U.S. consumer sentiment edges up in May but worries about social isolation grow

U.S. consumer sentiment rose unexpectedly in early May after a record plunge a month earlier as emergency assistance payments improved household finances hurt by mass layoffs from the coronavirus crisis, a survey released on Friday showed......»»

Category: topSource: reutersMay 15th, 2020

Some Americans fear zero-down mortgages are a trap that will lead to another crisis like 2008

Zero-down mortgages like Bank of America's worry some buyers who think they could lead to another 2008-style foreclosure crisis and housing crash. Some lenders have started offering mortgages that don't require a down payment, closing costs, or a minimum credit score to qualify.Getty Images To help borrowers afford homeownership, some lenders have introduced zero-down-payment mortgages. Some are suspicious that these products could trigger a repeat of the 2008 foreclosure crisis. Experts said that while the fear is understandable, lending restrictions are much tighter today. A mortgage that doesn't require a down payment, closing costs, or a minimum credit score might seem too good to be true.After Bank of America announced its new zero-down mortgage offering last month, people took to social media to voice concerns that it would lead to another housing crash like the one in 2008."The premise is helping out marginalized communities but, like, come on, dude. Literally stop and read  — it's the same trend as the 2008 crash," the TikTok user Inkwater said in a September video. @inkwater #greenscreen #economy #housing #finance #stonks #recession ♬ original sound - [redacted] But experts say this is not the market of 2008, and lending standards are much higher. A spokesperson for the Consumer Financial Protection Bureau, a federal consumer-watchdog group, told Insider these fears are misplaced, and lenders like Bank of America, Navy Federal Credit Union, and Northpointe Bank have expanded access to mortgages by using nontraditional ways of determining ability to pay, like checking a borrower's payment history of rent, phone, auto, and utility bills."It's an interesting way to help folks who maybe don't have a traditional credit profile," the spokesperson said. "Think about somebody who doesn't have student loans or credit cards but pays all their bills, rent, and utilities on time." Plus, the new wave of zero-down mortgages come with stricter lending criteria. As long as borrowers are making sound financial decisions and can afford the monthly payments that come with a home purchase, experts say they needn't worry about foreclosure."Using those types of measures like the ability to repay are actually an interesting way to get folks who may have fallen through the cracks before," the CFPB spokesperson said.Lending standards have improved since 2008, making new mortgage offerings saferAs prices soar in the housing market, prospective homebuyers — and the lenders who help to make their homeownership dreams a reality — are seeking different methods to afford a home purchase. The Federal Reserve's fight against surging inflation has resulted in several interest-rate hikes, which have led to a significant jump in mortgage rates. With rates on the rise, the typical homebuyer's mortgage payment has increased by 15% since August.That, combined with the pandemic boom in prices, means a lot of would-be buyers are having a difficult time affording homeownership — regardless of home-price declines throughout the country. To address the affordable-housing crisis in the US, several mortgage lenders have introduced products to help potential borrowers better afford homeownership. Bank of America's recent mortgage offering, called the Community Affordable Loan Solution, requires qualifying borrowers to complete a homebuyer-certification course prior to application.While the offer is available in appointed markets to buyers of any race, it's being touted as a way to help close the racial homeownership gap in markets that include historically Black and Hispanic neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles; and Miami.While the BOA program has been met with praise, it has also received its fair share of criticismOn Twitter and TikTok, people are suspicious of the mortgage offering and others of its kind. While critics have numerous reasons for their apprehension, a shared sentiment is that zero-down mortgages could help trigger a 2008-style housing crash.During that time, a combination of cheap debt, predatory lending practices, and complex financial engineering led to many borrowers being granted unaffordable mortgages. When the situation reached a boiling point, it provoked a foreclosure crisis among homeowners — especially those of color —  and a credit crisis among the investors who owned bonds backed by the defaulted mortgages. The end result was a global recession.  As some of the factors that led to the 2008 housing crash reemerge, many Americans are fearful history will repeat itself. Brian Moynihan, Bank of America's CEO, says the company's zero-down-payment product is unlikely to trigger such a catastrophe."This is about granting a down payment — which we've been doing with lots of special programs for years — to a buyer who, no matter who they are, as long as they meet the income requirements, to buy a house in a majority-minority neighborhood," Moynihan told Fox News, adding that the company's loan-to-value ratio is in the 60% range, so it is "very well suited with high FICO scores, so delinquencies are next to nothing."His confidence has yet to soothe the worries of distrustful Americans. —Chris Fenton (@TheDragonFeeder) September 8, 2022  The CFPB said Americans should not panic as this is not the housing market of the mid-aughts. "The 2008 housing crisis was caused by a total lack of underwriting," the spokesperson said. "Down payment in itself — while it is a risk factor —  can be mitigated by other factors. In 2006, folks were being underwritten with just nothing more than a credit score, and lenders weren't even verifying the rules that the bureau put into place to prohibit that behavior."The CFPB said BOA's program is sound and will help to make homeownership more attainable for Americans who may have previously been locked out. To ensure Americans can continue to pursue homeownership in a healthy environment, the CFPB said it is tracking mortgage products. "We have issued guidance, as has HUD and other agencies," the spokesperson said. "Something to also remember is that the majority of mortgages are now backed by the federal government in some way. They have to meet Fannie, Freddie, FHA, or VA rules, in addition to whatever the bank has." "So we have rules in place and lenders have to follow them, so the same thing that happened in 2008 can't happen in the same way this time."Read the original article on Business Insider.....»»

Category: personnelSource: nytOct 9th, 2022

3 Stocks to Watch That Recently Hiked Their Dividends

Microsoft Corporation (MSFT), Texas Instruments Incorporated (TXN) and Keurig Dr Pepper Inc. (KDP) hiked their dividends. Soaring inflation has been the biggest concern for the American economy that’s been affecting markets for months. The Fed has so far struggled to get a firm grip on rising inflation despite multiple rate hikes. On Sep 21, the Fed increased interest rates for the fourth time this year in its bid to control surging inflation.However, the crisis is far from over as the Fed has indicated more interest rate hikes in the coming months, or at least till sky-high commodity prices don’t cool off to the desired levels.Another Interest Rate HikeThe Fed, on Sep 21, hiked interest rates by 75 basis points, its fourth hike this year. This takes the total hike to 300 basis points so far this year to a target range of 3% to 3.25%. However, this is not the end as the struggle to tame rising inflation continues.The Fed has also hinted at raising interest rates by another 125 basis points by the year-end. That would take the benchmark interest rate to a midpoint of 4.4% by the end of this year. Moreover, the central bank has indicated that it doesn’t plan to cut interest rates till 2024.The move doesn’t come as a surprise given that Fed Chair Jerome Powell had earlier shared similar hawkish views toward hiking rates.Inflationary pressures have been taking a toll on stocks since the beginning of the year. Markets managed to end in the green only in March and July in the first eight months of the year. September is historically known as one of the worst-performing months for markets. This time it has been worse, with the month starting with severe volatility after the two-month-long summer rally evaporated in August.Investors were initially expecting a not-so-steep rate hike, which fueled the summer rally but the positive sentiment was dampened by the hotter-than-expected inflation reading in August. Powell added to the gloom by commenting that the central bank will continue to hike interest aggressively so long it gets full control over soaring inflation.The unexpected jump in the consumer price index in August gave Fed the perfect cover to go for another steep rate hike.In fact, Powell’s comments following Wednesday’s rate hike indicate further hikes in the coming months. The Fed’s aggressive monetary policy has instilled fears of an economic slowdown in the minds of investors.Higher interest rates mean a higher cost of borrowing, which increases the chances of an economic slowdown. Both are negative signs for the markets, which have already experienced volatility this year. Stock prices are still being affected by worries of an economic slowdown.Stocks to WatchGiven this situation, investors should exercise caution and continue holding dividend-paying stocks to protect their portfolios. We think it's a good idea to consider stocks that have recently hiked their dividend payouts. Four such companies are: Microsoft Corporation MSFT, Texas Instruments Incorporated TXN, Keurig Dr Pepper Inc. KDP.Microsoft Corporation is one of the largest broad-based technology providers in the world. MSFT dominates the PC software market, with more than 80% of the market share for operating systems.On Sep 20, 2022, Microsoft Corporation announced that its shareholders would receive a dividend of $0.68 per share on Dec 8, 2022. MSFT has a dividend yield of 1.02%. Over the past 5 years, Microsoft Corporation has increased its dividend six times, and its payout ratio is presently 27% of earnings. Check MSFT’s dividend history here.Microsoft Corporation Dividend Yield (TTM) Microsoft Corporation dividend-yield-ttm | Microsoft Corporation QuoteTexas Instruments Incorporated is an original equipment manufacturer of analog, mixed-signal and digital signal processing integrated circuits. TXN has manufacturing and design facilities, including wafer fabrication and assembly/test operations in North America, Asia and Europe.On Sep 15, 2022, Texas Instruments Incorporated declared that its shareholders would receive a dividend of $1.24 per share on Nov 15, 2022. TXN has a dividend yield of 2.77%. Over the past 5 years, Texas Instruments Incorporated has increased its dividend six times, and its payout ratio is presently 50% of earnings. Check TXN’s dividend history here.Texas Instruments Incorporated Dividend Yield (TTM) Texas Instruments Incorporated dividend-yield-ttm | Texas Instruments Incorporated QuoteKeurig Dr Pepper Inc. is a beverage and coffee company in the United States and Canada. KDP sells its products through at-home and away-from-home channels to retailers, including supermarkets, department stores, mass merchandisers, club stores and convenience stores; and restaurants, hospitality accounts, office coffee distributors and partner brand owners, as well as to consumers through its websites.On Sep 14, 2022, Keurig Dr Pepperannounced that its shareholders would receive a dividend of $0.20 per share on Oct 14, 2022. KDP has a dividend yield of 2%. Over the past 5 years, Keurig Dr Pepperhas increased its dividend three times, and its payout ratio is presently 47% of earnings. Check KDP’s dividend history here.Keurig Dr Pepper, Inc Dividend Yield (TTM) Keurig Dr Pepper, Inc dividend-yield-ttm | Keurig Dr Pepper, Inc Quote Just Released: Free Report Reveals Little-Known Strategies to Help Profit from the  $30 Trillion Metaverse Boom It's undeniable. The metaverse is gaining steam every day. Just follow the money. Google. Microsoft. Adobe. Nike. Facebook even rebranded itself as Meta because Mark Zuckerberg believes the metaverse is the next iteration of the internet. The inevitable result? Many investors will get rich as the metaverse evolves. What do they know that you don't? They’re aware of the companies best poised to grow as the metaverse does. And in a new FREE report, Zacks is revealing those stocks to you. This week, you can download, The Metaverse - What is it? And How to Profit with These 5 Pioneering Stocks. It reveals specific stocks set to skyrocket as this emerging technology develops and expands. Don't miss your chance to access it for free with no obligation.>>Show me how I could profit from the metaverse!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 Texas Instruments Incorporated (TXN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 22nd, 2022

5 Solid ETFs Under $20 for Your Portfolio

Low-priced stocks could be attractive as these will enable them to buy more shares instead of just a handful of higher-priced shares for the same amount. Most investors want to put their money in equities but may not be able to afford large stakes in valuable companies with higher-priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more shares instead of just a handful of higher-priced shares for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1. Further, most of the low-priced stocks have high levels of liquidity, giving these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for investors.And guess what, the recent volatility, induced by renewed aggressive rate hikes by the Fed and global growth concerns, has provided investors a great opportunity to tap some of these stocks. The preference is not only limited to the stock world but can be felt in the ETF space. In fact, there is only a handful of ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that the choices are limited for investors who like to get a decent number of shares from their investment (read: Most Interesting New ETFs). So, let us dig into some of the ETFs that are below $20 and have AUM of more than $50 million to ensure enough liquidity. Further, these funds have a Zacks ETF Rank #2 (Buy) or 3 (Hold). These low-priced ETFs could lead to huge gains in the coming months based on market trends.Global X SuperDividend ETF SDIV – Last Closing Price: $8.86The appeal for dividend-focused ETFs has been on the rise as volatility grips the stock market. Soaring inflation and rising interest rates have sparked worries of a recession, resulting in a sharp-sell-off in high-growth stocks. Additionally, bouts of weak economic data across the globe are weighing on investor sentiment.  Global X SuperDividend ETF provides exposure to the 93 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. It has amassed $748.6 million in its asset base and sees a good trading volume of about 552,000 shares a day on average. Global X SuperDividend ETF has an expense ratio is 0.58% and carries a Zacks ETF Rank #3 with a Low risk outlook. It has lost about 23.7% so far this year.Invesco S&P SmallCap Energy ETF PSCE - Last Closing Price: $9.94The outlook for the energy sector looks promising amid waning demand. This is especially true given OPEC’s new output cut and the unrest in Libya that will continue to keep supply in check. Invesco S&P SmallCap Energy ETF offers exposure to the companies that are principally engaged in producing, distributing or servicing energy-related products, including oil and gas exploration and production, refining, oil services and pipelines. It tracks the S&P Small Cap 600 Capped Energy Index, holding 28 stocks in its basket (read: Should You Buy Energy ETFs On Dip?).Invesco S&P SmallCap Energy ETF has accumulated $130.3 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 237,000 shares and has a Zacks ETF Rank #2 with a High risk outlook. Invesco S&P SmallCap Energy ETF has jumped 36.7% so far this year.Invesco KBW High Dividend Yield Financial ETF KBWD – Last Closing Price: $17.34A rising rate environment is highly beneficial for the financial sector as it bolsters profits for banks, insurance companies, discount brokerage firms and asset managers. Additionally, financial stocks have become extremely cheap after a heavy sell-off in the first half of the year. Invesco KBW High Dividend Yield Financial ETF ETF follows the KBW Nasdaq Financial Sector Dividend Yield Index, which is a modified-dividend yield-weighted index of companies principally engaged in the business of providing financial services and products. It holds 40 stocks in its basket and has 2.59% in expense ratio.Invesco KBW High Dividend Yield Financial ETF has amassed $417.5 million in its asset base and trades in a volume of 79,000 shares a day on average. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook and has shed 10.4% so far this year (read: Fearing Stagflation? ETF Strategies to Win).The Global X Cloud Computing ETF CLOU – Last Closing Price: $17.27Demand for cloud computing services surged during the pandemic and is expected to grow further, as work, school, and social activities moved increasingly to digital experiences. Global X Cloud Computing ETF seeks to invest in companies positioned to benefit from the increased adoption of cloud computing technology, including companies whose principal business is in offering computing Software-as-a-Service, Platform-as-a-Service, Infrastructure-as-a-Service, managed server storage space and data center real estate investment trusts, and/or cloud and edge computing infrastructure and hardware. The ETF tracks the Indxx Global Cloud Computing Index.Global X Cloud Computing ETF holds 35 stocks in its basket with American firms accounting for 90.5% of assets. It has AUM of $641.3 million and trades in an average daily volume of 394,000 shares. The ETF charges 68 bps in annual fees and has a Zacks ETF Rank #2. It has tumbled nearly 33% this year.U.S. Global Jets ETF JETS - Last Closing Price: $17.91Travel ETFs will surge on optimism that consumers will continue flying this year despite higher fares. U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 57 securities and charges 60 bps in annual fees.U.S. Global Jets ETF has gathered $2.5 billion in its asset base while seeing a heavy trading volume of nearly 5 million shares a day. JETS is down 15.1% this year and has a Zacks ETF Rank #2. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P SmallCap Energy ETF (PSCE): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports Global X SuperDividend ETF (SDIV): ETF Research Reports Invesco KBW High Dividend Yield Financial ETF (KBWD): ETF Research Reports Global X Cloud Computing ETF (CLOU): ETF Research Reports To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 13th, 2022

They Were Told They’d Find Good Tech Jobs. Now They’re Being Hounded for Thousands of Dollars

Tech boot camps dangled the prospect of well-paid jobs in tech, 'debt-free.' Students were left owing thousands instead The very idea that she, a Black person living in Alabama, could make $75,000 a year in the tech industry after just a 10-week boot camp is what drew Aaryn Johnson into Flockjay. The ad for the boot camp specializing in tech sales followed her around social media: “This is the bullet train you don’t want to miss! It’s recession-proof even in the midst of a Global Pandemic.” Even better, according to the company’s promotional material, students didn’t have to pay a cent in tuition to Flockjay until they landed a job that paid at least $40,000 a year. [time-brightcove not-tgx=”true”] It seemed too good to be true. Johnson assumed the scheme was fake until one day she saw on Twitter that Black celebrities like Serena Williams and Will Smith had invested in Flockjay—and that the Walnut, California–based startup pledged to help people from underrepresented backgrounds get into the tech industry. When Johnson started an application and then abandoned it, a Flockjay sales rep called her and made it sound like the program was exclusive, she says, but that she had a good shot at getting in, because she’d worked in sales in the past. “They said, ‘You’re going to kill it; you’re going to make so much money.’ ” When she learned that Flockjay was about to close admissions for the class, Johnson completed her application, signed an enrollment agreement, and began the program in August 2021. Flockjay delivered on little of what it promised, Johnson says. The curriculum was so easy that her 7-year-old nephew could have done it, she says. Students were taught how to make posts on LinkedIn—something most all of them knew—including a homework assignment to post about how much they were enjoying Flockjay’s program. Classes had them act out selling tech products to one another, much in the same way children pretend to sell things at a grocery store, with no simulation as to what it would actually be like in the real world. Within Johnson’s first two weeks of the program, the representative who had urged her to join was laid off, along with half of Flockjay’s staff. The result was that the one-on-one coaching students were promised was effectively removed from the program. Johnson had entered the lawless arena of tech boot camps; These camps are among thousands of unaccredited schools that pitch their services to students through heavy marketing spends and often don’t deliver on the promises made in their advertising pitches. Unaccredited schools have long flourished in the U.S., but this new wave of schools does something different: attracting students by offering a relatively new funding model called an income share agreement (ISA). They pitch these ISAs as a way to access education without taking out a loan, but students like Johnson soon find out that these agreements can leave them owing a lot of money without the good career prospects they were promised. Nor are these students eligible for any of the Biden Administration’s planned federal loan forgiveness programs, because ISAs are offered not by the U.S. government but by private companies. Now, a year after enrolling, Johnson is getting hounded by Meratas, the company responsible for collecting on her Flockjay tuition, despite the fact that Johnson says she did not receive the education Flockjay promised. She finished the course, since the company had pledged to match her with hiring partners once she graduated, but after waiting for weeks to be connected with a company, she hustled and found her own job in sales. She never mentioned Flockjay to her new employer. She doesn’t make anywhere near the $75,000 salary the company mentioned in its promotions. Her sales job, while technically in the technology industry, is basically telemarketing, she says: “This is literally the most soul-sucking job I’ve had in my entire life.” Flockjay was cited in October of 2020 by California’s Bureau for Private Postsecondary Education for operating without approval, Johnson has since learned, and ordered to cease advertising to students and enrolling them. The company has not complied. Blair, the company that gave Johnson the money for her tuition, no longer works with Flockjay; they have turned over her financial debt to Meratas. “Their shtick was that it was about getting Black people into tech—but over the 10 weeks, they didn’t train us for any real-life situation,” says Johnson. “There were so many people who tried to get jobs after and could not.” Boot-camp boom In the turbulent economy of the pandemic era, few industries seem as attractive as the tech sector, where people can earn high salaries, work remotely, and feel with some degree of certainty that they’re in a growing field. But tech can also seem opaque to outsiders. After all, it’s much harder to understand what tech employees do all day than it is to picture what happens in a car factory. Boot camps like Flockjay attract students by promising to demystify tech and get students high-paying jobs without having to take on the debt of attending a four-year college. Business has been booming. Around 100,000 people were enrolled in tech boot camps in 2021, according to the research firm HolonIQ, a fivefold increase since 2015. These businesses generated $1.2 billion in revenue in 2020, six times what they did in 2015. Boot camps like Flockjay have flourished over the last few years in part because they partner with companies that offer ISAs, which give students upfront money for tuition if they agree to repay the money once they’re earning a certain wage. Students can either fork over a certain percentage of their salary or a dedicated lump sum every month until they’ve paid back the amount they’ve borrowed—or more, depending on the agreement. ISAs have been used at accredited schools, like Purdue University, but they’re especially popular for nonaccredited schools like boot camps, which often promote these financing arrangements in their sales pitches, since their students cannot access federal student loan dollars. On the surface, the symbiotic relationship between boot camps and ISA providers seems like a smart way to get people into technology. Boot camps are expensive, with tuition ranging from $3,000 to $15,000, and ISAs enable students to pay that tuition without taking out private student loans, which usually have high interest rates and fees. ISAs often behave as servicers, providing students the money that allow boot camps to operate, and then handling the details of repayment so that schools can focus on education. ISAs have better terms than private loans, but not as much flexibility as federal student loans. If boot camps didn’t exist, ISAs might struggle to find a market. “There was a lot of hope that this new emerging high-tech world would save us.” ISA proponents say the financial product allies students, the school, and the ISA provider, since each has a vested interest in a student graduating and making a good salary. “Because a Flockjay education can be financed via an income share agreement, the incentives of the school and the student are highly aligned—Flockjay is a blueprint for College 2.0,” Romeen Sheth, a Flockjay investor, wrote on Medium in 2019, explaining why he had invested in the company. (Sheth did not respond to a request for comment for this story.) But groups that advocate on behalf of students say ISAs are not the cure-all solution that proponents say they are, even as the companies continue to sell students the promise of a swanky future in the high-flying world of tech. The example of Flockjay, showered with praise and funding by venture capitalists and celebrities, even as students say the company ultimately took their money and delivered little in return, shows the risk of allowing both ISAs and for-profit tech schools to operate without regulation. “There was a lot of hope that this new emerging high-tech world would save us,” says Ben Kaufman, director of research and investigations at the Student Borrower Protection Center, which advocates for students, and which provided support to Flockjay students who had complaints about the company. “But there’s a long history of fly-by-night con men setting up for-profit educational enterprises, and then finding ever more exotic and dangerous forms of credit to facilitate them.” Flockjay isn’t the only company that has produced crops of angry students. Three students sued the coding boot camp Lambda School in 2021, alleging that the school misrepresented its job-placement rates and how its ISA worked. They reached a confidential settlement in July, but a fourth such claim remains in court. A lawsuit filed this summer in Atlanta alleges that an online programming boot camp called Clever Programmer charged students tens of thousands of dollars for services it did not deliver. And Washington State filed a lawsuit against tech sales camp Prehired, saying its ISAs are invalid because the company operated without a license, and that the company misled students about its programs. Prehired has denied the allegations in the complaint. Boot camps and ISAs are arguably creating a new generation of debtors, even as the nation grapples with how to handle its existing student debt crisis. President Biden said last month that he planned to wipe away up to $20,000 in federal student loan debt for some borrowers, and earlier this year, the Department of Education said it would forgive billions worth of loans given to students who attended schools like Corinthian Colleges Inc. that it found had misrepresented borrower’s employment prospects. But these boot camps and the ISAs that enable them may be creating some of the same problems—and debt burdens—that the Biden administration is seeking to solve. There’s not a whole lot that Flockjay alums like Johnson can do about their complaints. Some students filed a notice with California’s Workforce and Development Agency in July, suggesting they would file a lawsuit against Flockjay if the agency does not take action. Many more students are like Johnson—embarrassed that they signed up for Flockjay, and just wanting to move on. “This was a scam, but you feel stupid because you fell for it,” she says. Flockjay did not respond to questions for this story, but the company did provide a statement, attributed to Bryant Lau, its head of demand. “We stand by the success our hundreds of graduates have had and the incredibly hard work of our staff when we ran our sales academy,” it says. Meratas did not respond to a request for comment. Not all boot-camp students have stories like Johnson’s. There are many boot camps that do provide a solid tech-focused education, and that have helped students get high-paying tech jobs. These often teach specific skills, such as programming languages like Python, or computer-science skills like encryption and system architecture. Educational programs that are not accredited can still provide students useful skills that will prepare them for the job market. But research indicates that students with industry-recognized credentials like a certificate and degree—credentials that Flockjay and many other tech sales boot camps don’t offer—are most useful for preparing students for the job market. The lure of ‘debt-free’ college To say there’s a student debt crisis in America is a vast understatement. Income-sharing agreements have sprung up as an alternative to taking on this debt. The pitch: ISAs shift the risks of poor workforce outcomes from students to lenders, since lenders only get repaid if the students find a good-paying job. “This is true ‘debt-free’ college,” former Indiana governor Mitch Daniels wrote in 2015, when pitching ISAs as a solution to the student debt crisis. Daniels launched one of the first and most high-profile ISAs at Purdue University, where he was then president, in 2016. The program, called “Back a Boiler,” gave students a portion of their tuition in exchange for the students’ agreeing to pay back a percentage of their future income for a period of time after they graduated. The program partnered with a startup called Vemo Education, which in 2017 raised $7.4 million from venture-capital firms. (In 2022, Purdue suspended its Back a Boiler program amid complaints that it had misled students about how much money they’d owe after graduating. Daniels also announced in June that he was stepping down as Purdue’s president.) ISAs have long been popular at private universities in Europe and Latin America, and U.S. entrepreneurs began founding ISA companies as early as 2012 to fill the gap between federal student loans and private loans, which often have high interest rates and inflexible payback terms. Many of the earliest ISA companies, including Upstart and Pave, have since switched to offering traditional loans. In 2019, $250 million in income-share agreements were created, and 40 colleges and boot camps either offered or were developing ISA programs, according to Edly, an education lending platform, which estimated before the pandemic began that $500 million would be generated in 2020. Flockjay talked about the potential merits of ISAs as part of its funding pitch to investors. The angle paid off; in 2019, Flockjay received funding from startup accelerator Y Combinator; Dreamers VC, the venture capital fund co-founded by Will Smith; and Serena Williams’ investment firm Serena Ventures, which Williams has recently said she plans to focus on when she retires from professional tennis. (Serena Ventures did not respond to requests for comment. A Dreamers VC representative says that Flockjay was one of the few boot camps proactively engaging in communication with California regulators.) “It’s really smoke and mirrors they use to trap people in expensive debt that lasts longer than they think it will.” Advocates like the Student Borrower Protection Center (SBPC) say the way ISAs and boot camps became popular—by marketing themselves as a debt-free alternative to college—was misleading. “THIS IS NOT A LOAN,” a Flockjay deferred-tuition agreement seen by TIME says, and other ISAs clearly state that they are not loans. But ISAs behave very much like loans, with similar terms and fees, and sometimes require borrowers to pay back much more money than they’ve originally borrowed. ISAs often have payment caps that limit the amount a student has to repay, but these can be three times as high as the amount borrowed, according to the SBPC. In some cases, if borrowers want to pay off their ISA early, they have to pay the amount of the payment cap as a penalty, rather than the initial tuition amount—as was the case with a Purdue student who took out an ISA for $15,000 and was told she’d have to pay $37,500 if she wanted to close her contract, according to the Indianapolis Star. “The products have this facial element of seeming really simple and elegant,” says Kaufman, of the SBPC, “but it’s really smoke and mirrors they use to trap people in expensive debt that lasts longer than they think it will.” And while student-borrower advocates agree that ISAs are probably a better alternative than private student loans, they say that any product pitched as a money-making operation to investors won’t be a good deal for students. Federal student loans do not earn the government profits. “The whole premise is that this will generate a profit for somebody, whether it’s an investor or a boot camp,” says Jessica Thompson, a vice president at the Institute for College Access and Success. “Since when does anybody think that students are going to come out on the better end of that deal?” Neither ISAs nor unaccredited boot camps are closely regulated, and that’s created many of the problems students like Johnson have encountered. Students can take out ISAs for schools that don’t offer a good educational product and mislead them about student outcomes—allegations made in numerous lawsuits against boot camps—and then still be required to pay them back. Flockjay, for instance, told students in promotional materials that the average full-time job offer from companies on its platform was $75,000. Yet according to the company’s own 2021 enrollment agreement, out of 114 students who began the program in 2019, only 52 were eligible for graduation, and of those 52, just 22 were in jobs making between $45,000 and $50,000. The rest were making less than $45,000 or didn’t report their salary information. Students like Johnson and Brianna Kirby, a Black woman who started the program in June 2021, say there were many more discrepancies between what Flockjay initially promised and what it delivered. Though these complaints are more focused on the quality of Flockjay’s educational product than the terms of its deferred tuition agreement they signed with Blair (now enforced by Meratas), students say they agreed to the tuition terms because they were told they would make good money after graduation. They say they are now saddled with debt without the benefits they expected. Courtesy Brianna KirbyBrianna Kirby started the Flockjay program in June 2021. Flockjay’s enrollment agreement said the company would give students coaching for interviews and perfecting their résumés, and that its career-services team would act as a liaison between hiring partners and graduates, but after the August 2021 layoffs, most of the career-services team was gone. The enrollment agreement required students to schedule mock interviews with the career-service team, but after the layoff, students would sign in to scheduled mock interviews and no Flockjay staff would ever show up, according to online messages TIME has viewed between Kirby and other students. The enrollment agreement prohibited students from looking for jobs on their own for a set period of time after graduation, so that Flockjay could match them with hiring partners, who paid the company a fee, but when those hiring partners didn’t materialize, students were stuck with no permitted way to find work. The résumé coach assigned to Kirby frequently entered spelling and other errors into her résumé. When students were sent assignments to perfect their résumés, these often weren’t graded on time, Kirby says, even though this significantly slowed down the job -search process. And students were asked to complete a “Capstone Project” to promote Flockjay and recruit new students, even though Flockjay was supposed to be teaching students business-to-business, not business-to-consumer sales; the winning students received an a $100 prize, according to graduates who talked to the Student Borrower Protection Center. After the August layoffs, students in Kirby’s and Johnson’s classes began to discuss the lax student services on Slack, wondering if they could take legal action. “I’ll be honest with you, if I wasn’t financially obligated I could care less about this whole ordeal,” one student wrote in the Slack channel. “However, I am stuck $7k.” After talking with other students about how they felt let down by Flockjay, Kirby and Johnson both closed down the bank accounts to which they had given the company access. (California law says that a note of debt for an educational program is not enforceable if the institution did not have approval to operate when that note was executed; it’s unclear how this would affect the debt of students who live in other states.) Like many other students, Kirby ended up finding a job on her own after graduation, without the help of Flockjay. She does not make anywhere near $75,000. Meratas has been sending her so many emails that she’s started marking them as spam. “Flockjay didn’t make good on their contract with us; they target vulnerable marginalized communities, and left us in the wings with no transparency or communication,” she says. “Now we’re stuck making full payments despite feeling shorted.” One former Flockjay worker says she thinks the company’s focus on increasing its student base is what led to its problems. Lynn Meadors was hired as a Flockjay résumé writer in early 2021. When she began, Flockjay had six classes of graduates, each around 25 students, but each month, the classes got bigger and bigger, she says. By the time she left, in November 2021, the classes were about four times the size they’d been in the beginning. That’s despite the company’s having about half the staff it had before August of that year. Meadors believes Flockjay was trying to add as many students as possible to increase its revenue. “Students were being recruited primarily because they could check a box or fill a seat in the class,” she says, “rather than because they had the potential to be successful.” When students didn’t complete assignments, staff would be encouraged to graduate them anyway. Because Flockjay’s “partner companies” had to pay them a fee whenever the companies hired a student Flockjay had introduced to them, students were told not to seek jobs on their own, so Flockjay could get the commission. “I do think there were a lot of predatory aspects of Flockjay,” Meadors says. “They made it sound like if you went through Flockjay, you were almost guaranteed to find employment, but I know many students who have not found work or who have had to accept jobs in totally different fields and are still now paying Flockjay.” Most of the students were people of color, Meadors says, and Flockjay’s model of getting current students to recruit new ones was successful at making people feel comfortable signing up, even if class quality was declining. Students told her they’d joined because they saw friends or friends of family members posting about their experience, or saw ads from alumni of color that said how successful they’d become in tech. “The thought that any person who entered the program could have a successful tech career is flawed,” Meadors says. “In reality, the majority of people were not successful.” Previous Flockjay students have reported better experiences with the program. Brenna Redpath’s son went through Flockjay in 2020, and she says he flourished in the program. He’s now working in tech sales and makes $80,000, she says, a path that motivated Redpath to enroll in Flockjay in August 2021. Her son’s class was about one-third the size that hers was, she says. Her son had a career coach dedicated to helping him find a job; Redpath says most of the career counselors who were supposed to be available to her had been laid off, with only about two for every 100 students. Redpath, who is 56, had a few interviews after graduating from Flockjay, but she did not find a tech job. She has since found work at a nonprofit that has nothing to do with the tech industry. But since she is making more than $40,000, she and her husband have been anxiously eyeing their bank account, which they did not close down because it’s linked to many of their other monthly payments. She worries Meratas will start collecting soon on her ISA. “I believe in the mission of Flockjay,” says Redpath, “but I watched them not deliver for people who could use it.” Policing a new financial product Since they’re structured differently from loans, ISAs have been difficult for regulators to handle. Regulations often require that lenders disclose the amount of interest a loan has accrued, for example—something ISA providers say would be difficult to calculate. Until the Consumer Financial Protection Bureau entered into a consent order with Better Future Forward, a nonprofit ISA provider, in 2021, some ISA providers weren’t even certain they had to adhere to the Truth in Lending Act, which governs which disclosures student loan borrowers receive. Since the consent order requiring the nonprofit to follow the Truth in Lending Act and the Consumer Financial Protection Act only addresses Better Future Forward and its ISAs, many providers say they still don’t know what federal regulations apply to their own ISAs. Since 2014, Sen. Marco Rubio (R-FL) has introduced numerous Congressional bills that would regulate ISAs, but they have never gone anywhere. This year is no exception—in July, Rubio and three colleagues introduced a bipartisan bill they say would help regulate ISAs. The bill would prevent ISA contracts from being longer than 20 years, and would allow students making below a certain income to be exempt from making payments toward their ISA. The bill is endorsed by Better Future Forward’s CEO Kevin James and Purdue’s president, ISA champion Daniels. But SBPC’s Kaufman says it would “enshrine into law all the worst aspects of ISAs,” and allow providers to continue to claim that these agreements aren’t loans. It may be difficult for the industry to grow until policymakers create a system of regulatory oversight that prevents abuse of ISAs, says James, of Better Future Forward. He argues that used correctly, ISAs can be a powerful tool. Better Future Forward, for instance, offers ISAs only to certain students who attend certain handpicked accredited universities in Minnesota, Wisconsin, and Illinois. The company has worked with regulators in an attempt to create new laws that would make sure that ISAs could be discharged in bankruptcy, unlike student loans, and that students don’t have to repay if they make below a certain income. The U.S. higher educational system needs programs that expand access to financial support and that are built around students’ success, James says. Without access to ISAs, students could further become trapped in debt, since the current loans system is broken, he says. The loan-forgiveness programs the Biden Administration is offering “are patches on a broken system—doing little to ensure history won’t repeat itself,” James wrote in a June 2022 paper laying out his preferred regulatory approach. Since there is little meaningful federal regulation, ISA companies have to comply with different regulations from 50 different states, making it even harder for them to operate, according to the CEO of one company that has recently stopped providing ISAs, and which is not authorized to speak on the record because of pending litigation. The startups that offer ISAs don’t have a lot of capital, and can either spend their money on ensuring they comply with every state-level regulation, or they can spend it on its educational product, or on marketing. “Clear rules would have probably been the best thing that could have happened to us,” the CEO says. A lack of regulation has forced many ISA companies to pivot to other business models, which leaves students with few options other than private loans, which have extremely high interest rates. Indeed, many of the companies that have tried to offer ISAs in the past decade have since left the market because of a lack of regulation. Flockjay itself has since pivoted from tech boot camps, and says it is now focused on helping its graduates and other tech sales workers get better at the jobs they already have. The company is now pitching this as a new service to former students, even though students say they were told they’d receive ongoing alumni support for life as part of the program they had already paid for. The example of Flockjay students indicates that the state regulation is not particularly effective. Though California’s Bureau for Private and Postsecondary Education (BPPE) fined Flockjay $15,000 in October of 2020 for operating without state approval, a year later the BPPE lowered the fine to $10,000—roughly equivalent to the tuition of 1.25 students. The BPPE did not take any further regulatory action against Flockjay. The school still does not have approval to operate in the state of California. California’s Department of Consumer Affairs, which oversees the BPPE, said in a statement that Flockjay appealed its citation for operating without approval; when its appeal was denied, the school submitted evidence in November 2021 that it was no longer operating. The regulator does not confirm, discuss, or comment on investigations, the statement said. BPPE refers matters related to financing to the Department of Financial Protection and Innovation (DFPI.). In a statement, DFPI said: “It is the DFPI’s stance that ISAs issued by schools not licensed or registered with BPPE are unenforceable and cannot be serviced. In August 2021, Meratas, which took over servicing Flockjay’s ISAs in June, entered into a consent order with the DFPI. The consent order states that Meratas will not service any ISAs “that have been determined or declared unenforceable or void by the DFPI or any regulatory agency.” But students including Kirby, Johnson, and Redpath say they are getting emails from Meratas trying to collect on their Flockjay ISAs. They say they’ve also been offered “discounted tuition” offers, in which their debts will be wiped out if they pay $6,000 right away. In August, Redpath emailed Flockjay asking to speak to someone “who can have a conversation about the contractual problem of Flockjay holding teaching for my batch while legally being banned from doing so by the Department of Education.” She noted in the email that many students were unhappy about the lack of career support services, and that their class was three times bigger than previous classes had been. She received an email back the next day. “You can continue to defer your tuition payments until you get a job exceeding $40,000/annually,” a Flockjay customer-success manager wrote. “Per the DTA [deferred tuition agreement] this is only deferred until you get any job.” —With reporting by Simmone Shah.....»»

