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RPM earnings call for the period ending March 31, 2021.
“What saddens me is the way the weak hands and recent buyers see Elon Musk as a prophet, powerhouse and decisive figure in bitcoin,” said one trader.
All aboard McDonald's stock following its surprising minimum wage hike?
(Bloomberg) -- Wild stock swings, spikes in Treasury yields, startling economic readings? Interesting, sure. But if you really want to get people’s attention right now, you need to tell them a story about crypto.And there have been a lot of those. Even for a market that’s famous for its wild volatility and gimmicks, the past week’s cryptocurrency news set new records for jaw-droppers.It began with Elon Musk’s highly anticipated appearance as host on “Saturday Night Live.” Dogecoin owners watched hoping that the “Dogefather” would further propel the digital currency that had soared this year from less than a penny to 74 cents before he took the stage.What they got instead was a skit in which he laughed after calling the coin a “hustle.” Since then, the Shiba Inu-branded coin created as a joke has lost almost half of its value.Dogecoin wasn’t the only canine-themed coin to take a tumble.Shiba Inu coin -- yes, a meta joke about the joke that is Dogecoin -- soared earlier in the week as it was added to exchanges like OKEx and Binance. It and other Dogecoin imitators’ popularity reached such heights that transaction fees on the Ethereum network hit an all-time high, according to CoinDesk.The rally faded quickly. The cryptocurrency plunged Wednesday after the Wall Street Journal reported that Ethereum creator Vitalik Buterin donated more than $1 billion of the coin to a charity that is fighting the spread of Covid-19 in India.Then that night, Musk struck again. He announced that Tesla Inc. would no longer accept Bitcoin as a form of payment for its cars. In a tweet, Musk said that the carmaker was “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”While his tweet left Bitcoin holders wondering what spurred the change -- the facts of the coin’s energy profile hadn’t changed since Tesla announced in March that it would accept it as payment -- the market reacted swiftly. Bitcoin plunged from nearly $57,000 before his flip-flop to $46,000 within two hours.Thursday brought some good news for crypto die-hards. Point72, the hedge fund run by billionaire New York Mets owner Steve Cohen, was set to make a sizable move into the market. Bitcoin gained 2.5% following the news.The rally didn’t last long.Tether, the crypto stablecoin that says it’s backed one-for-one by fiat currencies, released a reserves breakdown for the first time that showed a large portion in unspecified commercial paper. The company has faced questions over both its reserves and whether it was used to manipulate cryptocurrency prices. In February, Tether settled a legal dispute with the New York Attorney General’s Office and paid a fine of $18.5 million.After that, reports surfaced that Colonial Pipeline Co. paid nearly $5 million in untraceable cryptocurrency to the hackers that infiltrated the company’s network and forced the shutdown of its infrastructure, setting off widespread gasoline shortages up the U.S. eastern seaboard.At about the same time, Bloomberg reported that Binance Holdings Ltd., the world’s biggest cryptocurrency exchange, was under investigation by the Justice Department and Internal Revenue Service in relation to possible money-laundering and tax offenses.News of the investigation sent Bitcoin and Ethereum, the two largest cryptocurrencies, down by more than 7% each as fears were stoked about the Biden administration taking a tougher approach toward an industry that has largely operated outside of the gaze of regulators.Then at 4:00 p.m. New York time, Coinbase Global, Inc., the biggest U.S. crypto exchange, reported first-quarter earnings. Its revenues fell just short of consensus estimates and the company projected flat user growth. Coinbase also plans to offer Dogecoin trading on its platform. The exchange’s shares fell as much as 6.5% in after-hours trading before recovering.Friday in Asia is already bringing further drama, beginning with more comments from Musk. The billionaire in a tweet said he “strongly” believes in crypto but that “it can’t drive a massive increase in fossil fuel use, especially coal.”Not long after, he followed up with another post saying that he’s working with Dogecoin “devs to improve system transaction efficiency,” describing the effort as “potentially promising.”(Updates with more comments from Musk in the penultimate paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Three asset classes that will help you beat the inflation heat or at best help you hedge the growing risk at a time when global inflationary pressures are looming as major economies recover from the COVID-19 pandemic.
