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What businesses could get from California"s nearly $100 billion budget surplus

Gov. Gavin Newsom presented his revised proposal for the California state budget on Friday, along with the updated estimate for the state budget surplus......»»

Category: topSource: bizjournalsMay 14th, 2022

What businesses could get from California"s nearly $100 billion budget surplus

Gov. Gavin Newsom presented his revised proposal for the California state budget on Friday, along with the updated estimate for the state budget surplus......»»

Category: topSource: bizjournalsMay 14th, 2022

BCE reports first quarter 2022 results

This news release contains forward-looking statements. For a description of the related risk factors and assumptions, please see the section entitled "Caution Regarding Forward-Looking Statements" later in this news release. The information contained in this news release is unaudited. Consolidated adjusted EBITDA1 growth of 6.4% on 4.2% higher service revenue Net earnings of $934 million, up 36.0%, with net earnings attributable to common shareholders of $877 million, or $0.96 per common share, up 35.2%; adjusted net earnings1 of $811 million generated adjusted EPS1 of $0.89, up 14.1% Leading wireless financial results with best quarterly organic service revenue growth in 11 years of 8.7%, 9.3% higher adjusted EBITDA and 5.1% increase in mobile phone blended ARPU2; 34,230 new net mobile phone postpaid subscribers added, up 4.0% 26,024 retail Internet net activations, up 22.7%, driving 8% residential Internet revenue growth; IPTV net activations increased 14.6% to 12,260; 91% of Bell residential households with TV and Internet now on a pure fibre network First major operator to offer 3 Gbps symmetrical Internet speeds, three times faster than speeds available with cable technology On pace to deliver approximately 900,000 new fibre locations and mobile 5G to more than 80% of Canadians in 2022; 80% of planned broadband buildout program to be completed by year end Media revenue up 15.7% on stronger year-over-year TV performance and 84% higher digital revenue3, contributing to industry-best adjusted EBITDA growth of 45.5% Strong financial position maintained with more than $2.8 billion of available liquidity1 at end of Q1, including $104 million in cash Reconfirming all 2022 financial guidance targets MONTRÉAL, May 5, 2022 /PRNewswire/ - BCE Inc. (TSX:BCE) (NYSE:BCE) today reported results for the first quarter (Q1) of 2022. "Bell's Q1 results highlight our continued momentum from 2021 into this year, demonstrating that our accelerated fibre expansion and customer experience improvements continue to offer greater value to our growing base of customers and the communities we live in," said Mirko Bibic, President and CEO of BCE and Bell Canada. "Bell's solid performance across all segments shows that we have the right strategy in place, we're consistently executing on that strategy and our products and services are resonating with our customers. In particular, I'm proud of the gains we made to continue championing the customer experience with a 36% decrease in complaints per the CCTS mid-year report. We delivered our best quarterly organic wireless service revenue growth rate in 11 years through balancing the right market share growth with operating profitability. In addition, our net retail Internet and IPTV subscribers activations are up 20% over last year. With our historic capital expenditure acceleration program now in its second year, we will continue to bring direct fibre connections and 5G to more locations across our footprint throughout 2022. This is the first quarter since the start of the pandemic in which our consolidated financial results surpassed pre-COVID levels and I am very proud of the Bell team for their continued focus on operational excellence, and all that they've done over the past two years to deliver for our customers." ___________________________ 1 Adjusted net earnings and available liquidity are non-GAAP financial measures, adjusted EPS is a non-GAAP ratio, and adjusted EBITDA is a total of segments measure. Refer to the Non-GAAP and Other Financial Measures section in this news release for more information on these measures. 2 Mobile phone blended ARPU is calculated by dividing wireless operating service revenues by the average mobile phone subscriber base for the specified period and is expressed as a dollar unit per month. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on blended ARPU. 3 Digital revenues are comprised of advertising revenue from digital platforms including web sites, mobile apps, connected TV apps and OOH digital assets/platforms, as well as advertising procured through Bell digital buying platforms and subscription revenue from direct-to-consumer services and Video on Demand services.   KEY BUSINESS DEVELOPMENTS Champion customer experienceBell had the largest reduction of customer complaints among national providers with a 36% decrease over the previous year in the Commission for Complaints for Telecom-television Services (CCTS) 2021-2022 mid-year report. The share of Bell's overall complaints decreased by 13%, reducing its share for the seventh year in a row. To strengthen its presence in Québec, Bell acquired EBOX and other related companies, and will continue to offer Internet services to the budget-conscious segment of consumers and businesses in Québec and parts of Ontario under the EBOX brand. Lucky Mobile is now available in more than 160 Best Buy locations across Canada, increasing the reach of Bell's prepaid wireless offering. Building the best networks with the fastest speedsBell introduced a 3-gigabit per second symmetrical Internet service, speeds three times faster than speeds available with cable technology, in most areas of Toronto, and expanding soon to other localities. Bell is also expanding fibre Internet access to 87,000 additional homes in the Ontario communities of Amherstburg, Georgina, Guelph and Pickering, and Bell continued to work closely with governments on projects to bring broadband access to remote and other hard to serve areas, including a large-scale initiative in Newfoundland and Labrador with the federal Universal Broadband Fund. 5G leadership and technology innovationBuilding on Bell's strategic agreement with Amazon Web Services (AWS) to accelerate 5G innovation and cloud adoption, Bell deployed the first public MEC (multi-access edge computing) platform with AWS Wavelength in Canada at the edge of its 5G network. Bell also deployed the first global production implementation of Google Distributed Cloud Edge for its core network functions to drive its digital transformation and operational efficiencies. To continue accelerating the development and adoption of AI applications across Bell, it entered into a five-year strategic engagement with the Vector Institute, an independent, not-for-profit corporation dedicated to research in the field of artificial intelligence (AI) to encourage the development of this emerging technology in Canada. Delivering the most compelling contentSuper Bowl LVI was the most-watched broadcast in Canada since last year's Super Bowl, attracting an average audience of 8.1 million viewers on CTV, TSN and RDS according to Numeris. Other sports action included the 2022 Masters Tournament on CTV, TSN and RDS, and the 2022 NCAA March Madness tournament on TSN. In addition, TSN and RDS secured the broadcast rights for the complete 2022 FIA Formula One World Championship season. TSN signed a multi-year agreement with FanDuel, designating FanDuel the official sportsbook partner of TSN with the introduction of sports betting in Ontario, and TSN expanded its TSN 5G View / Vision 5G RDS experience to now include regional coverage of the Winnipeg Jets home games on TSN. Bell for Better: Better World, Better WorkplaceBell set absolute, science-based GHG emissions reduction targets that are consistent with limiting temperature rise to 1.5 degrees Celsius. Bell was the only telecommunications company included on the 2022 LinkedIn Top Companies List in Canada, was named one of Canada's Top Diversity Employers for the sixth consecutive year by Mediacorp, and received the Women in Governance's Platinum Parity Certification. Bell also welcomed its employees back to most office locations in April with its flexible, hybrid work model, Bell Workways. Bell donated $100,000 to the Canadian Red Cross to support critical humanitarian relief efforts in Ukraine. Bell team members stepped up with over $54,000 in donations through the Team Bell Giving Program, and the funds were matched by Bell for an additional $108,000 donated to Ukraine relief efforts. Bell Let's Talk announced $500,000 in new grants from the 2022 Diversity Fund to support 6 more organizations working to improve access to mental health care for members of Black, Indigenous and People of Colour (BIPOC) communities in Canada. BCE RESULTS Financial Highlights ($ millions except per share amounts) (unaudited) Q1 2022   Q1 2021   % change BCE Operating revenues 5,850 5,706 2.5% Net earnings 934 687 36.0% Net earnings attributable to common shareholders 877 642 36.6% Adjusted net earnings 811 704 15.2% Adjusted EBITDA 2,584 2,429 6.4% Net earnings per common share (EPS) 0.96 0.71 35.2% Adjusted EPS 0.89 0.78 14.1% Cash flows from operating activities 1,716 1,992 (13.9%) Capital expenditures (952) (1,012) 5.9% Free cash flow1 723 940 (23.1%) ___________________________ 1 Free cash flow is a non-GAAP financial measure. Refer to the Non-GAAP and Other Financial Measures section in this news release for more information on this measure   "Bell's strong Q1 financial performance demonstrated excellent execution by the Bell team across all segments, with consolidated financial results surpassing pre-COVID levels for the first time since the start of the pandemic. Net earnings were up 36% on consolidated adjusted EBITDA growth of 6.4%, and 4.2% higher service revenue, driven by strong wireless, residential Internet and media results. Our media segment reported industry-leading financial performance with revenue up 15.7% and adjusted EBITDA growth of 45.5%," said Glen LeBlanc, Chief Financial Officer for BCE and Bell Canada. "With healthy recurring cash flow and substantial liquidity, and all our major defined benefit pension plans in a surplus position, we have the financial strength to execute on our strategic priorities, keeping us on track to meet our financial guidance targets for 2022." BCE operating revenue increased 2.5% compared to Q1 2021 to $5,850 million, driven by 4.2% higher service revenue of $5,177 million on strong wireless, residential Internet and media growth. Product revenue was down 8.8% to $673 million, reflecting fewer new mobile device transactions and lower business wireline data equipment sales. Net earnings increased 36.0% to $934 million and net earnings attributable to common shareholders totalled $877 million, or $0.96 per share, up 36.6% and 35.2% respectively. The year-over-year increases were due to higher adjusted EBITDA, higher other income and lower severance, acquisition and other costs, partly offset by higher income taxes from higher earnings. Adjusted net earnings increased 15.2% to $811 million, delivering 14.1% higher adjusted EPS of $0.89. Adjusted EBITDA grew 6.4% to $2,584 million, driven by year-over-year increases at all Bell operating segments. BCE's consolidated adjusted EBITDA margin1 increased 1.6 percentage points to 44.2% from 42.6% in Q1 2021, due to flow-through impact of higher year-over-year service revenue and a decline in low-margin product sales. BCE capital expenditures were $952 million, compared to $1,012 million in Q1 2021, corresponding to a capital intensity2 of 16.3%, down from 17.7% last year. The year-over-year decrease can be attributed to timing. Capital expenditures this quarter were focused on the continued accelerated rollout of Bell's pure fibre and wireless 5G networks. BCE cash flows from operating activities were $1,716 million, down 13.9% from Q1 2021, reflecting a reduction in cash from the timing of working capital and higher interest paid, partly offset by higher adjusted EBITDA. Free cash flow decreased 23.1% to $723 million from $940 million in Q1 2021, due to lower cash flows from operating activities, excluding acquisition and other costs paid, partly offset by lower capital expenditures. ___________________________ 1 Adjusted EBITDA margin is defined as adjusted EBITDA divided by operating revenues. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on adjusted EBITDA margin. 2 Capital intensity is defined as capital expenditures divided by operating revenues. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on capital intensity.   OPERATING RESULTS BY SEGMENT Bell Wireless Total wireless operating revenue increased 5.2% to $2,210 million, the result of strong service revenue growth, partly offset by lower year-over-year product revenue. Service revenue grew 8.7% to $1,646 million, driven by increases in our mobile phone and connected device subscriber bases and higher blended mobile phone ARPU, as well as higher roaming revenue as international travel volumes continued to recover. Product revenue decreased 3.8% to $564 million, due to lower year-over-year sales transaction volumes. Wireless adjusted EBITDA increased 9.3% to $1,009 million on the flow-through of strong service revenue growth, yielding a 1.7 percentage-point margin increase to 45.7%. Bell added 32,176 total net new postpaid and prepaid mobile phone subscribers1, up significantly from 2,405 in Q1 2021. Postpaid mobile phone net subscriber activations totaled 34,230, up 4.0% from 32,925 in Q1 2021. The increase reflected a 10 basis-point improvement in mobile phone customer churn1 to 0.79%, partly offset by a 7.3% decrease in gross subscriber activations due to more targeted promotional offers and mobile device discounting compared to last year given a greater focus on higher-value subscriber loadings. Bell's prepaid mobile phone customer base decreased by 2,054 net subscribers, compared to a net loss of 30,520 in Q1 2021. The improvement was the result of 30.8% higher gross activations from increased market activity as well as a lower customer churn rate, which improved 7 basis points to 4.61%. Bell's mobile phone customer base totalled 9,491,361 at the end of Q1, a 3.5% increase over last year, comprising 8,664,275 postpaid subscribers, up 3.6%, and 827,086 prepaid customers, up 2.7%. Blended mobile phone ARPU was up 5.1% to $57.98, driven by higher roaming revenues as international travel volumes increased with the easing of COVID-19 restrictions, and more customers on higher-value rate plans. Mobile connected device net subscriber¹ activations were down 34.1% to 48,877, despite continued healthy growth in Bell's business IoT net connections. This was due to higher data device net losses, reflecting the continued de-emphasis of unprofitable, low-ARPU tablet transactions. Mobile connected device subscribers totalled 2,298,671 at the end of Q1, an increase of 7.9% over last year. Bell Wireline Total wireline operating revenue decreased 2.2% to $3,013 million, compared to Q1 2021. Wireline service revenue was down 0.8% to $2,903 million, mainly the result of ongoing declines in legacy voice, data and satellite TV services, reduced sales of IP connectivity and business service solutions revenue2, due partly to delayed project spending by large enterprise customers because of ongoing ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaMay 5th, 2022

BCE reports first quarter 2022 results

This news release contains forward-looking statements. For a description of the related risk factors and assumptions, please see the section entitled "Caution Regarding Forward-Looking Statements" later in this news release. The information contained in this news release is unaudited. Consolidated adjusted EBITDA1 growth of 6.4% on 4.2% higher service revenue Net earnings of $934 million, up 36.0%, with net earnings attributable to common shareholders of $877 million, or $0.96 per common share, up 35.2%; adjusted net earnings1 of $811 million generated adjusted EPS1 of $0.89, up 14.1% Leading wireless financial results with best quarterly organic service revenue growth in 11 years of 8.7%, 9.3% higher adjusted EBITDA and 5.1% increase in mobile phone blended ARPU2; 34,230 new net mobile phone postpaid subscribers added, up 4.0% 26,024 retail Internet net activations, up 22.7%, driving 8% residential Internet revenue growth; IPTV net activations increased 14.6% to 12,260; 91% of Bell residential households with TV and Internet now on a pure fibre network First major operator to offer 3 Gbps symmetrical Internet speeds, three times faster than speeds available with cable technology On pace to deliver approximately 900,000 new fibre locations and mobile 5G to more than 80% of Canadians in 2022; 80% of planned broadband buildout program to be completed by year end Media revenue up 15.7% on stronger year-over-year TV performance and 84% higher digital revenue3, contributing to industry-best adjusted EBITDA growth of 45.5% Strong financial position maintained with more than $2.8 billion of available liquidity1 at end of Q1, including $104 million in cash Reconfirming all 2022 financial guidance targets MONTRÉAL, May 5, 2022 /CNW/ - BCE Inc. (TSX:BCE) (NYSE:BCE) today reported results for the first quarter (Q1) of 2022. "Bell's Q1 results highlight our continued momentum from 2021 into this year, demonstrating that our accelerated fibre expansion and customer experience improvements continue to offer greater value to our growing base of customers and the communities we live in," said Mirko Bibic, President and CEO of BCE and Bell Canada. "Bell's solid performance across all segments shows that we have the right strategy in place, we're consistently executing on that strategy and our products and services are resonating with our customers. In particular, I'm proud of the gains we made to continue championing the customer experience with a 36% decrease in complaints per the CCTS mid-year report. We delivered our best quarterly organic wireless service revenue growth rate in 11 years through balancing the right market share growth with operating profitability. In addition, our net retail Internet and IPTV subscribers activations are up 20% over last year. With our historic capital expenditure acceleration program now in its second year, we will continue to bring direct fibre connections and 5G to more locations across our footprint throughout 2022. This is the first quarter since the start of the pandemic in which our consolidated financial results surpassed pre-COVID levels and I am very proud of the Bell team for their continued focus on operational excellence, and all that they've done over the past two years to deliver for our customers." ___________________________ 1 Adjusted net earnings and available liquidity are non-GAAP financial measures, adjusted EPS is a non-GAAP ratio, and adjusted EBITDA is a total of segments measure. Refer to the Non-GAAP and Other Financial Measures section in this news release for more information on these measures. 2 Mobile phone blended ARPU is calculated by dividing wireless operating service revenues by the average mobile phone subscriber base for the specified period and is expressed as a dollar unit per month. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on blended ARPU. 3 Digital revenues are comprised of advertising revenue from digital platforms including web sites, mobile apps, connected TV apps and OOH digital assets/platforms, as well as advertising procured through Bell digital buying platforms and subscription revenue from direct-to-consumer services and Video on Demand services.   KEY BUSINESS DEVELOPMENTS Champion customer experienceBell had the largest reduction of customer complaints among national providers with a 36% decrease over the previous year in the Commission for Complaints for Telecom-television Services (CCTS) 2021-2022 mid-year report. The share of Bell's overall complaints decreased by 13%, reducing its share for the seventh year in a row. To strengthen its presence in Québec, Bell acquired EBOX and other related companies, and will continue to offer Internet services to the budget-conscious segment of consumers and businesses in Québec and parts of Ontario under the EBOX brand. Lucky Mobile is now available in more than 160 Best Buy locations across Canada, increasing the reach of Bell's prepaid wireless offering. Building the best networks with the fastest speedsBell introduced a 3-gigabit per second symmetrical Internet service, speeds three times faster than speeds available with cable technology, in most areas of Toronto, and expanding soon to other localities. Bell is also expanding fibre Internet access to 87,000 additional homes in the Ontario communities of Amherstburg, Georgina, Guelph and Pickering, and Bell continued to work closely with governments on projects to bring broadband access to remote and other hard to serve areas, including a large-scale initiative in Newfoundland and Labrador with the federal Universal Broadband Fund. 5G leadership and technology innovationBuilding on Bell's strategic agreement with Amazon Web Services (AWS) to accelerate 5G innovation and cloud adoption, Bell deployed the first public MEC (multi-access edge computing) platform with AWS Wavelength in Canada at the edge of its 5G network. Bell also deployed the first global production implementation of Google Distributed Cloud Edge for its core network functions to drive its digital transformation and operational efficiencies. To continue accelerating the development and adoption of AI applications across Bell, it entered into a five-year strategic engagement with the Vector Institute, an independent, not-for-profit corporation dedicated to research in the field of artificial intelligence (AI) to encourage the development of this emerging technology in Canada. Delivering the most compelling contentSuper Bowl LVI was the most-watched broadcast in Canada since last year's Super Bowl, attracting an average audience of 8.1 million viewers on CTV, TSN and RDS according to Numeris. Other sports action included the 2022 Masters Tournament on CTV, TSN and RDS, and the 2022 NCAA March Madness tournament on TSN. In addition, TSN and RDS secured the broadcast rights for the complete 2022 FIA Formula One World Championship season. TSN signed a multi-year agreement with FanDuel, designating FanDuel the official sportsbook partner of TSN with the introduction of sports betting in Ontario, and TSN expanded its TSN 5G View / Vision 5G RDS experience to now include regional coverage of the Winnipeg Jets home games on TSN. Bell for Better: Better World, Better WorkplaceBell set absolute, science-based GHG emissions reduction targets that are consistent with limiting temperature rise to 1.5 degrees Celsius. Bell was the only telecommunications company included on the 2022 LinkedIn Top Companies List in Canada, was named one of Canada's Top Diversity Employers for the sixth consecutive year by Mediacorp, and received the Women in Governance's Platinum Parity Certification. Bell also welcomed its employees back to most office locations in April with its flexible, hybrid work model, Bell Workways. Bell donated $100,000 to the Canadian Red Cross to support critical humanitarian relief efforts in Ukraine. Bell team members stepped up with over $54,000 in donations through the Team Bell Giving Program, and the funds were matched by Bell for an additional $108,000 donated to Ukraine relief efforts. Bell Let's Talk announced $500,000 in new grants from the 2022 Diversity Fund to support 6 more organizations working to improve access to mental health care for members of Black, Indigenous and People of Colour (BIPOC) communities in Canada. BCE RESULTS Financial Highlights ($ millions except per share amounts) (unaudited) Q1 2022   Q1 2021   % change BCE Operating revenues 5,850 5,706 2.5% Net earnings 934 687 36.0% Net earnings attributable to common shareholders 877 642 36.6% Adjusted net earnings 811 704 15.2% Adjusted EBITDA 2,584 2,429 6.4% Net earnings per common share (EPS) 0.96 0.71 35.2% Adjusted EPS 0.89 0.78 14.1% Cash flows from operating activities 1,716 1,992 (13.9%) Capital expenditures (952) (1,012) 5.9% Free cash flow1 723 940 (23.1%) ___________________________ 1 Free cash flow is a non-GAAP financial measure. Refer to the Non-GAAP and Other Financial Measures section in this news release for more information on this measure   "Bell's strong Q1 financial performance demonstrated excellent execution by the Bell team across all segments, with consolidated financial results surpassing pre-COVID levels for the first time since the start of the pandemic. Net earnings were up 36% on consolidated adjusted EBITDA growth of 6.4%, and 4.2% higher service revenue, driven by strong wireless, residential Internet and media results. Our media segment reported industry-leading financial performance with revenue up 15.7% and adjusted EBITDA growth of 45.5%," said Glen LeBlanc, Chief Financial Officer for BCE and Bell Canada. "With healthy recurring cash flow and substantial liquidity, and all our major defined benefit pension plans in a surplus position, we have the financial strength to execute on our strategic priorities, keeping us on track to meet our financial guidance targets for 2022." BCE operating revenue increased 2.5% compared to Q1 2021 to $5,850 million, driven by 4.2% higher service revenue of $5,177 million on strong wireless, residential Internet and media growth. Product revenue was down 8.8% to $673 million, reflecting fewer new mobile device transactions and lower business wireline data equipment sales. Net earnings increased 36.0% to $934 million and net earnings attributable to common shareholders totalled $877 million, or $0.96 per share, up 36.6% and 35.2% respectively. The year-over-year increases were due to higher adjusted EBITDA, higher other income and lower severance, acquisition and other costs, partly offset by higher income taxes from higher earnings. Adjusted net earnings increased 15.2% to $811 million, delivering 14.1% higher adjusted EPS of $0.89. Adjusted EBITDA grew 6.4% to $2,584 million, driven by year-over-year increases at all Bell operating segments. BCE's consolidated adjusted EBITDA margin1 increased 1.6 percentage points to 44.2% from 42.6% in Q1 2021, due to flow-through impact of higher year-over-year service revenue and a decline in low-margin product sales. BCE capital expenditures were $952 million, compared to $1,012 million in Q1 2021, corresponding to a capital intensity2 of 16.3%, down from 17.7% last year. The year-over-year decrease can be attributed to timing. Capital expenditures this quarter were focused on the continued accelerated rollout of Bell's pure fibre and wireless 5G networks. BCE cash flows from operating activities were $1,716 million, down 13.9% from Q1 2021, reflecting a reduction in cash from the timing of working capital and higher interest paid, partly offset by higher adjusted EBITDA. Free cash flow decreased 23.1% to $723 million from $940 million in Q1 2021, due to lower cash flows from operating activities, excluding acquisition and other costs paid, partly offset by lower capital expenditures. ___________________________ 1 Adjusted EBITDA margin is defined as adjusted EBITDA divided by operating revenues. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on adjusted EBITDA margin. 2 Capital intensity is defined as capital expenditures divided by operating revenues. Refer to the Key Performance Indicators (KPIs) section in this news release for more information on capital intensity.   OPERATING RESULTS BY SEGMENT Bell Wireless Total wireless operating revenue increased 5.2% to $2,210 million, the result of strong service revenue growth, partly offset by lower year-over-year product revenue. Service revenue grew 8.7% to $1,646 million, driven by increases in our mobile phone and connected device subscriber bases and higher blended mobile phone ARPU, as well as higher roaming revenue as international travel volumes continued to recover. Product revenue decreased 3.8% to $564 million, due to lower year-over-year sales transaction volumes. Wireless adjusted EBITDA increased 9.3% to $1,009 million on the flow-through of strong service revenue growth, yielding a 1.7 percentage-point margin increase to 45.7%. Bell added 32,176 total net new postpaid and prepaid mobile phone subscribers1, up significantly from 2,405 in Q1 2021. Postpaid mobile phone net subscriber activations totaled 34,230, up 4.0% from 32,925 in Q1 2021. The increase reflected a 10 basis-point improvement in mobile phone customer churn1 to 0.79%, partly offset by a 7.3% decrease in gross subscriber activations due to more targeted promotional offers and mobile device discounting compared to last year given a greater focus on higher-value subscriber loadings. Bell's prepaid mobile phone customer base decreased by 2,054 net subscribers, compared to a net loss of 30,520 in Q1 2021. The improvement was the result of 30.8% higher gross activations from increased market activity as well as a lower customer churn rate, which improved 7 basis points to 4.61%. Bell's mobile phone customer base totalled 9,491,361 at the end of Q1, a 3.5% increase over last year, comprising 8,664,275 postpaid subscribers, up 3.6%, and 827,086 prepaid customers, up 2.7%. Blended mobile phone ARPU was up 5.1% to $57.98, driven by higher roaming revenues as international travel volumes increased with the easing of COVID-19 restrictions, and more customers on higher-value rate plans. Mobile connected device net subscriber¹ activations were down 34.1% to 48,877, despite continued healthy growth in Bell's business IoT net connections. This was due to higher data device net losses, reflecting the continued de-emphasis of unprofitable, low-ARPU tablet transactions. Mobile connected device subscribers totalled 2,298,671 at the end of Q1, an increase of 7.9% over last year. Bell Wireline Total wireline operating revenue decreased 2.2% to $3,013 million, compared to Q1 2021. Wireline service revenue was down 0.8% to $2,903 million, mainly the result of ongoing declines in legacy voice, data and satellite TV services, reduced sales of IP connectivity and business service solutions revenue2, due partly to delayed project spending by large enterprise customers because of ongoing COVID-related disruptions, and the sale of Createch on ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaMay 5th, 2022