Category: topSource: timeSep 8th, 2022

Futures Flat In Muted End To Turbulent Week With All Eyes On Payrolls

Futures Flat In Muted End To Turbulent Week With All Eyes On Payrolls US futures dropped on Friday, ending a third straight week of declines, as investors eyed a key jobs report that will be pivotal for this month’s Fed rate hike decision. S&P futures fell 0.2% at 730 a.m. ET, with the underlying cash index down 2.2% this week. Nasdaq 100 futures fell 0.3%, with the tech-heavy index down 2.6% in the previous four days. The dollar index slipped from a record high and the euro strengthened. 10Y yield traded slightly lower, at 3.25%, following yesterday's spike. In pre-market trading, Lululemon jumped 10% after raising its full-year outlook. Meanwhile, Bed Bath & Beyond fell as much as 6%, putting the home-goods retailer on track for a weekly loss following its survival plan earlier in the week.  Analysts raise PTs on the stock, though some flag higher inventory levels as a note of bearishness. Here are other notable movers: Procept BioRobotics (PRCT US) initiated at overweight by Wells Fargo, highlighting the potential of the company’s AquaBeam Robotic System, a therapy for prostate gland enlargement JPMorgan cuts its ratings on Dow and LyondellBasell (LYB US) to neutral from overweight, saying the petrochemicals companies are “probably not the best places to put new money to work.” Shares in Addentax (ATXG US), a Chinese garment-maker, drop as much as 40% in US premarket trading, set to extend yesterday’s 95% plunge into a second day. US semiconductor- related stocks could be active on Friday after Broadcom gave a robust sales forecast for the current quarter, calming worries that spending on infrastructure is slowing The outlook for stocks has soured since mid-August after traders ramped up bets that the Fed will continue its aggressive monetary tightening, hurting the economy in the process. The S&P 500 has erased $2 trillion in market capitalization in the past five days, and has given up half of its gains made in the summer rally. Meanwhile, tech stocks have succumbed to rising rates, which are a headwind to the expensive growth sector. “We don’t have a lot of reasons to be bullish in this type of environment for the next couple of weeks and months,” Meera Pandit, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “Yet when we think about the longer term perspective and the longer term investor, these are the types of level that can be fruitful in the long run.” US stocks had outflows of $6.1 billion in the week to Aug. 31 - the biggest exodus in 10 weeks - according to a Bank of America's Michael Hartnett, adding that investors expect  “fast inflation shock, slow recession shock” as nominal growth continues to be boosted by surging consumer prices, fiscal stimulus, large household savings and the impact of the war in Ukraine. Next up on investor minds is the August jobs report in under an hour, which is expected to show healthy payrolls growth following a stronger-than-expected US manufacturing report. This is how Goldman traders framed what to expect (full preview here): "we are still in a bad is good and vice versa set up for US stocks as Fed has made it clear that they want to see some froth exit the labor market in tandem with cooling inflation: i) Strong print here will clearly make 75bps much more likely on 9/21; ii) Inline print of 300k(ish) will keep pressure on this tape...anything close to last month’s shocking print of 528k would lead to real risk unwind into the wknd (I think at least a 200bp sell off). iii) Sweet spot for stocks tomorrow is a 0 – 100k headline reading...should get a 100+bp rally for S&P in this scenario after this recent drawdown. If we happen to get a negative number an even sharper rally", and the pivot will be right back on the Q1 calendar. “The risk of having another additional 75-basis-points hike is high and also to have a big rally on the real rates” depending on the outcome of the jobs report, said Claudia Panseri, a global equity strategist at UBS Global Wealth Management. “Volatility in the equity market will remain quite high until the picture on inflation becomes more clear than it is right now,” she told Bloomberg Television. In Europe, the Euro 50 rose 0.9%, with Germany's DAX outperforming peers, adding 1.5%, IBEX lags, rising 0.2%. Autos, financial services and energy are the strongest-performing sectors. Here are the biggest Europen movers: Nokia shares are up as much as 1.4% on Friday, adding to a weekly gain and outperforming the wider markets decline as the communications company will join the Euro Stoxx 50 benchmark Ashmore shares gain as much as 5.5%, reversing a small decline at the open, with Panmure Gordon upgrading the emerging markets fund manager to buy from hold following its FY results Smith & Nephew rises as much as 4.9%, extending a weekly gain. RBC says investors are viewing stock’s “historically low valuation” against orthopedic peers as a “buying opportunity.” Segro and Tritax Big Box gain 2.5% and 2.2%, respectively, after Shore Capital upgrades the REITs, saying downside risks for Segro are “fairly priced,” and the risk- reward balance for Tritax is more even UK homebuilders fall and are among the worst performers in the Stoxx 600 after HSBC cut its ratings on seven stocks, saying the UK is on the “cusp of a housing downturn” Sectra shares are down as much as 6.6% after the Swedish medical technology company presented its latest earnings, which included a drop in operating profit Alliance Pharma falls as much 11%, most since July, as the UK’s competition watchdog seeks to disqualify seven of the firm’s directors, including CEO Peter Butterfield Proximus falls to fresh record low, declining as much as 4.3% after Morgan Stanley resumes at underweight in note citing structural market headwinds and an unsupportive valuation Kofola CeskoSlovensko shares drop 2.5% after rising costs prompted the Czech producer of soft beverages to reduce its dividend proposal and rein in guidance Compleo Charging Solutions falls as much as 4% after Berenberg downgrades to hold and lowers its price target by 80%, citing resignation of the company’s co-founder Checrallah Kachouh Earlier in the session, Asian stocks fell, on course for their worst week in more than two months, as the dollar hit a new high amid worries about the Federal Reserve’s aggressive rate-hike path and as lockdowns continued in China.  The MSCI Asia Pacific Index declined as much as 0.7%, set for a weekly loss of nearly 4%. TSMC and other tech stocks contributed the most to the benchmark’s drop as Treasury yields climbed, sending the Bloomberg Dollar Spot Index to a record high.  Equity gauges in Hong Kong led declines in the region, dragged by the banking and tech sectors. Meanwhile, shares in Japan fell as the yen slipped to a 24-year-low against the dollar.  Fresh lockdowns in China are also weighing on sentiment, putting the Asian stock benchmark on track for its third-straight weekly decline. The sell-off reflects broad concerns of an economic slowdown amid weaker manufacturing data in the region’s major tech exporters. “Dollar momentum sees no sign of breaking,” Saxo Capital Markets strategists including Redmond Wong wrote in a note. “Fresh Covid lockdowns in China, in particular, the full lockdown of Chengdu and extended restriction in Shenzhen, have caused some demand concerns.”  Investors will keep a keen eye on the US August jobs report due later Friday to gauge the Fed’s next move in its September meeting.  While weak sentiment has kept Asian shares hovering near their two-year lows, hedge-fund giant Man Group said Asian stocks are set to outshine peers next year. The investment firm is betting on defensive stocks in India and Southeast Asia, Andrew Swan, Man GLG’s head of Asia ex-Japan equities, said in an interview Japanese stocks fell as investors awaited key US employment figures and assessed the yen’s decline to a 24-year low against the dollar. The Topix Index dropped 0.3% to 1,930.17 as of the market close in Tokyo, while the Nikkei 225 was virtually unchanged at 27,650.84. Sony Group contributed the most to the Topix’s decline, decreasing 1.1%. Out of 2,169 stocks in the index, 738 rose and 1,307 fell, while 124 were unchanged. “The US jobs report won’t be very positive no matter what’s out,” said Tatsushi Maeno, a senior strategist at Okasan Asset Management. “If it’s strong, the FOMC will lean toward a 0.75% rate hike and on the other hand, if it’s weak, there could be talk of a recession." India’s benchmark equities index closed slightly higher, after swinging between gains and losses several times throughout the session, as investors tried to gauge the impact of the US Federal Reserve’s hawkish stance in a week marked by volatility.     The S&P BSE Sensex rose 0.1% to 58,803.33 in Mumbai, but ended lower for a second consecutive week. The NSE Nifty 50 Index was little change on Friday. Housing Development Finance Corp and HDFC Bank provided the biggest support to the Sensex, which saw 19 of its 30 member stocks ending lower.  Thirteen of the 19 sector indexes compiled by BSE Ltd. declined, led by a measure of oil and gas companies.  “The effect of Jackson Hole is still revolving across financial markets, with a soaring dollar and falling equities as the main themes,” Prashanth Tapse, an analyst at Mehta Securities, wrote in a note.  In FX, the greenback fell against all of its Group-of-10 peers except the yen. The euro rose a fourth day in five against the greenback, to edge above parity. The pound languished near the lowest since March 2020 versus the dollar. Investors awaited the results of a vote to choose the country’s next prime minister on Monday, with expected winner Liz Truss aiming to cut taxes and increase borrowing. The Norwegian krone outperformed, and rebounded from a six-week low versus the greenback, amid a recovery in oil prices before an OPEC+ meeting on supply at which Saudi Arabia could push for output cuts. The yen weakened past 140 per dollar after a slight rally in Asian trading faded. In rates, treasuries were little changed while European bonds slipped. The 10-year Treasury yield held steady near 3.26%; while gilts 10-year yield is up 2.6bps around 2.90% and bunds 10-year yield is up 2bps to 1.58%. In commodities, WTI crude futures rebound 3% to around $89, within Thursday’s range; oil pared gains after news that the Group of Seven most industrialized countries is poised to agree to introduce a price cap for global purchases of Russian oil, while Russia looks set to resume gas supplies through its key pipeline. Gold rose $6 to around $1,704.  Meanwhile, zinc headed for its biggest weekly loss in over a decade on concern Chinese demand will be hamstrung by new virus restrictions. Bitcoin has reclaimed the USD 20k mark but the upward move is yet to gain any real traction amid the broader contained price action. Looking to the day ahead now, the main highlight will be the US jobs report for August. Otherwise on the data side, there’s US factory orders for July and Euro Area PPI for July. Market Snapshot S&P 500 futures little changed at 3,969.25 Gold spot up 0.4% to $1,704.52 MXAP down 0.5% to 154.28 MXAPJ down 0.5% to 506.44 Nikkei little changed at 27,650.84 Topix down 0.3% to 1,930.17 Hang Seng Index down 0.7% to 19,452.09 Shanghai Composite little changed at 3,186.48 Sensex up 0.4% to 59,025.66 Australia S&P/ASX 200 down 0.2% to 6,828.71 Kospi down 0.3% to 2,409.41 STOXX Europe 600 up 0.7% to 410.47 German 10Y yield little changed at 1.58% Euro up 0.3% to $0.9980 U.S. Dollar Index down 0.25% to 109.42 Top Overnight News from Bloomberg Under pressure from central bankers determined to quash inflation even at the cost of a recession, global bonds slumped into their first bear market in a generation. The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds has fallen more than 20% from its 2021 peak, the biggest drawdown since its inception in 1990 The ECB remains behind the curve on tackling record euro- zone inflation and will have to act more forcefully than previously envisaged to wrest control of prices, according to a survey of economists Consumers’ expectations for inflation in three years rose to 3% in July from 2.8% in June, European Central Bank says in statement summarizing the results of its monthly survey. Russia looks set to resume gas supplies through its key pipeline to Europe, a relief for markets even as fears persist about more halts this winter. Grid data indicate that flows will resume on Saturday at 20% of capacity as planned German exports and imports both fell in July as surging prices and the war in Ukraine threaten to send Europe’s largest economy into a recession. The trade surplus shrank to 5.4 billion euros ($5.4 billion) from 6.2 billion euros in June, as exports dropped by 2.1% and imports by 1.5% A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were indecisive with price action relatively rangebound after the mixed lead from the US and with the region lacking firm commitment as participants await the upcoming US NFP jobs data. ASX 200 was lacklustre as earnings releases quietened and with strength in financials offset by losses across the commodity-related sectors. Nikkei 225 traded subdued amid underperformance in large industrials although losses in the index were stemmed by retailers after several reported strong August sales. Hang Seng and Shanghai Comp were mixed as Hong Kong underperformed amid notable losses in developers and with the mainland choppy but ultimately kept afloat after the PBoC recently cut rates on its Standing Lending Facility by 10bps from August 15th and after several officials pledged measures. Top Asian News PBoC official Ruan said monetary policy is to further improve cross-cyclical adjustments and maintain stable and moderate credit development, while they will keep liquidity reasonably ample. PBoC will also better coordinate structural and aggregate policy tools but will avoid flood-like stimulus and keep prices stable. Furthermore, the PBoC said China has not taken excessive monetary policy stimulus since the pandemic, leaving room for subsequent policy adjustments and that balanced consumer prices also create favourable conditions for monetary policy adjustments, according to Reuters. PBoC adviser Wang said banks need to increase financial support for infrastructure and that infrastructure is restricted by local government debt levels, while Wang added that they need to ensure property companies' financing needs are met, according to Reuters. China's securities regulator official said they will promote new legislation for overseas listings and will implement the China-US audit agreement, as well as continue strengthening communication with foreign institutional investors, according to Reuters. China's banking regulator official said they will steadily resolve the risks faced by small and medium-sized financial institutions, while they will improve monitoring and disposal of debt risks of large companies, according to Reuters. Japanese Finance Minister Suzuki said it is important for currencies to move stably reflecting economic fundamentals, while he noted that recent FX moves are big and they will take appropriate action on FX if necessary. Suzuki also stated that they are watching FX with a sense of urgency and will brief the media after the G7 finance ministers meeting tonight. European bourses are firmer across the board as hawkish yield action in the EZ has eased from yesterday's recent peaks, Euro Stoxx 50 +0.8%. Stateside, futures are contained and flat with all focus on the NFP report. Alphabet's Google (GOOG) is planning to accept the use of third-party payment services on its smartphone app in national such as Japan and India but not the US, according to the Nikkei Top European News British Chambers of Commerce said the UK is already in the midst of a recession and it expects the UK economy to decline for two more periods following the contraction in Q2, while it also sees inflation to reach 14% later this year EU warned UK Foreign Secretary Truss against triggering Article 16 and said they will refuse to engage in serious talks on reforms to the post-Brexit deal unless she takes the “loaded gun” of unilateral legislation off the table German Economy Gets Another Growth Warning as Trade Volumes Drop Russian Gas Link Set to Restart as Traders Weigh Further Halts ECB Says Consumers Now See Inflation in Three Years at 3% A Hot Jobs Report Could Send Bitcoin to $15,000, Hedge Fund Says Citi Favors Bets on 75Bps Hikes at Each of Next Two ECB Meetings FX DXY's overnight pullback has picked up pace in early European hours. The EUR stands as the best performer alongside reports that Nord Stream 1 flows are expected to resume on Saturday. Non-US dollars are all modestly firmer to varying degrees, whilst JPY fails to benefit from the dollar weakness. Yuan shrugged off another notably firmer-than-expected CNY fixing overnight. Fixed Income Comparably contained session overall thus far though Bunds are holding at the lower end of a 85 tick range in limited newsflow pre-NFP. Currently, the Bund low is circa. 10 ticks above 147.00, with yesterday’s 146.78 trough in focus and then 145.97/87 thereafter. Gilts and USTs are very similar thus far in that both benchmarks are essentially unchanged. Commodities WTI Oct and Brent Nov futures are firmer on the day amid a softer Dollar and narrowing prospects of an imminent Iranian Nuclear deal. Spot gold edges higher as the Dollar remains weak, with the yellow metal back on a 1,700/oz+. Base metals are mixed LME copper softer around the USD 7,500/t. US Event Calendar 08:30: Aug. Change in Nonfarm Payrolls, est. 298,000, prior 528,000 Change in Private Payrolls, est. 300,000, prior 471,000 Change in Manufact. Payrolls, est. 15,000, prior 30,000 Unemployment Rate, est. 3.5%, prior 3.5% Labor Force Participation Rate, est. 62.2%, prior 62.1% Underemployment Rate, prior 6.7% Average Hourly Earnings YoY, est. 5.3%, prior 5.2% Average Hourly Earnings MoM, est. 0.4%, prior 0.5% Average Weekly Hours All Emplo, est. 34.6, prior 34.6 10:00: July Durable Goods Orders, est. 0%, prior 0%; July -Less Transportation, est. 0.3%, prior 0.3% 10:00: July Factory Orders, est. 0.2%, prior 2.0% 10:00: July Cap Goods Orders Nondef Ex Air, prior 0.4% 10:00: July Factory Orders Ex Trans, est. 0.4%, prior 1.4% DB's Jim Reid concludes the overnight wrap If I'm not here on Monday it's not impossible that I've been eaten by a snake or a small crocodile, or poisoned by a tarantula. For our twins' 5th birthday party this weekend we've hired a professional reptile handler to come round and show 30-40 overexcitable kids some interesting animals. If I'm not eaten or bitten I'm a bit worried he won't do the full register on the way out and I'll be left with a huge lizard hiding in my bed. All I can say is that for my 5th birthday party we just had pin the tail on the donkey and a few stale sandwiches. Life was so much simpler then. Markets are pretty complicated at the moment with investors not being quite able to decide whether the newsflow was bad or good yesterday for risk assets. We went to both extremes with the US rallying back into positive territory by the close (S&P 500 +0.30% having been -1.23% just after Europe logged off). As the US starts it's day a bit later we'll have a fresh payroll print to throw into the mix which could be the swing factor between 50 and 75bps at the September Fed meeting. Last month’s strong print ratcheted up expectations that the Fed could hike by 75bps for a third meeting in a row, and markets are still pricing that as the more likely outcome than 50bps, with futures now pricing in +67.7bps worth of hikes. In terms of what to expect today, our US economists are looking for +300k growth in nonfarm payrolls, which should be enough to keep the unemployment rate at its current 3.5%. Ahead of that, the US labour market data we got yesterday was pretty good, continuing the run of decent releases over recent days. Initial jobless claims for the week through August 27 unexpectedly fell back to 232k (vs. 248k expected), and the previous week was also revised down by -6k. That’s the third week in a row that the jobless claims have fallen, marking a change from the mostly upward trend we’ve seen since late March. On top of that, the ISM manufacturing release also surpassed expectations, remaining at 52.8 (vs. 51.9 expected), with the employment component at a 5-month high of 54.2 (vs. 49.5 expected). Treasuries lost significant ground on the day, even before the data, with the 2yr yield rising +1bps to hit another post-2007 high of 3.50%, whilst the 10yr yield rose +6bps to 3.25%. The moves were driven by higher real yields across the curve, with the 5yr real yield hitting a 3-year high of 0.849%. It was a similar story in Europe too, where yields on 10yr bunds (+2.2bps), OATs (+2.5bps) and BTPs (+3.3bps) rose. Those European moves came as investors grew increasingly confident that the ECB would hike by 75bps at some point this year, which was aided by the latest data that showed Euro Area unemployment fell to a new low of 6.6% in July. That’s the lowest level since the single currency’s formation, and means that the latest data is showing that the Euro Area simultaneously has the highest inflation and the lowest unemployment of its existence. As discussed at the top, US equities turned round late in the session with the Nasdaq nearly making it back into the green (-0.26%) as well as the S&P after being -2.28% at 6pm London time. This was too late to save the European session as the STOXX 600 (-1.80%) took a significant hit. Sentiment was pretty downbeat from the outset after the lockdown of the Chinese city of Chengdu (population 21m) risked further disruption to supply chains and global economic demand. That said, the energy situation continued to develop in a positive direction, with German power prices for next year coming down by a further -9.11% to €523.40 per megawatt-hour. In fact they have halved since their intraday peak on Monday when they hit €1050, which just shows how amazingly volatile this market is right now. The EU is considering various interventions to deal with the current turmoil, including price caps and windfall taxes, and Commission President Von der Leyen is set to outline the measures in her State of the Union address on September 14. Staying on commodities, the decline in oil prices continued yesterday thanks to fears of further Chinese lockdowns and hawkish central banks. Brent crude was down -4.28% to $92.36/bbl, which is a substantial decline since its closing level on Monday of $105.09/bbl. As we go to print, crude oil prices are showing some recovery with Brent futures +1.91% higher at $94.12/bbl. There was a similar negative pattern among industrial metals, with copper (-2.96%) down for a 5th day running on the back of those same fears about demand. Meanwhile in the precious metal space, gold (-0.79%) slipped below $1700/oz, while hitting its lowest since July intraday as markets priced higher interest rates, thus raising the opportunity cost of holding a non-interest-bearing asset. Over in the FX space, a number of new milestones were reached yesterday, most notably a rise in the dollar index (+0.91%) to levels not seen since 2002. The greenback was supported yesterday by the strong data that added to expectations the Fed would keep hiking into next year, although the reverse picture was that the Euro fell back beneath parity against the dollar, and the Japanese yen fell to 140 per dollar for the first time since 1998. In Asia’ morning trade, the Japanese yen further weakened, touching 140.26 per US dollar. Here in the UK, sterling also fell just beneath the $1.15 mark in trading for the first time since March 2020. In Asia this morning, the Nikkei (-0.21%), the Hang Seng (-0.58%), and the CSI (-0.20%) are trading lower with the Shanghai Composite (+0.28%) bucking the trend. Elsewhere, the Kospi (+0.04%) is struggling to gain traction after South Korea’s headline inflation slowed after six months of accelerating (more below). Moving ahead, US stock futures are fairly flat with contracts on the S&P 500 (-0.08%) and NASDAQ 100 (-0.04%) treading water. Early morning data showed that Korea’s inflation eased to +5.7% y/y in August (v/s +6.1% expected) from +6.3% in July as energy prices eased. MoM prices dropped -0.1% in August (v/s +0.3% expected) after rising +0.5% in the prior month thus providing some comfort to the Bank of Korea (BoK) in its yearlong tightening cycle. Rounding off yesterday's data, there was plenty to digest from the global manufacturing PMIs, although they mostly confirmed the picture from the flash readings we’d already got. In the Euro Area, the reading came in at 49.6 (vs. flash 49.7), and the US had a 51.5 reading (vs. flash 51.3). The UK had a stronger revision up to 47.3 (vs. flash 46), but it was still in contractionary territory and the lowest since May 2020. Elsewhere, German retail sales grew by +1.9% (vs. -0.1% expected). To the day ahead now, and the main highlight will be the US jobs report for August. Otherwise on the data side, there’s US factory orders for July and Euro Area PPI for July.   Tyler Durden Fri, 09/02/2022 - 07:52.....»»

Category: blogSource: zerohedgeSep 2nd, 2022

FTSE Review: Cineworld’s Horror Story Continues, While Abrdn Is Set To Leave The Big League

The FTSE All Share Index Quarterly Review is based on yesterday’s closing prices and is due to be announced this evening (Wednesday 31st August) by FTSE Russell, with changes effective after the close on Friday 16th September. Cineworld Group plc (LON:CINE) is set to leave the FTSE All Share Index as its horror story continues […] The FTSE All Share Index Quarterly Review is based on yesterday’s closing prices and is due to be announced this evening (Wednesday 31st August) by FTSE Russell, with changes effective after the close on Friday 16th September. Cineworld Group plc (LON:CINE) is set to leave the FTSE All Share Index as its horror story continues Struggling furniture maker Made.Com Group PLC (LON:MADE) also is heading out of the FTSE All Share Asset manager Abrdn PLC (LON:ABDN), Hikma Pharmaceuticals Plc (LON:HIK) and Howden Joinery Group Plc (LON:HWDN) are set to leave the FTSE 100 Harbour Energy PLC (LON:HBR), F&C Investment Trust PLC (LON:FCIT) and wound care specialist Convatec group look set to join FTSE 100 Go-Ahead Group plc (LON:GOG), Puretech Health PLC (LON:PRTC), NextEnergy Solar Fund Ltd (LON:NESF) and Bluefield Solar Income Fund Ltd (LON:BSIF) look set to be promoted from the FTSE Small Cap to the FTSE 250 Door manufacturer Tyman PLC (LON:TYMN), and lender Provident Financial plc (LON:PFG), are among the companies which are likely to leave the FTSE 250 Homeserve plc (LON:HSV) looks set to vault into the FTSE 100 temporarily, replacing cyber firm Avast PLC (LON:AVST) after its takeover goes through – but the home repairs company will also soon be taken private. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Cheap UK assets, volatility in financial markets, the cost-of-living crisis and a structural shift in the movie industry are all factors behind the moves expected to be announced in the latest FTSE quarterly review. Based on yesterday’s closing prices it appears Abrdn’s time in the FTSE 100 limelight is drawing to an end for now, as the investment company looks set for demotion, hit by volatility in financial market and seen as “behind the curve” in its ESG fund offerings. The horror story continues for Cineworld as it prepares for bankruptcy with its latest share slide propelling it out of the FTSE All Share. This index represents around 98% of the UK market, so Cineworld’s exit from this wide pool demonstrates just how far its star has fallen. It’s been weighed down by its huge debts after Covid played out as a highly depressing scene for the industry with revenue streams drying up as the might of the streaming giants ate into ticket sales. HomeServe is set to jump back into the FTSE 100 earlier than the official reshuffle as it is set to leap into the place vacated by Avast, due to its takeover by US cyber giant NortonLifeLock. But its extra time in the top-flight is expected to be limited for HomeServe as it in turn awaits takeover by Canada’s Brookfield Asset Management. Go-Ahead group is also expected to jump into the FTSE 250, but it’s also likely to be a short lived stint given that the transport operator has also agreed to a buy-out offer from an Australian and Spanish consortium. As suitors continue to circle UK assets, amid a weak pound and worries about the health of the economy, the risk is that more listed companies will be erased from indices. The cost-of-living crisis also looms large in this reshuffle with Howdens Joinery, door and window firm Tyman and furniture maker looking set for relegation from their positions. This is partly due to worries that increasingly squeezed household budgets will slow the pace of purchases and renovations.” Abrdn - Set To Be Relegated From The FTSE 100 Huge geopolitical uncertainty, sky high inflation and worries about economic growth have been challenging for the asset management sector, and Abrdn’s weaker performance in this environment looks set to propel it out of the big league. Operating profits came in lower than expected as fund flows reduced further. But this isn’t just a recent problem, assets have been walking out the door for years. It’s Environmental, Social and Governance (ESG) options currently lag peers, and demand for ESG investments is on the rise, which puts it in a tricky position. It’s been trying to keep revenue moving in the right direction through acquisitions. It now owns Interactive Investor, which should provide a relatively stable source of assets for the group given its one of the UK's biggest direct-to-consumer investment platforms. The majority of the funds abrdn manages have been able to deliver investment returns ahead of their benchmark – which is a key requirement if fund investors are to be tempted back. Hikma Pharma - Set To Be Relegated From The FTSE 100 Pharmaceutical company Hikma Pharma is in the drop zone after growth ground to a halt and its chief executive headed for the door. Amid the pile up of disappointing news was the slashing of guidance for revenues and margins in its key genetics medicines division. However, there were still a few rosier developments, with forecasts increased for its branded products and the injectables part of the business is still expected to follow the slightly higher trajectory laid out in April. But weakness may continue until a long-term replacement is found for Siggi Olafsson given that the executive chair and former CEO Said Darwazah, has only stepped into the breach temporarily. Howdens - Demotion From The FTSE 100 “There were high hopes that the shift in consumer behaviour brought about by the pandemic would be long term and the focus on doing up homes would continue as people continued to race for more space amid new hybrid ways of working. But worries are rising that amid the cost-of-living crisis consumers will put off launching fresh new renovation schemes unless absolutely necessary and that’s led to falls in Howden’s valuation, making it a potential contender for demotion from the FTSE 100, after only joining the index earlier in the spring. The red-hot housing market is also seeing tentative signs of cooling off with rates set to continue to rise amid painful inflation. However, Britain’s housing stock is ageing and that should provide some resilience particularly with the fresh focus on energy efficiency which could provide added impetus for renovations.’’ AVAST Set To Leave FTSE 100 While Homeserve Is Set To Join Temporarily “The London market may be showing signs of some short-term resilience but private equity firms are set to keep circling around the bargain bin, picking up firms discarded by investors. After the Competition and Markets Authority provisionally approved the takeover deal of cyber security firm Avast by US giant NortonLifeLock, the deal is expected to go through assuming final approval is given on 12 September, which will see Avast removed from the index. HomeServe, the Walsall based British multinational home emergency repairs and improvements business will temporarily move back into the FTSE 100. But it will be scratched from the index once its takeover by Brookfield Asset Management goes through in the next few months. These exits from the London market are unlikely to be the last, given how much interest there has been in UK assets from overseas buyers. The risk to capital markets is that competition and innovation could suffer if corporate concentration continues to rise. Retail investors who are unable to access private markets may also lose out because they won’t be able to share in the returns of as many companies in the economy, with some of the better opportunities going private.” Harbour Energy – Set To Enter The FTSE 100 North Sea oil and gas producer Harbour Energy headed downstream out of the FTSE 100 at the last reshuffle after worries about the windfall tax ricocheted around the stock. Harbour Energy is the reincarnation of Premier Oil formed via a reverse takeover by recently listed Chrysaor. But the share price has climbed back up, helped by the elevated price of fossil fuels which pushed half-year profits up to $1.49bn up from £120 million a year ago. The energy price levy will still be relatively onerous for the company, compared to larger producers given the majority of its production in hubs are in the UK. The full year tax liability is expected to be in the region of $300 million but it’s not deterring investment in the UK market, with new projects in the pipeline.” Convatec – Set To Enter The FTSE 100 “Medical company Convatec specialises in wound and skin care and demand for its products is expected to increase amid a rising number of surgical procedures globally and new initiatives for treatment. It’s battled cost inflation but its profit’s performance has still be pretty hardy, despite the headwinds. As populations age around the world, the ailments of the elderly such as leg ulcers are expected to provide brisk business for the company. Its product range extends to continence and critical care products, which are also expected to increase in demand as demographics change and medical professionals update care requirements.’’ F&C Investment Trust - Set To Enter The FTSE 100 “Although the F&C Investment Trust hasn’t escaped the recent market volatility, it’s resilience with its share price up 10% over the past six months makes it another contender for entry into the FTSE 100. The Trust aims to secure long-term growth in capital and income from an international diversified portfolio of listed equities, as well as unlisted securities and private equity.” PureTech Health - Set To Enter The FTSE 250 “The reshuffle could prove to be a revolving door for Biotech company PureTech Health as it’s in position to head back into the FTSE 250 after exiting the index at the last review. It had been a casualty of investors’ increasingly cautious approach to risk. The nature of the product pipeline makes the results quite volatile, and sentiment has rebounded highlighting how the broad spectrum of drugs should help offer longer term resilience.” Next Energy Solar and BlueField Solar - Set To Enter The FTSE 250 Despite the volatility facing the financial markets, there is still strength in the appetite for renewable energy stocks, with NextEnergy Solar Fund and BlueField Solar set to enter the FTSE 250. Next Energy Solar is a specialised solar and energy storage climate impact fund which has been boosted after its sustainability credentials were recognised under new European regulations known as the EU taxonomy. It has also managed to do a deal for more subsidised solar contracts in the UK, under the government-backed low carbon contracts company and it’s reported a rise in its net asset value amid an increase in power forecasts assumptions. BlueField Solar has also seen its net asset value rise and the Guernsey-based investment company has also won fresh contracts in the UK, with a 15-year duration, for sites in Northamptonshire, Hampshire and Norfolk. Tyman – Set To Leave The FTSE 250 Tyman the door and window manufacturer could be heading for the exit just months after it entered the FTSE 250. It had benefited from a robust demand for repairs, renovations and new build homes in its key markets, but there are concerns that demand could shift down a gear as interest rates continue to rise and the housing market cools. There are also worries about consumer confidence and a dwindling appetite for non-essential spending. A house makeover might be nice to have, but with budgets set for an even bigger squeeze, investors are concerned that Tyman could see a sharp slowdown in revenues. Provident Financial – Set To Exit The FTSE 250 Provident Financial looks set to be heading out of the FTSE 250 after worries about the cost-of-living crisis rise and it was forced to wind down its doorstep lending unit following a surge of complaints. Although the costs of the winding down have fallen, and business remained relatively robust in its credit card arm, concerns are growing across the sector about future potential spike in bad loans as consumer struggle to make payments amid soaring prices. Cineworld – Looks Set To Exit The FTSE All Share Index Cineworld has struggled to grab hold of fresh financial lifelines, and is looking at bankruptcy options, unable to survive the post pandemic floodwaters in its current form. Crawling back to profitability after being sideswiped by Covid was always going to require almost superhero levels of effort and with the blockbuster pipeline drying up, its options are very limited. The surge in streaming services might have been good news for movie fans confined to their homes and has helped support the big studios, but for the cinema industry it came as a double blow. Even when social distancing measures eased, not enough movie goers booked seats, forcing the company into an even more precarious position. Losing its position in the FTSE All Share Index is another twist in the Covid horror story for Cineworld, with its future now highly uncertain.” – Set To Leave The FTSE All Share Index “Bigger ticket items like furniture are much harder to shift as many consumers who are facing squeezed budgets are tightening the purse strings. A plush new sofa may be nice to have but it’s far from essential expenditure, when grocery bills are rising so fast. Retailer is now considering an equity raise to strengthen its balance sheet amid volatile trading conditions. It had already highlighted that it was hard to attract new customers while hanging onto decent margins and expected gross sales to fall from between 15% and 30% this year. With the extent of its slide in fortunes becoming clear, its share price is down 93% year to date, and it looks set to drop out of the FTSE All Share. Other Movements Expected In The Upcoming Reshuffle XP Power, Greencore and Chrysalis Investments look set to be relegated from the FTSE 250. It’s likely there will be two new entries into the FTSE All Share: Industrials REIT and Warehouse REIT. About by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.....»»

Category: blogSource: valuewalkAug 31st, 2022

Tverberg: Why No Politician Is Willing To Tell Us The Real Energy Story

Tverberg: Why No Politician Is Willing To Tell Us The Real Energy Story Authored by Gail Tverberg via Our Finite World blog, No politician wants to tell us the real story of fossil fuel depletion. The real story is that we are already running short of oil, coal and natural gas because the direct and indirect costs of extraction are reaching a point where the selling price of food and other basic necessities needs to be unacceptably high to make the overall economic system work. At the same time, wind and solar and other “clean energy” sources are nowhere nearly able to substitute for the quantity of fossil fuels being lost. This unfortunate energy story is essentially a physics problem. Energy per capita and, in fact, resources per capita, must stay high enough for an economy’s growing population. When this does not happen, history shows that civilizations tend to collapse. Figure 1. World fossil fuel energy consumption per capita, based on data of BP’s 2022 Statistical Review of World Energy. Politicians cannot possibly admit that today’s world economy is headed for collapse, in a way similar to that of prior civilizations. Instead, they need to provide the illusion that they are in charge. The self-organizing system somehow leads politicians to put forward reasons why the changes ahead might be desirable (to avert climate change), or at least temporary (because of sanctions against Russia). In this post, I will try to try to explain at least a few of the issues involved. [1] Citizens around the world can sense that something is very wrong. It looks like the economy may be headed for a serious recession in the near term. Figure 2. Index of consumer sentiment and news heard of company changes as reported by the University of Michigan Survey of Consumers, based on preliminary indications for August 2022. Consumer sentiment is at an extraordinarily low level, worse than during the 2008-2009 great recession according to a chart (Figure 2) shown on the University of Michigan Survey of Consumers website. According to the same website, nearly 48% of consumers blame inflation for eroding their standard of living. Food prices have risen significantly. Over the past year, the cost of car ownership has escalated, as has the cost of buying or renting a home. The situation in Europe is at least as bad, or worse. Citizens are worried about possibly “freezing in the dark” this winter if electricity generation cannot be maintained at an adequate level. Natural gas supplies, mostly purchased from Russia by pipeline, are less available and high-priced. Coal is also high-priced. Because of the fall of the Euro relative to the US dollar, the price of oil in euros is as high as it was in 2008 and 2012. Figure 3. Inflation-adjusted Brent crude oil price in US dollars and euros, in chart by the US Energy Information Administration, as published in EIA’s August 2022 Short Term Energy Outlook. Many other countries, besides those in the Eurozone, are experiencing low currencies relative to the dollar. Some examples include Argentina, India, Pakistan, Nigeria, Turkey, Japan, and South Korea. China has problems with developers of condominium homes for its citizen. Many of these homes cannot be delivered to purchasers as promised. As a protest, buyers are withholding payments on their unfinished homes. To make matters worse, the prices of condominium homes have started to fall, leading to a loss of value of these would-be investments. All of this could lead to serious problems for the Chinese banking industry. Even with these major problems, central banks in the US, the UK and the Eurozone are raising target interest rates. The US is also implementing Quantitative Tightening, which also tends to raise interest rates. Thus, central banks are intentionally raising the cost of borrowing. It doesn’t take much insight to see that the combination of price inflation and higher borrowing costs is likely to force consumers to cut back on spending, leading to recession. [2] Politicians will avoid talking about possible future economic problems related to inadequate energy supply. Politicians want to get re-elected. They want citizens to think that everything is OK. If there are energy supply problems, they need to be framed as being temporary, perhaps related to the war in Ukraine. Alternatively, any issue that arises will be discussed as if it can easily be fixed with new legislation and perhaps a little more debt. Businesses also want to minimize problems. They want citizens to place orders for their goods and services, without the fear of being laid off. They would like the news media to publish stories saying that any economic dip is likely to be very mild and temporary. Universities don’t mind problems, but they want the problems to be framed as solvable ones that will offer their students opportunities for jobs that will pay well. A near-term, unsolvable predicament is not helpful at all. [3] What is wrong is a physics problem. The operation of our economy requires energy of the correct type and the right quantity. The economy is something that grows through the “dissipation” of energy. Examples of dissipation of energy include the digestion of food to give energy to humans, the burning of fossil fuels, and the use of electricity to power a light bulb. A rise in world energy consumption is highly correlated with growth in the world economy. Falling energy consumption is associated with economic contraction. Figure 4. Correlation between world GDP measured in “Purchasing Power Parity” (PPP) 2017 International $ and world energy consumption, including both fossil fuels and renewables. GDP is as reported by the World Bank for 1990 through 2021 as of July 26, 2022; total energy consumption is as reported by BP in its 2022 Statistical Review of World Energy. In physics terms, the world economy is a dissipative structure, just as all plants, animals and ecosystems are. All dissipative structures have finite lifespans, including the world economy. This finding is not well known because academic researchers seem to operate in ivory towers. Researchers in economic departments aren’t expected to understand physics and how it applies to the economy. In fairness to academia, the discovery that the economy is a dissipative structure did not occur until 1996. It takes a long time for findings to filter through from one department to another. Even now, I am one of a very small number of people in the world writing about this issue. Also, economic researchers are not expected to study the history of the many smaller, more-localized civilizations that have collapsed in the past. Typically, the population of these smaller civilizations increased at the same time as the resources used by the population started to degrade. The use of technology, such as dams to redirect water flows, may have helped for a while, but eventually this was not enough. The combination of declining availability of high quality resources and increasing population tended to leave these civilizations with little margin for dealing with the bad times that can be expected to occur by chance. In many cases, such civilizations collapsed after disease epidemics, a military invasion, or a climate fluctuation that led to a series of crop failures. [4] Many people have been confused by common misunderstandings regarding how an economy really works. [a] Standard economics models foster the belief that the economy can continue to grow without a corresponding increase in energy supply. When economic models are designed with labor and capital being the important inputs, energy supply doesn’t seem to be needed, at all. [b] People seem to understand that legislation capping apartment rents will stop the building of new apartments, but they do not make the same connection with steps taken to hold down fossil fuel prices. If efforts are made to bring down the prices of fossil fuels (such as raising interest rates and adding oil from the US petroleum reserves to increase total oil supply), we need to expect that extraction will be adversely affected. One article reports that Saudi Arabia does not seem to be using recent record profits to quickly raise reinvestment to the level that seemed to be required a few years ago. This suggests that Saudi Arabia needs prices that are quite a bit higher than $100 per barrel in order to take significant steps toward extracting the country’s remaining resources. This would seem to contradict published reserves that, in theory, take current prices into consideration. Reuters reports that Venezuela has reneged on its promise to send more oil to Europe, under an oil for debt deal. It wants oil product swaps instead, since it is lacking in its ability to make finished products from its oil itself. It would take a long run of prices much higher than today’s level for Venezuela to be able to sufficiently invest in infrastructure to do such refining. Venezuela reports the highest oil reserves in the world (303.8 thousand million barrels), even higher than Saudi Arabia’s reported 297.5 thousand million barrels, but neither country can be counted on to take major steps to raise supply. Similarly, there have been reports that US shale drillers are not investing to keep production growing, despite what seem to be sufficiently high prices. There are simply too many issues. The cost of new investment is very high, outside of the already drilled sweet spots. Also, there is no guarantee the price will stay high. There are also supply line issues, such as whether appropriate steel drilling pipes and fracking sand will be available, when needed. [c] Published information suggests that there is a huge amount of fossil fuels remaining to be extracted, given today’s level of technology. If we assume that technology will get better and better, it is easy to believe that any fossil fuel limit is hundreds of years in the future. The way the economy works, the extraction limit is really an affordability issue. If the cost of extraction rises too high, relative to what people around the world have for spendable income, production will stop because demand (in terms of what people can afford) will drop too low. People will tend to cut back on discretionary spending, such as vacation travel and meals in restaurants, cutting back on demand for fossil fuels. [d] How “demand” works is poorly understood. Very often, researchers and the general public assume that demand for energy products will automatically remain high. A surprisingly large share of demand is tied to the need for food, water, and basic services such as schools, roads, and bus service. Poor people require these basics just as much as rich people do. There are literally billions of poor people in the world. If the wages of poor people fall too low relative to the wages of rich people, the system cannot work. Poor people find that they must spend nearly all their income on food, water and housing. As a result, they have little left to pay taxes to support basic governmental services. Without adequate demand from poor people, the prices of commodities tend to fall too low to encourage reinvestment. The majority of fossil fuel use is by commercial and industrial users. For example, natural gas is often used in making nitrogen fertilizer. If the price of natural gas is high, the price of fertilizer will rise higher than farmers are willing to pay for the fertilizer. Farmers will cut back on fertilizer use, reducing yields for their crops. The farmers’ own costs will be lower, but there will be less of the desired crops grown, perhaps indirectly raising overall food prices. This is not a connection that economic modelers build into their models. The lockdowns of 2020 show that governments can indeed ramp up demand (and thus prices) for energy products by sending out checks to citizens. We are now seeing that the approach seems to produce inflation rather than more energy production. Also, countries without energy resources of their own may see their currencies fall with respect to the US dollar. [e] It is not true that energy types can easily be substituted for one another. In energy modeling, such as in calculating “Energy Return on Energy Invested,” a popular assumption is that all energy is substitutable for other energy. This isn’t true, unless a person accounts for all of the details of the transition, and the energy needed to make such a transition possible. For example, intermittent electricity, such as that generated by wind turbines or solar panels, is not substitutable for load-following electricity. Such intermittent electricity is not always available when people need it. Some of this intermittency is very long-term. For example, wind-generated electricity may be low for more than a month at a time. In the case of solar energy, the problem tends to be storing up enough electricity during summer months for use in winter. A naive person might assume that adding a few hours of battery backup would fix intermittency problems, but such a fix turns out to be very inadequate. If people are not to freeze in the dark in winter, longer-term solutions are needed. One standard approach is to use a fossil fuel system to fill in the gaps when wind and solar are not available. The catch, then, is that the fossil fuel system really needs to be a year-around system, with trained staffing, pipelines and adequate fuel storage. A modeler needs to consider the need to build a whole double system instead of a single system. Because of intermittency issues, electricity from wind and solar only substitute for fuels (coal, natural gas, uranium) that operate our current system. Publications often talk about the cost of intermittent electricity being at “grid parity” when its temporary cost seems to match the cost of grid electricity, but this is matching “apples and oranges.” The cost comparison needs to be in comparison to the average cost of fuel for plants producing electricity, rather than to electricity prices. Another popular assumption is that electricity can be substituted for liquid fuels. For example, in theory, every piece of farm equipment could be redesigned and rebuilt to be based on electricity, rather than diesel, which is typically used today. The catch is that there would need to be an enormous number of batteries built and eventually disposed of for this transition to work. There would need also need to be factories to build all this new equipment. We would need an international trade system operating extraordinarily well, to find all the raw materials. Likely, there would still not be enough raw materials to make the system work. [f] There is a great deal of confusion about expected oil and other energy prices, as an economy reaches energy limits. This issue is closely related to [4][d], with respect to the confusion about how energy demand works. A common assumption among analysts is that “of course” oil prices will rise, as limits are approached. This assumption is based on the standard supply and demand curve used by economists. Figure 5. Standard economic supply and demand curve from Wikipedia. Description of how this curve works: The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D1 to D2, resulting in an increase in price (P) and quantity sold (Q) of the product. The issue is that the availability of inexpensive energy products very much affects demand as well as supply. Jobs that pay well are only available if inexpensive energy products can leverage human labor. For example, surgeons today perform robotic surgery, requiring, at a minimum, a stable source of electricity for each operation. Furthermore, the equipment used in the surgery is created using fossil fuels. Surgeons also use anesthetic products that require fossil fuels. Without today’s fancy equipment, surgeons would not be able to charge nearly as much they do for their services. Thus, it is not immediately obvious whether demand or supply would tend to fall faster, if energy supply should hit limits. We know that Revelation 18:11-13 in the Bible provides a list of a number of commodities, including humans sold as slaves, for which prices dropped very low at the time of the collapse of ancient Babylon. This suggests that at least sometimes during prior collapses, the problem was too low demand (and too low prices), rather than too low supply of energy products. [5] The International Energy Agency and politicians around the world have recommended a transition to the use of wind and solar to try to prevent climate change for quite a few years. This approach seemed to have the approval of both those concerned about too much burning of fossil fuels causing climate change and those concerned about too little fossil fuel energy causing economic collapse. A rough estimate of what the decline in energy supply might look like under the rapid shift to renewables proposed by politicians is shown in Figure 6. Figure 6. Estimate by Gail Tverberg of World Energy Consumption from 1820 to 2050. Amounts for earliest years based on estimates in Vaclav Smil’s book Energy Transitions: History, Requirements and Prospectsand BP’s 2020 Statistical Review of World Energy for the years 1965 to 2019. Energy consumption for 2020 is estimated to be 5% below that for 2019. Energy for years after 2020 is assumed to fall by 6.6% per year, so that the amount reaches a level similar to renewables only by 2050. Amounts shown include more use of local energy products (wood and animal dung) than BP includes. If a person understands the connection between energy consumption and the economy, such a rapid drop in energy supply looks like something that would likely be associated with economic collapse. The goal of politicians seems to be to keep citizens from understanding how awful the situation really is by reframing the story of the decline in energy supply as something politicians and economists have chosen to do, to try to prevent climate change for the sake of future generations. The rich and powerful can see this change as a good thing if they themselves can profit from it. When there is not enough energy, the physics of the situation tends to lead to increasing wage and wealth disparities. Wealthy individuals see this outcome as a good thing: They can perhaps personally profit. For example, Bill Gates has amassed about 270,000 acres of farmland in the United States, including newly purchased farmland in North Dakota. Furthermore, politicians see that they can have more control over populations if they can direct citizens in a way that will use less energy. For example, bank accounts can be linked to some type of social credit score. Politicians will explain that this is for people’s own good–to prevent the spread of disease or to prevent undesirables from using too much of the available resources. One way of dramatically reducing energy consumption is by mandating shutdowns in an area, purportedly to prevent the spread of Covid-19, as China has been doing recently. Such shutdowns can be explained as being needed to stop the spread of disease. These shutdowns can also help hide other problems, such as not having enough fuels to prevent rolling blackouts of electricity. [6] We are living in a truly unusual time, with a major energy problem being hidden from view. Politicians cannot tell the world how bad the energy situation really is. The problem with near-term energy limits has been known since at least 1956 (M. King Hubbert) and 1957 (Hyman Rickover). The problem was confirmed in the modeling performed for the 1972 book, The Limits to Growth by Donella Meadows and others. Most high-level politicians are aware of the energy supply issue, but they cannot possibly talk about it. Instead, they choose to talk about what would happen if the economy were allowed to speed ahead without limits, and how bad the consequences of that might be. Militaries around the world are no doubt well aware of the fact that there will not be enough energy supplies to go around. This means that the world will be in a contest for who gets how much. In a war-like setting, we should not be surprised if communications are carefully controlled. The views we can expect to hear loudly and repeatedly are the ones governments and influential individuals want ordinary citizens to hear. Tyler Durden Wed, 08/24/2022 - 21:00.....»»

