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Biden taps progressive favorite Sarah Bloom Raskin as top Fed banking regulator

President Biden on Friday announced three new nominations for the Federal Reserve's Board of Governors, including progressive favorite Sarah Bloom Raskin for the top regulatory spot, as the central bank prepares to confront the hottest inflation in a generation......»»

Category: topSource: foxnewsJan 14th, 2022

Futures Fade Rally With Congress Set To Avert Government Shutdown

Futures Fade Rally With Congress Set To Avert Government Shutdown US equity futures faded an overnight rally on the last day of September as lingering global-growth risks underscored by China's official manufacturing PMI contracted for the first time since Feb 2020 as widely expected offset a debt-ceiling deal in Washington and central-bank assurances about transitory inflation. The deal to extend government funding removes one uncertainty from the minds of investors, amid China risks and concerns over Federal Reserve tapering. Comments from Fed Chair Powell and ECB head Christine Lagarde about inflation being transitory rather than permanent also helped sentiment, even if nobody actually believes them any more.In China, authorities told bankers to help local governments support the property market and homebuyers, signaling concern at the economic fallout from the debt crisis at China Evergrande As of 7:15am ET, S&P futures were up 18 points ot 0.44%, trimming an earlier gain of 0.9%. Dow eminis were up 135 or 0.4% and Nasdaq futs rose 0.43%. 10Y TSY yields were higher, rising as high as 1.54% and last seen at 1.5289%; the US Dollar erased earlier losses and was unchanged. All the three major indexes are set for a monthly drop, with the benchmark S&P 500 on track to break its seven-month winning streak as worries about persistent inflation, the fallout from China Evergrande’s potential default and political wrangling over the debt ceiling rattled sentiment. The index was, however, on course to mark its sixth straight quarterly gain, albeit its smallest, since March 2020’s drop. The rate-sensitive FAANG stocks have lost about $415 billion in value this month after the Federal Reserve’s hawkish shift on monetary policy sparked a rally in Treasury yields and prompted investors to move into energy, banks and small-cap sectors that stand to benefit the most from an economic revival. Among individual stocks, oil-and-gas companies APA Corp. and Devon Energy Corp. led premarket gains among S&P 500 members. Virgin Galactic shares surged 9.7% in premarket trading after the U.S. aviation regulator gave the company a green-light to resume flights to the brink of space. Perrigo climbed 14% after reporting a settlement in a tax dispute with Ireland.  U.S.-listed Macau casino operators may get a boost Thursday after Macau Chief Executive Ho Iat Seng said the region will strive to resume quarantine-free travel to Zhuhai by Oct. 1, the start of the Golden Week holiday, if the Covid-19 situation in Macau is stable. Here are some of the other biggest U.S. movers today: Retail investor favorites Farmmi (FAMI US) and Camber Energy (CEI US) both rise in U.S. premarket trading, continuing their strong recent runs on high volumes Virgin Galactic (SPCE US) shares rise 8.9% in U.S. premarket trading after the U.S. aviation regulator gave co. a green-light to resume flights to the brink of space Perrigo (PRGO US) rises 15% in U.S. premarket trading after reporting a settlement in a tax dispute with Ireland. The stock was raised to buy from hold at Jefferies over the “very favorable” resolution Landec (LNDC US) shares fell 17% in Wednesday postmarket trading after fiscal 1Q revenue and adjusted loss per share miss consensus estimates Affimed (AFMD US) rises 4.3% in Wednesday postmarket trading after Stifel analyst Bradley Canino initiates at a buy with a $12 price target, implying the stock may more than double over the next year Herman Miller (MLHR US) up ~2.8% in Wednesday postmarket trading after the office furnishings maker posts fiscal 1Q net sales that beat the consensus estimate Orion Group Holdings (ORN US) shares surged as much as 43% in Wednesday extended trading after the company disclosed two contract awards for its Marine segment totaling nearly $200m Kaival Brands (KAVL US) fell 18% Wednesday postmarket after offering shares, warrants via Maxim An agreement among U.S. lawmakers to extend government funding removes one uncertainty from a litany of risks investors are contenting with, ranging from China’s growth slowdown to Federal Reserve tapering. “Republicans and Democrats showed some compromise by averting a government shutdown,” Sebastien Galy, a senior macro strategist at Nordea Investment Funds. “By removing what felt like a significant risk for a retail audience, it helps sentiment in the equity market.” Still, president Joe Biden’s agenda remains at risk of being derailed by divisions among his own Democrats, as moderates voiced anger on Wednesday at the idea of delaying a $1 trillion infrastructure bill ahead of a critical vote to avert a government shutdown. The big overnight economic news came from China whose September NBS manufacturing PMI fell to 49.6 from 50.1 in August, the first contraction since Feb 2020, likely due to the production cuts caused by energy constraints. Both the output sub-index and the new orders sub-index in the NBS manufacturing PMI survey decreased in September. The NBS non-manufacturing PMI rebounded to 53.2 in September from 47.5 in August on a recovery of services activities as COVID restrictions eased. However, the numbers may not capture full impact of energy restrictions as the NBS survey was taken around 22nd-25th of the month: expect far worse number in the months ahead unless China manages to contain its energy crisis. Europe’s Stoxx 600 Index advanced 0.3%, trimming a monthly loss but fading an earlier gain of 0.9%, led by gains in basic resources companies as iron ore climbed, with the CAC and FTSE 100 outperforming at the margin. Technology stocks, battered earlier this week, also extended their rebound.  Miners, oil & gas and media are the strongest sectors; utility and industrial names lag. European natural gas and power markets hit fresh record highs as supply constraints persist. Perrigo jumped 13.8% after the drugmaker agreed to settle with Irish tax authorities over a 2018 issue by paying $1.90 billion in taxes Asian stocks were poised to cap their first quarterly loss since March 2020 as Chinese technology names fell and as investors remained wary over a recent rise in U.S. Treasury yields.  The MSCI Asia Pacific Index is set to end the September quarter with a loss of more than 5%, snapping a winning streak of five straight quarters. A combination of higher yields, Beijing’s corporate crackdown and worry over slowing economic growth in Asia’s biggest economy have hurt sentiment, bringing the market down following a brief rally in late August.  The Asian benchmark rose less than 0.1% after posting its worst single-day drop in six weeks on Wednesday. Consumer discretionary and communication services groups fell, while financials advanced. The Hang Seng Tech Index ended 1.3% lower as Beijing announced new curbs on the sector, while higher yields hurt sentiment toward growth stocks.  “Because there’s growing worry over U.S. inflation, we need to keep an eye on the potential risks, globally,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “Also, there’s the Evergrande issue. The market is in a wait-and-see mode now, with a focus on whether the group will be able to make future interest rate payments.”  Benchmarks in Thailand and Malaysia were the biggest losers, while Indonesia and Australia outperformed. Japan’s Topix and the Nikkei 225 Stock Average slipped for a fourth day as investors weighed Fumio Kishida’s election victory as the new ruling party leader. Global stocks are poised to end the quarter with a small loss, after a five-quarter rally, as investors braced for the Fed to wind down its stimulus. They also remain concerned about slowing growth and elevated inflation, supply-chain bottlenecks, an energy crunch and regulatory risks emanating from China. A majority of participants in a Citigroup survey said a 20% pullback in stocks is more likely than a 20% rally. In rates, Treasuries were slightly cheaper across the curve, off session lows as stock futures pare gains. 10-year TSY yields were around 1.53%, cheaper by 1.2bp on the day vs 2.3bp for U.K. 10-year; MPC-dated OIS rates price in ~65bps of BOE hikes by December 2022. Gilts lead the selloff, with U.K. curve bear-steepening as BOE rate-hike expectations continue to ramp up. Host of Fed speakers are in focus during U.S. session, while month-end extension may serve to underpin long-end of the curve.   A gauge of the dollar’s strength headed for its first drop in five days as Treasury yields steadied after a recent rise, and amid quarter-end flows. The Bloomberg Dollar Spot Index fell as the dollar steady or weaker against most of its Group-of-10 peers. The euro hovered around $1.16 and the pound was steady while Gilts inched lower, underperforming Bunds and Treasuries. Money markets now see around 65 basis points of tightening by the BOE’s December 2022 meeting, according to sterling overnight index swaps. That means they’re betting the key rate will rise to 0.75% next year from 0.1% currently. The Australian dollar led gains after it rose off its lowest level since August 23 amid exporter month-end demand and as iron ore buyers locked in purchases ahead of a week-long holiday in China. Norway’s krone was the worst G-10 performer and slipped a fifth day versus the dollar, its longest loosing streak in a year. In commodities, oil surrendered gains, still heading for a monthly gain amid tighter supplies. West Texas Intermediate futures briefly recaptured the level above $75 per barrel, before trading at $74.71. APA and Devon rose at least 1.8% in early New York trading. European gas prices meanwhile hit a new all time high. Looking at the day ahead, one of the highlights will be Fed Chair Powell’s appearance at the House Financial Services Committee, alongside Treasury Secretary Yellen. Other central bank speakers include the Fed’s Williams, Bostic, Harker, Evans, Bullard and Daly, as well as the ECB’s Centeno, Visco and Hernandez de Cos. On the data side, today’s highlights include German, French and Italian CPI for September, while in the US there’s the weekly initial jobless claims, the third estimate of Q2 GDP and the MNI Chicago PMI for September. Market Snapshot S&P 500 futures up 0.7% to 4,379.00 STOXX Europe 600 up 0.6% to 457.59 MXAP little changed at 196.85 MXAPJ up 0.3% to 635.71 Nikkei down 0.3% to 29,452.66 Topix down 0.4% to 2,030.16 Hang Seng Index down 0.4% to 24,575.64 Shanghai Composite up 0.9% to 3,568.17 Sensex down 0.3% to 59,239.76 Australia S&P/ASX 200 up 1.9% to 7,332.16 Kospi up 0.3% to 3,068.82 Brent Futures up 0.4% to $78.98/bbl Gold spot up 0.4% to $1,732.86 U.S. Dollar Index little changed at 94.27 German 10Y yield fell 0.5 bps to -0.212% Euro little changed at $1.1607 Top Overnight News from Bloomberg U.K. gross domestic product rose 5.5% in the second quarter instead of the 4.8% earlier estimated, official figures published Thursday show. The data, which reflected the reopening of stores and the hospitality industry, mean the economy was still 3.3% smaller than it was before the pandemic struck. China has urged financial institutions to help local governments stabilize the rapidly cooling housing market and ease mortgages for some home buyers, another signal that authorities are worried about fallout from the debt crisis at China Evergrande Group. The U.S. currency’s surge is helping the Chinese yuan record its largest gain in eight months on a trade-weighted basis in September. It adds to headwinds for the world’s second- largest economy already slowing due to a resurgence in Covid cases, a power crisis and regulatory curbs. The Swiss National Bank bought foreign exchange worth 5.44 billion francs ($5.8 billion) in the second quarter, part of its long-running policy to alleviate appreciation pressure on the franc   A few members of the Riksbank’s executive board discussed a rate path that could indicate a rate rise at the end of the forecast period, Sweden’s central bank says in minutes from its Sept. 20 meeting French inflation accelerated in September as households in the euro area’s second-largest economy faced a jump in the costs of energy and services. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded somewhat varied with the region indecisive at quarter-end and as participants digested a slew of data releases including mixed Chinese PMI figures. ASX 200 (+1.7%) was underpinned by broad strength across its industries including the top-weighted financials sector and with the large cap miners lifted as iron ore futures surge by double-digit percentages, while the surprise expansion in Building Approvals also helped markets overlook the 51% spike in daily new infections for Victoria state. Nikkei 225 (+0.1%) was subdued for most of the session after disappointing Industrial Production and Retail Sales data which prompted the government to cut its assessment of industrial output which it stated was stalling. The government also warned that factory output could decline for a third consecutive month in September and that October has large downside risk due to uncertainty from auto manufacturing cuts. However, Nikkei 225 then recovered with the index marginally supported by currency flows. Hang Seng (-1.0%) and Shanghai Comp. (+0.4%) diverged heading into the National Day holidays and week-long closure for the mainland with tech names in Hong Kong pressured by ongoing regulatory concerns as China is to tighten regulation of algorithms related to internet information services. Nonetheless, mainland bourses were kept afloat after a further liquidity injection by the PBoC ahead of the Golden Week celebrations and as markets took the latest PMI figures in their strides whereby the official headline Manufacturing PMI disappointed to print its first contraction since February 2020, although Non-Manufacturing PMI and Composite PMI returned to expansionary territory and Caixin Manufacturing PMI topped estimates to print at the 50-benchmark level. Top Asian News S&P Points to Progress as Bondholders Wait: Evergrande Update Bank Linked to Kazakh Leader Buys Kcell Stake After Share Slump Goldman Sachs Names Andy Tai Head of IBD Southeast Asia: Memo What Japan’s Middle-of-the-Road New Leader Means for Markets The upside momentum seen across US and European equity futures overnight stalled, with European cash also drifting from the best seen at the open (Euro Stoxx 50 +0.1%; Stoxx 600 +0.4%). This follows somewhat mixed APAC handover, and as newsflow remains light on month and quarter-end. US equity futures are firmer across the board, but again off best levels, although the RTY (+0.8%) outperforms the ES (+0.4%), YM (+0.4%) and NQ (+0.5%). Back to Europe, the periphery lags vs core markets, whilst the DAX 40 (-0.3%) underperforms within the core market. Sectors in Europe are mostly in the green but do not portray a particular risk bias. Basic Resources top the chart with aid from overnight action in some base metals, particularly iron, in turn aiding the large iron miners BHP (+2.2%), Rio Tinto (+3.4%) and Anglo American (+2.9%). The bottom of the sectors meanwhile consists of Travel & Leisure, Autos & Parts and Industrial Goods & Services, with the former potentially feeling some headwinds from China’s travel restrictions during its upcoming National Day holiday. In terms of M&A, French press reported that CAC-listed Carrefour (-1.3%) is reportedly looking at options for sector consolidation, and talks are said to have taken place with the chain stores