2 Stocks to Watch From the Promising Nursing Home Industry

The Zacks Medical-Nursing Home industry is set to witness a growing demand from the aging population growth. Ensign Group and Brookdale Senior are poised to benefit from a favorable change in demographics. The Zacks Medical-Nursing Home industry players are benefiting from the growing number of aging adults, which is driving demand for their nursing home facilities. Also, a provision for outpatient therapy, health and wellness, fitness and concierge as well as other ancillary services are aiding their business growth. Even though the companies have been grappling with a surplus supply of facilities that is weighing on its occupancy levels, the receding impact of the pandemic and increased vaccinations will ensure rising demand for nursing home players. Under these circumstances, The Ensign Group, Inc. ENSG and Brookdale Senior Living Inc. BKD are well poised for significant growth.About the IndustryCompanies in the Zacks Medical-Nursing Home industry provide long-term skilled nursing care and social services. The industry includes skilled nursing facilities for recovery from acute or chronic medical conditions, mental health and substance abuse facilities along with various types of independent living, community care and assisted-living arrangements. Nursing homes typically care for patients recuperating from major medical procedures and senior patients with chronic disabilities and deteriorating mental and physical capacities. A wide array of healthcare and dependent-care services is provided, including 24-hour nursing care, physical therapy, help with activities of daily living such as bathing, eating and dressing, housekeeping, food service, personal services and leisure activities. Also, some provide mobile diagnostics services, benefiting patients with low mobility.3 Trends Defining Nursing Home Industry's FutureAging Population Growth: The primary market of the senior living industry consists of individuals aged 80 and above. Owing to continuous advancements in science, nutrition and healthcare and demographic trends, the senior population is likely to keep rising. The U.S. Census projections suggest that starting 2022, there will be nearly 1 million new potential residents per year. By 2030, 21% of the population is expected to age 65 years and older, up from 17% witnessed in 2020. Hence, demand for senior care is bound to increase in the future. As seniors are living longer, rapid growth in this segment of the population is expected.This change in demographics is also expected to lead to a higher number of people suffering from Alzheimer's disease, other dementias, and the onus of other chronic diseases and conditions. As a result of increased mobility in the society, shrinking average family size and the growing number of two-wage earner couples, families struggle to provide care for seniors and therefore look for alternatives outside their familial bonds for care. There is a growing awareness among seniors and their families concerning the types of services provided by senior living operators, which can further buoy the demand for assisted living services.Oversupplied Market: Even though construction of new senior living communities slowed down in 2020, the industry experienced several years of significant construction of new communities and other buildings. This resulted in excessive supply, which put downward pressure on occupancy and the rates that operators can charge for their services to their residents. Demand has also taken a hit as older adults are either raising the age limit at which they move to senior living communities or forgoing such a move entirely. Additionally, a burden on governmental budget-induced reductions or limitations in government funding growth for senior living and healthcare services, despite the increasing regulatory requirements imposed on the industry, is hurting the companies. These revenue pressures are further accompanied by increased costs for labor, insurance and regulatory compliance. Yet, the receding impact of the pandemic and improvement in technologies can somewhat help in offsetting the decline in the number of people opting to move to senior living communities.Inorganic Growth:The oversupplied market, its fragmented nature and the ongoing economic recovery have created the opportunity for mergers and acquisitions (M&A) in the nursing home space. Companies looking for ways to enhance footprints, diversify operations and grow market share are likely to opt for some M&A actions, which will be supported by improved capital levels, thanks to the economic recovery. Small operators, who were badly hit amid the pandemic, are looking for big partners and organizations. This will lead to significant inorganic growth for the market players in the long term.Zacks Industry Rank Indicates Bullish OutlookThe group’s  Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. The Zacks Medical-Nursing Home industry, which is housed within the broader Zacks Medical sector, currently carries a Zacks Industry Rank #42, which places it at the top 17% of more than 250 Zacks industries.Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Given the promising near-term prospects, companies in the space are expected to flourish.Before we present a couple of stocks that you may want to buy or retain in your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.Industry Outperforms Sector, Underperforms S&P 500The Zacks Medical-Nursing Home industry remained below the Zacks S&P 500 composite but fared better than its own sector over the past year.The stocks in this industry have collectively increased 1.4% in the past year, while the Medical sector has declined 9%. Meanwhile, the Zacks S&P 500 composite has gained 11.8%.One-Year Price PerformanceIndustry's Current ValuationOn the basis of the forward 12-month Price/Earnings ratio, which is commonly used for valuing nursing home stocks, the industry is currently trading at 280.05X compared with the S&P 500’s 19.98X and the sector’s 21.26X.Forward 12-Month Price/Earnings (P/E) Ratio2 Stocks Worth A Closer LookWe are presenting two stocks from the Medical-Nursing Home industry. Considering the current industry scenario, it might be prudent for investors to either buy or hold these stocks in their portfolio, as these are well placed to generate long-term growth.The Ensign Group, Inc.: Based in San Juan Capistrano, CA, Ensign provides healthcare services in the post-acute care continuum, urgent care center and mobile ancillary businesses in the United States. ENSG’s growth has been driven by its expertise in acquiring real estate or leasing post-acute care operations and transforming them into market leaders. The stock has increased 25.2% in the past six months and is expected to rise further in the coming days. Its series of buyouts and alliances poise it well for bottom-line growth.Ensign provided its earnings projection of $4.01-$4.13 per share for the current year, indicating an increase from the 2021 level of $3.64. It anticipates annual revenues in the band of $2.93-$2.98 billion, whose mid-point indicates a 12.4% rise from the 2021 reported figure. ENSG’s earnings per share have witnessed three upward estimate revisions in the past 60 days against none in the opposite direction. The Zacks Rank #2 (Buy) company beat earnings estimates in each of the past four quarters, with the average being 1.7%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Price and Consensus: ENSG Brookdale Senior Living Inc.: Headquartered in Brentwood, TN, Brookdale is riding on economic growth in the domestic market. It operates more than 679 senior living communities across 41 states in the country. BKD’s vast network enables it to increase wellness and provide premier healthcare for more than 60,000 residents. It has witnessed occupancy growth for the past few quarters, indicating a recovery in demand. This has boosted the stock by 14.7% in the past six months and is expected to push it even higher in the coming days.Brookdale currently has a Zacks Rank #3 (Hold). With rising liquidity and decreasing debt level, the company’s balance sheet is expected to become stronger. The Zacks Consensus Estimate for 2022 revenues is pegged at $2.8 billion. The consensus mark for 2022 earnings indicates a 34.5% year-over-year improvement. BKD beat earnings estimates twice in the last four quarters and missed on the other two occasions, with the average surprise being 5.9%.Price and Consensus: BKD Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022? Last year's 2021 Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buysAccess Zacks Top 10 Stocks for 2022 today >>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 The Ensign Group, Inc. (ENSG): Free Stock Analysis Report Brookdale Senior Living Inc. (BKD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksApr 4th, 2022

Edging Towards A Gold Standard

Edging Towards A Gold Standard Authored by Alasdair Macleod via GoldMoney.com, Commentators are trying to make sense of Russian moves... However, there is a back story which differs from much of the speculation, which this article addresses. The Russians have not put the rouble on some sort of gold standard. Instead, they have repeated the Nixon/Kissinger strategy which created the petrodollar in 1973 by getting the Saudis to agree to accept only dollars for oil. This time, nations deemed by Russia to be unfriendly will be forced to buy roubles – roughly 2 trillion by the EU alone based on last year’s natural gas and oil imports from Russia — driving up the exchange rate. The rouble has now doubled against the dollar from its low point of RUB 150 to RUB 75 yesterday in just over three weeks. The Russian Central Bank will soon be able to normalise the domestic economy by reducing interest rates and removing exchange controls. The Russians and Chinese will be acutely aware that Western currencies, particularly the yen and euro, are likely to be undermined by recent developments. The financial war, which has always been in the background, is emerging into plain sight and becoming a battlefield between fiat currencies, and it is full on. The winner by default is almost certainly gold, now the only reliable reserve asset for those not aligned with Russia’s “unfriendlies”. But it is still a long way from backing any currency. Putin is losing the battle for Ukraine President Putin is embattled. His army as let him down — it turns out that his generals lack the necessary leadership qualities, the squaddies are suffering from lack of food, fuel, and are suffering from frostbite. It is reported that one brigade commander, Colonel Yuri Medvedev, was deliberately run down by one of his own men in a tank, a measure of the chaos at the front line. And Putin is not the first national leader to have misplaced his confidence in military forces. Conventional wisdom (from Carl von Clausewitz, no less) suggested Putin might win the battle for Ukraine but would be unable to hold the territory. That requires the willingness of the population to accept defeat, and a lesson the Soviets had learned in Afghanistan, with the same experience repeated by America and the UK. But Putin has not even won the battle and word from the Kremlin is of accepting a face-saving fall-back position, perhaps taking Donetsk and the coast of the Sea of Azov to join it up with Crimea. There was little doubt that if Putin came under pressure militarily, he would probably step up the commodity and financial war. This he has now done by insisting on payments in roubles. The mistake made in the West was to believe that Russia must sell commodities, and even though sanctions harm the West greatly, the strategy is to put maximum pressure on the Russian economy for a quick resolution. It is obviously flawed because Russia can still trade with China, India, and other significant economies. And thanks to rising commodity prices the Russian economy is not in the bad place the West believed either. Besides nations representing 84% of the world’s population standing aside from the Western alliance’s sanctions and with some like India sorely tempted to buy discounted Russian oil, we would profit from paying attention to some very basic factors. Russia can certainly afford to sell oil at significant discounts to market prices, and there are buyers willing to break the American-led embargoes. The non-Western world is no longer automatically on-side with American hegemony; that is a rotting hulk which the Americans are desperately trying to keep afloat. Observing this, the Kremlin seems relaxed and has said that it is willing to accept currencies from its friends, but Western enemies (the “unfriendlies”) would have to pay for oil in roubles or, it has also been suggested, in gold. On 23 March the Kremlin drew up a list of these unfriendly countries, which includes the 27 EU members, Switzerland, Norway, the United States, the United Kingdom, Canada, Australia, New Zealand, Japan, and South Korea. Payment in roubles is easy to understand. We can assume that all oil and natural gas long-term supply contracts with the unfriendlies have force majeure clauses, because that is normal practice. In the light of sanctions, the Russians are entitled to claim different payment terms. And it is this that the Russians are relying upon for insisting on payment in roubles. Germany, for example, would have to buy roubles on the foreign exchanges to pay for her gas. Buying roubles supports the currency, and this was the tactic that created the petrodollar in 1973 when Nixon and Kissinger persuaded the Saudis to take nothing else but dollars for oil. It was that single move which more than anything confirmed the dollar as the world’s international and reserve currency in the aftermath of the temporary suspension of the Bretton Woods Agreement. That’s not quite the objective here; it is to not only underwrite the rouble, but to drive it higher relative to other currencies. The immediate effect has been clear, as the chart from Bloomberg below shows. Having halved in value against the dollar on 7 March, all the rouble’s fall has been recovered. And that’s even before Germany et al buy roubles on the foreign exchanges to pay for Russian energy. The gold issue is more complex. The West has banned not only Russian transactions settling in their currencies but also from settling in gold. The assumption is that gold is the only liquid asset Russia has left to trade with. But just as ahead of the end of the cold war Western intelligence completely misread the Soviet economy, it could be making a mistake again. This time, intel seems to be misled by full-on Keynesian macro analysis, suggesting the Russian economy is vulnerable when it is inherently stronger in a currency shoot-out than even the dollar. There is no need for Russia to sell any gold at all. The Russian economy has a broadly non-interventionist government, a flat rate of income tax of 13%, and a government debt of 20% of GDP. There are flaws in the Russian economy, particularly in the lack of respect for property rights and the pervasive problem of the Russian Mafia. But in many respects, Russia’s economy is like that of the US before 1916, when the highest income tax rate was 15%. An important difference is that the Russian government gets substantial revenues from energy and commodity exports, taking its income up to over 40% of GDP. While export volumes of energy and other commodities are being hit by sanctions, their prices have risen substantially. But it remains to be seen what form of money or currency for future payments will be used for over $550bn equivalent of exports, while $297bn of imports will be substantially reduced by sanctions, widening Russia’s trade surplus considerably. Euros, yen, dollars, and sterling are ruled out, worthless in the hands of the Central Bank. That leaves Chinese renminbi, Indian rupees, weakening Turkish lira and that’s about it. It’s hardly surprising that Russia is prepared to accept gold. Putin’s view on the subject is shown in Figure 1 of stills taken from a Tik Tok video released last weekend. Furthermore, Russia’s official reserves are only a small part of the story. Simon Hunt of Simon Hunt Strategic Services, who I have found to be consistently well informed in these matters, is convinced based on his information that Russia’s gold reserves are significantly higher than reported — he thinks 12,000 tonnes is closer to the mark. The payment choice for those on Russia’s unfriendly list, if we rule out gold, is effectively of only one — buy roubles to pay for Russian energy. By sanctioning the world’s largest energy exporter, the effect on energy prices in dollars is likely to drive them far higher yet. Additionally, market liquidity for roubles is likely to be restricted, and the likelihood of a bear squeeze on any shorts is therefore high. The question is how high? Last year, the EU imported 155 billion cubic meters of natural gas from Russia, valued at about $180bn at current volatile prices. Oil exports from Russia to the EU were about 2.3 million barrels per day, worth an additional $105bn for a combined total of $285bn, which at the current exchange rate of RUB 75.5 is RUB 2.15 trillion. EU Gas consumption is likely to fall as spring approaches, but payments in roubles will still drive the exchange rate significantly higher. And attempts to obtain alternative sources of LNG will take time, be insufficient, and serve to drive natural gas prices from other suppliers even higher. For now, we should dismiss ideas over payments to the Russians in gold. The Russian gold story, initially at least, is a domestic issue. Though it might spill over into international markets. On 25 March, Russia’s central bank announced it will buy gold from credit institutions at a fixed rate of 5,000 roubles per gramme starting this week and through to 30 June. The press release stated that it will enable “a stable supply of gold and smooth functioning of the gold mining industry.” In other words, it allows banks to continue to lend money to gold mining and related activities, particularly for financing new gold mining developments. Meanwhile, the state will continue to accumulate bullion which, as discussed above, it has no need to spend on imports. When the RCB’s announcement was made the rouble was considerably weaker and the price offered by the central bank was about 20% below the market price. But that has now changed. Based on last night’s exchange rate of 75.5 roubles to the dollar (30 March) and with gold at $1935, the price offered by the central bank is at a premium of 7.2% to the market. Whether this opens the situation up to arbitrage from overseas bullion markets is an intriguing question. And we can assume that Russian banks will find ways of acquiring and deploying the dollars to do so through their offshore facilities, until, under the cover of a strong rouble, the RCB removes exchange controls. There is nothing in the RCB’s statement to prevent a Russian bank sourcing gold from, say, Dubai, to sell to the central bank. Guidance notes to which we cannot be privy may address this issue but let us assume this arbitrage will be permitted, because it might be difficult to stop. And if Russia does have undeclared bullion reserves more than those allegedly held by the US Treasury, then given that the real war is essentially financial, it is in Russia’s interest to see the gold price rise in dollars. Not only would Eurozone banks be scrambling to obtain roubles, but the entire Western banking system, which takes the short side of derivative transactions in gold will find itself in increasing difficulties. Normally, bullion banks rely on central banks and the Bank for International Settlements to backstop the market with physical liquidity through leases and swaps. But the unfortunate message from the West to every central bank not on Russia’s unfriendly list is that London’s or New York’s respect for ownership rights to their nation’s gold cannot be relied upon. Not only will lease and swap liquidity dry up, but it is likely that requests will be made for earmarked gold in these centres to be repatriated. In short, Russia appears to be initiating a squeeze on gold derivatives in Western capital markets by exploiting diminishing faith in Western institutions and their cavalier treatment of foreign property rights. By forcing the unfriendlies into buying roubles, the RCB will shortly be able to reduce interest rates back to previous policy levels and remove exchange controls. At the same time, the inflation problems faced by the West will be ameliorated by a strong rouble. It ties in with the politics for Putin’s survival. Together with the economic benefits of an improving exchange rate for the rouble and the relatively minor inconvenience of not being able to buy imports from the West (alternatives from China and India will still be available) Putin can retreat from his disastrous Ukrainian campaign. Senior figures in the Russian army will be disciplined, imprisoned, or disappear accused of incompetence and misleading Putin into thinking his “special operation” would be quickly achieved. Putin will absolve himself of any blame and dissenters can expect even greater clampdowns on protests. Russia’s moves are likely to have been thought out in advance. The move to support the rouble is evidence it is so, giving the central bank the opportunity to reverse the interest rate hike to 20% to protect the rouble. Foreign exchange controls on Russians can shortly be lifted. Almost certainly the consequences for Western currencies were discussed. The conclusion would surely have been that higher energy and other Russian commodity prices would persist, driving Western price inflation higher and for longer than discounted in financial markets. Western economies face soaring interest rates and a slump. And depending on their central bank’s actions, Japan and the Eurozone with negative interest rates are almost certainly most vulnerable to a financial, currency, and economic crisis. The impact of Russia’s new policy of only accepting roubles was, perhaps, the inevitable consequence of the West’s policies of self-immolation. From Russia’s failure in Ukraine, Putin appears to have had little option but to go on the offensive and escalate the financial, or commodity-currency war to cover his retreat. We can only speculate about the effect of a strong rouble on the international gold price, but if Russian banks can indeed buy bullion from non-Russian sources to sell to the RCB, it would mark a very aggressive move in the ongoing financial war. China’s position China will be learning unpalatable lessens about its ambition to invade Taiwan, and Taiwan will be encouraged mightily by Ukraine’s success at repelling an unwelcome invader. A 100-mile channel is an enormous obstacle for a Chinese invasion that Russia didn’t have to navigate before Ukrainian locals exploited defensive tactics to repel the invader. There can now be little doubt of the outcome if China tried the same tactics against Taiwan. President Xi would be sensible not to make the same mistake as Putin and tone down the anti-Taiwan rhetoric and try the softer approach of friendly relations and economic integration to reunite Chinese interests. That has been a costless lesson for China, but another consideration is the continuing relationship with Russia. The earlier Chinese description of it made sense: “We are not allies, but we are partners”. What this means is that China would abstain rather than support Russia in the various supranational forums where the world’s leaders gather. But she would continue to trade with Russia as normal, even engaging in currency swaps to facilitate it. More recently, a small crack has appeared in this relationship, with China concerned that US and EU sanctions might be extended to Chinese entities in joint ventures with Russian businesses linked to sanctioned oligarchs and Putin supporters. The highest profile example has been the suspension of a joint project to build a petrochemical plant in Russia involving Sinopec, because of the involvement of Gennady Timchenko, a close ally of Putin. But according to a report from Nikkei Asia, Sinopec has confirmed it will continue to buy Russian crude oil and gas. As always with its geopolitics, we can expect China to play its hand with great care. China was prepared for the consequences of US monetary policy in March 2020 when the Fed reduced its funds rate to zero and instituted quantitative easing of $120bn every month. By its actions it judged these moves to be very inflationary, and began stockpiling commodities ahead of dollar price rises, including energy and grains to project its own people. The yuan has risen against the dollar by about 11%, which with moderate credit policies has kept annualised domestic price inflation subdued to about 1% currently, while consumer price inflation in the West is soaring out of control. China is not therefore in the weak financial position of Russia’s “unfriendlies”; the highly indebted governments whose finances and economies are likely to be destabilised by rising energy prices and interest rates. But it does have a potential economic crisis on its hands in the form of a collapsing property market. In February, its response was to ease the credit restrictions imposed following the initial pandemic recovery in 2021, which had included attempts to deleverage the property sector. Property aside, we can assume that China will not want to destabilise the West by her own actions. The West is doing that very effectively without China’s assistance. But having demonstrated an understanding of why the West is sliding into an inflation crisis of its own making China will be keen not to make the same mistakes. Her partnership with Russia, as joint leaders in the Shanghai Cooperation Organisation, is central to detaching herself from what its Maoist economists forecast as the inevitable collapse of imperial capitalism. Having set itself up in the image of that imperialism, it must now become independent from it to avoid the same fate. Gold’s wider role in China, Russia, and the SCO Gold has always been central to China’s fallback position. I estimated that before permitting its own people to buy gold in 2002, the state had acquired as much as 20,000 tonnes. Subsequently, through the Shanghai Gold Exchange the Chinese public has taken delivery of a further 20,000 tonnes, mainly through imports from outside China. No gold escapes China, and the Chinese government is likely to have added to its hoard over the last twenty years. The government maintains a monopoly on refining and has stimulated the mining industry to become the largest national producer. Together with its understanding of the West’s inflationary policies the evidence is clear: China is prepared for a world of sound money with gold replacing the dollar’s hegemony, and it now dominates the world’s physical market with that in mind. These plans are shared with Russia, and the members, dialog partners and associates of the Shanghai Cooperation Organisation — almost all of which have been accumulating gold reserves. Mine output from these countries is estimated by the US Geological Survey at 830 tonnes, 27% of the global total. The move away from pure fiat was confirmed recently by some half-baked plans for the Eurasian Economic Union and China to escape from Western fiat by setting up a new currency for cross-border trade backed partly by commodities, including gold. The extent of “off balance sheet” bullion is a critical issue, because at some stage they are likely to be declared. In this context, the Russian position is important, because if Simon Hunt, quoted above, is correct Russia could have more gold than the US’s 8,130 tonnes, which it is widely thought to overstate the latter’s true position. Furthermore, Western central banks routinely lease and swap their gold reserves, leading to double counting, which almost certainly reduces their actual position in aggregate. And if fiat currencies continue to decline we could find that the two ringmasters for the SCO have more monetary gold than all the other central banks put together — something like 30,000-40,000 tonnes for Chinese and Russian governments, compared with perhaps less than 20,000 tonnes for Russia’s adversaries (officially ,the unfriendlies own about 24,000 tonnes, but we can assume that at least 5,000 of that is double counted or does not exist due to leasing and swaps). The endgame for the yen and the euro Without doubt, the terrible twins in the major fiat currencies are the yen and the euro. They share much in common: negative interest rates, major commercial banks highly leveraged with asset to equity ratios averaging over twenty times, and central bank balance sheets overloaded with bonds which are collapsing in value. They now face rising interest rates spiralling beyond their control, the consequences of the ECB and Bank of Japan being trapped under the zero bound and being in denial over falling purchasing power for their currencies. Consequently, we are seeing capital flight, which has accelerated dramatically this month for the yen, but in truth follows on from relative weakness for both currencies since the middle of 2021 when global bond yields began rising. Statistically, we can therefore link the collapse of both currencies on the foreign exchanges with rising bond yields. And given that rising interest rates and bond yields are in their early stages, there is considerable currency weakness yet to come. Japan and its yen The Bank of Japan has publicly stated it would buy an unlimited amount of 10-year Japanese Government Bonds at a 0.25% yield to contain the bond sell-off. A higher yield would be more than embarrassing for the BOJ, already requiring a recapitalisation, presumably with its heavily indebted government stumping up the money. Figure 2 shows that the 10-year JGB yield is already testing the 0.25% yield level (charts from Bloomberg). Fig 2. JGB yields hits BoJ Limit and Yen collapsing As avid Keynesians, the BOJ is following similar policies to that of John Law in 1720’s France. Law issued fresh livres which he used to prop up the Mississippi venture by buying shares in the market. The bubble popped, the venture survived, but the livre was destroyed. Today, the BOJ is issuing yen to prop up the Japanese government bond market. As the issuer of the currency, the BOJ is by any yardstick bankrupt and in desperate need of new capital. Since it commenced QE in 2000, it has accumulated so much government and corporate debt, and even equities bundled into ETFs, that the falling value of the BOJ’s holdings makes its liabilities significantly greater than its assets, currently to the tune of about ¥4 trillion ($3.3bn). Ignoring the cynic’s definition of madness, the BOJ is doubling down on its commitment, announcing on Monday further unlimited purchases of 10-year JGBs at a fixed yield of 0.25%. In other words, it is supporting bond prices from falling further, echoing Mario Draghi’s “whatever it takes” and confirming its John Law policy. Last Tuesday’s Summary of Opinions at the Monetary Policy Meeting on March 17 and 18 had this gem: “Heightened geopolitical risks due to the situation surrounding Ukraine have caused price rises of energy and other items, and this will push down domestic demand while raising the CPI. Under the circumstances, it is necessary to improve labour market conditions and provide stronger support for wage increases, and therefore it is increasingly important that the bank persistently continue with the current monetary easing.” No, this is not satire. In other words, the BOJ’s deposit rate will remain negative. And the following was added from Government Representatives at the same meeting: “The budget for fiscal 2022 aims to realise a new form of capitalism through a virtual circle of growth and distribution and the government has been making efforts to swiftly obtain the Diet’s approval.” A virtuous circle of growth? It seems like intensified intervention. Meanwhile, Japan’s major banks with asset to equity ratios of over twenty times are too highly geared to survive rising interest rates without a bank credit crisis threatening to take them down. It is hardly surprising that international capital is fleeing the yen, realising that it will be sacrificed by the BOJ in the vain hope that it can continue to maintain bond prices far above where they should be. The euro system and its euro The euro system and the euro share similar characteristics to the BOJ and the yen: interest rates trapped under the zero bound, Eurozone G-SIBs with asset to equity ratios of over 20 times and market realities forcing interest rates and bond yields higher, as Figure 3 shows. Furthermore, Eurozone banks are heavily exposed to Russian and Ukrainian debt due to their geographic proximity. Fig 3: Euro declining as bond yields soar There are two additional problems for the Eurosystem not faced by the BOJ and the yen. The ECB’s shareholders are the national central banks in the euro system, which in turn have balance sheet liabilities more than their assets. The structure of the euro system means that in recapitalising itself the ECB does not have a government to which it can issue credit and receive equity capital in return, the normal way in which a central bank would refinance its balance sheet by turning credit into equity. Instead, it will have to refinance itself through the national central banks which being insolvent themselves in turn would have to refinance themselves through their governments. The second problem is a further complication. The euro system’s TARGET2 settlement system reflects enormous imbalances which complicates resolving a funding crisis. For example, on the last figures (end-February), Germany’s Bundesbank was owed €1,150 billion through TARGET2, while Italy owed €568 billion. It would be in the interests of a recapitalisation for the Italian government to want its central bank to write off this amount, while the Bundesbank is already in negative equity without writing off TARGET2 balances. Germany’s politicians might demand the balances owed to the Bundesbank be secured. This problem is not insoluble perhaps, but one can see that political and public wrangling over these imbalances will only serve to draw attention to the fragility of the whole system and undermine public trust in the currency. With Germany’s CPI now rising at 7.6% and Spain’s at 9.8%, negative deposit rates are wildly inappropriate. When the system breaks it can be expected to be sudden, violent and a shock to those in thrall to the euro system. Conclusion For decades, a showdown between an Asian partnership and hegemonic America has been building. We can date this back to 1983, when China began to accumulate physical gold having appointed the Peoples’ Bank for the purpose. That act was the first indication that China felt the need to protect itself from others as it ventured into capitalism. China has navigated itself through increasing American assertion of its hegemony and attempts to destabilise Hong Kong. It has faced obstacles to its lucrative export trade through tariffs. It has been cut off from Western markets for its advanced technology. China has resented having to use the dollar. After Russia’s ill-advised invasion of Ukraine, it now appears that the invisible war over global financial resources and control is intensifying. The fuse has been lit and events are taking over. The destabilisation of the yen and the euro are now as certain as can be. While the yen is the victim of John Law-like market-rigging policies and likely to go the same way as France’s livre, perhaps the greater danger is for the euro. The contradictions in its set-up, and the destruction of Germany’s sound money principals in favour of the inflationism of the PIGS was always going to be finite. The ECB has got itself into a ridiculous position, and no amount of conjuring and cajoling of financial institutions can resolve the ECB’s own insolvency and that of all its shareholders. History shows that there are two groups involved in a currency collapse. International holders take fright and sell for other currencies and assets they believe to be more secure. They drive the exchange rate lower. The second group is the public in a nation, those who use the currency for transactions. If they lose confidence in it, the currency can rapidly descend into worthlessness as ordinary people accelerate its disposal for anything tangible in a final crack-up boom. In the past, an alternative currency was always the sounder one, one backed by and exchangeable for gold coin. That is so long ago that we in the West have mostly forgotten the difference between money, that is gold and silver, and unbacked fiat currencies. The great unknown has been how much abuse of money and credit it would take for the public to relearn the difference. Cryptocurrencies have alerted us, but they are not a widely accepted medium of exchange and don’t have the legal standing of gold and gold substitutes. War is to be our wake-up call — financial rather than physical in character. Western central banks and their governments have been fiddling the books, telling us that currency debasement is good for us. That debasement has accelerated in recent years. But by upping the anti against Russia with sanctions that end up undermining the purchasing power of all the West’s major currencies, our leaders have called an end to the reign of fiat. Tyler Durden Sat, 04/02/2022 - 14:30.....»»