Category: blogSource: zerohedgeAug 24th, 2022

Futures Flat After Hawkish Fed Comments, Dollar Ascent Resumes

Futures Flat After Hawkish Fed Comments, Dollar Ascent Resumes The downbeat market mood continued for a fourth day, with US stock futures turning red and erasing earlier gains after a three-day drop saw the S&P 500 lose $1.4 trillion in market capitalization amid renewed concerns about a hawkish Fed and a potential J-Pow bomb during Friday's J-Hole symposium (that said, with expectations so bearish, there is almost no way Powell can sound hawkish). S&P 500 futures dropped 0.1% at 7:00am ET after falling as much as 0.5%. Nasdaq 100 futures were also modestly red as the yield on the 10-year Treasury hit 3.05%. The US dollar reversed yesterday's sharp drop and extended its recent surge as the EURUSD resumed its plunge trading ever farther from parity, and at 0.992 last. Oil meanwhile has continued its ascent, pushing Brent above $100, and leading to the first Diesel price increase at the Pump since mid-June. “Globally we haven’t seen a deceleration like this that has been so synchronized in many decades,” Frances Stacy, director of strategy at Optimal Capital Advisors LLC, said on Bloomberg Television. “I don’t want to be directional” in picking trades, she added. The latest data showed economic activity weakening from the US to Europe and Asia, underlining the dire dilemma the Fed faces in hiking interest rates to bring down high inflation without sparking a recession. Still, Minneapolis Fed President Neel Kashkari said inflation is very high and the central bank must act to bring it back down to 2% and it is "very clear" they need to tighten monetary policy. Kashkari also stated that half to two-thirds of US high inflation is driven by supply-side shocks and help is needed on the supply side to get inflation down, with the more help they get from the supply side, the less the Fed has to do and will be better able to avoid a hard landing. Furthermore, he said there is currently no trade-off between employment and inflation mandates and they can only relax on rate hikes when they see compelling evidence inflation is heading toward 2%. In US pre-market trading, Nordstrom plunged as much as 14% and was set for its biggest drop in nine months, after an outlook cut prompted analyst worries that the need to clear inventory and discounting could hurt margins in the second half. Brokers said that the higher-end department store owner’s results have been more volatile than expected and show that the company is “not immune” to a difficult macroeconomic backdrop. Bed Bath & Beyond shares rose as much as 18% in premarket trading following a WSJ report that the home goods retailer told prospective lenders that it has selected a lender for a loan after a marketing by JPMorgan Chase. Other notable premarket movers: Urban Outfitters (URBN US) delivered quarterly results that look broadly in line with other apparel retailers, with a slowdown in lower-end brands and pressure on margins from markdowns, analysts say. Frontier GroupHoldings (ULCC US) is resumed with an overweight rating at Morgan Stanley, with broker saying that the company is “the quintessential ultra-low-cost carrier” and has attractive margins. Starbox (STBX US) shares jump as much as 30% in US premarket trading, with the Malaysian digital payments firm set for another day of gains after soaring in Tuesday’s Nasdaq Stock Market debut. Stock futures were rangebound in muted volumes, as traders assessed the fact that directors at two of the Fed’s 12 regional branches favored a 100 basis-point increase in the discount rate in July. One of them, Minneapolis President Neel Kashkari, said US inflation is very high and the central bank must act to bring it back under control. All eyes remain on Fed officials as they head to Jackson Hole, Wyoming, this week for an annual conference, where Chair Jerome Powell will have a chance to reset investor expectations when he speaks on the economic outlook at 10am on Friday. “We’ve been getting mixed signals from the Fed, highlighting risks of over-tightening but also concerns over still elevated inflation,” Madison Faller, global strategist at JPMorgan Private Bank, told Bloomberg Television. “It’s going to take more than one reading, we are going to have to see inflation fall over several months before we can really get a sense of whether a Fed pivot is on the way.” According to an analysis of 13F reports by Goldman, last quarter hedge funds ramped up bets on megacap US tech stocks and whittled down overall holdings to concentrate on favored names, with conviction growing to levels last seen before the pandemic. The funds boosted tech and consumer discretionary holdings, while cutting energy and materials wagers, a trade which once again backfired spectacularly as tech crashed and energy soared. Since then however, the story has changed as Nasdaq 100 valuations rose well above the average for the past decade as the index soared from its June lows. The gauge remains under pressure, however, as higher rates weigh on the present value of future profits, hurting growth sectors like tech. In Europe, the Stoxx 600 index edged lower, heading for a fourth straight day of declines, with retailers under pressure after US peer Nordstrom trimmed its full-year outlook. Luxury-goods giant Richemont surged after selling a stake in its online business. European natural gas prices increased, with outages at plants in the US and Norway adding to supply curbs from Russia. Here are some of the biggest European movers today: Richemont shares rise as much as 3.3% after the luxury retailer announced the sale of its YNAP stake to US online retailer Farfetch, which was up 9.4% in US premarket trading Tenaris gains as much as 3.3%, extending Tuesday’s 8.8% jump, with Banca Akros upgrading the company to buy from accumulate noting its outlook remains positive ASR Nederland shares jump as much as 4.1% after the insurer reported interim results. KBC says the company delivered solid results despite headwinds from Non-Life segment Lookers shares gain as much as 8%. The motor vehicle dealer’s pretax profit beat last year’s “exceptional performance” and was “comfortably ahead” of expectations, Peel Hunt (buy) says CTS Eventim shares gain as much as 4% after the ticket seller’s 2Q results, with Jefferies pointing to a significant beat driven by ticketing Norwegian fish farming stocks drop, led by Mowi, Leroy and Austevoll after the trio reported their respective quarterly results, with DNB expecting cuts to Mowi consensus estimates Vimian shares sink as much as 14% to a record low after the animal health company reported 2Q results that saw only slight organic growth and a lower Ebita margin Sydbank shares slide as much as 6.1% after the Danish lender’s latest results included a miss on net income, while saying its 2022 net profit will likely be in upper end of the previously reported range Agfa-Gevaert shares decline as much as 11%, the most intraday since May 2021, despite a 2Q revenue beat as ING questioned the quality of the earnings Earlier in the session, Asian stocks headed for a fifth day of declines, weighed down by losses in China, with investors trimming risky bets as they await clarity on the Federal Reserve’s policy path at the Jackson Hole meeting. The MSCI Asia Pacific Index dropped as much as 0.7%, set for its longest losing streak in two months. The consumer discretionary sector was the biggest drag. China’s CSI 300 Index slumped 1.9%, the most among regional benchmarks, with electric-vehicle linked shares leading the declines after CATL reported weaker battery margins. Fed Minneapolis President Neel Kashkari said US inflation is very high and the central bank must act to bring it under control, in the latest run of hawkish remarks by US officials. That, coupled with weak US business activity data overnight, renewed concerns about global growth as central bankers gather for an annual symposium in Jackson Hole.  “We could see more short-term pressure on equities, starting in the US. This could also spill over to Asia given that corporate earnings in APAC are relatively sensitive to the region’s export performance,” said Tai Hui, APAC chief global market strategist at JP Morgan Asset Management. “We expect market sentiment to remain cautious as we approach the Jackson Hole meeting.”   In addition to a flurry of earnings this week from the region’s heavyweights, investors are also closely watching the impact of a drought in China that has led to shutdown of factories.  Japanese equities ended lower, erasing earlier gains, as investors assess the potential for further tightening by the Federal Reserve to fight inflation.  The Topix Index fell 0.2% to 1,967.18 as of market close Tokyo time, while the Nikkei declined 0.5% to 28,313.47. Sony Group Corp. contributed the most to the Topix Index decline, decreasing 1.4%. Out of 2,170 stocks in the index, 1,165 rose and 861 fell, while 144 were unchanged. “The key point to watch on the Jackson Hole is whether Powell will be hawkish, or a little less hawkish,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank. India’s benchmark equities index closed slightly higher, after seesawing between gains and losses several times throughout the day, helped by an advance in lenders.  The S&P BSE Sensex rose 0.1% to close at 59,085.43 in Mumbai, after falling as much as 0.5% earlier in the session. The NSE Nifty 50 Index added 0.2%.   ICICI Bank Ltd. provided the biggest boost to the Sensex, which saw 16 of the 30 member stocks ending higher. Fourteen of 19 sectoral sub-indexes compiled by BSE Ltd. rose, led by a gauge of realty companies.  Investors will focus on Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday for a sense of how aggressive the US central bank will be in the face of weak economic trends.  “Market strategists blamed the three-day losing streak in U.S. stocks on a number of factors, including nerves ahead of Federal Reserve Chairman Jerome Powell’s speech on Friday, combined with a drumbeat of downbeat economic news, along with anxieties about rising Treasury yields and a stronger U.S. dollar,” Deepak Jasani, head of retail research at HDFC Securities Ltd., wrote in a note.  In FX, the Bloomberg Dollar Spot Index was little changed and the greenback advanced against most of its Group-of-10 peers. Treasuries advanced, outperforming European peers, amid some paring of Fed rate hike bets. The euro traded in a narrow range around $0.950. Germany’s 10-year yield climbed to the highest since July 1 as money markets added to ECB rate-hike wagers before paring most of that rise. The pound slipped against the dollar and was steady versus the euro. Gilts underperformed with UK 2-, 5 and 30-year yields extending their advance to the highest since 2008, 2011 and 2014 respectively, before paring; the 10-year yield rose to the highest in two months. In rates, Treasuries were mixed with 20-year sector outperforming, and broader market faring better than UK and euro-zone bond markets, where a full point of ECB hikes by October is priced in for the first time with energy seen adding to inflationary pressures. The 10Y TSY yield rose modestly to 3.05% after trading north of 3.00% all session. The New 2-year is ~1bp richer on the day with UK 2-year cheaper by ~15bp, German 2-year by ~6bp; 20-year Treasuries are richer by ~1bp outright and ~2bp on the 10s20s30s fly. The US Treasury auction cycle resumes with $45b 5-year at 1pm ET, concludes with $37b seven-year Thursday; Tuesday’s 2-year sale tailed by 1.4bp. In commodities, WTI crude drifted above $94 a barrel, bolstered by shrinking US stockpiles and possible OPEC+ output cuts. Bitcoin is incrementally softer but resides towards the mid-point of relatively contained parameters and remains comfortably above the USD 21k mark. Looking at the day ahead now, and data releases from the US include the preliminary durable goods orders and core capital goods orders for July, along with pending home sales for that month too. Otherwise, earnings releases include Nvidia, Salesforce and Royal Bank of Canada. Market Snapshot S&P 500 futures little changed at 4,133.25 STOXX Europe 600 little changed at 431.26 MXAP down 0.5% to 157.88 MXAPJ down 0.6% to 512.64 Nikkei down 0.5% to 28,313.47 Topix down 0.2% to 1,967.18 Hang Seng Index down 1.2% to 19,268.74 Shanghai Composite down 1.9% to 3,215.20 Sensex little changed at 58,991.22 Australia S&P/ASX 200 up 0.5% to 6,998.12 Kospi up 0.5% to 2,447.45 German 10Y yield little changed at 1.32% Euro down 0.2% to $0.9949 Gold spot up 0.1% to $1,750.10 U.S. Dollar Index little changed at 108.65 Top Overnight News from Bloomberg Federal Reserve Bank of Minneapolis President Neel Kashkari said US inflation is very high and the central bank must act to bring it back under control The head of macro and FICC research at Sweden’s biggest lender, SEB AB, has urged the Riksbank to stop selling off its own currency because it risks hurting the economy The latest round of euro weakness has resulted in a series of bearish options structures for hedge funds and macro accounts. First stop for the common currency could be the $0.98 handle The world’s largest pension fund said its equity investments based on environmental, social and governance criteria have outperformed as global stocks slump on concerns over inflation and monetary tightening Oil rose for a second day as an industry report signaled another drawdown in US crude inventories, adding to a tightening supply outlook after Saudi Arabia flagged possible cuts to production The UK imported no fuel from Russia for the first time on record in June as the government achieved its ambition to phase out all purchases of natural gas and oil in the wake of the invasion of Ukraine A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mixed and only partially shrugged off the lacklustre lead from global counterparts. ASX 200 reclaimed the 7,000 level and was led by the tech and commodity-related sectors although gains were capped amid another busy day of earnings releases. Nikkei 225 failed to sustain opening advances following reports that Japan is considering lowering the COVID employment subsidy. Hang Seng and Shanghai Comp declined with property names pressured by several bearish factors including weak developer earnings and a default warning by Guangzhou R&F Properties, while China is also reportedly probing real estate executives for possible law violations. Top Asian News China Securities Times noted that moderate CNY depreciation is positive for export competitiveness and that the widening US-China interest rate spread has a limited impact on CNY. Hong Kong is considering a storm level 8 from 18:00 local time 11:00BST/06:00EDT which could result in a market closure on Thursday, according to Bloomberg. Japanese PM Kishida announced to relax border rules on COVID and will waive tests for vaccinated passenger arrivals from September 7th, but added there was no decision yet on raising the number of daily arrivals, according to Reuters. Cautious price action in European hours with fresh drivers limited and the docket sparse ahead of Jackson Hole commencing on Thursday (Powell Friday), Euro Stoxx 50 -0.1% Stateside, futures are in-fitting both directionally and in terms of magnitude, ES -0.1%. In Europe, the FTSE 100 is the marginal laggard with metals (ex-aluminium) under broad pressure as the USD gains momentum. Top European News Scottish Power CEO proposed to UK Business Secretary Kwarteng capping household energy bills at around GBP 2000/year which would need funding of over GBP 100bln over two years, according to FT citing sources. ECB's Rehn says the investigation phase for the digital EUR is expected to conclude in October 2023, will then determine whether to embark on actually building a digital EUR. Ukraine Latest: US to Mark Kyiv’s Independence With New Arms BNP Hires Zink Secher as Head of ESG Ratings Advisory for EMEA Cineworld Short Seller Argonaut Says Shareholders to Get Nothing Euro Traders Bet on Move Below $0.98 as Bold Wagers Also in Play FX DXY attempted to claw back some of Tuesday’s losses overnight but lost momentum at a current session peak of 108.81. EUR is subdued as the bearish bias persists, GBP/USD is under similar mild pressure around (and marginally below) 1.1800. Non US-dollars are all softer against the USD whilst havens JPY and CHF outperform. Fixed Income Initial pronounced EGB pressure briefly abated and brought benchmarks into positive territory; though, this failed to cement itself. Gilts are leading the downside though are circa. 20 ticks off worst levels, complex cognisant of the upcoming Ofgem announcement and inflation/rate implications. USTs are bucking the trend once more and are incrementally positive with 5yr issuance due and the curve incrementally steeper. Commodities WTI and Brent October futures have been grinding higher since the European entrance following an APAC session of consolidation. Spot gold has been drifting higher after mounting the USD 1,750/oz mark. Base metals are mixed with 3M LME copper lower but still north of USD 8,000/t, whilst aluminium outperforms. US Private Inventory report (bbls): Crude -5.6mln (exp. -0.9mln), Cushing +0.7mln, Gasoline +0.3mln (exp. -1.5mln), Distillates +1.1mln (exp. +0.6mln). Canada and Germany signed a hydrogen alliance deal to accelerate exports of Canadian hydrogen to Germany by 2025, according to Reuters. Russia's Sakhalin has scrapped a gas shipment to a buyer due to a payment issue, via Bloomberg. Major oil traders and some producers have ceased direct sales of crude to India's Nayara energy amid concerns regarding Russian sanctions, according to Reuters sources. American Automobile Association says that US diesel pump prices have climbed for the first time since mid-June. Indonesia extends the palm oil export levy waiver until October 31st, according to the Trade Minister. US Event Calendar 07:00: Aug. MBA Mortgage Applications, prior -2.3% 08:30: July Durable Goods Orders, est. 0.8%, prior 2.0%; Durables-Less Transportation, est. 0.2%, prior 0.4% July Cap Goods Orders Nondef Ex Air, est. 0.3%, prior 0.7% July Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.7% 10:00: July Pending Home Sales (MoM), est. -2.6%, prior -8.6%; YoY, est. -21.4%, prior -19.8% DB's Tim Wessel concludes the overnight wrap Despite the best efforts of data releases, US rates markets just do not want to fundamentally re-price the outlook until Chair Powell’s remarks this Friday at Jackson Hole (and, to an extent, the next round of employment and inflation data before the September FOMC). Our US economists have published a preview for his remarks (link here), with the one-line takeaway being they are looking for the Chair to fill in reaction function details. These being my last hours on the clock before the Chair’s remarks (as we here at EMR HQ navigate the summer holiday minefield that my inbox stuffed with automatic out-of-office replies suggest is ubiquitous across the financial sector) I can’t help but leave you, dear reader, with my final thoughts. The retracement of every rally following downside data surprises, along with the build up in short policy futures positions, suggests that the market is looking for a very hawkish tone from the Chair. That a priori expectations are for such hawkish messaging, the bar to clear for rates to selloff further is that much higher. It does not seem like the Chair can deliver the sort of shock necessary to drive a material re-pricing of policy, especially with inflation and employment data still due before the September FOMC, but time will tell. The case that a hawkish shock is to come is that the Chair most frequently has to speak publicly on behalf of the Committee, and this is his opportunity to slant his remarks towards his own personal bias. The Chair may well personally weigh the balance of risks toward worse inflation outcomes, but let’s see if his lean is strong enough to satiate the market’s appetite. The latest example of rates markets retracing back to their starting point came yesterday, when PMIs, the Richmond Fed Manufacturing Index, and New Home Sales all missed to the downside in quick succession. In particular, the Services PMI (44.1 v 49.8 expected) fell to its lowest on record outside of the pandemic, with the survey showing weakness across new sales, new orders, and employment elements, along with abating price pressures. Nevertheless, respondents were optimistic about the path ahead, not making it any easier for market participants to disentangle signal from noise. Rounding out the other morning data, Manufacturing PMI fared better than Services, printing at 51.3 vs. 51.8 expected, still leaving the Composite at 45.0, its worst reading since February 2021. The Richmond Fed Manufacturing index was -8 vs. -2 expectations, while there were 511k new home sales in July vs. 575k expectations, another print on the downbeat for US housing markets. Following the lackluster data, 2yr Treasury yields fell -11.8bps peak-to-trough, only, as intimated, to stage a retracement to end the day a mere -1.0bp lower. Similarly, 10yr Treasury yields were -9.3bps lower, peak-to-trough, but retraced with more vigor, nearly returning to intraday highs, ultimately closing +3.2bps higher at 3.05%. The S&P 500 followed a similar cadence, staging an initial bad-news-is-good-news rally following the data, increasing +0.53%, reverting to a narrow range just in the red the rest of the day, finishing down -0.22%. The NASDAQ danced to the same tune, but was even more reluctant to re-evaluate the outlook, closing perfectly flat, day-over-day. Futures are currently lower as we go to press, with the S&P 500 (-0.37%), NASDAQ 100 (-0.46%) and DAX (-0.65%) all in the red. Most European assets were similarly subdued, with 10yr bunds (+1.2bps), OATs (+2.0bps), and BTPs (+1.8bps) trading near the prior day’s levels. The bund curve also twist steepened, with 2yr yields falling -3.8bps. Risk fared a touch worse; the STOXX 600 fell -0.42% and the DAX was -0.27% lower. Eurozone PMIs were a bit stronger than US counterparts, across Manufacturing (49.7 vs. 49.0), Services (50.2 vs. 50.5), and the Composite (49.2 vs. 49.0). Meanwhile, consumer confidence bounced back from record lows set in July, printing at -24.9 (vs. -28.0). Sentiment in Europe was boosted by a slight retrenchment in energy prices; German power fell -1.92%, the first daily decline in more than two weeks, while natural gas futures were -2.78% lower. The euro was able to temporarily break through parity versus the US dollar after the weak US data, but finished the day below the mark at $0.997. Gilt yields increased more than other core sovereign bonds, with 2yr yields +9.8bps higher and 10yr benchmarks +6.1bps higher. UK Manufacturing PMI registered a poor 46.0 (vs. 51.0), though Services (52.5 vs. 51.6) and the Composite (50.9 vs. 51.0) fared better. However, the fear that UK inflation will continue to present a large problem is forcing gilts to underperform. On top of that, the threat of looming labour strife only intensifies the risks ahead. The FTSE 100 underperformed, falling -0.61%. Following headlines from the Saudi energy minister yesterday, Brent crude oil rallied +3.39% closing above $100/bbl for the first time since late July. While progress on the Iranian nuclear deal still seemed positive, up to nine OPEC+ members confirmed they would support production cuts if Iranian supply came back online or if the global economy entered a recession, fueling the rally. Overnight, Asian equity markets are again slipping into the red this morning amid growth fears. The Hang Seng (-1.49%) is leading losses with the Shanghai Composite (-1.38%), the CSI (-0.63%) and the Nikkei (-0.40%) all trading in negative territory. Elsewhere, the Kospi (+0.02%) is oscillating between gains and losses after opening higher. Moving on to FX news, the Chinese Yuan (-0.42%) fell to its weakest level in almost two years against the US dollar, trading at 6.86 per dollar, as the PBOC looks to ease policy to support the economy while property sector troubles remain top of mind. Minneapolis Fed President Kashkari in an overnight speech reiterated the need for more aggressive rate hikes to control inflation and sees another two full percentage points by the end of next year. Kashkari downplayed the two-sided risk of Fed tightening that has permeated recent discourse, noting that if inflation were at 4%, he would be willing to consider a more gradual path to avoid the risk of overdoing tightening. Alas, it is not. To the day ahead now, and data releases from the US include the preliminary durable goods orders and core capital goods orders for July, along with pending home sales for that month too. Otherwise, earnings releases include Nvidia, Salesforce and Royal Bank of Canada. Tyler Durden Wed, 08/24/2022 - 07:33.....»»

Category: blogSource: zerohedgeAug 24th, 2022

ATRenew Inc. Reports Unaudited Second Quarter 2022 Financial Results

SHANGHAI, Aug. 24, 2022 /PRNewswire/ -- ATRenew Inc. ("ATRenew" or the "Company") (NYSE:RERE), a leading technology-driven pre-owned consumer electronics transactions and services platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2022.  Second Quarter 2022 Highlights Total net revenues grew by 14.9% to RMB2,145.7 million (US$320.3 million) from RMB1,867.7 million in the second quarter of 2021. Loss from operations was RMB168.2 million (US$25.1 million), compared to RMB507.3 million in the second quarter of 2021. Adjusted loss from operations (non-GAAP)[1] was RMB42.3 million (US$6.3 million) compared to an adjusted loss from operations of RMB51.0 million in the second quarter of 2021. Total Gross Merchandise Volume ("GMV[2]") increased by 10.3% to RMB8.6 billion from RMB7.8 billion in the second quarter of 2021. GMV for product sales increased by 15.8% to RMB2.2 billion from RMB1.9 billion in the second quarter of 2021. GMV for online marketplaces increased by 8.5% to RMB6.4 billion from RMB5.9 billion in the second quarter of 2021. Number of consumer products transacted[3] remained flat at 7.8 million compared to the second quarter of 2021. [1] See "Reconciliations of GAAP and Non-GAAP Results" for more information. [2] "GMV" represents the total dollar value of goods distributed to merchants and consumers through transactions on the Company's platform in a given period for which payments have been made, prior to returns and cancellations, excluding shipping cost but including sales tax. [3] "Number of consumer products transacted" represents the number of consumer products distributed to merchants and consumers through transactions on the Company's PJT Marketplace, Paipai Marketplace and other channels the Company operates in a given period, prior to returns and cancellations, excluding the number of consumer products collected through AHS Recycle; a single consumer product may be counted more than once according to the number of times it is transacted on PJT Marketplace, Paipai Marketplace and other channels the Company operates through the distribution process to end consumer. Mr. Kerry Xuefeng Chen, the Founder, Chairman, and Chief Executive Officer of ATRenew, commented, "Despite the challenges posed by the COVID-19 resurgence, our quarterly revenue surpassed the guidance we provided, as our team proactively adjusted our operations to adapt to changes. Although our business is facing short-term headwinds from the pandemic, we firmly believe that the demand for electronic device recycling, trade-in, and other value-added services will grow concurrently with the long-term development of the circular economy in China. Going forward, we will continue to focus on executing our city-level integration strategy while constantly increasing the penetration of our recycling offerings. At the same time, we will maintain our investment in automation to improve cost efficiency. Furthermore, we will increase strategic investment in category expansion and corresponding capabilities while continuing to provide consumers with more diverse and convenient recycling services." Mr. Rex Chen, the Chief Financial Officer of ATRenew, added, "The pandemic has disrupted domestic consumption and adversely impacted our self-operated store business as well as marketplace transactions. Facing such challenges, we responded nimbly by adjusting our operating strategy and implementing cost control measures. As a result, our losses narrowed compared with the same period of last year. Since June, when cities including Shanghai and Beijing resumed normal production and daily life, our self-operated recycling and trade-in businesses went on a visible path to recovery. In addition, as of June 30, 2022, we have sufficient cash reserves to support our business in the face of a dynamic operating environment. Looking ahead, we plan to tap into new categories and further generate synergies from our city-level integration strategy. We look forward to expanding our market share and delivering long-term value to shareholders and society." Second Quarter 2022 Financial Results REVENUE Total net revenues increased by 14.9% to RMB2,145.7 million (US$320.3 million) from RMB1,867.7 million in the same period of 2021. Net product revenues increased by 15.6% to RMB1,854.1 million (US$276.8 million) from RMB1,603.4 million in the same period of 2021. The increase was primarily attributable to an increase in the sourcing volume and the corresponding sales of pre-owned consumer electronics through Paipai Marketplace and the Company's overseas channels. Net service revenues increased by 10.3% to RMB291.6 million (US$43.5 million) from RMB264.3 million in the same period of 2021. The increase was primarily due to the increases in transaction volume and monetization capability of PJT Marketplace. OPERATING COSTS AND EXPENSES Operating costs and expenses decreased by 2.2% to RMB2,327.4 million (US$347.5 million) from RMB2,379.4 million in the same period of 2021. Merchandise costs increased by 18.5% to RMB1,653.8 million (US$246.9 million) from RMB1,395.4 million in the same period of 2021. The increase was primarily due to the growth in product sales. Fulfillment expenses decreased by 0.1% to RMB275.2 million (US$41.1 million) from RMB275.5 million in the same period of 2021. The decrease was primarily due to the decrease of share-based compensation expenses as the Company recognized more expenses with IPO condition in the same period of last year which was offset by the increases in operation center related expenses and personnel cost which were in line with the Company's business growth. Selling and marketing expenses decreased by 7.2% to RMB293.4 million (US$43.8 million) from RMB316.3 million in the same period of 2021. The decrease was primarily due to (i) a decrease in sales promotion and coupon expenses as a cost control measure during the resurgence of the COVID-19 variants; and (ii) the decrease of share-based compensation expenses as the Company recognized more expenses with IPO condition in the same period of last year. General and administrative expenses decreased by 85.4% to RMB45.2 million (US$6.8 million) from RMB310.3 million in the same period of 2021. The decrease was primarily due to the decrease of share-based compensation expenses as the Company recognized more expenses resulting from share-based awards granted with an IPO condition in the second quarter of 2021. Technology and content expenses decreased by 27.1% to RMB59.7 million (US$8.9 million) from RMB81.9 million in the same period of 2021. The decrease was primarily due to the decrease in the recognition of share-based compensation expenses resulting from options granted to employees with an IPO condition compared to the second quarter of 2021. LOSS FROM OPERATIONS Loss from operations decreased by 66.8% to RMB168.2 million (US$25.1 million) from RMB507.3 million in the same period of 2021. Adjusted loss from operations (non-GAAP), excluding amortization of intangible assets and deferred cost resulting from assets and business acquisitions and recognition of share-based compensation expenses resulting from options and restricted stock units granted to employees, decreased by 17.1% to RMB42.3 million (US$6.3 million) from RMB51.0 million in the same period of 2021. NET LOSS Net loss was RMB125.3 million (US$18.7 million), compared to RMB505.7 million in the same period of 2021. Adjusted net loss (non-GAAP)[1] was RMB13.2 million (US$2.0 million), compared to RMB59.7 million in the same period of 2021. BASIC AND DILUTED NET LOSS PER ORDINARY SHARE Basic and diluted net loss per ordinary share were RMB0.78 (US$0.12), compared to RMB13.47 in the same period of 2021. Adjusted basic and diluted net loss per ordinary share (non-GAAP)[1] were RMB0.08 (US$0.01), compared to RMB1.59 in the same period of 2021. CASH AND CASH EQUIVALENTS, RESTRICTED CASH, SHORT-TERM INVESTMENTS AND FUNDS RECEIVABLE FROM THIRD PARTY PAYMENT SERVICE PROVIDERS Cash and cash equivalents, restricted cash, short-term investments and funds receivable from third party payment service providers increased to RMB2,594.1 million (US$387.3 million) as of June 30, 2022, from RMB2,421.9 million as of December 31, 2021. Business Outlook For the third quarter of 2022, the Company currently expects its total revenues to be between RMB2,500.0 million and RMB2,550.0 million. This forecast only reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change. Environment, Social, and Governance On June 9, 2022, ATRenew published its second annual environmental, social, and governance ("ESG") report (the "Report") incorporating the Task Force on Climate-related Financial Disclosures recommendations, a framework set by the G20's Financial Stability Board, for the first time. In the Report, the Company explores the climate-change-related opportunities and challenges it faces in its operation and reuse of pre-owned electronic devices through the perspectives of governance, strategy, risk management, and metrics and targets. In order to help quantify its commitment to ESG, the Company has leveraged the Circular Footprint Formula for the first time to disclose its contribution of 464,000 metric tons of green-house gas emission reductions through reusing pre-owned mobile phones in 2021. Recent Development On December 28, 2021, ATRenew announced a share repurchase program, effective immediately, to repurchase up to US$100 million of its shares over a twelve-month period. During the second quarter 2022, the Company repurchased 2,881,811 American depositary shares ("ADSs") in the open market at an average price of US$3.14 per ADS, with a total cash consideration of US$9.0 million. As at the end of the second quarter 2022, the Company repurchased a total of 7,635,651 ADSs for approximately US$31.5 million under its share repurchase program. Conference Call Information The Company's management will hold a conference call on Wednesday, August 24, 2022, at 08:00 A.M. Eastern Time (or 08:00 P.M. Beijing Time on Wednesday, August 24, 2022) to discuss the financial results. Listeners may access the call by dialing the following numbers:  International: 1-412-317-6061 United States Toll Free: 1-888-317-6003 Mainland China Toll Free: 4001-206115 Hong Kong Toll Free: 800-963976 Access Code: 7639205 The replay will be accessible through August 31, 2022, by dialing the following numbers: International: 1-412-317-0088 United States Toll Free: 1-877-344-7529 Access Code: 6668246 A live and archived webcast of the conference call will also be available at the Company's investor relations website at About ATRenew Inc. Headquartered in Shanghai, ATRenew Inc. operates a leading technology-driven pre-owned consumer electronics transactions and services platform in China under the brand ATRenew. Since its inception in 2011, ATRenew has been on a mission to give a second life to all idle goods, addressing the environmental impact of pre-owned consumer electronics by facilitating recycling and trade-in services, and distributing the devices to prolong their lifecycle. ATRenew's open platform integrates C2B, B2B, and B2C capabilities to empower its online and offline services. Through its end-to-end coverage of the entire value chain and its proprietary inspection, grading, and pricing technologies, ATRenew sets the standard for China's pre-owned consumer electronics industry. Exchange Rate Information This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.6981 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of June 30, 2022. Use of Non-GAAP Financial Measures The Company also uses certain non-GAAP financial measures in evaluating its business. For example, the Company uses adjusted loss from operations, adjusted net loss and adjusted net loss per ordinary share as supplemental measures to review and assess its financial and operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Adjusted loss from operations is loss from operations excluding the impact of share-based compensation expenses and amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net loss is net loss excluding the impact of share-based compensation expenses, amortization of intangible assets and deferred cost resulting from assets and business acquisitions, fair value change in warrant liabilities and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions. Adjusted net loss per ordinary share is adjusted net loss attributable to ordinary shareholders divided by weighted average number of shares used in calculating net loss per ordinary share. The Company presents non-GAAP financial measures because they are used by the Company's management to evaluate the Company's financial and operating performance and formulate business plans. The Company believes that adjusted loss from operations and adjusted net loss help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that are included in loss from operations and net loss. The Company also believes that the use of non-GAAP financial measures facilitates investors' assessment of the Company's operating performance. The Company believes that adjusted loss from operations and adjusted net loss provide useful information about the Company's operating results, enhance the overall understanding of the Company's past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision making. The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP financial measures is that they do not reflect all items of income and expense that affect the Company's operations. Share-based compensation expenses, amortization of intangible assets and deferred cost resulting from assets and business acquisitions, fair value change in warrant liabilities and tax effects of amortization of intangible assets and deferred cost resulting from assets and business acquisitions have been and may continue to be incurred in the Company's business and is not reflected in the presentation of non-GAAP financial measures. Further, the non-GAAP measures may differ from the non-GAAP measures used by other companies, including peer companies, potentially limiting the comparability of their financial results to the Company's. In light of the foregoing limitations, the non-GAAP financial measures for the period should not be considered in isolation from or as an alternative to loss from operations, net loss, and net loss attributable to ordinary shareholders per share, or other financial measures prepared in accordance with U.S. GAAP. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company's performance. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, "Reconciliations of GAAP and Non-GAAP Results." Safe Harbor Statement This press release contains statements that may constitute "forward-looking" statements pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to" and similar statements. Among other things, quotations in this announcement, contain forward-looking statements. ATRenew may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about ATRenew's beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: ATRenew's strategies; ATRenew's future business development, financial condition and results of operations; ATRenew's ability to maintain its relationship with major strategic investors; its ability to provide facilitate pre-owned consumer electronics transactions and provide relevant services; its ability to maintain and enhance the recognition and reputation of its brand; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in ATRenew's filings with the SEC. All information provided in this press release is as of the date of this press release, and ATRenew does not undertake any obligation to update any forward-looking statement, except as required under applicable law. Investor Relations Contact In China:ATRenew Inc.Investor RelationsEmail: In the United States:ICR LLC.Email: atrenew@icrinc.comTel: +1-212-537-0461   ATRENEW INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share and otherwise noted) As of December 31, As of June 30, 2021 2022 RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 1,356,342 1,215,953 181,537 Restricted cash 150,000 — — Short-term investments 510,467 1,030,682 153,877 Amount due from related parties, net 410,088 139,043 20,759 Inventories 478,751 673,444 100,543 Funds receivable from third party payment service providers 405,095 347,468 51,876 Prepayments and other receivables, net 840,102 697,237 104,095 Total current assets 4,150,845 4,103,827 612,687 Non-current assets: Long-term investments 241,527 234,457 35,004 Property and equipment, net 103,843 115,467 17,239 Intangible assets, net 1,075,811 913,693 136,411 Goodwill 1,803,415 1,819,926 271,708 Other non-current assets 127,321 91,234 13,619 Total non-current assets 3,351,917 3,174,777 473,981 TOTAL ASSETS 7,502,762 7,278,604 1,086,668 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings 94,999 146,370 21,852 Accounts payable 41,311 66,894 9,987 Contract liabilities 211,964 304,867 45,516 Accrued expenses and other current liabilities 296,627 387,508 57,853 Accrued payroll and welfare.....»»

Category: earningsSource: benzingaAug 24th, 2022

Futures Plunge, Yields Roar Higher As Bear-Market Rally Slams Brick Wall On $2.1 Trillion Op-Ex

Futures Plunge, Yields Roar Higher As Bear-Market Rally Slams Brick Wall On $2.1 Trillion Op-Ex The combination of plunging bitcoin prices, the (latest) bursting of the meme bubble courtesy of Ryan Cohen's historic pump and dump, rising Fed warnings that another 75bps rate hike is coming amid fears next week's Jackson Hole meeting will be a hawkano, rising oil prices and TSY yields at the highest level in a month, and mix it all in on a day when there is absolutely no liquidity (one day after the lowest volume of the year) as $2.1 trillion in options expire... ... and you get a perfect storm that has sent futures tumbling 40 points or 0.93%, but another confirmation that BofA's Michael Hartnett is the best strategist on Wall Street (while his peers are nothing more than broken records). Nasdaq 100 futures slumped 1.2% by 7.30 a.m. in New York as the yield on the 10-year Treasury climbed about 5 basis points to 2.95%, the highest level in one month amid divergent signals from Fed officials over the size of the next interest-rate hike. The tech-heavy index is set to end the week lower after four weeks of gains; the Nasdaq 100 underperformed this week in the face of rising bond yields as higher rates weigh on the present value of future profits, hurting growth stocks with the highest valuations. The dollar headed for the biggest weekly rally since June 2021 and bitcoin plunged by $2,000 overnight, crashing below $21,500. In premarket trading, Bed Bath & Beyond shares crashed 45%, after plunging more than 20% during the regular session, after top investor Ryan Cohen pulled the biggest pump and dump in history. Cryptocurrency-exposed stocks like Coinbase and Riot Blockchain also slid amid a broad selloff across digital tokens.  Coinbase (COIN US) fell 7%, Marathon Digital (MARA US) -11%, Riot Blockchain (RIOT US) -9%. Here are other notable premarket movers: Applied Materials (AMAT US) rose as much as 1.4%, with analysts positive on the chip equipment maker’s results, saying it saw a strong performance amid a tough macroeconomic backdrop, though some brokers nudged down their price targets. Morgan Stanley analysts cut their price target on Meta Platforms (META US), saying the social media giant’s shift toward Reels and declining user-engagement rates pose a risk to its revenue growth. The stock was down 1.7%. (BILL US) surged 21% after fiscal 4Q results from the infrastructure software firm that analysts said were “perfect” alongside guidance that “blew away” expectations. StoneCo (STNE US) dropped 9% after the Brazilian payments firm reported adjusted net for the second quarter that missed the average analyst estimate. Traders have also turned cautious toward risk assets ahead of the Fed’s annual symposium next week in Jackson Hole. Beyond that, inflation and employment figures will also be closely monitored before the central bank’s highly anticipated interest-rate decision in September. Additionally, on Thursday two Fed voting members - St. Louis’s James Bullard and Kansas City’s Esther George - emphasized that the US central bank will continue to raise interest rates until inflation eased back to its 2% target although their views diverged on how big the Fed’s September move should be. This is notable since traders had continued piling into stocks and bonds, completely ignoring the Fed's repeated jawboning and dismissing the risk of a more aggressive Fed as they expect it to ease the pace of rate hikes while inflation pulls back from its peak, according to Bank of America strategists. US stocks saw $9.2 billion of inflows in the week through Aug. 17 BofA's Michael Hartnett wrote in a note. “The Fed would, in order to get inflation down to the 2% target, have to crush the economy,” said Ann-Katrin Petersen, a senior investment strategist at BlackRock Investment Institute. In order to bolster growth, the Fed will at some point “accept to live with inflation. This dovish pivot is not likely in the very near term, in contrast to what markets seem to be expecting right now, but this dovish pivot may come in 2023,” she told Bloomberg Television. In Europe, the Stoxx 50 fell 0.8%. FTSE 100 outperforms, dropping 0.2%, Travel, real estate and autos are the worst-performing sectors. Italy's FTSE MIB lags, dropping 1.4%.  after a right-wing coalition led by Brothers of Italy party was seen reaching 49.8% level in voting intentions for Italy’s lower house of parliament for September election, according to a Tecne poll on August 18. Center-left bloc at 30%; Five Star Movement at 10.2%; Centrist coalition at 4.8%; Other parties at 5.2%. Here are some of the biggest European movers today: Just Eat Takeaway shares soar as much as 38% in Amsterdam trading, the most ever, after the food delivery firm agreed to sell its 33% stake in iFood for as much as EU1.8b Holmen rises as much as 5.3% on 2Q earnings that beat consensus on adjusted operating profit, net sales and operating profit. The report was strong, but expected, Jefferies writes Kingspan gains as much as 8.6% after 1H results from the Irish insulation supplier that Goodbody says were ahead of expectations U-blox surges as much as 16% after the Swiss semiconductor company lifted FY revenue and Ebit outlooks that it previously raised in May, citing a record- high order book Mobilezone rises as much as 5.3%, the most intraday since March, as analysts note the Swiss firm’s robust 1H earnings and confirmation of guidance in the face of powerful FX headwinds Joules plunges as much as 41% after the UK apparel retailer forecast an FY adjusted pretax loss significantly bigger than market views. Liberum cut its rating on the stock to hold from buy Bachem drops as much as 3.9% after Baader published a note saying the company’s first-half results due on Aug. 25 may be a trigger for a downward revision to consensus falls as much as 12% after the Polish distributor of tires, tools and bikes reported a 70% y/y drop in 2Q net income due to higher costs and lower sales of tires Hypoport declines as much as 12% after Metzler downgrades to sell on a slowdown in growth for its Europace unit and as the company’s insurance application “fails to convince” at this stage Earlier in the session, Asian stocks headed for their first weekly drop in five, as renewed concerns about growth in China -- the region’s biggest economy -- damped investor sentiment.   The MSCI Asia Pacific Index retreated as much as 0.7%, set for a decline of more than 1% this week. Meanwhile, a gauge of China stocks listed in Hong Kong posted its worst week in August, losing 2%. Shares in South Korea and India were among the region’s worst performers Friday. Concerns about China’s growth resurfaced as the country planned more fiscal stimulus over a gloomy outlook and as banks were expected to lower borrowing costs next week. Goldman Sachs, Nomura and Citi further cut their growth estimates for China’s gross domestic product earlier this week as a power supply crunch adds more uncertainty to the outlook. “Regulatory issues and sluggish economic recovery are behind the weak performance of stocks in Hong Kong as many of the stocks listed there are related to the real estate sector and regulations,” said Kim Kyung Hwan, a China equity strategist at Hana Financial Investment in Seoul. “There are lingering concerns that China’s economic fundamentals may take an L-shaped recovery and the government’s intervention in the property crisis may be delayed,” he added.  Improved appetite for haven assets was also reflected in the dollar, which rose to the highest in nearly a month following a Bloomberg News report that China’s President Xi Jinping and Russia’s leader Vladimir Putin will attend the G-20 summit in Indonesia later this year.  All but two sectoral indexes declined in Asia’s key benchmark, with health care and financials the biggest losers. Samsung Electronics and NetEase were among the biggest drags on the measure, with the latter tumbling on profit-taking following earnings results.  Caution also prevailed with next week expected to be the busiest period for quarterly earnings announcements from MSCI Asia Pacific Index members. Chinese tech giants Meituan and Inc. are among the more than 300 companies set to release results In FX, the Bloomberg Dollar Spot Index advanced for a third day and the greenback strengthened against all of its Group-of-10 peers. The pound fell to a one-month low while the euro was steady against the dollar. UK retail sales volumes unexpectedly rose 0.3% last month, but the cost of those sales increased more rapidly by 1.3%. UK consumer confidence fell to a record low as concerns about a recession increased and soaring inflation tightened a squeeze on household finances. GfK said its gauge of confidence declined 3 points to minus 44 in August. The New Zealand dollar was weighed by comments from RBNZ Governor Adrian Orr that the central bank would “retain optionality” over the pace of future rate increases. The yen is headed for its biggest weekly decline in two months as hawkish comments from Fed officials spurred bets for another outsized rate hike. Options traders are finally betting on a rise in the dollar-yen currency pair after staying bearish for two months, as they await cues from the next week’s Jackson Hole symposium by the Federal Reserve. In rates, Treasuries held losses into early US session, leaving yields cheaper by up to 6bp across front-end of the curve, following wider gilt-led selloff after stronger-than-forecast UK retail sales figures in July. US yields cheaper by 6bp to 3.5bp across the curve with front- end led losses flattening 2s10s, 5s30s by around 1bp each; 10- year yields around 2.95%, trading 8.5bp and 7bp richer in the sector vs. gilts and bunds. Bunds and Italian bonds declined for a fourth day, the longest streak since June and July respectively, as 125bps of ECB hikes were briefly priced by year-end, or two half-point increases.  Money markets ramped up ECB tightening wagers following hawkish Fed talk and stronger-than-forecast UK retail sales figures in July.  Peripheral spreads widen to Germany with 10y BTP/Bund adding 2.3bps to 224.3bps. WTI trades within Thursday’s range, falling 1.4% to trade around $89. Spot gold falls roughly $4 to trade around $1,754/oz. Spot silver loses 1.4% around $19. Most base metals trade in the red; LME tin falls 1.2%, underperforming peers. LME nickel outperforms, adding 0.8%. Luckily, there is nothing on today's calendar. Central bank speakers include Richmond Fed President Barkin, and earnings releases include Deere & Company. Market Snapshot S&P 500 futures down 0.9% to 4,250.00 STOXX Europe 600 down 0.6% to 437.98 MXAP down 0.6% to 161.10 MXAPJ down 0.5% to 524.13 Nikkei little changed at 28,930.33 Topix up 0.2% to 1,994.52 Hang Seng Index little changed at 19,773.03 Shanghai Composite down 0.6% to 3,258.08 Sensex down 1.3% to 59,517.87 Australia S&P/ASX 200 little changed at 7,114.46 Kospi down 0.6% to 2,492.69 German 10Y yield little changed at 1.18% Euro little changed at $1.0084 Gold spot down 0.3% to $1,752.91 U.S. Dollar Index up 0.19% to 107.69 Top Overnight News from Bloomberg China’s efforts to stomp out a lucrative carry trade by banks in the nation’s bond market and divert cash to the real economy is meeting with limited success. The spread between the 10-year yield and the overnight borrowing rate remained around 140 basis points, even though the latter rose for four straight days amid the central bank’s cash withdrawals. That means banks can still make a profit by funding from each other in the interbank market and purchasing government bonds A larger-than-forecast £4.9 billion ($5.8 billion) UK budget deficit in July took the total for 2022-23 so far to £55 billion pounds -- £3 billion more than officials forecast in March Investors continued piling into stocks and bonds, dismissing the risk of a more aggressive Federal Reserve as they expect it to ease the pace of rate hikes while inflation pulls back from its peak, according to Bank of America Corp. strategists. Global equity funds attracted $7.9 billion in the week through Aug. 17, strategists led by Michael Hartnett wrote in a note, citing EPFR Global data The right-wing coalition led by Giorgia Meloni’s Brothers of Italy party neared a landmark level of support, registering 49.8% of voter approval for Italy’s Sept. 25 election, in a survey by the Tecne research institute A more detailed look at global markets courtesy of Newsquawk APAC stocks lacked firm direction despite the mild tailwinds from the US where sentiment was somewhat underpinned by mostly encouraging data. ASX 200 just about kept afloat amid outperformance in energy on recent oil price gains although the upside was limited by weakness in financials and amid another influx of earnings results. Nikkei 225 returned to flat territory beneath the 29k level after early momentum petered out. Hang Seng and Shanghai Comp were indecisive amid a lack of macro drivers and with newsflow dominated by earnings, while markets await a cut to the benchmark lending rates early next week. Top Asian News Indonesia May Impose Nickel Export Tax in 2022, Jokowi Says H.K. Home Prices Could Fall 10% After HSBC, StanChart Hike Rates Hong Kong Monetary Authority Deputy CEO Edmond Lau Resigns Moody’s Reviews Huarong AMC’s Ratings for Downgrade Some Country Garden, CIFI USD Notes Set for Record Weekly Gains Modi to Be Challenged by Local Leaders in 2024 India Elections European bourses are under modest pressure, Euro Stoxx 50 -0.6%, in a session of limited newsflow with focus on continuing hawkish price action. Stateside, given the hawkish action, NQ -1.0% is the incremental underperformer ahead of commentary from 2024 voter Barkin. China's CPCA forecast shows August passenger car sales lifting MM to 1.88mln (prev. 1.77mln), latest COVID outbreak is expected to have a relatively limited impact on the auto market. Deere & Co (DE) Q2 2022 (USD): EPS 6.16 (exp. 6.69), Revenue 14.1bln (exp. 12.78bln); FY view Net 7.0-7.2bln (prev. 7.0-7.4bln, exp. 7.1bln). Top European News Gas Heading for Another Weekly Rise Intensifies Europe’s Pain Germany’s Drive to Replace Russian Gas Can’t Rely on Canada Germany Risks a Factory Exodus as Energy Prices Bite Hard Food Banks for Pets Show UK Inflation Reaching Cats and Dogs Londoners Wake to Transit Headaches as Strike Hobbles City FX Dollar continues to reign as risk sentiment sours again and yields ratchet higher, DXY up to 107.930 and close to mid-July high just shy of 108.000 Euro remains relatively resistant amidst further EGB retracement and strong Eurozone inflation data, EUR/USD sub-1.0100, but above 1.0050. No retail therapy for Sterling as wider UK economic worries weigh on the Pound, Cable under 1.1900 and EUR/GBP eyeing 0.8500. NZ trade data fails to give Kiwi a lift as deficit remains wide, NZD/USD hovering above 0.6200. Yen shrugs off Japanese CPI as UST-JGB spreads widen further, USD/JPY touches 136.76 before waning. Loonie and Nokkie undermined by softer oil prices as former awaits Canadian retail sales for independent impetus, USD/CAD 1.2950+, EUR/NOK around 9.8500 Yuan retreats as Moody’s joins list of those downgrading forecasts for Chinese growth this year, USD/CNY over 6.8100 and USD/CNH almost 6.8300 overnight. Fixed Income Only dead cat bounces in debt as hawkish Central Bank and hot inflation vibes persist. Bunds through trendline support to 152.61 and 10 year yield above 1.15% Fib resistance. Gilts probing 113.00 vs 113.45 at best and T-note towards base of 118-11/118-29+ range . Commodities Under broad pressure given USD strength with crude curtailed as it awaits another JCPOA response; benchmarks lower by circa. USD 1.50/bbl, vs USD 7/bbl ranges for the week. Spot gold clipped by the USD, though only by just over USD 5/oz compared to weekly parameters of over USD 50/oz; broader metals in-fitting in limited newsflow. China's daily coal output +19.4% YY, between August 1st and 17th, via the Energy Administration. US Event Calendar Nothing major scheduled DB's Tim Wessel concludes the overnight wrap Filling in again from Stateside much like the rumored involvement of yank Elon Musk in the English product Manchester United. The metaphor does not have much life beyond that, however. Despite what you may have heard, I am not a billionaire nor do I have any designs on going to space, while on the product side, the EMR has a chance of success this year. Taking the developments by time zones. In Europe, yields crept slightly higher on the now familiar formula of tighter expected ECB policy and concerns about energy pricing. On the former, in a Reuters interview, the ECB’s Schnabel said that “The concerns we had in July have not been alleviated... I do not think this outlook has changed fundamentally.” She also said that “I would not exclude that, in the short run, inflation is going to increase further”. The ECB’s Kazaks also echoed this, saying that “we will continue to increase interest rates” so as to prevent inflation becoming entrenched. Markets continue to fully price in another 50bp move at the next meeting in September, with 52bps currently priced in, so some probability of an even larger hike. On the energy front, price pressures continue to get worse, where natural gas futures closed at a record high of €241 per megawatt-hour, with year-ahead German power registering a fresh record of their own, closing at €540 per megawatt-hour. In line with what we’ve covered, Germany is offering fiscal support to alleviate price pressures, as German Chancellor Scholz announced a temporary VAT cut on natural gas from 19% to 7%, which will apply for 18 months from October 1. It’s worth plugging our team’s latest gas supply monitor again, link here to stay on top of the latest. All told, the yield move was rather modest, with 10yr bunds +1.9bps higher, outpacing increases in OATs (+1.7bps) and BTPs (+0.4bps), which helped support risk assets on the day. For their part, equities also posted a modest gain, as the STOXX 600 climbed +0.39%, the DAX gained +0.52%, and the CAC increased +0.45%. In the US, it was another day of mixed, but supportive data on balance. Initial jobless claims fell to 250k (vs. 264k expected). Continuing claims, which our US econ team has identified as one of the best leading indicators for recessionary risk, also came in below expectations at 1437k (vs. 1455k). Reminder, our team has found that when the rolling 4-week average of continuing claims increases around 11% above the last year’s nadir, near-term recession risk increases. That warning level would be around 1456k, still some ways above the 4-week average of 1413k. Indeed, one need go back to the first week of April to find any individual print, let alone moving average, that has breached 1456k, and that was as claims were still falling, only to hit their lows in late May. Elsewhere in data, the Philadelphia Fed Business Outlook surprised to the upside at 6.2, versus expectations of -5.0 and a prior print of -12.3. On the downside, housing activity continued to be strangled by Fed tightening, with existing home sales falling to a 4.81m pace (vs. 4.86m expectations), their lowest since the summer of 2020’s stilted homebuying season. There was a suite of Fed officials on the tape yesterday. Across speakers, they still sounded a resolute tone around current inflationary ills, but offered different prescriptions for the path of policy going forward. On one end, San Francisco Fed President Daly expressed support for a 50bp hike to the fed funds target range at the September FOMC, with policy rates getting “a little” above 3% by then end of this year, reserving the right to go higher if the data call for that. St. Louis Fed President Bullard played the customary foil, preferring to hike rates 75bps in September, getting policy closer to 4% by year-end. Bullard noted that the Fed “shouldn’t drag out process of raising rates”. Splitting the difference, Kansas City President George noted it was too early to declare victory over inflation, so the case for continued hikes remained strong, even if the Committee had to be mindful of what the lagged impact of tightening may look like, echoing the July meeting minutes. Finally, Minneapolis President Kashkari was ambivalent about the prospects of a soft landing, saying he didn’t know if the Fed could bring inflation back to target without a recession given he couldn’t count on supply side expansion, particularly in the labor market. Like other speakers, he re-emphasized breaking inflation’s back was urgent. In short, nothing explicitly new from Fed speakers, so it holds that Chair Powell’s Jackson Hole remarks next Friday, August 26, (confirmed by the Fed yesterday), along with the inflation and employment data before the September FOMC are the key events for policy over the near-term. Yields on 2yr Treasuries fell -8.8bps, while increased +2.7bps, while 10yr yields were -1.5bps lower, driving the 2s10s yield curve to its steepest level in more than two weeks at -32bps. Like their European counterparts, US equities were similarly subdued, with the S&P 500 gaining +0.23%. Energy shares climbed +2.53%, following a +3.14% increase in Brent crude oil, but otherwise sector dispersion was rather narrow between Tech gaining +0.49% and Real Estate lagging at -0.75%. On the war in Ukraine, talks with President Zelenskiy, UN Secretary General Guterres, and Turkish President Erdogan were staged in Lviv. Following the meeting, Turkey is set to evaluate the talks with President Putin, cementing Turkeys status as the key interlocutor between Ukraine and Russia. Reports from the meeting suggested diplomatic progress seemed possible, and our team took it as a positive that both sides appeared to be open to indirect communication, though much work remains. Asian stock markets are mixed this morning following a quiet US session. The Nikkei (+0.10%) and the Hang Seng (+0.46%) are trading in positive territory while the Shanghai Composite (-0.28%), the CSI (-0.27%) and the Kospi (-0.10%) are trading lower. US equity futures are likewise sleepy, with the S&P 500 (-0.08%) and NASDAQ (-0.08%) flitting around zero. Japan’s headline inflation rose +2.6% y/y in July, in line with market expectations and against a +2.4% rise in June, edging past the Bank of Japan's 2% inflation goal for a fourth straight month. The increase in core CPI (+2.4% y/y from +2.2% in June) was the sharpest in about seven and half years. To the day ahead now, and data releases include UK retail sales and German PPI for July. Central bank speakers include Richmond Fed President Barkin, and earnings releases include Deere & Company. Tyler Durden Fri, 08/19/2022 - 08:02.....»»