Auchan, with peer Casino (Unch) also initially seeing a leg higher in sympathy amid the prospect of sector consolidation. That being said, Carrefour has now reversed its earlier upside with no particular catalyst for the reversal. It is, however, worth keeping in mind that regulatory/competition hurdles cannot be ruled out – as a reminder, earlier this year, France blocked the takeover of Carrefour by Canada’s Alimentation Couche-Tard. In the case of a successful deal, Carrefour will likely be the acquirer as the largest supermarket in France. Sticking with M&A, Eutelsat (+14%) was bolstered at the open amid source reports that French billionaire Patrick Drahi is said to have made an unsolicited takeover offer of EUR 12.10/shr for Eutelsat (vs EUR 10.35 close on Wednesday), whilst the FT reported that this offer was rejected. Top European News European Banks Dangle $26 Billion in Payouts as ECB Cap Ends U.K. Economy Emerged From Lockdown Stronger Than Expected In a First, Uber Joins Drivers in Strike Against Brussels Rules EU, U.S. Seek to Avert Chip-Subsidy Race, Float Supply Links In FX, The non-US Dollars are taking advantage of the Greenback’s loss of momentum, and the Aussie in particular given an unexpected boost from building approvals completely confounding expectations for a fall, while a spike in iron ore prices overnight provided additional incentive amidst somewhat mixed external impulses via Chinese PMIs. Hence, Aud/Usd is leading the chasing pack and back up around 0.7200, Usd/Cad is retreating through 1.2750 and away from decent option expiry interest at 1.2755 and between 1.2750-40 (in 1.3 bn and 1 bn respectively) with some assistance from the latest bounce in crude benchmarks and Nzd/Usd is still trying to tag along, but capped into 0.6900 as the Aud/Nzd cross continues to grind higher and hamper the Kiwi. DXY/GBP/JPY/EUR/CHF - It’s far too early to call time on the Buck’s impressive rally and revival from recent lows, but it has stalled following a midweek extension that propelled the index to the brink of 94.500, at 94.435. The DXY subsequently slipped back to 94.233 and is now meandering around 94.300 having topped out at 94.401 awaiting residual rebalancing flows for the final day of September, Q3 and the half fy that Citi is still classifying as Dollar positive, albeit with tweaks to sd hedges for certain Usd/major pairings. Also ahead, the last US data and survey releases for the month including final Q2 GDP, IJC and Chicago PMI before another raft of Fed speakers. Meanwhile, Sterling has gleaned some much needed support from upward revisions to Q2 UK GDP, a much narrower than forecast current account deficit and upbeat Lloyds business barometer rather than sub-consensus Nationwide house prices to bounce from the low 1.3600 area vs the Greenback and unwind more of its underperformance against the Euro within a 0.8643-12 range. However, the latter is keeping tabs on 1.1600 vs its US peer in wake of firmer German state CPI prints and with the aforementioned Citi model flagging a sub-1 standard deviation for Eur/Usd in contrast to Usd/Jpy that has been elevated to 1.85 from a prelim 1.12. Nevertheless, the Yen is deriving some traction from the calmer yield backdrop rather than disappointing Japanese data in the form of ip and retail sales to contain losses under 112.00, and the Franc is trying to do the same around 0.9350. SCANDI/EM - The tables have been turning and fortunes changing for the Nok and Sek, but the former has now given up all and more its post-Norges Bank hike gains and more as Brent consolidates beneath Usd 80/brl and the foreign currency purchases have been set at the same level for October as the current month. Conversely, the latter has taken heed of a hawkish hue to the latest set of Riksbank minutes and the fact that a few Board members discussed a rate path that could indicate a rise at the end of the forecast period. Elsewhere, the Zar looks underpinned by marginally firmer than anticipated SA ppi and private sector credit, while the Mxn is treading cautiously ahead of Banxico and a widely touted 25 bp hike. In commodities, WTI and Brent futures are choppy but trade with modest gains heading into the US open and in the run-up to Monday’s OPEC+ meeting. The European session thus far has been quiet from a news flow standpoint, but the contracts saw some fleeting upside after breaking above overnight ranges, albeit the momentum did not last long. Eyes turn to OPEC+ commentary heading into the meeting, which is expected to be another smooth affair, according to Argus sources. As a reminder, the group is expected to stick to its plan to raise output by 400k BPD despite outside pressure to further open the taps in a bid to control prices. Elsewhere, as a mild proxy for Chinese demand, China’s Sinopec noted that all LNG receiving terminals are to be operated at full capacity. WTI trades on either side of USD 75/bbl (vs low USD 74.54/bbl), while its Brent counterpart remains north of USD 78/bbl (vs low USD 77.66/bbl). Turning to metals, spot gold and silver continue to consolidate after yesterday’s Dollar induced losses, with the former finding some support around the USD 1,725/oz mark and the latter establishing a floor around USD 21.50/oz. Over to base metals, Dalian iron ore futures rose to three-week highs amid pre-holiday Chinese demand and after Fortescue Metals Group halted mining operations at a Pilbara project. Conversely, LME copper is on a softer footing as the Buck holds onto recent gains. US Event Calendar 8:30am: 2Q PCE Core QoQ, est. 6.1%, prior 6.1% 8:30am: 2Q GDP Price Index, est. 6.1%, prior 6.1% 8:30am: 2Q Personal Consumption, est. 11.9%, prior 11.9% 8:30am: Sept. Continuing Claims, est. 2.79m, prior 2.85m 8:30am: 2Q GDP Annualized QoQ, est. 6.6%, prior 6.6% 8:30am: Sept. Initial Jobless Claims, est. 330,000, prior 351,000 9:45am: Sept. MNI Chicago PMI, est. 65.0, prior 66.8 Central Bank speakers 10am: Fed’s Williams Discusses the Fed’s Pandemic Response 10am: Powell and Yellen Appear Before House Finance Panel 11am: Fed’s Bostic Discusses Economic Mobility 11:30am: Fed’s Harker Discusses Sustainable Assets and Financial... 12:30pm: Fed’s Evans Discusses Economic Outlook 1:05pm: Fed’s Bullard Makes Opening Remarks at Book Launch 2:30pm: Fed’s Daly Speaks at Women and Leadership Event Government Calendar 10am ET: Treasury Secretary Yellen, Fed Chair Powell appear at a House Financial Services Committee hearing on the Treasury, Fed’s pandemic response 10:30am ET: Senate begins voting process for continuing resolution that extends U.S. government funding to December 3 10:30am ET: Senate Commerce subcommittee holds hearing on Facebook, Instagram’s influence on kids with Antigone Davis, Director, Global Head of Safety, Facebook 10:45am ET: House Speaker Nancy Pelosi holds weekly press briefing DB's Jim Reid concludes the overnight wrap I’ll be getting my stitches out of my knee today and will have a chance to grill the surgeon who I think told me I’ll probably soon need a knee replacement. I say think as it was all a bit of a medicated blur post the operation 2 weeks ago. These have been a painfully slow 2 weeks of no weight bearing with another 4 to go and perhaps all to no avail. As you can imagine I’ve done no housework, can’t fend much for myself, or been able to control the kids much over this period. I’m not sure if having bad knees are grounds for divorce but I’m going to further put it to the test over the next month. In sickness and in health I plea. Like me, markets are hobbling into the end of Q3 today even if they’ve seen some signs of stabilising over the last 24 hours following their latest selloff, with equities bouncing back a bit and sovereign bond yields taking a breather from their recent relentless climb. It did feel that we hit yield levels on Tuesday that started to hurt risk enough that some flight to quality money recycled back into bonds. So the next leg higher in yields (which I think will happen) might be met with more risk off resistance, and counter rallies. The latest moves came amidst relatively dovish and supportive comments from central bank governors at the ECB’s forum yesterday, but sentiment was dampened somewhat as uncertainty abounds over a potential US government shutdown and breaching of the debt ceiling, after both houses of Congress could not agree on a plan to extend government funding. Overnight, there have been signs of progress on the shutdown question, with Majority Leader Schumer saying that senators had reached agreement on a stopgap funding measure that will fund the government through December 3, with the Senate set to vote on the measure this morning.However, we’re still no closer to resolving the debt ceiling issue (where the latest estimates from the Treasury Department point to October 18 as the deadline), and tensions within the Democratic party between moderates and progressives are threatening to sink both the $550bn bipartisan infrastructure bill and the $3.5tn reconciliation package, which together contain much of President Biden’s economic agenda. We could see some developments on that soon however, as Speaker Pelosi said yesterday that the House was set to vote on the infrastructure bill today. Assuming the vote goes ahead later, this will be very interesting since a number of progressive Democrats have said that they don’t want to pass the infrastructure bill without the reconciliation bill (which contains the administration’s other priorities on social programs). This is because they fear that with the infrastructure bill passed (which moderates are keen on), the moderates could then scale back the spending in the reconciliation bill, and by holding out on passing the infrastructure bill, this gives them leverage on reconciliation. House Speaker Pelosi and Majority Leader Schumer were in the Oval Office with President Biden yesterday, and a White House statement said that Biden spoke on the phone with lawmakers and engagement would continue into today. So an important day for Biden’s agenda. Against this backdrop, risk assets made a tentative recovery yesterday, with the S&P 500 up +0.16% and Europe’s STOXX 600 up +0.59%. However, unless we get a big surge in either index today, both indices remain on track for their worst monthly performances so far this year, even if they’re still in positive territory for Q3 as a whole. Looking elsewhere, tech stocks had appeared set to pare back some of the previous day’s losses, but a late fade left the NASDAQ down -0.24% and the FANG+ index down a greater -0.72%. Much of the tech weakness was driven by falling semiconductor shares (-1.53%), as producers have offered investors poor revenue guidance on the heels of the ongoing supply chain issues that are driving chip shortages globally. Outside of tech, US equities broadly did better yesterday with 17 of 24 industry groups gaining, led by utilities (+1.30%), biotech (+1.05%) and food & beverages (+1.00%). Similarly, while they initially staged a recovery, small caps in the Russell 2000 (-0.20%) continued to struggle. One asset that remained on trend was the US dollar. The greenback continued its climb yesterday, with the dollar index increasing +0.61% to close at its highest level in over a year, exceeding its closing high from last November. Over in sovereign bond markets, the partial rebound saw yields on 10yr Treasuries down -2.1bps at 1.517%, marking their first move lower in a week. And there was much the same pattern in Europe as well, where yields on 10yr bunds (-1.4bps), OATs (-1.3bps) and BTPs (-3.1bps) all moved lower as well. One continued underperformer were UK gilts (+0.3bps), and yesterday we saw the spread between 10yr gilt and bund yields widen to its biggest gap in over 2 years, at 120bps. Staying on the UK, the pound (-0.81%) continued to slump yesterday, hitting its lowest level against the dollar since last December, which comes as the country has continued to face major issues over its energy supply. Yesterday actually saw natural gas prices take another leg higher in both the UK (+10.09%) and Europe (+10.24%), and the UK regulator said that three smaller suppliers (who supply fewer than 1% of domestic customers between them) had gone out of business. This energy/inflation/BoE conundrum is confusing the life out of Sterling 10 year breakevens. They rose +18bps from Monday morning to Tuesday lunchtime but then entirely reversed the move into last night’s close. This is an exaggerated version of how the world’s financial markets are puzzling over whether breakevens should go up because of energy or go down because of the demand destruction and central bank response. Central bankers were in no mood to panic yesterday though as we saw Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and BoJ Governor Kuroda all appear on a policy panel at the ECB’s forum on central banking. There was much to discuss but the central bank heads all maintained that this current inflation spike will relent with Powell saying that it was “really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy -- which is a process that will have a beginning, a middle and an end.” ECB President Lagarde shared that sentiment, adding that “we certainly have no reason to believe that these price increases that we are seeing now will not be largely transitory going forward.” Overnight in Asia, equities have seen a mixed performance, with the Nikkei (-0.40%), and the Hang Seng (-1.08%) both losing ground, whereas the Kospi (+0.41%) and the Shanghai Composite (+0.30%) have posted gains. The moves came amidst weak September PMI data from China, which showed the manufacturing PMI fall to 49.6 (vs. 50.0 expected), marking its lowest level since the height of the Covid crisis in February 2020. The non-manufacturing PMI held up better however, at a stronger 53.2 (vs. 49.8 expected), although new orders were beneath 50 for a 4th consecutive month. Elsewhere, futures on the S&P 500 (+0.50%) and those on European indices are pointing to a higher start later on, as markets continue to stabilise after their slump earlier in the week. Staying on Asia, shortly after we went to press yesterday, former Japanese foreign minister Fumio Kishida was elected as leader of the governing Liberal Democratic Party, and is set to become the country’s next Prime Minister. The Japanese Diet will hold a vote on Monday to elect Kishida as the new PM, after which he’ll announce a new cabinet, and attention will very soon turn to the upcoming general election, which is due to take place by the end of November. Our Chief Japan economist has written more on Kishida’s victory and his economic policy (link here), but he notes that on fiscal policy, Kishida’s plans to redistribute income echo the shift towards a greater role for government in the US and elsewhere. There wasn’t a massive amount of data yesterday, though Spain’s CPI reading for September rose to an above-expected +4.0% (vs. 3.5% expected), so it will be interesting to see if something similar happens with today’s releases from Germany, France and Italy, ahead of the Euro Area release tomorrow. Otherwise, UK mortgage approvals came in at 74.5k in August (vs. 73.0k expected), and the European Commission’s economic sentiment indicator for the Euro Area rose to 117.8 in September (vs. 117.0 expected). To the day ahead now, and one of the highlights will be Fed Chair Powell’s appearance at the House Financial Services Committee, alongside Treasury Secretary Yellen. Other central bank speakers include the Fed’s Williams, Bostic, Harker, Evans, Bullard and Daly, as well as the ECB’s Centeno, Visco and Hernandez de Cos. On the data side, today’s highlights include German, French and Italian CPI for September, while in the US there’s the weekly initial jobless claims, the third estimate of Q2 GDP and the MNI Chicago PMI for September. Tyler Durden Thu, 09/30/2021 - 07:49.....»»