(Bloomberg) -- First they struck California, then Texas. Now blackouts are threatening the entire U.S. West as nearly a dozen states head into summer with too little electricity.From New Mexico to Washington, power grids are being strained by forces years in the making — some of them fueled by climate change, others by the fight against it. If a heat wave strikes the whole region at once, the rolling outages that darkened Southern California and Silicon Valley last August will have been previews, not flukes.“It’s really the same case in different parts of the West,” said Elliot Mainzer, chief executive officer of the California Independent System Operator, which runs most of the state’s grid. “It’s revealed competition for scarce resources that we haven’t seen for some time.”The specter of blackouts highlights a paradox of the clean-energy transition: Extreme weather fueled by climate change is exposing cracks in society’s move away from fossil fuels, even as that shift is supposed to rein in the worst of global warming. States shuttering coal and gas-fired power plants simply aren’t replacing them fast enough to keep pace with the vagaries of an unstable climate, and the region’s existing power infrastructure is woefully vulnerable to wildfires (which threaten transmission lines), drought (which saps once-abundant hydropower resources) and heat waves (which play havoc with demand).On Wednesday, California's grid managers warned that while they're better positioned than last summer, the risk of power shortages during extreme heat remains a clear possibility. Wildfires, already getting started after a dry winter, could compound the danger if they threaten transmission lines. “We are headed to yet another very dangerous fire year,” U.S. Agriculture Secretary Tom Vilsack said during a briefing Thursday. “We're seeing a higher level of risk and an earlier level risk.” For many, California’s power crisis in 2020 was the first indication of how serious the regional power shortfall had become. While the blackouts highlighted the state’s reliance on solar power — a resource that ebbs in the evening just as demand picks up — an equally significant problem was California’s dependence on imported electricity. Utilities routinely source power supplies from out of state, drawing electricity across high-voltage transmission lines to wherever it’s needed. But last summer, neighboring states coping with the same heat wave as California were straining to keep their own lights on, and imports were hard to come by.This year, that dynamic is playing out on a larger scale. Across the West, states have grown dependent on importing power from one another. That works fine in temperate weather, when electricity demand is relatively low. But it's a problem when a widespread heatwave blankets the entire region. The Western Electricity Coordinating Council, which oversees electricity grids throughout the western U.S. and Canada, estimates that without imports, Nevada, Utah and Colorado could be short of power during hundreds of hours this year, or the equivalent of 34 days. Arizona and New Mexico could be short for enough hours to total 17 days, according to a report by the organization that looked at worst-case scenarios to help states develop plans to head off potential outages.“It’s no longer necessarily a California problem or a Phoenix problem,” said Jordan White, vice president of strategic engagement for the group, known as WECC. “Everyone is chasing the same number of megawatts.” While blackouts aren’t a guarantee in any region, traders are already betting on supply shortages and sending power prices soaring throughout the West. At the heavily traded Palo Verde hub in Arizona, prices have nearly quadrupled since last summer’s outages, while the Pacific Northwest’s Mid-Columbia hub has tripled.“We are already seeing record-breaking prices across the West, some of which can be attributed to a fear factor being priced in,” said JP McMahon, a market associate for Wood Mackenzie. “Last year was a bit of a wake-up call.”The reasons behind the shortfall are two-fold: Climate change is making it harder to forecast demand for electricity while the shift to clean energy is straining power supplies.Where utilities and grid managers were once able to rely on predictable consumption patterns season to season — more air conditioner use in August, less in October — they’re now reckoning with record-hot summers and historic winter storms that cause great, unexpected surges in demand.“It’s becoming challenging to take out the crystal ball to know with any level of certainty how hot it it’s going to be,” White said.At the same time, older coal and gas plants capable of providing power 24 hours a day are being pushed out by climate change regulations and their own dwindling profitability. In the West, power generation from such plants slipped 6% from 2010 through 2018, according to WECC. While wind and solar capacity have more than tripled in the region, the output from those resources varies by the hour, making them harder to rely on during an unexpected demand crunch. Massive batteries can help make up the difference, but their installation is just beginning.It’s a global phenomenon. Sweden this summer is bracing for power outages and curbing electricity exports after nuclear retirements have left the country with too little spare capacity to balance big swings in demand. In China last winter, even a surplus of coal plants couldn’t keep the lights on during a severe cold blast.At this point, no subregion in WECC’s coverage area generates enough electricity to meet its own needs during periods of high demand; they