Carry Trades Roar Back Into Favor as Emerging Currencies Rally
An index of carry returns — for which a trader borrows in a low-yielding currency and then invests in another offering higher returns, hit a seven-year high in late May. Asset managers have boosted long positions in developing-nation currencies in recent weeks, with those on Mexico's peso reaching a nine-month high, based on CME Group Inc. data.
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Yahoo
20 minutes ago
- Yahoo
The Smartest Cryptocurrency to Buy With $500 Right Now (XRP)
Key Points The cryptocurrency industry is getting a boost from favorable U.S. government policy. XRP has some natural long-term advantages. 10 stocks we like better than XRP › Nowadays, $500 doesn't feel like much -- especially if you invest it in the S&P 500 index, where you can expect to make an average annual return of 10% (assuming historical trends remain constant). That's just $50 per year. However, the cryptocurrency industry offers the potential for significantly larger gains than traditional asset classes, like stocks or bonds, for investors who are willing to tolerate more volatility. Below I'll explore why the payments-focused token digital XRP (CRYPTO: XRP) might make an excellent long-term pick as it racks up regulatory wins in the U.S. and seeks to disrupt the market for international transactions. The regulatory climate is easing Donald Trump's presidential election victory sparked a sharp rally in many cryptocurrencies, and it isn't hard to understand why Wall Street is so optimistic. On the campaign trail, he promised to support the digital asset industry and, so far, his administration is meeting or even exceeding expectations with a raft of newly passed legislation. On July 18, Trump signed the Guiding and Establishing National Innovation for US Stablecoins (Genius) Act, which is designed to create a framework for issuing dollar-pegged stablecoins. On its face, this law helps legitimize cryptocurrency as a mainstream asset class, which will encourage businesses and institutional investors to get more involved without the fear of potentially breaking any rules. The Genius Act is a departure from the climate under the previous administration, when lawsuits and enforcement stifled crypto adoption. XRP's developer, Ripple Labs, was affected by this legal uncertainty. In 2021, Ripple lost its partnership with one of its highest-profile clients, MoneyGram, which stopped using its XRP-based liquidity solutions after Ripple was sued by the Securities and Exchange Commission (SEC) over alleged securities law violations. The case has now been largely resolved with XRP not classified as a security when sold to retail investors, although there are still discussions about settling fines related to Ripple's sales of XRP to institutional investors. The path to real-world utility XRP's main selling point is its focus on real-world utility. Instead of trying to be a platform for highly speculative and often useless decentralized applications (dApps), XRP focuses on the more tangible market for international payments. Its speed and low fees (0.00001 XRP per transaction) make it an ideal bridge between different currencies. For example, if someone in the U.S. wanted to send money to Japan, they could buy XRP with dollars and use that XRP to buy Japanese yen, bypassing slow and potentially costly intermediaries. Dollar-pegged stablecoins promise to make this process even easier by removing the volatility inherent in a free-floating bridge currency like XRP. Instead of allowing its niche to be disrupted, XRP's developers are joining the fray. In 2024, they launched a dollar-pegged stablecoin of their own called RLUSD. Consumer use of RLUSD can indirectly benefit XRP because both tokens are built on the same network. RLUSD transaction fees are paid with XRP, which is then removed from circulation (burned). Is it too late to buy XRP? Despite its relatively small unit price of just $3.15 at the time of this writing, XRP is the third-largest cryptocurrency, with a market cap of $187 billion. While this vast size gives it more brand recognition and stability, it also means that investors shouldn't expect a repeat of the explosive returns XRP enjoyed in the past. That said, slow and steady often wins the race. XRP has graduated from the boom and bust volatility of a meme coin, and investors should focus on its long-term growth potential as it benefits from easing regulatory pressure and compelling real-world use cases. Should you buy stock in XRP right now? Before you buy stock in XRP, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and XRP wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 28, 2025 Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy. The Smartest Cryptocurrency to Buy With $500 Right Now (XRP) was originally published by The Motley Fool
Yahoo
20 minutes ago
- Yahoo
Trump's tariffs could squeeze US factories and boost costs by up to 4.5%, a new analysis finds
WASHINGTON (AP) — As President Donald Trump prepares to announce new tariff increases, the costs of his policies are starting to come into focus for a domestic manufacturing sector that depends on global supply chains, with a new analysis suggesting factory costs could increase by roughly 2% to 4.5%. 'There's going to be a cash squeeze for a lot of these firms,' said Chris Bangert-Drowns, the researcher at the Washington Center for Equitable Growth who conducted the analysis. Those seemingly small changes at factories with slim profit margins, Bangert-Drowns said, 'could lead to stagnation of wages, if not layoffs and closures of plants" if the costs are untenable. The analysis, released Tuesday, points to the challenges Trump might face in trying to sell his tariffs to the public as a broader political and economic win and not just as evidence his negotiating style gets other nations to back down. The success of Trump's policies ultimately depends on whether everyday Americans become wealthier and factory towns experience revivals, a goal outside economists say his Republican administration is unlikely to meet with tariffs. Trump has announced new frameworks with the European Union, Japan, the Philippines, Indonesia and Britain that would each raise the import taxes charged by the United States. He's prepared to levy tariffs against goods from dozens of other countries starting on Friday in the stated range of 15% to 50%. The U.S. stock market has shown relief the tariff rates aren't as high as Trump initially threatened in April and hope for a sense of stability going forward. Trump maintains the tariff revenues will whittle down the budget deficit and help whip up domestic factory jobs, all while playing down the risks of higher prices. 