Category: blogSource: zerohedgeSep 30th, 2021

Futures Rebound As Yields Drop

Futures Rebound As Yields Drop U.S. index futures rebounded on Tuesday from Monday's stagflation-fear driven rout as an increase in Treasury yields abated and the greenback dropped from a 10 month high while Brent crude dropped from a 3 year high of $80/barrel after API showed a surprise stockpile build across all products. One day after one of Wall Street’s worst selloff of this year which saw the S&P's biggest one-day drop since May, dip buyers made yet another another triumphal return to global markets, with Nasdaq 100 futures climbing 130 points or 0.9% after the tech-heavy index tumbled the most since March on Tuesday as U.S. Treasury yields rose on tapering and stagflationconcerns. S&P 500 futures rose 28 points or 0.6% after the underlying gauge also slumped amid mounting concern over the debt-ceiling impasse in Washington. A key catalyst for today's easing in financial conditions was the 10-year yield shedding four basis points and the five-year rate falling below 1%. In the past five sessions, the 10Y yield rose by a whopping 25 basis point, a fast enough move to trigger VaR shocks across risk parity investors. "We think (10-year treasury yields) are likely to around 1.5% to 1.75%, so they obviously still have room to go," said Daniel Lam, senior cross-asset strategist at Standard Chartered, who added that the rise in yields was driven by the fact that the United States was almost definitely going to start tapering its massive asset purchases by the end of this year, and that this would drive a shift from growth stocks into value names. Shares of FAAMG gigatechs rose between 1% and 1.3% in premarket trading as the surge in yields eased. Oil firms and supermajors like Exxon and Chevron dipped as a rally in crude prices petered out. The S&P energy sector has gained 3.9% so far this week and is on track for its best monthly performance since February. Among stocks, Boeing rose 2.5% after it said 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year. Cybersecurity firm Fortinet Inc. led premarket gains among S&P 500 Index companies. Here are some of the other big movers this morning: Micron (MU US) shares down more than 3% in U.S. premarket trading after the chipmaker’s forecast came in well below analyst expectations. Co. was hurt by slowing demand from personal-computer makers Lucid (LCID US) shares rise 9.7% in U.S. premarket trading after the electric-vehicle company said it has started production on its debut consumer car EQT Corp. (EQT US) shares fell 4.8% in Tuesday postmarket trading after co. reports offering by certain shareholders who received shares as a part of its acquisition of Alta Resources Development’s upstream and midstream units PTK Acquisition (PTK US) rises in U.S. premarket trading after the blank-check company’s shareholders approved its combination with the Israel-based semiconductor company Valens Cal-Maine (CALM US) shares rose 4.4% postmarket Tuesday after it reported net sales for the first quarter that beat the average analyst estimate as well as a narrower-than-estimated loss Sherwin-Williams (SHW US) dropped 3.5% in Tuesday postmarket trading after its forecasted adjusted earnings per share for the third quarter missed the average analyst estimate Boeing (BA US) and Spirit Aerosystems (SPR US) climb as much as 3% after being upgraded to outperform by Bernstein on travel finally heading to inflection point The S&P 500 is set to break its seven-month winning streak as fears about non-transitory inflation, China Evergrande’s default, potential higher corporate taxes and a sooner-than expected tapering of monetary support by the Federal Reserve clouded investor sentiment in what is usually a seasonally weak month. Meanwhile, Senate Democrats are seeking a vote Wednesday on a stopgap funding bill to avert a government shutdown, but without a provision to increase the federal debt limit. On Tuesday, Jamie Dimon said a U.S. default would be “potentially catastrophic” event, in other words yet another multibillion bailout for his bank. “Many things are in flux: the pandemic is not over, the supply chain bottlenecks we are seeing are affecting all sorts of prices and we’ll need to see how it plays out because the results are not clear in terms of inflation,” Belita Ong, Dalton Investments chairman, said on Bloomberg Television. Europe’s Stoxx 600 gauge rebounded from a two-month low, rising 0.9% and reversing half of yesterday's losses. Semiconductor-equipment company ASM International posted the biggest increase on the index amid positive comments by analysts on its growth outlook. A sharp rebound during the European session marked a turnaround from the downbeat Asian session, when equities extended losses amid concerns over stagflation and China Evergrande Group’s debt crisis. Sentiment improved as a steady flow of buyers emerged in the Treasury market, ranging from foreign and domestic funds to leveraged accounts.  Here are some of the biggest European movers today: Academedia shares rise as much as 6.9% in Stockholm, the most since June 1, after the company said the number of participants for its higher vocational education has increased 25% y/y. ASM International jumps as much as 7.3%, rebounding from a three-day sell-off, boosted by supportive analyst comments and easing bond yields. GEA Group gains as much as 4.7% after the company published new financial targets through 2026, which Citigroup says are above analysts’ consensus and an encouraging signal. DSV bounces as much as 4.4% as JPMorgan upgrades to overweight, saying the recent pullback in the shares presents an opportunity. Genova Property Group falls as much as 10% in Stockholm trading after the real estate services company placed shares at a discount to the last close. ITM Power drops as much as 6.4% after JPMorgan downgrades to neutral from overweight on relative valuation, with a more mixed near-term outlook making risk/reward seem less compelling. Royal Mail slides as much as 6.2% after UBS cuts its rating to sell from buy, expecting U.K. labor shortages and wage inflation pressures to hurt the parcel service company’s profit margins. Earlier in the session, Asian equities slumped in delayed response to the US rout. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.43% with Australia off 1.5%, and South Korea falling 2.06%. The Hong Kong benchmark shed 1.2% and Chinese blue chips were 1.1% lower. Japan's Nikkei shed 2.35% hurt by the general mood as the country's ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election due in weeks.  Also on traders' minds was cash-strapped China Evergrande whose shares rose as much as 12% after it said it plans to sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank. Evergrande is due to make a $47.5 million bond interest payment on its 9.5% March 2024 dollar bond, having missed a similar payment last week, but it said in the stock exchange filing the proceeds of the sale should be used to settle its financial liabilities due to Shengjing Bank. Chinese real estate company Fantasia Holdings Group is struggling to avoid falling deeper into distress, just as the crisis at China Evergrande flags broader risks to other heavily indebted developers. In Japan, the country's PGIF, or Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan- denominated Chinese sovereign debt in its portfolio. In rates, as noted above, Treasuries lead global bonds higher, paring large portion of Tuesday’s losses with gains led by intermediates out to long-end of the curve. Treasury yields richer by up to 4bp across long-end of the curve with 10s at around 1.50%, outperforming bunds and gilts both by 2bp; front-end of the curve just marginally richer, flattening 2s10s spread by 3.2bp with 5s30s tighter by 0.5bp. Futures volumes remain elevated amid evidence of dip buyers emerging Tuesday and continuing over Wednesday’s Asia hours. Session highlights include a number of Fed speakers, including Chair Powell.     In FX, the Bloomberg Dollar Spot Index was little changed after earlier advancing, and the dollar slipped versus most of its Group-of-10 peers. The yen was the best G-10 performer as it whipsawed after earlier dropping to 111.68 per dollar, its weakest level since March 2020. The Australian dollar also advanced amid optimism over easing of Covid-related restrictions while the New Zealand dollar was the worst performer amid rising infections. The euro dropped to an 11-month low while the pound touched its weakest level since January against the greenback amid a bout of dollar strength as the London session kicked off. Confidence in the euro-area economy unexpectedly rose in September as consumers turned more optimistic about the outlook and construction companies saw employment prospects improve. The yen climbed from an 18-month low as a decline in stocks around the world helps boost demand for the currency as a haven. Japanese bonds also gained. In commodities, oil prices dropped after touching a near three-year high the day before. Brent crude fell 0.83% to $78.25 per barrel after topping $80 yesterday; WTI dipped 1.09% to $74.47 a barrel. Gold edged higher with the spot price at $1,735.6 an ounce, up 0.1% from the seven-week low hit the day before as higher yields hurt demand for the non interest bearing asset. Base metals are under pressure with LME aluminum and copper lagging. Looking at the day ahead, the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Market Snapshot S&P 500 futures up 0.7% to 4,371.75 STOXX Europe 600 up 0.8% to 455.97 MXAP down 1.2% to 197.38 MXAPJ down 0.7% to 635.17 Nikkei down 2.1% to 29,544.29 Topix down 2.1% to 2,038.29 Hang Seng Index up 0.7% to 24,663.50 Shanghai Composite down 1.8% to 3,536.29 Sensex down 0.4% to 59,445.57 Australia S&P/ASX 200 down 1.1% to 7,196.71 Kospi down 1.2% to 3,060.27 Brent Futures down 0.7% to $78.53/bbl Gold spot up 0.4% to $1,740.79 U.S. Dollar Index little changed at 93.81 German 10Y yield fell 1.1 bps to -0.210% Euro down 0.2% to $1.1664 Top Overnight News from Bloomberg China’s central bank governor said quantitative easing implemented by global peers can be damaging over the long term and vowed to keep policy normal for as long as possible China’s central bank injected liquidity into the financial system for a ninth day in the longest run since December as it sought to meet a surge in seasonal demand for cash China stepped in to buy a stake in a struggling regional bank from China Evergrande Group as it seeks to limit contagion in the financial sector from the embattled property developer The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch Japan’s Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan-denominated Chinese sovereign debt in its portfolio. The decision comes as FTSE Russell is set to start adding Chinese debt to its benchmark global bond index, which the GPIF follows, from October Fumio Kishida is set to become Japan’s prime minister, after the ex-foreign minister overcame popular reformer Taro Kono to win leadership of the country’s ruling party, leaving stock traders feeling optimistic ECB Governing Council member Gabriel Makhlouf said policy makers must be ready to respond to persistently higher inflation that could result from lasting supply bottlenecks Inflation accelerated in Spain to the fastest pace in 13 years, evidence of how surging energy costs are feeding through to citizens around the euro-zone economy Sterling-debt sales by corporates exceeded 2020’s annual tally as borrowers rushed to secure ultra-cheap funding costs while they still can. Offerings will top 70 billion pounds ($95 billion) through Wednesday, beating last year’s total sales by at least 600 million pounds, according to data compiled by Bloomberg A more detailed look at global markets courtesy of Newsquawk Asian equity markets were pressured on spillover selling from global peers which saw the S&P 500 suffer its worst day since May after tech losses were magnified as yields climbed and with sentiment also dampened by weak data in the form of US Consumer Confidence and Richmond Fed indexes. ASX 200 (-1.1%) was heavily pressured by tech and with mining-related stocks dragged lower by weakness in underlying commodity prices, with the mood also clouded by reports that Queensland is on alert for a potential lockdown and that Australia will wind down emergency pandemic support payments within weeks. Nikkei 225 (-2.1%) underperformed amid the broad sell-off and as participants awaited the outcome of the LDP leadership vote which saw no candidate win a majority (as expected), triggering a runoff between vaccine minister Kono and former foreign minister Kishida to face off in a second round vote in which Kishida was named the new PM. KOSPI (-1.2%) was heavily pressured by the tech woes and after North Korea confirmed that yesterday’s launch was a new type of hypersonic missile. Hang Seng (+0.7%) and Shanghai Comp. (-1.8%) conformed to the broad risk aversion with tech stocks hit in Hong Kong, although the losses were milder compared to regional peers with Evergrande shares boosted after it sold CNY 10bln of shares in Shengjing Bank that will be used to pay the developer’s debt owed to Shengjing Bank, which is the Co.’s first asset sale amid the current collapse concerns although it still faces another USD 45.2mln in interest payments due today. In addition, the PBoC continued with its liquidity efforts and there was also the absence of Stock Connect flows to Hong Kong with Southbound trading already closed through to the National Holidays. Finally, 10yr JGBs were slightly higher as risk assets took a hit from the tech sell-off and with T-notes finding some reprieve overnight. Furthermore, the BoJ were also in the market for nearly JPY 1tln of JGBs mostly in 3yr-10yr maturities and there were notable comments from Japan’s GPIF that it is to avoid investments in Chinese government bonds due to concerns over China market. Top Asian News L&T Is Said in Talks to Merge Power Unit With Sembcorp India Prosecutors Seek Two Years Jail for Ghosn’s Alleged Accomplice Japan to Start Process to Sell $8.5 Billion Postal Stake Gold Climbs From Seven Week Low as Yields Retreat, Dollar Pauses Bourses in Europe are attempting to claw back some ground lost in the prior session’s global stocks rout (Euro Stoxx 50 +0.9%; Stoxx 600 +0.8%). The upside momentum seen at the cash open has somewhat stabilised amid a lack of news flow and with a busy agenda ahead from a central bank standpoint, with traders also cognizant of potential month-end influence. US equity futures have also been gradually drifting higher since the reopen of electronic trade. As things stand, the NQ (+1.0%) narrowly outperforms the ES (+0.7%), RTY (+0.8%) and YM (+0.6%) following the tech tumble in the prior session, and with yields easing off best levels. Back to European cash, major regional bourses see broad-based gains with no standout performers. Sectors are mostly in the green; Oil & Gas resides at the foot of the bunch as crude prices drift lower and following two consecutive sessions of outperformance. On the flip side, Tech resides among today’s winners in what is seemingly a reversal of yesterday’s sector configuration, although ASML (+1.3%) may be offering some tailwinds after upping its long-term outlook whilst suggesting ASML and its supply chain partners are actively adding and improving capacity to meet this future customer demand – potentially alleviating some concerns in the Auto sector which is outperforming at the time of writing. Retail also stands strong as Next (+3.0%) upped its guidance whilst suggesting the longer-term outlook for the Co. looks more positive than it had been for many years. In terms of individual movers, Unilever (+1.0%) is underpinned by source reports that the Co. has compiled a shortlist of at least four bidders for its PG Tips and Lipton Iced Tea brands for some GBP 4bln. HeidelbergCement (-1.4%) is pressured after acquiring a 45% stake in the software firm Command Alko. Elsewhere, Morrisons (+1.3%) is on the front foot as the takeover of the Co. is to be decided via an auction process as touted earlier in the month. Top European News Makhlouf Says ECB Must Be Ready to Act If Inflation Entrenched ASML to Ride Decade-Long Sales Boom After Chip Supply Crunch Spanish Inflation at 13-Year High in Foretaste of Regional Spike U.K. Mortgage Approvals Fall to 74,453 in Aug. Vs. Est. 73,000 In FX, the yield and risk backdrop is not as constructive for the Dollar directly, but the index has posted another marginal new y-t-d best, at 93.891 compared to 93.805 yesterday with ongoing bullish momentum and the bulk of the US Treasury curve remaining above key or psychological levels, in contrast to other global bond benchmarks. Hence, the Buck is still elevated and on an upward trajectory approaching month end on Thursday, aside from the fact that hedge rebalancing flows are moderately positive and stronger vs the Yen. Indeed, the Euro is the latest domino to fall and slip to a fresh 2021 low around 1.1656, not far from big barriers at 1.1650 and further away from decent option expiry interest at the 1.1700 strike (1 bn), and it may only be a matter of time before Sterling succumbs to the same fate. Cable is currently hovering precariously above 1.3500 and shy of the January 18 base (1.3520) that formed the last pillar of support for the Pound before the trough set a week earlier (circa 1.3451), and ostensibly supportive UK data in the form of BoE mortgage lending and approvals has not provided much relief. AUD/JPY - A rather odd couple in many ways given their contrasting characteristics as a high beta or activity currency vs traditional safe haven, but both are benefiting from an element of corrective trade, consolidation and short covering relative to their US counterpart. Aud/Usd is clinging to 0.7250 in advance of Aussie building approvals on Thursday and Usd/Jpy is retracing from its new 111.68 y-t-d pinnacle amidst the less rampant yield environment and weighing up the implications of ex-Foreign Minister Kishida’s run-off win in the LDP leadership contest and the PM-in-waiting’s pledge to put together a Yen tens of trillion COVID-19 stimulus package before year end. CHF/CAD/NZD - All relatively confined vs their US rival, as the Franc continues to fend off assaults on the 0.9300 level with some impetus from a significant improvement in Swiss investor sentiment, while the Loonie is striving to keep its head above 1.2700 ahead of Canadian ppi data and absent the recent prop of galloping oil prices with WTI back under Usd 75/brl from Usd 76.67 at best on Tuesday. Elsewhere, the Kiwi is pivoting 0.6950 pre-NZ building consents and still being buffeted by strong Aud/Nzd headwinds. SCANDI/EM - Not much purchase for the Sek via upgrades to Swedish GDP and inflation forecast upgrades by NIER as sentiment indices slipped across the board, but some respite for the Try given cheaper crude and an uptick in Turkish economic confidence. Conversely, the Cnh and Cny have not received their customary fillip even though the PBoC added liquidity for the ninth day in a row overnight and China’s currency regulator has tightened control over interbank trade and asked market makers to narrow the bid/ask spread, according to sources. In commodities, WTI and Brent front month futures have been trimming overnight losses in early European trade. Losses overnight were seemingly a function of profit-taking alongside the bearish Private Inventory Report – which showed a surprise build in weekly crude stocks of 4.1mln bbls vs exp. -1.7mln bbls, whilst the headline DoE looks for a draw of 1.652mln bbls. Further, there have been growing calls for OPEC+ to further open the taps beyond the monthly 400k BPD hike, with details also light on the White House’s deliberations with OPEC ahead of the decision-making meeting next week. Despite these calls, it’s worth bearing in mind that OPEC’s latest MOMR stated, “increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates. As a result, 2H21 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into 1H22.” Brent Dec dipped back under USD 78/bbl (vs low 763.77/bbl) after testing USD 80/bbl yesterday, whilst WTI Nov lost the USD 75/bbl handle (vs low USD 73.37/bbl). Over to metals, spot gold and silver have seen somewhat of divergence as real yields negate some effects of the new YTD peak printed by the Dollar index, whilst spot silver succumbs to the Buck. Over to base metals, LME copper trade is lacklustre as the firmer dollar weighs on the red metal. Shanghai stainless steel meanwhile extended on losses, notching the fourth session of overnight losses with desks citing dampened demand from the Chinese power crunch. US Event Calendar 7am: Sept. MBA Mortgage Applications, prior 4.9% 10am: Aug. Pending Home Sales YoY, est. -13.8%, prior -9.5% 10am: Aug. Pending Home Sales (MoM), est. 1.3%, prior -1.8% Central Bank speakers 9am: Fed’s Harker Discusses Economic Outlook 11:45am: Powell Takes Part in ECB Forum on Central Banking 11:45am: Bailey, Kuroda, Lagarde, Powell on ECB Forum Panel 1pm: Fed’s Daly Gives Speech to UCLA 2pm: Fed’s Bostic Gives Remarks at Chicago Fed Payments DB's Jim Reid concludes the overnight wrap The main story of the last 24 hours has been a big enough rise in yields to cause a major risk-off move, with 10yr Treasury yields up another +5.0bps to 1.537% yesterday, and this morning only seeing a slight -0.3bps pullback to 1.534%. At the intraday peak yesterday, they did climb as high as 1.565% earlier in the session, but this accelerated the risk off and sent yields somewhat lower intraday as a result, which impacted the European bond closes as we’ll see below. All told, US yields closed at their highest level in 3 months and up nearly +24bps since last Wednesday’s close, shortly after the FOMC meeting. That’s the largest 4-day jump in US yields since March 2020, at the outset of the pandemic and shortly after the Fed announced their latest round of QE. This all led to the worst day for the S&P 500 (-2.04%) since mid-May and the worst for the NASDAQ (-2.83%) since mid-March. The S&P 500 is down -4.06% from the highs now – trading just below the Evergrande (remember that?) lows from last week. So the index still has not seen a -5% sell-off on a closing basis for 228 days and counting. If we make it to Halloween it will be a full calendar year. Regardless, the S&P and STOXX 600 remain on track for their worst monthly performances so far this year. Those moves have continued this morning in Asia, where the KOSPI (-2.05%), Nikkei (-1.64%), Hang Seng (-0.60%), and the Shanghai Comp (-1.79%) are all trading lower. The power crisis in China is further dampening sentiment there, and this morning Bloomberg have reported that the government are considering raising prices for industrial users to ease the shortage. Separately, we heard that Evergrande would be selling its stake in a regional bank at 10 billion yuan ($1.55bn) as a step to resolve its debt crisis, and Fitch Ratings also downgraded Evergrande overnight from CC to C. However, US equity futures are pointing to some stabilisation later, with those on the S&P 500 up +0.49%. Running through yesterday’s moves in more depth, 23 of the 24 industry groups in the S&P 500 fell back yesterday with the lone exception being energy stocks (+0.46%), which gained despite the late pullback in oil prices. In fact only 53 S&P constituents gained on the day. The largest losses were in high-growth sectors like semiconductors (-3.82%), media (-3.08%) and software (-3.05%), whilst the FANG+ index was down -2.52% as 9 of the 10 index members lost ground – Alibaba’s +1.47% gain was the sole exception. Over in Europe it was much the same story, with the STOXX 600 (-2.18%) falling to its worst daily performance since July as bourses across the continent fell back, including the German DAX (-2.09%) and France’s CAC 40 (-2.17%). Back to bonds and the rise in 10yr Treasury yields yesterday was primarily led by higher real rates (+2.1bps), which hit a 3-month high of their own, whilst rising inflation breakevens (+2.3bps) also offered support. In turn, higher yields supported the US dollar, which strengthened +0.41% to its highest level since November last year, though precious metals including gold (-0.92%) fell back as investors had less need for the zero-interest safe haven. Over in Europe the sell-off was more muted as bonds rallied into the close before selling off again after. Yields on 10yr bunds (+2.4bps), OATs (+3.0bps) and BTPs (+6.1bps) all moved higher but were well off the peaks for the day. 10yr Gilts closed up +4.2bps but that was -6.6bps off the high print. And staying with the UK, sterling (-1.18%) saw its worst day this year and fell to its lowest level since January 11 as sentiment has increasingly been knocked by the optics of the fuel crisis here. Given this and the hawkish BoE last week many are now talking up the stagflation risk. On the petrol crisis it’s hard to know how much is real and how much is like an old fashion bank run fuelled mostly by wild speculation. Regardless it doesn’t look good to investors for now. All this came against the backdrop of yet further milestones on inflation expectations, as the German 10yr breakeven hit a fresh 8-year high of 1.690%, just as the Euro Area 5y5y forward inflation swap hit a 4-year high of its own at 1.789%. Meanwhile 10yr UK breakevens pulled back some, finishing -6bps lower on the day after initially spiking up nearly +5bps in the opening hours of trading. This highlights the uncertainty as to the implications of a more hawkish BoE last week. As we’ve discussed over recent days, part of the renewed concerns about inflation have come from a fresh spike in energy prices, and yesterday saw Brent crude move above $80/bbl in regards intraday trading for the first time since 2018. Furthermore, natural gas prices continued to hit fresh highs yesterday, with European futures up +2.69% to a fresh high of €78.56 megawatt-hours. That said, oil prices did pare back their gains later in the session as the equity selloff got underway, with Brent crude (-0.55%) and WTI (-0.21%) both closing lower on the day, and this morning they’ve fallen a further -1.49% and -1.54% respectively. Yesterday, Fed Chair Powell and his predecessor Treasury Secretary Yellen appeared jointly before the Senate Banking Committee. The most notable moment came from Senator Warren who criticized Chair Powell for his track record on regulation, saying he was a “dangerous man” and then saying on the record that the she would not support his re-nomination ahead of his term ending in February. Many senators, mostly Republicans, voiced concerns over inflationary pressures, but both Yellen and Powell maintained their stances that the current high level of inflation was temporary and due to the supply chain issues from Covid-19 that they expect to be resolved in time. Lastly, both Powell and Yellen warned the Senators that a potential US default would be “catastrophic” and Treasury Secretary Yellen said in a letter to Congress that the Treasury Department now estimated the US would hit the debt ceiling on October 18. So we’ve got an important few days and weeks coming up. Last night, Senate Majority Leader Schumer tried to pass a vote that would drop the threshold from 60 to a simple majority to suspend the debt limit, but GOP Senator Cruz amongst others blocked this and went forward with forcing Democrats to use the budget reconciliation measure instead. Some Democrats have pushed back saying that the budget process would take too long and increases the risk of a default. While this is all going on we’re now less than 48 hours from a US government shutdown as it stands, though there seems to be an agreement on the funding measure if it were to be raised as clean bill without the debt ceiling provisions. There is also other business in Washington due tomorrow, with the bipartisan infrastructure bill with $550bn of new spending up for a vote. While the funding bill is the higher short-term priority, there was news yesterday that progressive members of the House of Representatives may try and block the infrastructure bill if it comes up ahead of the budget reconciliation vote. That was according to Congressional Progressive Caucus Chair Jayapal who said “Progressives will vote for both bills, but a majority of our members will only vote for the infrastructure bill after the President’s visionary Build Back Better Act passes.” The infrastructure bill could be tabled once again as there is no real urgency to get it voted on until the more pressing debt ceiling and funding bill issues are resolved. Democratic leadership is trying to thread a needle and the key sticking point appears to be if the moderate and progressive wing can agree on the budget quickly enough to beat the clock on the US defaulting on its debt. Shifting back to central bankers, ECB President Lagarde warned against withdrawing stimulus too rapidly as a response to inflationary pressures. She contested that there are “no signs that this increase in inflation is becoming broad-based across the economy,” and continued that the “key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term.” Similar to her US counterpart, Lagarde cited higher energy prices and supply-chain breakdowns as the root cause for the current high inflation data and argued these would recede in due time. The ECB continues to strike a more dovish tone than the Fed and BoE. Speaking of inflation, DB’s chief European economist, Mark Wall, has just put out a podcast where he discusses the ECB, inflation and the value of a flexible asset purchase programme. He and his team have a baseline assumption that the ECB will double the pace of their asset purchases to €40bn per month to smooth the exit from the Pandemic Emergency Purchase Programme, but the upward momentum in the inflation outlook and the latest uncertainty from recent supply shocks puts a premium on policy flexibility. You can listen to the podcast "Focus Europe: Podcast: ECB, inflation and the value of a flexible APP" here. In Germany, there weren’t a great deal of developments regarding the election and coalition negotiations yesterday, but NTV reported that CSU leader Markus Söder had told a regional group meeting of the party that he expected the next government would be a traffic-light coalition of the SPD, the Greens and the FDP. Speaking to reporters later in the day, he went onto say that the SPD’s Olaf Scholz had the best chance of becoming chancellor, and that the SPD had the right to begin coalition negotiations. Running through yesterday’s data, the Conference Board’s consumer confidence reading in the US for September fell to 109.3 (vs. 115.0 expected), which marks the third consecutive decline in the reading and the lowest it’s been since February. Meanwhile house prices continued to rise, with the FHFA’s house price index for July up +1.4% (vs. +1.5% expected), just as the S&P CoreLogic Case-Shiller index saw a record +19.7% increase in July as well. To the day ahead now, and the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Tyler Durden Wed, 09/29/2021 - 07:42.....»»

