Business

(NEW YORK) — The cryptocurrency industry, in recent months, has suffered some blows: high-profile bankruptcies, the arrest of wunderkind Sam Bankman-Fried and a regulator lawsuit against top crypto exchange Binance.

Despite it all, the price of the largest cryptocurrency, bitcoin, has surged.

Bitcoin has climbed 65% this year, far surpassing the S&P 500, which has jumped 7%. Even the Nasdaq, a tech-heavy index, has delivered just a quarter of bitcoin’s gains.

In fact, bitcoin has benefited from crises in the cryptocurrency arena, analysts said, since the unrest has pushed investors away from lesser-known coins and toward the sector’s household name.

Plus, the price has gained a boost from wider economic forces like trouble in the financial system and slowing interest rate hikes, they said.

But the coming months pose uncertainty, experts added, as a looming recession could test the performance of an asset less than 15 years old.

The blockbuster performance of bitcoin in 2023 comes after the digital currency’s price plummeted last year. In all, the price of bitcoin fell 65% last year, exceeding the losses suffered by the S&P 500, which dropped about 20%.

The price struggles for bitcoin, which extended throughout much of the cryptocurrency sector, coincided with an aggressive series of interest rate hikes that put downward pressure on many assets, including the major stock indexes.

“There had been a big bubble,” James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. “The bubble was pricked by the Fed.”

The distress in cryptocurrency helped trigger a slew of failures. Last May, a major coin, Terra, collapsed along with its sister coin Luna. Meanwhile, several crypto lenders such as Block Fi, Celsius and Genesis filed for bankruptcy last year.

In dramatic fashion, crypto exchange FTX filed for bankruptcy in November after a collapse in a matter of days that was followed by the arrest of Bankman-Fried, the company’s founder and former CEO. Bankman-Fried has pleaded not guilty to all 13 counts he faces, including fraud and conspiracy.

The unrest last year sent crypto investors toward well-known digital currencies, Callie Cox, an analyst at the investment company eToro who tracks cryptocurrencies, told ABC News.

“Bitcoin has been the beneficiary of a flight to quality within the crypto industry,” Cox said. “This is the crypto name that my mom and your family probably know.”

Butterfill, of CoinShares, echoed the point: “People are becoming a lot more discerning. There are 50,000 crypto coins out there and a lot of them are rubbish.”

Ethereum, the world’s second-largest cryptocurrency, has surged 52% this year, benefiting as well from the rush toward prominent coins, Butterfill said.

The rise in the price of bitcoin has coincided with favorable developments across the wider economy, since the Federal Reserve has slowed its interest rate hikes and unrest in the traditional banking sector has pushed some investors to seek a digital alternative, experts said.

Since March, three of the nation’s 30-largest banks have collapsed. Shares of regional lender PacWest Bancorp plummeted on Thursday after the bank said it lost 9% of deposits last week, suggesting that financial instability persists.

“When the banking system faced threats, a lot of investors saw reason to doubt the financial system,” said Cox, of eToro. “They went looking for alternatives.”

There is little data available that depositors pulled money out of banks and placed it in bitcoin, Butterfill noted, adding that he had heard anecdotes of bank customers transferring funds to crypto.

If the Fed halts its rate hikes, as many investors expect, bitcoin could continue its rise over the latter part of the year, experts said. However, they cautioned that a potential recession could bring volatility.

“There might be nervousness about bitcoin as we move closer to a recession,” Cox said, pointing out that interest rates would remain elevated even after a pause. “There are a lot of crosswinds for crypto right now.”

Butterfill acknowledged uncertainty about the outlook of day-to-day performance for bitcoin, but remained optimistic about the remainder of 2023, even if it involves a recession.

“Economic data continues to deteriorate,” Butterfill said. “In that environment, bitcoin would be volatile and perform quite well.”

Copyright © 2023, ABC Audio. All rights reserved.

(SAN FRANCISCO) — Elon Musk has chosen a new CEO of Twitter and plans to step down from the role within about six weeks, the billionaire entrepreneur said on Thursday.

Musk, who runs Tesla and Space X, did not disclose the identity of the incoming chief executive. He said he plans to transition to a role as executive chairman and chief technology officer, in which he’ll focus on “overseeing product.”

The announcement comes months after Musk pledged in December to step down as the head of Twitter as soon as he found someone “foolish enough to take the job.”

Musk’s tentative resignation late last year followed a Twitter poll posted by Musk in which 57.5% of respondents called on him to stop leading the company.

