Patti Payne"s Cool Pads: Paul Archer puts Issaquah estate up for sale

Futures Dip As Tech Rally Faces First Major Test With Microsoft Earnings The rally in US tech stocks and European markets paused on Tuesday as investors prepared for earnings updates from industry giants, including Microsoft and Texas Instruments. US equity futures fell after the tech-heavy Nasdaq 100 posted its best two-day gain since November, as traders braced for the worst tech earnings slump since 2016. Europe’s region’s Stoxx 600 Index erased an early advance to fall into the red. At 7:30am ET, S&P 500 futures were 0.2% lower and Nasdaq futures were down 0.3%; the tech-heavy benchmark is up8.5% in January, on pace for its best month since July even as profit estimates are declining and as Federal Reserve officials advocate for more policy tightening to combat inflation if at a slower, 25bps pace. The USD rose; Treasuries were unchanged while commodities were mixed with strength in natgas, nickel, oil and precious metals. In pre-market trading, Alphabet shares fell slightly after a Bloomberg News report that the US Justice Department could file an antitrust lawsuit against Google as soon as Tuesday regarding the search giant’s dominance over the digital advertising market. Microsoft, which reports results today, was little changed. Yesterday the world’s largest software maker confirmed it is investing $10 billion in OpenAI, the owner of artificial intelligence tool ChatGPT. Advanced Micro Devices fell in pre-market trading, after Bernstein downgraded the stock to market perform from outperform, citing a worsening PC climate and “semi-destructive behavior” by rival Intel Corp. Here are the other notable pre-market movers: 3M forecast adjusted earnings per share for 2023; the guidance missed the average analyst estimate. Shares decline 4.9%. GE forecast adjusted earnings per share for 2023; the guidance missed the average analyst estimate. Shares gain 1.8%. Johnson & Johnson guided to stronger earnings for 2023 than analysts were expecting after a year in which the pharma division suffered because of waning demand for its unpopular Covid-19 shot. Shares rise 0.5%. Lyft shares gain 3.4% after KeyBanc upgrades the ride- hailing firm to overweight from sector weight, with broker saying data indicates that the firm is turning a corner, while cost-cutting could boost Ebitda. HighPeak Energy shares rise 15% after the oil producer’s board voted to initiate a process to evaluate strategic alternatives including a potential sale. Zions shares drop 2.7% after the bank’s total deposits fell short of Wall Street estimates, with analysts also disappointed by the firm’s forecast for net interest income which they said could put pressure on estimates amid a tough macroeconomic backdrop. Watch oil and gas stocks as Morgan Stanley says it’s increasingly selective in the sector as it continues to see a “mixed setup” for North American shares ahead of earnings. Upgrades Marathon Oil to overweight, and cuts APA and Ovintiv to equal-weight. Keep an eye on Target shares as Oppenheimer begins coverage at outperform, seeing potential for a “strong multi-year profit recovery” and opportunity for the discount retailer to capture market share. KeyBanc initiates coverage of Virgin Galactic Holdings at sector weight, saying the company could be highly profitable if it succeeds in ramping up its “next-generation” spaceship fleet, but that its performance hinges on execution. Amazon’price target and 2024 outlook cut at Telsey Advisory Group as the spending environment becomes more challenging and growth rates normalize after a couple of years of acceleration during Covid. Shares decline 0.3%. Cheesecake Factory downgraded at Raymond James to market perform from outperform reflecting concerns about the restaurant chain operator’s ability to recover pre-Covid margins. The brokerage also cut its rating on Dine Brands Global, the parent company of Applebee’s Neighborhood Grill + Bar and IHOP restaurants. Shares decline 1.8%. Cymabay Therapeutics gains 11% in premarket trading after the offering priced via Piper Sandler, Raymond James, Cantor Fitzgerald. Halliburton Co. boosted its dividend 33% as the world’s biggest provider of fracking services follows its oil-and-gas clients by expanding shareholder returns amid tight global supplies for crude. Shares gain 0.3%. HighPeak Energy (HPK) shares rise 17% after the oil producer’s board voted to initiate a process to evaluate strategic alternatives including a potential sale. Lululemon Athletica Inc. (LULU) falls as much as 2.1% after Bernstein analyst Aneesha Sherman cut her recommendation on the athleticwear maker to underperform from market perform. PennantPark Floating (PFLT) drops 6.4% after an offering of 4.25m shares raised proceeds of $47.6 million, or $11.20 apiece, representing a discount to last close. Verizon Communications Inc.’s profit outlook trailed Wall Street estimates in a sign that consumer wireless business continues to weigh down performance as the company turns to costly phone giveaways to compete with its peers. Shares decline 2%. In previewing this week's barrage of tech earnings, JPMorgan writes that with MSFT earnings coming today, and the balance of the FANG+ complex next week, "many are asking whether the US can reverse its underperformance. In the near-term, the answer seemingly lies with Tech earnings, which are expected to experience their largest decline since 2016, according to Bloomberg. Longer-term, a Fed pause may not be enough given the difference in growth rates of regions economies. The weakening USD has been a bigger benefit to international Equities than it has to create a domestic earnings tailwind. It may also be the case where the US is more vulnerable to margin compression than its international counterparts. Longer-term, if we do experience a Fed pivot this year, then would anticipate a strong, positive buying impulse for Tech." Wall Street has been slashing earnings estimates for months for the tech sector, which is projected to be the biggest drag on S&P 500 profits in the fourth quarter, data compiled by Bloomberg Intelligence show. The danger for investors, however, is that analysts still prove too optimistic, with demand for the industry’s products crumbling as the economy cools. “We do not see much scope for markets to rally in the near term, especially given our outlook for continued pressure on corporate profit growth,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note echoing what is now a consensus view with identical sentiment shared by his peers at Goldman, JPM, and Bank of America. Haefele noted that UBS GWM’s S&P 500 target for both June and December, at 3,700 points and 4,000 points, were both below Monday’s 4,020 close. “In our view, the risk-reward trade-off remains unfavorable for broad US indexes, and we retain a least preferred stance on US equities and the technology sector,” he added. European stocks also traded lower with the Stoxx 600 down 0.3%. Energy, miners and personal care are the worst performing sectors while insurance and media rise. The risk-off tone has benefited bonds with UK and German benchmarks rising and 10-year borrowing costs falling by 5bps and 2bps respectively. Here are the most notable European movers: Norwegian salmon farmers surge after a politician told newspaper Dagbladet the party is open to modifying a proposed resource tax to be levied on seafood producers in Norway Logitech shares edge up by as much as 2.4% as analysts highlighted better sell- through figures, market-share gains and solid 3Q cash flow from the computer-equipment maker Swatch shares rise 2.1% after analysts said China’s ending of its zero-Covid stance should mean a robust rebound in demand Topdanmark shares bounce as much as 4.9%, the most since February 2022, with a higher-than- expected special dividend the highlight of the Danish insurer’s results Marston’s shares gain as much as 8.7%, with analysts saying the trading update from the UK pub company shows some encouraging sales trends Senior Plc gains as much as 12% in early trading, after the company issued a trading update Monday showing a “strong finish” to the year, with profits ahead of expectations Ericsson shares fall as much as 2.9% after being cut to sell from neutral at Goldman Sachs with the broker bearish on the telecoms-equipment group’s ongoing downside risks Associated British Foods shares slip as much as 1.7% after the food processing and retailing company posted a trading update noting a softer sugar segment offsetting strong performances elsewhere Direct Line shares fall as much as 3.2% as Citi switches to a new system to better value European insurance stocks, cutting the company to sell Dometic slides as much as 4.4% after Pareto Securities cut the Swedish recreational vehicle equipment maker to hold, with US demand in “free fall” in the short term Meanwhile, European flash business activity data, while better than expected, highlighted ongoing weakness across the euro bloc and in Britain, while US figures later in the day will offer investors a snapshot of how the world’s largest economy is faring.  Commenting on today's PMI data, which came out as follows... Germany Jan. Flash Manufacturing PMI 47; Est 48 Germany Jan. Flash Services PMI 50.4; Est 49.5 France Jan. Flash Manufacturing PMI 50.8; Est 49.5 France Jan. Flash Services PMI 49.2; Est 49.8 UK Jan. Flash Services PMI 48; Est 49.5 UK Jan. Flash Manufacturing PMI 46.7; Est 45.5 ... Goldman writes that "the January flash PMIs showed significant improvements in future expectations and other forward-looking indicators like new orders also improved on the margin." And some more details: The Euro area composite flash PMI increased by 0.9pt to 50.2 in January, above consensus expectations. The increase in the composite index was broad-based across sectors, with the services sector surpassing the 50 threshold for the first time since July. Across countries, the improvement was led by the periphery and Germany, offset partially by a moderation in France. In the UK, the composite flash PMI decreased by 1.2pt to 47.8, well below consensus expectations. We see three main takeaways from today's data. First, the upside surprise in the data today and the Euro area composite PMI surpassing the 50 threshold confirm our view that Euro area growth prospects have improved significantly recently. Second, cost inflation is moderating but the increase in output prices released today provided another reminder that underlying inflation remains sticky. Third, today's data reinforce our expectation that the UK will underperform the Euro area even with falling energy prices. PMI data aside, the upcoming wave of US corporate earnings — from tech giants such as Microsoft Corp. and Texas Instruments Inc. as well as industrials such as GE — is likely to dominate attention. “It’s all about earnings,” said Peter Kinsella, head of FX strategy at asset manager UBP. “Given that equities are trading at elevated levels, any earnings disappointment would justify a shift lower in stocks.” Kinsella said there was scope for bonds to rally and reckons that the dollar, already down about 1.7% this year against a basket of rivals, has likely seen its peak as the Federal Reserve approaches the end of its rate-hiking cycle. The US central bank bank is expected to cut rates by a smaller 25 basis points at a Jan. 31-Feb. 1 meeting. “The market is saying inflation is done and dusted, which justifies a turn in tone from the Fed,” Kinsella added. “Overall I am off the view we saw the multi-year dollar peak last year.” Earlier in the session, Asian stocks extended their recent rise in holiday thinned trading, as investors looked beyond expected near-term earnings weakness and rising US interest rates. The MSCI Asia Pacific Index rose 0.8%, poised for a third straight day of gains, driven by industrial and technology shares. Japan led the advance for a second session, with China and much of the region still shut for Lunar New Year. “With job cuts proceeding apace, the markets likely continue to ignore short-term earnings and look into next year,” a bullish scenario, analyst Mark Chadwick wrote in a note on Smartkarma. Growth stocks also benefit with “Fed hike risks out of the headlines and consensus now around peak rates at 5%.” Major Asian tech stocks reporting results this week include South Korean EV battery maker LG Energy Solution and Japanese robot maker Fanuc. In addition to the rebound in global peers, local shares have also gained on optimism over China’s reopening and easing corporate crackdowns Japanese stocks rose Tuesday, gaining traction after a tech rally drove gains in US peers and amid growing optimism that the Federal Reserve will be less hawkish than previously expected. The Topix Index rose 1.4% to 1,972.92 at the market’s close in Tokyo, while the Nikkei advanced 1.5% to 27,299.19. Sony Group Corp. contributed the most to the Topix’s advance, increasing 1.9%. Mitsubishi UFJ Financial and Toyota Motor were other notable gainers. Among 2,161 stocks in the index, 1,713 rose, 369 fell and 79 were unchanged. “The rise in US stocks is positive to Japanese equities, especially with a fairly strong sentiment that US interest rate hikes might come to an end soon,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management. “In Japan, exporters are rebounding as concerns over yen’s appreciation cool and inbound demand continues to contribute to the rally.” Australian stocks rose for a fifth session; the S&P/ASX 200 index rose 0.4% to close at 7,490.40, led by gains in mining and real estate shares. The benchmark closed at the highest since April 21, extending gains for fifth session.  In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,932.92 In FX, the Bloomberg Dollar Spot Index swung to a gain in European session and the greenback rose against all of its Group-of-10 peers apart from the yen and the Swedish krona. The pound fell to the bottom of the G-10 pile after PMI data highlighted the looming risk of a recession in the UK economy. Readings from France and Germany were more mixed but enough to prompt the euro to reverse an earlier advance.  Traders position for a series of US data releases and the next meetings by the world’s major central banks, and the dollar meets topside demand through options. The euro climbed toward $1.09 only to reverse its gain after Germany’s manufacturing PMI unexpectedly fell. Germany’s composite PMI however came in better than forecast, at 49.7, and the composite for the whole euro zone entered expansionary territory after rising to 50.2, versus expected 49.8. Separately, German February GfK consumer confidence improved to -33.9 versus estimate -33.3 The pound fell against all of its G-10 peers and gilts outperformed Treasuries and bunds after S&P Global’s UK PMI fell to 47.8 in January from 49 the month before, well below economists’ forecasts for little change The yen advanced for the first time in three days and bonds fell. Investors were waiting for the Bank of Japan’s summary of opinions from its January meeting and Tokyo inflation data later this week to see if a further policy change was in store Australian sovereign bonds pared opening losses as markets parsed improved National Australia Bank business confidence, instead focusing on how components to business conditions softened. Australian and New Zealand dollars swung to losses in European trading In rates, Treasuries are slightly richer with yields shedding 1-3bps across the curve, supported by a wider rally in gilts after lower-than-estimated UK PMI services gauge. The 10Y TSY is around 3.50%, richer by 1bp vs Monday’s close while lagging gilts by 2bp in the sector. The risk-off tone has benefited bonds with UK and German benchmarks rising and 10-year borrowing costs falling by 5bps and 2bps respectively. In core European rates gilts outperform in bull-steepening move where front-end and belly yields are richer by 5bp on the day. The US auction cycle begins at 1pm with $42b 2-year note sale, ahead of $43b 5- year and $35b 7-year notes Wednesday and Thursday. Focal points of US session also include January PMIs, along with 2-year note auction, first of this week’s three coupon sales.   In commodities, crude futures are little changed while spot gold rises 0.3% to trade near $1,938/oz. FBI said two hacker groups associated with North Korea were behind the USD 100mln theft from US crypto firm Harmony Horizon Bridge last June, according to Reuters. Looking to the day ahead now, the main data highlight will be the January flash PMIs from Europe and the US. Elsewhere, central bank speakers include ECB President Lagarde, along with the ECB’s Knot and Vujcic. Earnings releases include Microsoft, General Electric, Danaher, Johnson & Johnson, Lockheed Martin, Texas Instruments, Union Pacific and Verizon Communications. Market Snapshot S&P 500 futures down 0.1% to 4,031.75 STOXX Europe 600 down 0.1% to 453.95 MXAP up 0.6% to 168.43 MXAPJ little changed at 551.68 Nikkei up 1.5% to 27,299.19 Topix up 1.4% to 1,972.92 Hang Seng Index up 1.8% to 22,044.65 Shanghai Composite up 0.8% to 3,264.81 Sensex up 0.1% to 61,016.22 Australia S&P/ASX 200 up 0.4% to 7,490.40 Kospi up 0.6% to 2,395.26 German 10Y yield little changed at 2.18% Euro little changed at $1.0867 Brent Futures down 0.5% to $87.73/bbl Gold spot up 0.2% to $1,935.75 U.S. Dollar Index down 0.11% to 102.03 Top Overnight News From Bloomberg The UK government sank deeper into debt in December as rising debt-interest payments and the cost of insulating consumers and businesses from the energy-price shock strained the public finances. The budget deficit stood at £27.4 billion ($34 billion), a record for the month and almost triple the £10.7 billion shortfall a year earlier Some UK homes are requested to curb power demand on Tuesday evening as the nation’s grid struggles for a second day to plug the gap left by a drop in wind generation The immense wealth coming from Norway’s gas and oil fields is underpinning a new refrain among market experts: it’s time for a big rebound in the krone A more detailed summary of overnight events courtesy of Newsquawk Asia-Pacific stocks were positive and took impetus from the tech rally on Wall Street but with trade quiet amid a lack of fresh catalysts and as many participants in the region remained absent with markets in China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia and Vietnam all closed for the holiday. ASX 200 was underpinned by strength in the real estate, tech and mining industries albeit with gains capped after a mixed NAB business survey and soft PMI data which showed a contraction in the manufacturing and services.  Nikkei 225 continued its outperformance and climbed above the 27,000 level with the index unaffected by the latest preliminary PMI data in which Manufacturing PMI contracted for the 3rd consecutive month although Services and Composite PMIs improved with the latter back in expansionary territory, while reports also noted that Japan is considering early May for its planned downgrade of COVID policy. Top Asian News US President Biden's Administration reportedly confronted China's government with evidence that suggested some China SOEs may be providing assistance to Russia's war effort, according to Bloomberg. The first three days of the Chinese Spring Festival holidays saw bookings for domestic hotel and scenic spots increase by 56% and 79% Y/Y, according to data by online travel agency Tongcheng Travel cited by these Global Times; Domestic air ticket bookings rose by 30%, China's passenger trips via railway, road, waterway and plane amounted 23.53 million on Monday, up 67.7% Y/Y. BoJ Governor Kuroda says markets moves are becoming more stable, via Reuters. European bourses are a touch softer overall, Euro Stoxx 50 -0.2%, and relatively unreactive to better-than-expected EZ Flash PMIs. Albeit, the FTSE 100 -0.4% is lagging slightly following its own PMIs, which point to a particularly grim start to the UK economy for 2023. Stateside, futures are a touch softer but contained overall, ES -0.2% but above 4k, ahead of data points and key earnings including MSFT. Top European News Euro-Area Business Activity Unexpectedly Grows at Start of Year Britain and the EU are unlikely to make major changes to the underlying Brexit deal, according to a report by the academic body UK in a Changing Europe cited by Reuters. ECB's Nagel said ECB is not done on far too high inflation, according to L'Express; additionally, Villeroy said the ECB probably will reach peak rates by summer. Judge Removed From HSBC Dispute Over Loan to Hot Yoga Studio UK Homes Asked to Curb Power for Second Day as Wind Fades Ukraine Latest: Stoltenberg Confident of Solution on Tanks Soon Notable data EU S&P Global Composite Flash PMI (Jan) 50.2 vs. Exp. 49.8 (Prev. 49.3); “The region is by no means out of the woods yet, however, as demand continues to fall – merely dropping at a reduced rate – and an upturn in the rate of inflation of selling prices for both goods and services will add encouragement to the hawks to push for further monetary policy tightening. The case for higher interest rates is fuelled further by the upturn in employment growth recorded during the month and signs of higher wages driving the latest upturn in price pressures." EU S&P Global Manufacturing Flash PMI (Jan) 48.8 vs. Exp. 48.5 (Prev. 47.8); Services Flash PMI (Jan) 50.7 vs. Exp. 50.2 (Prev. 49.8) German S&P Global Composite Flash PMI (Jan) 49.7 vs. Exp. 49.6 (Prev. 49.0); Click here for more detail. German S&P Global Manufacturing Flash PMI (Jan) 47.0 vs. Exp. 47.9 (Prev. 47.1); Services Flash PMI (Jan) 50.4 vs. Exp. 49.6 (Prev. 49.2) UK Flash Composite PMI (Jan) 47.8 vs. Exp. 49.1 (Prev. 49.0): "Jobs also continued to be lost as firms tightened their belts in the face of these headwinds, though many other firms reported being constrained by an ongoing lack of available labour." UK Flash Services PMI (Jan) 48.0 vs. Exp. 49.7 (Prev. 49.9); Manufacturing PMI (Jan) 46.7 vs. Exp. 45.5 (Prev. 45.3) German GfK Consumer Sentiment (Feb) -33.9 vs. Exp. -33.0 (Prev. -37.8, Rev. -37.6) FX The USD has benefitted from a PMI-induced decline in Sterling, with the DXY lifted to a 102.17 peak and Cable testing 1.23 to the downside. In contrast, the EUR was underpinned by Monday's late-doors ECB speak though EUR/USD stalled on a test of 1.09 before contrasting EZ/regional PMIs. JPY is the marked outperformer having been below 130.00 against the USD, though it has given back some of this recovery momentum in face of the above USD action. CAD is contained pre-BoC with the Antipodeans equally rangebound ahead of inflation data. Brazil's Finance Minister Haddad said President Lula and Argentina's President Fernandez requested the creation of a clearing house with a common currency to settle accounts, but added it has no name or deadline and their idea does not seek monetary unification as is the case with the Euro, according to Reuters. Fixed Income EGBs perhaps gleaned initial support on technical factors, though subsequent action was driven by a marked spike in Gilts to near 105.00. Much of the UK move was driven by the region's PMI release though subsequent bearish fiscal developments served as a fleeting headwind for Gilts and, to a lesser extent, peers more broadly with Bunds continuing to slip post-PMIs. USTs are a touch firmer given the above action and ahead of its own data release and 2yr issuance. UK sells GBP 6bln 2053 Gilt via syndication, order book closed in excess of GBP 65bln, according to a bookrunner. Commodities The crude benchmarks are little changed/slightly softer as a GBP-induced lift to the USD weighs on the complex. However, WTI and Brent remain underpinned overall by the broader improving demand picture amid the Lunar New Year holiday. US is weighing the cancellation of the next SPR sale, according to sources cited by Energy Intel. Dubai sets the official crude differential to DME Oman for April at a USD 0.20/bbl discount. Norwegian Energy Ministry plans a 2023 APA oil and gas licensing round, adding acreage to the Norwegian and Barents sea. 5.4 magnitude earthquake strikes Nepal, via EMSC. Spot gold has slipped from its intraday peak given USD action, though the yellow metal continues to glean support from the slightly softer equity tone while LME Copper has slipped from best but remains in proximity to USD 9.5k/T. Geopolitics Russian Chief of the General Staff Gerasimov said the new army plan considers threats such as Finland and Sweden's desire to join NATO, and the use of Ukraine as a tool of hybrid war against Russia, according to TASS. Polish Defence Minister said Germany has now received Poland's official request to re-export Leopard tanks to Ukraine; following the German Defence Minister saying there is no new position on the Leopard tanks. US Event Calendar 08:30: Jan. Philadelphia Fed Non-Manufactu, prior -17.1, revised -12.8 09:45: Jan. S&P Global US Composite PMI, est. 46.4, prior 45.0 09:45: Jan. S&P Global US Services PMI, est. 45.0, prior 44.7 09:45: Jan. S&P Global US Manufacturing PM, est. 46.0, prior 46.2 10:00: Jan. Richmond Fed Index, est. -5, prior 1 DB's Jim Reid concludes the overnight wrap Risk assets got the week off to a very strong start yesterday, with the S&P 500 (+1.19%) at a 7-week high as investors awaited a raft of earnings reports over the coming days. However, just as equities were surging to fresh highs for 2023, there were also growing concerns about a potential US recession, with the Conference Board’s leading index for December falling by a larger-than-expected -1.0% (vs. -0.7% expected). So that’s a further negative signal after last week’s downbeat releases on retail sales and industrial production, and one that will increase the focus on today’s flash PMIs for January. In many respects, this divergence between more positive markets and weak economic data echoes what Jim and I published last week in our “Sweet Spot” note (link here). We pointed out how it was consistent to be tactically positive on risk assets whilst maintaining our (very) bearish view for H2 2023. In essence, since October markets have been less concerned about inflation and where rates might need to go, with terminal pricing for the Fed funds remaining steady around the 5% mark for a few months now. But we also haven’t reached the US recession that we’re forecasting for H2, which is giving markets scope to rally in the meantime. Indeed, we show in the piece this is also consistent with the historic pattern, with the S&P 500 only tending to turn significantly lower a few weeks before the recession on average. When it came to that release from the Conference Board, the -1.0% decline in December marked the 10th successive monthly decline for the leading index. Furthermore, it means that it’s now down -6.0% on a year-on-year basis, the most since June 2020. Bear in mind that on every other occasion the index has been down by that amount in a single year, the US economy has either been in a recession or was just emerging from one. So clearly not a positive sign by historic standards. For the time being at least, investors put aside their caution on a recession, with equities seeing a strong rally on both sides of the Atlantic. Tech stocks led the advance, which continues their very strong performance in January so far. The NASDAQ was up +2.01%, thus bringing its YTD gains to +8.58%. Meanwhile the FANG+ index of megacap tech stocks saw even larger gains, with a +4.03% advance that brought its own YTD performance to +14.80%, and puts it on track for its best monthly performance since August 2020. After the close there was a Bloomberg report that the US Justice Department was set to sue Google’s parent company Alphabet as soon as today about their digital ad dominance. Alphabet shares were down -0.9% in after-market trading, but futures for the NASDAQ 100 more broadly saw little reaction, and are only down -0.02% this morning. Elsewhere, the cyclical sectors outperformed in line with the risk-on tone for the day, but there was a broader underperformance in Europe, with the STOXX 600 only up +0.52%. Whilst equities were buoyant, sovereign bonds lost ground amidst the risk-off tone, with yields on 10yr Treasuries up by +3.1bps yesterday to 3.51%, followed up by a +0.7bps move overnight to 3.52% as we go to print. That was echoed in Europe too, with yields on 10yr bunds (+2.9bps), OATs (+3.2bps) and BTPs (+3.4bps) seeing similar rises of their own. Those moves came as there was some pushback from ECB speakers about the idea of slowing their rate hikes down from 50bps after the February meeting, with Slovakia’s Kazimir saying yesterday that “we need to deliver two more 50 basis-point moves”. After the close, we also heard from President Lagarde, who said that “We will stay the course to ensure the timely return of inflation to our target”. Looking forward, the main highlight today will be the flash PMIs for January, since they’ll provide an initial steer on how the global economy is performing into 2023. Last month both the US and the Eurozone composite PMIs were in contractionary territory, thus adding to fears about a potential recession. However, the year so far has brought some relatively good news, with European natural gas currently around its lowest in over a year, alongside clear signs that consumer confidence has begun to recover. When it comes to the PMIs, our European economists think the positive impact of easing uncertainty is more likely to come in services than manufacturing. Overnight, we’ve already had some initial PMI numbers from Japan and Australia, which have added to that picture that the global economy might be faring worse than feared. Starting with Japan, the composite PMI moved back into expansionary territory at 50.8, following two months beneath the 50 mark. The manufacturing PMI did remain in contractionary territory at 48.9, but services saw a stronger move higher to 52.4. Meanwhile in Australia, there was also a rise in the composite PMI overnight to 48.2 (vs. 47.5 previously), so still in contractionary territory but a change from three consecutive declines in the PMI. Those more positive PMI releases along with the US equity rally has boosted sentiment in Asian markets this morning, with the Nikkei (+1.52%) as well as the S&P/ASX 200 (+0.44%) both trading in positive territory. However, several major markets across the region remained closed for the Lunar New year holiday. Elsewhere, equity futures suggest that US stocks will hold onto yesterday’s gains, with those on the S&P 500 basically stable at +0.02%. Otherwise yesterday, there was a fair amount of optimism across different asset classes. For instance, Brent crude oil closed above $88/bbl for the first time in 2023 (+0.64% yesterday), which is a decent jump after trading beneath $78/bbl at the lows around the start of the month. Elsewhere, Bloomberg’s index of US financial conditions showed they were at their most accommodative levels since last February. And we also saw the Euro move above $1.09 in trading for the first time since April, before closing back at $1.087. Finally in other data yesterday, the European Commission’s preliminary consumer confidence indicator for the Euro Area in January rose to -20.9 (vs. -20.0 expected). That was beneath expectations, but still the strongest that reading has been since last February. To the day ahead now, and the main data highlight will be the January flash PMIs from Europe and the US. Elsewhere, central bank speakers include ECB President Lagarde, along with the ECB’s Knot and Vujcic. Earnings releases include Microsoft, General Electric, Danaher, Johnson & Johnson, Lockheed Martin, Texas Instruments, Union Pacific and Verizon Communications. Tyler Durden Tue, 01/24/2023 - 08:06.....»»

Gautam Adani, now the world's third-richest man, is worth $125 billion, while Mukesh Ambani, who's number nine on the list, is worth $89.7 billion. Mukesh Ambani (L) and Gautam Adani (R) have grown their empires for years without competing directly with each other.Debajyoti Chakraborty/NurPhoto via Getty Images and Prodip Guha/Getty Images Two of Asia's moguls now rank among the world's top 10 wealthiest people. Gautam Adani and Mukesh Ambani own giant multi-sector companies in a rapidly developing India. The two moguls may soon butt heads as their empires grow larger. Editor's note: This story was first published in August 2022 and has been updated to reflect the most recent financial figures.Billionaires Mukesh Ambani and Gautam Adani are both central figures in the rapid growth of India's industries.A girl walks past a Reliance Jio store in Kolkata, India, 03 March, 2021.Indranil Aditya/NurPhoto via Getty ImagesMukesh Ambani and Gautam Adani have both seen a meteoric rise in their wealth in the last decade as they've dominated India's energy, infrastructure, retail, and defense development industries.But it's in the last three years that the pair has seen its fortunes roar to heights unprecedented in Asia. Adani, whose personal wealth grew from around $13 billion in 2020 to $110 billion as of December 27, is now the third-richest person in the world, per Bloomberg's Billionaire Index. That puts him and his fortune ahead of Jeff Bezos, Bill Gates, and Warren Buffett.Ambani is currently the world's ninth-richest person, with a net worth of $85 billion as of December 27, per the index. He's still seen a great leap in wealth since 2020, when he was worth around $32 billion.We took a look at each of the two billionaires' business empires, fortunes, and real-estate investments. Representatives for Ambani and Adani did not respond to Insider's requests for comment.NET WORTH: Gautam Adani is the only top 10 billionaire who grew his personal fortune this year.Gautam Adani (R) interacts Chief economic advisor Amit Mitra (L) during sixth edition of Bengal Global Business Summit (BGBS) with industrial stalwarts and representatives from 49 countries at Biswa Bangla Convention Centre, New Town on April 20, 2022 in Kolkata, India.Samir Jana/Hindustan Times via Getty ImagesAmid a rocky economy and a post-COVID slump for most of the world's richest people, Adani is the standout this year. He made $33.8 billion over the last 12 months, according to the Bloomberg Billionaires Index.That makes him the only top 10 billionaire to post gains this year so far, while high-profile plutocrats like Elon Musk and Jeff Bezos lost $132 billion and $84 billion respectively, per Bloomberg.Once a college dropout, Adani overtook Ambani in February as the richest man in Asia, after his wealth skyrocketed by $12 billion in the first two months of 2022.He was briefly the world's second-richest person in September, behind only Elon Musk's then-$263.9 billion fortune, according to Bloomberg. But he was later knocked down from the spot after Louis Vuitton founder Bernard Arnault enjoyed a post-COVID boost in luxury brand sales.Mukesh Ambani, the second-richest person in Asia, is an energy mogul who recently started dominating India's telecom space.Mukesh Ambani and his family attend the IPL opening celebration in 2010.Prodip Guha/Getty ImagesAmbani is currently worth $85.4 billion, making him the second-richest person in Asia, according to the Bloomberg Billionaires Index. He nearly tripled his wealth during the pandemic — his net worth was around $36 billion in 2020, per Forbes.Ambani's telecom company, Jio Infocomm, has seen a staggering rise: It claims to have accrued more than 350 million subscribers in the first five years after its launch in 2015. This year, Jio Infocomm was estimated to have around 410 million subscribers, according to the company's latest annual reports.BUSINESS EMPIRE: Adani Group, a powerhouse in energy, logistics, and renewal resources, saw profits soar over the last few years.Wespro, India's largest state-of-the-art coal terminal at the Adani Port in Gujarat, India.Soumik Kar/Getty ImagesThe Adani Group, founded in 1988, is Adani's multi-industry powerhouse firm based in India. Its share price has jumped nearly 20-fold since August 2020, and the company hit $260 billion in market value in September.Adani Group's ports and terminals are its hallmark trade. Adani first developed a port in 1995 in his home province of Gujarat, and it claims to be India's largest private commercial port. It now operates alongside 12 other Adani ports and terminals along India's coast. The organization also has businesses in power-grid distribution, gas, solar, and thermal power, data centers, real estate, airports, water management, retail for fruit and edible oils, and financial services, according to its annual report.Adani's recent success is often attributed to his companies moving in lockstep with India's leadership.The Adani Group made significant gains this year by expanding beyond coal and fossil fuels, investing billions into green energy industries as Prime Minister Narendra Modi also pushes India toward renewable power.Modi has also established a vision for India to boost its defence equipment exports and lower its dependence on foreign military supplies. Meanwhile, Adani Group has started developing UAVs, small arms and ammo, and counter drone technology, helping it secure contracts with the Indian Armed Forces.Ambani's Reliance Industries is a heavyweight in oil and gas. It also owns India's biggest telco.Of the 1,394 petrol pumps that Reliance operates, 518 are company owned and the remaining dealer operated,RIL outperforms industry in petrol, diesel sales from its 1,400-odd outlets, near Kolkata in 2020.Debajyoti Chakraborty/NurPhoto via Getty ImagesAmbani's Reliance Industries started growing exponentially around 2014, according to its annual reports, putting it ahead of the Adani Group in its rise to prominence.In 2020, it became the first Indian company to cross an estimated $200 billion in market value, although the Adani Group also achieved that milestone this year.Reliance Industries has delved into fewer sectors than the Adani Group, focusing instead on several core pillars such as gas production, media and entertainment, digital services, retail stores, and oil refinement — its biggest business, per its 2021-2022 annual report.Its oil refining ventures alone raked in $40 billion in revenue last year, the report states.The 38-year-old company operates India's largest telecom network through Jio Infocomm, which has grown by 120 million subscribers since the pandemic began.Its vast retail network of 15,000 branded stores for toys, jewelry, clothing, and groceries covers at least 41.6 million square feet in total, per its annual report.SPENDING HABITS: Adani keeps his wealth and assets low key, but reports say he owns at least three private jets, travels by chopper, and has a $50 million bungalow.AW-139 model helicopter by Italian-British manufacturer AgustaWestland is seen during the 8th International Helicopter Industry Exhibition HeliRussia 2015, at the Crocus Expo Center, on May 21, 2015, in Moscow, Russia. International helicopter industry exhibition HeliRussia will take place in the comfortable walls of the IEC Crocus Expo on May 21-23, 2015.Sefa Karacan/Anadolu Agency/Getty ImagesLittle of Adani's lifestyle or spending is publicly known. Older news reports, such as a 2011 article from India's Economic Times, say Adani built a helipad in his home and regularly travels via helicopter instead of on the road.The Economic Times reported that one of these choppers is the Agusta Westland A139, a 15-seat twin-engined helicopter that's marketed as both a luxury travel option as well as a vehicle for law enforcement or fire and rescue work. The chopper can cost up to $9.65 million, according to aircraft sales website AVBuyer. In 2012, the outlet reported that Adani owns three private jets — a Canadian Challenger 605, an Embraer Legacy 650, and a Hawker Beechcraft 850XP. NDTV reported in 2020 that Adani purchased a $50 million residential property in New Delhi, citing a bid by his company. But while Ambani has given tours of his luxurious home before, the exact location and features of Adani's home are not publicly known.On social media, Adani shies away from flashy posts. One of the only personal photos he's ever tweeted was of him and his family celebrating his birthday with a cake at home.Ambani's family lives in a 27-floor mansion replete with helicopter pads, a snow room, and a garage for 168 cars.The twenty-seven storey Antilia is seen in Mumbai on October 19, 2010. The 400,000 square foot residence, named after a mythical island in the Atlantic, is expected to be occupied by Ambani, his wife and three children later in the year. The building has three helicopter pads, underground parking for 160 cars, and requires some 600 staff to run.INDRANIL MUKHERJEE/AFP via Getty ImagesAmbani's home, fleet of luxury vehicles, family events, and vacations have been the subject of vast public scrutiny.He and his family live in Antilia, a 400,000-square-foot mansion with 27 floors, three helipads, a 168-car garage, nine elevators, and a snow room, per Architectural Digest.According to The South China Morning Post, it takes around 600 staff to run Antilia and maintain its ballroom, temple, and 50-seat theater.The outlet also reported that Antilia is outfitted with a snow room that pumps artificial snow on demand, as well as its own ice cream parlor.Ambani made international headlines in 2018, when it was said that the wedding of his daughter, Isha Ambani, cost around $100 million. The 600 attendees of the high-profile event included Beyoncé, Hillary Clinton, Bollywood legend Shah Rukh Khan, and Huffington Post founder Arianna Huffington.Ambani also owns more than 170 luxury cars, including a $2 million Rolls-Royce Cullinan with a $128,000 paint job, per Luxury Launches, an Indian lifestyle news website.Recently, Ambani booked his family into suites at Switzerland's luxurious Bürgenstock Resort at around $74,000 per night in July.Ambani and Adani grew their empires separately for years, but in 2022 signs emerged that a momentous clash could be drawing ever closer.Mukesh Ambani stands next to Indian Prime Minister Narendra Modi at an event celebrating the launch of 5G services in India.Sonu Mehta/Hindustan Times via Getty ImagesThough they operate in some of the same industries, Adani and Ambani's gigantic multi-sector companies have largely steered clear of direct competition with one another. They dodged a clash over a telecommunications bid in August, when Adani was said to be keen on vying for India's first 5G airwaves — new territory for him, but one of Ambani's main pillars of business. He ultimately declined to challenge the bid, Bloomberg reported.Still, the rapid growth of each billionaire's business territory has given rise to speculation that the two giants will eventually go head-to-head over a massive deal, Bloomberg wrote. Adani and Ambani's companies have been competing for other smaller deals this year, such as when they both tried in November to acquire the beleaguered Future Retail, which was once India's second-largest retail company but defaulted on its loans. Ambani's Reliance landed the purchase, though it later dropped the deal because Future Retail's creditors didn't approve of its $3.4 billion offer.In the same month, Adani's and Ambani's groups both expressed interest in purchasing the same assets from an insolvent energy company, Lanco Infratech.But both backed off from the auction on December 1, citing concerns over a reported violation in the sale process, local media reported.Read the original article on Business Insider.....»»