all rely on imports to avoid outages.In the aftermath of the California crisis, utilities have been signing up contracts for more emergency power supplies and are trying to make sure they aren’t relying on the same suppliers as everyone else. Some entities, including the Imperial Irrigation District of Southern California are working to curb their reliance on imports. But it’s not clear that all utilities in the highest-risk areas plan to do much differently. The situation is, if not dire, getting close. Temperatures in the West are expected to be above average through the summer, with the worst heat slamming the Southwest. More than 84% of land in the 11 Western states is gripped by drought.Following last summer’s outages, California is among the best positioned going into summer. The state is plugging roughly 1,500 megawatts of batteries into the grid, has postponed the retirement of several aging gas plants and raised the price cap on power trades to incentivize imports if outside supplies are necessary and available. Even if imports are readily available for those that need them, there’s no guarantee that transmission lines will be able to carry those electrons where they need to go. Extreme weather can take out the high-voltage conduits that stitch the Western states together, and wildfires are notorious for knocking out transmission lines. Although it received little attention at the time, a major transmission line in the Pacific Northwest that suffered damage in a storm last spring limited power flows into California throughout the summer energy crisis.Energy consultant Mike Florio, who used to sit on the board of California’s grid operator, said other states can learn from the West’s dilemma. They should keep a variety of resources as they decarbonize, learning how to balance the daily rhythms of solar and wind, and not move too quickly to shutter old gas-burning plants that can provide power in a pinch.“We forget that we’re still learning a lot about how to run a system like this,” Florio said. “We probably want to keep our existing gas capacity, at least in reserve. It may be used less, but something that’s already built is cheap insurance.”(Adds quote from U.S. agriculture secretary in sixth paragraph. )For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The Bank of Canada is closely monitoring recent gains in the nation’s currency, to ensure the appreciation doesn’t create headwinds for the nation’s economic outlook, according to the central bank’s head.At a press conference Thursday, Governor Tiff Macklem said the recent appreciation reflects in part higher commodity prices, which are good for the nation’s economy. Still, a continuation of the gains could begin to pose a risk to the central bank’s most recent forecasts released last month, which assumed an exchange rate of $0.8 per Canadian dollar.The Canadian dollar is up 4.9% so far this year, the best performing major currency. It weakened after Macklem’s comments, falling to C$1.2179 per U.S. dollar, or $0.8211 per Canadian dollar at 1:12 p.m. in Toronto trading.“If it moves a lot further that could have a material impact on our outlook and it’s something we’d have to take into account in our setting of monetary policy,” Macklem said Wednesday. “If the dollar were to continue to move -- particularly if its not reflecting good developments for Canada -- that could become more of a headwind on our export projection.”The Canadian dollar has been tracking resource prices higher this year. The Bank of Canada commodity price index -- a gauge that tracks movements of commodities produced in the country -- has hit the highest since 2014 after gaining 30% so far this year. Excluding energy, the index is at an all-time high.But the currency also appears to have gotten a lift from Macklem’s messaging, after the Bank of Canada last month accelerated the timetable for a possible interest-rate increase and pared back its bond purchases.“Macklem only said that if the currency were to appreciate absent fundamental reasons, then they’d be more concerned about competitiveness implications but that so far that’s not the case,” Derek Holt, an economist at Bank of Nova Scotia, said by email.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Binance Holdings Ltd. is under investigation by the Justice Department and Internal Revenue Service, ensnaring the world’s biggest cryptocurrency exchange in U.S. efforts to root out illicit activity that’s thrived in the red-hot but mostly unregulated market.As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business, according to people with knowledge of the matter who asked not to be named because the probe is confidential. Led by Changpeng Zhao, a charismatic tech executive who relishes promoting tokens on Twitter and in media interviews, Binance has leap-frogged rivals since he co-founded it in 2017.The firm, like the industry it operates in, has succeeded largely outside the scope of government oversight. Binance is incorporated in the Cayman Islands and has an office in Singapore but says it lacks a single corporate headquarters. Chainalysis Inc., a blockchain forensics firm whose clients include U.S. federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange.