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Enabling circular economy for supply chain visibility: Interview with Dutch startup Circularise

Aimed to facilitate transparency and traceability across global supply chains to enable a shift to a circular economy, Dutch startup Circularise was established in 2016 to provide solutions based on blockchain technology to bridge the information gap......»»

Category: topSource: digitimesNov 25th, 2021

Transcript: Soraya Darabi

     The transcript from this week’s, MiB: Soraya Darabi, TMV, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This… Read More The post Transcript: Soraya Darabi appeared first on The Big Picture.      The transcript from this week’s, MiB: Soraya Darabi, TMV, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest. Her name is Soraya Darabi. She is a venture capital and impact investor who has an absolutely fascinating background working for, first with the New York Times Social Media Group then with a startup that eventually gets purchased by OpenTable, and then becoming a venture investor that focuses on women and people of color-led startups which is not merely a way to, quote-unquote, “do good” but it’s a broad area that is wildly underserved by the venture community and therefore is very inefficient. Meaning, there’s a lot of upside in this. You can both do well and do good by investing in these areas. I found this to be absolutely fascinating and I think you will also, if you’re at all interested in entrepreneurship, social media startups, deal flow, how funds identify who they want to invest in, what it’s like to actually experience an exit as an entrepreneur, I think you’ll find this to be quite fascinating. So with no further ado, my conversation with TMV’s Soraya Darabi. VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. My special guest this week is Soraya Darabi. She is the Co-Founder and General Partner of TMV, a venture capital firm that has had a number of that exits despite being relatively young, 65 percent of TMV’s startups are led by women or people of color. Previously, she was the cofounder of Foodspotting, an app named App of the Year by Apple and Wire that was eventually purchased by OpenTable. Soraya Darabi, welcome to Bloomberg. SORAYA DARABI; GENERAL PARTNER & FOUNDER; TMV: My goodness, Barry, thank you for having me. RITHOLTZ: I’ve been looking forward to this conversation since our previous discussion. We were on a Zoom call with a number of people discussing blockchain and crypto when it was really quite fascinating and I thought you had such an unusual and interesting background, I thought you would make a perfect guest for the show. Let’s start with your Manager of Digital Partnerships and Social Media at the “New York Times” when social media was really just ramping up. Tell us about what that was like. Tell us what you did in the late aughts at The Times. DARABI: Absolutely. I was fresh faced out of a university. I had recently graduated with mostly a journalism concentration from Georgetown and did a small stint in Condé Nast right around the time they acquired Reddit for what will soon be nothing because Reddit’s expecting to IPO at around 15 billion. And that experience at Reddit really offered me a deep understanding of convergence, what was happening to digital media properties as they partnered for the first time when nascent but scaling social media platforms. And so the “New York Times” generously offered me a role that was originally called manager of buzz marketing. I think that’s what they called social media in 2006 and then that eventually evolved into manager of digital partnerships and social media which, in essence, meant that we were aiming to be the first media property in the world to partner with companies that are household names today but back in the they were fairly unbalanced to Facebook and Twitters, of course, but also platforms that really took off for a while and then plateaued potentially. The Tumblers of the world. And it was responsibility to understand how we could effectively generate an understanding of the burgeoning demographics of this platform and how we could potentially bring income into The Times for working with them, but more importantly have a journalist that could authentically represent themselves on new media. And so, that was a really wonderful role to have directly out of University and then introduce me to folks with whom I still work today. DARABI: That’s quite interesting. So when you’re looking at a lot of these companies, you mentioned Facebook and Twitter and Tumbler, how do you know if something’s going to be a Facebook or a MySpace, so Twitter or a Tumbler, what’s going to survive or not, when you’re cutting deals with these companies on behalf of The Times, are you thinking in terms of hey, who’s going to stick around, wasn’t that much earlier that the dot-com implosion took place prior to you starting with The Times? DARABI: It’s true, although I don’t remember the dot-com implosion. So, maybe that naivete helped because all I had was enthusiasm, unbridled enthusiasm for these new companies and I operated then and now still with a beta approach to business. Testing out new platforms and trying to track the data, what’s scaling, what velocity is this platform scaling and can we hitch a ride on the rochet ship if they will so allow. But a lot of our partnerships then and now, as an investor, are predicated upon relationships. And so, as most, I think terrific investors that I listen to, who I listen to in your show, at least, will talk to you about the importance of believing and the founder and the founder’s vision and that was the case back then and remains the case today. RITHOLTZ: So, when you were at The Times, your tenure there very much overlapped the great financial crisis. You’re looking at social media, how did that manifest the world of social media when it looked like the world of finance was imploding at that time? DARABI: Well, it was a very interesting time. I remember having, quite literally, 30-second meetings with Sorkin as he would run upstairs to my floor, in the eighth floor, to talk about a deal book app that we wanted to launch and then he’d ran back down to his desk to do much more important work, I think, and — between the financial crisis to the world. So, 30-second meetings aside, it was considered to be, in some ways, a great awakening for the Web 2.0 era as the economy was bottoming out, like a recession, it also offered a really interesting opportunity for entrepreneurs, many of whom had just been laid off or we’re looking at this as a sizeable moment to begin to work on a side hustle or a life pursuit. And so, there’s — it’s unsettling, of course, any recession or any great awakening, but lemonade-lemons, when the opening door closing, there was a — there was a true opportunity as well for social media founders, founders focusing on convergence in any industry, really, many of which are predicated in New York. But again, tinkering on an idea that could ultimately become quite powerful because if you’re in the earliest stage of the riskiest asset class, big venture, there’s always going to be seed funding for a great founder with a great idea. And so, I think some of the smartest people I’d ever met in my life, I met at the onset of the aftermath of that particular era in time. RITHOLTZ: So you mentioned side hustle. Let’s talk a little bit about Foodspotting which is described as a visual geolocal guide to dishes instead of restaurants which sounds appealing to me. And it was named App of the Year by both Apple and Wired. How do you go from working at a giant organization like The Times to a startup with you and a cofounder and a handful of other coders working with you? DARABI: Well, five to six nights a week after my day job at the “New York Times,” I would go to networking events with technologists and entrepreneurs after hours. I saw that a priority to be able to partner from the earliest infancy with interesting companies for that media entity. I need to at least know who these founders were in New York and Silicon Valley. And so, without a true agenda other than keen curiosity to learn what this business were all about, I would go to New York tech meetup which Scott Heiferman of meetup.com who’s now in charge LP in my fund would create. And back then, the New York Tech Meetup was fewer than 40 people. I believe it’s been the tens of thousands now. RITHOLTZ: Wow, that’s … DARABI: In New York City alone. And so, it was there that I met some really brilliant people. And in particular, a gentleman my age who’s building a cloud-computing company that was essentially arbitraging AWS to repopulate consumer-facing cloud data services for enterprises, B2B2C play. And we all thought it would be Dropbox. The company ultimately wasn’t, but I will tell you the people with whom I worked with that startup because I left the “New York Times” to join that startup, to this day remain some of the most successful people in Silicon Valley and Alley. And actually, one of those persons is a partner at our firm now, Darshan. He was the cofounder of that particular company which is called drop.io. but I stayed there very quickly. I was there for about six months. But at that startup, I observed how a young person my age could build a business, raise VC, he was the son of a VC and so he was exceptionally attuned to the changing landscape of venture and how to position the company so that it would be attractive to the RREs of the world and then the DFJs. And I … RITHOLTZ: Define those for us. RREs and BFJs. DARABI: Sorry. Still, today, very relevant and very successful venture capital firms. And in particular, they were backing a lot of the most interesting ideas in Web 2.0 era when I joined this particular startup in 2010. Well, that startup was acquired by Facebook and I often say, no, thanks to me. But the mafia that left that particular startup continues to this day to coinvest with one another and help one another’s ideas to exceed. And it was there that I began to build the confidence, I think, that I really needed to explore my own entrepreneurial ideas or to help accelerate ideas. And Foodspotting was a company that I was advising while at that particular startup, that was really taking off. This was in the early days of when Instagram was still in beta and we observed that the most commonly posted photos on Instagram were of food. And so, by following that lead, we basically built an app as well that activity that continues to take place every single day. I still see food photos on Twitter every time I open up my stream. And decided to match that with an algorithm that showed folks wherever they were in the world, say in Greece, that might want spanakopita or if I’m in Japan, Okinawa, we help people to discover not just the Michelin-rated restaurants or the most popular local hunt in New York but rather what’s the dish that they should be ordering. And then the app was extremely good was populating beautiful photos of that particular dish and then mirroring them with accredited reviews from the Zagats of the world but also popular celebrity shots like Marcus Samuelsson in New York. And that’s why we took off because it was a cult-beloved app of its time back when there were only three geolocation apps in the iTunes apparently store. It was we and Twitter and Foursquare. So, there was a first-mover advantage. Looking back in hindsight, I think we sold that company too soon. OpenTable bought the business. A year and a half later, Priceline bought OpenTable. Both were generous liquidity events for the founders that enabled us to become angel investors. But sometimes I wish that that app still existed today because I could see it being still incredibly handy in my day-to-day life. RITHOLTZ: To say the least. So did you have to raise money for Foodspotting or did you just bootstrapped it and how did that experience compare with what that exit was like? DARABI: We did. We raised from tremendous investors like Aydin Senkut of Felicis Ventures whom I think of as being one of the best angel investors of the world. He was on the board. But we didn’t raise that much capital before the business is ultimately sold and what I learned in some of those early conversations, I would say, that may have ultimately led to LOIs and term sheets was that so much of M&As about wining and dining and as a young person, particularly for me, you and I discussed before the show, Barry, we’re both from New York, I’m not from a business-oriented family to say the least. My mom’s an academic, my father was a cab driver in New York City. And so, there are certain elements of this game, raising venture and ultimately trying to exit your company, that you don’t learn from a business book. And I think navigating that as a young person was complicated if I had to speak economically. RITHOLTZ: Quite fascinating. What is purposeful change? DARABI: Well, the world purpose, I suppose, especially in the VC game could come across as somewhat of a cliché. But we try to be as specific as possible when we allude to the impact that our investment could potentially make. And so, specifically, we invest in five verticals at our early stage New York City-based venture fund. We invest in what we call the care economy, just companies making all forms of care, elder care to pet care to health care, more accessible and equitable. We invest in financial inclusion. So this is a spin on fintech. These are companies enabling wealth creation, education, and most importantly literacy for all, that I think is really important to democratization of finance. We invest in the future of work which are companies creating better outcomes for workers and employees alike. We invest in the future of work which are companies creating better outcomes for workers and employers alike. We invest in purpose as it pertains to transportation. So, not immediately intuitive but companies creating transparency and efficiency around global supply chain and mobility. I’m going to talk about why we pick that category in a bit. And sustainability. So, tech-enabled sustainable solutions. These are companies optimizing for sustainability from process to product. With these five verticals combined, we have a subspecies which is that diverse founders and diverse employee bases and diverse cap table. It is not charity, it’s simply good for business. And so, in addition to being hyper specific about the impact in which we invest, we also make it a priority and a mandate at our firm to invest in the way the world truly look. And when we say that on our website, we link to census data. And so, we invest in man and women equally. We invest in diverse founders, almost all of the time. And we track this with data and precious to make sure that our investments reflect not just one zip code in California but rather America at large. RITHOLTZ: And you have described this as non-obvious founders. Tell us a little bit about that phrase. DARABI: Well, not obvious is a term you hear a lot when you go out to Silicon Valley. And I don’t know, I think it was coined by a well-known early PayPal employee turned billionaire turned investor who actually have a conference centered around non-obvious ideas. And I love the phrase. I love thinking about investment PC that are contrary because we have a contrary point of view, contrarian point of view, you often have outlier results because if you’re right, you’re taking the risk and your capturing the reward. When you’re investing in non-obvious founders, it should be that is the exact same outcome. And so, it almost sort of befuddled me as a person with a hard to pronounce name in Silicon Valley, why it was that we’re an industry that prides itself on investing in innovation and groundbreaking ideas and the next frontier of X, Y, and Z and yet all of those founders in which we were investing, collectively, tended to kind of look the same. They were coming from the same schools and the same types of families. And so, to me, there was nothing innovative at all about backing that Wharton, PSB, HBS guy who is second or third-generation finance. And what really excites me about venture is capturing a moment in time that’s young but also the energy is palpable around not only the idea in which the founder is building but the categories of which they’re tackling and that sounded big. I’ll be a little bit more speficic. And so, at TMV, we tried to see things before they’re even coming around the bend. For instance, we were early investors in a company called Cityblock Health which is offering best in class health care specifically for low income Americans. So they focus on the most vulnerable population which are underserved with health care and they’re offering them best in class health care access at affordable pricing because it’s predominantly covered through a payer relationship. And this company is so powerful to us for three reasons because it’s not simply offering health care to the elite. It’s democratizing access to care which I think is absolutely necessary in term out for success of any kind. We thought this was profoundly interesting because the population which they serve is also incredibly diverse. And so when you look at that investment over, say, a comparable company, I won’t name names, that offers for-profit health care, out-of-pocket, you can see why this is an opportunity that excites us as impact investors but we don’t see the diversity of the team it’s impact. We actually see that as their unfair advantage because they are accessing a population authentically that others might ignore. RITHOLTZ: Let me see if I understand this correctly. When you talk about non-obvious find — founders and spaces like this, what I’m hearing from you is you’re looking at areas where the market has been very inefficient with how it allocates capital … DARABI: Yes. RITHOLTZ: … that these areas are just overlooked and ignored, hey, if you want to go on to silicon valley and compete with everybody else and pay up for what looks like the same old startup, maybe it will successful and maybe it won’t, that’s hypercompetitive and hyper efficient, these are areas that are just overlooked and there is — this is more than just do-goodery for lack of a better word. There are genuine economic opportunities here with lots of potential upside. DARABI: Absolutely. So, my business partner and I, she and I found each other 20 years ago as undergrads at Georgetown but we went in to business after she was successful and being one of the only women in the world to take a shipping business public with her family, and we got together and we said we have a really unique access, she and I. And the first SPV that we collaborated on back in 2016 was a young business at the time, started by two women, that was focused on medical apparel predominantly for nurses. Now it’s nurses and doctors. And they were offering a solution to make medical apparel, so scrubs, more comfortable and more fashionable for nurses. I happen to have nurses and doctors in my family so doing due diligence for this business is relatively simple. I called my aunt who’s a nurse practitioner, a nurse her life, and she said, absolutely. When you’re working in a uniform at the hospital, you want something comfortable with extra pockets that makes you look and feel good. The VCs that they spoke to at the time, and they’ve been very public about this, in the beginning, anyway, were less excited because they correlated this particular business for the fashion company. But if you look back at our original memo which I saved, it says, FIGS, now public on the New York Stock Exchange is a utility business. It’s a uniform company that can verticalize beyond just medical apparel. And so, we helped value that company at 15 million back in 2016. And this year, in 2021, they went public at a $7 billion market cap. RITHOLTZ: Wow. DARABI: And so, what is particularly exciting for us going back to that conversation on non-obvious founders is that particular business, FIGS, was the first company in history to have two female co-founders go public. And when we think of success at TMV, we don’t just think about financial success and IRR and cash on cash return for our LPs, of course we think about that. But we also think who are we cheerleading and with whom do we want to go into business. I went to the story on the other side of the fence that we want to help and we measure non-obvious not just based on gender or race because I think that’s a little too precise in some ways. Sometimes, for us non-obvious, is around geography, I would say. I’m calling you from Athens, as you know, and in Greece, yesterday, I got together with a fund manager. I’m lucky enough to be an LP in her fund and she was talking about the average size of a seed round in Silicon Valley these days, hovering around 30 million. And I was scratching my head because at our fund, TMV, we don’t see that. We’re investing in Baltimore, Maryland, and in Austin, Texas and the average price for us to invest in the seed round is closer to 5 million or 6 million. And so, we actually can capture larger ownership of the pie early on and then develop a very close-knit relationship with these founders but might not be as networked in the Valley where there’s 30 VC funds to everyone that exist in Austin, Texas. RITHOLTZ: Right. DARABI: And so, yes, I think you’re right to say that it’s about inefficiencies in market but also just around — about being persistent and looking where others are not. RITHOLTZ: That’s quite intriguing. Your team is female-led. You have a portfolio of companies that’s about 65 percent women and people of color. Tell us how you go about finding these non-obvious startups? DARABI: It’s a good question. TMV celebrates its five-year anniversary this year. So the way we go about funding companies now is a bit different than the way we began five years ago. Now, it’s systematic. We collectively, as a partnership, there are many of us take over 50 calls a month with Tier 1 venture capital firms that have known us for a while like the work that we do, believe in our value-add because the partnership comprised of four more operators. So, we really roll up our sleeves to help. And when you’ve invested at this firms, enough time, they will write to you and say I found a company that’s a little too early for us, for XYZ reason, but it resonates and I think it might be for you. So we found some of our best deals that way. But other times, we found our deal flow through building our own communities. And so, when I first started visit as an EM, an emerging manager of a VC firm. And roughly 30 percent of LP capital goes to EM each year but that’s sort of an outsized percentage because when you think about the w-fix-solve (ph) addition capital, taking 1.3 billion of that pie, then you recognize the definition of emerging manager might need to change a bit. So, when I was starting as an EM, I recognize that the landscape wasn’t necessarily leveled. If you weren’t, what’s called the spinout, somebody that has spent a few years at a traditional established blue-chip firm, then it’s harder to develop and cultivate relationships with institutional LPs who will give you a shot even though the data absolutely points to there being a real opportunity in capturing lightning in a bottle if you find a right EM with the right idea in the right market conditions which is certainly what we’re in right now. And so, I decided to start a network specifically tailored around helping women fund managers, connecting one another and it began as a WhatsApp group and a weekly Google Meet that has now blown into something that requires a lot of dedicated time. And so we’re hiring an executive director for this group. They’re called Transact Global, 250 women ex-fund managers globally, from Hong Kong, to Luxembourg, to Venezuela, Canada, Nigeria, you name it. There are women fund managers in our group and we have one of the most active deal flow channels in the world. And so two of our TMV deals over the last year, a fintech combatting student debt and helping young Americans save for retirement at the same time, as an example, came from this WhatsApp deal flow channel. So, I think creating the community, being the change, so to speak, has been incredibly effective for us a proprietary deal flow mechanism. And then last but not least, I think that having some sort of media presence really has helped. And so, I’ve hosted a podcast and I’ve worked on building up what I think to be a fairly organic Twitter following over the years and we surprise ourselves by getting some really exceptional founders cold pitching us on LinkedIn and on Twitter because we make ourselves available as next gen EMs. So, that’s a sort of long-winded answer to your question. But it’s not the traditional means by any means. RITHOLTZ: To say the least. Are you — the companies you’re investing in, are they — and I’ll try and keep this simple for people who are not all that well-versed in the world of venture, is it seed stage, is it the A round, the B round? How far into their growth process do you put money in? DARABI: So it is a predominantly seed fund. We call our investments core investments. So, these are checks that average, 1 and 1.5 million. So for about 1.25 million, on average, we’re capturing 10-15% of a cap payable. And in this area, that’s called a seed round. It will probably be called a Series A 10 years ago. RITHOLTZ: Right. DARABI: And then we follow on through the Series A and it max around, I think, our pro rata at the B. So, our goal via Series B is to have, on average, 10% by the cap. And then we give ourselves a little bit of wiggle room with our modeling. We take mars and moonshot investments with smaller checks so we call these initial interest checks. And initial interest means I’m interested but your idea is still audacious, they won’t prove itself out for three or four years or to be very honest, we weren’t the first to get into this cap or you’re picking Sequoia over us, so we understand but let’s see if we can just promise you a bit of value add to edge our way into your business. RITHOLTZ: Right. DARABI: And oftentimes, when you speak as a former founder yourself with a high level of compassion and you promise with integrity that you’re going to work very hard for that company, they will increase the size of their round and they will carve out space for you. And so, we do those types of investments rarely, 10 times, in any given portfolio. But what’s interesting in looking back at some of our outliers from found one, it came from those initial interest checks. So that’s our model in a nutshell. We’re pretty transparent about it. What we like about this model is that it doesn’t make us tigers, we’re off the board by the B, so we’re still owning enough of the cap table to be a meaningful presence in the founder’s lives and in their business and it allows us to feel like we’re not spraying and praying. RITHOLTZ: Spraying and praying is an amusing term but I’m kind of intrigued by the fact that we use to call it smart money but you’re really describing it as value-added capital when a founder takes money from TMV, they’re getting more than just a check, they’re getting the involvement from entrepreneurs who have been through the process from startup to capital raise to exit, tell us a li bit about how that works its way into the deals you end up doing, who you look at, and what the sort of deal flow you see is like. DARABI: Well, years ago, I had the pleasure of meeting a world-class advertiser and I was at his incredibly fancy office down in Wall Street, his ad agency. And he described to me with pride how he basically bartered his marketing services for one percent of a unicorn. And he was sort of showing off of it about how, from very little time and effort, a few months, he walked away with a relatively large portion of a business. And I thought, yes, that’s clever. But for the founder, they gave up too much of their business too soon. RITHOLTZ: Right. DARABI: And I came up with an idea that I floated by Marina back in the day where our original for TMV Fund I began with the slide marketing as the future of venture and venture is the future of marketing. Meaning, it’s a VC fund where the position itself more like an ad agency but rather than charging for its services, it’s go-to-market services. You offer them free of charge but then you were paid in equity and you could quantify the value that you were offering to these businesses. And back then, people laughed us even though all around New York City, ad agencies were really doing incredible work and benefiting from the startups in that ecosystem. And so, we sort of changed the positioning a bit. And now, we say to our LPs and to our founders, your both clients of our firm. So, we do think of ourselves as an agency. But one set of our marketplace, you have LPs and what they want is crystal clear. The value that they derive from us is through a community and connectivity and co-investment and that’s it. It’s pretty kind of dry. Call me up once a year where you have an exceptional opportunity. Let me invest alongside you. Invite me to dinners four times a year, give me some information and a point of view that I can’t get elsewhere. Thank you for your time. And I love that. It’s a great relationship to have with incredibly smart people. It’s cut and dry but it’s so different. What founders want is something more like family. They want a VC on their board that they can turn to during critical moments. Two a.m. on a Saturday is not an uncommon time for me to get a text message from a founder saying what do I do. So what they want is more like 24/7 services for a period of time. And they want to know when that relationship should start and finish. So it’s sort of the Montessori approach to venture. We’re going to tell them what we’re going to tell them. Tell them what they’re telling them. Tell them what we told them. We say to founders with a reverse pitch deck. So we pitch them as they’re pitching us. Here’s what we promise to deliver for you for the first — each of the 24 months of your infancy and then we promise you we’ll mostly get lost. You can come back to use when your business is growing if you want to do it tender and we’ll operate an SPV for you for you or if you simply want advice, we’re never going to ignore you but our specialty, our black belt, if you will, Barry, is in those first 24 months of your business, that go-to-market. And so, we staffed up TMV to include, well, it’s punching above our weight but the cofounder of an exceptionally successful consumer marketing business, a gross marketer, a recruiter who helps one of our portfolio companies hire 40 of their earliest employees. We have a PR woman. You’ve met Viyash (ph), she’s exceptional with whom, I don’t know, how we would function sometimes because she’s constantly writing and re-editing press releases for the founders with which we work. And then Anna, our copywriter who came from IAC and Sean, our creative director, used to be the design director for Rolling Stone, and I can go on and on. So, some firms called us a platform team but we call it the go-to-market team. And then we promise a set number of hours for ever company that we invest into. RITHOLTZ: That’s … DARABI: And then the results — go ahead. RITHOLTZ: No, that’s just — I’m completely fascinated by that. But I have to ask maybe this is an obvious question or maybe it’s not, so you — you sound very much like a non-traditional venture capital firm. DARABI: Yes. RITHOLTZ: Who are your limited partners, who are your clients, and what motivates them to be involved with TMV because it sounds so different than what has been a pretty standard model in the world of venture, one that’s been tremendous successful for the top-tier firms? DARABI: Our LP set is crafted with intention. And so, 50% of our investors are institutional. This concludes institutional-sized family offices and family offices in a multibillions. We work with three major banks, Fortune 500 banks. We work with a couple of corporate Fortune 500 as investors or LPs and a couple of fund to funds. So that’s really run of the mill. But 50 percent of our investors and that’s why I’m in Athens today are family offices, global family offices, that I think are reinventing with ventures like, to look like in the future because wealth has never been greater globally. There’s a trillion dollars of assets that are passing to the hands of one generation to the next and what’s super interesting to me, as a woman, is that historically, a lot of that asset transferred was from father to son, but actually, for the first time in history, over 50 percent, so 51% of those asset inheritors are actually women. And so, as my business partner could tell because she herself is a next gen, in prior generations, women were encouraged to go into the philanthropic or nonprofit side of the family business … RITHOLTZ: Right. DARABI: And the sons were expected to take over the business or the family office and all of that is completely turned around in the last 10 years. And so, my anchor investor is actually a young woman. She’s under the age of 35. There’s a little bit of our firm that’s in the rocks because we’re not playing by the same rules that the establishment has played by. But certainly, we’re posturing ourselves to be able to grow in to a blue-chip firm which is why we want to maintain that balance, so 50 percent institutional and 50 percent, I would call it bespoke capital. And so, the LPs that are bespoke, we work at an Australian family office and Venezuelan family office and the Chilean family office and the Mexican family office and so on. For those family offices, we come to them, we invite them to events in New York City, we give them personalized introductions to our founders and we get on the phone with them. Whenever they’d like, we host Zooms. We call them the future of everything series. They can learn from us. And we get to know them as human beings and I think that there’s a reason why two thirds of our Fund I LPs converted over into Fund II because they like that level of access, it’s what the modern LP is really looking for. RITHOLTZ: Let’s talk a little bit about some of the areas that you find intriguing. What sectors are really capturing your attention these days? What are you most excited about? DARABI: Well, Barry, I’m most excited about five categories for which we’ve been investing for quite some time, but they’re really being accelerated due to the 2020 pandemic and a looming recession. And so, we’re particularly fascinated by not just health care investing as has been called in the past but rather the care economy. I’m not a huge fan of the term femtech, it always sounds like fembot to me. But care as it pertains to women alone is a multitrillion dollar opportunity. And so, when we think of the care economy, we think of health care, pet care, elder care, community care, personal care as it pertains to young people, old people, men, women, children, we bifurcate and we look for interesting opportunities that don’t exist because they’ve been undercapitalized, undervalued for so long. Case in point, we were early investors Kindbody, a reproductive health care company focused on women who want to preserve their fertility because if you look at 2010 census data, you can see that the data has been there for some time that women, in particular, were delaying marriage and childbirth and there are a lot of world-famous economists who will tell you this, the global population will decline because we’re aging and we’re not necessarily having as many children as we would have in the past plus it’s expensive. And so, we saw that as investors as a really interesting opportunity and jumped on the chance to ask Gina Bartasi who’s incredible when she came to us with a way to make fertility preservation plus expenses. So she followed the B2C playbook and she started with the mobile clinic that helps women freeze their eggs extensively. That company has gone on to raise hundreds — pardon me — and that company is now valued in the hundreds of million and for us, it was as simple as following our intuition as women fund managers, we know what our peers are thinking about because we talk to them all the time and I think the fact that we’re bringing a new perspective to venture means that we’re also bringing a new perspective to what has previously been called femtech. We invest in financial inclusion. Everyone in the world that’s investing fintech, the self-directed financial mobile apps are always going to be capitalized especially in a post Robin Hood era but we’re specifically interested in the democratization of access to financial information and we’re specifically interested in student debt and alleviating student debt in America because not only is it going to be one of the greatest challenges our generation will have to overcome, but it’s also prohibiting us from living out the American dream, $1.7 trillion of student debt in America that needs to be alleviated. And then we’re interested in the future of work, and long have been, that certainly was very much accelerated during the pandemic but we’ve been investing in the 1099 and remote work for quite some time. And so, really proud to have been the first check into a company called Bravely which is an HR chatbot that helps employees inside of a company chat a anonymously with HR representatives outside of that company, that’s 1099. That issue is like DEI, an inclusion and upward mobility and culture setting and what to do when you’re all of a sudden working for home. So that’s an example of a future of work business. And then in the tech-enabled sustainable solutions category, it’s a mouthful, let’s call that sustainability, we are proud to have been early investors of a company called Ridwell, out of Seattle Washington, focused on not just private — privatized recycling but upcycling and reconnaissance. Where are our things going when we recycle them? For me, it always been a pretty big question. And so, Ridwell allows you to re and upcycle things that are hard to get rid of out of your home like children’s eyeglasses and paints and battery, single-use plastic. And it shows you where those things are going which I think is super cool and there’s good reason why it has one of the highest NPS scores, Net Promoter Scores, of any company I’ve ever worked with. People are craving this kind of modern solution. And last but not least, we invest in transportation and part because of the unfair advantage my partner, Marina, brings to TMV as she comes from a maritime family. And so, we can pile it, transportation technology, within her own ecosystem. That’s pretty great. But also, because we’re just fascinated by the fact that 90 percent of the world commodities move on ship and the biggest contributor to emissions in the world outside of corporate is coming from transportation. SO, if we can sort of figure out this industry, we can solve a lot of the problems that our generation are inheriting. Now, these categories might sound massive and we do consider ourselves a generalist firm but we stick to five-course sectors that we truly believe in and we give ourselves room to kick out a sector or to add a new one with any given new fund. For the most part, we haven’t needed to because this remain the categories that are not only most appealing to us as investors but I think paramount to our generation. RITHOLTZ: That’s really intriguing. Give us an example of moonshot or what you called earlier, a Mars shot technology or a company that can really be a gamechanger but may not pay off for quite a while. DARABI: We’ve just backed a company that is focusing on food science. Gosh, I can’t give away too much because they haven’t truly launched in the U.S. But maybe I’ll kind of allude to it. They use crushed produce, like, crush potato skins to make plastic but biodegrades. And so, it’s a Mars shot because it’s a materials business and it’s a food science business rolled off into both the CPG business and an enterprise business. This particular material can wrap itself around industrial pellets. Even though it’s audacious, it’s not really a Mars shot when you think about the way the world is headed. Everybody wants to figure out how do we consume less plastic and recycle plastic better. And so, if there are new materials out there that will not only disintegrate but also, in some ways, feed the environment, it will be a no-brainer and then if you add to the equation the fact that it could be maybe not less expensive but of comparable pricing to the alternative, I can’t think of a company in the world that wouldn’t switch to this solution. RITHOLTZ: Right. So this is plastic that you don’t throw away. You just toss in the garden and it becomes compost? DARABI: Yes, exactly. Exactly. It should help your garden grow. So, yes, so that’s what I would call a Mars shot in some ways. But in other ways, it’s just common sense, right? RITHOLTZ: So let’s talk a little bit about your investment vehicles. You guys run, I want to make sure I get this right, two funds and three vehicles, is that right? DARABI: We have two funds. They’re both considered micro funds because they’re both under 100 million and then we operate in parallel for SPVs that are relatively evergreen and they serve as opportunistic investments to continue to double down on our winners. RITHOLTZ: SPV is special purpose investment … DARABI: Vehicles. Yes. RITHOLTZ: Right. DARABI: And the PE world, they’re called sidecars. RITHOLTZ: That’s really interesting. So how do these gets structured? Does everything look very similar when you have a fund? How quickly do you deploy the capital and typically how long you locked for or investors locked up for? DARABI: Well investors are usually in private equity are VC funds locked up for 10 years. That’s not usual. We have shown liquidity faster, certainly, for Fund I. It’s well in the black and it’s only five years old less, four and a half years old. So, how do we make money? We charge standard fees, 2 on 20 is the rubric of it, we operate by. And then lesser fees for sidecars or direct investments. So that’s kind of how we stay on business. When you think about an emerging manager starting their first fund, management fees are certainly not so we can live a lavish rock and roll life on a $10 million fund with a two percent management fee, we’re talking about 200K for the entire business to operate. RITHOLTZ: Wow. DARABI: So Marina and I, not only anchored our first fund with their own capital but we didn’t pay ourselves for four years. It’s not glamorous. I mean, there’s some friends of mine that thing the venture capital life is glam and it is if you’re on Sand Hill Road. But if you’re an EM, it’s a lot more like a startup where you’re burning the midnight oil, you are bartering favors with your friends, and you are begging the smartest people you know to take a chance on you to invite you on to their cap table. But it somehow works out because we do put in that extra effort, I think, the metrics, certainly for Fund I have shown us that we’re in this for the long haul now. RITHOLTZ: So your fund 1 and Fund 2, are there any plans of launching Fund III? DARABI: Yes. I think that given the proof points between Fund I and Fund II and a conversation that my partner and I recently had, five years out, are we in this? Do we love this? We do. OK. This is our life’s work. So you can see larger and more demonstrable sized funds but not in an outsized way, not just because we can raise more capital now but because we want to build out a partnership and the kind of culture that we always dreamed of working for back when we were employees, so we have a very diverse set of colleagues with whom we couldn’t operate and we’ll be adding to the partnership in the next two or three years which is really exciting to say. So, yes, the TMV will be around for a while. RITHOLTZ: That’s really interesting. I want to ask you the question I ask any venture capitalist that I interview. Tell us about your best and worst investments and what did you pass on that perhaps you wish you didn’t? DARABI: Gosh. The FOMO list is so long and so embarrassing. Let me start with what I passed on that I regret. Well, I don’t know she really would have invited me to invest, but certainly, I had a wonderful conversation a peer from high school, Katrina Lake, when she was in beta mode for Stitch Fix. I think she was still at HBS at the time or had just recently graduated from Harvard. When Katrina and I had coffee in Minneapolis were we went to high school and she was telling me about the Netflix for clothing that she was building and certainly I regret not really picking up on the clues that she was offering in that conversation. Stitch Fix had an incredible IPO and I’m a proud shareholder today. And similarly, when my friend for starting Cloudflare which luckily they did bring me in to pre-IPO and I’m grateful for that, but when they were starting Cloudflare, I really should have jumped on that moment or when my buddy Ryan Graves whom I still chat with pretty frequently was starting out Uber in beta with Travis and Garrett, that’s another opportunity that I definitely missed. I was in Ireland when the Series A term sheet assigned. So there’s such a long laundry list of namedropped, namedropped, missed, missed, missed. But in terms of what I’m proud of, I’d say far more. I don’t like Sophie’s Choice. I don’t like to cherry pick the certain investments to just brag about them. But we’ve talked about someone to call today, I’d rather kind of shine a light — look at my track record, right? There’s a large realized IRR that I’m very proud of. But more on the opportunity of the companies that we more recently backed that prevent damages (ph) of CRM for oncology patient that help them navigate through the most strenuous time of their life. And by doing so, get better access to health care. And we get to wrote that check a couple of months ago. But already, it’s becoming a company that I couldn’t be more excited about because if they execute the way I think Shirley and Victor will, that has the power to help so many people in a profound way, not just in the Silicon Valley cliché way of this could change the world but this could actually help people receive better care. So, yes, I’m proud of having been an early investor in the Caspers of the world. Certainly, we’re all getting better sleep. There’s no shame there. But I’m really excited now today at investing in financial inclusion in the care economy and so on. RITHOLTZ: And let’s talk a little bit about impactful companies. Is there any different when you’re making a seed stage investment in a potentially impactful company versus traditional startup investing? DARABI: Well, pre-seed and seed investing isn’t a science and it’s certainly not a science that anyone has perfected. There are people who are incredibly good at it because they have a combination of luck and access. But if you’re a disciplined investor in any asset class and I talk to my friends who run hedge funds and work for hedge funds about 10 bets that they take a day and I think that’s a lot trickier than what I do because our do due diligence process, on average, takes an entire quarter of the year. We’re not making that many investments each year. So even though it sounds sort of fruity, when you look at a Y Combinator Demo Day, Y Comb is the biggest accelerator in Silicon Valley and they produce over 300 companies, three or four times a year. When you look at the outsized valuations coming out of Y Comb, it’s easy to think that starting company is as simple as sort of downloading a company in a Box Excel and running with it. But from where we sit, we’re scorching the earth for really compelling ideas in areas that have yet to converge and we’re looking for businesses that may have never pitched the VC before. Maybe they’re not even seeking capital. Maybe it’s a company that isn’t so interested in raising a penny eventually because they don’t need to. They’re profitable from day one. Those are the companies that we find most exciting because as former operators, we know how to appeal to them and then we also know how to work with them. RITHOLTZ: That’s really interesting. Before I get to my favorite question, let me just throw you’re a curveball, tell me a little bit about Business Schooled, the podcast you hosted for quite a while. DARABI: So, Synchrony, Sync, came to me a few years ago with a very compelling and exciting opportunity to host a podcast with them that allowed me a fortunate opportunity to travel the country and I went to just under a dozen cities to meet with founders who have persevered past their startup phase. And what I loved about the concept of business school is that the cities that I hosted were really focused on founders who didn’t have access to VC capital, they put money on credit card. So I took SBA loans or asked friends and family to give them starter capital and then they made their business work through trying times and when you pass the five-year mark for any business, I’m passing it right now for TMV, there’s a moment of reflection where you can say, wow, I did it. it’s incredibly difficult to be a startup founder, more than 60 percent of companies fail and probably for good reason. And so, yes, I hosted business school, Seasons 2 and 3 and potentially there will be more seasons and I’m very proud of the fact that at one point we cracked the top 20 business podcasts and people seem to be really entertained through these conversations with insightful founders who are vulnerable with me about what it was like to build their business and I like to think they were vulnerable because I have a good amount of compassion for the experience of being founder and also because I’m a New Yorker and I just like to talk. RITHOLTZ: You’re also a founder so there’s going to be some empathy that’s genuine. You went through what they’re going through. DARABI: Exactly. Exactly. And so, what you do, Barry, is quite similar. You’re — you host an exceptionally successful business podcast and you’re also an allocator. You know that it’s interesting to do both because I think that being an investor is a lot like being a journalist. In both professions, you won’t succeed unless you are constantly curious and if you are having conversations to listen more than you speak. DARABI: Well, I’ll let you in on a little secret since it’s so late in the podcast and fewer people will be hearing this, the people I invite on the show are essentially just conversations I want to have. If other people come along and listen, that’s fantastic. But honestly, it’s for an audience of one, namely me, the reason I wanted to have you on is because I’m intrigued by the world of venture and alternatives and impact. I think it’s safe to say that a lot of people have been somewhat disappointed in the results of ESG investing and impact investing that for — it’s captured a lot more mindshare than it has captured capital although we’re seeing signs that’s starting to shift. But then the real question becomes, all right, so I’m investing less in oil companies and more in other companies that just happen to consume fossil fuels, what’s the genuine impact of my ESG investing? It feels like it’s sort of de minimis whereas what you do really feels like it has a major impact for people who are interested in having their capital make a positive difference. DARABI: Thank you for saying that. And I will return the compliment by saying that I really enjoyed getting to know you on our one key economist Zoom and I think that you’re right. I think that ESG investing, certainly in the public markets has had diminished returns historically because the definition has been so bizarre and so all over the place. RITHOLTZ: Right. DARABI: And I read incredible books from people like Antony Bugg-Levine who helps coin the term the Rockefeller Foundation, who originally coined the term you read about, mortgage, IRR and IRS plus measurement and it’s so hard to have just standardization of what it means to be an impact investor and so it can be bothered but we bother. Rather, we kind of come up with our own subjective point of view of the world and we say what does impact mean to us? Certainly, it means not investing in sin stocks but then those sin stocks have to begin somewhere, has to begin with an idea that somebody had once upon a time. And so, whether we are investing in the way the world should look from our perspective. And with that in mind, it doesn’t have to be impact by your grandpa’s VC, it can be impact from modern generation but simply things that behave differently. Some folks with their dollars. People often say, well, my ESG portfolio is underperforming. But then if you dig in to the specifics, are you investing in Tesla? It’s not a pretty good year. Did you back Beyond Meat? Had a great year. And so, when you kind of redefine the public market not by a sleeve and a bank’s version of a portfolio, but rather by company that you think are making demonstrable change in the world, then you can walk away, realizing had I only invested in these companies that are purpose driven, I would have had outsized returns and that’s what we’re trying to deliver on at TMV. That’s the promise. RITHOLTZ: Really, really very, very intriguing. I know I only have you for a few minutes so let’s jump to my favorite questions that I ask all of our guests starting with tell us what you’re streaming these days. Give us your favorite, Netflix, Amazon Prime, or any podcast that are keeping you entertained during the pandemic. DARABI: Well, my family has been binging on 100 Foot Wave on HBO Max which is the story of big wave surfer Garrett McNamara who is constantly surfing the world’s largest waves and I’m fascinated by people who have a mission that’s sort of bigger than success or fame but they’re driven by something and part of that something is curiosity and part of it is insanity. And so not only is it visually stunning to kind of watch these big wave surfers in Portugal, but it’s also a mind trip. What motivates them to get out of bed every day and potentially risk their lives doing something so dangerous and so bananas but also at the same time so brave and heroic. So, highly recommend. I am listening to too many podcasts. I listen to, I don’t know, a stream of things. I’m a Kara Swisher fan, Ezra Klein fan, so they’re both part of the “New York Times” these days. And of course, your podcast, Barry. RITHOLTZ: Well, thank you so much. Well, thank you so much. Let’s talk a little bit about who your early mentors were and who helped shape you career? DARABI: It’s going to sound ungrateful but I don’t think, in like a post lean in definition of the word, I ever truly had a mentor or a sponsor. Now, having said that, I’ve had people who really looked at for me and been incredibly gracious with their time and capital. And so, I would absolutely like to acknowledge that first and foremost. I think about how generous Adam Grant has been with his time and his investments for TMV in Fund I and Fund II and he’s a best-selling author and worked on highest-rated business school professor. So shout out to Adam, if he’s listening or Beth Comstock, the former Vice Chair of GE who has been instrumental in my career for about a decade and a half now. And she is also really leaning in to the TMV portfolio and has become a patient of Parsley Health, an early investment of ours and also an official adviser to the business. So, people like Adam and Beth certainly come to mind. But I don’t know, I just — I’m not sure mentors really exist outside of corporate America anymore and part of the reason why we started Transact Global is to kind of foster the concept of the peer mentor, people who are going through the same thing as you at the same time and allowing that hive mentality with an abundance mentality to catalyze people to kind of go further and faster. RITHOLTZ: Let’s talk about some of your favorite books and what you might reading right now. DARABI: OK, so in the biz book world, because I know your listeners as craving, I’m a big fan of “Negotiation Genius.” I took a crash course with one of the authors, Max Bazerman at the Kennedy School and it was illuminating. I mean, he’s one of the most captivating professors I’ve ever had the pleasure of hearing lecture and this book has really helped me understand the concept of the ZOPA, the Zone of Possible Agreement, and how to really negotiate well. And then for Adam whom I just referenced, of all of his incredible books, my favorite is Give and Take because I try to operate with that approach of business. Give more than you take and maybe in the short term, you’ll feel depleted but in the long term, karma pays off. But mostly, Barry, I read fiction. I think the most interesting people in the world or at least the most entertaining at dinner parties are all avoid readers of fiction and history. So I recently reread, for instance, all of my favorite short stories from college, from Dostoyevsky’s “A Gentle Creature” to “Drown” Junot Diaz. “Passing” by Nella Larsen, “The Diamond as Big as the Ritz” by Fitzgerald. Those are some of my very favorite stories of all time. And my retirement dream is to write a book of short stories. RITHOLTZ: Really, really quite intriguing. Are they all available in a single collection or these just, going back to your favorites and just plowing through them for fun? DARABI: Those are just going back to my favorites. I try to re-read “Passing” every few years which is somehow seems to be more and more relevant as I get older and Junot Diaz has become so incredibly famous when I first read “Drown” about 20 years ago which is an original collection of short stories that broadened my perspective of why it’s important to think about a broader definition of America, I guess. And, yes, no, that’s just — that was just sort of off the top of my head as the offering of a few stories that I really love, no collection. RITHOLTZ: That’s a good collection. And we’re down to our final two questions. What sort of advice would you give to a recent college grad who was interested in a career in either venture capital or entrepreneurship? DARABI: Venture capital or entrepreneurship. Well, I would say, learn as early as possible how to trust your gut. So, this could mean a myriad of things. As an entrepreneur, it could mean under the halo effect of an institution, university or high school or maybe having a comfortable day job, tinker with ideas, get feedback on that idea, don’t be afraid of looking or sounding dumb and build that peer network that I described. People who are rooting you on and are also insatiably curious about wonky things. And I would say that for venture capital, similar play on the same theme, but whether it’s putting small amounts of money into new concept, blockchain investing, or whether it’s meeting with entrepreneurs and saying maybe I only have $3,000 save up but I believe in you enough to bet amongst friends in Brooklyn on your concept if you’ll have me as an investor. So, play with your own money because what it’s really teaching you in return is how to follow instincts and to base pattern recognition off your own judgement. And if you do that early on, overtime, these all become datapoints that you can point to and these are lessons that you can glean while not taking the risk of portfolio management. So, I guess the real advice to your listeners is more action, please. RITHOLTZ: Really very, very intriguing. And our final question, what do you know about the world of venture investing today that you wish you knew 15 or 20 years ago when you first getting started? DARABI: Twenty years ago, I was a bit of a Pollyanna and I thought every wonderful idea that simply is built by smart people and has timed the market correctly will work out. And I will say that I’m slightly more jaded today because of the capital structure that is systematically allowing the biggest firms in the world to kind of eat up a generous portion of, let’s call it the LP pie, which leaves less capital available to the young upstart VC firms, and of course I’m biased because I run one, that are taking outsized risks on those non-obvious ideas that we referenced. And so, what I wish for the future is that institutional capital kind of reprioritizes what it’s looking for. And in addition to having a bottom line of reliable and demonstrable return on any given investment, there are new standards put into play saying we want to make sure that a portion of our portfolio goes to diverse managers. Because in turn, we recognize that they are three times more likely to invest in diverse founders or we believe in impact investing can be broader than the ESG definitely of a decade ago, so we’re coming up with our own way to measure on sustainability or what impact means to us. And if they go through those exercises which I know is hard because, certainly, I’m not trying to add work to anyone’s plate, I do think that the results will more than make up for it. RITHOLTZ: Quite intriguing. Thank you, Soraya, for being so generous with your time. We have been speaking with Soraya Darabi who is the Co-Founder and General Partner at TMV Investments. If you enjoy this conversation, well, be sure and check out any of the prior 376 conversations we’ve had before. You can find those at iTunes or Spotify, wherever you buy your favorite podcast. We love your comments, feedback, and suggestions. Write to us at MIB podcast@bloomberg.net. You can sign up for my daily reads at ritholtz.com. Check out my weekly column at bloomberg.com/opinion. Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack team that helps me put these conversations together each week. Tim Harrow is my audio engineer. Paris Walt (ph) is my producer. Atika Valbrun is our project manager, Michael Batnick is my head of research. I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.   ~~~     The post Transcript: Soraya Darabi appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureOct 20th, 2021