Category: blogSource: zerohedgeSep 29th, 2021

Biden Nominates Sarah Bloom Raskin, Philip Jefferson and Lisa Cook To Fed Board

Biden Nominates Sarah Bloom Raskin, Philip Jefferson and Lisa Cook To Fed Board As was leaked previously, on Thursday night the White House said that Joe Biden - still reeling from what many said was the worst day in his presidency hammered by the Sinema/SCOTUS double whammy - will nominate Sarah Bloom Raskin, a former top Treasury Department official, to serve as the Federal Reserve’s top banking regulator post. Sarah Bloom Raskin  If confirmed by the Senate, Raskin, a former Fed governor, would become the central bank’s vice chairwoman of supervision, the government’s most influential overseer of the American banking system. Rounding out his "diversity hiring mandate", Biden will also nominate two economists for other Fed board seats: Lisa Cook, a professor of economics and international relations at Michigan State University; and Philip Jefferson, a professor and administrator at Davidson College in North Carolina. Philip Jefferson Each nominee will in the coming weeks face questioning from the Senate Banking Committee. The three picks complete Biden’s remake of the Fed board, following his decision in November to offer a second term to Fed Chairman Jerome Powell and nominate Fed governor Lael Brainard to become Fed vice chairwoman who replaces Richard Clarida whose last day is tomorrow as his Fed career was cut short by the stock-trading scandal. Lisa Cook If all nominees win Senate approval, Raskin and Brainard would succeed top officials chosen by Donald Trump. Biden’s appointees would hold five of the seven board seats, with four positions held by women. The nominations of Cook and Jefferson, who are both black, would help Biden fulfill his promise to improve diversity atop the central bank, which according to the WSJ, has had only three Black board members, all men. The most recent was former Fed Vice Chairman Roger Ferguson, who left the board in 2006. Raskin’s nomination is meant to satisfy progressive Democrats, some of whom - especially Elizabeth Warren - opposed Biden’s nomination of Powell, a Trump-picked Republican. They have called for the Fed to take a tougher stance in regulating big banks and a bolder approach in addressing financial risks posed by climate change, although to this day it remains unclear just how or why the Fed intends to regulate "climate change risk." Former Vice Chair for Supervision Randal Quarles, who recently left the Fed, played a major role in reducing capital requirements for U.S. banks with less than $700 billion in assets and relaxing the Volcker Rule’s audit rules for trades made by JPMorgan Chase, Goldman Sachs and other investment banks. Fed officials in favor of easier regulatory stance argue the industry is well-capitalized and not in need of some of the more restrictive measures enacted in the wake of the crisis. Many Democrats, including Massachusetts Sen. Elizabeth Warren, have pushed back and said rollbacks leave the banking sector more vulnerable to shocks and liable to excess risk taking. There is a risk that Raskin’s calls for the Fed to play a more proactive role on climate change could attract opposition from Republicans. In a New York Times opinion article in May 2020, Raskin was critical of broad-based emergency-lending backstops enacted by the Treasury and Fed to assist businesses during the pandemic because she believed they should have taken steps to prevent lending to oil-and-gas concerns. “The decisions the Fed makes on our behalf should build toward a stronger economy with more jobs in innovative industries—not prop up and enrich dying ones,” she wrote. As the WSJ notes, with a closely divided Senate, Biden needs either universal support of Democrats to confirm his nominees or support from some Republicans to overcome holdouts from his own party. Raskin can be confirmed by the Senate but faces a “tight, contentious vote” with “perhaps…a Republican or two on her side,” said Ian Katz, a financial-policy analyst at Capital Alpha Partners, in a recent note to clients. At the Fed, Raskin maintained a low profile on monetary policy but was deeply involved in behind-the-scenes work to write rules implementing the 2010 Dodd-Frank financial-regulatory overhaul. In a speech in September 2009, Raskin blamed the financial crisis on “a deregulatory fervor that marginalized the interests of many” and said the downturn had been “brought upon us through a combination of greed, weak regulation and weak enforcement.” Raskin, who has a Harvard University law degree and wrote her undergraduate thesis at Amherst College on monetary policy, served in the Obama administration as deputy Treasury secretary from 2014 to 2017 and as a Fed governor from 2010 to 2014. She was previously Maryland’s state commissioner of financial regulation. She is currently a law professor at Duke University and is married to Rep. Jamie Raskin (D., Md.). Ironically, she has served since 2017 on the board of directors of investment giant Vanguard Group. Tyler Durden Fri, 01/14/2022 - 07:00.....»»

Category: personnelSource: nytJan 14th, 2022

Bitcoin Unbound: When Freedom Money Is Used For Hate

Bitcoin Unbound: When Freedom Money Is Used For Hate Authored by Tony Cross via BitcoinMagazine.com, Bitcoin’s technological innovation is available for anyone to use, even bigots; but this shouldn’t sully the entire network’s reputation... The Southern Poverty Law Center (SPLC) issued a new report on the use of bitcoin and other cryptocurrencies by white supremacists and far-right extremists. In the report, Megan Squire, senior fellow for data analytics, and senior investigative reporter Michael Edison Hayden, link 600 addresses to white supremacists, estimating they hold “tens of millions of dollars” worth of value. Kevin Collier and Brandy Zadrozny, writing for NBC News, then picked up the story, running with the headline, “Bitcoin Surge Was A Windfall For White Supremacists, Research Finds.” Bitcoiners know what to do: take a deep breath. Let the FUD flow through you. Maintain stoic equanimity. For more than a decade, the media has tarred this open-source protocol, and those of us who use it, by association with all manner of evil: money laundering, tax evasion, terrorist financing, ponzi scamming, and my personal favorite, the boiling of oceans. Such poorly-argued and ill-informed attacks can be calmly dispatched or simply ignored. We stack sats. We stay humble. It’s just another day in the life of a bitcoiner. But this one hits differently. White supremacism is real, and it is repugnant. For those of us in Portland, Oregon, hate groups regularly march into our town and demonstrate, seeking out violent encounters on the streets. For targeted individuals — which I am not — these groups represent not only an attack on their personhood and dignity but a threat to their safety and bodily integrity. So it’s hard to let this particular story simply pass by without comment. Neither the original report nor the subsequent NBC story provide context for their findings. Their point is simply that fringe political groups control 600 addresses and potentially tens of millions of dollars worth of bitcoin and other cryptocurrencies. What they fail to mention, however, is that there are more than 200 million non-empty bitcoin addresses worldwide and nearly a trillion dollars of value in bitcoin. That means these hate groups hold .0003% of addresses and at least 0.0001% of bitcoin’s value, a far less compelling headline. Imagine Amazon stock ownership could be tracked on a public ledger and some white supremacists were relatively early investors, now constituting .0003% of shareholders. Would it taint the entire company and all other shareholders? Would it merit a news story that made no qualifications and provided no context? I think we know the answers. Neither the original report nor the NBC story observes that the same censorship resistance that makes bitcoin useful to hate groups in the U.S. is also what allows it to support dissidents and oppressed minorities from Palestine to Cuba to Nigeria to Belarus. Readers of Bitcoin Magazine who follow the work of human rights activist Alex Gladstein will be familiar with dozens of such examples. The SPLC researchers do not track wallets of women in Afghanistan — nor should they!— who were paid in bitcoin as far back as 2013. Their windfalls allowed one to start a new life in Germany, another to pay her college tuition in the U.S. The researchers do not track — nor should they! — the wallets of the Feminist Coalition in Nigeria, whose bank accounts were frozen, and who turned to bitcoin instead. The researchers do not track — nor should they! — the wallets of Cuban bitcoiners, whose peso has lost two thirds of its value since the end of 2020, and who, without bitcoin, may have been unable to afford basic necessities. Yet, without such tracking, the mere fact that 600 wallets are controlled by white supremacists tells us nothing about who is benefiting from bitcoin on the whole. These researchers also seem unaware that bitcoin’s international usage correlates with low national ratings of democracy, government integrity, investment freedom, monetary freedom, and property rights. Bitcoin thrives wherever money and good governance is failing. Turning to the domestic scene, these researchers seem unaware that while only 11% of white Americans own cryptocurrencies, 23% of Black Americans and 17% of Hispanic Americans do. In sum, the “windfall” accruing to a handful of white supremacists in the U.S. also lifted millions worldwide. But instead of any attempt to see how bitcoin is being used more broadly, the identities behind 600 wallets are used to besmirch bitcoin itself – and others who’d use it – while the remaining 199,999,400 wallets are ignored. The NBC story does, at least, frankly acknowledge how easy it is to track payments simply by pairing social-media-posted addresses with on-chain transactions: “The list of 600 addresses we analyzed is just a big list that I made of who owns what, and the way that we get those is just watching these guys tell each other where to send the money,” Squire said. “It’s just literally just looking this stuff up on this public ledger.” And isn't that kind of transparency novel and refreshing? Especially when compared with the by-design opacity of offshore shell companies and cold hard cash, neither of which lends itself to this kind of investigative journalism? But the stories make no mention of these alternatives. The most glaring omission from a progressive Bitcoiner perspective is any consideration of the actual currency with the closest ties to white supremacism, namely, the U.S. dollar itself. The dollar’s value accrued to whites first through violent conquest, then literal enslavement, and thereafter, by Jim Crow segregation, financial redlining, and mass incarceration. To focus on the use of 600 bitcoin addresses by white supremacists while ignoring this shameful, systemic legacy of racism betrays a disturbing lack of perspective. Neither the racist history of the dollar nor the revolutionary potential of bitcoin is, of course, lost on Black Bitcoiners. Dawdu M. Amantanah, in “Closing The Wealth Gap: Black America And Bitcoin Adoption,” highlights Bitcoin’s decentralization, which means the monetary network, unlike traditional banking, offers financial inclusion, and the promise of financial freedom, to all. As Twitter persona Lawrence Douglas, aka @AxeCapYa, who publishes a newsletter called “Black And Bullish,” explains, “Bitcoin is the first asset that allows the average citizen to participate in a global financial system on equal footing. Its low barrier of entry allows bitcoin to transform the financial lives of those that choose to adopt it as a long-term store of value.” Black bitcoin is its own universe with books like “Bitcoin And Black America” by Isaiah Jackson, “Bitcoin And Black Powernomics,” by Will Hobdy, and “From Bars to Bitcoin” by Justin Rhedrick, as well as websites, Twitter spaces, Clubhouse chat rooms, podcasts, clubs, newsletters, fin-tech apps, and conferences. This burgeoning world, created entirely by and for Black investors is aimed at financial education and entrepreneurship, encouraging Black ownership through bitcoin and cryptocurrency. SPLC and NBC fail to acknowledge its existence. It must be said that certain corners of the Bitcoin community are, in fact, bigoted in a variety of ways. I have witnessed instances of it myself. And we must all, always condemn such bigotry when encountered, simply as a matter of decency and humanity. Something similar was true in the early days of the internet, when neo-Nazis recruited on online bulletin boards. As a percentage, white supremacy groups probably marred the internet to a greater degree then, than they pollute the Bitcoin blockchain now, and in fact, such online recruiting is still a problem. YouTube and Facebook algorithms have probably done as much as anything to radicalize segments of our society. Yet few are calling for a shutdown of the internet or shaming all its users because it is a neo-Nazi recruiting tool. Instead, we recognize the issue’s inherent difficulty: there are unavoidable tradeoffs between freedom of expression, utility, and safety, and we recognize, too, the perils of designating and empowering authorities on the matter of what speech should and should not be permitted by global networks of communication. Perhaps it is too much to ask for subtlety, for complexity, in an era of clicks. But the real issue here is whether, on balance, the benefits of bitcoin's censorship resistance outweigh the negative consequences of bitcoin being spent in odious ways and accrued by nefarious characters. Here lies a deep philosophical question about the proper reach and limits of our rights to property and exchange, as well as an empirical question about what positive and negative outcomes are enabled by Bitcoin’s technology. Absent proper comparisons, absent context about the network as a whole, absent imagination about the possibilities for bitcoin ranging across the whole moral spectrum, we're left with an icky feeling, but nothing of substance. Maybe that was the point. Tyler Durden Wed, 12/15/2021 - 18:20.....»»

Category: personnelSource: nytDec 15th, 2021

Sanofi"s (SNY) Filing for Rare Disease Drug Accepted by EMA

The EMA accepts Sanofi's (SNY) regulatory submission seeking approval for olipudase alfa, a potential treatment for acid sphingomyelinase deficiency. Sanofi SNY announced that the European Medicines Agency (“EMA”) has accepted the marketing authorization applications (MAA) for olipudase alfa, the company’s investigational enzyme replacement therapy for the treatment of acid sphingomyelinase deficiency (ASMD). ASMD is a rare, progressive and potentially life-threatening disease for which no treatment has been approved.The regulatory agency has accepted the MAA for review under an accelerated assessment procedure. An EMA decision is expected in second-half 2022.Sanofi’s stock has declined 2.1% this year so far against the industry’s 12.4% rise.Image Source: Zacks Investment ResearchThe EMA’s acceptance of the MAA is based on data from two clinical studies — ASCEND and ASCEND-Peds — evaluating olipudase alfain adult and pediatric patients, respectively,  with non-central nervous system manifestations of ASMD type A/B and ASMD type B.Please note that olipudase alfa has been granted the PRIority Medicines (PRIME) designation. Candidates that are designated as PRIME receive expedited approval and development support from the EMA.We also inform investors that olipudase alfahas been granted the Breakthrough Therapy designation by the FDA. Earlier in September,Sanofi filed a regulatory application with the Japanese health regulator seeking approval for olipudase alfa in ASMD.ASMD is caused by a deficiency in enzyme acid sphingomyelinase (ASM), which is required to break down lipids called sphingomyelin. If sphingomyelin builds up within cells, it eventually causes cell death and malfunction of major organ systems. Per management, an estimated 2,000 people in Europe, Japan and the United States are affected by ASMD.Olipudase alfa is designed to replace the deficient ASM, thus allowing the breakdown of sphingomyelin. If approved, olipudase alfa will become the first therapy for treating ASMD.Sanofi Price Sanofi price | Sanofi QuoteZacks Rank & Stocks to ConsiderSanofi currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the drug/biotech sector include Endo International ENDP, GlaxoSmithKline GSK and Roche Holding RHHBY. While Endo International sports a Zacks Rank #1 (Strong Buy) at present, both GlaxoSmithKline and Roche each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Endo International’s earnings per share estimates for 2021 have increased from $2.29 to $2.84 in the past 60 days. The same for 2022 has increased from $2.24 to $2.47 in the past 60 days.Earnings of Endo International beat estimates in all the last four quarters, with the average being 57.7%.GlaxoSmithKline’s earnings per share estimates for 2021 have increased from $2.80 to $3.06 in the past 60 days. The same for 2022 has increased from $3.08 to $3.26 in the past 60 days. Shares of Glaxo have risen 13.5% in the year so far.Earnings of GlaxoSmithKline beat estimates in three of the last four quarters and missed once, with the average surprise being 15.3%.Roche Holding’s earnings per share estimates for 2021 have increased from $2.76 to $2.78 in the past 60 days. The same for 2022 has increased from $2.79 to $2.81 in the past 60 days.Shares of Roche have risen 13.4% in the year so far. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sanofi (SNY): Free Stock Analysis Report GlaxoSmithKline plc (GSK): Free Stock Analysis Report Roche Holding AG (RHHBY): Free Stock Analysis Report Endo International plc (ENDP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 8th, 2021

Under pressure to cancel student debt, a top federal aid official points to Biden: "It is a decision for the White House to make"

Federal Student Aid head Richard Cordray made clear broad student-debt cancellation is Biden's job — but Biden has yet to announce what he will do. FSA head Richard Cordray.Pete Marovich/Getty Images) Richard Cordray, head of Federal Student Aid, said cancelling student debt broadly is not his job. "It is a decision for the White House to make," he said, noting his involvement in the Feb. 1 payment restart. Biden has yet to announce whether he will cancel student debt for every federal borrower. There's no question that President Joe Biden's administration officials tasked with overseeing the student-loan portfolio get their fair share of questions about debt forgiveness.But one of those officials made clear that people can stop sending those questions his way because canceling student debt is simply not his job.On Tuesday, Federal Student Aid (FSA) director Richard Cordray spoke at a conference for college financial aid administrators on how they can best help student-loan borrowers across the country. One of the topics brought up was student-loan forgiveness — something on the top of many borrowers minds, especially now, given that payments are resuming in February after what will be a nearly two-year pause during the pandemic.Cordray made clear, though, that while he is "deeply involved" in the transition back to repayment and facilitating targeted loan forgiveness programs, broad student-debt cancellation for every borrower is not in his job description."On general loan forgiveness, many people seem to have a great deal to say, but as the chief of FSA, I do not," Cordray said. "Instead, I will simply say it is a decision for the White House to make, not for me. And, whatever they decide, FSA will faithfully implement."He added that he continues to oversee student-debt cancellation for targeted groups of borrowers, like those defrauded by for-profit schools and borrowers with disabilities, along with overseeing the Education Department's recent overhaul of the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servants, like teachers, after ten years of qualifying payments.With regards to the return to repayment on February 1, Cordray said that FSA's role will take the form of a "communications campaign" to ensure borrowers have all the information they need to resume paying off their debt."We recognize that the stakes are extremely high as we face this challenge," Cordray said.Cordray's role in the FSA may be short-lived. The Wall Street Journal first reported on Tuesday that he is being considered to serve as the Federal Reserve's top banking regulator, but the White House has yet to make a final decision and Cordray has not commented on the news.Biden has yet to say if he will cancel student debt broadlyAs Cordray made clear, cancelling student debt is Biden's decision, and 43 million federal student-loan borrowers continue to anxiously await what the president will decide.During his campaign, Biden said he would approve a $10,000 student-debt cancellation. When it comes to cancelling a higher amount, like Massachusetts Sen. Elizabeth Warren's proposal of $50,000 per borrower, Biden wasn't sure if he had that legal authority, so he called on the Education and Justice Departments early in his presidency to prepare memos on his ability to cancel student debt broadly via executive action.However, while his administration continues to say they are still examining that authority, documents released last month revealed the Education Department gave Biden the memo in April, and it may have existed as early as February.Many progressive lawmakers are fed up and want Biden to give needed relief to millions of borrowers before payments pick back up in two months."Millions of borrowers across the country are desperately asking for student debt relief," Minnesota Rep. Ilhan Omar previously told Insider. "We know the President can do it with the stroke of a pen.""Release the memo," she added. "Cancel student debt."Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 1st, 2021