“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion,” Binance spokeswoman Jessica Jung said in an emailed statement, while adding that the company doesn’t comment on specific matters or inquiries. “We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity.”Spokespeople for the Justice Department and IRS declined to comment.U.S. ConcernsU.S. officials have expressed concerns that cryptocurrencies are being used to conceal illegal transactions, including theft and drug deals, and that Americans who’ve made windfalls betting on the market’s meteoric rise are evading taxes. Such worries have been a hindrance to the industry going mainstream, even as Wall Street increasingly embraces Bitcoin and other tokens amid a global investing frenzy.Read More: How Bitcoin Is Edging Toward Financial MainstreamThis month’s cyber-attack against Colonial Pipeline Co. that’s triggered fuel shortages across the Eastern U.S. is the latest sign of what’s at stake. Colonial paid Eastern European hackers a nearly $5 million ransom in untraceable cryptocurrency within hours of the breach, Bloomberg News reported Thursday, citing two people familiar with the matter.Bitcoin losses accelerated Thursday after Bloomberg reported the investigation into Binance. While the Justice Department and IRS probe potential criminal violations, the specifics of what the agencies are examining couldn’t be determined, and not all inquiries lead to allegations of wrongdoing.The officials involved include prosecutors within the Justice Department’s bank integrity unit, which probes complex cases targeting financial firms, and investigators from the U.S. Attorney’s Office in Seattle. The scrutiny by IRS agents goes back months, with their questions signaling that they’re reviewing both the conduct of Binance’s customers and its employees, another person said.The U.S. Commodity Futures Trading Commission has also been investigating Binance over whether it permitted Americans to make illegal trades, Bloomberg reported in March. In that case, authorities have been examining whether Binance let investors buy derivatives that are linked to digital tokens. U.S. residents are barred from purchasing such products unless the firms offering them are registered with the CFTC.Analyzing TransactionsZhao has said Binance closely follows U.S. rules, blocks Americans from its website, and uses advanced technology to analyze transactions for signs of money laundering and other illicit activity. Last year, the firm warned that U.S. residents would have their accounts frozen if they were found to be trading, crypto trade publications have reported.The inquiries follow a Chainalysis report on criminal transactions involving digital tokens. The firm tracked Bitcoin worth $2.8 billion that it suspects crooks moved on to trading platforms in 2019. Chainalysis determined that roughly 27%, or $756 million, wound up on Binance. Binance responded by saying it adheres to all anti-money laundering regulations in the jurisdictions in which it operates and works with partners like Chainalysis to improve its systems.In the U.S., authorities have been cracking down on exchanges for flouting laws that are meant to prevent financial crimes, with officials citing the platforms use by terrorists and hackers. Tax violations have also been a priority, with the government recently winning a court order as it seeks to unmask U.S. clients of Kraken, a San Francisco-based exchange.Read More: Crypto’s Anonymity Has Regulators Circling After Colonial HackIn October, federal prosecutors in Manhattan announced charges against the founders of Seychelles-based BitMEX, accusing them of violating the Bank Secrecy Act by permitting thousands of U.S. customers to trade while publicly claiming to restrict their access. The claims included failing to register as a futures merchant with the CFTC and not having adequate anti-money laundering controls. Three of the BitMex officials pleaded not guilty and a trial has been scheduled for March 2022. One remains at large.Washington PresenceWith the U.S. circling, Binance has stepped up its presence in Washington and retained a former Treasury Department official and top white-collar defense lawyers to represent it in legal cases and matters being reviewed by regulators. In March, the firm tapped former U.S. Senator Max Baucus, a Montana Democrat, to advise it on policy and government relations.Read More: Crypto Lobby Forms to Shake Reputation as Criminals’ CurrencyIn September 2019, Binance partnered with a firm called BAM Trading Services Inc., which launched Binance.US to cater to American clients. Brian Brooks, who was a top banking regulator when he led the Office of the Comptroller of the Currency during the Trump administration, became chief executive officer of Binance.US this month.Amid the hiring blitz, the company has popped up in U.S. cases tied to criminal activity. In February, two Florida men were charged with running an online fentanyl trafficking operation, with one of them accused of depositing the proceeds in a Binance account. That same month, the Justice Department sought the forfeiture of cryptocurrency worth $450,000 traced from ransomware attacks that hit several U.S. companies to a Binance account held by a 20-year-old Ukrainian national. The government didn’t accuse Binance of wrongdoing in either enforcement action.Disguising LocationsAlong with the CFTC, the Justice Department is likely to examine steps that Binance has taken to keep U.S. residents off its exchange. One person familiar with Binance’s operations said that prior to the establishment of Binance.US, Americans were advised to use a virtual proxy network, or VPN, to disguise their locations when seeking to access the exchange.Jung, the Binance spokeswoman, said the exchange has never encouraged U.S. residents to use VPNs to get around its rules, as doing so would be something “that has always been contrary to our company’s principles.” In January, Zhao tweeted that Binance’s security systems block Americans even if they try to connect through one of the networks.