Category: blogSource: zerohedgeAug 19th, 2022

Futures Rise In Morbid Volumes With All Eyes On 50% Fib Retracement Level

Futures Rise In Morbid Volumes With All Eyes On 50% Fib Retracement Level European stocks and US futures rallied on the last day of the week, however traded well off session highs in extremely low-volume trading and tracked the sudden drop in oil, as investors pressed bets that easing inflation will allow the Fed to pivot to less aggressive rate hiking (if not ease outright). S&P 500 and Nasdaq 100 contracts rose about 0.3%, with both underlying indexes set to post their longest sequence of weekly gains since November. Treasury yields were steady at 2.87% and the US dollar rose but was set for the worst week since May. Crude oil fell, reducing its biggest weekly gain in about four months. Gold headed for a fourth weekly gain and Bitcoin was summarily smacked down below the $24,000 level yet again as crypto bears fight to preserve the upper hand. For the second day in a row an attempt to void the bear market rally narrative by pushing spoos above the 50% fib retracement level is being defended by bears, with futures trading at 4222, or right on top of the critical level, which also doubles as the 100DMA. If broken through it could lead to substantial upside gains as even more bears throw in the towel. In premarket trading, Alibaba led a premarket decline in US-listed China stocks after some of the nation’s largest state-owned companies announced plans to delist from American exchanges. Bank stocks traded higher, set to gain for a fourth straight day as investors continue to pile into stocks amid signs that inflation is cooling. In corporate news, Huobi Group founder Leon Li is in talks with a clutch of investors to sell his majority stake in the crypto-exchange at a valuation of as much as $3 billion. Here are some of the other notable premarket movers: Rivian (RIVN US) shares fall 1.4% in premarket trading after the electric vehicle-maker forecast a bigger adjusted Ebitda loss for the full year than previously expected. Expensify (EXFY US) shares fall 14% in premarket trading after the software company’s second-quarter revenue missed the average analyst estimate. Toast (TOST US) shares soar 15% in premarket trading after the company boosted its revenue guidance for the full year and beat analyst estimates. Chinese stocks in US slip in premarket trading after China Life Insurance (LFC US), PetroChina (PTR US) and Sinopec (SNP US) announced plans to delist American depository shares from the NYSE. Ciena (CIEN US) gains 2.9% in premarket trading as Morgan Stanley upgrades its rating on to overweight with strong quarters seen ahead for the telecoms and networking equipment firm. Co-Diagnostics (CODX US) shares plunge as much as 40% in US premarket trading, after the molecular diagnostics firm flagged lower volumes for its Covid-19 test. Olo (OLO US) falls 31% in premarket trading, after the restaurant delivery platform cut revenue guidance. Phunware (PHUN US) falls almost 7% in premarket trading after the enterprise cloud platform posted revenue and Ebitda that missed the average estimate. Poshmark (POSH US) gave a weaker-than- expected quarterly revenue forecast as the online marketplace for second-hand goods sees sales growth being held back by macro pressures. The stock fell about 5% in postmarket trading on Thursday. SmartRent’s (SMRT US) lowered full-year guidance represents a more attainable earnings outlook for the smart-home automation company, Cantor Fitzgerald said. Shares fell 16% in postmarket trading. Traders pared back bets on Fed rate hikes after a report on Thursday showed US producer prices fell in July from a month earlier for the first time in over two years. That added to Wednesday’s data on slower increases in consumer prices to provide signs of cooling but still troubling inflation. Swaps referencing the Fed’s September meeting point to some uncertainty over whether a half-point or another 75 basis-point rate hike is on the cards. Working hard to prevent stocks from rising even more, in the latest US central banker comments, San Francisco Fed President Mary Daly said inflation is too high, adding she anticipates more restrictive monetary policy in 2023. Her baseline is a half-point September hike but she’s open to another 75 basis-point move if necessary, Daly said in a Bloomberg Television interview. “The macroeconomic environment may be starting to improve a little bit, with a peak in US CPI calling into question the need to hike rates aggressively,” economists at Rand Merchant Bank in Johannesburg said. “Inflation is still high and the Fed will still need to increase rates, but the situation is not as bad as many had feared.” European stocks erased early gains as energy stocks fell with crude oil futures and investors weighed the impact of recent macroeconomic data on central bank policy. The Stoxx Europe 600 index fell 0.1% by 12:03 p.m. in London after gaining as much as 0.5% earlier. Health care giant GSK Plc was among outperformers, trimming a rout this week that was driven by worries about Zantac litigation, with some analysts suggesting the selloff may have been extreme. Elsewhere, travel and leisure was lifted by gains for Flutter Entertainment Plc following earnings, while consumer staples and miners declined. The region’s main stocks benchmark has risen about 10% since early July, with gains this week spurred by softer-than-expected US inflation data. Still, many investors are skeptical over the impact the report will have on monetary policy. “We’re having another moment where the market is not listening to central banks,” said Tatjana Greil Castro, co-head of public markets at Muzinich & Co. “Marginally, investors are very reluctant to sell anything and want to buy,” she told Bloomberg Television. Paradoxically, at the same time, data from Bank of America showed outflows from European equity funds continued for a 26th week at $4.8 billion. The recent bounce for the region’s benchmark is likely to fizzle out in the absence of a pickup in economic growth, BofA’s strategists said. Here are the biggest European movers: Flutter shares rise as much as much as 13% after the gambling firm reported 1H earnings that beat estimates. The strong update was led by the US and Australia, according to Goodbody. GSK shares rise as much as 5% after its worst two-day rout on Zantac litigation worries. In response to the selloff on Zantac, GSK downplayed cancer risks from ranitidine and said it will vigorously defend all claims. Sanofi, also caught up in the Zantac-related selloff, rises as much as 3.2%, while Haleon edges up as much as 2%. Telecom Italia gains as much as 9.1% following a Bloomberg News report that Italy’s far-right Brothers of Italy party is promoting a plan to take the phone company private and sell off its in a bid to cut its debt pile by more than half. Nexi shares surge as much as 7.4% amid a Reuters report that the payment firm has received several unsolicited approaches from private equity firms, including Silver Lake, to take the company private. Boozt shares rise as much as 18%, the most since October 2020, with DNB (buy) highlighting a strong beat on the bottom line for the Swedish ecommerce retailer. Argenx shares rise as much as 3.7% after KBC reiterates its buy recommendation, saying the biotech is executing on schedule after yesterday’s European approval for Vyvgart, and with regulatory filing submitted in China. Kingfisher shares drop as much as 4.2% after UBS cut its recommendation on the stock to sell from neutral, citing a softening outlook for the UK do-it-yourself (DIY) and do-it-for- me (DIFM) categories. 888 Holdings shares drop as much as 16%, the most since February 2015, after the gambling company reported results and forecast 2H revenue will be in line with 1H. Galenica shares fall as much as 2.5%, with Credit Suisse recommending staying put due to “demanding” valuation. Asian stocks rose to a two-month high as Japan lifted the region higher in a catch-up rally, with traders digesting another downside surprise in US inflation. The MSCI Asia Pacific Index rose as much as 0.7%, poised for a third day of gains. Japan’s Topix Index added 2% after traders returned from a holiday, while markets in the rest of the region were mixed. Chinese shares fluctuated in a narrow range. Concerns on US inflation eased further after an unexpected month-on-month fall in July’s producer price index, which came a day after slower-than-expected US consumer prices. Stocks were initially strong overnight, before the rally faltered on concerns it may have gone to far. Gains in Asia were more modest on Friday, following hawkish commentary from a Fed speaker.  Some optimism has emerged across Asia this week as traders bet on slower interest-rate increases by the Fed amid easing price pressures. The regional stock benchmark headed for a fourth weekly gain, the longest streak since January 2021. Still, the gauge is down more than 15% this year, trailing other equity benchmarks in the US and Europe. “Clearly in the last month and a half, people sort of moved from that inflationary fear to the Goldilocks scenario. And I think that gives a bit of time for reflection,” Joshua Crabb, head of Asia Pacific equities at Robeco, said in a Bloomberg TV interview. The current earnings season is critical because “we’re also gonna see how much demand destruction that inflation is gonna put forward.” Australia's S&P/ASX 200 index fell 0.5% to close at 7,032.50, dragged by losses in mining and health shares. Still, the benchmark climbed 0.2% for the week in its fourth straight week of gains.  The materials sub-gauge contributed most to the gauge’s decline on Friday after iron ore fell, as a report showed stockpiles of the steel-making ingredient are still rising. In New Zealand, the S&P/NZX 50 index fell 0.3% to 11,730.52. The nation’s food prices surged 7.4% from a year earlier in July, the largest increase in four months, according to data released by Statistics New Zealand Indian stocks clocked their longest stretch of weekly gains since the middle of January as a pickup in foreign buying pushed key indexes higher.  The S&P BSE Sensex rose 0.2% to 59,462.78 in Mumbai, taking its weekly gains to almost 2%. This was the fourth week of advance for the key index. The NSE Nifty 50 Index also climbed 0.2% on Friday. Of the 30 stocks in the Sensex, half fell and the rest climbed. Reliance Industries offered the biggest boost to the key gauge.  Thirteen of 19 sectoral sub-indexes compiled by BSE Ltd. rose, led by a gauge of oil and gas companies.  Foreign investors have bought a net $3.2 billion of Indian shares since the end of June through Aug. 10. That’s after dumping about $33 billion in the previous nine months as concerns over the Federal Reserve’s aggressive tightening boosted the dollar and spurred outflows from emerging market assets. “FPIs flows were positive this week. With results season coming towards a close, market focus will shift towards macro factors that includes inflation, central bank rate action, oil prices and recession concerns in key economies globally,” Shrikant Chouhan, head of equity research at Kotak Securities wrote in a note. In FX, Bloomberg dollar spot index is in a holding pattern, up about 0.1%. NZD and AUD are the strongest performers in G-10 FX, SEK and GBP underperform. The Swedish krona led losses after weaker-than-expected inflation data, with the pound also lagging after stronger-than-expected data showed the UK economy shrank in the second quarter. The yen also underperformed. The Canadian dollar and Norwegian krone led gains, with NOK/SEK hitting the highest since April In rates, Treasuries were slightly richer across the curve with gains led by long-end, although futures remain near bottom of Thursday’s range. Curve mildly flatter, but spreads broadly hold Thursday’s steepening move. Gilts underperform after raft of UK data including 2Q GDP which contracted less than expected. US yields richer by as much as 4bp across long-end of the curve with 5s30s spreads steeper by more than 2bp on the day; 10-year yields around 2.865%, richer by 2bp on the day and outperforming bunds, gilts by 3.5bp and 5.5bp in the sector. Gilts underperform bunds and Treasuries, trading about 3-4bps higher across the yield curve after UK 2Q GDP contracted less than expected, with traders raising BOE tightening bets. German 10-year yield briefly rose above 1%, now up about 2bps to 0.99%. Peripheral spreads widen to Germany. Treasuries 10-year yield down 1 bps to 2.87%. In commodities, WTI crude is trading slightly lower at ~$94, within Thursday’s range, and gold is down close to $3 at ~$1,787 Looking to the day ahead now, and data releases include the UK’s GDP reading for Q2, Euro Area industrial production for June, and in the US there’s the University of Michigan’s preliminary consumer sentiment index for August. Market Snapshot S&P 500 futures up 0.6% to 4,234.25 STOXX Europe 600 up 0.4% to 442.02 MXAP up 0.6% to 163.27 MXAPJ up 0.2% to 531.44 Nikkei up 2.6% to 28,546.98 Topix up 2.0% to 1,973.18 Hang Seng Index up 0.5% to 20,175.62 Shanghai Composite down 0.1% to 3,276.89 Sensex up 0.3% to 59,482.94 Australia S&P/ASX 200 down 0.5% to 7,032.51 Kospi up 0.2% to 2,527.94 German 10Y yield little changed at 1.00% Euro down 0.2% to $1.0295 Brent Futures up 0.3% to $99.90/bbl Brent Futures up 0.3% to $99.87/bbl Gold spot down 0.1% to $1,787.09 U.S. Dollar Index up 0.25% to 105.35 Top Overnight News from Bloomberg Three of China’s largest state-owned companies announced plans to delist from US exchanges as the two countries struggle to come to an agreement allowing American regulators to inspect audits of Chinese businesses The cooler inflation reading for July is welcome news and may mean it’s appropriate for the Federal Reserve to slow its interest-rate increase to 50 basis points at its September meeting, but the fight against fast price growth is far from over, San Francisco Fed President Mary Daly said. China may be ready to curb some of the excess liquidity sloshing in the banking system as it turns its focus to mitigating risks in the financial industry. In the fight against pandemic inflation, Latin America led the world into a new age of tight money. Eighteen months later, there’s not much sign that being first in will help the region to become first out The UK economy shrank in the second quarter for the first time since the pandemic, driven by a decline in spending by households and on fighting the coronavirus A more detailed look at global markets courtesy of Newsquawk Asia-Pc stocks were mixed following a similar indecisive lead from Wall Street where stocks and treasuries faded the initial gains from the softer-than-expected PPI data, although Japan outperformed on return from holiday. ASX 200 was dragged lower by losses across nearly all sectors including the top-weighted financial industry despite the confirmation of a return to profit for IAG, while energy bucked the trend after a recent rebound in oil. Nikkei 225 notched firm gains as it played catch-up to global peers and took its first opportunity to react to the softer inflationary signals from the US, while Softbank was among the top performers as it expects to gain USD 34bln from reducing its stake in Alibaba. Hang Seng and Shanghai Comp were both subdued in early trade amid weakness in property stocks and ongoing COVID-related headwinds, although the Hong Kong benchmark gradually recovered with earnings releases also in the limelight. Top Asian News Japanese PM Kishida plans to hold a meeting on August 15th to address rising goods prices, wages and daily life, while he called for additional measures on dealing with rising food and energy prices, according to Reuters. Jardine Matheson Slumps 9.6% as MSCI Cuts Co. Weight in Indexes Baltic States Abandon East European Cooperation With China Gold Set for Fourth Weekly Gain on Signs Fed to Ease Rate Hikes Asian Gas Prices Rally on Rush by Japan to Secure Winter Supply European bourses are firmer, but action has been relatively contained with newsflow slim, Euro Stoxx 50 +0.2%; however, benchmarks waned alongside US futures following China ADS updates. Currently, ES +0.4% but similarly off best levels amid Chinese stocks announcing intentions to delist their ADSs and reports that Germany is being looked at as a banking base. China Life (2628 HK), PetroChina (857 HK), Sinopec (386 HK) plan to delist ADSs from NYSE; last trading day for China Life expected to be on or after 1st September. Subsequently, China's Securities Regulator says it is normal within capital markets for companies to list and delist. Chinese brokers are reportedly looking at Germany as a banking base amid tensions with the US, via Bloomberg citing sources. SMIC (0981 HK) CEO says increasing geopolitical tensions, elevated inflation and a cyclical downturn in demand for chips has resulted in "some panic" within the industry, via FT. Huawei - H1 2022 (CNY): Revenue -5.9% Y/Y to 301.6bln. Net Profit 15.08bln (prev. 31.39bln Y/Y). Device Business Revenue -25.3% Y/Y. 2022 will probably be the most challenging year historically for our devices business Chinese and Hong Kong regulators are to announce adjustments to the trading calendar for the stock connect Top European News Union Leaders Kick Off Rallies Across UK in Living Cost Protest Baltic States Abandon East European Cooperation With China Swedish Core Inflation Surge Fuels Bets of Faster Rate Hikes JPMorgan Strategists Say US 2Q Earnings Fall 3% Excluding Energy Ukraine Latest: Putin’s Economy in Focus; More Grain on the Move FX DXY attempts to recover from its post-CPI lows as it eyes yesterday’s 105.46 high. EUR, JPY, and GBP are under pressure from the firmer Dollar; EUR/USD eyes some notable OpEx for the NY cut. The non-US Dollars are resilient this morning on the back of the general risk tone across stocks and the rise in commodities. Fleeting SEK upside was seen in wake of inflation data, with the metrics being in-line/below expectations. Fixed Income Core benchmarks are little changed overall on the session and particularly when compared to price action seen earlier in the week. Further pressure seen following the Gilt open in wake of UK GDP metrics. USTs in-fitting with peers and the yield curve, currently, does not exhibit any overt bias Commodities WTI and Brent hold an upside bias in Europe amid the broader risk tone. Spot gold is relatively uneventful as the firming Dollar keeps the yellow metal capped under USD 1,800/oz. Base metals markets are relatively mixed with the market breadth shallow, although LME copper extends on gains above USD 8k/t. US Event Calendar 08:30: July Import Price Index YoY, est. 9.4%, prior 10.7%; MoM, est. -0.9%, prior 0.2% July Export Price Index YoY, prior 18.2%; MoM, est. -1.0%, prior 0.7% 10:00: Aug. U. of Mich. Sentiment, est. 52.5, prior 51.5 Aug. U. of Mich. Current Conditions, est. 57.8, prior 58.1 Aug. U. of Mich. Expectations, est. 48.5, prior 47.3 Aug. U. of Mich. 1 Yr Inflation, est. 5.1%, prior 5.2%; 5-10 Yr Inflation, est. 2.8%, prior 2.9% DB's Jim Reid concludes the overnight wrap This will be the last EMR from me for a couple of weeks as I'm off on holiday. We're going to Cornwall rather than our usual France trip this summer as transporting a child in a wheelchair around a beach was seen as mildly easier than doing the same up and down a mountain. Hopefully this time next year we'll be back in the invigorating mountain air. If you're reading this having originated from Cornwall please don't take offence! However I've never liked beach holidays and I think I'm too old to change my mind. The kids on the other hand can't contain their excitement. So expect me to spend most of my time in an uncomfortable wetsuit trying desperately to ensure that they don't get washed away. Give me the stress of payrolls or CPI any day over that. I'll be gazing longingly from the sea at the golf course next door. Life's been quite a beach for markets of late but the last 24 hours have been a bit strange, as a second successive weaker-than-expected US inflation reading (PPI) actually left longer dated yields notably higher than where they were before the better than expected CPI on Wednesday, and at one point they were +23bps above where they were immediately after the first of these two dovish prints. The S&P 500 also reversed earlier gains of more than +1% to finish lower at -0.07%. Maybe we shouldn't read too much into summer illiquidity but the moves have been a bit all over the place of late. While the combination of below-expectations inflation and worsening labour data (see below) initially drove a dovish-Fed interpretation, the price action reverted throughout the day, and we closed with still around even odds between a 50bp or 75bp hike at the September FOMC meeting (61.8bps implied). When it came to Treasuries, despite the selloff, there was a decent amount of curve steepening, with the 2yr yield climbing +0.4bps whilst the 10yr yield rose by +10.6bps to 2.89%, the highest since July 20th. This helped the 2s10s curve to see its biggest daily steepening move in over 3 months and closing at -33bps, but still having closed inverted 29 for days running. 30yr Treasuries (+14.2bps) hit the highest since July 8 after receiving a lukewarm reception at auction. Maybe the longer end yield rises actually reflect a view that the Fed will be less likely to need to choke the recovery off now inflation is cooling. So maybe yields would have been lower this week with stronger inflation prints? Or is that just the silly season getting to me? To add to the ups and downs, this morning in Asia, 10yr UST yields (-2.73 bps) are edging lower, trading at 2.86% with the 2yr yield down -1.86 bps at 3.20% thus flattening the curve a tad as we go to press. Over in equities, the S&P 500 (-0.07%) was marginally lower last night after increasing more than +1% in the New York morning. Small caps were a big outperformer, with the Russell 2000 index up by +0.31% to reach its highest level since April as the near-term growth outlook still looks OK, whereas the NASDAQ bore the brunt of the gradual duration selloff throughout the day, falling -0.58%. Overnight, contracts on the S&P 500 (+0.14%) and NASDAQ 100 (+0.22%) are moving slightly higher again. In terms of the details of that inflation print, US producer prices fell by -0.5% in July, which was some way beneath expectations for a +0.2% rise, and marks the biggest monthly decline since April 2020 when the economy was experiencing Covid lockdowns. As with the CPI release the previous day, the PPI was dragged down by a sharp fall in energy prices, which fell by -9.0% on the month, and that helped the annual headline measure fall from +11.3% in June down to +9.8% in July. Even if you just looked at core PPI however, the reading was still softer than expected, with the monthly gain excluding food and energy at +0.2% (vs. +0.4% expected), which sent the annual gain down to +7.6%. The prospect that the Fed would be more cautious in hiking rates was given a slight bit of extra support thanks to additional signs that the labour market was softening. The weekly initial jobless claims for the week through August 6 came in at 262k (vs. 265k expected), which is their highest level since November, and the smoother 4-week moving average also rose to a post-November high of 252k. Continuing claims climbed to 1428k, above expectations. Recall, our US economics team has showed that once the 4-week average of continuing claims increases 11% over recent lows near-term recession alarms start sounding. We’re at 1399k on the 4-week moving average on claims, still a reasonable distance from this 11% increase of 1465k. Overall, although the weekly claims data is slowly getting worse, it's still happening in a sea of huge job openings and generally big job growth. Perhaps the labour market is behaving slightly different from usual in that you can have both big job openings but claims edging up because of a sudden skills mismatch post Covid. If so it makes traditional clues to the future direction of the economy more difficult to decipher. For us the US jobs market is still healthy for now. I suspect it won't be in 12 months time but that's a story for another day. For Europe, the newsflow continued to be much more downbeat than in the US of late, as concerns mounted across the continent about the energy situation this winter. Natural gas futures rose a further +1.34% yesterday to €208 per megawatt-hour, putting them at their highest levels since early March just after Russia’s invasion of Ukraine began. Power prices also soared to fresh records, with German prices for next year up +5.24% to €449 per megawatt-hour, whilst French prices were up +6.62% to €615 per megawatt-hour. Governments are coming under increasing pressure to do something about this, and German Chancellor Scholz said yesterday that there would be further relief measures for consumers. Growing concerns about an imminent recession meant that European equities also had a lacklustre day, with the STOXX 600 only up +0.06%. Sovereign bonds also lost ground, with yields on 10yr bunds (+8.2bps), OATs (+8.3bps) and BTPs (+3.8bps) all moving higher on the day, although gilts were the biggest underperformer on this side of the Atlantic with yields up by +10.8bps. Asian equity markets are relatively quiet this morning with the exception of the Nikkei (+2.37%) which is surging and catching-up up after a holiday on Thursday, whilst the Hang Seng (+0.09%), the Shanghai Composite (+0.16%), the CSI (+0.08%) and the Kospi (+0.02%) are all edging up. Elsewhere, the San Francisco Fed President Mary Daly in her overnight remarks indicated that a 50 bps interest rate hike in September “makes sense” following two back-to-back 75-basis-point hikes in June and July given recent economic data including on inflation. However, she added that she is open for a bigger rate hike if the data showed it was needed. To the day ahead now, and data releases include the UK’s GDP reading for Q2, Euro Area industrial production for June, and in the US there’s the University of Michigan’s preliminary consumer sentiment index for August. Tyler Durden Fri, 08/12/2022 - 08:08.....»»

Category: dealsSource: nytAug 12th, 2022

Global Markets Slump With Terrified Traders Tracking Pelosi"s Next Move

Global Markets Slump With Terrified Traders Tracking Pelosi's Next Move Forget inflation, stagflation, recession, depression, earnings, Biden locked up in the basement with covid, and everything else: today's it all about whether Nancy Pelosi will start World War 3 when she lands in Taiwan in 3 hours. US stocks were set for a second day of declines as investors hunkered down over the imminent (military) response by China to Pelosi's Taiwan planned visit to Taiwan, along with the risks from weakening economic growth amid hawkish central bank policy. Nasdaq 100 contracts were down 0.7% by 7:30a.m. in New York, while S&P 500 futures fell 0.6% having fallen as much as 1% earlier. 10Y yields are down to 2.55% after hitting 2.51% earlier, while both the dollar and gold are higher. Elsewhere around the world, Europe's Stoxx 600 fell 0.6%, with energy among the few industries bucking the trend after BP hiked its dividend and accelerated share buybacks to the fastest pace yet after profits surged. Asian stocks slid the most in three weeks, with some of the steepest falls in Hong Kong, China and Taiwan. Among notable movers in premarket trading, Pinterest shares jumped 19% after the social-media company reported second-quarter sales and user figures that beat analysts’ estimates, and activist investor Elliott Investment Management confirmed a major stake in the company. US-listed Chinese stocks were on track to fall for a fourth day, which would mark the group’s longest streak of losses since late-June, amid the rising geopolitical tensions. In premarket trading, bank stocks are lower amid rising tensions between the US and China. S&P 500 futures are also lower, falling as much as 0.9%, while the 10-year Treasury yield falls to 2.56%. Cowen Inc. shares gained as much as 7.5% after Toronto-Dominion Bank agreed to buy the US brokerage for $1.3 billion in cash. Meanwhile, KKR’s distributable earnings fell 9% during the second quarter as the alternative-asset manager saw fewer deal exits amid tough market conditions. Here are some other notable premarket movers: Activision Blizzard (ATVI US Equity) falls 0.6% though analysts are positive on the company’s plans to roll out new video game titles after it reported adjusted second-quarter revenue that beat expectations. While the $68.7 billion Microsoft takeover deal remains a focus point, the company is building out a “robust” pipeline, Jefferies said. Arista Networks (ANET US) analysts said that the cloud networking company’s results were “impressive,” especially given supply-chain constraints, with a couple of brokers nudging their targets higher. Arista’s shares rose more than 5% in US after-hours trading on Monday after the company’s revenue guidance for the third quarter beat the average analyst estimate. Avis Budget (CAR US) saw a “big beat” on low Americas fleet costs and strong performance for its international segment, Morgan Stanley says. The rental-car firm’s shares rose 5.5% in US after-hours trading on Monday, after second-quarter profit and revenue beat the average analyst estimate. Snowflake (SNOW US) falls 5.3% after being cut at BTIG to neutral from buy, citing field checks that show a potential slowdown in product revenue growth in the coming quarters. Clarus Corp. (CLAR US) should continue to see “outsized demand” from the “mega-trend” of people seeking the great outdoors, Jefferies says, after the sports gear manufacturer reported second-quarter sales that beat estimates. Clarus’s shares climbed 9% in US postmarket trading on Monday. Cryptocurrency-exposed stocks are lower in US premarket trading as Bitcoin falls for the third consecutive session as global markets and cryptocurrencies remain pressured over deepening US-China tension. Coinbase (COIN US) falls 2.3% while Marathon Digital (MARA US) drops 3.3%. Transocean (RIG US) rises 18% in US premarket trading after 2Q Ebitda beat estimates, with other positives including a new contract and a 2-year extension of a revolver. US-listed Chinese stocks are on track to fall for a fourth day, which would mark the group’s longest streak of losses since end-of-June, amid geopolitical tensions related to House Speaker Nancy Pelosi’s expected visit to Taiwan. Alibaba (BABA) falls 2.5% and Baidu (BIDU US) dips 2.7% ZoomInfo Technologies analysts were positive on the software firm’s raised guidance and improved margins, with Piper Sandler saying the firm is “in a class of its own.” The shares rose more than 11% in US after-hours trading, after closing at $37.73. Pelosi is expected to land in Taiwan on Tuesday, the highest-ranking American politician to visit the island in 25 years, a little after 10pm local time evening in defiance of Chinese threats. China, which regards Taiwan as part of its territory, has vowed an unspecified military response to a visit that risks sparking a crisis between the world’s biggest economies. “There is no way people will want to put on risk right now with this potential boiling point,” said Neil Campling, head of tech, media and telecom research at Mirabaud Securities. The potential ramifications of Pelosi’s planned visit “are huge.” The growing tensions are the latest addition to a myriad of challenges facing equity investors going into the second half of the year. Fears of a US recession as the Federal Reserve tightens policy to tame soaring inflation have weighed on risk assets. US manufacturing activity continued to cool in July, with the data highlighting softer demand for merchandise as the economy struggles for momentum. In the off chance we avoid world war, there will be a shallow recession that could start by the end of the year, according to Rupert Thompson, chief investment officer at Kingswood Holdings. Meanwhile, the market is too optimistic about the path of monetary policy and “the risk is the Fed goes further than the markets are building in in terms of hiking,” Thompson said in an interview with Bloomberg Television. Goldman Sachs strategists also said it was too soon for stock markets to fade the risks of a recession on expectations of a pivot in the Fed’s hawkish policy. On the other hand, JPMorgan strategists said the outlook for US equities is improving for the second half of the year on attractive valuations and as the peak in investor hawkishness has likely passed. “Although the activity outlook remains challenging, we believe that the risk-reward for equities is looking more attractive as we move through the second half,” JPMorgan’s Marko Kolanovic wrote in a note dated Aug. 1. “The phase of bad data being interpreted as good is gaining traction, while the call of peak Federal Reserve hawkishness, peak yields and peak inflation is playing out.” Markets are also bracing for commentary on the US interest-rate outlook from Chicago Fed President Charles Evans and St. Louis Fed President James Bullard. In Europe, tech, financial services and travel are the worst-performing sectors. Euro Stoxx 50 falls 0.8%. FTSE 100 is flat but outperforms peers. Here are some of the biggest European movers today: BP shares rise as much as 4.8% on earnings. The oil major’s quarterly results look strong with an earnings beat, dividend hike and increased buyback all positives, analysts say. OCI rises as much as 8.6%, the most since March, on its latest earnings. Analysts say the results are ahead of expectations and the fertilizer firm’s short-term outlook remains robust. Maersk shares rise as much as 3.7% after the Danish shipping giant boosted its underlying Ebit forecast for the full year. Analysts note the boosted guidance is significantly above consensus estimates. Greggs shares rise as much as 4% after the UK bakery chain reported an increase in 1H sales. The 1H results are “solid,” while the start to 2H is “robust,” according to Goodbody. Delivery Hero shares gain as much as 3.8%. The stock is upgraded to overweight from neutral at JPMorgan, which said many of the negatives that have weighed on the firm are starting to turn. Rotork gains as much as 4%, the most since June 24, after beating analyst expectations for 1H 2022. Shore Capital says the company shows “good momentum” in the report. Credit Suisse shares decline as much as 6.4% after its senior debt was downgraded by Moody’s, and its credit outlook cut by S&P, while Vontobel lowered the PT following “disappointing” 2Q earnings. Travis Perkins shares drop as much as 11%, the most since March 2020. Citi says the builders’ merchant’s results are “slightly weaker than expected,” with RBC noting shortfalls in sales and Ebita. DSM shares drop by as much as 4.9% as Citi notes weak free cash flow after company reported adjusted Ebitda for the second quarter up 5.3% with FY22 guidance unchanged. UK homebuilders fall after house prices in the country posted their smallest increase in at least a year, indicating that the property market is starting to cool, with Crest Nichols dropping as much as 5.2%. Wind-turbine stocks fall in Europe after Spain’s Siemens Gamesa cut sales and margin guidance, with Siemens Energy dropping as much as 6.1%, with Vestas Wind Systems down as much as 4.7%. Earlier in the session, Asian stocks fell as traders braced for a potential escalation of US-China tensions given a possible visit by US House Speaker Nancy Pelosi to Taiwan. The MSCI Asia Pacific Index dropped as much as 1.4%, poised for its worst day in five weeks. All sectors, barring real estate, were lower with chipmaker TSMC and China’s tech stocks among the biggest drags on the regional measure. Pelosi is expected to arrive in Taipei late on Tuesday. Beijing regards Taiwan as part of its territory and has promised “grave consequences” for her trip. Benchmarks in Hong Kong, China and Taiwan were among the laggards in Asia, slipping at least 1.4% each. Japan’s Topix declined as the yen received a boost from safe-haven demand.  还没打就见血了。4400个股票受伤。 Chinese stocks collapsed in the shadow of a looming conflict. 4400 of 4800 stocks hurt. — Hao HONG 洪灝, CFA (@HAOHONG_CFA) August 2, 2022 “I do expect a negative feedback loop into China-related equities especially those related to the semiconductor and technology sectors as Pelosi’s potential visit to Taiwan is likely to harden the current frosty US-China tech war,” said Kelvin Wong, analyst at CMC Markets (Singapore). Pelosi’s controversial trip is souring a nascent revival in risk appetite in the region that saw the MSCI Asia gauge rise in July to cap its best month this year. China’s economic slowdown continues to weigh on sentiment, as authorities said this year’s economic growth target of “around 5.5%” should serve as a guidance rather than a hard target.  Japanese equities fell as the yen soared to a two month high over concerns of US-China tensions escalating with US House Speaker Nancy Pelosi expected to visit Taiwan on Tuesday.  The Topix fell 1.8% to 1,925.49 as of the market close, while the Nikkei declined 1.4% to 27,594.73. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 2.6%. Out of 2,170 shares in the index, 227 rose and 1,903 fell, while 40 were unchanged. Pelosi would become the highest-ranking American politician to visit Taiwan in 25 years. China views the island as its territory and has warned of consequences if the trip takes place. “The relationship between the US and China was just about to enter into a period of review, with a move from the US to reduce China tariffs,” said Ikuo Mitsui a fund manager at Aizawa Securities. That could change now as a result of Pelosi’s visit, he added Meanwhile, Australia’s S&P/ASX 200 index erased an earlier loss of as much as 0.7% to close 0.1% higher after the Reserve Bank’s widely-expected half-percentage point lift of the cash rate to 1.85%. The index wiped out a loss of as much as 0.7% in early trade. The RBA’s statement was “not as hawkish as anticipated and the lower growth forecast suggests the RBA is aware of both the domestic and international drags on the economy,” said Kerry Craig, global market strategist at JPMorgan.  “We expect the RBA will continue to push interest rates back to a neutral level this year given the successive upgrades to the inflation outlook, but 2023 looks to be a much less eventful year for the RBA,” Craig said.  Banks and consumer discretionary advanced to boost the index, while miners and energy shares declined.   In New Zealand, the S&P/NZX 50 index rose less than 0.1% to 11,532.46. Indian stock indexes are on course to claw back this year’s losses on steady buying by foreigners. The S&P BSE Sensex closed little changed at 58,136.36 in Mumbai, after falling as much as 0.6% earlier in the day. The measure is now just 0.2% away from turning positive for the year. The NSE Nifty Index too is a few ticks away from moving into the green. Nine of the BSE Ltd.’s 19 sector sub-indexes advanced on Tuesday, led by power and utilities companies.  Foreigners bought local shares worth $836.2 million in July, after pulling out a record $33 billion from the Indian equity market since October. July was the first month of net equity purchases by foreign institutional investors, after nine months of outflows. Still, “choppiness would remain high due to the upcoming RBI policy meet outcome and prevailing earnings season,” Ajit Mishra, vice-president for research at Religare Broking Ltd. wrote in a note. “Participants should continue with the buy-on-dips approach.” The Reserve Bank of India is widely expected to raise interest rates for a third straight time on Friday. Of the 33 Nifty companies that have reported results so far, 18 have beaten the consensus view while 15 have trailed. Of the 30 shares in the Sensex index, 16 rose, while 14 fell. IndusInd Bank and Asian Paints were among the key gainers on the Sensex, while Tech Mahindra Ltd. and mortgage lender Housing Development Finance Corp were prominent decliners.  In FX, the Bloomberg dollar spot index rises 0.1%. JPY and CAD are the strongest performers in G-10 FX, NOK and AUD underperforms, after Australia’s central bank hiked rates by 50 basis-points for a third straight month and signaled policy flexibility. USD/JPY dropped as much as 0.9% to 130.41, the lowest since June 3, in the longest streak of daily losses since April 2021. Leveraged accounts are adding to short positions on the pair ahead of Pelosi’s visit, Asia-based FX traders said. In rates, treasuries extended Monday’s rally in early Asia session as 10-year yields dropped as low as 2.514% amid escalating US-China tension over Taiwan. Treasury yields were richer by up to 5bp across long-end of the curve, where 20-year sector continues to outperform ahead of Wednesday’s quarterly refunding announcement, expected to make extra cutbacks to the tenor. US 10-year yields off lows of the day around 2.55%, lagging bunds by 4bp and gilts by 4.5bp. US stock futures slumped given risk adverse backdrop, adding support into Treasuries while bunds outperform as traders scale back ECB rate hike expectations. The yield on the two-year German note, among the most sensitive to rate hikes, fell as low as 0.17%, its lowest since May 16. Gilts also gained across the curve. Bund curve bull-steepens with 2s10s widening ~2 bps. Gilt and Treasury curves mostly bull-flatten. Australian bonds soared after RBA delivered a third- straight 50bp rate hike as expected, but gave itself wriggle room to slow the pace of tightening in the coming months. In commodities, WTI trades within Monday’s range, falling 0.6% to trade around $93, while Brent falls below $100. Spot gold is little changed at $1,779/oz. Base metals are mixed; LME nickel falls 2% while LME zinc gains 0.6%. Bitcoin remains under modest pressure and has incrementally lost the USD 23k mark, but remains comfortably above last-week's USD 20.6k trough. Looking to the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Market Snapshot S&P 500 futures down 0.6% to 4,096.50 STOXX Europe 600 down 0.5% to 435.13 MXAP down 1.3% to 159.73 MXAPJ down 1.3% to 516.82 Nikkei down 1.4% to 27,594.73 Topix down 1.8% to 1,925.49 Hang Seng Index down 2.4% to 19,689.21 Shanghai Composite down 2.3% to 3,186.27 Sensex little changed at 58,120.97 Australia S&P/ASX 200 little changed at 6,998.05 Kospi down 0.5% to 2,439.62 German 10Y yield little changed at 0.74% Euro down 0.3% to $1.0231 Brent Futures down 0.6% to $99.44/bbl Gold spot down 0.1% to $1,770.93 U.S. Dollar Index up 0.15% to 105.61 Top Overnight News from Bloomberg Oil Steadies Before OPEC+ as Traders Weigh Up Market Tightness China Slaps Export Ban on 100 Taiwan Brands Before Pelosi Visit Pozsar Says L-Shaped Recession Is Needed to Conquer Inflation Pelosi’s Taiwan Trip Raises Angst in Global Financial Markets Taiwan Risk Joins Long List of Reasons to Shun China Stocks Biden Says Strike in Kabul Killed a Planner of 9/11 Attacks Biden Team Tries to Blunt China Rage as Pelosi Heads for Taiwan The Best and Worst Airlines for Flight Cancellations GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill US to Stop TSMC, Intel From Adding Advanced Chip Fabs in China US Anti-Terrorism Operation in Afghanistan Kills Al-Qaeda Leader They Quit Goldman’s Star Trading Team, Then It Raised Alarms Sinema’s Silence on Manchin’s Deal Keeps Everyone Guessing Manchin Side-Deal Seeks to Advance Mountain Valley Pipeline A more detailed look at global markets courtesy of Newsquawk APAC stocks followed suit to the weak performance across global counterparts as tensions simmered amid Pelosi's potential visit to Taiwan. ASX 200 was initially pressured ahead of the RBA rate decision where the central bank hiked by 50bp, as expected, although most of the losses in the index were pared amid a lack of any hawkish surprises in the statement and after the central bank noted it was not on a pre-set path. Nikkei 225 declined amid a slew of earnings and continued unwinding of the JPY depreciation. Hang Seng and Shanghai Comp underperformed due to the ongoing US-China tensions after reports that House Speaker Pelosi will arrive in Taiwan late on Tuesday despite the military threats by China, while losses in Hong Kong were exacerbated by weakness in tech and it was also reported that Chinese leaders said the GDP goal is guidance and not a hard target which doesn't provide much confidence in China's economy. Top Asian News Tourism Jump to Power Thai GDP Growth to Five-Year High in 2023 China in Longest Streak of Liquidity Withdrawals Since February Singapore Says Can Tame Wild Power Market Without State Control India’s Zomato Appoints Four CEOs, to Change Name to Eternal Taiwan Tensions Raise Risks in One of Busiest Shipping Lanes Japan Trading Giants Book $1.7 Billion Russian LNG Impairment     Japan Proposes Record Minimum Wage Hike as Inflation Hits European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%. As such, the Energy sector bucks the trend which has the majority in the red and a defensive bias in-play. Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%. Apple (AAPL) files final pricing term sheet for four-part notes offering of up to USD 5.5bln, according to a filing. Top European News Ukraine Sees Slow Return of Grain Exports as World Watches Ruble Boosts Raiffeisen’s Russian Unit Despite Credit Halt DSM 2Q Adj. Ebitda Up; Jefferies Sees ‘Muted’ Reaction Credit Suisse Hit by More Rating Downgrades After CEO Reboot Man Group Sees Assets Decline for First Time in Two Years Exodus of Young Germans From Family Nest Is Getting Ever Bigger FX Yen extends winning streak through yet more key levels vs Buck and irrespective of general Greenback recovery on heightened US-China tensions over Taiwan USD/JPY breaches support around 131.35 and probes 130.50 before stalling, but remains sub-131.00 even though the DXY hovers above 105.500 within a 105.030-710 range. Aussie undermined by risk aversion and no hawkish shift by RBA after latest 50bp hike; AUD/USD nearer 0.6900 having climbed to within a few pips of 0.7050 on Monday. Kiwi holds up better with AUD/NZD tailwind awaiting NZ jobs data, NZD/USD hovering just under 0.6300 and cross closer to 1.1000 than 1.1100. Euro and Pound wane after falling fractionally short of round number levels vs Dollar, EUR/USD back under 1.0250 vs 1.0294 at best, Cable pivoting 1.2200 from 1.2293 yesterday. Loonie and Franc rangy after return from Canadian and Swiss market holidays, USD/CAD straddling 1.2850 and USD/CHF rotating around 0.9500. Yuan off lows after slightly firmer PBoC midpoint fix, but awaiting repercussions of Pelosi trip given Chinese warnings about strong reprisals, USD/CNH circa 6.7700 and USD/CNY just below 6.7600 vs 6.7950+ and 6.7800+ respectively. South Africa's Eskom says due to a shortage of generation capacity, Stage Two loadshedding could be implemented at short notice between 16:00-00:00 over the next three days. Fixed Income Taiwan-related risk aversion keeps bonds afloat ahead of relatively light pm agenda before a trio of Fed speakers. Bunds hold above 159.00 within 159.70-158.57 range, Gilts around 119.50 between 119.70-20 parameters and T-note nearer 122-02 peak than 121-17+ trough. UK 2032 supply comfortably twice oversubscribed irrespective of little concession. Commodities WTI Sept and Brent Oct futures trade with both contracts under the USD 100/bbl mark as the participants juggle a myriad of major factors, incl. the JTC commencing shortly. Spot gold is stable and just below the 50-DMA at USD 1793/oz while base metals succumb to the broader tone. A source with knowledge of last month's meeting between President Biden and Saudi King Salman said the Saudis will push OPEC+ to increase oil production at their meeting on Wednesday and that the Saudi King made the assurance to President Biden during their face-to-face meeting July 16th, according to Fox Business's Lawrence. US Senator Manchin "secured a commitment" from President Biden, Senate Majority Leader Schumer and House Speaker Pelosi for completion of the Mountain Valley Pipeline, according to 13NEWS. US Event Calendar July Wards Total Vehicle Sales, est. 13.4m, prior 13m 10:00: June JOLTs Job Openings, est. 11m, prior 11.3m 10:00: Fed’s Evans Hosts Media Breakfast 11:00: NY Fed Releases 2Q Household Debt and Credit Report 13:00: Fed’s Mester Takes Part in Washington Post Live Event 18:45: Fed’s Bullard Speaks to the Money Marketeers DB's Jim Reid concludes the overnight wrap In thin markets, US House Speaker Nancy Pelosi's visit to Taiwan today for meetings tomorrow (as part of her tour of Asia) could be the main event. She's scheduled to land tonight local time which will be mid-morning US time. She'll be the highest ranking US politician to visit in 25 years. Expect some reaction from the Chinese and markets to be nervous. Meanwhile to dial back rising tensions, the White House has urged China to refrain from an aggressive response as speaker Pelosi’s visit does not change the US position toward the island. As the headline confirming her visit was going ahead broke, 10 year US Treasuries immediately fell a handful of basis point from 2.69% (opened at 2.665%) and continued falling to around 2.58% as Europe retired for the day, roughly where it closed (-6.8bps). Breakevens led most of the move. 2 year notes actually held in which inverted the curve a further -6.12bps and to the lowest this cycle at -30.84bps. Remember that August is the best month of the year for fixed income (see my CoTD last week here for more on this) so the month has started off in line with the textbook. This morning 10yr USTs yields have dipped another -3bps to 2.55%, some 14bps lower than when Pelosi stopover was first confirmed 18 hours ago. 2yr yields have slightly out-performed with the curve just back below -30bps again. Lower yields initially helped to lift equities yesterday, with the Nasdaq being up more than a percent at one point before falling with the rest of the market and closing -0.18%. The S&P 500 was -0.28% and dragged lower by energy (-2.17%). The latter came as crude prices moved substantially lower, with WTI losing -4.91% and Brent (-3.97%) dipping below $100 per barrel as well. Growth concerns, partly due to the weekend and yesterday’s data from China, and partly due to the US risk off yesterday, were mainly to blame. These worries filtered through other commodities as well, including industrial metals and agriculture. For the latter, Ukraine’s first grain shipment since the war began was a contributing factor. European gas was a standout, notching a +5.2% gain as the relentless march continues. In an overall risk-off market, staples (+1.21%) were the only sector meaningfully advancing on the day, followed by discretionary (+0.51%) stocks. Meanwhile, real estate (-0.90%), financials (-0.89%) and materials (-0.82%) dragged the index lower. Although yesterday’s earnings stack was light, today’s line up includes BP, Starbucks, Airbnb and PayPal. Asian equity markets opened sharply lower this morning on the fresh geopolitical tensions between the US and China over Taiwan. Across the region, the Hang Seng (-2.96%) is leading losses after yesterday’s data showed that Hong Kong slipped into a technical recession as Q2 GDP shrank by -1.4%, contracting for the second consecutive quarter as global headwinds mount. Mainland China stocks are also sliding with the Shanghai Composite (-2.90%) and CSI (-2.33%) trading deep in the red whilst the Nikkei (-1.59%) is also in negative territory. Elsewhere, the Kospi (-0.77%) is also weak in early trade. Outside of Asia, DMs stock futures point to a lower restart with contracts on the S&P 500 (-0.38%), NASDAQ 100 (-0.40%) and DAX (-0.50%) all turning lower. As we go to print, the RBA board has raised rates by another 50 basis points to 1.85%. Their economic forecasts seem to have been lowered and they have now said monetary policy is "not on a pre-set path" which some are already interpreting as possibly meaning 25bps instead of 50bps at the next meeting. Aussie 10yr yields dropped 7-8bps on the announcement and 10bps on the day. Back to yesterday, and the important US ISM index, on balance, painted a slightly more comforting picture than it could have been – although the index slowed to the lowest since June 2020. The headline came in above the median estimate on Bloomberg (52.8 vs 52.0). We did see a second month in a row of below-50 score for new orders, but a fall in prices paid from 78.5 to 60.0, the lowest since August 2020, offered some respite to fears about price pressures. Similarly, a rise in the employment gauge from 47.3 to 49.9, beating estimates, was also a positive. The manufacturing PMI was revised down a tenth from the preliminary reading which didn't move the needle. JOLTS today will be on my radar given it's been the best measure of US labour market tightness over the past year or so. Also Fed hawks Mester (lunchtime US) and Bullard (after the closing bell) will be speaking today. Turning to Europe, price action across sovereign bond markets was driven by dovish repricing of ECB’s monetary policy, in contrast to the US where the front end held up. A cloudier growth outlook from yesterday’s European data releases helped drive yields lower – retail sales in Germany unexpectedly contracted in June (-1.6% vs estimates of +0.3%) and Italy’s manufacturing PMI slipped below 50 (48.5 vs 49.0 expected). So Bund yields fell -3.8bps, similar to OATs (-3.1bps). The decline was more pronounced in peripheral yields and spreads, with BTPs (-12.9bps) in particular dropping below 3% for the first time since May of this year, perhaps on further follow through from last week's story that the far right party leading the polls aren't planning to break EU budget rules. Spreads have recovered the lost ground from Draghi's resignation announcement now. Weaker economic data overpowered the effect of lower yields and sent European stocks faded into the close after being higher most of the day with the STOXX 600 eventually declining -0.19%. The Italian market outperformed (+0.11%) for the reasons discussed above. Early this morning, data showed that South Korea’s July CPI inflation rate rose to +6.3% y/y, hitting its highest level since November 1998 (v/s +6.0% in June), in line with the market consensus. The strong inflation data comes as the Bank of Korea (BOK) mulls further interest rate hikes at its next policy meeting on August 25. To the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Tyler Durden Tue, 08/02/2022 - 08:05.....»»