Futures Jump, Squeezed By Reversal In UK Fiscal Plans And Apocalyptic Trader Sentiment As we discussed and previewed over the weekend in "Behind Friday's Market Massacre: A Huge Burst Of Hedge Funds Shorting, Setting Up Another Squeeze", futures are indeed sharply higher to start the week as Treasury yields slumped and the dollar eased as the British peso (also called Britcoin) rallied and UK bonds surged as the new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices from next April as he set out a package of measures to get a grip on the public finances, effectively reversing pretty much all UK tax cut measures announced just a few weeks ago. Sentiment was also boosted by company results after Bank of America reported beats on the top and bottom line, rising in premarket trading while utilities and auto stocks led gains in Europe. That was indeed enough to spark a modest (for now) squeeze and as of 730am, S&P 500 futures trade higher by 1.3% and Nasdasq 100 futs rose 1.5% bouncing back from a selloff on Friday that left the technology-heavy gauge at its lowest since July 2020; Europe's Estoxx50 rose 0.7% in early London session, which sees cable higher by 1%. The BBG Dollar index was down 0.2% and the 10Y traded at 3.95%. And if all those record retail puts purchased in recent days get monetized, expect another epic meltup today. I don't think people really appreciate what's happening in the options market right now. Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open. This is the first time in history that puts were 3x calls. pic.twitter.com/GR2apNfFtb — Jason Goepfert (@jasongoepfert) October 16, 2022 Among notable premarket movers, Splunk rose after a Wall Street Journal report about activist investor Starboard Value building a stake of just under 5% in the application software company. Opendoor Technologies Inc. slipped after Goldman Sachs downgraded the stock to sell. US-listed Chinese stocks gained as President Xi Jinping reiterated that economic development is the party’s top priority in his speech at the Communist Party Congress, although he signaled little change in the Covid Zero strategy and housing market policies. Alibaba (BABA US) +1.9%, Pinduoduo (PDD US) +2.8%, JD.com (JD US) +3.3%, Nio (NIO US) +2.7%, Li Auto (LI US) +2%. Here are some other notable premarket movers: Opendoor Technologies (OPEN US) slides 1.8% in premarket trading after Goldman Sachs downgrades stock to sell, saying it sees the ongoing weakness in housing through next year to “depress” the online real estate platform’s earnings power and in turn limit upside in shares. Keep an eye on Fox Corp. (FOXA US) and News Corp. (NWSA US) shares after the companies said on Friday they were exploring options to recombine, while analysts suggested a deal is unlikely to solve the valuation problem for the pair. Watch PPG Industries (PPG US) shares as KeyBanc Capital Markets initiated coverage of the stock with an overweight recommendation, saying there’s probably going to be a sharp decline in costs in 1H23 that will help offset cyclical volume pressure. Keep an eye on household products stocks as Morgan Stanley is starting to warm to the sector with margins seen rebounding in 2023, while toning down its preference for beverage stocks. The broker upgrades Church & Dwight (CHD US) and Clorox (CLX US) to equal-weight from underweight, while cutting Edgewell Personal Care (EPC US) to underweight from equal-weight. Investors are focused on results due this week -- including from Bank of America which just reported stronger than expected revenues and EPS, Goldman Sachs and Tesla -- for clues about how company earnings are holding up. They’re also monitoring the possibility of more aggressive rate hikes in the US after Federal Reserve Bank of St. Louis President James Bullard on Friday left open the possibility that the central bank would raise interest rates by 75 basis points at each of its next two meetings. “I think the likelihood of them doing 75bps and more is definitely higher after the University of Michigan survey last week, reason being is that they’re late to the party of inflation control and the world economy is paying the price,” said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James. “The risk is that they break growth, but what is much more concerning is that they’re risking financial stability in parts of the market, which is a risk that needs to be priced in,” she said on Bloomberg TV. In major corporate reorganization  news, the WSJ reported that Goldman Sachs plans to recombine the bank’s asset management and private wealth businesses into one unit in yet another overhaul. Morgan Stanley's in-house permabear, Michael Wilson, echoed precisely what we said on Saturday, namely that technicals may now take the upper hand over fundamentals, with the 200-week moving average acting as a strong support to equities, while inflation expectations peak. They see a tactical rally looking likely until earnings estimates are cut or a full-blown recession arrives. Meanwhile, the outlook for consumer prices in the US continues to fuel bets that the Federal Reserve may make jumbo rate hikes at its next two meetings, weighing broadly on the outlook for global economic growth and markets. Fed officials in their latest comments suggested they were ready to hike rates higher than previously planned. Kansas City Fed President Esther George said the terminal rate may need to be higher to cool prices. San Francisco Fed’s Mary Daly said she’s “very supportive” of raising to restrictive levels and to between 4.5% and 5% “is the most likely outcome.” In European stocks, utilities, autos and insurance are the strongest performing sectors. Euro Stoxx 50 rises 0.3%. IBEX outperforms peers, adding 1.1%. Here are the most notable European movers: ITV shares jump as much as 9.7%, the most since March, after the Financial Times reported that the company is exploring options for its production arm ITV Studios, including a stake sale. Nel shares rise as much as 10%, the most since late July, after the company won a NOK600m contract to provide alkaline electrolyser equipment to Woodside Energy. Made.com shares soared as much as 35% after the online furniture seller said it has received several “non-binding indicative proposals,” including possible offers for the company. Sulzer shares climb as much as 4.4% after the Swiss company announced Suzanne Thoma will replace CEO Frédéric Lalanne, who is stepping down at the end of the month. Thoma’s experience and continuation of the company’s strategic review is viewed as a positive, according to analysts. Hargreaves Lansdown shares fall as much as 7.9% after its 1Q trading update, with its CEO announcing his intention to retire amid a lawsuit relating to a failed equity fund run by Neil Woodford. Asos shares drop as much as 13% after the online fast fashion retailer said it was in talks with banks to boost its financial flexibility, following a Sky News report that the firm’s lenders were hiring restructuring advisers, including AlixPartners. Draegerwerk shares tumble as much as 7.5% after company withdrew FY22 guidance following market close on Friday, based on its preliminary 9-month figures. Shares in bike helmet maker Mips plunge as much as 27%, the most in three years, as Handelsbanken said lower-than-expected 3Q sales from the company show the bike boom of the past years turning “into a bust” while 2023 risks becoming a “lost year.” European luxury stocks drop after Chinese President Xi Jinping signaled no change in China’s strict Covid rules at the country’s Communist Party congress in Beijing on Sunday. LVMH shares decline as much as 1.8%. As noted above, the yield on 10-year gilts fell 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293 after new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices as he set out a package of measures to get a grip on public finances in a televised statement on Monday. It’s the start of what may be a particularly torrid week for British assets, with the beleaguered Truss battling to rescue her premiership after the Bank of England ended its emergency bond-buying program on Friday and as mutinous backbenchers plot to oust her. “I think we’re in for a period where UK credibility is continually questioned and UK assets remain incredibly volatile for a significant period of time,” Benjamin Jones, Invesco Director of Macro Research, said on Bloomberg Television. “Watching the gilt market will be absolutely key in understanding if the market does believe Hunt to be more stable and if he will be able to push these policies through.” Hunt will also speak to the House of Commons at 3:30 p.m. London time and Truss is due to host a reception for the Cabinet at 10 Downing Street on Monday evening. U-turns on the government’s “mini budget” now total £32 billion, however that may not be enough as the official estimate of the black hole in the public finances is believed around £70 billion. Earlier in the session, Asian equities resumed their decline, led by tech stocks, as investors analyzed Chinese President Xi Jinping’s speech at Party Congress, in which he ruled out changes to strict Covid rules.  The MSCI Asia Pacific Index retreated as much as 1.4% before paring the drop, with TSMC and Keyence among the biggest drags after a broader US tech selloff last week. All sectors but real estate were in the red.  Taiwan’s benchmark was a notable regional loser, ending 1.2% lower as the local currency weakened following comments by Xi’s about the island. Stock gauges in Japan fell about 1% after the Bank of Japan vowed to continue with monetary easing as the yen approached a key level.  Benchmarks in Hong Kong erased losses, while gains in defense and tech stocks helped gauges in mainland China close moderately higher after Xi’s Sunday speech emphasized national security and self-reliance in core technologies. Planned steps by Chinese regulators to stem a slump in equities also buoyed sentiment. Asian stocks have underperformed US and European peers this year as the region struggles with challenges in China in addition to aggressive rate hikes by the Federal Reserve, prompting an exodus of foreign funds from emerging countries.  "The work report made no reference to future policy changes on Covid containment,” Nomura economists including Ting Lu wrote in a note, adding that they expect Chinese markets to suffer regardless due to disappointment about either no real opening or a surge in Covid infection numbers.  Concerns of aggressive tightening by the Fed were reinforced after a survey Friday showed US year-ahead inflation expectations rose in early October for the first time in seven months. “More bad news is baked into Asia, which might suggest that the risk reward is a little bit better if we can see overall the Fed starts to stabilize at some point, perhaps early next year,” Timothy Moe, chief Asia equity strategist at Goldman Sachs, said in an interview with Bloomberg TV, citing Asia’s “excessive discounting particularly in valuations.” Japanese stocks dropped, with electronics makers the biggest drag, following US peers lower after a report showed American year-ahead inflation expectations rose for the first time in seven months.  The Topix fell 1% to close at 1,879.56, while the Nikkei declined 1.2% to 26,775.79. Keyence Corp. contributed the most to the Topix Index decline, decreasing 2.9%. Out of 2,167 stocks in the index, 476 rose and 1,603 fell, while 88 were unchanged Australia stocks slid, the S&P/ASX 200 index falling 1.4% to close at 6,664.40, tracking a decline in US shares last week after inflation expectations rose. All sub-gauges slid, with energy and materials companies the worst performers.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 10,785.92. In FX, the dollar weakened against all of its G-10 peers apart from the yen, as the Bloomberg dollar spot index fell 0.2%. SEK and JPY are the weakest performers in G-10 FX, GBP and AUD outperform; the pound topped the leaderboard and UK government bonds surged on the fiscal policy u-turn. Yields on 10-year gilts fell 26 basis points to 4.05%, while sterling advanced up to 1.2% higher on the day to touch $1.1305 after the BOE confirmed it terminated its emergency bond-buying program. Hedging the pound overnight remains a costly exercise after UK Chancellor of the Exchequer Jeremy Hunt announced measures to “support fiscal sustainability”.  Commodity currencies also outperformed. The Australian and New Zealand dollars rose as traders covered shorts after Chinese President Xi warning of “dangerous storms” ahead failed to spur broader selling. The euro traded in a narrow $0.9711-57 range. Bunds and Italian bonds rose alongside Treasuries as central bank tightening bets were pared. Japan's Yen traded in a narrow range, close to 32-year lows, as traders await fresh impetus to drive it lower and assess potential action from Japanese authorities. Japan’s 30-year bond yield rose to a seven-year high. In rates, Treasuries rallied, led by the belly and richer by 5bp to 8bp across the curve with gains led by front-end and belly, richening the 2s5s30s fly by almost 5bp on the day; 10-year yields around 3.945%, richer by 7.5bp on the day and lagging gilts by additional 27bp in the sector, following a surge across gilts as BOE rate-hike premium is pared after Chancellor Hunt scraps vast portions of the expansive fiscal stimulus plan that had plunged the market into turmoil. UK yields off lows of the day, although remain richer by 35bp to 40bp across the curve into early US session. UK bonds rally across the curve, led by the long-end, as the new Chancellor is expected to make a statement on the government’s fiscal plans, with the yield on 10-year gilts falling 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293. In commodities, WTI drifts 0.2% lower to trade near $85.41 as it fluctuated after a weekly slump as fears over an economic slowdown continue to weigh on the outlook for demand. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. Bitcoin was rangebound and holding just above the USD 19k mark at present. Looking at the day today, it's a quiet day with just the Empire Manufacturing index on deck (exp. -4.3). Market Snapshot S&P 500 futures up 0.9% to 3,630.00 STOXX Europe 600 up 0.3% to 392.36 MXAP down 0.8% to 136.71 MXAPJ down 0.6% to 442.50 Nikkei down 1.2% to 26,775.79 Topix down 1.0% to 1,879.56 Hang Seng Index up 0.2% to 16,612.90 Shanghai Composite up 0.4% to 3,084.94 Sensex up 0.6% to 58,280.17 Australia S&P/ASX 200 down 1.4% to 6,664.44 Kospi up 0.3% to 2,219.71 German 10Y yield little changed at 2.27% Euro little changed at $0.9728 Brent Futures down 0.2% to $91.45/bbl Gold spot up 0.63% to $1,654,87 U.S. Dollar Index down 0.17% to 113.12 Top Overnight News from Bloomberg UK Chancellor of the Exchequer Jeremy Hunt will accelerate plans on Monday to try to bring order to the UK’s public finances and reassure markets, after Liz Truss’s economic program triggered weeks of turmoil Chinese President Xi Jinping signaled no change in direction for two main risk factors dragging down China’s economy -- strict Covid rules and housing market policies -- providing little lift to a worsening growth outlook Double-digit inflation is set to return in the UK and linger through the end of this year despite the government’s effort to cap energy bills, a survey of economists shows Speculation intensified among Tokyo’s yen watchers that Japan may be using subtle ways to slow the currency’s decline, zeroing in on the volatility seen after Thursday’s surprise US inflation data. By one estimate, authorities may have spent around 1 trillion yen ($6.7 billion) to support the currency Further rate hikes are costs without benefits, Polish Monetary Policy member Ireneusz Dabrowski says in interview with Parkiet newspaper ECB Governing Council member Martins Kazaks said interest rates should be raised beyond year- end -- a time when economists increasingly expect the euro zone to be in the midst of a recession ECB Governing Council member Olli Rehn said financial stability risks on the international markets are “clearly increasing” EU natural gas prices fell to the lowest level in more than three months as the European Commission plans to propose a temporary mechanism to prevent extreme price spikes in derivatives trading through a dynamic limit for transactions on the Dutch Title Transfer Facility, according to a draft document seen by Bloomberg News. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were negative as the region took its cue from last Friday's declines on Wall St where risk assets were pressured by inflationary concerns, while the region also digested hawkish global central bank rhetoric and China sticking to its strict zero-COVID policy. ASX 200 was led lower by the commodity-related sectors and with Australian Treasurer Chalmers flagging an increase in the cost of living due to floods in the primary food growing areas. Nikkei 225 weakened with Japan said to consider a rise in corporation tax as an option to fund the nation’s defence budget which could double in the next few years. Hang Seng and Shanghai Comp. were lower following Chinese President Xi’s speech to kick-start the Communist Party Congress in which he defended the zero-Covid policy and reaffirmed intentions for the reunification of Taiwan, while attention was also on the PBoC which rolled over CNY 500bln of MLF loans and kept the rate at 2.75% which suggests a likely pause in its benchmark rates later this week. Top Asian News Chinese will delay the release of Q3 economic indicators including GDP, according to the Stats Bureau; no new date mentioned. PBoC injected CNY 500bln via 1-year MLF with the rate kept at 2.75%, as expected. China locked down nearly 1mln people near an Apple (AAPL) iPhone factory in which Zhengzhou city ordered residents in one district to stay home, according to Bloomberg. BoJ Governor Kuroda said the BoJ is continuing with monetary easing since Japan’s headline inflation is likely to fall below 2% next fiscal year, while he added it is appropriate to continue monetary easing to ensure a shift in the deflationary norm and achieve the inflation target in a sustainable and stable manner, according to Reuters. BoJ Deputy Governor Wakatabe said it is up to the Finance Ministry to decide on whether or not to intervene in the FX market and that current FX fluctuations are clearly too rapid and too one-sided. Japanese top currency diplomat Kanda said they are ready to take decisive action if excess FX moves continue and are backed by speculative trading, while Kanda reiterated that recent JPY moves were somewhat rapid, according to Reuters. BoK Governor Rhee said he does not see interest among US officials in pursuing a plaza accord to stem the dollar strength, while Rhee also stated that the BoK needs a little bit more experience and technical capacity for forward guidance, according to Reuters. South Korean Finance Minister Choo said the government will scrap taxes on foreigners’ income from Korean treasury bonds and monetary stabilisation bonds from Monday, according to Reuters. China Delays Release of GBP Data Due Tuesday, No Reason Given Xi Says China’s Power Has Increased, Warns of ‘Dangerous Storms’ EU Agrees to New Iran Sanctions Over Human-Rights Issues Mizuho CEO Eyes Expanding Investment Banking in US: Nikkei European bourses see a choppy session but have tilted towards the green after experiencing a mixed cash open. Sectors are mostly firmer with no overaching theme - Insurance, Autos, and Utilties lead the gains whilst Chemicals, Retail and Consumer Products lag. US equity futures see gains across the board following the steep losses on Friday - with the NQ and RTY narrowly outperforming Top European News BoE Governor Bailey said they will not hesitate to raise interest rates to meet the inflation target and that the Bank had to intervene to deal with the threat to the stability of the financial system, while they think inflation should peak at around 11% and his best guess is that inflationary pressures will require a stronger response than perhaps thought in August, according to Reuters. BoE Governor Bailey said he does not comment on fiscal policy but has to emphasise sustainability, while he spoke with UK Chancellor Hunt and said that there is a meeting of minds on sustainability. Furthermore, Bailey said they are going to have to stay very focused on the risks of second-round effects on inflation, according to Reuters. UK Chancellor Hunt said taking difficult decisions now is the best way to stop interest rates from rising and that the PM hasn’t changed the destination, she has changed the way we are going to get there. Hunt also commented that the PM is in charge and the last thing they need is another Conservative leadership campaign, according to Reuters. UK Chancellor Hunt said ‘yes’ when asked if he can change the mini-Budget plans and noted that the priority will be to help struggling businesses and families, while he is leaving all possibilities open when asked about government spending and stated that tax will not be cut as quickly and some taxes will go up, according to Reuters. UK Chancellor Hunt is to make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability, via Treasury. Hunt will deliver the full medium-term fiscal plan, to be published with OBR forecasts, on 31st October. Chancellor Hunt met with BoE Governor Bailey and the DMO head on Sunday night, to brief them on these plans. UK Chancellor Hunt is to delay plans to reduce the basic rate of income tax by a year and it was also reported that the draft forecast by the OBR fiscal watchdog sees the UK will have a black hole in public finances of up to GBP 72bln by 2027/28, according to The Sunday Times. Senior Tories will hold talks this week on a “rescue mission” that could see the swift removal of Liz Truss as leader, after the new Chancellor Hunt tore up her economic package and signalled a new era of austerity, according to The Observer. Furthermore, The Times reported that Tories held secret talks on installing a new leader and Daily Mail also reported that UK lawmakers will attempt to oust UK PM Truss this week despite warnings from Downing Street that it could trigger a general election. Reportedly almost all of Kwarteng's GBP 45bln of unfunded tax reductions is set to be scrapped by Chancellor Hunt, via FT's Parker; "including income tax cut and stuff on dividends, stamp duty, foreign shoppers and IR35." US President Biden said he wasn’t the only one who thought that UK PM Truss’s original economic plan was a mistake, according to Reuters. It was also separately reported that Goldman Sachs downgraded its UK growth outlook after the government tax U-turn. Head of UK's Unison union warned the largest nationwide strike of NHS workers since the early 1980s could occur this winter if ministers ignore calls to match pay with inflation, according to FT. BoE is publishing a market notice which sets out how energy firms and commercial lenders can apply to participate in the energy markets financing scheme; open to applications today; alongside this the UK Gov't has published a release, outlining the financing scheme and specifying that the gov't will only be liable if a firm defaults on their repayment; scheme is designed to help firms facing temporary shot-term financing problems. Europe Gas Drops to 3-Month Low as EU Plans More Crisis Measures Germany Faces $85 Billion Hit as Labor Shortages Intensify Dominant Hunt Refuses to Rule Out New U-Turn on Truss Taxes ITV Jumps as Report Says It’s Exploring Options for Studios Unit FX Pound perkier on premise that new UK Chancellor will be more frugal with public finances, Cable comfortable on 1.1200 handle and EUR/GBP probing 50 DMA just shy of 0.8650. Aussie and Kiwi recover amidst less risk-off environment ahead of RBA minutes and NZ Q3 CPI; AUD/USD hovering around 0.6250 and NZD/USD just under 0.5600. Loonie, Franc and Euro all firmer vs Greenback as DXY slips from Friday's peak to pivot 113.000, USD/CAD eyeing 1.3800, USD/CHF close to parity and EUR/USD above 0.9750. Yen propped ahead of 149.00 vs Dollar as Japanese officials turn up volume of verbal intervention. PBoC set USD/CNY mid-point at 7.1095 vs exp. 7.1331 (prev. 7.1088) Major Chinese state-owned banks were seen swapping yuan for dollars in the forwards market and selling dollars in the spot market to stabilise the local currency, according to sources cited by Reuters. Fixed Income Gilts gap-up and lead the way ahead of a potential "mini-Budget" U-turn from new Chancellor Hunt, peers buoyed in turn. Specifically, Gilt Dec'22 posts upside of over 300 ticks around the 97.00 mark with the associated 10yr yield down to near 4.0%. Amidst this, SONIA is taking a dovish-turn despite the weekend's remarks from Bailey, with pricing dipping to 'just' a ~75% chance of a 100bp increase in November. Stateside, USTs are firmer by around 15ticks with the US-specific docket comparably sparse after last week's key inputs. BoE Gilt statement: As previously announced, the Bank terminated these operations and ceased all bond purchases on Friday 14 October. As intended, these operations have enabled a significant increase in the resilience of the sector. Commodities WTI and Brent futures trimmed earlier gains in downside that was exacerbated after reports China is to delay is Q3 GDP release. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. CCP National Congress Chinese President Xi declared the new core mission of the party is to lead China united in the challenge to be a powerful, modern socialist nation by 2049. Chinese President Xi said they will promote a high level of opening to the outside world and will maintain pluralistic and stable economic relations with other countries. Furthermore, Xi said they will strengthen the ability to prevent and control the epidemic, while he also commented that the next five years will be crucial for building a modern socialist power and will aim for high-quality growth, as well as support the private economy unwaveringly, according to Reuters. China Communist Party spokesman Sun said China is capable of greater miracles going forward but noted China has entered a new normal of slower growth and is more focused on fixing long-term issues than growth. Sun also stated that they all hope the pandemic will end soon but what they see now is that the pandemic is still on and that their Covid prevention policy is the best and most economically efficient, according to Reuters. Chinese government officials are backpedalling on efforts to organise a meeting between US President Biden and Chinese President Xi on the sidelines of the G20 summit next month, according to Politico. Chinese President Xi said they will firmly promote reunification efforts with Taiwan and it is up to the Chinese people to resolve the Taiwan issue, while he added they will never renounce the right to use force and said reunification of the motherland must and will certainly be achieved. Chinese Communist Party spokesman Sun said achieving reunification with Taiwan by peaceful means best meets the interest of all and the use of force is the last resort under compelling circumstances, while he added that Taiwan will plunge into a disaster if pro-independence Taiwan and external forces are left unchecked, according to Reuters. OPEC Headlines OPEC Secretary-General al-Ghais said slow economic growth reflects on oil demand and that OPEC+ took the pre-emptive decision, while he added OPEC doesn’t target a specific price but targets a balance between supply and demand. Al Ghais also stated that they do not control oil prices and that their decisions are purely technical, as well as noted that there is always space for flexibility in OPEC when asked about reviewing this month’s oil output cut. Furthermore, he commented that oil markets are going through a stage of great fluctuations, according to Reuters. Iraq said OPEC+ decisions are based on economic indicators and there is consensus in OPEC+ to be pre-emptive to deal with the current uncertainty in oil markets, while it added that the OPEC+ latest decision is based on market inputs and it is essential to achieve market stability, according to a SOMO statement cited by Reuters. UAE Energy Minister said the OPEC decision was purely technical and unanimous not political as some described, according to Reuters. Kuwait said it welcomes the recent decision by OPEC+ to cut output and said it is keen to maintain balance in the oil markets for the benefit of consumers and producers, while it added that expected slow global economic growth led to more disturbance in the balance of supply and demand in oil markets, according to Reuters. Furthermore, Kuwait appointed Badr Al Mulla as its new Oil Minister and appointed Wahab Al Rasheed as Finance Minister, according to a tweet. Oman’s Energy Ministry said OPEC+ decisions are based on purely economic considerations, as well as realities of supply and demand in the market, while the decision was important and necessary to reassure the market and support its stability, according to a Tweet. Bahrain’s Oil Minister said the OPEC+ decision was reached by consensus among all member states and that OPEC+ will study any economic developments in the future to ensure the stability of markets and global supply, according to the state news agency cited by Reuters. ECB Headlines ECB’s Knot said he is increasingly convinced that rates need to rise above neutral and once rates hit a neutral level, it makes sense to consider running off APP stock, according to Reuters. ECB's Rehn said the threat of stagflation has intensified. The stability risks of international financial markets are clearly increasing. Although the global financial crisis has been avoided for now, it is not time to breathe a sigh of relief. ECB's Lane expected to propose a 75bps hike at the upcoming ECB meeting, according to an ECB insider cited by Econostream. ECB's de Guindos expects FX rate to stabilise in the coming months, via Reuters. Some ECB officials are seeing legal basis to toughen bank TLTRO terms, according to Bloomberg sources. Geopolitics Ukrainian President Zelensky said Bakhmut and Soledar in eastern Donbas are hotspots at the front with heavy fighting, while it was separately reported that that Kyiv's Mayor Klitschko said blasts hit Kyiv's city centre, according to Reuters. Russian Defence Ministry said Russia destroyed three US-made M777 Howitzers in Ukraine’s Kharkiv region and that Russian troops repelled Ukrainian attempts to advance in the regions of Donetsk, Kherson and Mykolaiv, according to Reuters. Russian Defence Ministry said 11 people were killed and 15 were wounded after two Tajikistan citizens committed an act of terrorism at a training ground in Russia’s Belgorod. US Event Calendar Oct. 14-Oct. 21: Sept. Monthly Budget Statement, est. -$50b, prior -$64.9b 08:30: Oct. Empire Manufacturing, est. -4.2, prior -1.5 DB's Jim Reid concludes the overnight wrap After numerous weeks of immense volatility, will the fact that US payrolls and CPI are out the way and the fact that the UK has sacked its Chancellor, and is gradually backtracking, bit by bit, on its recent fiscal giveaway, lead to calmer markets? We shouldn't underestimate how much the relatively small UK market has buffeted global markets in recent weeks. The politics are slowly moving in a more market friendly direction but a very sharp sell-off in Gilts on Friday afternoon left a nasty taste as we ended the week. 30yr Gilts closed +24bps on Friday to 4.79% but were around +55bps higher from the lunchtime lows. The Bank of England won't be buying today for the first time in this mini-crisis so we'll soon have a decent idea if there are still pension fund liquidity problems. Part of the reason Gilts sold off late on Friday was a global related sell-off but part of it was a buy the fact sell the rumour trade after news leaked in the morning that the Chancellor was to be sacked. PM Truss's subsequent afternoon press conference seemed to leave the market wanting more climb downs. In fact new Chancellor Hunt did extensive media rounds over the weekend saying that nothing is off the table in terms of reviewing the mini budget and that some taxes may have to rise. Several media reports suggest that the planned 1p income tax cut next April will be delayed by a year. So it’ll be fascinating to see how UK yields open up. Over the weekend, the Bank of England (BOE) Governor Andrew Bailey stated that the central bank will not hesitate to increase interest rates to meet its inflation target as it believes that the current inflationary pressures demand a stronger policy action than announced in August. In early Asia trading, the pound (+0.52%) is rallying rising to $1.1230 on the weekend's tighter fiscal commentary. Literally as we go to print, a headline has come through saying that the UK Chancellor will make a statement today on the medium-term fiscal plan. So things are accelerating rapidly. For this week China's Party Congress that started yesterday could generate plenty of headlines, with key leadership roles and priorities for the next five years in focus (see latest below). The country's Q3 GDP and key economic activity indicators will be released tomorrow. Elsewhere, housing market indicators from the US, inflation data in the UK and economic sentiment indicators from Europe will be released. Netflix, IBM, Tesla, Bank of America, and Johnson & Johnson will be among the corporates reporting as earnings season starts to gather momentum. This could be key to sentiment in the coming weeks. Let’s go through the key economic data in a little more detail now. Starting with the US, this week will feature industrial activity indicators such as industrial production (Tues) and the Empire manufacturing index (today). For the former, our US economists expect a -0.4% print (-0.2% in August). The housing market will be in focus too, with fears over a big softening on one hand but balanced in the short-term by last week's CPI print that showed strong momentum in rents. The releases will include housing starts, building permits (both Weds) and existing home sales (Thurs). Over in Europe, the UK will continue to be in the spotlight with CPI, RPI and PPI to be released on Wednesday with the first expected at 10.1% (August CPI printed at 9.9% YoY and below July's 10.1%). Staying in the UK, October GfK consumer confidence figures will be released as well as September retail sales on Friday. Elsewhere in the region, sentiment indicators will include the ZEW survey for Germany and the Eurozone tomorrow and business and manufacturing confidence for France on Thursday. We will get the PPI for Germany on the same day. In politics, the European Council's two-day meeting will start on Thursday with topics of Ukraine, energy and the economy on the agenda. In Asia, China's Q3 GDP, industrial production and retail sales, along with other indicators, will be released tomorrow. The median estimate on Bloomberg points to a +3.4% YoY reading, up from +0.4% in Q2. On Friday we will also get the nationwide CPI from Japan and our Chief Japan economist expects core inflation excluding fresh food to show a +2.9% YoY increase (+2.8% in August) and core-core inflation excluding fresh food and energy to rise by +1.8% (+1.6% in August). Durable goods and food prices are seen as the core inflation drivers. Finally, this week will be packed with corporate Q3 results from key American and European firms as this earnings season ramps up. The tech names we will hear from include Netflix, ASML, IBM and Lam Research, with hardware makers particularly in focus amid slowing demand concerns. Other notable reporters will include Johnson & Johnson, Lockheed Martin, Tesla, Bank of America (today), Procter & Gamble, and Goldman Sachs. The day by day week ahead guide at the end has which days each report. Asian equity markets are trading in negative territory at the start of the week, following a weak close to the week in the DM world, although US futures are up as we start the week. Across the region, the Nikkei (-1.43%) is leading losses with the Hang Seng (-1.16%), the CSI (-0.45%) and the Shanghai Composite (-0.10%) also trading lower. The KOSPI is flat. Contracts on the S&P 500 (+0.43%) and the NASDAQ 100 (+0.39%) are both edging up. Over the weekend, Chinese President Xi Jinping, in his speech at the opening ceremony of the ruling Communist Party of China’s 20th National Congress, gave a defiant message to the world as he warned against “interference by outside forces” in Taiwan. At the same time, he reiterated the validity of the Zero-Covid policy while signaling that there would be no immediate loosening in restrictions despite the social and economic pain caused by the policy. Staying on China, The People’s Bank of China (PBOC) announced that it will maintain its 1-yr Medium-Term Lending Facility (MLF) interest rate at 2.75% for the second consecutive month while injecting liquidity worth 500 billion yuan into the banking system through MLF operations. So far in 2022, the MLF rate has been cut by 20bps with 10bps moves in January and August. In FX, the Japanese Yen dropped to 148.77 against the US dollar, a fresh 32-year low, before easing to settle at 148.70. Meanwhile, yields on 10yr USTs are trading just below 4% level (-2.5bps) as we go to press. Looking back on last week now, yet another upside CPI surprise ruined any chance of a near-term Fed policy pivot, driving yields higher and the curve flatter. All told 2yr Treasury yields were +19.0bps higher on the week (+3.5bps Friday) while the 10yr climbed +13.5bps (+7.3bps Friday). That left the 2s10s curve at -48bps, near its most inverted levels of the cycle, as additional tightening and a harder landing was priced in. By the end of trading, markets were pricing +142bps of tightening through the next two FOMC meetings. That’s close to our updated US Economic call of +75bp hikes in November and December, but markets are pricing some risk of +100bps in November following the blockbuster CPI, with +78.6bps priced at the end of last week. The S&P 500 staged a befuddling rally the day of the print (with a 5.5% turnaround) but ultimately retreated -1.55% (-2.37% Friday) on the week. In line with tighter expected policy, the NASDAQ underperformed, falling -3.11% (-3.08% Friday). The moves came with huge intraday swings, which had the Vix index of volatility close above 30 every day, closing the week at 32.02, just beneath the year’s high of 36.45 reached when Russia invaded Ukraine. US banks kicked earnings off in earnest on Friday. As you might expect, FICC revenues have held up given the heightened volatility, and net interest income improved with the blistering pace of Fed rate hikes, while deal making revenue has slowed given the gloomy economic outlook. All told, the S&P 500 banks advanced +2.43% on the week (+0.03% Friday), outperforming the broader index. In Europe, yields also took another leg higher, with 10yr bunds +15.2bps higher over the week (+5.9bps Friday). However, the curve steepened, with 2yr bunds gaining +9.0bps (+3.5bps Friday). The biggest story was of course in the UK, with the Chancellor gone and the partial u-turn on the budget. That led gilts to outperform bunds, where 10yr gilts gained +9.7bps (+13.7bps Friday) and 2yr gilts fell -25.4bps (+11.6bps) as some near-term crisis management hikes were priced out of the market. However as mentioned at the top 30yr Gilts were still an issue, climbing +39bps in a volatile week (+24hrs Friday). European equities fared much better than the US. The STOXX 600 pulled back just -0.09% (+0.56% Friday), with the DAX (+1.34%, +0.67% Friday) and CAC (+1.11%, +0.90% Friday) both out-performing. Tyler Durden Mon, 10/17/2022 - 07:49.....»»