The Euro"s Death Wish

The Euro's Death Wish Authored by Alasdair Macleod via GoldMoney.com, Last week’s Goldmoney article explained the Fed’s increasing commitment to dollar hyperinflation. This week’s article examines the additional issues facing the euro and the Eurozone. More nakedly than is evidenced by other major central banks, the ECB through its system of satellite national central banks is now almost solely committed to financing national government debts and smothering over the consequences. The result is a commercial banking system both highly leveraged and burdened with overvalued government debt secured only by an implied ECB guarantee. The failings of this statist control system have been covered up by a pass-the-parcel any collateral goes €10 trillion plus repo market, which with the TARGET2 settlement system has concealed the progressive accumulation of private sector bad debts ever since the first Eurozone crisis hit Spain in 2012. These distortions can only continue so long as interest rates are suppressed beneath the zero bound. But rising interest rates globally are now a certainty — only officially unrecognised by central bankers — so there can only be two major consequences. First, the inevitable Eurozone economic recession (now being given an extra push through renewed covid restrictions) will send debt-burdened government deficits which are already high soaring, requiring an accelerated pace of inflationary financing by the ECB. And second, the collapse of the bloated repo market, which is to be avoided at all costs, will almost certainly be triggered. This article attempts to clarify these issues. It is hardly surprising that for the ECB raising interest rates is not an option. Therefore, the recent weakness of the euro on the foreign exchanges marks only the start of a threat to the euro system, the outcome of which will be decided by the markets, not the ECB. Introduction The euro, as it is said of the camel, was designed by a committee. Unlike the ship of the desert the euro and its institutions will not survive — we can say that with increasing certainty considering current developments. Instead of evolving as demanded by its users, the euro has become even more of a state control mechanism than the other major currencies, with the exception, perhaps, of China’s renminbi. But for all its faults, the Chinese state at least pays attention to the economic demands of its citizens to guide it in its management of the currency. The commissars in Brussels along with national politicians seem to be blind to the social and economic consequences of drifting into totalitarianism, where people are forced into new lockdowns and in some cases are being forced into mandatory covid vaccinations. The ECB in Frankfurt has also ignored the economic consequences of its actions and has just two priorities intact from its inception: to finance member governments by inflationary means and to suppress or ignore all evidence of the consequences. The ECB’s founding was not auspicious. Before monetary union socialistic France relied on inflationary financing of government spending while Germany did not. The French state was interventionist while Germany fostered its mittelstand with sound money. The compromise was that the ECB would be in Frankfurt (the locational credibility argument won the day) while its first true president, after Wim Duisenberg oversaw its establishment and cut short his presidency, would be French: Jean-Claude Trichet. Membership qualifications for the Eurozone were set out in the Maastricht treaty, and then promptly ignored to let in Italy. They were ignored again to let in Greece, which in terms of ease of doing business ranked lower than both Jamaica and Columbia at the time. And now the Maastricht rules are ignored by everyone. Following the establishment of the ECB the EU made no attempt to tackle the divergence between fiscally responsible Germany with similarly conservative northern states, and the spendthrift southern PIGS. Indeed, many claimed a virtue in that Germany’s savings could be deployed for the benefit of investment in less advanced member nations, a belief insufficiently addressed by the Germans at the time. The ECB presided over the rapidly expanding balance sheets of the major banks which in the early days of the euro made them fortunes arbitraging between Germany’s and the PIGs’ converging bond yields. The ECB was seemingly oblivious to the rapid balance sheet expansion with which came risks spiralling out of control. To be fair, the ECB was not the only major central bank unaware of what was happening on the banking scene ahead of the great financial crisis, but that does not absolve it from responsibility. The ECB and its banking regulator (the European Banking Authority — EBA) has done nothing since the Lehman failure to reduce banking risk. Figure 1 shows current leverages for the Eurozone’s global systemically important banks, the G-SIBs. Doubtless, there are other lesser Eurozone banks with even higher balance sheet ratios, the failure of any of which threatens the Eurosystem itself. Even these numbers don’t tell the whole story. Most of the credit expansion has been into government debt aided and abetted by Basel regulations, which rank government debt as the least risky balance sheet asset, irrespective whether it is German or Italian. Throughout the PIGS, private sector bad debts have been rated as “performing” by national regulators so that they can be used as collateral against loans and repurchase agreements, depositing them into the amorphous TARGET2 settlement system and upon other unwary counterparties. Figure 2 shows the growth of M1 narrow money, which has admittedly not been as dramatic as in the US dollar’s M1. But the translation of bank lending into circulating currency in the Eurozone is by way of government borrowing without stimulation cheques. It is still progressing, Cantillon-like, through the monetary statistics. And they will almost certainly increase substantially further on the back of the ongoing covid pandemic, as state spending rises, tax revenues fall, and budget deficits soar. Bear in mind that the new covid lockdowns currently being implemented will knock the recent anaemic recovery firmly on the head and drive the Eurozone into a new slump. There can be no doubt that M1 for the euro area is set to increase significantly from here, particularly since the ECB is now nakedly a machine for inflationary financing. In the US’s case, rising interest rates, which the Fed is keen to avoid, will undermine the US stock market with knock-on economic effects. In the Eurozone, rising interest rates will undermine spendthrift governments and the entire commercial banking system. Government debt creation out of control The table below shows government spending for leading Eurozone states as a proportion of their GDP last year, ranked from highest government spending to GDP to lowest (column 1). The US is included for comparison. Some of the increase in government spending relative to their economies was due to significant falls in GDP, and some of it due to increased spending. The current year has seen a recovery in GDP, which will have not yet led to a general improvement in tax revenues, beyond sales taxes. And now, much of Europe faces new covid restrictions and lockdowns which are emasculating any hopes of stabilising government debt levels. The final column in the table adjusts government debt to show it relative to the tax base, which is the productive private sector upon which all government spending, including borrowing costs and much of inflationary financing, depends. This is a more important measure than the commonly quoted debt to GDP ratios in the second column. The sensitivity to and importance of maintaining tax income becomes readily apparent and informs us that government debt to private sector GDP is potentially catastrophic. As well as the private sectors’ own tax burden, through their taxes and currency debasement they are having to support far larger obligations than generally realised. Productive citizens who don’t feel they are on a treadmill going ever faster for no purpose are lacking awareness. These are the dynamics of national debt traps which only miss one element to trigger them: rising interest rates. Instead, they are being heavily suppressed by the ECB’s deposit rate of minus 0.5%. The market is so distorted that the nominal yield on France’s 5-year bond is minus 0.45%. In other words, a nation with a national debt that is so high as to be impossible to stabilise without the necessary political will to do so is being paid to borrow. Greece’s 5-year bond yields a paltry 0.48% and Italy’s 0.25%. Welcome to the mad, mad world of Eurozone government finances. The ECB’s policy failure It is therefore unsurprising that the ECB is resisting interest rate increases despite producer and consumer price inflation taking off. Consumer price inflation across the Eurozone is most recently recorded at 4.1%, making the real yield on Germany’s 5-year bond minus 4.67%. But Germany’s producer prices for October rose 18.4% compared with a year ago. There can be no doubt that producer prices will feed into consumer prices, and that rising consumer prices have much further to go, fuelled by the acceleration of currency debasement in recent years. Therefore, in real terms, not only are negative rates already increasing, but they will go even further into record territory due to rising producer and consumer prices. It is also the consequence of all major central banks’ accelerated expansion of their base currencies, particularly since March 2020. Unless it abandons the euro to its fate on the foreign exchanges altogether, the ECB will be forced to raise its deposit rate very soon, to offset the euro’s depreciation. And given the sheer scale of previous monetary expansion, which is driving its loss of purchasing power, euro interest rates will have to rise considerably to have any stabilising effect. But even if they increased only into modestly positive territory, the ECB would have to quicken the pace of its monetary creation just to keep Eurozone member governments afloat. The foreign exchanges will quickly recognise the situation, punishing the euro if the ECB fails to raise rates and punishing it if it does. But it won’t be limited to cross rates against other currencies, which to varying degrees face similar dilemmas, but measured against prices for commodities and essential products. Arguably, the euro’s rerating on the foreign exchanges has already commenced. The ECB is being forced into an impossible situation of its own making. Bond yields have started to rise or become less negative, threatening to bankrupt the whole Eurozone network as the trend continues, and inflicting mark-to-market losses on highly leveraged commercial banks invested in government bonds. Furthermore, the Euro system’s network of national central banks is like a basket of rotten apples. It is the consequence not just of a flawed system, but of policies first introduced to rescue Spain from soaring bond yields in 2012. That was when Mario Draghi, the ECB’s President at the time said he was ready to do whatever it takes to save the euro, adding, “Believe me, it will be enough”. It was then and its demise was deferred. The threat of intervention was enough to drive Spanish bond yields down (currently minus 0.24% on the 5-year bond!) and is probably behind the complacent thinking in the ECB to this day. But as the other bookend to Draghi’s promise to deploy bond purchasing programmes, Lagarde’s current intervention policy is of necessity far larger and more destabilising. And then there is the market problem: the ECB now acts as if it can ignore it for ever. It wasn’t always like this. The euro started with the promise of being a far more stable currency replacement for national currencies, particularly the Italian lira, the Spanish peseta, the French franc, and the Greek drachma. But the first president of the ECB, Wim Duisenberg, resigned halfway during his term to make way for Jean-Claude Trichet, who was a French statist from the École Nationale d’Administration and a career civil servant. His was a political appointment, promoted by the French on a mixture of nationalism and a determination to neutralise the sound money advocates in Germany. To be fair to Trichet, he resisted some of the more overt pressures for inflationism. But then things had not yet started to go wrong on his watch. Following Trichet, the ECB has pursued increasingly inflationist policies. Unlike the Bundesbank which closely monitored the money supply and paid attention to little else, the ECB adopted a wide range of economic indicators, allowing it to shift its focus from money to employment, confidence polls, long-term interest rates, output measures and others, allowing a fully flexible attitude to money. The ECB is now intensely political, masquerading as an independent monetary institution. But there is no question that it is subservient to Brussels and whose primary purpose is to ensure Eurozone governments’ profligate spending is always financed; “whatever it takes”. The private sector is now a distant irrelevance, only an alternative source of government revenue to inflation, the delegated responsibility of compliant national central banks, who take their orders from the economically remote ECB. It is an arrangement that will eventually collapse through currency debasement and economic breakdown. Prices rising to multiples of the official CPI target and the necessary abandonment by the ECB of the euro in the foreign exchanges in favour of interest rate suppression now threaten the ability of the ECB to finance in perpetuity increasing government deficits. The ECB, TARGET2 and the repo market Figure 3 shows how the Eurozone’s central bank balance sheets have grown since the great financial crisis. The growth has virtually matched that of the Fed, increasing to $9.7 trillion equivalent against the Fed’s $8.5 trillion, but from a base about $700bn higher. While they are reflected in central bank assets, TARGET2 imbalances are an additional complication, which are shown in the Osnabrück University chart reproduced in Figure 4. Points to note are that Germany is owed €1,067bn. The ECB collectively owes the national central banks (NCBs) €364bn. Italy owes €519bn, Spain €487bn and Portugal €82bn. The effect of the ECB deficit, which arises from bond purchases conducted on its behalf by the national central banks, is to artificially reduce the TARGET2 balances of debtors in the system to the extent the ECB has bought their government bonds and not paid the relevant national central bank for them. The combined debts of Italy and Spain to the other national central banks is about €1 trillion. In theory, these imbalances should not exist. The fact that they do and that from 2015 they have been increasing is due partly to accumulating bad debts, particularly in Portugal, Italy, Greece, and Spain. Local regulators are incentivised to declare non-performing bank loans as performing, so that they can be used as collateral for repurchase agreements with the local central bank and other counterparties. This has the effect of reducing non-performing loans at the national level, encouraging the view that there is no bad debt problem. But much of it has merely been removed from national banking systems and lost in both the euro system and the wider repo market. Demand for collateral against which to obtain liquidity has led to significant monetary expansion, with the repo market acting not as a marginal liquidity management tool as is the case in other banking systems, but as an accumulating supply of raw money. This is shown in Figure 4, which is the result of an ICMA survey of 58 leading institutions in the euro system. The total for this form of short-term financing grew to €8.31 trillion in outstanding contracts by December 2019. The collateral includes everything from government bonds and bills to pre-packaged commercial bank debt. According to the ICMA survey, double counting, whereby repos are offset by reverse repos, is minimal. This is important when one considers that a reverse repo is the other side of a repo, so that with repos being additional to the reverse repos recorded, the sum of the two is a valid measure of the size of the market outstanding. The value of repos transacted with central banks as part of official monetary policy operations were not included in the survey and continue to be “very substantial”. But repos with central banks in the ordinary course of financing are included. Today, even excluding central bank repos connected with monetary policy operations, this figure probably exceeds €10 trillion, allowing for the underlying growth in this market and when one includes participants beyond the 58 dealers in the survey. An interesting driver of this market is negative interest rates, which means that the repayment of the cash side of a repo (and of a reverse repo) can be less than its initial payment. By tapping into central bank cash through a repo it gives a commercial bank a guaranteed return. This must be one reason that the repo market in euros has grown to be considerably larger than it is in the US. This consideration raises the question as to the consequences of the ECB’s deposit rate being forced back into positive territory. It is likely to substantially reduce a source of balance sheet funding for commercial banks as repos from national central banks no longer offer negative rate funding. They would then be forced to sell balance sheet assets, which would drive all negative bond yields into positive territory, and higher. Furthermore, the contraction of bank credit implied by the withdrawal of repo finance will almost certainly have the knock-on effect of triggering a widespread banking liquidity crisis in a banking cohort with such high balance sheet gearing. There is a further issue over collateral quality. While the US Fed only accepts very high-quality securities as repo collateral, with the Eurozone’s national banks and the ECB almost anything is accepted — it had to be when Greece and other PIGS were bailed out. High quality debt represents most of the repo collateral and commercial banks can take it back onto their balance sheets. But the hidden bailouts of Italian banks by taking dodgy loans off their books could not continue to this day without them being posted as repo collateral rolled into the TARGET2 system and into the wider commercial repo network. The result is that the repos that will not be renewed by commercial counterparties are those whose collateral is bad or doubtful. We have no knowledge how much is involved. But given the incentive for national regulators to have deemed them creditworthy so that they could act as repo collateral, the amounts will be considerable. Having accepted this dodgy collateral, national central banks will be unable to reject them for fear of triggering a banking crisis in their own jurisdictions. Furthermore, they are likely to be forced to accept additional repo collateral rejected by commercial counterparties. In short, in the bloated repo market there are the makings of the next Eurozone banking crisis. The numbers are far larger than the central banking system’s capital. And the tide will rapidly ebb on them with rising interest rates. Inflation and interest rate outlook Starting with input prices, the commodity tracker in Figure 6 illustrates the rise in commodity and energy prices in euros, ever since the US Fed went “all in” in early 2020. To these inputs we can add soaring shipping costs, logistical disruption, and labour shortages — in effect all the problems seen in other jurisdictions. Additionally, this article demonstrates that not only is the ECB determined not to raise interest rates, but it simply cannot afford to. Being on the edge of a combined government funding crisis and with a possible collapse in the repo market taking out the banking system, the ECB is paralyzed with fear. That being so, we can expect further weakness in the euro exchange rate. And the commodity tracker in Figure 6 shows that when commodity prices break out above their current consolidation phase, they will likely push alarmingly higher in euros at least. The ECB’s dilemma over choosing inflationary financing or saving the currency is about to get considerably worse. And for probable confirmation of mounting fear over the situation in Frankfurt, look no further than the resignation of the President of the Bundesbank, who has asked the Federal President to dismiss him early for personal reasons. It was all very polite, but a high-flying, sound money man such as Jens Weidmann is unlikely to just want to spend more time with his family. That he can no longer act as a restraint on the ECB’s inflationism is clear, and more than any outsider he will be acutely aware of the coming crisis. Let us hope that Weidmann will be available to pick up the pieces and reintroduce a gold-backed mark.   Tyler Durden Sun, 11/28/2021 - 07:00.....»»