Here"s Why You Should Add Omnicell (OMCL) To Your Portfolio

Investors are optimistic about Omnicell (OMCL) owing to its better-than-expected results in the third quarter and robust segmental performance. Omnicell, Inc. OMCL is well poised for growth in the coming quarters, backed by its strong segmental performance and notable developments in Autonomous Pharmacy. The company exited the third quarter with better-than-expected results. It’s recent acquisition of FDS Amplicare, in an effort to strengthen its Advanced Services portfolio, appears promising. A strong solvency position also bodes well for the company. Omnicell is well on track to achieve its 2025 targets, driven by a number of factors that raise our optimism.Over the past year, the Zacks Rank #2 (Buy) stock has gained 71.3% compared with 35% fall of the industry and 32.4% rise of the S&P 500.The renowned medical device solutions provider has a market capitalization of $8.05 billion. Its third-quarter 2021 earnings beat the Zacks Consensus Estimate by 18.7%.Over the past five years, the company registered earnings growth of 19.6%, ahead of the industry’s 6.1% rise and the S&P 500’s 2.8% increase. The long-term expected growth rate is estimated to be 16% compared with the industry’s growth projection of 20% and the S&P 500’s projected 11.7% growth.Image Source: Zacks Investment ResearchLet’s delve deeper.Factors At PlayQ3 Upsides: Omnicell exited the third quarter with better-than-expected revenues and earnings. Growth across both operating segments contributed to the top line. Omnicell added three net new long-term sole source customers in the third quarter, bringing the total to 251 of the top three hundred health systems. The company also became the medication management partner of choice for three prestigious healthcare providers — a major Northeastern Health system of current Omnicell customer, one of the nation's leading children's hospitals and a Texas-based health system. Omnicell’s strong performance in the quarter and year to date is reflective of the robust demand for its medication management and adherence automation solutions. Expansion in both the margins was another upside. The raised adjusted EPS guidance for 2021 also buoys optimism.2025 Roadmap Looks Impressive: In terms of its 2025 financial roadmap, Omnicell is targeting to reach $1.9 billion to $2 billion in total revenues by 2025 — a 14% to 15% compounded total annual revenue growth rate from 2021 to 2025. Over the same period of time, it is also targeting an expansion of non-GAAP EBITDA margin from 21% in 2021 to 25% by 2025, representing a margin expansion of approximately 400 bps. According to the company, its strong position in the market, growing customer base and strategic focus on innovation will help it achieve these goals.Autonomous Pharmacy Model Holds Potential: Omnicell has an elaborate vision for the Autonomous Pharmacy. We are upbeat about the recent introduction of Omnicell One, which utilizes cloud-based data and predictive prescriptive analytics to provide real-time visibility with actionable insights and workflow optimization recommendations. These recommendations are expected to help improve clinical, financial and operational outcomes across the pharmacy supply chain. Another development in autonomous pharmacy is the acquisition of FDS Amplicare in September. With this acquisition, Omnicell's EnlivenHealth division’s offerings have broadened to help pharmacies to measurably improve patient health outcomes, while enabling new clinical services and expanding their growth and profitability opportunities.Strong Solvency Position: Omnicell exited the third quarter of 2021 with cash and cash equivalents of $482 million. Meanwhile, the quarter-end total debt came at $483 million. Although the third quarter’s total debt was much higher than the corresponding cash and cash equivalent level, the company has no short-term-payable debt on its balance sheet. This is good news in terms of the company’s solvency position, particularly during the time of a global pandemic when it is facing major manufacturing and supply halts globally.DownsidesEscalating Costs: Omnicell continues to battle escalating costs arising from its strategies to drive top-line growth, including portfolio expansion, acquisitions and further penetration in the medication adherence market. Also, the company continues to expect higher costs in the upcoming quarters stemming from integration of new acquisitions and the expenses related to the XT series and IV workflow.Tough Hospital Spending Trends: Hospitals continue to remain cautious with respect to capital spending in the current economic environment. Thus, a resilient hospital capital expenditure environment might adversely affect the adoption of Omnicell’s solutions. Moreover, the reimbursement mix has also affected the endowments income, further affecting hospital spending capabilities. While the company has won some new deals in larger hospitals, the market is still susceptible to the economy and credit conditions.Estimate TrendOmnicell has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 2.2% to $3.77.The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $310.1 million, suggesting a 24.4% rise from the year-ago reported number.Key PicksA few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, GlaxoSmithKline plc GSK and NextGen Healthcare, Inc. NXGN. You can see the complete list of today’s Zacks #1 Rank stocks here.AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in all of the trailing four quarters, delivering an average surprise of 19.5%.AMN Healthcare has outperformed its industry over the past year. AMN has gained 91.1% compared with the industry’s 47.5% fall.GlaxoSmithKline, carrying a Zacks Rank #1, has a long-term earnings growth rate of 5.8%. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 15.3%.GlaxoSmithKline has underperformed its industry over the past year. GSK has gained 13.2% compared with the industry’s 19.9% rise.NextGen, sporting a Zacks Rank #2, has a long-term earnings growth rate of 8.5%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 16%.NextGen has outperformed the industry it belongs to in the past year. NXGN has declined 0.3% versus the industry’s 35% fall. 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 GlaxoSmithKline plc (GSK): Free Stock Analysis Report Omnicell, Inc. (OMCL): Free Stock Analysis Report AMN Healthcare Services Inc (AMN): Free Stock Analysis Report NEXTGEN HEALTHCARE, INC (NXGN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 22nd, 2021

16 B Corps making products we love that you can feel good about buying

B Corporations are businesses that get voluntarily graded by the nonprofit B Lab on everything from worker health to environmental impact. When you buy through our links, Insider may earn an affiliate commission. Learn more.United by Blue B Corps are businesses graded on their efforts to create an inclusive, sustainable economy. These companies treat "good business" as an idea that includes both profit and purpose.  Below, we rounded up the B Corps we love shopping at most, including Patagonia, Allbirds, and Prose. Table of Contents: Masthead StickyAs history can attest, nonprofits aren't enough to single-handedly eradicate poverty and inequality and infuse the workplace with jobs that make workers feel dignified and purposeful.To pitch in, some companies are willing to bet on a different conceptualization of "good business." Perhaps most impressive of this group are B Corps — businesses that nonprofit B Lab grade each year to ensure they're meeting the highest standards of social and environmental performance, public transparency, and legal accountability to balance profit and purpose. Companies awarded B Corp status have committed to using their businesses to work toward a more inclusive and sustainable economy. They strive to reduce inequality; lower poverty levels; and create a healthier environment, stronger communities, and purposeful jobs.They leverage their resources to pay into a better world, creating a definition of success that includes commonwealth and positive impact as necessary aspects of sustainable consumerism. It's not charity; it's better business, and the point is to move the needle on "better practices" further from extra credit and closer to universal compliance.We rounded up 16 companies we love to shop from that also happen to be certified B Corps, helping drive a global movement that uses business as a force for good. Check out 16 B-Corps brands we love to shop from:LeesaLeesaLeesa is best-known for being one of the forerunners in the increasingly crowded direct-to-consumer mattress space. Its Leesa Mattress has over 20,000 five-star reviews, and its Hybrid is one of the picks in our best mattress guide.The company also has a strong social impact: giving one mattress for every ten sold and devoting resources to national and local organizations. Despite the startup's accomplishments in a crowded space, Leesa's Head of Social Impact, Jen-Ai Notman, told Insider the social mission would be likely to still rank as the overwhelming incentive for working at the company.Overall, Leesa has donated more than 37,000 mattresses to those in need and makes a point to provide the opportunity for employees to feel invested in their own backyards with local volunteer opportunities.Shop Leesa here.The Body ShopThe Body Shop/FacebookYou may know The Body Shop from frequent trips to the mall, but the retailer has attracted a dedicated customer base for its social responsibility and wide array of ethically sourced bodycare products. In 2019, the company became a certified B Corp.Since opening its doors in 1976, The Body Shop has launched a series of activism campaigns, even becoming the first international cosmetics brand recognized under the Humane Cosmetics Standard.The Body Shop has also launched a Community Trade partnership with The Tungteiya Women's Association in northern Ghana. Through the partnership, over 640 women help source the high-quality shea butter used in The Body Shop's products, like the shea butter shampoo and conditioner, which is former senior reporter Connie Chen's go-to haircare set.The Coconut Body Butter is one of our favorite bodycare products, and we ranked its Tea Tree Oil as the best tea tree oil we've tried. Shop The Body Shop here.ProseProseProse is a trailblazer for custom haircare and is one of the most personalized beauty brands on the market.Launched in 2017 and added to the B Corp list in 2019, Prose creates complete customized haircare products that cater to the specific needs and goals of each individual's hair and scalp. Prose founders used their experiences in marketing, digital strategy, and R&D roles at consumer product companies like Procter & Gamble and L'Oréal to help define Prose's data-driven and ingredient-centric business model.Because of this technology-driven approach mixed with an apothecary-style concept, Prose's made-to-order products offer the highest quality of clean, sustainably sourced ingredients.Read our entire Prose review here.Shop Prose here.AllbirdsAllbirds/InstagramAllbirds are often referred to as the "world's most comfortable shoes," and we'd be inclined to agree. We also love that each collection seems to get even better at optimizing natural materials without raising prices or diminishing quality.Allbirds' classic sneakers and loungers are made from moisture-wicking, temperature-regulating, odor-resistant merino wool that is ZQ-certified (meaning it meets stringent standards for sustainable farming and animal welfare) and uses 60% less energy than synthetics.Their second collection was comprised of sneakers and skippers made from cooling, eco-friendly eucalyptus pulp. Both collections are ultra-comfortable, low-maintenance, made from sustainable materials, and cost $95 for a pair. Shop Allbirds here.PatagoniaPatagoniaPatagonia is a beloved outdoors company for many reasons: its superior products and the environmental efforts that led to it being named a UN Champion of the Earth in 2019, the UN's top environmental honor.You can read more on how Patagonia walks the walk here. A few of our favorite examples include being the first California company to sign up for B certification in 2012; imposing an earth tax on itself; and giving 100% (yes, 100%) of their profits from Black Friday in the past directly to grassroots nonprofits working to protect air, water, and soil quality for future generations. Since 1985, the company has donated over $89 million to environmental work.It also bucks corporate trends by not being afraid to get political. It's led boycotts and sued the United States government after the former Trump administration proposed reducing two national monuments by up to 85%.The company also revised its mission statement from "build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis" to the simpler, more urgent "we're in business to save our home planet."Shop Patagonia here.CotopaxiCotopaxiCotopaxi is an outdoors brand with social purpose built into its DNA. Its gear is superior (I count their 35L and 42L travel pack as among my all-time best finds). But, somehow, it's almost more exciting to talk about the work the company is doing outside of its retail line. From its inception, Cotopaxi has been founded upon the idea that the interests of profit and people could not only coexist but should and already do enjoy a mutually beneficial relationship.The B Corp values can be found at all levels of operation. Employees spend 10% of their work time in their local communities, adventuring outdoors, or doing service. The company donates 1% of its yearly revenue to ending poverty by funding local organizations working on sustainable solutions. Cotopaxi also puts out a Repurposed Collection of limited-edition gear made out of product scraps. The company has also created a skills-based volunteering initiative that leverages the time and talent of employees to respond to community needs, such as a card-writing program that provides a paid first job for refugees in Salt Lake City. The program provides youth with professional development, work experience, a competitive wage, and the opportunity to practice their English language skills. This is one company whose "Do Good" products actually feel authentic. Shop Cotopaxi here.Frank and OakFrank And OakFrank and Oak is a Canadian apparel company dedicated to making modern, high-quality essentials with sustainable materials and production methods.The company has winter boots made from coffee waste, recycled rubber, and plant-dyed leather, as well as circular denim made from post-consumer waste in a way that uses 79% less energy, 50% fewer chemicals, and 95% less water than the standard.About 50% of the retailer's products are made with minimal-impact processes and materials. Its shipping boxes are 100% recycled and recyclable, and its bags are biodegradable. What's more, its Canadian stores were built with recycled materials. It also keeps a lean supply of products on hand to avoid surplus, which makes nearly every collection limited-edition. Shop Frank and Oak.BombasBombasBombas is another company that was founded with the primary directive of giving back to the community, with its actual product idea coming second. But Bombas are still the best pair of socks we've ever tried.Founders David Heath and Randy Goldberg told Insider the now cult-favorite company began as a way to address the fact that homeless shelters have a great shortage of sock donations. And after noticing that consumers didn't have a great option between high-end niche technical socks and a six-pack at Target, Heath and Goldberg spent two years obsessively re-inventing the wheel.Bombas socks have blister tabs, a reinforced footbed, targeted areas of tension, "stay-up technology," and contoured seaming like a Y-stitched heel to minimize bunching, sliding, and sticking.Since 2013, the company has also donated more than 48,000,000 million items to homeless shelters thanks to its "buy one, give one" model for its socks and tees.And the socks and clothes Bombas does donate have been designed in conjunction with their giving partners to cater specifically to the needs of its recipients, who may not have access to the luxury of putting on clean clothes every day. For instance, the socks come in darker colors to avoid visible wear and tear, added anti-microbial treatment to prevent odor or bacteria if they can't be washed as frequently, and reinforced seams for durability. Shop Bombas here.BeautycounterBeautycounterBeautycounter, a skincare and makeup brand, has become synonymous with the clean beauty movement. Since its founding in 2013, the company has had what it calls The Never List — a laundry list of 1,800 questionable or harmful chemicals that are never used in its products, including the 1,400 banned or restricted by the EU. (The US bans just 30.)It's also involved in advocacy for better, healthier legal regulation in the US and Canada. Its makeup is solid, but it has some of the best skincare products around — and all blessedly sans harmful chemicals.Read our entire Beautycounter review here.Shop Beautycounter here.TentreeTentreeTentree is an outdoor company that essentially thinks of itself as a forestry program that ended up selling clothes. For every product you buy, the company plants 10 trees through thoughtful programs that reforest the earth and help rebuild communities around sustainable local economies. Since its inception, Tentree has planted over 57 million new trees on earth. By 2030, the company's goal is 1 billion. The brand's clothes mostly consist of comfy, unassuming sweatshirts, shirts, leggings, and other basic apparel sold at a reasonable price. It's also fostered a lively online community and lays claim to one of the most-liked Instagram posts of all time.Shop Tentree here.United by BlueUnited By BlueUnited by Blue, an outdoor apparel and accessories brand, was founded first and foremost to preserve and protect the places in which explorers go to play. That means its top-notch gear goes hand-in-hand with conservation work.The company utilizes inventive, sustainable materials and removes 1 pound of trash from the world's oceans and waterways for every product sold. It's working to ban single-use plastic from its business operations. You can also join them in a cleanup. We're particularly big fans of their flannel shirts as well as their jackets and socks that utilize bison down — a surprisingly sustainable material that packs a lot of warmth. Shop United by Blue here.EthiqueEthiqueEthique is helping tackle plastic waste by developing solid bars made for beauty, body, and haircare needs.Founded by a female biologist, the company formulates over 30 solid beauty bars that work as shampoos, conditioners, moisturizers, self-tanners, and body washes, and they work well. Every bar is vegan, sustainably sourced, naturally derived, and comes in biodegradable packaging. They also last two to five times longer than bottled options since they're so concentrated (since about 70% of bottled shampoo is water), meaning you save money and contribute a smaller carbon footprint since you're ordering less frequently. To date, the company has prevented the making of more than 11 million plastic bottles.Ethique (French for "ethical") is certified climate-neutral and cruelty-free and donates 20% of its profit to charity.In 2015, the company was recognized as New Zealand's most sustainable business with the Best in B award. In its early stages, the company also attracted the highest number of female investors in PledgeMe history. (PledgeMe is New Zealand's crowdfunding platform.)Shop Ethique here. (Its Amazon orders are fulfilled by Pharmapacks.)AthletaAthletaSan Francisco-based Athleta makes relatively affordable but premium performance clothing designed by women athletes, and it focuses most of its philanthropy on empowering girls and women. Through the Gap Inc. P.A.C.E. program and Fair Trade U.S.A., the label supports programs impacting the lives of the majority-female workers that create its apparel and has run empowerment-focused campaigns such as "Power of She." The company also offers thousands of free fitness and wellness events each year.  In 2021, it's diverted 74% of shipping waste from landfills, and 71% of its materials are made from sustainable fibers.Shop Athleta here.Uncommon GoodsUncommonGoodsUncommonGoods is a marketplace of creative craft-esque inventions, like long-distance friendship lamps, that make great gifts. The site feels like a clean, navigable Etsy with fewer products and a more distinct thesis: utilitarian but "unique." It's unusual to see a diverse aggregator like UncommonGoods as a B Corp (Etsy gave up the distinction in 2017), but the company has been one since 2007. UncommonGoods works with its artists to use sustainable or recycled materials when possible, chooses environmentally friendlier packing materials, and prints its catalog on FSC (Forest Stewardship Council) certified and recycled paper. They also founded "Better to Give," which allows customers to choose a nonprofit partner for the company to donate $1 to with every order. For UncommonGoods, the "business for good" model is working, with the company growing steadily from five employees to over 200 year-round. As part of their approach to business, their lowest-paid hourly seasonal worker makes double the federal minimum wage. They've also advocated for higher minimum wage and paid family leave in New York and other states. The company partnered with the Thurgood Marshall College Fund and created the Uncommon Scholars program, which creates internship and scholarship opportunities for students enrolled at historically Black colleges and universities.Shop UncommonGoods here.MPOWERDAmazonNYC-based MPOWERD makes affordable, innovative products that help make clean energy accessible. Its best-known product is the Luci, an inflatable solar light. Particularly well-loved for its versatile applications for campers and hikers, MPOWERD is an increasingly recognizable name in the outdoors genre.Its big sales drive down costs, and those savings are passed on to MPOWERD's clients in developing economies.Through this process and a myriad of others, the company delivers affordable, life-changing solar lights to off-the-grid communities around the world. It has over 700 strategic nonprofit partnerships worldwide, emergency relief sales, and a customer-driven Give Luci program that encourages shoppers to purchase units for their global nonprofit partners. Shop MPOWERD here.Eileen FisherEileen FisherEileen Fisher has been a B-Corp since 2015 and has incorporated conscious practices into most of its supply chain, including "green initiatives" at its headquarters, stores, and distribution centers, along with volunteer work.The company has been involved in some meaningful policy engagement in the past, and it has designed a grant program that supports women involved in environmental justice. Shop Eileen Fisher.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 17th, 2021

