Ian Krysztofiak, Staff

The Trump Organization is to begin trial on Monday, Oct. 24, involving tax fraud regarding compensation for the company’s Chief Financial Officer. Jury selection begins as the prosecutor argues that executives were paid in cars, private school tuition, apartments and cash. While the Trump Organization has been the subject of legal scrutiny, this is one of the first criminal trials that the company has faced. The Trump Organization faces criminal counts of conspiracy, criminal tax fraud and falsifying business records. The company could face fines of $1.6 million under New York state law if convicted. 

The Manhattan district attorney’s office says that the Trump Organization kept two sets of books, internal records review that chief financial officer Allen Weisselberg received compensation through Mercedes-Benz cars and private school tuition for his grandchild. Weisselberg argues that the company didn’t report these benefits to tax authorities.  The Trump Organization is expected to say that the incident was an isolated practice of Mr. Weisselberg and another employee. Mr. Weisselberg is expected to take a plea deal to fully testify against the Trump Organization. 

Along with Mr. Weisselberg, Donald Bender, a partner at accounting firm Mazars USA LLP, will be another witness who prepares the company’s tax returns. Mazars said earlier this year that it would drop the Trump Organization as one of its clients and that it does not stand by its prior financial statements. 

Even though Mr. Trump and his family were not charged, the indictment says that the former president signed checks for private-school tuition. This trial follows a multiyear investigation by Manhattan’s district attorney’s office into the Trump Organization’s unethical conduct involving hush money payments to adult film actress Stormy Daniels among their many other civil lawsuits. The New York Attorney General, Letitia James, brought a civil suit against Mr. Trump, his three children, and his company last month for the misrepresentation of the company’s assets to its lenders and insurers. However, this trial is only regarding the company’s payroll practices. 

Jorden McVeagh, Editor

https://www.nbcnews.com/news/us-news/rivian-recalling-nearly-vehicles-loose-fastener-concerns-rcna51319

On Oct. 7^th, 2022, Electric truck and SUV company Rivian Automotive announced that they would be recalling  all their vehicle lines as a result of a loose fastener. The recall will tighten said fastener in order for drivers to steer the vehicle without issue. Rivian, founded in 2009, will be recalling over 13,000 of their vehicles. The cause of the problem is a result of the front upper-control arm and steering knuckle not having enough torque. The company based out of Irvine, California, believes that it would only take a few minutes to make the fix and that all repairs should be completed within 30 days, assuming customers collaborate willingly. Rivian is trying to jump on the EV buzz and fix their problems now with the hopes the emerging consumers within the EV market will start to purchase their vehicles and grab a hold of the overall market share currently dominated by Tesla. The company has been public for little over a year and has already surpassed Ford and GM in market value making it the second most valuable automaker from the US behind Tesla. However, with the current economic conditions, the stock price does not reflect their prosperous first year being publicly traded as it has dropped 67% on the year thus far. Big news for the company came last month as they announced a partnership with Mercedes-Benz. The two companies will be building a factory in Europe that will produce electric vans for both companies to sell to the public. Even though Rivian has experienced success as of late, it has not come without its hardships. It started in March when the company announced price hikes on all vehicles which resulted in huge backlash from angry customers. Then in April, the company laid off over 800 workers after reporting a $1.6 billion net loss in the first quarter of 2022 alone.  Followed up by another poor second quarter where they posted a $1.7 billion net loss. Then as the old saying goes, “when it rains it pours.” Rivian has not been able to escape the global supply chain issues that have plagued the global economic environment. As a result, their factory stationed in Illinois can produce 150,000 vehicles per year on average. This year, the factory will be happy to produce 25,000. 

Jason Ryan, Staff

A significant consumer pullback is showing up in ocean shipping, with logistics managers and specialists stating they have seen a 20% drop in ocean freight orders for the months of September and October. The decline in demand cuts across products, including machinery, housing, industrial and some apparel. 

Ocean carriers have been canceling dozens of sailings on the busiest routes during their peak season, the most recent sign of the economic whiplash touching firms as inflation weighs on global trade and consumer spending.

For the first two weeks of October, a total of about forty scheduled sailings to the U.S. West Coast from Asia and 21 sailings to the East Coast from Asia have already been scrapped. Typically, during this time of the year, an average of two to four sailings in a week are blanked, the industrial term for canceled sailings.

The cancellations in October 2022 are a sharp reversal from months back when the scarce shipping space pushed the freight rates higher, and the carriers’ profits touched record levels. In October 2021, firms like Walmart and Home Depot were chartering their ships to get around the bottlenecks at major ports to satisfy a surge in demand for imports, this is just not the case now. 