Futures Drift Higher Despite Sharp Drop In Chinese Exports Futs are starting flat for a second consecutive day, having reversed earlier losses, after China reported a bigger-than-expected drop in exports and OECD warned of a weak global economic recovery. Shares are trying to build on Tuesday’s gains as a rally in megacap stocks that had propelled the S&P 500 to the edge of a bull market continued to fizzle. As of 8:00 am ET, S&P futures were modestly in the green at 4295 while Nasdaq 100 futs were up 0.2%The Bloomberg Dollar Spot Index traded near the day’s lows, boosting most Group-of-10 currencies. Treasury yields were little changed amid listless trading global bond markets. Oil and gold were flat, while Bitcoin retreats a day after climbing more than 5%. Today’s macro data includes mtge applications, trade balance, and consumer credit. Ultimately, the macro data prints are light for the balance of the week. In premarket trading, Apple was set to extend Tuesday’s decline, falling in premarket trade along with Nvidia and Microsoft in a signal that more air is coming out of the rally in tech shares. Tech stocks continued to decline amid growing expectations that central banks will keep rates higher for longer (at least until the next big macro print), disappointing hopes they will pivot to rate cuts later this year. Here are some other notable premarket movers: Amazon.com was upgraded to outperform from neutral at Edgewater Research, which sees a more positive outlook for the e-commerce and cloud-computing company. Shares are up as much as 0.7%. Coinbase rises 2.2% after the crypto firm slumped 12% on Tuesday following the Securities and Exchange Commission’s lawsuit against the firm. Dave & Buster’s rises 5.1% after the food and entertainment venue operator reported first-quarter earnings per share that beat estimates. Herbalife slips 0.6% as Mizuho Securities initiates coverage with a neutral recommendation, saying the long-term targets of the nutrition company are achievable, but near-term visibility is limited. Novocure Ltd. climbs as much as 5.1% as Wedbush analyst David Nierengarten raised his recommendation on the stock to neutral from underperform. Petroleo Brasileiro SA’s US-traded shares are up 2.1% after Morgan Stanley upgraded the company to overweight from equal weight and raised the price target to $16.50 from $12.50, citing “further room for capital appreciation.” Stitch Fix rises 7.3% as analysts note that the online clothing company’s better-than-expected revenue and cost-cutting measures could pave the way for better profitability. Yext Inc. rallies 18% after the infrastructure-software company boosted its adjusted earnings per share guidance for the full year. “One of the things I’m a little nervous about is that the rates market got a little too carried away about the central banks being able to quickly pre-emptively cut rates,” said Karen Ward, chief market strategist for EMEA at JPMorgan Asset Management, in an interview with Bloomberg TV. With rates markets pricing out some expected cuts, “that to me puts some of those growth, those megacap tech valuations, a little at risk,” she said. European shares wavered, with sentiment damped by a bigger-than-expected drop in Chinese exports and an OECD warning that the global economy is set for a weak recovery, dogged by persistent inflation and restrictive central bank policies. Specifically, the OECD said a global recovery that will be weaker than expected, +2.7% for FY23 and +2.9% for FY24 vs. +3.4% average over the 7 years preceding COVID; this comes amid elevated global inflation Euro Stoxx 50 falls 0.5%. FTSE MIB lags regionals, dropping 0.9%. Autos, insurance and chemicals are the worst-performing sectors. The FTSE 100 fluctuated after UK lender Halifax said the nation’s house prices posted their first annual decline since 2012. Hermes International was among the biggest drags on the benchmark, and was set to decline for the third straight session on Wednesday. Despite some hopes over potential stimulus, conviction on the China reopening trade has faltered, with sectors such as luxury goods among the hardest-hit. Here are some notable European movers: Inditex shares rise as much as 6.2% to the highest since 2017 after the Zara owner reported a 1Q earnings beat and a strong start to 2Q. Analysts see potential consensus increases after the results. Danske Bank gains as much as 5.9%, the most since October, after the Danish lender raised its key profitability target and said it will offer more than DKK50 billion in dividends by 2026. Hugo Boss rises as much as 4.1% after UBS initiated coverage with buy and a Street-high price target, noting the firm’s turnaround story. SBB climbs as much as 14%, extending the gains triggered after Friday’s surprise announcement that the beleaguered Swedish landlord would change its CEO. DiscoverIE rises as much as 4.9% after the electronic components distributor reported results which analysts say demonstrate the strength of its business model, noting the firm’s positive outlook. Assa Abloy gains as much as 4.9% after the Swedish lock and entrance systems manufacturer announced Mexican authorities gave a green light to its acquisition of hardware unit HHI. 888 Holdings rises as much as 22%, extending Tuesday’s gains, after a group of gambling-industry veterans built a stake in the owner of British betting chain William Hill. Sectra drops as much as 10% after the Swedish medical imaging company was downgraded to sell at Carnegie, with the broker saying that the stock’s valuation has again become too high. BE Semiconductor falls as much as 6.4%, extending a decline that started during Tuesday’s capital markets day, with analysts flagging a delay to a key product to 2027 from earlier 2025. PGE drops as much as 3.4% after a court in Warsaw suspended the execution of the environmental decision for the company’s Turow open-pit lignite mine, allowing it to operate until 2044. KBC dips as much as 0.7% after AlphaValue/Baader downgraded the Belgian bank to reduce as it expects margins to decline in 2024 due to rate cuts and lower loan volumes than anticipated. “Weaker global trade is not a new story but it is surprising how quickly China’s reopening boost has faded,” said Craig Erlam, a senior market analyst at Oanda. “Pressure is set to intensify on the leadership to announce new stimulus measures in a bid to revitalize the economy again.” Earlier in the session, Asian shares were mostly stronger following the positive handover from Wall St where the S&P 500 posted its highest close YTD and the Russell 2000 rallied amid strength in regional banks, although advances were capped as the attention in Asia turned to softer-than-expected Chinese trade data. Hang Seng and Shanghai Comp. were positive after reports that China asked the largest banks to cut deposit rates to boost the economy and with Hong Kong led by tech strength, while price action was less decisive in the mainland after the latest Chinese trade data mostly disappointed including the wider-than-expected contraction in dollar-denominated exports. Nikkei 225 wiped out its initial gains in an early 700-point swing and briefly dipped beneath the 32,000 level where it found some support. ASX 200 was just about kept afloat but with the upside limited by the weaker-than-expected Australian GDP and hawkish adjustments to peak rate forecasts. Indian stocks rallied for fourth consecutive day to hover around all-time high levels ahead of interest rate-setting panel’s decision on Thursday. The S&P BSE Sensex rose 0.6% to 63,142.96 in Mumbai, while the NSE Nifty 50 Index advanced 0.7% and both gauges closed a little short of their peak levels seen in December. Reliance Industries contributed the most to the Sensex’s gain, increasing 0.7%. Out of 30 shares in the Sensex index, 20 rose and 6 fell, while 4 were unchanged In FX, the Bloomberg dollar spot index gives up earlier gains. NZD and DKK are the weakest performers in G-10 FX, NOK and AUD outperform.  the Turkey lira plunged to a record low, and is the worst-performing currency against the dollar versus expanded majors, as traders said state lenders had halted dollar sales to defend it. In rates, treasuries are slightly cheaper across the curve with losses led by front-end and belly, flattening 2s10s, 5s30s spreads on the day. Stock futures remain inside Tuesday session range, while WTI crude oil futures advance over 1%. US session quiet for scheduled events, with minimal data, supply (except 17-week bills) and no Fed speakers expected.  Yields cheaper by up to 3bp across front-end of the curve with 2s10s, 5s30s spreads flatter by 0.8bp and 2bp on the day; 10- year yields around 3.685%, cheaper by 2.5bp vs. Tuesday close with bunds and gilts outperforming by 1.5bp and 3bp in the sector In commodities, WTI traded about 1% higher around $72.50 while ags appear to have caught a bid from the escalation of hostilities in Ukraine. Spot gold is little changed at $1,962/oz. Looking at today's calendar, at 7 a.m., we got the latest mortgage applications data (another drop, this time -1.4%), followed by April trade figures at 8:30 a.m and a consumer credit report at 3 p.m. The Bank of Canada will deliver a rate decision at 10 a.m. New York time. President Joe Biden will meet with his UK Prime Minister Rishi Sunak in Washington. Market Snapshot S&P 500 futures down 0.1% to 4,284.00 MXAP little changed at 163.82 MXAPJ up 0.5% to 517.07 Nikkei down 1.8% to 31,913.74 Topix down 1.3% to 2,206.30 Hang Seng Index up 0.8% to 19,252.00 Shanghai Composite little changed at 3,197.76 Sensex up 0.3% to 63,005.26 Australia S&P/ASX 200 down 0.2% to 7,117.99 Kospi little changed at 2,615.60 STOXX Europe 600 down 0.2% to 460.81 German 10Y yield little changed at 2.38% Euro little changed at $1.0686 Brent Futures little changed at $76.30/bbl Gold spot down 0.2% to $1,959.65 U.S. Dollar Index little changed at 104.16 Top Overnight News China’s May exports come in below plan, dropping 7.5% Y/Y in May (vs. the Street’s -1.8% forecast and much weaker than the +8.5% in April), although imports were a bit better (-4.5% vs. the Street’s -8%). China posts health commodity imports in May despite softer exports, with crude imports the third-highest monthly level on record. RTRS US secretary of state Antony Blinken will travel to China this month, in the latest sign that Beijing and Washington are beginning to stabilize a turbulent bilateral relationship that had sunk to the lowest point in decades. FT India expected to begin manufacturing GE jet-fighter engines in the country under a deal expected to be struck with Washington, part of New Delhi’s pivot away from Russian military equipment. WSJ The Turkish lira plunged the most in more than a year as state lenders halted dollar sales to defend it, a sign the new economic administration is giving up on costly interventions. The currency fell as much as 7.2% per dollar, weakening for a 12th day. BBG New York pushed past Hong Kong as the world's most expensive city to live in as an expat, thanks to inflation and rising accommodation costs, while skyrocketing rents saw Singapore crash into the top five for the first time. Geneva and London remained in third and fourth places, according to the ECA International's Cost of Living Rankings for 2023. BBG Michael Dell's family office plans to diversify its portfolio to absorb a payday of cash and stock worth more than $20 billion after Broadcom acquires VMware. BBG Mike Pence kicks off his presidential campaign in Iowa, with the former VP saying "different times call for different leadership." Pence is offering himself as the only traditional conservative who can win the nomination, defeat Biden and govern with more civility than Donald Trump. "Our party and our country need a leader that’ll appeal, as Lincoln said, to the better angels of our nature," he said. BBG    Wells Fargo will sell an office building in San Francisco for $42.6-46MM, a steep discount to the $108MM paid for the property back in 2005. Real Deal Reddit is cutting about 90 people, or 5% of its staff, and plans to slow hiring going forward, becoming the latest tech firm to reduce headcount. WSJ AI: Equity investors are vigorously debating the influence generative artificial intelligence (AI) may have on the future revenue growth and profitability of companies, and the valuation of stocks. We believe further upside exists to the S&P 500 index level if investors price some potential productivity and profit boost from AI adoption. Based on a range of productivity scenarios, we estimate the benefit to S&P 500 fair value could be as small as +5% vs. current levels and as large as +14%. Read Ryan Hammond and team’s full report here. A more detailed look at global markets courtesy of Newsquawk APAC stocks mostly gained following the positive handover from Wall St where the S&P 500 posted its highest close YTD and the Russell 2000 rallied amid strength in regional banks, although advances were capped as the attention in Asia turned to softer-than-expected Chinese trade data. ASX 200 was just about kept afloat but with the upside limited by the weaker-than-expected Australian GDP and hawkish adjustments to peak rate forecasts. Nikkei 225 wiped out its initial gains in an early 700-point swing and briefly dipped beneath the 32,000 level where it found some support. Hang Seng and Shanghai Comp. were positive after reports that China asked the largest banks to cut deposit rates to boost the economy and with Hong Kong led by tech strength, while price action was less decisive in the mainland after the latest Chinese trade data mostly disappointed including the wider-than-expected contraction in dollar-denominated exports. Top Asian News China Stocks Woes Hamper Hong Kong IPO Recovery: ECM Watch Blinken Plans Trip to Beijing in Bid to Stabilize US-China Ties China Traders Are Leveraging Up The Most on Record on Flush Cash Pakistan Bonds, Stocks Rise on Growing Optimism for IMF Loan China’s Steel Slowdown Pushes Exports to Highest Since 2016 Air India Sends Relief Jet to Russia for Stranded Passengers European bourses are softer, Euro Stoxx 50 -0.3%, with the complex drifting after the cash open amid a relative lack of fresh catalysts/drivers. Though, attention remains on the soft Chinese trade figures and German industrial output, on the latter ING writes that unless there is a significant pickup Germany could continue into a Q2 recession. Sectors are similarly softer though Retail names outperform amid strength in Inditex post earnings while Danske Bank is the Stoxx 600 outperformer after providing FY26 targets and a dividend update. Stateside, futures are slightly softer in-fitting with the above in similarly limited trade with the region entirely focused on next week's CPI/FOMC; though, today's BoC might provide an interim focal point, ES -0.1%. US lawmakers are reportedly attempting to curb Mastercard (MA) and Visa (V) fees, via WSJ. Top European news ECB's Schnabel says, on rates, "We have more ground to cover. It will depend on the incoming data by how much more rates will have to increase.". When questioned on market expectations for two 25bp hikes: "A peak in underlying inflation would not be sufficient to declare victory: we need to see convincing evidence that inflation returns to our 2% target in a sustained and timely manner. We are not at that point yet." ECB's de Guindos says "To complete the crisis management toolkit for large banks in the EU, we also need to make progress in other areas, such as liquidity in resolution and a backstop to the Single Resolution Fund.". ECB's Knot says prolonged monetary tightening could still result in stress for financial markets, inflation expectations in financial markets seem optimistic, not convinced that current tightening is sufficient. UK PM Sunak seeks to forge an economic alliance with US President Biden and aims to extract concessions from the US on green technologies, according to FT. FX DXY drifts on the 104.000 handle in the absence of primary US data and Fed commentary during pre-FOMC purdah. Yen relishes softer Treasury yields as USD/JPY retreats further from recent peaks towards 139.00 and decent option expiries. Yuan continues to wilt as weak Chinese trade/export metrics compound growth concerns, USD/CNY and USD/CNH top 7.1300 and 7.1400 respectively. Aussie underpinned near 0.6700 vs Greenback as RBA officials underline hawkish guidance, but AUD/USD is capped by tech resistance and hefty expiry interest. Loonie perky pre-BoC around 1.3400 handle against Buck as market pricing sits tight between pause and 25 bp hike. TRY depreciation is a strong signal of a move away from state controls in favour of a free market and declines in the CBRT's reserves have stopped after signs of FX policy change, according to traders cited by Reuters. PBoC set USD/CNY mid-point at 7.1196 vs exp. 7.1194 (prev. 7.1075) Fixed Income Bonds regroup after reversal from highs through or towards prior closing levels. Bunds, Gilts and T-notes back above parity within 134.67-07, 96.87-51 and 114-02+/113-26 respective ranges awaiting US and Canadian trade data pre-BoC. Demand for German Green Bobl exceptionally strong (record high), while 2025 UK Gilt sale reasonably well covered. Orders for the new 4yr BTP Valore retail bond reach EUR 11bln since the beginning of the offer period. Commodities Crude benchmarks are firmer and back towards post-inventory levels as the USD dips and despite overnight trade data. Currently, WTI Jul'23 and Brent Aug'23 post upside of around USD 0.50/bbl; newsflow has been limited and focused on geopols and while IEA's Birol spoke he added little aside from looking for a tight H2. US Energy Inventory Data (bbls): Crude -1.7mln (exp. +1.0mln), Gasoline +2.4mln (exp. +0.9mln), Distillate +4.5mln (exp. +1.3mln), Cushing +1.5mln. Base metals are modestly firmer and largely shrugged off Chinese trade as the import metrics seemingly indicate the overall reopening-recovery narrative remains in play. Spot gold is little changed as the USD pulls back to near-U/C with the yellow metal holding above the USD 1956/oz 10-DMA but unable to make much headway from session high circa. USD 10/oz above. Discussions on the Black Sea grain deal to occur in Geneva on Friday, via Ria citing sources. Indian Steel Minster says they are looking aggressively to diversify coking coal imports, requirement for this product is going to increase. Crypto Binance commented on the US SEC filing a motion to freeze assets in which it stated that user assets remain safe and its platform continues normal deposit and withdrawal operations, while it added that the filing of the preliminary injunction is unwarranted and it looks forward to defending against it in court, according to Reuters. Coinbase (COIN) says the incident with delayed ETH transactions has been resolved. Geopolitics US Secretary of State Blinken and Saudi Crown Prince MBS had an open and candid discussion covering a full range of bilateral issues, while there was a good degree of convergence in the meeting but also differences. Furthermore, they discussed the potential for normalisation of relations between Saudi Arabia and Israel, as well as agreed to continue dialogue on normalisation, while Blinken raised human rights issues with MBS both generally and related to specific cases, according to a US official. US Secretary of State Blinken is set to travel to China for talks in the coming weeks in a visit intended to be a major step in thawing relations between the two countries, according to Reuters citing a US official. EU nations are approaching a deal on the 11th sanctions package against Russia. Representatives in Brussels are aiming to get the package over the line at their meeting today. EU diplomats suggest that several questions are still open, according to Politico. Number of IAEA inspectors at the Zaporizhzhia nuclear plant to increase several times, via Tass citing Russia's Rosenergoatom. US Event calendar 07:00: June MBA Mortgage Applications, prior -3.7% 08:30: Revisions: US Trade in Goods and Services 08:30: April Trade Balance, est. -$75.8b, prior -$64.2b 15:00: April Consumer Credit, est. $22b, prior $26.5b DB's Jim Reid concludes the overnight wrap Today is the day where I see whether I need to start the training clock for the 2036 Olympics as my daughter Maisie has her first ever swimming gala. It's only against a couple of schools so if she wins her race the dream is still on and if she doesn't I'll conclude that unless we have all the global medalists for 2036 in the same 5 mile catchment area in Surrey then it's probably not going to happen. Last week she swam 6 times!! If anyone can explain how you can have any kind of life with a full time job and 3 kids with various sporting commitments and parties then I'd love to know. I didn't see my wife in the evenings last week or last weekend with all the ferrying. All answers gratefully received. Markets are generally swimming slightly against the tide this week, with the S&P 500 (+0.22%) still not quite able to break out into bull market territory that it crossed intra-day on Monday. Having said that the index did just about close at a high for 2023 so the momentum is still there to some degree. In a week of limited data and a Fed blackout there have been a few stories swirling around in the background that have dampened sentiment without reversing it. That has included geopolitical risks, weak data releases, as well as growing scepticism that the Fed would end up cutting rates this year. In fact, by the close yesterday, the 2s10s curve had inverted to a post-SVB low of -82.3bps, which just demonstrates how various recessionary indicators are still flashing with growing alarm. The newsflow was pretty subdued from the outset yesterday, and shortly after we went to press German factory orders unexpectedly contracted by -0.4% in April (vs. +2.8% expected). This echoed the signals in the latest manufacturing PMI for May, which hit a 3-year low of 43.2, as well as the data revisions a couple of weeks ago that Germany did experience a winter recession after all. That weak data interacted with further geopolitical concerns, particularly after the Kakhovka dam in Ukraine was destroyed, which has led to serious flooding in southern Ukraine. A key concern is with regard to the Zaporizhzhia nuclear plant, which relies on water supplies to cool its reactors, but experts didn’t consider a nuclear incident likely. From a market perspective, the bigger concern could well be the impact on agricultural prices and hence inflation, with wheat prices (+0.52%) recording a 5th consecutive daily increase, although having pared back earlier gains when it had been up as much as +3.85%. As it happens, we flagged in our World Outlook on Monday (link here) that a widely-predicted El Nino event this year was a risk to the trend of declining food prices over recent months, so events like that and the Ukraine flooding could provide an additional inflationary impulse as growth slows. You could add in bubbling concerns about low water levels at the lake that feeds the Panama Canal to that list of supply side concerns. The Panama Canal Authority is predicting a record low water level for the end of July with weight limits and rising surcharges already in force. So one to watch in the weeks ahead. On the theme of geopolitics/supply chains, this morning Marion Laboure and Cassidy Ainsworth-Grace on my team have published an update on the landscape for semiconductors and rare earth metals (link here). It’s a topical story, since yesterday saw Japan announce a revised chips strategy that has the goal of tripling sales of Japanese-produced semiconductors by 2030. And that follows China’s announcement in late-May that Micron’s products had failed its cybersecurity review, saying that it posed “relatively serious” cybersecurity risks. It also comes amidst a growing push towards more resilient supply chains, which was one of the themes at last month’s summit of G7 leaders. Back to markets and risk assets were fairly steady on the whole, and the S&P 500 (+0.22%) posted only a very modest gain. Banks (+1.84%) were the main outperformer in the index, whilst the megacap tech stocks continued to strengthen, with the FANG+ Index (+0.56%) taking its YTD gains up to +67.53% by the close. With equities grinding higher, equity volatility hit a new local low as the VIX index closed under 14.0pts (13.96) for the first time since February 2020. Small cap stocks strongly outperformed with the Russell 2000 index +2.73% higher, which was its second best day since November with the only better day being last Friday. European equities also recovered from their Monday losses, with the STOXX 600 up +0.38%. When it came to sovereign bonds, there was a mixed performance on either side of the Atlantic. US Treasuries were flat, with the 10yr yield unchanged at 3.683%. That comes with just a week to go until the Fed’s next decision, where markets are still pricing in a temporary pause as the most likely outcome, which would be a big milestone after a run of 10 consecutive rate hikes. But it was a different story in Europe, where yields on 10yr bunds (-3.0bps) and OATs (-0.6bps) both moved lower. In part, they were supported by the ECB’s latest Consumer Expectations Survey for April, which showed that median 1yr inflation expectations were down to 4.1%, which is their lowest since February 2022 when Russia’s invasion of Ukraine began. Asian equity markets are mixed this morning after erasing their opening gains after China’s May trade data disappointed (more on this below). As I check my screens, the rally in Japanese stocks has paused for breath after recently hitting 30yr plus highs with the Nikkei sliding -1.44% and leading losses across the region. Mainland Chinese markets are also struggling with the CSI (-0.34%) trading in the red and the Shanghai Composite (+0.02%) surrendering its opening gains. Elsewhere, the Hang Seng (+0.94%) is moving higher with the KOSPI (+0.32%) also seeing a positive start after coming back from a public holiday. In overnight trading, US stock futures tied to the S&P 500 (+0.01%) are flat. Coming back China, the data showed that exports (-7.5% y/y) fell in May for the first time since February, much faster than the market expected drop of -1.8%, after a gain of +8.5% in the preceding month. Meanwhile, imports declined at a slower pace, dropping -4.5% y/y in May (v/s -8.0% expected; -7.9% in April). The call for fresh stimulus is mounting. Elsewhere in Australia, Q1 GDP expanded +2.3% y/y, slightly below market expected growth of +2.4% and against a downwardly revised expansion of +2.6% in the final quarter of 2022. On a q-o-q basis, GDP grew by just +0.2% in the March quarter, the smallest increase since the nation emerged from the Covid lockdown in September 2021 and compared with a rise of +0.3% expected before today's announcement. Staying with growth, the World Bank released their latest global outlook yesterday, which pointed to growth of +2.1% in 2023, up by four-tenths relative to their January forecast. However, they revised down their 2024 forecast by three-tenths to 2.4%. Looking out to 2025, they then see growth accelerating back up to +3.0%. Otherwise, Euro Area retail sales were unchanged in April (vs. +0.2% expected), although the previous month’s contraction was revised up to show a smaller -0.4% decline. To the day ahead now, and data releases include German industrial production and Italian retail sales for April, along with the US trade balance for April. Otherwise, the Bank of Canada will be making its latest policy decision, and we’ll hear from ECB Vice President de Guindos, and the ECB’s Knot, Panetta and Vujcic. Lastly, the OECD will be releasing its latest Economic Outlook, and UK PM Sunak will be visiting US President Biden in Washington. Tyler Durden Wed, 06/07/2023 - 08:11.....»»

Robust demand for online betting bodes well for the Gaming industry. Stocks like DKNG, WYNN and CRSR are benefiting from an improving industry trend. The Zacks Gaming industry is benefiting from improving visitation. The industry is gaining from positive momentum in Macau’s gaming revenues. Moreover, robust demand for sports betting is aiding the industry. The expansion of online betting offerings bodes well. Stocks like DraftKings Inc. DKNG, Wynn Resorts, Limited WYNN and Corsair Gaming, Inc. CRSR are likely to gain traction from this upbeat demand.Industry DescriptionThe Zacks Gaming industry includes companies, which primarily own and operate integrated casinos, hotels and entertainment resorts. Some industry players also deliver technology products and services across lotteries, electronic gaming machines, sports betting and interactive gaming. Some industry participants develop and operate gaming establishments and associated lodging, restaurant, horse racing and entertainment amenities. Some companies are also involved in developing and selling gaming applications. Additionally, e-sport or sporting event or tournament services, content management system, video software, mobile applications and e-sports data platform solutions are provided.Key Themes Shaping the Gaming IndustryVisitation Improving: The industry is benefiting from improving visitation. In May, Macau’s gross gaming revenues (GGR) surged 365.9% year over year to MOP$15.57 billion (US$1.93 billion). For the first five months of February GGR is up 172.9% year over year. Notably, companies continue to focus on the level of services and staffing with selective amenities, and enhanced safety and social-distancing protocols in the gaming floor to welcome gamers. However, easing of restrictions and investment will boost gaming revenues in Macau. In the next 10 years, six casinos companies will invest nearly $15 billion.U.S. Commercial Gaming Revenues Make Record: The gaming industry in the United States continues to perform better-than-expected. Per the American Gaming Association data, revenues from gambling hit a record high of $60.42 billion in 2022. In 2022, sports betting increased 72.7% year over year. In first-quarter of 2023, U.S. commercial gaming revenues reached $16.6 billion. This marks the industry’s eighth straight record-breaking quarter. The U.S. gaming industry will continue to improve.  Sports Betting a Major Driver: The legalization of sports betting in Delaware, Mississippi, New Jersey, New Mexico, West Virginia, Pennsylvania, Rhode Island, Montana, Indiana, Tennessee, Illinois and New Hampshire has been driving growth. Moreover, bettors can place wagers via the digital platforms in Connecticut, Kentucky, Michigan, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Louisiana, Oklahoma, South Carolina, California, Oregon, Arizona, Montana, Colorado and other states. Some popular gaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch.Zacks Industry Rank Indicates Bright ProspectsThe Zacks Gaming industry is grouped within the broader Zacks Consumer Discretionary sector.  It carries a Zacks Industry Rank #63, which places it in the top 25% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since Feb 28, 2023, the industry’s northbound estimate for the current year has increased 181.8%.We will present a few gaming stocks that one can add to the investment portfolio, given their strong fundamentals. But it’s worth looking at the industry’s shareholder returns and its current valuation first.Industry Outperforms Sector and the S&P 500The Zacks Gaming industry has outpaced the S&P 500 Index and the broader Zacks Consumer Discretionary sector over the past year.The industry has gained 27.5% over this period compared with the S&P 500 Index’s increase of 4.1% and the sector’s decrease of 4.7%.One-Year Price PerformanceGaming Industry's ValuationSince gaming companies are debt-laden, valuing the same based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio makes sense. The industry currently has a forward 12-month EV/EBITDA ratio of 13.41. The space is trading at a discount compared to the market at large, as the forward 12-month EV/EBITDA ratio for the S&P 500 is 19.75.Over the past five years, the industry has traded as high as 16.43X and as low as 6.74X, with a median of 10.38X, as the chart below shows.Enterprise Value-to EBITDA Ratio (Past 5 Years) 3 Zacks Gaming Stocks to Watch forDraftKings: Headquartered in Boston, Massachusetts, DraftKings is benefiting from increasing global demand for online gambling and sports betting. DraftKings is live with mobile sports betting in 20 states that collectively represent approximately 42% of the U.S. population following the launch of its online Sportsbook in Ohio on Jan 1, 2023. The company operates iGaming in five states, representing approximately 11% of the U.S. population.Shares of this presently Zacks Rank #2 (Buy) player have increased 90.6% in the past year. DKNG’s 2023 earnings and sales are anticipated to increase 40.5% and 43% each, from the respective year-ago reported figures. You can see the complete list of today’s Zacks #1 Rank stocks here. Price & Consensus: DKNGWynn Resorts: Based in Las Vegas, NV, Wynn Resorts, the company, together with its subsidiaries, is a leading developer, owner and operator of casino resorts. The company is benefiting from improved non-gaming revenues and expansion efforts. The company has entered into a definitive agreement with Realty Income Corporation for the sale-leaseback of its real estate at Encore Boston Harbor.Shares of this presently Zacks Rank #2 player have surged 50.1% in the past year. WYNN’s 2023 earnings and sales are anticipated to increase 138% and 59.9% each from the respective year-ago reported numbers.Price & Consensus: WYNNCorsair Gaming: Headquartered in Milpitas, CA, Corsair Gaming is a leading global developer and manufacturer of high-performance gear and technology for gamers, content creators as well as PC fanatics. The company is benefiting from increased focus on creating innovative gaming and streaming gear such as gaming mice, keyboards, headsets and performance controllers.Shares of this presently Zacks Rank #2 player have increased 22.1% in the past year. In the past 30 days, earnings estimates for 2023 have increased 1% to $5.87. CRSR’s 2023 earnings and sales are anticipated to increase 233.3% and 7% each from the respective year-ago reported numbers.Price & Consensus: CRSR Top 5 ChatGPT Stocks Revealed Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion. Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”Download Free ChatGPT Stock Report Right 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 DraftKings Inc. (DKNG): Free Stock Analysis Report Wynn Resorts, Limited (WYNN): Free Stock Analysis Report Corsair Gaming, Inc. (CRSR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

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US Futures Jump Led By Record-Breaking Surge In Nvidia US equity futures are higher led by tech names after blowout earnings reported by Nvidia - which as Goldman reminds us "is now #5 weight in the S&P and the poster child for “AI” Euphoria + momentum" - whose stock is up almost 30% premarket and rapidly approaching $1 trillion in market cap. S&P futures  were up 0.6% to 4,151 with Nasdaq 100 futures up  a whopping 2% led higher by NVDA and semi stocks. Bond yields are slightly higher, while USD is stronger. Commodities are mostly lower as WTI fell 1.5% reversing all of yesterday's gains after Russia played down the likelihood of OPEC+ cutting production further. In premarket trading, Tech stocks are surging boosted by NVDA which reported after the bell yesterday with forecast beat; stocks is up almost 30% after close. For some context, NVDA added > $200bn in market cap overnight post earnings and as Goldman notes, "this might be the best TMT earnings print we've seen since that June qtr 2020 print from Zoom (ZM), when they beat revs by ~62%."  In any case, it’s another sign that investors are willing to pile into promising tech stocks, despite the growing worries about China’s economy and a potentially catastrophic US debt default. “If you look at tech it continues to reinvent itself over and over,” Larry Adam, chief investment officer at Raymond James, said in an interview on Bloomberg Television. “I continue to like the big tech names.” Here are some other notable premarket movers: American Eagle Outfitters (AEO) shares tumble 21% after the apparel retailer’s forecast for the full-year disappointed analysts. Carnival Corp. (CCL) rises 2.5% after Citi upgrades to buy from hold, citing in note continued good momentum for the cruise sector. Desktop Metal (DM) shares trade 9.1% higher after Stratasys agreed to buy the 3D printer company in an all-stock transaction valued at around $1.8 billion. Stratasys shares are up 3.8%, reversing an earlier drop. Dish Network Corp. (DISH) shares are down 3.4% after Citi downgraded the satellite television company to neutral from buy. Dorian LPG (LPG) upgraded to outperform from inline at Evercore ISI based on valuation, following the propane gas shipper’s fourth-quarter results. Shares are up 1.1% Dycom Industries (DY) rises 1.5% as Wells Fargo raises to overweight from equal-weight after the engineering services company “massively” beat first-quarter expectations. Leidos (LDOS) rises 1.7% after Wells Fargo upgrades to overweight from equal-weight, saying the engineering company’s valuation includes too much fear around short-term uncertainty, while not taking into account upside for 2024 sales, margin and cash flow. Nutanix (NTNX) shares are up 17% after the infrastructure-software company boosted its revenue guidance for the full year. The outlook beat the average analyst estimate. The company also said its audit committee completed an investigation of third-party software usage. Nvidia Corp.’s (NVDA) blowout sales forecast puts a fresh emphasis on the latest game in town: identifying artificial intelligence losers. Shares are up 28%. Snowflake (SNOW) shares fall 13% after the cloud-software company cut its product revenue guidance for the full year. In other overnight news, Fitch put US’s AAA rating on negative watch amid debt ceiling concerns, and this morning DBRS echoed the move when it "Placed United States Ratings Under Review With Negative Implications." McCarthy signaled some progress being made on the negotiation, but representatives are not required to stay in DC over the holiday weekend. Meanwhile, JPM sees the odds of passing x-date without an increase in the ceiling index is now around 25% and rising. Elsewhere, Treasury-bill yields slated to mature early next month surged above 7% on Wednesday, with the rate on the June 1 and June 6 maturities increasing by more than a percentage point. Those securities are seen as most at risk of non-payment if the government exhausts its borrowing capacity. On Thursday morning, Bills maturing on June 1 traded just around 7%. “Nvidia was last night’s good surprise,” said Gilles Guibout, head of European equity strategies at Axa Investment Managers. “But more broadly, there are few reasons for the market to keep rising: interest rates are not going down, global economic growth isn’t rebounding, full-year earnings are seen flat and stock valuations are already at a decent level.” European markets were propped up by chipmakers after sales guidance from Nvidia smashed expectations - shares in the US semiconductor maker are up ~28% in the premarket. The Stoxx 600 is up 0.1% after touching a seven-week low on Wednesday. Here are some of the most notable European movers: ASML leads a rally in shares of European semiconductor equipment makers after US chipmaker Nvidia gave a sales forecast that blew past estimates, boosted by burgeoning AI demand GN Store Nord gains as much as 10%, the most in a month, after a DKK2.75 billion rights issue removes a “significant overhang” for the Danish hearing-aid and audio equipment firm, Citi says Tate & Lyle rises as much as 2.6% after the ingredients company reported FY23 results and forecast revenue growth of 4%-6% for the current fiscal year. The profit beat was impressive, Citi says Elekta shares gain as much as 4.8% after the Swedish medical technology firm beat expectations on sales and Ebit, with Handelsbanken noting the company’s free cash flows are at a record high D’Ieteren rises as much as 3.3% after the automotive retailer reiterates its pretax profit guidance for the full year. Analysts flag this was maintained despite costs associated with recent refinancing QinetiQ rises as much as 2.2%, snapping three days of declines, after the British technology and research firm delivered full-year results that Barclays says beat consensus on all metrics ALSO gains as much as 2.4% after Stifel initiated coverage of the Swiss IT and consumer electronics wholesaler with buy, saying its cloud marketplace business is an underestimated value driver Allegro shares fall as much as 6.7%, their biggest decline in more than four months, after Poland’s biggest e-commerce platform guided for slower gross merchandise value growth in 2Q Johnson Matthey shares decline as much as 3.8%, to the lowest since October, after the UK-based chemicals company published below-consensus guidance for this year and next Earlier in the session, Asian stocks were mostly lower with the region cautious after the losses on Wall Street due to debt ceiling fears. The MSCI Asia-Pacific index closed 0.8% lower for the day as sentiment around Chinese markets continued to worsen. The Hang Seng Index shed 1.9% on the day and the yuan broke through the closely-watched 7-per-dollar level. The key worry for investors is that China’s economy is losing momentum and there are persistent financial troubles in the real estate industry. Recent data suggest gross domestic product growth this year will be closer to the government’s target of about 5%, contrary to expectations of a large overshoot formed earlier in the year. The Hang Seng was pressured with underperformance in Hong Kong after the benchmark index slipped beneath the 19,000 level. Japan's Nikkei 225 was kept afloat but with the upside capped in the absence of any major positive drivers. Australia's ASX 200 weakened as the commodity-related sectors led the broad declines across nearly all industries and with sentiment also dampened as households are set to pay hundreds of dollars more each year after the energy regulator approved an increase of up to 25% in electricity bills. Korea's KOSPI was subdued after the BoK rate decision in which the central bank kept rates unchanged as expected, although 6 out of the 7 board members saw the need to keep the door open for one more rate hike. Indian stocks recovered late in the day to end higher and outperform most of their Asian peers even as broad sentiment remains cautious amid ongoing concerns of a possible debt default by the US. The S&P BSE Sensex rose 0.2% to 61,872.62 in Mumbai, while the NSE Nifty 50 Index advanced 0.2% to 18,321.15. Stocks of consumer staple, energy and communication services firms, part of the benchmarks, led the recovery as the May futures contract expired. In FX, the Bloomberg dollar index climbed for a fourth day, boosted by rising US yields and more-averse trading conditions after Fitch Ratings on Wednesday said it may downgrade the US’s AAA credit rating; the kiwi is the weakest of the G-10 currencies. The USD/JPY was little changed at 139.49, holding near 139.70 hit in earlier trade, its highest since late November. In rates, treasuries are lower with the US 10-year yield rising 1bps to 3.76% ahead of GDP and claims data. The yield on two-year Treasuries rose 4 basis points to 4.42%, its highest since March; traders are pricing in a nearly 50% chance that the Fed will raise rates by 25 basis points next month; 10-year yields sit around 3.76%, with gilts trading cheaper by 10bp in the sector as rate-hike premium increases further in sterling swaps. A late Wednesday announcement that Fitch placed US credit on “rating watch negative” elicited limited market reaction. The US auction cycle concludes with $35b 7-year note sale at 1pm, following strong demand for 2- and 5-year sales. WI yield around 3.790% is ~25bp cheaper than last month’s, which tailed by 1.3bp. Meanwhile, UK government bonds led losses in Europe. Traders added to bets the Bank of England will keep raising interest rates after an unexpectedly strong reading of UK inflation Wednesday. Money markets are now pricing more than 100 basis points of additional tightening by December.   In commodities, WTI declined 1.3% to trade near $73.40 on Thursday after the dollar strengthened and Russia played down the likelihood of OPEC+ cutting production further. Billionaire mining investor Robert Friedland says the copper market weakness is temporary. Southwestern Energy is among the most active resources stocks in premarket trading, falling 4.6%.  Bitcoin is lower but holding above the $26k mark despite briefly dropping below in early trade, with the USD capping upside and broader marks still focused on the debt ceiling as we near the US long weekend. To the day ahead now, and data releases from the US include the weekly initial jobless claims, the second estimate of Q1 GDP, pending home sales for April, and the Kansas City Fed’s manufacturing index for May. Central bank speakers include the Fed’s Barkin and Collins, ECB Vice President de Guindos and the ECB’s Nagel, Villeroy, Centeno and De Cos, along with the BoE’s Haskel. Market Snapshot S&P 500 futures up 0.5% to 4,144.75 MXAP down 0.8% to 159.34 MXAPJ down 0.9% to 503.86 Nikkei up 0.4% to 30,801.13 Topix down 0.3% to 2,146.15 Hang Seng Index down 1.9% to 18,746.92 Shanghai Composite down 0.1% to 3,201.26 Sensex down 0.4% to 61,526.09 Australia S&P/ASX 200 down 1.0% to 7,138.16 Kospi down 0.5% to 2,554.69 STOXX Europe 600 down 0.1% to 457.06 German 10Y yield little changed at 2.47% Euro down 0.2% to $1.0727 Brent Futures down 0.9% to $77.68/bbl Gold spot up 0.4% to $1,964.02 U.S. Dollar Index up 0.16% to 104.06 Top Overnight News China’s muted economic rebound and Beijing’s reluctance to deploy large-scale stimulus are reverberating around the globe, crushing commodity prices and weakening equity markets. Investors are pegging back their expectations for the world’s second-biggest economy as worries mount that its recovery from pandemic restrictions has lost momentum. BBG   The widening rift between the world’s two biggest economies, the US and China, now looks in some regards to be irreconcilable, according to Singapore Deputy Prime Minister Lawrence Wong. The geopolitical situation has become more dangerous amid tensions between the two sides with the Taiwan Strait becoming the region’s “most dangerous flashpoint,” Wong said in his speech at the Nikkei Forum 28th Future of Asia in Tokyo. BBG Russian Deputy Prime Minister Alexander Novak said on Thursday he expected no new steps from the OPEC+ group of oil producers at its meeting in Vienna on June 4, Russian media reported, after the group announced a significant output cut earlier this year. RTRS Germany suffered its first recession since the start of pandemic, extinguishing hopes that Europe’s top economy could escape such a fate after the war in Ukraine sent energy prices soaring. First-quarter output shrank 0.3% from the previous three months following a 0.5% drop between October and December, the statistics office said Thursday. Its initial estimate, last month, was for stagnation. BBG Don't expect Fed rate cuts until "well into 2024," Raphael Bostic warned. "The tightening that we've done is just starting to show up," but it's not clear how much time it'll take for higher rates to slow the economy. BBG Fitch Ratings is reviewing whether the U.S. should retain its top credit rating as the White House and Republicans struggle to reach an agreement on raising the debt limit. WSJ On Friday, June 2, millions of Americans are due a total of $25 billion worth of Social Security payments. And more than anything else, that may prove a decisive element in forcing an end to the partisan standoff over raising the federal debt limit. That obligation is “an enforcement mechanism we can’t ignore,” Democratic Senator Chris Coons of Delaware, one of President Joe Biden’s top allies in Congress, said on MSNBC Wednesday. “When they find out that they’re not getting that check, our phones will light up like a Christmas tree.” BBG Richard Branson's Virgin Galactic faces a crucial test of whether it can start its commercial space service next month. Unity 25, scheduled to lift off at 8 a.m. local time from New Mexico, will take a six-person crew to the edge of outer space. It's only been to space four times and has suffered technical issues during flights and a crash in 2014. The company, which had expected to start commercial service at the end of 2022, also must overcome doubts about its financial viability. BBG NVDA added > $200bn in market cap overnight post earnings. Hardly any 'real' feedback from investors, but this might be the best TMT earnings print we've seen since that June qtr 2020 print from Zoom (ZM), when they beat revs by ~62% A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly lower with the region cautious after the losses on Wall St owing to debt ceiling fears and after the FOMC Minutes showed officials were split on support for more hikes, while Fitch placed the US AAA sovereign rating on Rating Watch Negative despite several optimistic comments from House Speaker McCarthy. ASX 200 weakened as the commodity-related sectors led the broad declines across nearly all industries and with sentiment also dampened as households are set to pay hundreds of dollars more each year after the energy regulator approved an increase of up to 25% in electricity bills. Nikkei 225 was kept afloat but with the upside capped in the absence of any major positive drivers. KOSPI was subdued after the BoK rate decision in which the central bank kept rates unchanged as expected, although 6 out of the 7 board members saw the need to keep the door open for one more rate hike. Hang Seng and Shanghai Comp. were pressured with underperformance in Hong Kong after the benchmark index slipped beneath the 19,000 level, while the mainland was lacklustre amid recent US-China frictions. Top Asian News Chinese companies reportedly switch auditors to avoid US delisting risk, according to FT. USTR Tai is reportedly to meet with Taiwan's minister in charge of the Office of Trade Negotiations. BoK maintained its base rate at 3.5%, as expected, through a unanimous decision although six board members saw the need to keep the door open for one more rate hike. BoK statement noted economic growth is to remain weak for some time and inflation will likely fall considerably before rebounding slightly for the rest of the year, while it stated uncertainty is high over the Chinese economy and IT sector, as well as lowered its 2023 GDP growth forecast to 1.4% from 1.6%. Furthermore, BoK Governor Rhee said core inflation is not easing as much as board members had expected and that board members share the opinion that it is premature to talk about a rate cut this year with uncertainty higher over regarding whether inflation will approach the 2% target before year-end. RBNZ Governor Orr said rates are restrictive and well above neutral, while he added that economic growth and inflation are weaker than expected although they can change the assessment if needed as new data emerges, according to Reuters. BoJ Governor Ueda says we are beginning to see good signs in the economy but still some distance to stably and sustainably hit inflation target; BoJ will patiently sustain easy monetary policy. Japan raises May overall economic view for first time since July 2022 and says economy is recovering moderately. European bourses are mixed after initial pressure on a negative German GDP revision, DAX 40 -0.2%; though, tech is the standout outperformer post-NVDA, with Euro Stoxx 50 +0.3% as such. Stateside, the NQ +1.9% and ES +0.7% are firmer, given Nvidia, while the RTY and YM reside in negative territory amid broader market concern over the debt ceiling and after Fitch's update. Nvidia (NVDA) Q1 23 (USD): Adj. EPS 1.09 (exp. 0.92), revenue 7.19bln (exp. 6.52bln). Q2 23 revenue view 11bln (+/- 2%) (exp. 7.18bln). CFO said that the data centre revenue rise in the quarter is led by growing demand for generative AI and large language models using GPUs. +24% in pre-market trade. Swiss government to commence consultation on liquidity backstop of all systemically important banks, according to the Finance Ministry; SNB's Maechler says Credit Suisse (CSGN SW) crisis was one of confidence. Top European News ECB's Vasle said the ECB must still raise rates further and inflation is becoming increasingly stubborn. Riksbank's Thedeen says the SEKs level is worrying. UK's Ofgem sets the energy price cap at GBP 2074 for dual-fuel households (prev. 3280), for July-September; the cap represents a reduction QQ and a reduction in how much customers will pay on their bills. Shipping activity returns to normal in Suez Canal after a malfunctioning ship was towed away, according to Two Canal. FX Dollar remains dominant as US debt ceiling talks proceed productively, DXY tops 104.000 and probes Fib at 104.090. Kiwi descends further as RBNZ Governor Orr underscores guidance indicating no further tightening, NZD/USD hovers under 0.6100. Euro undermined by unexpected negative German Q1 GDP print, EUR/USD fades from just above 1.0750 and EUR/GBP retreats through sub-0.8700 10 DMA. Sterling rebounds towards 1.2400 vs Buck as Gilts reverse sharply from post-UK inflation correction lows. Yen hits new y-t-d trough, but stays afloat of big option barriers seen at 140.00 against Greenback PBoC set USD/CNY mid-point at 7.0529 vs exp. 7.0515 (prev. 7.0560) Turkey asked banks to buy dollar debt to support default swaps, according to Bloomberg. Fixed Income Gilts markedly underperform amidst reversion toward post-UK inflation data lows within a 96.24-95.10 range. Bunds and T-notes retreat in sympathy between 133.93-56 and 113-12+/00 bounds, the former irrespective of Q1 German GDP contraction and the latter ahead of US IJC, GDP, Fed speakers and 7 year auction. BTPs resilient and only just below par in the wake of well-received Italian end-of-month supply. Commodities Crude benchmarks are softer intraday, with WTI & Brent July under USD 73.50 and USD 77.50/bbl respectively after soft German data and remarks from Novak ahead of next week's OPEC+ confab; most recently, the benchmarks are closer to USD 73.00/bbl and USD 77.00/bbl. On this, ING writes that “There is a large speculative gross short in the market and they will likely be hesitant to carry too much risk into the OPEC+ meeting scheduled for 4 June”. Spot gold is deriving support from the broader macro tone, ex-tech, though is yet to see any real haven bid despite the Fitch update and as the X-date draws closer as updates on progress this morning are more-encouraging, overall. Base metals mixed with LME Copper still under USD 8k/T while tin was initially bolstered after the Wa region reiterated its mining ban. Russian Deputy PM Novak says do not see new steps at the June 4th OPEC+ meeting and sees Brent crude above USD 80/bbl by year-end. Chevron (CVX) launched the sale of tis oil and gas assets in Congo which could raise up to USD 1.5bln, according to Reuters sources. Debt Ceiling Headlines US House Speaker McCarthy said he believes they can get back to a 2022 spending level and has always thought that they could get a deal in a day, while he also stated there should not be any fear in markets and negotiations have made some progress. McCarthy also noted that a number of issues remain unresolved but added that things are better than they were the prior day, while he will stay in Washington DC this weekend and said they could get a debt agreement in principle this weekend, according to Reuters. US House Majority Leader Scalise said the weekend recess will begin on Thursday as planned, while debt ceiling talks will continue and lawmakers should be ready to return in case of a deal. Scalise also stated that members will get 24 hours' notice that they need to return if an agreement is reached and members will get 72 hours to read any debt ceiling bill, according to Reuters. US House Republican leadership reportedly feels very good about the state of the debt limit negotiations after several days of little progress, according to Punchbowl's Jake Sherman. US House Democratic leader Jeffries demanded that the length of spending caps match the length of the debt limit increase, according to a Bloomberg reporter. Fitch placed the US AAA sovereign rating on Rating Watch Negative which reflects the increased political partisanship that is hindering a resolution to raise or suspend the debt limit, while it still expects a resolution to the debt limit before the X-date but believes risks have risen that the debt limit will not be raised or suspended prior to the X-date. Fitch added that it would expect the US country ceiling to remain at AAA even in the scenario of a debt default and believes a failure to make full and timely payments on debt securities is less likely than reaching the X-date and is a very low probability event, according to Reuters. White House said the Fitch report reinforces the need for Congress to quickly pass a bipartisan agreement to avoid a debt default, while the US Treasury said brinkmanship over the debt limit does serious harm to businesses and American families, raises short-term borrowing costs for taxpayers and threatens the credit rating of the US. Many within the US House Republican Leadership expect a deal to be finalised by the weekend, via Punchbowl; if a deal came together on Thursday, it would take around two days to convert this into legislative text, implying a final vote as soon as Tuesday. Albeit, Punchbowl writes "it seems very possible that Congress won’t be able to lift the debt limit until next weekend, which is June 3-4". Geopolitics EU is reportedly discussing sending profits from EUR 196.6bln of frozen Russian assets to Ukraine, according to FT. Twitter sources noted air raid sirens in Kyiv and that Shahed drones were launched towards northern and southern Ukraine. Hundreds of thousands of South Korean artillery rounds are on their way to Ukraine via the US, according to WSJ sources. Russian and Belarus Defence Ministers have signed a document on the deployment of tactical nuclear weapons in Belarus, via Tass; Russia's Shoigu says West is waging undeclared war against Russia and Belarus, according to RIA; Defence Minister Shoigu says Russia are to control nuclear weapons in Belarus, according to IFX. China Commerce Minister Wang will meet US Commerce Secretary Raimondo, according to Reuters citing the Chinese Commerce Ministry Japan Defence Ministry says Japan scrambled jets after spotting Russian information gathering aircrafts over pacific ocean, sea of Japan on Thursday. US Event Calendar 08:30: May Initial Jobless Claims, est. 245,000, prior 242,000 May Continuing Claims, est. 1.8m, prior 1.8m 08:30: 1Q GDP Annualized QoQ, est. 1.1%, prior 1.1% 1Q Personal Consumption, est. 3.7%, prior 3.7% 1Q GDP Price Index, est. 4.0%, prior 4.0% 1Q PCE Core QoQ, est. 4.9%, prior 4.9% 08:30: April Chicago Fed Nat Activity Index, est. -0.20, prior -0.19 10:00: April Pending Home Sales YoY, est. -20.1%, prior -23.3% 10:00: April Pending Home Sales (MoM), est. 1.0%, prior -5.2% 11:00: May Kansas City Fed Manf. Activity, est. -9, prior -10 Central Bank Speakers 09:50: Fed’s Barkin Speaks at Southwest Virginia Economic Forum 10:30: Fed’s Collins Speaks at Community College of Rhode Island DB's Jim Reid concludes the overnight wrap Given it’s our AI week, it’s appropriate that one of the world’s largest chipmakers Nvidia reported earnings last night, which included an outlook far above expectations thanks to demand for AI processers. They said that revenue in the three months ending July was expected to be $11bn, which was well above analysts’ estimates for $7.18bn, and their shares were up by around 25% in after-hours trading. That’s given a massive boost to other chipmakers too, and futures for the NASDAQ 100 are up by +1.39% this morning. For instance in Tokyo, shares in the equipment supplier Advantest are up +15.58% this morning, whilst the memory-chip maker SK Hynix is up +4.50% in Seoul. Although AI could prove to be a turning point, elsewhere actually saw markets slump again yesterday as fears ramped up on several fronts. The biggest issue right now is the US debt ceiling, where there’s still no sign of a resolution, even though we might be as little as a week away from the Treasury being unable to pay its bills. On top of that, there was a very strong UK inflation print, which brought back fears that more persistent inflation was still on the cards and central banks would need to keep hiking rates to deal with that. And the other data from the last 24 hours was also pretty weak, such as the Ifo’s business climate indicator from Germany that saw its biggest monthly decline since September. All this led to another combined bond-equity selloff, with the S&P 500 down -0.73%, whilst yields on 10yr Treasuries were up +5.0bps to 3.74%. For now at least, the focus is still very much on the debt ceiling, where there are several signs of growing market stress around the X-date. In terms of the latest news, there wasn’t anything particularly promising, with Speaker McCarthy saying to reporters that “there are a number of places where we are still far apart”. He noted later on that he thinks “we have time to get an agreement”, and said it could happen over the weekend, but thus far there haven’t been any tangible signs of progress. After the US close, we then heard from the credit rating agency Fitch that they’d placed the US’ AAA rating on “Rating Watch Negative”. Whilst their base case was that a deal would be reached, they said that the move was down to “increased political partisanship” and reflected growing risks that “the government could begin to miss payments on some of its obligations.” The lack of any agreement (or even signs of one) has meant that market stress around the X-date has only continued to rise, with front-end T-bills around the debt ceiling now yielding well above 6%. For instance, the bill that matures on June 1 saw its yield surge by +111bps yesterday to 6.84%, and the bill maturing on June 6 is now at 6.68% (+65bps yesterday). The effects of that are increasingly being felt further out the curve as well, with the 3-month yield (+10.1bps) closing at a post-2001 high yesterday of 5.33%. Those bond losses driven by the debt ceiling were also interacting with a very strong upside surprise in UK inflation earlier in the day, which showed headline CPI at +8.7% in April (vs. +8.2% expected). That was above every economist’s expectation on Bloomberg, as well as the +8.4% projection from the BoE a couple of weeks ago. Furthermore, core CPI rose to its highest level since 1992, at +6.8% (vs. +6.2% expected). The reading added to fears that inflation was becoming entrenched, which led investors to rapidly dial up their expectations for rate hikes from the BoE. For instance, further 25bp hikes are now fully priced in for the next two meetings in June and August, whilst terminal rate pricing has also surged, with the peak rate seen by the December meeting standing 92bps above current levels. Whilst it was just the UK that had a strong inflation print yesterday, investors responded by dialling up the chances of rate hikes more broadly. And those moves then got further momentum thanks to a speech from Fed Governor Waller, who signalled a clear openness to another hike in June, saying that “I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2 percent objective.” He framed the options around hiking, skipping, or pausing, suggesting that there was thought being given to the idea of skipping a hike in June ahead of another hike in July. Atlanta Fed President Bostic later reiterated his preference for both a near term pause and for no rate cuts until “well into 2024.” In response, investors dialled up the chances of a hike by July, with futures now putting the chance at 66% this morning, which shows how this is now being seriously considered by market participants. Looking further out, the rate expected by the December meeting also hit a post-SVB high of 4.83% by the close yesterday, and this morning that’s risen further to 4.86%, which just shows how investors are increasingly pricing out the chances of rate cuts this year. With another upside surprise on inflation and hawkish rhetoric from officials, sovereign bonds sold off on both sides of the Atlantic. UK gilts were at the epicentre of this, with the 2yr gilt yield ending the session up by a massive +23.7bps, taking it up to its highest level since September 27, just after the mini-budget that triggered market turmoil. Likewise, the 10yr yield was up +5.6bps to its highest level since October. In the US, yields on 10yr Treasuries were up +5.0bps to 3.74%, which is their highest level since the SVB collapse, and in Europe yields on 10yr bunds (+0.3bps), OATs (+0.9bps) and BTPs (+1.7bps) all moved higher as well. Overnight, 10yr Treasury yields have seen a further +0.8bps increase to 3.75%. The deteriorating global backdrop also led to a bad day for equities, with the S&P 500 (-0.73%) losing ground for a second day running amidst broad-based declines. Over in Europe the losses were even more severe, with the STOXX 600 (-1.81%) seeing its worst daily performance since March 15 at the height of the market turmoil over Credit Suisse, which took the index back to a 7-week low. On a sectoral basis, the biggest outperformer was energy thanks to a further rise in oil prices, with Brent crude (+1.98%) closing at a 3-week high of $78.36/bbl. Another event yesterday were the latest Fed minutes from the meeting on May 2-3, but they weren’t a particularly market-moving event. They showed that the committee members were becoming more open to a pause in rate hikes, and it said that “Many participants focused on the need to retain optionality” moving forward. Some participants noted that since the “progress in returning inflation to 2% could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings.” But the counter was that if there were a medium-term economic slowdown there wouldn’t be the need for further tightening. There was also a note that “that data through March indicated that declines in inflation, particularly for measures of core inflation, had been slower than they had expected”, which correlates to Fed speakers becoming more hawkish in recent weeks. Overnight in Asia, the selloff has mostly continued, with losses for the Hang Seng (-2.07%), the Shanghai Comp (-0.66%), the CSI 300 (-0.49%), and the KOSPI (-0.52%). The main exception is the Nikkei, which has posted a +0.50% advance. And looking forward, there are signs that markets are now beginning to stabilise, with futures on the S&P 500 up +0.38% this morning, having been helped by the strong Nvidia earnings last night. On the data side, the main release yesterday aside from the UK CPI print was the Ifo’s business climate indicator from Germany. That came in at 91.7 in May (vs. 93.0 expected), and marked an end to 6 consecutive monthly gains in that indicator. The expectations reading fell to 88.6 (vs. 91.6 expected), ending a run of 7 consecutive gains, and the current assessment reading fell to 94.8 (vs. 94.7 expected). Whilst the release is only one indicator, it adds to the pattern across Europe in recent months whereby we’re no longer seeing the big upside surprises from Q1, and if anything the releases have been more on the downside of late. Finally in the political sphere, there was another announcement in the 2024 presidential race yesterday as Florida Governor Ron DeSantis formally confirmed he would be a candidate. According to FiveThirtyEight’s polling average for the Republican nomination, DeSantis is currently in second place behind former President Trump. However, Trump’s lead has widened significantly over the last couple of months, and Trump currently stands at 54.3%, with DeSantis some way behind on 20.6%, and then former Vice President Pence (who hasn’t yet declared) on 5.3%. The first primaries won’t actually be until 2024, but based on past cycles we can expect the field to come increasingly into view over the summer as the various candidates seek to coalesce public support, raise funds and win key endorsements beforehand. To the day ahead now, and data releases from the US include the weekly initial jobless claims, the second estimate of Q1 GDP, pending home sales for April, and the Kansas City Fed’s manufacturing index for May. Central bank speakers include the Fed’s Barkin and Collins, ECB Vice President de Guindos and the ECB’s Nagel, Villeroy, Centeno and De Cos, along with the BoE’s Haskel. Tyler Durden Thu, 05/25/2023 - 08:11.....»»