5 kinds of technology that the US"s top spy catchers say rivals are gaining an edge in

That tech "may determine whether America remains the world's leading superpower or is eclipsed by strategic competitors," the NCSC says. Chinese President Xi Jinping on screen at a gala for the 100th anniversary of Chinese Communist Party, at the Olympic Bird's Nest stadium in Beijing, June 28, 2021. Kevin Frayer/Getty Images The top US counterintelligence agency recently published a list of five tech sectors it says are vital to US interests. Those sectors are also vulnerable to adversaries, according to the National Counterintelligence and Security Center. That tech "that may determine whether America remains the world's leading superpower," the NCSC says. The US's top counterintelligence and security agency recently published a list of five technology sectors vital to US national and economic security that it says are vulnerable to malicious actors and adversaries.According to the National Counterintelligence and Security Center, those five prized sectors are artificial intelligence, bioeconomy, autonomous systems, quantum information science and technology, and semiconductors."These sectors produce technologies that may determine whether America remains the world's leading superpower or is eclipsed by strategic competitors in the next few years," the NCSC says.Although the threat mainly comes from near-peer adversaries, such as China and Russia, it isn't limited to those countries. In addition to publishing the list, the US intelligence community is contacting private industry with advice and training to protect US national security and the US's competitive advantages.Artificial intelligence Children dance with a companion robot at the World Robot Conference, in Beijing, October 21, 2016. AP Photo/Ng Han Guan Artificial intelligence is a constellation of technologies that demonstrate cognition and creative problem-solving, essentially enabling machines to perform the tasks of humans.Uses for AI range from narrow applications designed to solve specific problems to broad applications, such as Artificial General Intelligence, that have the potential to match or even exceed the understanding and learning abilities of humans.Artificial intelligence also has many military applications. The F-35 stealth fighter jet relies heavily on artificial intelligence for many of its functions. Compromising that technology could undermine or negate many of the jet's capabilities.Artificial intelligence is also key to bulk data collection. The NSA, for example, uses it to quickly process and help analyze the immense amount of data it collects daily.Quantum information science and technology Google CEO Sundar Pichai, left, with a Google quantum computer in a company lab in Santa Barbara, October 2019. Google/Handout via Reuters This technology uses the fundamental properties of matter to create new information technologies. For example, quantum computers use atoms and photons to accelerate some kinds of problem-solving.Quantum-related technology has been used in the development of semiconductor microelectronics, the global positioning system, and magnetic resonance imaging.Quantum technology could also have a critical impact on cryptography, or the encryption and decryption of communications. Were China to gain an advantage in quantum, it could target the essential encrypted communications of the US military, intelligence agencies, and private sector."In short, whoever wins the race for quantum computing supremacy could potentially compromise the communications of others," the NCSC states.Bioeconomy Technicians in a biotech lab. picture alliance/Getty Images Bioeconomy is economic activity related to and driven by research and innovation in biotechnology.The US bioeconomy improves many aspects of daily life, such as food and healthcare. It can also present a serious threat to national security and even humanity.China is aggressively collecting domestic and foreign DNA material to gain an advantage in biotechnology and for more sinister reasons. The uniqueness of DNA makes it virtually impossible for a person or group to hide from an oppressive surveillance state like China.Genomic technology that is designed to treat diseases can also be used against specific individuals or whole populations.Semiconductors A researcher plants a semiconductor on an interface board at Tsinghua Unigroup research centre in Beijing, February 29, 2016. Reuters These small pieces of technology have become essential to most aspects of modern life, powering military technology such as satellites and stealth fighter jet and consumer products integral to everyday activity, such as TV and toasters.The lighter, faster, and cheaper a semiconductor is, the better it is, and global nature of the semiconductor supply chain raises challenges to ensuring steady access for the US, which is reliant on Taiwan and China for most of those chips.Adversaries have targeted the US semiconductor industry, draining talent and resources, and future attacks on that supply chain could further undermine the US economy."Since semiconductors are such key components, the fragile supply chain for semiconductors puts virtually every sector of the economy at risk of disruption," the NCSC says.Autonomous Systems Navy maintainers prepare to run diagnostics on a MQ-8B unmanned helicopter aboard USS Gabrielle Giffords, May 14, 2020. US Navy/MCS2 Brenton Poyser Unmanned systems perform tasks without or with limited human intervention or control, though many of them, such as remotely piloted aircraft or unmanned undersea vehicles, require some human involvement.Such systems can improve productivity and safety for humans, but those systems' reliance on software, computing, and connectivity creates opportunities for malicious cyberattacks against them. They're also vulnerable to supply-chain disruptions.Foreign and malicious actors can also target autonomous systems for intelligence gathering, using malicious software to compromise them.Beijing and Moscow Xi and Russian President Vladimir Putin at the Asia Pacific Economic Cooperation forum. Kim Kyung-Hoon/Reuters China and Russia are the main threats to the above five tech sectors.Beijing seeks global leadership in those and other technologies by 2030, and has pursued that goal through several avenues, including legal means and outright theft. The Kremlin also views the development of advanced science and technology as national security and strategic priority.Both countries employ various methods to get their hands on such technologies, including operations by their intelligence services, investments in private companies, promotion of academic collaboration and research partnerships, and luring top talent.A transformation in intelligence collection is driving Beijing's and Moscow's targeting of these five sectors. During the Cold War, adversary intelligence agencies went after classified military and intelligence secrets, but now they have shifted toward the private sector."If you look back 20 years ago, what we were most concerned about was intelligence services targeting the US government for classified information or targeting DOD technologies," Mike Orlando, acting director of the NCSC, said in an interview earlier this year."What we've seen over the last 20 years is the shift to private-sector intellectual-property research and development, particularly by China, who has been the most egregious one in stealing those technologies," Orlando added.Stavros Atlamazoglou is a defense journalist specializing in special operations, a Hellenic Army veteran (national service with the 575th Marine Battalion and Army HQ), and a Johns Hopkins University graduate.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 15th, 2021

Interview With Jim Andrew, Virginie Helias, Juvencio Maeztu From CNBC’s ESG Impact Conference

Following is the unofficial transcript of a CNBC interview with PepsiCo, Inc. (NASDAQ:PEP) Chief Sustainability Officer Jim Andrew, Procter & Gamble Co (NYSE:PG) Chief Sustainability Officer Virginie Helias and Ingka Group CFO & Deputy CEO Juvencio Maeztu at CNBC’s ESG Impact conference, which took place today, Thursday, October 28th. Video from the interview will be […] Following is the unofficial transcript of a CNBC interview with PepsiCo, Inc. (NASDAQ:PEP) Chief Sustainability Officer Jim Andrew, Procter & Gamble Co (NYSE:PG) Chief Sustainability Officer Virginie Helias and Ingka Group CFO & Deputy CEO Juvencio Maeztu at CNBC’s ESG Impact conference, which took place today, Thursday, October 28th. Video from the interview will be available at cnbc.com/esg-impact/. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Interview With Jim Andrew, Virginie Helias, And Juvencio Maeztu KRISTINA PARTSINEVELOS: Thank you, Tyler. So we got a star studded panel and I just want to remind the panelists, we have a really smart audience, so no need to break down the nitty gritty of the definitions, but I want to start with more of a high level macro question. And this is going to be directed at Juvencio. So for you Juvencio, given that COP26 is just around the corner, you have over 1,400 companies making promises towards net zero, now we're talking about phasing out coal. What do you want to see? What do you think are the most pressing actual items that need to be addressed? JUVENCIO MAEZTU: Good morning and afternoon everybody. Sustainability is complex. Complexity in my opinion needs three things. First is holistic solutions then it is long term commitment and finally, it's about togetherness. And it is the togetherness we should expect more from at COP26. Because everybody has to play a part. Nobody can do everything. But everybody must do something. So when it comes to the businesses, we should ask all businesses what we ask ourselves. A. science-based targets – but not only for scope one and two, but also for scope three because this is normally the biggest part of the footprint. B. Then, you have to measure and follow up – if you do not measure and you do not follow up, you don’t move. And finally, business should integrate sustainability in the decision making. What we will policy makers is to raise the ambitions. But also not only to punish the bad economy with taxes, but to also fast track and accelerate the transition into the green economy. So the next to three years are difficult and I want to finish by saying that the important thing is not setting the commitment – it’s not the commitment that is the important thing, it's about taking action. We cannot procrastinate hoping that problems will solve itself by more advanced technology.  We have to act now and the same goes for the coming years. We have developed goals for 2020 and we have achieved them. We have now set goals for 2021, 2025, and for 2030. So it’s time to talk about actions, the clock is ticking. PARTSINEVELOS: Right. That's a perfect segue to my next question. You raise a lot of good points especially trying to even scope three given how difficult that is to, you know, track and metrics and all of the above. But if I were to focus more on the how. You had mentioned everybody needs to do something. And so this leads into Virginie, my question for you. Often we'll put these climate proposals on the table and then we're not talking about the steps, the how are we going to do it. So with Procter and Gamble, can you break down the sustainable innovations that are involved with the company specifically, consumer packaging, and how that process has been to innovate and change your packaging, especially when you guys use a lot plastic? VIRGINIE HELIAS: Absolutely, Kristina. And I very much agree with what was just said. I mean, innovation and collaboration are certainly part of the solution and we need to see more action. You know, the way we look at it at P&G is through three lenses. So impact first – inside then outside and then system wide. I mean inside because we believe that we need to start with the emission that we can control. You know, kind of get our own house in order and through that we've committed to net zero by 2040 including with the goal of being carbon neutral for a decade in operation by 2030. But then it's outside and outside basically means reducing our emissions through collaboration. And for us it's collaboration upstream. That means in our supply chain. And we've also committed to net zero by 2040. But it's also a reduction through our downstream usage you know. And that's basically our consumers. You know, we touch 5 million people around the world every day through our brands and 80% of P&G total footprint is basically in the use case. That means basically when people use heated water to shave, to do their laundry, wash their hair, do their dishes and clean the floor. And so we can enable them to reduce their own emission through innovation. And then the third part which is really important is what we call system wide. How can we leverage our scalar influence, our innovation capability to help drive system transformation. You know, and one project which is particularly near to my heart and at IKEA that I just joined, it's called a 15 liter home. And it's a good example of how innovation plus collaboration can drive system transformation. 15 liter home is basically how can you reduce the daily consumption of people in their home – gas emission – and the second sources in homes is basically heating the water. So how can you reduce the amount of water that people use every day in the home to 15 liter, they sustainable level? Today it is 150 liter per person, per day in Europe. It is up to 500 liter per person, per day in some parts of the U.S. So, you create innovation and you reinvent infrastructure so that you can recycle and repurpose and so forth. So that's really an example of system wide consolidation. So I think that's what we need. We need both, you know, inside, outside for supply chain downstream consumer and system wide innovation and collaboration. PARTSINEVELOS: So keyword collaboration, which is – it doesn't come easy, that's for sure. And so it's a nice of course segue to the next question, which is directed at Jim. And I want to talk about water positivity. So water positivity is defined pretty much as replenishing more water than what a company uses. Unfortunately, though, the definition varies a little bit. I'll give you an example. You have Facebook that counts only the water that has evaporated on their premise as their water consumption. And then you have PepsiCo on the opposite side – well not opposite side, but counting all the water that is used in operations but in water stressed regions. So Jim, given Virginie just talked about the collaboration aspect in getting third party members involved, how has it been for you guys to involve your franchise bottlers, as well as your third party manufacturers to get on board with this water positivity goal? JIM ANDREW: Right, well, thank you. And as the points been made, collaboration and looking across the entire value chain is essential. And we came out earlier this year with a water positive as you said, and the goal is really twofold. And as you rightly pointed out, we're looking at the entire value chain. It's really about how do we reduce across the whole system, the absolute amount of water that's used. Everywhere in that chain. And then second, how do we replenish more than we end up using? And you know, we've learned a lot on this journey already. And our bottlers that are very valued partners around the world, they know it's a journey, they understand the business case and the imperative. And so we're working very closely with bottlers on things like how do we share technology? What are best practices that we can lift and shift around the world? What are the lessons that we jointly learn? And to use Virginie’s words – how do we collaborate on both efficiency initiatives and also on replenishment activities? And let me give you a great example. In Mexico, our Sabrita’s halo plant, we worked – which is where we make food – we worked very closely with our franchise bottler to take the processing water that the bottler uses in their ingredient processing, we then took that water when they were done with it, treated it so that it became drinking quality water and then used that in one of our food plants to wash the potatoes before they were sliced and cooked. So we really looked system wide, collaborated with our bottlers and what we were able to do there is we reduced freshwater demand by 50%. And we were able to increase the reuse to 80%. And so this is the kind of example where we can work as a system, we can collaborate and we're looking to replicate that as many places as we can. PARTSINEVELOS: Thank you, Jim. Virginie, I want to just go back to you because you brought up engaging the consumer. I think we often forget about that. We have these corporations that make promises, but really in the end, it's about you and I changing our ways and that's not always easy. You did briefly mention how you're engaging consumers. So if I could just get you to elaborate a little bit more on some campaigns that P&G is involved with to engage consumers. And then if you could just weigh in on just how important it is to have these incremental steps getting towards that goal. So it's not just you know, we're sticking this out here 10, 15 years from now, and we'll get to it somehow. So can you elaborate on some of those campaigns within your company, please? HELIAS: Absolutely. And I just want to say that often, you know, people are saying, yeah, you are putting everything on the consumer. This is absolutely not the case. Actually, it's everything on us because we need to innovate to really enable them to embrace sustainable consumption. And two examples, leading brands in our detergent business. So Ariel in Europe and Tide in the U.S. We've been doing that for decades, you know, nudging people so that they can wash their clothes in cold water because – is actually the main source of greenhouse gas emission. And so you know, through the influence that we are doing on Tide and Ariel, we will reduce our emission by 13 million tons by 2030. So that's massive, you know. It's a small act has a big impact. But you can only do that if you develop formulation that for better in cold water. Otherwise people are afraid that the stains will not come out. So that this is why innovation comes first. And then you encourage people to wash in cold like Tide. You may have seen that they are teaming up with the NFL, you know, to inspire 80 million households of NFL fans to turn to cold. So you know that's a very concrete way to do it. Another example, which is very recently in the US is Cascade. Cascade Dishwasher. So in the US the penetration of dishwasher is very high but usage is very low. And you know why? Because people believe that this will show that is uses more time and energy. And the fact is that a running sink, use a four gallons of water every two minutes. And four gallons is exactly what a dishwasher load uses. So you do the math as of eight dishes is better actually to use your dishwasher if you want to save energy and water than doing the dishes by hand. But the key caveat here is that you need to trust your detergent that it will wash good enough so that you don't have to clean your dishes under the sink which is what many people do that. And cascade has developed combination that allows you to skip the rinse. And just to give you an idea of the impact. You know, we've been running this campaign for 18 months. And you know, heavy changes is really hard. But after 18 months, we are seeing an increase in dishwasher usage by 25% which is actually equivalent of saving 25 billion gallons of water across the U.S. And that's hidden water. So it's also saving energy. So you know, innovation and then engaging consumers with creativity as we do, you know, at P&G. That’s kind of the recipe to ensure responsible consumption. PARTSINEVELOS: Congratulations on achieving that. Juvencio, if I were to just speak about IKEA right now and the fact that within nine years IKEA plans to become a circular business. And from the website you're going to use only renewable and recycled materials with lower climate footprint. Given how accessible your furniture is, that must not be an easy task at all. Could you share with us how you plan to do that? MAEZTU: Yeah, it's a good question. And it's not easy. That's why leadership is so important when it comes to sustainability. Sustainability should be integrated in the business because this is where this issue and dilemmas have to be solved. We have decided we can become climate positive by 2030 by reducing more greenhouse gas emissions than our value chain emits. And then as you rightly said, materials is a big part of that footprint. The good thing is that we started several years ago so this is not new for us. I mean in order to deliver the commitment we said not only 2030 set as a goal, but in between goals which is extremely important. For example, as of last year 60% of all the products in IKEA are either coming from the renewable or recycled materials. So, we are very proud of that. But we still have a gap to close. That is why we are working heavily on that. For example, as of last year 100%, no 98% sorry, of the wood that was used was FSC or – from 2015, 100% of the cotton in our products come from sustainable sources. And we are working really hard in the development of recycled and new solutions. For example, But, this is the circularity of the material. But then the second one is about the circularity of giving that second life. Extending the life by repairing, by promoting the second hand. We for example, we are now giving a second life to more than 30 million products. So, it is a very good thing. It is a complex thing. But we are fully committed. The good thing is that it is possible to decouple growth from greenhouse gases, for example, the last 4 years, we grew by 13.7% and we reduced Green House Gases by 14%. And the good thing is not only about looking at the planet, it’s by doing that you've also created employment – and you're also paying taxes. And in our case, we can provide a better life at home and more affordable prices. But this message and idea of social impact is quite important. So, we are proud that we are at full blast and we are excited. PARTSINEVELOS: Well, congratulations to hit all those goals including the 60% of products are recycled. I know I've accumulated quite a few Allen keys from IKEA, so I'm looking forward to recycling those. But I'm going to transition to the last question which is for Jim. Jim, PepsiCo aims to sustainably source 100% of key ingredients and this while extending regenerative farming practices. I know in your previous answer, you did touch upon this. But I would love for you just to elaborate just how that transition has been especially in less developed nations in terms of using those regenerative farming practices. And then if you could just how you've added some female empowerment in that mix. I know it's a loaded question right now and you're the last one, so please do feel free to share. ANDREW: Right. Thank you. It's a terrific question and a really important one. We all know agriculture is one of the greatest opportunities both to reduce greenhouse gas emissions, but also to help feed the planet. And so in April, we launched our what we call positive agriculture as part of our overall PepsiCo positive. And as you said, 7 million acres which is basically our entire agricultural footprint and improve the livelihood— bringing regenerative practices to those acres, sustainably source 100% of our key ingredients and then also improve the livelihoods of 250,000 people with a particular emphasis on female empowerment as you said. If I talk about the regenerative agriculture piece and absolutely developing markets is a key part of that, there's really three things that are necessary. The first is technical assistance. The second is cultural acceptability. And the third is financial. And technical assistance is a great one that you know, there's lots of sexy technology and there's lots of technology –  it's really boots on the ground. You know, we have 350 demo farms, where farmers are teaching farmers about new practices, about showing and understanding the benefit and really making that real because there's no better way for a farmer learn something than from another farmer. And 80% of those farms use regenerative practices or are in the process of really scaling those up. Cultural acceptability, you know, regenerative practices, to a large extent are sort of outside the mainstream today still, we need to make farmers comfortable. And then finally financial. We know that regenerative practices are more profitable. But and this is again, relevant in particular for some of the developing markets, the transition comes with upfront costs. And so as a company and as an industry, we need to provide incentives, we need to provide markets to help reduce risk because farmers are business people. This is how they feed their families, right. And a great example is of a technology that's very relevant in developing markets is one called  drip and it's a gravity fed drip irrigation system. Our venture team partnered with them to pilot in places like India, and Vietnam. and what we've seen is 10% more yield and 50% less water usage than traditional flood irrigation. So that's technology directly impacting developing markets and farmers. And again, we are looking to scale that up. And it's going to take all of us private, entities, governments, UN, NGOs who work very closely with USAID for example, in India around female empowerment. And, you know, we know that if we get more females into farming, it's a huge driver of productivity and a huge driver of additional economic empowerment not only for them, but for the countries. So we have a set of programs again, partnership collaboration, working with them. So those are a couple of the things that we're doing at PepsiCo to help really drive both improve regenerative practices, but with a particular focus on female empowerment. In particular also in developing countries and economies. I'm optimistic that when we all get together, we're going to be able to really do something positive and you know, we'll look back with pride and also with a little bit of relief that we all did the right thing when we had the chance. PARTSINEVELOS: Doing the right thing and I think the key word amongst all of you is collaboration, right? We got to work together and with that, unfortunately have to end this panel. It's been great chatting with all of you. Updated on Oct 29, 2021, 1:01 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 30th, 2021

Is Fintech Turning Green?

Fintech is one of the fastest-growing tech sectors. Sustainability is one of the most urgent challenges of modern times. Are the two related? Should they be? Q2 2021 hedge fund letters, conferences and more BX3 recently spoke with Pete Blackshaw, CEO of Cintrifuse, about how Fintech will be shaped by climate change. Cintrifuse, a startup […] Fintech is one of the fastest-growing tech sectors. Sustainability is one of the most urgent challenges of modern times. Are the two related? Should they be? .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more BX3 recently spoke with Pete Blackshaw, CEO of Cintrifuse, about how Fintech will be shaped by climate change. Cintrifuse, a startup hub with more than $90 million in venture capital invested and more than 600 startups in its pipeline aims to make Greater Cincinnati the top tech startup hub in the midwest and among the most attractive innovation hubs in the nation. For Blackshaw, the question of Fintech’s role in mitigating climate change has been top of mind for him recently especially as next month Cintrifuse is hosting a FinTech pitch competition featuring over $75,000 in prizes to showcase the most innovative FinTech startups of tomorrow, including those focused on environmental impact. He has come to the conclusion that the greening of Fintech will be among one of the most important transitions the industry will face over the next decade. Companies are prioritizing Environmental, Social and Governance (ESG) more than ever before. Consider the data: Bank of America reports ESG assets swelled to a record $329 billion in July, more than doubling year over year. Bloomberg Intelligence predicts Global ESG assets will exceed $53 trillion by 2025. And recently, financial services leader Mastercard announced the launch of a Sustainability Innovation Lab, which will spearhead the further development of the company’s portfolio of environmentally conscious digital products and solutions. “Fostering innovative solutions with practical applications is urgently needed to achieve global climate change goals,” said Kristina Kloberdanz, Chief Sustainability Officer, Mastercard, in a press release. The Lab will focus on ways to empower businesses and consumers to transform how they produce, distribute and purchase products and services, ensuring both people and the planet can thrive as the global economy rapidly digitizes. Other major banks like Barclays are setting bold “net zero” ambitions, putting aside over $100 billion of financing for green activity that supports low-carbon transition, including for renewables, energy efficiency and sustainable transport. “Amidst this global urgency to address climate change, what bold territory might FinTech entrepreneurs tackle with so-called “Green Fintech” — the intersection of climate, finance, and digital technology?” asked Blackshaw. Green Fintech is a huge tent in which to drive solutions in both B2B and B2C environments. The possibilities are manifold, and exciting to think about; including: Consumer-facing shopper apps that measure the carbon footprint of products Blockchain applications in sustainability to drive radical transparency Gamification of transactions, green incentives, and green habits B2B carbon measurements and analytics Green digital wallets and mobile payments Carbon credits for sustainable behavior Home energy bills translated into habit-shifting behavior Insurance products that reward or decrease premiums based on personal carbon footprints A wave of “Green Trust marks for online shopping” Sustainable eCommerce Transactions and Connections Blockchain - The Mother of All Green Tech We can’t talk about Green Fintech without also mentioning the mother of all green fintech technologies: blockchain. “I received my first exposure to this while at Nestle when we used blockchain to vet supply chain sustainability standards,” says Blackshaw. Blockchain is a vital enabler in tracking the connected world of carbon emissions and energy consumption and overall supply chain. One interesting example of a blockchain-based company in the ESG space is YvesBlue, which has created a platform for investors that pulls together the disparate and growing number of ESG data sources, and presents a consolidated view of the impact characteristics of the companies in a portfolio. The company's platform offers sector-specific metrics, streamlined onboarding, consolidated dashboard, tailored reporting, carbon budget insights, and news-based analysis, providing investment companies and institutions with a clear picture of their portfolio health and associated risks. Another, Topl.co, which is part of the Cintrifuse Fund Network, helps businesses prove their ethical and sustainable practices, billing itself as ‘The World's First Blockchain Built to be a Global Impact Monetization Engine’. The company's technology offers a novel blockchain that empowers businesses to prove and monetize ethical and sustainable practices, enabling businesses to transform the impact into an asset. Measurements & Reporting 2020 is also a historic year both for the energy transition and for the flow of capital which finances decarbonization. Nossa Data, an alumnus of the 2021 New York Barclays Accelerator, powered by Techstars is streamlining the ESG world for corporations, simplifying all parts of their long and complex reporting journey. Nossa Data provides companies with a platform with simple ESG reporting templates, data collection, workflow optimization, and robust peer and investor analytics. Patch is using the smart application of APIs to help digital banks calculate carbon footprints and identify offset projects to programmatically remove carbon from their operations. Growing Momentum for Green FinTech While the upcoming Cintrifuse Pitch competition is looking for Green Fintech ideas (among many other Fintech topics such as Data & Privacy, Supply Chain, and Increasing Access) other events are 100 percent dedicated to the issue. Just recently, New Energy Nexus announced a Climate Fintech: Cards & Payments Challenge (C&P Challenge) to catalyze innovation across the financial sector to address climate change. The program is supported by Barclays US Consumer Bank; Rise, created by Barclays; Mastercard; Doconomy; and Patch. The evidence is clear: the financial technology sector has an opportunity to enable radical changes in business and society at large that can immediately make an impact on carbon emissions and contribute to the health of our planet. The movement is underway, and we’ll only continue to see the greening of Fintech, as the sector grows more and more focused on ESG. “Tackling climate change is an essential component of the global sustainability agenda and one in which financial services can make an important contribution,” says Blackshaw. Additional Resources and Articles: What is Climate Tech by New Energy Nexus Climate FinTech by Barclay's Rise Doconomy Impact Calculator by Doconomy Updated on Oct 1, 2021, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 1st, 2021

Reusable Packaging Is the Latest Eco-Friendly Trend. But Does It Actually Make a Difference?

When you toss a plastic bottle into your recycling bin, there’s no guarantee it actually gets recycled. In fact, odds are, it doesn’t. According to the World Economic Forum, just 14% of plastic packaging is collected for recycling globally. And because of complexities in the recycling process, huge amounts of single-use plastic (as well as… When you toss a plastic bottle into your recycling bin, there’s no guarantee it actually gets recycled. In fact, odds are, it doesn’t. According to the World Economic Forum, just 14% of plastic packaging is collected for recycling globally. And because of complexities in the recycling process, huge amounts of single-use plastic (as well as glass and cardboard) that consumers try to recycle ultimately end up getting burned or tossed into landfills anyway. If recyclable materials are contaminated by food waste, or if consumers misunderstand what can be recycled and where—to cite two common examples—their garbage may not end up being repurposed after all. A 2017 study in Science Advances estimated that, of all the plastic waste generated globally up to 2015, just 9% had been recycled, while 12% was incinerated and the rest ended up in landfills or scattered around the natural environment. Some plastic waste is burned to create fuel or energy, but this process is itself energy-intensive and emits carbon dioxide into the atmosphere. [time-brightcove not-tgx=”true”] Given that broken system, it’s clear that “recycling our way out of [the climate crisis] will not work,” says Sander Defruyt, who runs plastic innovation initiatives at the Ellen MacArthur Foundation (EMF), a sustainability-focused nonprofit. “Reuse, as well as plain elimination of a lot of packaging we don’t need, will also have to be a crucial part of the solution.” Recycling is, at its core, about reuse. But Defruyt is talking about something slightly different than that broad definition. Proponents of what’s known as a “circular economy” argue that, instead of feeding into the convoluted recycling process, companies should replace single-use containers with those that can be used over and over again—often a durable metal or glass vessel that can be refilled either in a store, by a company or in a consumer’s own home. These systems have a clear appeal. They’re intuitive, for one thing: it’s easy to understand the concept of refilling a bottle, whereas it’s hard to know where the plastic container you toss in a bin actually goes, or what happens to it when it gets there. And rather than dealing with waste after the fact, circular systems reduce it at the source. Using the same containers, in the same form, over and over again ideally eases demand for virgin materials, reduces energy needed to spit out thousands of new plastic bottles or cardboard boxes, and prevents heaps of trash from ending up in landfills or oceans. But such programs are not perfect. They rely heavily on consumers following directions and actually reusing packages as intended, and often involve upcharges that exclude consumers without disposable income. Perhaps more importantly, the environmental benefits of these initiatives may not be as great as they appear. The idea of reusing containers is hardly new. If you’ve ever bought a vat of hand soap and used it to refill various dispensers around your house, or brought your own cup to Starbucks, you’ve taken part in this system. But in recent years, companies have experimented with new ways of doing it. The startup Loop, an offshoot of the recycling company TerraCycle (which critics say does not recycle as much as it promises), launched in the U.S. in 2019 as an e-commerce platform selling food, beauty products and household essentials, all in reusable packaging. Consumers could order quinoa in a metal canister or face wash in a glass jar, then send back the empty packaging for cleaning and refilling and repeat the cycle. On Sept. 22, Loop announced that it would also begin offering products in a limited number of brick-and-mortar Walgreens/Duane Reade and Kroger stores nationwide. It’s also working with retailers in the U.K., Japan, France and Australia. Global corporations including Coca-Cola, Unilever and Procter & Gamble have also piloted reusable packaging programs within the last few years. Unilever, for example, set up refill stations for select hair care products in some Walmart locations in Mexico and Target locations in the U.S.; in Chile, it works with a startup that delivers laundry detergent and cleaning product refills to customers’ homes by electric tricycle. Major beauty brands like the Body Shop are also experimenting with in-store refill stations. Then there are startups like CleanPath and Blueland, whose entire business model is designed around selling concentrated detergents and cleaning products that people can mix with water in reusable containers at home. Read more: Fossil Fuel Companies Say Hydrogen Made From Natural Gas Is a Climate Solution. But the Tech May Not Be Very Green Right now, reuse programs like these are small potatoes in the scheme of global manufacturing. Dozens of major companies, including Unilever, Walmart and Johnson & Johnson, share data on their use of both recycled and reusable materials with EMF. Cumulatively, less than 2% of their plastic packaging was reusable as of 2019, Defruyt says. Still, over the past few years, the circular economy movement has gained steam. In the U.S. alone, according to market-research firm Mintel, the reusable packaging market for beauty and personal care products grew by about 65% from June 2020 to May 2021. Unilever and Procter & Gamble have pledged to halve their use of virgin plastics by 2025 and 2030, respectively. While the particulars of reuse programs vary from brand to brand, two questions apply across the board. One, will customers buy into the system? And two, is the program actually environmentally friendly? The answer to the second question depends heavily on the answer to the first. Shelie Miller, a professor at the University of Michigan’s School for Environment and Sustainability, says there’s a “payback” period associated with any reusable item—a number of times it must be reused before it’s actually better for the environment than the single-use alternative. Something like reusable sandwich wrap may never break even, according to Miller’s research, because the energy and resources required to make and wash it far exceed what goes into making flimsy disposable bags. (Ditto for many cotton tote bags, as explored recently by the New York Times.) Refillable replacements for containers that use rigid plastics, like shampoo bottles, are a better bet, Miller says. Making a reusable version of that bottle likely takes only a little more energy than the plastic one, so each time it gets reused, it moves a little closer to paying off its environmental debt—assuming, of course, that buyers refill as directed. Consumer interest in reuse programs is there: In a 2021 survey run by Trivium Packaging and Boston Consulting Group, about 70% of respondents said they would be willing to pay more for a product that comes in sustainable packaging. But there aren’t many studies on how often consumers actually refill multi-use packages. If someone buys a metal shampoo bottle, gets lazy and tosses it in the garbage instead of refilling it, that may end up being worse for the environment than simply buying a single-use bottle, because more energy went into making the durable metal version. The mechanics behind reuse programs matter too, says Daniel Johnson, chair of the department of packaging science at the Rochester Institute of Technology. “For the right product category and the right supply chain, the effect [of reusable packaging] can be huge,” Johnson says. “But it comes down to, what methods are you going to use to try to recover the packaging…and what does it take to get more product to the consumer?” For example, if someone has to mail back an empty metal bottle for refilling, there will be an environmental burden associated with transporting it back and forth and cleaning it—one which may eclipse the environmental impact of a single-use plastic bottle that actually gets recycled, Johnson says. Direct-to-consumer companies that give people all the tools they need to refill at home—like shampoo capsules or detergent concentrates—are a good option because they don’t require return shipping and are convenient, he says. For a reuse program to work, “the simpler, the better,” agrees David Luttenberger, who heads the department that researches packaging at Mintel. Convenience is key—but since refilling containers is never going to be easier than buying from Amazon, brands should also make it “more of an experience for consumers,” Luttenberger says, with well-designed refill stations or discounts on repeat purchases. For Lush, a Canada-based cosmetics company, reusable packaging is something of a fallback option. Plan A is selling goods without any packaging at all, as Lush does with about 65% of its permanent products, says Katrina Shum, Lush’s sustainability manager—in these cases, the brand sells solids like bath bombs and shampoo bars loose. Liquid products that require packaging, like lotions and shower gels, are sold in pots made from post-consumer-recycled plastic. If customers return five pots to the store, they get a free face mask. Even with the promise of free stuff, Lush has only about a 17% return rate in North America, Shum says. And because it’s so difficult to adequately clean the returned pots, Lush instead breaks them down and uses them to make new ones. Doing so reduces the brand’s need to buy recycled plastic from other sources, but Shum admits she’s “not too sure if it’s really too much different,” from an environmental perspective, than simply making new pots from recycled material. TerraCycle founder Tom Szaky says Loop has a return rate of more than 80%, largely because of the financial incentives it offers: customers must pay a deposit of up to $10 (for a pack of Clorox cleaning wipes) for each container they purchase, and it’s only refunded when they return it for refilling. That concept is well-established. A 2019 report from researchers at the Rochester Institute of Technology found that, compared to the rest of the country, glass-bottle recycling rates are 40% higher in the 10 U.S. states that bake in a refundable deposit to the cost of items that come in such containers. But while Loop’s return rate is high, its denominator is low—only about 20,000 people worldwide have used Loop’s pilot programs since they launched two years ago. Szaky is frank about the model’s shortcomings: ordering from the website is expensive (on top of the deposits, round-trip shipping costs at least $20 in the U.S.) and somewhat inconvenient (items come in bulky tote bags best suited for large orders). But, he says, those flaws might be overcome once Loop can move its offerings from e-commerce to retail stores, as will happen soon in the U.S. That was always the end game, Szaky says, because it eliminates some of these costs and hassles. ”If you’re already going to walk to a Duane Reade, what’s the big deal in taking some empties?” Read more: Thinking of Investing in a Green Fund? Many Don’t Live Up to Their Promises, a New Report Claims By the beginning of 2022, Loop will enable U.S. customers to buy dozens of brand-name products in refillable containers at select Kroger and Walgreens/Duane Reade stores across the country, then return them at any participating location. (The website will be phased out as the retail program expands, Szaky says.) Loop is also working with fast food restaurants including Burger King to offer reusable food and beverage containers that can also be returned at any participating Loop retailer. At a September reusability forum hosted by Loop, the World Economic Forum and the World Wildlife Fund, Kate Daly of the think tank Closed Loop Partners pitched an even bigger idea: cities could someday put reusable container dropoff stations on the street, as they currently do with trash and recycling bins. There are obviously logistical challenges around collecting, sorting and returning reusable packages from multiple makers, but Daly said this kind of widespread adoption is crucial for the concept to ever make a significant impact. “You want to have every citizen within a city have access to this new system,” she said. But are the payoffs really worth the logistical headaches? Though packaging is perhaps the aspect of consumer goods that is most visibly wasteful, “It’s often the product itself that is more environmentally intensive than the package,” Miller says, when you factor in the water, materials and energy required to grow, make and ship it. For the average food product, she says, packaging accounts for only about 10% of its total environmental burden—so while it makes sense for companies to experiment with reusable packaging, it’s also something of a baby step on the path to actual eco-friendliness. In other words, reusing a bottle is great, but it doesn’t counteract the water and energy required to make and transport the thing in that bottle. As long as we want a fridge full of sodas and a bathroom full of shampoos, there will be environmental prices to pay. Packaging is just the tax on top......»»

