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Meta Reportedly Issuing $10 Billion In Bonds To Invest In Its Metaverse Products And Other Initiatives

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Meta Reportedly Issuing $10 Billion In Bonds To Invest In Its Metaverse Products And Other Initiatives

Meta, the social media company, is planning to issue its first set of bonds to finance new investments and operations, according to reports. The company will be selling $10 billion in debt, to maintain a healthy cash flow and fund buybacks, per statements of two people with reported knowledge of the deal.

Meta to Issue Bonds to Finance New Investments

Meta, one of the first companies that pivoted to the metaverse as part of its main business model, is set to issue debt in order to continue to fund part of its operations and to maintain a healthy free cash flow. According to reports coming from people close to the deal, the company will be issuing $10 billion in bonds as part of the first debt offering of this kind for the tech giant.

The operation, which was set to happen Thursday, has received a big response, with investors offering $30 billion to take advantage of this move. The bonds will have different maturities, going from five years to 40 years, with the majority of the demand being directed towards the latter.

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Per source statements, the offering has been in the works for the last two months, with Meta deciding to launch it after releasing its latest earnings report in July. The company obtained satisfactory ratings from different agencies, getting an ‘A1’ rating from Moody’s and an ‘AA- rating’ and a ‘stable’ outlook from S&P.

An Expensive Metaverse Move

The issuance of this bond has to do with the shrinkage of the free cash flow that the company has experienced during the last year. Meta had $4.45 billion in free cash flow, compared to the $8.51 billion the company had a year ago. Sources indicated that the bond offering will have the objective of giving the company more breathing room to keep funding part of its operations, including its metaverse initiatives.

Meta’s metaverse push is costing the company a lot of funds in research and development. In its latest earnings call, the company reported that its metaverse unit, Reality Labs, had reached sales of more than $400 million, but registered losses of more than $2.8 billion during Q2 2022. Predictions are not good either, with the company acknowledging that Reality Labs would continue to lose money during Q3.

Meta has also made some moves on the sales side of the equation, raising the price of its flagship VR headset, the Quest 2, by $100 “in order to continue investing in moving the VR industry forward for the long term.”

What do you think about Meta’s $10 billion bond issuance? Tell us in the comments section below

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Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Marcelo Mollaretti / Shutterstock.com

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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“zero-Covid-19” strategy

Erratic Bond Yields, Lockdowns, And War — 3 Reasons Why Economic Recovery Won’t Happen Quickly

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Erratic Bond Yields, Lockdowns, And War — 3 Reasons Why Economic Recovery Won’t Happen Quickly

The global economy looks bleak as inflation continues to rise, and a wide array of financial investments continue to shudder in value. Since May 2, 2022, the crypto economy has dropped more than 15% from $1.83 trillion to today’s $1.54 trillion. The price of gold has lost 5% in 30 days, and major stock market indexes have seen record lows during the past two weeks. While many people hope the world’s financial markets will see a turnaround, there are three major obstacles impeding the path to recovery.

3 Factors That Will Impede the Global Economy’s Healing Process

While many people are surprised by the economy floundering, a great number of individuals predicted the economic downfall following the stimulus measures leveraged to fight Covid-19. Presently, global markets are looking awful, as equities are falling in value, precious metals have slipped over the last month, and crypto markets have been a bloodbath during the past 30 days as well.

On Monday, May 9, 2022, it was a day many investors won’t forget as the Nasdaq index slid by 4%, gold dropped by 2%, crude oil slipped by 7%, and the crypto economy shed 8% over the last 24 hours. Currently, there are three major reasons why the economy may continue to flounder until things start to change. The reasons include the ongoing war in Europe, the current Covid-19 outbreak in China, and U.S. bond market yields.

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The Ukraine-Russia war

The first is simple to understand, war is not good for the economy except for firms like Raytheon, Lockheed, Northrop, and General Dynamics. While a great majority of stocks have plummeted, six-month statistics show the aforementioned company stocks have seen significant gains.

For the rest of the ordinary citizens, war is leading to more inflation. Significant financial sanctions against Russia have made it so many countries will not transact with the country. This has caused the tightest financial sanctions in decades which in turn has caused the price of goods and services and especially petroleum products to skyrocket.

Trends forecaster Gerald Celente recently detailed that as long as the Ukraine-Russia war ensues, the “odds of recession increase.” Many other forecasters and financial analysts believe that as long as the war continues, the “U.S. economy will slow, and Europe risks a recession.”

