Here’s what’s been happening on Wall Street overnight

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The next stock market crash will simply be a warm-up for an even bigger issue facing Main Street

When the next bear market hits stocks, Wall Street will feel the pain, as it always does.

Hedge funds will take deep losses, trading desks will flail, and the volatile environment will make it more difficult for companies to tap capital markets.

But outside the nation’s financial epicentre, the stakes are arguably higher.

That’s not because Main Street is more vulnerable to a stock-centered meltdown – in fact, the opposite is true. It’s because such steep sell-offs have historically signalled that the economy is in its final stage and that a recession is near.

That is why the perilous situation unfolding in the US consumer market is so troubling. The household savings rate is now sitting at its lowest level since the previous crisis, leaving people no choice but to load up on more debt if they wish to keep consuming.

Replicating Robinhood in Europe

Startups across Europe are racing to try and replicate the success of Robinhood, the hot US stock trading app.

San Francisco-based Robinhood offers a zero-fee trading app that has taken off with young Americans. Founded in 2013, it claims to have 4 million customers and in May hit a valuation of $US5.6 billion.

This success has not gone unnoticed. Fast-growing UK fintech startup Revolut on Thursday announced plans to build a commission-free stock trading platform, similar to the way Robinhood works.

Meanwhile, Freetrade, another UK startup trying to offer free basic stock trading, raised £3 million in a crowdfunding round in May. Dabbl, another new stock trading app, is running a crowdfunding campaign later this month.

Revolut, Freetrade, and Dabbl are part of a group of startups across Europe vying to repeat Robinhood’s success.

ZTE saved by Trump

The US has reached an agreement to lift sanctions on the Chinese telecom equipment maker ZTE, Commerce Secretary Wilbur Ross said Thursday.

The deal will force ZTE to pay a $US1 billion fine and place $US400 million in escrow in the event the company violates sanctions again. In addition to the monetary damages, ZTE will be forced to make changes to its management and submit to closer examinations by a US compliance team.

The deal ends a tense period of negotiations between the US and Chinese governments over the telecom equipment maker.

More here.

‘Bitcoin king’ on regulators

Mike Novogratz, the famed hedge funder turned cryptocurrency enthusiast, poked a little fun at a segment on the financial-news network CNBC when describing to its rival Bloomberg News the crypto hype that marked the start of 2018.

“CNBC, not to pick on CNBC, but I think I can since I am here, they literally had a show where they were one by one walking people through how to buy the Ripple, the XRP coin, literally when it was trading at $US3.20 having moved from $US0.20 eight weeks earlier,” Novogratz said, speaking with Bloomberg’s Erik Schatzker.

Novogratz said that was “peak nonsense.”

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