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First Week of May 2022 Options Trading For Westwater Resources (WWR)

Stock Options Channel.....»»

Category: topSource: redinewsNov 15th, 2021

Michael Wilson Blames Retail BTFDers For Crushing His Vision Of A "Fire And Ice" Market Dump

Michael Wilson Blames Retail BTFDers For Crushing His Vision Of A "Fire And Ice" Market Dump You gotta hand it to Morgan Stanley's chief equity strategist Michael Wilson: he is persistent. Just two weeks a week after Wilson called (again) for a "fire and ice" correction that would send stocks lower by 10%-20% in the 4th quarter, stocks continue to grind higher completely oblivious of all mounting risks including stagflation, China property, Covid, tapering, supply chain bottlenecks, soaring energy costs, rate hikes, slowing global growth, higher interest rates and so on (implicitly validating Goldman's call for a meltup in the coming weeks), the Morgan Stanley strategist is out with a new "weekly warm-up" note, and while this time he is not making fresh recos, he is instead trying to pin the blame for the continued ascent. The culprit this time: no the Fed or massive stock buybacks (which according to Goldman amount to almost $4 billion per trading day) but retail investors. Wilson starts with a preemptive mea culpa, telling impatient bears that last week he warned "it may take a bit longer for the Ice portion of our Fire and Ice narrative to play out" due to the potential for markets to look through the near-term supply bottlenecks and shortages as temporary; he also notes that with the Biden administration directing substantial resources toward addressing the problem, that conclusion is potentially easier to make. Second, the MS strategist notes that the budget reconciliation process has been pushed out and is unlikely to be resolved until later this year. This in turn delays the negative earnings revisions from higher taxes dynamic which he thinks has yet to be incorporated into 2022 consensus forecasts. In short, while earnings revisions breadth is falling from extreme levels, it isn't falling fast enough yet to cause a deeper correction in the broader index. Also worth noting is that earnings revisions breadth is tied to FY2 estimates (i.e., CY2022) "so while forecasts may come down in the near term for supply / cost reasons, 2022 estimates could stay sticky until these issues are proven to be longer lasting and / or weaker demand appears in 1Q." In any case, "Q3 earnings post-Financials should bring more clarity here in coming weeks" he says. But the real reason why stocks just refuse to fall, according to Wilson, is the fact that "retail continues to be a major buyer of the dip." Wilson points clients to a note he published two weeks ago in which highlighted that the Evergrande dip was taking longer to recover than prior dips this year; "in fact, both the primary uptrend and the 50-day moving average had finally been breached on significant volume. Could it be that the retail investor had finally run out of dry powder or willingness to buy the dip?" Fast forward to today when Wilson concedes that the answer to that question is a definitive "no." Looking at the first charts below, the MS strategist notes "that retail investors remain steadfast in their commitment to buying equities, particularly on down days." Making matters worse for bears, he point to the next two charts which shows that the correlation of buying to negative price action is trong. The bottom line—until these flows subside or reverse, the index will remain elevated even as the fundamental picture deteriorates. What is bizarre about this conclusion is that it directly conflicts Bloomberg's own conclusion, which writes today that amateur traders (i.e. retail) continued to head for the exits, at least when it comes to buying S&P 500 calls. Citing data compiled by the Options Clearing Corp. and analyzed by Susquehanna International Group show, Bloomberg notes that while the overall volume of call options jumped last week, in line with the equity gauge’s 1.8% rally, demand from the smallest options traders continued to go down. The average dollar premium that small-lot investors -- those buying 10 contracts or less at a time -- spent on call contracts fell to the lowest since June 2020. In other words, retail investors may be buying the dip but they are no longer rushing to buy calls and ramp gamma. Whether retail is buying or not aside, one thing is clear: hedge funds are rushing back into stocks, and after scaling their exposure to the S&P in late August and September, hedge funds again turned long futures on the index in the back half of last month: "as the gauge’s selloff showed signs of easing, they boosted their net long S&P 500 futures positions to nearly 99,000 contracts, the most in a year." So much for technicals and fund flows, what about fundamentals? Well, here Wilson remains as bearish as ever, writing that "the fundamental outlook continues to deteriorate... albeit not fast enough to deter those looking to play the seasonal strength in equity markets." As noted above, earnings revisions breadth is rolling over and Wilson expects it to eventually revert back toward the zero line, if not below, between now and early next year. Some of this is due to higher costs/supply shortages which investors seem increasingly willing to look through as temporary. Specifically, he points to how markets penalized Nike for its supply issues in September but Apple received a pass last week. One could interpret this price action as the markets' way of saying it's fully discounted. Such a conclusion assumes these supply / cost issues are temporary and that demand, in fact, remains robust. Needless to say, on both counts Wilson remains more skeptical as the data "supports sustained supply chain pressures, rising costs, and the potential for weaker demand than anticipated next year." As he has discussed previously, one of the most predictive variables for the direction of equity markets is the PMI, shown below. As part of his mid-cycle transition call, Wilson has been expecting the PMIs to fall back toward the low 50s as they typically do at this stage of any recovery. However, they have remained stickier on the upside than normal, particularly when compared against the regional indices. But now the bank's internal indices are confirming PMI downside as they tend to be good leading/coincident indicators for the all important PMIs. Furthermore, it's not just manufacturing businesses that are struggling with costs/supply issues (Exhibit 9). Services are also showing material deterioration (Exhibit 10). Whether it proves to be important for equity markets remains unknown, but Wilson says he wouldn't bet against it. That said, the next readings aren't due until early November and until proven one way or the other, equity markets can drift higher with the seasonals despite growing evidence the outcome will ultimately be disappointing. Of course, a meltup in November could result in double digits gains, which Wilson's client will fail to catch if they listen to the strategist, even once he is eventually proven right. Going back to the core topic of this post, Wilson writes that one of the more dramatic divergences he has observed recently, is the relentless buying of the dip mentality from retail investors despite the steep fall in consumer confidence. Here we would beg to differ: consumer confidence in the economy may well be crashing, but retail investor confidence that the Fed will bail them out each and every time remains unshaken, and the only way this will ever change is if stocks do suffer a 10%, 20% or more correction. Until then absolutely every dip will be bought, precisely to boost consumer confidence because we live in a world where sentiment resulting from printing of funny money has more impact on the consumer psyche than one job prospects or wages. Wilson does touch on some of this, noting that the consumer appears to be most concerned with rising prices rather than their job or income. This jibes with the conclusion many are making that demand remains robust and we just need to get through these supply bottlenecks and price spikes. Whatever the reason, Wilson thinks that "this remains an unresolved risk in our view" and once again we disagree: there is absolutely nothing out there that can possibly shake consumer confidence that stonks will just keep rising forever and ever, especially if we are heading into a $150 trillion "net zero", "climate change" gauntlet which will see $2 trillion in QE for the next 30 years... you know, for grandkids. Tyler Durden Mon, 10/18/2021 - 14:16.....»»