Category: topSource: timeSep 28th, 2021

Labor Shortages And Inflation Are Affecting Everyone – But In Different Ways Than You May Think

It’s no secret that jobs have been hard to fill and that an employee shortage is having a significant impact on the economy. Additionally, the COVID-19 pandemic has disrupted public health and created economic disorder on a global scale. Because of this, businesses worldwide are experiencing supply chain disruptions and labor shortages, while consumers are […] It’s no secret that jobs have been hard to fill and that an employee shortage is having a significant impact on the economy. Additionally, the COVID-19 pandemic has disrupted public health and created economic disorder on a global scale. Because of this, businesses worldwide are experiencing supply chain disruptions and labor shortages, while consumers are dealing with the aftermath of inflation. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more There are 8.6 million potential employable workers and 10 million job openings in the U.S. today, reflecting the strong decrease in workforce participation that contributes to the ongoing supply chain disruptions impacting many industries, including suppliers, distributors, and consumers, with the most significant impact on consumers and the economic growth. For example, American Airlines canceled more than 460 flights earlier in November due to staffing shortages that led to travel disruptions for tens of thousands of people. Unfortunately, the labor shortages and supply chain issues also impact inflation and will only worsen before it gets better. These labor shortages and supply chain disruptions have created a destructive cyclical effect. Fewer employees result in fewer goods produced. As fewer goods are available with higher demand, prices rise, which has caused inflation to hit a 31-year high with no signs of abating anytime soon. While it's easy to think that these realities impact everyone similarly, some companies persevere through these times, and consumers notice. At the same time, many other companies struggle to adapt, and the volume of social and media activity around these issues demonstrates consumer frustrations. So, which companies are performing well, and which aren't? And how can you quantify the difference? Using AI And NLP To Analyze Data And Calculate Sentiment Using artificial intelligence (AI) and natural language processing (NLP), financial services firms can quickly pull data from several sources, like news, social media reports, financial reports, and third-party data providers. AI and NLP can analyze the information gathered from these sources and rank the sentiment of the data with either a negative, neutral or positive sentiment score. At Accern, we’ve created a no-code AI platform that allows financial organizations to extract sentiment and insights from textual data for better risk and investment decisions. We recently analyzed the impact of labor shortages and inflation on companies and consumers. After gathering data on the companies most impacted, we analyzed the human emotion behind the news and issued a sentiment score for each piece of information pulled. Insights On Labor Shortages There are a few companies experiencing outsized negative sentiment among consumers, including Yum! Brands, Spirit Airlines, American Airlines, Ulta Beauty, Foot Locker, and Delta Airlines, to name a few. The most significant issues impacting these companies include airline labor shortages, food shortages, truck driver shortages, and supply chain disruptions. Additionally, restaurant employees and drivers are speaking out against low wages and harsh working conditions. To put things in perspective, roughly half of the news activity around these companies embodies a negative sentiment. Considering the lack of truck drivers, more drivers are voicing negative points of view around uncomfortable working conditions and resigning as shown in the snippets pulled from the dashboard above. The shortage of drivers has created a rift within the global economy and exacerbated the supply chain crisis as stores do not receive their goods in time to fill the empty shelves and meet shoppers' demands. Especially with holiday shopping, panicked consumers are experiencing the impact of the supply chain disruption and labor shortages. Stores like Ulta and Foot Locker, which have not fully adapted to the supply chain problems, are not only reporting lower earnings but are dealing with negative sentiment from the media, investors, and consumers. Although Ulta and Foot Locker expected higher growth once physical stores reopened, investors were disappointed to see the earnings for each store drop. As consumers have stuck to the pandemic habits of online shopping, they now look for convenience and digital experiences more than ever. Although Ulta and Foot Locker are doing their best to ensure that these digital experiences are available to consumers as fast as possible, there is still a long way to go. Conversely, companies like Anheuser Busch, Pepsi, Coca-Cola, and JetBlue are seeing outsized positive attention despite the same labor shortages and supply chain disruption trends. The difference lies in increasing employee benefits and providing better digital experiences to consumers, leading to higher earnings reports. For example, PepsiCo’s response to the supply chain crisis was to digitize the supply chain and invest in technological innovation at scale to ensure that consumers all across the globe receive their products. Pepsi's response has generated positive sentiment from the news and consumers around the world. Consumers are happiest when brands meet their demands, act ethically, and innovate their services and products. Innovation is critical in keeping consumers interested in products as it shows that companies are adapting to new technologies to meet their consumers' needs. Insights On Inflation The supply chain and labor shortage crises are driving inflation. In the most recent CPI report, inflation came in at 6.2 percent, marking the highest increase in over 30 years. But companies that have navigated well around supply chain disruptions and labor shortages have also proven their ability to minimize the impact of inflation. Our recent analysis shows that companies like Discover, Peloton, Nike, and Capital One are receiving negative sentiment from consumers, while JB Hunt, American Express, Starbucks, and Costco are not drawing the ire of their customers. Nike is one company that has used digital acceleration to adapt during the pandemic and saw consumer demand rise as profits rose 16 percent in the last year. Despite its revenue growth, supply chain issues also inflate cotton prices and disrupt the flow of products to stores. As a result, Nike announced that it anticipates increasing prices in the second half of 2022 to offset supply chain-related costs. Contrarily, Costco is navigating higher labor and freight costs, transportation demand, and container shortages. Still, they manage to keep their prices low and membership fees the same while meeting the needs of consumers. Additionally, Costco acquired a logistic network to enable the company to deliver large items within days instead of weeks and has gone digital with e-commerce platforms like Instacart. These AI-generated insights demonstrate how certain companies are effectively navigating the most prominent issues affecting our economy today. Accern's AI and NLP analysis reveals that companies proactively innovating their products and services can meet consumers' demands without significantly cutting employee salaries or raising costs. These companies are the ones that are also driving positive sentiment from the media and consumers. With the amount of structured and unstructured data available today, AI and NLP are crucial in understanding the relative health of companies and how different players in the economy are handling challenges – and staying afloat. Article By Kumesh Aroomoogan, co-founder and CEO, Accern About Kumesh Aroomoogan Kumesh Aroomoogan is the co-founder and CEO of Accern, a New York-based, venture-backed AI startup. Founded in 2014, Accern accelerates AI workflows for financial enterprises with a no-code development platform and has raised $16m to date. In 2018 Kumesh was named to the Forbes 30 Under 30 Enterprise Technology list. Previously, he was the co-founder and CEO of BrandingScholars, an advertising agency, a General Accountant at the Ford Foundation, an Executive Board Member, Chairman of Public Relations at ALPFA, Equity Researcher at Citigroup, and a Financial Analyst at SIFMA. Updated on Dec 3, 2021, 3:34 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalk18 hr. 52 min. ago

Rabobank: The NecronOmicron Has Been Opened, And The Results Will Be Terrible

Rabobank: The NecronOmicron Has Been Opened, And The Results Will Be Terrible By Michael Every of Rabobank Put and Call of Cthulhu options “Nor is it to be thought...that man is either the oldest or the last of earth’s masters, or that the common bulk of life and substances walks alone. The Old Ones were, the Old Ones are, and the Old Ones shall be. Not in the spaces we know, but between them….Their hand is at your throats, yet ye see Them not; and Their habitation is even one with your guarded threshold….Man rules now where They ruled once; They shall soon rule where man rules now. After summer is winter, and after winter summer. They wait patient and potent, for here shall They reign again.” - H.P. Lovecraft, The Dulwich Horror Yesterday was a terrifying day. Even market mania could not compete with the evil spirits that gripped them. US stocks started up but closed down, the S&P sitting at a key moving average; so did key bond yields, with a pronounced curve flattening, US 2s down 6bp peak to trough and US 10s down 10bp to 1.40%; so did energy; and so did basically everything. The Russell up 2%+ intraday but finished the day down over 2%, only the 9th time in history it has done that. The ostensible reason for the terror was the new Covid variant, Omicron, being found in the US. Despite the fact this was inevitable given the recent pick up in global travel and cases elsewhere, the NecronOmicron was taken as being as evil a portent as the horror book ‘The Necronomicon’ created by H.P. Lovecraft a century ago. Which is odd, because while there are genuine reasons to be deeply fearful of a virus variant that could underline what some sceptics have been warning about since day one --that, in a worst case, mutations might outrun vaccines, keeping us trapped in our present insanity forever-- there is also a possibility Omicron is highly transmissible AND mild, which is exactly what one would *want* to see in order to defeat this biological foe. The scientific jury is still out on that one, but for once there is at least some logical reason to travel in hope. Yet there was reason to fear other Old Ones: inflation and central-bank policy errors. Indeed, as The Hill states, ‘Powell, Yellen say they underestimated inflation and supply snarls’ in testimony to Congress. Of course, the message from Yellen was still that fiscal stimulus must proceed anyway, and was only a small driver of inflationary pressures, and all the proposed fiscal spending was inflation neutral(!) because it was revenue neutral(!)…because there are no differences in marginal propensities to consumer between rich and poor(?!); but Powell did not walk back the hawkishness he showed earlier this week when given the opportunity to do so. The horror! Yes, Omicron could complicate re-opening the US economy, and is already disrupting supply chains in Asia again. It will of course be used as an argument for more stimulus ahead if so – on top of the same fractured supply chains that helped drive inflation so high in the first place. So, while markets might like the idea of said stimulus, they won’t like the inflation that will come with it. After all, even the Beige Book just noted: “Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy,” without saying “But lumber! But used cars!” Trust me, neither Powell nor Yellen truly understand this issue yet even after their limited mea culpas yesterday (as long-term shipping rates move higher, and The Federal Trade Commission ordered nine major retailers, including Amazon, Kroger, and Walmart, to release company information on ongoing supply chain issues to help better understand them). If they did, then just like hapless characters in Lovecraft novels, they would have been driven mad by the knowledge of their true powerlessness in the face of far greater forces. Yet in that ignorance, if Omicron is just a shadow and not a monster, the Fed has little excuse not to press ahead with what the market is screaming will be a huge policy error. On which note, horror fans know the Necronomicon gained a second lease of ‘life’ in ‘The Evil Dead’ movie of 1981. You want to scare markets? Look where Fed Funds and 10-year Treasuries were then, if you dare: “Groovy”, as Ash from the Evil Dead likes to say? I think not. Yet that is what happens when you push up demand in response to supply-side shocks that shift the economic paradigm in ways arrogant mortals don’t understand – and, after the inevitable blood and tears, an adult with a shotgun and chainsaw hand has to sort things out. (As well as going all neoliberal, moving supply chains offshore, and so setting us up for the inevitable horror sequel we are now deep into.) True, the collapse in energy prices we have just seen is deflationary – and indeed, the real fear for many is a surge in supply-side inflation, and then a Fed policy error, and then a deflationary monster on the other side. Which would (un)naturally release all kinds of ancient evils of its own on the policy front, no doubt. Volatility is something we can expect: things will go bump in the night – and intra-day too. What put and Call of Cthulhu options does that suggest? And there are other Old Ones markets are opting to remain deliberately ignorant of. Escalation between Russia and Ukraine continues: Moscow claims Kyiv is stoking tensions along the border, alleging 125,000 Ukrainian troops, half its total, have been moved to the hotspot Donbass region; Belarus’s Lukashenko gave a TV interview in which he stressed “Ukraine is ours,” and he would support Russia if required (as if there was any doubt); US Secretary of State Blinken stated Russia is "laying the groundwork for an invasion"; and NATO argues Russia has no right to declare Ukraine can never join, which has always been a red line for Moscow. To some, this is all taking place ‘At the Mountains of Madness’. Yet things are starting to edge towards the territory where either someone blinks --meaning either the US or Russia gives enormous geopolitical ground on Ukraine and relative global power-- or the growing tail risk is both sides create an inexorable dynamic towards another kind of terrible policy error. It would also flow through to supply chains globally in ways we cannot grasp – and comes on top of former Japanese PM Abe stating that if China were to move on Taiwan, it would be “economic suicide,” prompting diplomatic complaints from Beijing. Frankly, all we can be sure of now is volatility, and that if the Necronomicon is opened, the results will always be terrible. Worry about that more than Omicron? Tyler Durden Thu, 12/02/2021 - 10:32.....»»

Category: smallbizSource: nytDec 2nd, 2021

Futures Rebound Fizzles On Slowing iPhone Demand, Omicron Fears

Futures Rebound Fizzles On Slowing iPhone Demand, Omicron Fears U.S. index futures regained some ground alongside Asian markets while European stocks slumped to session lows in a delayed response to yesterday's late Omicron-driven US selloff, as markets remained volatile following the biggest two-day plunge in more than a year, spurred by concern about the omicron coronavirus variant and Federal Reserve tightening. Investors await data for unemployment claims, as well as earnings from companies including Dollar General and Kroger. Tech is the weakest sector, dropping in sympathy after Apple warned its suppliers of slowing iPhone demand. Nasdaq futures pared earlier gains of up to 0.8% to trade down 0.1% while S&P futures are only 0.2% higher after rising as much as 0.9%. While the knee-jerk reaction of stock investors may “continue to be to take profits before the end of the year,” there is “plenty of liquidity available to drive stock prices higher as dip-buyers enter the market,” Ed Yardeni wrote in a note. The U.S. economy grew at a modest to moderate pace through mid-November, while price hikes were widespread amid supply-chain disruptions and labor shortages, the Federal Reserve said in its Beige Book survey Tuesday. Cruise-ship operator Carnival jumped 3.8% in premarket trading, while Pfizer and Moderna fell as the World Health Organization said that existing vaccines will likely protect against severe cases of the variant. Boeing contracts gained 3.4% after a report that the flagship 737 Max aircraft has regained airworthiness approval in China. With lots of uncertainty surrounding the pandemic and Fed policy, the size of potential market swings is still considerable.  Here are some other notable premarket movers today: Apple (AAPL US) shares fell 1.8% in premarket trading after the iPhone maker was said to tell suppliers that demand for its flagship product has slowed. Wall Street analysts, however, remained bullish. U.S. stocks tied to former President Donald Trump rise in premarket trading following a report his media group is in talks to raise new financing. Digital World Acquisition (DWAC US) +24%, Phunware (PHUN US) +38%. Katapult (KPLT US) shares sink 14% in premarket after the financial technology firm said its gross originations over a two-month period were lower than 2020 levels. Vir (VIR US) shares jump 8.1% in premarket trading after its Covid-19 antibody treatment, co-developed with Glaxo, looked to be effective against the new omicron variant in early testing. Snowflake (SNOW US) is up 17% premarket following quarterly results that impressed analysts, though some raise questions over the data software company’s valuation. CrowdStrike (CRWD US) shares jumped 5.1% in premarket after it boosted its revenue forecast for the full year. Square’s (SQ US) shares are 0.4% higher premarket. Corporate name change to Block Inc. indicates “a symbolic rebirth,” according to Barclays as it shows a broader set of possibilities than those of a pure payments company. Okta’s (OKTA US) shares advanced in postmarket trading. 3Q results show the cybersecurity company is well- positioned to deliver growth, even if some analysts say its guidance looks conservative and that its growth was not as strong as in prior quarters. The Omicron variant also hurt risk appetite, making the safe-haven bonds more attractive to investors, pushing yields down - although yields picked up again in early European trading. Volatility in equity markets as measured by the Vix hit its highest since February on Wednesday, before easing on Thursday, but remained well above this year’s average and almost twice as high as a month ago. Investors are braced for volatility to continue through December, stirred by tightening central-bank policies to fight inflation just as the omicron variant complicates the outlook for the pandemic recovery. The recent market turmoil may offer investors a chance to position for a trend reversal in reopening and commodity trades, according to JPMorgan Chase & Co. "Investors will need to maintain their calm during a period of uncertainty until the scientific data give a clearer picture of which scenario we face," said Mark Haefele, chief investment officer at UBS Global Wealth Management in Zurich. “This, in turn, will help shape the reaction of central bankers." Also weighing on stock markets, and flattening the U.S. yield curve, were remarks by Federal Reserve Chair Jerome Powell, who said that he would consider a faster end to the Fed's bond-buying programme, which could open the door to earlier interest rate hikes. In his second day of testimony in Congress on Wednesday, Powell reiterated that the U.S. central bank needs to be ready to respond to the possibility that inflation does not recede in the second half of next year. read more "In this past what we’ve seen is central banks using COVID as an excuse to remain dovish, and what we're seeing is central banks turn hawkish despite rising concerns around COVID, so it is a bit of a shift in communication," said Mohammed Kazmi, portfolio manager at UBP.  That said, the market is now so oversold, this is where we usually see aggressive dip-buying. In Europe, tech companies were the worst performers after Apple warned its component suppliers of slowing demand for its iPhone 13, the news dragged index heavyweight ASML Holding NV more than 4%. Meanwhile, travel shares were among the worst performers as the omicron variant continued to pop upin countries around the world, including the U.S., Norway, Ireland and South Korea. The Euro Stoxx 50 dropped as much as 1.7% while the Stoxx 600 Index fell 1.5%, extending declines to trade at a session low, with all sectors in the red and led lower by technology and travel stocks. The Stoxx 600 Technology Index slumped as much as 3.9%, the most in two months. Vifor Pharma surged by a record 18% following a report that Australia’s CSL is in advanced talks to acquire Swiss drugmaker. Here are some of the biggest European movers today: Vifor Pharma shares rise as much as 18% on a report that Australia’s CSL is in advanced talks to acquire the Swiss-based drug maker and developer while working with BofA on a A$4 billion funding package. Argenx jumps as much as 9.5% after Kepler Cheuvreux upgrades the stock to buy, saying the biotech company is on the brink of launching its first commercial product. Duerr gains as much as 7.2%, most since Aug. 10, after Deutsche Bank upgrades to buy and sets aa Street-high PT of EU60 for the German engineering company, citing the digitalization of the industry. Daily Mail & General Trust rises as much as 3.9% after Rothermere Continuation raised its bid for all DMGT’s Class A shares by 5.9% to 270p a share in cash. Klarabo surges as much as 54% as shares start trading on Nasdaq Stockholm after the Swedish property company raised SEK750m in an IPO. Eurofins Scientific declines for a fourth session, falling as much as 3.2%, as Goldman Sachs downgrades the company to neutral from buy “following strong outperformance YTD.” Deliveroo drops as much as 6.4% after an offering of 17.6m shares by CEO Will Shu and CFO Adam Miller at a price of 278p a share, representing a 4.2% discount to the last close. M&S falls as much as 3.4% after UBS cut its rating to neutral from buy, citing limited upside to its new price target as well as “little room for meaningful upgrades.” Earlier in the session, Asian stocks erased an earlier loss to trade slightly up, as traders continued to assess the potential impact of the omicron virus strain and the Federal Reserve’s efforts to keep inflation in check.  The MSCI Asia Pacific Index rose 0.2% after falling 0.4% in the morning. South Korea led regional gains, helped by large-cap chipmakers, while Japan was among the worst performers after the government dropped a plan for a blanket halt to all new incoming flight reservations. Asia’s equity benchmark is still down about 4% so far this year after rebounding in the past two sessions from a one-year low reached earlier this week. Despite the region’s underperformance against the U.S. and Europe, cheap valuations and foreign-investor positioning have prompted brokerages including Credit Suisse Group AG and Nomura Securities Co. Ltd. to turn bullish on Asia’s prospects next year. “Equity markets continue to play omicron tennis and traders looking for short-term direction should just wait for the next virus headline and then act accordingly,” said Jeffrey Halley, a senior market analyst at Oanda Corp. “Volatility, and not market direction, will be the winner this week.” Chinese technology shares including Alibaba Group Holding slid after Beijing was said to be planning to close a loophole used by the sector to go public abroad, fueling concern over existing overseas listings. Japanese equities declined, following U.S. peers lower after the first American case of the omicron coronavirus variant was confirmed. Electronics makers and telecoms were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and TDK were the largest contributors to a 0.7% loss in the Nikkei 225.  The S&P 500 posted its worst two-day selloff since October 2020 after the first U.S. case of the new strain was reported. Federal Reserve Chair Jerome Powell reiterated that officials should consider a quicker reduction of monetary stimulus amid elevated inflation. “Truth is, there’s probably a lot of people who are wanting to buy stocks at some point,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “But, with omicron still an unknown, people are responding sensitively to news development, and that’s keeping them from buying.” India’s benchmark equity index climbed for a second day, led by software exporters, on an improving economic outlook and as investors grabbed some beaten-down stocks after recent declines. The S&P BSE Sensex Index rose 1.4% to close at 58,461.29 in Mumbai, the biggest advance since Nov. 1. Its two-day gains increased to 2.5%, the most since Aug. 31. The NSE Nifty 50 Index also surged by a similar magnitude. All of the 19 sector sub-indexes compiled by BSE Ltd. were up, led by a gauge of utilities companies. “India underperformed the global markets in recent weeks. Investors are now going for value buying in stocks at lower levels,” said A. K. Prabhakar, head of research at IDBI Capital Market Services. The Sensex gained in three of the past four sessions after plunging 2.9% on Friday, the biggest drop since April. The rally, however, is in contrast to most global peers which are witnessing volatility on worries over the spread of the omicron variant. High frequency indicators in India, such as tax collection and manufacturing activities, have shown robust growth in recent months, while the country’s economy expanded 8.4% in the quarter ended in September, according to an official data release on Tuesday. Mortgage lender HDFC contributed the most to the Sensex’s gain, increasing 3.9%. Out of 30 shares in the index, 27 rose and three fell. In rates, trading has been relatively quiet as bunds and gilts bull steepen a touch with risk offered, while cash TSYs bear flatten, cheapening ~5bps across the curve.Treasuries retraced part of yesterday’s rally that sent the benchmark 30-year rate to the lowest since early January. A large buyer of 5-year U.S. Treasury options targets the yield dropping around 17bps. 5s10s, 5s30s spreads flattened by ~1bp and ~2bp to multimonth lows; 10-year yields around 1.43%, cheaper by more than 3bp on the day while bunds and gilt yields are richer by ~1bp. Front-end and belly of the curve underperform vs long-end, while bunds and gilts outperform Treasuries. With little economic data slated, speeches by several Fed officials are main focal points. Peripheral spreads tighten with 10y Spain outperforming after well received auctions, albeit with a small size on offer. U.S. economic data slate includes November Challenger job cuts (7:30am) and initial jobless claims (8:30am) In FX, the Bloomberg Dollar Spot Index fell to a day low in the European session and the greenback traded mixed versus its Group-of-10 peers as most crosses consolidated in recent ranges. Two-week implied volatility in the major currencies trades in the green Thursday as it now captures the next policy decisions by the world’s major central banks. Euro- dollar on the tenor rises by as much as 138 basis points to touch 8.22%, highest in a year; the relative premium, however, remains below parity as realized has risen to levels unseen since August 2020. The pound rose along with some other risk- sensitive currencies following the British currency’s three-day slump against the dollar. Long-end gilts underperformed, leading to some steepening of the curve. The yen fell for the first day in three while the Swiss franc fell a second day. The Hungarian forint rose to almost a three-week high after the central bank in Budapest raised the one-week deposit rate by 20 basis points to 3.10%. Economists in a Bloomberg survey were evenly split in predicting a 10 or 20 basis point increase. The Turkish lira resumed its slump after President Recep Tayyip Erdogan abruptly replaced his finance minister amid deepening rifts in the administration over aggressive interest-rate cuts that have undermined the currency and fueled inflation. Poland’s central bank Governor Adam Glapinski sent the zloty to a three-week high against the euro on Thursday with his changed rhetoric on inflation, which he no longer sees as transitory after prices surged at the fastest pace in more than two decades. Currency market volatility also rose, with euro-dollar one-month volatility gauges below Monday's one-year peak but still at elevate levels . "Liquidity in some areas of the market is still quite poor as people grapple with this news and as we head towards year-end, a lot of it is really liquidity driven, which is leading to some volatility," said UBP's Kazmi. "Even in the most liquid market of the U.S. treasury market we've seen some fairly large moves on very little newsflow at times." In commodities, crude futures extend Asia’s gains. WTI adds 2.2% near $67, Brent near $70.50 ahead of today’s OPEC+ meeting. Spot gold finds support near Tuesday’s, recovering somewhat to trade near $1,774/oz. Base metals are mixed: LME aluminum drops as much as 1.1%, nickel, zinc and tin hold in the green Looking at the day ahead now, and central bank speakers include the Fed’s Quarles, Bostic, Daly and Barkin, as well as the ECB’s Panetta. Data releases include the Euro Area unemployment rate and PPI inflation for October, while there’s also the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting. Market Snapshot S&P 500 futures up 0.7% to 4,540.25 STOXX Europe 600 down 1.0% to 466.37 MXAP up 0.2% to 192.07 MXAPJ up 0.7% to 629.36 Nikkei down 0.7% to 27,753.37 Topix down 0.5% to 1,926.37 Hang Seng Index up 0.5% to 23,788.93 Shanghai Composite little changed at 3,573.84 Sensex up 1.3% to 58,436.52 Australia S&P/ASX 200 down 0.1% to 7,225.18 Kospi up 1.6% to 2,945.27 Brent Futures up 2.4% to $70.53/bbl Gold spot down 0.6% to $1,771.73 U.S. Dollar Index little changed at 96.03 German 10Y yield little changed at -0.35% Euro little changed at $1.1320 Top Overnight News from Bloomberg Federal Reserve Bank of Cleveland President Loretta Mester said she’s “very open” to scaling back the Fed’s asset purchases at a faster pace so it can raise interest rates a couple of times next year if needed A United Nations gauge of global food prices rose 1.2% last month, threatening to make it more expensive for households to put a meal on the table. It’s more evidence of inflation soaring in the world’s largest economies and may make it even harder for the poorest nations to import food, worsening a hunger crisis Germany is poised to clamp down on people who aren’t vaccinated against Covid-19 and drastically curtail social contacts to ease pressure on increasingly stretched hospitals Some investors buffeted by concerns about tighter monetary policy are turning their sights to China’s battered junk bonds, given they offer some of the biggest yield buffers anywhere in global credit markets Pfizer Inc. says data on how well its Covid-19 vaccine protects against the omicron variant should be available within two to three weeks, an executive said GlaxoSmithKline Plc said its Covid-19 antibody treatment looks to be effective against the new omicron variant in early testing A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded tentatively following the declines on Wall St where all major indices extended on losses and selling was exacerbated on confirmation of the first Omicron case in the US, while the Asia-Pac region also contended with its own pandemic concerns. ASX 200 (-0.2%) was subdued amid heavy losses in the tech sector and with a surge of infections in Victoria state, although downside in the index was cushioned amid inline Retail Sales and Trade Balance, as well as M&A optimism after Woolworths made a non-binding indicative proposal for Australian Pharmaceutical Industries. Nikkei 225 (-0.7%) weakened after the government instructed airlines to halt inbound flight bookings for a month due to fears of the new variant and with auto names also pressured by declines in monthly sales amid the chip supply crunch. KOSPI (+1.6%) showed resilience amid expectations for lawmakers to pass a record budget today and recouped opening losses despite the record increase in daily infections and confirmation of its first Omicron cases, while the index also shrugged off the highest CPI reading in a decade which effectively supports the case for further rate increases by the BoK. Hang Seng (+0.6%) and Shanghai Comp. (-0.1%) were choppy following another liquidity drain by the PBoC and with tech pressured in Hong Kong as Alibaba shares extended on declines after recently slipping to a 4-year low in its US listing. Beijing regulatory tightening also provided a headwind as initial reports suggested China is to crack down on loopholes used by tech firms for foreign IPOs, although this was later refuted by China, and the CBIRC is planning stricter regulations on major shareholders of banks and insurance companies, as well as confirmed it will better regulate connected transactions of banks. Finally, 10yr JGBs were higher as prices tracked gains in global counterparts and amid the risk aversion in Japan, although prices are off intraday highs after hitting resistance during a brief incursion to the 152.00 level and despite the marginally improved metrics from 10yr JGB auction. Top Asian News Asia Stocks Swing as Investors Weigh Omicron Impact, Fed Views Apple Tells Suppliers IPhone Demand Slowing as Holidays Near Moody’s Cuts China Property Sales View on Financing Difficulties Faith in Singapore Leaders Hit by Record Covid Wave, Poll Shows Bourses across Europe have held onto losses seen at the cash open (Euro Stoxx 50 -1.4%; Stoxx -1.2%), as the region plays catchup to the downside seen on Wall Street – seemingly sparked by a concoction of hawkish Fed rhetoric and the discovery of the Omicron variant in the US. Nonetheless, US equity futures are firmer across the board but to varying degrees – with the cyclical RTY (+1.1%) and the NQ (+0.3%) the current laggard. European futures ahead of the cash open saw some mild fleeting impetus on reports GlaxoSmithKline's (-0.3%) COVID treatment Sotrovimab retains its activity against Omicron variant, and the UK MHRA simultaneously approved the use of Sotrovimab – but caveated that it is too early to know whether Omicron has any impact on effectiveness. Conversely, brief risk-off crept into the market following commentary from a South African Scientist who warned the country is seeing an exponential rise in new COVID cases with a predominance of Omicron variant across the country – with the variant causing the fastest ever community transmission - but expects fewer active cases and hospitalisations this wave. Back to Europe, Euro indices see broad-based losses whilst the downside in the FTSE 100 (-0.7%) is less severe amid support from its heavyweight Oil & Gas sector – the outperforming sector in the region. Delving deeper, sectors see no overarching theme nor bias – Food & Beverages, Autos and Banks are towards the top of the bunch, whilst Tech, Telecoms, and Travel &Leisure. Tech is predominantly weighed on by reports that Apple (-2% pre-market) reportedly told iPhone component suppliers that demand slowed down. As such ASML (-5.0%), STMicroelectronics (-4.4%) and Infineon (-3.6%) reside among the biggest losers in the Stoxx 600. Deliveroo (-5.3%) is softer following an offering of almost 18mln at a discount to yesterday's close. In terms of market commentary, Morgan Stanley believes that inflation will remain high over the next few months, in turn supporting commodities, financials and some cyclical sectors. The bank identifies beneficiaries including EDF (-1.5%), Engie (-1.2%), SSE (-0.2%), Legrand (-1.3%), Tesco (-0.5%), BT (-0.8%), Michelin (-1.6%) and Sika (-0.9%). Top European News Shell Kicks Off First Wave of Buybacks From Permian Sale Omicron Threatens to Prolong Pain in Bid to Vaccinate the World Apple, Suppliers Drop Premarket After Report Demand Slowed Valeo, Gestamp Gain After Barclays Raises to Overweight In FX, currency markets are still in a state of flux, or limbo bar a few exceptions, and the Greenback is gyrating against major peers awaiting the next major event that could provide clearer direction and a more decisive range break. Thursday’s agenda offers some scope on that front via US initial jobless claims and a host of Fed speakers, but in truth NFP tomorrow is probably more likely to be influential even though chair Powell has effectively given the green light to fast-track tapering from December. In the interim, the index continues to keep a relatively short leash around 96.000, and is holding within 96.138-95.895 confines so far today. JPY/CHF - Although risk considerations look supportive for the Yen, on paper, UST-JGB/Fed-BoJ differentials coupled with technical impulses are keeping Usd/Jpy buoyant on the 113.00 handle, with additional demand said to have come from Japanese exporters overnight. However, the headline pair may run into offers/resistance circa 113.50 and any breach could be capped by decent option expiry interest spanning 113.60-75 (1.5 bn). Similarly, the Franc has slipped back below 0.9200 on yield and Swiss/US Central Bank policy stances plus near term outlooks, and hardly helped by a slowdown in retail sales. GBP/CAD/NZD - All firmer vs their US counterpart, though again well within recent admittedly wide ranges, and the Pound perhaps more attuned to Eur/Gbp fluctuations as the cross retreats to retest 0.8500 and Cable rebounds to have another look at 1.3300 where a fairly big option expiry resides (850 mn). Indeed, Sterling has largely shrugged off the latest BoE Monthly Decision Maker Panel release that in truth did not deliver any clues on what is set to be another knife-edge MPC gathering in December. Elsewhere, the Loonie is straddling 1.2800 with eyes on WTI crude ahead of Canadian jobs data on Friday and the Kiwi is hovering above 0.6800 after weaker NZ Q3 terms of trade were offset to some extent by favourable Aud/Nzd headwinds. AUD/EUR - Both narrowly mixed against US Dollar, with the Aussie pivoting 0.7100 in wake of roughly in line trade and retail sales data overnight, but wary about the latest virus outbreak in the state of Victoria, while the Euro is sitting somewhat uncomfortably on the 1.1300 handle amidst softer EGB yields and heightened uncertainty about what the ECB might or might not do in December on the QE guidance front. In commodities, WTI and Brent front-month futures are firmer intraday as traders gear up for the JMMC and OPEC+ confabs at 12:00GMT and 13:00GMT, respectively. The jury is still split on what the final decision could be, but the case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening against the backdrop of Omicron coupled with the coordinated SPR releases (an updating Rolling Headline is available on the Newsquawk headline feed). As expected, OPEC sources have been testing the waters in the run-up, whilst yesterday's JTC/OPEC meetings largely surrounded the successor to the Secretary-General position. Oil market price action will likely be centred around OPEC+ today in the absence of any macro shocks. WTI Jan resides around USD 66.50/bbl (vs low USD 65.41/bbl) whilst Brent Feb briefly topped USD 70/bbl (vs low USD 68.73/bbl). Elsewhere, spot gold has eased further from the USD 1,800/oz after failing to sustain a break above the 50, 100 and 200 DMAs which have all converged to USD 1,791/oz today. LME copper is on the backfoot amid the cautious risk sentiment, with the red metal back under USD 9,500/t but off overnight lows. US Event Calendar 7:30am: Nov. Challenger Job Cuts -77.0% YoY, prior -71.7% 8:30am: Nov. Initial Jobless Claims, est. 240,000, prior 199,000; 8:30am: Nov. Continuing Claims, est. 2m, prior 2.05m 9:45am: Nov. Langer Consumer Comfort, prior 52.2 DB's Jim Reid concludes the overnight wrap With investors remaining on tenterhooks to find out some definitive information on the Omicron variant, yesterday saw markets continue to see-saw for a 4th day running. Following one of the biggest sell-offs of the year on Friday, we then had a partial bounceback on Monday, another bout of fears on Tuesday (not helped by the prospect of faster tapering), and yesterday saw another rally back before risk sentiment turned sharply later in the day as an initial case of the Omicron variant was discovered in the US. You can get some idea of this by the fact that Europe’s STOXX 600 (+1.71%) posted its best daily performance since May, whereas the S&P 500 moved from an intraday high where it had been up +1.88%, before shedding all those gains and more to close -1.18% lower. In fact, that decline means the S&P has now lost over -3% in the last two sessions, marking its worst 2-day performance in over a year, and this heightened volatility saw the VIX index close back above 30 for the first time since early February. In terms of developments about Omicron, we’re still in a waiting game for some concrete stats, but there was positive news early on from the World Health Organization’s chief scientist, who said that they think vaccines “will still protect against severe disease as they have against the other variants”. On the other hand, there was further negative news out of South Africa, as the country reported 8,561 infections over the previous day, with a positivity rate of 16.5%. That’s up from 4,373 cases the day before, and 2,273 the day before that, so all eyes will be on whether this trend continues, and also on what that means for hospitalisation and death rates over the days ahead. Against this backdrop, calls for fresh restrictions mounted across a range of countries, particularly on the travel side. In the US, it’s been reported already by the Washington Post that President Biden could today announce stricter testing requirements for arriving travellers. Meanwhile, France is moving to require non-EU arrivals to show a negative test before arrival, irrespective of their vaccination status. The EU Commission further said that member states should conduct daily reviews of essential travel restrictions, and Commission President von der Leyen also said that the EU should discuss the topic of mandatory vaccinations. There was also a Bloomberg report that German Chancellor Merkel would recommend mandatory vaccinations from February 2022, according to a Chancellery paper that they’d obtained. That came as Slovakia sought to incentivise vaccination uptake among older citizens, with the cabinet backing a €500 hospitality voucher for residents over 60 who’ve been vaccinated. As on Tuesday, the other main headlines yesterday were provided by Fed Chair Powell, who re-emphasised his more hawkish rhetoric around inflation before the House Financial Services Committee. Notably he said that “We’ve seen inflation be more persistent. We’ve seen the factors that are causing higher inflation to be more persistent”, though yields on 2yr Treasuries (-1.4bps) already had the shift in stance priced in. New York Fed President Williams echoed that view in an interview, noting it would be germane to discuss and decide whether it was appropriate to accelerate the pace of tapering at the December FOMC. 10yr yields (-4.1bps) continued their decline, predominantly driven by the turn in sentiment following the negative Omicron headlines. That latest round of curve flattening left the 2s10s slope at its flattest level since early January around the time of the Georgia Senate race that ushered in the prospect of much larger fiscal stimulus. In terms of markets elsewhere, strong data releases helped to support risk appetite earlier in yesterday’s session, with investors also looking forward to tomorrow’s US jobs report for November that will be an important one ahead of the Fed’s decision in less than a couple of weeks’ time. The ISM manufacturing release for November saw the headline number come in roughly as expected at 61.1 (vs. 61.2 expected), and also included a rise in both the new orders (61.5) and the employment (53.3) components relative to last month. Separately, the ADP’s report of private payrolls for November likewise came in around expectations, with a +534k gain (vs. +526k expected). Staying on the US, one thing to keep an eye out over the next 24 hours will be any news on a government shutdown, with funding currently set to run out by the weekend as it stands. The headlines yesterday weren’t promising for those hoping for an uneventful, tidy resolution, as Politico indicated that some Congressional Republicans would not agree to an expedited process to fund the government should certain vaccine mandates remain in place. An expedited process is necessary to avoid a government shutdown at the end of the week, so one to watch. After the incredibly divergent equity performances in the US and Europe, we’ve seen a much more mixed performance in Asia overnight, with the KOSPI (+1.09%), Hang Seng (+0.23%), and CSI (+0.23%) all advancing, whereas the Shanghai Composite (-0.05%) and the Nikkei (-0.60%) are trading lower. In terms of the latest on Omicron, authorities in South Korea confirmed five cases, which came as the country also reported that CPI in November rose to its fastest since December 2011, at +3.7% (vs +3.1% expected). Separately in China, 53 local Covid-19 cases were reported in Inner Mongolia, whilst Harbin province reported 3 local cases. Looking forward, futures are indicating a positive start in the US with those on the S&P 500 (+0.64%) pointing higher. Back in Europe, sovereign bonds lost ground yesterday, and yields on 10yr bunds (+0.5bps), OATs (+1.1bps) and BTPs (+4.2bps) continued to move higher. Interestingly, there was a continued widening in peripheral spreads, with the gap between both Italian and Spanish 10yr yields over bunds reaching their biggest level in over a year, at 135bps and 77bps, respectively. Another factor to keep an eye on in Europe is another round of increases in natural gas prices, with futures up +3.42% to their highest level since mid-October yesterday. Lastly on the data front, the main other story was the release of the manufacturing PMIs from around the world. We’d already had the flash readings from a number of the key economies, so they weren’t too surprising, but the Euro Area came in at 58.4 (vs. flash 58.6), Germany came in at 57.4 (vs. flash 57.6), and the UK came in at 58.1 (vs. flash 58.2). One country that saw a decent upward revision was France, with the final number at 55.9 (vs. flash 54.6), which marks an end to 5 successive monthly declines in the French manufacturing PMI. One other release were German retail sales for October, which unexpectedly fell -0.3% (vs. +0.9% expected). To the day ahead now, and central bank speakers include the Fed’s Quarles, Bostic, Daly and Barkin, as well as the ECB’s Panetta. Data releases include the Euro Area unemployment rate and PPI inflation for October, while there’s also the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting. Tyler Durden Thu, 12/02/2021 - 07:57.....»»