'We've wiped out inflation," Trump said last Friday before boarding Marine One while on his way to Scotland. But there's the possibility of backlash in the form of higher prices and slower growth once tariffs flow more fully through the world economy. A June survey by the Atlanta Federal Reserve suggested companies would on average pass half of their tariff costs onto U.S. consumers through higher prices. Labor Department data shows America lost 14,000 manufacturing jobs after Trump rolled out his April tariffs, putting a lot of pressure as to whether a rebound starts in the June employment report coming out Friday. With new tariffs in place, there are new costs for factories The Washington Center for Equitable Growth analysis shows how Trump's devotion to tariffs carries potential economic and political costs for his agenda. In the swing states of Michigan and Wisconsin, more than 1 in 5 jobs are in the critical sectors of manufacturing, construction, mining and oil drilling and maintenance that have high exposures to his import taxes. The artificial intelligence sector Trump last week touted as the future of the economy is dependent on imports. More than 20% of the inputs for computer and electronics manufacturing are imported, so the tariffs could ultimately magnify a hefty multitrillion-dollar price tag for building out the technology in the U.S. The White House argues American businesses will access new markets because of the trade frameworks, saying companies will ultimately benefit as a result. 'The 'Made in USA' label is set to resume its global dominance under President Trump,' White House spokesman Kush Desai said. Still lots of uncertainty, but world economy faces a new toll There are limits to the analysis. Trump's tariff rates have been a moving target, and the analysis looks only at additional costs, not how those costs will be absorbed among foreign producers, domestic manufacturers and consumers. Also, the legal basis of the tariffs as an 'emergency' act goes before a U.S. appeals court on Thursday. Treasury Secretary Scott Bessent said in an interview last week on Fox Business Network's 'Kudlow" show countries were essentially accepting the tariffs to maintain access to the U.S. market. 'Everyone is willing to pay a toll,' he said. But what Bessent didn't say is U.S. manufacturers are also paying much of that toll. 'We're getting squeezed from all sides,'' said Justin Johnson, president of Jordan Manufacturing Co. in Belding, Michigan, northeast of Grand Rapids. His grandfather founded the company in 1949. The company, which makes parts used by Amazon warehouses, auto companies and aerospace firms, has seen the price of a key raw material — steel coil — rise 5% to 10% this year. Trump has imposed 50% tariffs on imported steel and aluminum. Jordan Manufacturing doesn't buy foreign steel. But by crippling foreign competition, Trump's tariffs have allowed domestic U.S. steelmakers to hike prices. Johnson doesn't blame them. 'There's no red-blooded capitalist who isn't going to raise his prices'' under those circumstances, he said. Trump says no inflation from tariffs, but businesses see higher prices The Trump White House insists inflation is not surfacing in the economy, issuing a report through the Council of Economic Advisers this month saying the price of imported goods fell between December of last year and this past May. 'These findings contradict claims that tariffs or tariff-fears would lead to an acceleration of inflation,' the report concludes. Ernie Tedeschi, director of economics at the Budget Lab at Yale University, said that the more accurate measure would be to compare the trends in import prices with themselves in the past and that the CEA's own numbers show 'import prices have accelerated in recent months.' The latest estimate from the Budget Lab at Yale is the tariffs would cause the average household to have $2,400 less than it would otherwise have. Keeping the economy on a knife's edge Josh Smith, founder and president of Montana Knife Co., called himself a Trump voter but said he sees the tariffs on foreign steel and other goods as threatening his business. For instance, Smith just ordered a $515,000 machine from Germany that grinds his knife blades to a sharp edge. Trump had imposed a 10% tax on products from the EU that is set to rise to 15% under the trade framework he announced Sunday. So Trump's tax on the machine comes to $77,250 — about enough for Smith to hire an entry-level worker. Smith would happily buy the bevel-grinding machines from an American supplier. But there aren't any. 'There's only two companies in the world that make them, and they're both in Germany,'' Smith said. Then there's imported steel, which Trump is taxing at 50%. Until this year, Montana Knife bought the powdered steel it needs from Crucible Industries in Syracuse, New York. But Crucible declared bankruptcy last December, and its assets were purchased by a Swedish firm, Erasteel, which moved production to Sweden. Smith beat the tariffs by buying a year's worth of the steel in advance. But starting in 2026, the specialty steel he'll be importing from Sweden is set to be hit with a 50% duty. 'The average American is not sitting in the position I am, looking at the numbers I am and making the decisions each day, like, 'Hey, we cannot hire those extra few people because we might have to pay this tariff on this steel or this tariff on this grinder,''' he said. 'I want to buy more equipment and hire more people. That's what I want to do.'
CNBC
23 minutes ago
- CNBC
UPS posts downbeat quarterly results as shifting trade policies weigh
United Parcel Service reported a decline in second-quarter profit and revenue on Tuesday, as demand took a hit from new "de minimis" tariffs on low-value Chinese shipments and mounting risks from President Donald Trump's trade policies. The White House in May began collecting tariffs on shipments under $800 from China that were previously duty-free. While those levies were reduced to 54% from 120% as part of a trade truce, consumer demand is still expected to take a hit. Experts believe the removal of the exemption likely creates a greater-than-expected volume headwind for the company's international segment, as customers may cut back on discretionary online purchases, reducing shipments from bargain e-commerce sellers such as Temu and Shein on UPS's most profitable China-U.S. trade lines. The company did not update its full-year outlook for a second straight quarter, citing ongoing macroeconomic uncertainty. In its last forecast, issued in January, UPS projected 2025 revenue of $89.0 billion. It reported adjusted net income of $1.55 per share for the quarter ended June 30, from $1.79 per share a year earlier. UPS and rival FedEx are seen as bellwethers for the health of the global economy as they serve clients across industries and geographies. Shares of UPS were down 1.4% in premarket trading. They have fallen more than 19% since the start of the year, compared with a nearly 14% fall in shares of FedEx.