Category: smallbizSource: nytOct 18th, 2021

Camber Energy: What If They Made a Whole Company Out of Red Flags? – Kerrisdale

Kerrisdale Capital is short shares of Camber Energy Inc (NYSEAMERICAN:CEI). Camber is a defunct oil producer that has failed to file financial statements with the SEC since September 2020, is in danger of having its stock delisted next month, and just fired its accounting firm in September. Its only real asset is a 73% stake […] Kerrisdale Capital is short shares of Camber Energy Inc (NYSEAMERICAN:CEI). Camber is a defunct oil producer that has failed to file financial statements with the SEC since September 2020, is in danger of having its stock delisted next month, and just fired its accounting firm in September. Its only real asset is a 73% stake in Viking Energy Group Inc (OTCMKTS:VKIN), an OTC-traded company with negative book value and a going-concern warning that recently violated the maximum-leverage covenant on one of its loans. (For a time, it also had a fake CFO – long story.) Nonetheless, Camber’s stock price has increased by 6x over the past month; last week, astonishingly, an average of $1.9 billion worth of Camber shares changed hands every day. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more Is there any logic to this bizarre frenzy? Camber pumpers have seized upon the notion that the company is now a play on carbon capture and clean energy, citing a license agreement recently entered into by Viking. But the “ESG Clean Energy” technology license is a joke. Not only is it tiny relative to Camber’s market cap (costing only $5 million and granting exclusivity only in Canada), but it has embroiled Camber in the long-running escapades of a western Massachusetts family that once claimed to have created a revolutionary new combustion engine, only to wind up being penalized by the SEC for raising $80 million in unregistered securities offerings, often to unaccredited investors, and spending much of it on themselves. But the most fascinating part of the CEI boondoggle actually has to do with something far more basic: how many shares are there, and why has dilution been spiraling out of control? We believe the market is badly mistaken about Camber’s share count and ignorant of its terrifying capital structure. In fact, we estimate its fully diluted share count is roughly triple the widely reported number, bringing its true, fully diluted market cap, absurdly, to nearly $900 million. Since Camber is delinquent on its financials, investors have failed to fully appreciate the impact of its ongoing issuance of an unusual, highly dilutive class of convertible preferred stock. As a result of this “death spiral” preferred, Camber has already seen its share count increase 50- million-fold from early 2016 to July 2021 – and we believe it isn’t over yet, as preferred holders can and will continue to convert their securities and sell the resulting common shares. Even at the much lower valuation that investors incorrectly think Camber trades for, it’s still overvalued. The core Viking assets are low-quality and dangerously levered, while any near- term benefits from higher commodity prices will be muted by hedges established in 2020. The recent clean-energy license is nearly worthless. It’s ridiculous to have to say this, but Camber isn’t worth $900 million. If it looks like a penny stock, and it acts like a penny stock, it is a penny stock. Camber has been a penny stock before – no more than a month ago, in fact – and we expect that it will be once again. Company Background Founded in 2004, Camber was originally called Lucas Energy Resources. It went public via a reverse merger in 2006 with the plan of “capitaliz[ing] on the increasing availability of opportunistic acquisitions in the energy sector.”1 But after years of bad investments and a nearly 100% decline in its stock price, the company, which renamed itself Camber in 2017, found itself with little economic value left; faced with the prospect of losing its NYSE American listing, it cast about for new acquisitions beginning in early 2019. That’s when Viking entered the picture. Jim Miller, a member of Camber’s board, had served on the board of a micro-cap company called Guardian 8 that was working on “a proprietary new class of enhanced non-lethal weapons”; Guardian 8’s CEO, Steve Cochennet, happened to also be part owner of a Kansas-based company that operated some of Viking’s oil and gas assets and knew that Viking, whose shares traded over the counter, was interested in moving up to a national exchange.2 (In case you’re wondering, under Miller and Cochennet’s watch, Guardian 8’s stock saw its price drop to ~$0; it was delisted in 2019.3) Viking itself also had a checkered past. Previously a shell company, it was repurposed by a corporate lawyer and investment banker named Tom Simeo to create SinoCubate, “an incubator of and investor in privately held companies mainly in P.R. China.” But this business model went nowhere. In 2012, SinoCubate changed its name to Viking Investments but continued to achieve little. In 2014, Simeo brought in James A. Doris, a Canadian lawyer, as a member of the board of directors and then as president and CEO, tasked with executing on Viking’s new strategy of “acquir[ing] income-producing assets throughout North America in various sectors, including energy and real estate.” In a series of transactions, Doris gradually built up a portfolio of oil wells and other energy assets in the United States, relying on large amounts of high-cost debt to get deals done. But Viking has never achieved consistent GAAP profitability; indeed, under Doris’s leadership, from 2015 to the first half of 2021, Viking’s cumulative net income has totaled negative $105 million, and its financial statements warn of “substantial doubt regarding the Company’s ability to continue as a going concern.”4 At first, despite the Guardian 8 crew’s match-making, Camber showed little interest in Viking and pursued another acquisition instead. But, when that deal fell apart, Camber re-engaged with Viking and, in February 2020, announced an all-stock acquisition – effectively a reverse merger in which Viking would end up as the surviving company but transfer some value to incumbent Camber shareholders in exchange for the national listing. For reasons that remain somewhat unclear, this original deal structure was beset with delays, and in December 2020 (after months of insisting that deal closing was just around the corner) Camber announced that it would instead directly purchase a 51% stake in Viking; at the same time, Doris, Viking’s CEO, officially took over Camber as well. Subsequent transactions through July 2021 have brough Camber’s Viking stake up to 69.9 million shares (73% of Viking’s total common shares), in exchange for consideration in the form of a mixture of cash, debt forgiveness,5 and debt assumption, valued in the aggregate by Viking at only $50.7 million: Camber and Viking announced a new merger agreement in February 2021, aiming to take out the remaining Viking shares not owned by Camber and thus fully combine the two companies, but that plan is on hold because Camber has failed to file its last 10-K (as well as two subsequent 10-Qs) and is thus in danger of being delisted unless it catches up by November. Today, then, Camber’s absurd equity valuation rests entirely on its majority stake in a small, unprofitable oil-and-gas roll-up cobbled together by a Canadian lawyer. An Opaque Capital Structure Has Concealed the True Insanity of Camber’s Valuation What actually is Camber’s equity valuation? It sounds like a simple question, and sources like Bloomberg and Yahoo Finance supply what looks like a simple answer: 104.2 million shares outstanding times a $3.09 closing price (as of October 4, 2021) equals a market cap of $322 million – absurd enough, given what Camber owns. But these figures only tell part of the story. We estimate that the correct fully diluted market cap is actually a staggering $882 million, including the impact of both Camber’s unusual, highly dilutive Series C convertible preferred stock and its convertible debt. Because Camber is delinquent on its SEC filings, it’s difficult to assemble an up-to-date picture of its balance sheet and capital structure. The widely used 104.2-million-share figure comes from an 8-K filed in July that states, in part: As of July 9, 2021, the Company had 104,195,295 shares of common stock issued and outstanding. The increase in our outstanding shares of common stock from the date of the Company’s February 23, 2021 increase in authorized shares of common stock (from 25 million shares to 250 million shares), is primarily due to conversions of shares of Series C Preferred Stock of the Company into common stock, and conversion premiums due thereon, which are payable in shares of common stock. This bland language belies the stunning magnitude of the dilution that has already taken place. Indeed, we estimate that, of the 104.2 million common shares outstanding on July 9th, 99.7% were created via the conversion of Series C preferred in the past few years – and there’s more where that came from. The terms of Camber’s preferreds are complex but boil down to the following: they accrue non- cash dividends at the sky-high rate of 24.95% per year for a notional seven years but can be converted into common shares at any time. The face value of the preferred shares converts into common shares at a fixed conversion price of $162.50 per share, far higher than the current trading price – so far, so good (from a Camber-shareholder perspective). The problem is the additional “conversion premium,” which is equal to the full seven years’ worth of dividends, or 7 x 24.95% ≈ 175% of face value, all at once, and is converted at a far lower conversion price that “will never be above approximately $0.3985 per share…regardless of the actual trading price of Camber’s common stock” (but could in principle go lower if the price crashes to new lows).6 The upshot of all this is that one share of Series C preferred is now convertible into ~43,885 shares of common stock.7 Historically, all of Camber’s Series C preferred was held by one investor: Discover Growth Fund. The terms of the preferred agreement cap Discover’s ownership of Camber’s common shares at 9.99% of the total, but nothing stops Discover from converting preferred into common up to that cap, selling off the resulting shares, converting additional preferred shares into common up to the cap, selling those common shares, etc., as Camber has stated explicitly (and as Discover has in fact done over the years) (emphasis added): Although Discover may not receive shares of common stock exceeding 9.99% of its outstanding shares of common stock immediately after affecting such conversion, this restriction does not prevent Discover from receiving shares up to the 9.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still staying below the 9.99% limit. If Discover chooses to do this, it will cause substantial dilution to the then holders of its common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of its common stock as Discover sells material amounts of Camber’s common stock over time and/or in a short period of time. This could place further downward pressure on the price of its common stock and in turn result in Discover receiving an ever increasing number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in turn will likely lead to further dilution, reductions in the exercise/conversion price of Discover’s securities and even more downward pressure on its common stock, which could lead to its common stock becoming devalued or worthless.8 In 2017, soon after Discover began to convert some of its first preferred shares, Camber’s then- management claimed to be shocked by the results and sued Discover for fraud, arguing that “[t]he catastrophic effect of the Discover Documents [i.e. the terms of the preferred] is so devastating that the Discover Documents are prima facie unconscionable” because “they will permit Discover to strip Camber of its value and business well beyond the simple repayment of its debt.” Camber called the documents “extremely difficult to understand” and insisted that they “were drafted in such a way as to obscure the true terms of such documents and the total number of shares of common stock that could be issuable by Camber thereunder. … Only after signing the documents did Camber and [its then CEO]…learn that Discover’s reading of the Discover Documents was that the terms that applied were the strictest and most Camber unfriendly interpretation possible.”9 But the judge wasn’t impressed, suggesting that it was Camber’s own fault for failing to read the fine print, and the case was dismissed. With no better options, Camber then repeatedly came crawling back to Discover for additional tranches of funding via preferred sales. While the recent spike in common share count to 104.2 million as of early July includes some of the impact of ongoing preferred conversion, we believe it fails to include all of it. In addition to Discover’s 2,093 shares of Series C preferred held as of February 2021, Camber issued additional shares to EMC Capital Partners, a creditor of Viking’s, as part of a January agreement to reduce Viking’s debt.10 Then, in July, Camber issued another block of preferred shares – also to Discover, we believe – to help fund Viking’s recent deals.11 We speculate that many of these preferred shares have already been converted into common shares that have subsequently been sold into a frenzied retail bid. Beyond the Series C preferred, there is one additional source of potential dilution: debt issued to Discover in three transactions from December 2020 to April 2021, totaling $20.5 million in face value, and amended in July to be convertible at a fixed price of $1.25 per share.12 We summarize our estimates of all of these sources of potential common share issuance below: Might we be wrong about this math? Absolutely – the mechanics of the Series C preferreds are so convoluted that prior Camber management sued Discover complaining that the legal documents governing them “were drafted in such a way as to obscure the true terms of such documents and the total number of shares of common stock that could be issuable by Camber thereunder.” Camber management could easily set the record straight by revealing the most up- to-date share count via an SEC filing, along with any additional clarifications about the expected future share count upon conversion of all outstanding convertible securities. But we're confident that the current share count reported in financial databases like Bloomberg and Yahoo Finance significantly understates the true, fully diluted figure. An additional indication that Camber expects massive future dilution relates to the total authorized shares of common stock under its official articles of incorporation. It was only a few months ago, in February, that Camber had to hold a special shareholder meeting to increase its maximum authorized share count from 25 million to 250 million in order to accommodate all the shares to be issued because of preferred conversions. But under Camber’s July agreement to sell additional preferred shares to Discover, the company (emphasis added) agreed to include proposals relating to the approval of the July 2021 Purchase Agreement and the issuance of the shares of common stock upon conversion of the Series C Preferred Stock sold pursuant to the July 2021 Purchase Agreement, as well as an increase in authorized common stock to fulfill our obligations to issue such shares, at the Company’s next Annual Meeting, the meeting held to approve the Merger or a separate meeting in the event the Merger is terminated prior to shareholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to January 1, 2022.13 In other words, Camber can already see that 250 million shares will soon not be enough, consistent with our estimate of ~285 million fully diluted shares above. In sum, Camber’s true overvaluation is dramatically worse than it initially appears because of the massive number of common shares that its preferred and other securities can convert into, leading to a fully diluted share count that is nearly triple the figure found in standard information sources used by investors. This enormous latent dilution, impossible to discern without combing through numerous scattered filings made by a company with no up-to-date financial statements in the public domain, means that the market is – perhaps out of ignorance – attributing close to one billion dollars of value to a very weak business. Camber’s Stake in Viking Has Little Real Value In light of Camber’s gargantuan valuation, it’s worth dwelling on some basic facts about its sole meaningful asset, a 73% stake in Viking Energy. As of 6/30/21: Viking had negative $15 million in shareholder equity/book Its financial statements noted “substantial doubt regarding the Company’s ability to continue as a going ” Of its $101.3 million in outstanding debt (at face value), nearly half (48%) was scheduled to mature and come due over the following 12 months. Viking noted that it “does not currently maintain controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms.” Viking’s CEO “has concluded that these [disclosure] controls and procedures are not effective in providing reasonable assurance of compliance.” Viking disclosed that a key subsidiary, Elysium Energy, was “in default of the maximum leverage ratio covenant under the term loan agreement at June 30, 2021”; this covenant caps the entity’s total secured debt to EBITDA at 75 to 1.14 This is hardly a healthy operation. Indeed, even according to Viking’s own black-box estimates, the present value of its total proved reserves of oil and gas, using a 10% discount rate (likely generous given the company’s high debt costs), was $120 million as of 12/31/20,15 while its outstanding debt, as stated above, is $101 million – perhaps implying a sliver of residual economic value to equity holders, but not much. And while some market observers have recently gotten excited about how increases in commodity prices could benefit Camber/Viking, any near-term impact will be blunted by hedges put on by Viking in early 2020, which cover, with respect to its Elysium properties, “60% of the estimated production for 2021 and 50% of the estimated production for the period between January, 2022 to July, 2022. Theses hedges have a floor of $45 and a ceiling ranging from $52.70 to $56.00 for oil, and a floor of $2.00 and a ceiling of $2.425 for natural gas” – cutting into the benefit of any price spikes above those ceiling levels.16 Sharing our dreary view of Viking’s prospects is one of Viking’s own financial advisors, a firm called Scalar, LLC, that Viking hired to prepare a fairness opinion under the original all-stock merger agreement with Camber. Combining Viking’s own internal projections with data on comparable-company valuation multiples, Scalar concluded in October 2020 that Viking’s equity was worth somewhere between $0 and $20 million, depending on the methodology used, with the “purest” methodology – a true, full-blown DCF – yielding the lowest estimate of $0-1 million: Camber’s advisor, Mercer Capital, came to a similar conclusion: its “analysis indicated an implied equity value of Viking of $0 to $34.3 million.”17 It’s inconceivable that a majority stake in this company, deemed potentially worthless by multiple experts and clearly experiencing financial strains, could somehow justify a near-billion-dollar valuation. Instead of dwelling on the unpleasant realities of Viking’s oil and gas business, Camber has drawn investor attention to two recent transactions conducted by Viking with Camber funding: a license agreement with “ESG Clean Energy,” discussed in further detail below, and the acquisition of a 60.3% stake in Simson-Maxwell, described as “a leading manufacturer and supplier of industrial engines, power generation products, services and custom energy solutions.” But Viking paid just $8 million for its Simson-Maxwell shares,18 and the company has just 125 employees; it defies belief to think that this purchase was such a bargain as to make a material dent in Camber’s overvaluation. And what does Simson-Maxwell actually do? One of its key officers, Daryl Kruper (identified as its chairman in Camber’s press release), describes the company a bit less grandly and more concretely on his LinkedIn page: Simson Maxwell is a power systems specialist. The company assembles and sells generator sets, industrial engines, power control systems and switchgear. Simson Maxwell has service and parts facilities in Edmonton, Calgary, Prince George, Vancouver, Nanaimo and Terrace. The company has provided its western Canadian customers with exceptional service for over 70 years. In other words, Simson-Maxwell acts as a sort of distributor/consultant, packaging industrial- strength generators and engines manufactured by companies like GE and Mitsubishi into systems that can provide electrical power, often in remote areas in western Canada; Simson- Maxwell employees then drive around in vans maintaining and repairing these systems. There’s nothing obviously wrong with this business, but it’s small, regional (not just Canada – western Canada specifically), likely driven by an unpredictable flow of new large projects, and unlikely to garner a high standalone valuation. Indeed, buried in one of Viking’s agreements with Simson- Maxwell’s selling shareholders (see p. 23) are clauses giving Viking the right to purchase the rest of the company between July 2024 and July 2026 at a price of at least 8x trailing EBITDA and giving the selling shareholders the right to sell the rest of their shares during the same time frame at a price of at least 7x trailing EBITDA – the kind of multiples associated with sleepy industrial distributors, not fast-growing retail darlings. Since Simon-Maxwell has nothing to do with Viking’s pre-existing assets or (alleged) expertise in oil and gas, and Viking and Camber are hardly flush with cash, why did they make the purchase? We speculate that management is concerned about the combined company’s ability to maintain its listing on the NYSE American. For example, when describing its restruck merger agreement with Viking, Camber noted: Additional closing conditions to the Merger include that in the event the NYSE American determines that the Merger constitutes, or will constitute, a “back-door listing”/“reverse merger”, Camber (and its common stock) is required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the Effective Time. What does it take to qualify for initial listing on the NYSE American? There are several ways, but three require at least $4 million of positive stockholders’ equity, which Viking, the intended surviving company, doesn’t have today; another requires a market cap of greater than $75 million, which management might (quite reasonably) be concerned about achieving sustainably. That leaves a standard that requires a listed company to have $75 million in assets and revenue. With Viking running at only ~$40 million of annualized revenue, we believe management is attempting to buy up more via acquisition. In fact, if the goal is simply to “buy” GAAP revenue, the most efficient way to do it is by acquiring a stake in a low-margin, slow- growing business – little earnings power, hence a low purchase price, but plenty of revenue. And by buying a majority stake instead of the whole thing, the acquirer can further reduce the capital outlay while still being able to consolidate all of the operation’s revenue under GAAP accounting. Buying 60.3% of Simson-Maxwell seems to fit the bill, but it’s a placeholder, not a real value-creator. Camber’s Partners in the Laughable “ESG Clean Energy” Deal Have a Long History of Broken Promises and Alleged Securities Fraud The “catalyst” most commonly cited by Camber Energy bulls for the recent massive increase in the company’s stock price is an August 24th press release, “Camber Energy Secures Exclusive IP License for Patented Carbon-Capture System,” announcing that the company, via Viking, “entered into an Exclusive Intellectual Property License Agreement with ESG Clean Energy, LLC (‘ESG’) regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide.” Our research suggests that the “intellectual property” in question amounts to very little: in essence, the concept of collecting the exhaust gases emitted by a natural-gas–fueled electric generator, cooling it down to distill out the water vapor, and isolating the remaining carbon dioxide. But what happens to the carbon dioxide then? The clearest answer ESG Clean Energy has given is that it “can be sold to…cannabis producers”19 to help their plants grow faster, though the vast majority of the carbon dioxide would still end up escaping into the atmosphere over time, and additional greenhouse gases would be generated in compressing and shipping this carbon dioxide to the cannabis producers, likely leading to a net worsening of carbon emissions.20 And what is Viking – which primarily extracts oil and gas from the ground, as opposed to running generators and selling electrical power – supposed to do with this technology anyway? The idea seems to be that the newly acquired Simson-Maxwell business will attempt to sell the “technology” as a value-add to customers who are buying generators in western Canada. Indeed, while Camber’s press-release headline emphasized the “exclusive” nature of the license, the license is only exclusive in Canada plus “up to twenty-five locations in the United States” – making the much vaunted deal even more trivial than it might first appear. Viking paid an upfront royalty of $1.5 million in cash in August, with additional installments of $1.5 and $2 million due by January and April 2022, respectively, for a total of $5 million. In addition, Viking “shall pay to ESG continuing royalties of not more than 15% of the net revenues of Viking generated using the Intellectual Property, with the continuing royalty percentage to be jointly determined by the parties collaboratively based on the parties’ development of realistic cashflow models resulting from initial projects utilizing the Intellectual Property, and with the parties utilizing mediation if they cannot jointly agree to the continuing royalty percentage”21 – a strangely open-ended, perhaps rushed, way of setting a royalty rate. Overall, then, Viking is paying $5 million for roughly 85% of the economics of a technology that might conceivably help “capture” CO2 emitted by electric generators in Canada (and up to 25 locations in the United States!) but then probably just re-emit it again. This is the great advance that has driven Camber to a nearly billion-dollar market cap. It’s with good reason that on ESG Clean Energy’s web site (as of early October), the list of “press releases that show that ESG Clean Energy is making waves in the distributive power industry” is blank: If the ESG Clean Energy license deal were just another trivial bit of vaporware hyped up by a promotional company and its over-eager shareholders, it would be problematic but unremarkable; things like that happen all the time. But it’s the nature and history of Camber/Viking’s counterparty in the ESG deal that truly makes the situation sublime. ESG Clean Energy is in fact an offshoot of the Scuderi Group, a family business in western Massachusetts created to develop the now deceased Carmelo Scuderi’s idea for a revolutionary new type of engine. (In a 2005 AP article entitled “Engine design draws skepticism,” an MIT professor “said the creation is almost certain to fail.”) Two of Carmelo’s children, Nick and Sal, appeared in a recent ESG Clean Energy video with Camber’s CEO, who called Sal “more of the brains behind the operation” but didn’t state his official role – interesting since documents associated with ESG Clean Energy’s recent small-scale capital raises don’t mention Sal at all. Buried in Viking’s contract with ESG Clean Energy is the following section, indicating that the patents and technology underlying the deal actually belong in the first instance to the Scuderi Group, Inc.: 2.6 Demonstration of ESG’s Exclusive License with Scuderi Group and Right to Grant Licenses in this Agreement. ESG shall provide necessary documentation to Viking which demonstrates ESG’s right to grant the licenses in this Section 2 of this Agreement. For the avoidance of doubt, ESG shall provide necessary documentation that verifies the terms and conditions of ESG’s exclusive license with the Scuderi Group, Inc., a Delaware USA corporation, having an address of 1111 Elm Street, Suite 33, West Springfield, MA 01089 USA (“Scuderi Group”), and that nothing within ESG’s exclusive license with the Scuderi Group is inconsistent with the terms of this Agreement. In fact, the ESG Clean Energy entity itself was originally called Scuderi Clean Energy but changed its name in 2019; its subsidiary ESG-H1, LLC, which presides over a long-delayed power-generation project in the small city of Holyoke, Massachusetts (discussed further below), used to be called Scuderi Holyoke Power LLC but also changed its name in 2019.22 The SEC provided a good summary of the Scuderi Group’s history in a 2013 cease-and-desist order that imposed a $100,000 civil money penalty on Sal Scuderi (emphasis added): Founded in 2002, Scuderi Group has been in the business of developing a new internal combustion engine design. Scuderi Group’s business plan is to develop, patent, and license its engine technology to automobile companies and other large engine manufacturers. Scuderi Group, which considers itself a development stage company, has not generated any revenue… …These proceedings arise out of unregistered, non-exempt stock offerings and misleading disclosures regarding the use of offering proceeds by Scuderi Group and Mr. Scuderi, the company’s president. Between 2004 and 2011, Scuderi Group sold more than $80 million worth of securities through offerings that were not registered with the Commission and did not qualify for any of the exemptions from the Securities Act’s registration requirement. The company’s private placement memoranda informed investors that Scuderi Group intended to use the proceeds from its offerings for “general corporate purposes, including working capital.” In fact, the company was making significant payments to Scuderi family members for non-corporate purposes, including, large, ad hoc bonus payments to Scuderi family employees to cover personal expenses; payments to family members who provided no services to Scuderi; loans to Scuderi family members that were undocumented, with no written interest and repayment terms; large loans to fund $20 million personal insurance policies for six of the Scuderi siblings for which the company has not been, and will not be, repaid; and personal estate planning services for the Scuderi family. Between 2008 and 2011, a period when Scuderi Group sold more than $75 million in securities despite not obtaining any revenue, Mr. Scuderi authorized more than $3.2 million in Scuderi Group spending on such purposes. …In connection with these offerings [of stock], Scuderi Group disseminated more than 3,000 PPMs [private placement memoranda] to potential investors, directly and through third parties. Scuderi Group found these potential investors by, among other things, conducting hundreds of roadshows across the U.S.; hiring a registered broker-dealer to find investors; and paying numerous intermediaries to encourage people to attend meetings that Scuderi Group arranged for potential investors. …Scuderi Group’s own documents reflect that, in total, over 90 of the company’s investors were non-accredited investors… The Scuderi Group and Sal Scuderi neither admitted nor denied the SEC’s findings but agreed to stop violating securities law. Contemporary local news coverage of the regulatory action added color to the SEC’s description of the Scuderis’ fund-raising tactics (emphasis added): Here on Long Island, folks like HVAC specialist Bill Constantine were early investors, hoping to earn a windfall from Scuderi licensing the idea to every engine manufacturer in the world. Constantine said he was familiar with the Scuderis because he worked at an Islandia company that distributed an oil-less compressor for a refrigerant recovery system designed by the family patriarch. Constantine told [Long Island Business News] he began investing in the engine in 2007, getting many of his friends and family to put their money in, too. The company held an invitation-only sales pitch at the Marriott in Islandia in February 2011. Commercial real estate broker George Tsunis said he was asked to recruit investors for the Scuderi Group, but declined after hearing the pitch. “They were talking about doing business with Volkswagen and Mercedes, but everything was on the come,” Tsunis said. “They were having a party and nobody came.” Hot on the heels of the SEC action, an individual investor who had purchased $197,000 of Scuderi Group preferred units sued the Scuderi Group as well as Sal, Nick, Deborah, Stephen, and Ruth Scuderi individually, alleging, among other things, securities fraud (e.g. “untrue statements of material fact” in offering memoranda). This case was settled out of court in 2016 after the judge reportedly “said from the bench that he was likely to grant summary judgement for [the] plaintiff. … That ruling would have clear the way for other investors in Scuderi to claim at least part of a monetary settlement.” (Two other investors filed a similar lawsuit in 2017 but had it dismissed in 2018 because they ran afoul of the statute of limitations.23) The Scuderi Group put on a brave face, saying publicly, “The company is very pleased to put the SEC matter behind it and return focus to its technology.” In fact, in December 2013, just months after the SEC news broke, the company entered into a “Cooperative Consortium Agreement” with Hino Motors, a Japanese manufacturer, creating an “engineering research group” to further develop the Scuderi engine concept. “Hino paid Scuderi an initial fee of $150,000 to join the Consortium Group, which was to be refunded if Scuderi was unable to raise the funding necessary to start the Project by the Commencement Date,” in the words of Hino’s later lawsuit.24 Sure enough, the Scuderi Group ended up canceling the project in early October 2014 “due to funding and participant issues” – but it didn’t pay back the $150,000. Hino’s lawsuit documents Stephen Scuderi’s long series of emailed excuses: 10/31/14: “I must apologize, but we are going to be a little late in our refund of the Consortium Fee of $150,000. I am sure you have been able to deduce that we have a fair amount of challenging financial problems that we are working through. I am counting on financing for our current backlog of Power Purchase Agreement (PPA) projects to provide the capital to refund the Consortium Fee. Though we are very optimistic that the financial package for our PPA projects will be completed successfully, the process is taking a little longer than I originally expected to complete (approximately 3 months longer).” 11/25/14: “I am confident that we can pay Hino back its refund by the end of January. … The reason I have been slow to respond is because I was waiting for feedback from a few large cornerstone investors that we have been negotiating with. The negotiations have been progressing very well and we are close to a comprehensive financing deal, but (as often happens) the back and forth of the negotiating process takes ” 1/12/15: “We have given a proposal to the potential high-end investors that is most interested in investing a large sum of money into Scuderi Group. That investor has done his due-diligence on our company and has communicated to us that he likes our proposal but wants to give us a counter ” 1/31/15: “The individual I spoke of last month is one of several high net worth individuals that are currently evaluating investing a significant amount of equity capital into our That particular individual has not yet responded with a counter proposal, because he wishes to complete a study on the power generation market as part of his due diligence effort first. Though we learned of the study only recently, we believe that his enthusiasm for investing in Scuderi Group remains as strong as ever and steady progress is being made with the other high net worth individuals as well. … I ask only that you be patient for a short while longer as we make every effort possible to raise the monies need[ed] to refund Hino its consortium fee.” Fed up, Hino sued instead of waiting for the next excuse – but ended up discovering that the Scuderi bank account to which it had wired the $150,000 now contained only about $64,000. Hino and the Scuderi Group then entered into a settlement in which that account balance was supposed to be immediately handed over to Hino, with the remainder plus interest to be paid back later – but Scuderi didn’t even comply with its own settlement, forcing Hino to re-initiate its lawsuit and obtain an official court judgment against Scuderi. Pursuant to that judgment, Hino formally requested an array of documents like tax returns and bank statements, but Scuderi simply ignored these requests, using the following brazen logic:25 Though as of this date, the execution has not been satisfied, Scuderi continues to operate in the ordinary course of business and reasonably expects to have money available to satisfy the execution in full in the near future. … Responding to the post- judgment discovery requests, as a practical matter, will not enable Scuderi to pay Hino any faster than can be achieved by Scuderi using all of its resources and efforts to conduct its day-to-day business operations and will only serve to impose additional and unnecessary costs on both parties. Scuderi has offered and is willing to make payments every 30 days to Hino in amounts not less than $10,000 until the execution is satisfied in full. Shortly thereafter, in March 2016, Hino dropped its case, perhaps having chosen to take the $10,000 per month rather than continue to tangle in court with the Scuderis (though we don’t know for sure). With its name tarnished by disgruntled investors and the SEC, and at least one of its bank accounts wiped out by Hino Motors, the Scuderi Group didn’t appear to have a bright future. But then, like a phoenix rising from the ashes, a new business was born: Scuderi Clean Energy, “a wholly owned subsidiary of Scuderi Group, Inc. … formed in October 2015 to market Scuderi Engine Technology to the power generation industry.” (Over time, references to the troubled “Scuderi Engine Technology” have faded away; today ESG Clean Energy is purportedly planning to use standard, off-the-shelf Caterpillar engines. And while an early press release described Scuderi Clean Energy as “a wholly owned subsidiary of Scuderi Group,” the current Scuderi/ESG Clean Energy, LLC, appears to have been created later as its own (nominally) independent entity, led by Nick Scuderi.) As the emailed excuses in the Hino dispute suggested, this pivot to “clean energy” and electric power generation had been in the works for some time, enabling Scuderi Clean Energy to hit the ground running by signing a deal with Holyoke Gas and Electric, a small utility company owned by the city of Holyoke, Massachusetts (population 38,238) in December 2015. The basic idea was that Scuderi Clean Energy would install a large natural-gas generator and associated equipment on a vacant lot and use it to supply Holyoke Gas and Electric with supplemental electric power, especially during “peak demand periods in the summer.”26 But it appears that, from day one, Holyoke had its doubts. In its 2015 annual report (p. 80), the company wrote (emphasis added): In December 2015, the Department contracted with Scuderi Clean Energy, LLC under a twenty (20) year [power purchase agreement] for a 4.375 MW [megawatt] natural gas generator. Uncertain if this project will move forward; however Department mitigated market and development risk by ensuring interconnection costs are born by other party and that rates under PPA are discounted to full wholesale energy and resulting load reduction cost savings (where and if applicable). Holyoke was right to be uncertain. Though its 2017 annual report optimistically said, “Expected Commercial Operation date is April 1, 2018” (p. 90), the 2018 annual report changed to “Expected Commercial Operation is unknown at this time” – language that had to be repeated verbatim in the 2019 and 2020 annual reports. Six years after the contract was signed, the Scuderi Clean Energy, now ESG Clean Energy, project still hasn’t produced one iota of power, let alone one dollar of revenue. What it has produced, however, is funding from retail investors, though perhaps not as much as the Scuderis could have hoped. Beginning in 2017, Scuderi Clean Energy managed to sell roughly $1.3 million27 in 5-year “TIGRcub” bonds (Top-Line Income Generation Rights Certificates) on the small online Entrex platform by advertising a 12% “minimum yield” and 16.72% “projected IRR” (based on 18.84% “revenue participation”) over a 5-year term. While we don’t know the exact terms of these bonds, we believe that, at least early on, interest payments were covered by some sort of prepaid insurance policy, while later payments depend on (so far nonexistent) revenue from the Holyoke project. But Scuderi Clean Energy had been aiming to raise $6 million to complete the project, not $1 million; indeed, this was only supposed to be the first component of a whole empire of “Scuderi power plants”28 that would require over $100 million to build but were supposedly already under contract.29 So far, however, nothing has come of these other projects, and, seemingly suffering from insufficient funding, the Holyoke effort languished. (Of course, it might have been more investor-friendly if Scuderi Clean Energy had only accepted funding on the condition that there was enough to actually complete construction.) Under the new ESG Clean Energy name, the Scuderis tried in 2019 to raise capital again, this time in the form of $5 million of preferred units marketed as a “5 year tax free Investment with 18% cash-on-cash return,” but, based on an SEC filing, it appears that the offering didn’t go well, raising just $150,000. With funding still limited and the Holyoke project far from finished, the clock is ticking: the $1.3 million of bonds will begin to mature in early 2022. It was thus fortunate that Viking came along when it did to pay ESG Clean Energy a $1.5 million upfront royalty for its incredible technology. Interestingly, ESG Clean Energy began in late 2020 to provide extremely detailed updates on its Holyoke construction progress, including items as prosaic as “Throughout the week, ESG had met with and continued to exchange numerous e-mails with our mechanical engineering firm.” With frequent references to the “very fluid environment,” the tone is unmistakably defensive. Consider the September update (emphasis not added): Reading between the lines, we believe the intended message is this: “We didn’t just take your money and run – honest! We’re working hard!” Nonetheless, someone appears to be unhappy, as indicated by the FINRA BrokerCheck report for one Eric Willer, a former employee of Fusion Analytics, which was listed as a recipient of sales compensation in connection with the Scuderi Clean Energy bond offerings. Willer may now be in hot water: a disclosure notice dated 3/31/2021 reads: “Wells Notice received as a preliminary determination to recommend disciplinary action of fraud, negligent misrepresentation, and recommendation without due diligence in the sale of bonds issued by Scuderi Holyoke,” with a further investigation still pending. We wait eagerly for additional updates. Why does the saga of the Scuderis matter? Many Camber investors seem to have convinced themselves that the ESG Clean Energy “carbon capture” IP licensed by Viking has enormous value and can plausibly justify hundreds of millions of dollars of incremental market cap. As we explained above, we find this thoroughly implausible even without getting into Scuderi family history: in the end, the “technology” will at best add a smidgen of value to some generators in Canada. But track records matter too, and the Scuderi track record of failed R&D, delays, excuses, and alleged misuse of funds is worth considering. These people have spent six years trying and failing to sell power to a single municipally owned utility company in a single small city in western Massachusetts. Are they really about to end climate change? The Case of the Fictitious CFO Since Camber is effectively a bet on Viking, and Viking, in its current form, has been assembled by James Doris, it’s important to assess Doris’s probity and good judgment. In that connection, it’s noteworthy that, from December 2014 to July 2016, at the very start of Doris’s reign as Viking’s CEO and president, the company’s CFO, Guangfang “Cecile” Yang, was apparently fictitious. (Covering the case in 2019, Dealbreaker used the headline “Possibly Imaginary CFO Grounds For Very Real Fraud Lawsuit.”) This strange situation was brought to light by an SEC lawsuit against Viking’s founder, Tom Simeo; just last month, a US district court granted summary judgment in favor of the SEC against Simeo, but Simeo’s penalties have yet to be determined.30 The court’s opinion provided a good overview of the facts (references omitted, emphasis added): In 2013, Simeo hired Yang, who lives in Shanghai, China, to be Viking’s CFO. Yang served in that position until she purportedly resigned in July 2016. When Yang joined the company, Simeo fabricated a standing resignation letter, in which Yang purported to “irrevocably” resign her position with Viking “at any time desired by the Company” and “[u]pon notification that the Company accepted [her] resignation”…Simeo forged Yang’s signature on this document. This letter allowed Simeo to remove Yang from the position of CFO whenever he pleased. Simeo also fabricated a power of attorney purportedly signed by Yang that allowed Simeo to “affix Yang’s signature to any and all documents,” including documents that Viking had to file with the SEC. Viking represented to the public that Yang was the company’s CFO and a member of its Board of Directors. But “Yang never actually functioned as Viking’s CFO.” She “was not involved in the financial and strategic decisions” of Viking during the Relevant Period. Nor did she play any role in “preparing Viking’s financial statements or public filings.” Indeed, at least as of April 3, 2015, Yang did not do “any work” on Viking’s financial statements and did not speak with anyone who was preparing them. She also did not “review or evaluate Viking’s internal controls over financial reporting.” Further, during most or all of the Relevant Period, Viking did not compensate Yang despite the fact that she was the company’s highest ranking financial employee. Nevertheless, Simeo says that he personally paid her in cash. Yang’s “sole point of contact” at Viking was Simeo. Indeed Simeo was “the only person at Viking who communicated with Yang.” Thus many people at Viking never interacted with Yang. Despite the fact that Doris has served as Viking’s CEO since December 2014, he “has never met or spoken to Yang either in person or through any other means, and he has never communicated with Yang in writing.” … To think Yang served as CFO during this time, but the CEO and other individuals involved with Viking’s SEC filings never once spoke with her, strains all logical credulity. It remains unclear whether Yang is even a real person. When the SEC asked Simeo directly (“Is it the case that you made up the existence of Ms. Yang?”) he responded by “invoking the Fifth Amendment.”31 While the SEC’s efforts thus far have focused on Simeo, the case clearly raises the question of what Doris knew and when he knew it. Indeed, though many of the required Sarbanes-Oxley certifications of Viking’s financial statements during the Yang period were signed by Simeo in his role as chairman, Doris did personally sign off on an amended 2015 10-K that refers to Yang as CFO through July 2016 and includes her complete, apparently fictitious, biography. Viking has also disclosed the following, which we believe pertains to the Yang affair (emphasis added): In April of 2019, the staff (the “Staff”) of the SEC’s Division of Enforcement notified the Company that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against the Company, as well as against its CEO and its CFO, for alleged violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder [laws that pertain to securities fraud] during the period from early 2014 through late 2016. The Staff’s notice is not a formal allegation or a finding of wrongdoing by the Company, and the Company has communicated with the Staff regarding its preliminary determination. The Company believes it has adequate defenses and intends to vigorously defend any enforcement action that may be initiated by the SEC.32 Perhaps the SEC has moved on from this matter and will let Doris and Viking off the hook, but the fact pattern is eyebrow-raising nonetheless. A similarly troubling incident came soon after the time of Yang’s “resignation,” when Viking’s auditing firm resigned, withdrew its recent audit report, and wrote a letter “advising the Company that it believed an illegal act may have occurred” – because of concerns that had nothing to do with Yang. First, Viking accounted for the timing of a grant of shares to a consultant in apparent contradiction of the terms of the written agreement with the consultant – a seemingly minor issue. But, under scrutiny from the auditor, Viking “produced a letter… (the version which was provided to us was unsigned), from the consultant stating that the Agreement was invalidated verbally.” Reading between the lines, the “uncomfortable” auditor suspected that this letter was a fake, created just to get him off Viking’s back. In another incident, the auditor “became aware that seven of the company’s loans…were due to be repaid” in August 2016 but hadn’t been, creating a default that would in turn “trigger[] a cross-default clause contained in 17 additional loans” – but Viking claimed it “had secured an oral extension to the loans from the broker-dealer representing the lenders by September 6, 2016” – after the loans’ maturity dates – “so the Company did not need to disclose ‘the defaults under these loans’ after such time since the loans were not in default.” It’s easy to see why an auditor would object to this attitude toward financial disclosure – no need to mention a default in August as long as you can secure a verbal agreement resolving it by September! Against this backdrop of disturbing behavior, the fact that Camber just dismissed its auditing firm three weeks ago on September 16th, even with delisting looming if the company can’t become current again with its SEC filings by November, seems even more unsettling. Have Camber and Viking management earned investors’ trust? Conclusion It’s not clear why, back in 2017, Lucas Energy changed its name to “Camber” specifically, but we’d like to think the inspiration was England’s Camber Castle. According to Atlas Obscura, the castle was supposed to help defend the English coast, but it took so long to build that its “advanced design was obsolete by the time of its completion,” and changes in the local environment meant that “the sea had receded so far that cannons fired from the fort would no longer be able to reach any invading ships.” Still, the useless castle was “manned and serviced” for nearly a century before being officially decommissioned. Today, Camber “lies derelict and almost unheard of.” But what’s in a name? Article by Kerrisdale Capital Management Updated on Oct 5, 2021, 12:06 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 5th, 2021

