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One Big Beautiful Bill, Wine Tariffs, Wearable Technology, Monetary Policy & AI

One Big Beautiful Bill, Wine Tariffs, Wearable Technology, Monetary Policy & AI

Bloomberg3 days ago
This week, Former Treasury Secretary Lawrence H. Summers says President Trump's One Big Beautiful Bill cuts many Americans' safety net. And we take a look at how the US wine industry will be threatened by tariffs that are intended to protect domestic businesses. Plus, is wearable technology the new fountain of youth? Later, a look at how AI could shape the future of monetary policy. (Source: Bloomberg)
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Day-Trading Restraints to Be Loosened Under Proposed Rule Change
Day-Trading Restraints to Be Loosened Under Proposed Rule Change

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Day-Trading Restraints to Be Loosened Under Proposed Rule Change

(Bloomberg) -- US regulators are finalizing plans to replace a controversial rule that would dramatically lower a threshold for retail investors to trade equities and options more often. Why the Federal Reserve's Building Renovation Costs $2.5 Billion Milan Corruption Probe Casts Shadow Over Property Boom How San Jose's Mayor Is Working to Build an AI Capital The Financial Industry Regulatory Authority is looking to rework the 'pattern day trading' rule that limits investors with less than $25,000 in their margin account from borrowing to trade four or more times in a five-day period. In a proposal being prepared for Finra's board to eventually vote on, retail investors would need to have only $2,000 in their accounts for such trades. Currently, when an investor with less than $25,000 exceeds the $2,000 margin in borrowing from a brokerage to make equity and options trades, Finra classifies the investor as a pattern day trader, meaning they're prohibited from making excess trades on margin. If the draft proposal goes forward, the three-trade maximum would be eliminated and individual brokerages would make their own margin calculation and decisions as to the minimum balance that customers need to day trade. The existing rule, adopted in 2001, was put in place to protect investors from massive losses and borrowing more than they can cover in holdings or cash. Industry executives say that markets have evolved since, spurring Finra to review the current requirements. 'Today, trading is often commission-free, although not in all securities, and there's less concern about excessive commission cost,' said Haoxiang Zhu, a finance professor at the Massachusetts Institute of Technology's Sloan School of Management and former Securities and Exchange Commission official. 'For this reason, I think a moderate reduction in the minimum margin for pattern day trading is fine, in particular if the reduction applies to securities for which trading is now commission-free.' As Finra considers revising the rule, a group of retail brokerages met to discuss a draft of the proposal that is likely to be submitted to Finra's board in the fall, according to people with knowledge of the matter. If the board approves the proposal, Finra — a self-regulatory organization for broker-dealers — is expected to submit it to the SEC for final approval by the end of the year, the people said, asking not to be identified discussing information that isn't public. SEC Approval More than 50 brokerages and clients have written to Finra, which requested comments on a potential rule change in late October. If the current iteration of the proposal is sent to Finra, it will then go through to an additional comment period before progressing to the SEC. An actual rule change may take as long as a year to implement, according to people familiar with the matter. A Finra representative said the regulator has 'no update to share at this time' beyond the October request for comments. The PDT rule has long garnered complaints from retail investors and their brokerages for being overly restrictive on those with smaller accounts. The market for equity-options contracts has expanded by 23% since last June. Addressing demand growth, brokerages point to improvements in their own risk-management since the rule was put in place more than two decades ago. Any change is likely to open up the market for more retail participation, given the lowering of the day-trading threshold to $2,000. That could garner criticism from those who warn against impulsive day-trading habits, with fewer guardrails against excessive risk-taking. A study from the Stanford Graduate School of Business in 2024 found 'increasing market access will likely impair retail investors' performance.' Outside the US, regulators have flagged their own concerns. The Securities and Exchange Board of India study released this month found that 91% of retail investors report losses from trading equity derivatives. 'Day trading on a margin account is risky, and that's why Finra put this rule in place,' Zhu said. Options Embraced Individual investors have embraced options trading, a type of derivative that gives holders the ability to buy or sell an asset — such as an individual stock or an exchange-traded fund —— at a specific price on or before a certain date. This practice enables traders to bet on the direction of stocks for a fraction of the cost of buying and selling the actual securities. Options trading has soared as tariff-related uncertainty has yet to abate. Seeking quick returns, retail traders have been 'buying the dip,' taking risky bets on price moves comparable to those made during the meme-stock craze that started in 2020. At the time, traders sitting at home funneled their money into equities such as GameStop Corp. and AMC Entertainment Holdings Inc. with little concern for company performance, and many investors lost substantial amounts of money. Online brokerages such as Robinhood Markets Inc. were criticized during the meme-stock boom for 'gamifying' investing, but have since sought to rebrand and target risk-averse customers alongside other clients. Some brokerages and retail traders now see the PDT rule as an antiquated relic of the dot-com bubble, when greater protections were deemed necessary to mitigate risks. Some of these risks involved high trading costs and a lack of customer oversight by brokerages — more of an issue when monitoring software was less sophisticated. Changing Times 'This rule was created at a time when retail investors' access to information, pricing and news was greatly disadvantaged,' Anthony Denier, US chief executive officer of retail brokerage Webull Financial, said in an emailed statement. 'Times have changed and the rule needs to be changed as well by removing the minimum dollar amount requirement.' Brokerages including Robinhood, Fidelity Investments and Tastytrade Inc. wrote in their comment letters to Finra that improved monitoring of trades makes it easier for customers to avoid margin calls — when an account is frozen until the minimum balance is restored —— and that the introduction of zero-commission fees has lowered costs and eased financial risk. Brokers currently reject trades if an account has insufficient buying power and track their clients' positions using automated controls and monitoring systems, allowing customers to manage intraday risk in real time. In today's options market, profits are reliant on incremental price changes, meaning the ability to quickly open and close positions is crucial. 'I think the balance requirement should be ended entirely,' said Cullen Baker, 23, who graduated from Carleton College in June with a degree in computer science. At 18, Baker was unable to trade options due to the rule, and instead ended up trading riskier products such as futures, ultimately 'blowing up' his account, said Cullen, who submitted comments asking Finra to change the rule. 'It's a pointless barrier if you want to figure out how to trade.' Individual investors frequently complain on Reddit forums that the $25,000 minimum is arbitrary, making traders over-allocate capital to their accounts to an extent detrimental to saving, and imposing a barrier for those seen as not wealthy or intelligent enough to trade equity derivatives. Clients can also open additional margin accounts at multiple brokerages to work around the rule, leading brokerages to view it as ineffective. 'It's kind of a silly little rule that gets in the way of freely functioning markets,' said Mark Phillips, founder and principal of Redding, Connecticut-based Harvested Financial, a financial-advisory firm that specializes in options trading. 'If you want people to trade options well and not gamble, they have to learn how to trade.' 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Life sciences VC Omega Funds closes $647m funding round
Life sciences VC Omega Funds closes $647m funding round