“We have implemented strong access controls that have been tested via external audit and are under continuous review and evaluation by Binance to ensure that the appropriate restrictions are in place and are effective,” Jung said.(Updates with Bitcoin falling in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Chinese corporations are defaulting on local bonds at the fastest pace on record, as authorities ramp up efforts to introduce more financial discipline and transparency in the world’s second-largest debt market.Firms so far this year have failed to make payments on 99.8 billion yuan ($15.5 billion) of onshore bonds, according to Bloomberg-compiled data. While 2021 is set to be the fourth straight year the 100 billion yuan level has been topped, it previously hadn’t happened before September. For all of 2015, when China’s stock market crashed, defaults totaled just 8.9 billion yuan.Missed payments are running at a record pace this year, following the late 2020 defaults of some state-linked firms which affirmed convictions that authorities in China are increasingly willing to not bail out weak firms. The recent tumult surrounding bad debt manager China Huarong Asset Management Co. raised fresh questions about support for central state-owned firms, even as the risk of contagion remains relatively contained. Signs of a maturing credit market have helped Chinese officials’ effort to refocus on financial risks in areas like asset prices and debt levels.Ultimately, more defaults are part of a healthy credit market with a genuine high-yield onshore sector and adequate pricing of risk, according to Jean-Charles Sambor, head of emerging-market debt at BNP Paribas Asset Management.“Policy makers are willing to draw a line in the sand between what is systemic and what is not,” he said. “They want to inject more credit risk in the system and change the mindset of investors, forcing them to look more at stand alone credit risk rather than speculating on the likelihood of support from the central government.”Delinquencies are crucial in helping develop a mature and efficient market that improves transparency, reduces moral hazard and prompts a reassessment of risk. Increased financial discipline for companies and improved credit ratings serves Beijing’s longer-term goal of attracting more foreign cash to the country’s capital markets-- especially from more stable sources like pension funds and insurers instead of hot money flows.Payment failures also help deepen regulation, as well as create a more standardized process and better assumptions in terms of recovery rates, Sambor said. “This short-term pain will translate into medium-term gain.”China’s central bank, in its first-quarter monetary report published Tuesday, urged establishing a mechanism that holds local party and government leaders accountable for major financial risks.Developer DefaultsReal estate firms are leading this year’s surge in onshore bond defaults, as authorities tighten access to funding in the debt-laden sector. Developers have made up about 25% of those missed payments with the government’s “three red lines” policy increasingly weighing on these borrowers. Payment failures at China Fortune Land Development Co. and Tianjin Real Estate Group Co. topped 10 billion yuan in the first quarter, according to Bloomberg-compiled data. They also did for chipmaker Tsinghua Unigroup Co. and Hainan Airlines Holding Co.Defaults on offshore bonds have also ramped up -- logging a combined $3.7 billion in January and February but none since, according to Bloomberg-compiled data. Still, that’s nearly half of 2020’s full-year $8.3 billion.(Adds quote in the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Katie Stockton charts dogecoin and bitcoin technicals
(Bloomberg) -- Brookfield Asset Management Inc. said it plans to raise $100 billion for its next round of flagship funds after it delivered first-quarter earnings buoyed by share sales and asset divestitures.The Toronto-based alternative asset manager sold $13 billion of assets during the quarter, resulting in $6.4 billion in profit for Brookfield and its clients, the company said Thursday. Brookfield’s share amounted to $1.8 billion. Chief Executive Officer Bruce Flatt called it an “exceptional” result.“In the current low interest-rate environment, demand for the type of assets we own is strong,” Flatt said in a letter to shareholders. “Many of our businesses are critical infrastructure assets that are underpinned by long-dated, contracted or regulated cash flows. With the capital markets being highly accommodative, we have been monetizing assets.”During the quarter, Brookfield took public its Shoals Technologies Group Inc. solar products business, sold a life-sciences real estate portfolio and completed two secondary offerings of shares in Graftech International Ltd. It also unloaded a portion of its holdings in Brookfield Renewable Corp. and West Fraser Timber Co., a Canadian firm that’s enjoying the benefit of soaring lumber prices.Flatt said the combination of strong markets and asset sales means there’s enough capital on hand for its planned $6.5 billion privatization of Brookfield Property Partners LP, and the repurchase of its own shares, to soak up some of the new equity being issued in the transaction.Brookfield said it had a record quarter, with its funds from operations reaching $2.8 billion and its distributable earnings hitting $2.5 billion. Total assets under management grew to $609 billion.The company has about $80 billion in capital available, Flatt said in the letter, including $18 billion on its own balance sheet. Brookfield has started raising money for its fourth flagship real estate fund and its new Global Transition Fund, which will focus on environmentally and socially responsible investments.It’s also in the midst of closing a new debt fund and aims to launch new infrastructure and private equity funds in the next 12 months as part of its plan to raise $100 billion across its flagship funds, Flatt said.