Futures Fade Rally With Congress Set To Avert Government Shutdown

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

Category: blogSource: zerohedgeSep 30th, 2021

Fear And Panic As Bitcoin Crashes 50% From All Time High

Fear And Panic As Bitcoin Crashes 50% From All Time High Just two months after cryptos hit an all time high amid widespread euphoria that the newly launched bitcoin ETF would lead to even more substantial upside, the two largest tokens have lost half of their value, with the broader crypto sector suffering more than $1 trillion in losses amid an accelerating liquidation panic that the Fed's tightening cycle will lead to another crypto winter.  Such is the volatility in the sector where, as Bloomberg put it overnight, there has been just one constant recently: "decline after decline after decline." Of course, for veteran hodlers, Bloomberg hyperbole seems trivial in a world where 80% drawdowns are the norm and the current drop may have a ways to go before it hits a bottom, before a new all time high is hit. Where Bloomberg is right however, is that superlatives for the latest carnage have been easy to come by: Friday’s decline led to the liquidation of more than $1.1 billion in crypto futures positions and overall more than $1 trillion in market value has been destroyed since the last peak. In other words, "the meltdown is pouring salt on an already-deep wound." After the latest furious puke that pushed Bitcoin RSI's indicator to the most oversold level since the covid crash in March of 2020... ... Bitcoin, which lost more than 12% on Friday, saw its price drop just above $34,000 with Ethereum sliding as low as $2,400, as the two largest digital assets now trade at a 50% discount from their all time highs and are back to levels last seen in late July, early August. Other digital currencies have suffered just as much, if not more, most meme coins mired in similar drawdowns. While the selling has been relentless for the past two months, it accelerated in the past three weeks, after the latest Fed minutes - published in early January - showed its intention to not only hike rates but to accelerate the unwind of its balance sheet, which has sent all "bubble baskets" plunging, with bitcoin getting hit especially hard amid the carnage. And while there have been much larger percentage drawdowns for both Bitcoin and the aggregate market, according to Bespoke,  this marks the second-largest ever decline in dollar terms for both. “It gives an idea of the scale of value destruction that percentage declines can mask,” wrote Bespoke analysts in a note. “Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about both in raw dollar terms as well as in percentage terms.” Another fact that Bloomberg gets right, is that over the past year, cryptos have transformed from relatively uncorrelated assets providing diversification during market turbulence, into what is effectively a high beta stock. This is easily seen in the following chart showing the 60d correlation between cryptos and stocks. One can thank institutional adoption for that, because the same institutions that are now facing margin calls on their tech holdings, are also dumping cryptos to provide much needed liquidity. “Crypto is reacting to the same kind of dynamics that are weighing on risk-assets globally,” said Stephane Ouellette, chief executive and co-founder of institutional crypto-platform FRNT Financial. “Unfortunately for some of the mature projects like BTC, there is so much cross-correlation within the crypto asset class it’s almost a certainty that it falls, at least temporarily in a broader alt-coin valuation contraction.” Antoni Trenchev,, co-founder of Nexo, cites Bitcoin’s correlation to the tech-heavy Nasdaq 100, which right now is near the highest in a decade. “Bitcoin is being battered by a wave of risk-off sentiment. For further cues, keep an eye on traditional markets,” he said. “Fear and unease among investors is palpable.” According to  Art Hogan, chief market strategist at National Securities, it’s useful to think of cryptocurrencies as living in the same space as other speculative sectors, including special-purpose acquisition companies and electric-vehicle makers. “When we’re in an environment where all of those riskier assets are selling off, crypto is going to find itself doing the same,” Hogan said. “When the Nasdaq 100 or any of the other more-speculative, rapid-growth, momentum-type asset classes start to gain some traction, so will cryptocurrencies.” Unfortunately for Bitcoin longs, one place where the token's correlation is especially high is that to such market naplam as Cathie Wood’s sinking ARK Innovation ETF, a pandemic poster-child of speculative risk-taking. That correlation stands at around 60% year-to-date, versus about 14% for the price of gold, according to Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis. It’s “reminding us to categorize Bitcoin and altcoins as risk assets rather than safe havens,” she said. Perhaps unaware what "hodling" means, data from Coinglass shows that more than 342,000 traders had their positions closed over the past 24 hours, with liquidations totaling roughly $1.1 billion. “Digital-currency markets in total have been challenged this month,” said Jonathan Padilla, co-founder of Snickerdoodle Labs, a blockchain company focused on data privacy. “There’s definitely some pain there.” Though liquidations have spiked, the numbers are rather muted when compared to previous declines, according to Noelle Acheson, head of market insights at Genesis Global Trading. Acheson points out that Bitcoin’s one-week skew, which compares the cost of bearish options to bullish ones, spiked to almost 15% on Wednesday compared to an average of about 6% in the past seven days. “This flagged a jump in bearish sentiment, in line with overall market jitters given the current macro uncertainty,” she said. Amid the pain, some of bitcoin's most faithful are professing patience... HODLing #Bitcoin is painful. If you survive the journey, you will truly know what HODL means. — Dan Held (@danheld) January 21, 2022 ... while others are starting to wonder out loud at what point the battering might end. Famed crypto investor and (former?) billionaire Mike Novogratz mused on Twitter that “this will be a year where people realize being an investor is a difficult job.” 2600 $Eth would be the next support. Hoping and thinking it holds. Unfortunately Russel has like 14 percent more to go before it bottoms. Won’t be a straight line down. This will be a year where people realize being an investor is a difficult job. — Mike Novogratz (@novogratz) January 21, 2022 Unfortunately for Novogratz, 2600 did not hold and Eth is now trading below 2,400. Still, many point out that like on all previous occasions when cryptos crashed, they eventually rebounded to new all time highs. At some point, sellers will become exhausted and the market could see some capitulation soon, said Matt Maley, chief market strategist for Miller Tabak + Co. “When that happens, the institutions will come back in in a meaningful way,” he said. “Once the asset class becomes more washed-out, they’ll have a lot more confidence to come back in and buy them. They know that cryptos are not going away, so they’ll have to move back into them before long.” But it's not just central bank tightening fears and liquidation technicals that have depressed cryptos: one can also throw in a relentless news cycle, where just in recent days, regulators from Russia, the U.K., Singapore and Spain all announced interventions that could undermine crypto companies looking to grow in those regions. Meanwhile, the Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose, Bloomberg reported late on Friday. Testing the resilience and patience of the faithful, so far the sharp drop below the psychological level of $40,000 has failed to serve as an upward inflection point. Crypto proponents say heavy liquidations often serve to cut out the froth in easy-win asset speculation, helping to solidify new bottoms in the market. Ultimately, the real support will come from none other than the Fed, which will soon realize that it is hiking into a slowing economy... Tightening into a slowdown… Déjà vu? pic.twitter.com/pczXzMVSxb — Julien Bittel, CFA (@BittelJulien) January 22, 2022 ... and will be forced to be far more dovish during this week's FOMC meeting, a reversal which should serve to send risk assets sharply higher. “Fear and unease among investors is palpable,” Nexo's Trenchev,said. “If we see a bigger selloff in equities, expect the Fed to verbally intervene to calm nerves and that’s when Bitcoin and other cryptos will bounce.” In other words, the more the Fed tightens - or the more the Fed scares markets into believing it will tighten - the bigger the market selloff, and the worse the economic slowdown, until eventually Powell will be forced to ease, a key point brought up by  Bank of America CIO Michael Hartnett yesterday. Incidentally, it also means that the faster markets crash, the faster the Fed panics, and is forced to stabilize stocks because even if the new and improved Powell Put is well below previous levels, the Fed can't risk a market crash just to appease Biden's demands for an inflationary slowdown so Democrats aren't destroyed in the midterms. And incidentally, this weekend's ongoing selloff in cryptos means that while stocks are currently mercifully not trading, Monday should be another bloodbath, as Jim Bianco reminds us. The BTC/SPX correlation is "significant" Or as @jeffdorsman says, crypto is a 24/7 VIX. See the table, as of this writing, Crypto is down another 10% since Friday's NYSE Close. If this hold, no-coiners have about 36 more hours to gloat before it is their turn. pic.twitter.com/JpWeMJZbAf — Jim Bianco biancoresearch.eth (@biancoresearch) January 22, 2022 One thing is certain: several more 2% drops in the Nasdaq, and Powell - who two years ago crossed the Fed's final rubicon and bought corporate bonds to halt a catastrophic collapse - will be making emergency phone calls to put an end to the carnage. As such, a continuation of the meltdown may just be the best thing that the bitcoin faithful can hope for. Tyler Durden Sat, 01/22/2022 - 13:04.....»»

Category: dealsSource: nytJan 22nd, 2022

Forget a bitcoin winter — a crypto "ice age" might be coming as the Fed ends the easy-money era

Crypto prices have tumbled as bond yields have shot higher. Some investors think they might not recover for a long time. Prices have slumped, raising fears about a crypto winter.FTiare/Getty Images A crypto "ice age" might be coming as the Fed slashes its support for markets and the economy. Crypto prices have slumped, with bitcoin tumbling to a six-month low below $38,000 on Friday. With the Fed hiking interest rates, and nagging questions about regulation and the technology, the outlook could be bleak. Things are getting cold in crypto-land. Bitcoin is down dramatically from its November peak of close to $69,000, falling to a six-month low below $38,000 Friday. Trading volumes have slumped.Some investors are concerned that the market is going into a "crypto winter" — a period when prices fall sharply and fail to recover for more than a year — as the Federal Reserve abruptly tightens monetary policy.But it could be worse than that. Crypto could in fact be heading for an "ice age," where prices stay low for years and many investors lose interest, Paul Jackson, Invesco's global head of asset allocation research, told Insider recently.It's not just Fed policy. Many potential investors have niggling doubts about the robustness of cryptocurrency technology, and regulation that could stifle industry development.The Fed could put crypto in the deep freezeEarly last year, "Bond King" Jeff Gundlach said he thought bitcoin was "the stimulus asset"  boosted the most by the "torrent" of money from the Fed and US government during the coronavirus crisis.But less than a year later, the Fed is turning off its faucet as it tackles soaring inflation. Markets are now expecting four interest rate hikes in 2022.The resultant jump in bond yields has already whacked unprofitable tech stocks and cryptocurrencies. The two speculative assets look a lot less attractive when returns on risk-free bonds are higher.But more pain is likely, as bond yields have considerably further to rise, according to Invesco's Jackson."Central banks and governments have played a role in jacking up these markets, and as those policies reverse, then I think they will have a role in depressing them," he said.Read more: A 21-year veteran trader breaks down an options trade designed to help investors 'sustain risks long enough to see the light of profitability' — and explains why bitcoin could continue to move in tandem with tech stocksEven bulls such as Galaxy Digital founder Mike Novogratz have said crypto is likely to stay under pressure."I think it could be an ice age," Jackson said. "I think if you take away those conditions that have been created by the Fed ... it does change the outlook."Nagging questions about regulation and crypto technologyOf course, many cryptocurrency supporters disagree. Dan Morehead, CEO of investment firm Pantera, said in a note last week the sector should stay strong because the uses for crypto networks have ballooned.He pointed in particular to the growth in decentralized finance, or DeFi, where financial activities such as trading can be carried out without the need for intermediaries, thanks to crypto technology.But many investors are less convinced, with regulation a particular worry. The central bank of Russia, a crypto hub, this week proposed an outright ban of mining and transactions, adding to Friday's sell-off. European regulators could be about to toughen up their rules, and Spain and the UK are cracking down on crypto adverts.James Malcolm, head of foreign-exchange strategy at UBS, told Insider he thinks problems with crypto technology could be one of several factors, alongside stricter regulation, that could drag the crypto world into another winter.Malcolm cited a blog by the founder of the Signal messaging app, which concluded that blockchain technology is clunky and far from decentralized. Meanwhile, users of the ethereum crypto network have been infuriated by congestion and high transaction fees, which are proving very hard to fix."A lot of people in the technology space seem to be questioning whether or not [crypto tech] is that effective," Malcolm said. "It begs the question if it was so blatantly next-generation technology, then why aren't a lot of big tech companies all over it? Why isn't Google massively invested?"Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 22nd, 2022

Another One Bites The Dust

S&P 500 gave up opening gains that could have lasted longer – but the bear is still strong, and didn‘t pause even for a day or two. Defeated during the first hour, the sellers couldn‘t make much progress, and credit markets confirm the grim picture. There is a but, though – quality debt instruments turned […] S&P 500 gave up opening gains that could have lasted longer – but the bear is still strong, and didn‘t pause even for a day or two. Defeated during the first hour, the sellers couldn‘t make much progress, and credit markets confirm the grim picture. There is a but, though – quality debt instruments turned higher, and maintained much of their intraday gains. 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); Q4 2021 hedge fund letters, conferences and more And that could be a sign – in spite of the bearish onslaught driving the buyers back to the basement before the closing bell – that more buying would materialize to close this week, with consequences for S&P 500 as well. I would simply have preferred to see rising yields once again, that would be a great catalyst of further stock market selling. Now, the wisest course of action looks to be waiting for the upcoming upswing (one that didn‘t develop during the Asian session really), to get exhausted. Remember my yesterday‘s words: (…) The rising yields are all about betting on a really, really hawkish Fed – just how far are the calls for not 25, but 50bp hike this Mar? Inflation is still resilient (of course) but all it takes is some more hawkish statements that wouldn‘t venture out of the latest narrative line. Anyway, the markets aren‘t drinking the kool-aid – the yield curve continues flattening, which means the bets on Fed‘s misstep are on. True, the tightening moves have been quite finely telegraphed, but the markets didn‘t buy it, and were focused on the Santa Claus (liquidity-facilitated) rally instead – therefore, my Dec 20 warning is on. The clock to adding zero fresh liquidity, and potentially even not rolling over maturing securities (as early as Mar?) is ticking. And the run to commodities goes on, with $85 crude oil not even needing fresh conflict in Eastern Europe – the demand almost at pre-corona levels leaving supply and stockpiles in the dust, is fit for the job. With SPX short profits off the table, crude oil consolidating, and cryptos having second thoughts about the decline continuation, it‘s been precious metals that stole the spotlight yesterday – really great moves across the board to enjoy! Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 buyers are nowhere to be seen – what kind of reflexive rebound would we get next? The odds aren‘t arrayed for it to be reaching very high – yields are catching up even with financials... Credit Markets HYG is likely to pause a little next, and the degree of its move relative to the quality debt instruments, would be telling. Rates are though going to keep rising, so keep looking for a temporary HYG stabilization only. Gold, Silver and Miners Gold and silver keep catching fire, and are slowly breaking out of the unpleasantly long consolidation. The strongly bullish undertones are playing out nicely – these aren‘t yet the true celebrations. Crude Oil Crude oil looks like it could pause a little here – the stellar run (by no means over yet) is attracting selling interest. The buyers are likely to pause for a moment over the next few days. Copper Copper is paring back on the missed opportunity to catch up – the red metal will be dragged higher alongside the other commodities, and isn‘t yet offering signs of true, outperforming strength. Bitcoin and Ethereum Bitcoin and Ethereum really are setting up a little breather, but I‘m not looking for bullish miracles to happen. Still, the buying interest was there yesterday, and that would influence the entry to the coming week (bullishly). Summary S&P 500 upswing turned into a dead cat bounce pretty fast, and while we may see another attempt by the bulls, I think it would be rather short-lived. Think lasting a couple of days only. Not until there is a change in the credit markets, have the stock market bulls snowball‘s chance in hell. Commodities and especially precious metals, are well placed to keep reaping the rewards – just as I had written a week ago. For now, it‘s fun to be riding the short side in S&P 500 judiciously, and the time for another position opening, looks slowly but surely approaching. Let the great profits grow elsewhere in the meantime. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Jan 21, 2022, 1:29 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: valuewalkJan 21st, 2022

Should You Buy Payment Disruptor Stocks In 2022?

There’s a big “threat” looming over one of my favorite groups of stocks. After years of running higher, these stocks reversed course in 2021… Q4 2021 hedge fund letters, conferences and more And are now trading at a steep discount. But while most folks are getting this story completely wrong… I’ll show you why this […] There’s a big “threat” looming over one of my favorite groups of stocks. After years of running higher, these stocks reversed course in 2021… 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 Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss 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); Q4 2021 hedge fund letters, conferences and more And are now trading at a steep discount. But while most folks are getting this story completely wrong… I’ll show you why this “threat” is presenting a great buying opportunity. Payment Disruptor Stocks Long-time readers know I’ve pounded the table on payments stocks for years… In short, payment disruptors have seized banks’ most profitable businesses one by one, leaving them with scraps. PayPal’s (NASDAQ:PYPL) app lets you buy groceries and bitcoin… receive Social Security... and even pay taxes. Credit card giants Visa (NYSE:V) and Mastercard (NYSE:MA) now handle more digital payments than big banks like JPMorgan. More than 40 million people now use Block’s (NYSE:SQ) Cash App at least once a month. That’s roughly one in eight Americans. In short, payment disruptors have turned Wall Street on its head. And it’s made them among the fastest-growing and best stocks to own from 2016–2020: But 2021 marked a big reversal for payments stocks..​ Visa and Mastercard had one of their worst years in almost a decade. PayPal, Block (formerly Square), and almost every other money disruptor slipped into the red. The Biggest Threats What’s going on with these former stock market darlings? There are a few reasons for payments stocks’ recent struggles. But one of the biggest “threats” can be summed up in four words: “Buy now, pay later.” As the name suggests, buy now, pay later lets you break up purchases into installments. Say you buy a pair of sneakers for $100. Instead of handing over 100 bucks at the cash register, you can pay in four $25 installments over a few weeks. Last year, consumers made $100 billion worth of retail purchases through BNPL companies like Affirm, Klarna, and Afterpay. That’s a huge jump up from $24 billion in 2020. Buy now, pay later is considered a threat to existing payment methods because it’s a closed-loop system. In short, BNPL firms don’t run on top of the existing payment networks that Visa and Mastercard largely own. They’ve crafted a whole new payment network, which cuts credit card firms and other players out of the picture. This closed loop allows BNPL companies to keep all the fees for themselves. The concern is BNPL firms will steal an ever-increasing share of payments for themselves, dampening growth for PayPal, Visa, and other payments stocks. But BNPL is not a real threat… it’s a massive opportunity. As I mentioned, BNPL firms like Klarna and Affirm have created their own payment networks. The thing is… roughly 85% of installment payments are made with debit cards. And guess who issues those cards? Visa and Mastercard. Afterpay, the firm that pioneered BNPL, teamed up with Mastercard for its debit card. Source: Afterpay BNPL is not a threat to these payment giants… it’s an opportunity. Long-time readers know credit card companies earn a small fee each time you swipe your card. When folks choose buy now, pay later, they’re using their card multiple times. This means Mastercard now collects fees on four installments instead of one payment. Affirm’s CFO Michael Linford agrees BNPL is an opportunity for payment networks. He recently said: “You can’t say Visa is a loser here. We ride Visa rails for a meaningful number of our transactions.” BNPL is also a moneymaker for PayPal and Block. PayPal launched its own buy now, pay later option in late 2020. This past quarter it processed $2 billion+ of installment payments. PayPal quietly built a BNPL business that’s 75% the size of Affirm. And back in June, Block acquired Afterpay. Over 100,000 businesses and 16 million customers have used Afterpay. Block now gets to collect all those fees. Closed-Loop Networks Closed-loop networks aren’t a new idea. A few years back, PayPal created a closed-loop network and tried to cut credit card giants like Visa out of the picture. It just had to convince folks not to link their cards to their PayPal accounts… and instead pay using PayPal’s digital wallet. PayPal hid card payment options and put its own wallet front and center. It was a total failure. Today, most PayPal transactions are paid for with debit cards. BNPL firms will suffer the same fate. They need to tap into the five billion or so plastic cards across the world to attract users. But Stephen… what if you’re wrong? What if BNPL firms do succeed in building a closed-loop system? Investment bank Credit Suisse ran the numbers on this potential threat. They looked at what would happen if BNPL accounted for a quarter of all digital payments and these folks chose not to pay with a card. Even in this worst-case scenario, buy now, pay later firms would steal just 2.6% of Visa and Mastercard revenues. That’s nothing for companies that grow sales roughly 15% per year. I mentioned consumers made $100 billion worth of retail purchases last year through BNPL companies. That’s a drop in the ocean compared to the volume payment giants handle. Look at this graph showing how small the buy now, pay later “threat” really is. Billions of dollars might flow through BNPL companies, but payment rails handle trillions of dollars. Even PayPal is on track to process over $1 trillion this year. Don’t be fooled: BNPL isn’t a threat to payments stocks. It’s an opportunity. That’s why I recently made PYPL, MA, and SQ all “buys” in my premium Disruption Investor portfolio. Next week, we’ll dig into another big threat weighing on payments stocks: the US Federal Reserve’s new payment system. The Great Disruptors: 3 Breakthrough Stocks Set to Double Your Money" Get my latest report where I reveal my three favorite stocks that will hand you 100% gains as they disrupt whole industries. Get your free copy here. Article By Stephen McBride, Mauldin Economics Updated on Jan 21, 2022, 3:04 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: valuewalkJan 21st, 2022