Moreover, Trans-Pacific shipping rates have plummeted about 75% from levels seen a year ago. The transportation industry has been grappling with weaker demands as giant retailers cancel orders with vendors and step up their efforts to cut inventories.

The impact of Hurricane Ian can also be a reason for the cancellations. For example, this CNBC Supply Chain Heat Map demonstrates how vessel congestion on the east coast continues and how the impact of Hurricane Ian will delay the clearing out of vessel congestion.

To elaborate, during the period of Sept. 12-18, the Port of Savannah, a major U.S. seaport, reached the highest number of weekly average days waiting at anchor and cancellations since April 2022. Because of Hurricane Ian, zero vessel calls have been recorded at the Port of Savannah since Sept. 29. There is no question this new disruption by Ian will increase the existing congestion even more. 

  ryanj21@lasalle.edu

Ian Krysztofiak, Staff

https://www.bloomberg.com/opinion/articles/2022-08-17/hsbc-citigroup-and-the-end-of-global-banking

The British pound hit a record low of $1.0349 when compared to the dollar during Asian trading hours on Monday, surpassing 1985’s previous record low. This comes after the British government unveiled tax cut programs on Friday. These plans include canceling the proposed plan of a 25% corporate tax hike, and a reduction on income and bonus taxes. These tax cuts come after a rise in energy prices from Russia’s cut in energy exports. The tax cuts will hopefully shield businesses and households from surging energy prices. It has been 50 years since Britain has seen tax cuts of this scale. 

Resulting in a low pound against the dollar, imports, oil and gas, and other commodities priced in dollars will now be more costly, which puts more economic stress on England. A low pound also affects yields on ten-year UK government bonds, which ultimately makes government borrowing more expensive. The ten-year UK government bond yield is currently at 4.12%. 

Recently, currency exchange markets have been hit hard; the Turkish Lira has also hit a record low against the dollar. And China has recently announced that it will make it harder to bet against the Yuan by introducing a 20% risk-reserve ratio for any financial institutions that sell foreign exchange forward contracts. This will make it costlier for banks and their clients to sell Yuan to buy Dollars in the derivatives market. The Euro has also fallen to a 20-year-low against the dollar. 

Critics see the falling pound as a potential debt problem for the U.K., as they recently borrowed 11.8 billion pounds in August, a 5.3 billion difference from what they borrowed in 2019. These tax cuts by the U.K. are a gamble, using the cuts to both fight inflation, and high energy prices are accelerating worries of a recession. With inflation at a 40-year high of 9.9 percent, this is a bold strategy from Kwasi Kwarteng, the Chancellor of the Exchequer. Unfortunately, these tax cuts will most likely only benefit the wealthy more than the middle class.

Jorden McVeagh, Editor

What do Rising Interest Rates Mean for Your Money? | Access Wealth 

This upcoming Wednesday Sept. 21, The Federal Reserve will meet to discuss the topic of raising interest rates once again. The past two meetings have resulted in two interest rate hikes which is significant since they haven’t raised rates since 2018. However, since March alone, the Fed’s benchmark policy rate has risen 2.25% and it stands to go up again after Wednesday’s meeting. After the meeting concludes interest rates once again will receive a bump of three quarters of a point which would bring rates to 3%. In addition, they also could raise rates by as much as an entire percentage point which would bring rates to 3.25%. All around Wall Street it is a back-and-forth discussion between whether or not people think the Fed will continue raising interest rates until November or if inflation will slow down so the central banks can relax for a little. 

Forecasts for the last quarter show that interest rates could rise to as high as 3.5-4% by November and jump up to 3.75-4.5% in December. When it comes to answering the question “do you think this will slow down anytime soon?” economists believe that there is still more to come in the future. Inflation is still rather high in comparison but has gone down over the past year. Before August, the national inflation rate sat at 8.52% with it now sitting at 8.26%. This is certainly moving in the right direction, but still up from last year’s closing rate of 5.25%.

Even though interest rates are still high, this still doesn’t mean the economy is struggling all around. The job market is sitting in an amazing position right now with an unemployment rate of 3.7% equaling 6 million people across the US without work. To put it into perspective, it is generally accepted that an unemployment rate between 4-5% is full employment. Full employment refers to the economic system where anyone who wants to and is able to work is employed. In addition, consumer spending is also still going strong. We are seeing consumer spending numbers at a higher level than it was during the COVID-19 pandemic period, it is still strong with consumers spending $1.392 trillion (USD) in the second quarter of 2022. This is up slightly from the $1.388 trillion that was spent in the first quarter of 2022. 