Category: personnelSource: nytAug 2nd, 2022

Futures Reverse Losses, Rise To Session Highs Ahead Of Data, Fed Juggernaut

Futures Reverse Losses, Rise To Session Highs Ahead Of Data, Fed Juggernaut Whether it's because Goldman forecast over $11 billion in "forced" buying every day this week between the end of the buyback blackout period and systematic purchases amid the sliding VIX, or because hopes of an imminent recession prompted more expectations of a Fed pivot after Friday's drop led to oversold conditions amid record bearishness, but this morning US equity futures have moved higher ahead of what will be an extremely busy week with 30% of the S&P reporting earnings including big tech, the US revealing if Q2 GDP was negative thus pushing the US into a recession, and the Fed hiking another whopping 75bps. Or perhaps the optimistic sentiment came out of China where Chinese property stocks rallied after a reported move by Beijing to establish a fund to support developers fueled optimism about a turnaround for the struggling sector.  Whatever the reason, stocks and US equity futures reversed earlier declines on Monday and traded near session highs with S&P 500 and Nasdaq 100 futures rising 0.6% and 0.5% respectively, while European stocks extended gains after their best week since May, rising 0.5%. Treasury yields advanced and a dollar gauge slipped. Oil also reversed earlier losses and last traded 0.9% higher. The S&P 500 posted its biggest weekly gain in a month last week and is on a pace for its largest monthly increase since October. Stocks have gotten a lift as the corporate earnings season began with better-than-feared reports and as investors bet that a lot of the negative economic news was priced in. Among notable movers in premarket trading, shares in companies that focus on antivirals and vaccines jumped after the head of the World Health Organization said the monkeypox outbreak is a public health emergency of international concern. Cryptocurrency-exposed stocks, on the other hand, fell as Bitcoin slipped back under $22,000 amid a wider cryptocurrency selloff.  Here are some other notable premarket movers: Watch Amazon (AMZN US) stock as its price target was trimmed at Oppenheimer (outperform), with the brokerage “conservatively” reducing its second-half 2021 e- commerce estimates as consumer spending slows after stable summer trends. Keep an eye on Integra LifeSciences (IART US) as Morgan Stanley initiated coverage of the stock with a recommendation of equal-weight, saying “visibility into pipeline-driven growth remains in the early stages.” Watch Ivanhoe Electric (IE US) as its shares were initiated with an outperform rating at BMO, with the broker touting the mining firm’s “notable” portfolio of copper exploration assets and technology. Keep an eye on Snap (SNAP US) as Morgan Stanley cut the recommendation on the stock to underweight from overweight, saying that the social media platform’s “ad business is less developed” than previously thought. Focus this week is on reports from the giga tech companies including Google parent Alphabet Inc., Apple., Meta Platforms Inc. and Inc. Stock prices already reflect a lot of bad news, with the Nasdaq 100 down 24% this year. While earnings season got under way with several companies citing high inflation and a strong dollar as the reason for cutting full-year profit forecasts, UBS Global Wealth Management strategists said the results are turning out to be better than feared as consumer spending remains resilient. Goldman Sachs strategists agreed with UBS that S&P 500 revenues would be pressured by a stronger greenback in this season. There are also plenty of skeptics about the market’s recent strength. Strategists at BlackRock Inc. and Morgan Stanley warned that challenging economic data suggests stocks could see more declines. “For as long as central banks don’t acknowledge any impact on growth from their aggressive rate hike, we don’t want to chase any bear market rebound,” said Wei Li, global chief investment strategist at BlackRock Investment Institute. Fresh economic statistics could point to “ever-tightening policy and rate-hiking signals,” she said on Bloomberg TV. Meanwhile, Wall Street's uber-bear, Morgan Stanley strategist Michael Wilson said it was too early for stocks to price in a pause in the Fed’s policy even as recession fears grow. His counterpart Mislav Matejka at JPMorgan Chase on the other hand, said bets of peaking inflation could lead to a pivot in the Fed’s policy and improve the outlook for equities in the second half of the year. Besides earnings, all eyes this week will be on the Fed’s two-day policy meeting, with a decision on interest rates on Wednesday. Economists predict the central bank will hike rates by another 75 basis points after last month delivering its biggest increase since 1994. The Fed's decision this week, along with earnings from the likes of Google’s Alphabet Inc. and technology titan Apple Inc., will help to clarify the outlook for a one-month-old rebound in stocks. Prices already reflect a lot of bad news, with the Nasdaq 100 down 24% this year. “We still see further downside for risky assets as recession fears accumulate and central banks remain committed to fighting inflation at the expense of growth,” wrote Eric Robertsen, chief strategist at Standard Chartered Bank Plc. In Europe, the Euro Stoxx 600 rose 0.2% with Spain's IBEX outperforming peers, adding 0.5%. Banks, telecoms and insurance are the strongest-performing sectors. German business confidence deteriorated to the worst level since the early months of the pandemic on growing concerns that record inflation and limited energy supplies from Russia will throw Europe’s biggest economy into a downturn. Here are the other notable European movers: Ryanair shares fluctuated between gains and losses as the budget airline reported a quarterly earnings beat but analysts flagged ongoing uncertainty in its outlook. Faurecia jumps as much as 8.3% after Forvia, the auto-supplier formed out of the French company and Germany’s Hella, reported first-half results and confirmed full-year guidance. Bechtle shares jump as much as 6.4% after the IT services firm reported preliminary second-quarter revenue that beat consensus estimates. Oddo BHF says the results were “impressive” in the face of a weakening macro environment. Verbund climbs as much as 3.3% and hits a record high of EUR109.70 after the Austrian power company was upgraded to overweight from equal-weight at Barclays. The bank analysts view company share price as unreflective of power-price rally. Richemont shares climb as much as 2.5%, outperforming other luxury stocks, after Miss Tweed reports that the Cartier owner is getting closer to a deal with Farfetch on the online fashion retailer YNAP. Volkswagen preference shares drop as much as 4.6% in Frankfurt after Porsche AG boss Oliver Blume was named CEO of the German carmaker. Bernstein and Jefferies are divided on what Blume’s appointment means for the company. Philips shares fall as much as 12% after the Dutch medtech firm published earnings which Jefferies says were “significantly below” consensus estimates and cut its guidance. Uniper falls as much as 11% as JPMorgan cut the stock to underweight. The downgrade leaves the stocks with six sell ratings, one buy and nine analysts advising to hold. Majority- owner Fortum’s shares were down as much as 8.4%. Kuehne + Nagel shares fall as much as 5.4% despite results beat, with analysts saying lower volumes across air and sea as well as a pricing decline is negative for sentiment and expecting past quarters’ momentum to slow. Earlier in the session, equities across Asia Pacific fell Monday, as investors took a risk-off approach ahead of the Federal Reserve’s monetary-policy decision later this week.  The MSCI Asia Pacific Index slipped as much as 0.8%, poised to snap a five-day winning streak, as energy and consumer-discretionary shares declined the most. Chinese tech stocks slid even as the State Council reiterated a call for measures to support healthy development of the Internet platform economy.  Benchmarks in the Philippines, Japan and China led declines, while measures for Thailand and South Korea bucked the downtrend. Risk appetite has soured as investors await another Fed interest-rate hike of at least 75 basis points this week. Earnings releases of US big-tech companies will also be closely analyzed to gauge global growth momentum. Data released on Friday showed a contraction in US business activity for the first time since 2020, escalating fears the economy is headed into a recession. “Big week ahead with the Fed likely to go ahead with another jumbo rate hike and 30% of S&P 500 companies reporting earnings this week -- including the big tech,” said Charu Chanana, market strategist at Saxo Capital Markets. “Investors are being cautious and closing their positions ahead of the slew of risk events.” China’s economic slowdown and a stronger dollar remain key overhangs for Asian corporates. The MSCI Asia gauge is still nearly 30% lower from a 2021 peak, even as some money managers consider the recent selloff in Chinese stocks as a blip.   Japanese stocks declined, with the Nikkei 225 ending a seven-day winning streak, after US stocks fell on disappointing earnings from social-media firms and as concerns of a global slowdown continue to weigh on investor sentiment. The Topix Index fell 0.7% to 1,943.21 as of market close Tokyo time, while the Nikkei declined 0.8% to 27,699.25. Sony Group Corp. contributed the most to the Topix Index decline, decreasing 2.7%. Out of 2,170 shares in the index, 836 rose and 1,224 fell, while 110 were unchanged. “Stocks were soaring for seven straight days last week as well, so there could be a fair amount of selling,” said Naoki Fujiwara chief fund manager at Shinkin Asset Management.  In Australia, the S&P/ASX 200 index was little changed to close at 6,789.90 after a volatile session. Gains in materials and industrials stocks were offset by declines in healthcare and technology shares. EML Payments was the worst performer after the Irish Central Bank said it identified shortcomings in components of the remediation program of EML’s Irish subsidiary PFS Card Services. Insurance Australia Group was the best performer, rising the most since August.  In New Zealand, the S&P/NZX 50 index fell 0.6% to 11,198.68 In FX, the Bloomberg dollar spot index fell 0.2%, sliding against most of its Group-of-10 peers. Investors are monitoring weaker economic data amid expectations the Federal Reserve will inflict more pain on the economy to get inflation under control. It’s set to raise rates for a fourth straight meeting this week. JPY and NZD are the weakest performers in G-10 FX, SEK and NOK outperform. TRY lags EMFX, weakens 0.6%.  “We are not yet ready to change our strong dollar call” as the Fed is likely to continue hiking in the second half, Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. in New York, wrote in a note to clients. “US economic data have been weakening but we do not think a recession is imminent. We believe the US economy remains the most resilient” In rates, the US Treasury curve steepened as long-end leads yields were cheaper on the day: US yields were cheaper by more than 7bp across long-end of the curve, steepening 5s30s by ~4bp, 2s10s by ~3bp on the day; 10-year yields around 2.81%, cheaper by more than 5bp vs Friday’s close and underperforming bunds by 3bp in the sector. Recession fears ratcheted higher Friday after US data showed business activity contracted in July for the first time in more than two years. Final coupon auctions of May-July quarter begin with $45b 2-year note sale at 1pm ET, followed by 5-year notes Tuesday and 7-year sale on Thursday. Preliminary estimates for corporate supply this week are $15b to $20b, expected to be front-loaded before Wednesday’s Fed policy announcement. Focal points of US session include 2-year note auction, while new activity may be sidelined before Wednesday’s Fed decision. Bunds, gilts both outperform Treasuries over European morning. Bunds bear-flatten. Gilts bear- steepen. Peripheral spreads are mixed to Germany; Italy widens, Spain tightens and Portugal tightens. In commodities, WTI rose 0.9% higher to trade near $94.76, after sliding at the open. Brent also rose near $104.51. Base metals are mixed; LME tin falls 1.8% while LME copper gains 0.2%. Spot gold rises roughly $2 to trade near $1,729/oz. Wheat climbed as commodity markets evaluated a Russian missile strike on Odesa’s sea port that threatened to test a fledgling agreement to unblock Ukrainian grain exports from the Black Sea. Bitcoin remains under pressure and is yet to convincingly reclaims the USD 22k mark, after slipping to USD 21.75k overnight. The busy economic data slate this week includes June Chicago Fed national activity index (8:30am) and July Dallas Fed manufacturing activity (10:30am); this week also includes consumer confidence, new home sales, durable goods orders, 2Q GDP, personal income/spending (includes PCE deflator), MNI Chicago PMI and University of Michigan sentiment Market Snapshot S&P 500 futures little changed at 3,967.25 STOXX Europe 600 down 0.1% to 425.16 MXAP down 0.5% to 158.83 MXAPJ down 0.3% to 519.58 Nikkei down 0.8% to 27,699.25 Topix down 0.7% to 1,943.21 Hang Seng Index down 0.2% to 20,562.94 Shanghai Composite down 0.6% to 3,250.39 Sensex down 0.5% to 55,771.23 Australia S&P/ASX 200 little changed at 6,789.90 Kospi up 0.4% to 2,403.69 German 10Y yield little changed at 1.04% Euro little changed at $1.0207 Gold spot up 0.1% to $1,728.88 U.S. Dollar Index down 0.11% to 106.62 Top Overnight News from Bloomberg Markets are looking tentative at the start of a busy week that includes a Fed policy meeting and much data. The dollar faded earlier gains and stocks traded softly in the green The Federal Reserve will most likely fail to tame inflation without driving the economy into a ditch, according to the results of the latest MLIV Pulse survey Stocks and US equity futures wavered Monday amid concerns about a dimming economic outlook and possible recession While last week’s price action suggests that earnings downgrades have been well-priced, a more hawkish than expected Fed could spill the apple cart. Inflation data, European gas and Chinese Covid-19 developments are also a source of risk The pound’s woes run deep, and whoever becomes 10 Downing Street’s newest resident will inherit a maelstrom of economic problems A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly lower with the tech sector in the region hit following the Stateside sectoral performance.    ASX 200 saw the gains in its Metals & Mining sector offset by a selloff in Tech. Nikkei 225 underperformed following the JPY strength seen on Friday, whilst the KOSPI outpaced peers. Hang Seng was lower following reports China is said to be mulling categorising US-listed Chinese firms into three groups based on the sensitivity of data held by the firms, but the property sector outperformed amid reports that China is planning to set up a real estate fund. Shanghai Comp was also softer but monkeypox-related stocks soared after the WHO declared monkeypox a global health emergency. Top Asian News China is reportedly imposing COVID "closed loops" on major Shenzhen companies which include Foxconn (2354 TW), BYD (1211 HK), CNOOC (0833 HK) and Huawei (002502 SZ), via Bloomberg. China is said to be mulling categorising US-listed Chinese firms into three groups based on the sensitivity of data held by the firms, according to FT sources. Neither the EU nor China believes that conditions are ripe for the implementation of the China-EU Comprehensive Investment Agreement, according to Chinese sources cited by SGH Macro. China reportedly plans to set up a real estate fund worth up to USD 44bln, according to REDD cited by Reuters. Hong Kong is reportedly planning to cut hotel quarantine times, according to Sing Tao Daily. The Sakurajima volcano on Japan's western major island of Kyushu has erupted with the alert level raised to 5 - the highest, according to Sky News. No damage has been reported but volcanic stones could be seen raining down up to 1.5 miles away from the site, according to NHK. China’s securities regulator said in a statement it has not researched a plan for a three-tiered system to help Chinese companies avoid US delisting, according to CNBC. European bourses are firmer across the board as the initially cautious tone amid soft-Ifo and weekend developments dissipated amid USD-downside and constructive Kremlin remarks; Euro Stoxx 50 +0.3%. US futures are modestly firmer, ES +0.5%, as we kick off the busiest week of earnings for Q2 and in the run-up to the FOMC. Tesla (TSLA) discloses a USD 170mln impairment loss resulting from changes to the carrying value of Bitcoin during H1 (ending June 30th). Increases FY22-24 CapEx to USD 6-8bln/yr (prev. 5-7bln). Top European News Italy's far-right Brothers of Italy party is reportedly struggling to find ministerial candidates, according to The Times. A survey by DIHK of 3,500 firms in Germany found that 16% are scaling back production or partially pausing business operations amid high energy prices, via Reuters. Fitch affirmed Hungary at "BBB"; outlook Stable; affirmed Ireland at "AA"; outlook stable. Central Banks ECB's Lagarde said the ECB will raise rates for as long as it takes to bring inflation back to target, according to an interview via Funke Mediengruppe. ECB's Nagel said it is better to start with a bigger hike and is confident that ECB's TPI would survive legal challenges, according to Handelsblatt. He added that future rate hikes are to depend on data, and we still see positive growth in 2022 and 2023. He said TPI is to be used in exceptional circumstances. ECB's Holzmann said the ECB may accept a "light recession" if the outlook for CPI rises, according to an interview via ORF. Holzmann said the ECB is to consider the economic situation before another big hike and said economic growth is slowing and that has brought in caution. ECB's Kazaks says large interest rate hikes may not be over; too weak EUR is a "problem". The hike in September needs to be quite "significant" and should be open to larger hikes. BoJ's Takata (new member) says the BoJ is able to keep monetary policy easy, but are facing new challenges such as dwindling bank margin and impact on market function. BoJ's Tamura (new member) says Japan may soon see positive cycle commence, with wages increasing with inflation. If this occurred, exit from easy policy would become focus of discussions. FX DXY down again ahead of the Fed on Wednesday as risk appetite recovers broadly, index slips further from 107.00 to 106.240. Euro underpinned by hawkish ECB commentary and supportive Russian gas supply vibe to the extent that bleak German Ifo survey findings are shrugged off, USD/USD probes 1.0250 where hefty option expiry interest sits (1.86bln). Aussie derives traction from spike in iron ore prices, AUD/USD through 0.6950 and towards circa 1bln option expiries at 0.7000 strike. Franc and Yen underperform as bond yields rebound firmly from recent lows, USD/CHF around 0.9625 and USD/JPY 136.00+ vs Friday lows of 0.9600 and 135.57. Yuan welcomes PBoC notice of recovery in support of cultural and tourism sectors plus reports of Chinese real estate fund, USD/CNH and USD/CNY both sub-6.7500 compared to highs at 7.7667 and 6.7577 respectively. Lira laments deterioration in Turkish manufacturing confidence, USD/TRY just shy of 17.8400. AUD/USD -- Although spot rally stalled at 50-DMA, additional attempts can’t be ruled out amid bullish momentum. That said, further resistance at 0.6996, June 20 high should be respected EUR/USD -- Needs to close above 38.2% Fibonacci to put in a short-term low. Otherwise further visits below parity remain in play USD/JPY -- Close below ascending channel support speaks to further losses, which look to be corrective in nature NZD/USD -- A relief rally from this point would be limited to the 50% level of the June/July range, which comes in near the 0.6316, 50-day moving average Fixed Income Debt futures flip then flop in choppy fashion amidst hawkish ECB rhetoric and encouraging news from Russia on EU gas supplies. Bunds rebound to 154.86 before retreat to 153.78, Gilts recoil from 117.48 to 117.02 and 10 year T-note within a 120-02+/119-21 range Downbeat German Ifo survey and mixed UK CBI industrial orders vs business optimism largely ignored 2 year note supply looms and may be interesting as a gauge of investor demand ahead of the Fed Commodities Crude benchmarks began the session on the back foot, amidst the generally cautious APAC mode where participants were digesting multiple updates including Russia/Ukraine, Nord Stream, China/US and reiterations from Biden. However, a seeming USD-driven move lifted the benchmarks back towards session highs amid a concerted risk move following Kremlin commentary. US President Biden said gasoline prices are still too high and is working to make sure gasoline prices move with oil prices and said companies should use profits to boost output, according to Reuters. LME will not ban Nornickel's metal as the Russian firm is not under UK sanctions, according to Reuters sources. Chicago wheat, corn and soybean futures rose at the open, possibly on the back of reports that the Ukrainian port of Odessa was hit by Russian missiles less than 24 hours after the signing of the grains agreement in Turkey. Malaysia's Commodities Minister said crude palm oil prices are likely to remain weak for most of Q3 2022 as Jakarta lifts the exports levy; but prices are expected to be higher in Q4 amid the resumption of Indonesia's palm oil export levy, via Reuters. Spot gold has found support from the declining USD, lifting to USD 1733.70/oz, though upside is capped by the broader risk tone with the yellow metal yet to test Friday’s USD 1738.99/oz best. US Event Calendar 08:30: June Chicago Fed Nat Activity Index, est. -0.03, prior 0.01, revised -0.19 10:30: July Dallas Fed Manf. Activity, est. -22.0, prior -17.7 DB's Jim Reid concludes the overnight wrap I've never been to a wedding before where there is not a nervous bride or groom worried about what scandal might be dredged up about the groom in the speeches. However that changed at my colleague Henry's wedding on Saturday as I couldn't find anything incriminating about him from anyone. And boy did I ask. The nearest I got was that maybe he may have hit someone with a cricket bat once and it might have been an accident. Overall, a wonderful and wholesome wedding. Congratulations to my co-author Henry and his lovely wife Beth. If last week was all things European (Gas, Italy and the ECB), this week mostly belongs to the US with the highlight being the FOMC concluding on Wednesday. Unless we hear otherwise in a newspaper, they are expected to raise rates 75bps, but we’ll go through some of the nuances below. An important US Q2 GDP number on Thursday will tell us whether we’re in a technical recession or not (DB at -0.6%, Atlanta Fed tracker -1.6%). Expect lots and lots of headlines if we are. In case you thought it was safe to take your eye off Europe though, be warned that Thursday and Friday sees multiple Q2 GDP and CPI releases. Don’t forget as well that Putin has suggested that if the turbine is not back early this week then gas flow may fall to 20% capacity even though originally this turbine wasn’t expected to be needed until September. So watch out for gas politics. Elsewhere we have US durable goods (Wednesday), consumer confidence numbers (tomorrow), spending and income data (including the important core PCE deflator), and final consumer confidence numbers with the important revisions to inflation expectations to round out a big macro week on Friday. The micro will also be significant with 166 S&P 500 and 197 Stoxx 600 companies reporting. The full day by day calendar will appear at the end as per usual for a Monday but we’ll spend most of time previewing the Fed before we briefly review Asia and last week. Our economics team expect +75bps this week (to 2.375%) followed by +50bps hikes in September and November, with a further +25bps in December until a terminal rate of 4.1% is reached which is notably above ever lower market pricing of 3.3%. There won’t be new economic projections in this meeting so all focus will be on how the Fed guides us in a world where no-one should really believe central bank forward guidance anymore as it’s proved very unreliable over the last year. However the market will still devour clues as to whether the committee are leaning towards 50 or 75 for September. To be fair there are two CPIs before then so it’s likely the Fed don’t really know at the moment. In terms of the press conference, it will be interesting to see how Powell navigates the line between tackling inflation and supporting growth. The market is increasingly pricing a more dovish pivot at some point early in 2023 so all eyes on how firm Powell is that inflation is the number one priority or whether he looks set to blink on growth weakness. Turning to corporate earnings, it will be a busy week filled with results from the BigTech, oil majors and key consumer-focussed companies. Starting with the former, Microsoft, Alphabet (tomorrow), Meta (Wednesday), Apple and Amazon (Thursday) all report. Notable hardware tech firms reporting include NXP Semiconductors (today), Texas Instruments (tomorrow), SK Hynix, Qualcomm, Lam Research (Wednesday), Samsung, Intel (Thursday) and Sony (Friday). In commodities, oil majors Shell, Total Energies (Thursday), Exxon and Chevron (Friday) will be among the largest companies reporting. Utilities will be in focus too amid energy concerns in Europe, with results due from Iberdrola (Wednesday), Enel, EDF and EDP (Thursday). Finally, key players in materials like Rio Tinto (Wednesday), Vale and Anglo American (Thursday) will also report. Industrial highlights include Raytheon Technologies (tomorrow) and Honeywell (Thursday). In healthcare, Pfizer, Merck and Sanofi (Thursday) will release. Major automakers releasing include General Motors (tomorrow), Mercedes-Benz, Ford (Wednesday) and Volkswagen (Thursday). In staples and food, the spotlight will be on Coca-Cola, McDonald's, Unilever and Mondelez (tomorrow), Kraft Heinz (Wednesday), Nestle and AB InBev on Thursday and Procter & Gamble and Colgate-Palmolive on Friday. Asian equity markets are slipping at the start of a key week as concerns about a global economic slowdown is sapping risk appetite in the region. The Hang Seng (-0.97%) is the largest underperformer amid a drop in Chinese listed technology stocks with the Nikkei (-0.77%), Shanghai Composite (-0.71%) and CSI (-0.63%) also trading in negative territory. Elsewhere, the Kospi (+0.50%) is bucking the trend. Outside of Asia, stock futures in the DM world are edging lower in the US with contracts on the S&P 500 (-0.15%) and NASDAQ 100 (-0.15%) slightly weaker. DAX futures (-0.87%) are catching down to a weaker US close on Friday. Elsewhere, Oil prices gave up earlier gains with Brent futures now -0.54% down at $102.64/bbl and WTI futures (-0.63%) at $94.10/bbl as I type. Recapping last week now and we saw another major week for news-flow and volatility. The ECB surprised markets with a 50bp hike only for lacklustre data and political risks to send yields lower over the course of the week. The +50bps from the ECB came alongside their new anti-fragmentation tool, the Transmission Protection Instrument (TPI). One wonders whether central banks will eventually run out of letters for all their bailout vehicles and have to create a new alphabet. In terms of the TPI, markets were skeptical about its parameters, ultimately leaving 10yr BTP spreads +13.9bps wider to German bunds over the week. However maybe it would have been hard to rally in a week where the resignation of Prime Minister Draghi eventually proved irreversible thus exposing the country, and Europe, to fresh elections and the prospects of populists in power again. The turn in growth and political sentiment left year-end 2022 ECB policy pricing only +3.0bps higher over the week. Most of that action took place on Friday after poor PMIs, when 2yr bunds fell -22.3bps, bringing them -1.4bps lower on the week. The declines were larger further out the curve, driving a recessionary signaling flattening, with 10yr bunds -10.2bps lower on the week, and -19.2bps on Friday alone. The back-and-forth energy brinksmanship left European natural gas futures a marginal +0.99% higher on the week, with some larger intraweek swings. The fact that gas went back to pre maintenance 40% capacity was a positive but Germany (and much of Europe) lives day-by-day to see what Putin does next on gas supplies. The US certainly saw a rolling over of growth expectations towards the end of last week, where a combination of poor business optimism, increasing jobless claims, and a large services PMI miss (47.0 versus expectations of 52.7) drove yields lower as investors priced in an easier Fed policy path. 2yr Treasuries fell -15.2bps (-11.7bps Friday) while 10yrs were -16.5bps lower (-12.bps Friday), driven by a -14.7bp decline in real yields given the easier Fed policy path (-16.7bps Friday). The parallel shock left 2s10s little changed, but still deeply inverted at -22.bps, closing inverted for its 14th day in a row. Terminal fed funds retreated to around 3.3% from 3.5% the week before, all setting the stage for a big FOMC this week when inflation is still raging. This morning in Asia, yields on 10yr USTs have edged +2.91bps higher to 2.78% as I type. This is after touching 3.08% immediately after the ECB less than 48 business hours ago. Easier expected policy proved a boon to equity prices, where the STOXX 600, DAX, and CAC climbed +2.88% (+0.31% Friday), +3.02% (+0.05% Friday), and +3.00% (+0.25% Friday), respectively. In the US, easier policy pushed equities higher as well, through a back-and-forth positive/negative packed earnings schedule, ultimately bringing the S&P 500 +2.55% higher (-0.93% Friday). Given the easier policy path, tech and mega-caps outperformed over the week, with the NASDAQ up +3.33% (-1.87% Friday) and the FANG+ up +5.02% despite a large -2.94% drawdown Friday. After all that no rest this week in a busy week with holidays likely to reduce liquidity.   Tyler Durden Mon, 07/25/2022 - 08:01.....»»