China’s ‘Zero-Covid-19’ Strategy

Another factor that may impede the global economy’s healing progress is China’s recent Covid-19 lockdown measures. During the past two months, China’s authorities have tested a two-phase lockdown in Shanghai with its strict “zero-Covid-19” strategy. The measures China has been leveraging in recent times have shaken investors, according to various reports.

Five days ago, the New York Times wrote that China’s Covid-19 policies are making it so European investors are wary of investing there. The NYT highlights a survey that says “lockdowns and supply chain issues have soured European businesses in China on the idea of further investment in the country.”

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China’s lockdowns and the “zero-Covid-19” strategy have investors shaking in their boots because of what happened in 2020. When China was dealing with Covid-19 in early 2020, many believe the country’s lockdown tactics spread across the world causing a great number of countries to shut down their economies. Investors today are likely frightened that this could happen again and China’s “zero-Covid-19” strategy will spread to other regions worldwide. In turn, an event like this could once again shut down global markets, impede supply chains, and cause economic chaos.

Erratic Bond Markets

The final problem that is hurting financial investors is current bond market yields are wild and erratic these days. On May 10, reports show that the 10-year U.S. Treasury yield slipped by 3% on Tuesday, “as fears of rising inflation and a potential economic slowdown lingered.” In addition to U.S. bond market carnage, bonds in Europe have been extremely volatile as well.

The reason people fear bond market volatility is because bonds are generational investment vehicles with long-term yields that affect fixed-income investors. Bond markets have been tanking for weeks on end and many believe the economy won’t heal unless bond markets stabilize. The broken bond markets are also being blamed on the Ukraine-Russia war but they were showing signs of weakness well before the conflict.

Moreover, younger generations of bond investors have not felt volatility like this before. The director of global macro at Fidelity Investments, Jurrien Timmer, says the current bond bear market is “historic.” In the same report, JPMorgan Asset Management’s chief investment officer, Steve Lear, said the broken bond market is painful. “It’s been a real and significant and painful move,” Lear said. “For those who haven’t experienced a bond bear market, this is what it feels like.”

These three factors are sores on the global economy and unless they heal, an even deeper recession could be in the cards. Presently, the Ukraine-Russia war continues, China’s lockdown measures are still shaking investors, and bond markets have been erratic for weeks on end and continue to rattle investors to this very day.

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“zero-Covid-19” strategy, 10-year U.S. Treasury yield, Arms Dealers, Bond Markets, Bond yields, bonds, China, China’s Covid-19 policies, crypto economy, economics, Economy, Europe, free markets, Gerald Celente, gold, Investors, Lockdowns, Precious Metals, recovery, Shut-downs, stocks, supply chains, Ukraine-Russia war, US, War

What do you think about the three factors that could impede a global economic recovery? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Bank Of America Strategist Warns ‘Recession Shock’ Is Coming, Analyst Says Crypto Could Outperform Bonds

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Bank Of America Strategist Warns ‘Recession Shock’ Is Coming, Analyst Says Crypto Could Outperform Bonds

On Friday, Bank of America’s (BOFA) chief investment strategist Michael Hartnett explained in a weekly financial note to clients that the U.S. economy could head into a recession. The BOFA strategist’s note further detailed that cryptocurrencies could outperform bonds and stocks.

BOFA Strategist Notes inflation Shock Is Worsening, Cryptocurrencies Could Outperform Bonds and Stocks

Bank of America’s chief investment strategist has warned the U.S. economy could feel some economic shocks. In recent times, inflation in the United States has run rampant and the Fed has felt the need to step in and manage the issue. On March 16, the U.S. Federal Reserve raised the benchmark bank rate for the first time since 2018, and the central bank expects six more increases this year. Meanwhile, on April 8, Reuters reports that BOFA’s Michael Hartnett says that the macro-economic situation is worsening.

With the macro-economic environment in calamity, the Fed hiking rates, and the central bank tapering large-asset purchases, the BOFA strategist said the U.S. economy could be headed for a recession. Hartnett insists that “‘Inflation shock’ worsening, ‘rates shock’ just beginning, ‘recession shock’ coming.” The BOFA analyst’s statements follow U.S. bond markets signaling that an economic downturn is predicted. This took place last week when the spread between 2-year and 10-year Treasury yields inverted, signaling the U.S. economy may be headed for a recession.

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Hartnett’s note to investors on Friday further said that commodities, cash, and cryptocurrencies “could outperform bonds and stocks,” according to the Reuters author Julien Ponthus. The BOFA note said that during the last ten weeks, emerging market equity funds saw better market performances as did debt vehicles. During the last six months, Bank of America has had a lot to say about cryptocurrencies. For instance, a BOFA analyst said in January that the smart contract platform token Solana’s market cap could take market share away from the current leader Ethereum.