Here is a look at a half-dozen stocks with some heavy call flow over the last week.  Many investors don’t pay attention to unusual options activity because options are too confusing and there can be multiple implications from a single data point. However, astute traders who are looking for opportunity often like to see their investment thesis line up with reality. Simply put, when large traders or big investors  — like hedge funds and investment firms — make their moves, they can often leave their footprints behind. Those footprints show up in the form of outsized options activity in the underlying stocks. With that in mind, let’s look at a half-dozen stocks with some heavy call flow over the last week. Meta Platforms (META) Meta Platforms (US:META) kicks off the week at the top of the list for unusual options activity. Some might think it was because of the call sales — a bearish bet — logged on May 17. That’s as one trader sold $5.56 million worth of the January $290 calls. Around the same time, someone also sold $1.1 million worth of next week’s $220 calls, which were in-the-money and expire on May 26. However, the far-larger trade that grabbed our attention was a deep-in-the-money call buyer. That’s as someone scooped up some 48,000 contracts of the August $200 META stock calls. They paid $228 million for the position, which was about $40 in the money at the time of the trade. Enphase Energy (ENPH) The solar trade looked to be dead, but then it found some light following clarity from the US Treasury Department. It resulted in some interesting options activity in Enphase Energy (US:ENPH). On May 17, someone sold $31.3 million worth of the deep-in-the-money $205 puts expiring on May 19. Later in the day, they sold another $30 million of the same puts. In between that action, a trader sold $16.5 million worth of the $220 ENPR stock puts, which were even deeper in-the-money and also expired on Friday. Almost all of the unusual options activity in Enphase from this week, also expired this week. Microsoft (MSFT) Given its $2.36 trillion market cap, it’s not surprising to see Microsoft (US:MSFT) in the Number 3 spot for the unusual options activity leaderboard. There was sizeable action all week, particularly in this week’s monthly options expiration. However if we go out in time a bit, there were other notable trades. Specifically, there was a flurry of activity for the deep-in-the-money MSFT stock puts expiring in January 2024. The action centered on sales in the $450 and $460 puts, with $48.5 million in premium being collected across six trades in the early afternoon. There were also some large trades in the $490 and $440 puts of the same expiration, with almost $28 million being paid out in premium across three trades. In all, it looks to be a spread (or several spreads) across multiple strikes, while there was more flow in the same strikes later in the day. Lastly, one trader sold $7.4 million of the August $310 calls and bought $4.5 million of the August $325 calls. Moderna (MRNA) It’s been a while since we’ve talked about the drugmakers — particularly the Covid vaccine winners — but Moderna (US:MRNA) popped up on our options scan this week. Those bets heavily favored the long side. That’s as almost $42 million worth of various in-the-money put sales hit the tape on May 17, all in the July expiration. It included one sale of $18.6 million for the July $190 puts. The July MRNA stock put sellers went back to work throughout the day, selling $18.9 million of the $190 puts, $5.4 million worth of the $200 puts and then $19.1 million of the $190 puts again later in the day. Two days later, they were fairly active again, selling $7.2 million worth of the July $190 puts and $9.5 million of the $200 puts. Nvidia (NVDA) Nvidia (US:NVDA) has been the leader of the AI trade so far in 2023, so it’s not surprising to see the stock doing plenty of options volume. On May 17, one trader took a deep-in-the-money bullish position, buying almost $45 million worth of the June 2024 $150 and $160 calls. A few hours later, someone bought $5.5 million of the June 2024 $400 calls. Not everything was bullish, though. That’s as one trader bought $5.2 million worth of January 2024 $320 puts, which were only slightly in-the-money on May 18. On the same day, three big call sales — typically a bearish NVDA stock trade — took place. They included $2.05 million worth of the June $340 calls, $2.48 million of the August $310 calls and $2.475 million of the September $310 calls. A day later, someone sold $5.15 million worth of the June $312.50 calls. Qualcomm (QCOM) Qualcomm (US:QCOM) has not performed very well in 2023, down 15.3% over the last three months and almost hitting 52-week lows after a post-earnings sell off earlier this month. However, there was a wave of bullish options activity in the past week. Plain and simple, the action came as someone sold $28 million worth of in-the-money put premium — a bullish position — that expired on Friday. The action was spread out between the $115, $120 and $125 puts. If it was a straight put sale (meaning there was no other position involved), then it was a way for someone to get assigned a rather large position in QCOM stock. Otherwise, it could have been part of a more complex strategy. This article originally appeared on Fintel Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit......»»

 The transcript from this week’s, MiB: Robyn Grew, Man Group CEO, is below. You can stream and download our full conversation, including any podcast extras, on iTunes Stitcher, Bloomberg, Spotify, Google, and YouTube. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business… Read More The post Transcript: Robyn Grew appeared first on The Big Picture.  The transcript from this week’s, MiB: Robyn Grew, Man Group CEO, is below. You can stream and download our full conversation, including any podcast extras, on iTunes Stitcher, Bloomberg, Spotify, Google, and YouTube. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, another extra special guest, Robin Grew, President of Man Group, $145 billion publicly traded hedge fund in the UK, and soon to be Man Group’s CEO. This is a fascinating conversation about business growth and leadership and management and how to run a team. How to recruit and retain the best people and how to use technology as a tool to give you an edge, not just in investing but in the ability to offer clients various solutions improving your efficiency, effectiveness and productivity as a company. I — I found this to just be a fascinating masterclass in running a giant financial organization. And I think you will also. So with no further ado, my conversation with Man Group’s incoming CEO, Robyn Grew. ROBYN GREW, PRESIDENT, MAN GROUP: Thank you for having me, Barry. RITHOLTZ: I — I have been looking forward to this for a while. And when we first booked you, you were like a junior analyst. Then suddenly in the ensuing weeks, you get tagged to be CEO. That has to be a little bit of a surreal experience. GREW: It is nothing short of surreal. This is obviously new news for this particular podcast, and it is — you hear the words that people say, you know, it’s an honor and it’s a privilege. And it sounds a little trite. I mean you find yourself in one of these rare positions where somebody is asking you to take on the CEO. And I have to tell you, I mean it very authentically, it’s an honor and it’s a privilege. And it is slightly surreal. RITHOLTZ: And — and to — for a little context, maybe for some of the audience in America who may not be that familiar with Man Group, this isn’t like a startup. This traces its roots back to 18th century sugar trading, right? How old is Man Group? GREW: Well, it’s 240 years old. Put it that way, 1783. And you’re right, it traces its way back to sugar trading and at one point being the monopolistic supplier of rum to the Royal Navy, which — and in those days, that was important because everybody had a ration in the Royal Navy, and everybody wanted to use it. And it’s the journey isn’t’ it? It’s the journey of organizations to continue to be relevant. So, 240 years ago, there’s a conversation I have with people which is, if we didn’t keep changing, we’d still be making barrels on the side of the River Thames and trading sugar and hoping that the Royal Navy still needed a lot of rum. So that’s not where we are today. But the roots are deep. And now we, you know, we’re just shy of $145 billion of assets on the management across the entire credit curve. Trading through our CTAS and Quant and discretionary and private markets, reaching investors all over the world. RITHOLTZ: So, we’re going to spend a little more time delving deep into Man Group’s practice. Let’s start with your background. GREW: Sure. RITHOLTZ: Which doesn’t quite go back 274 — GREW: Thank — thank you very much for that. RITHOLTZ: You went to law school. Were the plans to become a solicitor or a barrister? That’s not the thought process of someone who wants to go into finance. GREW: You — you’re spot on. I actually qualified as a barrister, which is the fun words of I went to the bar. People use that all the time to describe me. And you’re right, I had thought I was going to be an advocate, quite frankly, a barrister, you know the one with the wigs and gowns, that you see on TV. My — my roots were very more reasonably humble. My dad was a public GP, you know, in the National Health Service in England and my mom was a public school teacher. And quite frankly, I didn’t know what financial services was. It was this — this thing that existed somewhere else. And so, when I went to law school and went to the bar, I had every — every thought that I was just going to be a barrister and be another vocational professional in my family. RITHOLTZ: When did it enter your mind that, hey, this finance stuff looks kind of interesting? GREW: It entered my mind when very early on I found myself in a position where I was looking at brief that had come to me. And it was yet another sort of sketchy criminal defense piece, where I had to go and interview a client who had been arrested because he had been out on bail and escaped bail. And I went to a very old magistrates’ court in London, at Bow Street. It’s very close to Covent Garden and very old cells. And the doors of these cells were built for men. And you — you, Barry, you have the benefit of seeing how short I am or tall I am. RITHOLTZ: You’re five foot nothing, right? GREW: I’m five foot nothing. And so I couldn’t see through the little window. I just couldn’t reach it. Right, I just wasn’t able. So, the guards had to actually stand, sort of open the door and stand on either side of me. And they were worried about me because my client was so out of his head on whatever it was he had taken, that they were actually worried for my safety. And I went home that night, and I went, do you know what, I might not want to do this forever. This might not be — this might not be a good idea. And I thought, I know what I’ll do, I will go into commerce. That’s what I thought. I’ll go into commerce. I’ll go into business. And then I will go back, and I will be a commercial barrister where they don’t have to get this into cells and see whether — RITHOLTZ: Right. GREW: — I’d be worried about the safety that have to do with people like me now. So that’s — that’s what the plan was. And so, it was a plan to get into this space, get experience from being an insider, in business and go back. And I got hooked. I just never went back. RITHOLTZ: What — what was the first job in — in commerce, so to speak? GREW: In commerce? So, there was an advertisement in the newspaper. That’s a thing. That’s how old I am. There was an advertisement in the newspaper for Fidelity. And I thought, well, that sounds interesting. They wanted — they wanted to have new kind of graduates, postgraduates type people to come and do a round robin. And that’s also an expression that gets used with me a lot. And so I applied and I sent in a letter and I said yes, it sounds terribly interesting. Can you give me a shot at this? And I got invited to this interview thing. And it was a thing. So I turned up, and there are 150 people in a room. RITHOLTZ: Right. Cattle call. GREW: It was a cattle call. And I – totally new to me and I had no idea that this is what happened. So I just chatted to everybody I met. I just chatted — RITHOLTZ: Online while you’re waiting to go for the interview. GREW: Yeah, you just — you don’t know when you’re being interviewed or when you’re not being interviewed quite frankly. RITHOLTZ: Oh. Okay. GREW: I was one of the come and meet these people. And it was, I had a great time. I’m a chatty kind of individual. And off I went round the room, chatted for a couple of hours and then left and, you know, drove home. And I was rung the next day, and they said we really — really — would you like to come and join us and I said, well, yes, for sure. Let’s do that then. And I bounced around. Yes, I did some legal stuff and rank stuff but I, you know, I went in on the weekends when we did the stock certificate count. RITHOLTZ: Right. GREW: And counted share certificates, that it was that long ago. And I did early tech kind of pieces. I manned client call phones. I did everything. And it was a bit of a blast. It was this kind of thing of being in the center of Fidelity’s brokerage arm at that point. Not its asset management, its brokerage piece. And then — RITHOLTZ: This — this is late ‘80s or early ‘90s? GREW: Yeah, and — and then I was, necessarily (inaudible) — and I was called into — I was called in ’91 so – in that ‘90s period. And then I was called by a headhunter, by a recruiter, who said, listen, there’s this — spent a couple years at Fidelity by this time — there’s a role at this thing called LIFFE or LIFFE. RITHOLTZ: Right. GREW: Um, and they really need somebody who understands a criminal law. And they need it because when they conduct interviews, it’s undertaken under this police and criminal evidence act (ph) thing. We — in other words it’s done in a way that whatever is said in that interview could be brought as evidence in a court. And I said, well, I know — I know that bit of it. I’ve done — I’ve done that bit. And so I turned up to LIFFE. RITHOLTZ: What was the commerce side of LIFFE? GREW: So, it’s an exchange. It’s an open outcry exchange. In fact, at that time, the biggest open outcry exchange in Europe and we had — it was a time when LIFFE was biggest in the bond contract (ph). RITHOLTZ: So, I have to ask, why the concern about future criminal evidence? It seems sort of at odds. GREW: I know, right. So, what happens is, when you work in an open outcry (ph) environment, there are trade practices — RITHOLTZ: Okay. GREW: — that get investigated. And those trading practices are quite — they’re fun. They’re interesting and they’re complex because it’s all about hand signals. RITHOLTZ: Right. And everybody’s word is their bond or their gestures, their bond. GREW: Exactly right. And so, you’re looking at, at that point, very forward thinking videotaped evidence. RITHOLTZ: Mm-hmm. GREW: You’ve got pit observers. And you are trying to piece if there are malpractices or going on, you need to piece that all together. And so, at that point, you are building a case. You are running a market (ph) investigations team, which is looking at ensuring proper conduct. From a regulatory perspective, you are the regulator. You are managing the efficacy of those markets, and across futures and options. And so, I went to an interview. And they said how much do you know about futures and options? And I said, not a lot. In fact, I said, and there’s a chap who I’m still in touch with who repeats this at regular intervals to my embarrassment, he says, you said you know a postage stamp and you know really large writing. That’s how much I know. But I’m a super quick learner. RITHOLTZ: Right. GREW: And, for good or for bad and for my benefit, they hired me. RITHOLTZ: How long did you stay with LIFFE? Or LIFFE as in — GREW: LIFFE — a couple of years, just over again. And then I got another call. RITHOLTZ: Uh-oh. GREW: I know, this seems to be a process. RITHOLTZ: Right. GREW: So, I got a call and this one was ultimately from a recruiter who’s working for Lehman Brothers, an investment bank, a bond house. RITHOLTZ: Another one that’s a few hundred years old as well. GREW: Another one that — RITHOLTZ: At least was. GREW: Was a few hundred years old. Again, set up by, you now, brothers and all the rest of it. So, and that was another conversation where they were looking for somebody, quite frankly, who had some sort of futures, options, star LIFFE (ph) experience, because they wanted somebody to go and sit on a fixed income floor. RITHOLTZ: Right. And I want to say the criminal background turned out not to hurt either. GREW: No, they — thanks for that. We’ll talk about that later, Barry. So, the — so the sense of again, another opportunity just sort of thrown in my way. And as I joined Lehman Brothers, it was the first time that Russia had a — had a little bit of a crisis. RITHOLTZ: ’98, something like that. GREW: Correct. Correct, spot on. And I was thrown at a, okay, we now need to know what have we got in Russia, what’s our exposure, what are our legal contracts, how does this work? And I was one of many, many people. But it — it talked about landing and the rubber hitting the road. RITHOLTZ: Right. GREW: And at that point Lehman share price had its first sort of crumbs moment. And that was fascinating to just be in the inner workings. Baptisms by fire, I sort of enjoy — I shouldn’t probably admit that. RITHOLTZ: That’s the phrase that popped into my head as soon as you described — GREW: It is — it is sort of baptism of fire. And it was something which was phenomenal to actually be part of but for the fact that you’re living it. Does that make sense? RITHOLTZ: Sure. GREW: As an academic exercise, marvelous. When you’re in the middle of it, you – you’re kind of so caught in it. And I ended up on working on the fixed income floors until — RITHOLTZ: You’re working in London not in New York at the time. GREW: Correct, working in London. And again, the first time I’d worked in the South Side. And that’s where I sort of feel I had my biggest growth and my growing up was in that Lehman Brothers phase. In part because I again benefited from being in the mix when we were the second bank that was raided by the Japanese regulators after they’d gone into Credit Suisse. And the Japanese regulators were having a tough time with cross collateralization and issues about whether there were balance sheet accounting issues. RITHOLTZ: Is this how you ended up living in uh, Tokyo? Is that right? GREW: It is — it is. RITHOLTZ: And how long were you there for? GREW: So, well, for the year of the first year of the investigation, I flew back and forth to London. This is becoming a theme with me, flying back and forth to London. RITHOLTZ: Right. GREW: And then after that another two and a half years where we actually lived in Japan. Fabulous. RITHOLTZ: Tokyo, it’s supposed to be an amazing city. GREW: It was extraordinary and brilliant. And the things you learn when you live overseas, I’m not sure I can ever really put on value on those experiences. Being responsible for a region in which you are very much alien in that space. RITHOLTZ: Mm-hmm. GREW: Where you have to learn cultural cues in ways that you’ve never had to understand it before. Where you’re navigating different countries and different relationships between those countries, which — all so tricky. Lehman had its headquarters for AsiaPac unusually in Tokyo. RITHOLTZ: Mm-hmm. GREW: Most of us had a kind of Hong Kong piece — RITHOLTZ: Right. GREW: — or Singapore piece and then ex-Japan piece of it. That wasn’t how Lehman did it. So being responsible for AsiaPac was — from a Tokyo base, was brilliant. RITHOLTZ: Huh, quite fascinating. (BREAK) RITHOLTZ: So, you were very successful at Lehman. You kind of worked your way up the ranks there. What else did you focus on outside of putting out fires in Japan? GREW: Well, after running and building up that, sort of, that team, I hired my successor. By the way, fabulous thing to do, I suggest everybody does that actually. I mean genuinely, we can talk about it later. But that ability to hire tremendously strong, quality people around you, is I think been an enormous opportunity to provide you with opportunity to move on and do more. So, I got a call. I got a call from the U.S. who said, hey, how do you fancy coming to the U.S.? And that again was to work at Lehman’s headquarters — fabulous opportunity. So off we went from Japan to — to New York. That was a cultural change. RITHOLTZ: Yeah, to say the very least. Lehman was very much a hyper aggressive, macho culture, Dick Fuld’s nickname was the “Gorilla.” GREW: It was. RITHOLTZ: What was it like working in that sort of, you know, very much bro culture? GREW: And I’m — and I’m slightly worried I’m going to disappoint you with this answer. But it was fabulous. I had the best time. And I never encountered that sense of being overwhelmed by a — a masculine overtly bullying kind of culture. In fact, some of the early work that I did on diversity and inclusion was at Lehman in New York. RITHOLTZ: Huh. GREW: And was sponsored by people like Joe Gregory, who was just a real champion of that — of that content. So that, maybe I’m — maybe I’m thick skinned or something. But the truth of the matter is I loved it. I enjoyed it. And I think Lehman was — I owe a lot to my experiences in that organization. RITHOLTZ: As much as Lehman spectacularly crashed and burned in the financial crisis, everybody I know who worked there really liked it. It was a pure meritocracy. GREW: Absolutely. RITHOLTZ: They didn’t care if you made money, it didn’t matter. GREW: That’s right. RITHOLTZ: And, yeah, it was a little sharp elbowed. It was a tough place to work. But people who came through that said it was the best experience professionally of their lives. GREW: Absolutely right. And you know, they had a phrase. which I still use. You know when you get to that point in — in investment banking, you ended up with those loose sites, with, you know, various things that you’re supposed to, you know, mouse (ph) match with something as well. RITHOLTZ: Sure, all the little banking things, yeah. GREW: All the little banking things from whatever. And they had one phrase, and I — I still use it which is be smart, be dumb. And it’s kind of a curious — RITHOLTZ: Be smart, be dumb. GREW: Be smart, be dumb. And what that retranslated into was, if you don’t understand something that is going on, if you’re in a meeting and you don’t get it, if you’re outside of the meeting and don’t get it, say something. Actually, ask the question. Because you’d be surprised how many people can answer the question by the way. RITHOLTZ: Uh-huh. GREW: But also, it’s okay not to know everything. It’s the only way you learn. And I still use that. I might have it — I don’t quite have it on a Lucite anymore, but I absolutely believe that to be the case. If you don’t get it ask the question. I’m not supposed to know everything in the room, that’s not the point. But I would like to understand what’s going on. RITHOLTZ: Huh. Really, really intriguing. So, let’s talk a little bit about the history for those listening who might not be familiar with uh, Man Group. What is its focus and specialties? Who are its clients? GREW: So, Man is a — as you said hundred million – 145-billion-dollar hedge fund. It’s there to –to and loan only (ph). It’s not just a hedge fund, it’s not just doing long shortcuts (ph) or loan only (ph). It’s got private markets, it’s through the credit curve it has core business engines which are driven by styles. So, we have large comp businesses. CTA and um, equity comp businesses. We have a discretionary business, what some of you might have already been familiar with in GOG, we have private markets business which is focused really on real estate. And the — that — that — the single family real estate ownership piece. Um, and community housing, and then we have something called solutions. And the solutions piece is the piece where we work with in effect our institutional clients or institutional client business, but those institutional clients are pension funds, their endowments, they are looking after the pensions and the savings of real individuals. The individuals that might — mom and dad right. The doctors, the teachers, the metal workers in Holland, wherever they may be. And we partner with those institutions to return value. And that’s our early goal. When we come in, in the morning, we think about who the real underlying clients are here. And how we partner and make sure that we’re returning Alpha. We’re an active manager and that solutions piece is how we create the spoke solution. So, we’ll take elements or particular strategies from each part of our discretionary strategy and match it with con strategy and return it to clients because we understand and we work with them on their portfolio, the exposure, what they need to achieve, their risk management to create something that is a spoke for them. RITHOLTZ: So that’s very interesting because the typical funds is this is our strategy — GREW: Take it or leave it. RITHOLTZ: Right, that’s pretty much it. You sort of have a one foot in the um, financial planning, asset management side and another side in actual fund management. What are the advantages of marrying those two together? GREW: I think the reality for me is that more and more institutional clients need something in a separate managed account. They want something that’s bespoke to them, and the portfolio risk or construction that they need answers to. These are long strategic relationships where we are investing time and effort in partnership within these institutions to understand what their portfolio construction needs to look like or what they want to achieve. And then we are part of helping them understand that. And helping them deliver a solution that we can provide to them to address certain issues. And maybe it’s the combination of strategies, maybe it’s a combination of strategies with additional transparency or additional liquidity? Maybe it’s leverage, maybe it’s a tele protection, maybe it’s an overlay hedge, maybe it’s any number of these things. The capability that Man has to do that, is what we have spent time and energy and money on. And technology on. Let’s be clear, we talk about tech and I’m sure we’ll cover it later, we talk about how we deploy tech, and we think about tech within that quant space. But we deploy technology throughout the organization to give us scale and capability, that we use to service our clients. RITHOLTZ: So, let’s stay with that, before we get to the tech side of it, all the entities that you referred to various uh, foundations and institutions and pensions, many of them have a future liability. Meaning they have an obligation to pay out a certain amount of money to a certain class of beneficiaries at some point in the future. So, when you’re describing bespoke strategies, I’m assuming your targeting those future liabilities for each of those — those entities? GREW: It can be that it can be anything that they want in reality. We are much more about understanding client needs. And remember they have, as you know, vast portfolios. Trillions of dollars that they are putting into that. We’re part of that and doing it abs — understanding what they’re trying to achieve, is less efficient potentially for them. So, let me give you an example of what I mean by this. I was um, speaking to a couple clients, in the last couple of days and they were talking to me and they say listen, what we would really like to do is sit down with you and there are two or three areas and I was like terrific, what do you want to talk about? And they said, well, first of all we’d like to understand data and how you manage data and how you manage your technology in that? I said great. And then they said the second thing is, we’d really like your help in understanding our portfolio construction and whether what we think it’s doing is what it’s doing or whether we’ve got correlation where we didn’t think we’d have correlation. Or how we’re positioned. And I said sure, we’ve got tools that can help you do that. And then the third thing they said, I really want to talk to you about how you’re achieving diversity and equity and inclusion. RITHOLTZ: Really? GREW: And I was like — RITHOLTZ: That comes up in these conversations? GREW: And so, I was like, okay, we can talk to you about that too. The point is, it’s not just about delivering a fund, here’s a product let me flog it to you. It’s about a much deeper relationship for us and it’s about delivering all of the firm, not just part of the firm. And that is important to us because I think we do a better job. And by the way, I’ll put this in there as well, we believe in making our, you know, our clients smarter and better because they make us smarter and better in return. There’s a – there’s an interesting piece on a Podcast listening to Fran Lebowitz actually the other day and she was talking about the massive loss we had in the ‘80’s with the AIDS crisis of artists. And she made this really great point which is, it wasn’t just the artists we lost, we lost the audience. We lost the decerning audience in that process too. And I — it resonated with me about how we think about Man. We want our clients to be smarter and better, and equipped with what we can give them because they hold us as we hold ourselves accountable. They’re the better audience that makes the better performance. RITHOLTZ: Huh, really quite interesting. So we’ll circle back to diversity, inclusion, ESG a little later. Let’s stay with technology for a minute. How is Man deploying new technologies, what are you using in your quant work, in your — your trading and how does this, um, infiltrate the entire organization? GREW: Well, it – it’s a similar one, let me say, you know we view technology and the adoption of AI technology as a fundamental part of innovation. And it’s useful across our entire organization, in the investment process, but also through trading and execution. It’s used in every single juncture. We’re constantly looking to align the latest technology and latest techniques with our underlying investment for philosophies, not the other way around. Does that make sense. So, it’s one of the tools that make us better at delivering what we do. And new technologies aren’t replacement. They’re for me — they’re rather a compliment to what we are trying to achieve. And we are never going to be reliant on one technology. This space is moving so quickly. RITHOLTZ: Right. GREW: It’s about adopting the new, finding its application, seeing whether we can gain alpha from it whether it makes us smarter, allows us to monetize something which reduces cost, whatever it may be and making that happen. I think AI can do much for example, then just automate. Um, it — it’s innovative, it can increase productivity, we use it as part of our processing of data of our large data, of looking at our models, looking at portfolio construction. Um, it — we have used it for example for ESG prediction metrics. Let’s look about whether where we see weather cycles. Where we look at it um, use it in your linguistic programing to look at — to make sense of sentiment in um, annual reporting from example. RITHOLTZ: Mm-hmm. GREW: So many different applications by nature, as you know Barry, we are open source, um, space, we love it. Our developers love it. I mean I wish I was as smart as a developer, but our developers love open source. It makes them better. When you look at GitUp — RITHOLTZ: Sure. GREW: Which is one of these mechanisms which I’m sure most people know, I think we’re number two on GitUp, but it’s this sense of open-source technology um, where we use it as much as we can or we — we withing the organization but we’re always interested in what else is out there. So, we’re not frightened by tech development, we want to use it, but we don’t depart from philosophically where we start and what we need it for. RITHOLTZ: Yeah there — there’s been a little bit of a backlash against things like various AI and – and chatbots etcetera. To me it’s always been a tool, all this technology is a tool that makes people more productive, more effective, more efficient. Uh, I’ve never thought hey, ChatGPT is going to put all of us out of business it — it’s something that can be used to the betterment of our work product, and it sounds like that’s integral to Man’s philosophy. GREW: I kind of agree. ChatGPT is clearly the greatest disruptor we’ve had in the last year. I mean, it’s been — it’s been given some really quite momentous uh, bylines as well. But it’s certainly a massive disruptor from my perspective, if you think about it negatively, you’re missing the mark. RITHOLTZ: Right. GREW: It’s — it’s — RITHOLTZ: I’m sure it hallucinates occasionally, but — GREW: But — but, well I was going to say something, who doesn’t, but that’s not true. Um, but it’s also not going to be the first or the last piece of AI technology. This isn’t well, I’ve got ChatGPT, therefore we’re done. RITHOLTZ: We’re done. Right. GREW: That’s not going to happen, this sort of semi-hysterical fear of it, I think is all wrong. There is — there are undoubtedly going to be benefits for us being able to use technology to capture large data sources, look at what we’ve done and I, you know, I’m talking to a man at Bloomberg’s so you will know this. We talked about open architecture a minute ago, and look at what we’ve done with this ArcticDB. So, this is a piece of technology that was developed at Man Group, which in effect is a super charged database. You know, it’s able to process large chunks of data which we’re all trying to deal with in a much more efficient and effective way. We actually open sourced it back in 2015, um, it’s first version, but in one of those moments where you’ve got to be careful you’re not drinking your own Kool-aid a little bit. RITHOLTZ: Uh-huh. GREW: We – I mean we talk about tech all the time, we went to Bloomberg and said we have this cool piece of kit, um, would you like to take a look at it? And we came to Bloomberg because if there’s one place that has a phenomenal tech — RITHOLTZ: Right. GREW: Space and a Ka trillion developers, and all the rest of it, it’s Bloomberg. So we came here and we were testing ourselves. Back to that audience thing. RITHOLTZ: Right. GREW: show me how, whether we can be better at this and show me where we’ve kidded ourselves, is this really – is this really the thing? RITHOLTZ: Mm-hmm. GREW: And after months and months it’s now in the hands of Bloomberg and it’s being — RITHOLTZ: Oh really? GREW: Endorsed as that as a program that is in the mix and is part of the Bloomberg offering in that space. So, we — we checked our audience. We worked out we weren’t drinking the Kool-Aid. But it shows you sort of the way that we think about tech. and how we think about it as something that makes us all better, but I will be super clear, it’s only part of what we have. We have a million models, we have our own technology, we have our own philosophical investment ideas within each of our engines and we use tech to make us better at that. RITHOLTZ: Huh. That sounds quite fascinating. Let’s discuss the major divisions at Man Group. I want to try and wrap my arms around, first what is Man AHL? GREW: Okay. So, think of, we have two, let me do it a slightly different way. We have two quant engines. One is numeric and one is AHL. CTA, macro, big trading hub. RITHOLTZ: When I hear CTA, I hear commodity trading. GREW: Right. RITHOLTZ: Okay. GREW: That’s where it’s originally coming at, from, but it’s much more than that. And then equities, resprimia (ph), Maloney (ph), piece and numeric which is also quant. GOG, third engine. Discretionary, human beings, people like you and me and by the way, the way I started at the firm was through GOG. That was an acquisition which is something that we — you know is part and parcel of how Man has grown over the years. So, GOG, discretionary portfolio management. Um, then you have what is FRM MSL. So that’s that solutions piece, we talked about earlier, although FRM was, and you’ve spoken to Luke before, so the fund to funds business. Um, which was also an acquisition, but that’s rolled into lucia (ph) as well and we have still got a fund to fund business where people might have thought in the past that that was a dying part, not so much, people need some help when it comes to their selection also of uh, managers that are out there and that is still something that we are part and part of. And then the fifth piece is that private market space where we have that real estate piece that we talked about earlier and we within each of those engines we also have credit offerings as part of that. RITHOLTZ: Huh, really quite fascinating. (BREAK) RITHOLTZ: So — so let’s talk a little bit about your approach to leadership. You’ve managed to distinguish yourself in a very competitive field. Tell — tell us how. GREW: Here’s the answer everyone, it’s not true. Um, I — I tell you and perhaps this is a way of thinking about it, what I have done perhaps is the better way of saying, do I and how I distinguish myself. What I’ve done is taken every single opportunity, that has come my way. And I — RITHOLTZ: So, no master plan and this just, you just stumbled blindly from one gig to the next, is that — GREW: I mean — I mean that’s the perfect way of summing it up. The um, the way of summing it up is this, if you’d have asked me 25 years ago, do you think you’ll be the CEO of an investment management company, I would have laughed. RITHOLTZ: Right. GREW: I would have laughed. I didn’t have a grand master plan. What I did have was a somewhat insatiable desire to learn and have some fun doing so that I loved being a fixer, I loved being put on planes, or being sent into areas to solve things. I have innately hired people around me and built teams of highly credible quality people, um, who I have empowered and who I have loved to partner in achieving whatever it was that we needed to achieve better, faster, smarter than before. And that — that empowerment piece is huge. The ability to not have to be the smartest, in fact, let me do it a different way. If I am the smartest person in the room — RITHOLTZ: You’ve done something wrong. GREW: I — I worry, I mean that’s not okay. Um, so on that basis, leadership style, hire brilliant people, put great minds around you. Put people around you who are willing to disagree with you or better still stop you from careening off a cliff. If you’re headed in the wrong direction, I can’t tell you how many times that, that is just as important as sort of the rugby tackle TE’s bit. If you’ve suddenly got yourself into a frame of this is where we’re going and I have enormously benefited from that style of management which is inclusive, it’s about delegation, it’s about empowering people to sometimes be really horrible. RITHOLTZ: So, let’s stick with the delegation and the empowerment because those are key themes. You don’t sound like you’re a micromanager, you sound like you tell people this is what we want you to do, tell us what you need to get it done and now go do it. GREW: That’s our job. As great leaders I — I — that sounded arrogant. I don’t mean — RITHOLTZ: Any leader. GREW: Any leaders — RITHOLTZ: Right. GREW: I think any great leader, any capable leader, maybe that’s a better way of phrasing it, any capable leader, that’s one of the hallmarks it feels to me. Migrate people, empower them. If they can’t deliver, if you’ve got the wrong person, change the person. Don’t micromanage. Don’t find the fix in making it, you do the job or somebody else. RITHOLTZ: Swap the people on board. GREW: That’s right. And so that has always been — I always find that really smart people want that. They want to be given the keys, they want to run these things and the smartest people know when they don’t know. The most frightening person is the person who doesn’t know that they don’t know. The best person who works for you is the one who goes, yep, don’t know the answer to this, leave it with me or we got to find the best solution here, not the perfect solution here. You’ve got to be able to move dynamically. You have to be able to think. You have to be able to find solutions and it be execution divine if you’re working with me. RITHOLTZ: So, you clearly have great insights and leadership skills, but you’ve said you’re surprised that you got named CEO of this large financial firm. Why the surprise? GREW: I was — RITHOLTZ: By the way I’m calling you out for a little false humility here. Defend yourself. GREW: Defend, excellent here I go – on goes the Barrister — RITHOLTZ: Barrister. GREW: Making cracks so we can get on. Let me say I — I think there are tremendously strong people. We have a great bench of senior management at Man Group. It is a bit of a privilege, and it sounds a bit trite, just happens to be true that we have a phenomenal bench of high-quality people. I don’t want to assume and didn’t want to assume that I’d be named the CEO. I am thrilled, let me tell you that I am going to be the CEO for the first of September. But it’s — there are so many capable individuals that it doesn’t do you any harm to step back and recognize the skills and the qualities of those people who you have worked with and who you want to work with going forward. So, that was, that has been something that I think has held me in good stead actually to have perspective and to keep my feet very firmly grounded. I think what perhaps surprised me in reality and yet it shouldn’t have done was the press coverage that the announcement garnered — RITHOLTZ: Meaning, and I don’t want to put words in your mouth, but I’ve read everything you’ve written. You were genuinely surprised people focused on you as a woman taking the CEO. I mean this is still a pretty — especially in finance, look there is a gender parody in business, generally and finance lags business and hedge funds lag finance. So why so surprised? GREW: At this point, I think this is where I call myself out and say why — you can’t go well obviously when you put it like that. I think perhaps I was so focused on the job. I was so focused on this being something that I looked at internally rather than I perhaps focused on the external ramification or impact of it. And it’s humbling when that happens, and it’s been heartening and, in some ways, overwhelming, and brilliant all at the same time. And of course, you get — one gets a thousand emails and a thousand messages and all of those things and some of the most touching are those from people who — who are really just saying, you know thanks — thank you Robyn but thank you Man for breaking that. For giving us somebody who is underrepresented, and it means that we all think we now, we’ve got more people, one more person sorry to — that’s broken through that barrier. Whatever that barrier may look like. And that was — that was touching I have to say. RITHOLTZ: It — it’s also when you’re on the inside, you see the changes that others won’t see manifest for years or decades, so you’re aware that things might be a little better than they appear from the outside. So maybe there’s a little surprise there. I have to mention at this point, that by the time you become CEO on September first, the Chairman replacing John Cryan, uh, will be Ann Wade. You’ll be not only led by women, the firm will be led by two women. There — there’s nothing like that in the hedge fund universe at all. GREW: It’s phenomenal, um, and Ann is a superstar. I’m very, very lucky to also work with board, we’re very luck to work with a board at Man that is — that is brilliant and engaged and highly qualified. And that with Ann has been, again, the master of transition, the master of how we think of succession at Man has been very deep in the way that the board has thought about the succession of the chair has also been a very, very in-depth, assessment and analysis. Buy happens stance we are in this position with Ann and myself, I’ve got to tell you it’s going to be brilliant, but it’s not because we’re women, it’s because we’re the best people to take these roles. RITHOLTZ: So, let’s talk about the best people, the firm is 144.7 billion in assets. Let’s round it up to 145 as much as my compliance people hate when I do that. How do you guys’ plan on growing the assets, do you have any targets in mind? Do you want to get to 200 billion. Is it a trillion-dollar firm a decade from now. What are you thinking about? GREW: And it’s — it’s a great question, it’s also an early question let’s be clear. So um, I’m going to perhaps not give you the satisfactory answer you want. Nevertheless, you’d expect me to do exactly just what I’m about to do. The firm is brilliant, I mean it has a cracking core business and my number one job apart from anything is not to break that because that is value and it’s real and it will continue to grow. We will continue to see the value of technology and we have 35 years, 40 years of quant and data and tech behind us and we will continue to invest in that space. We will continue to look for opportunities in an MLA format. We’ve made it very clear to the market. Um, can’t guess what they’re going to be. Couldn’t tell you if I did know. But I can’t guess what that’s going to be. What I will tell you is it will additive, and it will be additive for our clients. Ultimately this is about having deeper and better client offerings. It’s that piece about the solutions that we talked about earlier. How do I ensure that I’ve got each of the components that can provide a better offering for our institutional clients. And we’ll grow that. U.S. massively important to us. Deep capitol market, you’ll absolutely see us putting effort and time into building our presence here too. RITHOLTZ: Looking forward to that. Tell us a little bit about your background in environmental, social and governance-based investing. GREW: It certainly has become a little bit controversial here but yes, so let me talk — let me talk about our background. We — in the early 2000’s we had our first sort of um, involvement in creating on thinking about climate and signing up to various supplies of information when it came to climate data. Um, and but it really, let’s be clear, it’s ESG as a concept has really hotted up, if I’m allowed to use that phrase. RITHOLTZ: Sure. GREW: With ESG. In the last — RITHOLTZ: No pun intended? GREW: No pun intended, maybe a tiny pun intended. In the last five years or so, where you see the massive change in the European regulatory environment. We have these article eight and article nine funds which are responsible investing funds, you know, you have to have a certain percentage of responsive investing and um, investments within them that can differ between article nine and article eight. Um, where we’ve moved away from exclusionness where things are becoming more complex and where data points are becoming more interesting and where um, drive investment decisions. We have certainly seen an uptick of investment interest in RI in Europe. There’s almost a point where you can’t have a conversation with somebody in Europe without the client, without there being an RI piece to it. RITHOLTZ: RI meaning? GREW: Responsible Investing. RITHOLTZ: Okay. GREW: My apologies. And so ESG RI interchangeable in this space. Um, but — but a comment I would say more generally is, since when didn’t we take into account governance and risk in investment decision making? That’s — that’s the bit that I find quite interesting here. So when I answer your questions, I answered in the format of what you’re really asking me which is the ESG kind of concept. RITHOLTZ: Right. GREW: When actually, you extract governance, and you say do we look like a governance of issuers. RITHOLTZ: Right. GREW: Who doesn’t? RITHOLTZ: It’s a risk screen if any. GREW: It’s a risk screen. And so, the way that we think about ESG at Man, is not as an evangelical point where I soap box you into saying what is right and wrong. That’s not what we’re here to do. We’re here as product providers, solution providers to our clients. And so, if a client comes to us and says I want to have a portfolio which has – which uses its impact. If I want to look at biodiversity, if I want to invest in, and his has not happened by the way, but you know, it only boards which, I only want to invest in publicly listed companies where 50 percent of the boards are made up of diverse candidates. Doesn’t happen, but these criteria, that’s where we are placed. Now, the difference that Man has is that what is happening is that there is a chunk of data out there that is holy inconsistent, highly complex, multiply sourced, and damn right contradictory. And what we can do with that is apply those 35-40 years of data science, quants and tech capability. I can throw 500 people at that if I wanted to. Well, we don’t need to, to understand what the signals are in that space. But it isn’t that everything that we do at Man Group is now, has to be ESG, it’s what do clients want. And we certainly have clients who will only want something that is responsibly invested in some format, and we have a lot of clients who don’t. RITHOLTZ: When you say the data is contradictory, there’s been some studies that have shown that ESG doesn’t generate any form of alpha or alphaperformance, very often tied to how well oil companies are doing because if you pull those out it’s a major component. And there’s others that say we’ve mentioned the risk component, hey, if you have a lot of companies with bad governance, they have a disconcerting tendency to blow up and crash. Uh, how do you reconcile these different data points or is it all in the framing and the definition of what ESG is or, what diversity and inclusion means? GREW: Well, it — it great question Barry. I think what you are pulling out there is the complexity of the questions let alone the answer. So, fundamentally, yes it has something to do with strategy. If you were in a growth strategy last year that had ESG — RITHOLTZ: Didn’t matter. GREW: Didn’t matter. If right, so, some of this is also about extracting the ESG factor not just understanding and understanding it as against the strategy that ESG was attached to. Absolutely, you’re finding, if you’re a hydroelectric company, and where your hydroelectric base is, is now suffering from drought, every year. If you are a wind company and wind patterns for the last few years have been off considerably. These are climate change, but they take into account effectively the effectiveness of your business. RITHOLTZ: Right. GREW: Now, so — so how do you — how do you extract the various points of that to make it a decent thesis. And the argument is what is it that you want to achieve as a client? What are you after? And are you willing, and some points of this, is the discussion out there that happens with some clients, is — is it all about P&L? Is it about alpha capture or is there a willingness here to actually say, actually, I’m more interested in, I want P & L, I want alpha capture and I actually want social impact. Or I want climate impact, or I want decarbonization. The other piece of this is, there are absolute strategies which are about transition. And transition is about recognizing the journey, between where we are between carbon and greenhouse gas vs. where a company might be going. So, you will have, and we have had clients who say I am interested in, I still want to look at all the gas and fossil fuels, but I’m interested in the transition. I’m interested in who is really putting money to work to transition from those fossil fuels into radiopuls (ph) for example. So, a complex question which then begets some fortunately, a complex answer. RITHOLTZ: Let’s talk a little bit about diversity and inclusion. How do you think about that as a manager and then how do you think about that as an investor? GREW: We turn a mirror on ourselves, let’s be clear. You know that — that’s important, we continue to put every effort into seeking and having difference in our organization. I mean real difference as well. I think this piece about, I’m not really interested in the person who is different on the outside but actually went through all the same educational processes and the same training. I think we need difference — RITHOLTZ: By the way, it’s funny you mention that. But there was just a study recently and I don’t remember if it was the Times or Wall Street Journal or Bloomberg, that had the story, the vast majority of economists were working in finance, went to the same six grad schools. So, what does it matter how they look, it’s the same widget coming out of the same factory. GREW: And we’ve got to get comfortable as well, let’s be clear. We have to be comfortable with discomfort. If you want real diversity — RITHOLTZ: Say that again, comfortable with discomfort. GREW: Comfortable with discomfort. When you are in a room and you can connect over your whatever it may be, it doesn’t really matter what your connections, your school or your experience in life, where you, your football team, your and by that I meant — RITHOLTZ: Soccer. GREW: Soccer. Anyway, that thing, that — that’s what we do as human beings. As human beings we try to connect with each other, that is how we smooth the conversations and how we move things forward. Actually, when you have real difference in the room it feels kind of uncomfortable. It feels a little bit jarring from time to time. Well, what do you mean you don’t understand, or you don’t get that or that wasn’t an easy conversation. We gravitate as human beings towards easier conversations where we find commonality. And what we’re asking of our organizations is to make it a little bit more friction full not friction less in that space. But I am 1,000 percent, I shouldn’t say that I know it’s a bad phrase, I’m 100 percent — RITHOLTZ: Right. GREW: Um — RITHOLTZ: Thank you so much for that by the way, because my question is always, why 1,000, why not 2,000? GREW: Why not 2,000. 100 percent sure that we need, and there is a war for the best talent. And if we think, if the premise that — that only the best people come from um, certain demographics. RITHOLTZ: Your tribe. GREW: Your tribe. RITHOLTZ: Right. GREW: Is when you say it out loud, nonsense. RITHOLTZ: Right. GREW: So, how we get people into our organizations that feel, look and have difference and how we ensure that we give them the space to be that different in our organizations that’s the criticality to it. That bit of, yeah — yeah, it’s okay, we’ll have you and then please can you be like us. You’ve got to know how to create an organization which actually gives people the space to be different, because that’s what you’re getting them for. It’s a bit like an acquisition where you understand the commercial reality of it, you buy something because of its commercial differentiation and then you bring it in, and you try to squish it into something that degrades that commercial benefit. It’s the same with people, we’ve got to bring people in, you’ve got to let them fly and you’ve got to be comfortable, perhaps being a little bit more uncomfortable than you were before. RITHOLTZ: All the academic studies say if you want to avoid group thinking, if you want better decisions, the more diverse the group the more likely you are to — to reach a better decision. So even that discomfort, there’s some academic research that supports it right? GREW: Absolutely, over and over again you see the academic research and yet, it think there’s an arrogance that we’ve had in our industry a little bit, which has been that great people will come to us. And then we suddenly woke up a little while ago, especially as tech became so incredibly important to all of us, that there were other options for these very smart people. That they didn’t have to come and work at hedge funds, or maybe they weren’t interested in finance, what? How could that possibly, what, how could that be Barry? You and I — RITHOLTZ: Shocking. GREW: Shocking right? RITHOLTZ: I’ll let you in on a little secret. I’m a recovering attorney myself, so I — I get it. GREW: Right? So, it was attorney’s anonymous where you go to, anyway that aside. The so — so we suddenly found ourselves believing that we are great, therefore great people will come. RITHOLTZ: Right. GREW: And actually, not so much. The — the — that — those new generations have many more choices on how to deploy that expertise and actually, they look at us and they say why would I come and work for an organization where you don’t look like me, you don’t feel like me, you don’t understand me, and you’ll make me do stuff I don’t want to do. And by the way I’ve watched billions and I’m – I’m this is the difficult part of the podcast, I just made a funny face, but the point being, we have to do, and we’ve had to do a much better job I think in — in joining up the dots for that brilliant talent that’s coming through. About what we do and why we’re valuable and why it matters that we do what we do and why they are important part of ensuring financial security for millions of people who have worked very, very hard their whole lives and deserve a high-quality return on their pension. RITHOLTZ: So, I’ve always imagined the competition for the best talent is between financial companies. What you’re really saying is finance is an entity collectively has to compete against other — GREW: Absolutely. RITHOLTZ: Fields and institutions. GREW: Every day of the week. Every day of the week and maybe it’s startups, maybe that piece or maybe its Tesla or maybe it’s Facebook or maybe it’s Google, maybe it’s any number of these other spaces that are tech enabled and where their doing this their — their PR — their PR is better, has been smarter than ours and you know that piece where we use — where people skate board in the office bit, you know and I think we’ve had to be a little bit smarter and a little less scathing and a little more humble to ensure that we really are the employer or the industry or version of that choice for the best and brightest. And that includes people who are different, and they look at financial services and they don’t see difference. (BREAK) RITHOLTZ: So let me dredge up a quote of yours. GREW: Uh-oh. RITHOLTZ: That I thought was quite fascinating. You told somebody recently and I believe it was after you were named incoming CEO, “I’ve never been in the majority, whether because I was a woman, and or someone who proudly identifies as part of the LGBTQ community and that can create challenges and means that prejudice has been in a reality for me at different points in my career.” How does that affect how you run a company, how you engage in recruitment and how you think about diversity and inclusion? GREW: I think it’s given me insight. I think when you live it, when it’s your lived experience, you know it and you feel it. I think also I am now in a position and have been, I guess, for the last few years of being proof positive that people who are different can — can be in senior positions and can now run companies. I think that the prejudice for me, just kind of made me more punchy and made me more determined to succeed. So I think it makes me better at understanding what it feels like when you don’t belong. When you’re on the outside of conversation. When the culture of an organization genuinely isn’t inclusive. And that it’s not about checking boxes, it’s about investing in your culture and your organization in a way that’s very, very authentic. I — I’m lucky in many ways, I never struggled with the I shouldn’t be this, this isn’t what society wants, I’m never going to succeed. I don’t know what happened, but that bypassed me. Luckily. And so I’ve always been the way I really am today and that has been extraordinarily good for me in large part, but it’s not been without issue. I just think that I’ve overcome those issues which makes them something that I’m alive for other people. That in my organization and beyond, those struggles are still real. RITHOLTZ: Huh, really, really quite fascinating. Let’s jump to our favorite questions that we ask all of our guests, starting with what have you been entertaining yourself with, what are you listening to or watching or streaming? GREW: So, what I — I — Guilty — Guilty, what I’m watching. I have — I love Ted Lasso. RITHOLTZ: What’s not to love, it’s a delightful show. GREW: It’s a brilliant show and I think that it — it seems to, it’s the feel-good thing we kind of all need at t the moment, it feels to me as well. So, Ted Lasso — RITHOLTZ: I don’t even think that’s a guilty pleasure, the acting is great, the writing is so sharp. GREW: It’s fabulous. So sharp. RITHOLTZ: And people who like it are embarrassed, and go I like Ted Lasso. Why shouldn’t you like it, it’s fantastic. GREW: I find myself quoting Ted Lasso. What — perhaps not Ted Lasso himself but there are definitely points where I may be channeling some of the other characters. Definitely. Podcasts, I — I — well, obviously it would be wrong, Barry for me to not say you. RITHOLTZ: Stop. GREW: Stop — stop. But — but I — I do find — some of the series very useful. I find some of the Goldman stuff very useful. RITHOLTZ: Yeah. GREW: But I also find when I dip into, you know, Talk Easy, or I’ll dip into Dark Shepherd from time to time because it’s really interesting, hearing some of that sort of outside (inaudible). You’re finding yourself with somebody different, asking people like us different questions. RITHOLTZ: Really intriguing. Tell us about your mentors who helped shape your career. GREW: Goodness. This isn’t an exception speech. But I’ve been super lucky through every part from — from my university days through here’s — here’s something I’ll admit to. There is not one company that I have worked for or regulator that I worked for where I’m not still in touch with, my old bosses. And that is because they took the time to work at who I was and then they put me to work. And I will forever be grateful for that willingness to step back, not take a box, but invest in me as an individual and then work at what I was good at and then make it better. And so, there’s not one person through any part, you know, but I would say one of the most transformational mentors or allies or sponsors or whatever, is Luke. I have had enormous benefit from having his confidence and he has pushed me like no one else. RITHOLTZ: Huh. Really — really quite intriguing. I very much enjoyed my conversation with him also, fascinating person. GREW: He is, he’s — RITHOLTZ: Really fascinating. GREW: He’s everything and more. RITHOLTZ: Huh. Let’s talk about some of your favorite books and what you’re reading lately. GREW: So, living in Japan, gives you a bit of an insight on many things so, any Japanese author, um, Murakami, anytime Murakami puts anything out I read it then I read it again. RITHOLTZ: I’m assuming you’re reading the translated version in English not in the original. GREW: You know, I wish I was that smart. I tell you something actually about it, really good point. The translators of these books, aren’t they gifted? RITHOLTZ: Really. GREW: I mean, because it’s not just a word – it’s not like put it into Google and see what you get. It’s — RITHOLTZ: Right. GREW: It’s everything and that is fine. That is just an extraordinary capability. So anything in that sort of Murakami space. What’s open on my bedside table right now, is the I can’t tell you how many times I’ve read it. But is Orlando. And — RITHOLTZ: Really. GREW: There is something extraordinary about that transformational through time, through gender, through experience. There’s something that’s really quite fascinating. I’m not saying it’s an easy book to read, I’m just saying it just happens to be the one I reopened a month ago and I’m still going through. RITHOLTZ: Interesting. And now we’re down to our final two questions. What sort of advice would you give to a recent college grad who was thinking about a career in finance. GREW: Do it. I would — I mean — I think if, don’t expect it to be what you think it is. experience it without any form of prejudice in some ways or without any form of expectation. I would also say go for it in a take the opportunities. What finance does which is I had not anticipated, but is why I’m still in it, is it’s fast, it’s intellectually demanding, it has reached beyond its real estate footprint, it has impact, it is topical, it covers geopolitical risk. There isn’t a part of the world or society it doesn’t impact and if you embrace it, on that basis, the opportunities are actually endless. So, be yourself, go for it, don’t think too much about ladders and what your next title is or whatever that stuff is. Just immerse yourself in it and take every opportunity that is given to you. RITHOLTZ: Really interesting advice. And our final question, what do you know about the world of investing and finance and hedge funds for that matter that you wish you knew 25-30 years ago when you were first starting out? GREW: I don’t think I wish I’d known anything. I think that my slightly wide eyed, slightly intrigued, slightly uneducated start point in finance was almost a gift. Because my expectations weren’t there, because I didn’t need to know because I just was hungry to learn. Because I didn’t really think about corporate structure or what my next job was. RITHOLTZ: Right. GREW: And it was freeing, and I look back on my career and I look back on the experiences and I look back on the people, some of whom still work for me. And I — I’m not sure I’d change that. And so I’m okay with where I was. RITHOLTZ: Quite fascinating. Robyn, thank you for being so generous with your time. This has been absolutely intriguing. We have been speaking with Robyn Grew. She is the incoming Chief Executive Officer at Man Group. If you enjoyed this conversation, well, be sure and check out any of the other 500 or so we’ve done over the past eight years. You can find those at Spotify, iTunes, YouTube or wherever you find your favorite Podcast. Be sure and sign up for our daily reads at Ritholtz.com. Follow me on Twitter @ritholtz. Follow all of the fine family of Bloomberg podcasts at Podcasts. I would be remiss if I did not thank the crack team that helps with these conversations together each week. Bob Bragg is my audio engineer, Atika Valbrun is my project manager, Paris Wald is our Producer, Sean Russo is my head of research. I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Robyn Grew appeared first on The Big Picture......»»