Category: blogSource: zerohedgeNov 28th, 2021

Futures Rebound As Energy Prices Soar

Futures Rebound As Energy Prices Soar US equity futures and European markets rebounded from a tech rout on Monday that was triggered by fears of soaring energy costs, stagflation, tech overvaluation and escalating Chinese property distress even as Asian shares tracked Monday's broad Wall Street sell-off to weaken for a third straight session. The dollar rose and yields rebounded back ato 1.50% as the rise in oil continued, pushing Brent above $82/bbl. At of 7:15am ET, S&P futures were up 16.25 points, or 0.38%, to 4,307; Dow futs were up 116 points and Nasdaq futures rose 47.25 points as technology shares bounced in Europe. Bitcoin jumped above $50,000 for the first time since Sept 7. The “market correction, initially sparked by tapering expectations and China’s property sector worries, is now being driven by record energy prices as well as lingering political uncertainties in the U.S. about the crucial question of the debt ceiling,” said Pierre Veyret, a technical analyst at ActivTrades. “Markets are likely to stay volatile this week and with no clear direction until there is significant progress on the existing concerns.” Additionally, the recent calm in global markets which hit an all time high as recently as a few weeks ago, has been shattered by a growing wall of worry spanning a debt crisis in China, elevated inflation on the back of commodity supply shocks, fading economic recovery and U.S. political bickering. Meanwhile, investors brace for a tapering of stimulus by the Federal Reserve. Nerves eased on Tuesday, however, led by a tech rebound following Monday's Facebook-led rout, and big bank stocks were higher in premarket trading as 10-year Treasury yields climbed to about 1.5% led again by breakevens as oil not only held onto recent impressive gains - along with most other commodities after a gauge of commodities soared to an all-time record - but Brent rose above $82 . As to the insanity in Europe's gas sector, European natural gas contracts soared on Tuesday to an unprecedented 111.70 euros per megawatt-hour, compared with 15.49 euros in February. The continent is bracing for a winter crunch in energy supply, with German front-month power contracts also jumping to record levels. Global shortages of gas and coal are pushing energy prices higher, disrupting markets from the U.K. to China, as economies emerge from the pandemic. Surging costs are threatening to raise inflation and starting to weigh onindustrial production, with some companies in Europe forced to cut output. “The fiercely nervous sentiment on the market continues due to fears of reduced supply during the winter,” trader Energi Danmark wrote in a note Tuesday. “Everything looks set for another week of price climbs.” In U.S. premarket trading, Facebook found dip buyers in premarket trading after a 4.9% plunge on Monday amid an hours-long service disruption. The stock added 1.6% in the early New York session. Lordstown Motors shares declined as much as 4.6% after the electric vehicle automaker was downgraded to underweight by Morgan Stanley, while the PT was also cut to $2 from $8. Uphealth fell after pricing its share offering at a discount. And Facebook was up 1.5% following Monday’s slump after it blamed a global service outage that kept its social media apps offline for much of yesterday on a problem with its network configuration. Here are some other notable premarket movers: Amplify Energy (AMPY US) rises 10% in U.S. premarket trading, paring some of Monday’s 44% plunge tied to an oil spill from a California offshore pipeline operated by the company Comtech Telecom (CMTL US) slid more than 7% Monday postmarket after it reported adjusted earnings below average analyst estimates It is “the period of a multiplicity of shocks percolating through the financial markets leaving them in the fog, with many watching from the sidelines for clarity,” Sebastien Galy, a senior macro strategist at Nordea Invetsment, wrote in a note. The technology subgroup in Europe’s benchmark Stoxx 600 advanced for the first time in eight days. European natural-gas contracts jumped as much as 16% and West Texas Intermediate crude headed for a seven-year high. Earlier in the session, MSCI's broadest index of Asia-Pacific shares outside Japan dropped as much as 1.3%, declining for a third consecutive session. Japan stocks were down 2.5%, South Korea gave up 2% and Australia shed 0.4%. The drop in markets took MSCI's main benchmark to 619.77, the lowest since November 2020 but it pared losses to be down 0.6% in late Asia trade. The index has shed more than 5% this year, with Hong Kong and Japanese markets among the big losers. "Investors are clearly worried about inflation due to supply chain disruptions and the rally in energy prices," said Vasu Menon, executive  director of investment strategy at OCBC Bank.  "We have seen tech stocks outperform value stocks, so if inflation remains a worry, then tech stocks tend to get hit," Menon said. In rates, Treasuries were under pressure with yields near session highs, cheaper by up to 2.5bp across belly of the curve. Yields rose not only on the continued surge in commodities, but about the total chaos over the debt ceiling D-Date which will be hit in two weeks. Gilts lag amid bond auctions, adding to upside pressure on yields, while S&P 500 futures pare about a third of Monday’s 1.3% slide. The RBA kept monetary policy unchanged as expected.  In FX, the dollar rose against most Group-of-10 currencies near a one-year high versus major peers ahead of key U.S. payrolls data due at the end of the week; the pound bucked the trend, advancing for a fourth session. The euro fell 0.25% to $1.1592, while the yen rose 0.29% to $111.18. Leveraged funds sold the kiwi aggressively after a New Zealand business survey showed weak third-quarter economic sentiment.  Sentiment on the euro over the next year reached its most bearish since June 2020 on Friday amid a widening policy divergence between the Federal Reserve and the European Central Bank. In commodities, oil prices reached a three-year high on Monday (and continued higher on Tuesday) after OPEC+ confirmed it would stick to its current output policy as demand for petroleum products rebounds, despite pressure from some countries for a bigger boost to production. Underscoring the rise in commodity prices, the Refinitiv/CoreCommodity CRB index rose to 233.08 on Monday, the highest in more than six years. U.S. oil rose 1.15% to $78.51 a barrel, a day after hitting its highest since 2014. Brent crude stood at $82.2 after rising to a three-year top. Gold prices eased to $1,757 per ounce, after rising on Monday to the highest since Sept. 23. "OPEC+ may inadvertently cause oil prices to surge even higher, adding to an energy crisis that primarily reflects very tight gas and coal markets," said Commonwealth Bank of Australia's commodities analyst Vivek Dhar. "That potentially threatens the global economic recovery, just as global oil demand growth is picking up as economies re‑open on the back of rising vaccination rates," Dhar said in a note. Traders are now turning their attention to Friday’s nonfarm-payrolls data to gauge the timing of the Fed’s taper. In the latest Fed comments, St. Louis President James Bullard said elevated price pressures may be changing the mentality of businesses and consumers by making them more accustomed to higher inflation. Australia’s central bank kept its monetary settings unchanged. Looking at the day ahead now, the main data highlight will be the services and composite PMIs for September from around the world. We’ll also get the Euro Area PPI reading for August, and from the US there’s the August trade balance and the September ISM Services index. Otherwise, central bank speakers include ECB President Lagarde, the ECB’s Holzmann, and the Fed’s Quarles. Market Snapshot S&P 500 futures up 0.2% to 4,301.00 STOXX Europe 600 up 0.4% to 452.37 MXAP down 0.7% to 192.58 MXAPJ down 0.3% to 626.41 Nikkei down 2.2% to 27,822.12 Topix down 1.3% to 1,947.75 Hang Seng Index up 0.3% to 24,104.15 Shanghai Composite up 0.9% to 3,568.17 Sensex up 0.4% to 59,531.35 Australia S&P/ASX 200 down 0.4% to 7,248.36 Kospi down 1.9% to 2,962.17 Brent Futures up 0.7% to $81.86/bbl Gold spot down 0.6% to $1,758.11 U.S. Dollar Index up 0.15% to 93.92 German 10Y yield fell 1.2 bps to -0.225% Euro down 0.2% to $1.1603 Top Overnight News from Bloomberg China’s heavily leveraged property firms saw their stocks and bonds tumble after a failure by developer Fantasia Holdings Group Co. to repay notes deepened investor concerns about the sector’s outlook A steep surge in inflation in the euro area has started to take its toll on the economy, according to a survey by IHS Markit China will strictly prevent bank and insurance funds from being used in speculating commodities in a push to maintain market order and stabilize prices The Federal Reserve said that its internal watchdog plans to open an investigation into trading activity by senior U.S. central bank officials, following revelations about transactions in 2020 Facebook Inc. blamed a global service outage that kept its social media apps offline for much of Monday on a problem with its network configuration, adding that it found no evidence that user data was compromised during the downtime A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were pressured following the tech sell-off in the US and amid several headwinds for global markets including US-China trade frictions, China's record incursion into Taiwanese airspace and with higher oil prices stoking inflationary concerns. ASX 200 (-0.6%) was dragged lower after the losses in tech rolled over into the region and following somewhat mixed Trade and PMI data releases, but with downside stemmed by resilience in gold miners and the energy sector, after gains in the underlying commodity prices including the rally in oil to a seven-year high. Nikkei 225 (-2.2%) slumped below the 28k level and briefly entered into correction territory as it suffered intraday losses of as much as 3% and with index heavyweights Fast Retailing and SoftBank dominating the list of worst performers, while KOSPI (-1.9%) also fell into a correction with the index at least 10% below the record highs registered earlier this year despite efforts by South Korea’s antitrust regulator to dispel fears of a harsh tech crackdown. Hang Seng (+0.3%) was pressured at the open amid tech woes and default fears after reports that Fantasia Holdings missed payments due yesterday for USD 206mln of bonds, although the Hong Kong benchmark then pared its losses with notable strength seen in Chinese oil majors as they benefit from the rising energy prices. Finally, 10yr JGBs were initially kept afloat by the risk aversion but then reversed course amid the uninspired mood in T-notes and Bund futures, as well as weaker metrics from the 10yr JGB auction which attracted a lower bid to cover despite a decline in accepted prices. Top Asian News Gold Drops After Three-Day Gain as Yields and Dollar Push Higher ‘Kishida Shock’ Hits Japan Markets Wary of Redistribution Plan China Orders Banks to Ramp Up Funding to Boost Coal Output S.Korea’s NPS Could Lose $3.5m From Evergrande Stock Investment European equities (Euro Stoxx 50 +0.9%; Stoxx 600 +0.7%) have extended on the marginal gains seen at the open as indices attempt to claw back some of yesterday’s losses. Incremental macro newsflow since the close has not provided much cause for optimism and therefore it remains to be seen how durable any recovery will be. Overnight, the APAC session was mostly downbeat as the region contended with the negative US lead, ongoing US-China trade frictions, China's record incursion into Taiwanese airspace and higher oil prices stoking inflationary concern. Final PMIs for the Eurozone saw the composite revised very modestly higher to 56.02 from 56.1 with IHS Markit noting “the current economic situation in the eurozone is an unwelcome mix of rising price pressures but slower growth”. Stateside, futures are exhibiting gains of a similar magnitude to their European counterparts with the ES +0.2% and no real discernible theme across the US majors as traders await further progress in Washington. Sectors in Europe are mostly higher with clear outperformance in banking names with JP Morgan bullish on the sector; Credit Agricole sits at the top of the CAC after launching a new EUR 500mln share repurchase scheme. To the downside, laggards include Construction & Materials and Autos. Individual movers include Greggs (+8.7%) at the top of the Stoxx 600 after raising its profit outlook for the FY despite concerns over supply chain disruptions and staffing issues. Elsewhere, Infineon (+2.8%) has provided some support for the IT sector after confirming its FY 21 forecasts and being confident about the FY22 outlook. Finally, Melrose (-2.2%) is a notable laggard after the Co. cautioned on the fallout of the global chip shortage which has prompted a surge in client cancellations. Top European News European Banks Have Upside on Capital Returns, Yields, JPM Says Romania Edges Toward First Rate Hike Since 2018: Decision Guide Romania Approves Partial Compensation for Higher Energy Costs Morgan Stanley Expands Diversity-Focused ‘Shark Tank’ to Europe In FX, the broader Dollar and index remain firmer on the session, with the latter on either side of 94.000 from a 93.804 overnight base, but still within yesterday’s 93.675-94.104 range which marks the first immediate points of support/resistance. State-side, US President Biden spoke with 12 progressive members of Congress in which they agreed to follow through on key priorities, while it was also reported that President Biden told House progressives the spending package needs to be between USD 1.9tln-2.2tln. Biden will meet with moderate House Democrats virtually today. It is also worth keeping an eye on the Fed’s review of trading activities which could lead to a shift in the balance between hawks and doves, following the parting of hawks Rosengren (2022 voter) and Kaplan (2023 voter), who were set to be voters during the projected rate hike period. Ahead, the US ISM Services PMI will likely be the focal point from a state-side data standpoint. EUR, GBP - The EUR and GBP continue to diverge. Sterling extends on earlier gains, seemingly a function of the EUR/GBP cross topping out just before its 50 DMA (0.8546) before taking out yesterday’s 0.8529 low on its way towards 0.8500. The Sterling strength has helped Cable regain 1.3600+ status from a 1.3585 low. EUR/USD meanders around 1.1600 in a relatively narrow 1.1591-1.1622 current intraday band – with yesterday’s low at 1.1586 ahead of the 200 WMA at 1.1572. Europe saw the release of final Services and Composite PMIs, which continue to highlight the theme of rising prices and spillover into demand. AUD, NZD, CAD - he non-US Dollars see mild losses but trade off worst levels as the Dollar recedes and as market sentiment holds an upside bias. The AUD/NZD cross meanwhile remains in focus amid this week’s RBA/RBNZ central bank standoff. The RBA overnight provided no surprises and did not contain any significant new observations, with the currency experiencing choppiness upon the release. The RBNZ, meanwhile, is poised for a 25bps OCR hike at its announcement at 02:00BST/21:00EDT tomorrow. The AUD/NZD cross resides around session lows near 1.0455, whilst OpEx sees some AUD 2.1bln at strike 1.0410. The Loonie sees an underlying bid from crude prices, with USD/CAD back under its 50 DMA at 1.2600 ahead of Canadian trade data. JPY, CHF - The traditional havens are at the foot of the G10 bunch in what is seemingly a risk-influenced move. USD/JPY within a tight 110.88-111.25 band vs yesterday’s 110.50-112.07 range. USD/CHF, meanwhile, has popped above its 21 DMA (0.9250) and trades towards the top of its current 0.9238-70 parameter. In commodities, WTI and Brent front month futures are choppy but ultimately hold an upside bias in the aftermath of the OPEC+ meeting yesterday. Nonetheless, the benchmarks remain near yesterday’s highs which saw Brent Dec test USD 82.00/bbl to the upside. Brent resides around USD 81.50/bbl at the time of writing whilst WTI Nov hovers just under USD 78/bbl. With OPEC out of the way and until the next meeting, traders will be eyeing developments (if any) regarding the Iranian nuclear talks, alongside the electricity situation in China. Furthermore, traders must be cognizant of potential intervention by governments in a bid to control rising energy prices. As a reminder, the White House held talks with Saudi counterparts before the recent OPEC+ meeting and expressed concern on prices. Aside from that, news flow for the complex has been light during the European morning. Elsewhere, precious metals are softer on the day but spot gold and silver trade off worst levels with the yellow metal still holding into USD 1,750/oz-status and spot silver back above USD 22.50/oz. Over to base metals, LME copper remains pressured in what seems to be a continuation of the lacklustre trade seen during APAC hours amid a lack of demand as China remains on holiday. US Trade Calendar 8:30am: Aug. Trade Balance, est. -$70.8b, prior -$70.1b 9:45am: Sept. Markit US Composite PMI, prior 54.5 9:45am: Sept. Markit US Services PMI, est. 54.4, prior 54.4 10am: Sept. ISM Services Index, est. 59.8, prior 61.7 DB's Jim Reid concludes the overnight wrap I’m hoping you all survived without WhatsApp, Instagram and Facebook yesterday after the outage. We actually had to resort to a conversation over dinner last night. It was a bit weird without hearing pings go off every few minutes. Once the conversation dried up we went on Twitter and then watched Netflix so it wasn’t a total disaster for US tech in our household. Oh and I’m writing this on my iPad while looking up a few things on Google. Tech led the sell-off last night that stretched to both equities and bonds. One of the noticeable features of the recent weakness in equities is that bonds have struggled to rally. This hints at technicals being nowhere near as strong as they were in the summer and also a realisation that bonds aren’t a great haven if the sell-off is partly inflation related. By the close of trade yesterday, the S&P 500 had shed another -1.30%, making it the 3rd time in the last 5 sessions that the index has lost more than 1%, with the latest move now taking it -5.21% beneath its all-time closing high back in early September. However, unlike some of the other declines of the last month, which have been quite obviously connected to a particular concern like Evergrande or the impact of higher yields, the latest selloff looks to be coming from a more generalised set of concerns, with those worries given a fresh impetus by yet another rise in energy prices yesterday as oil hit multi-year highs. In turn, that spike in energy prices has led to renewed fears about inflation accelerating even further than current forecasts are implying, with knock-on implications for central banks and the amount of monetary stimulus we can expect over the coming months. We’ll start with those moves in energy given the effects they had elsewhere. Yesterday saw Brent Crude oil prices (+2.50%) close above $81/bbl for the first time in nearly 3 years, and this morning it’s up another +0.42%. On top of that, WTI (+2.29%) oil prices hit a 6-year high of its own at $77.62/bbl, which saw its YTD gains rise above +60%. The latest advance for oil has come as the OPEC+ group agreed yesterday that they’d stick to their planned output hike of +400k barrels per day in November, in spite of some speculation that there could be a larger increase in supply. However, it wasn’t just oil moving higher, with European natural gas prices (+2.07%) taking another leg up after their recent surge, which leaves them just shy of their recent peak last Thursday. And what’s also concerning from an inflationary standpoint is that the moves in commodities were broader than simply energy, with metals including copper (+1.17%) seeing sizeable gains as well. Overall, that meant Bloomberg’s Commodity Spot Index (+1.12%) finally exceeded its 2011 high yesterday, and brings the index’s gains since the post-pandemic low in March 2020 to +94.7%. Against this backdrop, equities took another tumble as the major indices on both sides of the Atlantic moved lower, including the S&P 500 (-1.30%) and Europe’s STOXX 600 (-0.47%). Tech stocks saw the brunt of the declines, with the NASDAQ down -2.14% and the FANG+ index down -3.00%, while Europe’s STOXX Technology Index (-2.39%) fell for a 7th consecutive session. Facebook was one of the bigger laggards yesterday as it fell -4.89% - its worst day since November 2020. The company is dealing with whistleblower allegations that their internal research doesn’t match what executives have been saying about the effect the social media company has on its users. The equal weight S&P 500 was only down -0.63% so the big tech stocks definitely led the way. European equities were less affected than their US counterparts however, having missed out on Friday’s late US equity rally following the European close, with the DAX (-0.79%), the CAC 40 (-0.61%) and the FTSE 100 (-0.23%) all seeing declines of less than 1%. A lower tech weighting probably also helped. Those concerns about stagflation represented further bad news for sovereign bonds yesterday, as investors moved to upgrade their expectations of future inflation. In Europe, 10yr German breakevens were up by +2.0bps to an 8-year high of 1.72%, while their Italian counterparts hit their highest level in over a decade, at 1.63%. Meanwhile in the US, 10yr breakevens were also up +1.3bps to 2.39%. Those moves in inflation expectations supported higher yields, with those on 10yr Treasuries up +1.7bps to 1.479% by the close of trade, as yields on bunds (+1.0bps), OATs (+1.3bps) and BTPs (+1.8bps) similarly moved higher. Overnight in Asia, equities have mostly followed the US lower, with the Nikkei (-2.77%), KOSPI (-1.71%), and Australia’s ASX 200 (-0.74%) all losing ground, though the Hang Seng (+0.20%) has recovered slightly thanks to energy stocks, and S&P 500 futures (+0.13%) are also pointing to a modest recovery. Those declines for the Nikkei and the KOSPI leave them just shy of a 10% correction from their recent peaks. In terms of the latest on Evergrande, there are signs that risks are spreading to other property developers, as China’s Fantasia Holdings missed a repayment worth $205.7m on a bond that matured Monday. Unsurprisingly, the developments are continuing to affect China’s HY dollar bond prices, with a Bloomberg index now down by -14.3% since its high back in May. Elsewhere in Asia, we got confirmation shortly after we went to press yesterday from new Japanese PM Fumio Kishida that there’d be a general election on October 31. Interestingly, that will actually be the 3rd general election in a G7 economy in the space of just six weeks, following the votes in Canada and Germany in late September. Back to the US, and Treasury Secretary Yellen’s estimated deadline to raise the debt ceiling – 18 Oct – is now under 2 weeks away, and during a press conference yesterday President Biden called on Republicans to join with Democrats to raise the debt limit, arguing that over a quarter of the US debt was accumulated during the Trump administration and that it should not be tied to “any new spending being considered. It has nothing to do with my plan for infrastructure or building back better, zero.” Senate Majority Leader Schumer plans to hold a vote this week to lift the debt ceiling, though Republicans are set to block the legislation and are forcing Democrats to use the partisan budget reconciliation process that is currently the vehicle of the Biden “Build Back Better” plan. Whilst time was running out to deal with the debt ceiling, President Biden also met with progressive House Democrats yesterday to discuss the budget reconciliation package and about potentially limiting the scope of the bill that makes up much of the President’s economic agenda. Press Secretary Psaki said that there is a “recognition that this package is going to be smaller than originally proposed,” but that the President is looking to get it across the goal line. Initial estimates could see the final package closer to $2 trillion over 10 years versus the current $3.5 trillion plans. Meanwhile on trade, the Biden administration also announced yesterday that they would hold direct talks with Chinese officials in the coming week seeking to enforce prior commitments and start fresh talks to exclude some goods from US tariffs. US Trade Representative Katherine Tai will meet with Chinese Vice Premier Liu He, and is expected to focus on how to add and adjust to the Trump administration’s most recent deal with the Chinese government rather than starting from scratch. There wasn’t much in the way of data yesterday, though US factory orders in August rose by +1.2% (vs. +1.0% expected), and the previous month’s growth was revised up to +0.7% (vs. +0.4% previously). To the day ahead now, and the main data highlight will be the services and composite PMIs for September from around the world. We’ll also get the Euro Area PPI reading for August, and from the US there’s the August trade balance and the September ISM Services index. Otherwise, central bank speakers include ECB President Lagarde, the ECB’s Holzmann, and the Fed’s Quarles. Tyler Durden Tue, 10/05/2021 - 07:45.....»»