After acquiring Twitter in October, Musk made major changes to the company and its platform. In an effort to significantly slash costs, the company has cut roughly 75% of its 7,500-person workforce, raising concerns about Twitter’s capacity to maintain its platform.

Twitter suffered a user outage in February that lasted for hours and required an emergency fix, prompting an apology from the company.

Musk has also sought to rejuvenate the platform’s subscription offering as a means of supplementing its advertising revenue. Under Twitter’s new subscription, users gain access to account verification — the site’s signature blue checkmark — for an $8 monthly fee, which amounts to $96 per year.

Previously, Twitter verified celebrities, politicians, journalists and prominent figures on a case-by-case basis in an effort to authenticate their identities and prevent impersonation.

Twitter partially reversed the subscription change last month by reverifying some legacy accounts, including accounts affiliated with basketball star Lebron James and author Stephen King.

Musk has defended his actions at Twitter as part of an aggressive effort to rescue the company from financial peril, which he described in a Twitter Spaces interview in December as an “emergency fire drill.”

This is a developing story. Please check back for updates.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Shares of PacWest Bancorp plummeted more than 20% in early trading on Thursday after the regional lender said it faced a sizable withdrawal of deposits last week, renewing concern over financial trouble in the aftermath of a string of major bank collapses.

The sharp decline of PacWest stock prompted a pause in trading of the company’s shares minutes after the market opened on Thursday morning, but trading later resumed.

PacWest said in a securities filing on Thursday that the bank lost 9.5% of deposits last week, marking a turnabout after the company said at the outset of this month that deposits remained stable.

While noting the deposit flight, PacWest said that as of Wednesday it retained $15 billion in immediately-available cash if needed to fulfill further withdrawals. The liquidity far exceeds total uninsured deposits, which amount to $5.2 billion, the bank said.

PacWest did not immediately respond to ABC News’ request for comment on the stock decline.

The Los Angeles-based midsized lender said last week that it is exploring “all options” as it weighs offers from potential investors as well as the sale of a $2.7 billion loan portfolio.

In the statement last week, the company rejected concern about a sudden run on deposits, saying it had “not experienced out-of-the-ordinary deposit flows” after the seizure and sale of First Republic two days prior.

The significant withdrawal of deposits mostly took place in the days following the announcement last week, PacWest said on Thursday.

In all, PacWest stock has fallen more than 80% this year, erasing hundreds of millions of dollars in value.

The financial distress at PacWest follows the collapse within weeks of three of the nation’s 30-largest banks.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some regional banks.

The failure of Silicon Valley Bank in March sent shockwaves through the financial system that days later helped bring down New York City-based Signature Bank. Last Monday, First Republic fell under government control before a sale to JPMorgan Chase.

While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Addressing concern about deposits that lack government protection, PacWest said last week that insured deposits make up 75% of its holdings, which marks a sharp increase from the end of last year, when just 48% of its deposits were insured.

Stock prices at some other regional banks held steady or increased in early trading on Thursday, suggesting that the financial fallout remained limited to PacWest. Phoenix-based Western Alliance Bancorp shares rose about 5%; while Salt Lake City-based Zions Bancorp inched down less than 1%.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Peloton is recalling over two million bikes, warning that the bike seat post assembly could break and cause users to fall.

The Peloton Bikes Model PL01 is the one being recalled. Users are told to immediately stop using the bike and call Peloton for a free repair.

There have been 35 reports of people falling off their bikes with 13 injuries, according to the Consumer Product Safety Commission.

Story developing…

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Uber will soon allow customers to book plane tickets directly through its app.

The new feature powered by online travel agent Hopper will roll out for users in the United Kingdom this summer. Customers can enter their destination and travel dates, select their desired flights and then pay directly on the Uber app. The company said users will also be able to choose their seat assignments in the app on flights with major carriers.

U.K. users can already book cars, buses, trains and boat transportation through the app.

Uber would not say if the program will be launched in the U.S.

“For now, we’re focused on piloting this ticketing feature in the U.K. and we’ll be closely monitoring customer engagement before we commit to a timeline to expand the feature to other markets,” a spokesperson from Uber told ABC News.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Consumer prices rose 4.9% last month compared to a year ago, extending a monthslong slowdown and bolstering hopes that inflation will continue its return back to normal levels.

The fresh data aligns with the Federal Reserve’s effort to slow the economy and slash prices while averting a recession.

The Fed last week escalated an aggressive series of interest rate increases with a quarter-point hike as it aims to slash inflation by slowing the economy.