“The sustained low interest-rate environment combined with institutions’ need to earn returns from alternatives has created a very constructive fundraising environment,” Flatt said.Brookfield remains confident that commercial real estate will rebound as Covid-19 vaccinations take hold. Flatt said he believes many people survived in the short term without an office, but in the long run most companies won’t prosper without the interaction that comes from people working in close proximity to one another.“The tone in the market for commercial property assets is very negative at the moment. Real estate stocks have been trading as though no company will ever occupy an office again, no person will ever set foot in a store and nobody will ever travel again, for either business or leisure,” Flatt wrote. “We do not believe that any of these will be the case, and so we are investing accordingly.”‘Outsized Gains’Andrew Kuske, an analyst with Credit Suisse, said he expects Brookfield’s transactional activity to accelerate in the back half of 2021 and into 2022.“On balance, the quarter is positive on continued growth in the underlying asset management business along with the validation of past investments with outsized gains being realized -- even with some operating weakness,” Kuske said in a note to clients.Flatt said he believes there’s an opportunity to pick up infrastructure assets because governments have borrowed heavily to launch stimulus programs to combat the pandemic. That could open an opportunity for government infrastructure assets to come to market to raise funds.Brookfield shares were up 1.2% to $45.28 at 11:59 a.m. in New York.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Ant Group Co.’s profit rose to $3.4 billion in the December quarter after Chinese regulators thwarted its record initial public offering and told it to scale back its sprawling business.Billionaire Jack Ma’s fintech giant contributed nearly 7.2 billion yuan to Alibaba Group Holding Ltd.’s earnings, a company filing showed Thursday. Based on Alibaba’s one-third stake in Ant, that translates to 21.8 billion yuan ($3.4 billion) in profit, up 50% from 14.5 billion yuan in the previous three months. Ant’s earnings lag one quarter behind Alibaba’s. Ant declined to comment.The tally underscores the earnings powers Ant boasted before authorities demanded China’s largest fintech company fold its financial business into a holding company, curtailing its growth prospects. Regulators have issued a battery of proposals that threaten to curb Ant’s dominance in online payments and scale back its expansion into consumer lending and wealth management.While Chairman Eric Jing has promised staff that the company will eventually go public, it’s likely to be worth much less than before the crackdown that saw the IPO halted in November. Fidelity Investments halved its valuation estimate for Ant to about $144 billion in February, compared with $295 billion assigned in August.Ant isn’t alone in facing the clampdown. The government imposed wide-ranging restrictions on the financial divisions of 13 companies including Tencent Holdings Ltd. and ByteDance Ltd. Units of JD.com Inc., Meituan and Didi Chuxing were also among companies summoned to a meeting where regulators handed out stricter compliance requirements in April.The company’s affiliate Alibaba reported its first loss in nine years, vowing to hike spending for expansion next year in technology and community commerce.(Updates with Alibaba profit details in last paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The S&P 500 fell initially during the Globex session on Thursday but has turned around to show stability at the 50 day EMA.
Earlier, the three major indexes rebounded after declining sharply earlier this week.
(Bloomberg) -- When it comes to investing their own money to tackle climate-change or promote better corporate governance, European Central Bank officials are decidedly average.Members of the ECB’s Governing Council and Supervisory Board keep nearly half of their private investments in assets that rank “average” or “laggard” on a sustainability scale devised by MSCI Inc., according to an analysis by Bloomberg News of publicly available declarations of interest.A quarter of the fund or equity securities owned by the policy makers are considered “leaders” in environmental, social and governance criteria, or ESG. More than a quarter were unrated.The results highlight the challenge of shifting the financial industry toward greater action on climate change and other goals such as corporate gender balance or labor rights, even by committed professionals. The process of divesting from companies that harm the environment or assessing compliance with social targets is messy and takes time -- as evidenced by Bill Gates’ long exit from fossil fuels.ECB President Christine Lagarde has voiced support for the European Union’s efforts to transition to a more climate-friendly economy and has promoted gender parity in the workplace since taking over leadership of the institution in 2019.