Category: personnelSource: nytJul 25th, 2022

Futures, Oil Jump As Record Dollar Rally Fizzles

Futures, Oil Jump As Record Dollar Rally Fizzles US futures and European stocks advanced, shaking off data that showed China’s economy expanded slowest pace since the initial 2020 Wuhan outbreak amid pervasive lockdowns... ... while the dollar’s record surge stalled at the end of a week in which markets have been whipsawed by shifting expectations for monetary tightening by the Federal Reserve and worries over global economic growth. S&P futures traded at session highs, rising 0.38% or 14 points to 3807.50 signaling a higher open for US stocks after Wall Street closed with a small drop as investors dialed back expectations of how aggressively the Fed will hike interest rates to combat inflation. Europe's Estoxx50 gained 1% in quiet trading while Asian stocks closed mixed after lower-than-forecast China GDP data. Oil reversed recent losses which briefly dragged it below the 200DMA, and was also near session highs, up 3% even as WTI is poised to end the week below $100 a barrel for the first time since April.  Commodity metals remained under pressure, with copper touching below $7,000/t, its lowest level in 20 months, as growth data from China fueled concern around the demand outlook for commodities while gold tested support at $1,700/oz. Treasuries rose and the the yield curve between two-year and 10-year maturities remained inverted, something viewed as recession signal. The Bloomberg Dollar Spot Index dipped from a record high. In premarket trading, Wells Fargo dropped after missing analysts’ second-quarter profit estimates, adding to worries about the outlook for corporate profits after disappointing results yesterday from JPMorgan Chase & Co. and Morgan Stanley. Here are some other notable premarket movers: Pinterest (PINS US) shares surge as much as 16% in premarket trading after the Wall Street Journal reported that activist investor Elliott Management has acquired a stake in the social- media company. Codexis (CDXS US) tumbles 21% in premarket trading after the enzyme engineering company cut its sales guidance for the year and reported preliminary quarterly revenue that trailed the average estimate. Vonage (VG US) rises 7% in premarket trading after Ericsson receives all the necessary approvals from regulators to buy the cloud-based communications provider. Solar stocks could be active on Friday after Senator Joe Manchin told Democratic leaders he wouldn’t support new spending on climate measures or tax increases. First Solar (FSLR US) falls 2% in premarket trading. Investors are evaluating how hawkish the Fed must be to curb inflation and the likely toll on the economy. Bets on a one-percentage-point July rate hike have been scaled back after the latest commentary pointed toward 75 basis points; a retail sales miss in this morning's data should take a 100bps rate hike off the table. “It seems most market operators are buying the news after selling the rumor of more monetary tightening brought by a higher US CPI,” said Pierre Veyret, a technical analyst at ActivTrades. Investors now expect a 0.75-1% rate hike from the Fed at the end of the month, he said adding that the tightening cycle is projected to end with the benchmark rate at about 3.2% in 2023, with monetary policy then seen as easing to combat slower economic conditions. The pace of monetary tightening along with ebbing liquidity still threatens to stir more market volatility after steep losses for stocks and bonds in 2022. In his latest comments, Fed Governor Christopher Waller backed raising rates by 75 basis points this month, nixing Nomura's base case of a 100bps rate hike, though he said he could go bigger if warranted by the data. St. Louis Fed President James Bullard echoed some of those comments, saying he favored hiking by the same amount. “We need liquidity to dry up in order to reduce inflation,” Erin Gibbs, chief investment officer at Main Street Asset Management, said on Bloomberg Radio. “It’s a challenge, it’s a difficult situation, transition. I don’t envy the Federal Reserve, but we’ve known there has been too much money out there and that’s why we’re here in this position.” In Europe, the Stoxx 50 rallied 1.2%. DAX outperforms adding 1.7%. Autos, energy and retailers are the strongest-performing sectors, while luxury stocks got hit after data showed China’s economy grew at the slowest pace since the country was first hit by the coronavirus outbreak two years ago. LVMH led the declines in European luxury stocks while Richemont and Burberry slide as China’s Covid Zero policy weighs on results. Louis Vuitton owner LVMH down 2.2%, while Birkin handbag maker Hermes and watch maker Swatch fall 1.1% and 3.1%, respectively, as China is a key market for luxury houses. Italy’s benchmark index rallied after the country’s president rejected an offer from Mario Draghi to resign as prime minister. Here are the biggest European equity movers: European automakers and car-parts suppliers lead gains in Europe with the Stoxx 600 Autos sub-index up as much as 3.8%. BofA analysts say current sector concerns are overdone. Uniper gains as much as 12% on Friday as Goldman Sachs upgraded the stock and progress was said to be made on its rescue package. Fortum, which owns 75% of Uniper, up 3.4%. Fevertree shares fall as much as 33%, the most on record, after the high-end tonic maker cut its outlook for the year. RBC said the profit warning raises questions about the company’s pricing power and long-term earnings potential, while UBS pointed to concerns about the “visibility on 2022 and beyond.” Burberry shares drop as much as 7%, the most since March 4, after the British fashion brand surprised investors by reporting a weak 1Q in the Americas. The operating environment in China remains “extremely volatile,” according to Morgan Stanley. Richemont shares fall as much as 6%, the most since May 20, with the 1Q sales beat not enough to quell investor concern over the broader macro-economic backdrop, including what Citigroup calls an “uncertain recovery in China.” TomTom shares gained as much as 9.8%, most since Feb. 7, after company reported “satisfactory results given challenging circumstances,” writes ING. Hapag-Lloyd shares drop as much as 7.1% after Morgan Stanley cuts its recommendation to underweight from equal-weight on expectations that demand for containers will decline in 2023. Direct Line shares rise as much as 3.6% following a 12% drop for the motor insurer in the prior session. Berenberg upgrades its rating to buy, saying the decline has created an opportunity, while JPMorgan cuts its ratings on both Direct Line and peer Admiral. Rio Tinto shares fall as much as 2.9% in London after the miner’s 2Q production report, with the company noting headwinds from a global economic slowdown and China’s Covid outbreaks. Aston Martin shares jump as much as 28%, reversing an early decline, after the luxury car-maker announces a funding package. Friday’s gain is the biggest since May 2020. Earlier in the session, Asian stocks declined as renewed fear of a crackdown on enterprises battered Chinese internet names while traders assessed the market impact from weaker-than-expected China growth data and corporate earnings.  The MSCI Asia Pacific Index fell as much as 0.6%, on track for a weekly decline. Alibaba dragged down the Asian benchmark and the Hang Seng Tech Index following a report that said some company executives were summoned for talks by authorities in Shanghai in connection with the theft of a vast police database. All but two sectors slipped.  Stocks in China declined after data showed that the world’s second-largest economy grew 0.4% in the second quarter, the slowest pace since the country was first hit by the coronavirus outbreak two years ago. While the lower-than-expected expansion extended hopes that Beijing would maintain its easing stance, the latest figure puts its GDP target out of reach. According to Jack Siu, Greater China chief investment officer at Credit Suisse, the government’s current fiscal stimulus on tax rebate and the front loading of special purpose bonds issuance should bring 2022 GDP to 4.8%. READ: Fresh Scrutiny of Alibaba Sends China Tech Stocks Into Tailspin “While disappointing growth data gave views that the current easing stance would be maintained, traders are waiting for the government’s further response as banks, property and other sectors are hit by regulations and growth concerns,” said Kim Kyung Hwan, a Chinese equity strategist at Hana Financial Investment. Asian stocks are poised for their worst week in about a month amid worries about resurging virus cases in China and a possible global recession. Central banks in the region and elsewhere have been tightening their policy to curb high inflation, with decisions by Singapore and the Philippines surprising investors earlier in the week. Japan’s Nikkei 225 rose as the yen held near a fresh 24-year low, remaining close to 140 per dollar.  The Nikkei 225 advanced 0.5% to 26,788.47 at the 3 p.m. close in Tokyo, while the Topix index was virtually unchanged at 1,892.50. Out of 2,170 shares in the index, 745 rose and 1,334 fell, while 91 were unchanged. “The yen’s depreciation to 139 yen provided support, but there is a limit to that,” said Mamoru Shimode, chief strategist at Resona Asset Management. In Australia, the S&P/ASX 200 index fell 0.7% to close at 6,605.60, dragged lower by miners and energy stocks as commodities from iron ore to copper declined. Pendal was the worst performer after reporting net outflows for the third quarter of A$4.2 billion. Iron ore miners dropped on weaker prices for the steelmaking ingredient. Goldman analysts also cut their rating on peer BHP, while Rio Tinto warned of headwinds emerging from a global economic slowdown and China’s Covid-19 outbreaks. In New Zealand, the S&P/NZX 50 index fell 0.6% to 11,122.61. In FX, the Bloomberg Dollar Spot Index slumped with AUD and NZD the weakest performers in G-10 FX, while CHF and SEK outperform. The euro held above parity, rising to session highs as US traders walked in. Sterling hovered near a two-year low against the US dollar, which remains broadly supported by demand for the safe-haven greenback. Markets will be keeping an eye on a debate between UK Conservative party candidates later in the day for a steer on who could become the country’s next prime minister. The Aussie weakened for a second day after Westpac trimmed its forecast for RBA rate hikes, and iron-ore prices tumbled. The yen rose from a 24-year low as risk sentiment was subdued amid weak Chinese economic data and concerns over aggressive policy tightening in the US. In rates, Treasuries rose, led by the belly, while gilts jumped at the open and bunds extended gains. Treasuries were slightly richer across the curve with front-end lagging, mildly flattening 2s10s and 2s5s spreads. Yields richer by 2bp to 3bp across the curve with 10-year around 2.93%, trading broadly inline with bunds and outperforming Italian bonds by 4bp. Peripheral spreads widen to Germany with 10y BTP/Bund adding 6.5bps to 213.4bps. Italian bonds yields rose at the front end of the curve as political uncertainty prevailed: indeed, the focus remains on Italian bonds after President Sergio Mattarella rejected Prime Minister Mario Draghi’s resignation late Thursday. US session includes a packed data slate and three Fed speakers before blackout ahead of July 27 policy meeting.  In commodities, crude futures rose. WTI trades within Thursday’s range, adding 0.3% to trade near $96.05. Brent rises 0.7% near $99.83. Metals remain under pressure, with copper touching below $7,000/t and gold testing support at $1,700/oz. To the day ahead now, and data releases include US retail sales, industrial production and capacity utilisation for June, along with the Empire State manufacturing survey for July, and the University of Michigan’s preliminary consumer sentiment index for July. Central bank speakers include the ECB’s Rehn, and the Fed’s Bostic and Bullard. Earnings releases include UnitedHealth Group, Wells Fargo, BlackRock and Citigroup. Finally, G20 finance ministers and central bank governors will be meeting in Indonesia. Market Snapshot S&P 500 futures little changed at 3,795.50 STOXX Europe 600 up 0.9% to 410.06 MXAP down 0.5% to 153.77 MXAPJ down 0.8% to 505.79 Nikkei up 0.5% to 26,788.47 Topix little changed at 1,892.50 Hang Seng Index down 2.2% to 20,297.72 Shanghai Composite down 1.6% to 3,228.06 Sensex up 0.1% to 53,490.31 Australia S&P/ASX 200 down 0.7% to 6,605.57 Kospi up 0.4% to 2,330.98 German 10Y yield little changed at 1.11% Euro little changed at $1.0026 Gold spot down 0.4% to $1,702.69 US Dollar Index little changed at 108.58 Top Overnight News from Bloomberg China’s economy grew at the slowest pace since the country was first hit by the coronavirus outbreak two years ago, making Beijing’s growth target for the year increasingly unattainable as economists downgrade their forecasts further. The 0.4% expansion in GDP reported for the second quarter, when dozens of cities including Shanghai and Changchun imposed lockdowns, was the second weakest ever recorded With Italy on the brink of chaos, Mario Draghi has less than a week to forge some difficult compromises with the populists in his government that have reluctantly backed him for the past 18 months The ECB will unveil an unlimited bond-buying tool next week to help markets better adjust to steeper and faster interest-rate increases than previously thought, economists surveyed by Bloomberg say Copper is heading for its steepest weekly decline since the early months of the coronavirus pandemic, with fears mounting of a recession that could destroy global demand for industrial commodities A more detailed looked at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed after the 100bps Fed rate hike bets unwound and with headwinds from China's GDP miss. ASX 200 was dragged lower by the mining sector amid losses in Rio Tinto shares despite an increase in its quarterly output and shipments, as it also warned of headwinds to its business and higher costs. Nikkei 225 swung between gains and losses but was ultimately higher intraday amid recent currency weakness and with index heavyweight Fast Retailing boosted by strong 9-month results. Hang Seng and Shanghai Comp. were indecisive after disappointing Chinese growth data which showed weaker than expected GDP and Industrial Production, although Retail Sales surprisingly expanded and the Unemployment Rate declined. Top Asian News PBoC injected CNY 100bln via 1-year MLF vs CNY 100bln maturing with the rate kept at 2.85%. China's Foreign Minister Wang also commented that China-Australia relations currently face challenges and opportunities, while he added that China is willing to recalibrate relations in the spirit of mutual respect, according to Reuters. China NBS official said downward pressure on the domestic economy increased substantially during Q2 and that the foundation for a sustained economic recovery is not solid, while the economy is facing shrinking demand and supply shock, according to Reuters. China's Huaiyuan county has announced a lockdown amid COVID, according to local TV; 151 prelim cases were reported on July 14th, according to CCTV. China Traders Pile Into Carry Trades While Easy Money Lasts Telkom Indonesia Jumps Most in Seven Months on 2Q Bet MTN in Talks to Buy Rival Telkom in Cash & Shares: M&A Snapshot SK Hynix Is Said to Weigh Slashing Spending by 25% in 2023 European bourses are firmer across the board, as initial jittery performance dissipated with participants looking to US data and Fed speak. US futures are in the green, but only modestly so, and have been relatively contained awaiting further guidance from upcoming Fed  officials on the 75bp/100bp discussion. UnitedHealth Group Inc (UNH) Q2 2022 (USD): Adj. EPS 5.57 (exp. 5.20/4.98 GAAP), Revenue 80.30bln (exp. 79.68bln). BlackRock Inc (BLK) Q2 2022 (USD): EPS 7.06 (exp. 7.90) Revenue 4.53bln (exp. 4.65bln). AUM 8.49tln (exp. 8.86tln). Net inflows 89.57bln (exp. 116.78bln). Top European News ECB's Rehn says ECB likely to go 25bps in July and 50bps in September. Note, the ECB is in its quiet period at the moment. Burberry Upbeat on Outlook But Concerns About China Remain Aston Martin Stock Jumps as Carmaker’s Fundraising Calms Nerves Euro Extreme Bearish Bets Have Room to Grow on NatGas Shut Off UBS Wealth Sees 15% Downside for European Stocks in Recession FX Dollar in need of consumption or production boost after two Fed hawks lean against 100bp hike expectations that were becoming embedded for forthcoming FOMC meeting, DXY retreats through 108.500 after setting new 2022 peak at 109.290 yesterday. Franc outpaces fellow majors as yields retreat and curves re-steepen, while retaining bid against Euro, USD/CHF sub-0.9800 vs high near 0.9900 on Thursday, EUR/CHF depressed largely under 0.9850. Aussie underperforms as Chinese GDP data disappoints and iron ore dumps in response; AUD/USD top heavy above 0.6750, AUD/NZD reverses around 1.1000 handle. Loonie pares declines from new y-t-d low vs Greenback as crude prices stabilise, USD/CAD close to 1.15bln option expiries at the 1.3100 strike compared to 1.3200+ high yesterday. Euro attempts to consolidate back on a par with Buck after fleeting if not false break below. Yuan nurses losses after further depreciation on growth concerns and latest Covid lockdowns -Usd/Cnh and Usd/Cny slip from overnight peaks circa 6.7840 and 6.7690 respectively. Fixed Income Bonds back off following further retracement from lows on less hawkish Fed vibes that prompted bull re-steepening Bunds sub-153.00 vs new 153.80 WTD peak, Gilts under 116.00 from 116.39 and 10 year T-note midway between 118-29+/118-13 stalls BTPs stage impressive recovery to 124.30 from 121.96 trough on Thursday awaiting next chapter in Italian political drama Commodities Crude benchmarks are firmer, tracking sentiment, but cognizant of the Saudi-Biden meeting though an immediate production increase is not anticipated; WTI +USD 0.20/bbl. The US is not expecting Saudi Arabia to immediately boost oil production, US eyes the next OPEC+ meeting, according to a US official cited by Reuters. UAE says it wants more stable oil markets, will abide by OPEC+ decision; idea of a confrontational approach re. Iran is not something they buy into, via Reuters. Spot gold remains pressured near, but yet to breach, the USD 1700/oz handle; despite a pull-back in the USD as sentiment turns incrementally more constructive. US Event Calendar 08:30: June Import Price Index YoY, est. 11.4%, prior 11.7%; MoM, est. 0.7%, prior 0.6% June Export Price Index YoY, est. 19.9%, prior 18.9%; MoM, est. 1.2%, prior 2.8% 08:30: June Retail Sales Advance MoM, est. 0.9%, prior -0.3% June Retail Sales Ex Auto MoM, est. 0.7%, prior 0.5% June Retail Sales Ex Auto and Gas, est. 0.1%, prior 0.1% June Retail Sales Control Group, est. 0.3%, prior 0% 08:30: July Empire Manufacturing, est. -2.0, prior -1.2 09:15: June Industrial Production MoM, est. 0.1%, prior 0.2%, revised 0.1% June Capacity Utilization, est. 80.8%, prior 79.0%, revised 80.8% June Manufacturing (SIC) Production, est. -0.1%, prior -0.1% 10:00: May Business Inventories, est. 1.4%, prior 1.2% 10:00: July U. of Mich. Sentiment, est. 50.0, prior 50.0; Expectations, est. 47.0, prior 47.5; Current Conditions, est. 53.7, prior 53.8 1 Yr Inflation, est. 5.3%, prior 5.3% 5-10 Yr Inflation, est. 3.0%, prior 3.1% DB's Jim Reid concludes the overnight wrap The last 24 hours have seen another major risk-off move in financial markets, with worries about a potential recession getting fresh support from a weak round of US bank earnings as we kick off the latest results season, followed by much weaker than expected Chinese GDP growth in Q2. To be honest, it was hard to find an asset class where recession signals weren’t flashing red, with yesterday seeing the S&P 500 (-0.30%) lose ground for a 5th consecutive session, peripheral bond spreads widen in Europe, and oil prices seeing their lowest intraday levels since Russia’s invasion of Ukraine began. In terms of the specific moves, equities declined across the board yesterday with the S&P 500’s losses led by energy and the more cyclical sectors. Banks were a major contributor to that, and JPMorgan (-3.49%) suffered, hitting a 20-month low after their earnings missed expectations and they announced the suspension of share buybacks, whilst Morgan Stanley (-0.39%) saw investment banking revenue down -55% on the previous year. European equities also suffered significant losses, with the STOXX 600 coming down -1.53% on the day. However, the final losses by the US close were far from where they had been at the open, with the S&P 500 recovering from intraday losses of -2.11% after the FOMC’s resident hawks walked back the prospects of a super-sized 100bps hike in July, and signalled that a 75bp increase remained preferable despite the CPI beat. Tech shares were a particular beneficiary, and the NASDAQ managed to eke out a +0.03% gain by the close as a result. In terms of the comments, Governor Waller said that “with the CPI data in hand, I support another 75-basis point increase”. However, he did say that if upcoming retail sales and housing data were “materially stronger than expected it would make me lean towards a larger hike”. And then St Louis Fed President Bullard was quoted in a Nikkei interview that he “would advocate 75 basis points again at the next meeting.” In response, futures dialled back their expectations for a 100bp move, with pricing moving down from a peak of +94bps not long before Waller’s remarks came out, to +82.5bps by the close of trade. Those remarks helped trigger a recovery among US Treasuries, with the 2yr yield falling back from an intraday high of 3.27% to end the day at 3.13%, and this morning it’s fallen further to 3.12%. Yield curves also steepened on the back of the remarks, although the 2s10s curve (+4.9bps yesterday) still remains well in inversion territory at -18.1bps as we go to press. Yields on 10yr Treasuries were up +2.6bps yesterday to 2.96%, although this morning have also fallen back to 2.94%. Today we’ll get further comments from Atlanta Fed President Bostic, St Louis Fed President Bullard and San Francisco President Daly, which will be important as today is the last day before the FOMC’s blackout period begins ahead of their next meeting, so all eyes will be on their thoughts about a 100bps move. Over in Europe, Italian assets lost significant ground yesterday amidst ongoing political turmoil in the country. Prime Minister Draghi tried to tender his resignation after the Five Star Movement boycotted a confidence vote in the Senate, saying that “The loyalty agreement that was the foundation of my government has gone missing”, but President Mattarella rejected it, and it’s uncertain what exactly will happen next. Draghi is set to address parliament next week, although early elections remain a possibility if an agreement is unable to be reached. In terms of the market reaction, Italy’s FTSE MIB underperformed all the other major European indices, with a -3.44% decline that leaves the index at its lowest level since November 2020 just before Pfizer announced their positive vaccine news. Meanwhile the spread of 10yr Italian yields over bunds widened +7.7bps to 206bps yesterday, which is their highest level in nearly a month. That theme of widening spreads was echoed on the credit side too, where iTraxx Crossover widened +22.2bps to 626bps, which is its highest level since April 2020. Yields on 10yr bunds themselves were up +3.3bps. That negative tone has persisted in Asia overnight after China’s Q2 GDP data showed economic growth slowed to just +0.4% year-on-year in Q2 (vs. +1.2% expected). On a quarter-on-quarter basis, there was even a -2.6% contraction (vs. -2.0% expected), which marks the first quarterly contraction since Q1 2020 when the Covid-19 pandemic started. The data for June alone was better however, with retail sales up +3.1% year-on-year (vs. +0.3% expected), and industrial production up +3.9% year-on-year (vs. +4.0% expected). Separately, China have reported their highest number of daily Covid-19 cases in 7 weeks, with 432 infections yesterday, of which 165 were in Guangxi province. A number of equity indices have lost ground against that backdrop, including the CSI 300 (-0.05%), the Shanghai Comp (-0.24%) and the Hang Seng (-1.19%), although the Kospi (+0.22%) and the Nikkei (+0.58%) have advanced, whilst Brent crude oil prices are back above $100/bbl. US and European equity futures are also pointing to a positive start, with those on the S&P 500 (+0.32%), the NASDAQ 100 (+0.41%) and the DAX (+0.99%) all up. Yesterday’s other data releases didn’t exactly help sentiment either, with US producer price inflation beating expectations as well at a monthly +1.1% (vs. +0.8% expected), although core inflation did fall to +0.4% (vs. +0.5% expected). That pushed the headline year-on-year PPI reading up to +11.3% (vs. +10.7% expected), and core fell to +8.2% as expected. Separately, the weekly initial jobless claims for the week through July 9 came in at 244k (vs. 235k expected), which is their highest level since November. Furthermore, the 4-week moving average of claims rose to 235.75k, which was its highest level since December. Instead, the main positive news came from the continuing claims data for the week through July 2, which fell to 1331k (vs. 1380k expected). Here in the UK, the second ballot of Conservative MPs took place yesterday as they select their next leader and the country’s next Prime minister. Former Chancellor Sunak remained in the lead with 101 votes, but trade minister Penny Mordaunt maintained her momentum with an increase to 83 votes, whilst Foreign Secretary Truss won 64 votes. There are now just 5 candidates remaining with the next ballot scheduled for Monday, and there are also a couple of TV debates taking place before then, so there’s still the potential for things to change over the weekend. To the day ahead now, and data releases include US retail sales, industrial production and capacity utilisation for June, along with the Empire State manufacturing survey for July, and the University of Michigan’s preliminary consumer sentiment index for July. Central bank speakers include the ECB’s Rehn, and the Fed’s Bostic and Bullard. Earnings releases include UnitedHealth Group, Wells Fargo, BlackRock and Citigroup. Finally, G20 finance ministers and central bank governors will be meeting in Indonesia. Tyler Durden Fri, 07/15/2022 - 07:57.....»»

Category: personnelSource: nytJul 15th, 2022

Futures, Yields, Oil And Gold Slide As German Confidence Plummets To 2011 Lows, Euro Hits Parity

Futures, Yields, Oil And Gold Slide As German Confidence Plummets To 2011 Lows, Euro Hits Parity US index futures, global markets, Treasury yields, bitcoin and oil all fell on Tuesday as the dollar continued its relentless ascent to  levels just shy of the March 2020 global crash record high... ... highlighting pervasive trader unease about the economic outlook as high inflation and a looming recession are set to unleash a catastrophic global recession coupled with a worldwide dollar shortage, now with the added boost of China’s renewed struggles with Covid. S&P and Nasdaq 100 emini futures dropped about 0.5% each having slumped as much as 0.9% earlier, as traders brace for an ugly Q2 earnings season which may provide clues on how companies are weathering inflation and recession concerns. The US 10-year Treasury yield falls to about 2.91% amid a broad-based flight to safety; bonds also rallied in Europe. German bonds surged, sending the benchmark 10-year yield to the lowest since May, after data showed investor confidence plunged to a 2011 low. As shown above, the dollar rose just shy of record highs last seen at the height of the 2020 market panic over Covid and the yen strengthened, underlining investor caution. The euro meanwhile briefly touched parity (technically, it was 1.00003 but that's semantics for purists who have nothing better to do) hammered by the region’s energy crisis and acute recession fears. Dollar strength will not only “affect this quarter’s earnings, but more likely it’s going to affect the revenue generation outlook for the next couple of quarters and that, I think, is a big problem,” Kimberly Forrest, founder and chief investment officer of Bokeh Capital Partners, said on Bloomberg Radio. PepsiCo, one of the first major corporations to report, rose in premarket trading after lifting its revenue forecast. The soft-drinks maker said demand remained robust despite inflation, though it expected headwinds from the strong dollar. Bank stocks, meanwhile, were lower in premarket trading amid a broader slump in risk assets. Cryptocurrency stocks drop in premarket trading as Bitcoin drops below $20,000 in its fourth straight day of declines amid a stronger dollar. In corporate news, LoanDepot said it will cut about 2,000 additional staff by the end of the year. Here are the other notable premarket movers: Gap (GPS US) shares fall 6.4% in premarket trading after the apparel retailer fired CEO Sonia Syngal and said it expects rising costs and deepening discounts to erase this quarter’s operating profit. American Express (AXP US) shares are down 2.2% in premarket trading after Morgan Stanley cut the recommendation on the stock, as well as on Capital One (COF US), to equal- weight from overweight as inflation takes a larger share of household disposable incomes. STORE Capital (STOR US) shares fall 3.3% in premarket trading after Morgan Stanley downgrades it to underweight from equal-weight and cuts National Retail Properties (NNN US) to equal-weight from overweight, saying that US triple net REITs could see a headwind from the rising cost of capital. Ginkgo Bioworks (DNA US) shares are up 9% in premarket trading after exchange-traded funds managed by Cathie Wood’s Ark Investment Management bought 860,480 shares in the company. Meanwhile, the latest Fed commentary highlighted both the central bank’s hawkishness and the risks that come with aggressive interest-rate hikes. Fed Bank of Atlanta President Raphael Bostic said the US economy can copewith higher interest rates and repeated his support for another jumbo move this month. Fed Bank of Kansas City President Esther George, who dissented last month against the central bank’s 75 basis-point rate increase, cautioned that rushing to tighten policy could backfire. European bourses are also deep in the red. Euro Stoxx 50 falls 0.7% with the Stoxx Europe 600 sliding for a second day, though it pared the decline with utilities outperforming as EDF jumped after a report that the French government will pay a premium to take control of the electricity company. The DAX lags, dropping 0.8%. Banks, travel and autos are the worst performing sectors. German bonds surged, sending the benchmark 10-year yield to the lowest since May, after data showed investor confidence plunged to a level not seen since the sovereign debt crisis in 2011. Asian stocks fell to a new two-year low as China’s technology shares continued to face selling pressure amid regulatory jitters and a resurgence of Covid cases in the nation.  The MSCI Asia Pacific Index slipped as much as 1.5%, dragged by tech and consumer discretionary shares. The Hang Seng Tech Index fell 11% from a June high to enter a technical correction as regulatory fines for the country’s tech giants continued to damp sentiment. In China, investors are concerned more Covid lockdowns may lie ahead as Beijing continues with a strategy of mass testing and mobility curbs. Chinese benchmarks took a hit from renewed lockdown fears from a fresh virus outbreak in Shanghai. Japan and Taiwan were among the region’s worst performing markets on lingering concerns of a global economic slowdown. Market participants are hoping that key US inflation data due Wednesday and China’s GDP figures on Friday will provide clues on the global economy’s direction. Asia’s stock benchmark has slumped 20% this year amid worries about higher interest rates and the prospect of an economic downturn.  Investor sentiment continued to weaken in Asia despite remaining positive in China, said Olivier d’Assier, the head of APAC applied research at Qontigo. “Within an inflationary background, hopes of continued high profit margins in developed markets can only be balanced with fears of a margin squeeze among the developing world’s supply chain.” In FX, the Bloomberg Dollar Spot Index rose a second day as the greenback was steady or higher against all of its Group-of-10 peers apart from the yen amid rising recession concerns. The euro fell to a low of 1.00003 per dollar but struggled to go below parity. Options traders are still preparing for life below this psychological support level. The pound lagged all of its Group-of-10 peers. UK retailers reported another drop in sales, while economists see the risk of a UK recession in the next 12 months at almost 50-50. Australian and New Zealand fell gradually. Iron ore prices sank to a seven- month low, with the demand outlook dimming on fears China may again impose strict Covid-19 curbs that hurt construction activity. In rates, Treasuries were underpinned following gains for bunds and gilts after German ZEW expectations gauge dropped to -53.8 vs -40.5 estimate. Treasury yields richer by up to 7.5bp across intermediates, flattening 2s10s spread by 1.4bp on the day to -10.3bp, deepest inversion since 2007; German 10s outperform Treasuries by ~5bp, gilts by ~7bp. German 10-year yields dropped to lowest since May, dragging Treasury yields lower. German curve bull-flattens, richening 12-14bps across the back end. Gilts bull-steepen, with short-dated yields dropping over 15bps. Peripheral spreads widen to Germany with 10y BTP/Bund widening ~3bps to 199bps. In bond auctions we get a $33BN reopening of 10-year notes at 1pm ET follows good demand for Monday’s 3-year new issue, which stopped 0.5bp through. WI 10-year yield around 2.92% is ~11bp richer than June result, which tailed by 1.2bp. Crude futures decline. WTI falls ~2.5% to trade near $101.60. Base metals are mixed; LME tin falls 3.1% while LME aluminum gains 0.3%. Spot gold is little changed at $1,735/oz. Spot silver loses 1.1% near $19. Bitcoin drops over 3.5% to trade back below $20,000. Looking at the day ahead now, and data releases include the US NFIB small business optimism index for June. Central bank speakers include BoE Governor Bailey, the Fed’s Barkin and the ECB’s Villeroy. Finally, earnings releases today include PepsiCo. Market Snapshot S&P 500 futures down 0.6% to 3,835.50 STOXX Europe 600 down 0.4% to 413.46 MXAP down 1.3% to 154.65 MXAPJ down 1.3% to 508.44 Nikkei down 1.8% to 26,336.66 Topix down 1.6% to 1,883.30 Hang Seng Index down 1.3% to 20,844.74 Shanghai Composite down 1.0% to 3,281.47 Sensex down 0.6% to 54,067.35 Australia S&P/ASX 200 little changed at 6,606.28 Kospi down 1.0% to 2,317.76 German 10Y yield little changed at 1.16% Euro down 0.3% to $1.0008 Brent Futures down 2.1% to $104.83/bbl Gold spot up 0.2% to $1,736.88 U.S. Dollar Index up 0.43% to 108.48 Top Overnight News from Bloomnerg Investor confidence in Germany’s economy slumped to the lowest since 2011 as the country faces the growing prospect of a recession and risks mount that it’s shut off from Russian energy supplies US Treasury Secretary Janet Yellen agreed with her Japanese counterpart Tuesday that volatile exchange rates pose a risk, and pledged to consult and cooperate as appropriate A global squeeze on energy supply that’s triggered crippling shortages and sent power and fuel prices surging may get worse, according to the head of the International Energy Agency A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly negative after the weak performance across global counterparts as China's COVID flare-up and Europe's energy concerns added to the headwinds for the growth outlook. ASX 200 bucked the trend with the index kept afloat by defensives although the upside was capped by weak consumer and business confidence data. Nikkei 225 underperformed as the Japanese currency attempted to compose itself from recent rapid depreciation and with automakers pressured after Toyota flagged a potential cut to its output plan citing a chip shortage and COVID impact. Hang Seng and Shanghai Comp. were lower amid the ongoing COVD concerns which overshadowed reports that China’s authorities will increase financial support for manufacturers, as well as the recent stronger than expected aggregate financing and loans data. Top Asian News China is to lockdown Wugang city in Henan for 3 days due to 1 COVID case, according to Bloomberg. Japanese Finance Minister Suzuki said they will conduct necessary economic steps taking prices and economy into account, while he added that they are watching the FX market even more closely while working with the BoJ and will take necessary steps against the FX market with FX authorities from other nations, according to Reuters. Japanese Finance Minister told US Treasury Secretary Yellen that Japan is concerned about the rapid JPY weakening recently; watching currency markets with a sense of urgency; agreed to continue consulting in foreign exchange. European bourses are pressured in a broad China-COVID driven risk move, Euro Stoxx 50 -0.5%; alongside known concerns and a dismal ZEW. Stateside, futures are lower across the board with the NQ somewhat more choppy than peers amid pronounced rate activity this morning and on PEP earnings. Back to Europe, sectors are mixed and feature IT as the laggard while Energy is green despite benchmark pricing amid outperformance in EDF. PepsiCo Inc (PEP) Q2 2022 (USD): EPS 1.86 (exp. 1.74), Revenue 20.2bln (exp. 19.51bln). FY Revenue view 82.7bln (exp. 82.72bln) Top European News UK's Heathrow airport is imposing a capacity cap of 100k departing passengers a day, until September 11th. Beleive further action is needed now; cap means some summer journeys will be rescheduled, relocated or cancelled. Asks airline partners to stop the sale of summer tickets in order to limit the passenger impact. Former UK Chancellor Sunak confirmed his commitment to fiscal discipline and will stand firm on taxes until he has 'gripped inflation', according to FT. German ZEW Economic Sentiment (Jul) -53.8 vs. Exp. -38.3 (Prev. -28.0); ZEW Survey Expectations (Jul) -51.1 (Prev. -28.0) ZEW: current major concerns about energy supply, ECB's announced rate hikes, restrictions in China, led to a deterioration in the outlook; economic situation significantly more negative than in previous month, experts further lower their already unfavourable forecast for the next six months. Fixed Income Bonds breach recent resistance levels, with Bunds up to new July highs at 153.48 after a bleak German ZEW survey Gilts back on the 116.00 handle from a 115.04 Liffe low awaiting more comments from BoE Governor Bailey and 10 year T-note towards top of 119-03/118-09+ range pre-USD 33bn refunding leg DMO's 2032 tap well received and German Schatz covered, but results mixed overall FX Pound underperforms awaiting UK political developments as Labour Party prepares no-confidence motion against Tories; Cable on the cusp of 1.1800, while EUR/GBP rebounds over 0.8450. Euro prods parity vs Dollar before and after dire German ZEW survey, while DXY breaches 108.500 amidst broad Buck gains. Yen regroups as risk sentiment remains sour and yields retreat further, with Japan’s Finance Minister also raising concern about rapid decline, USD/JPY closer to 137.00 than 137.50+ top and Monday's 137.75 peak. Loonie and Nokkie recoil alongside crude prices, but Kiwi holds up better than Aussie ahead of anticipated 50bp RBNZ rate hike on Wednesday, USD/CAD back up near 1.3050, EUR/NOK propped around 10.2600, NZD/USD holding just above 0.6100 and AUD/USD sub-0.6750. Yuan breaks below recent range as China’s Covid situation continues to deteriorate - USD/CNH and USD/CNY probe 6.7500 and 6.7350 respectively. Commodities WTI and Brent have extended on APAC pressure as the demand-side of the equation remains sensitive to lockdowns with the OPEC MOMR and EIA STEO due. Currently, benchmarks are in relative proximity to their respective USD 101.06/bbl and USD 104.35/bbl lows. IEA's Birol said the world is in the midst of the first energy crisis and it has not seen the worst of the energy crisis, according to Bloomberg. US senior official warned that a failure to implement a proposed price cap on Russian oil with the exemption of purchases below the cap, could see oil prices increase to around USD 140/bbl, while the official added that Treasury Secretary Yellen will speak to Japanese Finance Minister Suzuki on the proposed Russian oil price cap, according to Reuters. US Department of Energy announced a contract for 14 companies to purchase crude oil from the SPR with deliveries to take place between August 16th to September 30th, according to Reuters. China's NDRC says retail prices of gasoline and diesel will be cut by CNY 360/tonne and CNY 345/tonne respectively from July 13th. US National Security Adviser Sullivan responded that there is a capacity for further steps that can be taken when questioned about oil output, according to Reuters. Spot gold is relatively resilient despite broader price action, and the yellow metal is torn between COVID-driven haven allure and the USD’s ongoing advances. US Event Calendar 06:00: June SMALL BUSINESS OPTIMISM, 89.5, est. 92.5, prior 93.1 Central Banks 12:30: Fed’s Barkin Discusses the ‘Recession Question’ Government: President Biden will meet with Mexico President Andrés Manuel López Obrador at 11:15am ET House Jan. 6 select committee will hold a hearing on the extremists involved in the assault at 1pm ET DB's Jim Reid concludes the overnight wrap It's so hot, even at 5am, that I have two fans pointing at me as I type this. Electric ones not two people that have kindly voted for me in the II survey. Never has a commute to the office and the lure of aircon been so alluring. When we renovated 3-4 years ago we considered having some aircon fitted but decided that given the cost we would forgo that for the couple of days a year where Britain sweltered. Given that this spell looks set to last a couple of weeks I may sleep in the office, especially as the kids have now broken up and are running riot at home. The heat may have also tired markets out after a mini rally so far in July. The last 24 hours has seen sentiment become more gloomy once again as investors looked forward to multiple data releases and earnings reports this week that’ll set the stage for some important central bank meetings over the next couple of weeks. The US CPI report will be the main highlight tomorrow, but we shouldn’t forget the start of the Q2 earnings season either, which will shed some light on how corporates are faring as the market narrative has flirted with the view that the US economy might already be in a recession. One bit of “good” news yesterday was the NY Fed’s long-run consumer inflation expectations series which showed a decent dip and helped encourage a big rally in bonds as the tug of war in the asset class continues. More on that later but equities didn’t get that memo as they lost ground on both sides of the Atlantic yesterday with the S&P 500 shedding -1.15% by the close of trade, in what looked like a classic risk off rotation, with only Utilities and Real Estate higher, and the latter only barely up (+0.01%). Tech stocks led the declines, with the NASDAQ down by -2.26% whilst the FANG+ index of megacap tech stocks saw an even larger -4.52% decline as all 10 companies in the index lost ground. Along with a sour risk day, mega-cap shares were probably sluggish following the news over the weekend that Elon Musk would be pulling out of his Twitter deal. Small-caps were another underperformer, with the Russell 2000 down -2.11%, whereas the Dow Jones experienced a more modest -0.52% loss. Meanwhile in Europe it was much the same story, with the STOXX 600 (-0.50%) and Germany’s DAX (-1.40%) seeing decent losses of their own. Speaking of Europe, all eyes are on what’s going to happen with the gas situation now that the Nord Stream pipeline is undergoing scheduled 10-day maintenance. European natural gas futures (-6.10%) did come down yesterday after rising for 4 consecutive weeks, thanks to the news at the very end of last week that Canada would return a turbine for the Nord Stream pipeline after their government issued a “time-limited and revocable” permit that removed it from sanctions. That said there are still significant jitters as to whether the pipeline will be turned back on again after the maintenance concludes, which meant that the Euro itself fell even closer to parity against the US Dollar. In fact, the euro closed near its weakest levels of the day at $1.0040, and has hit a fresh low of $1.0010 as we go to press as markets face up to the prospect of what a full cut-off of Russian gas would mean for the European economy. Speaking to DB's Peter Sidorov yesterday, he tells me that the ambiguity over gas may linger as even if Russia did need this turbine part to restore stronger gas flows, the technical logistics may mean it would take an extra week or two to integrate into the pipeline. So the uncertainty may linger until early August. Another factor behind the Euro’s decline recently has been the growing divergence in interest rates between the Fed (who’ve already hiked by 150bps this year) and the ECB (who haven’t even begun yet and with worries as to how far they will get). If the upcoming moves this month are in line with our economists’ (and market) expectations, then that divergence will only grow as the Fed hikes by 75bps for a second consecutive meeting, while the ECB commences the hiking cycle with a much smaller 25bps move. However, yesterday brought some more dovish news from the Fed, with Kansas City President George warning against moving too fast on rate hikes, saying that moving “too fast raises the prospect of oversteering”. That may not be too surprising given that George was the only FOMC voters to dissent from the 75bps majority last month in favour of a smaller 50bps hike. George also warned that the extra volatility the Fed injects into the market when its policy path is so uncertain may hurt Treasury market functioning, which seems like she was not a fan changing policy guidance with such short notice before the June FOMC, perhaps another reason for her dissent. Elsewhere, as discussed at the top, we also received the New York Fed’s latest Survey of Consumer Expectations for June. And whilst 1-year ahead inflation expectations hit a record high since the series began at 6.8%, 3-year ahead expectations came down from 3.9% in May to 3.6% in June, and 5-year ahead expectations fell from 2.9% to 2.8%. That newsflow along with the more general risk-off tone helped support a major rally in Treasuries, with 10yr yields falling -8.8bps to 2.99%, as both inflation breakevens and real rates fell on the day. There was also a fresh flattening in the yield curve, with the 2s10s closing in inversion territory for a 5th day running, finishing at -8.5bps, which isn’t such a good sign as a recessionary indicator, and the length of the inversion now puts it ahead of the 3-day inversion back in late-March/early April, so this is getting harder to dismiss as just a blip. Furthermore, even the Fed’s preferred yield curve indicator of the near-term forward spread flattened to just 114bps, which is something we haven’t seen since early January after peaking at 270bps on April 1. This morning yields on 10yr USTs are another -3.34 bps lower at 2.954% as I type. In Europe there was much the same pattern, with yields on 10yr bunds (-9.9bps), OATs (-10.3bps) and BTPs (-7.3bps) all moving lower. But the risk-off move meant there was a widening in peripheral spreads, and the iTraxx Crossover was another to widen (+8.6bps to 585bps), thus reversing three consecutive moves lower. The losses in US and European equities are echoing in Asian this morning. The nervousness is not being helped by news of another Covid-19 surge in China as the renewed outbreak is raising fears of more lockdowns (see below). As I type, the Nikkei (-1.68%) is leading losses across the region followed by the Hang Seng (-1.57%) and the Kospi (-1.37%). In mainland China, the Shanghai Composite and (-0.83%) and CSI (-0.74%) are also lower. Outside of Asia, equity futures in DMs point to further losses with contracts on the S&P 500 (-0.54%), NASDAQ 100 (-0.68%) and DAX (-0.71%) all weaker. Oil prices are also lower overnight as recession fears and China’s Covid curbs weigh on demand prospects. As we go to press, Brent futures are -1.46% at $105.54/bbl and WTI futures -1.68% at $102.34/bbl. Over in China, Shanghai city reported 59 new infections for Monday, above 50 for the fourth day in a row thus prompting the city authorities to another mass testing effort after finding a highly transmissible Omicron subvariant. Early morning data showed that producer prices in Japan rose +0.7% m/m in June (v/s +0.6% expected) and against a +0.1% rise in May. In the UK, the ruling Conservative party are opening nominations for the next leadership today, with voting starting tomorrow. MPs will then, through a series of voting rounds over the next week choose their favourite two candidates, from which point the party membership will make their decision and with the new PM expected to be announced on September 5. There wasn’t much data to speak of yesterday, but Italian retail sales for May grew by +1.9% (vs. +0.4% expected), and the prior month was also revised positively. To the day ahead now, and data releases include the German ZEW survey for July, as well as the US NFIB small business optimism index for June. Central bank speakers include BoE Governor Bailey, the Fed’s Barkin and the ECB’s Villeroy. Finally, earnings releases today include PepsiCo. Tyler Durden Tue, 07/12/2022 - 07:59.....»»

Category: blogSource: zerohedgeJul 12th, 2022

Worries About Scorching Inflation And A Global Slowdown Keep Investors Nervous

Uncertain outlook keeps stock markets volatile. FTSE 100 opens down 1% with miners on the back foot. Covid horror story not yet over as China lockdowns continue. Strong US jobs figures add to expectations of aggressive rate hikes. Recession warning lights blink in bond markets. Scorching Inflation “The uncertain outlook is keeping stock markets volatile […] Uncertain outlook keeps stock markets volatile. FTSE 100 opens down 1% with miners on the back foot. Covid horror story not yet over as China lockdowns continue. Strong US jobs figures add to expectations of aggressive rate hikes. Recession warning lights blink in bond markets. Scorching Inflation “The uncertain outlook is keeping stock markets volatile as worries wax and wane about scorching inflation and a global slowdown while Covid fears rear up again. Nerves are also frayed given that earnings season is also kicking off this week and US multinationals will be giving updates about how slowing consumer and businesses sentiment and rising costs may be affecting the bottom line. Q2 2022 hedge fund letters, conferences and more Find A Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now. The FTSE 100 has fallen 1% in early trade, with mining giants topping the lists of fallers. Worries are ratcheting up about the global downturn hitting demand for commodities. Iron ore prices have fallen to levels not seen since December, as stockpiles of steel build up following a slump in the Chinese property sector, while companies tread water impatient for Beijing’s promised infrastructure boost to materialise. Signs that the Covid horror story is still not quite over are rattling nerves. China has re-imposed strict rules with 30 million people back in lockdown in six cities and region, including parts of Shanghai. Residents are being urged to share heart-warming tales to make isolation more bearable, but the latest crackdown has sent a cold chill across financial markets amid worries fresh supply chain issues and weakening demand will hit, just as hopes of recovery had crept up. What’s particularly perturbing is the discovery of a new variant of Omicron, adding to fears it could spread rapidly to other regions in China. Stock Market Worries The central worry affecting stock markets right now is that as central banks around the world take more aggressive steps to dampen down inflation, it will cause demand to fall rapidly pushing economies into reverse. With the American labour market looking so buoyant right now, expectations have risen that the US Federal Reserve will try and deflate red hot prices by hiking interest rates by 0.75% at the next meeting and keep the pressure on in the months to come. Forecasts that this will squeeze out growth in the economy are coming thick and fast, and that’s reflected in the bond markets which are now pricing in a sharp deceleration of inflation over the next few years. A recession warning light is blinking with the two year bond yields, commanding higher yields than ten year bonds, given that this inversion is often seen as a sign that recession could be looming. Investors who tie up their money for longer periods of time usually are rewarded with higher yields. Right now the curve is indicating that investors expect the Federal Reserve will put its foot down hard on the accelerator of rate rises to rein inflation but then put on the brakes to stop the economy slamming into a brick wall of a deep recession. In Europe, energy security concerns also rising with the biggest pipeline supplying Russian gas to Germany closing for maintenance. Speculation has swirled that the closure could end up being extended by Russia as part of strong arm tactics to punish European nations for the sanctions imposed for Moscow’s invasion of Ukraine. The progress of repair work will be watched closely and any indication that delays are looming could see a fresh scurry upwards in European gas prices.” Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown About Hargreaves Lansdown Over 1.7 million clients trust us with £132.2 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month. Updated on Jul 11, 2022, 3:41 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 11th, 2022

We"ve got nearly 50 pitch decks that helped fintechs disrupting trading, investing, and banking raise millions in funding