Category: blogSource: zerohedgeApr 2nd, 2022

5 Property & Casualty Insurers to Gain From Better Pricing

Frequent catastrophes accelerating policy renewal rate and the resultant upward pricing pressure are likely to boost the performance of Zacks Property and Casualty Insurance industry players like CB, CINF, WRB, RE and KNSL. The Zacks Property and Casualty Insurance (P&C) industry is likely to benefit from better pricing, prudent underwriting and exposure growth. Industry players like Chubb Limited CB, Cincinnati Financial Corporation CINF, W.R. Berkley Corporation WRB, Everest Re Group Limited RE and Kinsale Capital Group KNSL are poised to grow despite a rise in catastrophic activities. Given an active catastrophe environment, the policy renewal rate should accelerate, apart from the rate firming up. This apart, increasing adoption of technology and emergence of insurtech will help in the smooth functioning of the industry players.Though pandemic-related uncertainties weigh on merger and acquisition (M&A) activities, a low rate environment, improvement in surplus, and reopening of economic activities set the stage for a better M&A environment.About the IndustryThe Zacks Property and Casualty Insurance industry comprises companies that provide commercial and personal property insurance, and casualty insurance products and services. Such insurance helps to safeguard property in case of any natural or man-made disaster. Liability coverages are also provided by some players. Coverages offered also include automobiles, professional risk, marine, excess casualty, aviation, personal accident, commercial multi-peril, and professional indemnity and surety. Premiums are the primary source of revenues. These companies invest a portion of premiums to meet their commitments to policyholders. Though the rate environment is still near-zero level, there are indications that it could rise this year after the Fed completes tapering. All eyes are on the FOMC scheduled on Mar 15-16. However, the tension between Ukraine and Russia remains a dampener.4 Trends Shaping the Future of Property and Casualty Insurance IndustryImproved pricing to help navigate claims: Catastrophes are a concern for insurers due to the high degree of losses incurred. They implement price hikes to ensure uninterrupted claims payment. Per Willis Towers Watson’s 2022 Insurance Marketplace Realities report, rates will continue to rise but by a small margin.  Better pricing will help insurers write higher premiums and address claims payment prudently. Per Deloitte insights, global non-life premiums are estimated to grow 3.7% in 2022.  Catastrophe loss induces volatility in underwriting profits: The property and casualty insurance industry is susceptible to catastrophe events, which drag down underwriting profit. Per Swiss Re, the insurance and reinsurance industry incurred the fourth-highest global insured catastrophe losses of about $112 billion in 2021. Swiss Re Institute's preliminary sigma estimates insured losses from natural catastrophes of $105 billion. According to a Verisk and the American Property Casualty Insurance Association report, underwriting loss was $5.6 billion during the first nine months of 2021 with the combined ratio deteriorating 70 basis points to 99.5 due to higher non-cat loss, especially in personal auto. However, exposure growth, better pricing, prudent underwriting and favorable reserve development will help withstand the blow. Also, frequent occurrences of natural disasters should accelerate the policy renewal rate.Merger and acquisitions: Consolidation in the property and casualty industry is likely to continue as players look to diversify their operations into new business lines and geography. Buying businesses along the same lines will also continue as players look to gain market share and grow in their niche areas. With the reopening of the economy, optimistic growth outlook and sturdy capital level, the industry is witnessing a number of mergers, acquisitions and consolidations.Increased adoption of technology: The industry is witnessing increased use of technology like blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation that expedite business operations and save cost. The industry has also witnessed the emergence of insurtech — technology-led insurers — creating competition for incumbent players. The focus of insurtech is mainly on the property and casualty insurance industry. Accelerated digitalization has become the need of the hour and the insurers continue to invest heavily in technology to improve basis points, scale and efficiencies. Per Deloitte Insights, the technology budget is projected to increase 13.7% in 2022. As insurtechs use the latest technologies and concepts that the incumbents are just beginning to experiment with, there remains a huge market risk. Zacks Industry Rank Indicates Bright ProspectsThe group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid prospects in the near term. The Zacks Property and Casualty Insurance industry, which is housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #65, which places it in the top 26% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 26% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. The estimates have moved up 2.5% since September 2021 end.Before we present a few property and casualty stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture. Industry Outperforms S&P 500 and SectorThe Property and Casualty Insurance industry has outperformed both the Zacks S&P 500 composite as well as its sector over the past year. The stocks in this industry have collectively gained 12.4% in the past year compared with the Finance sector’s increase of 1.6% and the Zacks S&P 500 composite’s rise of 6.1%.One-Year Price Performance Current ValuationOn the basis of the trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.27X compared with the S&P 500’s 6.24X and the sector’s 3.14X.Over the past five years, the industry has traded as high as 1.42X, as low as 1.17X and at the median of 1.31X. Price-to-Book (P/B) Ratio (TTM)Price-to-Book (P/B) Ratio (TTM) 5 Property and Casualty Insurance Stocks to Add to PortfolioWe are recommending two Zacks Rank #1 (Strong Buy) stocks and three Zacks Rank #2 (Buy) stocks from the P&C Insurance industry. You can see the complete list of today’s Zacks #1 Rank stocks here. Kinsale Capital Group: This Richmond, VA-based company offers various insurance and reinsurance products across all 50 states of the United States, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands. This Zacks Rank #1 company is poised for long-term growth, given its continued focus on the E&S market, improved revenues, solid underwriting results and effective capital deployment measures. The Zacks Consensus Estimate for its 2022 and 2023 bottom line has moved 5.9% and 8.2% north, respectively over the past 30 days. The consensus estimate also suggests a respective year-over-year increase of 15.3% and 15% for 2022 and 2023.Price and Consensus: KNSLCincinnati Financial: Fairfield, OH-based Cincinnati Financial markets property and casualty insurance. This Zacks Rank #1 company should continue to grow given the disciplined expansion of Cincinnati Re, an agent-focused business model, and strong performance at the Commercial Lines segment.Estimates for Cincinnati Financial’s 2022 and 2023 bottom line have moved 5.7% and 5.5% north, respectively, over the past 30 days.Price and Consensus: CINF Everest Re: Hamilton, Bermuda, Everest Re Group, carrying a Zacks Rank 2, writes property and casualty, reinsurance and insurance in the U.S, Bermuda and international markets. Everest Re has a huge market share in the insurance and reinsurance market and is expected to benefit from capital adequacy, financial flexibility, traditional risk management capabilities, improved pricing and focus on building a portfolio with a mix toward product lines with better rate adequacy and higher long-term margins.Estimates for Everest Re’s 2022 and 2023 bottom line have moved 1.8% and 1.2% north, respectively over the past 30 days. The consensus estimate suggests a respective year-over-year increase of 14.7% and 15.4% for 2022 and 2023. The expected long-term earnings growth rate is 10.1%.Price and Consensus: REW.R. Berkley: Greenwich, CT-based W.R. Berkley is one of the nation’s largest commercial lines property-casualty insurance providers benefiting from its insurance business. This Zacks Rank #2 insurer should continue to benefit from its well-performing insurance business. Rate increases, reserving discipline, and growing premiums from international business, mainly supported by the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia bode well.Estimates for W.R. Berkley’s 2022 and 2023 bottom line have moved 6.3% and 1.5% north, respectively over the past 30 days. The consensus estimate also suggests a respective year-over-year increase of 6.5% and 8.6% for 2022 and 2023. The expected long-term earnings growth rate is 9%.Price and Consensus: WRB Chubb: Based in Zurich, Switzerland, Chubb is one of the world’s largest providers of P&C insurance and reinsurance. It has diversified through acquisitions into many specialty lines and also provides specialized insurance products. The company is poised to benefit from its focus on capitalizing on the potential of middle-market businesses, and strategic initiatives, which pave the way for long-term growth.Chubb carries a Zacks Rank #2. Estimates for its 2022 and 2023 bottom line have moved 3% and 1.5% north, respectively over the past 30 days. The consensus estimate also suggests a respective year-over-year increase of 16% and 10.1% for 2022 and 2023. The expected long-term earnings growth rate is 10%.Price and Consensus: CB  Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top buy-and-hold tickers for the entirety of 2022? Last year's 2021 Zacks Top 10 Stocks portfolio returned gains as high as +147.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buysAccess Zacks Top 10 Stocks for 2022 today >>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 Chubb Limited (CB): Free Stock Analysis Report W.R. Berkley Corporation (WRB): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report Everest Re Group, Ltd. (RE): Free Stock Analysis Report Kinsale Capital Group, Inc. (KNSL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMar 14th, 2022

More Coronavirus Stimulus Checks from California Possible as Analyst Predicts $31B Surplus

Since the beginning of the pandemic last year, the federal government has sent three stimulus checks, and is unlikely to send more direct payments. However, when talking about the states, California leads the pack, and has so far sent two stimulus checks under its Golden State Stimulus program. Now, there possibly may be more coronavirus […] Since the beginning of the pandemic last year, the federal government has sent three stimulus checks, and is unlikely to send more direct payments. However, when talking about the states, California leads the pack, and has so far sent two stimulus checks under its Golden State Stimulus program. Now, there possibly may be more coronavirus stimulus checks from California as the state is again predicted to have a budget surplus for the fiscal year 2022. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more More Coronavirus Stimulus Checks From California Possible A Wednesday report from the independent Legislative Analyst’s Office (LAO) estimates a $31 billion budget surplus for California next fiscal year, which starts from July 1. Since the state is not officially allowed to spend more tax dollars per Californian than it did in 1979 (adjusted for inflation), it is left with only a few options to use the budget surplus. These options include offering tax rebates, reducing taxes, supporting schools and community colleges, or using it for certain purposes, such as infrastructure. Hinting on what options the state could go for, Gov. Gavin Newsom said he could “substantially increase” the infrastructure investment, or could send more stimulus checks. “How we framed that historic surplus last year, similarly, we will frame our approach this year,” Newsom said, adding, "I'm very proud of the historic tax rebate last year.” Earlier this year, the state Legislature approved tax rebates amounting to $12 billion in the state budget that was also predicted to result in a surplus. The tax revenue for California has been rising despite the coronavirus pandemic. For the April to June quarter this year, California businesses posted record taxable sales of $216.8 billion, an increase of over 38% over the same period last year. Also, the tax collections (on income, sales and corporations) for September were 40% more than September last year and about 60% more than September 2019. A primary reason for record tax collections is the double-digit growth in retail sales. Whether or not more coronavirus stimulus checks from California would come next year will only be known in January, when Newsom is expected to come up with his budget proposal. Second Golden State Stimulus Program California, meanwhile, continues to send out the payment under the second Golden State Stimulus program. As per the California Franchise Tax Board, the most recent batch of payments were mailed on November 15. Further, the CFTB estimates that all the stimulus checks will be sent before the end of the year. The stimulus checks for the zip codes ending 544-709 would be mailed between November 29 and December 17, while for zip codes ending 710-988, the payment would be sent from December 13. Once the authorities mail the stimulus checks, it could take about three weeks for the payment to show up in mailboxes. California is sending stimulus checks between $600 and $1,100 under the second Golden State Stimulus program to those with AGI (adjusted gross income) of less than $75,000. Updated on Nov 19, 2021, 9:30 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 19th, 2021