The pandemic is over, but return to office mandates have largely failed. Companies are planning for the new future. When many companies were trying to get rid of their office space to save money during the pandemic, the architecture and design firm NBBJ was doing the opposite. It took over the former offices of the clothing company Eileen Fisher in the Flatiron district of New York City and started ripping out walls and creating a 28,000 square foot “living lab”—a space where the company could test what type of design and layout works best for hybrid work. The idea wasn’t to force NBBJ employees into the office five days a week, but instead to create a place for hybrid work where people would actually want to come, despite the long commutes typical in the New York area. NBBJ could then take what worked and use that as the basis for designing offices for their clients also looking towards the hybrid future. [time-brightcove not-tgx=”true”] “We’re in the early stages of a deep recognition that the workplace needs to be different,” says Steve McConnell, NBBJ’s managing partner and board chair, who spearheaded the redesign. The Flatiron space, which opened in November, feels like a mix between an office and a social club, with conference rooms giving off living room vibes, thanks to their homey bookshelves and couches; a lab where employees can look at tiny models of buildings the company is designing; green carpets throughout that feel like forest meadows; and rotating art projects on screens stretching towards the high ceilings. It’s nearly twice as big as the company’s former office space, and with its natural light and dark green tones, seems to communicate more “cool Airbnb” than “office.” Sean Airhart / NBBJNBBJ’s new office have a variety of seating arrangements. The commercial real estate market is still in the dumps, with office occupancy at around 50% of pre-pandemic levels in the 10 largest U.S. cities, according to Kastle Systems, which tracks unique card swipes in office buildings. Many companies are now battling workers over whether return to office will be a requirement and how many days will be mandatory, including Amazon, the Walt Disney Company, and the New York Times. But now that the Biden Administration has declared the pandemic officially over, some companies are ready to declare hybrid work the new reality and are redesigning their offices accordingly—taking advantage of low prices and desperate landlords and creating spaces in which employees might actually want to work. “We’re never going to force people back into the office, but we feel a sense of responsibility to build an office space that is delightful,” says Holly Barbacovi, the head of human resources at the video game maker Bungie, which is nearly finished building its new office space in Bellevue, Wash. During the pandemic, Bungie decided to allow for fully remote work; today, the company is expanding its square footage from 80,000 to 200,000. Such hybrid workplaces appear to be the future of corporate offices. Though 42% of companies had a full-time in-office policy in the second quarter of 2023, that’s down from 49% in the first quarter of the year, according to the Flex Index, a database of surveys and publicly available information that tracks the return-to-office policies of more than 4,000 companies. Further, around 30% of companies now allow for hybrid work, up from 20% in the first quarter, the report finds. Sean Airhart / NBBJRotating art exhibits pop up in NBBJ’s new offices. “I think a lot of employers are reenvisioning their offices to be better shared offices, less places you go into to do heads-down work,” says Robert Sadow, the CEO and co-founder of Scoop Technologies, which puts out the Flex Index. This is happening more in certain companies than others, of course—around 63% of companies with fewer than 500 employees are fully flexible, according to the Flex Index, compared to just 13% of companies with more than 50,000 employees. Some companies are completely rethinking the idea of a permanent office, says Prithwiraj Choudhury, a professor at Harvard Business School who has been studying remote work for years. Some startups are deciding that the purpose of an office is really to socialize, and they’re allowing employees to work from anywhere, and then picking a place for people to meet occasionally throughout the year to get to know each other. A company called Zapier, for example, has company retreats where it invites all workers to spend a few days in-person with their colleagues; the company pays for flights, accommodation, and food, and organizes ways for people in different departments to get to know each other. Gitlab, which Choudhury says is one of the world’s largest remote companies, with 1,300 employees, allows employees to be fully remote but has at least one offsite meetup around the world each year. Amina Moreau—Radious.pro.Women gather at a remote workspace in a rented home New companies are forming to meet the needs of businesses looking for alternative workplaces; for example, there’s Radious, an Airbnb-type app which allows people to rent out extra space in their homes to remote workers, and Project Pair, which helps Bay Area companies share hybrid office space. “There’s a whole new generation of companies that are organizing work in a very different way,” Choudhury says. How to Fix Work Even before the pandemic, many companies accepted that the office was broken. The open floor-plan offices that seemed like such a good idea a few years ago had become noisy places where workers were having trouble focusing. In 2019, people spent an average of 47 seconds on a given screen before switching to another, down from 2.5 minutes in 2004, according to research from Gloria Mark, an informatics professor at the University of California, Irvine. Some companies were even moving to four-day work weeks to try and give employees more focus time. Read more: The COVID-19 Pandemic Upended the Office. It’s Time to Radically Rethink How We Work Before the pandemic, one architect, David Dewane, came up with the idea for a utopian office where employees had room to socialize but also do the kind of deep work needed for many knowledge jobs—he called it the Eudaimonia machine, for the Greek word that denotes a state of flourishing and prosperity. His design had a gallery where workers would see material that would inspire them and remind them of the purpose of their work; a salon where they could socialize and have conversations, a library where they could do research; an office where they could do expenses and “light work;” and then an isolated room for deep work where they could focus. Today, Dewane is working with a design firm called Geniant to help companies figure out the best office space for their mix of workers. Amina Moreau—Radious.pro.Workers collaborate at a rented workspace in a home “The old workplace is performative, what we are trying to get to now is places where your space is enabling you to do your jobs at a higher level,” he says. What NBBJ has found so far is that the new office needs to be a place where people can gather, socialize, and be inspired. Not a place where they come to sit under fluorescent lights in conference rooms and long for home. Despite the NBBJ office’s large size, there still aren’t enough individual desks for every employee; designers assume that people will want to also sit at long tables where they can spread out papers, or at couches or comfy chairs. “If you’re coming back to the office, you’re not coming back to sit at a desk—you’re coming back to collaborate. So we worked out these areas and zones where people could really come in and collectively work together,” says Suzanne Carlson, senior corporate market director at NBBJ. Carlson’s preferred space: the Living Room, which has a dark green carpet, a comfy gray couch with blankets, a coffee table, and a big TV for Zoom calls. “If you work with leaders in a conference room and then do a wrap up in the living room, the intimacy and quality of sharing and openness shifts,” she says. “Space matters.” NBBJLinkedIn headquarters. NBBJLinkedIn headquarters. Zach Russell, Bungie’s senior director of employee experience, says he wants to make the office a place “where people want to come versus where they have to come.” Bungie hopes its new offices will help people have the type of accidental “collisions” that help companies be more innovative and also lead to more workplace satisfaction. Work stations are on the outside of the office, and when people get a cup of coffee or go to the bathroom, they have to move to the center of the office, where they run into other people. There are also some wide-open spaces with couches and seating areas where people can hold Zoom calls or play video games—and throughout, there are life-sized figures from some of the company’s most popular games. The company recently held an event at its new office space, and it proved so popular that some remote workers mentioned the idea of relocating to be closer to the beating heartbeat of the company, says Barbacovi. Now, Bungie has launched a new policy allowing workers a relocation budget should they want to relocate to Bellevue now or in the future. Flexibility is the most important piece Of course, many companies haven’t changed their offices at all. They’re still deciding exactly what their working arrangements will look like and if they can get people to come back into the office. The risk of a recession is also making some companies hesitant to spend money on new digs. But the pandemic has changed the way office design will happen, when it does happen, going forward. “With the complete disruption to society and significance of the pandemic—it’s well understood that these kinds of cataclysmic events accelerate change,” says McConnell, with NBBJ. Sean Airhart—NBBJMitsubishi’s office. Joshua Harding—NBBJMitsubishi’s office. Before the pandemic, for example, NBBJ didn’t spend too much time talking about whether companies were hybrid when they were designing their offices. Now, the firm always starts by asking companies what their real estate strategy is and if they want to have a physical space in the future, and what their workforce strategy is and whether people will be hybrid. Read More: Why Return to Office Policies Spell Trouble for Working Moms Though companies have different ideas about what a hybrid workspace looks like, there’s one thing that ties many of these spaces together: they are flexible, changeable, and may look different in a year or two. The shoe company Brooks started looking for commercial office space in 2020—Tom Ross, the firm’s vice president of finance, jokes that he was the only person in Seattle looking for office space at the time. The company decided it didn’t want to just have people come in now and again, but that it wanted an office where people could collaborate frequently in person. But Brooks learned from the pandemic that things could unexpectedly change again, so the company is working with NBBJ to make the office as flexible as possible. And indeed, furniture, if designed correctly, can be moved easily, as can walls, says Ross. “We designed it in a way that we can make relatively quick and inexpensive changes if we need to so that we’re not bound to a specific design,” he says. Sean Airhart / NBBJThe Living Room at NBBJ’s new offices is a favorite among employees. NBBJ’s new offices—the living lab—are flexible too. Walls can be moved and furniture taken apart so a room becomes a gathering space or a seating area easily. The desks and chairs are the first New York office iteration of the Vitra Comma flexible furniture system, designed in 2022 to allow companies to easily assemble and disassemble desks and shelves like scaffolding. There are art installations that change over time, and projects that the company is working on are laid out in the open, in a way that welcomes feedback from colleagues. “We want this to be hackable, flexible, if people come back in two months it will look different,” says John Gunn, corporate practice lead with NBBJ. There’s one thing that companies like NBBJ can’t change when they redesign new offices: housing prices, the factor that has driven so many workers to live far away and not want to weather long commutes to the office. But Gunn and NBBJ say they hope that they can design offices that will make people want to come in, even if they have long commutes. Gunn, for example, lives in Beacon, which is a two-hour commute, one way, from the new offices. He’s in just about every day......»»

The couple even received an anonymous package in the mail with old photos and real estate listings of their house that date back to the 1930s. The exterior of their 1907 Dutch Colonial home.Wilfred House A New Jersey couple traded their rental apartment for a 1907 Dutch Colonial house that they bought for $435,000. Maggie Rogers and Joe Gesualdo documented their lives and the five-year renovation on social media. Now, they're planning to relocate to a different state and sell the 116-year-old residence for $649,000. Maggie Rogers and Joe Gesualdo had been renting a 435-square-foot studio apartment in Jersey City for four years when they decided they wanted more space.Maggie Rogers and Joe Gesualdo sitting on the front steps of their home on the day they closed the deal.Wilfred HouseThe couple initially planned to continue renting, so they started looking at one-bedroom and one-and-a-half-bedroom apartments in the area."As we looked at different apartments, we realized how expensive they were. In many cases, they were the same price as having a mortgage if we were to buy a house," Rogers told Insider. "So we started looking to buy a house instead."Both of them were working in Manhattan back then and their priority was to have an easy commute to their offices that took less than 40 minutes, Rogers said. Her husband is a software engineer and she works in healthcare."We basically took a map and started drawing little circles around the different train stations and looking at the towns with direct trains," she added. "That's how we found Bloomfield — the town we live in now. And we liked it because it has a 30-minute direct train to Manhattan as well as Hoboken."After being outbid on the first house they made an offer on, the couple chanced upon a 1907 Dutch Colonial home in the same area and fell in love with the property at first sight.The couple's 1907 Dutch Colonial home with a mint green facade.Wilfred House"I was in our apartment in Jersey City, scrolling Zillow, when we saw our current home come up," Rogers said. "It was just an outside photo of the house and looked like a photo from someone's phone — it wasn't even a professional photo." Right then her phone rang: It turns out that Gesualdo, who was on his commute home from work, had spotted the listing at the same moment she did and was calling to tell her about it."It was a moment of fate," Rogers said.Gesualdo went on his own to view the house with their agent first, she said. The couple agreed that if he liked it, then Rogers would take the train from work to the house to see what the commute was like."It was such an easy commute. I get off the train, I walk two blocks down the street and I see the house. We both instantly decided that this was it," she added.As lovers of old homes, the two of them liked that their house came with original features including the staircase and wooden floorboards.The staircase was one of the main features that drew the couple to the home.Wilfred House"We have this very ornate staircase with lots of spindles," Rogers said. "And on our first floor, we have these inlay wood floors with detailed borders."The floors in each room have a different design and it was unlike any other house that they've seen before, she said."The house is a Dutch Colonial Revival and I've had a few people from the Netherlands ask me what makes it Dutch," Rogers said. "Honestly, the only thing that makes it Dutch is that the style of home was built by Dutch settlers in New Jersey and New York."This style of house has a very distinct gambrel roof that resembles that of a barn, with interiors set like an American Foursquare, she said."There are no long hallways or anything like that. It's just four rooms. We had toured bigger houses, but this house feels larger than it is because of the layout," she added.While the house was in pretty good condition, the interiors were a mix of styles from renovations that were completed at different times by different owners.The living room.Wilfred House"I think in the past 20 years alone, we are the fifth family that has owned the house," Rogers said. "You could tell different renovations that people did in different time periods, so it was a mishmash kind of style."The couple already knew that they wanted to renovate the house when they moved in, and this gave them an opportunity to restore some of the features that the previous occupants had torn out or boarded over."We wanted to be able to make the house feel a bit more like ours," Rogers added.The couple bought the house in July 2017 for $435,000 and moved in in September. They started out hiring contractors, but ended up doing the bulk of the renovation themselves.A selfie of the couple during renovation.Wilfred HouseThey weren't intending to DIY anything at first, but changed their mind after having bad experiences with their contractors."We hired people to refinish the treads on the stairs as well as the wood floors on the second-floor hallway," Rogers said. "And it was bad — I had to have the owner of the company come back to fix it."The floors didn't look like they had any finish, and the contractors they hired ended up bumping into all of the walls and the built-in closet with the sander."They had taken chunks out of it with the sander," she added. "It was bad."The contractors also declined to restore the original wooden floorboards that the couple found beneath the blue carpeting in their library.A collage showing the original wooden floorboards that were hidden beneath a blue carpet in their library.Wilfred House"We had ripped up the wall-to-wall carpet in the library and underneath were wooden floors that looked horrific — you could tell why someone covered them with carpet," Rogers said.The wooden floorboards were covered in paint, glue, and even nails, but the couple wanted to fix as much as they could."We had the floor finishers take a look at that as well, but they declined to do it because they said the floorboards were too thin," she said.After the whole fiasco with the hallway floors, the couple decided to take matters into their own hands and rented a floor sander from Home Depot.The library room floor was the couple's first-ever DIY project.Wilfred House"We figured that the floors couldn't get worse than the condition they were already in," Rogers added. "If it doesn't work out we'll replace the floors or put carpet down."The floors turned out quite well for a first-time project, and that's when the couple realized they wanted to continue doing projects on their own.Although it's been five years since they moved in, Roger says that renovation is an ongoing process.The library.Wilfred House"I would say consistently for the past five and a half years, there has been at least one project in the house that we have been working on," Rogers said.Since they both had full-time jobs, they were only able to chip away at their projects in the evenings or on the weekends."We've completed all of the major projects that we wanted to do but there's an endless list that could probably last us the next 20 years if we wanted to do it," Rogers said.The couple's kitchen nook.Wilfred HouseThe only real constraints of a home renovation were time and money, Rogers said."I think a renovation ends when the person who owns the house decides it ends," she said. "It could last forever if you keep changing and updating things, or it could end when you feel good about how it is right now. "Prior to this home, the two of them did not have any experience with such projects."We were in a small apartment that we didn't own before. We didn't even paint the walls. This is the first time we owned anything and could make modifications to it," Rogers said.The couple has also built a 101,000-strong following on Instagram by sharing snippets of their space and their renovation online.The couple only just completed updating their kitchen a few days ago.Wilfred HouseBut they didn't set out to be content creators when they first started documenting their experience, Rogers said."Our friends and family were always asking us about what we were working on and they wanted to see photos of what we had done, so we thought the easiest way to let everyone know would be to post photos online," Rogers said of their Instagram account.She didn't realize that there was an entire community of Instagram users who have accounts dedicated to their homes — and specifically, restoring old houses."I started becoming friends with some of those people online and the account just kept growing," she added. "It's definitely shocking when I realize how many people follow us and our house because we're not influencers. We have full-time jobs completely unrelated to home and DIY."One of the most exciting parts about living in an old home is tracing the property's history, Rogers said.The dining room.Wilfred HouseThe couple was new to this, but Rogers chanced upon an old Harvard yearbook that helped them uncover the identity of the original owner of their home."According to the yearbook, a man named Wilfred Newsom Stull was listed as living here in 1907, which is the year that our house was built. So we figured that he must be the first person that owned the house," Rogers said.The two of them ended up naming their Instagram handle — Wilfred House — after him, she added. But after their initial breakthrough, their research ground to a halt as there wasn't much information online.The couple received an anonymous package in the mail containing old real estate photos and listings of their house from the '30s, '40s, and '50s.Wilfred House"We happened to find through Google another article stating that Wilfred's father John lived here and died in our house. It was just a brief little blurb, and that was it. That was all we had," Rogers said.However, more than a year after they moved in, the couple received an anonymous package in the mail containing old photos and real estate listings of their house dating back to as early as the 1930s, Rogers said.It was interesting to see that the documents captured features that are still in the house today, including the parquet floors, she added.In a twist of events, the two of them got to know the son of one of the former owners who lived here in the '70s.A 1971 photo of the couple's house that was provided by the son of the former owner, who's also pictured as a child standing on the front porch.Greg and Wilfred House"One day we were sitting on our front porch when a car pulls up," Rogers said. "This guy gets out and says that he grew up in this house and that his dad owned the place for 30 years."While the couple was initially skeptical, they soon warmed up to the stranger when he was able to describe the interiors of their home and all the renovations that his father had done."He happened to be a major history buff, and basically as a gift to his father, he was doing all this research on the house's history," Rogers said. "And he started sending us all the things he found about our house and the owners, including Wilfred and Wilfred's family who lived here."But the coolest thing that they received were old photographs taken from inside their home, Rogers said.An enhanced black and white image from around 1911 of Wilfred Stull's daughter, Helen, looking at a book at the dining room table.Wilfred House"The photos that we have, I think they would be considered quite rare because they're mostly candid photos — people laughing on the front porch or a baby wearing a silly hat," Rogers said. "That was really cool because you can see what rooms the photos were taken in."The couple believes that Stull was the one who took the photos, thanks to some old Kodak boxes and chemical bottles that they found underneath the floorboards in one of the rooms."Wilfred was a chemist and so we have a theory that he used the third-floor closet as a dark room to develop the photos that we now have," Rogers said. "He had to have been the one taking the photos of his family because they're so candid and they're of daily life."Most of the furniture in the house are secondhand items from thrift stores, Facebook marketplace, or picked up during their neighborhood's "freecycle night."Rogers standing on their front porch with a thrifted cabinet and a rug from their neighborhood's freecycle night.Wilfred House"Buying secondhand and buying locally has always been a thing that we've done because it reduces material waste," Rogers said. "Old things are made differently — they're often much better quality than mass-produced items and a lot more affordable."The area that the couple lives in also has a practice known as "freecycling," where people put usable things that they no longer want out on their curb for others to take, she said."We very strategically take our dog out for a walk on the freecycle night and that's how we've gotten a lot of things in our house," she added. "Some of them we fixed up and others were perfect the way they were."After over five years of calling the place home, the couple is putting the four-bedroom property on the market for $649,000.One of the bedrooms in the house.Wilfred HouseOne of the main reasons why the couple bought the house was because of how convenient it was for them to commute to work, Rogers said. But after the pandemic, everything changed."Our jobs went full-time remote, and all of a sudden we weren't in New York City anymore, ever," Rogers said. "And we started thinking about if there was somewhere else that we could live."Even though they live in an area with lots of conveniences nearby, including the grocery store, coffee shops, and even bars, it wasn't the same as being in the city, she said."It was a really big shift for us to just be in our home and in the suburbs 24/7," Rogers said. "So we made the decision that we think we could have a better quality of life somewhere else and we've decided to sell the house."The property will be coming unfurnished, although they'll be holding a sale to sell off the furniture items that they can't bring with them to their next place, she added.And while the couple is parting ways with the house, they're not letting go of the Wilfred House Instagram handle.One of the bathrooms in the house.Wilfred House"We picked the handle because we thought it would be a permanent thing, because we planned to live here forever. We never imagined we would be selling the house," Rogers said.Although their account started out about the home, it has since grown to be a space where the couple shares snippets of their daily life as well. "I realized over time that people don't just follow our account for our house, they also follow it for us," Rogers said."Obviously an aspect of our Instagram is our house, but when you look at it, so much of our house is us too. We are in it, our stuff is in it. And when a new family lives here, it's going to look like a different home," she added.Since the property is not located in the historic district, nor does it have an official name, there wouldn't be an issue for them to keep the Instagram handle.The half-bathroom.Wilfred House"Technically, it probably would have been called the Stull House, which is Wilfred's last name," Rogers said.The couple is planning to move into an apartment in Raleigh, North Carolina, while they figure out their next steps."We plan to keep the account to document the moving process and our next old house — whenever that happens," she added.Read the original article on Business Insider.....»»