Category: dealsSource: nytDec 2nd, 2021

Only A Banking Crisis Or Higher Rates Can Stop Inflation Now: Trader

Only A Banking Crisis Or Higher Rates Can Stop Inflation Now: Trader Submitted by QTR's Fringe Finance This is Part 2 of an exclusive interview with Rosemont Seneca, a U.S. based professional trader focused on event-driven and distressed situations. Rosemont spent their career on the buy-side working as a financials analyst and their investing/trading style is inspired in equal parts by Icahn and Druckenmiller. Like me, Rosemont is not an RIA and does not hold licenses. Market commentary and opinion expressed in this interview are personal views, not investment advice or solicitation for business. QTR’s Note: The point of this blog is to bring to the reader information and perspectives they, or the mainstream media, may not otherwise find on their own. The cool thing about FinTwit is that you get to meet people based on their ideas and investing acumen and not their identities. I have been following Rosemont on Twitter for years and love their perspective and takes on the market - their takes often stand at odds with my own and they have helped me broaden my horizon and be less bearish on markets, while still maintaining my skepticism about monetary policy. They have chosen to remain completely anonymous with me, which I respect, and I have never personally met or otherwise know anything about the identity of Rosemont. That doesn’t matter, however, because I like their ideas and their commentary. You can follow Rosemont on Twitter here. Part 1 of this interview can be read here. Bernard Baruch, 1919 / Photo used for @rosemontseneca's Twitter profileQ: What's your take on how we're handling Covid? You've mentioned what happened to our economy over the last 18 months was "economic terrorism". Will we learn - either through people revolting or negative consequences - or will we continue down this Orwellian path? It’s very disappointing to see how politicized the pandemic became in the United States. It obviously didn’t help that COVID struck in an Election year, but there will be plenty of blame to go around the table when a proper post-mortem analysis is conducted years from now. We hope that Bethany McLean (Enron: The Smartest Guys in the Room) will eventually write a thoroughly unbiased expose on the timeline of policy decisions in 2020. We’re of the firm belief that our Leaders in Washington D.C. did more harm than good in the early months of this pandemic. We can safely conclude the 2020 COVID shutdowns are the direct cause for the supply chain dislocations and hyperinflation that Americans are about to suffer. The shutdowns that we witnessed in the United States were a flawed policy decision akin to willful pilot error or ‘economic terrorism;’ Federal and State Governments suffocated millions of livelihoods and permanently destroyed hundreds of thousands of perfectly viable small & medium family-owned businesses. The larger, better capitalized multinational corporations capable of accessing capital markets and Government Stimulus Programs not only survived, they eventually thrived. What happened can only be described as a crime. Does the Fed and the Biden administration have a handle on the inflation problem? Why or why not? If you study the history of inflation in the U.S., whenever CPI surpasses 5.0% outside of wartime, the only thing that prevents inflation from marching higher is a banking crisis (’92, ’08) or significantly higher interest rates, which occur with a considerable lag. Capital market participants today are of the consensual view that the Fed is hamstrung from raising their Target Rate significantly higher due to Treasury’s debt service and interest burden. We don’t buy that premise; if CPI inflation trends 10% or higher they will have to act with Volckerian resolution. Our supply chains have been diligently outsourced overseas during the last three decades. The physical goods we import ($3.0 trillion/year) and consume will probably continue to see tremendous inflation in 2022-2023, the worst since the Carter years. There is absolutely nothing Biden can do (not even SPR releases) to change this paradigm as tremendous damage was done in 2020; a patient who suffers a debilitating stroke may take many months or years to learn to walk again. The same goes for our global economy. In the meantime, inflation will gallop away. When China exits the crypto market, could it be because they are worried about a crash - or do you think it's just so it doesn't compete with the digital yuan? We’ve been in regular touch with China-based crypto traders in Shenzhen and Hong Kong since 2015. What we gather (and this was widely commented) is the CCP didn’t want energy resources and coal being wasted on crypto mining during a time of energy supply shortages post-COVID. North Korea, Iran and Venezuela proactively hack and mine crypto currencies today. The cynical conclusion is that China wanted to save this nefarious business for the State. The CCP is already in the business of industrial espionage and stealing U.S. intellectual property; operating within a $2.5 trillion crypto market with a large addressable market with far fewer diplomatic consequences seems like a better business. What stocks/sectors would you avoid at all costs right now? There are many sectors that are in a clear and present mania: -       Most electric vehicle companies (Tesla included) -       crypto currency and NFT-related equities -       majority of Meme Stocks     -       90% of SPAC-linked structures    -       Emerging Market equities (why send precious U.S. Dollars to die abroad?) -       80% of stocks in the ARKK fund (ARK Invest analysts are glorified journalists) Is it "different" this time? Will we normalize at these PE ratios and this balance of growth vs. value? Or will PEs eventually crash back under 10 and will value be a virtue again? It’s never different this time. Cycles get longer or shorter, the catalysts change, but the progression of boom-bust cycles never changes. Warren Buffett likes to gauge total U.S. market capitalization / GDP levels, Pierre Lassonde tracks the Dow / Gold ratio. At extremes these metrics provide interesting signals to be cautious or greedy. By those measures the U.S. equity market seems extremely overstretched at present. The Shiller PE Ratio (38x) is also back at 1999-2000 levels. We would probably need a very acute banking crisis similar to 2008 or a Fed Fund Target Rate in the 8-10% range for the market multiple to de-rate down to 10x. Given the schizophrenic high-frequency nature of our equity market, it’s very hard to predict growth/value factor rotations, timing and duration. We’ll defer to competent equity market Strategists like Mike Wilson or Tom Lee to go in-depth with you on this question. -- You can read Part 1 of this interview here. Zerohedge readers always get 10% off a subscription to my blog for life by using this link. -- DISCLAIMER:  It should be assumed I or Rosemont Seneca has positions in any security or commodity mentioned in this article. None of this is a solicitation to buy or sell securities. Neiher I nor RS hold licenses or are investing professional. None of this is financial advice. Positions can always change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.  Tyler Durden Wed, 12/01/2021 - 12:37.....»»

Category: dealsSource: nytDec 1st, 2021

Futures Surge After Powell-Driven Rout Proves To Be "Transitory"

Futures Surge After Powell-Driven Rout Proves To Be "Transitory" Heading into yesterday's painful close to one of the ugliest months since March 2020, which saw a huge forced liquidation rebalance with more than $8 billion in Market on Close orders, we said that while we are seeing "forced selling dump into the close today" this would be followed by "forced Dec 1 buying frontrunning after the close." Forced selling dump into the close today. Forced Dec 1 buying frontrunning after the close — zerohedge (@zerohedge) November 30, 2021 And just as expected, despite yesterday's dramatic hawkish pivot by Powell, who said it was time to retire the word transitory in describing the inflation outlook (the same word the Fed used hundreds of times earlier in 2021 sparking relentless mockery from this website for being clueless as usual) while also saying the U.S. central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks, the frontrunning of new monthly inflows is in full force with S&P futures rising over 1.2%, Nasdaq futures up 1.3%, and Dow futures up 0.9%, recovering almost all of Tuesday’s decline. The seemingly 'hawkish' comments served as a double whammy for markets, which were already nervous about the spread of the Omicron coronavirus variant and its potential to hinder a global economic recovery. "At this point, COVID does not appear to be the biggest long-term Street fear, although it could have the largest impact if the new (or next) variant turns out to be worse than expected," Howard Silverblatt, senior index analyst for S&P and Dow Jones indices, said in a note. "That honor goes to inflation, which continues to be fed by supply shortages, labor costs, worker shortages, as well as consumers, who have not pulled back." However, new month fund flows proved too powerful to sustain yesterday's month-end dump and with futures rising - and panic receding - safe havens were sold and the 10-year Treasury yield jumped almost 6bps, approaching 1.50%. The gap between yields on 5-year and 30-year Treasuries was around the narrowest since March last year. Crude oil and commodity-linked currencies rebounded. Gold remained just under $1,800 and bitcoin traded just over $57,000. There was more good news on the covid front with a WHO official saying some of the early indications are that most Omicron cases are mild with no severe cases. Separately Merck gained 3.8% in premarket trade after a panel of advisers to the U.S. Food and Drug Administration narrowly voted to recommend the agency authorize the drugmaker's antiviral pill to treat COVID-19. Travel and leisure stocks also rebounded, with cruiseliners Norwegian, Carnival, Royal Caribbean rising more than 2.5% each. Easing of covid fears also pushed airlines and travel stocks higher in premarket trading: Southwest +2.9%, Delta +2.5%, Spirit +2.3%, American +2.2%, United +1.9%, JetBlue +1.3%. Vaccine makers traded modestly lower in pre-market trading after soaring in recent days as Wall Street weighs the widening spread of the omicron variant. Merck & Co. bucked the trend after its Covid-19 pill narrowly gained a key recommendation from advisers to U.S. regulators. Moderna slips 2.1%, BioNTech dips 1.3% and Pfizer is down 0.2%. Elsewhere, Occidental Petroleum led gains among the energy stocks, up 3.2% as oil prices climbed over 4% ahead of OPEC's meeting. Shares of major Wall Street lenders also moved higher after steep falls on Tuesday. Here are some of the other biggest U.S. movers today: Salesforce (CRM US) drops 5.9% in premarket trading after results and guidance missed estimates, with analysts highlighting currency-related headwinds and plateauing growth at the MuleSoft integration software business. Hewlett Packard Enterprise (HPE US) falls 1.3% in premarket after the computer equipment maker’s quarterly results showed the impact of the global supply chain crunch. Analysts noted solid order trends. Merck (MRK US) shares rise 5.8% in premarket after the company’s Covid-19 pill narrowly wins backing from FDA advisers, which analysts say is a sign of progress despite lingering challenges. Chinese electric vehicle makers were higher in premarket, leading U.S. peers up, after Nio, Li and XPeng reported strong deliveries for November; Nio (NIO US) +4%, Li (LI US ) +6%, XPeng (XPEV US) +4.3%. Ardelyx (ARDX US) shares gain as much as 34% in premarket, extending the biotech’s bounce after announcing plans to launch its irritable bowel syndrome treatment Ibsrela in the second quarter. CTI BioPharma (CTIC US) shares sink 18% in premarket after the company said the FDA extended the review period for a new drug application for pacritinib. Allbirds (BIRD US) fell 7.5% postmarket after the low end of the shoe retailer’s 2021 revenue forecast missed the average analyst estimate. Zscaler (ZS US) posted “yet another impressive quarter,” according to BMO. Several analysts increased their price targets for the security software company. Shares rose 4.6% in postmarket. Ambarella (AMBA US) rose 14% in postmarket after forecasting revenue for the fourth quarter that beat the average analyst estimate. Emcore (EMKR US) fell 9% postmarket after the aerospace and communications supplier reported fiscal fourth-quarter Ebitda that missed the average analyst estimate. Box (BOX US) shares gained as much as 10% in postmarket trading after the cloud company raised its revenue forecast for the full year. Meanwhile, the omicron variant continues to spread around the globe, though symptoms so far appear to be relatively mild. The Biden administration plans to tighten rules on travel to the U.S., and Japan said it would bar foreign residents returning from 10 southern African nations. As Bloomberg notes, volatility is buffeting markets as investors scrutinize whether the pandemic recovery can weather diminishing monetary policy support and potential risks from the omicron virus variant. Global manufacturing activity stabilized last month, purchasing managers’ gauges showed Wednesday, and while central banks are scaling back ultra-loose settings, financial conditions remain favorable in key economies. “The reality is hotter inflation coupled with a strong economic backdrop could end the Fed’s bond buying program as early as the first quarter of next year,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in emailed comments. “With potential changes in policy on the horizon, market participants should expect additional market volatility in this uncharted territory.” Looking ahead, Powell is back on the Hill for day 2, and is due to testify before a House Financial Services Committee hybrid hearing at 10 a.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. Investors are also awaiting the Fed's latest "Beige Book" due at 2:00 p.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. European equities soared more than 1.2%, with travel stocks and carmakers leading broad-based gain in the Stoxx Europe 600 index, all but wiping out Tuesday’s decline that capped only the third monthly loss for the benchmark this year.  Travel, miners and autos are the strongest sectors. Here are some of the biggest European movers today: Proximus shares rise as much as 6.5% after the company said it’s started preliminary talks regarding a potential deal involving TeleSign, with a SPAC merger among options under consideration. Dr. Martens gains as much as 4.6% to the highest since Sept. 8 after being upgraded to overweight from equal- weight at Barclays, which says the stock’s de-rating is overdone. Husqvarna advances as much as 5.3% after the company upgraded financial targets ahead of its capital markets day, including raising the profit margin target to 13% from 10%. Wizz Air, Lufthansa and other travel shares were among the biggest gainers as the sector rebounded after Tuesday’s losses; at a conference Wizz Air’s CEO reiterated expansion plans. Wizz Air gains as much as 7.5%, Lufthansa as much as 6.8% Elis, Accor and other stocks in the French travel and hospitality sector also rise after the country’s government pledged to support an industry that’s starting to get hit by the latest Covid-19 wave. Pendragon climbs as much as 6.5% after the car dealer boosted its outlook after the company said a supply crunch in the new vehicle market wasn’t as bad as it had anticipated. UniCredit rises as much as 3.6%, outperforming the Stoxx 600 Banks Index, after Deutsche Bank added the stock to its “top picks” list alongside UBS, and Bank of Ireland, Erste, Lloyds and Societe Generale. Earlier in the session, Asian stocks also soared, snapping a three-day losing streak, led by energy and technology shares, as traders assessed the potential impact from the omicron coronavirus variant and U.S. Federal Reserve Chair Jerome Powell’s hawkish pivot. The MSCI Asia Pacific Index rose as much as 1.3% Wednesday. South Korea led regional gains after reporting strong export figures, which bolsters growth prospects despite record domestic Covid-19 cases. Hong Kong stocks also bounced back after falling Tuesday to their lowest level since September 2020. Asia’s stock benchmark rebounded from a one-year low, though sentiment remained clouded by lingering concerns on the omicron strain and Fed’s potentially faster tapering pace. Powell earlier hinted that the U.S. central bank will accelerate its asset purchases at its meeting later this month.  “A faster taper in the U.S. is still dependent on omicron not causing a big setback to the outlook in the next few weeks,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital, adding that he expects the Fed’s policy rate “will still be low through next year, which should still enable good global growth which will benefit Asia.” Chinese equities edged up after the latest economic data showed manufacturing activity remained at relatively weak levels in November, missing economists’ expectations. Earlier, Chinese Vice Premier Liu He said he’s fully confident in the nation’s economic growth in 2022 Japanese stocks rose, overcoming early volatility as traders parsed hawkish comments from Federal Reserve Chair Jerome Powell. Electronics and auto makers were the biggest boosts to the Topix, which closed 0.4% higher after swinging between a gain of 0.9% and loss of 0.7% in the morning session. Daikin and Fanuc were the largest contributors to a 0.4% rise in the Nikkei 225, which similarly fluctuated. The Topix had dropped 4.8% over the previous three sessions due to concerns over the omicron virus variant. The benchmark fell 3.6% in November, its worst month since July 2020. “The market’s tolerance to risk is quite low at the moment, with people responding in a big way to the smallest bit of negative news,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo. “But the decline in Japanese equities was far worse than those of other developed markets, so today’s market may find a bit of calm.” U.S. shares tumbled Tuesday after Powell said officials should weigh removing pandemic support at a faster pace and retired the word “transitory” to describe stubbornly high inflation In rates, bonds trade heavy, as yield curves bear-flatten. Treasuries extended declines with belly of the curve cheapening vs wings as traders continue to price in additional rate-hike premium over the next two years. Treasury yields were cheaper by up to 5bp across belly of the curve, cheapening 2s5s30s spread by ~5.5bp on the day; 10-year yields around 1.48%, cheaper by ~4bp, while gilts lag by additional 2bp in the sector. The short-end of the gilt curve markedly underperforms bunds and Treasuries with 2y yields rising ~11bps near 0.568%. Peripheral spreads widen with belly of the Italian curve lagging. The flattening Treasury yield curve “doesn’t suggest imminent doom for the equity market in and of itself,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg Television. “Alarm bells go off in terms of recession” when the curve gets closer to inverting, she said. In FX, the Turkish lira had a wild session, offered in early London trade before fading. USD/TRY dropped sharply to lows of 12.4267 on reports of central bank FX intervention due to “unhealthy price formations” before, once again, fading TRY strength after comments from Erdogan. The rest of G-10 FX is choppy; commodity currencies retain Asia’s bid tone, havens are sold: the Bloomberg Dollar Spot Index inched lower, as the greenback traded mixed versus its Group-of-10 peers. The euro moved in a narrow range and Bund yields followed U.S. yields higher. The pound advanced as risk sentiment stabilized with focus still on news about the omicron variant. The U.K. 10-, 30-year curve flirted with inversion as gilts flattened, with money markets betting on 10bps of BOE tightening this month for the first time since Friday. The Australian and New Zealand dollars advanced as rising commodity prices fuel demand from exporters and leveraged funds. Better-than-expected growth data also aided the Aussie, with GDP expanding by 3.9% in the third quarter from a year earlier, beating the 3% estimated by economists. Austrian lawmakers extended a nationwide lockdown for a second 10-day period to suppress the latest wave of coronavirus infections before the Christmas holiday period.  The yen declined by the most among the Group-of-10 currencies as Powell’s comments renewed focus on yield differentials. 10-year yields rose ahead of Thursday’s debt auction In commodities, crude futures rally. WTI adds over 4% to trade on a $69-handle, Brent recovers near $72.40 after Goldman said overnight that oil had gotten extremely oversold. Spot gold fades a pop higher to trade near $1,785/oz. Base metals trade well with LME copper and nickel outperforming. Looking at the day ahead, once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Market Snapshot S&P 500 futures up 1.2% to 4,620.75 STOXX Europe 600 up 1.0% to 467.58 MXAP up 0.9% to 191.52 MXAPJ up 1.1% to 626.09 Nikkei up 0.4% to 27,935.62 Topix up 0.4% to 1,936.74 Hang Seng Index up 0.8% to 23,658.92 Shanghai Composite up 0.4% to 3,576.89 Sensex up 1.0% to 57,656.51 Australia S&P/ASX 200 down 0.3% to 7,235.85 Kospi up 2.1% to 2,899.72 Brent Futures up 4.2% to $72.15/bbl Gold spot up 0.2% to $1,778.93 U.S. Dollar Index little changed at 95.98 German 10Y yield little changed at -0.31% Euro down 0.1% to $1.1326 Top Overnight News from Bloomberg U.S. Secretary of State Antony Blinken will meet Russian Foreign Minister Sergei Lavrov Thursday, the first direct contact between officials of the two countries in weeks as tensions grow amid western fears Russia may be planning to invade Ukraine Oil rebounded from a sharp drop on speculation that recent deep losses were excessive and OPEC+ may on Thursday decide to pause hikes in production, with the abrupt reversal fanning already- elevated volatility The EU is set to recommend that member states review essential travel restrictions on a daily basis in the wake of the omicron variant, according to a draft EU document seen by Bloomberg China is planning to ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors Manufacturing activity in Asia outside China stabilized last month amid easing lockdown and border restrictions, setting the sector on course to face a possible new challenge from the omicron variant of the coronavirus Germany urgently needs stricter measures to check a surge in Covid-19 infections and protect hospitals from a “particularly dangerous situation,” according to the head of the country’s DIVI intensive-care medicine lobby. A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets traded mostly positive as regional bourses atoned for the prior day’s losses that were triggered by Omicron concerns, but with some of the momentum tempered by recent comments from Fed Chair Powell and mixed data releases including the miss on Chinese Caixin Manufacturing PMI. ASX 200 (-0.3%) was led lower by underperformance in consumer stocks and with utilities also pressured as reports noted that Shell and Telstra’s entrance in the domestic electricity market is set to ignite fierce competition and force existing players to overhaul their operations, although the losses in the index were cushioned following the latest GDP data which showed a narrower than feared quarterly contraction in Australia’s economy. Nikkei 225 (+0.4%) was on the mend after yesterday’s sell-off with the index helped by favourable currency flows and following a jump in company profits for Q3, while the KOSPI (+2.1%) was also boosted by strong trade data. Hang Seng (+0.8%) and Shanghai Comp. (+0.4%) were somewhat varied as a tech resurgence in Hong Kong overcompensated for the continued weakness in casinos stocks amid ongoing SunCity woes which closed all VIP gaming rooms in Macau after its Chairman's recent arrest, while the mood in the mainland was more reserved after a PBoC liquidity drain and disappointing Chinese Caixin Manufacturing PMI data which fell short of estimates and slipped back into contraction territory. Finally, 10yr JGBs were lower amid the gains in Japanese stocks and after the pullback in global fixed income peers in the aftermath of Fed Chair Powell’s hawkish comments, while a lack of BoJ purchases further contributed to the subdued demand for JGBs. Top Asian News Asia Stocks Bounce Back from One-Year Low Despite Looming Risks Gold Swings on Omicron’s Widening Spread, Inflation Worries Shell Sees Hedge Funds Moving to LNG, Supporting Higher Prices Abe Warns China Invading Taiwan Would Be ‘Economic Suicide’ Bourses in Europe are firmer across the board (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) as the positive APAC sentiment reverberated into European markets. US equity futures are also on the front foot with the cyclical RTY (+2.0%) outpacing its peers: ES (+1.2%), NQ (+1.5%), YM (+0.8%). COVID remains a central theme for the time being as the Omicron variant is observed for any effects of concern – which thus far have not been reported. Analysts at UBS expect market focus to shift away from the variant and more towards growth and earnings. The analysts expect Omicron to fuse into the ongoing Delta outbreak that economies have already been tackling. Under this scenario, the desk expects some of the more cyclical markets and sectors to outperform. The desk also flags two tails risks, including an evasive variant and central bank tightening – particularly after Fed chair Powell’s commentary yesterday. Meanwhile, BofA looks for an over-10% fall in European stocks next year. Sticking with macro updates, the OECD, in their latest economic outlook, cut US, China, Eurozone growth forecasts for 2021 and 2022, with Omicron cited as a factor. Back to trade, broad-based gains are seen across European cash markets. Sectors hold a clear cyclical bias which consists of Travel & Leisure, Basic Resources, Autos, Retail and Oil & Gas as the top performers – with the former bolstered by the seemingly low appetite for coordination on restrictions and measures at an EU level – Deutsche Lufthansa (+6%) and IAG (+5.1%) now reside at the top of the Stoxx 600. The other side of the spectrum sees the defensive sectors – with Healthcare, Household Goods, Food & Beverages as the straddlers. In terms of induvial movers, German-listed Adler Group (+22%) following a divestment, whilst Blue Prism (+1.7%) is firmer after SS&C raised its offer for the Co. Top European News Wizz Says Travelers Are Booking at Shorter and Shorter Notice Turkey Central Bank Intervenes in FX Markets to Stabilize Lira Gold Swings on Omicron’s Widening Spread, Inflation Worries Former ABG Sundal Collier Partner Starts Advisory Firm In FX, the Dollar remains mixed against majors, but well off highs prompted by Fed chair Powell ditching transitory from the list of adjectives used to describe inflation and flagging that a faster pace of tapering will be on the agenda at December’s FOMC. However, the index is keeping tabs on the 96.000 handle and has retrenched into a tighter 95.774-96.138 range, for the time being, as trade remains very choppy and volatility elevated awaiting clearer medical data and analysis on Omicron to gauge its impact compared to the Delta strain and earlier COVID-19 variants. In the interim, US macro fundamentals might have some bearing, but the bar is high before NFP on Friday unless ADP or ISM really deviate from consensus or outside the forecast range. Instead, Fed chair Powell part II may be more pivotal if he opts to manage hawkish market expectations, while the Beige Book prepared for next month’s policy meeting could also add some additional insight. NZD/AUD/CAD/GBP - Broad risk sentiment continues to swing from side to side, and currently back in favour of the high beta, commodity and cyclical types, so the Kiwi has bounced firmly from worst levels on Tuesday ahead of NZ terms of trade, the Aussie has pared a chunk of its declines with some assistance from a smaller than anticipated GDP contraction and the Loonie is licking wounds alongside WTI in advance of Canadian building permits and Markit’s manufacturing PMI. Similarly, Sterling has regained some poise irrespective of relatively dovish remarks from BoE’s Mann and a slender downward revision to the final UK manufacturing PMI. Nzd/Usd is firmly back above 0.6800, Aud/Usd close to 0.7150 again, Usd/Cad straddling 1.2750 and Cable hovering on the 1.3300 handle compared to circa 0.6772, 0.7063, 1.2837 and 1.3195 respectively at various fairly adjacent stages yesterday. JPY/EUR/CHF - All undermined by the aforementioned latest upturn in risk appetite or less angst about coronavirus contagion, albeit to varying degrees, as the Yen retreats to retest support sub-113.50, Euro treads water above 1.1300 and Franc straddles 0.9200 after firmer than forecast Swiss CPI data vs a dip in the manufacturing PMI. In commodities, WTI and Brent front month futures are recovering following yesterday’s COVID and Powell-induced declines in the run-up to the OPEC meetings later today. The complex has also been underpinned by the reduced prospects of coordinated EU-wide restrictions, as per the abandonment of the COVID video conference between EU leaders. However, OPEC+ will take centre stage over the next couple of days, with a deluge of source reports likely as OPEC tests the waters. The case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening. There have been major supply and demand developments since the prior meeting. The recent emergence of the Omicron COVID variant and coordinated release of oil reserves have shifted the balance of expectations relative to earlier in the month (full Newsquawk preview available in the Research Suite). In terms of the schedule, the OPEC meeting is slated for 13:00GMT/08:00EST followed by the JTC meeting at 15:00GMT/10:00EST, whilst tomorrow sees the JMMC meeting at 12:00GMT/07:00EST; OPEC+ meeting at 13:00GMT/08:00EST. WTI Jan has reclaimed a USD 69/bbl handle (vs USD 66.20/bbl low) while Brent Feb hovers around USD 72.50/bbl (vs low USD 69.38/bbl) at the time of writing. Elsewhere, spot gold and silver trade with modest gains and largely in tandem with the Buck. Spot gold failed to sustain gains above the cluster of DMAs under USD 1,800/oz (100 DMA at USD 1,792/oz, 200 DMA at USD 1,791/oz, and 50 DMA at USD 1,790/oz) – trader should be aware of the potential for a technical Golden Cross (50 DMA > 200 DMA). Turning to base metals, copper is supported by the overall risk appetite, with the LME contract back above USD 9,500/t. Overnight, Chinese coking coal and coke futures rose over 5% apiece, with traders citing disrupted supply from Mongolia amid the COVID outbreak in the region. US Event Calendar 7am: Nov. MBA Mortgage Applications, prior 1.8% 8:15am: Nov. ADP Employment Change, est. 525,000, prior 571,000 9:45am: Nov. Markit US Manufacturing PMI, est. 59.1, prior 59.1 10am: Oct. Construction Spending MoM, est. 0.4%, prior -0.5% 10am: Nov. ISM Manufacturing, est. 61.2, prior 60.8 2pm: U.S. Federal Reserve Releases Beige Book Nov. Wards Total Vehicle Sales, est. 13.4m, prior 13m Central Banks 10am: Powell, Yellen Testify Before House Panel on CARES Act Relief DB's Jim Reid concludes the overnight wrap If you’re under 10 and reading this there’s a spoiler alert today in this first para so please skip beyond and onto the second. Yes my heart broke a little last night as my little 6-year old Maisie said to me at bedtime that “Santa isn’t real is he Daddy?”. I lied (I think it’s a lie) and said yes he was. I made up an elaborate story about how when we renovated our 100 year old house we deliberately kept the chimney purely to let Santa come down it once a year. Otherwise why would we have kept it? She then asked what about her friend who lives in a flat? I tried to bluff my way through it but maybe my answer sounded a bit like my answers as to what will happen with Omicron. I’ll test both out on clients later to see which is more convincing. Before we get to the latest on the virus, given it’s the start of the month, we’ll shortly be publishing our November performance review looking at how different assets fared over the month just gone and YTD. It arrived late on but Omicron was obviously the dominant story and led to some of the biggest swings of the year so far. It meant that oil (which is still the top performer on a YTD basis) was the worst performer in our monthly sample, with WTI and Brent seeing their worst monthly performances since the initial wave of market turmoil over Covid back in March 2020. And at the other end, sovereign bonds outperformed in November as Omicron’s emergence saw investors push back the likelihood of imminent rate hikes from central banks. So what was shaping up to be a good month for risk and a bad one for bonds flipped around in injury time. Watch out for the report soon from Henry. Back to yesterday now, and frankly the main takeaway was that markets were desperate for any piece of news they could get their hands on about the Omicron variant, particularly given the lack of proper hard data at the moment. The morning started with a sharp selloff as we discussed at the top yesterday, as some of the more optimistic noises from Monday were outweighed by that FT interview, whereby Moderna’s chief executive had said that the existing vaccines wouldn’t be as effective against the new variant. Then we had some further negative news from Regeneron, who said that analysis and modelling of the Omicron mutations indicated that its antibody drug may not be as effective, but that they were doing further analysis to confirm this. However, we later got some comments from a University of Oxford spokesperson, who said that there wasn’t any evidence so far that vaccinations wouldn’t provide high levels of protection against severe disease, which coincided with a shift in sentiment early in the European afternoon as equities begun to pare back their losses. The CEO of BioNTech and the Israeli health minister expressed similar sentiments, noting that vaccines were still likely to protect against severe disease even among those infected by Omicron, joining other officials encouraging people to get vaccinated or get booster shots. Another reassuring sign came in an update from the EU’s ECDC yesterday, who said that all of the 44 confirmed cases where information was available on severity “were either asymptomatic or had mild symptoms.” After the close, the FDA endorsed Merck’s antiviral Covid pill. While it’s not clear how the pill interacts with Omicron, the proliferation of more Covid treatments is still good news as we head into another winter. The other big piece of news came from Fed Chair Powell’s testimony to the Senate Banking Committee, where the main headline was his tapering comment that “It is appropriate to consider wrapping up a few months sooner.” So that would indicate an acceleration in the pace, which would be consistent with the view from our US economists that we’ll see a doubling in the pace of reductions at the December meeting that’s only two weeks from today. The Fed Chair made a forceful case for a faster taper despite lingering Omicron uncertainties, noting inflation is likely to stay elevated, the labour market has improved without a commensurate increase in labour supply (those sidelined because of Covid are likely to stay there), spending has remained strong, and that tapering was a removal of accommodation (which the economy doesn’t need more of given the first three points). Powell took pains to stress the risk of higher inflation, going so far as to ‘retire’ the use of the term ‘transitory’ when describing the current inflation outlook. So team transitory have seemingly had the pitch taken away from them mid match. The Chair left an exit clause that this outlook would be informed by incoming inflation, employment, and Omicron data before the December FOMC meeting. A faster taper ostensibly opens the door to earlier rate hikes and Powell’s comment led to a sharp move higher in shorter-dated Treasury yields, with the 2yr yield up +8.1bps on the day, having actually been more than -4bps lower when Powell began speaking. They were as low as 0.44% then and got as high as 0.57% before closing at 0.56%. 2yr yields have taken another leg higher overnight, increasing +2.5bps to 0.592%. Long-end yields moved lower though and failed to back up the early day moves even after Powell, leading to a major flattening in the yield curve on the back of those remarks, with the 2s10s down -13.7bps to 87.3bps, which is its flattest level since early January. Overnight 10yr yields are back up +3bps but the curve is only a touch steeper. My 2 cents on the yield curve are that the 2s10s continues to be my favourite US recession indicator. It’s worked over more cycles through history than any other. No recession since the early 1950s has occurred without the 2s10s inverting. But it takes on average 12-18 months from inversion to recession. The shortest was the covid recession at around 7 months which clearly doesn’t count but I think we were very late cycle in early 2020 and the probability of recession in the not too distant future was quite high but we will never know.The shortest outside of that was around 9 months. So with the curve still at c.+90bps we are moving in a more worrying direction but I would still say 2023-24 is the very earliest a recession is likely to occur (outside of a unexpected shock) and we’ll need a rapid flattening in 22 to encourage that. History also suggests markets tend to ignore the YC until it’s too late. So I wouldn’t base my market views in 22 on the yield curve and recession signal yet. However its something to look at as the Fed seemingly embarks on a tightening cycle in the months ahead. Onto markets and those remarks from Powell (along with the additional earlier pessimism about Omicron) proved incredibly unhelpful for equities yesterday, with the S&P 500 (-1.90%) giving up the previous day’s gains to close at its lowest level in over a month. It’s hard to overstate how broad-based this decline was, as just 7 companies in the entire S&P moved higher yesterday, which is the lowest number of the entire year so far and the lowest since June 11th, 2020, when 1 company ended in the green. Over in Europe it was much the same story, although they were relatively less affected by Powell’s remarks, and the STOXX 600 (-0.92%) moved lower on the day as well. Overnight in Asia, stocks are trading higher though with the KOSPI (+2.02%), Hang Seng (+1.40%), the Nikkei (+0.37%), Shanghai Composite (+0.11%) and CSI (+0.09%) all in the green. Australia’s Q3 GDP contracted (-1.9% qoq) less than -2.7% consensus while India’s Q3 GDP grew at a firm +8.4% year-on-year beating the +8.3% consensus. In China the Caixin Manufacturing PMI for November came in at 49.9 against a 50.6 consensus. Futures markets are indicating a positive start to markets in US & Europe with the S&P 500 (+0.73%) and DAX (+0.44%) trading higher again. Back in Europe, there was a significant inflation story amidst the other headlines above, since Euro Area inflation rose to its highest level since the creation of the single currency, with the flash estimate for November up to +4.9% (vs. +4.5% expected). That exceeded every economist’s estimate on Bloomberg, and core inflation also surpassed expectations at +2.6% (vs. +2.3% expected), again surpassing the all-time high since the single currency began. That’s only going to add to the pressure on the ECB, and yesterday saw Germany’s incoming Chancellor Scholz say that “we have to do something” if inflation doesn’t ease. European sovereign bonds rallied in spite of the inflation reading, with those on 10yr bunds (-3.1bps), OATs (-3.5bps) and BTPs (-0.9bps) all moving lower. Peripheral spreads widened once again though, and the gap between Italian and German 10yr yields closed at its highest level in just over a year. Meanwhile governments continued to move towards further action as the Omicron variant spreads, and Greece said that vaccinations would be mandatory for everyone over 60 soon, with those refusing having to pay a monthly €100 fine. Separately in Germany, incoming Chancellor Scholz said that there would be a parliamentary vote on the question of compulsory vaccinations, saying to the Bild newspaper in an interview that “My recommendation is that we don’t do this as a government, because it’s an issue of conscience”. In terms of other data yesterday, German unemployment fell by -34k in November (vs. -25k expected). Separately, the November CPI readings from France at +3.4% (vs. +3.2% expected) and Italy at +4.0% (vs. +3.3% expected) surprised to the upside as well. In the US, however, the Conference Board’s consumer confidence measure in November fell to its lowest since February at 109.5 (vs. 110.9 expected), and the MNI Chicago PMI for November fell to 61.8 9vs. 67.0 expected). To the day ahead now, and once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Tyler Durden Wed, 12/01/2021 - 07:47.....»»