Money, Funny-Money, & Crypto

Money, Funny-Money, & Crypto Authored by Alasdair Macleod via GoldMoney.com, That the post-industrial era of fiat currencies is coming to an end is becoming a real possibility. Major economies are now stalling while price inflation is just beginning to take off, following the excessive currency debasement in all major jurisdictions since the Lehman crisis and accelerated even further by covid. The dilemma now faced by central banks is whether to raise interest rates sufficiently to tackle price inflation and lend support to their currencies, or to take one last gamble on yet more stimulus in the hope that recessions can be avoided. Politics and neo-Keynesian economics strongly favour monetary inflation and continued interest rate suppression. But following that course leads to the destruction of currencies. So, how should ordinary people protect themselves from currency risk? To assist them, this article draws out the distinctions between money, currency, and bank credit. It examines the claims of cryptocurrencies to be replacement money or currencies, explaining why they will be denied either role. An update is given on the uncanny resemblance between current neo-Keynesian monetary inflation and support for financial asset prices, compared with John Law’s proto-Keynesian policies which destroyed the French economy and currency in 1720. Assuming we continue to follow Law’s playbook, an understanding why money is only physical gold and silver and nothing else will be vital to surviving what appears to be a looming crisis in financial assets and currencies. Introduction With the recent acceleration in the growth of money supply it is readily apparent that government spending is increasingly financed through monetary inflation. Those who hoped it would be a temporary phenomenon are being shown to have been overly optimistic. The excuse that its expansion was only a one-off event limited to supporting businesses and consumers through the covid pandemic is now being extended to seeing them through continuing logistics disruptions along with other unexpected problems. We now face an economic slowdown which will reduce government revenues and, according to policy planners, may require additional monetary stimulation to preclude. Along with never-ending budget deficits, for the foreseeable future monetary inflation at elevated levels is here to stay. The threat to the future purchasing power of currencies should be obvious, yet few people appear to be attributing rising prices to prior monetary expansion. David Ricardo’s equation of exchange whereby changes in the quantity of money are shown to affect its purchasing power down the line has disappeared from the inflation narrative and is all but forgotten. That the users of the medium of exchange ultimately determine its utility is ignored. It is now assumed to be the state’s function to decide what acts as money and not its users. Instead, we are told that the state’s fiat currency is money, will always be money and that prices are rising due to failures of the capitalist system. Central to the deception is to call currency money, and to persist in describing its management by the state as monetary policy. And money supply is always the supply of fiat currency in all its forms. That these so-called monetary policies have failed and continue to do so is becoming more widely appreciated. It is the anti-capitalistic attitude of state planners which absolves them from the blame of mismanaging the relationship between their currencies and economies by blaming private sector actors when their policies fail. Instead of acting as the people’s servants, governments have become their controllers, expecting the public’s sheep-like cooperation in economic and monetary affairs. The state issues its currency backed by unquestioned faith and credit in the government’s monopoly to issue and manage it. Seeming to recognise the potential failure of their currency monopolies many central banks now intend to issue a new version, a central bank digital currency to give greater control over how citizens use and value it. Without doubt, the dangers from fiat currency instability are increasing. Never has it been more important for ordinary people, its users, to understand what real money constitutes and its difference from state-issued currencies. Not only are new currencies in the form of central bank digital currencies being proposed but some suggest that distributed ledger cryptocurrencies, which are beyond the control of governments, will be adopted when state fiat currencies fail, an eventual development for which increasing numbers of people expect. The currency scene is descending into a confusion for which policy planners are unprepared. Fiat currencies are failing, evidenced by declining purchasing power. Not only is it the lesson of history; not only are governments resorting to the printing press or its digital equivalent, but it is naïve to think that governments desire monetary stability over satisfying the interests of one group over those of another. By suppressing interest rates, central banks favour borrowers over depositors. By issuing additional currency they transfer wealth from their governments’ electors. The transfer is never equitable either, with early receivers of new currency getting to spend it before prices have adjusted to accommodate the increased quantity in circulation. Those who receive it last find that prices have risen because of currency dilution while their income has been devalued. The beneficiaries are those close to government and the banks who expand credit by ledger entry. The losers are the poor and pensioners — the people who in democratic theory are more morally entitled to protection from currency debasement than anyone else. The true role of money In the late eighteenth century, a French businessman and economist, Jean-Baptiste Say, noticed that when France’s currencies failed during the Revolution, people simply exchanged goods for other goods. A cobbler would exchange the shoes and boots he made for the food and other items he required to feed and sustain his family. The principles behind the division of labour had continued without money. But it became clear to Say that the role of money was to facilitate this exchange more efficiently than could be achieved in its absence. For Keynesian economists, this is the inconvenient truth of Say’s law. The division of labour, which permits individuals to deploy their personal skills to the greatest benefit for themselves and therefore for others, remains central to the commercial actions of all humanity. It is the mainspring of progress. A medium of exchange commonly accepted by society not only facilitates the efficient exchange of goods produced through individual skills but it allows a producer to retain money temporarily for future consumption. This can be because he has a surplus for his immediate requirements, or he decides to invest it in improving his product, increasing his output, or for other purposes than immediate consumption. Whether it is a corporation, manager, employee, or sole trader; whether the product be a good or a service— all qualify as producers. Everyone earning a living or striving to make a profit is a producer. Over the many millennia that have elapsed since the end of barter, people dividing their labour settled on metallic money as the mediums of exchange; recognisable, divisible, commonly accepted, and being scarce also valuable. And as civilisation progressed gold, silver, and copper were coined into recognisable units. These media of exchange in their unadulterated form were money, and even though they were stamped with images of kings and emperors, they were no one’s liability. Nowadays, humans across the planet still recognise physical gold and silver as true money. But it is a mistake to think they guarantee price stability — only that they are more stable than other media of exchange, which is why they have always survived and re-emerged after alternatives have failed. This is the key to understanding why they guaranteed money substitutes, notably through industrial revolutions, and remain money to this day. Britain led the way in replacing silver as its long-standing monetary standard with gold, relegating silver to a secondary coinage. In 1817 the new gold sovereign was introduced at the exchange rate equivalent of 113 grains (0.2354 ounces troy) to the pound currency. A working gold standard, whereby bank notes were exchangeable for gold coin commenced in 1821, remaining at that fixed rate until the outbreak of the First World War in 1914. By 1900, the gold standard had international as well as domestic aspects. It implied that nations settled balance of payment differences with each other in gold, although in practice this seems to have happened relatively little. Many smaller nations, while having domestic gold circulation, did not bother to keep physical gold in reserve, but held sterling balances which, again, were regarded as being as good as gold. The Bank of England had a remarkably small reserve of under 200 tonnes in 1900, compared with the Bank of France which held 544 tonnes, the Imperial Bank of Russia with 661 tonnes, and the US Treasury with 602 tonnes. But even though remarkably little gold was held by the Bank of England, over 1,400 tonnes of sovereign coins had been minted in Australia and the UK and were in public circulation. Therefore, some £200m of the UK and its empire’s money supply was in physical gold (the equivalent of £62bn at today’s prices). The relationship between gold and prices Metallic money’s purchasing power fluctuates, influenced by long-term factors such as changes in mine output and population growth. Gold is also held for non-monetary purposes such as jewellery though the distinction between bullion held as money and jewellery can be fuzzy. A minor use is industrial. The degree of coin circulation relative to the quantity of substitutes also affects its purchasing power, as experience from nineteenth century Britain attests. The economic progress of the industrial revolution increased the volume of goods relative to the quantity of money and money-substitutes (bank notes and bank deposits subject to cheques), so the general level of producer prices declined, even though they varied with changes in the level of bank credit. That generally held until the late-1880s, when bank credit in the economy expanded on the back of increased shipments of gold from South Africa. Furthermore, a combination of rising demand for industrial commodities through economic expansion of the entire British empire and more currencies linking themselves to gold indirectly via managed exchange rates against pounds and other gold-backed currencies all contributed to reverse the declining trend of wholesale prices between 1894—1914. Consequently, wholesale prices no longer declined but tended to increase modestly. This is shown in Figure 1. Figure 1 also explodes the myth in central bank monetary policy circles that varying interest rates controls money’s purchasing power by “pricing” money. Demand for credit is set by the economic calculations of businessmen and entrepreneurs, not idle rentiers as assumed by Keynes who named this paradox after Arthur Gibson, who pointed it out in 1923. The explanation eluded Keynes and his followers but is simple. In assessing the profitability of production, the most important variable (assuming that the means of production are readily available) is anticipated prices for finished products. Changes in borrowing rates, reflecting the affordability of interest that could be paid therefore do not precede changes in prices but follow changes in prices for this reason. While fluctuations in the sum of the quantities of money, currency and credit affect the general level of prices, there is an additional effect of the value placed on these components by its users. History has demonstrated that the most stable value is placed on gold coin, which is what qualifies it as money. It has been said that priced in gold a Roman toga 2,000 years ago cost the same as a lounge suit today. But we don’t need to go back that far for our evidence. Figure 2 shows WTI oil priced in dollars, the world’s reserve currency, and gold both indexed to 1986. Clearly, the dollar is significantly less reliable than gold as a stable medium of exchange. So long as gold is freely exchangeable for currency, this stability is imparted to currency as well. When it is suspected that this exchangeability is likely to be compromised, coin becomes hoarded and disappears from circulation. The purchasing power of the currency then becomes dependent on a combination of changes in its quantity and changes in faith in the issuer. Bank deposits face the additional risk of faith in the bank’s ability to pay its debts. In summary, the general level of prices tends to fall gradually over time in an economy where gold coin circulates as the underlying medium of exchange, and when faith in the currency as its circulating alternative is unquestioned. The existence of a coin exchange facility lifts the purchasing power of the currency above where it would otherwise be without a functioning standard. Even when gold exchange for a fiat currency becomes restricted, the purchasing power of the currency continues to enjoy some support, as we saw during the Bretton Woods Agreement. The distinction between money and currency So far, we have defined money, which is metallic and physical. Now we turn to what is erroneously taken to be money, which is currency. Originally, the dollar and pound sterling were freely exchangeable by its users for silver and then gold coin, so state-issued currencies came to be assumed to be as good as money. But its exchangeability diminished over time. In the United Kingdom exchangeability of sterling currency for gold coin ceased with the outbreak of hostilities in 1914, though sovereigns still exist as money officially today. They are simply subject to Gresham’s law, driven out of general circulation by inferior currency. The post-war gold standard of 1925-32 was a bullion standard whereby only 400-ounce bars could be demanded for circulating currency, which failed to tie in sterling to money proper. In the United States, gold coin was exchangeable for dollars in the decades before April 1933 at $20.67 to the ounce. Bank failures following the Wall Street crash encouraged citizens to exchange dollar deposits for gold, and foreign holders of dollar deposits similarly demanded gold, leading to a drain on American gold reserves. By Executive Order 6102 in April 1933 President Roosevelt banned private sector ownership of gold coin, gold bullion and gold certificates, thereby ending the gold coin standard and forcing Americans to accept inconvertible dollar currency as the circulating medium of exchange. This was followed by a devaluation of the dollar on the international exchanges to $35 to the ounce in January 1934. The entire removal of money from the global currency system was a gradual process, driven by a progression of currency events, until August 1971 when President Nixon ended the Bretton Woods Agreement. From then on, the US dollar became the world’s reserve currency, commonly used for pricing commodities and energy on international markets. But following the Nixon shock, the dollar had become purely fiat. Unlike gold coin, which has no counterparty risk, fiat currency is evidence of either a liability of an issuing central bank or of a commercial bank. It is not money. The fact that money, being gold or silver coin does not commonly circulate as media of exchange, cannot alter this fact. Since the dawn of modern banking with London’s goldsmiths in the seventeenth century, who deployed ledger debits and credits, most currency entitlements have been held in bank deposits, which are not the property of deposit customers, being liabilities of the banks and owed to them. It started with depositors placing specie with goldsmiths or transferring currency to them from other accounts on the understanding a goldsmith would deploy the funds so acquired to obtain sufficient profit to pay a 6% interest on deposits. To earn this return, it was agreed by the depositor that the funds would become the goldsmith’s property to be used as the goldsmith saw fit. Goldsmiths and their banking successors were and still are dealers in credit. As the goldsmiths’ banking business evolved, they would create deposits by extending credit to borrowers. A loan to the borrower appeared as an asset on a goldsmith’s balance sheet, which through double-entry book-keeping was balanced by a liability being the deposit facility from which the borrower would draw down the loan. Thus, money and currency issued by banks as claims upon them were replaced entirely by book-entry liabilities owed to depositors, encashable into specie, central bank currency or banker’s cheque only on demand. Through the expansion of bank credit, which is matched by the creation of deposits through double-entry book-keeping, commercial banks create liabilities subject to withdrawal as currency to this day. That there is an underlying cycle of expansion and contraction of bank credit is evidenced by the composite price index and bond yields between 1817 and 1885 shown in Figure 1 above. But so long as money, that is gold coin, remained exchangeable with currency and bank deposits on demand, fluctuations in outstanding bank credit only had a relatively short-term effect on the general level of prices. And as explained above, the expansion of the quantity of above-ground gold stocks from South African mines in the late 1880s contributed to the general level of prices increasing in the final decade of the nineteenth century until the First World War. Following the Great War, the earlier creation of the Federal Reserve Board in the United States led to the expansion of circulating dollar currency, fuelling the Roaring Twenties and the Wall Street bubble, followed by the Wall Street crash and the depression. These calamities were the inevitable consequence of excessive credit creation in the 1920s. The error made by statist economists at the time (and ever since) was to ignore what caused the depression, believing it to be a contemporaneous failure of capitalism instead of the consequence of earlier currency debasement and interest rate suppression. From then on, this error has been perpetuated by statists frustrated by the discipline imposed upon them by monetary gold. The solution was seen to be to remove money from the currency system so that the state would have unlimited flexibility to manage economic outcomes. With America dominating the global economy after the First World War, her use of the dollar both domestically and internationally had begun to dominate global economic outcomes. The errors of earlier currency expansion ahead of and during the Roaring Twenties, admittedly exacerbated by the introduction of farm machinery, led to a global slump in agricultural prices the following decade. And the additional error of Glass Stegall tariffs collapsed global trade in all goods. Following the Second World War, secondary wars in Korea and Vietnam led to exported dollars being accumulated and then sold by foreign central banks for American’s gold reserves. In 1948, America had 21,628.4 tonnes of gold reserves, 72% of the world total. By 1971, when the facility for central banks to encash dollars for gold was suspended, US gold reserves had fallen to 12,398 tonnes, 34% of world gold reserves. Today it stands officially at 8,133.5 tonnes, being less than 23% of world gold reserves — figures independently unaudited and suspected by many observers to overstate the true position. The consequences of currency expansion for the relationship between money and currency since the two were completely severed in 1971 is shown in Figure 3. Since 1960 (the indexed base of the chart) above-ground gold stocks have increased from 62,475 tonnes by about 200% to 189,000 tonnes — offset to a large degree by world population growth.[iv] M3 broad money has increased by 70 times, the disparity in these rates of increase being adjusted by the increase in the dollar price of money, with the dollar losing 98% of its purchasing power relative to gold. By basing the chart on 1960 much of the currency expansion which led to the collapse of the London gold pool in the mid-1960s is captured, illustrating the strains in the relationship that led to the Nixon shock. The rival status of cryptocurrencies Over the last decade, led by bitcoin cryptocurrencies have become a popular hedge against fiat currency debasement. Bitcoin has a finite limit of 21 million coins, having less than 2¼ million yet to be mined. And of those issued, some are irretrievably lost, theoretically adding to their value. Fans of cryptocurrencies are unusual, because they have grasped the essential weakness of state-issued fiat currencies ahead of the wider public. Armed with this knowledge they claim that distributed ledger technology independent from governments will form the basis of tomorrow’s money. It has led to a speculative frenzy, driving bitcoin’s price from a reported 10,000 for two pizzas in 2010 (therefore worth less than a cent each) to over $60,000 today. If, as hodlers hope, bitcoin replaces all state-issued fiat currencies when they fail, then the increase in its dollar value has much further to go. In theory there are reasons that bitcoin and similar cryptocurrencies can become media of exchange in a limited capacity, but never money, the basis that all currencies referred to for their original validity. Indeed, some transactions following the original pizza purchase have occurred since, but they are very few. The reasons bitcoin or rival cryptocurrencies are unlikely to be accepted widely as currencies, let alone as a replacement for money, are best summed up in the following bullet points. To replace money, as opposed to currencies, bitcoin would have to be accepted as a replacement for both gold and silver. Beyond the imagination of tech-savvy enthusiasts, making up perhaps less than one in two hundred transacting humans, it is impossible to see bitcoin achieving this goal, because they represent a vanishingly small number of the global population. There can be little doubt that if fiat currencies lose their utility the overwhelming majority of transacting individuals will desire physical money, and not another form of digital media, which currencies in the main and cryptocurrencies have become. Despite the advance of technology not everyone yet possesses the knowledge, media, or the reliable electricity and internet connections to conduct transactions in cryptocurrencies. Remote theft of them is easier and more profitable than that of gold and silver coin. Cryptocurrencies are too dependent on undefinable risk factors for transactional ubiquity. The number of rival cryptocurrencies has proliferated. It is estimated that there are now over 6,800 in existence compared with 180 government-issued currencies. They represent both an inflation of numbers and values, which if unsatisfied already makes the seventeenth century tulip mania look like to have been a relatively minor speed bump in comparison. In only a decade they have grown to $750 billion in value based on an unproven concept stimulating unallayed human greed at the expense of considered reason. By way of contrast, gold’s strength as money is its flexibility of supply from other uses combined with its record of ensuring price stability. As we saw in Figure 1’s illustration of the relationship between prices and borrowing costs, assuming the factors of production are available the stability of prices under a gold standard permits an assessment of final product values at the commencement of an investment in production. There is no such certainty with bitcoin or rival cryptocurrencies because a strictly finite quantity would make it impossible to calculate final prices at the end of an investment in production. Without providing the means for economic calculation, any money or currency replacement will fail. Unless they disappear with their currencies, central banks will never sanction distributed ledger currencies beyond their control acting as a general medium of exchange. This is one reason why they are working to introduce their own central bank digital currencies, allowing them to maintain statist control over currencies while extending powers over how they are used. Furthermore, central banks do not own cryptocurrencies, but they do officially own 35,554 tonnes of gold, having never discarded true money completely.[vi] Events have proved that they are even reluctant to allow monetary gold to circulate, not least because it would call into question the credibility of their fiat currencies. But if there is a fall-back position in the demise of fiat, it will be based on central bank gold and never on a private-sector cryptocurrency. We should also consider what happens to cryptocurrencies in the event of a fiat currency collapse. The point behind any money or currency is that it must possess all the objective value in a transaction with all subjectivity to be found in the goods or services being exchanged. It requires the currency to be scarce, but not so much that its value measured in goods is expected to continually rise. If that was the case, then its ability to circulate would become impaired through hoarding. We are left with questioning whether bitcoin can ever possess a purely objective value in transactions. Their potential role as a transacting currency will also evaporate along with fiat because these will be the circumstances where all currencies which cannot be issued as credible gold substitutes will become valueless, because if any currency is to survive the end of the fiat regime it will require action by central banks combined with new laws and regulations which can only come from governments. The nightmare for crypto enthusiasts is that central banks will be forced eventually to mobilise their gold reserves to back credibly what is left of their currencies’ collapsing purchasing power. We are providing an answer to another question over the fate of cryptocurrencies in the event that central banks are forced to mobilise their gold reserves, turning fiat currencies into credible money substitutes. Admittedly, it is unlikely to be a simple decision with the problem beyond the understanding of statist policy advisers and with competing interests seeking to influence the outcome. But, there can be only one action that will allow the state and banking system to retain control over currencies and credit, which is to back them with gold reserves, preferably with a gold coin standard. When that moment is anticipated, cryptocurrencies as potential circulating currencies will become fully redundant. They are then likely to lose most of or all their value as replacement currencies. Furthermore, it is hard to find anyone who currently holds a cryptocurrency who does not hope to cash in by selling them at higher prices for their national currencies. They have been bought for speculation and investment with little or no intention of ultimately spending them. Therefore, we can assume that the demise of fiat currencies, far from inviting replacements by bitcoin and its imitators, will also mean the death of the cryptocurrency phenomenon in a general return towards a money standard, which always has been physical and metallic. The progression towards currency destruction In last week’s article for Goldmoney I suggested four waypoints to mark the route towards the ending of the fiat currency system. The similarity of current events with those of John Law’s inflation and subsequent collapse of the Mississippi bubble and of the French livre so far is striking, but this time it’s on a global scale. The John Law experience offers us a template for what is already happening to financial assets and currencies today — hence the four waypoints. Briefly described, John Law was a proto-Keynesian money crank who operated a policy of inflating the values of his principal assets, the Banque Royale and his Mississippi venture, by issuing shares in partly paid form with calls due later. Ten per cent down translated into fortunes for early subscribers as share prices rose from L140 in June 1717 to over L10,000 in January 1720, fuelled by a bitcoin-style buying frenzy. But when calls became due in January 1720 and a scheme to merge the Banque Royale with the Mississippi venture was proposed, shares began to be sold to pay the calls and take up rights to new issues. Law used his position as controller of the currency to issue fiat livres to buy shares in the market to support prices, measures that finally failed in May. Priced in livres, the shares fell to under 3,500 by November. In sterling, they fell from £330 in January to below £50 in September. After October, there was no exchange rate for livres against sterling implying the livre had lost all its exchange value. By injecting cash into investing institutions in return for government bonds, central banks are following a remarkably similar policy today. Quantitative easing by the US’s central bank, which since March 2020 has injected over $2 trillion into US pension funds and insurance companies to invest in higher risk assets than government and agency bonds, is no less than a repetition of John Law’s policy of inflating asset values to ensure a spreading wealth effect, while ensuring finance is facilitated for the state. Last night (3 November) the Fed was forced to announce a phased reduction of quantitative easing to allay fears of intractable price inflation. The question now arises as to how many months of QE reduction it will take to deflate the financial asset bubble. And what will then be the Fed’s response: will QE be increased again in a repetition of the John Law proto-Keynesian mistakes? There comes a point where the prices of goods reflect the increased quantity of currency in circulation. Increases in the general level of prices inevitably lead to rising levels for interest rates, and the creation of credit in the main banking centres begin to go into reverse. John Law found that share prices could then no longer be supported, and the Mississippi bubble burst in May 1720; a fate which equity markets today will almost certainly face, because price rises for goods and services are now proving intractable. The outcome of Law’s proto-Keynesianism was a collapse in Mississippi shares, and the complete destruction of the livre. The similarity with the situation in financial markets today is truly remarkable. There are now no good options for policy makers. Hampered by similar neo-Keynesian errors and beliefs, central bankers and politicians lack the resolve to stop events leading inexorably towards the destruction of their currencies. The first waypoint in last week’s article for Goldmoney is now being seen: a growing realisation that major economies, particularly the US and UK, face the prospect of a combination of rising prices accompanied by an economic slump, frequently diagnosed as stagflation. Stagflation is a misnomer. Monetary inflation is a con which in smaller doses provides the illusion of stimulus. But there comes a point where the transfer of wealth from the productive economy to the government is too great to bear and the economy begins to collapse. While it is impossible to judge where that point lies, the accumulation of monetary inflation in recent years now weighs heavily on all major economies. The conditions today closely replicate those in France in late-1719 and early 1720. Prices were rising in the rural areas as well as in the cities, impoverishing the peasantry and asset inflation was running into headwinds, about to impoverish the beneficiaries of the bubble’s wealth effect as well. Conclusion If central banks decide to protect their currencies, they must let markets determine interest rates. With prices rising officially at over 5% in the US (more like 15% on independent estimates) the rise in interest rates will not only crash all financial asset values from fixed interest to equities, but force governments to rein in their spending to eliminate deficits. This will involve greater cuts than currently indicated, because of loss of tax revenues. Indeed, mandatory spending will put socialising governments in an impossible position. But even these measures are unlikely to protect currencies, because of extensive foreign ownership of the US dollar. Foreigners hold total some $33 trillion in financial assets and bank deposits, much of which will be liquidated or lost in a bear market. Long experience suggests that funds rescued from overexposure to foreign currencies will be repatriated. Alternatively, attempts to continue the inflationary policies of Keynesian money cranks will undermine currencies more rapidly, but this is almost certainly the line of least policy resistance — until it is too late. It has never been more important for the hapless citizen to recognise what is happening to currencies and to understand the fallacies behind cryptocurrencies. They are not practical replacements for state-issued currencies and are likely to turn out to be just another aspect of the financial bubble. The only protection from an increasingly likely collapse of the fiat money system and all that sails with it is to understand what constitutes money as opposed to currency; and that is only physical gold and silver coins and bars. Tyler Durden Sat, 11/13/2021 - 09:20.....»»

