
- The likely retirement bracket tax rate was 15% in 1980, 12% today
- Interest rates in 1980 were around 15%, compared to 0% today