“The shift to net-zero emissions, together with an adequate digital backbone, will require major investments across Europe in technology, infrastructure and networks,” Lagarde said on May 6, while calling for more regulatory action to support sustainable finance.An ECB spokesman declined to comment on the officials’ portfolios.Ratings that assess resilience to environmental, social or governance risks can offer indications on sustainability for investors, but they are also relatively new and suffer from a lack of comparable data. Lagarde and other officials have said that the difficulty of measuring climate and other risks impedes the use of such ratings to measure change in the industry.Own PortfolioWhile the ECB is still debating to what extent it can justifiably integrate climate goals into its monetary policy, officials have pledged to increase exposure to green investments in the “own funds” portfolio it uses to generate income for operating expenses.When it comes to officials’ private investments, the disclosures reveal few securities that directly tackle the range of concerns embodied in ESG ratings. MSCI’s metrics measure the resilience of companies and funds to long-term, industry-specific ESG risks, with ratings ranging from leader (AAA, AA), average (A, BBB, BB) to laggard (B, CCC).For instance, Executive Board member Isabel Schnabel holds 11 assets that fall into MSCI’s ESG “leader” category -- including shares in Microsoft Corp. and SAP SE -- and 27 that are rated average.Schnabel has one of the most extensive portfolios of all the Governing Council members, and has talked about the need to diversify investments. In a podcast released on May 12, she also said her thinking about how central banks should deal with with the environmental threat has changed.“Once one appreciates how important the financial sector is for this green transition, one has to admit that we as central bankers have to think about our role in the fight against climate change,” she said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Russia’s debt chiefs are working on a mechanism that will allow the government to retire costly ruble bonds sold to raise emergency funds during the coronavirus pandemic.“The goal is to restore the right structure of the portfolio so that in the next crisis, government debt can be used to conduct an active economic policy again,” Deputy Finance Minister Timur Maksimov said in an interview. The ministry is considering possible funding sources for the buybacks, he said, without elaborating on the timing or the amount of money that might be earmarked.Russia doubled its borrowing plan last year to help shield the economy from the pandemic as oil prices collapsed and the U.S. weighed sanctions on ruble debt sales. In a series of blowout auctions dominated by local banks, the Finance Ministry sold floating-rate bonds offering a coupon that climbs with the central bank’s key rate.Now that inflationary pressures are mounting and the Bank of Russia is back on a tightening path, Maksimov wants to shift away from debt whose servicing costs are set to rise. Floating-rate bonds now account for about 35% of the ministry’s outstanding local debt, and Maksimov said he wants that level cut back to 15% or 20%.It’s unlikely the ministry will rush to reduce the share, according to Dmitry Dolgin, chief economist at ING Bank in Moscow. He predicts such a target would cost 1 trillion to 2 trillion rubles ($13.5 billion to $27 billion) over a three-year span.President Joe Biden’s administration imposed long-feared sanctions on Russia’s debt markets earlier this year, punishing the Kremlin for U.S. elections meddling and hacking.But the penalties were ultimately judged to be mild because they only bar U.S. investors from buying ruble bonds, or OFZs, on the primary market. Bonds and the ruble have strengthened since the limits were announced.Read More: Goldman, Hedge Funds Hail Russia as Winner in Covid Recovery“The imposed restrictions don’t cover the secondary OFZ market, so we don’t expect the share of non-residents to move far from the current levels,” Maksimov said. “International investor interest, which can’t be satisfied on the primary market, may show up as demand on the secondary market.”Foreigners held around 19% of Russia’s sovereign ruble debt as of April 21. The ministry sold more than 45 billion rubles of notes at debt auctions Wednesday.‘Smooth Flow’“If the market situation allows us to borrow more in advance, we may do so, but we’d work on making the borrowing flow more smoothly,” Maksimov said. “Our weekly needs, taking into account the amount raised, are now at 45 billion to 50 billion rubles.”Having the Finance Ministry stick to that lower weekly volume of sales partly offsets the risks of rising global rates, said Dmitry Polevoy, an analyst at Locko-Invest. At the same time, the potential buybacks are “a definite positive” for the floating-rate notes, he said.International flows into local bonds have been positive so far this month, VTB Capital analysts led by Maxim Korovin wrote in a note Wednesday. About 57 billion rubles left the ruble debt market in the week following U.S. sanctions in April, according to the central bank.Still, the picture for local debt remains far from clear, and Rosbank analysts said the ruble-bond market is “in limbo.”Stabilizing global rates and support from local banks are an argument against selling, they said. But the prospect of further rate hikes, as well as some possible rebalancing before sanctions take effect on June 14 are weighing on the bonds for now.(Updates with analyst estimates in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
In another bearish signal for oil demand, a variant of the coronavirus has swept through India, the world’s third-biggest importer of crude.
Will the man who forecast bitcoin's price rise to $50K last year be heeded or ignored?