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Life sciences VC Omega Funds closes $647m funding round

Life sciences venture capital (VC) company Omega Funds has closed its eighth fund, with capital commitments totalling $647m. As with its previous funds, the US-based business said its oversubscribed funding, which had initially targeted a $600m close, will continue executing on its strategy to support management teams in the US and Europe that target severe, unmet medical needs through company creation, early venture rounds, and later-stage financing. Omega Funds managing director Francesco Draetta said: 'We believe our broad investment strategy is well-positioned for navigating this period of macro and policy uncertainty. 'We look forward to contributing our capital, expertise, and network connectivity in partnering with entrepreneurs, founders, co-investors, and the broader community to transform the standards of care for severe diseases.' According to Omega, it has raised $2.5bn since its first fund in 2004 to support the development of medical devices and therapeutics across indications including oncology, immunology, and rare diseases. In total, 52 products have been brought to market by Omega's former portfolio companies, with the VC's previous investments resulting in 50 exits via M&A, and 47 public listings. M&A exits include SoniVie, Scorpion Therapeutics, and Amunix Pharmaceuticals, which were acquired by Boston Scientific, Eli Lilly, and Sanofi, respectively. Companies that Omega has invested in have gone on to launch initial public offerings (IPO). These include Kestra Medical Technologies, Beta Bionics, and Imago Biosciences, all of which are listed on the Nasdaq exchange. Omega Funds' founder and managing director Otello Stampacchia commented: 'By exceeding its target size, fund VIII is a recognition of our investment strategy and track record of consistent exits across market cycles.' Life science companies are typically reliant on investment from VC or private equity (PE) businesses. While research by Bain & Company found that deal value in 2023 struggled to match the pace of previous years, more recent research by the consultant found that healthcare PE soared to an estimated $115bn in 2024, making it the second-highest deal value total on record. Other significant entities backing life science companies include Symbiotic Capital. The credit company from biotech entrepreneur Arie Belldegrun, founder of Kite Pharma and co-founder of Bellco Capital, launched in August 2024 with $600m for life science-specific loans. "Life sciences VC Omega Funds closes $647m funding round" was originally created and published by Pharmaceutical Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

MP Materials Corp. (MP): 'Not As Big As Everyone's Trying To Make It,' Says Jim Cramer
MP Materials Corp. (MP): 'Not As Big As Everyone's Trying To Make It,' Says Jim Cramer

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MP Materials Corp. (MP): 'Not As Big As Everyone's Trying To Make It,' Says Jim Cramer

We recently published . MP Materials Corp. (NYSE:MP) is one of the stocks Jim Cramer recently discussed. MP Materials Corp. (NYSE:MP) is an American rare earth metals company. Trade tensions between the US and China, which have seen China use rare earth metals as leverage, have injected new life into its shares as they have gained 288% year-to-date. MP Materials Corp. (NYSE:MP)'s shares have gained 112% in July on the back of several catalysts, such as Pentagon and Apple investments. Here's what Cramer said about the firm: 'MP's not as big as everyone's trying to make it out to be. But it's just so, the Defense Department's in there, Apple's in there, they're gonna get what, look I remember the days when everyone owned Moly. Molycorp. Because that was the predecessor. I remember when Lee Cooper called me and said listen. . .you've got to buy MP Materials because of the whole Moly thing. I said Moly lost billions. He goes yes, so did MP. And that's what's happening. We need more than just that strip. We need more than that part of California. But I'm sure that we're gonna do it. It's a different world. We've got such religion again.' Cramer previously discussed MP Materials Corp. (NYSE:MP)'s partnership with the Pentagon in detail: 'This morning, MP Materials announced that the Defense Department's taken a big stake in their company, which controls the largest rare earth mine in the country. The deal, which includes a $1 billion construction loan from a couple of banks along with a separate $150 million loan and a $400 million equity investment from the Defense Department, will ensure that MP can keep developing its Mountain Pass site and build a new rare earth magnet factory essential to our national security. It's all about having a reliable source of rare earths in order to reduce our dependence on China… Heavy machinery at work in a mining facility, excavating the earth for rare earth minerals. Now, suddenly, we know the strategic value of these rare earths… The Defense Department's assured us that the United States will be in a better position in the future by putting a price for the Mountain Pass site's key materials. You know what? It's an ingenious deal because it would simply cost too much for MP to refine all the rare earth minerals that our country needs by itself. We're finally getting serious about a national Achilles heel, and it's not just rare earths. Earlier this week, President Trump announced a 50% tariff on copper.' While we acknowledge the potential of MP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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