The move came days after the seizure and forced sale of First Republic Bank, the latest spasm of banking unrest that has arisen in part from the Fed’s rate hikes.

Consumer prices rose 5% in March compared to a year ago, recording inflation well below a summer peak, but leaving it more than double the target rate of 2%.

Economists expect year-over-year inflation to have stood flat at 5% in April, halting the progress in inflation reduction and placing pressure on the Fed to further hike its benchmark interest rate even as it risks deepening the financial unrest and plunging the economy into a recession.

Data released earlier this month showed that economic growth slowed at the outset of this year, suggesting the rate hikes have helped put the brakes on business activity.

U.S. gross domestic product grew by a 1.1% annualized rate over the three months ending in March, according to government data.

A better-than-expected jobs report on Friday, however, defied fears that rate hikes have substantially weakened the economy.

Instead, the U.S. added 253,000 jobs in April, marking a slight decline from an average of 290,000 over the previous six months. The unemployment rate fell to 3.4%, matching a 54-year low, government data showed.

Meanwhile, U.S. retail sales have fallen moderately but remained solid over the course of this year, suggesting that households still retain some pandemic-era savings.

While resilient economic measures offer policymakers some leeway as they weigh further rate hikes and invite a deeper slowdown, an extension of the Fed’s series of rate increases could worsen banking distress.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some banks.

Three of the nation’s 30-largest banks have failed since March. While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Last week, in response to a question about additional rate hikes, Fed Chair Jerome Powell noted the removal of a sentence that appeared in the Fed’s previous rate hike announcement in March that said “some additional policy increases might be appropriate.”

Powell described the omission in the announcement on Wednesday as “meaningful,” saying a decision about any additional rate hikes would be “data dependent.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Fresh inflation data on Wednesday will show whether price hikes slowed for the tenth consecutive month in April, easing financial pain for U.S. households and bolstering hopes that price increases are on their way back to normal levels.

The data arrives one week after the Federal Reserve escalated an aggressive series of interest rate increases with a quarter-point hike as it aims to slash inflation by slowing the economy.

The move came days after the seizure and forced sale of First Republic Bank, the latest spasm of banking unrest that has arisen in part from the Fed’s rate hikes.

Consumer prices rose 5% in March compared to a year ago, recording inflation well below a summer peak, but leaving it more than double the target rate of 2%.

Economists expect year-over-year inflation to have stood flat at 5% in April, halting the progress in inflation reduction and placing pressure on the Fed to further hike its benchmark interest rate even as it risks deepening the financial unrest and plunging the economy into a recession.

Data released earlier this month showed that economic growth slowed at the outset of this year, suggesting the rate hikes have helped put the brakes on business activity.

U.S. gross domestic product grew by a 1.1% annualized rate over the three months ending in March, according to government data.

A better-than-expected jobs report on Friday, however, defied fears that rate hikes have substantially weakened the economy.

Instead, the U.S. added 253,000 jobs in April, marking a slight decline from an average of 290,000 over the previous six months. The unemployment rate fell to 3.4%, matching a 54-year low, government data showed.

Meanwhile, U.S. retail sales have fallen moderately but remained solid over the course of this year, suggesting that households still retain some pandemic-era savings.

While resilient economic measures offer policymakers some leeway as they weigh further rate hikes and invite a deeper slowdown, an extension of the Fed’s series of rate increases could worsen banking distress.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some banks.

Three of the nation’s 30-largest banks have failed since March. While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Last week, in response to a question about additional rate hikes, Fed Chair Jerome Powell noted the removal of a sentence that appeared in the Fed’s previous rate hike announcement in March that said “some additional policy increases might be appropriate.”

Powell described the omission in the announcement on Wednesday as “meaningful,” saying a decision about any additional rate hikes would be “data dependent.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Customers at the bakery Nothing Bundt Cake, in Memphis, Tennessee, choose items from snickerdoodle, red velvet and blueberry bliss, among other flavors. But patrons cannot avoid the surging prices.

Amy Lupo, who runs three Memphis-area company franchises, said a jump in the cost of ingredients over the past year has caused her to hike the price of an individual-sized cake from $4.50 to $5.25, a staggering 16% increase.

“It’s a tough choice to raise prices,” Lupo told ABC News. “Our customers, for the most part, have been understanding because people go to the grocery store and see it everywhere.”

Lupo is hardly the only baker lifting prices. The cost of baked goods has jumped 14% over the last year — a rate nearly double the pace of food inflation and triple the rate of overall price hikes, government data shows.