The couple even received an anonymous package in the mail with old photos and real estate listings of their house that date back to the 1930s. The exterior of their 1907 Dutch Colonial home.Wilfred House A New Jersey couple traded their rental apartment for a 1907 Dutch Colonial house that they bought for $435,000. Maggie Rogers and Joe Gesualdo documented their lives and the five-year renovation on social media. Now, they're planning to relocate to a different state and sell the 116-year-old residence for $649,000. Maggie Rogers and Joe Gesualdo had been renting a 435-square-foot studio apartment in Jersey City for four years when they decided they wanted more space.Maggie Rogers and Joe Gesualdo sitting on the front steps of their home on the day they closed the deal.Wilfred HouseThe couple initially planned to continue renting, so they started looking at one-bedroom and one-and-a-half-bedroom apartments in the area."As we looked at different apartments, we realized how expensive they were. In many cases, they were the same price as having a mortgage if we were to buy a house," Rogers told Insider. "So we started looking to buy a house instead."Both of them were working in Manhattan back then and their priority was to have an easy commute to their offices that took less than 40 minutes, Rogers said. Her husband is a software engineer and she works in healthcare."We basically took a map and started drawing little circles around the different train stations and looking at the towns with direct trains," she added. "That's how we found Bloomfield — the town we live in now. And we liked it because it has a 30-minute direct train to Manhattan as well as Hoboken."After being outbid on the first house they made an offer on, the couple chanced upon a 1907 Dutch Colonial home in the same area and fell in love with the property at first sight.The couple's 1907 Dutch Colonial home with a mint green facade.Wilfred House"I was in our apartment in Jersey City, scrolling Zillow, when we saw our current home come up," Rogers said. "It was just an outside photo of the house and looked like a photo from someone's phone — it wasn't even a professional photo." Right then her phone rang: It turns out that Gesualdo, who was on his commute home from work, had spotted the listing at the same moment she did and was calling to tell her about it."It was a moment of fate," Rogers said.Gesualdo went on his own to view the house with their agent first, she said. The couple agreed that if he liked it, then Rogers would take the train from work to the house to see what the commute was like."It was such an easy commute. I get off the train, I walk two blocks down the street and I see the house. We both instantly decided that this was it," she added.As lovers of old homes, the two of them liked that their house came with original features including the staircase and wooden floorboards.The staircase was one of the main features that drew the couple to the home.Wilfred House"We have this very ornate staircase with lots of spindles," Rogers said. "And on our first floor, we have these inlay wood floors with detailed borders."The floors in each room have a different design and it was unlike any other house that they've seen before, she said."The house is a Dutch Colonial Revival and I've had a few people from the Netherlands ask me what makes it Dutch," Rogers said. "Honestly, the only thing that makes it Dutch is that the style of home was built by Dutch settlers in New Jersey and New York."This style of house has a very distinct gambrel roof that resembles that of a barn, with interiors set like an American Foursquare, she said."There are no long hallways or anything like that. It's just four rooms. We had toured bigger houses, but this house feels larger than it is because of the layout," she added.While the house was in pretty good condition, the interiors were a mix of styles from renovations that were completed at different times by different owners.The living room.Wilfred House"I think in the past 20 years alone, we are the fifth family that has owned the house," Rogers said. "You could tell different renovations that people did in different time periods, so it was a mishmash kind of style."The couple already knew that they wanted to renovate the house when they moved in, and this gave them an opportunity to restore some of the features that the previous occupants had torn out or boarded over."We wanted to be able to make the house feel a bit more like ours," Rogers added.The couple bought the house in July 2017 for $435,000 and moved in in September. They started out hiring contractors, but ended up doing the bulk of the renovation themselves.A selfie of the couple during renovation.Wilfred HouseThey weren't intending to DIY anything at first, but changed their mind after having bad experiences with their contractors."We hired people to refinish the treads on the stairs as well as the wood floors on the second-floor hallway," Rogers said. "And it was bad — I had to have the owner of the company come back to fix it."The floors didn't look like they had any finish, and the contractors they hired ended up bumping into all of the walls and the built-in closet with the sander."They had taken chunks out of it with the sander," she added. "It was bad."The contractors also declined to restore the original wooden floorboards that the couple found beneath the blue carpeting in their library.A collage showing the original wooden floorboards that were hidden beneath a blue carpet in their library.Wilfred House"We had ripped up the wall-to-wall carpet in the library and underneath were wooden floors that looked horrific — you could tell why someone covered them with carpet," Rogers said.The wooden floorboards were covered in paint, glue, and even nails, but the couple wanted to fix as much as they could."We had the floor finishers take a look at that as well, but they declined to do it because they said the floorboards were too thin," she said.After the whole fiasco with the hallway floors, the couple decided to take matters into their own hands and rented a floor sander from Home Depot.The library room floor was the couple's first-ever DIY project.Wilfred House"We figured that the floors couldn't get worse than the condition they were already in," Rogers added. "If it doesn't work out we'll replace the floors or put carpet down."The floors turned out quite well for a first-time project, and that's when the couple realized they wanted to continue doing projects on their own.Although it's been five years since they moved in, Roger says that renovation is an ongoing process.The library.Wilfred House"I would say consistently for the past five and a half years, there has been at least one project in the house that we have been working on," Rogers said.Since they both had full-time jobs, they were only able to chip away at their projects in the evenings or on the weekends."We've completed all of the major projects that we wanted to do but there's an endless list that could probably last us the next 20 years if we wanted to do it," Rogers said.The couple's kitchen nook.Wilfred HouseThe only real constraints of a home renovation were time and money, Rogers said."I think a renovation ends when the person who owns the house decides it ends," she said. "It could last forever if you keep changing and updating things, or it could end when you feel good about how it is right now. "Prior to this home, the two of them did not have any experience with such projects."We were in a small apartment that we didn't own before. We didn't even paint the walls. This is the first time we owned anything and could make modifications to it," Rogers said.The couple has also built a 101,000-strong following on Instagram by sharing snippets of their space and their renovation online.The couple only just completed updating their kitchen a few days ago.Wilfred HouseBut they didn't set out to be content creators when they first started documenting their experience, Rogers said."Our friends and family were always asking us about what we were working on and they wanted to see photos of what we had done, so we thought the easiest way to let everyone know would be to post photos online," Rogers said of their Instagram account.She didn't realize that there was an entire community of Instagram users who have accounts dedicated to their homes — and specifically, restoring old houses."I started becoming friends with some of those people online and the account just kept growing," she added. "It's definitely shocking when I realize how many people follow us and our house because we're not influencers. We have full-time jobs completely unrelated to home and DIY."One of the most exciting parts about living in an old home is tracing the property's history, Rogers said.The dining room.Wilfred HouseThe couple was new to this, but Rogers chanced upon an old Harvard yearbook that helped them uncover the identity of the original owner of their home."According to the yearbook, a man named Wilfred Newsom Stull was listed as living here in 1907, which is the year that our house was built. So we figured that he must be the first person that owned the house," Rogers said.The two of them ended up naming their Instagram handle — Wilfred House — after him, she added. But after their initial breakthrough, their research ground to a halt as there wasn't much information online.The couple received an anonymous package in the mail containing old real estate photos and listings of their house from the '30s, '40s, and '50s.Wilfred House"We happened to find through Google another article stating that Wilfred's father John lived here and died in our house. It was just a brief little blurb, and that was it. That was all we had," Rogers said.However, more than a year after they moved in, the couple received an anonymous package in the mail containing old photos and real estate listings of their house dating back to as early as the 1930s, Rogers said.It was interesting to see that the documents captured features that are still in the house today, including the parquet floors, she added.In a twist of events, the two of them got to know the son of one of the former owners who lived here in the '70s.A 1971 photo of the couple's house that was provided by the son of the former owner, who's also pictured as a child standing on the front porch.Greg and Wilfred House"One day we were sitting on our front porch when a car pulls up," Rogers said. "This guy gets out and says that he grew up in this house and that his dad owned the place for 30 years."While the couple was initially skeptical, they soon warmed up to the stranger when he was able to describe the interiors of their home and all the renovations that his father had done."He happened to be a major history buff, and basically as a gift to his father, he was doing all this research on the house's history," Rogers said. "And he started sending us all the things he found about our house and the owners, including Wilfred and Wilfred's family who lived here."But the coolest thing that they received were old photographs taken from inside their home, Rogers said.An enhanced black and white image from around 1911 of Wilfred Stull's daughter, Helen, looking at a book at the dining room table.Wilfred House"The photos that we have, I think they would be considered quite rare because they're mostly candid photos — people laughing on the front porch or a baby wearing a silly hat," Rogers said. "That was really cool because you can see what rooms the photos were taken in."The couple believes that Stull was the one who took the photos, thanks to some old Kodak boxes and chemical bottles that they found underneath the floorboards in one of the rooms."Wilfred was a chemist and so we have a theory that he used the third-floor closet as a dark room to develop the photos that we now have," Rogers said. "He had to have been the one taking the photos of his family because they're so candid and they're of daily life."Most of the furniture in the house are secondhand items from thrift stores, Facebook marketplace, or picked up during their neighborhood's "freecycle night."Rogers standing on their front porch with a thrifted cabinet and a rug from their neighborhood's freecycle night.Wilfred House"Buying secondhand and buying locally has always been a thing that we've done because it reduces material waste," Rogers said. "Old things are made differently — they're often much better quality than mass-produced items and a lot more affordable."The area that the couple lives in also has a practice known as "freecycling," where people put usable things that they no longer want out on their curb for others to take, she said."We very strategically take our dog out for a walk on the freecycle night and that's how we've gotten a lot of things in our house," she added. "Some of them we fixed up and others were perfect the way they were."After over five years of calling the place home, the couple is putting the four-bedroom property on the market for $649,000.One of the bedrooms in the house.Wilfred HouseOne of the main reasons why the couple bought the house was because of how convenient it was for them to commute to work, Rogers said. But after the pandemic, everything changed."Our jobs went full-time remote, and all of a sudden we weren't in New York City anymore, ever," Rogers said. "And we started thinking about if there was somewhere else that we could live."Even though they live in an area with lots of conveniences nearby, including the grocery store, coffee shops, and even bars, it wasn't the same as being in the city, she said."It was a really big shift for us to just be in our home and in the suburbs 24/7," Rogers said. "So we made the decision that we think we could have a better quality of life somewhere else and we've decided to sell the house."The property will be coming unfurnished, although they'll be holding a sale to sell off the furniture items that they can't bring with them to their next place, she added.And while the couple is parting ways with the house, they're not letting go of the Wilfred House Instagram handle.One of the bathrooms in the house.Wilfred House"We picked the handle because we thought it would be a permanent thing, because we planned to live here forever. We never imagined we would be selling the house," Rogers said.Although their account started out about the home, it has since grown to be a space where the couple shares snippets of their daily life as well. "I realized over time that people don't just follow our account for our house, they also follow it for us," Rogers said."Obviously an aspect of our Instagram is our house, but when you look at it, so much of our house is us too. We are in it, our stuff is in it. And when a new family lives here, it's going to look like a different home," she added.Since the property is not located in the historic district, nor does it have an official name, there wouldn't be an issue for them to keep the Instagram handle.The half-bathroom.Wilfred House"Technically, it probably would have been called the Stull House, which is Wilfred's last name," Rogers said.The couple is planning to move into an apartment in Raleigh, North Carolina, while they figure out their next steps."We plan to keep the account to document the moving process and our next old house — whenever that happens," she added.Read the original article on Business Insider.....»»

Futures Rise Amid Renewed Hope For Debt Ceiling Breakthrough US stock futures crept higher on Wednesday and traded near the best levels of the session, as investors remained focused on debt ceiling talks while negotiators seek a framework agreement for Joe Biden and Kevin McCarthy to review upon the president’s return from a truncated trip to Asia. Contracts on the S&P 500 were up 0.3% as 7:45am ET a.m. while Nasdaq 100 futures added 0.2%. Europe's Estoxx50 little changed on the day; while Japan's Nikkei 225 closed above the 30,000 for the first time since September 2021 a day after the Topix closed at its highest level in more than three decades. Treasuries are slightly richer across the curve with spreads broadly within 1bp-2bps of Tuesday’s close while the dollar is flat. Oil rebounded from an earlier drop concerns over demand in China and expectations of rising stockpiles in the US. Iron ore continues its week in the green, while gold and bitcoin declines. In premarket trading, Western Alliance Bancorp jumped as much as 9.8% after the regional lender reported growth in deposits this quarter, soothing concerns after it was caught up in the turmoil engulfing the US regional banking sector. Tesla rose as much as 1.7% in premarket trading on Wednesday, as CEO Elon Musk said the electric-car maker will “try a little advertising and see how it goes.” This is a major shift for the company that’s largely avoided traditional marketing to sell its vehicles. Manchester United gained after Bloomberg reported that Sheikh Jassim Bin Hamad J.J. Al-Thani submitted an improved offer for the football club. Here are some other notable premarket movers: Doximity drops as much as 11% in premarket trading on Wednesday, after the health-care software company gave a weaker-than-expected 1Q forecast due to delayed product launches. Analysts note that the outlook puts a lot of pressure on the company to ramp in the second half of the year. Gates Industrial Corp. declined 1.4% postmarket after leading holder Blackstone offered 22.5 million shares via Citigroup, Evercore ISI, Goldman Sachs. Maxeon Solar Technologies dropped 6% postmarket after the solar-panel maker offered 5.1 million shares and leading holder TotalEnergies offered an additional 1.7 million via BofA Securities, Morgan Stanley. Intapp Inc. fell 5.2% postmarket after the software company offered 2 million shares and selling stockholders offered 4.25 million via BofA Securities, Barclays. Container Store tumbled 17% in post-market trading Tuesday after its full- year net sales forecast fell short of the average of analysts’ estimates. Vivid Seats dropped 12% postmarket as selling stockholder Hoya Topco LLC offers 16m Class A shares via Citigroup, Morgan Stanley. A rally that lifted global stocks by almost 9% this year through the end of April reversed this month as the debt-ceiling standoff compounded fears about an economic slowdown and outweighed a better-than-feared corporate earnings season.  “That is leading to the reason why equity markets have stalled over the last couple of weeks because you are not really paid now to make big bets ahead of this event,” Grace Peters, JPMorgan Private Bank’s head of investment strategy, said in an interview with Bloomberg TV. Still, the calm in equity indexes “hides a lot of movement under the surface,” said Marija Veitmane, senior multi-asset strategist for State Street Global Markets.“Our favorite trade is preference for growth stocks over value as we believe that recession is inevitable so earnings are likely to falter, while growth should get some support from falling rates.”  Negotiators are seeking a framework agreement to review upon President Joe Biden’s return from a truncated trip to Asia. Any breakthrough in the talks would give markets cause to rally, dissipating one of the biggest tail risks weighing on sentiment. “Longer term, that would be a dip that we would buy if that were to come to pass,” Peters said. “The market does ultimately I think assume this will get resolved.” In the meantime, Treasury bills maturing after June 1 are under pressure, as costs to insure Treasuries in the credit-default swap market surge. Meanwhile, strategists at Goldman Sachs Group said artificial intelligence offers the biggest potential long-term support for US profit margins, although they warned there’s high uncertainty around AI’s impact. AI can boost net margins by nearly 400 basis points over a decade, strategists led by Ben Snider wrote in a note. European stocks are slightly lower as risk sentiment struggles to gain any real traction with US debt ceiling negotiations making only glacial progress. The Stoxx 600 is down 0.1% with real estate, financial services and retail the worst performing sectors while miners and travel stocks rise. Here are the most notable European movers: Argenx shares rise as much as 5.8% after Bloomberg reported several major drugmakers keen to expand in immunology have been studying the biotech and have it at the top of their wish lists Aegon shares climb as much as 5.6% after the Dutch insurance company’s 1Q capital generation before holdco costs beat consensus expectations, suggesting modest consensus upgrades, Citi says SAP shares rise as much as 1.9% after the software giant projected sales growth to accelerate beyond 2025, a bullish ambition as the firm’s transition to cloud bears fruit, according to analysts Watches of Switzerland shares fall as much as 12%, to the lowest since September 30, after the top seller of Rolex timepieces in the UK said it expects a decline in first-quarter sales Commerzbank declines as much as 7.9%, worst performer on the Stoxx 600 Banks Index, as analysts say an increase in guidance for FY net interest income is not enough, as it only matches consensus Experian shares decline as much as 5.7%, reaching the lowest since March, after the consumer credit reporting company’s organic revenue forecast for the year failed to match expectations British Land declines as much as 5.1% after the landlord’s FY results showed net asset values for the group fell more than expected. Jefferies noted the decline was worse than for rival Land Securities Ubisoft shares sink as much as 11% after the French video-game company’s quarterly bookings and outlook for the current quarter came in well below expectations Euronext shares decline as much as 5.5% as analysts point to limited room for consensus change after the French stock-market operator offered no adjustment to 2023 cost guidance JD Sports drops as much as 5.2% after the sports retailer reported a FY gross profit margin that missed estimates. RBC flagged the gross profit margin being below their expectations Zurich falls as much as 3.6% after the insurer’s presented “relatively solid” quarterly figures, with Jefferies flagging some weakness in its Farmers division and Vontobel notes a miss on Solvency Elsewhere, the greenback remains on the front foot with the Bloomberg Dollar Spot Index rising 0.3% to its highest in over five weeks. Bunds and gilts are on the front foot with German and UK 10-year yields falling by 4bps and 3bps respectively. Earlier in the session, Asian stocks retreated as weaker-than-expected data from China continued to weigh on sentiment concerning the country’s economic growth outlook.  The MSCI Asia Pacific Index fell as much as 0.5%, with AIA Group, Meituan and Ping An Insurance Group the biggest drags. Shares in Hong Kong were the region’s worst performers after disappointing factory output and jobless data yesterday. Key gauges in Japan, Taiwan and South Korea rose.  The Hang Seng Index declined 2.1%, the most in a week, dragged lower by property and technology stocks. Tencent, which ended down 0.6%, saw large fund net outflow before its earnings report came after the market closed. Japanese stocks gained for a fourth day after a better-than-expected GDP report, with the Nikkei 225 closing above the 30,000 for the first time since September 2021 a day after the Topix closed at its highest level in more than three decades. The Topix Index rose 0.3% to 2,133.61, while the Nikkei advanced 0.8% to 30,093.59. Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix Index gain, increasing 2.2%. Out of 2,159 stocks in the index, 900 rose and 1,161 fell, while 98 were unchanged. “It’s fascinating time to be looking at the Japanese equity market at the moment,” said Bruce Kirk, Chief Japan Equity Strategist at Goldman Sachs, on Bloomberg TV. “What we are seeing is a perfect alignment between the interests of the government, the regulator, the exchange, and also the investors, both foreign and domestic.”  Meanwhile commodity-heavy Australian stocks continued their decline, as the S&P/ASX 200 index fell 0.5% to close at 7,199.20, weighed by mining shares and banks.  Australian salaries rose at around half the pace of inflation in the first three months of 2023, suggesting the economy will avoid a wage-price spiral and bolstering the case for the central bank to stand pat in June. Read: Australia Pay Gains Suggest Economy to Avoid Wage Breakout In New Zealand, the S&P/NZX 50 index was little changed at 11,951.66 Stocks in India also dropped for a second session as investors continued to book profits after a recent rally in the key gauges. The S&P BSE Sensex fell 0.6% to 61,560.64 in Mumbai, while the NSE Nifty 50 Index posted a similar decline to close at 18,181.75. Stocks in the benchmark gauges are trading at 19.2 times their estimated earnings for the next 12 months, close to the 5-year average of 19.8x.  Infosys contributed the most to the index’s decline, decreasing 1.3%. Out of 30 shares in the Sensex index, 7 rose and 23 fell In FX, the Bloomberg Dollar Spot Index rose 0.3% to 1234.32 as the greenback rallied to a two-week high of 137.17 yen. In quiet trade, the dollar gained against all G10 currencies bar the New Zealand dollar, which rose as much as 0.4% to 0.6253. The yuan slid past the key level of 7 per dollar for the first time this year in a further sign the recovery of the world’s second- largest economy from its Covid restrictions is grinding to a halt; the offshore yuan slipped as much as 0.3% to 7.0201 per dollar, while the onshore currency dropped as much as 0.4% to 7.0026. In rates, treasuries are slightly richer across the curve with spreads broadly within 1bp-2bps of Tuesday’s close. 10-year yields are around 3.515%, richer by ~2bp on the day, with bunds and gilts outperforming by 3bp and 1.5bp in the sector. The two-year Treasury yield rose 2 basis points to 4.10%, after climbing as high as 4.12% on Tuesday; Treasuries remained pressured after Fed officials appeared divided on whether to raise rates or pause its tightening cycle. Traders are betting on the possibility that the Fed will keep rates on hold at 5.25% at its June meeting; they are pricing around 19 basis points in cuts in September, and a total of around 60 basis points of cuts by year-end. Bigger gains remain in core European rates after a strong 10-year German bond auction, which produced highest demand since August 2020. US session features 20-year bond sale at 1pm New York time.  For $15b 20- year bond auction, WI yield ~3.945% is 2.5bp cheaper than April’s stop-out, which tailed the WI by 0.2bp. IG issuance slate empty so far; Pfizer priced a $31b deal Tuesday, the 4th largest on record, while energy producer Ovintiv issued a $2.3b offering; Pfizer offered investors upwards of 20bps in new-issue concessions In commodities, crude futures decline with WTI down 0.2% to trade near $70.70. Spot gold falls 0.2% to around $1,985. Bitcoin drops 0.4%. UK MPs have warned that trading in Bitcoin and other speculative crypto assets should be regulated to prevent consumers from being lulled into a false sense of security about the risks posed, according to The Times. Looking to the day ahead now, data releases include US housing starts and building permits for April, along with the final CPI print for April from the Euro Area. From central banks, we’ll hear from BoE Governor Bailey, ECB Vice President de Guindos, along with the ECB’s de Cos, Elderson, Centeno and Rehn. Finally, earnings releases include Target and Cisco. Market Snapshot S&P 500 futures up 0.3% to 4,133.50 MXAP down 0.4% to 161.25 MXAPJ down 0.6% to 510.86 Nikkei up 0.8% to 30,093.59 Topix up 0.3% to 2,133.61 Hang Seng Index down 2.1% to 19,560.57 Shanghai Composite down 0.2% to 3,284.23 Sensex down 0.8% to 61,445.80 Australia S&P/ASX 200 down 0.5% to 7,199.24 Kospi up 0.6% to 2,494.66 STOXX Europe 600 down 0.1% to 464.11 German 10Y yield little changed at 2.33% Euro down 0.2% to $1.0843 Brent Futures down 0.3% to $74.67/bbl Gold spot down 0.1% to $1,986.63 U.S. Dollar Index up 0.28% to 102.85 Top Overnight News from Bloomberg Japan’s Q1 GDP comes in solidly above the Street consensus at +1.6% (the Street was modeling +0.8%) thanks to strong consumer spending. WSJ China’s new home prices for April comes in +0.32% M/M, down from the +0.44% number posted in March. WSJ UBS projects a massive accounting gain from its takeover of Credit Suisse, with the combined firms' "negative goodwill" seen boosting reported profit by $34.8 billion. On the downside, UBS estimates litigation, regulatory matters and related liabilities may take $4 billion out of capital over 12 months. BBG House Democrats plan to begin collecting signatures Wednesday for a discharge petition to raise the debt ceiling, a long-shot parliamentary maneuver designed to circumvent House Republican leadership and force a vote. WSJ US oil/gas drilling is starting to dip amid subdued prices, creating headwinds for the equipment industry (and potentially leading to higher energy prices down the board). FT The FTC’s lawsuit to block AMGN-HZNP is the first time in more than 10 years that the gov’t has tried to stop a drug merger (the FTC warned on Tues that “rampant consolidation” in the industry was pushing up prices). FT   Western Alliance provided some encouraging statistics around deposit dynamics. Overall deposits stabilized during the final days of March and have resumed a growth trajectory since. QTD deposit growth is north of $2B as of May 12. In addition, insured deposits are now nearly 80% of the total, while the company is making progress repositioning its balance sheet. RTRS TGT: Stock is down in the pre-market on the 2Q guide but our desk thinks they did what they needed to do with 1Q good enough and 2Q possible conservative (we’ll see more on that from the call).  2Q EPS of $2.05 vs Consensus $1.77 and EBITDA 12% better. Total sales were in-line, with comps of 0% (traffic was +0.9% vs Consensus +1% (bogey was for around a 0% to +0.5%, so this was about in-line and while nothing special, is no worse than feared).  Gross margins missed by 40 bps but SG&A beat by a sizeable 150 bps.   Guided 2Q EPS below at $1.30-$1.70 (Consensus $1.91) and comps of down low-singles (Consensus +0.2%). Encouragingly, inventory down 17% y/t vs -3% last quarter, reaffirming the FY guide, which could be considered a bit conservative after today’s beat (but early to say). H/T Scott Feiler Tesla's CEO Elon Musk said the electric-car maker will dabble in advertisements, a major shift for the company that’s largely avoided traditional marketing. “We’ll try a little advertising and see how it goes,” Musk said Tuesday at Tesla’s annual shareholder meeting, in response to an investor’s question. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks were mixed with the region cautious after the weak handover from the US where risk appetite was clouded amid debt ceiling concerns, while the meeting between US President Biden and congressional leaders achieved no major breakthroughs although was said to be productive and has set the stage to carry on further conversations. ASX 200 was subdued amid losses across nearly all sectors and following mixed wage price index data. Nikkei 225 outperformed and climbed above the 30,000 level for the first time since September 2021 with sentiment also underpinned by stronger-than-expected Japanese GDP data. Hang Seng and Shanghai Comp. were lower with price action contained amid a lack of fresh macro catalysts to detract from the recent streak of disappointing data releases from China. Top Asian News Chinese embassy spokesman said the visit to Taiwan by former UK PM Truss this week is a dangerous political show which will do nothing but harm to the UK, according to The Guardian. European bourses are in close proximity to the unchanged mark, Euro Stoxx 50 +0.1%, with fresh drivers somewhat limited and following a mixed APAC session though one that feature marked Nikkei 225 outperformance, above 30k. Within Europe, the DAX 40 +0.3% outperforms after heavyweight Siemens' (+2.0%) Q2 update alongside strength in SAP (+1.6%) following a guidance update and buyback announcement; in contrast, Financial Services are pressured by LSE and Euronext while Commerzbank is the Banking sector laggard. Stateside, futures are modestly firmer in generally horizontal trade with the ES +0.1% around 4130 ahead of debt  ceiling updates with the overnight developments slightly constructive but the impasse ultimately remains. Tencent (700 HK): Q1 2023 (CNY): Revenue 149.99bln (exp. 146.29nlm). Net 32.5bln (exp. 33.2bln), Operating 40.43bln (exp. 40.7bln); Weixin and Wechat MAUs 1.32bln (exp. 1.32bln). Top European News The Royal United Services Institute think tank warned that UK PM Sunak will have to find USD 42bln in tax hikes and spending cuts to pay for his pledge to boost defence spending to 2.5% of GDP, according to The Mirror. The Resolution Foundation has warned that the BoE's decision to hike interest rates could limit Chancellor Hunt's room to lower taxes in the Autumn, according to The Times. UK Labour opposition leader Keir Starmer calls for the UK's current Brexit deal to be renegotiated, but declares the UK must not re-join the EU or single market, according to Sky News. ECB's de Cos says the ECB is getting near the end of its tightening cycle; transmission remains strong. ECB's Rehn says need to see core CPI slow substantially. BoE Governor Bailey says "If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required.". MPC pays particular attention to indicators of inflation persistence, including labour market tightness and wage growth, and services price inflation. There are signs that the labour market is loosening a little. FX DXY tops 103.000 amidst broad gains mainly forged at the expense of the Yuan. USD/CNY probes 7.0000 and USD/CNH approaches Fib at 7.0364 after a spate of disappointing Chinese data. Yen under 137.00 vs Dollar and relying on 200 DMA for a reprieve, Sterling sub-1.2450 and relatively unaffected by BoE's Bailey. Euro teeters above Fib in the low 1.0800 zone. PBoC set USD/CNY mid-point at 6.9748 vs exp. 6.9750 (prev. 6.9506). Fixed Income Firm bounce in core EU bonds and strong demand for supply along the way. Bunds and Gilts are both towards the top of ranges extending to 135.82 and 100.83 from 135.28 and 100.41 respectively. USTs relatively restrained with T-note tethered to 115-00 ahead of US housing data and USD 15bln 20-year sale. Commodities Crude benchmarks are essentially unchanged after drifting in the first half of the session as the USD picked up and sentiment slipped; a narrative that has eased/lifted from respective session peaks since. Currently, WTI and Brent are incrementally firmer within circa. USD 1/bbl parameters with specific newsflow light and focus on geopols. amid reports that Iran's Economy Minister discussed oil and gas projects with Saudi Arabia, according to Bloomberg. Spot gold is drifting with the USD firmer and sentiment improving throughout the morning, yellow metal below USD 2k/oz and approaching the USD 1981/oz 50-DMA. Base metals are more mixed, with the region attempting to recoup some of the recent China-induced pressures but with action capped on USD strength. US Energy Inventory Data (bbls): Crude +3.7mln (exp. -0.9mln), Gasoline -2.5mln (exp. -1.1mln), Distillate -0.9mln (exp. +0.1mln), Cushing +2.9mln. UBS lowers Year-End Brent forecast by USD 10/bbl to USD 95/bbl amid greater-than-expected supply. Debt Ceiling latest US President Biden said they had a good, productive meeting on the debt ceiling and there is still more work to do, while he made it clear to House Speaker McCarthy that they will talk regularly over the next several days. Biden is confident they will continue to make progress on avoiding default and said that defaulting on debt is not an option, while he also noted it is disappointing Republicans refuse to consider raising revenue, according to Reuters. White House said President Biden directed staff to meet daily on outstanding issues and said he would like to check in with leaders later this week by phone and meet with them upon return from overseas. Biden also emphasised that while more work remains on a range of difficult issues, he is optimistic that there is a path to a budget agreement, according to Reuters. President Biden will no longer visit Australia or Papua New Guinea and will return to the US on Sunday to focus on the debt ceiling talks, according to NBC. US House Speaker McCarthy said they have set the stage to carry on conversations in debt talks and that President Biden agreed to appoint a couple of people from the administration to negotiate directly with his team. McCarthy also said there is a lot of work to do in a short amount of time and that they are still very far apart but added it is possible to get a deal by the end of the week and it is not that difficult to reach an agreement. However, McCarthy later said he is not more optimistic about getting a deal by the end of the week. US Senate Majority Leader Schumer said the debt meeting was good and productive, while he added that they all agreed a default is a horrible option, according to Reuters. US Senate Republican Leader McConnell earlier told Senate Republicans there had not been much progress on debt ceilings talks with POTUS and other leaders. House Democrats are to reportedly begin collecting signatures for effort to raise debt ceiling, according to WSJ. Punchbowl on the US debt limit, says "Initial discussions began Tuesday night, with full-scale negotiations set to kick off this morning, we’re told", "Sources close to the talks expect any debt-limit boost to run well into 2025." Geopolitics Russia's Kremlin says it will not enter a hypothetical discussion on what Russia will do if the grain deal lapses. DB's Jim Reid concludes the overnight wrap Yesterday Henry and I published a chartbook entitled "A Time Capsule for the Future". It imagines how those in the distant future might look at what the macro signals were telling us now in May 2023. Would it be obvious in hindsight as to what happened next? For us, this has been the most predictable US cycle of our careers from the moment the US money supply exploded. From then it wasn’t difficult to predict we’d get very high inflation, and from then that central banks would have to hike rates aggressively. The next stage continues to look clear to us: given aggressive rate hikes and curve inversions, we think there’ll be a US recession rather than a soft landing. Indeed, just about every leading indicator is now pointing to one. Does it look as obvious to you? Will future historians digging up this time capsule say the same thing? Or what are we not seeing that might prove us wrong? We'd be interested in hearing your views, especially those of you from the future! The presentation is here and tomorrow we'll be hosting a webinar on it at 2:30pm London time. Please Register Here if you want to view. Markets had a slightly tough session yesterday, as robust data and hawkish comments from Fed officials helped drive a selloff across bonds (mostly) and equities (a bit). Having said that the market was really waiting for the results of the latest meeting on the debt ceiling between President Biden and congressional leaders starting an hour before the US close. House Speaker McCarthy continues to say the two sides remain far apart. However, he acknowledged that “it is possible to get a deal by the end of the week” despite there being a lot of work to do. He also noted that the talks were “more productive” than previous meetings and that a smaller group of staffers from both sides are working toward a deal, with talks commencing as soon as tonight. President Biden announced that there was “consensus, I think, among the congressional leaders that defaulting on the debt is simply not an option.” Senate leadership from both parties exhibited optimism that a deal could be reached as well. Before the meeting even started there was news that President Biden was going to shorten his upcoming trip to Asia and return to Washington on Sunday after the G-7 meeting in Japan. This highlights the seriousness around Treasury Secretary Yellen’s June 1st deadline. Ahead of the meeting, Treasuries had already been hurt by a collection of strong data releases, which knocked hopes among investors that rates would be cut later this year. For instance, retail sales (excluding auto and gas) were up by +0.6% in April (vs. +0.2% expected) following two consecutive monthly declines. Then industrial production grew by +0.5% in April (vs. unch expected), whilst the NAHB’s housing market index rose for a 5th month running to 50 (vs. 45 expected). With those releases in hand and the hawkish Fed-speak discussed below, investors grew more doubtful that the Fed would pivot towards rate cuts this year, and the rate priced in for the December meeting was up +7.4bps on the day to 4.484%. In turn, that helped spur a rise in Treasury yields across the curve, with the 10yr yield up +3.2bps to 3.534% and 2yr yields +7.2bps higher. Meanwhile the 30yr yield was up +1.2bps at 3.854%, marking its highest level since March 8, just before SVB’s collapse led to market turmoil. Having said that yields are 1-2bps lower across the curve in Asia. Before the slight rally back in Asia, the losses for Treasuries were given added support from various Fed speakers, whose tone was generally on the hawkish side. First, we had Cleveland Fed President Mester, who said that rates weren’t sufficiently restrictive just yet, and that “given how stubborn inflation has been, I can’t say that I’m at a level of the fed funds rate where it’s equally probably that the next move could be an increase or a decrease”. Later on, Richmond Fed President Barkin said that “if more increases are what’s necessary” to reduce inflation then he was “comfortable doing that.” New York Fed President Williams said the committee was still waiting for the long lags of monetary policy while also noting that inflation is still “too high”. He did say that he sees supply-demand imbalances improving throughout the economy. Chicago Fed President Goolsbee reminded the market that service inflation remains too high and that “its far too premature to be talking about rate cuts.” Lastly, Dallas Fed President Logan tried to walk the line between the hawks and doves saying that gradual policy adjustment can help mitigate stability risks and that justifies the Fed slowing the pace of hikes or outright pausing. This combination of news meant that equities struggled yesterday, with the S&P 500 (-0.64%) reversing its gains from the previous session and close near its lows on the day. The declines were generally broad-based (88% of the index lower), but tech stocks were the exception and saw the NASDAQ outperform slightly (-0.18%) . That was aided by a strong advance from the megacap stocks, with the FANG+ index rising +0.97% yesterday in a big outperformance. The latest moves further showcase just show top-heavy the equity gains have been this year. Indeed, the S&P 500 is up by +7.04% on a YTD basis, but the equal-weighted S&P 500 is now down -0.80% since the start of the year. Back in Europe, markets followed a broadly similar pattern to the US, with the STOXX 600 down -0.42%, whilst yields on 10yr bunds (+4.4bps), OATs (+5.1bps) and BTPs (+3.5bps) all moved higher. Sentiment wasn’t helped by the latest ZEW survey from Germany, where the expectations component fell for a 3rd consecutive month in May to -10.7 (vs. -5.0 expected), so further reversing the more positive sentiment we saw around the turn of the year. On the other hand, there was some further good news from natural gas prices, which fell -1.53% to another 22-month low of €31.82/MWh. Elsewhere, UK gilts were an outperformer yesterday following signs that the labour market might be softening. In particular, the number of payrolled employees unexpectedly fell by -136k in April (vs. +25k expected), which marked the first monthly decline in that measure since February 2021. Furthermore, the unemployment rate over the three months to March rose a tenth to 3.9% (vs. 3.8% expected). See our economist's view on the data here. The release meant investors slightly downgraded the likelihood of a rate hike at the BoE’s next meeting in June, with the chances down to 78%, having been at 85% the previous day. It was the reverse story in Canada, with 10yr yields up by +17bps after the country’s CPI reading unexpectedly rose in April. That showed inflation rising to +4.4% (vs. +4.1% expected), which ended a run of 5 consecutive monthly declines in headline inflation. In turn, investors dialled up the chances that the Bank of Canada might hike rates at the next meeting following their recent pause, with overnight index swaps now seeing a 35% chance of another 25bp move in June. Asian equity markets are mixed this morning as US debt negotiations continue. Across the region, the Nikkei (+0.66%) is topping gains, moving beyond the 30,000 level for the first time since September 2021, as Japan’s Q1 GDP beat estimates (more below) while the KOSPI (+0.56%) is also trading up. Elsewhere, Chinese stocks are losing ground this morning with the Hang Seng (-0.48%), the CSI (-0.35%) and the Shanghai Composite (-0.24%) all edging lower. Outside of Asia, US stock futures are printing mild gains with those on the S&P 500 (+0.19%) and NASDAQ 100 (+0.25%) retracing some of yesterday's losses. Coming back to Japan, data showed that the economy grew +1.6% in the first quarter this year on an annualized basis (v/s +0.8% expected), recording the first increase in three quarters and following a revised -0.1% fall in Q4 last year (initially +0.1%). A strong rebound in service activity after reopening post pandemic was the main driver of growth. To the day ahead now, and data releases include US housing starts and building permits for April, along with the final CPI print for April from the Euro Area. From central banks, we’ll hear from BoE Governor Bailey, ECB Vice President de Guindos, along with the ECB’s de Cos, Elderson, Centeno and Rehn. Finally, earnings releases include Target and Cisco. Tyler Durden Wed, 05/17/2023 - 08:13.....»»

"The key issue now is to allow the patients that are in the hospital to come out," economist Mohamed El-Erian told Bloomberg TV about regional banks. Mohamed El-ErianYouTube / LinkedIn The regional banking crisis has shifted out a severe stage, economist Mohamed El-Erian told Bloomberg on Tuesday.  But another Fed policy mistake could drive small to mid-sized lenders "back into the ICU."  El-Erian has been a critic of the Fed reacting too slowly to raging inflation with rapid rate hikes.  The turmoil engulfing the regional banking sector this year has stepped out a severe stage but could reaccelerate if the Federal Reserve makes another policy misstep, economist Mohamed El-Erian said Tuesday. "We are still in the hospital because there are problems with the banking model of certain banks," El-Erian told Bloomberg Television about where the US currently stands with stress facing small and mid-sized lenders.Their distress erupted in March when Silicon Valley Bank and Signature Bank became the first lenders to collapse and be seized by federal regulators since the global financial crisis. "The key issue now is to allow the patients that are in the hospital to come out. If there's another [Fed] policy mistake, the patient goes back into the ICU," said the chief economic adviser at Allianz. The Fed's quick run of interest rate increases has been blamed for contributing to bank failures this year. SVB's bond holdings sank in value after the Fed began jacking up its key interest rate from a floor of zero percent in March 2002. A fire sale of SVB's bond portfolio resulted in huge losses, stoking the bank's eventual demise. Depositors have yanked hundreds of billions of dollars out of regional lenders collectively this year, including PacWest and First Republic Bank. The latter, which catered to wealthy clients, failed earlier this month, and JPMorgan bought the bulk of its assets. But weekly deposit flows have been stabilizing, said Fitch Ratings.  El-Erian has been a vocal critic of the Fed for reacting too slowly to soaring inflation and then racing to cool inflation to its 2% target with fast rate hikes. The 10th consecutive increase was issued in May and economists widely expect the US is heading into a recession. What would another policy mistake look like to El-Erian? "We ignore the fact that we can't get the 2% inflation [target] easily and we go after it too quickly," he said. That would also create a "second set of patients," including non-banks in the financial sector such as businesses in the commercial real estate market.Read the original article on Business Insider.....»»