Category: blogSource: zerohedgeDec 1st, 2021

Government Handling Of COVID Has Been "A Crime", Expect More Selloffs: Trader

Government Handling Of COVID Has Been "A Crime", Expect More Selloffs: Trader Submitted by QTR's Fringe Finance This is Part 1 of an exclusive interview with Rosemont Seneca, a U.S. based professional trader focused on event-driven and distressed situations. Rosemont spent their career on the buy-side working as a financials analyst and their investing/trading style is inspired in equal parts by Icahn and Druckenmiller. Like me, Rosemont is not an RIA and does not hold licenses. Market commentary and opinion expressed in this interview are personal views, not investment advice or solicitation for business. QTR’s Note: The point of this blog is to bring to the reader information and perspectives they, or the mainstream media, may not otherwise find on their own. The cool thing about FinTwit is that you get to meet people based on their ideas and investing acumen and not their identities. I have been following Rosemont on Twitter for years and love their perspective and takes on the market - their takes often stand at odds with my own and they have helped me broaden my horizon and be less bearish on markets, while still maintaining my skepticism about monetary policy. They have chosen to remain completely anonymous with me, which I respect, and I have never personally met or otherwise know anything about the identity of Rosemont. That doesn’t matter, however, because I like their ideas and their commentary. You can follow Rosemont on Twitter here. Part 2 of this interview can be found here. Bernard Baruch, 1919 / Photo used for @rosemontseneca's Twitter profileQ: Hi Rosemont. Thanks for agreeing to an interview for my readers despite wanting to stay anonymous. Right off the bat: why do you use Bernard Baruch for your Twitter profile photo? Baruch is one of the most fascinating Wall Street characters of 20th Century. He has tremendous intuition and gut instinct for the markets, macro economics and politics and he reminds us that the three are intertwined at all times That’s a great segue to my next question: you recently got very bullish on gold when you hadn't been in the past - what caused that shift in attitude? We saw a global risk contagion event in capital markets today (11/26); Bitcoin lost over 8.0% of its value, the S&P dropped -2.2% and gold ended the session flat on the day after a mostly positive session. We expect more days like this in 2022. This is the first time since the post-GFC period in 2009 that we’ve purchased or held gold instruments in our portfolios. At present we own an 8.0% position in the GLD ETF and periodically traffic in Barrick Gold and Newmont equities. Recall that during the Q4 2018 ‘Taper Tantrum’ and most acute phase of the COVID dislocation in Q1-Q2 2020, gold futures, ETFs, and gold miner equities protected your wealth from severe capital market drawdowns. Gold is an umbrella we hope will keep us dry if it rains very hard next year. Holding gold in a portfolio today is a pragmatic ‘TINA’ bet borne of healthy caution in the wake of a multi-year equity bubble that has begun to run amok. The reality is gold is not an optimal investment for compounding wealth in the long-run; owning the GLD ETF since inception in 2004 has returned a roughly 8.0% CAGR which is adequate for a pension fund or retiree but relatively mediocre vs. the alternatives. Investors are better off owning Walmart, Costco, McDonald’s or Starbucks and grow our capital tax-efficiently with high-ROE/RoIC ‘compounders’ that pay dividends. The gold ‘streamers’ such as Wheaton and Franco-Nevada however happen to be very interesting investments with compelling business models that have generated compounder-like returns for Shareholders over the last two to three decades. We’ve come a long way from the market depths of March 2020 and perhaps it’s time to take a more cautious stance going into year-end. We are currently operating on the premise that the Nasdaq and S&P could see negative returns in 2022. If the indices see a drawdown of 10-20% (or greater) we expect gold to appreciate or hold its value in real terms next year. There are labor and supply chain shortages globally that will definitely impact the gold mining industry. If CPI hits escape velocity and reaches 8-10% higher next year, we’ll be content with a 10% allocation in gold as we expect institutional and speculator capital flows to put a firm bid behind the yellow metal. You're one of the very few out there calling the entire crypto space a bubble. What's the key argument in differentiating crypto from other assets? Is crypto worth zero or is there a value and, if there is, where does the value come from? In the last few years market participants have adopted a pseudo-religious attitude towards Bitcoin, Ethereum, and a whole host of crypto currencies. People have come to either ‘believe’ or ‘not believe’ in the asset class and its prospects. What we can definitely say today is that there are over 14,850 different crypto currencies trading on over 430 venues with a combined ‘market capitalization’ of roughly $2.5 trillion dollars. To our best knowledge these assets produce zero cash flow or dividends, exhibit very high volatility, remain subject to boom-bust sequences, and are used as an apparatus for elaborate criminal hacking schemes. Photo: Time.comThe average daily volume of these 14,000+ crypto currencies is roughly $150 billion per day. We estimate that approximately 90% of this turnover is driven by purely speculative or gambling capital flows from small retail traders. If we assume that roughly 2-3% of average daily volume consists of bona fide commercial transactions (including portfolio investment), this leaves almost $10 billion of daily volume that derives from money laundering, fraud and other illicit schemes etc. Some governments have rushed to legalize, adopt or allow for crypto currencies to proliferate in their economy for fear of stymieing or not supporting innovation. Others have taken a hardline stance and begun to outlaw the usage of crypto in their banking and financial system. We are of the view that Bitcoin-like protocols present a clear & present danger to many emerging market countries' ability to issue currency and sovereign debt over the next decade. As the true nature of these crypto assets become more evident, we’ll see more and more countries outright ban and prosecute their usage in their economies. Bitcoin and Ethereum (combined 60% of total crypto market capitalization) may very well survive and find a way to thrive due to ‘fiat-by-consensus’ adoption. Under that scenario they clearly will not trade to zero. But that doesn’t negate the presence of a current bubble where 99% of cryptos are of near-zero ultimate value. Promoters have come to euphemize cryptocurrencies as ‘projects’ but most cryptocurrencies are outright frauds.   We think it’s time for crypto investors and regulators to have a more honest, empirical framework for discussing the intrinsic value and risks of these crypto assets. If we can handicap real estate on cap rates and LTV ratios and equites on P/E ratios and cashflow yields, we should adopt a framework for Bitcoin and Ethereum etc (Dogecoin?) that doesn’t border on the pseudo-religion. I wrote an entire article based off your assumption that we are once again in a 1999-2000 style crash setup. What were the signs that helped you recognize this? In the wake of the COVID crisis and ensuing Monetary/Fiscal stimulus, too many people with very little financial literacy or professional training took up day-trading of equities, options and crypto currencies as a hobby and eventual vocation. The prudent, cautious amongst us (Warren Buffett included) were seemingly left behind in the speculative frenzy that ensued in the summer of 2020. We’re often reminded to not confuse investing/trading luck with skill. Regardless, many very young people made a lot of money in a very short period and thought that this process was somehow normal or even sustainable. To be perfectly clear: there was nothing normal about the Meme Stock frenzy, SPAC mania, or crypto and NFT bubble that erupted. When we witnessed trillion-dollar market caps such as Tesla and Nvidia trading like biotechs in the frenzy of Q4 of 2021, we decided we’d seen enough of this equity market mania. It was eerily reminiscent of Cisco, Lucent, Intel in 1999. The equity market today feels bloated and reckless; it’s probably a good time to start taking chips off the table and leave the party while people are still having fun. November 2021 was a harsh reminder that valuations and capital structures eventually do matter; people will learn the hard way. What are the most likely catalysts to set the market off moving lower? Nobody rings the bell at a market top, but negative catalysts include: -       inability to eradicate COVID in Europe & Asia will keep global trade and travel routes shut for another year -       cascade of lingering supply chain woes = potentially very recessionary -       debilitating energy price spikes in 2022-2023 = looming stagflation -       margin loan balances are at historically very high levels -       continuation of the Tech selloff we witnessed in Q4 2021 -       fraud & accounting malpractice (always prevalent in manias) -       Fed signaling significantly higher interest rates in the aftermath of inflation -       Geopolitics: a potential Kamala Harris Presidency would see Russia and China turn belligerent overnight What's your take on how we're handling Covid? You've mentioned what happened to our economy over the last 18 months was "economic terrorism". Will we learn - either through people revolting or negative consequences - or will we continue down this Orwellian path? It’s very disappointing to see how politicized the pandemic became in the United States. It obviously didn’t help that COVID struck in an Election year, but there will be plenty of blame to go around the table when a proper post-mortem analysis is conducted years from now. We hope that Bethany McLean (Enron: The Smartest Guys in the Room) will eventually write a thoroughly unbiased expose on the timeline of policy decisions in 2020. We’re of the firm belief that our Leaders in Washington D.C. did more harm than good in the early months of this pandemic. We can safely conclude the 2020 COVID shutdowns are the direct cause for the supply chain dislocations and hyperinflation that Americans are about to suffer. The shutdowns that we witnessed in the United States were a flawed policy decision akin to willful pilot error or ‘economic terrorism;’ Federal and State Governments suffocated millions of livelihoods and permanently destroyed hundreds of thousands of perfectly viable small & medium family-owned businesses. The larger, better capitalized multinational corporations capable of accessing capital markets and Government Stimulus Programs not only survived, they eventually thrived. What happened can only be described as a crime. Part 2 of this interview, where we discuss inflation, the Biden administration, why China banned crypto and more, can be found here. -- DISCLAIMER:  It should be assumed I or Rosemont Seneca has positions in any security or commodity mentioned in this article. None of this is a solicitation to buy or sell securities. Neither I nor RS hold licenses or are investing professional. None of this is financial advice. Positions can always change immediately as soon as I publish this, with or without notice. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot.  Tyler Durden Tue, 11/30/2021 - 15:30.....»»

Category: blogSource: zerohedgeNov 30th, 2021

Rabobank: Brushing Up Our Greek Alphabets

Rabobank: Brushing Up Our Greek Alphabets By Michael Every of Rabobank Brushing up our Greek alphabets After a ‘sell first, ask questions later’ Friday, markets regained some confidence on Monday. News that Omicron may lead to relatively mild symptoms may have helped the mood, though much about the new strain still remains unclear, including how infectious it is compared to other variants and whether it requires updated vaccines. The health ministers of the G7 issued a joint statement that contained little new information on the strain, but did warn that it “requires urgent action”. European equities also defied news that Germany is now the next country to consider stricter measures to curb the rise in cases. The risk-on tone weighed on fixed income, with 10y Bund yields rising 2bp on the day, though that reverses only part of Friday’s decline. And the German inflation numbers didn’t provide much support for Bunds either. High inflation was already expected, with a 5.5% consensus forecast. Nevertheless, the German HICP managed to surpass that, as prices rose 6.0% y/y in November. With similar inflation rates already observed in other European countries, including Spain (5.6%) and Belgium (5.6%), a high Eurozone-aggregate HICP today shouldn’t come as a surprise. In addition to German inflation being higher than expected, it was also a bit more broad-based: certainly, energy was an important contributor, but clothing, furnishing and household equipment, and particularly recreation and culture -though notably a volatile component- also drove prices higher. Despite the wider base of inflationary pressures, that doesn’t take away from the fact that most of these effects are probably still temporary factors that result from the reopening of the economy, supply chain disruptions, and the changes to German VAT at the start of the year. Indeed, the Bundesbank had already warned for a near-6% inflation rate this month, and the ECB’s Isabel Schnabel stated in a TV interview that “November will prove to be the peak.” Nikkei reported some reassuring news to that extent, noting that the supply chain disruptions in the auto sector are starting to ease. According to the newspaper, the global supply of chips used in the auto industry may finally be improving: “after months of shortages, inventories have risen for the first time in nine months.” While it may still take some time before shortages across the entire supply chain are resolved, this does suggest that some bottlenecks are indeed gradually easing, boding well for both price pressures and for the output of one of Germany’s key industries. That said, bear in mind that the chip shortages were at the forefront of the global disruptions; since then shortages in many other materials and sectors have followed. The rebound in China’s manufacturing PMI may also offer some reassurance about the recovery of the global value chain. The headline recovered to an expansionary reading of 50.1, but this may understate the improvements in actual output, seeing that one of the main drags on this headline relates to a sharp decline in energy prices faced by manufacturers. This likely reflects the government’s interventions in the coal sector, boosting production. Bloomberg reports that the National Development and Reform Commission met with coal producers last week and that prices would have to be guided towards to a “reasonable range”. That is, of course, assuming that omicron does not throw a spanner in the works here. It certainly does make central bankers’ jobs that bit harder again. Fed Chair Powell said yesterday that the new strain, as well as the general rise in Covid-19 cases, poses downside risks to the full employment mandate and adds uncertainty to the inflation outlook. While he didn’t specifically mention any implications for the Fed’s current policy trajectory, it adds to the markets’ doubts whether the FOMC will still decide to accelerate the pace of tapering in its December meeting, and whether the market wasn’t too aggressive in its pricing of rate hikes next year. EUR/USD continues to find some support in this revaluation of potential for US policy moves. Certainly, uncertainty also clouds the ECB’s decisive December meeting. However, with a more dovish starting point, that is less of a marked change. If anything, the European Central Bank may want to commit less in December, leaving more options open for earlier in the year when the Governing Council has more clarity on the outlook and omicron’s impact. A key case in point are Vice President De Guindos’ remarks on the TLTRO-IIIs this morning: he is clear that “the TLTROs are not finished yet”, confirming that -in his view- this year’s long-term liquidity providing operations certainly weren’t the last. However, he added that “it’s not going to be a decision we discuss in December”. Assuming that the future of (or rather after) PEPP will still be decided in December, that does put much more weight on the few other tools the ECB could use to mitigate the expected end of pandemic purchases. This could set markets up for an initial disappointment. Tyler Durden Tue, 11/30/2021 - 10:45.....»»

