…and Wall Street's one-day settlement
| The student becomes the pro (Adam Bettcher/Getty Images) | |
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Yesterday's Market Moves | | Dow Jones
38,853 (-0.55%) | S&P 500
5,306 (+0.03%) | Nasdaq
17,020 (+0.59%) | Bitcoin
$68,306 (-1.53%) |
| Dow Jones
38,853 (-0.55%) | S&P 500
5,306 (+0.03%) | Nasdaq
17,020 (+0.59%) | Bitcoin
$68,306 (-1.53%) |
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Hey Snackers, Over the past eight years, Sia has gifted $1M to her favorite "Survivor" contestants. Now it appears the singer will stop doling out the unofficial cash prize. Sia later? A 7% rally in Nvidia stock yesterday helped the Nasdaq index close above 17K for the first time. Also upbeat: US consumer confidence surprisingly rose for the first time in four months. | |
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The NCAA agrees to pay athletes directly as the college-compensation battle rages on | Paid like a champion… Some student-athletes might soon be switching from ramen to ribeye. Colleges earn billions off their players, but they don't hand out paychecks. That could change: the NCAA and its five biggest athletic conferences agreed last week to an antitrust settlement that, if approved, would allow colleges to pay athletes directly. 14K+ current and former college athletes could receive a share of the $2.8B settlement (the lawsuit at the center of the case could've resulted in $20B in damages for the NCAA). Athletes could get up to $1.5B/year under the new model. Refresher: in 2021 the Supreme Court ruled that the NCAA couldn't ban payments to college athletes. The playbook: Universities would be allowed (but not forced) to share up to 22% of their yearly sports revenue with athletes as early as fall 2025. FYI: pro league revenue splits are about 50-50. Student section: College sports stars have already earned millions from NIL (name, image, likeness) deals, including brand sponsorships. Like NIL, the new revenue-sharing model could become crucial for recruiting.
The pay game's not over… Division I sports generated nearly $16B in revenue in 2019, and 18% of that went back to athletes through scholarships and medical treatments. But there's been a push to compensate student-athletes more like employees. Dartmouth's men's-basketball team voted to unionize in March, and USC football and basketball players are embroiled in a legal battle over their employment status. Last year, the NCAA called for the creation of a new sports tier where cash-rich schools would have to pay at least half of their athletes a minimum of $30K/year. |  | THE TAKEAWAY |
| Momentum can decide games… and it appears that student-athletes have it. As compensation opportunities expand and NCAA conference revenues climb, college athletics are looking increasingly professional. A looming case against the NCAA over whether players are employees could change the game even more. | |
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Wall Street trades are settling at the fastest pace in a century, as the SEC tries to cut risks | Sounds like a math problem… actually one of the biggest changes to Wall Street trading in a century. As of yesterday, trades of US stocks, bonds, ETFs, and some mutual funds now settle within one day (aka: "T+1") instead of two. FYI: when investors make a trade, it may seem on their end as if the transaction is completed, but more work is done behind the scenes to settle the trade. Since 2017, US exchanges had followed a T+2 policy, meaning it took two business days for clearinghouses to verify funds and transfer stocks. Now, that background work's been expedited, as the SEC looks to reduce the likelihood of issues arising between when a trade's made and when it's settled. Smooth move: SEC Chair Gary Gensler said the switch would let investors access cash quickly and make market plumbing more "resilient, timely, and orderly." The push for T+1 heated up during the volatile 2021 meme-stock rally. High-speed: The US joins India and China, which already settle trades in a day or less. On Monday, Canada, Mexico, and Argentina adopted T+1.
America's settlement saga… The last time Wall Street trades were settling in a day was in the 1920s, when markets were much smaller. But as trading grew more popular and complex, settlement times were pushed to several days to handle the volume. Now that T+1 is back, brokerages need to post enough collateral to cover just one day of risk, instead of two, before trades are settled. Theoretically, that halves the time during which things could go wrong (like: a trader defaulting before the transaction is settled). | | THE TAKEAWAY |
| Reducing risks can introduce new ones… While most traders likely won't notice the T+1 change, the transition isn't without risk. Faster trading could mean investors have less time to fix errors or freeze proceeds from fraud. Meanwhile, foreign investors (who hold nearly $27T in US stocks and bonds) will have half the time to buy the dollars needed to settle trades. Still, experts say faster settlement could boost market liquidity and lower the risk of brokerages being forced to restrict trades because of high volume or volatile prices. | |
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| How the Aperol Spritz became the drink of summer | | |
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What else we're Snackin' | Consoil-idation: Hess shareholders voted in favor of selling the gas company to rival Chevron for $53B (Exxon has beef with the deal). Oil titans have been on a buying spree in a big bet on fossil-fuel demand. Garfiosa: The box office had its worst Memorial Day weekend in nearly 30 years (excluding 2020), with "Furiosa" and "Garfield" making only ~$32M each. Summer's off to a cold start with ticket sales down 22% from last year. Xtra: Elon Musk's xAI said it had raised $6B to fund its upcoming products as it enters the AI race. Musk, who cofounded OpenAI, has accused the ChatGPT maker of straying from its nonprofit mission. Shift: Porsche introduced a hybrid version of its iconic 911. Hybrid-sales growth is outpacing EVs as consumers opt for cars that don't come with range anxiety. Networking: T-Mobile agreed to buy most of wireless carrier US Cellular for $4.4B in a deal that could improve customers' coverage. It also recently picked up Mint Mobile as it competes with Verizon and AT&T.
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Snack Fact Of the Day | 40% of S&P 500 companies mentioned AI on their Q1 earnings calls | | |
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Wednesday | Fed's "Beige Book" economic report Manhattanhenge day two Scripps National Spelling Bee Finals begin Earnings expected from Abercrombie & Fitch, Chewy, Advance Auto Parts, Bank of Montreal, Salesforce, C3.ai, Okta, HP, and Dick's Sporting Goods
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Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... See more | |
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