Finally, the housing market is still high even with the spike in interest rates in the past months. These rate hikes could prove to be costly in the long run though, as too many hikes could result in sending the US economy into a mild recession according to Chief Investment Officer at Girard Timothy Chubb. These hikes could also shift the stock market substantially in terms of market volatility. With interest rates still rather unpredictable, investors have no idea what forecasts for later in the year could look like. July 2023 forecasts have rates anywhere between 3.25-5% which would result in other central banks, such as the European Central Bank, to increase rates as well to keep the market in some sense of balance. If this were to happen it would make the markets that much more volatile making it harder to predict whether a stock price will go up or down based on other market occurrences.

While it is unknown what will happen this week and in the coming months, it will be interesting to see what happens and how it continues to impact the global economic environment. 

 

Jorden McVeagh, Editor

On Sunday Sept.4^th, Bed Bath and Beyond Chief Financial Officer Gustavo Arnal was found dead by New York City Police Officials. The former 52-year-old CFO was identified as deceased after it was found he threw himself off the balcony of his 18^th floor high-rise apartment. Arnal had joined the company at the peak of the COVID-19 pandemic in May 2020 after a successful career at companies such as Avon, Walgreens and Procter and Gamble. Arnal was instrumental in guiding triple B through the pandemic through his financial knowledge and his ability to create a strong collaborative culture around him. This news however comes at a terrible time for triple B as they creep closer to declaring bankruptcy. As of now, they are fighting this problem by downsizing.

 As of Wednesday Sept. 7, the company will be laying off 20% of their corporate employees, closing 150 stores, and reducing several in-house home good brands. In addition to this, $500 million has been saved up to help the company fight through the financial hardships they are facing at this time. Shifting the focus back on Gustavo Arnal, on Aug. 23, a lawsuit filed in the US District Court in DC naming Arnal as a defendant in a class action lawsuit. This case pinned him against Ryan Cohen, who accused the company and Arnal of pump and dump schemes to hyperinflate the company’s stock price. The contents of the lawsuit stated that Arnal and other company officials made misleading comments regarding the company’s current financial situation. Bed Bath and Beyond failed to communicate financial plans with investors, delayed stockholders from seeing their holdings and stock positions, and shared fake revenue numbers.

The company also introduced their “Buy Buy Baby” promotion for the purpose of increasing stock price. This promotion saw triple B acquire a privately held baby merchandising company for $67 million. This comes at a time of financial hardship for companies worldwide. It is worth noting that Ryan Cohen, the other side of the lawsuit against Arnal, sold his $178 million stake in the company. As a result of this sale, Bed Bath & Beyond stock (BBBY) dropped by a whopping 19.63%. On Aug. 18, the day Cohen sold his shares, Bed Bath and Beyond stock price dropped from $23.08 per share to $8.63 per share as of today. This was the beginning of the downfall for the company, and they have been fighting to stay afloat since. It will be interesting to see how Bed Bath and Beyond fights through this time and the financial standing of the company moving forward.

Elizabeth McLaughlin, Editor
Header Image: QuoteInspector

This will be my last article in the business section of my beloved school newspaper. Reflecting on my time spent editing this section for the past year, I have one regret: I wish we had talked about crypto more.

That’s not because I’m a crypto fanatic; I don’t own any Bitcoin or Ethereum or tokens. But I am about to complete my B.S. in finance and launch my art and design business. Given my background in finance coupled with my perspective as an artist, crypto clearly intersects with my interests.

I’ll admit: for the past two years or so, I would have groaned at the mere mention of the blockchain. What do you mean it’s digital money? Isn’t my money digital when I send it through Venmo? And what do you mean crypto is “decentralized…” where exactly is it? And what the f*ck is an NFT?

First, a few disclaimers:

1. Crypto isn’t going anywhere. Whether you like it or not, it is part of the future of finance.
2. There are strong arguments in favor of crypto. There are also strong arguments in opposition to crypto.
3. I have not found a single, comprehensive guide to understanding cryptocurrency, probably for a few reasons:
   1. The field is constantly evolving.
   2. Part of its appeal is that it remains ambiguous; cryptic, if you will. Pun intended.
4. It’s actually not that difficult to understand.

With those disclaimers in mind, let’s get into it. This guide heavily quotes the information provided by Cryptopedia.