Category: blogSource: zerohedgeNov 13th, 2021

Futures Reverse Losses Ahead Of Key CPI Report

Futures Reverse Losses Ahead Of Key CPI Report For the second day in a row, an overnight slump in equity futures sparked by concerns about iPhone sales (with Bloomberg reporting at the close on Tuesday that iPhone 13 production target may be cut by 10mm units due to chip shortages) and driven be more weakness out of China was rescued thanks to aggressive buying around the European open. At 800 a.m. ET, Dow e-minis were up 35 points, or 0.1%, S&P 500 e-minis were up 10.25 points, or 0.24%, and Nasdaq 100 e-minis were up 58.50 points, or 0.4% ahead of the CPI report due at 830am ET. 10Y yields dipped to 1.566%, the dollar was lower and Brent crude dropped below $83. JPMorgan rose as much as 0.8% in premarket trading after the firm’s merger advisory business reported its best quarterly profit. On the other end, Apple dropped 1% lower in premarket trading, a day after Bloomberg reported that the technology giant is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units due to prolonged chip shortages. Here are some of the biggest U.S. movers today: Suppliers Skyworks Solutions (SWKS US), Qorvo (ORVO) and Cirrus Logic (CRUS US) slipped Tuesday postmarket Koss (KOSS US) shares jump 23% in U.S. premarket trading in an extension of Tuesday’s surge after tech giant Apple was rebuffed in two patent challenges against the headphones and speakers firm Qualcomm (QCOM US) shares were up 2.7% in U.S. premarket trading after it announced a $10.0 billion stock buyback International Paper (IP US) in focus after its board authorized a program to acquire up to $2b of the company’s common stock; cut quarterly dividend by 5c per share Smart Global (SGH US) shares rose 2% Tuesday postmarket after it reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate Wayfair (W US) shares slide 1.8% in thin premarket trading after the stock gets tactical downgrade to hold at Jefferies Plug Power (PLUG US) gains 4.9% in premarket trading after Morgan Stanley upgrades the fuel cell systems company to overweight, saying in note that it’s “particularly well positioned” to be a leader in the hydrogen economy Wall Street ended lower in choppy trading on Tuesday, as investors grew jittery in the run-up to earnings amid worries about supply chain problems and higher prices affecting businesses emerging from the pandemic. As we noted last night, the S&P 500 has gone 27 straight days without rallying to a fresh high, the longest such stretch since last September, signaling some fatigue in the dip-buying that pushed the market up from drops earlier this year. Focus now turn to inflation data, due at 0830 a.m. ET, which will cement the imminent arrival of the Fed's taper.  "A strong inflation will only reinforce the expectation that the Fed would start tapering its bond purchases by next month, that's already priced in," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Yet, a too strong figure could boost expectations of an earlier rate hike from the Fed and that is not necessarily fully priced in." The minutes of the Federal Reserve's September policy meeting, due later in the day, will also be scrutinized for signals that the days of crisis-era policy were numbered. Most European equities reverse small opening losses and were last up about 0.5%, as news that German software giant SAP increased its revenue forecast led tech stocks higher. DAX gained 0.7% with tech, retail and travel names leading. FTSE 100, FTSE MIB and IBEX remained in the red. Here are some of the biggest European movers today: Entra shares gain as much as 10% after Balder increases its stake and says it intends to submit a mandatory offer. Spie jumps as much as 10%, the biggest intraday gain in more than a year, after the French company pulled out of the process to buy Engie’s Equans services unit. Man Group rises as much as 8.3% after the world’s largest publicly traded hedge fund announced quarterly record inflows. 3Q21 net inflows were a “clear beat” and confirm pipeline strength, Morgan Stanley said in a note. Barratt Developments climbs as much as 6.3%, with analysts saying the U.K. homebuilder’s update shows current trading is improving. Recticel climbs 15% to its highest level in more than 20 years as the stock resumes trading after the company announced plans to sell its foams unit to Carpenter Co. Bossard Holding rises as much as 9.1% to a record high after the company reported 3Q earnings that ZKB said show strong growth. Sartorius gains as much as 5.9% after Kepler Cheuvreux upgrades to hold from sell and raises its price target, saying it expects “impressive earnings growth” to continue for the lab equipment company. SAP jumps as much as 5% after the German software giant increased its revenue forecast owing to accelerating cloud sales. Just Eat Takeaway slides as much as 5.8% in Amsterdam to the lowest since March 2020 after a 3Q trading update. Analysts flagged disappointing orders as pandemic restrictions eased, and an underwhelming performance in the online food delivery firm’s U.S. market. Earlier in the session, Asian stocks posted a modest advance as investors awaited key inflation data out of the U.S. and Hong Kong closed its equity market because of typhoon Kompasu. The MSCI Asia Pacific Index rose 0.2% after fluctuating between gains and losses, with chip and electronics manufacturers sliding amid concerns over memory chip supply-chain issues and Apple’s iPhone 13 production targets. Hong Kong’s $6.3 trillion market was shut as strong winds and rain hit the financial hub.  “Broader supply tightness continues to be a real issue across a number of end markets,” Morgan Stanley analysts including Katy L. Huberty wrote in a note. The most significant iPhone production bottleneck stems from a “shortage of camera modules for the iPhone 13 Pro/Pro Max due to low utilization rates at a Sharp factory in southern Vietnam,” they added. Wednesday’s direction-less trading illustrated the uncertainty in Asian markets as traders reassess earnings forecasts to factor in inflation and supply chain concerns. U.S. consumer price index figures and FOMC minutes due overnight may move shares. Southeast Asian indexes rose thanks to their cyclical exposure. Singapore’s stock gauge was the top performer in the region, rising to its highest in about two months, before the the nation’s central bank decides on monetary policy on Thursday. Japanese stocks fell for a second day as electronics makers declined amid worries about memory chip supply-chain issues and concerns over Apple’s iPhone 13 production targets.  The Topix index fell 0.4% to 1,973.83 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.3% to 28,140.28. Toyota Motor Corp. contributed the most to the Topix’s loss, decreasing 1.3%. Out of 2,181 shares in the index, 608 rose and 1,489 fell, while 84 were unchanged. Japanese Apple suppliers such as TDK, Murata and Taiyo Yuden slid. The U.S. company is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units as prolonged chip shortages hit its flagship product, according to people with knowledge of the matter Australian stocks closed lower as banks and miners weighed on the index. The S&P/ASX 200 index fell 0.1% to close at 7,272.50, dragged down by banks and miners as iron ore extended its decline. All other subgauges edged higher. a2 Milk surged after its peer Bubs Australia reported growing China sales and pointed to a better outlook for daigou channels. Bank of Queensland tumbled after its earnings release. In New Zealand, the S&P/NZX 50 index rose 0.2% to 13,025.18. In rates, Treasuries extended Tuesday’s bull-flattening gains, led by gilts and, to a lesser extent, bunds. Treasuries were richer by ~2bps across the long-end of the curve, flattening 5s30s by about that much; U.K. 30-year yield is down nearly 7bp, with same curve flatter by ~6bp. Long-end gilts outperform in a broad-based bull flattening move that pushed 30y gilt yields down ~7bps back near 1.38%. Peripheral spreads widen slightly to Germany. Cash USTs bull flatten but trade cheaper by ~2bps across the back end to both bunds and gilt ahead of today’s CPI release. In FX, the Bloomberg Dollar Spot Index fell by as much as 0.2% and the greenback weakened against all of its Group-of-10 peers; the Treasury curve flattened, mainly via falling yields in the long- end, The euro advanced to trade at around $1.1550 and the Bund yield curve flattened, with German bonds outperforming Treasuries. The euro’s volatility skew versus the dollar shows investors remain bearish the common currency as policy divergence between the Federal Reserve and the European Central Bank remains for now. The pound advanced with traders shrugging off the U.K.’s weaker-than-expected economic growth performance in August. Australia’s sovereign yield curve flattened for a second day while the currency underperformed its New Zealand peer amid a drop in iron ore prices. The yen steadied after four days of declines. In commodities, crude futures hold a narrow range with WTI near $80, Brent dipping slightly below $83. Spot gold pops back toward Tuesday’s best levels near $1,770/oz. Base metals are in the green with most of the complex up at least 1%. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Market Snapshot S&P 500 futures up 0.1% to 4,346.25 STOXX Europe 600 up 0.4% to 459.04 MXAP up 0.2% to 194.60 MXAPJ up 0.4% to 638.16 Nikkei down 0.3% to 28,140.28 Topix down 0.4% to 1,973.83 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite up 0.4% to 3,561.76 Sensex up 0.8% to 60,782.71 Australia S&P/ASX 200 down 0.1% to 7,272.54 Kospi up 1.0% to 2,944.41 Brent Futures down 0.4% to $83.12/bbl Gold spot up 0.5% to $1,768.13 U.S. Dollar Index down 0.23% to 94.30 German 10Y yield fell 4.2 bps to -0.127% Euro little changed at $1.1553 Brent Futures down 0.4% to $83.12/bbl Top Overnight News from Bloomberg Vladimir Putin wants to press the EU to rewrite some of the rules of its gas market after years of ignoring Moscow’s concerns, to tilt them away from spot-pricing toward long-term contracts favored by Russia’s state run Gazprom, according to two people with knowledge of the matter. Russia is also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries, they said. Federal Reserve Vice Chairman for Supervision Randal Quarles will be removed from his role as the main watchdog of Wall Street lenders after his title officially expires this week. The EU will offer a new package of concessions to the U.K. that would ease trade barriers in Northern Ireland, as the two sides prepare for a new round of contentious Brexit negotiations. U.K. Chancellor of the Exchequer Rishi Sunak is on course to raise taxes and cut spending to control the budget deficit, while BoE Governor Andrew Bailey has warned interest rates are likely to rise in the coming months to curb a rapid surge in prices. Together, those moves would mark a simultaneous major tightening of both policy levers just months after the biggest recession in a century -- an unprecedented move since the BoE gained independence in 1997. Peter Kazimir, a member of the ECB’s Governing Council, was charged with bribery in Slovakia. Kazimir, who heads the country’s central bank, rejected the allegations A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mixed following the choppy performance stateside with global risk appetite cautious amid the rate hike bets in US and heading into key events including US CPI and FOMC Minutes, while there were also mild headwinds for US equity futures after the closing bell on reports that Apple is set to reduce output of iPhones by 10mln from what was initially planned amid the chip shortage. ASX 200 (unch.) was little changed as gains in gold miners, energy and tech were offset by losses in financials and the broader mining sector, with softer Westpac Consumer Confidence also limiting upside in the index. Nikkei 225 (-0.3%) was pressured at the open as participants digested mixed Machinery Orders data which showed the largest M/M contraction since February 2018 and prompted the government to cut its assessment on machinery orders, although the benchmark index gradually retraced most its losses after finding support around the 28k level and amid the recent favourable currency moves. Shanghai Comp. (+0.4%) also declined as participants digested mixed Chinese trade data in which exports topped estimates but imports disappointed and with Hong Kong markets kept shut due to a typhoon warning. Finally, 10yr JGBs were steady with price action contained after the curve flattening stateside and tentative mood heading to upcoming risk events, although prices were kept afloat amid the BoJ’s purchases in the market for around JPY 1tln of JGBs predominantly focused on 1-3yr and 5-10yr maturities. Top Asian News Gold Edges Higher on Weaker Dollar Before U.S. Inflation Report RBA Rate Hike Expectations Too Aggressive, TD Ameritrade Says LG Electronics Has Series of Stock-Target Cuts After Profit Miss The mood across European stocks has improved from the subdued cash open (Euro Stoxx 50 +0.5%; Stoxx 600 +0.3%) despite a distinct lack of newsflow and heading into the official start of US earnings season, US CPI and FOMC minutes. US equity futures have also nursed earlier losses and trade in modest positive territory across the board, with the NQ (+0.5%) narrowly outperforming owing to the intraday fall in yields, alongside the sectorial outperformance seen in European tech amid tech giant SAP (+4.7%) upgrading its full FY outlook, reflecting the strong business performance which is expected to continue to accelerate cloud revenue growth. As such, the DAX 40 (+0.7%) outperformed since the cash open, whilst the FTSE 100 (-0.2%) is weighed on by underperformance in its heavyweight Banking and Basic Resources sectors amid a decline in yields and hefty losses in iron ore prices. Elsewhere, the CAC 40 (+0.3%) is buoyed by LMVH (+2.0%) after the luxury name topped revenue forecasts and subsequently lifted the Retail sector in tandem. Overall, sectors are mixed with no clear bias. In terms of individual movers, Volkswagen (+3.5%) was bolstered amid Handelsblatt reports in which the Co was said to be cutting some 30k jobs as costs are too high vs competitors, whilst separate sources suggested the automaker is said to be mulling spinning off its Battery Cell and charging unit. Chipmakers meanwhile see mixed fortunes in the aftermath of sources which suggested Apple (-0.7% pre-market) is said to be slashing output amid the chip crunch. Top European News The Hut Shares Swing as Strategy Day Feeds Investor Concern U.K. Economy Grows Less Than Expected as Services Disappoint Man Group Gets $5.3 Billion to Lift Assets to Another Record Jeff Ubben and Singapore’s GIC Back $830 Million Fertiglobe IPO In FX, the Dollar looks somewhat deflated or jaded after yesterday’s exertions when it carved out several fresh 2021 highs against rival currencies and a new record peak vs the increasingly beleaguered Turkish Lira. In index terms, a bout of profit taking, consolidation and position paring seems to have prompted a pull-back from 94.563 into a marginally lower 94.533-246 range awaiting potentially pivotal US inflation data, more Fed rhetoric and FOMC minutes from the last policy meeting that may provide more clues or clarity about prospects for near term tapering. NZD/GBP - Both taking advantage of the Greenback’s aforementioned loss of momentum, but also deriving impetus from favourable crosswinds closer to home as the Kiwi briefly revisited 0.6950+ terrain and Aud/Nzd retreats quite sharply from 1.0600+, while Cable has rebounded through 1.3600 again as Eur/Gbp retests support south of 0.8480 yet again, or 1.1800 as a reciprocal. From a fundamental perspective, Nzd/Usd may also be gleaning leverage from the more forward-looking Activity Outlook component of ANZ’s preliminary business survey for October rather than a decline in sentiment, and Sterling could be content with reported concessions from the EU on NI customs in an effort to resolve the Protocol impasse. EUR/CAD/AUD/CHF - Also reclaiming some lost ground against the Buck, with the Euro rebounding from around 1.1525 to circa 1.1560, though not technically stable until closer to 1.1600 having faded ahead of the round number on several occasions in the last week. Meanwhile, the Loonie is straddling 1.2450 in keeping with WTI crude on the Usd 80/brl handle, the Aussie is pivoting 0.7350, but capped in wake of a dip in Westpac consumer confidence, and the Franc is rotating either side of 0.9300. JPY - The Yen seems rather reluctant to get too carried away by the Dollar’s demise or join the broad retracement given so many false dawns of late before further depreciation and a continuation of its losing streak. Indeed, the latest recovery has stalled around 113.35 and Usd/Jpy appears firmly underpinned following significantly weaker than expected Japanese m/m machinery orders overnight. SCANDI/EM - Not much upside in the Sek via firmer Swedish money market inflation expectations and perhaps due to the fact that actual CPI data preceded the latest survey and topped consensus, but the Cnh and Cny are firmer on the back of China’s much wider than forecast trade surplus that was bloated by exports exceeding estimates by some distance in contrast to imports. Elsewhere, further hawkish guidance for the Czk as CNB’s Benda contends that high inflation warrants relatively rapid tightening, but the Try has not derived a lot of support from reports that Turkey is in talks to secure extra gas supplies to meet demand this winter, according to a Minister, and perhaps due to more sabre-rattling from the Foreign Ministry over Syria with accusations aimed at the US and Russia. In commodities, WTI and Brent front-month futures see another choppy session within recent and elevated levels – with the former around USD 80.50/bbl (80.79-79.87/bbl) and the latter around 83.35/bbl (83.50-82.65/bbl range). The complex saw some downside in conjunction with jawboning from the Iraqi Energy Minster, who state oil price is unlikely to increase further, whilst at the same time, the Gazprom CEO suggested that the oil market is overheated. Nonetheless, prices saw a rebound from those lows heading into the US inflation figure, whilst the OPEC MOMR is scheduled for 12:00BST/07:00EDT. Although the release will not likely sway prices amidst the myriad of risk events on the docket, it will offer a peek into OPEC's current thinking on the market. As a reminder, the weekly Private Inventory report will be released tonight, with the DoE's slated for tomorrow on account of Monday's Columbus Day holiday. Gas prices, meanwhile, are relatively stable. Russia's Kremlin noted gas supplies have increased to their maximum possible levels, whilst Gazprom is sticking to its contractual obligations, and there can be no gas supplies beyond those obligations. Over to metals, spot gold and silver move in tandem with the receding Buck, with spot gold inching closer towards its 50 DMA at 1,776/oz (vs low 1,759.50/oz). In terms of base metals, LME copper has regained a footing above USD 9,500/t as stocks grind higher. Conversely, iron ore and rebar futures overnight fell some 6%, with overnight headlines suggesting that China has required steel mills to cut winter output. Further from the supply side, Nyrstar is to limit European smelter output by up to 50% due to energy costs. Nyrstar has a market-leading position in zinc and lead. LME zinc hit the highest levels since March 2018 following the headlines US Event Calendar 8:30am: Sept. CPI YoY, est. 5.3%, prior 5.3%; MoM, est. 0.3%, prior 0.3% 8:30am: Sept. CPI Ex Food and Energy YoY, est. 4.0%, prior 4.0%; MoM, est. 0.2%, prior 0.1% 8:30am: Sept. Real Avg Weekly Earnings YoY, prior -0.9%, revised -1.4% 2pm: Sept. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap So tonight it’s my first ever “live” parents evening and then James Bond via Wagamama. Given my daughter (6) is the eldest in her year and the twins (4) the youngest (plus additional youth for being premature), I’m expecting my daughter to be at least above average but for my boys to only just about be vaguely aware of what’s going on around them. Poor things. For those reading yesterday, the Cameo video of Nadia Comanenci went down a storm, especially when she mentioned our kids’ names, but the fact that there was no birthday cake wasn’t as popular. So I played a very complicated, defence splitting 80 yard through ball but missed an open goal. Anyway ahead of Bond tonight, with all this inflation about I’m half expecting him to be known as 008 going forward. The next installment of the US prices saga will be seen today with US CPI at 13:30 London time. This is an important one, since it’s the last CPI number the Fed will have ahead of their next policy decision just 3 weeks from now, where investors are awaiting a potential announcement on tapering asset purchases. Interestingly the August reading last month was the first time so far this year that the month-on-month measure was actually beneath the consensus expectation on Bloomberg, with the +0.3% growth being the slowest since January. Famous last words but this report might not be the most interesting since it may be a bit backward looking given WTI oil is up c.7.5% in October alone. In addition, used cars were up +5.4% in September after falling in late summer. So given the 2-3 month lag for this to filter through into the CPI we won’t be getting the full picture today. I loved the fact from his speech last night that the Fed’s Bostic has introduced a “transitory” swear jar in his office. More on the Fedspeak later. In terms of what to expect this time around though, our US economists are forecasting month-on-month growth of +0.41% in the headline CPI, and +0.27% for core, which would take the year-on-year rates to +5.4% for headline and +4.1% for core. Ahead of this, inflation expectations softened late in the day as Fed officials were on the hawkish side. The US 10yr breakeven dropped -1.9bps to 2.49% after trading at 2.527% earlier in the session. This is still the 3rd highest closing level since May, and remains only 7bps off its post-2013 closing high. Earlier, inflation expectations continued to climb in Europe, where the 5y5y forward inflation swap hit a post-2015 high of 1.84%. Also on inflation, the New York Fed released their latest Survey of Consumer Expectations later in the European session, which showed that 1-year ahead inflation expectations were now at +5.3%, which is the highest level since the survey began in 2013, whilst 3-year ahead expectations were now at +4.2%, which was also a high for the series. The late rally in US breakevens, coupled with lower real yields (-1.6bps) meant that the 10yr Treasury yield ended the session down -3.5bps at 1.577% - their biggest one day drop in just over 3 weeks. There was a decent flattening of the yield curve, with the 2yr yield up +2.0bps to 0.34%, its highest level since the pandemic began as the market priced in more near-term Fed rate hikes. In the Euro Area it was a very different story however, with 10yr yields rising to their highest level in months, including among bunds (+3.5bps), OATs (+2.9bps) and BTPs (+1.0bps). That rise in the 10yr bund yield left it at -0.09%, taking it above its recent peak earlier this year to its highest closing level since May 2019. Interestingly gilts (-4.0bps) massively out-performed after having aggressively sold off for the last week or so. Against this backdrop, equity markets struggled for direction as they awaited the CPI reading and the start of the US Q3 earnings season today. By the close of trade, the S&P 500 (-0.24%) and the STOXX 600 (-0.07%) had both posted modest losses as they awaited the next catalyst. Defensive sectors were the outperformers on both sides of the Atlantic. Real estate (+1.34%) and utilities (+0.67%) were among the best performing US stocks, though some notable “reopening” industries outperformed as well including airlines (+0.83%), hotels & leisure (+0.51%). News came out after the US close regarding the global chip shortage, with Bloomberg reporting that Apple, who are one of the largest buyers of chips, would revise down their iPhone 13 production targets for 2021 by 10 million units. Recent rumblings from chip producers suggest that the problems are expected to persist, which will make central bank decisions even more complicated over the coming weeks as they grapple with increasing supply-side constraints that push up inflation whilst threatening to undermine the recovery. Speaking of central bankers, Vice Chair Clarida echoed his previous remarks and other communications from the so-called “core” of the FOMC that the current bout of inflation would prove largely transitory and that underlying trend inflation was hovering close to 2%, while admitting that risks were tilted towards higher inflation. Atlanta Fed President Bostic took a much harder line though, noting that price pressures were expanding beyond the pandemic-impacted sectors, and measures of inflation expectations were creeping higher. Specifically, he said, “it is becoming increasingly clear that the feature of this episode that has animated price pressures — mainly the intense and widespread supply-chain disruptions — will not be brief.” His ‘transitory swear word jar’ for his office was considerably more full by the end of his speech. As highlighted above, while President Bostic spoke US 10yr breakevens dropped -2bps and then continued declining through the New York afternoon. In what is likely to be Clarida’s last consequential decision on monetary policy before his term expires, he noted it may soon be time to start a tapering program that ends in the middle of next year, in line with our US economics team’s call for a November taper announcement. In that vein, our US economists have updated their forecasts for rate hikes yesterday, and now see liftoff taking place in December 2022, followed by 3 rate increases in each of 2023 and 2024. That comes in light of supply disruptions lifting inflation, a likely rise in inflation expectations (which are sensitive to oil prices), and measures of labour market slack continuing to outperform. For those interested, you can read a more in-depth discussion of this here. Turning to commodities, yesterday saw a stabilisation in prices after the rapid gains on Monday, with WTI (+0.15%) and Brent Crude (-0.27%) oil prices seeing only modest movements either way, whilst iron ore prices in Singapore were down -3.45%. That said it wasn’t entirely bad news for the asset class, with Chinese coal futures (+4.45%) hitting fresh records, just as aluminium prices on the London Metal Exchange (+0.13%) eked out another gain to hit a new post-2008 high. Overnight in Asia, equity markets are seeing a mixed performance with the KOSPI (+1.24%) posting decent gains, whereas the CSI (-0.06%), Nikkei (-0.22%) and Shanghai Composite (-0.69%) have all lost ground. The KOSPI’s strength came about on the back of a decent jobs report, with South Korea adding +671k relative to a year earlier, the most since March 2014. The Hong Kong Exchange is closed however due to the impact of typhoon Kompasu. Separately, coal futures in China are up another +8.00% this morning, so no sign of those price pressures abating just yet following recent floods. Meanwhile, US equity futures are pointing to little change later on, with those on the S&P 500 down -0.12%. Here in Europe, we had some fresh Brexit headlines after the UK’s Brexit minister, David Frost, said that the Northern Ireland Protocol “is not working” and was not protecting the Good Friday Agreement. He said that he was sharing a new amended Protocol with the EU, which comes ahead of the release of the EU’s own proposals on the issue today. But Frost also said that “if we are going to get a solution we must, collectively, deliver significant change”, and that Article 16 which allows either side to take unilateral safeguard measures could be used “if necessary”. Elsewhere yesterday, the IMF marginally downgraded their global growth forecast for this year, now seeing +5.9% growth in 2021 (vs. +6.0% in July), whilst their 2022 forecast was maintained at +4.9%. This masked some serious differences between countries however, with the US downgraded to +6.0% in 2021 (vs. +7.0% in July), whereas Italy’s was upgraded to +5.8% (vs. +4.9% in July). On inflation they said that risks were skewed to the upside, and upgraded their forecasts for the advanced economies to +2.8% in 2021, and to +2.3% in 2022. Looking at yesterday’s data, US job openings declined in August for the first time this year, falling to 10.439m (vs. 10.954m expected). But the quits rate hit a record of 2.9%, well above its pre-Covid levels of 2.3-2.4%. Here in the UK, data showed the number of payroll employees rose by +207k in September, while the unemployment rate for the three months to August fell to 4.5%, in line with expectations. And in a further sign of supply-side issues, the number of job vacancies in the three months to September hit a record high of 1.102m. Separately in Germany, the ZEW survey results came in beneath expectations, with the current situation declining to 21.6 (vs. 28.0 expected), whilst expectations fell to 22.3 (vs. 23.5 expected), its lowest level since March 2020. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Tyler Durden Wed, 10/13/2021 - 08:13.....»»

Category: blogSource: zerohedgeOct 13th, 2021

Stimulus Checks from North Carolina: Gov. Cooper Reveals His Plans for $6.2B Surplus

Governors of several states have proposed stimulus benefits for residents in their budget proposals following a record budget surplus. North Carolina Gov. Roy Cooper also recently proposed benefits for residents in his budget proposal. Cooper’s proposal includes sending one-time stimulus checks from North Carolina to workers and teachers. Along with sending one-time bonuses, Cooper’s proposal […] Governors of several states have proposed stimulus benefits for residents in their budget proposals following a record budget surplus. North Carolina Gov. Roy Cooper also recently proposed benefits for residents in his budget proposal. Cooper’s proposal includes sending one-time stimulus checks from North Carolina to workers and teachers. Along with sending one-time bonuses, Cooper’s proposal addresses education inequities, affordable housing, worker retention and more. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Cooper’s Proposal: What Does It Include? Last week, Gov. Cooper revealed his plans on how his government would use the $6.2 billion surplus. Cooper detailed his recommended adjustments to the second year of a two-year budget that the lawmakers approved last fall. In addition to what the budget already includes, the latest adjustments call for higher pay for state employees and teachers. “The budget that I’m presenting today will build on our success and strengthen those areas that need reinforcement,” Gov. Cooper reports. Prior to the budget proposal, the General Assembly and Cooper administration revealed that the state would exceed the revenue projections for the current fiscal year by about $4.2 billion. Also, the authorities raised the projections by about $2 billion for the year starting July 1. Cooper has raised the second-year spending by $2.3 billion to $29.3 billion to use some of the surplus. Also, $2.4 billion of the surplus would go toward many itemized “investments,” including infrastructure, economic development and workforce training. Cooper's proposal doesn’t call for additional tax cuts, nor does it set aside more money for the state's rainy-day fund. The governor notes that the fund is on track to hit $4.25 billion. Cooper refers to the budget proposal as a “smart, fiscally sound budget,” adding, “I think that it’s clear that we want to invest more than (Republicans) do.” Stimulus Checks From North Carolina: Who Will Get Them? Cooper's proposal sets aside $687 million more for K-12 and University of North Carolina system construction projects and repairs. The proposal also calls for $102 million for buying and improving sites to attract big companies, as well as $165 million for affordable housing. Cooper also plans to spend $526 million more to cover the next year of a public education spending remedial plan, which was approved by a judge. The governor also proposes raising pay for most state employees by 5%, compared to 2.5% proposed earlier. Also, there is a proposal to raise the pay for state law enforcement and health care workers by 7.5%. Moreover, teachers' pay schedules would be adjusted to ensure they get a combined average raise of 7.5% this year and next, compared to 5% currently. As per the proposal, workers and teachers would also be entitled to a one-time bonus of $1,500 to $3,000. Cooper has also proposed expanding Medicaid for additional low-income adults through the 2010 federal Affordable Care Act. “The Governor’s budget proposes Medicaid Expansion to provide access to affordable health insurance to more than 600,000 additional North Carolinians….” the press release says. Updated on May 20, 2022, 9:47 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 20th, 2022

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms...