Q&A With Andy Howard, CEO of Climate Solutions Exchange

When it comes to carbon emissions, landowners can take matters into their own hands Q4 2021 hedge fund letters, conferences and more When Andy Howard teamed up with Sir Edward Millbank to found Climate Solutions Exchange (CSX Carbon) in January 2020, few could have imagined what the world would look like in just a few […] When it comes to carbon emissions, landowners can take matters into their own hands 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 Icahn eBook! Get our entire 10-part series on Carl Icahn and other famous investors in PDF for free! Save it to your desktop, read it on your tablet or print it! Sign up below. NO SPAM EVER (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2021 hedge fund letters, conferences and more When Andy Howard teamed up with Sir Edward Millbank to found Climate Solutions Exchange (CSX Carbon) in January 2020, few could have imagined what the world would look like in just a few months. On the cusp of its second anniversary, we spoke with Andy who serves as CEO of CSX Carbon and asked him what the future holds for the CSX team and their plans to help develop a trusted carbon market and offer land managers a fair return for environmental management. What was CSX launched to do and how would you assess progress to date? We’re incredibly proud of our progress to date, and with a lot more remaining to be done the momentum of both our business and the need for innovative solutions to the Climate Emergency from the private sector is gathering pace. We began building CSX in January 2020, to help find a way for land managers to use technology to collect and analyse the necessary data to provide an accurate measurement of carbon sequestration, and provide to corporate carbon buyers an audit trail on that carbon that is genuine and meaningful. Our platform integrates data from satellites, drones and ground truthing for quantifying carbon, employing cutting-edge technology such as Drone RGB and LIDAR imaging, along with Terrestrial Laser Scanning, to provide landowners with a way of verifying their carbon sequestration success. CSX is the first company in the UK to make this technology accessible, and helps its partners make decisions with certainty by providing a verifiable audit trail. Up until now, current satellite technology has been unable to provide accurate carbon calculations given it is both weather dependent and limited to resolutions of generally 10m and at best 25cm for the most expensive satellite derived data. In October, we received an initial £500,000 investment from Maughan Capital, which has been invaluable, and will help us to develop our LIDAR software. It’s been a great year for us and we think we’ll continue moving from strength to strength. Why did you decide to launch CSX now? The UK’s departure from the European Union has meant it no longer belongs to the EU’s Common Agricultural Policy. This has meant a big shift in the regulatory environment for sustainable farming practices including the upcoming introduction of the Environmental Land Management Scheme to incentivise sustainable farming practices. Because this new scheme rewards landowners who employ sustainable and environmentally friendly practices, we anticipate a demand for technologies like CSX which give landowners the ability to measure their own carbon footprint to improve their access to the benefits they deserve. You recently spoke at the United Nations Climate Conference (COP26). How did you find the event? It atmosphere made it feel like climate change is finally being recognised as the greatest threat facing mankind today, and that technology will be key to overcoming that threat. It was uplifting to see so many different kinds of innovation being talked about at the conference, which only emphasised to me the reality that our current approach to carbon offsetting - which came out of the Kyoto Protocol in 1997 - is no longer fit for purpose. The Kyoto Protocol was a good first step in encouraging businesses to address their emissions, but it was not designed for the level of demand nor for the level of accuracy the world needs in its fight against climate change. Do you think your model will become more common across the industry as businesses realise their need to measure carbon accurately? CSX technology is naturally positioned for scalability into a marketplace. In time, we are hoping to democratise the carbon trading market through affordable and accurate measurement, empowering businesses and landowners to track and improve their positive climate impact. As we continue to incorporate and experiment with new technologies, we think that the opportunity for expansion is strong. Our focus is very much on the supply side of the market, rather than the demand side, which we think serves businesses better in the long run. Though we’re currently focused on the UK, we’re already receiving enquiries from territories around the world, and there’s no reason to suggest that we couldn’t expand to other markets in time, perhaps catalysing the adoption of our approach as a new international standard. What do you make of the news from this week of the UN sounding climate change 'alarm bells' over the highest Arctic temperature on record? Rising temperature levels in Siberia and the Arctic region are one of the many indicators that tell us we have to act now. It is incredible to think that a temperature of 38 degrees centigrade was recorded in Siberia, a figure which seems more befitting of the Mediterranean. News like this reminds us of the importance of cutting carbon emissions wherever possible and doing our utmost to work together to make our atmosphere cleaner and more sustainable to reverse these devastating effects. What does 2022 have in store for CSX? We think the future is very bright indeed, with our operational platform going live for land owners and managers in the middle of January 2022. Our BEAMS project on forestry with the University of Oxford & University of Gent will increase its activity rate, and we’re in discussion with a number of other leading scientific institutions about a similar stream of work for peatlands. This investment in scientific research driving updates to our existing models. We plan to expand our resources and capability within machine learning and AI development, building on our recent partnership with C4DI Northallerton. We hope that 2022 will bring more by way of innovation, investment and development in the ideas we’ve been working on, in order to start rapidly expanding our customer base. Updated on Jan 21, 2022, 3:09 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: valuewalkJan 21st, 2022

Leveraged Trading Is Not The Source Of Recent Crypto Weakness: So What Is?

Leveraged Trading Is Not The Source Of Recent Crypto Weakness: So What Is? By Marcel Kasumovich, One River Asset Management head of research Macro narratives are driving digital asset sentiment, from asset swings to regulatory decisions. This alone speaks to a maturing ecosystem – investors want the macro story. But digital asset volatility has been mostly uncorrelated to other macro markets in the recent past. It is more about a shift in investor behavior. 1/ As digital assets enter the mainstream, market commentary focuses on price. And in a world where exchange rate volatility is near all-time lows, attention has naturally shifted to digital assets where volatility against the US dollar is breathtaking by comparison. The megatrend towards the digitalization of finance will not be defined by the shorter-term gyrations. The innovation happening more behind the scenes will dictate the secular formations. Recent advancements in the Lightning Network illustrate the quiet determination to digitalize finance. 2/ The Lightning Network was proposed in 2015 as a way of scaling smaller payments, able to accommodate billions of transactions in a second (here). It addressed the tiring argument of Bitcoin’s inefficiency head-on. And after a slow start, user adoption surged last year with a 3-fold rise in network capacity (Figure 1). It is also integrating into the regulatory mainstream. This week, Bottlepay, a payment provider built on the Lightning Network, was approved by the UK Financial Conduct Authority. These new technologies can hold up to regulatory standards including anti-money laundering (here). It is a powerful example of technologists and regulators working together to encourage innovation in a complacent legacy system. 3/ Innovation may drive the megatrends, but investors are still left to manage and explain portfolio volatility from digital assets. And just as digital innovation is garnering more institutional attention, so too are the narratives around the volatility of digital assets. Investors are looking for macro thematic narratives, including the sharp downturn since November and the abrupt decline to start the year. Explanations center on the downturn in inflation expectations, the Fed pivot toward faster rate hikes and balance sheet normalization, as well as the decline in growth stocks tied to the rise in real interest rates. The high correlation of bitcoin returns to inflation expectations last year (56%) reinforces a desire to put a tidy macro narrative to the digital ecosystem. 4/ But the analytics tell a different story. We run a simple empirical exercise to evaluate bitcoin returns as explained by three macro factors: market-based inflation expectations (5y5y inflation swaps), the inflation-adjusted terminal policy rate (5y5y overnight interest rate swap less 5y5y inflation swaps), and Nasdaq 100 equity returns. These factors only explain 10-45% of the variation in bitcoin over the past two years and with various representations of the data. More importantly, there is almost no relevance of these factors in explaining the bitcoin downturn since November. Those factors would imply a bitcoin price of 50-60k, much higher than the current price. 5/ What does that mean for investors? Digital assets volatility has been largely independent of macro factors in the recent past. To be sure, the independent volatility that most investors hope for is skewed to the upside. But in assets where volatility expectations have ranged from 55% to 158% in the past two years, there will be plenty of periods where idiosyncratic moves detract from a portfolio. The test for any investor is asking about the structural trends. What tokens will prosper with the digitalization of finance? How broad will token pluralism extend? If the answers to the structural questions are positive, then downside volatility should be met with programmatic rebalancing into digital assets. 6/ Of course, idiosyncratic volatility is not satisfying. It is a polite way of saying we need to dig deeper for an explanation. What is behind the swings in digital assets if the macro narrative falls flat? The hunt for the explanation is partly a process of elimination and partly identifying new patterns of behavior. There are three key elements of the market microstructure of interest. 7/ First, the bitcoin forward yield curve has been stable, indicating leveraged trading is not a source of downside volatility. Figure 2 illustrates the one-month annualized yield implied by bitcoin futures on the Deribit exchange, where leverage is more readily available to traders. A rise in speculative demand leads to higher forward bitcoin prices and higher implied yields (vice versa). In periods of excess leverage, forward prices fall more than spot as speculative traders forced to close positions at unfavorable prices. Last May, one-month yields fell to an annualized –75%, reflecting a costly, steep inversion of the forward curve to speculative long traders. On this downturn, the compression in yields is barely visible. 8/ Second, option markets have decoupled from previous correlations to spot prices, with declining volatility expectations. The one-week implied volatility on Ether is 70%, near the lows of the past year (Figure 3). Ordinarily, declines in spot prices, particularly severe ones, would have seen a surge in volatility expectations. However, volatility is low despite a sharp decline in spot prices. The same pattern is evident in 25-delta put-call volatility skew. The one-week skew in Ether options is only marginally positive, near the average of the past year. This is strongly counter to past downturns in spot prices, where option skew spiked well above 40%! Again, leveraged trading is not the source of the recent price weakness. 9/ Third, a rise in the dispersion of digital asset prices hints at a change in investor behavior. We illustrate this point with a unique parsing of the data based on the last two downturns: May 8, 2021 and Nov 9, 2021. Dispersion is measured by the median difference between the individual returns on the 12 assets of our Core Index and bitcoin returns. When Index asset returns are evenly dispersed around bitcoin returns, the measure is zero. The one-month dispersion in the latest downturn measures near-zero (–0.4%). This is vastly different from May 2021, where the one-month dispersion index measured –9.1%. Index assets exhibited higher beta to the bitcoin downturn. No doubt, two cyclical periods don’t make a trend, but it does call for attention. 10/ Market behavior is bifurcating. It is evident in futures markets, where the decline in yields has been greater in regulated markets (CME) than in unregulated ones (Deribit). It is evident in active supply, where the percentage of longer-term holders has dropped alongside a more-than 20% fall in large-value bitcoin addresses (greater than $10mn). It is evident in the surge of interest in venture applications (here). Investors focused on macro narratives have mattered more than leveraged traders. And it is these ebbs and flows that should remind investors that we are at the very early stages in the digitalization of finance. It is precisely in those imperfect, inefficient early stages where megatrend assets are most additive to a portfolio. Figure 1 – Lightning Network Capacity Surge, Adoption Rising Figure 2 – Bitcoin Futures’ Yield Stable, No Sign of Speculative Excess Figure 3 – Ether Volatility Low Despite Declining Prices Tyler Durden Sun, 01/16/2022 - 22:00.....»»

Category: dealsSource: nytJan 16th, 2022

Nancy Pelosi — under pressure — directs House to consider bigger penalties for lawmakers and aides who break a federal conflict-of-interest law

Insider's "Conflicted Congress" investigation found that dozens of lawmakers and more than 182 senior staff violated a law meant to increase transparency and banish conflicts of interest. Speaker of the House Nancy Pelosi, a Democrat from California, takes questions from reporters at her weekly news conference on Capitol Hill on Thursday, Nov. 4, 2021.Kent Nishimura / Los Angeles Times via Getty Images A House panel will scrutinize congressional stock trades following Insider's 'Conflicted Congress' investigation. Lawmakers may face higher fines if they report their stock trades late.  The move comes after Insider revealed numerous violations and lawmakers are proposing stock bans.  Facing withering criticism from political friends and foes alike, House Speaker Nancy Pelosi is directing a panel to consider higher fines for lawmakers and top aides who violate a law on congressional stock trading meant to combat financial conflicts of interest. The Democratic leader asked the Committee on House Administration to investigate how many members have broken the reporting requirements of the the 2012 Stop Trading on Congressional Knowledge Act, also known as the STOCK Act.At least 54 members of Congress and 182 of their top aides have violated the STOCK Act's disclosure provisions, according to Insider's "Conflicted Congress" investigation, which published in December.Drew Hammill, Pelosi's deputy chief of staff, told Insider that the Speaker asked the panel to look into "the possibility of stiffening penalties," and confirmed it would extend to senior staff. "The speaker believes that sunlight is the best disinfectant and has asked Committee on House Administration Chair Zoe Lofgren to examine the issue of Members' unacceptable noncompliance with the reporting requirements in the STOCK Act," he said. The panel is responsible for setting rules on lawmakers and staff, including everything from human resources directions to ethical standards.Pelosi's actions contrast with most recent statements about members of Congress and their stock trades. Following publication of Insider's "Conflicted Congress" project, Pelosi told Insider that members of Congress should be allowed to buy and sell individual stocks. "We are a free-market economy. They should be able to participate in that," Pelosi said, adding that members of Congress should report their trades on time.But while the STOCK Act requires members of Congress to publicly report their stock transactions within 30 to 45 days, depending on when they learned about a trade, dozens of Democrats and Republicans alike have recently failed to do so. Some have broken federal disclosure deadlines by months with stock trades worth into the millions of dollars.Lawmakers who have violated the STOCK Act's disclosure provisions routinely invest in companies that vie for federal contracts and lobby the federal government, sometimes spending millions of dollars annually to do so."Conflicted Congress" also revealed numerous, recent examples of potential conflicts: House Armed Services Committee members trading defense contractor stocks, lawmakers responsible for health policy buying shares of COVID-19 vaccine manufacturers, environmentally minded congressional members investing in oil companies.Pelosi does not personally trade stocks, but her husband, Paul Pelosi, has millions of dollars worth of stock investments that the speaker must by law disclose. Insider also contacted Senate Majority Leader Chuck Schumer's office and the Senate Rules Committee to ask whether the Senate might undertake a similar review, but did not immediately receive a response. On Tuesday, Schumer dodged a question about whether he supported a stock trading ban for lawmakers, but told Insider "I don't own any stocks, and I think that's the right thing to do."Republican House Minority Leader Kevin McCarthy of California and Democratic Rep. Alexandria Ocasio-Cortez of New York are among a growing, bipartisan coalition of lawmakers who have expressed support for a ban on members of Congress trading individual stocks.Aaron P. Bernstein/Getty Images; J. Scott Applewhite/AP PhotoMinimal consequencesInsider's "Conflicted Congress" investigation found that few face consequences for violating the law, including cases in which they reported millions of dollars in trades months or even years late.Scofflaws are supposed to pay a late fee of $200 the first time they file a report about their stock trades late, and increasingly higher fines are supposed to follow if they continue to be late — potentially costing tens of thousands of dollars in extreme cases. But that rarely happens.Pelosi's latest actions come as lawmakers on both sides of the aisle have in recent days proposed a slew of similar bills to ban stock trading, including a pair of competing proposals unveiled on Wednesday by Sen. Jon Ossoff, a Democrat of Georgia, and Sen. Josh Hawley, a Republican of Missouri. House Minority Leader Kevin McCarthy of California, who is poised to become the new speaker if Republicans win back the House after the 2022 elections, told Punchbowl News this week he supports restrictions on members of Congress buying and selling individual stocks. Republican Rep. Chip Roy of Texas has sponsored a bill restricting members of Congress from trading stocks, and US Senate candidate Blake Masters of Arizona has made banning congressional stock trades a cornerstone campaign issue.Reps. Alexandria Ocasio-Cortez and Abigail Spanberger, and Democratic Sens. Elizabeth Warren of Massachusetts, Mark Kelly of Arizona, Jeff Merkley of Oregon, and Mark Warner of Virginia rank among Democrats who've said they want tough restrictions on lawmakers' stock trades.Pelosi's decision also arrives as the White House on Friday opened the door to a potential ban on members of Congress trading individual stocks. Meanwhile, Rep. Angie Craig, a two-term Democrat from Minnesota, is preparing to next week introduce a resolution banning members of the US House from owning "common stock of any individual public corporation."Unlike the several other bills lawmakers are introducing to squelch stock trade activity among members of Congress, Craig's resolution, if passed, wouldn't be a law. Instead, it'd be a House rule that only applied to House members and not subject to a vote in the US Senate or the signature of President Joe Biden.Why is Craig willing to defy Pelosi on this matter and potentially invite political blowback from the speaker?"I just fundamentally disagree with her on this topic … I wish the speaker had a different point of view," Craig told Insider on Friday. "If the American people can't believe that we're here just to serve them, not to pad our own portfolios, then how can they trust we're doing what's in our best interest?"I want to start the conversation about why my leadership wants to block this legislation," Craig said, adding that she will "working across the aisle to see what kind of support we can build."Craig recalled once participating in a House Subcommittee on Aviation hearing involving Boeing, the aviation and defense contracting giant."I literally sat there that one day and said to myself, 'My God, if I wanted to short Boeing today, and make a little money — this is the most ridiculous thing in the world that members of Congress can trade individual stocks," she said. "We often get information before the general public."Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 14th, 2022

Rotate to Cyclical Sectors With These Top-Ranked ETFs

As the Federal Reserve turned more hawkish and expectations for interest rates hike rose, investors rotated out of the high-growth technology to cyclical sectors like energy, financials, materials and industrials. Rising yields have gripped Wall Street since the start of 2022, resulting in a sell-off in the tech sector. As the Federal Reserve turned more hawkish and expectations for interest rates hike rose, investors rotated out of the high-growth technology to cyclical sectors like energy, financials, materials and industrials.Investors seeking to tap the current trends could consider the ETFs form the cyclical sectors. While there are many options, Vanguard Energy ETF VDE, iShares U.S. Home Construction ETF ITB, U.S. Global Jets ETF JETS, Materials Select Sector SPDR XLB and SPDR S&P Bank ETF KBE with a Zacks Rank #1 (Strong Buy) or 2 (Buy) seem excellent choices.Why Cyclical?Prices for almost everything, from raw materials to food prices to shipping costs, soared last year at the fastest pace in nearly four decades. This is especially true as the consumer price index jumped 7% year over year in 2021, marking the largest 12-month gain since June 1982. The red-hot inflation has set the stage for the first interest rate hike as soon as in March (read: 5 ETF Plays to Make the Most of Red-Hot Inflation).The 10-year Treasury yield hit a two-year high on bets that the Federal Reserve could raise interest rates as soon as in March. The latest Fed minutes revealed policymakers’ concerns about worsening inflation and early interest rate hikes to combat rising inflation. The policymakers signaled three rate increases this year and three in the following year as inflation concerns deepened. The probabilities of a March interest rate hike of 0.25% surged to 72%, according to fed futures trading contracts.Omicron cases are also surging in the United States, with more than a million new cases in a single-day and hospitalizations hitting new highs.However, a still-improving economy backed by job growth and higher consumer confidence will likely bolster risk-on trade. Increased U.S. consumer confidence, suggests that the economy would continue to expand in 2022. Additionally, President Biden’s administration took steps to eliminate supply-chain bottlenecks, indicating that higher inflation will not last very long. Further, the wider spread of vaccinations, new vaccines as well as solid corporate earnings bode well for the economy. As the cyclical sectors are tied to economic activities, these outperform when economic growth improves.Vanguard Energy ETF (VDE)Vanguard Energy ETF is one of the popular choices in the energy space, having accumulated $6.6 billion in its asset base. It provides exposure to a basket of 104 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index (read: 5 Energy ETFs Making the Most of Oil Price Surge).Vanguard Energy ETF sees a good volume of about 1.5 million shares and charges 10 bps in annual fees. VDE has a Zacks ETF Rank #2.iShares U.S. Home Construction ETF (ITB)iShares U.S. Home Construction ETF provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $3 billion, iShares U.S. Home Construction ETF holds a basket of 46 stocks with heavy concentration on the top two firms.iShares U.S. Home Construction ETF charges 41 bps in annual fees and trades in a heavy volume of around 3 million shares a day on average. iShares U.S. Home Construction ETF has a Zacks ETF Rank #2.U.S. Global Jets ETF (JETS)U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 51 securities and charges investors 60 bps in annual fees.U.S. Global Jets ETF has gathered $3.5 billion in its asset base while seeing solid trading volume of nearly 12.1 million shares a day. It has a Zacks ETF Rank #2.Materials Select Sector SPDR (XLB)Materials Select Sector SPDR is the most-popular material ETF that follows the Materials Select Sector Index. It manages about $8.6 billion in its asset base and trades in volumes as heavy as around 6 million shares. Materials Select Sector SPDR holds about 28 securities in its basket and charges 12 bps in fees per year from its investors (read: 5 Top-Ranked ETFs to Add to Your Portfolio for 2022).In terms of industrial exposure, chemicals dominates the portfolio with a 68.8% share, while metals & mining, and containers & packaging round off the top three positions. The product has a Zacks ETF Rank #1.SPDR S&P Bank ETF (KBE)SPDR S&P Bank ETF offers equal-weight exposure to 98 banking stocks by tracking the S&P Banks Select Industry Index. Regional banks dominate the portfolio with 74.8% share while thrifts & mortgage finance, diversified banks, other diversified financial services and asset management & custody banks take the remainder.SPDR S&P Bank ETF has amassed $8.6 billion in its asset base while trading in a heavy volume of 2.8 million shares a day, on average. The product charges 35 bps in annual fees. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>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 Materials Select Sector SPDR ETF (XLB): ETF Research Reports iShares U.S. Home Construction ETF (ITB): ETF Research Reports SPDR S&P Bank ETF (KBE): ETF Research Reports Vanguard Energy ETF (VDE): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Take Advantage Of Elevated Volatility With Covered Call Options