The soaring prices stem from supply shortages imposed by the Russia-Ukraine war and lower-than-expected crop yields, experts said, noting that resilient consumer demand in the face of high prices has exacerbated the problem.

“If all the stars could align in a bad way — it happened,” Naomi Blohm, a senior market advisor for Total Farm Marketing, told ABC News.

Consumer prices overall rose 5% in March compared to a year ago, extending a months-long slowdown of price increases, government data showed.

Bakery items and ingredients, however, have defied the slowdown. The price of margarine has jumped 33% over the past year, while the cost of flour has leapt 17%. Cookie prices are up 16% and bread costs have spiked 13%, the data said.

An avian flu outbreak, meanwhile, has sent egg prices up 36% over the past year.

In recent years, a weak yield of crops like wheat, soybeans and corn snarled the global supply, leaving the food system vulnerable last February when Russia invaded Ukraine, the world’s fifth-largest exporter of wheat, Blohm said.

“We have not had an abundant crop here in the U.S. and around the world,” Blohm said. “Then the Ukraine-Russia war just ignited the wheat price.”

The price of wheat rose to as much as $11 per bushel last June, far higher than the typical cost of between $5 and $6 per bushel, elevating prices throughout the baked goods supply chain, Blohm added.

“When you’re feeding a dairy cow high-priced grain, milk prices go higher and butter prices go higher,” Blohm said.

Rather than scoff at high prices for baked goods and ingredients, U.S. consumers have borne them, drawing on savings accumulated during the pandemic when hundreds of millions received stimulus checks but were stuck at home with little to buy, David Ortega, a food economist at Michigan State University, told ABC News.

The resilient consumer demand, as well as uncertainty about the duration of the Russia-Ukraine war and the avian flu outbreak, have left food price hikes “very sticky,” Ortega told ABC News.

“Food prices tend to rise up very quickly but take much longer to come down,” he said.

Price increases for baked goods and ingredients will likely remain high this year, since the time it takes for production and distribution means that consumers are currently encountering the results of previous disruption, Blohm said.

However, the prices could cool at the outset of next year if Ukraine and Russia agree to allow grain from the region to reach the global market, she said, emphasizing the added importance of strong global crop yields this summer.

“We need cooperation from Mother Nature,” Blohm said.

The easing of costs would be welcome news for Lupo, of Nothing Bundt Cake, who said she wants to pass along the potential savings to customers.

“I would love to be able to roll back prices,” she said. “That would certainly be my hope.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Although it’s been over 20 years since Marisa Bardach Ramel’s mom Sally died in 2002, the Colorado-based author said she’s caught by surprise every year when Mother’s Day rolls around.

“Each year, I think I’m far enough away from it where it’s not going to bother me, and each year, it bothers me,” Bardach Ramel said of the holiday’s impact on her grief journey.

Early on, Bardach Ramel said she couldn’t walk into a drugstore this time of year without being bombarded with Mother’s Day reminders and messages. The ubiquitous marketing has since shifted online, but in 2019, she also noticed something new: A U.K. based florist started to let customers opt out of Mother’s Day emails — and other companies began to follow suit.

“I’m part of a lot of motherless daughters groups through Facebook, and there was a lot of hubbub in those groups of all of us motherless daughters being like, ‘Oh my gosh, people see us, people know that we exist. People know that this isn’t a happy holiday for some of us,'” Bardach Ramel told ABC News’ Good Morning America.

For Bardach Ramel, the Mother’s Day marketing emails don’t bother her as much as social media posts and tributes, but as she pointed out, grief doesn’t look the same for everyone, and it can change over time.

“It depends on where you are in your personal journey with your grief. But I think overall, it’s nice to have options,” the mom of two said.

Ron Hill, the Dean’s Professor of Marketing and Public Policy at American University in Washington, D.C., said the onslaught of marketing emails can trigger potential emotional reactions for some people.

“Holidays like this can be overwhelming for people … What happens if we’re not a mother? What happens if a mother [is no longer living]? There are lots of reasons why we might want to give people an opportunity not to have to listen to these messages, because they don’t fit,” Hill said.

“Since we get so many of these messages, the ability to not get some of them that aren’t targeted properly to us really can make a difference, because it reduces the clutter,” Hill added.

Some of the companies offering the option to opt out include beverage retailer Boisson, the graphic design platform Canva and the delivery service company DoorDash, which told GMA it’s had more than 80,000 consumers opt out of Mother’s Day marketing this year since emails started getting sent out at the end of April.

Fenot Tekle is the global head of communications at Canva and told GMA the Australian company started sending out opt-out emails to subscribers last year, and repeated the strategy again this year.