Mortgage Rates Rise, BOFA Downgrades 9 Transport Stocks, BOFA Institute Says Households Have More Cash on Hand

In December, BOFA explained it sees massive opportunity in the metaverse, and the month prior, the financial institution’s chief operating officer detailed that he does not see crypto as competition. According to BOFA’s recent outlook, the bank expects the Federal Reserve to raise the benchmark rate by 50 basis points during the next meeting. Furthermore, mortgage rates hit 5% in April making homeownership a touch more expensive. BOFA has also downgraded nine transport stocks this week, after citing “deteriorating demand.”

While BOFA’s chief investment strategist explained on Friday that assets like cash, commodities, and cryptocurrencies could do well, Bank of America Institute’s chief economist David Tinsley said on Thursday that people have been preparing for inflation with a cash surplus. “On average, the lower-income household has about $1,500 more in the savings and checking account than it did pre-pandemic,” Tinsley during a Yahoo Finance Live interview.

Tags in this story

50 basis points, Bank of America, Bitcoin, Bofa, bonds, chief investment strategist, Cryptocurrencies, David Tinsley, economics, Economy, Ethereum, Fed hiking rates, homeownership, inflation Shock, Michael Hartnett, Recession Shock, stocks, Treasury Yields

What do you think about BOFA’s note to investors written by the bank’s chief investment strategist Michael Hartnett? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bank of America: coming “recession shock” possible boon for crypto

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Bank of America: coming “recession shock” possible boon for crypto

U.S.› Bitcoin · Ethereum › Analysis

In a weekly research note, Bank of America warns of a coming “recession shock” as the Federal Reserve tightens its monetary policy to tame surging inflation. The shock may benefit cash, commodities and cryptocurrencies.

2 min read

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Updated: April 8, 2022 at 4:34 pm

Cover art/illustration via CryptoSlate

The macroeconomic picture is deteriorating fast and could push the U.S. economy into recession as the Federal Reserve tightens its monetary policy to tame surging inflation, Bank of America strategists warned in a weekly research note, Reuters reports.

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Bank of America chief investment strategist Michael Hartnett wrote, in a note to clients, that “Inflation shock” is worsening, “rates shock” is just beginning, and a “recession shock” is coming.”

The chief investment strategist also added that “in this context, cash, volatility, commodities and crypto currencies, such as bitcoin (BTC) and ether (ETH) could outperform bonds and stocks.”

Announced on Wednesday, April 6, the Federal Reserve said it will likely start plucking various assets off of its $9 trillion balance sheet. This process will begin with the Fed’s coming meeting in early May.

Quantitative tightening at double speed

Furthermore, unlike the Fed’s previous “quantitative tightening” exercises, this one will be executed at nearly twice the pace as the Fed engages in fighting inflation, running at rates not seen since the early 1980s.

According to Bank of America, many investors expect the central bank to hike its key interest rate by 50 basis points —twice as much as anticipated and signaled earlier.

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In terms of notable weekly flows, Bank of America said emerging market equity funds enjoyed the most significant inflow in ten weeks at $5.3 billion during the week of April 4, while emerging market debt vehicles attracted $2.2 billion, their best week since September 2021.

Markets have also seen eight weeks of outflows from European equities totaling $1.6 billion, while U.S. stocks enjoyed their second week of inflows, adding $1.5 billion in the week of April 4.

As reported by CryptoSlate on April 7, Bank of America is not the only Wall Street lender warning of macroeconomic shocks on the horizon.

Goldman Sachs’ chief economist Bill Dudley, formerly president of the Federal Reserve Bank in New York, believes that “to be effective, [the Federal Reserve] will have to inflict more losses on stock and bond investors than it has so far.”

The Fed wants stock prices to go down

According to Dudley, short-term interest rate hikes do little to affect most people in modern society since many mortgages are tied to fixed rates over a long period, especially in the U.S.

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Dudley believes market sentiment is focused on the fact that the Fed will need to drop interest rates in the next few years. Essentially, the markets are not going down as much as the Fed would like because investors predict a future bull run once inflation is under control. 

According to Dudley:

“[The Federal Reserve] will have to shock markets to achieve the desired response. This would mean hiking the federal funds rate considerably higher than currently anticipated. One way or another, to get inflation under control, the Fed will need to push bond yields higher and stock prices lower.”

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