Category: blogSource: zerohedgeOct 5th, 2021

Wells Fargo"s (WFC) Bid to Dismiss Shareholder Lawsuit Rejected

Wells Fargo's (WFC) appeal to dismiss a shareholder lawsuit alleging that the company kept shareholders in dark about its compliance with consent orders from U.S. regulators has been rejected. Wells Fargo & Company’s WFC request to dismiss a shareholder lawsuit that claimed that the company defrauded shareholders by painting a favorable picture about its compliance with U.S. regulators’ consent orders has been rejected.U.S. district judge Gregory Woods in Manhattan said the shareholders had plausibly alleged that certain comments made by various bank officials, including former chief executive Tim Sloan, were "deliberately or recklessly false or misleading." The shareholders claim that bank officials falsely reported that the company was making significant headway with its corrective actions to rebound from five years of scandals over its treatment of customers. But in reality, regulators had actually remarked that such progress was "deficient" and "unacceptable."The judge remarked, "based on the facts on the ground, Mr. Sloan knew or, more importantly, should have known that he was misrepresenting material facts related to the corporation”. The district judge, however, freed the current chief executive Charles Scharf from the suit and dismissed claims saying that he was not at fault.Per shareholders, the fourth-largest bank lost more than $54 billion of market value as the reality was gradually revealed spanning over a two-year period ended March 2020.The decision is a hindrance to Wells Fargo's recovery path from its scandals that include the opening of about 3.5 million accounts without customer knowledge and charging borrowers for unrequired auto insurance.Since these scandals surfaced, the company has paid more than $5 billion in fines and continued to operate under Fed’s $1.95-trillion asset cap that restricts the bank's growth.In fact, recently, the Department of Justice slapped the firm with a $37-million fine to settle U.S. government claims of deceitfully overcharging commercial clients on foreign exchange (FX) services.Specifically, the Department of Justice asserted that from 2010 to 2017, Wells Fargo’s FX sales specialists duped 771 customers (several were small- and medium-sized businesses as well as federally-insured financial institutions) by systematically charging them higher mark-ups on FX transactions than the representative cost, and obscuring those overcharges via various distortions and underhanded practices. (Read more: Wells Fargo to Pay $37.3M to Settle Forex Lawsuit)Since legal hassles have been snowballing on the company, it has undertaken numerous initiatives and achieved regulatory milestones. Specifically, the company has bifurcated three business groups into five, and created four Enterprise Functions to propel greater oversight and transparency. It has also launched an enterprise-wide risk and control self-assessment program to evaluate operational risks and controls as well as design appropriate mitigating controls.The company’s 2016 consent order, which was issued by the Consumer Financial Protection Bureau in relation to the bank’s retail sales practices, was terminated earlier this month.This January, the Office of the Comptroller of the Currency (“OCC”) terminated a 2015 consent order related to the Wall Street giant’s Bank Secrecy Act/Anti-Money Laundering compliance program. In May 2020, the OCC upgraded its Community Reinvestment Act rating to outstanding.Shares of the company have gained 17.1% over the past six months compared with 8.2% growth recorded by the industry.Image Source: Zacks Investment ResearchWells Fargo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Several other banks continue to encounter legal hassles and are charged with huge sums of money for business malpractices.Interactive Brokers Group, Inc. IBKR has agreed to pay $1.75 million as penalty for failing to adequately prepare its electronic trading system before the historic plunge in crude oil prices last year. The U.S. futures regulator alleged that when oil prices plunged below zero on Apr 20, 2020, the negative price was not displayed to the brokerage firm’s customers, who were unable to place limit orders to buy or sell.Charles Schwab SCHW has been slapped with a class-action lawsuit over violations of fiduciary duty by placing its own interest before the protection of clients through the robo-adviser SIP cash sweep program. The case, filed in the U.S. District Court in Northern California on Friday, also accused the company of breach of contract and violation of state laws.Mitsubishi UFJ Financial Group’s MUFG U.S. banking unit, MUFG Union Bank NA, has been slapped with a cease-and-desist order by the OCC over unsound technological practices. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report Mitsubishi UFJ Financial Group, Inc. (MUFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 1st, 2021

Washington Federal (WAFD) to Pay $2.5M for AML/BSA Consent Order

Washington Federal (WAFD) agrees to pay a civil money penalty of $2.5 million to the OCC for its previously disclosed Consent Order for AML/BSA deficiencies. Washington Federal, Inc. WAFD has agreed to pay a civil money penalty of $2.5 million to the Office of the Comptroller of the Currency (“OCC”) in relation to its February 2018 Consent Order for Anti-Money Laundering and Bank Secrecy Act (“AML/BSA”) deficiencies.The president and CEO of WaFd Bank, Brent Beardall, stated, “WaFd Bank is committed to building and maintaining an effective AML/BSA program and appreciates the opportunity to continue working with the OCC to achieve that goal.”In April 2017, Washington Federal entered an agreement to acquire Anchor Bancorp in an all-stock transaction. In September 2017, the companies amended the merger’s termination date from Dec 31, 2017, to Jun 30, 2018, because of the identification of some faults with respect to procedures, systems and processes of Washington Federal’s BSA program.However, on Jul 17, 2018, the companies decided to terminate the deal. Also, Washington Federal had said that it would not pursue acquisitions or branch expansions until its BSA program had improved.Thus, the payment of the civil money penalty is a milestone in the resolution of the Consent Order.So far this year, shares of Washington Federal have gained 33.3% compared with 43.1% growth recorded by the industry. Image Source: Zacks Investment Research Currently, Washington Federal carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Several finance companies continue to encounter legal hassles and are charged with huge sums of money for business malpractices.Charles Schwab SCHW has been slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and the violation of state laws.Mitsubishi UFJ Financial Group’s MUFG U.S. banking unit, MUFG Union Bank NA, was slapped with a cease-and-desist order by the OCC over its unsound technological practices. The regulator detected that the bank engaged in “unsafe or unsound practices” linked with technology and operational risk management. According to the order, the bank was also in non-conformity with certain security guidelines.Despite this, an agreement was entered by U.S. Bancorp USB and Mitsubishi, wherein U.S. Bancorp has agreed to acquire MUFG Union Bank’s core retail banking operations for $8 billion in a bid to boost its presence on the West Coast. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report U.S. Bancorp (USB): Free Stock Analysis Report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Washington Federal, Inc. (WAFD): Free Stock Analysis Report Mitsubishi UFJ Financial Group, Inc. (MUFG): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 1st, 2021

Wells Fargo (WFC) to Pay $37.3M to Settle Forex Lawsuit

Wells Fargo (WFC) agrees to pay $37 million after being accused of overcharging 771 businesses on foreign-exchange transactions. Even after facing a penalty and an enforcement action entailing business restrictions earlier this month, Wells Fargo & Company’s WFC legal hassles are far from over. This is because the Department of Justice slapped the firm with a $37-million fine to settle U.S. government claims of deceitfully overcharging commercial clients on foreign exchange (FX) services.Specifically, the Department of Justice asserted that, from 2010-2017, Wells Fargo’s FX sales specialists duped 771 customers (several were small- and medium-sized businesses and federally-insured financial institutions) by systematically charging them higher mark-ups on FX transactions than the representative cost, and obscuring those overcharges via various distortions and underhanded practices.Some FX sales employees were financially incentivized (more than $1 million a year as bonus), while the bank failed to take remedial actions to ensure fair pricing representations and training procedures.According to the complaint, “As a result of the improper incentives and lack of oversight, a culture developed in which Wells Fargo FX sales specialists were comfortable repeatedly defrauding the bank’s customers. FX sales specialists openly discussed and even celebrated transactions resulting in larger FX spreads than agreed to with customers and transactions generating large FX revenue.”As part of the approved settlement, Wells Fargo will pay a total of $72.6 million, with $35.3 million having been paid to the 771 customers collectively as compensation and $37.3 million as civil penalties to be paid to the United States under Financial Institutions Reform Recovery and Enforcement Act and as asset forfeit.Wells Fargo also admitted to certain misdeeds claimed in the government’s complaint, including the FX sales specialists overcharging customers by using larger sales margins or spreads than representative, and that, in certain instances, when customers communicated with the bank to investigate about higher-than-agreed-upon pricing, false explanations for inflated prices were conveyed to them by those FX sales specialists.Since legal hassles have been snowballing on the company, it has undertaken numerous initiatives and achieved regulatory milestones. Specifically, the company has bifurcated three business groups into five and created four Enterprise Functions to propel greater oversight and transparency. It also launched an enterprise-wide risk and control self-assessment program to evaluate the operational risks and controls as well as design appropriate mitigating controls.The company’s 2016 consent order, which was issued by the Consumer Financial Protection Bureau in relation to the bank’s retail sales practices, was terminated earlier this month.Moreover, this January, the Office of the Comptroller of the Currency (OCC) terminated a 2015 consent order related to the Wall Street giant’s Bank Secrecy Act/Anti-Money Laundering compliance program. In May 2020, the OCC upgraded the company’s Community Reinvestment Act rating to outstanding.Shares of the company have gained 23.7% over the past six months compared with 8.6% growth recorded by the industry.Image Source: Zacks Investment ResearchWells Fargo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Several other banks continue to encounter legal hassles and are charged with huge sums of money for business malpractices.Earlier this month, Mitsubishi UFJ Financial Group’s MUFG U.S. banking unit, MUFG Union Bank NA, has been slapped with a cease-and-desist order by the Office of the OCC over its unsound technological practices. The regulator detected that the bank engaged in "unsafe or unsound practices" linked with its technology and operational risk management. According to the order, the bank was also in non-conformity with certain security guidelines. Nonetheless, Mitsubishi UFG is in progress with the "corrective action" and has "committed resources to remediate the deficiencies".Credit Acceptance Corporation CACC had also announced the settlement of the lawsuit with the Massachusetts Attorney General and agreed to pay $27.2 million. In August 2020, AG Maura Healey filed a lawsuit in the Suffolk County Superior Court, claiming that Credit Acceptance has violated the state consumer protection, and debt collection laws and regulations.Charles Schwab SCHW has also been slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ (SIP) cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and the violation of state laws. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Credit Acceptance Corporation (CACC): Free Stock Analysis Report Mitsubishi UFJ Financial Group, Inc. (MUFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 29th, 2021

Mitsubishi (MUFG) U.S. Arm Gets OCC"s Cease-and-Desist Order

MUFG Union Bank NA, Mitsubishi UFJ's (MUFG) U.S. unit, served with a cease-and-desist order by the Office of the Comptroller of the Currency on unreliable technological deeds. Mitsubishi UFJ Financial Group’s MUFG U.S. banking unit, MUFG Union Bank NA, has been slapped with a cease-and-desist order by the Office of the Comptroller of the Currency (“OCC”) over its unsound technological practices.The regulator detected that the bank engaged in "unsafe or unsound practices" linked with technology and operational risk management. According to the order, the bank was also in non-conformity with certain security guidelines. Nonetheless, Mitsubishi UFG is in progress with the "corrective action" and has "committed resources to remediate the deficiencies".The bank’s board of directors will appoint a compliance committee by Oct 20, comprising at least three members. The majority of these will be directors who are not employees or officers of the bank or any of its subsidiaries or affiliates.DetailsAdditionally, within 90 days of the effective date of the order, Mitsubishi UFG must develop an acceptable, written action plan to include the details related to the corrective actions.The order further stated that by Jan 30, 2022, and thereafter, within a month, following the end of each quarter, the compliance committee should submit a written progress report to the board of directors. It will include details about the description of as well as specific remedial actions required to achieve compliance with each article of the order.The report would also bear the results and status of the reformatory actions. Upon receipt of each written progress report, the board must forward a copy of the same along with any additional comments to the examiner-in-charge within 10 days of the first board meeting subsequent to the board of director’s in-taking of such report.Further, by Feb 14, 2022, and thereafter, within 45 days after the end of each quarter, Mitsubishi UFG should draft, and submit to the board, a written action plan progress report. This must include the details pertaining to the description of the outstanding reformatory actions needed to attain compliance, the specific actions already undertaken, and the results and status of the same.Our TakeMitsubishi UFJ’s robust capital position keeps it well poised to undertake expansion strategies. Also, its intention to enter profitable business operations bodes well for the long term. However, the net interest income continues to remain under pressure due to the unfavorable interest rates.The stock has lost 4.5% over the past six months, against 1% growth recorded by the industry it belongs to.Image Source: Zacks Investment ResearchCurrently, Mitsubishi UFG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Several finance companies continue to encounter legal hassles and are charged with huge sums of money for business malpractices. Even after facing a penalty and an enforcement action entailing business restrictions earlier this month, Well Fargo & Company’s WFC legal hassles are far from over. This is because U.S. Senator Elizabeth Warren has addressed a letter to the Federal Reserve, urging the central bank to revoke the bank’s license as a financial holding company.Credit Acceptance Corporation CACC had also announced about the settlement of a lawsuit with the Massachusetts Attorney General and agreed to pay $27.2 million. In August 2020, AG Maura Healey filed a lawsuit in Suffolk County Superior Court, claiming that the company violated state consumer protection, and debt collection laws and regulations.Charles Schwab SCHW had been slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ (SIP) cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and the violation of state laws. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report The Charles Schwab Corporation (SCHW): Free Stock Analysis Report Credit Acceptance Corporation (CACC): Free Stock Analysis Report Mitsubishi UFJ Financial Group, Inc. (MUFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Trump taps budget aide to head Consumer Financial Protection Bureau, seeking to continue push to limit the agency"s reach

Kraninger is an unexpected choice for the position. She works closely with Mick Mulvaney at the OMB, but has never served as a banking regulator......»»