“Our core values are about being a force for good, and we, in this instance, prioritize being a good human and showing sensitivity to our community,” Tekle said. “Mother’s Day seemed like one that really does have a lot of emotions around it, and so we started with that holiday, but have expanded into other areas as well.”

The trend has caught on and doesn’t appear to be going away anytime soon.

Bardach Ramel said she noticed “with COVID in 2020, that’s when a lot of companies really joined in on that effort to be sensitive.”

“Because there was just so much loss, I think every company, when they went to send any kind of communication, whether it was through email or social media, just took that extra step of sensitivity because loss was affecting so many people. Loss became so much more universal,” she said.

Hill agreed, telling GMA, “My guess [is] it will continue. I think this is a recent attempt to try to connect with consumers in a way that shows a positive emotional response to the person.”

Tekle said Canva is planning to roll out similar marketing efforts seasonally and with other holidays too, such as Father’s Day and Christmas, as part of a larger push to be more inclusive.

“There’s a recognition that we’re really acting in an empathy-first way in our marketing efforts, and at the end of the day, I think that resonates with people and gives them a good sense of who we are as a company and what we stand for,” Tekle said.

“I think more and more companies are thinking about how to be more inclusive in the way they market to their audiences,” Tekle added. “It’s no longer sort of a ‘nice-to-have’ to be inclusive in the work that you’re doing. It’s table stakes. And this belief is an extension of that effort.”

For customers, Hill explained that opting out can be an empowering move and restore a semblance of control for people.

“We tend to feel that we’re inundated by marketers and these kinds of promotions and communications,” Hill said. “By marketers giving us some agency, they actually allow us to feel more empowered and then we can remove some of those things that we really aren’t very interested in.”

Bardach Ramel also pointed out that as much as it can be healthy to opt out, there’s also a case to be made about facing one’s grief triggers when time has passed.

“The truth is, we can never opt out of Mother’s Day fully,” she said.

She added, “I don’t think we should avoid all the triggers. Because we have a lot of emotions, and grief especially has a lot of emotions. And we need to feel them at some point. It’s important to feel them. Otherwise we just keep shoving them down.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Millions of Americans are planning summer trips in what could be the busiest summer travel season in years. Where you go and how you get there will determine if this summer’s trip will be the most expensive yet.

This summer will mark the first without most pandemic-era travel restrictions. Demand for travel to Europe and Asia is surging and prices are the highest in five years, according to travel app Hopper. Flights to Europe are running about 36% more than this time last year. Delta Airlines added 20% more seats on its international routes and 75% of all its seats were sold by early April, according to CEO Ed Bastian.

In March, travelers spent $9.6 billion on upcoming spring and summer flights, breaking the previous $9.3 billion record in March 2019, according to Airlines Reporting Corp.

There is relief for domestic flights. The average airfare is down about 20% to $306 roundtrip, but still up 6% from 2019, according to Hopper. Airline industry analyst Henry Harteveldt says travelers should set price alerts for itineraries even after they book their flight in case the price of the flight drops.

“If you haven’t booked a summer trip yet, don’t waste time to do so. Do your shopping, book your flights now, check the fare carefully, because in many cases, that fare may be refundable in the form of a travel credit on the airline where you booked your flight,” Harteveldt explained. “Let’s say you find a fare that costs $500 per person, but a few weeks from now, that fare has dropped to $350 per person. You can cancel the initial reservation, get a travel credit for each ticket for the full amount you paid, rebook at the lower fare, and you’ll have that travel credit to use on that airline for a future trip.”

But some airlines still have change fees on certain fares, even business class fares, and some fares, such as basic economy fares are completely nonrefundable. They are use it or lose it. So do your flight shopping and booking very carefully, “but don’t wait,” Harteveldt explained.

Expedia says its summer flight searches are up 12% since last year. The most searched destinations include Cancun, Riviera Maya, Punta Cana and Cabo. Hopper says its top domestic destinations are New York, Orlando and Las Vegas. London, Paris and Tokyo top its international list.

If you’re not planning on flying, there is good news for rental car prices. Hopper says the prices are down and are averaging about $46 per day, a 17% drop since last year. However, hotel prices are up 11% from last year and are averaging $237 per night, according to Hopper.

Vacation rental company VRBO says 60% of its vacation homes in July are already booked. The company also says if you plan to rent for the Fourth of July, it’s best to book no later than May 10. If you’re hoping for a Labor Day vacation, you should book no later than July 14.

Copyright © 2023, ABC Audio. All rights reserved.