High volume selling since early-November has been driven up volatility premiums on options across the equity market, generating rich Theta-catching opportunities It's once again time to start thinking about covered calls as monetary uncertainty in the face of unending COVID-fueled inflation induces a market pullback. The high volume selling (specifically in high-growth equities) we've seen since before Thanksgiving has been driven up implied volatility (IV) on options across the equity market, presenting us with generous Theta-catching opportunity.Covered calls will allow you to capture returns on stocks you already own or buy new shares of enterprises you've waiting to acquire at a discount.What's A Covered Call? Implementing a covered call strategy involves selling out-of-the-money call options on a stock that you own or want to purchase and collecting the premium that each call option yields you. This means that you are effectively sell-short the options contract.Your P&L on this option play would be inverse to the call's premium because you are effectively short in the derivatives market once you enter the trade. However, the underlying shares that you own protect you from any losses (aka covered call), making these trades risk-free (if you don't account for opportunity loss if the underlying stock soars above your strike).When executing a play like this, you must remember that each option contract represents 100 shares. Meaning you should only write (or sell) call contracts for each block of 100 shares that you own or would like to own.The Greeks To Focus OnTheta represents the time-value depreciation of an option's premium each day under the assumption the underlying security does not move. Theta can be seen as the daily return on a covered call option.It represents the expected daily returns of a covered call, assuming that the strike price is not reached prior to expirations. Theta (quoted as a negative figure) and implied volatility are directly correlated on an absolute value basis (aka disregarding -/+ signs).Theta and Vega, an option's sensitivity to implied volatility, are the most meaningful metrics to focus on when implementing a covered call strategy. As an option seller, we want Theta (expected daily returns) to be high on an absolute basis, while Vega (volatility risk) remains low.When assessing opportunities for covered calls, I'm looking for options with an IV of 50% or higher in combination with a Theta to Vega ratio that exceeds 0.25. The higher the Theta Vega ratio, the better the risk/reward outlay for option sellers (no matter what your strategy).Risk Of Writing Uncovered CallSelling call options is extraordinarily dangerous if you don't own the underly security because your downside is unlimited (similar to short selling a stock except leveraged due to the nature of options nature).To help you conceptualize this, imagine you sold a 1-Year out Alphabet (GOOGL) call in September 2020 for a September 2021 monthly contract (Sept 17th Exp.) at a $2,500 strike for a quoted $20 per share premium, with zero shares held.Now, most people in their right mind would think that there is absolutely no way that GOOGL, trading at $1,450 at the time, would be able to rally over 72% in the next year. Perceptively it was a 'low-risk trade,' despite not owning the $145,000 worth of stock needed to make this trade truly risk-free (100 shares).This trade would have provided an immediate credit of $2,000 ($20 quoted per share premium x 100 shares = $2,000), but as GOOGL rallied, your position would have quickly turned against you. Since you are short the call, every dollar the premium moves up is a dollar against your position as you would have to repurchase the call at market value to flatten your trade.Let's say you held on to this until it expired, assuming you didn't have the required shares on hand, you not only would have lost the entire $2,000 premium that you were credited a year prior but would now have to pay the difference between the $2,500 strike and $2,816 spot price of the stock. This would have run you $31,600, (($2,816 – $2,500) x 100 = $31,600).This trade risked an endless amount of capital for a measly upside of $2,000. Your brokerage account would have almost certainly sent you a risk alert or a margin call before you were able to lose this much (likely requiring $50k in liquidity), but this exemplifies the outsized risks involved in selling an uncovered call option.Now let's say you did own the necessary underlying shares when you sold the 1-year call on GOOGL (covered call). The trade would have yielded you the initial $2,000 credit, and you would have been making money on the underlying shares all the way up to $2,500. The transaction would have returned you ($2,500 - $1,450) x 100 + $2,000= $107,000 or a 74% profit.Since you owned the underlying shares, you still wanted the stock to go up, and the predetermined strike price you initially sold the call at was merely your exit price.How To Take Advantage FUD-fueled (fear, uncertainty, & doubt) market selloffs like these are the best times to execute a covered call strategy because the short-term surge in volatility causes the premium of these options to spike (seen as an increase in Theta on an absolute value basis). The higher the implied volatility (IV), the more uncertain the stock's future price is, which is reflected as an increase in the option's value. This allows you to capture a larger credit on the calls you would like to write.Remember only to sell calls that are tolerably out-of-the-money (above the market price of underlying shares) to ensure that you capture both the option credit and any potential upside in the share price if the stock does end up rallying to your strike price before expiration.There are a couple of crucial judgments you need to make when trading covered calls: what price you are willing to sell your stock at and whether you believe the market's volatility?If I write longer-term covered calls (6 to 18 months till exp.), I typically choose a strike price that I have predetermined as my price target (where I am willing to let go of the stock). If I'm selling a short-term covered call (1 week to 3 months till exp.) I can take advantage of near-term volatility, with the flexibility to roll the calls over each time the prior one expires if the volatility sustains (similar to a high-yielding fixed-income security).Buy-In StrategyIf you are looking to add equities to your portfolio with a size of 100 shares or more, it may be prudent to sell a call option simultaneously. Growth-oriented tech stocks are what I am focused on because of this cohort's significant valuation compression in recent months (50%+ declines in some cases) and the volatile premium on these already naturally high IV names is creating Theta-rich environment for generous returns on cover-call options.Stocks I'm looking to add are positioned for the next generation economy like AI-power customer service automator Twilio TWLO, best-in-class cybersecurity platform CrowdStrike CRWD, and real-time machine data management powerhouse Splunk SPLK. These stocks have long-term winners but are experiencing significant short-term uncertainty in the face of an increasingly hawkish Fed and broader market pressures from the latest COVID-variant (Omicron).These nascent tech enterprises hold a leadership position in their niche operating segments and have a compelling growth narrative that shouldn't be ignored. They will undoubtedly play a vital role in the commencing 4th Industrial Revolution, which is already rapidly digitalizing our global economy.Take a look at your portfolio and examine stocks where you hold a 100+ share position (1 call per 100 share block), with the highest IVs to capture the most Theta. This call selling tactic will not make you rich quick, but it is a savvy way to capture returns in a down-trending market.Make sure you are willing to exit these covered call positions at the strike price you chose. I am looking to sell March 18th expiring calls (the most liquid short-term monthly contracts), which will allow me catch volatility in this pivotal Q4 earnings season and provide the ability to roll these calls over if FUD continues to plague the market.I remain bullish as we enter the first earnings season of 2022 and am buying this dip in public equities.Happy Trading!Dan LaboeEquity Strategist & Editor of The Headline Trader Portfolio Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>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 Splunk Inc. (SPLK): Free Stock Analysis Report Twilio Inc. (TWLO): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

The 24 best subscription boxes for food, drink, style, beauty, hobbies, and pets in 2022

From coffee and snacks to games and books, these are the best subscription boxes you can buy as gifts for yourself and everyone else in 2022. Prices are accurate at the time of publication.When you buy through our links, Insider may earn an affiliate commission. Learn more.Birchbox Subscription box services are great for anything you love to receive on a regular basis. They can help you discover new products, develop your hobbies, or add convenience to your life. If you're looking for more great products, check out our list of the All-Time Best products we've ever tested. By now, the subscription concept has been widely applied to pretty much anything you can buy, but it's most useful for the things you actually use and enjoy regularly. Whether that's razor blades for your daily shaving routine or books to read during your commute, a subscription box helps automate the process for buying and receiving products so you have more time to use said products. Subscription boxes can help you discover new products in an arena you're already interested in or figure out if you want to pursue a hobby further. They're like trial runs for your various interests or needs and usually a lot more affordable than a full commitment. Plus, subscription boxes are great for gifting. With one fell swoop, you can gift three whole months of discovering new wine or trying out different perfumes.If you do change your mind about your subscription, all the following services make it easy to skip next month's shipment or cancel your subscription.Here are the best subscription boxes in 2022Food and drinkBest wine subscriptionConnie Chen/InsiderWinc Monthly Wine Subscription (4 bottles)$29.95 FROM WINCOriginally $52.00 | Save 42%Subscription frequency: Every monthShipping fee: $9 for orders of three bottles or fewer; free for orders of four bottles or moreA la carte shop: Yes Gifting available: YesWinc's straightforward ordering process, on-trend wine curation, and reliable shipping make it the best online wine club we've tried in the last few years. If your interest in a wine subscription stems not only from the need for convenience but also the desire to expand your wine knowledge, Winc offers informative resources, easy-to-digest bottle descriptions, and a community ratings system to help you develop your palate. Winc delivers wine every month, but it's easy to adjust your membership to skip automatic shipments. Although it matches you to wines that it thinks you'll like based on your profile of tastes and preferences, you can also customize your shipment and browse Winc's complete catalog of varietals from all over the world.Runners-up: Firstleaf, for affordable wine and big discounts ($80/month)Plonk, for natural and biodynamic wines ($110/month) Read more about the best wine subscriptions we tested in 2022. Read our reviews of Winc and Firstleaf.Best coffee subscriptionTrade/InstagramTrade Coffee Monthly Membership$14.75 FROM TRADESubscription frequency: Every 1, 2, or 4 weeksShipping fee: FreeA la carte shop: YesGifting available: YesTrade is where you can order top-quality coffee from cool roasters all over the country, like Verve (Santa Cruz, CA), Cuvee (Austin, TX), and Huckleberry (Denver, CO). If you're the type to immediately seek out the local specialty coffee shop when you travel to a new city, then Trade's the best coffee subscription for you — and you don't even have to leave your house to receive your beans. All you have to do is tell Trade about how you take your coffee and it'll show you the best coffee you should be drinking every morning. It'll also provide the roaster's schedule for roasting and when your bag was roasted.Runners-up: Driftaway, for sustainability-focused, single-origin coffee ($14.40/shipment)Atlas, for exploring the global coffee scene ($14/shipment)Read more about the best coffee subscriptions we tested in 2022. Read our reviews of Trade, Driftaway, and Atlas.Best tea subscriptionSips bySips by Monthly Tea Subscription$16.00 FROM SIPS BYSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesSips by is a personalized tea subscription that sends you four different teas (enough to make at least 16 cups) every month, so your tea rotation always stays new and exciting. You'll get to explore teas from big and familiar brands as well as local tea shops and farms and choose from loose leaf, bagged, herbal, and caffeinated teas. If you weren't already familiar with all the benefits of tea, how to steep your tea, and the differences among all the tea types, Sips by shares plenty of educational resources to strengthen your tea knowledge. Plus, the subscription considers your taste and steep preferences — we loved the personal touch. Runners-up: Atlas Tea Club Starter Pack, for single-origin and global teas ($14/shipment)David's Tea Tasting Club, for exclusive and seasonal tea blends ($35/shipment)Read our review of Sips by.Best beer subscriptionBeer of the Month ClubBeer of the Month Club Subscription$31.95 FROM BEER OF THE MONTH CLUBSubscription frequency: Every monthShipping fee: $15 A la carte shop: No Gifting available: YesChoose from five different beer memberships in this club: Microbrewed, Hop Heads, Rare Beers, International, and US and International. Each of these clubs gives you 12 12-oz beers in different styles from a few different breweries, plus brewery profiles and tasting notes. It's the most convenient way to tour breweries in the US and around the world. The original club started in 1994, and its panel of brewmasters and beer judges only pick out a mix of the most interesting and innovative craft beers every month. The diversity of options means you can stop pigeonholing yourself into drinking (and pretending to enjoy) IPAs.Runners-up: Tavour, for mobile-first beer orders (Price varies)Craft Beer Kings, for fun and creative flavors ($70/shipment)Best cocktail subscriptionCocktail Courier/InstagramCocktail Courier Classic Cocktail Kit Subscription$49.99 FROM COCKTAIL COURIERSubscription frequency: Every 1, 2, or 4 weeksShipping fee: FreeA la carte shop: YesGifting available: YesUnless you keep your bar cart fully stocked and meticulously updated, it can be a hassle to source all the ingredients for a specialty cocktail you want to make. Let's also not forget that going out for happy hour requires putting on clothes. Cocktail Courier makes kits based on recipes from top bartenders and sends you all the ingredients you need, including the spirits. Keep in mind, though, you do need your own basic equipment, like glassware and a shaker. For the subscription, just choose your favorite spirits and you'll only be sent kits with those spirits. There's also an option for just the mixers and garnishes, if you prefer to use your own alcohol. Runners-up: Shaker & Spoon, for a variety of cocktails that focus on one spirit (from $40/shipment)SaloonBox, for group cocktail parties (from $57/shipment)Best snack subscriptionSnackCrate/InstagramSnackCrate Original Snack Box Subscription$21.99 FROM SNACKCRATEOriginally $26.99 | Save 19%Subscription frequency: Every monthShipping fee: FreeA la carte shop: NoGifting available: YesOne of our favorite things to do when visiting a new country is to scour the snack aisles of the local grocery store. SnackCrate brings that same excitement and discovery process to your door. Every month's snack box focuses on a different country and includes full-sized snacks directly imported from that country. You'll also get a music playlist and booklet of games and facts related to the country. There are three box sizes available to suit everyone from occasional grazers to snack aficionados. Runners-up: Mouth, for gourmet snacks from indie makers ($60/month)Bokksu, for authentic Japanese snacks ($49.95/month)Read our review of Bokksu.Best cheese subscriptionMurray’s Cheese/InstagramMurray’s Classic Cheese of the Month Club$63.00 FROM MURRAY'SSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesNew York City institution Murray's Cheese offers a few different monthly clubs that let you get your fix for creamy, stinky, soft, smoky, and hard cheeses. It's part indulgence, part educational experience. The Classic Club is great for people who want a reliable way to enjoy cheeses you might not have heard of but still have an approachable flavor profile — think Montealva, a flaky and citrus-y goat's milk cheese from Spain or The Farm at Doe Run's butterscotch-infused cheese. If you want something more adventurous, try the Cheesemonger's Picks club instead. Runners-up: Curdbox, for cheese plates including sweet and savory pairings ($49.95/month)Jasper Hill, for special release and limited-edition cheese from Vermont ($100/month)Read our review of Murray's Cheese of the Month Club.Best meat subscriptionButcherBox/InstagramButcherBox Mixed Box$137.00 FROM BUTCHERBOXSubscription frequency: Every monthShipping fee: FreeA la carte shop: NoGifting available: YesIn addition to pre-curated boxes of grass-fed beef, free-range organic chicken, and crate-free pork, ButcherBox lets you choose from more than 25 different cuts to make your own custom box. It's an easy way to get high-quality meat (up to 14 pounds every month) without having to visit your local butcher or farmer's market. The subscription is also flexible in case you don't need that much meat every month. But if you're feeding a lot of mouths, hosting a barbeque, or just enjoy eating meat, you'll want to take advantage of ButcherBox's value every month.Runners-up: Porter Road, for underrated cuts of meat and the best variety (Price varies) Snake River Farms, for high-end meat like American Wagyu ($225/shipment)Read more about the best meat subscriptions we tested in 2022. Read our reviews of ButcherBox, Porter Road, and Snake River Farms. Best meal kit subscriptionBlue Apron/InstagramBlue Apron Meal Kits (3-meal, 2-serving)$53.94 FROM BLUE APRON Subscription frequency: Every weekShipping fee: FreeA la carte shop: NoGifting available: YesBlue Apron's flavorful, creative takes on familiar recipes and reliable, accurate delivery make it the best meal kit you can subscribe to. It's versatile and flexible, with meal options for all kinds of dietary preferences, a variety of plans for two- and four-person families, and add-ons like meat and seafood bundles, spice blends, and cookware and tools. There's even a wine add-on to complete your dining experience. The meals (like chimichurri tilapia, one-pan prosciutto gnocchi, and sambal-peanut chicken noodles) are always delicious and the portions are generous — you'll even have leftovers,  sometimes. The menu updates frequently and we rarely see the same recipe twice.Runners-up: Sunbasket, for organic ingredients and health-conscious recipes ($71.94/3-meal, 2-serving plan)Everyplate, for the most affordable yet filling meals ($39.93/3-meal, 2-serving plan)Read more about the best meal kit subscriptions we tested in 2022.Beauty, grooming, and styleBest beauty subscriptionBirchbox/InstagramBirchbox Beauty Subscription Box$13.00 FROM BIRCHBOXSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesBirchbox's mission is to make the vast world of beauty and skincare fun and less intimidating by giving you the freedom to sample tons of different products. Every month's affordable beauty box contains five samples you might like based on your Beauty Profile, featuring a variety of new and upcoming brands and products (makeup, skincare, haircare, fragrance).The brands included reflect Birchbox's core values of sustainability, inclusivity, and supporting women. For example, there's a limited edition Brown Girl Jane box which is made by and for Black women's wellness. Once you've tried a sample you really love, you can directly shop the full-sized product at Birchbox's shop. There's also a Grooming section with hair, face and body, and shaving essentials.Runners-up: Kura, for clean skincare bundles customized to your needs (from $99/shipment)Prose, for personalized haircare like shampoo and hair masks (Price varies)Read more about the best beauty subscription boxes we tested in 2022. Read our reviews of Birchbox and Prose.Best shaving subscriptionDollar Shave Club/InstagramDollar Shave Club Starter Set$10.00 FROM DOLLAR SHAVE CLUBSubscription frequency: Every 2, 3, or 4 monthsShipping fee: FreeA la carte shop: Yes Gifting available: YesThere are a variety of ways you can get sharp and budget-friendly razor shipments from Dollar Shave Club: the first is the Starter Set, which costs just $5 ($20 every two months afterward) and acts as your trial run for the shave subscription. Or, you can take the site's quiz to receive a personalized recommendation of products based on your hair type and shaving needs. Either way, this famous online shave club offers plenty of flexibility so that you'll always have a supply of razor blades and soothing post-shave essentials whenever you need it. Runners-up: Billie, for fun yet practical razors ($9/shipment)Harry's, for sleek designs and other body care products ($15/shipment)Read our reviews of Billie and Harry's.Best men's clothing subscriptionAmir Ismael/InsiderMenlo Club Subscription$20.00 FROM MENLO CLUBOriginally $60.00 | Save 67%Subscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesMenlo Club, the styling service loved by NBA stars and our own senior style reporter, curates two to three pieces for you per month based on your style preferences and clothing sizes. Brands include Five Four, Grand AC, and New Republic, and the pieces are easy to incorporate into your existing wardrobe. It's your best bet if you don't like or have time for clothing shopping because it offers high-quality clothing with plenty of variety. You can exchange sizes for free and you'll also get perks like exclusive discounts and early access to drops.Runners-up: Stitch Fix, for clothing picks made by your own personal stylist ($20/shipment)Gentleman's Box, for stylish accessories like ties and socks ($35/shipment)Read more about the best men's clothing subscriptions we tested in 2022.Read our review of Menlo Club.Best women's clothing subscriptionRent the RunwayRent the Runway 2 Swaps$85.00 FROM RENT THE RUNWAYOriginally $135.00 | Save 37%Subscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesWith over 750 designers to choose from, Rent the Runway is the closet of your dreams for special occasions like weddings, workwear essentials, or simply to add excitement to your regular wardrobe. Its most popular plan lets you rent four pieces at a time, twice a month, for just $99 a month (for the first two months). We've always found it easy to pick out, wear, and return dresses, tops, loungewear, and accessories from the service. It's all the fun and excitement of wearing designer clothing, without the exorbitant price tags or complicated dry cleaning.Runners-up: Stitch Fix, for clothing picks made by your own personal stylist ($20/shipment)Nuuly, for affordable rentals from Urban Outfitters, Anthropologie, and Free People ($88/shipment)Read our review of Rent the Runway.Best jewelry subscriptionRocksbox/InstagramRocksbox Monthly Jewelry Subscription$21.00 FROM ROCKSBOXSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesThe right jewelry can bring an outfit to the next level, and with Rocksbox, the search for the perfect ring, earring, necklace, or bracelet is easy and very affordable. The $21 monthly membership gets you three pieces of jewelry from brands like Kendra Scott, Slate, 8 Other Reasons, and more, and the best part is you can swap the pieces as many times as you want during the month. If you fall in love with a piece and decide to buy it, your membership fee turns into a credit towards your purchase, saving you even more money.Runners-up: Switch, for luxury and fine jewelry like Hermes and Chanel (from $40/shipment)Rowan, for hypoallergenic earrings and fun freebies ($35/shipment)Best underwear subscriptionMeUndies/InstagramMeUndies Monthly Subscription$14.00 FROM MEUNDIESSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesMeUndies makes incredibly soft and comfy underwear in a variety of cuts and a huge selection of fun, ever-rotating prints and patterns. Though new underwear every month may seem unnecessary, you might just change your tune once you try a pair from MeUndies. All its fabrics are breathable and stretchy and last through years of washes. The part to look forward to the most? Collecting all the unique prints, which have included sharks, a "Space Jam" collaboration, and sun-tanning alligators in the past.Runners-up: Underclub, for designer underwear in a range of styles (from $15/shipment)Savage by Fenty Xtra VIP, for access to monthly drops and exclusive deals from Rihanna's lingerie brand ($49.95/shipment)Read our review of MeUndies.Best subscription for perfume and cologneScentbird/InstagramScentbird Subscription Box$15.95 FROM SCENTBIRDSubscription frequency: Every 1, 2, or 3 monthsShipping fee: FreeA la carte shop: YesGifting available: YesFragrance is so personal to each individual person that it only makes sense to turn buying perfume or cologne into a sampling experience. Scentbird is home to over 500 fragrances from designer and indie brands, letting you discover your signature scent, add some variety to your current fragrance lineup, or simply try fragrances you wouldn't have access to otherwise. You'll be able to try perfume and cologne from Versace, D&G, Acqua di Parma and more. Each 8 mL sampler bottle holds about 140 sprays — enough to use a couple times a day, every day of the month.Runners-up: Scentbox, for an even larger variety of fragrances to choose from ($9.72/shipment)Skylar Scent Club, for limited-edition rollerballs made with clean ingredients ($20/shipment)Hobbies and interestsBest flower subscriptionLauren Savoie/InsiderBloomsyBox Flower Subscription Service$44.99 FROM BLOOMSYBOX$38.99 FROM AMAZONOriginally $44.99 | Save 13%Subscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesSome people like food or shoes or jewelry, but for us, flowers are the ultimate monthly pick-me-up. BloomsyBox's monthly flower delivery service features one unique bouquet of 22-24 stems, and though you can't pick the exact flowers you want, the ones we've received from the service have always been gorgeous. It's a lovely way to liven up your home with new and interesting arrangements and the flowers arrive fresh and undisturbed. Be on the lookout for cool, limited-time collaborations, like the current partnership with the New York Botanical Garden.Runners-up: UrbanStems, for timeless arrangements and deliveries as frequent as every week ($55/shipment)Read more about the best flower delivery services we tested in 2022. Read our reviews of Bloomsybox and UrbanStems.Best plant subscriptionHorti/InstagramHorti Month-to-Month Plant Subscription$28.00 FROM HORTISubscription frequency: Every monthShipping fee: $8-$12A la carte shop: YesGifting available: YesHorti is best for beginner plant enthusiasts who are interested in starting a plant collection but may not know where to start or how to learn the basics of plant care. Horti's subscription is strategically designed so you begin with hardy, low-maintenance plants but eventually graduate to more complex species as you develop your confidence and experience. Each one always comes in a hand-painted pot (or you can opt for just the naked plants) and sometimes you'll also receive planting tools and accessories. Runners-up: The Sill, for a robust variety of medium-sized, easy care plants ($50/shipment)The Plant Club, for unique, seasonal plants ($39/month)Read our review of The Sill. Best book subscriptionBook of the Month Club/InstagramBook of the Month Membership$9.99 FROM BOOK OF THE MONTHOriginally $15.99 | Save 38%Subscription frequency: Every monthShipping fee: YesA la carte shop: YesGifting available: YesAs the OG national book club (since 1926!), Book of the Month has book curation down to a science, with its finger on the pulse of all the books that everyone seems to be reading and talking about lately. Every month you have the opportunity to choose from five hardcover books representing a variety of genres. Whether you're trying to start up a reading habit or already a voracious reader, the consistent shipments will keep you on track and make you a more well-read citizen. It also offers a separate, formal Book Club service where you can organize your own book club with anyone in your circle.Runners-up: Owl Crate, for signed young adult books and extra freebies ($32.99/shipment)Next Big Idea Club, for nonfiction books curated by big names in business and psychology ($21/month)Read our review of Book of the Month. Best game subscriptionUnbox Boardom/FacebookUnbox Boardom Monthly Subscription$29.99 FROM UNBOX BOARDOMSubscription frequency: Every 1, 2, or 3 months Shipping fee: $5 A la carte shop: YesGifting available: YesIf you like to unplug and unwind with a board game, try the cleverly named Unbox Boardom subscription. Each month, you can either choose a new game yourself or let the gaming experts choose one for you. The membership has all kinds of unique games (strategy, family, trivia, and more) that you haven't heard of before and will keep you well occupied throughout the year. Soon enough, you'll have a healthy stack of games to choose from any time you want to exercise your brain a bit. Past games have included Photosynthesis, a strategy game where you chase the sun to grow trees and Sabordage, a mayhem-filled pirate adventure.Runners-up: Video Games Monthly, for classic and retro video games (from $34.99/shipment)Finders Seekers, for mystery and escape room games ($30/shipment)Best crafting subscriptionThe Crafter’s Box/InstagramThe Crafter's Box Monthly Membership$65.00 FROM THE CRAFTER'S BOXSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesFor people who love working with their hands, The Crafter's Box offers the convenient and affordable opportunity to try out different kinds of crafts and learn from real working crafters. In addition to the kit of materials, you'll receive access to a digital workshop and live chat with a community of fellow craft lovers. The exciting lineup of craft options include fabric weaving, leather sandal making, paper making, soap making, and contemporary quilting. Since The Crafter's Box sends you all the materials you need, you can test drive various crafting types and figure out the one you love the most before you drop an entire month's paycheck at Michael's.Runners-up: Kiwi Doodle Crate, for creative projects designed for teens ($22.95/shipment)Adults and Crafts, for small, approachable projects ($33/shipment)Read our review of KiwiCo Crates. Best subscription for kidsAlicia Betz/InsiderKiwico Crates$19.95 FROM KIWICOSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesCreated by an engineer and mother of three, KiwiCo makes kits with toys and activities for kids of every age, from newborns to 14-year-olds. The science and art projects, designed by educators and scientists including but not limited to mechanical and industrial engineers, are age-appropriate and teach kids important skills like creative problem-solving, curiosity and tinkering, and hands-on craft. The beauty of KiwiCo is it frees up time for parents: time spent researching activities to do, and time spent participating in those activities with their kids. Though parents can certainly join in on the fun, the kits work best when the child can play independently.Runners-up: Lovevery, for developmental play kits for babies and toddlers (Price varies)Baketivity, for kid-friendly baking kits ($32.95/shipment)Read our reviews of KiwiCo and Lovevery. Best subscription for dogsKate Barrington/InsiderBarkBox Single Box$35.00 FROM BARKBOXSubscription frequency: Every monthShipping fee: FreeA la carte shop: YesGifting available: YesDogs and their owners love this popular subscription box, which sends toys, treats, and chews revolving around a creative theme each month. When you sign up, you'll share info about your dog, including its breed, birthday, and dietary restrictions, so that Barkbox can send a personalized collection of items. The plush toys in particular are a pup favorite. Soft, squeaky, and durable, they're made for play. Barkbox also has the best themes and collaborations we've seen around, from movie character chews and toys to a winter cabin getaway bundle.Runners-up: Pupbox from Petco, for treats, toys, and training resources specifically for puppies ($39/shipment)Kongbox, for highly rugged Kong products and especially playful dogs ($44.95/shipment)Read our review of Barkbox.Best subscription for catsMeowboxMeowbox Monthly Subscription$22.95 FROM MEOWBOXSubscription frequency: Every 1 or 2 monthsShipping fee: FreeA la carte shop: YesGifting available: YesSometimes hair ties, lights, and cardboard boxes just won't cut it for your cat. That's where Meowbox comes in. Every box has five to six items, including high-quality toys and organic or grain-free treats that are always produced in the US or Canada. Plus, for every box sold, Meowbox donates a can of food to a cat shelter. It even provides a unique code you can use to track exactly where your donation has gone. Like Barkbox, Meowbox offers adorable themed products, like a summer fishing bucket hat or a "skippy kitty rope" and kettlebell for cat-owner workouts. The a la carte shop also features paraphernalia for the owner so you don't feel left out of the fun.Runners-up: KitNipBox, for extra treats and toys if you have more than one cat ($22.99/shipment)RescueBox, for a subscription box with high impact ($29.95/shipment)Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 13th, 2022