HCI Group (HCI) Q1 results reflect better performance at TypTap Insurance Company. HCI Group HCI reported first-quarter 2023 earnings of $1.50 per share that beat the Zacks Consensus Estimate of 9 cents per share. Quarterly earnings increased more than fourfold year over year.The results reflect better performance at TypTap Insurance Company.HCI Group, Inc. Price, Consensus and EPS Surprise HCI Group, Inc. price-consensus-eps-surprise-chart | HCI Group, Inc. QuoteBehind the HeadlinesGross premiums earned of $180.1 million increased 0.7% year over year, reflecting a higher average premium per policy.Net premiums earned increased 0.6% year over year to $180.1 million.Operating revenues increased 1.6% year over year to about $129 million on account of the rise in net premiums earned, net investment income and policy fee income. The top line beat the Zacks Consensus Estimate by 9.1%.Net investment income was $17.7 million, up more than three-fold, reflecting higher yields on fixed maturity securities, cash, and cash equivalents as well as a gain of $8.9 million from the sale of two real estate investment properties at Greenleaf.Total expenses decreased 13.9% year over year to $105.9 million due to increased losses and loss adjustment expenses, policy acquisition and other underwriting expenses and general and administrative personnel expenses.Losses and loss adjustment expenses were $60.6 million, down 16.6% year over year. Losses and loss adjustment expenses as a percent of gross premiums earned or gross loss ratio improved to 33.6% from 40.6% in the year-ago quarter.Financial UpdateHCI Group exited the quarter with cash and cash equivalents of $302 million, which increased 28.6% from the 2022-end level. Total investments increased 2.4% from 2022 end to $630.3 million at quarter end.  Long-term debt of $196.2 million decreased 7.3% from the 2022-end figure.As of Mar 31, 2022, total shareholders’ equity totaled $179.9 million, which increased 11.5% from the level at 2021 end.Book value per share dropped 33.8% from year-end 2022 to $20.97 at first quarter end.Zacks RankHCI Group currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other Property and Casualty InsurersThe Travelers Companies TRV reported first-quarter 2022 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41. However, the bottom line decreased 2.6% year over year. Travelers’ total revenues increased 10% from the year-ago quarter to $9.7 billion, primarily driven by higher premiums. The top-line figure however missed the Zacks Consensus Estimate of $9.8 billion.Net written premiums increased 12% year over year to a record $9.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $8.9 billion.Catastrophe losses totaled $422 million, wider than $36 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from severe wind and hail storms in multiple states. Travelers witnessed an underwriting gain of $501 million, down 12.9% year over year.  The combined ratio deteriorated 410 bps year over year to 95.4.The Progressive Corporation’s PGR first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 as well as our estimate of $1.50. The bottom line declined 20.7% year over year.Operating revenues were about $14.2 billion, up 15.8% year over year. This improvement was driven by a 15% increase in premiums, 18.5% higher fees and other revenues, a 7.1% increase in service revenues and a 73.2% higher investment income. The top line exceeded the Zacks Consensus Estimate of $14.1 billion and our estimate of $13.1 billion.Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion. The combined ratio deteriorated 450 bps from the prior-year quarter’s level to 99.RLI Corp. RLI reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Operating revenues for the reported quarter were $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%). Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability in its Property and Casualty segment. Combined ratio remained flat year over year at 77.9. Top 5 ChatGPT Stocks Revealed Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion. Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”Download Free ChatGPT Stock Report Right 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 RLI Corp. (RLI): Free Stock Analysis Report The Travelers Companies, Inc. (TRV): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report HCI Group, Inc. (HCI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Billionaires’ success stories are always fascinating. Want to know how the world’s most popular Billionaire, Elon Musk is making money? ... Read more Billionaires’ success stories are always fascinating. Want to know how the world’s most popular Billionaire, Elon Musk is making money? If so, this article has got you all covered. According to Forbes, Elon Musk is one of the richest men in the world. Let’s see, how did Elon reach these heights?  Elon Musk is the founder of famous companies like Tesla, SpaceX, Twitter, and OpenAi. Unlike Jeff Bezos or others, he is currently making money through different companies and businesses. In addition, he co-founded a Boring Company that aims to reduce traffic. Elon also co-founded PayPal, the “Payoneer of Digital Payment.” Elon started his journey long ago and never looked back. We will uncover everything related to this Tech Freak in this detailed guide. Keep reading for expert business and life tips to help you learn from this exceptional talent. Let’s start with his profile and education in his business life. Elon Musk’s Profile Elon Musk is a South African-born American business magnate, industrial designer, and engineer. He is the son of Errol Musk. He is currently living in Taxes. This profile section will answer some of the most common questions about Elon Musk’s personality. These questions include his height, zodiac sign, Elon Musk’s net worth, and religion. Let’s uncover them one by one. How Tall Is Elon? Elon Musk is 6 feet and 2 inches tall, 188 cm. He is tall, and in 2014, he also claimed it in a tweet about his height. The Billionaire doesn’t seem this tall in the pictures, but people who know him in real life told he has a broad physique. What Is Elon Musk’s Zodiac Sign? Musk’s birth date is 28th June 1971, meaning his zodiac sign is Cancer. Musk has a Cancer sun with an analytical Virgo Moon. In addition, his moon sign is Leo which brings a certain fearlessness in him when making tough decisions. Cancers are solid leaders; people follow them, and we can find all these qualities in Elon. Elon Musk’s Current Net Worth Elon musk is currently the 2nd wealthiest person behind Bernard Arnault. His real-time net worth is around $151.8 billion. It is growing speedily daily due to his extremely successful tech projects considered as future.  Religion Musk was brought up as a Christian, but he is an Atheist. He stated that he doesn’t believe in God or any religion. He praises Jesus but still doesn’t believe in any religion. In an interview, he also said he wouldn’t stand in Jesus’ way. How Did Elon Musk Start Out Making His Money? Musk’s story of earning starts by selling a video game. In his college Elon, alongside his fellow students, also rented a house and then converted it into a nightclub in his college days to pay the rent. He tried his fortune in many businesses and startups.  After he dropped out of Stanford University, he founded two technology startup companies in 1990. From a video game to Tesla and SpaceX, Elon has come a long way. Let’s see how Mr. Musk reached these heights.  Were Elon Musk’s Parents Rich? Although Elon’s parents were not Billionaires like him, they were not poor. His father, Errol Musk, was an electro-mechanical Engineer, pilot, and sailor. His mother, Maye Musk, was a model and dietitian. While they were not wealthy, they were relatively well-off and able to provide for their family’s needs. Elon denied a Twitter thread where he was responding to Berkeley professor Robert Reich who said that Musk’s father was a millionaire, so that’s why Musk is a billionaire now. Only the children of the rich get richer. So, we can say that Musk’s parents weren’t rich enough to make him a millionaire. Take a Look at The Wealth Of Elon Musk’s Family: Elon Musk As A Teenager Musk’s teenage life was more challenging as he used to live on $1 a day when he moved to Canada. He moved from his native home in South Africa to North America to start college studies. Elon Musk has been fascinated by technology and science since his childhood. He started reading the encyclopedia at a young age.  His aptitude for computer programming was recognized early on, and he began taking computer classes at a young age. At 12, he created and sold the code for his first video game, “Blastar.” He and his brother, Tosha, had plans to open their arcade, but their parents did not approve of the idea. Educational Background Musk started his education at Waterkloof House Preparatory School. He graduated from Pretoria Boys High School. He attended the University of Pretoria for 5 months. After that, he moved to Canada, where in 1990, he entered Queens University in Kingston. He also found his first wife, Justine, there. He completed his Bachelor of Arts degree in Physics from the University of Pennsylvania and Bachelor of science in economics from Wharton school. Musk says that he completed his degree in 1995, but on the records of UPenn, it was awarded in 1997. In 1995 he was accepted for a Ph.D. program at Stanford University, but after 2 days, he dropped the degree. After University He dropped out of the Ph.D. program offered by Stanford University. Musk, with his brother Kimbal Musk, co-founded the software company Zip2. Compaq then bought Zip2 for $307 million. Musk then co-founded X.com, which was an online bank. X.com, later in 2000, merged with Cofinity to become PayPal, which was sold to eBay for $1.5 billion. First Company Musk’s first company was Zip2 in 1995, an online city guide. Musk, with his brother, co-founded this company. According to multiple reports, his father gave him $28000 to start the project. This company changed Musk’s fortune and made him a millionaire. Later, many big newspaper companies like The New York Times and Hearst started using Zip2. The company grew rapidly, and many big companies like Compaq and CitySearch tried to merge with them.  After successfully selling Zip2, Musk invested in Xcom(Experimental.com), which later became Paypal. It was the first largest online payment succession. It was later sold to eBay in 2002 for $1.5 Billion.  First Million Elon Musk made his first Million by starting a software company called Zip 2. He built this company to help people get directions to businesses. Zip2 was a corporation that provided online city guide software to newspapers.  Zip2 allowed communications to take place among users and advertisers. One of the products of Zip2 was called Auto Guide. The purpose of AutoGuide was to connect online newspaper users with local dealerships. Up to 200 newspapers started using their platform in 1998. Still, Musk was far from the mark of 1 million. In 1996 Mohr Davidow Ventures invested $3 million in Zip2, but this investment made Musk hand over his CEO position to someone else. He was demoted to the CTO of the company.  In 1998 the CEO of Zip2 tried to merge the company with CitySearch, but Musk started a coup, and as a result, he took over the company again. Later on, Zip2 was sold to Compaq in 1999. Musk got $22 million as his share from the company. That’s how he made his first million. Starting Tesla and SpaceX Musk later invested the money earned from PayPal in Tesla and SpaceX. Although SpaceX initially failed in many experiments, both companies are highly successful these days. As electric vehicles are the future, their sales are increasing massively, and following the success of SpaceX, NASA has also shaken hands with them.  These two projects have been the key to reaching these heights. Tesla is ranked as the most valued automotive company in the world, with a brand value of $75.93 Bn in 2022. According to CNBC, SpaceX is valued at around $137 Bn as of 2023. Twitter Purchase Elon’s latest major purchase has been the famous social media application Twitter. Musk took over Twitter in October 2022 with a record $44 Billion price. He paid $54.20 per share of Twitter. He has bought it with ambitions of free speech for everyone. Activating Donald Trump’s Twitter account is one of its prime examples. Elon aims to make the brand revenue 4 times than now and have its user base by 2028. Since the takeover, he has been talking about improving this platform, like his concerns regarding fake accounts and spam on Twitter. Elon plans to make this platform free from bots acting as fake followers. Is Elon Musk Self-Made? Elon Musk is often referred to as a “self-made” billionaire, meaning that he built his wealth and success through his efforts rather than inheriting it from others. He was not born into a Billionaire or Millionaire family. He made his fortune through hard work. The journey from selling a video game to being the CEO of SpaceX is living proof.  Elon Musk has certainly achieved a great deal of success through his efforts. He has been involved in several successful business ventures, including PayPal, SpaceX, and Tesla. Elon is widely considered a visionary entrepreneur and inventor known for his ambitious plans and innovative ideas. That’s why the tech genius is referred to as a self-made Billionaire.  List Of What Elon Musk Invent Elon has been inventing since his teenage years, and his early ideas revolved around software and companies in this field. As his vision evolved, he focused on mass transportation and consumer products. Most of his ideas have proven to be huge successes. Let’s have a look at his amazing inventions till now. Blaster Video Game Elon Musk has been a fan of video games since childhood, and at 12, he created his own video game and sold it to a computer magazine for $500. This early experience in creating and selling his own video game demonstrates his entrepreneurial spirit and business acumen, even at a young age. Web Calls Elon Musk had an idea about allowing computers to make phone calls to landlines by clicking on a company’s contact information online. The calls would then be routed to the company via a call center. He secured a patent for this technology in 2001. This concept is known as click-to-call.  It allows users to initiate a phone call to a business directly from a website or online advertisement by clicking a button or link. This feature uses a technology called Voice over IP (VoIP) to make the call through the internet instead of traditional phone lines. Click-to-call is commonly used by businesses to provide convenient customer service and support.  Zip2 Zip2 is Elon’s first very successful project. He initially ran the company out of a small apartment in Silicon Valley. It provided online business directories and maps to newspapers. He played an important role in developing the company’s technology, including the mapping and navigation software used to power the directories. Paypal (Electronic Payments) Elon Musk was one of the co-founders of PayPal, an online payment system that eBay later acquired. He was part of the board of directors and a significant shareholder in the company.  Musk was one of the company’s largest shareholders when eBay acquired it in 2002 for $1.5 billion. He played a key role in developing PayPal’s business strategy and was instrumental in securing funding for the company during its early stages. Tesla (Electric Vehicles) Electric cars company Tesla is the most important creation of Elon Musk. Although he is not the one who invented electric cars, he set the foundation of the first working marketplace for electronic vehicles. 65% of electric vehicles being used in the US in 2022 were manufactured by Tesla motors. Its current net worth is $146B. Elon Musk’s goal for the company is to accelerate the world’s transition to sustainable energy through producing and selling electric vehicles, solar products, and energy storage systems. It is to address the CO2 emissions and climate change with an entire ecosystem. SpaceX (Falcon rocket) Falcon rocket is an invention of SpaceX. Elon Musk is the CEO of SpaceX. He led its foundation in 2002 with Tom Mueller with the main objective of reducing travel costs to space. Falcon 9 is its major invention which is a medium-lift launch vehicle. It can carry cargo and crew into Earth orbit and is partially reusable.  The rocket is two-staged, with the first stage reusable and the second stage expendable. The reusable first stage is intended to return to the launch site or a drone ship for recovery, enabling multiple launches with the same vehicle. SpaceX is currently valued at around $137 Bn. NASA has also awarded contracts to SpaceX and is working together on some projects.  Elon Musk, the CEO of SpaceX, has stated that his goal for the company is to make life multi-planetary by developing the technology needed to establish a permanent, self-sustaining human presence on Mars. He also aims to reduce the cost of space launches, making it possible for more companies and individuals to access space. Solar City Elon Musk played a central role in the formation and development of SolarCity, a solar energy services company. Musk had the idea to start SolarCity to address the need for clean, sustainable energy and help combat climate change. He believed that by making solar power more affordable and accessible, more people and businesses would adopt it as an energy source. Musk was actively involved in the company’s strategy, funding, and operations.  How Does Elon Musk Spend His Money? Elon Musk, the CEO of Tesla and SpaceX, is known for investing a significant portion of his wealth into his companies and other ventures. He has also made significant charitable donations to renewable energy and education. Let’s take a look at some of his prominent spending ways.  Reinvestments Elon Musk is known for reinvesting a significant portion of his wealth into his companies, particularly Tesla and SpaceX. He has used his wealth to help fund the development and production of electric cars, solar energy systems, and space exploration technology. Like Elon, after selling Zip2, reinvested $10 million in Xcom, which later became PayPal. He made $180 million from Paypal shares sale but reinvested $100 Million in SpaceX, $70 Million in Tesla, and the remaining $10 Million in his SolarCity project.  Donations Elon Musk has made many significant donations, primarily to education and renewable energy. Elon believes in giving or contributing back to society, so he has made several donations over the years. In 2015, he donated $10 million to the Future of Life Institute to support research to ensure that artificial intelligence is developed safely and efficiently.  In 2018, he donated $100 million to the global non-profit organization OpenAI, which aims to promote friendly AI and advance digital intelligence for the betterment of humanity. In addition, in 2020, he pledged $100 million to plant 100 million trees via a campaign named TeamTrees. Real Estate Elon Musk has a history of making high-profile real estate purchases. In 2012, he purchased a 20,248-square-foot mansion in Bel-Air, California, for $17 million. In 2016, he purchased four adjacent properties in the same neighborhood for $24.25 million. Also, in 2018, he purchased a $6.4 million ranch in Texas that includes a main house, a guesthouse, a pool, and a barn.  In addition to these personal properties, Musk’s companies, such as SpaceX, also own and operate several properties, including a launch facility at Cape Canaveral in Florida and a rocket development and testing facility in McGregor, Texas. Business & Life Tips From Elon Musk Elon Musk has had some really difficult challenges in business and life. He always overcomes those challenges. There’s a saying of Socrates, “Smart people learn from everything and everyone”. We have gathered some amazing tips from Elon to help you achieve your business and life goals.  Keep Investing Elon has been making money since his childhood. He was business minded and always looked forward to ways of reinvesting his earned money. Elon successfully sold Zip2 for $22 Million but chose to reinvest it rather than spend. Then he made $180 Million from the sale of shares in PayPal but again went on to invest in projects like SpaceX etc. This habit has been a key factor in his success till now.. Work On Your Strengths Elon and other Entrepreneurs always advise you to work on your strengths. Once Elon said, “Forcing yourself to do anything or be anyone you do not want to always ends up in disappointment. Play to your strengths, and you’ll succeed.” It means you should work in those fields you love to work in. If you are forcefully working in any place, you will never be able to get the best out of yourself. There’s a famous saying: You succeed when your passion and profession are the same. Elon has always been a tech guy since his childhood. He has always worked in relevant companies and places. Tesla, SpaceX, and Paypal are proof of it.  Take Risks There is no surety in business. Elon once said, “Take risks and do something bold.” We can also see this from his personal decisions. He made huge money from selling some companies to invest in new companies he never knew would succeed. SpaceX also failed in many major experiments, primarily Elon Musk decided to continue investing. When Musk was asked about bankruptcy, Musk replied, “My kids might have to go to a sort of government school. I mean big deal, I went to a government school.” So Elon never feared taking risks while making decisions. Even SpaceX nearly got bankrupt after the continuous failure of experiments. Work On Communication Skills Communication skills are very important ,no matter your profession. He advises, “Talk to people from different walks of life and industries, professions and skills”. To improve your communication skills. Communication skills are key, especially in a department like sales. Spend Wisely One more thing we learned from Elon’s life is to spend wisely. Usually, when people start earning, they start to spend more on luxuries and extravagance. Elon strictly opposes the idea. According to him, you must enjoy and spend too, within your domains.  We can see this idea in his personal life. Elon lives in a two-bedroom house within walking distance of his SpaceX facility, but he spent $78 Million to buy a private jet. So what matters is spending where it’s needed.  Stay Focused Focus is a key lesson if you want to succeed in any field. Whether you are getting results is only sometimes staying disciplined and focused on your goal. Stay focused like Elon has been through his whole journey; even as a Billionaire, he is working 80 to 100 hours a week. Affordable Hobbies Another thing to learn from Elon is always to have affordable hobbies. It helps you save a lot of money. Surely Billionaires don’t have time for hobbies, but Elon’s hobbies are inspiring. These are affordable hobbies, from spending time with family, listening to music in the car, and hanging out with friends to playing video games like Halo Infinite. Contribute To Society Elon musk believes in contributing to society. He has contributed a lot to charities. Its prime example is the donation of shares of Tesla worth $5.7 Billion. Elon once told Fridman, “Try to have a positive net contribution to society.” His company’s motto is living proof of it.  Tesla is the largest electronic vehicle-producing company aiming to reduce CO2 emissions. SpaceX is finding ways for humans to live on other planets. Musk once said during a podcast, “A lot of respect for someone who puts in an honest day’s work.” Think Big Businesses run by Elon Musk are known for their daring and forward-thinking outlook. As Elon says, work on “stuff that’s going to matter.” Getting away from fossil fuels and ensuring humanity’s long-term existence by populating Mars, are what drive him.  He believes that low ambition is baked into most companies’ incentive structures. Many companies focus on making small improvements to their existing products rather than daring to imagine completely new ones. Ignore the Critics Elon is known for his ambition and bold vision, which has led to some criticism and skepticism from others. He doesn’t let the opinions of others affect his decisions and instead focuses on his problems. As he refused, “I think it would be arrogant if we said we were definitely going to do it, as opposed to we’re aspiring to do it, and we’re going to give it our best shot.” He doesn’t worry about the potential for failure or looking foolish, as his passion for pursuing important ideas drives him. He believes that success should be measured by the problems solved rather than the money made. This mindset allows him to make decisions more easily and stay focused on what he believes is important.  Timeline Of Elon Musk  1971: Elon Musk was born in Pretoria, South Africa.  1989: Musk moved to Canada to attend Queen’s University.  1992: Musk moved to the University of Pennsylvania, receiving dual undergraduate degrees in economics and physics.  1995: Musk co-founded web software company Zip2 with his brother, which provided online business directories and maps to newspapers.  1999: Zip2 was sold to Compaq for $307 million, providing the initial funding for Musk to start X.com, an online payment company.  2002: X.com was renamed PayPal and was sold to eBay for $1.5 billion. Musk founded SpaceX to reduce the cost of space exploration and make it possible for humans to live on other planets.  2004: Musk joined the board of directors of Tesla, an electric car company.  2006: Musk became CEO of Tesla, leading the company to launch its first car, the Roadster, in 2008.  2008: Musk founded SolarCity, a solar energy services company.  2015: SpaceX landed the first stage of its Falcon 9 rocket, a major milestone in reusable rocket technology.  2016: Tesla acquired SolarCity, furthering Musk’s goal of creating a sustainable energy ecosystem. 2018: SpaceX launched its first Falcon Heavy rocket, which carried a Tesla Roadster into orbit around the sun.  2020: SpaceX sent its first crewed spacecraft, the Crew Dragon, to the International Space Station, marking a major milestone in commercial spaceflight. 2022: Elon Musk purchased Twitter for $44 billion.  FAQs Did Elon Musk Get Saved? Elon musk, in an interview, shared his thoughts about religion and Jesus Christ. He mentioned that he agrees with the principles of Jesus and that if Jesus is saving people, he won’t stay in his way. Musk also said he has a lot of questions about God, Faith, and religion. But he says he accepts “God as his savior.” How Much Does Elon Make A Minute? The co-founder of Tesla and SpaceX, Elon Musk, makes $29,200 per minute and $1.75 million per hour. These figures are not fixed because a lot of his money comes from the stocks of his companies, including Tesla, Space x, and others. How To Contact Elon Musk For Money? You can’t contact Elon Musk directly for money, but you can contact the company through emails and they may get you in touch with him. Here’s an email where you can contact him NAsales@teslamotors.com. If you are a resident of North America, you can contact Tesla by this email Press@tesla.com. Is Elon Buying Country Music? Yes there are rumors that Elon Musk plans to buy Country Music for $89 billion. The deal will include all music labels of the company. This deal aims to bring the genre to its past greatness. Country music is one of the oldest music institutions in America.  Did Tesla Buy KTM? Neither Musk nor his company Tesla has partnered with or bought the KTM. Musk clearly said that Tesla would never make an electric two-wheeler. He also recalled an event of his teenage years where he was nearly killed while riding a bike. Hence Tesla is not interested in any Bike projects. What Kind Of Phone Does Elon Musk Have? Musk stated that he uses both iPhone and Samsung phones, but Musk has been often seen using iPhone since 2012. The tech genius also mentioned iPhones in some of his interviews. However, he has yet to collaborate with any smartphone brands.  Final Thoughts That was all about the inspiring journey of Elon Musk. Now that you know how Elon Musk makes his money, you can follow in his footsteps to have a bright future. You may not be the world’s most influential Billionaire, but following Elon’s business and life tips will certainly help you a lot in achieving your goals. Elon Musk has always been a technology fan; it was his passion. You can also follow your passion and reach the heights in your field like Elon became the CEO of companies like Tesla and SpaceX. You have also learned about his money-making and spending ways and complete profile. Keep learning and following all these things if you idolize him. .....»»