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms... After months of endless jawboning and almost no action, overnight China finally cut its main mortgage interest rate by the most on record since the rate was introduced in 2019, as it tries to reduce the economic impact of Covid lockdowns and a property sector slowdown. The five-year loan prime rate was lowered from 4.6% to 4.45% on Friday (even as the 1 Year LPR was unchanged at 3.70%) . The reduction in the rate, which is set by a committee of banks and published by the People’s Bank of China, will directly reduce the borrowing costs on outstanding mortgages across the country (the move wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday). The rate cut was long overdue for China's property market which has experienced 8 straight months of home-price reductions with developers under extreme pressure. There was more bad news for China's embattled tech sector as Canada banned Huawei Technologies and ZTE equipment from use in its 5G network. The good news is that China's easing helped push Asian stocks higher, while European markets and US stock index futures also rose on Friday as buyers returned after a selloff fueled by recession fears saw the underlying S&P 500 lose more than $1 trillion in market value this week. Contracts on the S&P 500 advanced 1.1% as of 7:15a.m. in New York suggesting the index may be able to avoid entering a bear market (which would be triggered by spoos sliding below 3,855) at least for now, although today's $1.9 trillion Option Expiration will likely lead to substantial volatility, potentially to the downside.  Even with a solid jump today, should it not reverse as most ramps in recent days, the index - which is down almost 19% from its January record - is on track for a seventh week of losses, the longest such streak since March 2001. Futures on the Nasdaq 100 and Dow Jones indexes also gained. 10Y TSY yields rebounded from yesterday's tumble while the dollar was modestly lower. Gold and bitcoin were flat. In premarket trading, shares of gigacap tech giants rose, poised to recover some of the losses they incurred this week. Nasdaq 100 futures advanced 1.7%. The tech heavy benchmark has wiped out about $1.3 trillion in market value this month. Apple (AAPL US) is up 1.3% in premarket trading on Friday, Tesla (TSLA US) +2.6%.Palo Alto Networks jumped after topping estimates. Continuing the retail rout, Ross Stores cratered after the discount retailer cut its full-year outlook and first quarter results fell short of expectations. Here are some other notable premarket movers: Chinese stocks in US look set to extend this week’s gains on Friday after Chinese banks cut the five-year loan prime rate by a record amount, an effort to boost mortgage and loan demand in an economy hampered by Covid lockdowns. Alibaba (BABA US) +2.6%, Baidu (BIDU US) +1.1%, JD.com (JD US) +2.6%. Palo Alto Networks (PANW US) rises 11% in premarket trading on Friday after forecasting adjusted earnings per share for the fourth quarter that exceeded the average of analysts’ estimates. Applied Materials (AMAT US) falls 2.1% in premarket trading after its second-quarter results missed expectations as persistent chip shortages weighed on the outlook. However, Cowen analyst Krish Sankar notes that “while the macro/consumer data points have weakened, semicap demand is still healthy.” Ross Stores Inc. (ROST US) shares sank 28% in US premarket trade on Friday after the discount retailer cut its full-year outlook and 1Q results fell short of expectations, prompting analysts to slash their price targets. Foghorn Therapeutics (FHTX US) shares plunged 26% in postmarket trading after the company said the FDA has placed the phase 1 dose escalation study of FHD-286 in relapsed and/or refractory acute myelogenous leukemia and myelodysplastic syndrome on a partial clinical hold. Wix.com (WIX US) cut to equal-weight from overweight at Morgan Stanley as investors are unlikely to “give credit to a show-me story” in the current context which limits upside catalysts in the near term, according to note. Deckers Outdoor (DECK US) jumped 13% in US postmarket trading on Thursday after providing a year sales outlook range with a midpoint that beat the average consensus estimate. VF Corp’s (VFC US) reported mixed results, with analysts noting the positive performance of the company’s North Face brand, though revenues did miss estimates amid a tricky macro backdrop. The outdoor retailer’s shares rose 2.2% in US postmarket trading on Thursday. “The ‘risk-on’ trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China after the PBoC cut one of the key interest rates by a record amount,” said Pierre Veyret, a technical analyst at ActivTrades. “This will provide a fresh boost to the economy, helping small businesses and mitigate the negative impacts of lockdowns in the world’s second-largest economy.” Still, the broader market will have to fend off potential risks from options expiration, which is notorious for stirring up volatility. Traders will close old positions for an estimated $1.9 trillion of derivatives while rolling out new exposures on Friday. This time round, $460 billion of derivatives across single stocks is scheduled to expire, and $855 billion of S&P 500-linked contracts will expire according to Goldman. Rebounds in risk sentiment have tended to fizzle this year. Investors continue to grapple with concerns about an economic downturn, in part as the Federal Reserve hikes interest rates to quell price pressures. Global shares are on course for an historic seventh week of declines. “The risk-on trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China,” said Pierre Veyret, an analyst at ActivTrades. “This move significantly contrasts with the lingering inflation and recession risks in Western economies, where an increasing number of market operators and analysts are questioning the policies of central banks.” In Europe, the Stoxx Europe 600 index added 1.5%, erasing the week’s losses. The French CAC 40 lags, rising 0.9%. Autos, travel and miners are the strongest-performing sectors, rebounding after two days of declines. Basic resources outperformed as industrial metals rallied. Consumer products was the only sector in the red as Richemont slumped after the Swiss watch and jewelry maker reported operating profit for the full year that missed the average analyst estimate and its Chairman Johann Rupert said China is going to take an economic blow and warned the Chinese economy will suffer for longer than people think. The miss sent luxury stocks plunging: Richemont -11%, Swatch -3.8%, Hermes -3.2%, LVMH -1.9%, Kering -1.7%, Hugo Boss -1.7%, etc. These are the biggest European movers: Rockwool rises as much as 10% as the market continued to digest the company’s latest earnings report, which triggered a surge in the shares, with SocGen and BNP Paribas upgrading the stock. Valeo and other European auto stocks outperformed, rebounding after two days of losses. Citi says Valeo management confirmed that auto production troughed in April and activity is improving. Sinch gained as much as 5.4% after Berenberg said peer’s quarterly results confirmed the cloud communications company’s strong positioning in a fast-growing market. Lonza shares gain as much as 4.1% after the pharmaceutical ingredients maker was raised to outperform at RBC, with the broker bullish on the long-term demand dynamics for the firm. THG shares surge as much as 32% as British entrepreneur Nick Candy considers an offer to acquire the UK online retailer, while the company separately announced it rejected a rival bid. Maersk shares rise as much as 4.6%, snapping two days of declines, as global container rates advance according to Fearnley Securities which says 2H “looks increasingly promising.” PostNL shares jump as much as 8.2% after the announcement that Vesa will acquire sole control of the Dutch postal operator. Analysts say reaction in the shares is overdone. Dermapharm shares gain as much as 6.1%, the most since March 22, with Stifel saying the pharmaceuticals maker is “significantly undervalued” and have solid growth drivers. Richemont shares tumble as much as 14%, the most in more than two years, after the luxury retailer’s FY Ebit was a “clear miss,” with cost increases in operating expenses. Luxury peers were pulled lower alongside Richemont after the company’s disappointing earnings report, in which its CEO also flagged the Chinese market will lag for longer than people assume. Instone Real Estate shares drop as much as 12% as the stock is downgraded to hold from buy at Deutsche Bank, with the broker cutting its earnings estimates for the property developer Earlier in the session, Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood. ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Japanese stocks regain footing in the wake of Thursday’s selloff, after Chinese banks cut a key interest rate for long-term loans by a record amount. The Topix rose 0.9% to 1,877.37 at the 3 p.m. close in Tokyo, while the Nikkei 225 advanced 1.3% to 26,739.03. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 2.1%. Out of 2,171 shares in the index, 1,511 rose and 567 fell, while 93 were unchanged. In Australia, the S&P/ASX 200 index rose 1.2% to close at 7,145.60 on the eve of Australia’s national election. Technology shares and miners led sector gains. Chalice Mining climbed after getting approvals for further exploration drilling at the Hartog-Dampier targets within its Julimar project. Novonix advanced with other lithium-related shares after IGO announced its first and consistent production of battery grade lithium hydroxide from Kwinana. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,267.39 India’s benchmark stocks index rebounded from a 10-month low and completed its first weekly gain in six, boosted by an advance in Reliance Industries.  The S&P BSE Sensex jumped 2.9% to 54,326.39 in Mumbai. The NSE Nifty 50 Index also rose by a similar magnitude on Friday. Stocks across Asia advanced after Chinese banks lowered a key interest rates for long-term loans.   Reliance Industries climbed 5.8%, the largest advance since Nov. 25, and gave the biggest boost to the Sensex, which had all 30 member stocks trading higher. All 19 sector indexes compiled by BSE Ltd. advanced, led by a gauge of realty stocks.  “Stocks in Asia and US futures pushed higher today amid a bout of relative calm in markets, though worries about a darkening economic outlook and China’s Covid struggles could yet stoke more volatility,” according to a note from SMC Global Securities Ltd.  In earnings, of the 36 Nifty 50 firms that have announced results so far, 21 have either met or exceeded analyst estimates, while 15 have missed forecasts. In FX, the Bloomberg Dollar Spot Index inched higher as the greenback traded mixed against its Group-of-10 peers. Treasuries fell modestly, with yields rising 1-2bps. The euro weakened after failing to hold on to yesterday’s gains that pushed it above $1.06 for the first time in more than two weeks. Inversion returns for the term structures in the yen and the pound, yet for the euro it’s all about the next meetings by the European Central Bank and the Federal Reserve. The pound rose to a session high at the London open, coinciding with data showing UK retail sales rose more than forecast in April. Retail sales was up 1.4% m/m in April, vs est. -0.3%. Other showed a plunge in consumer confidence to the lowest in at least 48 years. The Swiss franc halted a three-day advance that had taken it to the strongest level against the greenback this month. Australia’s sovereign bonds held opening gains before a federal election Saturday amid fears of a hung parliament, which could stifle infrastructure spending. The Australian and New Zealand dollar reversed earlier losses. The offshore yuan and South Korean won paced gains in emerging Asian currencies as a rally in regional equities bolstered risk appetite. In rates, Treasuries were slightly cheaper as S&P 500 futures advanced. Yields were higher by 2bp-3bp across the Treasuries curve with 10- year around 2.865%, outperforming bunds and gilts by 1.7bp and 3.5bp on the day; curves spreads remain within 1bp of Thursday’s closing levels. Bunds and Italian bonds fell, underperforming Treasuries, as haven trades were unwound. US session has no Fed speakers or economic data slated. UK gilts 2s10s resume bear-flattening, underperforming Treasuries, after BOE’s Pill said tightening has more to run. Gilts 10y yields regain 1.90%. Bund yield curve-bear steepens. long end trades heavy with 30y yield ~6bps cheaper. Peripheral spreads widen to core with 5y Italy underperforming. Semi-core spreads tighten a touch. In commodities, WTI trades within Thursday’s range, falling 0.5% to around $111. Most base metals trade in the green; LME lead rises 2.6%, outperforming peers. LME nickel lags, dropping 1.5%. Spot gold is little changed at $1,844/oz. KEY HEADLINES: Looking at the day ahead, there is no macro news in the US. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Market Snapshot S&P 500 futures up 1.1% to 3,940.00 STOXX Europe 600 up 1.2% to 433.00 MXAP up 1.6% to 164.68 MXAPJ up 2.1% to 539.85 Nikkei up 1.3% to 26,739.03 Topix up 0.9% to 1,877.37 Hang Seng Index up 3.0% to 20,717.24 Shanghai Composite up 1.6% to 3,146.57 Sensex up 2.5% to 54,115.12 Australia S&P/ASX 200 up 1.1% to 7,145.64 Kospi up 1.8% to 2,639.29 German 10Y yield little changed at 0.97% Euro down 0.2% to $1.0567 Gold spot up 0.2% to $1,845.64 U.S. Dollar Index up 0.25% to 102.98 Brent Futures down 0.4% to $111.55/bbl Top Overnight News from Bloomberg BOE Chief Economist Huw Pill said monetary tightening has further to run in the UK because the balance of risks is tilted toward inflation surprising on the upside ECB Governing Council Member Visco says a June hike is ‘certainly’ out of the question while July is ‘perhaps’ the time to start rate hikes China’s plans to bolster growth as Covid outbreaks and lockdowns crush activity will see a whopping $5.3 trillion pumped into its economy this year Chinese banks cut a key interest rate for long- term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand caused by a property slump and Covid lockdowns China’s almost-trillion dollar hedge fund industry risks worsening the turmoil in its stock market as deepening portfolio losses trigger forced selling by some managers. About 2,350 stock-related hedge funds last month dropped below a threshold that typically activates clauses requiring them to slash exposures, with many headed toward a level that mandates liquidation Investors fled every major asset class in the past week, with US equities and Treasuries a rare exception to massive redemptions Ukraine’s central bank is considering a return to regular monetary policy decisions as soon as next month in a sign the country is getting its financial system back on its feet after a shock from Russia’s invasion The Group of Seven industrialized nations will agree on more than 18 billion euros ($19 billion) in aid for Ukraine to guarantee the short-term finances of the government in Kyiv, according to German Finance Minister Christian Lindner The best may already be over for the almighty dollar as growing fears of a US recession bring down Treasury yields A more detailed look at global markets courtesy of Newsquqawk Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood.  ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Nikkei 225 was underpinned following the BoJ’s ETF purchases yesterday and despite multi-year high inflation. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Top Asian News Chinese Premier Li vows efforts to aid the resumption of production, via Xinhua; will continue to build itself into a large global market and a hot spot for foreign investment, via Reuters. US and Japanese leaders are to urge China to reduce its nuclear arsenal, according to Yomiuri. It was also reported that Japanese PM Kishida is expected to announce a defence budget increase during the summit with US President Biden, according to TV Asahi. Offshore Yuan Halts Selloff With Biggest Weekly Gain Since 2017 Hong Kong Dollar Traders Brace for Rate Spike Amid Intervention Shanghai Factory Output Fell 20 Times Faster Than Rest of China Japan’s Inflation Tops 2%, Complicating BOJ Stimulus Message European indices have started the week's last trading day positively and have extended on gains in early trade. Swiss SMI (+0.5%) sees its upside capped by losses in Richemont which provided a downbeat China outlook. European sectors are almost wholly in the green with a clear pro-cyclical bias/anti-defensive bias - Healthcare, Personal & Consumer Goods, Telecoms, Food & Beverages all reside at the bottom of the chart, whilst Autos & Parts, Travel & Leisure and Retail lead the charge on the upside. US equity futures have also been trending higher since the reopening of futures trading overnight Top European News Holcim, HeidelbergCement Said to Compete for Sika US Unit Prosus Looking to Sell $6 Billion Russian Ads Business Avito European Autos Outperform in Rebound, Driven by Valeo, Faurecia Volkswagen Pitted Against Organic Farmer in Climate Court Clash FX DXY bound tightly to 103.000, but only really firm relative to Yen on renewed risk appetite. Yuan back to early May peaks after PBoC easing of 5 year LPR boosts risk sentiment - Usd/Cny and Usd/Cnh both sub-6.7000. Kiwi outperforms ahead of anticipated 50 bp RBNZ hike next week and with tailwind from Aussie cross pre-close call election result. Euro and Pound capped by resistance at round number levels irrespective of hawkish ECB commentary and surprisingly strong UK consumption data. Lira lurching after Turkish President Erdogan rejection of Swedish and Finnish NATO entry bids. Japanese PM Kishida says rapid FX moves are undesirable, via Nikkei interview; keeping close ties with overseas currency authorities, via Nikkei. Fixed Income Debt futures reverse course amidst pre-weekend risk revival, partly prompted by PBoC LPR cut. Bunds hovering above 153.00, Gilts sub-119.50 and T-note just over 119-16. UK debt also taking on board surprisingly strong retail sales metrics and EZ bonds acknowledging more hawkish ECB rhetoric. Commodities WTI and Brent July futures consolidate in early European trade in what has been another volatile week for the crude complex. Spot gold has been moving in tandem with the Buck and rose back above its 200 DMA Base metals are mostly firmer, with LME copper re-eyeing USD 9,500/t to the upside as the red metal is poised for its first weekly gain in seven weeks Russia's Gazprom continues gas shipments to Europe via Ukraine, with Friday volume at 62.4mln cubic metres (prev. 63.3mbm) Central Banks BoE Chief Economist Pill says inflation is the largest challenge faced by the MPC over the past 25 years. The MPC sees an upside skew in the risks around the inflation baseline in the latter part of the forecast period. Pill said further work needs to be done. "In my view, it would be preferable to have any such gilt sales running ‘in the background’, rather than being responsive to month-to-month data news.", via the BoE. ECB's Kazaks hopes the first ECB hike will happen in July, according to Bloomberg. ECB's Muller says focus needs to be on fighting high inflation, according to Bloomberg. ECB's Visco says the ECB can move out of negative rate territory; a June hike is "certainly" out of the question but July is perhaps the time to start Chinese Loan Prime Rate 1Y (May) 3.70% vs. Exp. 3.65% (Prev. 3.70%); Chinese Loan Prime Rate 5Y (May) 4.45% vs. Exp. 4.60% (Prev. 4.60%) Fed's Kashkari (2023 voter) said they are removing accommodation even faster than they added it at the start of COVID and have done quite a bit to remove support for the economy through forward guidance. Kashkari stated that he does not know how high rates need to go to bring inflation down and does not know the odds of pulling off a soft-landing, while he is seeing some evidence they are in a longer-term high inflation regime and if so, the Fed may need to be more aggressive, according to Reuters US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap The good thing about having all these injuries in recent years is that when it comes down to any father's football matches or sport day races I now know that no amount of competitive juices make getting involved a good idea. However my wife has not had to learn her lesson yet and tomorrow plays her first netball match for 37 years in a parents vs schoolgirls match. The mums had a practise session on Tuesday and within 3 minutes one of them had snapped their ACL. I'll be nervously watching from the sidelines. Markets were also very nervous yesterday after a torrid day for risk sentiment on Tuesday. Although equities fell again yesterday it was all fairly orderly. This morning Asia is bouncing though on fresh China stimulus, something we discussed in yesterday's CoTD here. More on that below but working through things chronologically, earlier the Stoxx 600 closed -1.37% lower, having missed a large portion of the previous day’s US selloff, but generally continues to out-perform. US equities bounced around, with the S&P 500 staging a recovery from near intraday lows after the European close, moving between red and green all day (perhaps today's option expiry is creating some additional vol) before closing down -0.58%. This sent the index to a fresh one year low and puts the week to date loss at -3.06%, having declined -18.68% since its January peak. Barring a major reversal today, the index is now on track to close lower for a 7th consecutive week for the first time since 2001. In terms of the sectoral breakdown, it was another broad-based decline yesterday, but consumer discretionary stocks (+0.13%) recovered somewhat following their significant -6.60% decline the previous day. Consumer staples, meanwhile, continued their poor run, falling -1.98%, while tech (-1.07%) was not far behind. Those losses occurred against the backdrop of a fresh round of US data releases that came in beneath expectations, which also helped the dollar index weaken -0.93% to mark its worst daily performance since March. First, there were the weekly initial jobless claims for the week through May 14, which is one of the timeliest indicators we get on the state of the economy. That rose to 218k (vs. 200k) expected, which is its highest level since January. Then there was the Philadelphia Fed’s manufacturing business outlook survey for May, which fell to a two-year low of 2.6 (vs. 15.0 expected). And finally, the number of existing home sales in April fell to its lowest level since June 2020, coming in at an annualised rate of 5.61m (vs. 5.64m expected). The broader risk-off move that created meant that sovereign bonds rallied on both sides of the Atlantic. Yields on 10yr Treasuries were down -4.7bps to 2.84%, which follows their -10.2bps decline in the previous session. We didn’t get much in the way of Fed speakers yesterday, but Kansas City Fed President George nodded to recent equity market volatility, saying that it was “not surprising”, and that whilst policy wasn’t aimed at equity markets, “it is one of the avenues through which tighter financial conditions will emerge”. So no sign yet of the Fed being unhappy about tighter financial conditions so far, and markets are continuing to fully price in two further 50bp moves from the Fed in June and July. Nobody said getting inflation back to target from such lofty levels would be easy. So if you’re looking for a Fed put, it may take a while. Later on, Minneapolis Fed President Kashkari drove that point home, saying he was not sure how high rates ultimately needed to go, but said the Fed must ensure inflation does not get embedded in expectations. Over in Europe debt moves were more significant yesterday, having not taken part in the late US rally on Wednesday. Yiields on 10yr bunds (-8.0bps), OATs (-7.4bps) and BTPs (-6.2bps) all saw a reasonable decline on the day. Over in credit as well, iTraxx Crossover widened +10.2bps to 478bps, which surpasses its recent high earlier this month and takes it to levels not seen since May 2020. We also got the account from the April ECB meeting, although there wasn’t much there in the way of fresh headlines, with hawks believing that it was “important to act without undue delay in order to demonstrate the Governing Council’s determination to achieve price stability in the medium term.” That group also said that the monetary policy stance “was no longer consistent with the inflation outlook”. But then the doves also argued that moving policy “too aggressively could prove counterproductive” since monetary policy couldn’t tackle “the immediate causes of high inflation.” Asian equity markets are trading higher this morning after the People’s Bank of China (PBOC) lowered key interest rates amid the faltering economy. They cut the 5-year loan prime rate (LPR) – which is the reference rate for home mortgages for the second time this year from 4.6% to 4.45%, the largest cut on record, as Beijing seeks to revive the ailing housing sector to prop up the economy. Meanwhile, it left the 1-year LPR unchanged at 3.7%. Across the region, the Hang Seng (+1.83%) is leading gains in early trade with the Shanghai Composite (+1.11%) and CSI (+1.41%) also trading up. Elsewhere, the Nikkei (+1.08%) and Kospi (+1.75%) are trading in positive territory. Outside of Asia, equity futures in DMs indicate a positive start with contracts on the S&P 500 (+0.75%), NASDAQ 100 (+1.01%) and DAX (+1.13%) all notably higher. In other news, Japan’s national CPI rose +2.5% y/y in April, the highest for the headline rate since October 2014 and compared to the previous month’s +1.2% increase. Oil prices are lower with Brent futures -0.77% down to $111.18/bbl, as I type. To the day ahead now, and data releases include UK retail sales and German PPI for April, as well as the advance Euro Area consumer confidence reading for May. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Tyler Durden Fri, 05/20/2022 - 08:02.....»»

Category: smallbizSource: nytMay 20th, 2022

Kevin Hart sold a $100 million stake in his media company to private equity firm Abry. Here are 10 Hollywood more production shops that are hot M&A targets.

Deals like Apollo's stake in "Dune" producer Legendary are heating up M&A in Hollywood. Insider identified 10 companies that could be acquisition targets in 2022. Kevin Hart.Axelle/Bauer-Griffin/FilmMagic/Getty Abry Partners' $100 million stake in Kevin Hart's company HartBeat is the latest big M&A move in Hollywood. Dealmakers said production companies are valuable amid the streaming wars and demand for content. Insider identified 10 companies that are attractive acquisition targets as consolidation continues. The streaming wars have spurred a period of frenzied dealmaking in Hollywood. Amazon kicked off a major round of M&A last May with its $8.45 billion offer for 97-year-old studio MGM. In the year since, several entertainment companies have sold pieces of their business, including Reese Witherspoon's Hello Sunshine and Will Smith and Jada Pinkett Smith's Westbrook Inc. to Blackstone-backed Candle Media.Joe and Anthony Russo's AGBO sold a stake in January to South Korean video game publisher Nexon. In March, Sony Pictures Television announced it would take a majority stake in Industrial Media — known for reality TV hits like TLC's "90 Day Fiancé" — in a deal valuing the company at $350 million. And STX Entertainment was acquired by the Najafi Companies in April for around $157 million, according to the Hollywood Reporter.In the latest deal, Kevin Hart's new media venture, HartBeat, announced that private equity firm Abry Partners was taking a $100 million minority stake in the business, which combines his HartBeat production shingle and digital comedy platform Laugh Out Loud. Thai Randolph stepped up as CEO of the company after leading the fundraise.The M&A activity had top Hollywood dealmakers telling Insider in early 2022 that practically every independent production company is a target.Private equity firms are leading the pursuit, especially when it comes to talent-fronted shingles, because they see value in investing in content before the streaming service boom plateaus — and demand for original programming along with it. Apollo in January took a $760 million stake in "Dune" producer Legendary, in a move that "is about us making our own IP," Apollo partner Aaron Sobel told Insider. "You're going to be seeing us do M&A and there's much more that's going to happen," he said."More traditional media companies are trying to pivot," said Waymaker Law founder Ryan Baker, adding that periods of disruption foment more M&A activity because it's "quite common for entrenched incumbent players tied to existing technology to not be as nimble" and they can often adapt more quickly by buying than building.Not only does the appetite for production capabilities appear insatiable, but valuations also are sky-high. Hello Sunshine, whose projects include Apple TV+ drama "The Morning Show," was valued at $900 million in its Candle Media deal. SpringHill Co., founded by LeBron James and Maverick Carter, nabbed a $725 million valuation when it took on an investment from a group including RedBird Capital, Nike, and Epic Games. 'The key is buying franchises.'Such targets aren't being evaluated as traditional production companies, but rather as IP generators that have the potential to feed the demand for the next "Squid Game" or "Yellowstone," projects built with DNA that could anchor universes and also extend beyond the screen. "Original content is becoming more important and you want to bring a lot of the production capabilities in house," said Pivotal entertainment analyst Jeffrey Wlodarczak. "The key is buying franchises." All that deal flow is leading some Hollywood companies to hang "for-sale" signs. Village Roadshow, the producer of "Joker" and "The Lego Movie," has hired PJT Partners to seek investment or acquisition offers, per the Wall Street Journal.The limited set of larger production businesses that make attractive acquisition targets, sources said, includes A24, Skydance Media, and MRC. But among smaller shops, having a talent affiliation is key. A production company without a big-name is more like an arms dealer, a top dealmaker said, and typically lacks the potential to expand into multiple verticals — or to command a top-tier valuation. Celebrity-fronted businesses come with their own risks. If the talent isn't interested in expanding beyond filmed entertainment, the value of the deal declines. And if a star's reputation falters, the business could slip with it. Not all independent shops control the IP they create. Many production companies make work-for-hire or don't control the rights to a project once it is sold off to a studio distributor. Still, some buyers are game to pay for access to the next big idea from, say, creators like the Russo brothers, even though their reputation was built largely on "The Avengers" — aka Marvel IP — said another dealmaker who asked to remain anonymous.Based on January interviews with five entertainment industry experts and insiders, Insider identified a list of 10 production companies that could be compelling acquisition targets as M&A activity continues.10 Hollywood M&A targets with production capabilities and brand recognitionA24 The company led by CEO David Fenkel and chairman Daniel Katz has long been the subject of acquisition speculation thanks to its lineup of buzzy titles, including Greta Gerwig's "Lady Bird" and best picture Oscar winner "Moonlight." A24 — which also produces TV shows like "Ramy" — has a production deal with Apple and a film licensing agreement with Showtime.   Array Ava DuVernay's company produces, markets, and distributes films from women and people of color. Array also is behind DuVernay projects like Netflix series "Colin in Black & White" and has a deal with the streamer to release film projects including 2021 dramedy "Donkeyhead." Bad Robot J.J. Abrams and wife Katie McGrath's 23-year-old shop is behind everything from HBO drama "Westworld" to the next installment of the "Mission: Impossible" franchise. Though Bad Robot doesn't own the rights to those titles, Abrams is such an in-demand creative talent that WarnerMedia in 2019 paid a reported $250 million for a five-year film and TV overall deal with him. Blumhouse Jason Blum's shingle has perfected its model of producing horror films on a tight budget, projects that reap big gains when they hit with audiences. Consider 2021's "Halloween Kills," which made more than $131 million at the box office, amid COVID fears and restrictions, on a $20 million budget. A 10-year first-look deal with Universal Pictures that runs through 2024 bodes stability for Blumhouse's film business.Chernin Entertainment Peter Chernin's company — which produced NBC's "New Girl" and the rebooted "Planet of the Apes" film series — is said to be exploring strategic options. It has a first-look deal with Netflix, and in 2020 it struck a deal with Spotify to develop its podcasts for film and TV. Imagine Entertainment Previously a target for Kevin Mayer and Tom Staggs' Candle Media, the production company co-founded by Ron Howard and Brian Grazer was in talks early this year to sell a stake to London-based Centricus, WSJ reported. Its recent films include "Hillbilly Elegy" and "Tick, Tick…Boom!" for Netflix. Scout Productions The 28-year-old company led by Michael Williams, David Collins and chief creative officer Rob Eric has driven some of the highest-profile LGBTQ+ projects in Hollywood, including "Queer Eye for the Straight Guy" and its "Queer Eye" reboot on Netflix.Seven Bucks Productions Led by Dwayne "The Rock" Johnson and Dany Garcia, Seven Bucks produced "Red Notice" for Netflix and has the upcoming "Black Adam" for Warner Bros. It also makes content for Johnson's YouTube channel, where he has 5.89 million subscribers. Skydance Media David Ellison's production shingle is behind the upcoming "Top Gun: Maverick" and is teaming with regular producing partner Bad Robot on "Mission: Impossible 7" and "Star Trek 4." The company — which has taken investments from RedBird Capital, Korea's CJ ENM, and Tencent — will produce a slate of live-action films for Apple, where it already has an animated film and TV series deal. Village Roadshow The film producer and financier majority owned by private equity firm Vine Alternative Investments is best known for Warner Bros. co-productions including "The Matrix Resurrections" and "Joker." The company, which is led by CEO Steve Mosko, recently has been focused on producing its own original films. This article was originally published on January 27 and has been updated, most recently on May 19.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 19th, 2022