Category: blogSource: zerohedgeNov 30th, 2021

Risk Cracks After Moderna CEO Comments Spark Global Stock Rout

Risk Cracks After Moderna CEO Comments Spark Global Stock Rout Ask a drug dealer if methadone helps cure a cocaine addition and - shockingly - you will hear that the answer is "hell no", after all an affirmative response would mean the fixer needs to get a real job. Just as shocking was the "admission" of Moderna CEO, Stéphane Bancel, who in the latest stop on his media whirlwind tour of the past 48 hours gave the FT an interview in which he predicted that existing vaccines will be much less effective at tackling Omicron than earlier strains of coronavirus and warned it would take months before pharmaceutical companies could manufacture new variant-specific jabs at scale. “There is no world, I think, where [the effectiveness] is the same level . . . we had with [the] Delta [variant],” Bancel told the Financial Times, claiming that the high number of Omicron mutations on the spike protein, which the virus uses to infect human cells, and the rapid spread of the variant in South Africa suggested that the current crop of vaccines may need to be modified next year. Here, the self-serving CEO whose sell-mode was fully engaged - after all what else would the maker of a vaccine for covid say than "yes, the world will need more of my product" - completely ignored the earlier comments from Barry Schoub, chairman of South Afruca's Ministerial Advisory Committee on Vaccines, who over the weekend said that the large number of mutations found in the omicron variant appears to destabilize the virus, which might make it less “fit” than the dominant delta strain. As such, it would be a far less virulent strain... but of course that would also reduce the need for Moderna's mRNA therapy and so Bancel failed to mention it. What is grotesque is that the Moderna CEO’s comments on existing vaccines’ effectiveness against the omicron variant is “old news so should be a fade,” says Prashant Newnaha, a senior Asia-Pacific rates strategist at TD Securities in Singapore. Indeed as Bloomberg notes, Bancel reiterated comments made by Moderna’s Chief Medical Officer Paul Burton during the weekend. Alas, the last thing algos care about is nuance and/or reading between the lines, and so moments after Bancel's interview hit, markets hit risk off mode on Tuesday, and yesterday’s bounce in markets immediately reversed amid fresh worries about the efficacy of currently available vaccines with U.S. equity futures dropping along with stocks in Europe. Bonds gained as investors sought havens. After dropping as much as 1.2%, S&P futures pared losses to -0.7%, down 37 points just above 4,600. Dow Eminis were down 339 points or 1% and Nasdaq was down -0.8%. Adding to concerns is Fed Chair Jerome Powell who today will speak, alongside Janet Yellen, at the Senate Banking Committee in congressional oversight hearings related to pandemic stimulus. Last night Powell made a dovish pivot saying the new variant poses downside risks to employment and growth while adding to uncertainty about inflation. Powell's comments dragged yields lower and hit bank stocks overnight. “The market’s reaction to reports such as Moderna’s suggest the ball is still very much in the court of proving that this will not escalate,” said Patrick Bennett, head of macro strategy for Asia at Canadian Imperial Bank of Commerce in Hong Kong. “Until that time, mode is to sell recoveries in risk and not to try and pick the extent of the selloff” U.S. airline and cruiseliner stocks dropped in premarket trading Tuesday, after vaccine maker Moderna’s top executives reiterated that the omicron variant of the coronavirus may require new vaccines. Most U.S. airline stocks were down: Alaska Air -5%, United -3.2%, American -3%, Spirit -2.7%, Delta -2.6%, JetBlue -2.6%, Southwest -1.7%. Here are some other notable movers today: U.S. banks decline in premarket trading following comments from Federal Reserve Chair Jerome Powell that may push back bets on when the central bank will raise rates. Citigroup (C US) -2.4%, JPMorgan (JPM US) -2.2%, Morgan Stanley (MS US) -2.6% Vaccine manufacturers mixed in U.S. premarket trading after rallying in recent days and following further comments from Moderna about treating the new omicron Covid-19 variant. Pfizer (PFE US) +1.6%, Novavax  (NVAS US) +1.3%, Moderna (MRNA US) -3.8% U.S. airline and cruiseliner stocks dropped in premarket trading Tuesday, after vaccine maker Moderna’s top executives reiterated that the omicron variant of the coronavirus may require new vaccines. Alaska Air (ALK US) -5%, United (UAL US) -3.2%, American (AAL US) -3% Krystal Biotech (KRYS US) jumped 4.3% in postmarket trading on Monday, extending gains after a 122% jump during the regular session. The company is offering $200m of shares via Goldman Sachs, BofA, Cowen, William Blair, according to a postmarket statement MEI Pharma (MEIP US) gained 8% postmarket after the cancer-treatment company said it will hold a webcast Tuesday to report on data from the ongoing Phase 2 Tidal study evaluating zandelisib in patients with relapsed or refractory follicular lymphoma Intuit (INTU US) declined 3.4% postmarket after holder Dan Kurzius, co-founder of Mailchimp, offered the stake via Goldman Sachs In Europe, the Stoxx 600 index fell to almost a seven-week low. Cyclical sectors including retail, travel and carmakers were among the biggest decliners, while energy stocks tumbled as crude oil headed for the worst monthly loss this year; every industry sector fell led by travel stocks. Earlier in the session, the Asia Pacific Index dropped 0.6% while the Hang Seng China Enterprises Index lost 1.5% to finish at its weakest level since May 2016. Asian stocks erased early gains to head for a third day of losses on fresh concerns that existing Covid-19 vaccines will be less effective at tackling the omicron variant. The MSCI Asia Pacific Index extended its fall to nearly 1% after having risen as much as 0.8% earlier on Tuesday. The current crop of vaccines may need to be modified next year, Moderna Chief Executive Officer Stephane Bancel said in an interview with the Financial Times, adding that it may take months before pharmaceutical firms can manufacture new variant-specific jabs at scale. U.S. futures also reversed gains. Property and consumer staples were the worst-performing sectors on the regional benchmark. Key gauges in Hong Kong and South Korea were the biggest losers in Asia, with the Kospi index erasing all of its gains for this year. The Hang Seng China Enterprises Index lost 1.5% to finish at its weakest level since May 2016. The fresh bout of selling offset early optimism spurred by data showing China’s factory sentiment improved in November. “With the slower vaccination rate and more limited health-care capacity in the region, uncertainty from the new omicron variant may seem to bring about higher economic risks for the region at a time where it is shifting towards further reopening,” said Jun Rong Yeap, a market strategist at IG Asia Pte. Asia’s stock benchmark is now down 3.5% for the month, set for its worst performance since July, as nervousness remains over the U.S. Federal Reserve’s tapering schedule and the potential economic impact of the omicron variant. “Moderna is one of the primary mRNA vaccines out there, so the risk-off sentiment is justified,” said Kelvin Wong, an analyst at CMC Markets (Singapore) Pte. Liquidity is thinner going into the end of the year, so investors are “thinking it’s wise to take some money off the table,” he added Japanese equities fell, reversing an earlier gain to cap their third-straight daily loss, after a report cast doubt on hopes for a quick answer to the omicron variant of the coronavirus. Telecoms and electronics makers were the biggest drags on the Topix, which dropped 1%, erasing an earlier gain of as much as 1.5%. Fast Retailing and SoftBank Group were the largest contributors to a 1.6% loss in the Nikkei 225. The yen strengthened about 0.4% against the dollar, reversing an earlier loss. Japanese stocks advanced earlier in the day, following U.S. peers higher as a relative sense of calm returned to global markets. Tokyo share gains reversed quickly in late afternoon trading after a Financial Times report that Moderna’s Chief Executive Officer Stephane Bancel said a new vaccine may be needed to fight omicron. “The report of Moderna CEO’s remarks has bolstered an overall movement toward taking off risk,” said SMBC Trust Bank analyst Masahiro Yamaguchi. “Market participants will probably be analyzing information on vaccines and the new virus variant for the next couple of weeks, so shares will likely continue to fluctuate on these headlines.” In FX, the dollar dropped alongside commodity-linked currencies while the yen and gold climbed and bitcoin surged as safe havens were bid. The yen swung to a gain after Moderna Inc.’s chief executive Stephane Bancel was quoted by the Financial Times saying existing vaccines may not be effective enough to tackle the omicron variant. Commodity-linked currencies including the Aussie, kiwi and Norwegian krone all declined, underperforming the dollar In rates, treasuries held gains after flight-to-quality rally extended during Asia session and European morning, when bunds and gilts also benefited from haven flows. Stocks fell after Moderna CEO predicted waning vaccine efficacy. Intermediates lead gains, with yields richer by nearly 6bp across 7-year sector; 10-year Treasuries are richer by 5.6bp at 1.443%, vs 2.5bp for German 10-year, 4.7bp for U.K. Long-end may draw support from potential for month-end buying; Bloomberg Treasury index rebalancing was projected to extend duration by 0.11yr as of Nov. 22. Expectations of month-end flows may support the market, and Fed Chair Powell is slated to testify to a Senate panel.       In commodities, crude futures are off their late-Asia lows but remain in the red. WTI trades close to $68.30, stalling near Friday’s lows; Brent is off over 2.5% near $71.50. Spot gold rises ~$11 near $1,796/oz. Base metals are mixed: LME zinc outperforms, rising as much as 1.6%.  To the day ahead now, and the main central bank highlight will be Fed Chair Powell’s appearance before the Senate Banking Committee, alongside Treasury Secretary Yellen. In addition, we’ll hear from Fed Vice Chair Clarida, the Fed’s Williams, the ECB’s Villeroy and de Cos, and the BoE’s Mann. On the data side, we’ll get the flash November CPI reading for the Euro Area today, as well as the readings from France and Italy. In addition, there’s data on German unemployment for November, Canadian GDP for Q3, whilst in the US there’s the Conference Board’s consumer confidence measure for November, the FHFA house price index for September, and the MNI Chicago PMI for November. Market Snapshot S&P 500 futures down 1.2% to 4,595.00 STOXX Europe 600 down 1.4% to 460.47 MXAP down 0.5% to 190.51 MXAPJ down 0.6% to 620.60 Nikkei down 1.6% to 27,821.76 Topix down 1.0% to 1,928.35 Hang Seng Index down 1.6% to 23,475.26 Shanghai Composite little changed at 3,563.89 Sensex down 0.2% to 57,122.74 Australia S&P/ASX 200 up 0.2% to 7,255.97 Kospi down 2.4% to 2,839.01 German 10Y yield little changed at -0.36% Euro up 0.6% to $1.1362 Brent Futures down 3.0% to $71.26/bbl Brent Futures down 3.0% to $71.26/bbl Gold spot up 0.7% to $1,796.41 U.S. Dollar Index down 0.65% to 95.72 Top Overnight News from Bloomberg Euro-area inflation surged to a record for the era of the single currency and exceeded all forecasts, adding to the European Central Bank’s challenge before a crucial meeting next month on the future of monetary stimulus. If the drop in government bond yields on Friday signaled how skittish markets were, fresh declines are leaving them looking no less nervous. One of Germany’s most prominent economists is urging the European Central Bank to be more transparent in outlining its exit from unprecedented monetary stimulus and argues that ruling out an end to negative interest rates next year may be a mistake. The Hong Kong dollar fell into the weak half of its trading band for the first time since December 2019 as the emergence of a new coronavirus variant hurt appetite for risk assets. A more detailed look at global markets courtesy of Newsquawk Asian equities traded mixed with early momentum seen following the rebound on Wall Street where risk assets recovered from Friday’s heavy selling pressure as liquidity conditions normalized post-Thanksgiving and after some of the Omicron fears abated given the mild nature in cases so far, while participants also digested a slew of data releases including better than expected Chinese Manufacturing PMI. However, markets were later spooked following comments from Moderna's CEO that existing vaccines will be much less effective against the Omicron variant. ASX 200 (+0.2%) was underpinned by early strength across its sectors aside from utilities and with gold miners also hampered by the recent lacklustre mood in the precious metal which failed to reclaim the USD 1800/oz level but remained in proximity for another attempt. In addition, disappointing Building Approvals and inline Net Exports Contribution data had little impact on sentiment ahead of tomorrow’s Q3 GDP release, although the index then faded most its gains after the comments from Moderna's CEO, while Nikkei 225 (-1.6%) was initially lifted by the recent rebound in USD/JPY but then slumped amid the broad risk aversion late in the session. Hang Seng (-1.6%) and Shanghai Comp. (Unch) were varied in which the mainland was kept afloat for most the session after a surprise expansion in Chinese Manufacturing PMI and a mild liquidity injection by the PBoC, with a central bank-backed publication also suggesting that recent open market operations demonstrates an ample liquidity goal, although Hong Kong underperformed on tech and property losses and with casino names pressured again as shares in junket operator Suncity slumped 37% on reopen from a trading halt in its first opportunity to react to the arrest of its Chairman. Finally, 10yr JGBs were initially contained following early momentum in stocks and somewhat inconclusive 2yr JGB auction which showed better results from the prior, albeit at just a marginal improvement, but then was underpinned on a haven bid after fears of the Omicron variant later resurfaced. Top Asian News China’s Biggest Crypto Exchange Picks Singapore as Asia Base SoftBank-Backed Snapdeal Targets $250 Million IPO in 2022 Omicron Reaches Nations From U.K. to Japan in Widening Spread Slump in China Gas Shows Spreading Impact of Property Slowdown Major European bourses are on the backfoot (Euro Stoxx 50 -1.5%; Stoxx 600 -1.5%) as COVID fears again take the spotlight on month-end. APAC markets were firmer for a large part of the overnight session, but thereafter the risk-off trigger was attributed to comments from Moderna's CEO suggesting that existing vaccines will be much less effective against the Omicron COVID strain. On this, some caveats worth keeping in mind - the commentary on the potential need for a vaccine does come from a vaccine maker, who could benefit from further global inoculation, whilst data on the new variant remains sparse. Meanwhile, WSJ reported Regeneron's and Eli Lilly's COVID antiviral cocktails had lost efficacy vs the Omicron variant - however, the extent to which will need to be subject to further testing. Furthermore, producers appear to be confident that they will be able to adjust their products to accommodate the new variant, albeit the timeline for mass production will not be immediate. Nonetheless, the sullied sentiment has persisted throughout the European morning and has also seeped into US equity futures: the cyclically bias RTY (-1.7%) lags the ES (-1.0%) and YM (-1.3%), whilst the tech-laden NQ (-0.5%) is cushioned by the slump in yields. Back to Europe, broad-based losses are seen across the majors. Sectors tilt defensive but to a lesser extent than seen at the European cash open. Travel & Leisure, Oil & Gas, and Retail all sit at the bottom of the bunch amid the potential implications of the new COVID variant. Tech benefits from the yield play, which subsequently weighs on the Banking sector. The retail sector is also weighed on by Spanish giant Inditex (-4.3%) following a CEO reshuffle. In terms of other movers, Glencore (-0.9%) is softer after Activist investor Bluebell Capital Partners called on the Co. to spin off its coal business and divest non-core assets. In a letter seen by the FT, Glencore was also asked to improve corporate governance. In terms of equity commentary, analysts at JPM suggest investors should take a more nuanced view on reopening as the bank expects post-COVID normalisation to gradually asset itself over the course of 2022. The bank highlights hawkish central bank policy shifts as the main risk to their outlook. Thus, the analysts see European equities outperforming the US, whilst China is seen outpacing EMs. JPM targets S&P 500 at 5,050 (closed at 4,655.27 yesterday) by the end of 2022 with EPS at USD 240 – marking a 14% increase in annual EPS. Top European News Omicron Reaches Nations From U.K. to Japan in Widening Spread ECB Bosses Lack Full Diplomatic Immunity, EU’s Top Court Says Adler Keeps Investors Waiting for Answers on Fraud Claims European Gas Prices Surge Above 100 Euros With Eyes on Russia In FX, the Greenback may well have been grounded amidst rebalancing flows on the final trading day of November, as bank models are flagging a net sell signal, albeit relatively weak aside from vs the Yen per Cit’s index, but renewed Omicron concerns stoked by Moderna’s CEO casting considerable doubt about the efficacy of current vaccines against the new SA strain have pushed the Buck back down in any case. Indeed, the index has now retreated further from its 2021 apex set less than a week ago and through 96.000 to 95.662, with only the Loonie and Swedish Krona underperforming within the basket, and the Antipodean Dollars plus Norwegian Crown in wider G10 circles. Looking at individual pairings, Usd/Jpy has reversed from the high 113.00 area and breached a Fib just below the round number on the way down to circa 112.68 for a marginal new m-t-d low, while Eur/Usd is back above 1.1350 having scaled a Fib at 1.1290 and both have left decent option expiries some distance behind in the process (1.6 bn at 113.80 and 1.3 bn between 1.1250-55 respectively). Elsewhere, Usd/Chf is eyeing 0.9175 irrespective of a slightly weaker than forecast Swiss KoF indicator and Cable has bounced firmly from the low 1.3300 zone towards 1.3375 awaiting commentary from BoE’s Mann. NZD/AUD/CAD - As noted above, the tables have turned for the Kiwi, Aussie and Loonie along with risk sentiment in general, and Nzd/Usd is now pivoting 0.6800 with little help from a deterioration in NBNZ business confidence or a decline in the activity outlook. Similarly, Aud/Usd has been undermined by much weaker than forecast building approvals and a smaller than anticipated current account surplus, but mostly keeping hold of the 0.7100 handle ahead of Q3 GDP and Usd/Cad has shot up from around 1.2730 to top 1.2800 at one stage in advance of Canadian growth data for the prior quarter and month of September as oil recoils (WTI to an even deeper trough only cents off Usd 67/brl). Back down under, 1 bn option expiry interest at 1.0470 in Aud/Nzd could well come into play given that the cross is currently hovering near the base of a 1.0483-39 range. SCANDI/EM - The aforementioned downturn in risk appetite after Monday’s brief revival has hit the Sek and Nok hard, but the latter is also bearing the brunt of Brent’s latest collapse to the brink of Usd 70/brl at worst, while also taking on board that the Norges Bank plans to refrain from foreign currency selling through December having stopped midway through this month. The Rub is also feeling the adverse effect of weaker crude prices and ongoing geopolitical angst to the extent that hawkish CBR rhetoric alluding to aggressive tightening next month is hardly keeping it propped, but the Cnh and Cny continue to defy the odds or gravity in wake of a surprise pop back above 50.0 in China’s official manufacturing PMI. Conversely, the Zar is struggling to contain losses sub-16.0000 vs the Usd on SA virus-related factors even though Gold is approaching Usd 1800/oz again, while the Try is striving to stay within sight of 13.0000 following a slender miss in Turkish Q3 y/y GDP. In commodities, WTI and Brent front month futures are once again under pressure amid the aforementioned COVID jitters threatening the demand side of the equation, albeit the market remains in a state of uncertainty given how little is known about the new variant ahead of the OPEC+ confab. It is still unclear at this point in time which route OPEC+ members will opt for, but seemingly the feasible options on the table are 1) a pause in output hikes, 2) a smaller output hike, 3) maintaining current output hikes. Energy journalists have suggested the group will likely be influenced by oil price action, but nonetheless, the findings of the JTC and JMMC will be closely watched for the group's updated forecasts against the backdrop of COVID and the recently coordinated SPR releases from net oil consumers – a move which the US pledged to repeat if needed. Elsewhere, Iranian nuclear talks were reportedly somewhat constructive – according to the Russian delegate – with working groups set to meet today and tomorrow regarding the sanctions on Iran. This sentiment, however, was not reciprocated by Western sources (cited by WSJ), which suggested there was no clarity yet on whether the teams were ready for serious negotiations and serious concessions. WTI Jan resides around session lows near USD 67.50/bbl (vs high USD 71.22/bbl), while Brent Feb dipped under USD 71/bbl (vs high USD 84.56/bb). Over to metals, spot gold remains underpinned in European trade by the cluster of DMA's under USD 1,800/oz – including the 100 (USD 1,792/oz), 200 (USD 1,791/oz) and 50 (1,790/oz). Turning to base metals, LME copper is modestly softer around the USD 9,500/t mark, whilst Dalian iron ore futures meanwhile rose over 6% overnight, with traders citing increasing Chinese demand. US Event Calendar 9am: 3Q House Price Purchase Index QoQ, prior 4.9% 9am: Sept. FHFA House Price Index MoM, est. 1.2%, prior 1.0% 9am: Sept. Case Shiller Composite-20 YoY, est. 19.30%, prior 19.66%; S&P/CS 20 City MoM SA, est. 1.20%, prior 1.17% 9:45am: Nov. MNI Chicago PMI, est. 67.0, prior 68.4 10am: Nov. Conf. Board Consumer Confidenc, est. 111.0, prior 113.8 10am: Nov. Conf. Board Present Situation, prior 147.4 10am: Nov. Conf. Board Expectations, prior 91.3 Central Banks 10am: Powell, Yellen Testify Before Senate Panel on CARES Act Relief 10:30am: Fed’s Williams gives remarks at NY Fed food- insecurity event 1pm: Fed’s Clarida Discusses Fed Independence DB's Jim Reid concludes the overnight wrap Just as we go to print markets are reacting negatively to an interview with the Moderna CEO in the FT that has just landed where he said that with regards to Omicron, “There is no world, I think, where (the effectiveness) is the same level... we had with Delta…… I think it’s going to be a material drop (efficacy). I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to . . . are like ‘this is not going to be good’.”” This is not really new news relative to the last 3-4 days given what we know about the new mutation but the market is picking up on the explicit comments. In response S&P futures have gone from slightly up to down just over -0.5% and Treasury yields immediately dipped -4bps to 1.46%. The Nikkei has erased gains and is down around -1% and the Hang Seng is c.-1.8%. This is breaking news so check your screens after you read this. In China the official November PMI data came in stronger than expected with the Manufacturing PMI at 50.1 (49.7 consensus vs 49.2 previous) and the non-manufacturing PMI at 52.3 (51.5 consensus vs 52.4 previous). The negative headlines above as we go to print followed a market recovery yesterday as investors hoped that the Omicron variant wouldn’t prove as bad as initially feared. In reality, the evidence is still incredibly limited on this question, and nothing from the Moderna CEO overnight changes that. However the more positive sentiment was also evident from the results of our flash poll in yesterday’s EMR where we had 1569 responses so very many thanks. The poll showed that just 10% thought it would still be the biggest topic in financial markets by the end of the year, with 30% instead thinking it’ll largely be forgotten about. The other 60% thought it would still be an issue but only of moderate importance. So if that’s correct and our respondents are a fair reflection of broader market sentiment, then it points to some big downside risks ahead if we get notable bad news on the variant. For the record I would have been with the majority with tendencies towards the largely forgotten about answer. So I will be as off-side as much as most of you on the variant downside risk scenario. When I did a similar poll on Evergrande 2 and a half months ago, only 8% thought it would be significantly impacting markets a month later with 78% in aggregate thinking limited mention/impact, and 15% thinking it would have no impact. So broadly similar responses and back then the 15% were most correct although the next 78% weren’t far off. In terms of the latest developments yesterday, we’re still waiting to find out some of the key pieces of information about this new strain, including how effective vaccines still are, and about the extent of any increased risk of transmission, hospitalisation and death. Nevertheless, countries around the world are continuing to ramp up their own responses as they await this information. President Biden laid out the US strategy for tackling Omicron in a public address yesterday, underscoring the variant was a cause for concern rather than panic. He noted travel bans from certain jurisdictions would remain in place to buy authorities time to evaluate the variant, but did not anticipate that further travel bans or domestic lockdowns would be implemented, instead urging citizens to get vaccinated or a booster shot. Over in Europe, Bloomberg reported that EU leaders were discussing whether to have a virtual summit on Friday about the issue, and Poland moved to toughen up their own domestic restrictions, with a 50% capacity limit on restaurants, hotels, gyms and cinemas. In Germany, Chancellor Merkel and Vice Chancellor Scholz will be meeting with state premiers today, whilst the UK government’s vaccination committee recommended that every adult be eligible for a booster shot, rather than just the over-40s at present. Boosters have done a tremendous job in dramatically reducing cases in the elder cohort in the UK in recent weeks so one by product of Omicron is that it may accelerate protection in a wider age group everywhere. Assuming vaccines have some impact on Omicron this could be a positive development, especially if symptoms are less bad. Markets recovered somewhat yesterday, with the S&P 500 gaining +1.32% to recover a large portion of Friday’s loss. The index was driven by mega-cap tech names, with the Nasdaq up +1.88% and small cap stocks underperforming, with the Russell 2000 down -0.18%, so the market wasn’t completely pricing out omicron risks by any means. Nevertheless, Covid-specific names performed how you would expect given the improved sentiment; stay-at-home trades that outperformed Friday fell, including Zoom (-0.56%), Peloton (-4.35%), and HelloFresh (-0.8%), while Moderna (+11.80%) was the biggest winner following the weekend news that a reformulated vaccine could be available in early 2022. Elsewhere, Twitter (-2.74%) initially gained after it was announced CEO and co-founder Jack Dorsey would be stepping down, but trended lower throughout the rest of the day. The broader moves put the index back in positive territory for the month as we hit November’s last trading day today. Europe saw its own bounceback too, with the STOXX 600 up +0.69%. Over in rates, the partial unwind of Friday’s moves was even smaller, with yields on 10yr Treasuries moving up +2.6bps to 1.50%, driven predominantly by real rates, as inflation breakevens were a touch narrower across the curve. One part of the curve that didn’t retrace Friday’s move was the short end, where markets continued to push Fed rate hikes back ever so slightly, with the first full hike now being priced for September (though contracts as early as May still price some meaningful probability of Fed hikes). We may see some further movements today as well, with Fed Chair Powell set to appear before the Senate Banking Committee at 15:00 London time, where he may well be asked about whether the Fed plans to accelerate the tapering of their asset purchases although it’s hard to believe he’ll go too far with any guidance with the Omicron uncertainty. The Chair’s brief planned testimony was published on the Fed’s website last night. It struck a slightly more hawkish tone on inflation, noting that the Fed’s forecast was for elevated inflation to persist well into next year and recognition that high inflation imposes burdens on those least able to handle them. On omicron, the testimony predictably stated it posed risks that could slow the economy’s progress, but tellingly on the inflation front, it could intensify supply chain disruptions. The real fireworks will almost certainly come in the question and answer portion of the testimony. The bond moves were more muted in Europe though, with yields on 10yr bunds (+2.0bps), OATs (+1.0bps) and BTPs (+0.4bps) only seeing a modest increase. Crude oil prices also didn’t bounce back with as much rigor as equities. Brent gained +0.99% while WTI futures increased +2.64%. They are back down -1 to -1.5% this morning. Elsewhere in DC, Senator Joe Manchin noted that Democrats could raise the debt ceiling on their own through the reconciliation process, but indicated a preference for the increase not to be included in the build back better bill, for which his support still seems lukewarm. We’re approaching crucial deadlines on the debt ceiling and financing the federal government, so these headlines should become more commonplace over the coming days. There were some further developments on the inflation front yesterday as Germany reported that inflation had risen to +6.0% in November (vs. +5.5% expected) on the EU-harmonised measure, and up from +4.6% in October. The German national measure also rose to +5.2% (vs. +5.0% expected), which was the highest since 1992. Speaking of Germany, Bloomberg reported that the shortlist for the Bundesbank presidency had been narrowed down to 4 candidates, which included Isabel Schnabel of the ECB’s Executive Board, and Joachim Nagel, who’s currently the Deputy Head of the Banking Department at the Bank for International Settlements. Today we’ll likely get some further headlines on inflation as the flash estimate for the entire Euro Area comes out, as well as the numbers for France and Italy. There wasn’t much in the way of other data yesterday, though UK mortgage approvals fell to 67.2k in October (vs. 70.0k expected), which is their lowest level since June 2020. Separately, US pending home sales were up +7.5% in October (vs. +1.0% expected), whilst the Dallas Fed’s manufacturing activity index for November unexpectedly fell to 11.8 (vs. 15.0 expected). Finally, the European Commission’s economic sentiment indicator for the Euro Area dipped to 117.5 in November as expected, its weakest level in 6 months. To the day ahead now, and the main central bank highlight will be Fed Chair Powell’s appearance before the Senate Banking Committee, alongside Treasury Secretary Yellen. In addition, we’ll hear from Fed Vice Chair Clarida, the Fed’s Williams, the ECB’s Villeroy and de Cos, and the BoE’s Mann. On the data side, we’ll get the flash November CPI reading for the Euro Area today, as well as the readings from France and Italy. In addition, there’s data on German unemployment for November, Canadian GDP for Q3, whilst in the US there’s the Conference Board’s consumer confidence measure for November, the FHFA house price index for September, and the MNI Chicago PMI for November. Tyler Durden Tue, 11/30/2021 - 07:50.....»»

Category: blogSource: zerohedgeNov 30th, 2021

Why (And How) B2B Companies Should Raise Prices Right Now

In March, a massive ship named the Ever Given ran aground in Egypt’s Suez Canal, which had knock-on effects around the world. Since then, and as we have headed out of the pandemic, other serious supply chain issues have surfaced. More recently, the great resignation has made it harder than ever to find top talent, […] In March, a massive ship named the Ever Given ran aground in Egypt’s Suez Canal, which had knock-on effects around the world. Since then, and as we have headed out of the pandemic, other serious supply chain issues have surfaced. More recently, the great resignation has made it harder than ever to find top talent, and a recent study found that 88% of Americans are worried about inflation as we head into the holiday season. Nowadays, there is more concern than ever about something bad happening to the economy. All these issues can squeeze company profits. What should B2B companies do about it? .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more When profitability suffers, the first order of business is to lower company costs. For example, Lean Process Improvement can have lasting positive effects on the bottom-line. Businesses can and should also consider outsourcing functions like IT, payroll, and even manufacturing. There may be alternate raw material suppliers, contractors, or temps that are capable of bringing instant skills to your organization. Cost reductions aside, to maintain profitability in these strange times, companies will also need to take pricing action. Different approaches are available for raising prices, but increases must be carefully implemented, with an eye to the competition. It is also important to look out for possible disruptors lurking in the shadows. Strategy Any pricing initiative should start with an understanding of company growth engines and the important sources of volume. Don’t jeopardize those. It is also necessary to have good tabs on market participants, since competition and differential value sets the boundaries for pricing. Improving the differential value of offerings makes it easier for customers to pay more! At the core of business strategy is segmentation, based on a solid understanding of customers performance needs, purchasing process and criteria. Do they want to buy direct or through a distributor, and where are there price sensitivities? Less profitable SKUs can be sold through alternate channels like ebusiness. Be more aggressive with price in segments where there are no clear substitutes. Make sure value propositions are fine tuned for each target segment. Do the company offerings help customers reduce cost (e.g. faster adhering glue for speedy processing), or increase revenue (maybe enabling a green claim with water based auto paint). There is nothing wrong with charging different prices in different markets. Re-Frame The Price Products, services and parts can be classified by how unique they are. Custom products and parts can be marked up, while items like nuts, bolts and hose need to be lower priced to avoid substitution. Having Good, Better and Best products for entry level, target level and show off products allows pricing flexibility. Lower price offerings with higher margins, like private label items or insourced entry level products also have their place in the product range. Items that are usually bought together can be bundled into an assembly or dispersion that makes subsequent processing faster. Parts used for routine maintenance, including consumables, lend themselves well to bundling. Imagine the convenience of a kit for gasket replacement, saving time and trips to the hardware store. Bundles can be priced slightly lower than the sum of the parts, or higher if there are efficiency gains. If an offering is late in its life- cycle and sales are declining, customers can be migrated to SKUs with better margins. Exploit price elasticity when switching costs are high, or there is a great degree of customization. Re-Define The Product Product definition can be changed by adding a valuable service component like installation or vendor managed inventory to a physical product. Delivery or maintenance contracts can be branded and productized for better price differentiation. Changes in product packaging are relatively easy -adding color coding on boxes, or offering tote quantities of liquids both offer opportunities for price adjustments. Price structure can be modified with a different unit of measure, and charging by activity like hours flown, gallons pumped or number of students trained. Industrial customers often prefer renting over buying, whereas Government customers may have easier access to capital budgets. Subscription models are popular in software and can also be used for consumables or rental equipment. Automatic renewals make the relationship stickier. The same product can be offered with different variations of fixed and variable price. Certain customers will prefer a monthly fixed fee with a variable usage charge, over a higher fixed fee with a capped variable. Communicate Value Many companies are shy about communicating quality and value. Be explicit about a product's price position in the market. Don’t let prospects guess -if you have a unique or premium product, say so to justify a higher price. Research customer operations in detail, and determine what end benefit your product contributes. Then value- price accordingly, while being very collaborative around innovation and product development. Stimulate new demand with an offering and pricing configurator tool on the website. Active Use of Terms Change the price context and mark up freight and rush orders, and have a surcharge for small orders. New clients can be hooked with a basic service, then offered self-serve upsell for more functionality. Changing cut-offs and target levels for volume discounts and rebates helps improve margins. Enforce surcharge rules in contracts for fuel, shipping costs or raw material price pass-throughs. Optimize price for high use/ high utility SKUs. If price increases are risky, there might still be a share of wallet to be had. If there is a great need to differentiate pricing between customers, payment terms can be adjusted. Implementation Before implementing price increases, charter a cross-functional pricing team including Sales, Marketing, Finance, and Operations. When deciding on pricing adjustments, reexamine prices line by line. SKUs that have not had increases recently may be priced too low, hence there will be less resistance to increases. Always make sure to provide product and service options to retain price sensitive customers. Cheaper, stripped-down “Good” versions work well for retaining customers, as do lower priced offerings made available in limited quantities only. When communicating price increases, provide an explanation for your decision. Don’t shy away from mentioning how long it’s been since prices were previously adjusted, or highlighting how much the customer has raised their selling prices. It is also a good idea to signal pending price increases directly to important customers. Announcing upcoming price moves through trade press is not collusion, and gives competitors a chance to follow suit, increasing industry profitability across the board. Bottom Line It is difficult to make a conventional price increase stick. Effective pricing starts with segmentation of the market, based on customer needs. With pain points well understood, an offering meeting segment needs can be designed and priced according to the value it provides. Adding service components to products can add differentiation, as can innovative pricing models like subscriptions or activity-based pricing. No matter how a company arrives at a price, it is important to communicate the value of each product and service. About Per Ohstrom Per Ohstrom is a CMO with Chief Outsiders, the nation’s fastest growing “executive-as-a-service” company. Updated on Nov 29, 2021, 3:05 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 29th, 2021

The supply-chain crisis is "shifting the perception of used" as shoppers turn to secondhand goods amid shipping delays and shortages

"Why wait three months to find my dresser when I could just go pick it up tomorrow?" one Facebook Marketplace seller told Insider. Women shop at a Goodwill store in Boulder, Colorado.Jeremy Papasso/Digital First Media/Boulder Daily Camera via Getty Images The secondhand economy is getting a boost from the supply-chain crisis. Sellers told Insider that more people are willing to buy used goods than before — from couches to holiday gifts. One Poshmark seller said he may reach $1 million in sales as big retailers run low on inventory. Holiday shoppers have officially found a way around supply-chain delays and shortages: buying used goods. "I've had people specifically say 'we just moved here and there are six months delays for Pottery Barn, Restoration Hardware ... and we just can't wait that long to have a dresser,'"  Leslie Jarrett, who sells flipped furniture on Facebook Marketplace, told Insider. "Why wait three months to find my dresser when I could just go pick it up tomorrow?"Shannon Jean, who sells purses on Poshmark and eBay, told Insider that supply-chain backlogs have both hurt and benefited his resale business. On the supply side, inventory is more difficult to come by. On the flip side, he's been able to sell more bags at higher prices, even if they're damaged or blemished.Before this year, most customers would try to bargain over discounts, Jean said. Now, everyone just wants to know how fast he can ship it."Because I have them and the retailers don't, my sales have really increased," he said, adding that his business may hit $1 million in sales this year. "People are just like 'oh my gosh, I can't believe you have it.'"And shoppers aren't just buying the purses for themselves — they're purchasing them as gifts. Jean told Insider that he fields "way more" questions about gifting than before.In a recent survey by Mercari, three in four of the American adults polled said they expect to buy at least one secondhand item this holiday season. "Our research suggests that 20 million people in the U.S. will shop secondhand as a way of avoiding supply chain issues and we estimate they will contribute $7 billion in resale revenues,"  Mercari CEO John Lagerling said in a press release. Executives at AptDeco and Fernish, two companies that rent or sell furniture through a circular business model, told Insider that the secondhand economy's growing popularity is really about shifting consumer attitudes toward used products."This consumer behavior is not just because of the supply chain," AptDeco CEO Reham Fagiri told Insider. "The supply chain just accelerated the shifting sort of perception of used."Fernish President and COO Kristin Smith told Insider that November has been an "incredibly strong" month for her furniture-renting business and that they're still trying to figure out why. "Right now we're in a mindset as consumers of access versus ownership. And that is true with cars and media and our closets," Smith said. "There is this ethos for consumers right now where it's like 'hey, I don't have to own things. In fact, owning things kind of ties me down.'"Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 28th, 2021