Nomura Fears "Fatigued" Bond Bears Face Imminent Squeeze As The Fed Is "Generally Priced-In"

Nomura Fears "Fatigued" Bond Bears Face Imminent Squeeze As The Fed Is "Generally Priced-In" The "bearish US Rates / USTs" trade is locally feeling quite "fatigued" and Nomura's Charlie McElligott warns that the extreme-positioned market is susceptible to further monetization from the payers/shorts. Source: Bloomberg Specifically, McElligott warns 'bears' that we'd need to see fresh +++ data surprises to see the market able to price-in additional hawkish tightening at this juncture - or a stickier (and more dangerous) scenario being the much-discussed  "Wage/Price-Spiral" kicking-off. Source: Bloomberg The Nomura strategist confirms this view even as more Fed speakers (now Daly and Harker) join the ranks of officials signaling March liftoff, and most communicating comfort with 3-4 hikes this year. A quick glimpse at the STIRs shows the last few days have seen March rate-hike odds hit a new cycle-high but the Dec 2022 expectations are fading very modestly (and are below the prevoious peak earlier in the week)... Source: Bloomberg "Think about it," says McElligott, in the past week, we have seen: 1) the Fed Minutes (and speakers thereafter) confirm Balance Sheet run-off beginning mid-year and alongside simultaneous hikes; 2) US Unemployment dipping below 4%; and 3) US CPI YoY at 7% Yet, EDM3 (June ’23 Eurodollar) is unchanged week-to-date and TY has RALLIED, which is telling us that the Fed, at this juncture, is generally “priced-in." Furthermore, the chief strategist notes with the near-certainty too that “the longer the trade sits and stops working,” that Shorts / downside trades in UST futs and ED$ will be incentivized to "profit-take," as the following table shows, CTAs are 'all-in' short... Specifically, McElligott points out the following key levels to watch in rates/bonds.. ED4, currently -100.0% short, [99.395], buying over 99.52 (+0.12) to get to -83%, more buying over 99.53 (+0.14) to get to -66% , flip to long over 99.55 (+0.16), max long over 99.56 (+0.17) JPY_10Y, currently -100.0% short, [151.05], buying over 151.21 (+0.16) to get to -83%, more buying over 151.22 (+0.17) to get to -66%, flip to long over 151.34 (+0.29), max long over 152.27 (+1.22) GBP_10Y, currently -66.1% short, [123.35], more selling under 123.8 (+0.45) to get to -83%, max short under 123.79 (+0.44), buying over 126.6 (+3.25) to get to -62% , more buying over 126.61 (+3.26) to get to -57% , flip to long over 130.4 (+7.05), max long over 130.41 (+7.06) EUR_10Y, currently -100.0% short, [170.22], buying over 170.86 (+0.64) to get to -83%, more buying over 170.87 (+0.65) to get to -66% , flip to long over 175.67 (+5.45), max long over 175.68 (+5.46) USD_10Y, currently -100.0% short, [128.578125], buying over 130.45 (+1.87) to get to -83%, more buying over 130.46 (+1.88) to get to - 66% , flip to long over 133.2 (+4.62), max long over 133.21 (+4.63) And if rates reverse lower, that will lift some of the feet on the throat of 'long-duration', hyper-growth stocks, which are trading at the range lows in Nomura's Tech Sentiment Index... And while we have seen US Equities Indices kinda "stall-out" here in the absence of Tech leadership, due to the recent "Secular Growth" revaluation shock over the past month or so, but, in recent days, Nomura notes that there has been a transition from Equities folks being “concerned about downside risk” to now, a more front-footed one, even somewhat more “offensive” dynamic playing-out yday a few different ways: Sellers of IWM “crashy” downside (Jan 198P sold 20k, Jan 200P sold 26k, Jan 195P sold 77k!) VIX Jan20C sold 30k to close (1mm in Vega, 25k in vVol), while separately seeing a client buyer of Feb 21P Overall US Equities Options market yday saw $13.5B of Call premium trade vs $7.5B of Put premium More broadly, Nomura is also seeing this “pivot from left to right tail” focus in SPX Jan Skew, where so far YTD, the dynamic is clearly “downside offered, upside bid”: So McElligott concludes there is then scope for a constructive scenario which could play out for Large Cap US Tech Equities—and with it, help lift broad US Eq Index—from the recent malaise: Macro-wise, the aforementioned “fatigue” being seen in the “bearish Rates” trade on hawkish Fed being “priced-to-perfection” at this point—which means US Treasury Yields now may be able to consolidate and help pause pain from the “(cheap) Value / (expensive) Growth” rotation bleed, ESPECIALLY as you see Tech / NDX / SPX rally here on this morning’s PPI marginal “disappointment” vs heady expectations Locally as noted, Dealers are now back in “stable regime” of “+ Gamma vs spot” territory in QQQ options (flip line down at 386.50), while Delta is pushing ever-nearer to “neutral” up at 390.07 in QQQs, with almost +$17B of $Delta picked-up in recent days off the lows Tech positioning locally  is much cleaner now, as per flows and PB data—hence the prior Vol metric “extremes” in QQQ options are coming off the boil (Skew, Put Skew, Term Structure) Also, from a much longer-horizon—but the “pull forward” of this potential catalyst can matter in the shorter-term…US Mega / Large Cap Tech historically derive a substantial portion of their Revenues from overseas—where currently, we see Nasdaq 100 @ ~40% of all Revs from outside US; so this “Weaker USD” trade which is brewing can help act as a tailwind for the largest Tech players, particularly under the guise that R.O.W. growth can also begin to pick-up again The net of all this, as SpotGamma notes, is that we have a fairly defined upside range, capped by 4800 for the next week. As long as the S&P500 holds >4700 its likely gamma builds around current prices, and this leads to a pin in the ~4750 area. Currently SpotGamma's EquityHub snapshot shows a gamma “node” at 4670. The indication here is that if the S&P breaks 4700 it could lead to a quick test of 4670, then we see hedging flows changing which could lead to support at the 4670 line. This pinning leads to a decline in realized volatility, which should drag implied volatility. This adds some supportive flow to market prices. Tyler Durden Thu, 01/13/2022 - 12:51.....»»

Category: dealsSource: nytJan 13th, 2022

The Cloud Kitchen Industry: Revolutionizing Traditional Restaurants for Evolving, New-Age Consumer Needs

Businesses, particularly dine-in restaurants, are struggling worldwide, and this now seems to be the new normal. It is a fact that unprecedented challenges trigger innovation; cloud kitchens are one such innovation, revolutionizing how traditional kitchens adapt to meet the increasing demand for online food delivery. In the current situation, when people are hesitant to visit […] Businesses, particularly dine-in restaurants, are struggling worldwide, and this now seems to be the new normal. It is a fact that unprecedented challenges trigger innovation; cloud kitchens are one such innovation, revolutionizing how traditional kitchens adapt to meet the increasing demand for online food delivery. In the current situation, when people are hesitant to visit crowded restaurants to enjoy their favorite meals, your stagnant business could not just survive but scale new heights with cloud kitchen technology. .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 What Is A Cloud Kitchen? The world is heading towards virtualization faster than expected; blame the pandemic or simple operational inefficiency, but the demand for door-step food is at an all-time high and is expected to grow even further. Whether you call it a cloud kitchen, ghost kitchen, shared kitchen, or virtual kitchen, it is where foods are prepared for delivery and take-out only. Food delivery isn’t new, as the pizza industry has relied on it for years. However, thanks to the technological advancements made in recent years, and consumer habits, anyone with a small space or even no space can start a new food delivery business or transform an existing restaurant into a roaring success with a cloud kitchen. Since cost is a big challenge, cloud kitchens allow you to start, scale, and explore innovative concepts and new markets without the stress of the hefty cost involved in building new kitchens. It is all about improving operational efficiency by optimizing resources, ordering, inventory, and delivery and minimizing additional costs. One option is to use a shared cloud kitchen, having your staff prepare and produce food for delivery using space and equipment owned by a third party. Here you will be sharing a common area with other similar businesses, so you save money to build dedicated kitchens in specific target markets. Alternatively, you could opt for a dedicated-space cloud kitchen - a rented space used exclusively by your brand. This way, you have the liberty of using the area to experiment with different concepts. In addition, if you want to test some new ideas, you can use already established kitchens without the need for heavy investment in a new kitchen. Cloud Kitchen vs. Ghost kitchens Virtualization is the key here, so call it a ghost, virtual, commissary, dark, or cloud kitchen. Ultimately it is a kitchen conceptualized for delivery or take-away only, with no dine-in food. Instead, you take orders online or via call and prepare food in a cloud kitchen to be delivered to the doorstep quickly. Both offer you the benefits of space optimization, and you remain focused on delivering quality food and exploring new markets. Technically, cloud kitchens give you a kitchen-as-service for rent, complete with all necessary services, including delivery solutions. As a result, you can launch a new delivery-only digital restaurant or expand your existing business with minimal risk and low capital. How Does A Cloud Kitchen Operate? “In simple words, you don’t invest your money in building a state-of-art fully equipped kitchen, but use a fully maintained kitchen to prepare foods and deliver at doorsteps. All your customers come via your website or from food-booking and delivery apps,” says Per Tannenberg, founder of Nivito, who has supplied kitchen equipment to various cloud kitchens. Thanks to the tech advancements, your operational processes can be streamlined for easy monitoring and management. You can focus solely on building and positioning your digital restaurant brand, exploring new markets, and experimenting with new concepts without the stress of additional rent and labor costs. In addition, cloud kitchens allow you to maximize orders at a minimum price. In recent years, the success of cloud kitchen enterprises suggests that restaurants are successfully leveraging the potential and expanding their businesses. You are free of the burden of investing money in creating an exclusive dine-in experience to attract and retain customers. In addition, unlike traditional restaurants, your margin improves significantly as you save money that goes to waste in high rental costs, maintenance, and waitstaff. Cloud kitchens work on the concept of “economy of scale.” Hence, these ghost kitchens are state-of-the-art, full-service facilities with complete operational control using the most up-to-date technology, which is difficult for small and medium-sized restaurants. As a result, you get access to a world-class, highly advanced kitchen with highly trained staff to prepare quality foods and, most importantly, a highly-efficient food delivery system. Advantages Of Cloud Kitchens Using a cloud kitchen for your digital-only restaurant brand gives you the advantage of speed and scale at a  low cost. With minimal paperwork and capital, you can start your food delivery business almost instantly. In addition, if you want to test your concept, a cloud kitchen could be the best possible option before launching your full-fledged brick-and-mortar restaurant in the location of your choice. Some of the benefits that cloud kitchens offer are: Low Capital: Restaurants are capital-intensive businesses, especially when launching in a busy market. You can avoid the exorbitantly high rent of an active marketplace using a cloud or ghost kitchen. Also, unlike traditional businesses, delivery-only digital restaurants don’t need to worry about the costs involved in maintenance, staffing, and creating a pleasant dine-in experience. Highly Efficient: Besides cost-efficiency, cloud kitchens also offer you the benefit of operational efficiency, as you are using a highly-advanced, custom-built, state-of-the-art kitchen to prepare and deliver quality foods. Depending on your business model, you can use a cloud kitchen to operate several brands and menus from a single location. Flexible Menu: The digital identity of your restaurant brand gives you the freedom to change the menu according to demand without any additional cost. You know your demand cycle, be it daily or seasonal, so you change the menu and ingredients and make them more cost-friendly for the target market. Freedom to Experiment: No matter what, people’s tastes change, so you need to keep on experimenting without affecting your brand’s value. Cloud kitchens allow you to experiment with new concepts at a very minimal cost and make changes on the go. Smooth Customer Relationship: Unlike traditional restaurants, cloud restaurants are fully digitalized to capture all relevant data from start to finish. So, you get high-quality customer data with feedback, allowing you to improve food quality accordingly. You can further optimize the process and staffing based on consumer data insights to make business more profitable. Easy Marketing: You can leverage the potential of highly user-friendly third-party food delivery apps, who invest heavily in attracting customers. These apps offer you several features to get more exposure with several deals. You don’t have to waste money in blind marketing; invest wisely to reach the need-driven target audience. Disadvantages Of Cloud Kitchens Easy access to need-driven customers and maximum exposure to food-delivery apps is a great advantage. Still, competition can be fierce as several players vie to acquire the same customer. So, of course, you have to be intelligent and efficient in building a brand of trust to remain ahead of the competition both in terms of quality and efficiency. The extraordinary dine-in ambiance of a walk-in establishment might be a tempting model, and it will remain an excellent option for many, at least on weekends. But when it comes to business and profitability, cloud kitchens give you the cost advantage to beat even the best-decorated local restaurants. Modern food delivery is all about speed. Cloud kitchens located away from your target market could be a challenge if your target market is highly diversified and spread out. You might be preparing the finest food using the finest ingredients, but when it goes out for delivery, anything can happen; there’s no telling how the food quality might be affected on the journey, so your reputation is at stake if delivery isn’t perfect. Packaging your food is a big challenge, as sub-standard materials fail to offer the temperature maintenance required for quality food delivery. A slight delay and your customer will be flooding social media with feedback, and you won’t want your prospective customers to see that. Cloud Kitchen In Here, But How To Choose Right Technology Your digital restaurant brand will get orders from digital platforms, so your cloud kitchen technology must offer smooth streamlining of orders, payment processing, and seamless kitchen management. Cloud kitchens cut your rent and labor costs, but a highly-effective, integrated point-of-sale system is of the utmost importance. Your cloud kitchen must offer easy capture and display of customer data and any other relevant data so that you can use them effectively to improve profitability. The choice depends on the stage and goal of your business, so you should check suitability and options to scale. Speed is the key; the interface should be straightforward so that kitchen staff, delivery boy, and inventory manager can execute tasks effortlessly without a glitch. In just a week or so, you will notice a significant improvement in operational efficiency, reflected in your bottom line. Updated on Jan 6, 2022, 1:42 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: valuewalkJan 6th, 2022

Sealed Air (SEE) Hits New 52-Week High: What"s Aiding the Stock

Sealed Air's (SEE) robust demand for automated equipment and sustainable packaging contributes to its share-price rally. Sealed Air Corporation SEE scaled a fresh 52-week high of $68.54 during the trading session on Jan 5, before retracting to close at $66.80. Strong demand for automated equipment and sustainable packaging solutions is driving share price appreciation. Consistent strength in packaging demand for food, medical supplies and consumer staples and surging e-commerce activities are also aiding growth.Price PerformanceSealed Air’s shares have gained 43.4% in the past year compared with the industry’s growth of 9.9%.Image Source: Zacks Investment ResearchDriving FactorsStrong demand for automated equipment and sustainable packaging solutions continues to drive Sealed Air’s food and protected packaging segments’ growth. In food, the retail channel and protein exports are expected to be solid. Its protein automation pipeline continues to grow across all regions, with major food producers committing to its SEE Touchless Automation future. The company has been witnessing higher foodservice demand compared with year-ago levels owing to the reopening of restaurants and other public venues. Backed by this, its fluid solutions portfolio, comprising Cryovac Barrier Bags and pouches for condiments, soups and sauces, is witnessing growth. These categories account for 50% of the Food segment’s sales. In protective, continued growth in e-commerce and fulfillment and higher demand in the industrial end markets are likely to drive performance. E-commerce sales, which contribute around 14% to the company’s sales, have been on the rise amid the stay-at-home scenario.Sealed Air’s focus on automation, digital and sustainability is likely to boost market-beating growth in its core business, enabling it to expand into new and adjacent markets. The company’s SEE automated solutions strategy is driving growth for the next phase of its Reinvent SEE business transformation. The company meets customers' most critical safety, productivity and labor scarcity needs with its touchless automated solutions. The company’s pipeline for automated equipment continues to improve, and it has set a target of more than $500 million by 2025. It is investing more than $30 million in capacity expansion to meet the strong demand for equipment solutions. These investments along with the company’s acquisitions of Automated Packaging Systems, AFP, Inc and Fagerdala will stoke growth.Sealed Air’s Reinvent SEE Strategy, which focuses on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements, is contributing to earnings. One of the most vital aspects of this strategy involves investing in technology and resources and focusing on the new and existing high-growth markets. The company is on track to realize the benefits from Reinvent SEE of around $65 million for full-year 2021.Positive Growth ProjectionsThe Zacks Consensus Estimate for earnings for 2022 is currently pegged at $4.14, which suggests year-over-year growth of 16.2%. The estimate has been revised upward by 1.2% in the past 60 days.Zacks Rank and Other Stocks to ConsiderSealed Air currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.A few other top-ranked stocks in the Industrial Products sector are Berry Global Group, Inc. BERY, ScanSource, Inc. SCSC and MSC Industrial Direct Co., Inc. MSM. While BERY flaunts a Zacks Rank #1, SCSC and MSM carry a Zacks Rank #2.Berry Global Group has an estimated earnings growth rate of around 2.8% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 18%.In a year, the company’s shares have increased 30.5%. Berry Global Group has a trailing four-quarter earnings surprise of 16.5%, on average.ScanSource has an expected earnings growth rate of 18.9% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 0.9% in the past 60 days.ScanSource’s shares have rallied 31.4% in the past year. SCSC has a trailing four-quarter earnings surprise of 34.7%, on average.MSC Industrial has a projected earnings growth rate of 19.9% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 2.9% in the past 60 days.MSM’s shares have gained 5.5% in a year. MSC Industrial has a trailing four-quarter earnings surprise of 2.9%, on average. Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through November, the Zacks Top 10 Stocks gained an impressive +962.5% versus the S&P 500’s +329.4%. Now our Director of Research is combing through 4,000 companies covered by the Zacks Rank to handpick the best 10 tickers to buy and hold. Don’t miss your chance to get in on these stocks when they’re released on January 3.Be First To New Top 10 Stocks >>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 Sealed Air Corporation (SEE): Free Stock Analysis Report MSC Industrial Direct Company, Inc. (MSM): Free Stock Analysis Report ScanSource, Inc. (SCSC): Free Stock Analysis Report Berry Global Group, Inc. (BERY): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 6th, 2022