Looking for examples of real fintech pitch decks? Check out pitch decks that Qolo, Lance, and other startups used to raise money from VCs. Check out these pitch decks for examples of fintech founders sold their vision.Yulia Reznikov/Getty Images Insider has been tracking the next wave of hot new startups that are blending finance and tech.  Check out these pitch decks to see how fintech founders sold their vision. See more stories on Insider's business page. Fintech funding has been on a tear.In 2021, fintech funding hit a record $132 billion globally, according to CB Insights, more than double 2020's mark.Insider has been tracking the next wave of hot new startups that are blending finance and tech. Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You'll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding. New twists on digital bankingZach Bruhnke, cofounder and CEO of HMBradleyHMBradleyConsumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime, N26, and Varo have benefited from. The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model. "Our thesis going in was that we don't swipe our debit cards all that often, and we don't think the customer base that we're focusing on does either," Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. "A lot of our customer base uses credit cards on a daily basis."Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.Notably, the rate tiers are dependent on the percentage of savings, not the net amount. "We'll pay you more when you save more of what comes in," Bruhnke said. "We didn't want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us."Check out the 14-page pitch deck fintech HMBradley, a neobank offering interest rates as high as 3%, used to raise an $18.25 million Series APersonal finance is only a text awayYinon Ravid, the chief executive and cofounder of Albert.AlbertThe COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert's savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company. Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It's looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that's a pay-what-you-can model, between $4 and $14 a month. And Albert's now banking on a new tool to bring together its investing, savings, and budgeting tools.Fintech Albert used this 10-page pitch deck to raise a $100 million Series C from General Atlantic and CapitalG 'A bank for immigrants'Priyank Singh and Rohit Mittal are the cofounders of Stilt.StiltRohit Mittal remembers the difficulties he faced when he first arrived in the United States a decade ago as a master's student at Columbia University.As an immigrant from India, Mittal had no credit score in the US and had difficulty integrating into the financial system. Mittal even struggled to get approved to rent an apartment and couch-surfed until he found a roommate willing to offer him space in his apartment in the New York neighborhood Morningside Heights.That roommate was Priyank Singh, who would go on to become Mittal's cofounder when the two started Stilt, a financial-technology company designed to address the problems Mittal faced when he arrived in the US.Stilt, which calls itself "a bank for immigrants," does not require a social security number or credit history to access its offerings, including unsecured personal loans.Instead of relying on traditional metrics like a credit score, Stilt uses data such as education and employment to predict an individual's future income stability and cash flow before issuing a loan. Stilt has seen its loan volume grow by 500% in the past 12 months, and the startup has loaned to immigrants from 160 countries since its launch. Here are the 15 slides Stilt, which calls itself 'a bank for immigrants,' used to raise a $14 million Series AAn IRA for alternativesHenry Yoshida is the co-founder and CEO of retirement fintech startup Rocket Dollar.Rocket DollarFintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.Park West Asset Management led the round, with participation from investors including Hyphen Capital, which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken's venture arm. Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs' investment management division for an estimated $20 million.Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.Here's the 34-page pitch deck a fintech that helps users invest their retirement savings in crypto and real estate assets used to nab $8 millionA trading app for activismAntoine Argouges, CEO and founder of TulipshareTulipshareAn up-and-coming fintech is taking aim at some of the world's largest corporations by empowering retail investors to push for social and environmental change by pooling their shareholder rights.London-based Tulipshare lets individuals in the UK invest as little as one pound in publicly-traded company stocks. The upstart combines individuals' shareholder rights with other like-minded investors to advocate for environmental, social, and corporate governance change at firms like JPMorgan, Apple, and Amazon.The goal is to achieve a higher number of shares to maximize the number of votes that can be submitted at shareholder meetings. Already a regulated broker-dealer in the UK, Tulipshare recently applied for registration as a broker-dealer in the US. "If you ask your friends and family if they've ever voted on shareholder resolutions, the answer will probably be close to zero," CEO and founder Antoine Argouges told Insider. "I started Tulipshare to utilize shareholder rights to bring about positive corporate change that has an impact on people's lives and our planet — what's more powerful than money to change the system we live in?"Check out the 14-page pitch deck from Tulipshare, a trading app that lets users pool their shareholder votes for activism campaignsDigital tools for independent financial advisorsJason Wenk, founder and CEO of AltruistAltruistJason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he's running a company that is hoping to broaden access to financial advice for less-wealthy individuals. The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup's total funding to just under $67 million.Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an "all-in-one" platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. Here's the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and InsightRethinking debt collection Jason Saltzman, founder and CEO of ReliefReliefFor lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.  Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures. Relief's fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed roundHelping small banks lendTKCollateralEdgeFor large corporations with a track record of tapping the credit markets, taking out debt is a well-structured and clear process handled by the nation's biggest investment banks and teams of accountants. But smaller, middle-market companies — typically those with annual revenues ranging up to $1 billion — are typically served by regional and community banks that don't always have the capacity to adequately measure the risk of loans or price them competitively. Per the National Center for the Middle Market, 200,000 companies fall into this range, accounting for roughly 33% of US private sector GDP and employment.Dallas-based fintech CollateralEdge works with these banks — typically those with between $1 billion and $50 billion in assets — to help analyze and price slices of commercial and industrial loans that previously might have gone unserved by smaller lenders.On October 20th, CollateralEdge announced a $3.5 million seed round led by Dallas venture fund Perot Jain with participation from Kneeland Youngblood (a founder of the healthcare-focused private-equity firm Pharos Capital) and other individual investors.Here's the 10-page deck CollateralEdge, a fintech streamlining how small banks lend to businesses, used to raise a $3.5 million seed roundA new way to assess creditworthinessPinwheel founders Curtis Lee, Kurt Lin, and Anish Basu.PinwheelGrowing up, Kurt Lin never saw his father get frustrated. A "traditional, stoic figure," Lin said his father immigrated to the United States in the 1970s. Becoming part of the financial system proved even more difficult than assimilating into a new culture.Lin recalled visiting bank after bank with his father as a child, watching as his father's applications for a mortgage were denied due to his lack of credit history. "That was the first time in my life I really saw him crack," Lin told Insider. "The system doesn't work for a lot of people — including my dad," he added. Lin would find a solution to his father's problem years later while working with Anish Basu, and Curtis Lee on an automated health savings account. The trio realized the payroll data integrations they were working on could be the basis of a product that would help lenders work with consumers without strong credit histories."That's when the lightbulb hit," said Lin, Pinwheel's CEO.In 2018, Lin, Basu, and Lee founded Pinwheel, an application-programming interface that shares payroll data to help both fintechs and traditional lenders serve consumers with limited or poor credit, who have historically struggled to access financial products. Here's the 9-page deck that Pinwheel, a fintech helping lenders tap into payroll data to serve consumers with little to no credit, used to raise a $50 million Series BAn alternative auto lenderTricolorAn alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds. Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income. Half of Tricolor's customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households. "For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle," Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.An auto lender that caters to underbanked Hispanics used this 25-page deck to raise $90 million from BlackRock investors A new way to access credit The TomoCredit teamTomoCreditKristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history. Kim, who came to the US from South Korea, couldn't initially get access to credit despite having a job in investment banking after graduating college. "I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything," Kim told Insider. "Many young professionals like me, we deserve an opportunity to be considered but just because we didn't have a Fico, we weren't given a chance to even apply," she added.Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.TomoCredit, a fintech that lends to thin- and no-credit borrowers, used this 17-page pitch deck to raise its $10 million Series AHelping streamline how debts are repaidMethod Financial cofounders Jose Bethancourt and Marco del Carmen.Method FinancialWhen Jose Bethancourt graduated from the University of Texas at Austin in May 2019, he faced the same question that confronts over 43 million Americans: How would he repay his student loans?The problem led Bethancourt on a nearly two-year journey that culminated in the creation of a startup aimed at making it easier for consumers to more seamlessly pay off all kinds of debt.  Initially, Bethancourt and fellow UT grad Marco del Carmen built GradJoy, an app that helped users better understand how to manage student loan repayment and other financial habits. GradJoy was accepted into Y Combinator in the summer of 2019. But the duo quickly realized the real benefit to users would be helping them move money to make payments instead of simply offering recommendations."When we started GradJoy, we thought, 'Oh, we'll just give advice — we don't think people are comfortable with us touching their student loans,' and then we realized that people were saying, 'Hey, just move the money — if you think I should pay extra, then I'll pay extra.' So that's kind of the movement that we've seen, just, everybody's more comfortable with fintechs doing what's best for them," Bethancourt told Insider. Here is the 11-slide pitch deck Method Financial, a Y Combinator-backed fintech making debt repayment easier, used to raise $2.5 million in pre-seed fundingQuantum computing made easyQC Ware CEO Matt Johnson.QC WareEven though banks and hedge funds are still several years out from adding quantum computing to their tech arsenals, that hasn't stopped Wall Street giants from investing time and money into the emerging technology class. And momentum for QC Ware, a startup looking to cut the time and resources it takes to use quantum computing, is accelerating. The fintech secured a $25 million Series B on September 29 co-led by Koch Disruptive Technologies and Covestro with participation from D.E. Shaw, Citi, and Samsung Ventures.QC Ware, founded in 2014, builds quantum algorithms for the likes of Goldman Sachs (which led the fintech's Series A), Airbus, and BMW Group. The algorithms, which are effectively code bases that include quantum processing elements, can run on any of the four main public-cloud providers.Quantum computing allows companies to do complex calculations faster than traditional computers by using a form of physics that runs on quantum bits as opposed to the traditional 1s and 0s that computers use. This is especially helpful in banking for risk analytics or algorithmic trading, where executing calculations milliseconds faster than the competition can give firms a leg up. Here's the 20-page deck QC Ware, a fintech making quantum computing more accessible, used to raised its $25 million Series BAnalyzing financial contractsEric Chang and Alex Schumacher, co-founders of ClairaClairaIt was a match made in heaven — at least the Wall Street type.Joseph Squeri, a former CIO at Citadel and Barclays, had always struggled with the digitization of financial documents. When he was tapped by Brady Dougan, the former chief executive of Credit Suisse, to build out an all-digital investment bank in Exos, Squeri spent the first year getting let down by more than a dozen tools that lacked a depth in financial legal documents. His solution came in the form of Alex Schumacher and Eric Chang who had the tech and financial expertise, respectively, to build the tool he needed.Schumacher is an expert in natural-language processing and natural-language understanding, having specialized in turning unstructured text into useful business information.Chang spent a decade as a trader and investment strategist at Goldman Sachs, BlackRock, and AQR. He developed a familiarity with the kinds of financial documents Squeri wanted to digitize, such as the terms and conditions information from SEC filings and publicly traded securities and transactions, like municipal bonds and collateralized loan obligations (CLOs). The three converged at Exos, Squeri as its COO and CTO, Schumacher as the lead data scientist, and Chang as head of tech and strategy. See the 14-page pitch deck that sold Citi on Claira, a startup using AI to help firms read through financial contracts in a fraction of the timeSimplifying quant modelsKirat Singh and Mark Higgins, Beacon's cofounders.BeaconA fintech that helps financial institutions use quantitative models to streamline their businesses and improve risk management is catching the attention, and capital, of some of the country's biggest investment managers.Beacon Platform, founded in 2014, is a fintech that builds applications and tools to help banks, asset managers, and trading firms quickly integrate quantitative models that can help with analyzing risk, ensuring compliance, and improving operational efficiency. The company raised its Series C on Wednesday, scoring a $56 million investment led by Warburg Pincus with support from Blackstone Innovations Investments, PIMCO, and Global Atlantic. Blackstone, PIMCO, and Global Atlantic are also users of Beacon's tech, as are the Commonwealth Bank of Australia and Shell New Energies, a division of Royal Dutch Shell, among others.The fintech provides a shortcut for firms looking to use quantitative modelling and data science across various aspects of their businesses, a process that can often take considerable resources if done solo.Here's the 20-page pitch deck Beacon, a fintech helping Wall Street better analyze risk and data, used to raise $56 million from Warburg Pincus, Blackstone, and PIMCOSussing out bad actorsFrom left to right: Cofounders CTO David Movshovitz, CEO Doron Hendler, and chief architect Adi DeGaniRevealSecurityAn encounter with an impersonation hacker led Doron Hendler to found RevealSecurity, a Tel Aviv-based cybersecurity startup that monitors for insider threats.Two years ago, a woman impersonating an insurance-agency representative called Hendler and convinced him that he made a mistake with his recent health insurance policy upgrade. She got him to share his login information for his insurer's website, even getting him to give the one-time passcode sent to his phone. Once the hacker got what she needed, she disconnected the call, prompting Hendler to call back. When no one picked up the phone, he realized he had been conned.He immediately called his insurance company to check on his account. Nothing seemed out of place to the representative. But Hendler, who was previously a vice president of a software company, suspected something intangible could have been collected, so he reset his credentials."The chief of information security, who was on the call, he asked me, 'So, how do you want me to identify you? You gave your credentials; you gave your ID; you gave the one time password. How the hell can I identify that it's not you?' And I told him, 'But I never behave like this,'" Hendler recalled of the conversation.RevealSecurity, a Tel Aviv-based cyber startup that tracks user behavior for abnormalities, used this 27-page deck to raise its Series AA new data feed for bond tradingMark Lennihan/APFor years, the only way investors could figure out the going price of a corporate bond was calling up a dealer on the phone. The rise of electronic trading has streamlined that process, but data can still be hard to come by sometimes. A startup founded by a former Goldman Sachs exec has big plans to change that. BondCliQ is a fintech that provides a data feed of pre-trade pricing quotes for the corporate bond market. Founded by Chris White, the creator of Goldman Sachs' defunct corporate-bond-trading system, BondCliQ strives to bring transparency to a market that has traditionally kept such data close to the vest. Banks, which typically serve as the dealers of corporate bonds, have historically kept pre-trade quotes hidden from other dealers to maintain a competitive advantage.But tech advancements and the rise of electronic marketplaces have shifted power dynamics into the hands of buy-side firms, like hedge funds and asset managers. The investors are now able to get a fuller picture of the market by aggregating price quotes directly from dealers or via vendors.Here's the 9-page pitch deck that BondCliQ, a fintech looking to bring more data and transparency to bond trading, used to raise its Series AFraud prevention for lenders and insurersFiordaliso/Getty ImagesOnboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.But preventing fraud is also a priority, and that's where Neuro-ID comes in. The startup analyzes what it calls "digital body language," or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It's built for banks, lenders, insurers, and e-commerce players."The train has left the station for digital transformation, but there's a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy," Neuro-ID CEO Jack Alton told Insider.Founded in 2014, the startup's pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless. In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.Here's the 11-slide pitch deck a startup that analyzes consumers' digital behavior to fight fraud used to raise a $7 million Series AAI-powered tools to spot phony online reviews FakespotMarketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.That's where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart."There are promotional reviews written by humans and bot-generated reviews written by robots or review farms," Fakespot founder and CEO Saoud Khalifah told Insider. "Our AI system has been built to detect both categories with very high accuracy."Fakespot's AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series AHelping fintechs manage dataProper Finance co-founders Travis Gibson (left) and Kyle MaloneyProper FinanceAs the flow of data becomes evermore crucial for fintechs, from the strappy startup to the established powerhouse, a thorny issue in the back office is becoming increasingly complex.Even though fintechs are known for their sleek front ends, the back end is often quite the opposite. Behind that streamlined interface can be a mosaic of different partner integrations — be it with banks, payments players and networks, or software vendors — with a channel of data running between them. Two people who know that better than the average are Kyle Maloney and Travis Gibson, two former employees of Marqeta, a fintech that provides other fintechs with payments processing and card issuance. "Take an established neobank for example. They'll likely have one or two card issuers, two to three bank partners, ACH processing for direct deposits and payouts, mobile check deposits, peer-to-peer payments, and lending," Gibson told Insider. Here's the 12-page pitch deck a startup helping fintechs manage their data used to score a $4.3 million seed from investors like Redpoint Ventures and Y CombinatorE-commerce focused business bankingMichael Rangel, cofounder and CEO, and Tyler McIntyre, cofounder and CTO of Novo.Kristelle Boulos PhotographyBusiness banking is a hot market in fintech. And it seems investors can't get enough.Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami. Here's the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series AShopify for embedded financeProductfy CEO and founder, Duy VoProductfyProductfy is looking to break into embedded finance by becoming the Shopify of back-end banking services.Embedded finance — integrating banking services in non-financial settings — has taken hold in the e-commerce world. But Productfy is going after a different kind of customer in churches, universities, and nonprofits.The San Jose, Calif.-based upstart aims to help non-finance companies offer their own banking products. Productfy can help customers launch finance features in as little as a week and without additional engineering resources or background knowledge of banking compliance or legal requirements, Productfy founder and CEO Duy Vo told Insider. "You don't need an engineer to stand up Shopify, right? You can be someone who's just creating art and you can use Shopify to build your own online store," Vo said, adding that Productfy is looking to take that user experience and replicate it for banking services.Here's the 15-page pitch deck Productfy, a fintech looking to be the Shopify of embedded finance, used to nab a $16 million Series ADeploying algorithms and automation to small-business financingJustin Straight and Bernard Worthy, LoanWell co-foundersLoanWellBernard Worthy and Justin Straight, the founders of LoanWell, want to break down barriers to financing for small and medium-size businesses — and they've got algorithms and automation in their tech arsenals that they hope will do it.Worthy, the company's CEO, and Straight, its chief operating and financial officer, are powering community-focused lenders to fill a gap in the SMB financing world by boosting access to loans under $100,000. And the upstart is known for catching the attention, and dollars, of mission-driven investors. LoanWell closed a $3 million seed financing round in December led by Impact America Fund with participation from SoftBank's SB Opportunity Fund and Collab Capital.LoanWell automates the financing process — from underwriting and origination, to money movement and servicing — which shaves down an up-to-90-day process to 30 days or even same-day with some LoanWell lenders, Worthy said. SMBs rely on these loans to process quickly after two years of financial uncertainty. But the pandemic illustrated how time-consuming and expensive SMB financing can be, highlighted by efforts like the federal government's Paycheck Protection Program.Community banks, once the lifeline to capital for many local businesses, continue to shutter. And demands for smaller loan amounts remain largely unmet. More than half of business-loan applicants sought $100,000 or less, according to 2018 data from the Federal Reserve. But the average small-business bank loan was closer to six times that amount, according to the latest data from a now discontinued Federal Reserve survey.Here's the 14-page pitch deck LoanWell used to raise $3 million from investors like SoftBank.Branded cards for SMBsJennifer Glaspie-Lundstrom is the cofounder and CEO of Tandym.TandymJennifer Glaspie-Lundstrom is no stranger to the private-label credit-card business. As a former Capital One exec, she worked in both the card giant's co-brand partnerships division and its tech organization during her seven years at the company.Now, Glaspie-Lundstrom is hoping to use that experience to innovate a sector that was initially created in malls decades ago.Glaspie-Lundstrom is the cofounder and CEO of Tandym, which offers private-label digital credit cards to merchants. Store and private-label credit cards aren't a new concept, but Tandym is targeting small- and medium-sized merchants with less than $1 billion in annual revenue. Glaspie-Lundstrom said that group often struggles to offer private-label credit due to the expense of working with legacy players."What you have is this example of a very valuable product type that merchants love and their customers love, but a huge, untapped market that has heretofore been unserved, and so that's what we're doing with Tandym," Glaspi-Lundstrom told Insider.A former Capital One exec used this deck to raise $60 million for a startup helping SMBs launch their own branded credit cardsCatering to 'micro businesses'Stefanie Sample is the founder and CEO of FundidFundidStartups aiming to simplify the often-complex world of corporate cards have boomed in recent years.Business-finance management startup Brex was last valued at $12.3 billion after raising $300 million last year. Startup card provider Ramp announced an $8.1 billion valuation in March after growing its revenue nearly 10x in 2021. Divvy, a small business card provider, was acquired by in May 2021 for approximately $2.5 billion.But despite how hot the market has gotten, Stefanie Sample said she ended up working in the space by accident. Sample is the founder and CEO of Fundid, a new fintech that provides credit and lending products to small businesses.This May, Fundid announced a $3.25 million seed round led by Nevcaut Ventures. Additional investors include the Artemis Fund and Builders and Backers. The funding announcement capped off the company's first year: Sample introduced the Fundid concept in April 2021, launched its website in May, and began raising capital in August."I never meant to do Fundid," Sample told Insider. "I never meant to do something that was venture-backed."Read the 12-page deck used by Fundid, a fintech offering credit and lending tools for 'micro businesses'Embedded payments for SMBsThe Highnote teamHighnoteBranded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty. The rise of embedded payments, or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards. The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.Here's the 12-page deck Highnote, a startup helping SMBs embed payments, used to raise $54 million in seed and Series A fundingSpeeding up loans for government contractors OppZo cofounders Warren Reed and Randy GarrettOppZoThe massive market for federal government contracts approached $700 billion in 2020, and it's likely to grow as spending accelerates amid an ongoing push for investment in the nation's infrastructure. Many of those dollars flow to small-and-medium sized businesses, even though larger corporations are awarded the bulk of contracts by volume. Of the roughly $680 billion in federal contracts awarded in 2020, roughly a quarter, according to federal guidelines, or some $146 billion that year, went to smaller businesses.But peeking under the hood of the procurement process, the cofounders of OppZo — Randy Garrett and Warren Reed — saw an opportunity to streamline how smaller-sized businesses can leverage those contracts to tap in to capital.  Securing a deal is "a government contractor's best day and their worst day," as Garrett, OppZo's president, likes to put it."At that point they need to pay vendors and hire folks to start the contract. And they may not get their first contract payment from the government for as long as 120 days," Reed, the startup's CEO,  told Insider. Check out the 12-page pitch deck OppZo, a fintech that has figured out how to speed up loans to small government contractors, used to raise $260 million in equity and debtHelping small businesses manage their taxesComplYant's founder Shiloh Jackson wants to help people be present in their bookkeeping.ComplYantAfter 14 years in tax accounting, Shiloh Johnson had formed a core philosophy around corporate accounting: everyone deserves to understand their business's money and business owners need to be present in their bookkeeping process.She wanted to help small businesses understand "this is why you need to do what you're doing and why you have to change the way you think about tax and be present in your bookkeeping process," she told Insider. The Los Angeles native wanted small businesses to not only understand business tax no matter their size but also to find the tools they needed to prepare their taxes in one spot. So Johnson developed a software platform that provides just that.The 13-page pitch deck ComplYant used to nab $4 million that details the tax startup's plan to be Turbotax, Quickbooks, and Xero rolled into one for small business ownersAutomating accounting ops for SMBsDecimal CEO Matt Tait.DecimalSmall- and medium-sized businesses can rely on any number of payroll, expense management, bill pay, and corporate-card startups promising to automate parts of their financial workflow. Smaller firms have adopted this corporate-financial software en masse, boosting growth throughout the pandemic for relatively new entrants like Ramp and massive, industry stalwarts like Intuit. But it's no easy task to connect all of those tools into one, seamless process. And while accounting operations might be far from where many startup founders want to focus their time, having efficient back-end finances does mean time — and capital — freed up to spend elsewhere. For Decimal CEO Matt Tait, there's ample opportunity in "the boring stuff you have to do to survive as a company," he told Insider. Launched in 2020, Decimal provides a back-end tech layer that small- and medium-sized businesses can use to integrate their accounting and business-management software tools in one place.On Wednesday, Decimal announced a $9 million seed fundraising round led by Minneapolis-based Arthur Ventures, alongside Service Providers Capital and other angel investors. See the 13-page pitch deck for Decimal, a startup automating accounting ops for small businessesInvoice financing for SMBsStacey Abrams and Lara Hodgson, Now co-foundersNowAbout a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain — but not in the traditional sense.Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business' cap, there was a hang-up."It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors," Hodgson told Insider. "Waiting to get paid was constraining our ability to grow."While it's not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession. Abrams and Hodgson couldn't secure a line of credit or use financing tools like factoring to solve their problem. The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.  "Why are we the ones borrowing money, when in fact we're the lender here because every time you send an invoice to a customer, you've essentially extended a free loan to that customer by letting them pay later," Hodgson said. "And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods," she added.Check out the 7-page deck that Now, Stacey Abrams' fintech that wants to help small businesses 'grow fearlessly', used to raise $29 millionCheckout made easyRyan Breslow.Ryan BreslowAmazon has long dominated e-commerce with its one-click checkout flows, offering easier ways for consumers to shop online than its small-business competitors.Bolt gives small merchants tools to offer the same easy checkouts so they can compete with the likes of Amazon.The startup raised its $393 million Series D to continue adding its one-click checkout feature to merchants' own websites in October.Bolt markets to merchants themselves. But a big part of Bolt's pitch is its growing network of consumers — currently over 5.6 million — that use its features across multiple Bolt merchant customers. Roughly 5% of Bolt's transactions were network-driven in May, meaning users that signed up for a Bolt account on another retailer's website used it elsewhere. The network effects were even more pronounced in verticals like furniture, where 49% of transactions were driven by the Bolt network."The network effect is now unleashed with Bolt in full fury, and that triggered the raise," Bolt's founder and CEO Ryan Breslow told Insider.Here's the 12-page deck that one-click checkout Bolt used to outline its network of 5.6 million consumers and raise its Series DPayments infrastructure for fintechsQolo CEO and co-founder Patricia MontesiQoloThree years ago, Patricia Montesi realized there was a disconnect in the payments world. "A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren't able to," Montesi, CEO and co-founder of Qolo, told Insider.Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments. "The way people were getting around that was that they were creating this spider web of fintech," she said, adding that "at the end of it all, they had this mess of suppliers and integrations and bank accounts."The 20-year payments veteran rounded up a group of three other co-founders — who together had more than a century of combined industry experience — to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.Here's the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series ABetter use of payroll dataAtomic's Head of Markets, Lindsay DavisAtomicEmployees at companies large and small know the importance — and limitations — of how firms manage their payrolls. A new crop of startups are building the API pipes that connect companies and their employees to offer a greater level of visibility and flexibility when it comes to payroll data and employee verification. On Thursday, one of those names, Atomic, announced a $40 million Series B fundraising round co-led by Mercato Partners and Greylock, alongside Core Innovation Capital, Portage, and ATX Capital. The round follows Atomic's Series A round announced in October, when the startup raised a $22 million Series A from investors including Core Innovation Capital, Portage, and Greylock.Payroll startup Atomic just raised a $40 million Series B. Here's an internal deck detailing the fintech's approach to the red-hot payments space.Saving on vendor invoicesHoward Katzenberg, Glean's CEO and cofounderGleanWhen it comes to high-flying tech startups, headlines and investors typically tend to focus on industry "disruption" and the total addressable market a company is hoping to reach. Expense cutting as a way to boost growth typically isn't part of the conversation early on, and finance teams are viewed as cost centers relative to sales teams. But one fast-growing area of business payments has turned its focus to managing those costs. Startups like Ramp and established names like have made their name offering automated expense-management systems. Now, one new fintech competitor, Glean, is looking to take that further by offering both automated payment services and tailored line-item accounts-payable insights driven by machine-learning models. Glean's CFO and founder, Howard Katzenberg, told Insider that the genesis of Glean was driven by his own personal experience managing the finance teams of startups, including mortgage lender, which Katzenberg left in 2019, and online small-business lender OnDeck. "As a CFO of high-growth companies, I spent a lot of time focused on revenue and I had amazing dashboards in real time where I could see what is going on top of the funnel, what's going on with conversion rates, what's going on in terms of pricing and attrition," Katzenberg told Insider. See the 15-slide pitch deck Glean, a startup using machine learning to find savings in vendor invoices, used to raise $10.8 million in seed fundingReal-estate management made easyAgora founders Noam Kahan, CTO, Bar Mor, CEO, and Lior Dolinski, CPOAgoraFor alternative asset managers of any type, the operations underpinning sales and investor communications are a crucial but often overlooked part of the business. Fund managers love to make bets on markets, not coordinate hundreds of wire transfers to clients each quarter or organize customer-relationship-management databases.Within the $10.6 trillion global market for professionally managed real-estate investing, that's where Tel Aviv and New York-based startup Agora hopes to make its mark.Founded in 2019, Agora offers a set of back-office, investor relations, and sales software tools that real-estate investment managers can plug into their workflows. On Wednesday, Agora announced a $9 million seed round, led by Israel-based venture firm Aleph, with participation from River Park Ventures and Maccabee Ventures. The funding comes on the heels of an October 2020 pre-seed fund raise worth $890,000, in which Maccabee also participated.Here's the 15-slide pitch deck that Agora, a startup helping real-estate investors manage communications and sales with their clients, used to raise a $9 million seed roundAccess to commercial real-estate investing LEX Markets cofounders and co-CEOs Drew Sterrett and Jesse Daugherty.LEX MarketsDrew Sterrett was structuring real-estate deals while working in private equity when he realized the inefficiencies that existed in the market. Only high-net worth individuals or accredited investors could participate in commercial real-estate deals. If they ever wanted to leave a partnership or sell their stake in a property, it was difficult to find another investor to replace them. Owners also struggled to sell minority stakes in their properties and didn't have many good options to recapitalize an asset if necessary.In short, the market had a high barrier to entry despite the fact it didn't always have enough participants to get deals done quickly. "Most investors don't have access to high-quality commercial real-estate investments. How do we have the oldest and largest asset class in the world and one of the largest wealth creators with no public and liquid market?" Sterrett told Insider. "It sort of seems like a no-brainer, and that this should have existed 50 or 60 years ago."This 15-page pitch deck helped LEX Markets, a startup making investing in commercial real estate more accessible, raise $15 millionInsurance goes digitalJamie Hale, CEO and cofounder of LadderLadderFintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market. And while verticals like auto, homeowner's, and renter's insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market. Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion, compared to $144 billion for auto policies and $97 billion for homeowner's insurance.Here's the 12-page deck that Ladder, a startup disrupting the 'crown jewel' of the insurance market, used to nab $100 millionData science for commercial insuranceTanner Hackett, founder and CEO of CounterpartCounterpartThere's been no shortage of funds flowing into insurance-technology companies over the past few years. Private-market funding to insurtechs soared to $15.4 billion in 2021, a 90% increase compared to 2020. Some of the most well-known consumer insurtech names — from Oscar (which focuses on health insurance) to Metromile (which focuses on auto) — launched on the public markets last year, only to fall over time or be acquired as investors questioned the sustainability of their business models. In the commercial arena, however, the head of one insurtech company thinks there is still room to grow — especially for those catering to small businesses operating in an entirely new, pandemic-defined environment. "The bigger opportunity is in commercial lines," Tanner Hackett, the CEO of management liability insurer Counterpart, told Insider."Everywhere I poke, I'm like, 'Oh my goodness, we're still in 1.0, and all the other businesses I've built were on version three.' Insurance is still in 1.0, still managing from spreadsheets and PDFs," added Hackett, who also previously co-founded Button, which focuses on mobile marketing. See the 8-page pitch deck Counterpart, a startup disrupting commercial insurance with data science, used to raise a $30 million Series BSmarter insurance for multifamily propertiesItai Ben-Zaken, cofounder and CEO of Honeycomb.HoneycombA veteran of the online-insurance world is looking to revolutionize the way the industry prices risk for commercial properties with the help of artificial intelligence.Insurance companies typically send inspectors to properties before issuing policies to better understand how the building is maintained and identify potential risks or issues with it. It's a process that can be time-consuming, expensive, and inefficient, making it hard to justify for smaller commercial properties, like apartment and condo buildings.Insurtech Honeycomb is looking to fix that by using AI to analyze a combination of third-party data and photos submitted by customers through the startup's app to quickly identify any potential risks at a property and more accurately price policies."That whole physical inspection thing had really good things in it, but it wasn't really something that is scalable and, it's also expensive," Itai Ben-Zaken, Honeycomb's cofounder and CEO, told Insider. "The best way to see a property right now is Google street view. Google street view is usually two years old."Here's the 10-page Series A pitch deck used by Honeycomb, a startup that wants to revolutionize the $26 billion market for multifamily property insuranceHelping freelancers with their taxesJaideep Singh is the CEO and co-founder of FlyFin, an AI-driven tax preparation software program for freelancers.FlyFinSome people, particularly those with families or freelancing businesses, spend days searching for receipts for tax season, making tax preparation a time consuming and, at times, taxing experience. That's why in 2020 Jaideep Singh founded FlyFin, an artificial-intelligence tax preparation program for freelancers that helps people, as he puts it, "fly through their finances." FlyFin is set up to connect to a person's bank accounts, allowing the AI program to help users monitor for certain expenses that can be claimed on their taxes like business expenditures, the interest on mortgages, property taxes, or whatever else that might apply. "For most individuals, people have expenses distributed over multiple financial institutions. So we built an AI platform that is able to look at expenses, understand the individual, understand your profession, understand the freelance population at large, and start the categorization," Singh told Insider.Check out the 7-page pitch deck a startup helping freelancers manage their taxes used to nab $8 million in fundingDigital banking for freelancersJGalione/Getty ImagesLance is a new digital bank hoping to simplify the life of those workers by offering what it calls an "active" approach to business banking. "We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it," Lance cofounder and CEO Oona Rokyta told Insider. Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that's connected to automated tax withholdings.In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.Here's the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including BarclaysSoftware for managing freelancersWorksome cofounder and CEO Morten Petersen.WorksomeThe way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risør.Here's the 21-slide pitch deck used by a startup that helps firms like Carlsberg and Deloitte manage freelancersPayments and operations support HoneyBook cofounders Dror Shimoni, Oz Alon, and Naama Alon.HoneyBookWhile countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork. HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup's startup investment arm that also backs fintech robo-advisor Betterment, participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company's fundraising total to $227 million to date.Here's the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger GlobalPay-as-you-go compliance for banks, fintechs, and crypto startupsNeepa Patel, Themis' founder and CEOThemisWhen Themis founder and CEO Neepa Patel set out to build a new compliance tool for banks, fintech startups, and crypto companies, she tapped into her own experience managing risk at some of the nation's biggest financial firms. Having worked as a bank regulator at the Office of the Comptroller of the Currency and in compliance at Morgan Stanley, Deutsche Bank, and the enterprise blockchain company R3, Patel was well-placed to assess the shortcomings in financial compliance software. But Patel, who left the corporate world to begin work on Themis in 2020, drew on more than just her own experience and frustrations to build the startup."It's not just me building a tool based on my personal pain points. I reached out to regulators. I reached out to bank compliance officers and members in the fintech community just to make sure that we're building it exactly how they do their work," Patel told Insider. "That was the biggest problem: No one built a tool that was reflective of how people do their work."Check out the 9-page pitch deck Themis, which offers pay-as-you-go compliance for banks, fintechs, and crypto startups, used to raise $9 million in seed fundingConnecting startups and investorsHum Capital cofounder and CEO Blair SilverbergHum CapitalBlair Silverberg is no stranger to fundraising.For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups."I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they're meeting a ton of investors, and the investors are all asking the same questions," Silverberg told Insider. He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech. This 11-page pitch deck helped Hum Capital, a fintech using AI to match investors with startups, raise a $9 million Series A.Helping LatAm startups get up to speedKamino cofounders Gut Fragoso, Rodrigo Perenha, Benjamin Gleason, and Gonzalo ParejoKaminoThere's more venture capital flowing into Latin America than ever before, but getting the funds in founders' hands is not exactly a simple process.In 2021, investors funneled $15.3 billion into Latin American companies, more than tripling the previous record of $4.9 billion in 2019. Fintech and e-commerce sectors drove funding, accounting for 39% and 25% of total funding, respectively.  However, for many startup founders in the region who have successfully sold their ideas and gotten investors on board, there's a patchwork of corporate structuring that's needed to access the funds, according to Benjamin Gleason, who was the chief financial officer at Groupon LatAm prior to cofounding Brazil-based fintech Kamino.It's a process Gleason and his three fellow Kamino cofounders have been through before as entrepreneurs and startup execs themselves. Most often, startups have to set up offshore financial accounts outside of Brazil, which "entails creating a Cayman [Islands] holding company, a Delaware LLC, and then connecting it to a local entity here and also opening US bank accounts for the Cayman entity, which is not trivial from a KYC perspective," said Gleason, who founded open-banking fintech Guiabolso in Sao Paulo. His partner, Gonzalo Parejo, experienced the same toils when he founded insurtech Bidu."Pretty much any international investor will usually ask for that," Gleason said, adding that investors typically cite liability issues."It's just a massive amount of bureaucracy, complexity, a lot of time from the founders. All of this just to get the money from the investor that wants to give them the money," he added.Here's the 8-page pitch deck Kamino, a fintech helping LatAm startups with everything from financing to corporate credit cards, used to raise a $6.1M pre-seed roundThe back-end tech for beautyDanielle Cohen-Shohet, CEO and founder of GlossGeniusGlossGeniusDanielle Cohen-Shohet might have started as a Goldman Sachs investment analyst, but at her core she was always a coder.After about three years at Goldman Sachs, Cohen-Shohet left the world of traditional finance to code her way into starting her own company in 2016. "There was a period of time where I did nothing, but eat, sleep, and code for a few weeks," Cohen-Shohet told Insider. Her technical edge and knowledge of the point-of-sale payment space led her to launch a software company focused on providing behind-the-scenes tech for beauty and wellness small businesses.Cohen-Shohet launched GlossGenius in 2017 to provide payments tech for hair stylists, nail technicians, blow-out bars, and other small businesses in the space.Here's the 11-page deck GlossGenius, a startup that provides back-end tech for the beauty industry, used to raise $16 millionRead the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 11th, 2022

Futures Slide On Renewed China Covid Lockdown Fears As Traders Brace For Q2 Earnings, Red Hot CPI

Futures Slide On Renewed China Covid Lockdown Fears As Traders Brace For Q2 Earnings, Red Hot CPI US equity futures and global markets started the second week of the 3rd quarter on the back foot, with spoos sliding on Monday morning as traders were spooked by fears that Covid may be making a return to China leading to more virus restrictions sending Chinese stocks tumbling the most in a month, amid growing concern about an ugly second-quarter earnings season which begins this week. A closely watched CPI print on Wednesday which is expected to rise again, will also keep markets on edge. Contracts on the S&P 500 and Nasdaq 100 traded 0.7% lower, suggesting last week’s rally in US stocks my stall as concerns about China’s Covid resurgence weigh on risk appetite. The dollar jumped, reversing two weeks of losses and trading around the highest level since 2020 while Treasuries gained. Bitcoin dropped, oil declined and iron ore extended losses on concern about the demand outlook in China. Adding to the risk-off mood were the latest covid news out of China, whose stocks had their worst day in about a month as a Covid resurgence combined with fresh fines for the tech giants sent investors running for the door.  Both the Hang Seng and Shanghai traded negative after a rise in Shanghai’s COVID-19 cases prompted authorities to declare more high-risk areas and the city also reported its first case of the BA.5 omicron subvariant, as well as two more rounds of mass testing in at least 9 districts. Casino stocks were heavily pressured in Hong Kong after Macau announced to shut all non-essential businesses including casinos, while shares in tech giants Tencent and Alibaba weakened after reports that they were among the companies fined by China’s antitrust watchdog concerning reporting of past transactions. There was more bad news out China including a rejection by China Evergrande Group’s bondholders on a proposal to extend debt payment, as well as a warning by a prominent investor’s wife that a key lithium maker’s stock is overvalued. The Chinese selloff is a reminder that the nation’s Covid Zero policy and lingering uncertainty toward tech crackdowns remain key risks for investors betting on a sustained rebound in Chinese shares. The Hang Seng China gauge has recorded just one positive session in the last eight after rallying nearly 30% from a March low.  Anyway, back to the US where in premarket trading, Twitter shares slumped in premarket trading after Elon Musk terminated his $44 billion takeover approach for the social media company. Some other social media stocks were lower too, while Digital World Acquisition (DWAC US), the SPAC tied to Donald Trump, jumps as much as 30%. Bank stocks are also lower in premarket trading Monday amid a broader decline in risk assets as investors await the release of key inflation data later this week. S&P 500 futures are also lower, falling as much as 1%, while the US 10-year Treasury yield holds above the 3% level. In corporate news, UBS is considering a plan to promote Iqbal Khan to sole head of the bank’s global wealth management business. Meanwhile, Klarna is shelling out loans for milk and gas with cash-strapped customers looking for ways to cover basic necessities. Here are some other notable premarket movers: US-listed Macau casino operators and Chinese tourism stocks fall after local authorities in the gambling hub shut almost all business premises as a Covid-19 outbreak in the area worsened. Las Vegas Sands (LVS US) down 3.5%, MGM Resorts (MGM US) -3.5%, Wynn Resorts (WYNN US) -3.1%. Cryptocurrency-exposed stocks were lower after the latest MLIV Pulse survey suggested that the token is more likely to tumble to $10,000, cutting its value roughly in half, than it is to rally back to $30,000. Crypto stocks that are down include: Marathon Digital (MARA US) -6%, Riot Blockchain (RIOT US) -4.5%, Coinbase (COIN US) -3.8%. Lululemon (LULU US) cut to underperform and Under Armour (UAA US) downgraded to hold by Jefferies in a note on athletic apparel firms, with buy-rated Nike (NKE US) “still best-in-class.” Lululemon drops 1.8% in US premarket trading, Under Armour -3.1% Morgan Stanley cut its recommendation on Fastly (FSLY US) to underweight from equal-weight, citing a less favorable risk/reward scenario heading into the second half of the year. Shares down 5.2% in premarket. Price pressures, a wave of monetary tightening and a slowing global economy continue to shadow markets. the June CPI print reading on Wedensday is expected to get closer to 9%, a fresh four-decade high, buttressing the Federal Reserve’s case for a jumbo July interest-rate hike. Company earnings will shed light on recession fears that contributed to an $18 trillion first-half wipe-out in global equities. “The real earnings hit will come in the second half as we’re hearing from companies, especially retailers, saying they’re already seeing weakness from consumers,” Ellen Lee, portfolio manager at Causeway Capital Management LLC, said on Bloomberg Television. The Stoxx Europe 600 index pared a decline of more than 1% as an advance for utilities offset losses for carmakers and miners. The Euro Stoxx 50 was down 0.8% as of 10:30 a.m. London time, having dropped as much as 1.9% shortly after the cash open. DAX and CAC underperform at the margin. Autos, miners and consumer products are the worst-performing sectors.  Copper stocks sank as fear of global recession continues to suppress metals prices; miners suffered: Anglo American -5.1%, Antofagasta -5.3%, Aurubis -3.7%, Salzgitter -5.1%. Copper was hit hard, with futures down 1.9% today. Here are the top European movers: Dufry shares rise as much as 11%, while Autogrill falls as much as 9.4% after the Swiss duty-free store operator agreed to buy the Italian company from the billionaire Benetton family, with the offer price being below Autogrill’s closing price on Friday. Danske Bank declines as much as 6.4% after the lender cut its outlook for the year. Fincantieri advances as much as 7% after the Italian shipbuilder said it secured an ultra-luxury cruise ship order that will be built by the end of 2025. Joules drops as much as 25% after the British retailer said it hired KPMG to advise on how to shore up its cash position. MJ Gleeson jumps as much as 7.4% after the homebuilder published a trading update stating that it sees full-year earnings being “significantly ahead of expectations.” Peel Hunt says it was a “strong finish to the year.” Uniper falls as much as 12%, adding to its declines in recent weeks, after the German utility last week asked the government for a bailout. Wizz Air declines as much as 5.3% after the low-cost carrier provided a 1Q update, with ticket fares down 12% versus FY20. Nordex rises as much as 7.8%, reversing early losses after the wind-turbine maker said it plans to raise EU212m via a fully-underwritten rights issue. Mining stocks sink as fear of global recession continues to suppress metals prices. Anglo American and Antofagasta are among the decliners. “Earnings expectations will come down this year and probably next year as well, which is somewhat priced,” Barclays Private Bank Chief Market Strategist Julien Lafargue said on Bloomberg Television. “The question is how big are the cuts we are going to see,” he added. The declines in Europe came as Chinese stocks had their worst day in about a month as the Covid resurgence combined with fresh fines for tech giants hit markets Earlier in the session, Asian stocks tumbled as resurging Covid-19 cases in China dented investor sentiment and raised fears of lockdowns that could hurt growth and corporate earnings. The MSCI Asia Pacific Index dropped as much as 1.1%, erasing an earlier gain of as much as 0.5%. Chinese stocks had their worst day in about a month as a Covid resurgence combined with fresh fines for the tech giants sent investors running for the door. Japan was a bright spot, buoyed by the prospect of administrative stability after the ruling coalition expanded its majority in an upper house election. Alibaba and Tencent dragged the gauge the most after China’s watchdog fined the internet firms. All but two sectors declined, with materials and consumer discretionary sectors leading the retreat. Chinese stocks were the region’s notable losers, with benchmarks in Hong Kong slumping about 3% and those in mainland China down more than 1%. A bevy of bad news from the world’s second-largest economy ahead of major economic data releases later this week dampened the mood. The first BA.5 sub-variant case was reported in Shanghai in another challenge to authorities struggling to counter a Covid-19 flare-up in the financial hub. Macau shuttered almost all casinos for a week from Monday as virus cases remain unabated.  “Sentiment got weakened again as Covid-19 cases spread again in China,” said Cui Xuehua, a China equity analyst at Meritz Securities in Seoul. “There are also worries about lockdowns as companies will start reporting their earnings.”   Meanwhile, benchmarks in Japan outperformed the region, gaining more than 1% following the ruling bloc’s big election victory.   Traders in Asia are awaiting for a set of data from the world’s second-largest economy this week, including its growth and money supply figures. Also on the watch are corporate earnings, which would give investors more clues about the impact of lockdowns in China and rising costs of goods and services. Japanese equities climbed after the ruling coalition expanded its majority in an upper house election held Sunday, two days after the assassination of former Prime Minister Shinzo Abe.  The Topix index rose 1.4% to 1,914.66 as of the market close in Tokyo, while the Nikkei 225 advanced 1.1% to 26,812.30. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 1.9%. Out of 2,170 shares in the index, 1,862 rose and 256 fell, while 52 were unchanged. “In the next two years or so, the government will be able to make some drastic policy changes and if they don’t go off in the wrong direction, the stability of the administration will be a major factor in attracting funds to the Japanese market,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Australia's S&P/ASX 200 index fell 1.1% to close at 6,602.20, with miners and banks contributing the most to its drop. All sectors declined, except for health. EML Payments was the worst performer after its CEO resigned. Costa slumped after Credit Suisse downgraded the stock. The produce company also said it’s faced quality issues from weather. In New Zealand, the S&P/NZX 50 index fell 0.6% to 11,106.14 India’s benchmark stock index declined following the start of the first quarter earnings season, with bellwether Tata Consultancy Services Ltd. disappointing amid worsening cost pressures faced by Indian companies.  The S&P BSE Sensex Index fell 0.2% to 54,395.23 in Mumbai, after posting its biggest weekly advance since April on Friday, helped by a recent correction in key commodity prices. The NSE Nifty 50 Index ended little changed on Monday.  Tata Consultancy contributed the most to the Sensex’s drop, falling 4.6%, its sharpest decline in seven weeks. Bharti Airtel slipped as Adani Group’s surprise announcement of participating in a 5G airwaves auction potentially challenges its telecom business. Still, 15 of the 19 sub-sector gauges compiled by BSE Ltd. gained, led by power producers. Software exporter HCL Technologies Ltd. slumped more than 4% before its results on Tuesday. In FX, the pound fell as the race to replace Boris Johnson as UK premier heats up. Over in Europe, the main conduit for Russian gas goes down for 10-day maintenance on Monday. Germany and its allies are bracing for President Vladimir Putin to use the opportunity to cut off flows for good in retaliation for the West’s support of Ukraine following Russia’s invasion. The Bloomberg Dollar Spot Index snapped a two-day decline as the greenback rose against all of its Group-of-10 peers. The Norwegian krone and the Australian dollar were the worst performers. The Aussie declined amid the greenback’s strength, and poor sentiment triggered by Covid news and political strife with China. Australian Prime Minister Anthony Albanese has ruled out complying with a list of demands from the Chinese government to improve relations between the two countries. Shanghai reported its first case of the BA.5 sub-variant on Sunday, warning of “very high” risks as the city’s rising Covid outbreak sparks fears of a return to its earlier lockdown. The yen dropped to a 24-year low above 137 per dollar. Japanese Prime Minister Fumio Kishida’s strong election victory presents him with a three-year time frame to pursue his own agenda of making capitalism fairer and greener, with no need to quickly change course on economic policy including central bank stimulus In rates, Treasuries are slightly richer across the curve with gains led by the front end, following a wider rally seen across bunds and, to a lesser extent, gilts as stocks drop. Sentiment shifts to second-quarter earnings season, while focus in the US will be on Tuesday’s inflation print. Bunds lead gilts and Treasuries higher amid haven buying. Treasury yields richer by up to 3.5bp across front end of the curve, steepening 2s10s and 5s30s spreads by almost 2bp; 10-year yields around 3.06%, with bunds and gilts trading 3bp and 1bp richer in the sector.  Auctions are front loaded, with 3-year note sale today, followed by 10- and 30-year Tuesday and Wednesday. Auctions resume with $43b 3-year note sale at 1pm ET, followed by $33b 10-year and $19b 30-year Tuesday and Wednesday. WI 3-year around 3.095% is above auction stops since 2007 and ~17bp cheaper than June’s stop-out. Bitcoin caught a downdraft from the cautious start to the week in global markets, falling as much as 2.6% but holding above $20,000. In commodities, crude futures decline. WTI trades within Friday’s range, falling 1.3% to trade near $103.48. Base metals are mixed; LME copper falls 1.4% while LME lead gains 1.4%. Spot gold maintains the narrow range seen since Thursday, falling roughly $4 to trade near $1,739/oz. It is a quiet start tot he week otherwise, with nothing scheduled on the US calendar today. Market Snapshot S&P 500 futures down 0.6% to 3,877.75 STOXX Europe 600 down 0.8% to 413.75 MXAP down 0.9% to 157.30 MXAPJ down 1.6% to 516.87 Nikkei up 1.1% to 26,812.30 Topix up 1.4% to 1,914.66 Hang Seng Index down 2.8% to 21,124.20 Shanghai Composite down 1.3% to 3,313.58 Sensex down 0.2% to 54,349.37 Australia S&P/ASX 200 down 1.1% to 6,602.16 Kospi down 0.4% to 2,340.27 German 10Y yield little changed at 1.28% Euro down 0.6% to $1.0122 Brent Futures down 2.2% to $104.66/bbl Gold spot down 0.3% to $1,738.11 U.S. Dollar Index up 0.47% to 107.51 Top Overnight News from Bloomberg Foreign Secretary Liz Truss entered the race to replace Boris Johnson as UK premier, the latest cabinet minister to make her move in an already fractious contest Price action in the spot market Friday for the euro was all about short-term positioning, options show The Riksbank needs to prevent high inflation becoming entrenched in price- and wage-setting, and to ensure that inflation returns to the target, it says in minutes from latest monetary policy meeting The probability of a euro-area economic contraction has increased to 45% from 30% in the previous survey of economists polled by Bloomberg, and 20% before Russia invaded Ukraine. Germany, one of the most- vulnerable members of the currency bloc to cutbacks in Russian energy flows, is more likely than not to see economic output shrink ECB Governing Council member Yannis Stournaras said a new tool to keep debt-market turmoil at bay as interest rates rise may not need to be used if it’s powerful enough to persuade investors not to test it The number of UK households facing acute financial strain has risen by almost 60% since October and is now higher than at any point during the pandemic A more detailed look at global markets courtesy of Newqsuawk Asia-Pac stocks traded mostly lower as the region digested last Friday’s stronger than expected NFP data in the US, with sentiment also mired by COVID-19 woes in China. ASX 200 was led lower by underperformance in tech and the mining-related sectors, while hopes were dashed regarding an immediate improvement in China-Australia ties following the meeting of their foreign ministers. Nikkei 225 bucked the trend amid a weaker currency and the ruling coalition’s strong performance at the Upper House elections, but with gains capped after Machinery Orders contracted for the first time in 3 months. Hang Seng and Shanghai Comp. traded negative amid COVID concerns after a rise in Shanghai’s COVID-19 cases prompted authorities to declare more high-risk areas and the city also reported its first case of the BA.5 omicron subvariant, as well as two more rounds of mass testing in at least 9 districts. Casino stocks were heavily pressured in Hong Kong after Macau announced to shut all non-essential businesses including casinos, while shares in tech giants Tencent and Alibaba weakened after reports that they were among the companies fined by China’s antitrust watchdog concerning reporting of past transactions. Top Asian News Shanghai’s COVID-19 cases continued to increase which prompted authorities to declare more high-risk areas and is fuelling fears that China’s financial hub may tighten movement restrictions again, according to Bloomberg. In relevant news, Shanghai reported its first case of the BA.5 omicron subvariant and authorities ordered two more rounds of mass testing in at least 9 districts. An official from China's Shanghai says authorities have classified additional areas as high risk areas. Macau will shut all non-essential businesses including casinos this week due to the COVID-19 outbreak, according to Reuters. It was separately reported that Hong Kong is considering a health code system similar to mainland China to fight COVID. China’s Foreign Minister Wang said he had a candid and comprehensive exchange with US Secretary of State Blinken, while he called for the US to cancel additional tariffs on China as soon as possible and said the US must not send any wrong signals to Taiwan independence forces, according to Reuters. US Secretary of State Blinken stated that the US expects US President Biden and Chinese President Xi will have the opportunity to speak in the weeks ahead, according to Reuters. US Commerce Secretary Raimondo said cutting China tariffs will not tame inflation and that many factors are pushing prices higher, according to FT. China’s antitrust watchdog fined companies including Alibaba (9988 HK) and Tencent (700 HK) regarding reporting of past deals, according to Bloomberg. Japan's ruling coalition is poised to win the majority of seats contested in Sunday's upper house election and is projected to win more than half of the 125 Upper House seats contested with a combined 76 seats and the LDP alone are projected to win 63 seats, according to an NHK exit poll cited by Reuters. Japanese PM Kishida said that they must work toward reviving Japan’s economy and they will take steps to address the pain from rising prices, while he added they will focus on putting a new bill that can be discussed in parliament when asked about constitutional revision and noted that they are not considering new COVID-19 restrictions now, according to Reuters. European bourses are pressured, Euro Stoxx 50 -0.5%, but will off post-open lows amid a gradual pick-up in sentiment. Pressure seeped in from APAC trade amid further China-COVID concerns amid a relatively limited docket to start the week. Stateside, futures are directionally in-fitting but with magnitudes less pronounced with earnings season underway from Tuesday; ES -0.4%. Toyota (7203 JP) announces additional adjustments to its domestic production for July; volume affected by the adjustment will be around 4000 units, global production plan to remain unchanged, via Reuters. Top European News Fitch affirmed European Stability Mechanism at AAA; Outlook Stable and affirmed Greece at BB; Outlook Stable, while it cut Turkey from BB- to B+; Outlook Negative. UK Companies are bracing for a recession this year with multiple companies said to have begun “war gaming” for a recession, according to FT. In other news, local leaders warned that England’s bus networks could shrink by as much as a third as the government’s COVID-19 subsidies end and commercial operators withdraw from unprofitable routes, according to FT. Senior Tory party figures are reportedly seeking to narrow the leadership field quickly, according to FT. It was separately reported that only four Tory party leadership candidates are expected to remain by the end of the week under an accelerated timetable being drawn up by the 1922 Committee of backbenchers, according to The Times. UK Chancellor Zahawi, Transport Minister Shapps, Foreign Secretary Truss, junior Trade Minister Mordaunt, Tory MPs Jeremy Hunt and Sajid Javid have announced their intentions to run for party leader to replace UK PM Johnson, while Defence Secretary Wallace decided to not run for PM and several have declared the intention to cut taxes as PM, according to The Telegraph, Evening Standard and Reuters. FX Buck firmly bid after strong US jobs report and pre-CPI on Wednesday that could set seal on another 75bp Fed hike this month, DXY towards top of 107.670-070 range vs last Friday's 107.790 high. Aussie undermined by rising Covid case count in China’s Shanghai, AUD/USD loses grip of 0.6800 handle Yen drops to fresh lows against Greenback after BoJ Governor Kuroda reiterates dovish policy stance amidst signs of slowing Japanese growth, USD/JPY reaches 137.28 before waning. Euro weak due to heightened concerns that Russia may cut all gas and oil supplies, EUR/USD eyes bids ahead of 1.0100. Pound down awaiting Conservative Party leadership contest and comments from BoE Governor Bailey, Cable under 1.2000 and losing traction around 1.1950. Hawkish Riksbank minutes help Swedish Crown avoid risk aversion, but Norwegian Krona declines irrespective of stronger than forecast headline inflation; EUR/SEK sub-10.7000, EUR/NOK over 10.3200. Yuan soft as Shanghai raises more areas to high-risk level; USD/CNH and USD/CNY nearer 6.7140 peaks than troughs below 6.6900 and 6.7000 respectively. Fixed Income Debt regains poise after post-NFP slide, with Bunds leading the way between 151.00-149.75 parameters Gilts lag within 114.94-33 range awaiting Conservative leadership contest and comments from BoE Governor Bailey 10 year T-note firm inside 118-00+/117-18+ bounds ahead of USD 43bln 3 year auction Commodities Crude benchmarks are curtailed amid the COVID situation with broader developments limited and heavily focused on Nord Stream. French Economy and Finance Minister Le Maire warned there is a strong chance that Moscow will totally halt gas supplies to Europe, according to Politico. Canada will grant a sanctions waiver to return the repaired Russian turbine to Germany needed for maintenance on the Nord Stream 1 gas pipeline but will expand sanctions against Russia’s energy sector to include industrial manufacturing. The US does not expect any specific announcements on oil production at this week’s US-Saudi summit, according to FT sources. JPMorgan (JPM) sees crude prices in the low USD 100s in H2 2022, falling to high USD 90s in 2023. Spot gold remains relatively resilient, torn between the downbeat risk tone and the USD's modest advances; attention on the metal's reaction if DXY surpasses Friday's best. Copper pulls back as Los Bambas returns to full output and on the China readacross. US Event Calendar Nothing major scheduled Central Banks 14:00: Fed’s Williams Takes Part in Discussion on Libor Transition DB's Jim Reid concludes the overnight wrap If you're in Europe over the next week good luck coping with the heatwave. In the UK I read last night that there's a 30% chance that we will see the hottest day ever over that period. The warning signs are always there when at 5am you're sweating and not just because of the immense effort put in on the EMR. Talking of red hot, it's that time of the month again where all roads point to US CPI which will be released exactly half way through the European week. This will be followed by the US PPI release (Thursday) and the University of Michigan survey for July on Friday where inflation expectations will be absolutely key. With US Q2 GDP currently tracking negative Friday's retail sales and industrial production could still help swing it both ways. Staying with the US it's time for Q2 earnings with a few high profile financials reporting. This is a very important season (aren't they all) as the collapse in equities so far in 2022 is largely due to margin compression and not really earnings weakness. Elsewhere China’s Q2 GDP on Friday alongside their main monthly big data dump is a highlight as we see how data is rebounding after the spike in Covid. In Europe, it will be a data-packed week for the UK. Going through some of this in more detail now and US CPI is the only place to start. Our economists note that while gas prices fell in the second half of June, the first half strength will still be enough to help the headline CPI print (+1.33% forecast vs. +0.97% previously) be strong on the month but with core (+0.64% vs. +0.63%) also strong. They have the headline YoY rate at 9.0% (from 8.6%) while core should tick down from 6.0% to 5.8%. Aside from an array of Fed speakers, investors will be paying attention to speeches from the BoE Governor Bailey (today and tomorrow). Markets will be also anticipating the Bank of Canada's decision on Wednesday, and another +50bps hike is expected based on Bloomberg's median estimate. Finally, G20 central bankers and finance ministers will gather in Bali on July 15-16. In Europe, it will be a busy week for the UK, with monthly May GDP, industrial production and trade data due on Wednesday, among other indicators. Germany's ZEW Survey for July (tomorrow) will also be in focus as European gas prices continue to be on a tear amid risks of Russian supply cut-offs. Speaking of which, Nord Stream 1 will be closed from today to July 21st for maintenance with much anticipation as to what happens at the end of this period. Elsewhere, Eurozone's May industrial production (Wednesday) and trade balance (Friday) will also be due. Finally, as Q2 earnings releases near for key US and European companies, key US banks will provide an early insights on the economic backdrop and consumer spending patterns. Results will be due from JPMorgan, Morgan Stanley (Thursday), Citi and BlackRock (Friday). In tech, TSMC's report on Thursday may provide more insight into the state of supply-demand imbalance in semiconductors. In consumer-driven companies, PepsiCo (tomorrow) and Delta (Wednesday) will also release their results. The rest of the day by day week ahead is it the end as usual. Asian equity markets are starting the week mostly lower on rising concerns around a fresh Covid flare-up in China as Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant on Sunday. Across the region, the Hang Seng (-2.89%) is the largest underperformer amid a broad sell-off in Chinese tech shares after China imposed fines on several companies including Tencent and Alibaba for not adhering to anti-monopoly rules on disclosures of transactions. In mainland China, the Shanghai Composite (-1.50%) and CSI (-2.05%) both are trading sharply lower whilst the Kospi (-0.30%) is also weaker after see-sawing in early trade. Bucking the trend is the Nikkei (+1.02%) after Japan’s ruling party, the Liberal Democratic Party (LDP) and its coalition partner, Komeito, expanded its majority in the upper house in the country’s parliamentary vote held on Sunday and following the assassination of former Prime Minister Shinzo Abe last week. Outside of Asia, US stock futures are pointing to a weaker start with contracts on the S&P 500 (-0.60%) and NASDAQ 100 (-0.85%) moving lower. Early morning data showed that Japan’s core machine orders dropped -5.6% m/m in May (v/s -5.5% expected) and against an increase of +10.8% in the previous month. Over the weekend, China’s factory gate inflation (+6.1% y/y) cooled to a 15-month low in June (v/s +6.0% expected) compared to a +6.4% rise in May. Additionally, consumer prices rose +2.5% y/y in June (v/s +2.4% expected), widening from a +2.1% gain in May and to the highest in 23 months. Elsewhere, oil prices are lower with Brent futures down -0.36% at $106.63/bbl and WTI futures (-0.77%) at $103.98/bbl as I type. Treasury yields are less than a basis point higher at the moment. Recapping last week now and a return to slightly more optimistic data boosted yields and equities, as central bank pricing got a bit more hawkish after a dovish run. More pessimistically, natural gas and electricity prices in Europe skyrocketed, as another bout of supply fears gripped the market. Elsewhere, the resignation of Prime Minister Johnson left a lot of questions about the medium-term policy path for the UK. After global growth fears intensified at the beginning of the month, a combination of stronger production and labour market data allayed short-term aggressive slow down fears. This sent 10yr Treasury and bund yields +20.6bps (+9.1bps Friday) and +11.3bps (+2.7bps Friday) higher last week. In the US, the better data coincided with expectations that the Fed would be able to tighten policy even more, which drove 2yr yields +27.2bps higher (+9.1bps Friday), and drove the 2s10s yield curve into inversion territory, closing the week at -2.5bps. The market is still anticipating that the FOMC will reach its terminal rate this cycle around the end of the first quarter next year, but that rate was +24.4bps (+12.2bps Friday) higher over the week. A large part of the jump in yields came on Friday following the much stronger than expected nonfarm payrolls figures, which climbed +372k in June, versus expectations of +265k. It’s hard to have a recession with that much job growth, so hiking will continue. Elsewhere in the print, average hourly earnings were in line at 0.3%, with the prior month revised higher to 0.4%, while the unemployment rate stayed at an historically tight 3.6% as consensus expected. Contrary to the US, yield curves were steeper in Europe, with 2yr bund yields managing just a +1.1bp climb (-3.1bps Friday). The continent had more immediate concerns in the form of a potential energy crisis. Fears that Russia would use the planned Nord Stream maintenance period beginning this week as a chance to squeeze supplies, alongside a now averted strike in Norway, sent European natural gas prices +14.44% higher (-4.24% Friday), ending the week at €175 per megawatt-hour, levels last rivaled during the initial invasion of Ukraine. German electricity prices also took off, increasing +20.26% (-7.54% Friday), setting off fears of a genuine energy crisis on the continent. That, combined with more expected Fed tightening priced in versus the ECB over the week, drove the euro -2.23% (+0.21% Friday) lower versus the US dollar, to $1.018, the closest to parity the single currency has come in over two decades. The fears were somewhat tempered by the end of the week, when it was reported that Canada would send a necessary turbine to Russia via Germany, enabling Russia to in theory remit gas supply back to Germany post the shutdown. Through all the macro noise the S&P 500 posted its 12th weekly gain of the year, climbing +1.94% (-0.08% Friday), driven by a particularly strong performance among tech and mega-cap stocks, with the NASDAQ (+4.56%, +0.12% Friday) and FANG+ (+5.82%, -0.22% Friday) both outperforming. European equities also managed to climb despite the energy fears, with the STOXX 600 gaining +2.35% (+0.51% Friday), the DAX gaining +1.58% (+1.34% Friday), and the CAC +1.72% higher (+0.44% Friday). UK equities underperformed, with the FTSE 100 gaining just +0.38% (+0.10% Friday). The pound was in the middle of the pack in terms of G10 currency performance versus the US dollar, however losing -0.53% (+0.05% Friday). Tyler Durden Mon, 07/11/2022 - 08:03.....»»