How Technology Is Transforming Retirement Preparation

People often say it’s never too early to start when it comes to retirement planning. However, many individuals feel a bit taken aback by the overall process and find it overwhelming. Fortunately, just as technology has caused a revolution in many parts of society, it has similarly affected how people get ready for retirement. Here […] People often say it’s never too early to start when it comes to retirement planning. However, many individuals feel a bit taken aback by the overall process and find it overwhelming. Fortunately, just as technology has caused a revolution in many parts of society, it has similarly affected how people get ready for retirement. Here are some specific ways technology assists them and those specializing in financial planning. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more It Expands the Possibilities for Making Money The internet has significantly broadened and altered how people can make their incomes. Someone only needs a good connection to find work they can do from home. That might mean going onto an online job board and finding people willing to pay top dollar for your skills. It could also entail setting up an Etsy store, selling collectible items on eBay, or making small amounts of money by completing short, simple tasks for businesses. Many people pursue such possibilities because they want flexibility beyond what more conventional sources of income offer. However, others use side hustles to help them put aside more money for retirement. Some freelancers charge $100 per hour or more, depending on their specialties and the market demand. If you take a freelance role, you’re most likely self-employed and will need to periodically submit tax payments rather than having them taken out of your earnings. Earning money through a side project also gives you the freedom to capitalize on trends. Drone technology is one example of an area with numerous business opportunities. One market report expected this industry’s worth to climb from $8.5 billion to $12 billion between 2016 and 2021. You could take advantage of that progressively increasing interest by starting a business related to drones, such as one offering aerial photography or security. Online technology could help by enabling you to promote the company to a wider audience. Goal-Setting Helps Side Hustles Succeed The most appropriate way to use the internet to make money to put toward retirement depends on numerous factors, including your interests and abilities and the amount of time you can spend on the endeavor. However, in any case, it’s best to set some parameters for how you’ll use what you earn. You might decide that anything you earn on the side will go toward your retirement or that just a certain percentage will. Setting out those specifics from the start should help you stay committed. Another thing to be aware of is that it often takes longer than a person expects to make a business profitable. That’s why you may want to look for side hustles with few or no expenses at first. Launching a product-based business will likely mean you need to budget for supplies, shipping costs, and other essentials. However, your costs will probably be substantially lower if doing something like copywriting or transcription tasks. It Opens Opportunities for Automation Automation is like the internet in that it has been a game-changer for many industries and consumers. People using automated email platforms enjoy features that sort incoming messages by priority, sender, and message type. The tools used by many businesses allow workers to move away from tedious manual tasks and spend more time on highly rewarding activities. Automation is also starting to positively impact people interested in retirement planning and the professionals that assist them with it. However, it’s important not to view automated tools as replacements for humans but as additional options that might suit your retirement preparation needs. Additionally, people should not think of automation as a “set it and forget it” option. Most algorithms running these solutions are incredibly advanced, but they’re not guaranteed to be error-free. That’s why it’s smart to periodically monitor all settings and activities associated with financial automation. Then, you’ll have a better chance of catching anything amiss if it crops up. It’s also necessary to revisit any automated tools if your financial situation or goals change. Doing these simple things limits the possibility of surprises. Auto-Portability Could Reduce Cashouts Changing jobs could cut into your retirement savings, even if you don’t realize it at the time. U.S. federal law lets companies initiate mandatory distributions for people with retirement account balances of less than $5,000. Individuals have a set period to coordinate rollovers into a new employer’s plan in such cases. However, that process can be prohibitively complicated. Research indicated that more than 54% of workers with account balances under $5,000 chose to cash out those amounts rather than roll them over. However, doing that incurs penalties and taxes. People are increasingly advocating for auto-portability features built into employers’ retirement plans. In short, they would automatically transfer savings to new, active savings accounts in cases where the funds are subject to mandatory distributions. Some financial experts also believe the blockchain could be instrumental in helping people track their retirement accounts. Blockchain-based solutions may not be automated themselves, but they could complement others that are. For example, a person could use a blockchain tool to verify that an auto-portability tool worked as expected and that their funds are in the correct account. Robo-Advisers Provide Potential Investment Solutions So-called robo-advisers offer another possibility. Research from 2021 indicated that 3.5 million adults in the United States would try them that year. First, the customers that use them fill out a survey. Then, automated tools make investment decisions based on that data. Brian Walsh, a senior manager of financial planning at SoFi Technologies, said, “I think there’s value humans provide. But on the investment side, I think robos have a huge advantage in being cost-efficient.” Elsewhere, Vanguard polled 1,500 people to find out more about their loyalties regarding human-based and robo-advising methods. One of the survey questions asked participants to estimate their annual portfolio returns when using either a human adviser or an automated one. The people only using digital tools estimated returns of 24%. They also believed their returns would drop by 3% without using an automated advising platform. The customers who’d hired human advisers estimated their returns at 15% and perceived a 5% value-add to annual performance if they had not received that input. The results also showed that only 7% of people with human advisers would consider switching to an automated-only solution. It Provides Improved Visibility and Empowerment Even as people remain aware of their retirement years gradually nearing, many don’t take the necessary steps to get themselves as prepared as possible. As a case in point, a U.S Department of Labor study found that only 40% of Americans had calculated how much they’d need to retire. However, technology has made it extremely straightforward to figure out that all-important information with tools like free retirement calculators. These options vary slightly in how they work, but most give users an idea of how much they need to save per year to reach their goals by the time they retire. Calculators and similar tools can help people become more decisive about the specific things they do to plan for retirement. That’s useful since not all methods are equally lucrative. For example, high-yield savings accounts average just 3% in returns, while the stock market’s returns are often higher over time. Technology can help you make smarter financial decisions, even if you don’t plan to retire for decades. Some tools can track unusual changes in spending, such as if your cellphone bill is double the usual average amount. In such cases, you become alerted to possible issues so they don’t cause unforeseen problems. Other providers also sell specialized solutions that monitor for identity theft or other matters that could derail your retirement plans if left unchecked. Chatbots Make Investing More Accessible People often want to explore how investing could help them get closer to their retirement goals. However, they may fall short of those aspirations because investment opportunities seem out of reach. Some professionals in the retirement planning and investment world believe artificial intelligence (AI) and chatbots could break down some existing barriers. However, they wouldn’t necessarily make the automatic investment decisions like the previously described robo-advisers. Some chatbots might take questions on behalf of professionals who provide retirement planning services and are looking for new clients. They are already well-established options for supporting an organization’s customer service needs. Alternatively, they could provide answers to questions people might prefer posing to a chatbot. Employees at one retirement plan provider analyzed three years’ worth of questions customers asked the company’s chatbot. They categorized the queries to determine the most common reasons individuals utilized the service. The results showed that matters related to 401(k) plans were the most frequent, which was somewhat of a surprise. Grant Easterbrook is a co-founder of Dream Forward Solutions, which offered the chatbot. He said, “We assumed a lot of the questions the AI would get would be around investing, financial concerns, and priorities. Actually, the complexities and headaches of managing your own 401(k) is a much bigger burden than people give credit for.” Chatbots for Personal Banking and Budget Management It’s increasingly common for banks to have chatbots for customers, too. Maybe you have a goal to set a certain percentage of your monthly earnings aside for retirement. You might also want to curb a certain type of spending, such as dining out or getting beverages in coffee shops. Cleo is a chatbot that links with numerous popular banks. The tool lets you ask questions to keep your monthly spending on track. You could say something like, “Can I afford a meal delivery tonight?” The chatbot would respond based on your monthly budget and what’s left of it. Sticking to a budget can help you form better financial habits that help with retirement preparedness and overall stability. Plus, chatbots make it easier to weigh the pros and cons of potential purchases, getting valuable visibility before those transactions happen. You might say, “I wish I would have realized beforehand that the outfit I splurged on would wreck my budget for the rest of the month.” Chatbots can prevent such scenarios. These easy-to-use tools help people get budgetary recommendations and bank account visibility in ways that were not available before. They can feel more prepared for what will happen in their retirement years, even if that period of their life is still decades away. Specialty Websites Help People Get Need-To-Know Information It’s also important to recognize the impact technology has had on information accessibility overall. Before the internet was so widespread, people got retirement advice in person or by reading books. Those methods are still valid, but the online realm opens additional opportunities to learn and plan. The internet gives people instant access to a gigantic assortment of information on any topic imaginable, including retirement preparation. Although users must learn to differentiate between reputable and faulty information, there’s no denying that the internet has had a tremendous impact on how and when people access content. Someone could go on a site like Reddit and find firsthand perspectives from other individuals in similar situations trying various strategies to prepare for retirement. They might also decide to follow blogs from financial planning thought leaders or regularly visit websites that recommend hot stocks to add to their portfolio. Technology can also help you narrow down retirement options on a more personal level. For example, maybe you’re interested in learning more about living in a continuing care retirement community (CCRC) as you age. Statistics indicate approximately 80% of these facilities are nonprofits. They usually provide three levels of care, ranging from independent living to total assistance with daily tasks. You might start researching which facilities have the amenities you want and offer desirable locations. Online reviews from residents and loved ones can be beneficial for learning more about the experiences of living at one in your area or wherever you plan to retire. Similarly, maybe you’ve had your heart set on spending your golden years in another country. The internet provides a wealth of information about the cost of living, quality of health care, ease of immigration for retirees, and other specifics to help you learn about a future potential home. It Helps Financial Professionals Market Their Services More Effectively Technology has also greatly improved how people specializing in financial services and retirement planning promote their services to potential customers. Before the internet, people found out about options through word-of-mouth or maybe by opening the phone book. The internet substantially changed that through websites and search engine listings. It only takes interested persons a few minutes to find advisers in their area and read about their experience and qualifications. Advisers who use technology effectively are better able to market to different demographics. That’s crucial, especially since people start retirement planning at numerous stages of life. One poll found that two-thirds of people from the millennial and Gen X generations have started planning for their retirements. That’s also true for 42% of the Gen Z population. The research also showed that people feel uncertain about the process regardless of age and need guidance. That sentiment opens possibilities for retirement planners to help. They’ll be best able to do that when they understand the needs of people from various age groups. Study Shows the Pandemic Changed Tech Utilization for Advisers Financial specialists have recently started viewing technology as essential for helping them meet clients’ expectations, especially during the COVID-19 pandemic. A study from Vestwell revealed that 85% of advisers were putting a bigger emphasis on technology to run their businesses. While commenting about the study, Adam Schumm, Vestwell’s CEO, said, “In a lot of ways, the pandemic served as a tipping point for the industry. Advisers realized that they needed to adapt to the changing times by using tech, while personal finance and retirement became a hot topic amidst the pandemic, making it a perfect storm for the industry.” Another finding from the study was that 45% of advisers found social media more effective now than in previous years. Plus, 25% said it was their most effective way of reaching out to customers. Brian Guerra, Vestwell’s vice president and head of marketing, explained that social media offers mutual benefits. “When it comes to an adviser and their practice, it’s a two-way street: Advisers use tools like LinkedIn to find leads, and leads use these tools to vet and learn about advisers. And I don’t think we’re at a plateau yet ⁠— advisers know social media is important, but not all have fully leveraged it yet. Those who are able to incorporate it into their practices effectively will definitely have a leg up,” he said. How Will Technology Help You Plan to Retire? The examples here show you have no shortage of options when thinking about how you’ll apply technology to your retirement-planning efforts. If you’re already familiar with using technology in everyday life, seeing how it aligns with your retirement goals could help you feel more in control of your future. Alternatively, if you don’t consider yourself tech-savvy currently, that’s no problem. Consider starting small, such as by using a retirement calculator or a budget tracker. Once you become accustomed to how those work, you’ll likely feel more confident about expanding your adoption of technology. It’s important to remember that technology will undoubtedly keep transforming how people plan for retirement. Staying abreast of that continual progress can help you gauge which new solutions might be most valuable for you and your financial goals now and into the future. Article by April Miller, Due About the Author April Miller is a writer, editor, and avid ongoing learner. Particularly, April is passionate about helping people learn how to use technology to save money, find financial opportunities, work smarter, plan for retirement, and live their best lives. Updated on May 17, 2022, 4:02 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

Minnesota budget deal includes tax cuts, infrastructure, more education spending

Minnesota Gov. Tim Walz and Legislature leaders on Monday said they'd reached a deal to spend much of a record $9.25 billion budget surplus on a mix of tax cuts and new spending on education, public safety and health care. The Pioneer Press has a report on the bipartisan agreement, which is still in the broad-strokes stage. The deal includes about $4 billion in tax reductions, $1 billion in new money for both schools and health and human services, $1.5 billion for state infrastructure and $450….....»»