Category: topSource: washpostJun 17th, 2018

The Arizona Democratic Party unanimously voted to censure Sen. Kyrsten Sinema for voting to uphold the filibuster

Sinema invoked the wrath of national and home state Democrats when she voted to keep the Senate filibuster on Wednesday. Senator Kyrsten Sinema of Arizona.Tom Williams/CQ-Roll Call Inc. via Getty Images The Arizona Democratic Party voted to censure Sen. Kyrsten Sinema, one of its own, on Saturday. The vote was unanimous. Sinema enraged local and national Democrats for voting to uphold the Senate filibuster on Wednesday. The Arizona Democratic Party unanimously voted to censure Sen. Kyrsten Sinema on Saturday in one of the most  significant rebukes yet for her vote to uphold the Senate filibuster."While we take no pleasure in this announcement, the ADP executive board has decided to formally censure Senator Sinema as a result of her failure to do whatever it takes to ensure the health of our democracy," said party chair Raquel Terán in a statement.The vote took place during an executive board meeting on Saturday, according to Michael Slugocki, vice chair of the Arizona Democrats.The vote is the latest sign of growing tension between Sinema and her home state's party apparatus."I've never, ever in my time organizing in the Arizona Democratic Party seen such a large amont of Democrats upset," Slugocki told Insider. "It's never been at these levels, ever."In October, the ADP issued a resolution that urged Sinema to vote with the rest of her colleagues to abolish the Senate filibuster, which allows the minority party to block unfavorable legislation. They had also warned of a possible vote of no confidence should Sinema choose to uphold the filibuster.The Democrats had hoped to pass two key voting rights bills this month, but with the filibuster in place, the bills faced an impassible Republican blockade in the Senate. Sinema held firm in her refusal to vote to change Senate rules, arguing that it would increase partisanship in the chamber.Arizona Democratic Party officials were enraged when she voted along with Republicans on Wednesday to keep the Senate filibuster intact. Their censure indicates growing frustration from state party officials with their sitting senator, and could portend trouble for Sinema as progressives clamor for a progressive to challenge her in a primary in 2024.State parties typically help raise funds, knock on doors, register voters, and arrage rallies, providing a major boost to a statewide candidate.Rep. Ruben Gallego, a congressman representing the Phoenix area, is emerging as an early favorite to primary Sinema in two years and has left the door open to a run in statements to the press.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 22nd, 2022

Synovus (SNV) Q4 Earnings & Revenue Beat, Stock Down 3.8%

Higher net interest income, lower expenses and reversal of provisions support Synovus Financial's (SNV) Q4 results. Yet, lower net interest margin and weak capital position are significant drags. Synovus Financial SNV reported fourth-quarter 2021 adjusted earnings of $1.35 per share, which beat the Zacks Consensus Estimate of $1.1. Also, the bottom line compares favorably with the earnings of $1.08 per share recorded in the year-ago quarter. Despite better-than-expected results, shares of SNV were down 3.8% on the announcement of earnings.Results were driven by rising net interest and fee income, lower expenses, as well as reversal of provisions. Solid loan and deposit balances stoked organic growth. However, shrinking net interest margin and deteriorating capital position were the undermining factors.Net income available to common shareholders came in at $192.1 million or $1.31 per share compared with $142.1 million or 96 cents per share recorded in the prior-year quarter.In 2021, adjusted earnings per share of $4.95 surpassed the consensus estimate of $4.70 and were significantly up. Also, net income of $727.3 million increased substantially.Revenues Rise, Expenses Down, Loans and Deposits UpTotal revenues in the fourth quarter came in at $509.4 million, up 1.7% from the prior-year quarter. Also, the top line outpaced the Zacks Consensus Estimate of $495.5 million.In 2021, total revenues decreased 1.9% to $1.98 billion. Nonetheless, the top line beat the consensus estimate of $1.97 billion.Net interest income improved 2% year over year to $392.3 million. However, net interest margin shrunk 16 basis points (bps) to 2.96%.Non-interest income increased 2% on a year-over-year basis to $117.1 million. Rise in all components except mortgage banking income and investment securities gains led to this upside.Non-interest expenses were $295.2 million, down 2% year on year. This downside mainly resulted from all components other than a rise in salaries and personnel expenses, and third-party processing and other services.Adjusted tangible efficiency ratio came in at 55.64% compared with 54.43% reported in the year-earlier quarter. A rise in this ratio indicates a decrease in profitability.Total deposits came in at $49.43 billion, up 4% sequentially. Moreover, total loans showed a 3% improvement sequentially, coming in at $39.31 billion.Strong Credit QualitySynovus’ credit metrics witnessed robust performance during the December-end quarter.Non-performing loans fell 13% year over year to $131 million. Net charge-offs decreased 52.6% to $10.5 million. The annualized net charge-off ratio was 0.11% compared with the year-ago quarter’s 0.23%.Further, reversal of provision for credit losses of $55.2 million was recorded in the fourth quarter against provision expenses of $11.1 million in the prior-year quarter.Total non-performing assets amounted to $158.2 million, underlining 18% year-over-year fall. Non-performing asset ratio came in at 0.4%, shrinking 10 bps from the prior-year quarter.Weak Capital Position, Profitability Ratios StrongTier 1 capital ratio and total risk-based capital ratio were 10.65% and 12.60%, respectively, down from 10.95% and 13.42% as of Dec 31, 2020.Moreover, as of Dec 31, 2021, Common Equity Tier 1 ratio (fully phased-in) was 9.49%, declining from 9.66% witnessed in the year-ago quarter. Nonetheless, Tier 1 leverage ratio was 8.72%, improving from 8.50% recorded in the year-earlier period.Return on average assets was 1.40%, up from the prior-year quarter’s 1.11%. Return on average common equity was 16.11%, up from the prior-year quarter’s 12.31%.Our TakeSynovus has grown organically with increased revenues and reversal of provision. Improving credit quality will bode well for the company. Though there has been a reduction in net interest margin, lower expenses will alleviate bottom-line pressure.Synovus Financial Corp. Price, Consensus and EPS Surprise Synovus Financial Corp. price-consensus-eps-surprise-chart | Synovus Financial Corp. QuoteCurrently, Synovus carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksZions Bancorporation ZION is scheduled to release fourth-quarter and full-year 2021 results on Jan 24.Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has remained unchanged at $1.33. This implies a 19.9% decrease from the prior-year quarter.Prosperity Bancshares PB is scheduled to release fourth-quarter and full-year 2021 results on Jan 26.Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has remained unchanged at $1.37. This suggests a 7.4% decrease from the prior-year quarter.East West Bancorp, Inc. EWBC is slated to report fourth-quarter and full-year 2021 results on Jan 27.Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has remained unchanged at $1.55. This indicates a 34.8% increase from the prior-year quarter. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Synovus Financial Corp. (SNV): Free Stock Analysis Report Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report Prosperity Bancshares, Inc. (PB): Free Stock Analysis Report East West Bancorp, Inc. (EWBC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Associated Banc-Corp (ASB) Q4 Earnings Beat, Revenues Down Y/Y

Rise in loan balance and provision benefit support Associated Banc-Corp's (ASB) Q4 results. Associated Banc-Corp’s ASB fourth-quarter 2021 earnings of 49 cents per share surpassed the Zacks Consensus Estimate of 42 cents. The bottom line improved from 40 cents in the prior-year quarter.Results gained from growth in loan balance and provision benefits. However, lower rates and a decline in both net interest income and non-interest income were the major headwinds.Net income available to common shareholders was $74 million, up 20% from the year-ago quarter.In 2021, earnings of $2.18 per share beat the consensus estimate of $2.11 and were up 17% year over year. Net income available to common shareholders was $333.9 million, up 16%.Revenues Fall, Expenses RiseNet revenues came in at $268.3 million, down 2% year over year. The top line beat the Zacks Consensus Estimate of $266.1 million.In 2021, net revenues decreased 17% to $1.06 billion. The top line matched the consensus estimate.Net interest income (NII) was $186.8 million, inching down 1%. Net interest margin was 2.40%, down 9 basis points (bps).Non-interest income fell 5% to $82.1 million. The decline was mainly due to lower net mortgage banking income and the absence of gains on the sale of branches in the reported quarter.Non-interest expenses rose 5% to $182.2 million. The increase was mainly due to higher personnel costs and other expenses.Efficiency ratio (on a fully tax-equivalent basis) was 65.46%, up from 58.02% in the prior-year quarter. A rise in efficiency ratio indicates deterioration in profitability.As of Dec 31, 2021, total loans were $24.2 billion, up 3% sequentially. Total deposits rose 2% to $28.5 billion.Credit Quality ImprovesProvisions for credit losses were a benefit of $6 million against the provision of $17 million in the prior-year quarter. As of Dec 31, 2021, the ratio of net charge-offs to annual average loans was 0.10%, down 31 bps.As of Dec 31, 2021, total non-performing assets were $160.1 million, down 29% year over year. Further, total non-accrual loans came in at $130.4 million, plunging 38%.Capital Ratios Deteriorate, Profitability Ratios ImproveAs of Dec 31, 2021, Tier 1 risk-based capital ratio was 11.02%, down from the 11.81% recorded in the corresponding period of 2020. Common equity Tier 1 capital ratio was 10.31%, down from 10.45%.At the end of the fourth quarter, annualized return on average assets was 0.87%, up from 0.78% recorded in the prior-year period. Return on average tangible common equity was 11.09%, up from the year-ago quarter’s 9.75%.Share Repurchase UpdateDuring the quarter, Associated Banc-Corp repurchased 1.1 million shares worth $25 million.2022 OutlookManagement anticipates NII to be more than $800 million. Non-interest income is expected to exceed $300 million.Management projects auto finance loan growth of more than $1.2 billion and total commercial loan growth in the range of $750 million to $1 billion.Non-interest expenses are expected to be in the range of $725-$740 million.Effective tax rate is expected to be 19-21%, assuming no change in the corporate tax rate.Common equity tier 1 ratio is expected to be 9.5% or higher, and tangible common equity ratio is estimated at or above 7.5%.The company expects to adjust provisions to indicate changes to risk grades, economic conditions, loan volumes and other indications of credit quality.Our TakeAssociated Banc-Corp’s business restructuring efforts are likely to keep supporting financials. The company has a solid balance-sheet position, making it well poised for growth. Associated BancCorp Price, Consensus and EPS Surprise Associated BancCorp price-consensus-eps-surprise-chart | Associated BancCorp QuoteAssociated Banc-Corp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksCommerce Bancshares Inc.’s CBSH fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.CBSH’s results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and a fall in net interest income were the major headwinds.Hancock Whitney Corporation’s HWC fourth-quarter 2021 adjusted earnings of $1.51 per share outpaced the Zacks Consensus Estimate of $1.35. The bottom line improved 29% from the prior-year quarter.HWC’s results benefited from higher non-interest income, fall in non-interest expenses and provision benefit. However, a decline in net interest income, which reflected lower interest rates, was the undermining factor.Washington Federal’s WAFD first-quarter fiscal 2022 (ended Dec 31) earnings of 71 cents per share surpassed the Zacks Consensus Estimate of 69 cents. The figure reflects a year-over-year jump of 39%.WAFD’s results primarily benefited from increased revenues, decreased provision for credit losses and a robust loan balance. The company’s balance-sheet position remained strong during the quarter. However, an increase in expenses was the undermining factor. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Commerce Bancshares, Inc. (CBSH): Free Stock Analysis Report Washington Federal, Inc. (WAFD): Free Stock Analysis Report Associated BancCorp (ASB): Free Stock Analysis Report Hancock Whitney Corporation (HWC): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 21st, 2022

Bank Stock Roundup: JPM, C, WFC, BAC & PNC in Focus on Q4 Earnings Beat

Major banks, including JPM, C, WFC, BAC & PNC, surpass Q4 earnings estimates on revenue strength, solid loan balance and provision benefit. Yet, rising cost expectations lead to bearish investor sentiments. Major banks’ Q4 earnings have been in full swing over the past four trading days. Almost all banks, including JPMorgan JPM, Citigroup C, Wells Fargo WFC, Bank of America BAC and PNC Financial PNC that announced quarterly results, beat earnings estimates on revenue strength, decent rise in loan demand and provision benefit.During the fourth quarter, a modest rise in loan demand drove net interest income (NII). However, major banks’ net interest margin growth was hampered by considerable deposits in their balance sheets and lower interest rates.On the fee income front, major banks’ top line received support from the solid performance of investment banking (IB) and equity trading businesses, while dismal fixed-income trading performance and weakness in mortgage banking were disappointing. Consumer banking business improved, as reflected in the increase in usage of debit/credit cards.Reserve release by major banks (driven by improving economic outlook) supported the results. Overall, banks’ balance sheet and liquidity positions remained solid.On the other hand, as major banks continued to spend heavily on technology upgrades and undertook efforts to streamline operations, expenses rose during the quarter. Also, a rise in compensation and benefit costs led to higher costs. Further, management commentary surrounding expenses disappointed investors, leading to a pessimistic stance.This, along with bearish sentiments across the broader markets, weighed heavily on major banks’ share price movement over the past four trading sessions.Image Source: Zacks Investment Research(See the last bank stock roundup here: Bank Stock Roundup for the Week Ending Dec 24, 2021)Re-cap of the Week’s Important Earnings1. Robust advisory business, reserve release and a rise in loan demand drove JPMorgan’s fourth-quarter 2021 earnings of $3.33 per share. The bottom line handily outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings came in at $2.86 per share.However, disappointing trading performance, lower interest rates and an increase in operating expenses were the major headwinds for JPMorgan’s quarterly results. Also, the company’s mortgage fees and related income plunged during the quarter.2. Citigroup delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 beat the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter.Citigroup’s investment banking revenues jumped, driven by equity underwriting and growth in advisory revenues. The dismal consumer banking business and higher operating expenses were the major headwinds.3. Wells Fargo’s fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year. Results included certain non-recurring items.Improved IB and other asset-based fees and strong equity gains in WFC’s affiliated venture capital and private equity businesses, as well as lower costs, supported the bank’s performance. Yet, a decline in NII due to low yields from earning assets and lower loans were the undermining factors.4. Bank of America’s fourth-quarter 2021 earnings of 82 cents per share beat the Zacks Consensus Estimate of 76 cents. The bottom line compared favorably with 59 cents earned in the prior-year quarter. Results in the quarter included a net reserve release of $851 million.Solid improvement in the lending scenario, consumer spending and economic rebound supported Bank of America’s NII growth. Further, robust IB performance and asset management business acted as tailwinds. However, trading numbers were not so impressive.5. PNC Financial pulled off a fourth-quarter 2021 earnings surprise of 1.94% on substantial recapturing of credit losses. Earnings per share, as adjusted (excluding pre-tax integration costs related to the BBVA USA acquisition), of $3.68 surpassed the Zacks Consensus Estimate of $3.61 and improved 12.5% year over year.Fee income growth on higher asset management revenues and corporate services supported PNC Financial’s results. However, higher expenses, margin contraction and a decline in loans were the headwinds.Price PerformanceHere is how the seven major stocks performed: Image Source: Zacks Investment ResearchOver the past four trading sessions, shares of U.S. Bancorp plunged 10%, while that of PNC Financial tanked 6.9%.What’s Next in the Banking Space?Over the next five trading days, the earnings season will continue full-fledged, with a number of banks coming out with their quarterly numbers. Also, investors will watch for clues on the timing of interest rate hikes at the end of the two-day FOMC meeting, which is scheduled on Jan 25-26. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Wall Street Analysts Believe PlayAGS (AGS) Could Rally 79%: Here"s is How to Trade

The mean of analysts' price targets for PlayAGS (AGS) points to a 79.3% upside in the stock. While this highly sought-after metric has not proven reasonably effective, strong agreement among analysts in raising earnings estimates does indicate an upside in the stock. PlayAGS (AGS) closed the last trading session at $7.81, gaining 15% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $14 indicates a 79.3% upside potential.The mean estimate comprises five short-term price targets with a standard deviation of $4.12. While the lowest estimate of $10 indicates a 28% increase from the current price level, the most optimistic analyst expects the stock to surge 168.9% to reach $21. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.But, for AGS, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.Here's Why There Could be Plenty of Upside Left in AGSThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 6.3%, as two estimates have moved higher while one has gone lower.Moreover, AGS currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than the 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>Therefore, while the consensus price target may not be a reliable indicator of how much AGS could gain, the direction of price movement it implies does appear to be a good guide. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PlayAGS, Inc. (AGS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022

Does Tenaris S.A. (TS) Have the Potential to Rally 25% as Wall Street Analysts Expect?

The mean of analysts' price targets for Tenaris S.A. (TS) points to a 25.3% upside in the stock. While this highly sought-after metric has not proven reasonably effective, strong agreement among analysts in raising earnings estimates does indicate an upside in the stock. Shares of Tenaris S.A. (TS) have gained 15.7% over the past four weeks to close the last trading session at $23.92, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $29.97 indicates a potential upside of 25.3%.The average comprises 10 short-term price targets ranging from a low of $22.70 to a high of $34, with a standard deviation of $3.44. While the lowest estimate indicates a decline of 5.1% from the current price level, the most optimistic estimate points to a 42.1% upside. More than the range, one should note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.But, for TS, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.Here's Why There Could be Plenty of Upside Left in TSAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 9%, as one estimate has moved higher compared to no negative revision.Moreover, TS currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than the 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>Therefore, while the consensus price target may not be a reliable indicator of how much TS could gain, the direction of price movement it implies does appear to be a good guide. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tenaris S.A. (TS): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 21st, 2022

Wall Street Analysts Believe Sibanye Gold Limited (SBSW) Could Rally 32%: Here"s is How to Trade

The mean of analysts' price targets for Sibanye Gold Limited (SBSW) points to a 31.7% upside in the stock. While this highly sought-after metric has not proven reasonably effective, strong agreement among analysts in raising earnings estimates does indicate an upside in the stock. Shares of Sibanye Gold Limited (SBSW) have gained 20.7% over the past four weeks to close the last trading session at $15.49, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $20.40 indicates a potential upside of 31.7%.The mean estimate comprises three short-term price targets with a standard deviation of $6.73. While the lowest estimate of $15.20 indicates a 1.9% decline from the current price level, the most optimistic analyst expects the stock to surge 80.8% to reach $28. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.But, for SBSW, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.Why SBSW Could Witness a Solid UpsideThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.The Zacks Consensus Estimate for the current year has increased 9.2% over the past month, as one estimate has gone higher compared to no negative revision.Moreover, SBSW currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than the 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>Therefore, while the consensus price target may not be a reliable indicator of how much SBSW could gain, the direction of price movement it implies does appear to be a good guide. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sibanye Gold Limited (SBSW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 21st, 2022