DiamondRock Hospitality Company (NYSE:DRH) Q1 2023 Earnings Call Transcript May 5, 2023 Operator: Good day and thank you for standing by. Welcome to the DiamondRock Hospitality Company’s First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be […] DiamondRock Hospitality Company (NYSE:DRH) Q1 2023 Earnings Call Transcript May 5, 2023 Operator: Good day and thank you for standing by. Welcome to the DiamondRock Hospitality Company’s First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Briony Quinn, Senior Vice President and Treasurer of DiamondRock Hospitality. Please go ahead. Briony Quinn: Thank you. Good morning, everyone. Welcome to DiamondRock’s first quarter 2023 earnings call and webcast. Before we get started, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those expressed in our comments today. In addition, on today’s call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. With that, I’m pleased to turn the call over to Mark Brugger, our President and Chief Executive Officer. Mark Brugger: Thank you for joining us today. The first quarter results from the DiamondRock portfolio set records for both revenues and total profits. In the quarter, comparable RevPAR increased 16.9% and comparable revenues increased 18% over the prior year. Hotel adjusted EBITDA increased $8.5 million or 15.9%. The results were also well ahead of 2019, with comparable RevPAR up 13.8% and hotel adjusted EBITDA up 19.5%. These record results speak to the quality of our real estate, our favorable geographic footprint and our strategy to have a portfolio of differentiated hotels and resorts. It is the DiamondRock portfolio that is our competitive advantage. The DiamondRock portfolio distinguishes itself from its public peers by having only two of its 35 hotels, subject to long-term management agreements. This increases both the liquidity and the NAV of these unencumbered properties. The portfolio today is comprised of 35 properties, 20 in urban gateway markets and 15 in prime resort locations. It’s a well-balanced portfolio. By full year revenue, it is about 60% urban and 40% resorts. We believe that we have carefully curated a unique portfolio that can outperform the industry averages over the long-term because of our focus on the right markets and the favorable experiential travel trend. Our urban properties are concentrated in some of the most desirable submarkets of the best gateway cities. These submarkets include New York’s Times Square and Midtown East, Boston Seaport and Financial Districts, Chicago’s, Magnificent Mile, Denver’s, Cherry Creek District, San Diego’s, Little Italy and Salt Lake City’s Temple Square. Just as importantly, we have largely avoided markets like San Francisco, Portland and Los Angeles, where values have been crushed for post-pandemic structural changes in demand, new transfer taxes and reduced operating efficiencies from recently adopted hotel ordinances. Our resorts like our gateway hotels are situated in prime locations, like the Vortex among the Red Rock Sedona, the snow-cap mountains of Vail, the Wine Country in Sonoma or the beaches of the Florida Keys. Collectively, these resort markets are positioned to outperform in the coming decade from the accelerated paradigm shift towards more leisure travel that powerfully is combined with little to no supply increases. Let’s get into the trends that we are currently seeing within the portfolio. The group segment is showing considerable strength. Compared to the first quarter of last year, room revenue increased 59% and in the quarter for the quarter activity was up nearly 15%. The benefit of owning well-maintained hotels in key submarkets is readily apparent in the performance of our group-centric hotels. RevPAR at the San Diego Westin increased 71% over Q1 2022. And RevPAR at the Chicago Marriott increased 62%. Similarly, RevPAR at the Boston Western Seaport increased 40% over the first quarter of 2022, which impressively was more than 10% over its prior first quarter peak. Business transient demand has also rapidly recovered. Midweek business transient occupancy at urban properties increased 50.8% in the first quarter from the comparable period. This strong business transient demand helped set records for our trio of select service hotels in Manhattan, which were stars in the first quarter with RevPAR increasing at an average of 45.6% over Q1 2022 and 8% higher than the comparable period in 2019. Business transient demand also propelled results at the Hotel Emblem, which cemented its status as the number one TripAdvisor ranked hotel in San Francisco. This tiny boutique delivered nearly an 80% increase in RevPAR over last year and double-digit RevPAR growth compared to 2019. Just as encouraging was the intra-quarter momentum for BT. In January, in business transient occupancy at our urban hotels was 51.7% of comparable 2019 levels. And by March, it was 16 percentage points higher at 67.7% of 2019 levels. However, it is really the resort segment that continues to be the big long-term beneficiary of travel trends that began before the onset of the pandemic. There is a fundamentally favorable imbalance of robust leisure demand for the limited number of resorts in the US. This imbalance underpins our belief that resorts remain a great capital allocation choice for the coming years. In fact it is now obvious that the more resorts you acquired prior to the pandemic the better off you are now. As you know, DiamondRock nearly doubled its number of resorts prior to the pandemic through the acquisition of seven different resorts in the five years prior to 2020. It was this delivered capital allocation that helped fuel our record-setting performance. For our entire resort portfolio, the results in the first quarter were very strong with RevPAR that was 30.4% higher than 2019 and adjusted EBITDA that was 47% higher than 2019. This operating outperformance yielded enormous NAV increases for our resorts where we estimate NAV increased by nearly $200 million or about $1 per share since 2019. For the industry, STR reported that the resort segment in the US increased year-over-year RevPAR by 12.9% in the first quarter. As the world settles down post pandemic each resort market is establishing a new normal baseline, which began happening around September of last year. Encouragingly, in this first quarter we saw record RevPAR performance from our luxury collection resort in Vail up 18.8%, our Hilton and Vermont up 13.5%, the lodge at Sonoma up 11.5% and the Kimpton Shorebreak in Huntington Beach, which is another number one ranked TripAdvisor hotel. After experiencing explosive growth during the last few years, we are seeing the resorts in Destin Beach and the Florida Keys stabilizing at their new normal still behind last year, but still more than 38% above 2019. We expect this new normal adjustment will continue until we get to lap this trend in late 2023. And when leisure is likely to resume its outperformance headed into 2024 and beyond. That’s a good transition to give you an update on the acquisition market more generally. While Jeff will discuss our current capital allocation options, including share repurchases at these steep discounts. We remain active in trying to find more acquisitions of the kind that have worked so well for us unique experiential hotels, generally owner-operated and held by non-institutional folks. We’ve been focusing these type of deals for almost a decade and have a first-mover advantage. DiamondRock’s well home skill set for identifying and unlocking value at these type of properties puts us in a great position to create value when we can pry them loose. Of course, a deal we would do this year will have to be something that we really love, but there are a few special opportunities out there where we are actively engaged in conversations. For broadly marketed deals, we expect the low transaction volumes to begin slowly picking up later in 2023, and into next year. Before turning the call over to Jeff to discuss our fortress balance sheet and earnings in greater detail we do want to provide comments on our outlook. Regarding group in full year 2022, we generated 83% of prior peak group room nights. Clearly, there is significant room for improvement and we are making excellent progress. In the first quarter, group room nights were 88% of prior peak and our current forecast is to finish 2023 at 94% of peak group room nights and 102% of peak group revenue. We are aggressively closing in on that target. Our group revenue booked in Q1 for the remainder of 2023 was up 28% over the last year with the strongest gains to be found in the next two quarters. Our full year forecast has group room rate up 14.5% to 2019, but it’s still about 46,000 room nights behind prior peak, including out of the room spend closing that gap and capturing those rooms could add $20 million of incremental revenue to our 2024 results. On leisure, it’s been the top performance segment over the past few years. In 2023, we expect each market will reach a different level of new normal after which leisure will likely return to its long-term secular growth trend line but off of a much higher base with the new normal 2023 resort NOI about 50% higher than 2019. As one point of additional opportunity for our resorts, they are projected to end 2023 at four percentage points of occupancy below prior peak and closing that gap next year could be worth another $24 million in revenue. Finally, business travelers are clearly getting back on the road, but we are seeing that positive BT trend line moderate a little on the demand side while we continue to push rate to maximize profitability. I’ll sum up by saying that, while the economic outlook is still too volatile to provide investors with useful earnings guidance. We continue to expect DiamondRock to achieve record revenues in 2023. With that, let me turn it over to Jeff. Jeff Donnelly: Thanks. As Mark said at the onset of the call, it was another strong quarter for DiamondRock. Comparable total revenue was up 18% over 2022 and 14% over 2019. Hotel adjusted EBITDA increased 16% over last year. This enabled us to generate corporate adjusted EBITDA of $55.4 million and adjusted FFO of $0.18 per share. Comparable RevPAR for the portfolio in the first quarter was $185, or nearly 17% higher than 2022 and nearly 14% higher than 2019. This growth was driven by a 23% increase in room rates over 2019. Occupancy was down 540 basis points to the first quarter in 2019. This is a 240 basis point sequential improvement, from Q4 2022. Closing this gap, remains one of several sources of future growth for DiamondRock. F&B and other revenue increased 14.1% or over $10 million on a combined basis, to nearly $83 million driven by several repositioned F&B outlets and new income streams created by our asset managers during the pandemic. We will share with you soon several new or upgraded outlets we are working on that will continue to drive profits to new levels, in 2024 and beyond. Comparable hotel adjusted EBITDA was $61.9 million, which beat first quarter 2019 by $10.1 million or nearly 20%. Adjusted EBITDA was $10.5 million and 23% better than 2022 and FFO per share was 28.6% better than 2022. Profit margins remain a great story for us. Comparable hotel adjusted EBITDA margins were 25.8%, up 117 basis points to 2019. Our resort portfolio finished the first quarter with a comparable hotel adjusted margin of 34.9% or 379 basis points higher than the same period in 2019. Importantly, this performance expanded upon the 341 basis point improvement reported by our resort portfolio in the fourth quarter of 2022. Comparable hotel adjusted EBITDA margins at our urban hotels were 18.2%, up 823 basis points over 2022. Urban hotels have yet to see demand recover to 2019 levels. So while we rebuild profitable corporate business, we are identifying permanent efficiencies to amplify our ultimate recovery. Operating efficiency is a critical factor in all aspects of capital spending on rooms, outlets and even back-of-house design. A more immediate example of efficiencies, can be found at our Chicago Marriott Magnificent Mile, which now operates with 20% fewer managers than it did in 2019. Our goal for 2023 is for hotel adjusted EBITDA margins to be roughly flat to 2019. Portfolio-wide increases in property insurance and property tax, are expected to be headwinds for the industry and for DiamondRock. Looking at the remaining three quarters of 2023, we expect total expense growth at our resorts will increase in the low single digits over 2022. For our urban hotels, expense growth is likely in the range of 12% to 13% for the remainder of the year, as we grow banquet business and fill positions as we rebuild occupancy. We are working hard to offset these increases through aggressive asset management, converting contract workers back to full-time employees and more efficient staffing models. Moving to capital allocation. As discussed in the prior earnings call, in early February, we executed two hedges to end the quarter with 64% of our total debt fixed or swapped. Subsequent to quarter end, we acquired the fee simple interest in the remaining land parcels under the Worthington Renaissance parking structure for approximately $1.8 million. We now own a 100% fee simple interest in the hotel. The transaction enhances the liquidity and financeability of this asset and more importantly, reinforces DiamondRock’s low exposure to ground lease assets. At the end of March, we acquired 56,400 shares of common stock at $7.26 per share before our window closed. This price represents nearly a 10.5% cap rate on trailing NOI or $270,000 per key of enterprise value, which is less than half our replacement cost. We were disappointed we could not be more active at these levels. Share repurchases are a key component of our capital allocation opportunity set and we constantly evaluate repurchases, against external growth opportunities as well as the high yields and long-term value creation, from our ROI pipeline. Speaking of ROIs, the portfolio continues to drive cash flow and create value as we execute our high ROI repositioning plans. In the last 24 months, we have completed the conversion and up-branding of the Vail Marriott to The Hythe, a Luxury Collection Hotel; the JW Marriott Denver to Hotel Clio, a Luxury Collection Hotel; the Key West Sheraton Suites to the Margaritaville Beach House and The Lodge at Sonoma to An Autograph Collection. In the first quarter these four hotels alone generated a collective RevPAR increase of 46% over 2019, with hotel adjusted EBITDA up 75% since 2019. Importantly, net asset values increased at these hotels and we are seeing a handsome return on our investments. Since 2021, we have, or will execute, a total of $90 million of ROI projects at 16 of our 35 hotels, creating and executing these types of repositioning is a core competency for DiamondRock. We are currently underway with three more ROI repositionings; the Hilton Boston to a lifestyle hotel that will be completed late summer; the Hilton Burlington to a lifestyle hotel to be named Hotel Champlain, a lakeside resort to be completed this fall as part of the Curio Collection; and the Bourbon Orleans repositioning to a premium urban lifestyle hotel in the French quarter to be completed before the Super Bowl and Mardi Gras in early 2024. We also have plans to create significant value and other — at several other properties including our Orchards Inn Sedona, our Lake Austin Spa Resort and our Landing Lake Tahoe Resort. These will allow us to grow value and drive premium core growth in future years. There is more to come, so stay tuned. Turning to the balance sheet. We remain committed to having a strong and flexible balance sheet. Our leverage is conservative as demonstrated by the low trailing four-quarter net debt to adjusted EBITDA ratio of 3.8 times. Our liquidity is very strong at $585 million, including $185 million of cash. Our $400 million revolver is undrawn. But just as critical, the $400 million is fully available to us even under our most restrictive debt covenants. Moreover, we expect to generate over $215 million of cash this year before capital expenditures and dividends. We have a few demands on our balance sheet and this allows us to play offense at a time when others may be forced to sell at depressed prices. Conversely, and to be clear, this is not our expectation, if real estate capital markets were to remain choppy for an extended period, we project we will have the capacity to retire all debt maturities, fully fund all capital expenditures, fund all pending ROI projects and pay projected preferred and common dividends through 2025 from current liquidity and retained cash flow. This scenario was not our house view of the future, but we believe it is an important point of differentiation for DiamondRock. We believe our well-maintained portfolio, low leverage, flexible and liquid structure, long weighted average maturity and strong cash flow are distinct and material advantages. Moreover, unwinding our balance sheet does not create a drag on our NAV. With that, let me turn the call back to Mark. Mark Brugger: Thanks, Jeff. Let me end by saying that we remain bullish on the future of travel. Travel is one of the most highly valued assets in our society and around the world. Leisure demand enjoyed a strong period of outperformance that began before the pandemic and we see that secular trend of outperformance continuing in the coming years. On group, the funnel for future business looks very strong. On business travel, while there is still some uncertainty as to where demand ultimately settles out, there clearly has been positive momentum and we are primed to take share from other hotels because of our excellent locations and from repositionings like the Clio, Denver, Luxury Collection hotel or the upcoming conversion of our hotel in Boston. To wrap up, the first quarter of 2023 was a record for DiamondRock’s portfolio in terms of both revenues and profits. Moreover, we believe that we are well positioned for this cycle with a very high-quality portfolio, a focused strategy and careful liquidity to move opportunistically. At this time, we would like to open it up for your questions. Q&A Session Follow Diamondrock Hospitality Co (NYSE:DRH) Follow Diamondrock Hospitality Co (NYSE:DRH) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. First question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is open. Austin Wurschmidt : Thanks and good morning. Mark can you just put some further details around your comment that BT is moderating. I’m just curious if that’s specific to any markets? Do you think this is a little bit of an air pocket, or are we actually seeing BT stall given what’s happening maybe just more broadly given the macro backdrop? Mark Brugger: Very good morning Austin. So I think it’s somewhat in comparison to the other segments. So leisure has been great. We’re well above and elevated from prior peak levels. Group is rebounding. And I think as we mentioned our group revenues will exceed prior peak this year. And then BT it’s coming back. It came back behind those other two segments. And we saw good momentum in the first quarter. I think what we’re trying to convey is we don’t see it reaching prior peak levels this year and it may settle out at something below what as the demand levels were in 2019 ultimately. So good positive volume that momentum that came on in the fourth quarter continued through the first quarter. But what we’re trying to indicate we don’t see — we talked about 16 percentage points of growth from January to March. We don’t see that see that same velocity while we continue to see here we don’t see the same velocity for the balance of the year. Austin Wurschmidt : Okay. Got it. And then just on group. I know you gave some stats but what percent of group revenues on the books relative to budget? And how much do you expect to pick up I guess in the quarter for the quarter over the balance of the year? And can you just talk a little bit about how the short-term leads are today relative to maybe what you saw last year? Mark Brugger: So I’ll take the front of that question and maybe I’ll hand it over to Justin to talk a little bit more about group. So we have today we ended the quarter with about 80% of the group room nights already under contract that we need to hit our forecast for the full year. So we feel good about the position that we’re sitting in for group. Justin, do you want to add some comments on the group? Justin Leonard : Yes. I think we hit it in our highlights and we’ve seen group as an area of strength just in the industry generally. And in full year ’22 we did 83% of prior peak. Q1 was 88% of prior peak and our current forecast is to get back to 94% of prior peak just in group room nights and we’re expecting to exceed that in volume. But I think more importantly what we’re seeing is in the year for the year pickup is actually accelerating. So in Q1 our in-the-quarter pickup for the remainder of 2023 was up 28% just in room night volume versus Q1 2019. So we continue to see that velocity while being somewhat short term expand over what we saw last year. And so we’re optimistic that we can even further close that room night gap to what we’re projecting for full year ’23. Austin Wurschmidt : Got it. Thanks, Justin. Thanks, Mark. Mark Brugger: You bet. Operator: Thank you. One moment for our next question. Next question comes from the line of Dori Kesten with Wells Fargo. Your line is now open. Dori Kesten : Thanks. Good morning. You talked a bit about your appetite to apply this year Mark. Should you transactionally assume you acquire pretty similar to what you have over the last several years like relatively small relationship potentially owner managed? Mark Brugger: Hey, Dori, it’s a great question. So we’re still focused — this isn’t the time to go out and do a big deal. We think we have ample liquidity and something we do given our cost of capital would have to be something that has relatively high returns in a market where there’s still a lot of private equity chasing deals. So we think our competitive advantage remains in these relationships we’ve built often in kind of differentiated resort markets from owner-operators. So that continues to be the bulk of the conversations that we’re having. That’s where we think we can create more value. It’s where we think we can buy things relative to our cost of capital that might make sense. But I can say in the broadly marketed deals we’ve seen they’re still — it’s still very competitive in the pricing. The pricing on this probably doesn’t make sense for us. So we’re trying to focus on the things where we think we have a competitive advantage. Dori Kesten: Okay. And some peers have talked about selectively reducing FTEs in the near term. Do you feel the need to do so, or is your focus more on offsetting contracts with permanent workers? Mark Brugger: Justin do you want to talk about the efforts we have for maintaining our margins? Justin Leonard : Sure. I think specifically on labor, we’re doing a number of things. I think one of the things Mark spoke about, specifically on the resort side where we’ve really cultivated a unique portfolio of small independent experiential resorts. We continue to look at how we can more efficiently run those small businesses by pooling resources. And I think it gives us an advantage both from a margin perspective but also in potential acquisitions. So, for test like cultivating relationships with luxury travel agents or small group meeting sales or even optimizing e-channel placement, we’re using external third party resources in lieu of on-property staffing for some of these smaller assets. It allows us really to get best-in-class resources for a significantly lower cost and eliminate those on-property FTEs versus the owner-operated run rate model. I think with respect to contract, we are focused on decreasing reliance on contract labor portfolio-wide. I think in the tight labor market in the last couple of years, everyone was forced to step up quickly and really use all labor sources we could secure. But given that market contract, labor costs have really inflated much faster than overall wage growth in many of our markets. It now represents a premium cost in a lot of those markets to bring those associates onto our property level teams, especially we factor around additional turnover and training. So we are — we continue to push for more FTEs on staff within our individual assets. Just as an example since acquiring Lake Austin, we’ve moved entirely away from contract labor in our spa operations. And we’re seeing that benefit both on the spa expense side, but it also helps us deliver better service to guests and probably more importantly, eliminating that middle man delivers a better paycheck to the associate. Dori Kesten: All right. Thanks. Operator: Thank you. One moment for our next question. Our next question comes from the line of Duane Pfennigwerth with Evercore ISI. Your line is now open. Duane Pfennigwerth: Hey. Good morning. Thanks. Just on F&B, one of the trends we’ve seen really across lodging this sector is higher F&B relative to room revenue. I wonder if you could just provide some context on what you think is driving that. And again, from an industry perspective, if you see it as sustainable? Mark Brugger: Sure. So, this is Mark. I’ll kind of kick that off. So I think generally what we’re seeing is we’re seeing better than anticipated outside the room spend on banquet. So the groups that have been coming over the last really six months, I would say, have generally surprised to the upside on their AV rental, what they’re doing for the events the food items. I think there’s this general sense that from the event planners that if they’re going to get people on the road and get them together, it needs to feel meaningful and have satisfied attendees you need to really kind of roll out the carpet to make sure that they feel like it’s worth the effort given the tight labor market. So, we’ve been very pleased on that side. I think for the DiamondRock portfolio, specifically otherwise, we hit new records for outlets last year. So we’ve made a conscious effort to — and we think increase the guest experience by putting in a number of specialty restaurants within our hotels whether that’s a Richard Sandoval, Toro or a Michael Mina restaurant or Vivian Howard in Charleston, we’ve cultivated a number of these relationships, which have led to a much higher F&B, particularly in the outlet and that’s sustainable. I think that continues to be something that makes our hotels more desirable, and it continues to resonate with the travelers today to have those kinds of choices within the properties. Justin, anything else on F&B? Justin Leonard: I think on the resorts, we’re pretty pleased to see continued growth in outlets, in food and beverage, I think due to some of those repositioning. I do think that comparable on a year-over-year basis will probably moderate for the urban. I mean there were a few of our urban assets. And I think there’s just in the industry generally where the outlets were not fully open in Q1 of 2022 and we didn’t have, for example, room service installed in Q1 of 2022. So, I do think some of that fruit of average growth will probably moderate just in terms of outsized revenue growth as we go through the year. Duane Pfennigwerth: Thanks. And Mark, maybe I’ll stick with you. When we were together in Bethesda with investors in late March, you had talked about increased dialogue with private equity firms, kicking tires on the sector and potentially kicking tires on DiamondRock specifically. Can you give us an update on that kind of the tenor and the pace of those conversations? Mark Brugger: Sure. So I guess we always have a year of conversations with private equity firms. As you know, there’s probably about — I think what the last chart, I saw was about $230 billion raised to deploy against real estate and hotels have moved up as a desirable asset class among those private equity firms. That’s what we’re hearing. We’ve been engaged in some regular conversations with folks as we always are. I’m not sure, it’s appropriate to comment on some of the substances and details of those conversations. But, I can tell you the interest in the sector from our conversations remains very high. Duane Pfennigwerth: Thank you. Operator: Thank you. One moment for your next question please. Our next question comes from the line of Smedes Rose with Citi. Your line is now open. Smedes Rose: Thanks. I just wanted to ask you, you talked about return to the new normal in Florida. And I was wondering would you apply that to what you’re seeing at the Lake Austin property, which looks like it saw a pretty steep year-over-year declines? And are you still comfortable with what you underwrote those assets with — in your initial guidance when you had — when you purchased them? Mark Brugger: Sure. So let me start with leisure generally. So we are seeing leisure demand we think at an all-time high. If you look at the STR data the year-over-year Q1 RevPAR was up 12.9%. Recently we were just listening to airline CEOs and the cruise line CEOs, you’re hearing about the robust demand. And frankly the airlines probably have the best data set. So we’re believers that there is more leisure and that’s going to continue. I think some of what we’re seeing in the Florida Keys is the couple that might have gone to Florida Keys last year. They were nervous by COVID now maybe they’re taking a cruise or they’re going to the Caribbean, but the overall pie is just much bigger and that’s a trend that we think continues to be a smart place asset allocate capital. On Lake Austin Spa, specifically that resort there was an ice storm in the first quarter. That was about a $500,000 hit. On the bottom line we’re still — through cost savings we’re still on our underwriting for the first quarter. So we feel good about our position I know that Justin spoke about some of the things we did on the labor there. The systems we talked about when we acquired it, converting from an owner operator pretty primitive pricing model that they had in place with sophisticated new systems and best-in-class operating tools. Given the backlog on getting those implemented, they’re really getting implemented in April and May and we think we’ll see enormous returns from those and our ability to professionally asset manage and revenue manage that property going forward. Smedes Rose: Okay. Thanks. And then I just wanted to ask you in Sonoma, you were up but I was just wondering did you guys see any weather impact out there from the rating activity during the quarter that may be depressed results at all or? Mark Brugger: No. We thought Sonoma performed well. It hit our expectations, actually exceeded our expectations a little bit. So we didn’t see any weather impact. Jeff Donnelly: We had some minor disruption maybe day and a half, but it wasn’t significant to the overall quarter. Smedes Rose: Okay. Thank you guys. Operator: Thank you. One moment for our next question. And our next question comes from Floris Van Dijkum with Compass Point Research & Trading. Your line is now open. Floris Van Dijkum: Thanks. Good morning guys. I had a question on your redevelopment assets. Obviously, you’ve got a couple of hotels that you’re rebranding. I wanted to — you haven’t disclosed what you’re rebranding the Boston Hilton to. Maybe if you could give us a little bit of insight into your thinking about having that be a soft brand versus a lifestyle unbranded hotel, and what the cost benefits potentially could be, because we understand that soft brands while they might have been seeing like an autograph or a Curio might have been cheaper two years ago, they probably aren’t as cheap as they were back then. And if you could give us some more update on that that would be great? Mark Brugger: Sure. Well, one, we think it’s a fabulous location in Boston. It’s a seven-day a week location, which gives us a lot more optionality. We’re not dependent on the brand and the brand channel of that particular location. We’re spending about $31 million on the property this year. Now it was due for rooms redo. So that’s not all incremental to the repositioning. But we’ll have it repositioned brand new spectacular gym that we built out, as well as the meeting space lobby everything redone. So we think it’s a unique special property. We probably will go independent at that property this summer. Jeff, do you want to give some numbers? I know you have an analysis in front of you? Jeff Donnelly: Yeah. How are you doing, Floris? As Mark mentioned we’re looking at the path we ultimately take with that asset this summer. I think there will be some displacements depending on whether or not we go fully independent door remain within the Hilton system just the change is going to cause some disruption. I think the figures we looked at for the full year is probably going to be around $5 million to $6 million on sort of a revenue and EBITDA impact than the plan that as we grow back we’ll be able to pick up substantially more than that just because I think that in that particular location and being able to appeal to a leisure customer being so close to Altisource destinations, but also a business customer in the financial district having more of an independent field to that hotel will be able to command a much higher rate premium than we have in the past and ultimately better profitability. So, it could be several million dollars more than the disruption we’ll realize this year in terms of earn back on NOI in the future. Floris Van Dijkum: Thanks. And maybe my follow-up. I mean I looked at the EBITDA contribution of your Worthington Fort Worth Hotel and your Salt Lake and they jumped up significantly. Was the Worthington increase due to the buying out of the ground rent or what was behind the big jump in performance from those in particular those two hotels? Mark Brugger: So, worthy to let’s talk about that specifically. So the ground lease is relatively small as tens of thousands of dollars in lease payments. It was not a material difference to the earnings result, frankly it didn’t impact Q1. We are excited to — it covered a portion of the parties but we’re always excited to eliminate any ground lease and now we have complete control of the property. And frankly, there is probably other things in the future that could be done with that location of that parcel. So we think that that’s a win for DimondRock. Worthington had good group exposure. Markets like Fort Worth markets like Salt Lake City those cities are doing particularly well as some other major markets become less desirable those markets are really prime to take share from the San Francisco and this economy. We’re seeing office and the desirability of the kind of companies wanting to be in those decisions really exceed what we’re seeing on a nationwide trends. So they’re benefiting from that. Floris Van Dijkum: Thanks Mark. Operator: Thank you. The next question comes from the line of Michael Bellisario with Baird. Your line is open. Michael Bellisario: Thank you. Good morning everyone. Mark just wanted to go back to some commentary on the resorts and performance during the quarter. Maybe just give us your view of in aggregate how they perform versus your internal expectations? And were there any particular markets that were better or worse than forecasted during the quarter aside from the commentary you already provided on Sonoma? Mark Brugger: Yes, I mean in addition to Sonoma, Vail, Huntington Beach were ahead of our expectations. I think the ones that were that kind of were different than our forecast at Lake Tahoe. There is obviously a record amount of snow and that impacted performance a little but it’s a tiny asset so it doesn’t move our overall numbers. And I would just say the — except for Fort Largo, which was we were able to group up very effectively, the Florida Keys were behind our expectations for the first quarter as kind of things kind of new normal whether significantly ahead of 2019, we think we’re establishing the new normal for the Florida Keys in 2023. And hopefully, we’ll be able to grow from that as we move into 2024. Michael Bellisario: Got it. Thanks. And then just a follow-up and switching gears on margins. Just wanted to dig into the commentary there. Did you say flat margins for the remainder of the year, or is your expectation that the full year 2023 is roughly flat at the hotel EBITDA level? And then any quarterly cadence 2Q to 4Q that you could provide to help with modeling would be appreciated. Thanks. Jeff Donnelly: Hey Mike, this is Jeff. I would say that on a full year basis, the thinking was that margins would be approximately flat to what they were in 2019 which is I believe about 29.5% was the number back in 2019 that we had on a comp basis out there. In terms of the cadence I’m just eyeballing this while we’re talking. No, I mean I think when you look at the remainder of the year, I think from a timing standpoint, probably our most difficult quarter is the second quarter when you begin to think about margin gains just because you certainly had strong — when you think about the comparisons to last year you had revenues that were very strong and ramping over the course of the year so the comparison will get tougher. And at the same time, if you think about the rebuild of expenses last year you still were earlier in the year seeing wage rates rise and staffing obviously moves with occupancy recovery. So I think probably the first half of the year generally has more difficult margin comparisons for us than the back end of the year. Mark Brugger: Yeah. Just to add on to that. On the resorts if you look at the Sedona and the South Florida markets, you can see the new normal kind of getting into place starting September of last year. So those comps also get easier which I think will help the overall margin story as we kind of move into fourth quarter and start 2024. Michael Bellisario: Helpful. Thank you. Operator: Thank you. One moment for our next question. The question comes from the line of Anthony Powell with Barclays. Your line is now open. Anthony Powell: Hi. Good morning. I guess a follow-up on the fourth quarter and then leisure kind of reaccelerating. Is that based on booking trends you’re seeing, for the holiday period? And do you expect the growth to be more in occupancy or rate? Mark Brugger: Great question. So leisure doesn’t usually book out six to nine months. But what we’re seeing and kind of what we were watching in real time September, October, November, December of last year particularly in Sedona in South Florida as we could kind of see the world reopen. So while demand was robust, generally for leisure, people felt comfortable traveling to alternative destinations. So kind of got to that new normal, I think as the world was opening up the people were comfortable. So our expectation is that, that comp gets much easier when we approach the fourth quarter both on probably evenly split between knock-in rate is our expectation right now. Anthony Powell: Got it. Thanks. And then, maybe one more in terms of dispositions, we talked about maybe selling some group hotels in the past. But given what you said about group being kind of a strong segment does it make sense to retain the group hotels that you currently own or even add more in the future? Mark Brugger: Yes. We like group probably by room type about half of our hotels are — by room number are about 40 — let me calculate about 49% of our hotel rooms are in group-centric hotels over 400 keys. I think its fine. I mean, I think group will continue to be good this year and next year. We still like the leisure segment probably the best over the next five to 10 years. But this year our group hotels are doing excellent probably the value of all those hotels increases over the next 12 months. And for large hotels it still remains a difficult debt market. So, those things combined to lead us to, it’s probably better to hold any group hotel in 2023. Anthony Powell: Thank you. Mark Brugger: But that said, everything is for sale at the right price. Anthony Powell: Got it. Thanks. Operator: Thank you. . And currently showing no further questions at this time, I’d like to hand the conference back to Mr. Brugger for any closing comments. Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day. Follow Diamondrock Hospitality Co (NYSE:DRH) Follow Diamondrock Hospitality Co (NYSE:DRH) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Gannett Co., Inc. (NYSE:GCI) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Greetings, and welcome to the Gannett First Quarter Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matthew Esposito, Investor Relations. You may begin sir. Matthew Esposito: Thank you. Good morning, everyone, […] Gannett Co., Inc. (NYSE:GCI) Q1 2023 Earnings Call Transcript May 4, 2023 Operator: Greetings, and welcome to the Gannett First Quarter Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matthew Esposito, Investor Relations. You may begin sir. Matthew Esposito: Thank you. Good morning, everyone, and thank you for joining our call today to discuss Gannett’s first quarter 2023 results. Presenting on today’s call will be Mike Reed, Chairman and Chief Executive Officer; and Doug Horne, Chief Financial Officer. During this call, we will discuss Gannett’s financial results for the quarter. If you navigate to the Gannett website, you will find that we have posted an earnings supplement in addition to our earlier press release. We will be referencing it today on the call as it provides you with additional detail on this quarter’s performance. Before we begin, please let me remind you that this call is being recorded. In addition, certain statements made during this call are or may be deemed to be forward-looking statements, including those with respect to future results and events and are based upon current expectations. These statements involve risks and uncertainties that may cause actual results and events to differ materially from those discussed today. We encourage you to read the cautionary statement regarding forward-looking statements in the earnings supplement as well as the risk factors described in Gannett’s filings made with the SEC. Except as required by law, we undertake no obligation to publicly update or correct any of the forward-looking statements made during this call. In addition, we will be discussing non-GAAP financial information during the call, including same-store revenues, free cash flow, adjusted EBITDA, adjusted EBITDA margin and adjusted net income attributable to Gannett. You can find reconciliations of our non-GAAP measures to the most comparable U.S. GAAP measures in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in Gannett. The webcast and audio cast are copyrighted material of Gannett and may not be duplicated, reproduced or rebroadcasted without prior written consent. With that, I would like to turn the call over to Mike Reed, Gannett’s Chairman and CEO. Michael Reed : Thanks, Matt. Thanks everyone for joining our first quarter earnings call this morning. We are pleased to report that 2023 is off to a great start. Adjusted EBITDA was down only 2% in the first quarter compared to the prior year after being down 22% in the fourth quarter of 2022. And entering Q2, we believe our most challenging comparisons to prior year are behind us. Excluding the impact of foreign currency, adjusted EBITDA was actually flat to the prior year. Our same-store revenue trends also improved sequentially in the first quarter and we expect this trend to continue into the second quarter. Net income in the first quarter grew by $13.3 million from the prior year to $10.3 million. That compares to a net loss of $3 million in the first quarter of last year. As forecasted in our last earnings call, we expect to achieve year-over-year adjusted EBITDA growth in 2023 as we capture the benefits from our cost management initiatives, see improving revenue trends, and cycle more favorable comparisons. And the solid performance in the first quarter of this year gives us the confidence to increase our 2023 full year outlook with respect to adjusted EBITDA, net income and free cash flow. To put it concisely, we believe that we are at an inflection point in the trajectory of our company. You’ll hear this throughout the call this morning as we are moving nicely in the right direction with regard to most of our financial measures. We believe our results in the first quarter demonstrate the effectiveness of the actions we put in place in the later half of 2022 to better position the company for long-term success. We are operating more efficiently from these efforts, resulting in anticipated annualized savings of at least $220 million in 2023. And our organizational structure changes have established a solid foundation for anticipated continued growth in our highly recurring digital businesses. We also remain committed to our aggressive debt repayment strategy evidenced by the $37 million of debt repayment in the first quarter, which reduced our leverage in the quarter as well and continues to improve our capital structure. As our digital revenue streams continue to grow, our cost structure comes down and inflationary pressures ease, we believe we will be able to generate significant free cash flow and year-over-year adjusted EBITDA growth in 2023. With that, I’d like to discuss the major highlights of the first quarter. When we spoke last on our fourth quarter earnings call in February, we outlined a more balanced approach between increasing profitability and growing digital-only paid subscriptions. We will continue to pursue paid digital subscriptions growth. However, we have become more targeted in our subscription acquisition strategy with an increased focus on profitability and ARPU. Our digital-only subscription volume in the first quarter reflects this refined balance of volume versus profitability. In the first quarter, digital-only paid subscriptions increased 15% year-over-year and remained relatively unchanged from the fourth quarter. This was in line with our expectations as we anticipated lower net ads in the first quarter as we focus on improving product efficiency and refocusing our marketing and pricing strategies. We anticipate this to continue in the second quarter. However, we do expect to see an increase in our subscription acquisition volumes as we move into Q3 and Q4 of this year. Even with our shift in focus, our digital-only circulation revenues had strong growth of 20% year-over-year on a same-store basis in the first quarter and we expect this growth to continue throughout the year. We believe that over the medium and long-term, we have a significant opportunity to grow our digital-only subscriber base given our large organic audience. For context, during the first quarter, we had 186 million average monthly unique visitors. We believe our current digital offerings have a significant addressable market for us to continue to attack and we are making further investments in our infrastructure to improve our penetration of this very sizable market and to further expand the audiences that visit our platform. Investments in this area include content, content creation, product enhancement, product improvements, and importantly, data collection and analysis. Data remains the most significant driver for growth with regard to our content strategy, our product strategy, and our marketing and pricing strategies. Within this significant addressable market, we have an active and engaged set of consumers across our registered users and newsletter subscribers. In the U.S. alone, at the end of the first quarter, we had 6.5 million registered users, and that grew 63% year-over-year. We also had 8.7 million newsletter subscribers, growing 16% year-over-year, of which 6.2 million of those were not yet registered users. So that’s nearly 13 million engaged consumers that are not yet subscribers who we are interacting with on a regular basis. And we expect these registered user numbers to continue to grow. Our goal is to build on those relationships, activate those users and convert a portion of this highly engaged pool of users into subscribers. Now switching gears a bit. One of our big growth opportunities is further monetization of this large audience in this content platform beyond subscriptions and beyond advertising. As previously announced, partnerships are a key focus of ours in order to leverage this growth opportunity. In addition to the partnerships previously announced in the sports gambling and financial services sectors, we have plans to establish additional partnerships covering big sectors such as home services and education. We anticipate these partnerships as well as others in the pipeline will allow us to expand our total addressable market and increase the overall monetization of our content platform. We’ll have much more to come and much more to announce in this area of our business over the next few quarters. We are also excited about Kristin Roberts joining Gannett as our Chief Content Officer. Kristin brings over 2 decades of experience to the role, most recently as Chief Content Officer of McClatchy. In her previous roles, Kristin has architected audience growth and engineered strategic and tactical changes to create new business categories for content, creating the fuel and investment needed to sustain high quality journalism. Kristin has a proven track record creating audience growth and we are energized that her expertise will help drive our digital transformation and content strategy across USA TODAY and our USA TODAY NETWORK. Her focus will be on leveraging data science to refine our content strategy that drives agile interactions with our consumers, ensuring our newsrooms deliver a dynamic digital model for journalism and monetizing Gannett’s breadth of content at both the national and local levels. All of these efforts are expected to lead to additional opportunities to further monetize and expand our significant audience. We are really thrilled to have Kristin on the team and we look forward to her contributions towards driving our transformation. Now, turning to our Digital Marketing Solutions business. We achieved core platform revenues of $111.4 million in the first quarter of 2023, increasing approximately 4% year-over-year, while maintaining strong adjusted EBITDA margins. ARPU and budget retention both grew year-over-year as well. We continue to expand our DMS product offerings through our freemium experience, which contributed to our DMS registered users surpassing 100,000 in the first quarter. Our registered user count continues to show impressive growth as demonstrated by nearly doubling from 55,000 registered users at the end of the fourth quarter. These freemium registered customers are in addition to our nearly 15,000 core platform customers. Our freemium customer segment provides an interested and engaged base of businesses to introduce low ARPU do-it-yourself or buy online products and we expect to start to more meaningfully monetize this business as we move forward. We continue to remain very optimistic about the DMS business and its growth potential. First, this business has many similarities to a subscription or SaaS model in that it generates high revenue and client retention. We have historically retained 95% of customer revenue comparable to that of a SaaS or subscription product. There are over 30 million small businesses in the U.S. and those businesses are increasingly dependent on a digital strategy to grow their own business, and importantly, to generate and manage leads. We serve these businesses with our digital platform that helps our business partners establish and optimize their digital presence. We assist them with optimizing their marketing spend across an increasingly complex online digital ecosystem while optimizing their lead management process. Finally, given our longstanding involvement and knowledge of the communities in which we operate, we believe that we have a true advantage at successfully reaching the small and medium sized business segment with a lower overall CAC. Let’s talk about generative AI for a second, a very hot topic globally and in our industry. Generative AI, while still in the early stages in terms of development, shows tremendous potential to help us improve our business, but, of course, has risks as well. Gannett is committed to being a leader in using AI effectively and innovatively while maintaining unique in-depth and unparalleled content that only our journalists can produce. We continue to explore the possibilities of AI, but have already seen and implemented use cases here at Gannett. Looking at where we can benefit most, one area that stands out is commoditized content, such as weather and event listings. By utilizing generative AI, we can effectively provide basic content to our audience while allowing our journalists to focus on creating more high quality, non-commoditize content and value-added services. We can further leverage AI to improve the product experience in areas such as personalized content recommendations and curated page experiences. And AI can help improve and quicken business decisions in areas such as pricing strategies or balance of premium content on our pages. The applications of AI are vast, and by responsibly leveraging the technology, we can improve the customer experience and create efficiencies that allow our journalists to provide more rich local and national content, all the content that Gannett is known for. Now before turning the call over to Doug, I want to reiterate a few very important points. We had a solid first quarter with noticeable improvement in trends across a broad spectrum of our business. It was very encouraging and our confidence enables us to raise our guidance in several key financial categories. With declining debt and lower leverage, improving same-store revenue trends with a greater portion of revenue coming from digital and the meaningfully lower cost structure, we are well positioned to grow adjusted EBITDA and free cash flow significantly this year over the prior year. And we remain confident in our ability to reach our inflection point towards the end of next year. We believe we are well positioned to execute on our transformation while we delever the company, resulting in significant value enhancement for our shareholders. I’d like to now turn the call over to Doug to provide additional detail and color around our 2023 first quarter as well as the details on the increase to our full year 2023 guidance. Doug? Douglas Horne : Thank you, Mike, and good morning, everybody. As Mike mentioned, we are excited by the progress we made in the first quarter. Adjusted EBITDA remained relatively stable year-over-year despite facing the most challenging comparisons of the year. Last year’s negative trends around revenue, inflationary impacts and currency, all became more significant beginning in the second quarter of 2022. We also improved our adjusted EBITDA margin in Q1 by 80 basis points year-over-year. The stabilization in adjusted EBITDA reflects the successful execution of our cost management initiatives as well as the sustained execution of our strategy. We are optimistic about the ongoing trends, which we anticipate will continue to improve throughout the year, most notably in Q2 and Q3. We believe this puts us in a favorable position to achieve year-over-year adjusted EBITDA growth for 2023. For Q1, total operating revenues were $668.9 million, a decrease of 10.6% as compared to the prior year quarter, or 9.3% on a same-store basis. This represents 100-basis point improvement from the 10.3% year-over-year same-store revenue decreases in the fourth quarter of 2022. And we expect this trend and improvement to continue for the balance of the year. Adjusted EBITDA totaled of $62.9 million in the first quarter of 2023 a slight decrease of 2% or $1.3 million year-over-year to almost exclusively to the impact from foreign exchange rates. The adjusted EBITDA margin was 9.4% compared to 8.6% in the prior quarter. The improvement in adjusted EBITDA margin was driven by the savings captured from our cost management initiatives with expenses related to these initiatives down approximately 12% year-over-year. This is despite the lingering impacts of inflationary pressures. While we believe these costs peaked in late 2022 the flow through impact was still meaningful on a year-over-year basis in the first quarter of 2023. On the bottom line, we ended the first quarter with net income attributable to Gannett of $10.3 million and $5.8 million in adjusted net income. Our net income represents a gain on the sale of real estate and other assets and a $17.6 million tax benefit. We continue to expect a full year tax provision to remain in line with our original guidance of 0 to $20 million with the expected tax benefit in the first half of the year being offset by an expected tax provision in the second half of 2023. Total digital revenues in Q1 were $247.5 million down 0.9% year-over-year on a same-store basis. In the first quarter, our total digital revenues accounted for 37% of our total revenues. Digital revenues decreased due to continued softness in digital advertising which started in mid Q2 of 2022 and was down 15.8% in Q1 of 2023 on a same-store basis year-over-year. The decrease in digital advertising revenue was primarily driven by lower monetization rates as compared to the prior year period. We expect to begin to cycle this impact midway through the second quarter of 2023 and return to digital revenue growth. This will help us reach our long-term projection of total digital revenues accounting for more than 50% of our total revenue. The performance in our digital-only circulation and Digital Marketing Solutions businesses is expected to continue to provide the foundation for future growth. On a same-store basis, our digital-only circulation revenues of $35.8 million increased nearly 20% over the prior year period. As we look ahead, we expect ARPU to gradually rise through the rest of the year as we continue to focus our customer acquisition efforts on more profitable subscribers. Print advertising revenue decreased 10.7% compared to the prior year on a same-store basis, reflecting a stabilization and improvement in trends despite the continued secular declines. There has been a significant improvement in print advertising trends on a sequential basis with an increase of over 600 basis points compared to Q4 of 2022. We did experience some softness in the classifieds market, which includes obituaries and employment listings. However, we have implemented self-service order capabilities across both of those verticals, and we are pleased to report that in the initial stages, the self-service functionality has led to an increase in both the order volume and average order size as well as an expanded customer base. Results in print circulation Operator: Excuse me one moment please. Hold for a moment please. Michael Reed : I am going to pick up for Doug here. Results in print circulation have also seen a sequential improvement compared to Q4 of 2022 as a result of the actions we implemented to improve the subscriber experience. We have started to see the results of our investments in addressing the open route situation and distribution challenges, and we’ve successfully seen the percentage of open delivery routes decrease from 14% to 9% in the first quarter of 2023, that’s helped us a lot. It’s important to stress that we believe our traditional print business remains a strong source of cash flow, which still has a long tail to it. This cash flow enables us to improve the balance sheet by repaying debt, and of course, it allows us to — invest in our digital growth opportunities. We are focusing — we are managing the tail and print as effectively as possible and have increased our efforts to reduce churn with our print subscribers. Revitalizing our local markets is a key objective for us in 2023. Our new Chief Content Officer, Kristin and her team are working to put our customers, readers, viewers and listeners at the forefront of every content decision. This will ensure that we remain vital to the communities we serve while maintaining a sustainable business model for independent journalism. We recognize that investing in our local teams and our local brands is vital to our success, and we are thrilled to have Kristin as part of the Gannett team. In our Digital Marketing Solutions business, total revenue in the first quarter was $112.8 million, an increase of 3.4% year-over-year on a same-store basis. Adjusted EBITDA for the segment was $11.7 million, representing a margin of 10.4% in the first quarter. Average monthly customer count decreased by approximately 4.5%. However, ARPU grew almost 9% versus the prior year. In terms of quarter-over-quarter results, customer count decreased slightly from 15,300 customers in Q4 to 14,700 in Q1 due to the inherent seasonality of our customer base. However, we believe our continued execution, especially with the freemium model, along with the development of additional products and features will increase our addressable market and mitigate at least in part, the effect of seasonality on the DMS business. I’ll turn it back over to Doug now to cover the balance sheet. Doug? Douglas Horne : Thank you, Mike apologies for the technical issues. So at the end of the first quarter, we had a cash balance of $83.1 million, translating to net debt of approximately $1.15 billion. In the first quarter, free cash flow usage was $2.1 million and included $18.2 million in severance and restructuring costs, largely associated with our cost management program. In Q4 of 2022, we highlighted that we anticipate a year-over-year reduction of more than $60 million in our 2023 cash obligations related to expenses such as pension and reorganization costs. In light of our Q1 results, we anticipate a significant improvement in our free cash flow, and we are now targeting free cash flow of $85 million to $105 million for the full year of 2023. We ended the first quarter with approximately $1.23 billion of total debt. Our first lien net leverage decreased to 2.59x, reflecting $37.3 million of total debt paydown in the first quarter. During the first quarter, we repurchased $6.1 million of our 2026 senior notes for approximately $5 million. We also repaid $31.3 million of our term loan through real estate and other asset sales totaling $16.2 million and our quarterly amortization payment of $15.1 million. In Q1, we completed 8 real estate and other asset sales totaling $29.3 million. For the full year of 2023, we continue to project $65 million to $75 million in real estate and other asset sales, including those we completed in the first quarter. We continue to maintain a sizable real estate sales pipeline of approximately $50 million to $60 million, which combined with our expected free cash flow improvement will contribute meaningfully to our aggressive debt paydown strategy. Moving now to guidance, we are reiterating our prior guidance as described in today’s earnings release with respect to revenues, same-store total revenues and first lien net leverage. We are increasing our 2023 full year outlook for both adjusted EBITDA and free cash flow by $5 million as a result of the first quarter results. We now expect full year adjusted EBITDA between $285 million to $305 million, which translates — to expected year-over-year growth of over 15%. This growth is expected to be most significant in Q2 and Q3 of 2023 due to the cycling of the more significant revenue declines and the ramping of our cost management initiatives. Free cash flow is now expected to be in the range of $85 million to $105 million. We also raised our 2023 full year outlook for both net income attributable to Gannett and cash provided by operating activities by $5 million. For the full year, we expect net income attributable to Gannett to range from a net loss of $15 million to net income of $15 million, while cash provided by operating activities is expected to be in the range of $125 million to $145 million. Just to recap, I am extremely pleased with our Q1 performance, the progress of our strategic initiatives, our ability to effectively reduce our overall cost base as well as our day-to-day execution. As a result, I believe we are very well positioned for growth in our adjusted EBITDA and free cash flow in Q2 as well as the second half of 2023. I’ll now hand it back over to the operator for questions, and then we can go to Mike for some closing thoughts. Q&A Session Follow Gannett Co. Inc. (NYSE:GCI) Follow Gannett Co. Inc. (NYSE:GCI) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Our first question comes from Courtney Bahlman with Barclays. Courtney Bahlman: Congrats on the results. I hopefully I didn’t miss this, but could you guys give a little bit of color on how we should think about the cadence of assets, the remaining asset sales and kind of how debt paydown ties to that any color would be great? Michael Reed : Yes, Courtney, this is Mike. Thanks. So with regard to debt paydown, we have our normal quarterly amortization that’s obviously straightforward, $15.1 million in the quarter. And then the remaining $50 million to $60 million of asset sales will be a little bit more, lumpy. So there’s, a couple of decent sized ones in there. So, I would say between now and the fourth quarter, we hope to complete most of that, and we factored that into our overall forecast for debt repayment of $120-plus million for the year, so real estate a little lumpy, because of a couple of sizable transactions, but really straightforward on the regular quarterly amor 32.43. Operator: Our next question comes from Doug Arthur with Huber Research. Douglas Arthur : I got to be brief here, because I’m going to jump on another call. But the digital — I know you talked about slowing digital subscription subscribers down to maximize — sort of approach — with a more profitable goal in mind. That looks like sequentially, it looks like it actually dropped from the fourth quarter in terms of number of subscribers. What sort of — is your expectation for growth in the volume number for the balance of the year? Michael Reed : Doug, it was actually 6,000 so not much of a drop. I think we’re at 2028 in the end of the first quarter it was 2022. We are focused on higher retention, higher paying, therefore, better ARPU and profitability on our subscribers, as I said, with better retention. So, we’re focused on getting the right content in front of them, the right curation, the right personalization and then having the right marketing and pricing strategies in place. So we’re playing with a few things here in Q1 and Q2 and expect to see much more significant growth in Q3 and Q4. We haven’t provided any guidance on that yet. And I’d say that — we’d like to be a little more comfortable with the success we see over the next few months to feel better about guiding to a — subscriber volume number. But we feel very confident in the efforts we’re undertaking to grow profitability in ARPU per subscriber to return to growth of paid subscribers from a digital perspective and to be able to increase the current revenue growth that we’re seeing of 20%, return that to something higher as well. So I think there’s definitely much more to come over the next couple quarters on that, Doug. Douglas Arthur : Okay. I mean — so in theory, you’re probably seeing, hopefully, better stickiness among the existing subscribers, because… Michael Reed : We are. Douglas Arthur : You’re sort of ferreting out the high churn ones. Michael Reed : Yes, that’s accurate. Operator: There are no further questions at this time. I would like to turn the floor back over to Mike Reed, CEO for closing comments. Please sir, go ahead. Michael Reed : Yes, thank you. I’d like to close this morning by reiterating how pleased we are with the significant progress we made in the first quarter. First quarter results were a little bit better than we had anticipated, and we were glad to see that. We saw significant growth in net income over the prior year, along with improving same-store revenue trends and essentially flat adjusted EBITDA compared to the prior year, reversing a decline in trends seen over the previous 5 quarters. We also made continued good progress in reducing debt, and we saw our net leverage decline in the quarter. We expect to see a lot more of that all of these things as the year goes on. We are very pleased that we are able to reiterate our full year revenue guidance along with increasing our full year guidance for net income, adjusted EBITDA and cash flow. We expect to see continued improvement in revenue trends as 2023 progresses, and we remain focused on achieving our revenue inflection point towards the end of 2024. Further, we expect to see significant adjusted EBITDA growth in 2023 versus the prior year as well as about $100 million in free cash flow growth this year. With our growth in adjusted EBITDA combined with our continued aggressive debt repayment, we expect firstly net leverage to be below 2x as we end this year. With the changes in our org structure and our strategic focus on leveraging our content org to grow audience and revenue, combined with our partnerships that will better monetize our significant audience on the platform and our improving strategy around digital subscriber and digital revenue growth, we are very optimistic about our continued improvement to revenue trends, not only in the back half of this year, but in 2024 as well. So with low leverage, good liquidity, a lower cost structure and improving same-store revenue trends, we are very well positioned to return significant value to our shareholders as we move forward. Thanks for joining us on the call today, and we look forward to updating you again at the end of the second quarter. Thank you. Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation. Follow Gannett Co. Inc. (NYSE:GCI) Follow Gannett Co. Inc. (NYSE:GCI) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

Built in 1915 for prominent olive oil importer John Vittucci, the property is currently owned by former Wizards of the Coast executive John Jordan, who has a background in olive oil as well......»»

Hyatt's (H) first-quarter 2023 performance benefits from strong leisure travel demand, favorable pricing environment and elevated airlift activities. Hyatt Hotels Corporation H delivered first-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues surpassing the same. The top and the bottom line increased on a year-over-year basis.Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, stated, "For the fourth consecutive quarter we posted record results that exceeded our expectations, demonstrating our unique positioning and differentiated model. We raised our full year RevPAR outlook while maintaining our record level pipeline and industry leading net rooms growth. During the quarter, the recovery in Asia Pacific was particularly remarkable with broad improvements across the region. We continue to experience favorable booking trends and our outlook remains optimistic."Q1 Earnings & RevenuesDuring the first quarter, Hyatt reported adjusted earnings per share (EPS) of 41 cents, missing the Zacks Consensus Estimate of 47 cents. In the prior-year quarter, the company reported an adjusted loss of 33 cents per share.Hyatt Hotels Corporation Price, Consensus and EPS Surprise  Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote Quarterly revenues of $1,680 million beat the consensus mark of $1,594 million by 6%. Moreover, the top line surged 31.4% on a year-over-year basis.Operating HighlightsDuring the quarter, adjusted EBITDA came in at $268 million compared with $169 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 27.8% in the first quarter compared with 22.6% reported in the year-ago quarter.Segmental DetailsHyatt manages business through five reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group Segment.During the first quarter, revenues in the Owned and Leased Hotels segment totaled $314 million compared with $271 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Continued recovery from group and business travel added to the upside. Owned and leased hotels’ RevPAR surged 52.9% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 11.1% and the occupancy rate increased 18.9 percentage points from 2022 levels.The segment’s adjusted EBITDA came in at $74 million during the fourth quarter compared with $54 million reported in the year-ago quarter.During the quarter, total Management and Franchise fee revenues came in at $231 million compared with $154 million reported in the year-ago quarter. The metric rose sequentially from $226 million reported in fourth-quarter 2022.In Americas Management and Franchising, RevPAR for comparable Americas hotels (during the first quarter) surged 31.1% from the prior-year quarter’s level. While ADR increased 10.1%, occupancy rates moved up 110.4 percentage points from the prior-year quarter’s number.Adjusted EBITDA during the first quarter came in at $119 million compared with $85 million reported in the year-ago quarter.In ASPAC Management and Franchising, RevPAR for comparable ASPAC hotels (during the first quarter) increased 104.9% from the year-ago quarter’s figure. ADR increased 27.8% and occupancy rates improved 24.3 percentage points from the year-ago quarter’s number. During the quarter, the company reported accelerated recovery in Mainland China, owing to the easing of travel restrictions.During the quarter, adjusted EBITDA came in at $25 million compared with $7 million reported in the year-ago quarter.In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia hotels’ RevPAR surged 47.4% from the year-ago quarter’s level. ADR increased 12% and occupancy rates rose 15 percentage points from the year-ago quarter’s number. The upside was primarily driven by strong leisure demand throughout Western Europe.Adjusted EBITDA during the first quarter came in at $12 million compared with $4 million reported in the year-ago quarter.In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the first quarter came in at $79 million compared with $56 million reported in the prior-year quarter. Solid demand for leisure travel, elevated airlift activities (for key Americas destinations) and a favorable pricing environment added to the upside.Balance SheetAs of Mar 31, 2023, Hyatt reported cash and cash equivalents of $1,051 million compared with $1,149 million reported in the previous quarter. Total debt as of Mar 31, 2023, stood at $3,102 million compared with $3,113 million as of Dec 31, 2022.The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.Other Business UpdatesComing to hotel openings, 28 new hotels (or 5,128 rooms) joined Hyatt's system in the first quarter of 2023. As of Mar 31, 2023, Hyatt executed management or franchise contracts for approximately 580 hotels (or 117,000 rooms).It continues to progress with respect to its $2.0 billion asset disposition commitment. During the first quarter, the company initiated the marketing for two assets held for sale. The company expects to generate approximately $2 billion in gross proceeds from the sales of real estate (net of acquisitions) by 2024-end. As of Mar 31, 2023, the company has realized proceeds worth $721 million (from the net disposition of owned assets).2023 OutlookFor 2023, the company expects adjusted selling, general and administrative expenses between $480 million and $490 million. Capital expenditures are projected at approximately $200 million. Unit growth in 2023 is anticipated at approximately 6% on a net-room basis.The company anticipates 2023 system-wide RevPAR to increase 12-16% from 2022 levels.Zacks Rank & Key picksHyatt currently has a Zacks Rank #3 (Hold).Some better-ranked stocks in the Zacks Consumer Discretionary sector are Boyd Gaming Corporation BYD, Crocs, Inc. CROX and PlayAGS, Inc. AGS.Boyd Gaming currently sports a Zacks Rank #1 (Strong Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 17.5% in the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 1.4% and 4%, respectively, from the year-ago period’s levels.Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 66.4% in the past year.The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.PlayAGS carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 133.3%, on average. The stock has declined 19.2% in the past year.The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,856.7%, respectively, from the year-ago period’s estimated levels. Top 5 ChatGPT Stocks Revealed Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion. Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”Download Free ChatGPT Stock Report Right 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 Hyatt Hotels Corporation (H): Free Stock Analysis Report Boyd Gaming Corporation (BYD): Free Stock Analysis Report Crocs, Inc. (CROX): Free Stock Analysis Report PlayAGS, Inc. (AGS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»