(Bloomberg) -- It seems like a pretty basic question: what’s the impact of inflation on stock-market returns?The answer, however, depends on whom you ask and what historical data you think is germane.As economists grapple with whether the U.S. is in store for a prolonged bout of inflation or a mere blip on the chart, equity analysts have turned their attention to answering just what it would mean for the stock market if inflation were to take hold.Strategists at Credit Suisse Group AG led by Jonathan Golub make the case that over the last year, rising inflation expectations -- measured by changes in the five-year breakeven rate -- have coincided with positive returns for stock indexes.“In contrast to the market’s recent pullback, stock prices tend to increase in periods of higher inflation,” the strategists wrote in a note Thursday.In the S&P 500 Index, every sector has, on average, gained on days when concerns over inflation were also on the uptick, they note. The biggest beneficiaries have been energy and financial companies, while the staples and utility sectors saw the most muted returns.Leuthold Group reaches a different conclusion based on the historical relationship between the U.S. consumer price index and the price-earnings ratio for the MSCI U.S. Index.“Equity investors might feel it’s too hot, as higher inflation has historically been associated with lower equity valuations,” Leuthold’s Chun Wang wrote in a Thursday report.But that finding came with a caveat.“Admittedly, this relationship has weakened over the past two years but, given the heady valuation level today, it wouldn’t take a big increase in inflation to trigger a derating move.”A prior research note from the firm postulated that such a move could translate to a fall of 37% for the S&P 500 Index if its multiples to sales and earnings return to their mean levels since 1995.Ultimately, the answer might lie not in whether inflation appears, but in the extent to which it manifests, said Keith Lerner, chief market strategist at Truist Advisory Services.“Some inflation is fine for the overall equity market,” Lerner said. “If you have some inflation and it’s not moving at too rapid of a pace, companies can pass along costs, there’s not sticker shock for the consumer. Yes, some inflation is healthy, but if it gets too hot too fast, there are concerns.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Singtel, whose biggest shareholder is state investor Temasek Holdings, also said it expects to report full year net exceptional losses of S$1.21 billion ($907 million). Singtel has been trying to diversify for years amid slowing growth in its traditional carrier business. It bought Amobee for $321 million in 2012 and Trustwave for $770 million in 2015.
(Bloomberg) -- Fisker Inc.’s existing agreement to develop an electric vehicle with Foxconn Technology Group will now include a factory in the U.S., the companies said in a statement Thursday.The joint project -- codenamed Project PEAR -- is targeting a start of production in the U.S. by the fourth quarter of 2023. The companies said they’re considering multiple sites around the world to support eventual global manufacturing capacity of 250,000 units a year. The partners plan to unveil a prototype of their jointly developed car later this year.Los Angeles-based Fisker’s shares rose as much as 22% to $12.13 in late trading in New York. The stock is down 32% this year through Thursday’s close. Hon Hai Precision Industry Co., the main listed arm of Foxconn, is up 12% for the year in Taipei.Electric vehicles have risen in prominence in recent months, with everyone from established automakers like Geely to smartphone purveyor Xiaomi Corp. making big investments in the category. Foxconn has an EV platform that will be used to launch two light vehicles in the fourth quarter of this year, Chairman Young Liu said in February. The company has also inked a manufacturing deal with Chinese startup Byton Ltd. and been among a coterie of suppliers and assemblers linked with a potential Apple Inc. car.Read more: IPhone Maker Foxconn to Help Launch Electric Cars This YearFisker is one of a wave of startups to go public via a special purpose acquisition company, or SPAC, and seek a fast-track challenge to Tesla Inc. in the EV market. It’s also the second battery-powered-car venture founded by its namesake founder and chief executive officer, Henrik Fisker, a longtime auto designer. Fisker’s first venture, Fisker Automotive, filed for bankruptcy in 2013.China Tech Giants Bet $19 Billion on Global Electric Car FrenzyUnder the agreement, Fisker and Foxconn will jointly invest in Project PEAR -- short for Personal Electric Automotive Revolution -- with each company taking proceeds if the launch is successful. Foxconn has said it will decide between Mexico and Wisconsin for the site of its first electric-car plant this year. The companies didn’t disclose any specifications of the vehicle they’re developing.The companies said the jointly developed vehicle will be priced below $30,000. Taiwan-based Foxconn, best known for assembling iPhones, is the second major manufacturer with which Fisker has announced a partnership since reaching a deal to go public last year. In October, the EV startup said Magna International Inc. would help it build its debut model. The Ocean electric SUV is scheduled to start production in late 2022 at a Magna facility in Graz, Austria.(Updates with other Foxconn EV projects in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.