CONAGRA BRANDS REPORTS SECOND QUARTER RESULTS

CHICAGO, Jan. 6, 2022 /PRNewswire/ -- Today Conagra Brands, Inc. (NYSE:CAG) reported results for the second quarter of fiscal year 2022, which ended on November 28, 2021. All comparisons are against the prior-year fiscal period, unless otherwise noted.  Certain terms used in this release, including "Organic net sales," "EBITDA," "Two-year compounded annualized," and certain "adjusted" results, are defined under the section entitled "Definitions."  See page 5 for more information. Highlights Second quarter net sales increased 2.1%; organic net sales increased 2.6%. On a two-year compounded annualized basis, fiscal 2022 second quarter net sales increased 4.1% and organic net sales increased 5.3%. Operating margin decreased 435 basis points to 13.4%; adjusted operating margin decreased 500 basis points to 14.6%. Diluted earnings per share (EPS) for the second quarter decreased 26.0% to $0.57, and adjusted EPS decreased 21.0% to $0.64. On a two-year compounded annualized basis, second quarter EPS increased 3.7% and adjusted EPS increased 0.8%. The Company is reiterating its adjusted EPS guidance for fiscal 2022 and updating its organic net sales and adjusted operating margin guidance to reflect continued top line strength, higher inflation expectations, and the timing of additional pricing actions. The Company's updated fiscal 2022 guidance is as follows: Organic net sales growth is expected to be approximately +3% versus prior guidance of approximately +1% Gross inflation (input cost inflation before the impacts of hedging and other sourcing benefits) is expected to be approximately 14% versus prior guidance of approximately 11% Adjusted operating margin is expected to be approximately 15.5% versus prior guidance of approximately 16% Adjusted EPS is expected to be approximately $2.50, representing no change to prior guidance CEO Perspective Sean Connolly, president and chief executive officer of Conagra Brands, commented, "Our business delivered another quarter of strong net sales growth as we continued to experience elevated levels of demand across our portfolio. I am proud of our team for continuing to demonstrate great agility in navigating the dynamic external landscape with a refuse to lose attitude and dedication to executing our Conagra Way playbook every day. Our focus on strategic innovation and our intentional approach to investment helped us maintain brand momentum in the second quarter and continue capturing share across each of our domains – frozen, snacks, and staples." He continued, "Looking ahead, we expect to continue experiencing cost pressures above original expectations in the second half of fiscal 2022. However, we believe the sustained elevated consumer demand coupled with the mitigating actions we have successfully executed, and will continue executing, put us on track to overcome these near-term challenges, improve margins in the back half of the fiscal year, and deliver on our profit plan." Total Company Second Quarter Results In the quarter, net sales increased 2.1% to $3.1 billion.  The increase in net sales primarily reflects: a 0.7% net decrease from the divestitures of the H.K. Anderson business, the Peter Pan peanut butter business, and the Egg Beaters business (collectively, the Sold Businesses); a 0.2% increase from the favorable impact of foreign exchange; and a 2.6% increase in organic net sales. The 2.6% increase in organic net sales was driven by a 6.8% improvement in price/mix, which was partially offset by a 4.2% decrease in volume. Price/mix was driven by favorable brand mix and net pricing as the company's inflation-driven pricing actions were reflected in the marketplace throughout the quarter. The volume decrease was primarily a result of lapping the prior year's surge in at-home food demand due to the COVID-19 pandemic. The year-over-year comparison negatively impacted fiscal 2022 second quarter volume growth rates in the company's retail reporting segments. Gross profit decreased 15.1% to $755 million in the quarter, and adjusted gross profit decreased 14.4% to $767 million.  Second quarter gross profit benefited from higher organic net sales, supply chain realized productivity, lower COVID-19 pandemic-related expenses, and cost synergies associated with the Pinnacle Foods acquisition. These benefits, however, were not enough to offset the impacts of cost of goods sold inflation of 16.4% and the lost profit from the Sold Businesses. Gross margin decreased 500 basis points to 24.7% in the quarter, and adjusted gross margin decreased 483 basis points to 25.1%. Adjusted gross margin declined more than originally expected as the company experienced higher-than-expected cost of goods sold inflation, made additional investments to prioritize servicing orders to maximize food supply for consumers, and experienced additional transitory supply chain costs. Selling, general, and administrative expense (SG&A), which includes advertising and promotional expense (A&P), decreased 3.5% to $345 million in the quarter.  Adjusted SG&A, which excludes A&P, was relatively flat compared to the prior-year period, increasing 1.7% to $248 million.  A&P for the quarter increased 12.5% to $71 million, driven primarily by higher eCommerce investments.  Net interest expense was $95 million in the quarter.  Compared to the prior-year period, net interest expense decreased 11.8% or $13 million, primarily due to a lower weighted average interest rate on outstanding debt. The average diluted share count decreased 1.8% compared to the prior-year period to 482 million, driven by the company's share repurchase activity in prior quarters. In the quarter, net income attributable to Conagra Brands decreased 27.3% to $275 million, or $0.57 per diluted share.  Adjusted net income attributable to Conagra Brands decreased 22.8% to $306 million, or $0.64 per diluted share, in the quarter.  The decreases were driven primarily by the decrease in gross profit. The combination of higher than expected inflation, investments to service orders, and additional transitory costs is estimated to have impacted adjusted EPS by approximately $0.04 to $0.06 in the quarter.   Adjusted EBITDA, which includes equity method investment earnings and pension and postretirement non-service income, decreased 17.9% to $585 million in the quarter, primarily driven by the decrease in adjusted gross profit. Grocery & Snacks Segment Second Quarter Results Net sales for the Grocery & Snacks segment decreased 1.4% to $1.3 billion in the quarter reflecting: a 0.8% decrease from the impact of the Sold Businesses; and a 0.6% decrease in organic net sales. On an organic net sales basis, volume decreased 5.3% and price/mix increased 4.7%.  The volume decline was primarily due to lapping the prior year's surge in at-home food demand from the COVID-19 pandemic.  Price/mix was primarily driven by favorability in inflation-driven pricing coupled with favorable brand mix. In the quarter, the company gained share in staples categories such as beans, and in snacking categories, including popcorn and seeds. Operating profit for the segment decreased 21.2% to $249 million in the quarter.  Adjusted operating profit decreased 14.1% to $274 million, primarily driven by cost of goods inflation, the organic net sales decline, incremental transitory supply chain costs, and the lost profit from the Sold Businesses. These negative impacts were partially offset by supply chain realized productivity, cost synergies associated with the Pinnacle Foods acquisition, and lower COVID-19 pandemic-related expenses. Refrigerated & Frozen Segment Second Quarter Results Net sales for the Refrigerated & Frozen segment increased 3.0% to $1.3 billion in the quarter reflecting: a 0.9% decrease from the impact of the Sold Businesses; and a 3.9% increase in organic net sales. On an organic net sales basis, volume decreased 4.7% and price/mix increased 8.6%.  The volume decline was primarily due to lapping the prior year's surge in at-home food demand from the COVID-19 pandemic.  The price/mix increase was driven by favorable brand mix and favorability in inflation-driven pricing. In the quarter, the company gained share in categories such as frozen single serve meals, whipped topping, and frozen desserts. Operating profit for the segment decreased 36.3% to $168 million in the quarter.  Adjusted operating profit decreased 30.4% to $189 million primarily due to cost of goods sold inflation, additional investments the company made to service orders, increased A&P investment, and the lost profit from the Sold Businesses. These impacts were partially offset by the benefits of supply chain realized productivity, higher organic net sales, lower COVID-19 pandemic-related expenses, and cost synergies associated with the Pinnacle Foods acquisition. International Segment Second Quarter Results Net sales for the International segment increased 5.0% to $262 million in the quarter reflecting: a 0.1% decrease from the impact of the Sold Businesses, a 3.0% increase from the favorable impact of foreign exchange; and a 2.1% increase in organic net sales. On an organic net sales basis, volume decreased 5.8% and price/mix increased 7.9%. Volume decreased primarily due to lapping the prior year's surge in demand from the COVID-19 pandemic. The price/mix increase was driven by inflation-driven pricing and favorable product mix.  Operating profit for the segment decreased 5.8% to $37 million in the quarter.  Adjusted operating profit decreased 5.9% to $37 million as the negative impacts of cost of goods sold inflation and increased A&P investment more than offset the benefits from favorable foreign exchange, supply chain realized productivity, and higher organic net sales. Foodservice Segment Second Quarter Results Net sales for the Foodservice segment increased 14.9% to $246 million in the quarter reflecting: a 0.3% decrease from the impact of the Sold Businesses; and a 15.2% increase in organic net sales. On an organic net sales basis, volume increased 9.1% as restaurant traffic continued to improve from the impacts of the COVID-19 pandemic. Price/mix was favorable at 6.1% in the quarter driven by inflation-driven pricing and favorable product mix. Operating profit for the segment decreased 39.1% to $14 million and adjusted operating profit decreased 18.1% to $19 million in the quarter as the impacts of cost of goods sold inflation more than offset the benefits of higher organic net sales and favorable supply chain realized productivity. Other Second Quarter Items Corporate expenses decreased 47.0% to $59 million in the quarter primarily from lapping incremental expenses related to the extinguishment of debt in the prior year period. Adjusted corporate expense increased 10.1% to $71 million in the quarter driven by increased employee related costs. Pension and post-retirement non-service income was $16 million in the quarter compared to $14 million of income in the prior-year period. In the quarter, equity method investment earnings were $30 million.  The $7 million increase was primarily driven by favorable market conditions for the Ardent Mills joint venture. In the quarter, the effective tax rate was 23.4% compared to 17.6% in the prior-year period.  The adjusted effective tax rate was 22.9% compared to 23.2% in the prior-year period. In the quarter, the company paid a dividend of $0.3125 per share, the first dividend payment at the increased rate.  Outlook The company is reiterating its adjusted EPS guidance for fiscal 2022 and updating its organic net sales and adjusted operating margin guidance. The outlook reflects expectations for continued top line strength, and higher cost of goods sold inflation, and the timing effect of additional pricing actions. The company previously shared its expectations that consumer demand for its retail products would remain elevated versus historical levels throughout fiscal 2022, as consumers have developed new habits during the COVID-19 pandemic. Given the trends to date, including stronger-than-expected consumer demand and lower-than-anticipated elasticities of demand, as well as additional planned pricing actions, organic net sales growth is now expected to be higher than previously anticipated. The company also continues to experience elevated cost of goods sold inflation, the rate of which was higher than expected during the second quarter of fiscal 2022. The company has taken, and plans to continue taking, a variety of actions to counteract the impact of this inflation, including incremental pricing actions and cost savings measures. The company continues to expect that the timing of the associated benefits from these margin lever actions will increase as the fiscal year progresses and, as a result, the company continues to expect margins to improve in the second half of the fiscal year. The Company's updated fiscal 2022 guidance is as follows: Organic net sales growth is expected to be approximately +3% versus prior guidance of approximately +1% Gross inflation (input cost inflation before the impacts of hedging and other sourcing benefits) is expected to be approximately 14% versus prior guidance of approximately 11% Adjusted operating margin is expected to be approximately 15.5% versus prior guidance of approximately 16% Adjusted EPS is expected to be approximately $2.50, representing no change to prior guidance. The above guidance is the company's best estimate of its expected financial performance in fiscal 2022. The company's ultimate fiscal 2022 performance will be highly dependent on factors including, without limitation: how consumers purchase food as foodservice establishments continue to reopen and people return to in-office work and in-person school; the cost of goods sold inflation the company experiences; consumers' response to inflation-driven price increases; and the ability of the end-to-end supply chain to continue to operate effectively as the COVID-19 pandemic continues to evolve. The inability to predict the amount and timing of the impacts of foreign exchange, acquisitions, divestitures, and other items impacting comparability makes a detailed reconciliation of forward-looking non-GAAP financial measures impracticable.  Please see the end of this release for more information. Items Affecting Comparability of EPS The following are included in the $0.57 EPS for the second quarter of fiscal 2022 (EPS amounts are rounded and after tax).  Please see the reconciliation schedules at the end of this release for additional details. Approximately $0.02 per diluted share of net expense related to restructuring plans Approximately $0.02 per diluted share of net benefit related to legal matters Approximately $0.01 per diluted share of net benefit related to proceeds received from the sale of a legacy investment Approximately $0.07 per diluted share of net expense related to impairment on businesses held for sale Approximately $0.01 per diluted share of net impact due to rounding The following are included in the $0.77 EPS for the second quarter of fiscal 2021 (EPS amounts are rounded and after tax).  Please see the reconciliation schedules at the end of this release for additional details. Approximately $0.03 per diluted share of net expense related to restructuring plans Approximately $0.01 per diluted share of net benefit related to corporate hedging derivative gains Approximately $0.01 per diluted share of net benefit related to the gain on divestiture of a business Approximately $0.07 per diluted share of net expense related to the early extinguishment of debt Approximately $0.05 per diluted share of net benefit related to a release of a valuation allowance on our capital loss carryforward Approximately $0.01 per diluted share of net impact due to rounding Definitions Organic net sales excludes, from reported net sales, the impacts of foreign exchange, divested businesses and acquisitions, as well as the impact of any 53rd week.  All references to changes in volume and price/mix throughout this release are on an organic net sales basis. References to adjusted items throughout this release refer to measures computed in accordance with GAAP less the impact of items impacting comparability. Items impacting comparability are income or expenses (and related tax impacts) that management believes have had, or are likely to have, a significant impact on the earnings of the applicable business segment or on the total corporation for the period in which the item is recognized, and are not indicative of the company's core operating results.  These items thus affect the comparability of underlying results from period to period. References to earnings before interest, taxes, depreciation, and amortization (EBITDA) refer to net income attributable to Conagra Brands before the impacts of discontinued operations, income tax expense (benefit), interest expense, depreciation, and amortization.  References to adjusted EBITDA refer to EBITDA before the impacts of items impacting comparability. References to two-year compounded annualized numbers are calculated as: ([(1 + current year period's growth rate) * (1 + prior year period's growth rate)] ^ 0.5) – 1. Please note that certain prior year amounts have been reclassified to conform with current year presentation Discussion of Results Conagra Brands will host a webcast and conference call at 9:30 a.m. Eastern time today to discuss the results.  The live audio webcast and presentation slides will be available on www.conagrabrands.com/investor-relations under Events & Presentations. The conference call may be accessed by dialing 1-877-883-0383 for participants in the U.S. and 1-412-902-6506 for all other participants and using passcode 3428984. Please dial in 10 to 15 minutes prior to the call start time. Following the Company's remarks, the conference call will include a question-and-answer session with the investment community.  A replay of the webcast will be available on www.conagrabrands.com/investor-relations under Events & Presentations until January 6, 2023. About Conagra Brands Conagra Brands, Inc. (NYSE:CAG), headquartered in Chicago, is one of North America's leading branded food companies. Guided by an entrepreneurial spirit, Conagra Brands combines a rich heritage of making great food with a sharpened focus on innovation. The company's portfolio is evolving to satisfy people's changing food preferences. Conagra's iconic brands, such as Birds Eye®, Marie Callender's®, Banquet®, Healthy Choice®, Slim Jim®, Reddi-wip®, and Vlasic®, as well as emerging brands, including Angie's® BOOMCHICKAPOP®, Duke's®, Earth Balance®, Gardein®, and Frontera®, offer choices for every occasion. For more information, visit www.conagrabrands.com. Note on Forward-looking Statements This document contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Readers of this document should understand that these statements are not guarantees of performance or results. Many factors could affect our actual financial results and cause them to vary materially from the expectations contained in the forward-looking statements, including those set forth in this document. These risks, uncertainties, and factors include, among other things: the risk that the cost savings and any other synergies from the acquisition of Pinnacle Foods Inc. (the Pinnacle acquisition) may not be fully realized or may take longer to realize than expected; the risk that the Pinnacle acquisition may not be accretive within the expected timeframe or to the extent anticipated; the risks that the Pinnacle acquisition and related integration will create disruption to the Company and its management and impede the achievement of business plans; risks related to our ability to achieve the intended benefits of other recent acquisitions and divestitures; risks associated with general economic and industry conditions; risks associated with our ability to successfully execute our long-term value creation strategies; risks related to our ability to deleverage on currently anticipated timelines, and to continue to access capital on acceptable terms or at all; risks related to our ability to execute operating and restructuring plans and achieve targeted operating efficiencies from cost-saving initiatives, and to benefit from trade optimization programs; risks related to the effectiveness of our hedging activities and ability to respond to volatility in commodities; risks related to the Company's competitive environment and related market conditions; risks related to our ability to respond to changing consumer preferences and the success of our innovation and marketing investments; risks related to the ultimate impact of any product recalls and litigation, including litigation related to the lead paint and pigment matters, as well as any securities litigation, including securities class action lawsuits; risk associated with actions of governments and regulatory bodies that affect our businesses, including the ultimate impact of new or revised regulations or interpretations; risks related to the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers and employees; risks related to our forecasts of consumer eat-at-home habits as the impacts of the COVID-19 pandemic abate; risks related to the availability and prices of supply chain resources, including raw materials, packaging, and transportation including any negative effects caused by changes in inflation rates, weather conditions, or health pandemics; disruptions or inefficiencies in our supply chain and/or operations, including from the COVID-19 pandemic; risks associated with actions by our customers, including changes in distribution and purchasing terms; risks and uncertainties associated with intangible assets, including any future goodwill or intangible assets impairment charges; risks related to a material failure in or breach of our or our vendors' information technology systems; the amount and timing of future dividends, which remain subject to Board approval and depend on market and other conditions; and other risks described in our reports filed from time to time with the Securities and Exchange Commission. We caution readers not to place undue reliance on any forward-looking statements included in this document, which speak only as of the date of this document. We undertake no responsibility to update these statements, except as required by law. Note on Non-GAAP Financial Measures This document includes certain non-GAAP financial measures, including adjusted EPS, organic net sales, adjusted gross profit, adjusted operating profit, adjusted SG&A, adjusted corporate expenses, adjusted gross margin, adjusted operating margin, adjusted effective tax rate, adjusted net income attributable to Conagra Brands, two-year compounded annualized organic net sales, two-year compounded annualized adjusted EPS, free cash flow, net debt, net leverage ratio, and adjusted EBITDA. Management considers GAAP financial measures as well as such non-GAAP financial information in its evaluation of the Company's financial statements and believes these non-GAAP measures provide useful supplemental information to assess the Company's operating performance and financial position. These measures should be viewed in addition to, and not in lieu of, the Company's diluted earnings per share, operating performance and financial measures as calculated in accordance with GAAP. Certain of these non-GAAP measures, such as organic net sales, adjusted operating margin, and adjusted EPS, are forward-looking.  Historically, the Company has excluded the impact of certain items impacting comparability, such as, but not limited to, restructuring expenses, the impact of the extinguishment of debt, the impact of foreign exchange, the impact of acquisitions and divestitures, hedging gains and losses, impairment charges, the impact of legacy legal contingencies, and the impact of unusual tax items, from the non-GAAP financial measures it presents.  Reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of such items impacting comparability and the periods in which such items may be recognized.  For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results. Hedge gains and losses are generally aggregated, and net amounts are reclassified from unallocated corporate expense to the operating segments when the underlying commodity or foreign currency being hedged is expensed in segment cost of goods sold. The Company identifies these amounts as items that impact comparability within the discussion of unallocated Corporate results.   Conagra Brands, Inc. Consolidated Statements of Earnings (in millions) (unaudited) SECOND QUARTER Thirteen Weeks Ended Thirteen Weeks Ended November 28, 2021 November 29, 2020 Percent Change Net sales $ 3,058.9 $ 2,995.2 2.1 % Costs and expenses: Cost of goods sold 2,304.1 2,106.3 9.4 % Selling, general and administrative expenses 345.4 357.7 (3.5) % Pension and postretirement non-service income (16.1) (13.7) 17.7 % Interest expense, net 94.9 107.7 (11.8) % Income before income taxes and equity method investment earnings 330.6 437.2 (24.4) % Income tax expense 84.2 80.7 4.3 % Equity method investment earnings 29.5 23.0 28.3 % Net income $ 275.9 $ 379.5 (27.3) % Less: Net income attributable to noncontrolling interests 0.4 0.6 (23.2) % Net income attributable to Conagra Brands, Inc. $ 275.5 $ 378.9 (27.3) % Earnings per share - basic Net income attributable to Conagra Brands, Inc. $ 0.57 $ 0.77 (26.0) % Weighted average shares outstanding 480.2 489.1 (1.8) % Earnings per share - diluted Net income attributable to Conagra Brands, Inc. $ 0.57 $ 0.77 (26.0) % Weighted average share and share equivalents outstanding 481.9 490.9 (1.8) %   Conagra Brands, Inc. Consolidated Statements of Earnings (in millions) (unaudited) SECOND QUARTER YEAR TO DATE Twenty-Six Weeks Ended Twenty-Six Weeks Ended November 28, 2021 November 29, 2020 Percent Change Net sales $ 5,712.2 $ 5,674.1 0.7 % Costs and expenses: Cost of goods sold 4,284.0 3,975.0 7.8 % Selling, general and administrative expenses 655.5 658.0 (0.4) % Pension and postretirement non-service income (32.2) (27.5) 17.0 % Interest expense, net 189.1 221.4 (14.6) % Income before income taxes and equity method investment earnings 615.8 847.2 (27.3) % Income tax expense 153.9 167.4 (8.1) % Equity method investment earnings 49.7 29.5 68.5 % Net income $ 511.6 $ 709.3 (27.9) % Less: Net income attributable to noncontrolling interests 0.7 1.4 (50.5) % Net income attributable to Conagra Brands, Inc. $ 510.9 $ 707.9 (27.8) % Earnings per share - basic Net income attributable to Conagra Brands, Inc. $ 1.06 $ 1.45 (26.9) % Weighted average shares outstanding 480.3 488.6 (1.7) % Earnings per share - diluted Net income attributable to Conagra Brands, Inc. $ 1.06 $ 1.44 (26.4) % Weighted average share and share equivalents outstanding 482.1 490.3 (1.7) %   Conagra Brands, Inc. Consolidated Balance Sheets (in millions) (unaudited) November 28, 2021 May 30, 2021 ASSETS Current assets Cash and cash equivalents $ 68.7 $ 79.2 Receivables, less allowance for doubtful accounts of $3.0 and $3.2 977.2 793.9 Inventories 1,858.7 1,709.7 Prepaid expenses and other current assets 111.1 95.0 Current assets held for sale 23.6 24.3 Total current assets 3,039.3 2,702.1 Property, plant and equipment, net 2,622.8 2,572.0 Goodwill 11,332.0 11,338.9 Brands, trademarks and other intangibles, net 4,092.2 4,124.6 Other assets 1,441.0 1,344.7 Noncurrent assets held for sale 64.7 113.3 $ 22,592.0 $ 22,195.6 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 585.8 $ 707.4 Current installments of long-term debt 270.6 23.1 Accounts payable 1,596.9 1,655.9 Accrued payroll 114.6 175.2 Other accrued liabilities 707.4 743.0 Current liabilities held for sale 1.7 1.6 Total current liabilities 3,277.0 3,306.2 Senior long-term debt, excluding current installments 8,527.8 8,275.2 Other noncurrent liabilities 2,027.9 1,979.6 Noncurrent liabilities held for sale 2.4 3.2 Total stockholders' equity 8,756.9 8,631.4 $ 22,592.0 $ 22,195.6   Conagra Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Twenty-Six Weeks Ended November 28, 2021 November 29, 2020 Cash flows from operating activities: Net income $ 511.6 $ 709.3 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization 193.5 193.0 Asset impairment charges 41.6 3.9 Loss on extinguishment of debt — 44.3 Gain on divestitures — (5.3) Equity method investment earnings in excess of distributions (24.2) (8.4) Stock-settled share-based payments expense 14.3 30.9 Contributions to pension plans (4.9) (20.7) Pension benefit (25.5) (19.1) Other items (14.5) 14.2 Change in operating assets and liabilities excluding effects of business acquisitions and dispositions: Receivables (183.3) (88.3) Inventories (148.4) (247.2) Deferred income taxes and income taxes payable, net (13.9) (39.9) Prepaid expenses and other current assets (10.4) (39.8) Accounts payable (14.1) 111.2 Accrued payroll (60.6) (58.0) Other accrued liabilities 0.9 (67.9) Deferred employer payroll taxes — 29.2 Net cash flows from operating activities 262.1 541.4 Cash flows from investing activities: Additions to property, plant and equipment (257.5) (282.0) Sale of property, plant and equipment 9.9 1.0 Purchase of marketable securities (1.9) (4.1) Sale of marketable securities 1.9 6.0 Proceeds from divestitures, net of cash divested 0.1 8.6 Other items 3.3 - Net cash flows from investing activities (244.2) (270.5) Cash flows from financing activities: Issuance of short-term borrowings, maturities greater than 90 days 392.6 298.6 Repayment of short-term borrowings, maturities greater than 90 days (249.8) — Net issuance (repayment) of other short-term borrowings (264.4) 68.9 Issuance of long-term debt 499.1 988.2 Repayment of long-term debt (29.4) (1,881.7) Debt issuance costs (2.5) (5.4) Repurchase of Conagra Brands, Inc. common shares (50.0) — Payment of intangible asset financing arrangement (12.6) (12.9) Cash dividends paid (282.0) (207.3) Exercise of stock options and issuance of other stock awards, including tax withholdings (17.4) (8.4) Other items (7.3) — Net cash flows from financing activities (23.7) (760.0) Effect of exchange rate changes on cash and cash equivalents and restricted cash (5.7) 3.8 Net change in cash and cash equivalents and restricted cash (11.5) (485.3) Cash and cash equivalents and restricted cash at beginning of period 80.2 554.3 Cash and cash equivalents and restricted cash at end of period $ 68.7 $ 69.0   Conagra Brands, Inc. Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures (in millions) Q2 FY22 Grocery &Snacks Refrigerated & Frozen International Foodservice Total Conagra Brands Net Sales $ 1,264.5 $ 1,285.9 $ 262.2 $ 246.3 $ 3,058.9 Impact of foreign exchange — — (7.5) — (7.5) Organic Net Sales $ 1,264.5 $ 1,285.9 $ 254.7 $ 246.3 $ 3,051.4 Year-over-year change - Net Sales (1.4) % 3.0 % 5.0 % 14.9 % 2.1 % Impact of foreign exchange (pp) — — (3.0) — (0.2) Net sales from divested businesses (pp) 0.8 0.9 0.1 0.3 0.7 Organic Net Sales (0.6) % 3.9 % 2.1 % 15.2 % 2.6 % Volume (Organic) (5.3) % (4.7) % (5.8) % 9.1 % (4.2) % Price/Mix 4.7 % 8.6 % 7.9 % 6.1 % 6.8 % Q2 FY21 Grocery & Snacks Refrigerated & Frozen International Foodservice Total Conagra Brands Net Sales $ 1,283.1 $ 1,248.0 $ 249.8 $ 214.3 $ 2,995.2 Net sales from divested businesses (10.8) (10.1) (0.4) (0.5) (21.8) Organic Net Sales $ 1,272.3 $ 1,237.9 $ 249.4 $ 213.8 $ 2,973.4 Q2 FY21 Grocery &Snacks Refrigerated & Frozen International Foodservice Total Conagra Brands Net Sales $ 1,283.1 $ 1,248.0 $ 249.8 $ 214.3 $ 2,995.2 Impact of foreign exchange — — 6.0 — 6.0 Net sales from divested businesses (1.6) — — (0.3) (1.9) Organic Net Sales $ 1,281.5 $ 1,248.0 $ 255.8 $ 214.0 $ 2,999.3 Year-over-year change - Net Sales 12.6 % 6.8 % 6.6 % (23.1) % 6.2 % Impact of foreign exchange (pp) — — 2.5 — 0.2 Net sales from divested businesses (pp) 2.8 1.0 — 1.6 1.7 Organic Net Sales 15.4 % 7.8 % 9.1 % (21.5) % 8.1 % Volume (Organic) 13.7 % 6.4 % 6.4 % (25.4) % 6.6 % Price/Mix 1.7 %.....»»

