Coffee Day Enterprises falls 20% as reports of Founder VG Siddhartha going missing surface. Liquidity crunch in the NBFC sector is spilling over into the fintech space. Capital One discloses data breach affecting over 106 million individuals across the US and Canada. Uber and Lyft announce staff shakeups amid heavy losses and disappointing market debuts. Rising numbers of women are being employed in the gig economy, but wages remain low. Fed expected to cut rates despite improving economic indicators. FOMC’s vote itself might be divisive.
Moving on to the top Business news of the day.
Coffee Day Enterprises falls 20% as reports of Founder VG Siddhartha going missing surface.
Share Drop: Shares of Coffee Day Enterprises plunged 20% after reports of Cafe Coffee Day founder VG Siddhartha going missing surfaced. The stock has lost 44% of its market value year-to-date.
Previously: Earlier this year, in March, Siddhartha had acquired c. INR3,200cr by selling his 20.32% stake in Mindtree to L&T and two CCD affiliate firms (Coffee Day Enterprises Ltd and Coffee Day Trading Ltd).
The deal had helped Siddhartha repay his debt of about INR2,900cr, vastly improving his financial condition.
In his last letter to the Coffee Day Enterprises' Board of Directors, dated July 27, Siddhartha had said he had fought for a long time but was giving up as he could not take any more pressure from one of the private equity partners who was forcing him to buy back shares.
Liquidity crunch in the NBFC sector is spilling over into the fintech space.
Spill Over: As per this report, the liquidity crunch in the non-banking finance space has begun to spill over into the fintech sector.
Tightening the Purse Strings: Fintech players, which rely on banks and NBFCs for capital to use for onward lending, are finding it expensive to raise credit as rates have gone up 75-150 basis points across categories.
This would mean that eventually the consumer will end up paying more.
Mounting Troubles: In addition to this, refinancing has also become a problem, with line of credit being halved in addition to more credit checks.
Also This: In conversation with Romesh Sobti, under whose aegis IndusInd Bank has grown to be one of the country’s best-performing lenders, almost at par with HDFC Bank.
Capital One discloses data breach affecting over 106 million individuals across the US and Canada.
The Big Hack: Financial services firm Capital One has revealed a data breach, first identified on 19 July, affecting the personal details of about 106 million individuals across the US and Canada.
Strike One: The financial services firm said about 140,000 social security numbers and 80,000 linked bank account numbers were compromised in the US.
Strike Two: In Canada, about one million social insurance numbers belonging to Capital One credit card customers were compromised.
However, the hacker did not gain access to credit card account numbers, assured the firm.
Belling the Cat: The alleged hacker, Paige Thompson, was arrested on Monday after reportedly boasting about the breach online.
Uber and Lyft announce staff shakeups amid heavy losses and disappointing market debuts. Rising numbers of women are being employed in the gig economy, but wages remain low.
Making Amends?: Ride-hailing companies Uber and Lyft have announced staff shakeups amid heavy losses and disappointing market debuts.
Stocks of both companies are still sagging below their initial public offering prices.
As part of the shakeup, Uber cut about 400 jobs in its marketing department while Lyft eliminated the role of Chief Operating Officer.
Transfin. Picks: As per its Employment Outlook report by staffing platform TeamLease Services, more and more women are being employed in the gig economy owing to lower attrition rates, better ratings for delivery women and improved productivity at warehouses. However, women are being paid less than men for the same jobs. More on this here.
Fed expected to cut rates despite improving economic indicators. FOMC’s vote itself might be divisive.
Prevention is Better Than Cure?: The markets are embracing new highs, credit-risk premiums are low and inflation shows signs of a modest comeback. Last December, these factors were polar opposites and the Federal Reserve nonetheless raised interest rates. This time around, contrarily, the Fed is expected to cut rates (and for the first time in over a decade).
The cut would be precautionary in nature, to address the “first sign of economic distress” , as noted by John Williams, Vice Chair of the Federal Open Market Committee (FOMC), which votes on rate policy. The Fed is also eager to meet target inflation of 2%.
But given that the numbers are not flashing red and the Central Bank has raised rates even when numbers were far worse, some are concerned that the Fed is capitulating to the White House’s public demands for easing monetary policy.
A House Divided: Meanwhile, the FOMC’s vote itself is expected to be divisive, with as many as three dissents possible. Lack of unanimity will make it harder for markets to anitipate future Fed policy.