Category: topSource: bizjournalsMay 17th, 2022

Futures Jump Amid Optimism China"s Covid Lockdowns Are Ending

Futures Jump Amid Optimism China's Covid Lockdowns Are Ending Another day, another dead cat-bouncing, bear market rally. After Monday's flattish session which saw tech names slump on fresh inflation fears, Nasdaq futures rebounded on Tuesday, setting up technology stocks for solid gains after a six-week rout as investors were encouraged by China's easing covid lockdowns and amid speculation that Beijing regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Nasdaq 100 futures jumped 2% by 7:00 a.m. in New York after the underlying gauge sank on Monday on concerns about a slowdown in economic growth; S&P 500 futures rose 1.6%. Treasury yields rose modestly above 2.90%, and the dollar retreated. Bitcoin managed to rebound back over $30K. Confirming what we said almost three weeks ago, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown. However, flareups elsewhere in China showed how hard it is to tackle the omicron strain. Among notable moves in US premarket trading, Twitter shares fell 3.3%, set to extend declines for an eighth straight session amid uncertainties around the deal with Elon Musk, while Citigroup rose 4.9% after Warren Buffett’s Berkshire Hathaway unexpectedly disclosed a new stake in the lender, a return to banks for the billionaire who purged many of his bank holdings several years ago. Tech names including Advanced Micro Devices, Tesla and Nvidia were among the biggest premarket gainers as growing recession concerns prompt markets to reasses just how many rate hikes the Fed will pull off before it is forced to reverse. Cryptocurrency-exposed stocks climbed as Bitcoin rose above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Chinese stocks in US jumped across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Here are the most notable premarket movers: Twitter (TWTR US) shares fell 2.4% in premarket trading, on course to extend their seven-day streak of declines, as uncertainties around a deal by buyer Elon Musk weigh on the stock. Tesla (TSLA US) shares rallied 3% in premarket trading. Chinese stocks in US jump across the board in premarket trading on speculation that regulators may ease a yearlong clampdown on internet companies at an upcoming meeting with tech executives. Alibaba (BABA US) +6.2%, JD.com (JD US) +5.6%, Pinduoduo (PDD US) +7% and Baidu (BIDU US) +3.6% Cryptocurrency-exposed stocks climb in US premarket as Bitcoin rises above $30,000 on Tuesday in cautious trading, with the fallout from a collapsed stablecoin continuing to keep sentiment in check. Riot Blockchain (RIOT US) +7.8%; Coinbase (COIN US) +6.8%; Marathon Digital (MARA US) +6.1% Advanced Micro Devices (AMD US) upgraded to overweight from neutral at Piper Sandler, which says in note that the company’s core businesses are running well and mid-to-long-term catalysts remain intact. Stock gains 3.6% in New York premarket trading. United Airlines Holdings’ (UAL US) updated second-quarter guidance is “a solid step in the right direction,” Citi says. United’s shares gained 4.3% in premarket trading. Bird Global (BRDS US) shares jump as much as 40% in US premarket trading with DA Davidson noting management’s announcement of a plan to streamline operations. Take-Two (TTWO US) reported better-than-expected fourth-quarter earnings helped by popular video games like NBA 2K22. The company’s shares rise 5.4% in premarket trading. Global-e Online (GLBE US) shares slump as much as 30% in US premarket trading as analysts slash their price targets on the e-commerce software firm after it lowered its full-year guidance for revenue and gross merchandise value. Imperial Petroleum (IMPP US) shares plunge 48% in US premarket trading. The shipping company priced an underwritten public offering of 72.7m units at $0.55 per unit, with expected gross proceeds of ~$40m. US stocks have been roiled in the past six weeks as the combination of high inflation and hawkish central banks fueled fears of a potential recession. While some strategists including Morgan Stanley’s Michael Wilson expect equities to fall further before finding a floor, they don’t foresee a recession as their base case. The main focus today will be on US retail sales data, which are expected to show a rise of 1% in April. “Investors’ appetite for riskier assets is on the rise after many welcomed today’s positive unemployment and GDP figures” from the eurozone and UK, said Pierre Veyret, an analyst at ActivTrades Plc. “The improving virus situation in China is also blowing a wind of relief in investors’ trading minds.” A challenging global economic outlook amid elevated food and record fuel costs, and tightening monetary settings continues to shape sentiment.  Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high. But one bond-market measure - the five-year breakeven rate - is signaling inflation has peaked, while the latest virus developments raised hopes China’s damaging lockdowns may soon be eased. On Monday, New York Fed President John Williams on Monday downplayed deteriorating liquidity conditions in financial markets, saying it was to be expected as investors grapple with uncertainty over global events and shifting U.S. monetary policy. No less than six Fed speakers - including Chair Jerome Powell - are due to speak later Tuesday. In Europe, technology and basic-resources stocks led a broad-based advance of the Stoxx Europe 600 following a rally in Chinese tech shares on optimism Beijing may ease up on a yearlong clampdown. Italy's FTSE MIB adds 1.6%, FTSE 100 lags, adding 0.7%. Miners, financial services and banks are the strongest-performing sectors. Equities were also buoyed by data showing the euro-area economy expanded more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Here are the biggest European movers: Clariant shares rise as much as 8.7% after the specialty chemical company announced its governance agreement with SABIC will expire at the June 24 AGM, and won’t be renewed. Imperial Brands climbs as much as 7.9% after the tobacco company reduced its losses from next-generation products and continued on a turnaround plan. Daimler Truck gains as much as 7.8% in Frankfurt; Oddo BHF notes strong 1Q report that will reassure in the current environment, while Citi says the company delivered an “encouraging” set of results. Engie rises as much as 6.9%, hitting the highest since March 1, after the French energy company boosted its profit guidance on higher European energy prices. CaixaBank advances as much as 5.4% after the Spanish lender released a new strategic plan that predicts a jump in a key profitability metric and announced a EU1.8b share buyback program. Prosus and Naspers both raised to overweight from neutral at JPMorgan following the broker’s upgrade of Tencent. Prosus shares gain as much as 6.5% in Amsterdam, Naspers climbs as much as 6.7% in Johannesburg. ContourGlobal gains as much as 34% after US private equity firm KKR agreed to buy the power generation business for 263.6p/share in cash, representing a premium of 36% to Monday’s close. Vodafone erases losses after dropping as much as 4.2% as the telecom operator’s forecast for adjusted Ebitda after-leases missed consensus estimates at mid- point. Earlier in the session, Asian stocks advanced for a third day -- its longest winning streak since mid-March -- amid a jump in some technology firms on the back of hopes for an unwind of Chinese lockdowns that have hurt the global economic outlook as well as a dialing back of Beijing’s regulatory crackdowns. The MSCI Asia-Pacific Index climbed as much as 1.5%, on track for a third day of gains. Chinese tech giants Tencent and Alibaba contributed most to the gain, while chipmakers TSMC and Samsung also helped. Shanghai reported no new Covid infections in the broader community for a third day, hitting a crucial milestone toward reduced restrictions. China’s top political advisory body is hosting a meeting Tuesday with some of the nation’s largest private-sector firms, sparking hopes for an improved business climate.  “The mood in Asia is risk on,” said Xue Hua Cui, a China equity analyst at Meritz Securities in Seoul. “Whether this remains a dead cat bounce or not depends on how quickly demand recovers following the end of Shanghai lockdowns.” Hong Kong outperformed, with the Hang Seng Index rising more than 3%. Benchmarks in India also advanced more than 2%, even as state-run insurer Life Insurance Corporation of India dropped in its Mumbai trading debut after a record initial public offering for the nation.  Japanese equities gained with Asian peers amid hopes that China will ease up on Covid lockdowns and regulatory crackdowns. The Topix rose 0.2% to close at 1,866.71. Tokyo time, while the Nikkei advanced 0.4% to 26,659.75. Recruit Holdings contributed the most to the Topix gain, rising 2% after its earnings report. Out of 2,172 shares in the index, 1,164 rose and 932 fell, while 76 were unchanged. Australia's S&P/ASX 200 index rose 0.3% to close at 7,112.50, taking its winning run to a third session. Miners and banks contributed the most to the gauge’s advance. Beach Energy was among the top performers, climbing with other energy shares as oil rallied. Brambles was the biggest laggard after saying CVC won’t be putting forward a proposal for the pallet maker. Investors also assessed minutes from the RBA’s May meeting. The central bank said it considered three options for the size of its first interest-rate increase since 2010. In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,137.88. India’s key gauges surged on Tuesday, boosted by Reliance Industries Ltd. which climbed the most since early March. Still, Life Insurance Corp. of India, the country’s biggest listing so far, slumped on debut. The S&P BSE Sensex rose 2.5%, its biggest jump in three months, to 54,318.47 in Mumbai, while the NSE Nifty 50 Index advanced 2.6%. All of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of metal companies. Reliance Industries advanced 4.2%, providing the biggest boost to the Sensex, which had all 30 members trading higher.  “It’s a much-needed breather for the bulls after five weeks of slide and we may further rise,” said Ajit Mishra, vice-president research at Religare Broking Ltd. “Since all the sectors are participating in the rebound, we suggest focusing more on stock selection. Despite strong gains in the broader market, shares in the state-controlled insurer plunged 7.8%, following a $2.7 billion IPO, India’s biggest on record. The stock trimmed losses from the low, but failed to touch the listing price in the session. LIC’s first-day performance makes for the second-worst debut among 11 global companies that listed this year after raising at least $1 billion through first-time share sales.  In FX, the Bloomberg Dollar Spot Index fell a third consecutive day and the greenback weakened against all of its Group-of-10 peers apart from the yen. The pound lead G-10 gains followed by Scandinavian and Antipodean currencies. The pound rallied and gilts slumped across the curve after a stronger-than-expected reading of the UK employment data stoked speculation that a tighter labor market may prompt the BOE to continue its monetary tightening cycle beyond a widely expected rate rise next month. Average weekly earnings surged 7% in the three months through March, compared to the 5.4% figure economists had expected. The euro rose on the back of a broadly weaker dollar. Bunds slid as haven demand was unwound. Italian bonds also tumbled as money markets wagered on up to 98bps of ECB hikes by December. The Aussie strengthened for a third day while Australia’s sovereign bonds fell after minutes from RBA’s May meeting indicated the central bank considered an outsized rate hike. The RBA said it considered three options for the size of its first interest-rate increase since 2010, according to minutes of its May 3 policy meeting, when it raised the cash rate by 25 basis points. The Australian and New Zealand dollars also benefitted from expectations that Covid lockdowns in Hong Kong and Shanghai will be lifted. The yen gave up earlier gains as US yields resumed their climb, which also weighed on Japan government bonds. In rates, yields rose as Treasuries cheapened with losses led by front-end of the curve, following a sharper bear flattening move across EGBs after ECB Governing Council member Klaas Knot said he supports a quarter-point increase in interest rates in July and that a bigger move may be justified if data show inflation worsening. US Treasury yields cheaper by up to 5.5bp across front-end of the curve, the 10Y TSY trading at 2.91% last and flattening 2s10s spread by 2.2bp on the day; 2-year German yields cheaper by 23bp on the day following Knot comments while German 10s are cheaper by 4bp vs. Treasuries. In U.S. session, focus on a stacked Fed speaker slate led by Chair Jerome Powell who will be interviewed during a Wall Street Journal live event in the afternoon. The Dollar issuance slate includes Export Development Canada 5Y SOFR, OKB 3Y SOFR and JICA 5Y SOFR; six deals priced $9.1n Monday in order books that were 3.3x oversubscribed In commodities, WTI drifts 0.2% higher to trade at around $114. Spot gold rises roughly $3 to trade above $1,825/oz. Base metals are mixed; LME tin falls 1.6% while LME zinc gains 2.4%. European gas prices hit four-week low after EU revised guidelines for purchases of Russian supplies. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 1.3% to 4,057.75 STOXX Europe 600 up 1.6% to 440.47 MXAP up 1.4% to 162.83 MXAPJ up 2.2% to 535.18 Nikkei up 0.4% to 26,659.75 Topix up 0.2% to 1,866.71 Hang Seng Index up 3.3% to 20,602.52 Shanghai Composite up 0.6% to 3,093.70 Sensex up 2.1% to 54,080.42 Australia S&P/ASX 200 up 0.3% to 7,112.53 Kospi up 0.9% to 2,620.44 German 10Y yield little changed at 0.99% Euro up 0.4% to $1.0480 Brent Futures up 0.3% to $114.53/bbl Gold spot up 0.2% to $1,827.11 U.S. Dollar Index down 0.42% to 103.75 Top Overnight News from Bloomberg The euro-area economy grew more than initially estimated at the start of the year as the region moved past a wave of Covid-19 infections and defied headwinds from the early days of the war in Ukraine. Economic output rose 0.3% in the first quarter, exceeding a flash reading of 0.2%, according to Eurostat data released Tuesday. Employment, meanwhile, gained 0.5% during same period The UK will lay out its plan to amend its post-Brexit trade deal Tuesday in a direct challenge to the European Union, which is insisting that Prime Minister Boris Johnson must honor the agreement he signed China’s main bond trading platform for foreign investors has quietly stopped providing data on their transactions, a move that may heighten concerns about transparency in the nation’s $20 trillion debt market after record outflows The American and European Union chambers of commerce in separate briefings said their members are rethinking their supply chains and whether to expand investment in the face of China’s zero tolerance approach to combating Covid-19 Turkish President Recep Tayyip Erdogan said he won’t allow Sweden and Finland to join NATO because of their stances on Kurdish militants, throwing a wrench into plans to strengthen the western military alliance after Russia’s invasion of Ukraine A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were positive but with gains capped after the uninspiring lead from Wall St and growth concerns. ASX 200 was kept afloat by strength in the commodity-related sectors after recent gains in underlying prices. Nikkei 225 traded marginally higher with Japan seeking to pass an extra budget by month-end and will begin permitting entry to a small number of tourists. Hang Seng and Shanghai Comp were both firmer with tech spearheading the outperformance in Hong Kong amid hopes of an easing of the crackdown on the sector, while the mainland lagged amid economic concerns and despite Shanghai reporting no cases outside of quarantine for a 3rd consecutive day. Top Asian News China's state planner said China's economy faces increasing downward pressure, while it will step up support for manufacturing companies, contact-intensive services, small companies and home businesses, according to Reuters. Senior Chinese officials are to meet with tech industry chiefs today amid talk of crackdown easing, according to Nikkei. It was later reported that China's top political consultative body began a conference on promoting the sustainable and healthy development of the digital economy, according to state media. Hong Kong Chief Executive Carrie Lam said they will proceed with the planned COVID curbs easing on May 19th, according to Bloomberg. BoJ Deputy Governor Amamiya said it is important to continue current powerful easing to firmly support the economy and that long-term interest rates have been stable since the adoption of fixed-rate operations, while he added that if monetary easing is reduced now, it would make the 2% price goal an even more distant target, according to Reuters. Japan is to permit small groups of tourists to visit this month as a trial ahead of its border reopening, according to Japan Times. European bourses are firmer across the board, Euro Stoxx 50 +1.7%, taking impetus from and extending on a positive APAC handover as the regions COVID situation improves. Stateside, futures are firmer across the board, ES +1.8%, following yesterday's  relatively lacklustre session with participants awaiting numerous Fed speak, including Chair Powell. Twitter (TWTR) prospective purchaser Musk says that his offer was based on the Co.'s SEC filing being accurate, however, yesterday the CEO refused to show proof of less than 5% of fake/spam accounts; deal cannot move forward until this has been disclosed. -3.5% in the pre-market. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.09 (exp. 3.67/3.67 GAAP), Revenue 38.9bln (exp. 36.71bln); Raises Fiscal 2022 Guidance. +2.5% in the pre-market Top European News UK Foreign Secretary Truss is to declare her intention to bring forward legislation that rips up parts of the post-Brexit trade deal on Northern Ireland, according to LBC. Expected around 12:30BST/07:30ET Irish Foreign Minister Coveney says he spoke with UK Foreign Minister Truss on Monday, notes the EU and UK sides haven't met since February and says it is "time to get back to the table" ECB is expected to raise the deposit rate in July according to 39 out of 39 respondents in a Reuters survey, while 26 out of 48 economists see the deposit rate at 0% in Q3 and 21 out of 48 see the deposit rate at 0.25% in Q4. FX Pound the standout G10 performer in wake of outstanding UK labour report; Cable clears string of resistance levels on the way towards 1.2500 and EUR/GBP probes 0.8400 after breaching technical supports . Kiwi and Aussie relish renewed risk appetite and latter also helped by hawkish RBA minutes; NZD/USD above 0.6350 and 1.3bln option expiries at 0.6300, AUD/USD back on 0.7000 handle. Greenback concedes ground ahead of top tier US data and raft of Fed speakers including chair Powell, DXY down to 103.470 vs 104.320 at best; latest session low in wake of ECB's Knot. Franc, Euro and Loonie all up at the expense of the Buck but latter also fuelled by WTI topping USD 115/bbl; USD/CHF sub-parity, EUR/USD surpassing 1.05 in wake of hawk-Knot and USD/CAD near 1.2800. Yen lags as risk sentiment improves and yields outside of Japan rebound firmly; USD/JPY rebounds through 129.00 and just over 129.50. Norwegian Crown boosted by Brent in stark contrast to crude import dependent Turkish Lira and Indian Rupee; EUR/NOK under 10.1500, USD/TRY touches 15.8850 and USD/INR crosses 78.0000 to set fresh ATH Fixed Income Bonds make way for risk revival and brace for US data amidst a raft of global Central Bank speakers. Bunds down to 152.74, Gilts hit 119.25 and 10 year T-note as low as 119-08 before paring some heavy declines UK DMO gets welcome reception for 2015 issuance, but new German Schatz receives cold shoulder even before hawkish comments from ECB's Knot not ruling out a 50 bp July hike if data warrants more than 25 bp China's main bond trading platform is said to have stopped the reporting of bond trades by foreigners following the market downside, according to Bloomberg. Commodities WTI and Brent are firmer in-fitting with broader risk appetite and the aforementioned China COVID improvement; posting gains of circa USD 0.80/bbl. However, upside remains capped amid the ongoing standoff between the EU and Hungary over a Russian import embargo. Iran set June Iranian light crude price to Asia at Oman/Dubai + USD 4.25/bbl, according to a Reuters source   OPEC+ production was 2.6mln below quotas in April, according to a report cited by Reuters; Russian production 1.28mln below the required level in April, sources add. Spot gold is firmer, taking impetus from the USD pressure; though, the yellow metal is yet to move out of earlier ranges. Base metals are bid on risk while Wheat declined amid reports that India is easing some of its export restrictions. Central Banks ECB's Knot says a 25bp hike in July is realistic; says a 50bp rate hike should not be excluded if data in the next few months suggests that inflation is broadening and accumulating. NBH's Virag says they will increase rates further, via Reuters citing slides. NBP's Kotecki says that interest rates will continue to move higher but it is currently difficult to define their target level. US Event Calendar 08:30: April Retail Sales Advance MoM, est. 1.0%, prior 0.5%, revised 0.7% April Retail Sales Ex Auto MoM, est. 0.4%, prior 1.1%, revised 1.4% April Retail Sales Ex Auto and Gas, est. 0.7%, prior 0.2%, revised 0.7% April Retail Sales Control Group, est. 0.7%, prior -0.1%, revised 0.7% 09:15: April Industrial Production MoM, est. 0.5%, prior 0.9% 09:15: April Manufacturing (SIC) Production, est. 0.4%, prior 0.9% 10:00: March Business Inventories, est. 1.9%, prior 1.5% 10:00: May NAHB Housing Market Index, est. 75, prior 77 Fed Speakers 08:00: Fed’s Bullard Discusses Economic Outlook 09:15: Fed’s Harker Discusses Healthcare as Economic Driver 12:30: Fed’s Kashkari Takes Part in a Moderated Townhall Discussion 14:00: Powell Interviewed During Wall Street Journal Live Event 14:30: Fed’s Mester Gives Opening Remarks to Panel on Inflation 18:45: Fed’s Evans Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Recession fears have continued to dominate markets over the last 24 hours, but Deutsche Bank Research is still the only bank to actually forecast one in the US. The tone was set for the day after some incredibly weak data out of China that we discussed yesterday, but that was then followed up with disappointing survey data from the US, which arrived ahead of an array of central bank speakers today (including Fed Chair Powell). Although markets in Asia are bouncing a little this morning, the S&P 500 (-0.39%) last night followed up its run of 6 consecutive weekly declines with a further loss. It was another volatile day that saw stocks trade in a 1.5% range, including going into positive territory briefly in the afternoon before slipping into the close. Sector dispersion was pretty wide, with energy shares gaining +2.62% and consumer discretionary stocks falling -2.12%, led by Tesla retreating -5.88%. Tech was the next biggest laggard, with the NASDAQ (-1.20%) and FANG+ index (-1.34%) underperforming the broader universe. That still leaves the S&P 500 index around 2% above its recent closing low on Thursday, but remember that if we get another week in negative territory, it would still be the first time since 2001 that the S&P has posted 7 consecutive weekly declines. After opening the week much lower, the STOXX 600 did recover through that day to post a slight +0.04% gain yesterday, continuing its recent outperformance. The prevailing risk-off mood meant that longer-dated sovereign bond yields also ended the day lower for the most part. Those on 10yr Treasuries were down -3.6bps to close at 2.88%, having already fallen by -20.8bps over the previous week as investors priced in a growing risk of recession over Fed and inflation concerns. The decline was split between breakevens and real yields. To be fair 10yr yields have gained +3.3bps this morning in Asia, thus almost reversing yesterday's losses so far. At the short-end, the amount of tightening priced in over the near-term has subsided somewhat of late, as it seems investors are searching high and low for a Fed put following a poor run of risk asset performance and the prior relentless repricing towards a more aggressive monetary tightening. Indeed if you were to stop the month right now, it would be the first month in 10 that the rate priced in by the December 2022 meeting has actually fallen rather than risen. That’s been echoed further out the curve as well, with investors now barely expecting the Fed Funds rate to get above 3% in 2023 at all, even though inflation has proven much stickier than the consensus expected over recent months. As Chair Powell put it in an interview last week, getting inflation back to target will “include some pain”. Markets are starting to price some of that out though. Over in Europe longer-dated sovereign bond yields also moved slightly lower, including those on 10yr bunds (-0.8bps), OATs (-1.4bps) and BTPs (-0.8bps). That came as we heard from Bank of France Governor Villeroy, who said to expect “a decisive June meeting, and an active summer”, which fits into the broader debate recently whereby markets are increasingly expecting an initial hike as soon as July. This saw the 2yr bund increase +3.0bps to 0.12%. Another point of interest were also his comments on the exchange rate, saying that “A euro that is too weak would go against our price-stability objective”. In line with the broader theme this year, one asset class that wasn’t impacted by the risk-off tone was commodities, and both Brent crude (+2.41%) and WTI (+3.36%) moved back above $114/bbl yesterday. This morning, both are seeing slight losses though (-0.36% and -0.46%, respectively). There were major gains for wheat futures (+5.94%) too, which saw a significant daily rise following India’s move over the weekend to restrict their exports. And that went alongside other rises in agricultural goods yesterday including corn (+3.6%) and sugar (+2.66%), which is an incredibly important story for emerging markets in particular given the much higher share of disposable income that consumers put towards food in those countries. Another asset class that has had a bad time of late is Bitcoin, shedding another -3.58% to $29,909 yesterday. This morning it is climbing back above the $30k threshold. Marion Laboure in my team published a piece yesterday looking at the recent selloff in crypto, adding some much needed context for what this means for broader adoption efforts. See here for more. Overnight in Asia, it has been a good start for the Hang Seng (+2.23%) amid optimism that today’s meeting between China’s corporates and regulators may lead to an easing of draconian measures on tech companies. Hong Kong is also on track to ease covid curbs on May 19th, a theme that also lifted the Shanghai Composite (+0.29%) after the city reported a third day of no new infections in the broader community, a threshold that allows it to roll back some of the restrictions. The sentiment is upbeat elsewhere in Asia too, with the Nikkei (+0.35%) and the KOSPI (+0.80%) also rising. This optimism is shared by S&P 500 futures, up +0.31%. Elsewhere, it’s likely that Brexit will be back in the headlines today as UK Foreign Secretary Liz Truss is expected to make a statement to parliament announcing a new law that would override parts of the Northern Ireland Protocol. For reference, the Protocol is a part of the Brexit deal which the UK and the EU agreed ahead of the UK’s departure, but has been a persistent source of controversy since. Northern Irish unionists view it as undermining their place in the UK because it places an economic border between Northern Ireland and Great Britain, and the DUP (the second-largest party in the Northern Ireland Assembly) are refusing to help form an executive following their recent elections unless action is taken on the Protocol. The EU have continued to warn the UK against any unilateral action, and there’s been fears of an UK-EU trade war if the row gets worse. There wasn’t much in the way of data yesterday, although the Empire State manufacturing survey for May underwhelmed with a reading of -11.6 (vs. 15.0 expected), which was beneath every estimate in Bloomberg’s survey. There was some easing in the prices paid index though, which fell to a 14-month low of 73.7. To the day ahead now, and there’s an array of central bank speakers including Fed Chair Powell, along with the Fed’s Bullard, Harker, Kashkari, Mester and Evans, ECB President Lagarde and BoE Deputy Governor Cunliffe. Data releases include US retail sales, industrial production and capacity utilisation for April, along with the NAHB’s housing market index for May. Elsewhere, there’s also the UK unemployment reading for March. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 05/17/2022 - 07:43.....»»

Category: blogSource: zerohedgeMay 17th, 2022

Mid-Afternoon Market Update: Dow Tumbles Over 100 Points; H&R Block Shares Spike Higher

U.S. stocks trade lower toward the end of trading, with the Dow Jones dropping more than 100 points on Wednesday. The Dow traded down 0.41% to 32,028.20 while the NASDAQ fell 2.20% to 11,479.00. The S&P also fell, dropping, 0.81% to 3,968.50. Also check this: Executives Buy Around $1.6M Of 4 Penny Stocks Leading and Lagging Sectors Energy shares jumped by 1.9% on Wednesday. Meanwhile, top gainers in the sector included SEACOR Marine Holdings Inc. (NYSE: SMHI), up 12% and TORM plc (NASDAQ: TRMD) up 15%. In trading on Wednesday, consumer discretionary shares fell 3.1%. Top Headline The US recorded a budget surplus of $308 billion in April versus from a $226 billion deficit in the year-ago period.   Equities Trading UP Trecora Resources (NYSE: TREC) shares shot up 27% to $9.55 as the company agreed to be acquired by an affiliate of Balmoral Funds at $9.81 per share in cash or an enterprise value of $247 million. Shares of Celsius Holdings, ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaMay 11th, 2022

: U.S. posts record $308 billion budget surplus in April as federal tax receipts surge

The U.S. posted a budget surplus of $308 billion in April --- the largest on record --- owing to a big increase in federal taxes and lower spending after the end of government stimulus......»»

Category: topSource: marketwatchMay 11th, 2022

Expanding Budgets for Buy-Side Trading Desks Fueling Fast Fintech Growth

New Coalition Greenwich Report Breaks Down Buy-Side Technology Spending on Trading Desks May 10, 2022 | Stamford, CT — Budget increases for trading desks drove buy-side technology spending above $10 billion last year and is fueling fierce competition amongst an expanding host of innovative institutional fintech providers. Q1 2022 hedge fund letters, conferences and more […] New Coalition Greenwich Report Breaks Down Buy-Side Technology Spending on Trading Desks May 10, 2022 | Stamford, CT — Budget increases for trading desks drove buy-side technology spending above $10 billion last year and is fueling fierce competition amongst an expanding host of innovative institutional fintech providers. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Buy-Side Trading Desk Budget Increase The average buy-side trading desk budget increased approximately 5% last year, to $2 million annually, according to new data from Coalition Greenwich. Technology accounts for about a third of that spending, with compensation making up the remainder. Looking ahead, Coalition Greenwich projects continued increases in spend on the technology side of the ledger. “Fintech providers are offering buy-side firms cutting-edge tools to improve the research process, risk management and cybersecurity capabilities, to name a few,” says Brad Tingley, Research Manager at Coalition Greenwich Market Structure & Technology and author of Buy-Side Technology Spending Continues Upward. “To remain competitive, trading desks must make sure they are taking advantage of all the opportunities technology provides.” Much of last year’s technology spending increase was driven by desks trading fixed income products. While budgets for equity trading desks increased 4%, and foreign exchange desk budgets actually declined 2%, budgets for fixed-income trading desks increased 12% year-to-year. “This is not to say that technology will be replacing human traders,” says Brad Tingley. “Success today requires having the right people in the right roles—with the right technology at their disposal.” About Coalition Greenwich We are a leading provider of strategic benchmarking, analytics and insights to the financial services industry. We specialize in providing unique, high-value and actionable information to help our clients improve their business performance.  Headquartered in London, we have 400+ professionals working in London, Paris, New York, Stamford CT, Mumbai, Singapore, and Tokyo. Connect with us: LINKEDIN | TWITTER About CRISIL CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the U.S., the UK, Argentina, Poland, China, Hong Kong and Singapore.  It is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. For more information, visit www.crisil.com Connect with us: LINKEDIN | TWITTER | YOUTUBE | FACEBOOK | INSTAGRAM Updated on May 10, 2022, 12:21 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 10th, 2022

Ukraine minister calls for immediate Russian energy embargo to make it harder for Putin to fund his military

President Joe Biden announced in early March the US would ban Russian energy imports. Meanwhile, the EU has proposed a ban on Russian oil imports. The EU has proposed implementing a gradual ban on Russian oil. The plan includes cutting out crude within six months.Massimo Vernicesole/Getty Images Ukraine's finance minister has called for an immediate full energy embargo against Russia. Serhiy Marchenko told the BBC it would make it harder for Russia to finance its military needs. The US banned oil imports in April, while the EU proposed a ban on Wednesday. Ukraine's finance minister is calling for a full and immediate energy embargo to make it harder for Russia to finance its military needs. Serhiy Marchenko spoke to BBC News about the embargo on Saturday.President Joe Biden announced in early March that the US would ban Russian energy imports. Meanwhile, the EU has proposed a ban on Russian oil imports, including cutting out crude within six months, as part of the sweeping sanctions taken to put pressure on the Kremlin over the war in Ukraine. Russia has halted its gas supplies to Poland and Bulgaria, which was dubbed "an instrument of blackmail," by the European Commission's chief. Marchenko said in the interview: "Huge oil and gas prices help Russia to receive additional amounts to make their budget run with a surplus. In comparison, we are running [the country] with a very huge deficit in our budget.""I believe that a full embargo can make Russia suffer more than it is right now," he added. The US imports about 3% of Russian oil, while the EU imports about 40% – a third of the bloc's supplies. On Wednesday, EU's President Ursula von der Leyen admitted it was "not easy to establish unity" among the 27 members but added that she was "confident" that an oil embargo could be agreed. Von der Leyen said: "Let us be clear: it will not be easy. Some member states are strongly dependent on Russian oil. But we simply have to work on it. We now propose a ban on Russian oil. This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined."Marchenko told BBC News that the war meant his country was collecting less in taxes "because more than 20% of our businesses are fully closed. It means that we can't manage to fulfill our necessary duty as a government without international support, or without just printing money."Russia has taken control of most of Ukraine's port cities and without the country's harbors available, the country cannot rely on its exports – Ukraine, before the war, was one of the world's top producers of crops like sunflower, corn, and wheat. Marchenko added that the principal issue for the country now is "how to unblock the seaports of Ukraine."Read the original article on Business Insider.....»»

Category: dealsSource: nytMay 8th, 2022

Ron DeSantis signs $1.2 billion in tax breaks for Floridians to fight "Bidenflation headwinds," though Biden"s stimulus will help pay for it

Florida is using $200 million in funding from the American Rescue Plan to fund its 25-cent, monthlong gas tax holiday starting in October. Florida Gov. Ron DeSantis has seen his star rise in the GOP as he openly tussles with the Biden administration on its public health and economic policies.Ronda Churchill/Getty Images DeSantis just signed several tax breaks into law in Florida, billing it as a way to fight inflation. It'll lower the cost of diapers, school supplies, gas, and more.  The state is flush with revenue, including from the federal government.  Floridians will get more than $1.2 billion in tax breaks on a slew of items from diapers to mobile homes thanks to a bill Republican Gov. Ron DeSantis signed into law on Friday. As he prepared to sign the bill at a Sam's Club in Ocala, Florida, DeSantis blamed President Joe Biden for the state's need to provide financial relief amid record-high inflation. He has also warned in recent weeks that the country may be heading into a recession. "We have done more than any other state to step up against Bidenflation headwinds, to give relief to our citizens, and we are going to keep on doing that," DeSantis said at a bill signing event at Sam's Club in Ocala, Florida. But at least one portion of the tax relief package is being paid for by congressional Democrats' $1.9 trillion coronavirus relief measure, called the American Rescue Plan, that Biden signed into law last year. Republicans and even some outside analysts frequently blame the spending package for contributing to inflation.A total of $200 billion in COVID rescue dollars is going toward a one-month gas holiday that starts in October. Through the measure, drivers and motorcyclists will save 25 cents per gallon.  Florida's relief at the gas pump will come ahead of the gubernatorial election, set for November 8. DeSantis is expected to easily win re-election and is also considered to be a top contender for the White House in 2024, particularly if former President Donald Trump doesn't run. The gas tax holiday in Florida is less than the five-month, $1 billion in savings DeSantis had recommended. State legislative leaders limited the relief because they said they were concerned it would otherwise go to people traveling to Florida from out of state.The idea of state gas taxes are popular, particularly as prices hit $6 a gallon in some places. Some members of Congress want to enact a federal gas tax holiday, but House Speaker Nancy Pelosi rejected the idea saying that oil companies aren't required to pass on the savings to consumers. But the tax breaks won't necessarily alleviate inflation. Some analysts, such as Howard Gleckman at the Tax Policy Center, have warned that tax breaks could actually worsen inflation because people will spend and consume more at a time when supplies are limited. Some of the tax breaks will go toward recreational gear for the summer, for instance. Other breaks will be on more essential supplies people would buy with or without a tax, such as diapers.  10 tax breaks on the horizon in FloridaStates all over the country have been unexpectedly flooded with cash not just from the COVID stimulus but also after they took in far more revenue than they expected during the COVID-19 pandemic.DeSantis predicted Florida's budget would have a $20 billion surplus by the start of the next fiscal year. Such revenue gives the state plenty of room to suspend or reduce its 6% sales tax.The earliest tax breaks are coming on children's books in just over a week. Families will get tax breaks for buying Energy Star appliances and for back-to-school shopping. Taxes on mobile homes will fall to 3%. One of the most popular provisions including among Democrats in the legislature is a yearlong tax break on diapers, as well as clothes and shoes for babies and toddlers, starting July 1. Another tax break will run May 28 to June 10 on disaster supplies ahead of hurricane season. It'll include items such as generators, fuel tanks, and batteries. Around Labor Day, the state is enacting a "Tool Time" holiday to waive the sales tax on tools for workers in skilled trades such as carpentry and plumbing. For the second year in a row Florida will have its "Freedom Week" tax holiday around the Fourth of July. The state will be suspending sales taxes on tickets for entertainment, as well as purchases for recreational activities, from bikes to boats. There will be no sales taxes on Tickets for the Daytona 500, Formula One races, and World Cup qualification matches. The longest tax break is for people to purchase impact-resistant windows and doors to fortify their properties. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 6th, 2022