Generation PMCA 3Q21 Commentary: Right Place Wrong Time

Generation PMCA commentary for the third quarter ended September 2021, titled, “Right Place Wrong Time.” Q3 2021 hedge fund letters, conferences and more Right Place Wrong Time Being in the wrong place at the right time is usually just an inconvenience or in market parlance a missed opportunity. In the wrong place at the wrong […] Generation PMCA commentary for the third quarter ended September 2021, titled, “Right Place Wrong Time.” if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Right Place Wrong Time Being in the wrong place at the right time is usually just an inconvenience or in market parlance a missed opportunity. In the wrong place at the wrong time, you're likely a victim of poor circumstances. For an investor, a poor selection coupled with an unforeseen shock. The opposite—right place at the right time—implies luck. Right place at the wrong time, according to a certain someone’s significant other, means she’s always waiting for someone who’s invariably late. More than a mere inconvenience. While some of our equity selections have recently been operating on their own schedules, and our timing appears off, we still feel we’re in the right places. The adage ‘better late than never’ comes to mind. Fund manager Bruce Berkowitz once quipped that he suffered from premature accumulation. We have felt similarly over the last few months because many of our positions have either lagged or declined outright despite fundamentals that we believe remain intact. Of course, when our positions are zigging while the markets are zagging, we reexamine our assumptions to ensure we are correctly positioned. We believe that only one of our securities suffered permanent impairment relative to our initial appraisal and we realized a loss because we saw better opportunities for the proceeds. We remain confident in our assessments of our other holdings. They trade well below our estimated FMVs (Fair Market Values) implying substantial upside potential. Though we don’t know when the market will come to its senses and see what we see. Regarding the market in general, we feel like the little boy that cried correction. Though he kept calling for it, and was eventually correct, his too frequent calls were ignored. The S&P 500 is at a ceiling in our TRACTM work. From this level, it’s either moving on to the next ceiling, about 30% higher, or returning to its recent floor, over 20% lower. Neither event must take place all at once. However, with the market’s FMV currently lower, the likelihood of a material rise from today’s levels is low. We expect sideways or downward price action for an extended period until underlying values catch up. And, with the absence of the typical wall of worry, any exogenous shock could lead to a rapid decline. Global Traffic Jam Speaking of poor timing, the concept of Just-in-Time inventories, designed to promote efficiencies, contributed to inefficiencies over the last year. Everyone encountered an IKEA (‘Swedish for out of stock’) problem. Demand has simply overwhelmed supply. With the economy essentially closed in the spring of last year, production was scaled back (i.e., a supply squeeze) only to require a substantial ramp-up over the last year as demand surged from massive government stimulus and vaccines which allowed for widespread reopening and a leap in consumer confidence. But this about-face created a logjam. Delivery times have been near record highs which has fueled higher costs and, in turn, increased prices. In the meantime, companies are adapting, finding other sources of supplies, different means of transportation, and implementing productivity enhancing measures. While this does not occur overnight, the congestion will dissipate. The market must believe this is all transitory too because it hasn’t impacted the overall indexes. This, despite staffing shortages which, for example, has caused FedEx to reroute packages and airlines to cancel flights. Companies have had to boost pay for overtime and raise wages to attract new employees. There has been a record backlog of ships at ports because of staffing constraints and calls for the U.S. National Guard to loan terminals which would assist in moving goods. Rolling blackouts due to power shortages in China led to production slowdowns. For diversification purposes, some companies moved a portion of their manufacturing to Vietnam, only to have to cope with Covid related shutdowns. Despite these cost pressures, demand has been overpowering because profit margins remain at all-time highs. The usual semiconductor deficit is a result of excess demand, spurred by work-from-home and advances in digitalization which increased the need for electronic components at a time when supply hasn’t been sufficient to fulfill needs. Since the length of time between ordering a semiconductor chip and taking delivery rose to a record high, nearly double the norm, new plants are being built, many in the U.S. being subsidized by the government. Nearly 30 new fabs will be under construction shortly in various jurisdictions, which is more than opened in the last 5 years combined. Looks like an eventual overshoot. Time Heals All The pendulum will swing in the other direction. The scarcity issues facing us now will beget surpluses. Look no further than the PPE shortages at the outset of the pandemic which were quickly met by increased production ultimately creating surpluses, even with demand still high. A capital goods spending cycle is clearly upon us as companies expand production which also bodes well for continued economic growth. Some of the issues will immediately halt. How about the crazy story of Tapestry (maker of Coach purses and other brands) announcing it’ll stop destroying returned product? Apparently, employees were hacking up merchandise and tossing it. That’s one way of creating a supply constraint, and a PR nightmare. Used car prices hit another record high—the normal ebb and flow gone. Prices have been leaping higher. But with production of new cars expected to be back to near normal over the next several months, used car prices should moderate. Commodity prices have surged too as inventories haven’t been sufficient to keep up with demand. However, nothing cures scarcity better than higher prices which encourages production. These constraints have pushed U.S. inflation to the highest since the mid '90s. While some argue it’s a monetary phenomenon, as central banks have poured money into the system, it appears to us more related to the overall supply/demand imbalances. A step-up in demand for raw materials and labour, when ports became congested, simultaneously increased shipping costs, and led to other logistical bottlenecks, all of which combined to ignite prices. Housing prices have also lifted materially. Single-family home prices in the U.S. have risen by a record 19.7% in the last year because of ever-growing demand (spurred by demographics, the shift to work-from-home, and low rates) and, perhaps more importantly, a dearth of listings. While construction costs are up, house prices have outpaced so new builds will in due course help level off prices. That’ll be the Economics 101 feedback loop between prices/costs and supply/demand at work. Core PCE, the broadest inflation measure, was 3.6% for September, moderating since the April highs, a positive sign. Since supply disruptions are beginning to alleviate, it bodes well for a further diminution of inflationary pressures especially since most of the rise in inflation is attributable to durable goods which have suffered the brunt of the bottlenecks. As consumer spending moves from goods back towards services, this should help too. Though growth rates should slow, we are still experiencing an economic boom. Look no further than global air traffic which, astonishingly, is running virtually at 2019 levels. The March of Time Watching inflation is important because it directly impacts our pocketbooks in the short term and our real-spending power over time. Not only because inflation erodes purchasing power but because it also influences the level of interest rates which affects the valuations of financial assets. Longer-term interest rates are likely heading higher, not just because they’re coming off a really low base or inflation is rising. Serious supply and demand dynamics in the bond market are in-play. Fewer bonds will be bought (tapering) by the Fed, who’s been buying, a previously inconceivable, 60% of all U.S. 10-year Treasury issuances. Yet extremely elevated deficit spending still requires massive government bond offerings, at a time when foreigners and individuals have been disinterested in bonds at such low yields. Increasing rates will be necessary to attract buyers (i.e., create demand). Interest rates should remain relatively low though. Primarily because inflation should remain low as a result of poor demographics (nearly every developed country’s birth rate isn’t sufficient to generate population growth), the strength of the U.S. dollar which is disinflationary, and high government debt. These factors should temper economic growth rates. Q3 U.S. GDP grew by only 2% over last year. Aggregate demand may be weakening just when supply constraints are diminishing. On a good note, lesser growth may bode well for an extended economic cycle with low interest rates and relatively high market valuations as the Fed may not need to quell growth. On the other hand, debt laden Japan’s growth rate was so slow since 2008 that it slipped into recession 5 times while the U.S. suffered only once. For a Bad Time Call… Speculators have been winning big, but it almost never ends well. Right now, speculation is still running hot—too hot. Call option purchases (the right to buy shares at a set price for a fixed period) have leaped. Investment dealers, making markets as counterparties on the other side of the call option trades, buy sufficient shares in the open market to offset (i.e., hedge) their positions. As stocks run higher, and call option prices increase, higher amounts of shares are bought. Tesla’s run-up to recent highs is a good example as call-option buying was extreme and a disproportionate amount of buying was attributable to dealer hedging. On a related side note, Tesla ran to about 43x book value recently. In our TRACTM work that’s one break point, or about 20% below, the 55x book value level that only a small number of mature companies have ever achieved because it is mathematically unsustainable since a company cannot produce a return on equity capital sufficient to maintain that valuation level. Historically, share prices invariably have materially suffered thereafter until underlying fundamentals catch up. This is probably not lost on Elon Musk who has tweeted about the overvaluation of Tesla and just sold billions of dollars of shares. Insiders at other companies have been concerned about their share prices too which has led to an uptick in overall insider selling. Meanwhile, use of margin debt as a percent of GDP is at an all-time high of 4%, about 25% higher than at the market peaks in 2000 and 2007. Purchases of leveraged ETFs are at highs too. U.S. equity issuances (IPOs/SPACs) are also at all-time highs as a percent of GDP. The record addition of supply of shares should cause problems for the stock market, especially if demand for shares suddenly wanes if interest rates spike, profit margins shrink, or an unforeseen negative event occurs. Stock ownership generally has reached a high (50% of household assets) which doesn’t bode well for stock market returns when other asset classes shine again. The NASDAQ is extremely overbought. Similar levels in the recent past have led to double-digit declines. The fact that so much of the major indexes are now concentrated in so few companies could hurt too. Worrisome, Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), and Meta Platforms Inc (NASDAQ:FB) (Facebook) are all at ceilings or have given “sell signals” in our TRACTM work. Buyout valuations paid by private equity firms has doubled over the last 10 years to levels that don’t make economic sense. Cryptocurrencies may have found a permanent role in the financial system; however, demand is too frothy. Just talk to teenagers or Uber drivers. Since it’s in weak hands, demand already running rampant, prices well above cost of producing coins, and supply virtually unlimited as new cryptos keep cropping up, prices could collapse. The overall hype should soon wither. While markets have already ignored the rise in 10-year Treasury yields, further increases could be harmful. Headline risk from inflation worsening in the short term, and rates rising further in reaction, could spoil the party. Valuations of growth companies are the most vulnerable to rising rates given their higher multiples and the more pronounced impact on cash flows which are further out in time. The forward-12-month S&P 500 earnings multiple is just about 30% above its 10-year average. The earnings yield less the inflation rate is at all-time lows. Earnings estimates themselves are likely too high, which is typically the case. Growth expectations are way above trend as analysts extrapolate the recent spectacular growth. But growth must moderate, if only because the comparison over time becomes much more challenging than last year’s trough. The added boost we’ve experienced from lowered tax rates and share repurchases should disappear too. Profit margins should eventually be negatively impacted. Not just from less sales growth but also from escalating costs, particularly on the labour front. Wage pressures are likely, and productivity may drop for a period, if companies cannot hire qualified workers. Job openings have skyrocketed, and job cuts haven’t been this low since 1997. Teens who’ve just graduated high school in California are training to drive trucks. This may be positive for teen employment but yikes! And global oil inventories have been plummeting. The inventory situation is expected to worsen which could lead to $100, or higher, oil prices, a level that would not be favourable for the economy. Investors generally are still expecting above-average returns for U.S. stocks over the next several years. Meanwhile, since valuations are so high, models that have been historically accurate predicting 10-year returns point to negligible returns. Our Strategy We continue to hedge (by shorting U.S. stock market ETFs in Growth accounts or holding inverse ETFs in registered or long-only accounts) principally because valuations have only been this high on 4 occasions in the last 50 years. Since we are not concerned about a recession, and the bear market that usually accompanies one, we’d like nothing better than to cover our hedges after a meaningful market correction. We sleep well at night knowing that we are partially hedged and that our holdings are growing, high-quality companies that, unlike the overall market, trade at substantial discounts to our estimates of FMV. The track record of most of our holdings shows steadily rising earnings over the last several years. And we foresee further growth ahead. Securities that are already detached from FMV can fall even further away if sentiment worsens. However, it doesn’t mean the companies are worse off, only that they’re temporarily losing the popularity contest. While the prices of our Chinese holdings have not gotten materially worse since last quarter, these holdings are still a drag on the portfolios. Since the ones we own are dominant high-quality companies, now trading at less than 40 cents-on-the-dollar in our view—a 60% off sale, we continue to wait for the end of the bear market in these shares. The entire KWEB, a Chinese Internet/technology ETF, is down 54% since February. Meanwhile, economic growth in China is expected to be 5% annually for the next several years, outpacing the U.S. which is expected to grow by less than 2% per year. By 2030, China should have the largest consuming middle class globally. The Chinese growth engine remains attractive. And the companies we hold continue to grow. With valuations so attractive and the stocks nearly universally shunned, we believe a new uptrend should be close. Our Portfolios The following descriptions of the holdings in our managed accounts are intended only to explain the reasons that we have made, and continue to hold, these investments in the accounts we manage for you and are not intended as advice or recommendations with respect to purchasing, selling or holding the securities described. Below, we discuss each of our new holdings and updates on key holdings if there have been material developments. All Cap Portfolios - Recent Developments for Key Holdings Our All Cap portfolios combine selections from our large cap strategy (Global Insight) with our best small and medium cap ideas. We generally prefer large cap companies for their superior liquidity and lower volatility. Importantly, they tend to recover back to their fair values much faster than smaller stocks, so they can be traded more frequently for enhanced returns. The smaller cap positions are less liquid holdings which are potentially more volatile; however, we hold these positions because they are cheaper, trading far below our FMV estimates making their risk/reward profiles favourable. There were no material changes in our smaller cap holdings recently. All Cap Portfolios - Changes In the last few months, we made several changes within our large cap positions all summarized in the Global Insight section below. Global Insight (Large Cap) Portfolios - Recent Developments for Key Holdings Global Insight represents our large cap model (typically with market caps over $5 billion at the time of purchase but may include those in the $2-5 billion range) where portfolios are managed Long/Short or Long only. A complete description of the Global Insight Model is available on our website. Our target for our large cap positions is more than a 20% return per year over a 2-year period, though some may rise toward our FMV estimates sooner should the market react to more quickly reduce their undervaluations. Or, some may be eliminated if they decline and breach TRAC floors. At an average of about 60 cents-on-the-dollar versus our FMV estimates, our Global Insight holdings appear much cheaper, in aggregate, than the overall market. Global Insight (Large Cap) Portfolios - Changes In the last few months, we made several changes within our large cap positions. We bought Altice USA Inc (NYSE:ATUS) and American Eagle Outfitters Inc (NYSE:AEO). We sold Wells Fargo & Co (NYSE:WFC) as it achieved or FMV estimate and TAL Education Group (NYSE:TAL) as it became clear we erred in our assessment once the Chinese government essentially eliminated for-profit education and other opportunities provide better reward vs. risk. Altice USA provides broadband, telephone, and television services to nearly 5 million customers across 21 states. Altice saw a surge in subscribers and plan upgrades with the increase in work from home. As people have returned to work, subscriber growth has slowed and become tougher to predict. At the same time, Altice is upgrading its network, leading to higher capital expenditures, lower free cash flow, and a moderation in share repurchases. Trading at over $35 at the end of last year, shares now trade near $17. We believe investors have become too focused on near-term subscriber trends and not the attractive long-term metrics of the business. Altice should generate close to $1.5 billion in free cash flow and see solid subscriber growth as network upgrades and fresh marketing initiatives bear fruit. Not unlike its peers, Altice carries a large debt-load. Though, management expects debt to decline even as spending accelerates and there are no material debt maturities before 2025. Our FMV estimate is $40. We believe there are numerous avenues for Altice to close the gap between its current share price and its intrinsic value. With large insider ownership already, a management-led buyout would not surprise us. American Eagle Outfitters is a vastly different company than it was just a few years ago. Gone are the days of chasing sales and market share. Management is now laser-focused on cash flow generation, return on investment, and total shareholder return (i.e., stock appreciation, dividends, and share buybacks). Its intimate apparel Aerie brand has metrics that top the retail field and is now close to 50% of revenue, on track to exceed $2 billion in revenue. Meanwhile, American Eagle continues to dominate denim. Years of investments in logistics and its supply chain are paying off. With disruptions everywhere, Eagle’s in-house logistics operations are now a major competitive advantage, enabling the company to achieve higher sales and margins on far less inventory. Our FMV estimate is $35. Income Holdings High-yield corporate bond yields have climbed slightly but at 4.4% remain near all-time lows. Our income holdings have an average current annual yield (income we receive as a percent of current market value of income securities held) of about 5%. Though most of our income holdings - bonds, preferred shares, REITs, and income funds—trade below our FMV estimates, attractive new income opportunities are still not easily found. We have our sights on several securities; however, we believe more attractive entry price points should avail themselves in the months ahead, either as rates rise and bond yields decline or as share prices correct, whether on a case-by-case basis or because of an overall market setback. We recently purchased, VICI Properties, one of the largest U.S. REITs, whose properties include 60 leading casinos (e.g., Caesar’s Palace, MGM, Mirage). Leases are long term with built-in escalators, provide high margins, required capital expenditures are low, and lease renewals are all but guaranteed as the behemoth tenants can’t simply relocate. It yields 5.1% and our FMV estimate is $39, well above the price. We also bought FS KKR Capital, one of the largest U.S. BDCs (business development corp.). The company utilizes its own investment-grade balance sheet (it borrowed $1.25 billion recently at 2.5%) to lend, mostly on a senior-secured basis, mainly to private middle-market U.S. companies. Despite delivering several good quarters recently, it trades at just over a 20% discount to its net asset value and sports an 11.6% dividend yield. All in Good Time We remain concerned about several factors, primarily high market valuations, which could trigger a market decline and reestablish a wall of worry. The average S&P 500 high-to-low annual decline since 1980 has been about 14%. In the last year, it’s only suffered just shy of a 6% correction. Prices have risen too far above underlying values and should revert. Many of our holdings, in contrast, have gone in the other direction, already enduring their own bear markets. We don’t expect to be right all the time. Nor do we need to be, to have respectable performance. But we’ve suffered unduly recently. We can’t turn back time and alter our selections. And we certainly don’t wish to rush time. Time is precious. But we do believe that good things happen to those who wait. And we will continue to wait patiently, biding our time, because our process is designed to select out-of-favour securities, the ones that are underappreciated but whose quality businesses we expect to advance, causing the disconnect between prices and values to alleviate, all in good time. We look forward to recovering from our recent lull and notes from clients stating, “It’s about time!” Randall Abramson, CFA Herb Abramson Generation PMCA Corp. Updated on Nov 26, 2021, 2:09 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 26th, 2021

Trump says "the border is a bigger problem than inflation" and repeats election lies in Fox Business interview

Offering his economic takes, Trump also claimed that "within a year I would have been bigger than Saudi Arabia and Russia combined" in oil production. Former President Donald Trump.Fox Business Network Former President Donald Trump appeared on Fox Business Friday morning for a call-in interview. Trump repeated many of the same falsehoods about the 2020 election, while also downplaying inflation. "The border is a bigger problem than inflation," Trump said. Former President Donald Trump said in a Fox Business interview on Friday morning that immigration is a bigger economic threat to the US than inflation."The border is a bigger problem than inflation," Trump said during a lengthy call to guest host David Asman.Trump's immigration policies cut off 2 million of the 3 million workers the US economy needs, Insider's Jason Lalljee and Andy Kiersz reported last week. Still, he floated this claim with no evidence or specificity on undocumented immigrants harming the job market. Trump's downplaying of inflation also runs counter to the Republican Party's recent messaging, which has sought to hammer President Joe Biden on rising prices.Rep. Jim Jordan of Ohio tweeted: "Biden is eating lobster in Nantucket for Thanksgiving, while you struggle to afford groceries at home." And GOP Sen. Rick Scott of Florida recently called inflation "a gold mine for us" when it comes to attacking Biden. —House Judiciary GOP (@JudiciaryGOP) November 26, 2021—Kevin McCarthy (@GOPLeader) November 26, 2021Mounting economic discontent has become a serious problem for Biden's presidency and the Democratic Party as his approval ratings have hit historic lows.As he often does in interviews and at his rallies, Trump mentioned that he studied at Pennsylvania University's Wharton School of Finance — after allegedly cheating on his SATs to transfer from Fordham University to Penn — to claim authority on a speculative opinion on inflation."So I graduated from Wharton, and I guarantee you they're right," Trump said, referring to the Congressional Budget Office's findings on Biden's Build Back Better Act. The agency said the bill won't bring in enough revenue to be "paid for" and avoid running a deficit."They're talking about it's actually $5 trillion," Trump said shortly afterwards about the CBO score, which clocked the total cost of the social spending bill at $1.7 trillion, not $5 trillion."That will make inflation, bring inflation to a level nobody's seen before," Trump continued even though the report does not make any assessments about inflation.While firing off other economic takes, Trump also claimed that "within a year I would have been bigger than Saudi Arabia and Russia combined" in oil production.At another point, Trump called on Republican Senate Minority Leader Mitch McConnell to resign over voting for Biden's infrastructure bill and allowing it to pass. He also repeated his lie about winning the 2020 election, with no pushback from Asman, and falsely claimed that Biden's vaccine mandates are causing supply chain issues, most of which originate overseas where the US president has no jurisdiction.Although Trump wanted to continue speaking past the half-hour mark of the show, Asman had to cut him off before moving on to a segment about the markets being down over concerns surrounding another COVID-19 variant.Read the original article on Business Insider.....»»

Category: personnelSource: nytNov 26th, 2021

I Tried Buying Only Used Holiday Gifts. It Changed How I Think About Shopping

Pre-owned or vintage gifts are often better for the environment, and won't run into the supply chain issues facing new goods made overseas. I love the double dopamine hit that comes from buying something new—the rush when you click “purchase,” and the second one when it arrives at your door and you tear open the box. And there are plenty of real benefits to our incredibly efficient online shopping network: grocery shipping is shrinking food deserts, rural communities with few store options can quickly and easily get items they otherwise couldn’t have, and the time we used to spend driving to stores and searching for things that may have been out of stock we can now spend more productively. But over the last few years, I’ve had a front-row seat to all the problems created by Americans’ obsession with shopping. I’ve seen cargo ships idling off the coast of Long Beach because the ports are so backlogged, containers stacked high as apartment buildings, the horizon a smoggy cloud of emissions. I’ve talked to truckers who spend weeks living out of their vehicles, prohibited from using the bathrooms at the warehouses where they’re waiting for hours to unload goods, all to get paid barely minimum wage. I’ve interviewed Amazon workers about the physical demands of packing goods in the fast-moving warehouses that provide much of the stuff we buy, and I’ve even undertaken the stressful toll of delivering Amazon packages myself. I’ve tried to look away as we devour resources like trees, water, and rare earth minerals in the pursuit of making more, more, more. [time-brightcove not-tgx=”true”] This year, I was feeling too guilty to buy my family new holiday gifts from Amazon. COP26 reminded me that nearly half—45%—of greenhouse gas emissions come from the way we make and use products and food, meaning that this consumption that drives our economy is also choking the planet. And even as scientists try to capture our attention about the urgency of reducing emissions, we’re consuming more and more. U.S. shoppers spent a record $638 billion in October at stores and restaurants, up 22% from October 2019. Forecasters are predicting even more spending in a holiday season where some families may be seeing each other for the first time in two years. Read More: How American Shoppers Broke the Supply Chain Was there a way, I wondered, to keep getting that nice little feeling I get when I buy something without also ruining the planet? Advocates talk of a Circular Economy where, instead of buying things, using them, and throwing them away, we reduce what we buy and reuse a lot more stuff. Even big companies are eyeing the practice; Apple announced last week that it would allow customers to repair their own iPhones, a giant shift in how they approach devices. ThredUp, an online resale company was valued at $1.3 billion in its IPO in March, after GlobalData projected the market for secondhand goods would double to $64 billion by 2024. ThredUp says that if everyone bought one used item instead of a new one this holiday season, we’d save 4.5 billion pounds of carbon, the equivalent of planting 66 million trees, and 25 billion gallons of water. I’ve long tried to buy used clothes and acquire toys and other household items from sites like NextDoor, Craigslist, and Buy Nothing, a Facebook group where members of your community post things they no longer need and anyone can claim them. (Buy Nothing recently launched an app, too.) But gifting used is a whole new arena. Still, the U.S. drives the world’s largest share of consumption-related emissions, and many of the things we buy are purchased for the sake of giving a gift and will sit languishing in a closet, unused. Maybe it was time to expand the circular economy to gifting, too. Jeremy M. Lange for TIMENovember 20, 2021. Carrboro, North Carolina. Sarah Urquhart browses the aisles at CommunityWorx Thrift Shop. Sarah tries to avoid buying new items and typically shops for herself and friends at thrift stores throughout the area. The rise of pre-owned I’m not the only person thinking this way. TheRealReal, a luxury resale site, saw a 60% increase in orders with gift boxes from 2019 to 2020. Poshmark, a secondhand clothing site, has seen a 31% increase in vintage sales in men’s clothing from last year. ThredUp has seen orders increase 28% from the third quarter in 2020 to the same period this year. And eBay reported $19.5 billion in sales in the last quarter, up 9% compared to the same period in 2019. This is all happening at the same time that younger generations are embracing “vintage” and “pre-owned” and buying clothes on online resale sites like Depop, which was acquired by Etsy for $1.6 billon earlier this year. Buy Nothing groups now have 4.3 million participants across the country, having grown by about 2 million people during the pandemic. Stress about the supply chain has also contributed to this turn toward used stuff, says Jordan Sweetnam, eBay’s general manager of the North Americas market. “People who may have been on the fence about shopping pre-owned are going to go to a traditional retailer and just see empty shelves,” he says. Already, on eBay, sales of certified refurbished products are up 25% since June, he says. Baby Boomers may still balk at the idea of using someone’s old blender, he says, but Generation Z has no qualms buying used goods, whether it be clothes or electronics. Read More: Why Is Everything More Expensive Right Now? Let This Stuffed Giraffe Explain Supply chain bottlenecks coupled with a growing disgust with rampant consumerism motivated Maria Patterson to accelerate her practice of not buying anything new for the holidays. Patterson, a 29-year-old mom in Austin, Tex., usually makes a craft like hot sauce or recipe books or beeswax wraps and gives them to many of the people on her gift list. She used to buy some new items around the holidays, but this year, she’s trying to not buy anything at all. It’s easy to bake treats or give a friend a sweater of yours they’ve always admired, she says, or just give less stuff overall. “The world cannot continue with the level of consumption that it currently has,” she says. I don’t mind receiving used gifts: for my November birthday, I asked my parents to gift me a used hiking Deuter backpack in mint condition from Craigslist, saving hundreds of dollars in the process. I’m always scouring the “finds” section of NextDoor for free kid stuff that’s being given away so I don’t have to buy clothes that my son will outgrow in a matter of months; I got a giant Fisher Price Jumperoo on Buy Nothing that my son loved until we couldn’t tolerate the space it took up, and we gave it to the next family. But giving used stuff to other people seems different. Spending less money on a used gift somehow feels like indicating the receiver is less valuable to you, which of course is not the intent. People who grew up wearing used clothes for financial reasons say they don’t want to revisit the stigma of having old stuff. Plus I’ve gotten accustomed to the ease of buying something on Amazon, not having to pay for shipping, and knowing it will arrive in time for a birthday or special event. A few gifts were easy to find used. I got my brother a Red Sox collectible Monopoly set from eBay because he loves sports and playing board games. From Facebook Marketplace, I found a used bamboo balance board for a standing desk for my husband, who has been half-jokingly asking for a treadmill under his home standing desk. I found a toy wooden dinosaur at a neighbor’s “free store”—they put out stuff to give away daily—and resolved to wrap it for my son in an old Amazon box, which he would probably enjoy as much as the toy. Read More: Price Hikes Will Likely Continue Through the End of 2021, Fed Signals But when I started looking for specific items, shopping used started to get a lot harder. My dad’s sweaters are always getting holes, but buying a used sweater would probably just mean they’d get holes even more quickly. My husband needed new sleepwear, but even I felt a little weird about getting him used pajamas. My mom likes painting, but I didn’t think there was such a thing as used paint. My son needed some shoes because he had outgrown the old ones, but kids’ shoes take such a beating I wondered if I’d be able to find any used that weren’t falling apart. Besides, after years of shopping on Amazon, where items are listed with multiple pictures, from many angles, and now even include videos, the presentation on sites like ThredUp and eBay left me feeling a little cold. On ThredUp, sweaters are poised on white headless mannequin torsos, and bizarrely, the site doesn’t seem to have a Men’s section. I know free shipping is bad for the environment, since it incentivizes people to buy, buy, buy, but I couldn’t help but balk at the shipping rates on some items. One eBay seller wanted me to pay $21.15 for shipping alone, which probably accurately reflects the environmental cost, but was more than the item itself. I settled with what seemed to me like a compromise—I found some RockDove Memory Foam slippers for my husband, whose old ones came from Amazon and are currently in shreds—on eBay, but they were in new condition, according to the seller, with the tags still on. I bought them for less than they cost on Amazon, paid $2.99 for shipping, and tried not to think about whether they had fallen off the back of a truck. Jeremy M. Lange for TIMESarah Urquhart browses the aisles at CommunityWorx Thrift Shop. Sarah tries to avoid buying new items and typically shops for herself and friends at thrift stores throughout the area. What will happen to the U.S. economy? Of course, if Americans stop buying so much new stuff, the economy could crater, which is exactly what happened at the beginning of the pandemic when people hunkered down and didn’t go out. GDP growth fell 31% in the second quarter of 2020, as Americans stopped spending. Millions of people lost their jobs as economists wondered how bad things could get. If Americans stopped buying so much new stuff, a very similar situation could unfold, says William Emmons, the lead economist in the division of Supervision, Credit, and Learning at the Federal Reserve Bank of St. Louis. Consumer spending drives nearly 70% of economic growth in the U.S., and while much of that is spending on services like meals out or massages, a big chunk of it is also all the stuff we buy for our homes and loved ones. With less consumer spending, there would be fewer jobs; Amazon alone employed 1.3 million people at the end of 2020. There would be less money created in the economy, and since so many government programs like the recent infrastructure bill are funded by taxing earnings, there might be less money for those programs, too. There’s a reason that federal policy in recessions has often been to give people stimulus money to spend—the government knows that increasing consumer spending will jumpstart the economy. Read More: 6 Things to Know (About Yourself) to Have a Successful Black Friday “The big rise in consumer spending we’re talking about may not be the best from its environmental consequences, and it is exacerbating distributional questions,” says William Emmons, the lead economist in the division of Supervision, Credit, and Learning at the Federal Reserve Bank of St. Louis. “But it may be the most feasible way to keep the motor running.” Sweetnam, of eBay, argues that if people started buying more used goods, other businesses would spring up to create value for the economy. There could be new businesses that sell used goods, that refurbish old clothes, that collect old products to make them new again. There are already companies that have succeeded in embracing the circular economy—Lehigh Technologies in Atlanta takes old tires and rubber waste and turns it into a type of rubber powder that can be used in construction. But economists say that just switching to a circular economy outright could be catastrophic in the short term because so much of economic growth right now depends on people buying lots and lots of new stuff. They say the best way to get people to stop buying so much wasteful stuff is to levy a carbon tax, which would make goods that have larger carbon footprints more expensive. Read More: ‘Buy Now, Pay Later’ Apps Are Taking Over Holiday Shopping Season. Here’s What to Know About the Risks Right now, says Mark Zandi, an economist at Moody’s Analytics, we’re not paying the true cost of the products we’re consuming. Since it is often cheaper to buy a new toy made from virgin materials in China and then shipped across the ocean than it is to buy a high-quality used toy from a stranger, that’s become the default way to shop, he says. A carbon tax could change that equation, by making people pay not just for the cost of the toy, but for the environmental cost of all the carbon its production generated. People will think twice about buying flights if they cost $600 instead of $300, he says, and the planet will benefit if the money raised is invested in new technology. A carbon tax would also save shoppers like me the headache of trying to figure out what gifts are more and less environmentally friendly. Buying your kid a used car might be worse for the planet than buying a new one, because older cars tend to have higher carbon emissions. “We just have to price carbon and if you do, the cost of things we spend money on that have a high carbon footprint will cost more, we will buy less of it,” Zandi says. “That’s the magic of our system: prices work.” Changing the way we shop Apple may be changing its approach by allowing customers to reuse and repair its devices, but there still isn’t a huge economy for buying high-quality used stuff. I felt guilty that I couldn’t find much used stuff that I felt comfortable gifting, but a nanny named Sarah Urquhart helped me realize that until companies fully embrace the circular economy, I would have to change how I bought gifts. Urquhart wasn’t always a nanny. She used to work at an Amazon call center. Saddened by the amount of waste she saw—of people endlessly buying things and returning them—she decided to change the way she shops. American affluence has meant most of us go into the holiday season in November and start thinking about what specific things our family members want and how to acquire them. It’s always been easy to make a list, and then tick the items off one by one, and online shopping has made it even easier. “It was just a culture I didn’t want to be a part of anymore,” Urquhart says. This year, she’s holding what she calls “Merry Thriftmas.” Buying used, she says, won’t work if you start shopping with specific gifts in mind. “If you’re only looking for that thing, you’re not going to be successful,” she says. Instead, she keeps an eye out year-round for used stuff that might appeal to a friend or family member, and then she sets it aside until the holidays. She doesn’t shop with a list of things her family members need; she keeps an open mind for things that might make her family laugh, or smile, or might make their life easier. Jeremy M. Lange for TIME. Urquhart bought a coffee mug that she says looks like her father in law. Sheet music that Ms. Urquhart collects to make wrapping paper with. She’s found some good gifts recently. There was a mug that looks exactly like her father-in-law, and a like-new Buzz Lightyear doll for the kids she nannies. She sanitized the doll, she says, “and it was the happiest kid I’d ever seen.” Her mother-in-law plays the piano, so she found some old sheet music to wrap her gift in—Urquhart hasn’t yet thrifted the right gift, though. Urquhart, who is also a member of her local Buy Nothing groups, says that giving used gifts can be much more satisfying than buying new. When she gives away and picks up things from Buy Nothing, she makes a connection to her neighbors that has much more longevity than her connection to a random box that arrives at her doorstep. She can now point to the houses where she’s picked something up or dropped something off. Finding the just the right unique used gift gives her even more of a dopamine hit than buying something new, she says. So does giving away something on Buy Nothing and learning that the person you gave it to really loves it. The day I talked to Urquhart, I gave away an agility ladder on my local Buy Nothing group that my husband bought to get in shape before our wedding, but had been sitting in our closet for a year. I dropped it through a gate on the way to pick up my son from daycare, and I got a message from the recipient telling me she works at a nursing home and was going to use it to help residents relearn how to step over things for fall prevention. Now, every time I pick up my son from daycare, I imagine elderly people gingerly stepping through my old bright yellow agility ladder—improving their fitness and unknowingly reducing carbon emissions all at once. It still makes me smile, which, you could argue, is the point of the holiday season.    .....»»

Category: topSource: timeNov 24th, 2021