Category: personnelSource: nytJul 11th, 2022

Futures Flat As Traders Brace For Latest FOMC Minutes

Futures Flat As Traders Brace For Latest FOMC Minutes After yesterday's remarkable U-turn in US stocks which tumbled at the open only to recover all losses by EOD (except the energy sector which suffered a furious rout), overnight futures traded subdued, fluctuating between gains and losses ahead of today's FOMC minutes as traders debate whether the coming recession is good news (more stimulus from the Fed) or bad news (stagflationary, tying the Fed's hands). S&P futures were down 0.1% last, having traded on both sides of the unchanged line for much of the past 12 hours while Europe’s Stoxx 600 was much more excited and climbed the most since June 24. The two- and 10-year US yield curve remained inverted as investors awaited the minutes of the Federal Reserve’s last meeting; the 10-year Treasury yield held steady around 2.81%. The dollar rose for a fourth day as the Euro tumbled while bitcoin traded at $20,000. In China, Shanghai launched mass testing for Covid in nine districts after detecting cases the past two days, fueling concerns that the financial hub may once again find itself locked down in pursuit of Covid Zero. The Shanghai Composite Index slid the most since May 24. In thin premarket trading, bank stocks were lower as investors await the release of the Federal Reserve’s meeting minutes. In corporate news, crypto broker Voyager Digital filed for Chapter 11 bankruptcy protection. Meanwhile, HSBC is in talks to sell its Russia unit to local lender Expobank, according to people familiar with the matter. Stocks related to cryptocurrencies fell in US premarket trading as Bitcoin fell amid mounting concerns of a global recession. Here are some of the most notable premarket movers: Kornit (KRNT US) shares plunged 23% in US premarket trading after the inkjet printer manufacturer issued disappointing preliminary second-quarter results. Stifel cut its recommendation to hold from buy. Chip and chip equipment stocks could be active on Wednesday after Bloomberg reported that the US is pushing the Netherlands to ban ASML from selling some chipmaking tools to China. Watch shares including Applied Materials (AMAT US), Lam Research (LRCX US) and KLA (KLAC US), as well as Nvidia (NVDA US), Qualcomm (QCOM US), Intel (INTC US), Advanced Micro Devices (AMD US) Stocks related to cryptocurrencies decline as Bitcoin drop amid mounting concerns of a global recession. Riot Blockchain (RIOT US) -4.2%, Coinbase (COIN US) -3.3%, Ebang (EBON US) -5.5%, Marathon Digital (MARA US) -1.8%, BitNile -5.2% (NILE US) Shopify (SHOP US) shares slide 0.9% as The Globe and Mail reports, citing people familiar, that the company is delaying a compensation overhaul that would give its employees flexibility on how their salary is paid in stock and cash. Cazoo (CZOO US) and Carvana (CVNA US) fall as Davy cuts earnings estimates and price targets for online auto stocks, citing inflation, higher interest rates and weakening consumer sentiment as threats to operational execution. RADA Electronic Industries (RADA US) sinks 11%, after the Israeli defense firm said that it’s withdrawing its full-year 2022 revenue guidance in light of its pending merger with Leonardo DRS. Watch cybersecurity companies like Palo Alto Networks (PANW US), CrowdStrike Holdings (CRWD US) and Okta (OKTA US) as Morgan Stanley analysts said they expect durable security spending environment in the second half of 2022 against an uncertain macro backdrop. With energy names plunging on expectations of a recession, bargain hunters chased technology stocks boosting US equity indexes on Tuesday, helping mask a deepening slump in stocks linked to economic activity, such as energy, commodity and industrial names. A renewed spike in China’s Covid cases and a worsening gas crisis in Europe signaled that a worldwide slowdown is coming even as central banks tighten monetary policy to contain consumer prices. “Markets are caught between two opposing forces and that’s the place we are going to be in for the next few months,” Diana Amoa, chief investment officer for long-biased strategies at Kirkoswald Asset Management, said on Bloomberg Television. “We go from trading lower growth to trading high inflation.” Today's 2 p.m. release of the June FOMC minutes will provide one of the session highlights. European stocks gave back over half of their opening gains with the Euro Stoxx 50 up 1.25% as of 7:30 a.m. ET having added as much as 2.3% in early trade, clawing back roughly half of Tuesday’s sharp losses. CAC 40 and FTSE 100 outperform. Retail, tech and media names are the best performers among broad-based sectoral gains within the Stoxx 600. European semiconductor stocks bounced back on Wednesday, following heavy selling in the past three sessions spurred by concerns over cooling chip demand. ASML shares rise 3.2% as of 9:39am CET, halting a seven-day losing streak, despite news that the US is pushing the Netherlands to stop the chip tool maker from selling deep ultraviolet lithography systems to China. Banks remain the only European industry group in the red on Wednesday, with the Stoxx 600 Bank Index. Here are the most notable European movers: Just Eat Takeaway shares surge over 20% after the meal delivery firm struck a deal with Amazon for the e-commerce giant to take up to a 15% stake in its US unit Grubhub. Abrdn shares jump as much as 8.8% after the UK asset management firm said it will commence a return of £300m through the repurchase of its shares, with a first phase of up to £150m being undertaken by Goldman Sachs, according to a filing. Atos shares climb as much as 8.1% after a filing shows Bank of America holding a 7.77% stake in the French tech services company. Meanwhile, governance remains in focus amid a fresh news report of shareholder unrest. Airlines rise on Wednesday amid a rebound in the broader European market. Ryanair shares rally as much as 5.1%, EasyJet +4.2%, Wizz Air +4.5%. Shop Apotheke shares gain as much as 13% after jumping 12% yesterday when the online pharmacy reported preliminary 2Q results. Baader notes that e-scripts will be mandatory in all German states by January 2023, further pushing the company’s sales prospects in the country. Trainline stock surges as much as 24% as its new FY23 guidance implies a 27% upgrade to consensus, Morgan Stanley writes in note following trading update. Fresnillo stocks fall as much as 4.2%, while Endeavour rises as much as 4% after Credit Suisse starts coverage of the former with an underperform recommendation and initiates UK-listed shares of the latter at outperform. TotalEnergies and Engie fall in Paris, underperforming peers, as President Emmanuel Macron comes under increasing pressure to introduce a windfall tax on energy and transport giants to fund his bill aimed at protecting consumer purchasing power. Adidas shares fall as much as 5.4% after Hauck & Aufhaeuser double downgrades to sell from buy, also setting a Street low price target for the sports-apparel maker, whose FY22 targets are likely at risk due to a 2Q margin squeeze. Earlier in the session, Asian stocks slipped as fears of a global economic recession and fresh Covid-19 outbreaks in China weighed on sentiment. The MSCI Asia Pacific Index fell as much as 1.3%, led by energy-related shares as oil traded below $100 per barrel, while investors snapped up defensive shares. Stocks in China declined as Shanghai ramped up mass testing in nine districts after detecting cases the past two days, fueling concerns that the financial hub may once again find itself locked down in pursuit of Covid Zero. The Shanghai Composite Index slid the most since May 24. Benchmarks in the tech-heavy markets of Taiwan and South Korea also dropped. In China, Shanghai launched mass testing for Covid The fall in Asia shares came despite US stocks recouping most of their losses in a volatile session overnight. Traders are turning their attention to the minutes of the most-recent Federal Reserve meeting, which will be released later today, for a sense of policy makers’ debate about the near-term path for interest rates.   Asian equities have been stuck in range-bound trading in recent months as investors weigh higher interest rates and the prospect of an economic downturn driven by elevated inflation. Still, narratives of peak inflation are building up as the Fed ramps up its policy-tightening campaign. It’s “much too early, in our view, to think that inflation trades are over,” Frank Benzimra, head of Asia equity strategy at Societe Generale, said in a Bloomberg TV interview. For emerging-market assets, “you also have some valuation buffer, some levels of yields which are becoming interesting. So this is where we are seeing that we may be close to the peak of pain.” Equity measures in the Philippines and New Zealand bucked the regional trend to each rise more than 1.6%. Japanese stocks declined as oil tumbled and concerns of a global economic downturn damped sentiment.  The Topix Index fell 1.2% to 1,855.97 at the market close in Tokyo, while the Nikkei 225 declined 1.2% to 26,107.65. Toyota Motor Corp. contributed the most to the Topix’s loss, decreasing 2.8%. Out of 2,170 shares in the index, 572 rose and 1,520 fell, while 78 were unchanged. “Japanese stocks are seen as representative of the global cyclical economy, so when concerns about recession appear, not only in the US but globally as well, stocks overall are likely to be sold off,” said Yasuhiko Hirakawa, head of an investment department at Rakuten Investment Management.  Oil Steadies Above $100 After Plunging on Recession Concerns Key equity gauges in India rallied as commodity prices eased while a recovery in monsoon rainfall buoyed sentiment. The S&P BSE Sensex Index rose 1.2% to 53,750.97 in Mumbai, while the NSE Nifty 50 Index advanced 1.1%. Hindustan Unilever was the biggest boost to the Sensex, increasing 4%. Out of 30 shares in the index, 25 rose and five fell. Seventeen of the 19 sectoral indexes compiled by BSE Ltd. gained, led by automobile and consumer goods companies. Asia’s biggest software exporter Tata Consultancy Services will kickoff the April-June earnings season for companies on Friday. Australia's S&P/ASX 200 index fell 0.5% to close at 6,594.50, as fears of a global economic recession as well as tumbling commodity prices hit market sentiment.  The benchmark was dragged by a group of mining shares that fell to the lowest level since Nov. 2, and energy stocks that fell the most in over two years. In New Zealand, the S&P/NZX 50 index rose 1.6% to 11,141.07 Fixed income was comparatively quiet. Bunds and USTs bear-steepened as 2y Bunds outperformed. Treasuries are flat in early US trading Wednesday with front end underperforming, pushing 2s10s yield curve into deeper inversion. Yields are mostly lower led by 2-year, at 2.82%; the 10Y yield was trading just south of 2.80% last; 5- to 30-year yields hold increases of less than 2bp after touching lowest levels since late May on Tuesday amid a slump in commodity prices led by oil. 2s10s curve inverted as much as 3.6bp; maximum inversion this year was 9.5bp on April 4, reached as futures markets began to price in bigger Fed rate increases in response to persistently high inflation readings, pushing 2- year yields higher. Latest inversion, by contrast, occurred as 10- year yield declined more than 2-year, with expectations for Fed rate path in broad decline on economic-slowdown concerns. UK Gilts bear-flattened, erasing an initial decline after comments from BOE’s Pill. Peripheral spreads are marginally wider to Germany. In FX, Bloomberg dollar spot index rises 0.2%. JPY is the strongest in G-10, trading near 135.30/USD. EUR sits at the bottom of the scoreboard with EUR/USD trading through Tuesday’s lows. In commodities, crude futures drift off Asia’s best levels. WTI slips below $100, Brent trades on a $104 handle, with Goldman Sachs arguing that a plunge driven by fears a recession will hurt demand was overdone. Today’s gains were small compared to Brent’s decline of more than $10 on Tuesday, its third largest ever in dollar terms. Investors have been pricing in the consequences of a slowdown even as physical crude markets continue to show signs of vigor and the war in Ukraine drags on. Copper dropped as fears of a global economic slowdown piled pressure on industrial metals.. Spot gold holds a narrow range near $1,765/oz. Base metals are mixed; LME tin falls 1.5% while LME lead gains 1.7%. Looking to the day ahead now, today's 2 p.m. release of the June FOMC minutes will provide one of the session highlights. Prior to that, economic data will include the weekly MBA Mortgage Applications release at 7 a.m., the final June Services PMI data at 9:45 a.m. and June's ISM Services Index and the May JOLTS Job Openings at 10 a.m. Elsewhere on the central bank front, the Riksbank's Cecilia Skingsley and BOE's Jon Cunliffe will speak on central bank digital currencies. Fed's John Williams is scheduled to deliver comments at a virtual event on banking culture at 9 a.m. Otherwise from central banks, we’ll get the minutes from the June FOMC meeting, and also hear from the Fed’s Williams, the ECB’s Rehn and the BoE’s Cunliffe and Pill. Market Snapshot S&P 500 futures down 0.2% to 3,825.75 MXAP down 0.8% to 156.29 MXAPJ down 0.9% to 516.65 Nikkei down 1.2% to 26,107.65 Topix down 1.2% to 1,855.97 Hang Seng Index down 1.2% to 21,586.66 Shanghai Composite down 1.4% to 3,355.35 Sensex up 0.8% to 53,570.29 Australia S&P/ASX 200 down 0.5% to 6,594.48 Kospi down 2.1% to 2,292.01 STOXX Europe 600 up 1.4% to 406.26 German 10Y yield little changed at 1.24% Euro little changed at $1.0259 Brent Futures up 1.3% to $104.15/bbl Gold spot up 0.2% to $1,769.16 U.S. Dollar Index little changed at 106.46 Top Overnight News from Bloomberg With the European economy lurching toward a recession, traders are growing more convinced that the euro breaking parity with the dollar is imminent “If the fragmentation in bond markets is unwarranted then we should be as unlimited as possible,” European Central Bank Governing Council member Pierre Wunsch tells the Financial Times. “The case to act is strong when faced with unwarranted fragmentation” German factory orders unexpectedly rose in May, even as global momentum was affected by rampant inflation and uncertainty stoked by Russia’s war in Ukraine. Demand increased 0.1% compared to the previous month, compared to an economist estimate of -0.5% Britain’s new Chancellor of the Exchequer, Nadhim Zahawi, signaled he wants to cut taxes faster than his predecessor Rishi Sunak, as he set out plans to boost the UK’s struggling economy British Prime Minister Boris Johnson is on red alert for signs of a coordinated plot from his ministers to bring him down, according to a senior government official China’s central bank looks set to withdraw cash from its financial system in a sign that it’s moving toward normalizing monetary policy as major global peers are forcefully raising interest rates A combination of the recent bond rebound and the spiraling cost to hedge the volatile yen has wiped out the yield premium a Japanese investor once enjoyed from US debt. The yen-hedged yield on 10-year Treasuries collapsed to 0.24% Tuesday from almost 1.7% in April, just above the 0.22% yield on comparable Japanese debt Emerging-market currencies are tumbling as the twin threats of rising US interest rates and a global recession send traders scurrying to the safety of the dollar. The MSCI Emerging Markets Currency Index dropped for a second day, extending this year’s slide to 4.4%, heading for the steepest annual drop since 2015 A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly negative with risk appetite sapped by headwinds from the global growth concerns and US recession fears. ASX 200 was marginally lower with energy leading the descent in the commodity-related sectors, although the downside in the index was stemmed by tech strength following the duration-sensitive bias stateside and lower yield environment. Nikkei 225 weakened alongside a firmer currency and with Japan said to delay the call on the start of the nationwide travel support.Hang Seng and Shanghai Comp. conformed to the downbeat mood after the PBoC continued to drain liquidity and with reports noting that US President Biden could lift tariffs on just USD 10bln of Chinese goods, while the US was also said to pressure ASML to stop selling key chipmaking equipment to China. In addition, COVID-19 concerns persisted after China’s Xi’an city entered a 7-day period of ‘temporary control measures’ and with Macau officials locking down the Grand Lisboa hotel and casino due to a cluster of infections. Top Asian News PBoC injected CNY 3bln via 7-day reverse repos with the rate at 2.10% for a CNY 97bln net drain. Shanghai suspended the operation of KTV venues due to COVID-19 but other entertainment venues can remain open, while the gradual reopening of cinemas and concert venues will go ahead from July 8th, according to Reuters. US top diplomat for East Asia Kritenbrink said the top priority for US Secretary of State Blinken's meeting with Chinese Foreign Minister Wang is to underscore US commitment to diplomacy and maintaining open lines of communication, while he expects Blinken to raise human rights in the meeting with China's Foreign Minister, according to Reuters. Two US senators called for the FTC to investigate TikTok after the disclosure about Chinese access to US data, according to Reuters. Chinese Capital Beijing will resume direct international flights in an orderly way, via Reuters. ‘Bad for EM’: Why Funds Are Furiously Selling Risky Currencies SenseTime Plunge Raises Stakes for Slew of China Lockups Lifts Goldman Sachs Sees Kotak Mahindra Bank to Double Market Value Singapore’s Price for Right to Buy a Car Hits All- Time High European bourses are firmer across the board, Euro Stoxx 50 +1.3%, continuing to take impetus from the NDX-led rebound in US hours on Tuesday and shrugging off negative APAC trade. Stateside, futures are mixed/flat at present, but like their European peers have been choppy in overnight ranges awaiting US data and Fed speak; ES -0.1%. Back to Europe, sectors exhibit a pro-cyclical bias that features Tech as the clear outperformer. China's CPCA says prelim figures show China sold 1.926mln cars in June, +22% Y/Y. Prelim. figures indicate Tesla (TSLA) sold 78k (prev. 32.1k MM) China-made vehicles in June, via Reuters. Top European News Latest British Political Drama Proves ‘Sideshow’ for Investors French Rail Strike Adds to European Summer Travel Havoc Russia Slams Macron for Breaching Diplomatic Confidentiality Bulgaria’s Gerb Holds Narrow Lead Over Ruling PP Party: Poll BOE Chief Economist Says Fighting UK Inflation Is Priority Italy Five Star Party is leaning on keeping support for PM Draghi, according to ANSA. Central Banks ECB's Wunsch said If the fragmentation in bond markets is unwarranted then we should be as unlimited as possible, via the FT. BoE's Cunliffe said we will act to ensure the inflation shock does not become imbedded. BoE's Pill says the (BoE) statement re. acting forcefully if necessary reflects both my willingness to adopt a faster pace of tightening than implemented thus far in this tightening cycle & emphasis conditionality on data; Pill will be data-dependant. Much remains to be resolved before we vote on our August policy decision. Adds, that there is a case of steady-handed approach; one-off bold moves can be disturbing to markets. FX Dollar dips, but retains firm underlying bid ahead of FOMC minutes, Fed’s Williams and services ISM, DXY holds around 106.500 within 106.760-340 range. Yen outperforms on technical grounds and with JPY crosses maintaining downward momentum; USD/JPY closer to 135.00 than 136.00, but faces stiff support if breached via recent lows . Euro remains pressured after largely weak Eurozone construction PMIs and no real compensation from mixed retail sales data, EUR/USD slips to new 20 year low nearer 1.0200. Pound precarious as more UK Tory Party MPs quit to pile pressure on PM Johnson, Cable back under 1.1950 after brief rebound from low 1.1900 area. Yuan bucks downbeat mood in EM currencies even though China suffers more outbreaks of Covid-19 as it adopts regional safe haven status; USD/CNH and USD/CNY straddle 6.7100. Lira lurches again and Forint falls to fresh all time low; USD/TRY tops 17.2550 and EUR/HUF touches 410.50. Fixed Income Bulls keep debt afloat after retreat from Tuesday peaks. Bunds subsequently breach prior session best by a lone tick, at 151.66 before running into supply issues, as new 10 year German benchmark technically uncovered. Gilts back on 116.00 handle from 115.47 Liffe low and T-note hovers nearer top end of 120-03/119-21 overnight range ahead of Fed's Williams, US services ISM and FOMC minutes. UK debt unruffled by more UK Government resignations and BoE rhetoric awaiting PMQs that will put spotlight on under fire Conservative Party leader Johnson. Commodities Crude benchmarks are firmer and having been moving with the equity space after yesterday's significant crude selloff; however, the 'recovery' is limited with WTI pivoting USD 100/bbl. Goldman Sachs said oil has overshot as the global deficit is unresolved and it is premature for oil to drop on recession concerns OPEC Secretary General Barkindo has passed away, according to Arab News. Note, from an OPEC personnel perspective, Barkindo's term as the OPEC SecGen was due to end on July 31st, after which the Kuwaiti oil executive Haitham Al Ghais was due to replace him as the new secretary-general Tengiz field in Kazakhstan continues operations following a blast, according to a source cited by Reuters. Spot gold is lacklustre after Tuesday's USD-driven downside; notably, the yellow metal has been fairly resilient to fresh advances in the DXY. While base metals continue to falter, LME copper below 7.5k/T at worst. US Event Calendar 07:00: July MBA Mortgage Applications -5.4%, prior 0.7% 09:45: June S&P Global US Services PMI, est. 51.6, prior 51.6 10:00: May JOLTs Job Openings, est. 10.9m, prior 11.4m 10:00: June ISM Services Index, est. 54.0, prior 55.9 14:00: June FOMC Meeting Minutes Central Banks 09:00: Fed’s Williams Makes Remarks at Event on Bank Culture 14:00: June FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap It's sports day at school today and I'm going to pop in for an hour to watch. However given that my 4yr old twins are the youngest in their year and my daughter is still in a wheelchair I suspect I won’t be building a new trophy cabinet. For those that have asked about Maisie (thanks by the way) she continues to be in great spirits and is exceptional at swimming for her age (6) so she would likely win that if there was such an event. Fingers crossed she'll be able to get out of the wheelchair in a few months after 8 months so far. The next scan is in 3 weeks and we’ll know if the hip ball has finished collapsing and if it is showing any early sign of regrowing. As my kids are unlikely to win a prize they've asked me to ensure I win some for them to make their tears go away. So if you value our research I would appreciate it if you would vote in the Global Institutional Investor FI survey that opened yesterday. You can see the categories I am up for in this (link here) pdf. There are a number but I've listed the priorities. If you could let us know if you voted that would be appreciated unless it is to tell me you voted for one of our competitors! It’s been another tumultuous 24 hours in markets, with a massive risk-off move reversing late in the US session as the S&P (+0.16%) climbed over 2% after Europe closed. We’ll run through the various headlines in a moment, but there was so much going on here’s a quick highlights reel. We’ve seen the euro decline to a 20-year low against the US Dollar, another round of inversions across the Treasury curve, a mammoth rally in bonds, the tightest financial conditions since the initial wave of the Covid pandemic, a market now pricing in at least two full rate cuts by the Fed in 2023, the German government starting work on bailing out the gas sector, near double-digit percentage drops in oil, and a UK Prime Minister who is getting hit with very high profile cabinet resignations. Running through the day, investor fears were evident from the get-go, with European markets swiftly giving up their gains after the open to move progressively lower through the day. An important catalyst for that was the latest bad news on the energy side, where an escalation in the Norwegian gas strike we mentioned yesterday means that nearly 60% of the country’s gas exports could have been affected from Saturday according to the Norwegian Oil and Gas Association. However, there were some optimistic signs overnight, as it appears the Norway labour minister intervened to put an end to the strike by summoning both sides to the table, saying “When the conflict can have such great social consequences for the whole of Europe, I have no choice but to intervene in the conflict”. It goes without saying that this strike would have been coming at a particularly bad time for the European economy, not least with the scheduled maintenance on Nord Stream that’s occurring from July 11-21 and the uncertainty over what happens next. Germany yesterday accelerated legislation that will allow it to rescue energy companies if the need arises with Uniper looking set to be the first to receive state support. Economy Minister Habeck has talked about gas as potentially being a Lehman Brothers moment so the stakes are high. Indeed this is a heavy cloud hanging over European assets at the moment and they were among the worst global performers yesterday as the prospect of a chaotic gas situation and recession came closer into view. Indeed, the euro itself weakened by a massive -1.50% against the US Dollar yesterday, which was its largest daily decline since March 2020, and left the single currency at its lowest level against the dollar since 2002, closing at just $1.0266. It's dipped another -0.2% overnight. Another factor behind the euro’s weakness were growing doubts that the ECB could embark on as aggressive a hiking cycle as initially thought. That expectation of more dovish central banks was present across the world yesterday in light of the recession fears, but it was particularly prevalent in Europe, where the rate priced in by the June 2023 meeting came down by -11.4bps by the close of trade. It was a similar story in the US where the rate priced in by June 2023 came down by -11.4bps, but what’s becoming increasingly apparent is that investors are now expecting that the Fed will shift towards easing policy by mid-2023, with at least a full 25bp cut now priced in between the February and July meetings in 2023, as well as a further one by year-end. Those fears of a recession were manifesting themselves in other asset classes too, with commodities more broadly (European natural gas excepted) having an awful day as the resiliency of global demand was brought into question. For instance, Brent crude oil prices (-9.45%) witnessed their largest daily move lower since March, taking prices down to their lowest level since early May at $102.77/bbl while WTI (-8.24%) broke beneath $100/bbl for the first time since April. The traditional industrial bellwether of copper was another victim of this trend, plummeting by another -5.36% yesterday to a 19-month low of its own, whilst wheat futures (-4.61%) are now trading beneath their levels prior to Russia’s invasion of Ukraine. In Asia, oil futures have pared bigger bounce back gains but are still trading slightly higher with Brent futures +1.05% and WTI futures (+0.72%) just above the $100/bbl level again. Given the rising doubts about future rate hikes and the weakening inflationary pressures from key commodities, sovereign bonds put in a strong performance as they also benefited from their usual appeal as a haven asset. Yields on 10yr Treasuries came down by -7.5bps to 2.81%, and the 10yr breakeven fell -6.2bps to 2.30%, which takes it to a level unseen since September 2021, back before the Fed had even begun to taper their asset purchases. The declines in yields were concentrated at longer maturities, with the 2s10s curve flattening by -6.2bps to -1.9bps, closing inverted for the first time in nearly a month. And speaking of inversions, another milestone was reached yesterday as the 2s5s curve inverted for the first time this cycle in trading, closing -5.0bps lower at -0.9bps. That picture was echoed over in Europe as well, where yields on 10yr bunds (-15.6bps), OATs (-13.8bps) and BTPs (-9.1bps) all moved lower on the day. This morning yields on 10yr USTs (+2.37 bps) are edging higher as I type. For equities, the layer upon layer of bad news resulted in another significant selloff until the Euro close, with the STOXX 600 shedding -2.11%. However the rate rally supported a steady tech-led march higher in the US after opening very weak and trading more than -2% lower. The S&P 500 finished +0.16% higher and the NASDAQ was up +1.75% on the day. Energy stocks led the moves lower on both sides of the Atlantic, and the index-level gains in the US were supported by a narrow subset of large cap stocks sensitive to lower rates, with only 3 S&P sectors – tech, discretionary, communications – in the green, and a massive 667bps differential between the best performing sector (communications +2.66%) and worst (energy -4.01%). Indeed, the even more concentrated mega-cap FANG+ outperformed the rest of the complex, gaining +3.01%. In line with the late US divergence, it was a tale of two credit markets, with HY credit spreads widening in Europe with the iTraxx crossover +27.4bps to 616bps, a level not seen since early April 2020 at the height of the initial lockdowns, while US HY CDX spreads tightened -11.8bps to 565bps after trading as high as 592bps intra-day. On the UK political scene, Prime Minister Johnson’s position is under significant pressure at the minute with two high profile resignations in his cabinet after yet more conduct issues were raised about the PM's leadership. Johnson has indicated he plans to stay on and has appointed replacements for the outgoing ministers, but his position looks increasingly perilous given the lack of party support. The pound was -1.41% lower versus the US dollar, but most of the decline took place before the news of the resignations and the pound was actually in the middle of the pack for G10 currency performance on the day, with the broader risk environment proving more perilous. If the PM can stay on he will likely pivot towards easier fiscal policy now the Chancellor has resigned. However it's tough to price that in as it's not clear whether the PM can survive this episode. Asian equity markets are lagging this morning even with the late US rally. Across the region, the Hang Seng (-1.56%) is the largest underperformer followed by the Kospi (-1.33%) and the Nikkei (-1.26%) in early trade. Markets in mainland China are also sliding with the Shanghai Composite (-1.20%) and CSI (-1.23%) trading in negative territory dragged down by worries about new COVID-19 cases in Shanghai risking fresh restrictions. Moving ahead, stock futures in the DMs indicate a mixed start with contracts on the S&P 500 (-0.12%) and NASDAQ 100 (-0.10%) edging lower albeit with DAX futures bouncing +1.35% after that late US rally. Moving to Covid news, Shanghai reported 24 infections yesterday, its most in three weeks although the overall case load remains small by global standards. To avert a wider spread and huge disruptions, Shanghai’s municipal government said in a statement that there’d be mass PCR testing in 9 districts and partial areas in another 3 districts, with residents required to take 2 tests within 3 days. The measures follow a reported outbreak, which has driven anxiety that the financial capital will be closed back down after just emerging from a two-month long lockdown. On the data side, US factory orders expanded by a stronger-than-expected +1.6% in May (vs. +0.5% expected), whilst the previous month’s growth was revised up four-tenths to +0.7%. Over in Europe, the final composite PMI for the Euro Area in June was revised up from the flash reading to 52 (vs. flash 51.9). To the day ahead now, and data releases from Europe include German factory orders for May, the German and UK construction PMIs for June, and Euro Area retail sales for May. Over in the US, there’s also the final services and composite PMIs for June, the ISM services index for June, and the JOLTS job openings for May. Otherwise from central banks, we’ll get the minutes from the June FOMC meeting, and also hear from the Fed’s Williams, the ECB’s Rehn and the BoE’s Cunliffe and Pill. Tyler Durden Wed, 07/06/2022 - 07:55.....»»

Category: personnelSource: nytJul 6th, 2022

3 Top Stocks to Buy in July and Hold for Long-Term Growth

The current uncertainty and bearish sentiment from many on Wall Street might offer investors a chance to start positions in fantastic stocks at nice entry points. The three stocks we explore today are Align Technology, Inc. (ALGN), Mastercard (MA), and Intuit (INTU). Today’s episode of Full Court Finance at Zacks explores where the market stands at the start of July following the worst first half since 1970. Soaring prices, higher interest rates, and recession fears remain the key economic and market worries. The current uncertainty and bearish sentiment from many on Wall Street might offer investors a chance to start positions in fantastic stocks at nice entry points. The three stocks we explore today are Align Technology, Inc. (ALGN), Mastercard (MA), and Intuit (INTU).The S&P 500 fell roughly 20.5% in the first six months of 2022 despite a nice relief rally in the second to last week of June. The benchmark’s downturn marked its worst first half since 1970 and has left both Wall Street heavyweights and retail investors frustrated and sitting on big losses.Many pandemic winners have had all of their gains washed away, and even giant companies with great long-term outlooks and amazing balance sheets have been hit hard following the massive bull run after the covid lockdowns. The recalibration of stocks, though painful, presents wonderful opportunities for long-term investors to start buying great stocks at attractive entry points.Clearly, the near-term future of the economy and the market remains cloudy as the Fed ramps up its rate hike efforts in order to tame 40-year high inflation. Other geopolitical forces are helping drive prices higher and continue to log jam supply chains.Yet the economy remains strong by historic standards when looking at the unemployment rate, job openings, and household income. There are also signs that inflation might start to come down from 40-year highs as the housing market cools and downbeat consumer sentiment starts to creep into retail spending data.Wall Street should be armed with far more data by the end of July and certainly by the end of the summer. The market has also historically rebounded in the second half of the year after the S&P 500 falls at least 15% in the first six months. Plus, calling an exact bottom is nearly impossible and trying to do so can hurt your portfolio if you still have decades of investing left.Image Source: Zacks Investment ResearchEven with the fall, the benchmark index is still up 31% in just the past three years and 60% in the last five. And valuations have already been heavily recalibrated. With this in mind, investors might want to consider buying some stocks at nice entry points that are poised to grow for years to come within areas of the economy that aren’t going out of style anytime soon.Align Technology’s ALGN Invisalign system changed the orthodontics industry forever. Its clear aligners are true alternatives to traditional metal braces that have continued to grow at a rapid pace and stay miles ahead of its competition. Align has expanded its international reach and it’s successfully tapping into the youth market who could be a key long-term growth area. ALGN stock is down nearly 70% from its highs and it’s trading at its lowest forward earnings multiple in nearly a decade.Mastercard MA is a credit card titan that’s expanding into a global payments and fintech firm built to thrive in the dynamic world of digital finance. Mastercard’s 2021 revenue surged 23% to outpace its pre-pandemic totals by $2 billion and its top and bottom line outlook for the next two years is fantastic. Mastercard stands to continue to climb in a world that relies less and less on cash.Last up is Intuit INTU which joins together two unstoppable forces that help make it a strong buy-and-hold candidate: taxes and software. Intuit is arguably most famous for its online tax software, TurboTax. INTU also sells software geared toward accounting, small business money management, and personal finance, including QuickBooks and Mint. Intuit purchased consumer finance firm Credit Karma in 2020 and email-marketing giant Mailchimp in November. And it’s trading 45% below its highs. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Align Technology, Inc. (ALGN): Free Stock Analysis Report Intuit Inc. (INTU): Free Stock Analysis Report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 1st, 2022