1. Cryptocurrency is a blockchain-based digital asset. There are two main blockchain-based digital assets: crypto and tokens. We’ll get to the blockchain later.
2. “A digital asset is anything that is stored digitally and is uniquely identifiable that organizations can use to realize value.”
3. The difference between crypto and tokens is that cryptocurrencies have their OWN blockchains, whereas tokens are built on EXISTING blockchains.
4. Where does the term “crypto” come from?
   1. Cryptography: an advanced encryption technique that assures the authenticity of crypto by eliminating the possibility of counterfeiting or double-spending.
   2. Encryption: computer-speak for converting data from one form into another; more specifically, plaintext into ciphertext.
5. What is the blockchain?
   1. Imagine a bank. Way back when, banks kept written records of all their transactions. Then computers came along, and they could print out data and store it in filing cabinets. All of this transaction data existed in real time and space, not just online. The blockchain is the digital “place” where transaction data is stored.
   2. Essentially, the blockchain is “a distributed ledger that connects a decentralized network on which users can send transactions and build applications without the need for a central authority or server” (Gemini).
      1. I implore you to look further into this and discover just how murky the “decentralization” truly is — basically, it is very difficult for any technology to not be centralized by one person or organization. Back to the basics.
   3. Bitcoin is the native cryptocurrency of its own blockchain. Ethereum is the native cryptocurrency of the Ethereum blockchain.
6. When and where do these networks operate?
   1. Everywhere, all the time. These networks are called peer-to-peer, or P2P, meaning you can communicate from Philadelphia to Seoul almost instantaneously, without first passing through a dedicated server.
7. So we understand the blockchain, and that the two biggest digital asset classes are crypto and tokens. What can you do with crypto?
   1. Trade it, use it as a medium of exchange, use it as a store of value.
8. What is a token? What can you do with it?
   1. It’s easier to tell you what it’s not. It’s not the native, or main or flagship currency that accompanies a blockchain.
      1. For example, Ethereum (the blockchain) has ETH (the crypto), but it also has DAI, LINK, COMP and CryptoKitties.
   2. Like crypto, tokens hold value and can be exchanged. They can also represent physical assets. They are also used by users of certain blockchains to vote on actions/policies taken by the blockchain. In other words, users can use them to guide the course of their network.
9. Is any of this stuff regulated?
   1. What a big question. I can’t answer it all in one guide. I can say, however, that tokens do follow sets of standards, known as ERC-20 and ERC-721. I cannot give you much more information on these standards than that. I never said I was an expert.
   2. Speaking strictly from a United States perspective, crypto is really hard to regulate from a governmental perspective. The age of the average Congressperson is around 61 years old. For context, I am 21 — I’ve had a Facebook account since age 8 — and even I don’t know where to begin with regulation.
10. How do cryptocurrencies/tokens gain or lose value?
    1. There are many ways. One thing that heavily contributes to the rate of Bitcoin, the first and biggest cryptocurrency, for example, is hype. People “in the know” buy low and sell high, as one does in any stock market situation.
    2. Their value can fluctuate greatly and quickly — it is a volatile market.

I hope this guide has clarified what cryptocurrency is. I invite any insight and/or corrections from those who are more well-versed in it than I. For further reading on the topic, I suggest:

• Netflix’s Explained episode on cryptocurrency
• Molly White’s The Edited Latecomer’s Guide to Crypto

Don’t let the finance bros gatekeep this knowledge from you. In fact, nobody should gatekeep financial knowledge of any sort — we all know the sayings, “knowledge is power” and “money is power,” so knowledge of money? Priceless.

I’m not saying crypto or finance in general are simple to understand; there are a lot of variables and context that you need to consider. In my research on crypto, I’m learning that there’s a lot more about coding that I’d like to know; information that would definitely enhance my understanding of digital finance.

But with this and with all new endeavors, remember to give yourself time. Nothing happens overnight, meaning you won’t wake up tomorrow with a full, clear understanding of the blockchain or how to invest. Just like investing, good things take time. 

You owe yourself the time it takes to understand how to function in our modern world. And you can do it. Perhaps I’m talking to myself here, or the handful of people who will read this article; either way, you can do it. In the words of Elle Woods, “What, like it’s hard?” Cryptocurrency in many ways needs to evolve before it is publicly accepted, especially due to its environmental impact, but it is the future of currency exchange and it’s here to stay.

Editor’s Note: There are many controversies surrounding cryptocurrency. For example, it is believed that one Bitcoin transaction, let alone mining, takes up the same amount of energy that a U.S. house uses in 42 days. 102.38 kilograms of CO2 is created from one Ethereum trade. 30,000 tons of electronic waste come from crypto a year. 35 percent of Bitcoin is mined in the U.S. and over 60 percent of the U.S. power grid runs on fossil fuels. NFTs can be used in pyramid schemes due to the public’s lack of understanding and pleasant nature of the images. The ethics of using NFTs to dodge copyright laws undermines the entertainment industry and art industry. Bitcoin is also used to fund criminal activity as it is difficult to track and regulate in many countries.