Category: earningsSource: benzingaJan 6th, 2022

SMART Global (SGH): The Next-Gen Options Trade You Don"t Want To Miss

SGH is roaring out of the shadows with an ambitious growth strategy that won't remain under the investors' radars for much longer SMART Global Holdings SGH is the under-the-radar semiconductor stock you've been looking for, with its broadening portfolio of cutting-edge chips that are poised to take flight in this commencing technological Renaissance.SGH is roaring out of the shadows with an ambitious growth strategy that won't remain under the investors' radars for much longer. New CEO Mark Adams is transforming this once complacent memory-focused legacy tech business into a motivated leader in niche innovations.The company released a record quarterly report at the start of 2022, blowing analysts' estimates out of the water and raising forward guidance. However, SGH's undiscovered attributes appear to have both positive and negative consequences, which we saw in its (unwarranted) post-earnings capitulation. This drop-off is a technical retreat catalyzed by the overbought RSI levels it had reached in recent weeks after an over 100% 52-week run into this year opening earnings report (confusion about the upcoming stock split may also be playing a role).The good news is that it presents us with an excellent trading opportunity as the stock picks up support at its 50-day moving average (which you can see below).Image Source: TradingViewSMART Global shares' exceedingly thin trading volumes (low liquidity due to its under-the-radar quality) allowed a small group of controlling institutional shareholders to direct its post-earnings narrative. They pulled profits from this recent winner (up 70% since mid-October), and the downward momentum catalyzed a fear-fueled domino sell-off.The TradeDon't let these big-shot Wall Street firms scare you away from this clear-cut winner. SGH's post-earnings capitulation is extraordinarily overdone and with the recent shareholder shuffle.Silver Lake, a nearly $100 billion tech-focus private equity fund, had been the primary shareholders of SGH since it went public in 2017 until this past fall when the global investment group completely exited the trade (with public returns of nearly 400% in just a few years), leaving $10s of millions in stock value up for grabs.SMART Global's ownership has since been erratic, with most of the investing world still unaware of this small-cap stock's existence. SGH's ownership is almost entirely institutional at this point, and with the already thin volumes, its vulnerability to short-term price manipulation is high.Nevertheless, those analysts covering SGH are more bullish than ever after its most recent quarterly release. SGH is lining up perfectly for an ideal options trade as it capitulates out of overbought RSI territory, and these fear-induced publicly-traded contracts maintain a muted implied volatility (meaning relatively cheap calls).I am looking at SGH March 18 $70 calls between $1.50 and $2.00 a contract. $75 is my short-term target price for SGH as today's elevated volumes, coupled with an early February stock split, bring a new slate of investors to the table. I'm projecting 200% to 300% returns on this trade but will begin pulling profits on my options once SGH breaks above $68 (Fibonacci retracement derived price target).The Earnings ReportSMART Global (SGH) reported its November quarter results (fiscal Q1 2022) after the closing bell Tuesday afternoon (1/4), beating analysts' estimates and raising guidance, yet SGH fell off a cliff. SMART Global achieved record revenues and margins that flowed down to an incredible 177% increase in per-share profits, with its top-of-the-line intelligence platforms (AI, HPC, & other cloud-functionality) being this next-generation innovator's primary growth driver.SGH was down as much as 18% in its post-earnings price action, but I remain unconvinced that it will stay below $70 a share for long. This knee-jerk sell-off reaction resulted from its small market cap (less than $1.5 billion), concentrated ownership, and overbought RSI levels, which SGH had floated up into following its sizable 25% end-of-year rally.SGH also announced that it would be initiating a 2-for-1 stock split, which would go into effect at the beginning of February. This is a clear signal from SMART Global's new CEO, Mark Adams, whose savvy ambition for innovative growth is the primary reason we are in SGH, that this stock is headed much higher. Either way, I'm more bullish on SGH post-earnings than ever before.The TransformationNow is the time to add this hidden gem to your portfolio before the broader investing world catches wind of this discounted chip winner.SMART Global has been around since the late 80s, but it wasn't until Mark Adams took the helm amid the pandemic last year that this chipmaker's upside potential went through the roof. Adams is transforming this once complacent memory-focused legacy tech company into an energized visionary.Adams was the leading force behind SGH's quick strategic acquisition of Cree's niche LED chip business at the peak of pandemic fear for a steal at $300 million. Cree LED's synergies are already paying dividends as it drives margin expansion, improves the firm's capital & operational efficiency, and provides critical industry relationships.Smart Global's new forward-thinking chief has already vastly improved its operational performance and is ramping up R&D spending to ensure that the enterprise remains ahead of the innovative curve.Analysts are getting increasingly bullish on this under-the-radar transformation play as SGH flips the switch on accelerating profitable growth, knocking estimates out of the park by an expanding percentage over the past 3 quarters. Zacks Consensus EPS Estimates for SGH's have been soaring across all time horizons after this most recent quarterly report driving the stock into a Zacks Rank #2 (Buy), and all 6 covering analysts agree on a buy rating for the unique value opportunity here.The BusinessSMART Global Holdings had been a reliable pure-play memory leader in the chip space for over 30 years before deciding to broaden its product portfolio, which appeared to be catalyzed by activist investors following SGH's 2017 IPO. The company has since executed 4 strategic acquisitions.Penguin Computing was SGH's first vital acquisition ($85 million price tag) back in 2018, adding a broad portfolio of leading next-generation products, including high-performance computing (HPC), cloud computing, hyperscale data centers, and the development of artificial intelligence (AI). This segment has exploded since its acquisition as its AI-focused products experience budding demand. In the summer of 2019, this resourceful chip giant acquired Artesyn Embedded Computing and Inforce Computing for $80 million and $12 million, respectively. Artesyn (which is now called Smart Embedded Computing) provides critical data center architecture used in "industries such as telecom, military and aerospace, medical, and diverse automation and industrial markets," according to its website.SMART Wireless Computing (formerly known as Inforce Computing) exposes the enterprise to cutting-edge technologies like "medical imaging, collaboration/videoconferencing, wearable hands-free computing, and robotics/unmanned aerial vehicles," according to its investor relations page.SMART's diverse set of growing end-market demands provides the company with an enormous total addressable market (TAM), significant upside potential, and not to mention an excellent hedge against the cyclical nature of the semiconductor market.Image Source: SGH IRThe 11x forward P/E that SGH is currently trading at is a remarkably underappreciated valuation multiple for a high-growth tech business that is expected to exhibit consistent 20%+ earnings growth in the years to come.Final ThoughtsWith its fresh innovation-oriented operational outlay, Mark Adams at the helm (with a now proven track record of skilled management), and an industry-wide outlook of accelerating growth, the future SGH has never been brighter. I would recommend that you purchase some shares for a long-term hold along with these monthly March calls in SMART Global before its takes flight. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>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 SMART Global Holdings, Inc. (SGH): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 5th, 2022

What"s Behind The Surge In Yields That Sent Tech Stocks Tumbling, And What Happens Next

What's Behind The Surge In Yields That Sent Tech Stocks Tumbling, And What Happens Next For a while it appeared that stocks, and especially giga-techs, were willing to ignore the plungefest in Treasuries and were riding the wave of new capital (some $125 billion according to Goldman) allocated to stocks of all stripes to start the new year. However, it wasn't meant to last, and with yields suffering their biggest 2-day surge since the chaos in March 2020... ... high-duration names, which just happen to be the market's all-important generals, are finally sliding which in a market with as little breadth as this one... ... is a very big problem because as Goldman warned a few weeks ago, a crack in the largest market leaders (the FAAMGs of course) could result in major pain: for those who forgot, the five most popular tech names - AAPL, MSFT, NVDA, TSLA, GOOGL - have contributed 51% of S&P 500 returns since April. And what goes up can just as easily go down if rates rise high - and fast - enough. Which brings us to the big question: what's behind the puke in Treasuries and will it persist? From 30,000 feet, the catalyst for the selling in Treasuries is hardly a surprise: the Fed is all hawked up and with the accelerated taper, rate hikes are scheduled to take place potentially as soon as April, with some speculating that the Fed may hike more than 25bps at a time (we seriously doubt it absent inflation truly spiraling out of control in the coming weeks). More likely, however, the recent yield spike is tactical (flow/positioning/liquidity-driven), and so we go to one of the most fastidious market tacticians, Nomura's Charlie McElligott who in his morning notes today does a post-mortem of the selloff that started yesterday and has continued for much of Tuesday. According to Charlie, the selloff in US Rates and Treasuries turned violent by the US midday on the first day of the new PNL year as bearish bets were re-engaged (with UST 10Y Yields now cleanly through 50, 100 and 200 DMA’s to the upside, while 30Y Yields are nearing a test of the 200 DMA themselves), and shares the following thesis checklist as a list of the drivers behind the move: Inflation “stuck” and currently unrelenting at multi-decade highs, with more Omicron supply-chain snarls further squeezing prices Still above multi-year trend growth in US (Atlanta Fed GDPNow @ 7.641% last) US Employment pushing “near full” again (4.2% U-Rate back to levels last seen pre-COVID) Imminent (obvious) Fed tapering commencement, but now, with actual balance-sheet runoff (QT) potential thereafter in UST and MBS being socialized by some Fed members, all of which would mean the need for actual (gasp) price-discovery for “private side” buyers--including convexity hedgers in Mortgages. Translation: we may very soon discover what the true yield of TSYs should be. Start-of-year resumption of heavy Corp debt issuance calendar @ ~ $11.25B of paper (Street expectations of ~$140B for the full-month of January), with a particularly duration-heavy (> 10 years) WAM seen in yesterday’s paper (note: more of the same today, with another 7 deals early, mostly Financials) Last but not least, we have seen the shift to the market not just pricing-in 3 full FOMC hikes this year, but pulling the liftoff forward almost every day, with the March meeting now ~ 72% “priced” These key drivers behind persistent Treasury weakness were not lost on the market, and as Charlie writes, there was lumpy Duration selling in both Cash and Futs on Monday (especially a notable late-day WN block seller ~ $1.1mm in DV01), which was matched by "particularly aggressive options flows", including what McElligott calls "an eye-wateringly ENORMOUS buyer of TY downside, where HUGE prem was spent on 71k of the TYH2 127 Puts (~1.95% yield target by mid-Feb exp) at nearly ~$5.5mm bp dv01" (here he notes that this was an ADD to a view, with OI on Dec 31st at 161k, but now 231k as of Jan 3rd). The move has led to Treasuries posting their worst start to the year since 2009, sending ripples through markets from Australia to the U.K. Adding to this, and in agreement with point 1 above, Bloomberg adds that Treasury traders "are betting the rapid spread of the omicron variant will increase inflationary pressures in the U.S. economy, rather than weaken them." Specifically, the article looks at 10-year breakeven rates which climbed to as high as 2.66% on Tuesday, the most since November, and up from as low as 2.36% on Dec. 14. Even real rates jumped from as low as -1.13% at the end of 2021 to -0.96% today. “Inflation continues to be the major theme of the market given life with the coronavirus,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities Inc. in Tokyo. There is speculation that “the widening spread of the virus will lead to a decline in labor participation and supply constraints,” he wrote in a research note. So how has this rate puke impacted stocks? Well, as McElligott continues, yesterday there was an outright “Momentum Shock” in the US Equities factor space, with the “Long-Term Momentum” factor absolutely "rekt" -3.5%, a 1d -3.1 std dev move over the past 1Y window and the largest drawdown in the factor since the peak of the meme stock / HF unwind on 1/27/21! Furthermore, the Nomura quant writes that the rally/short-squeeze in “Low Quality/High Vol” stocks seen yesterday - i.e. “Leverage” and “Short Interest” factors booming - was a stark contrast to the recent theme of the grab into “Quality” (high over low), “Size” (large over small), “Low Risk” (over high vol). Putting this together, this end-of-’21 “up in Quality” dynamic noted above was a large part of the blow-up in “Unprofitable Tech/Highly Speculatives” trade seen since the start of Nov ’21 into year-end (as the “short” leg of the trade), but yesterday, all of that “high spec” stuff really squeezed higher again, according to McElligott, as it looks like short books were de-grossed in a major way, while some too simply were taking discretionary punts on “high beta” to play for the January effect raising all boats, but particularly in the stuff which has just been the most beaten-down and ripe for O/P. Of course, this “Momentum shock” reversal (lower in Size, Quality, Low Risk “longs” vs the squeeze in “junk” Leverage / High Vol / Cyclical Value) also meant a frustrating day for hedge fund long & short “Crowding” proxies on the first day of the year, as both suffered outsized losses: Hedge Fund Crowding Factor -0.8% (-1.3 z-score) Hedge Fund L/S Proxy -1.5% (-1.8 z-score) Adding to the confusion, while hedge funds were clearing out their 2021 short-book leftovers, CTA/vol control funds were mechanistically rushing back into stocks, leading to the overall market ramp. According to McElligott's calculations, the Nomura QIS CTA model showed +$16.4B of fresh buying in Global Equities on the day (particularly focused in Asia with the Nikkei signal flipping from “-49% Short” to “+100% Long”—notionally buying +$15.6B, on top of +$800mm in US and and +$100mm in European equity futs). In the US, Nomura's Vol Control model estimated another +$3.8B of S&P futures buying as 1-month Realized Vol continued its collapse with a 6th straight day of buying, and now +$23.3B over the past 2 weeks (take a look at where the VIX is and compare it a month ago (spoiler alert: it has been cut in half). So what happens next? Well, as the Nomura strategist reminds us, next week should see the concentration of the forward buying - with particular focus on tomorrow (he is projecting a 1.0% chg = +$7.8B buying; 0.5% chg = +$14.5B buying; 0.0% chg = +$16.9 buying). Yet mechanistic buying aside, the risk is that with Index Options Gamma- and Delta getting longer/more positive, McElligott warns that we are slowly inching nearer towards “potential for a pullback” territory, and as usual Nomura's clients are urged again to focus on the monthly Op-Ex as the “unclench” catalyst there later mid-month January QQQ $Delta back to $13.2B, 94.9%ile SPX / SPY $Delta back to $291.6B, 80.1%ile In conclusion, the Op-Ex tied “window for a pullback” also corresponds with again “stress-y” vol signals as spot indices trade to new highs, and with “Skew” and “Put Skew” flashing again - but particularly noting that “Term Structure” is screening “extreme” and to the point made at the top of the note on the heavy selling of Vol / optionality.  Translated to plain English, what all of the above means is that instead of waiting until Friday to see where this week's op-ex chips may fall, the market is trading more or less as it should, and high duration giga-techs are dumping as yields are spiking... just as one would expect. The only question is whether this "logical" behavior will continue - one look at the chart below shows that the Nasdaq has a ways to drop if indeed it is allowed - or alternatively, if the remarkable bounceback from every op-ex makes another appearance, and spoos trade solidly back over 4,800 on their way to fresh all-time highs. Tyler Durden Tue, 01/04/2022 - 15:01.....»»

Category: blogSource: zerohedgeJan 4th, 2022

Beneath The Surface, Rally

Very good S&P 500 entry to 2022, and the HYG intraday reversal is the sight to rejoice. In the sea of rising yields, both tech and value managed to do well – the market breadth keeps improving as not only the ratio of stocks trading above their 200-day moving averages shows. Likewise VIX refused to […] Very good S&P 500 entry to 2022, and the HYG intraday reversal is the sight to rejoice. In the sea of rising yields, both tech and value managed to do well – the market breadth keeps improving as not only the ratio of stocks trading above their 200-day moving averages shows. Likewise VIX refused to reach even 19, and instead is attacking 16.50. This is not complacency – the bulls were thoroughly shaken at the entry to the session yesterday – but a buying interest that convincingly turned the tide during the day. 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 As I wrote yesterday: (…) thanks to the credit markets message, I‘m not reading into Friday‘s weakness much. There is still more in this rally – value held better than tech, and high yield corporate bonds didn‘t really slide. The year end rebalancing will likely give way to solid Monday‘s performance. While VIX appears to want to move up from the 17 level, it would probably take more than one day to play out. As the Santa Claus rally draws to its close, the nearest data point worth looking forward for, is Tuesday‘s ISM Manufacturing PMI. It‘ll likely show still expanding manufacturing (however challenged GDP growth is on a quarterly basis), and that would help commodities deal with the preceding downswing driven by energy and agrifoods. Both of these sectors are likely to return to gains, and especially oil is. The only sector taking a beating yesterday, were precious metals. While inflation expectations were little changed (don‘t look for inflation to go away any time soon as I‘ve been making the case repeatedly), the daily rise in yields propelled the dollar to reverse Friday‘s decline, and that knocked both gold and silver off the high perch they closed at last week. Still, none of the fundamental or monetary with fiscal policy originating reasoning has been invalidated – not even the charts were damaged badly by Monday‘s weakness. As economic growth gets questioned while fiscal policy remains expansive unlike the monetary one, volatily in the stock market together with persistent inflation would be putting a nice floor beneath the metals. Even cryptos are refusing to yield much ground, the Ethereum to Bitcoin ratio keeps trading positively, and I‘m not even talking the rubber band that commodities (crude oil and copper) are. Very good for our open positions there, as much as in the S&P 500 – let them keep bringing profits. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Really bullish price action in both S&P 500 and Nasdaq – that was the entry to 2022 I was looking for. Embellished with prior downswing that lends more credibility to the intraday reversal. Credit Markets HYG refusing to decline more, is the most bullish sign for today imaginable – let it hold, for junk bonds now hold the key, especially if quality debt instruments keep declining steeply. Gold, Silver and Miners Gold and silver look to have reversed, but reaching such a conclusion would be premature. The long basing pattern goes on, and breakout higher would follow once the Fed‘s attempting to take the punch bowl away inflicts damage on the real economy (and markets), which is what the yield curve compression depicts. Crude Oil Crude oil is about to launch higher – and it‘s not a matter of solid oil stocks performance only. Just look at the volume – it didn‘t disappoint, and in the risk-on revival that I expect for today, black gold would benefit. Copper Copper swooned, but regained composure – the stop run is over, and we‘re back to base building for the coming upswing. Broader commodities certainly agree. Bitcoin and Ethereum Bitcoin and Ethereum are very gently leaning bullish, but I‘m not sounding the all clear there yet thanks to how long Bitcoin is dillydallying. Cryptos aren‘t yet out of the woods, but their posture has improved thus far noticeably. Summary First trading day of 2022 extended prior S&P 500 gains, and the risk-on appetite is improving as we speak. Commodities are reaping the rewards, and we‘re looking at another good day ahead, including in precious metals taking a bite at yesterday‘s inordinately large downswing. Nothing of the big factors ahead for Q1 2022 as described in today‘s analysis (I wholeheartedly recommend reading it in full for the greatest benefits – there is only so much / little that I can fit into a one paragraph summary), and that means we‘re looking at further stock market gains as the bull runs (including in commodities and precious metals, yes precious metals), aren‘t over in the least. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. 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Category: blogSource: valuewalkJan 4th, 2022