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The company has increased its hash rate enough to steal mining share and compensate for the lower Bitcoin mining rewards.
(Bloomberg) -- Elon Musk continued to whipsaw the price of Bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday.The online commentary was the latest from the mercurial billionaire in a week of public statements that have roiled digital tokens. He lopped nearly $10,000 off the price of Bitcoin in hours last Wednesday after saying Tesla wouldn’t take it for cars. A few days earlier, he hosted “Saturday Night Live” and joked that Dogecoin, a token he had previously promoted, was a “hustle,” denting its price. Days later he tweeted he was working with Doge developers to improve its transaction efficiency.Musk’s disclosure in early February that Tesla used $1.5 billion of its nearly $20 billion in corporate cash to buy Bitcoin sent the token’s price to record and lent legitimacy to electronic currencies, which have become more of a mainstream asset in recent years despite some skepticism.His latest dustup with Bitcoin started with a tweet from a person using the handle @CryptoWhale, which said, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him...”The Tesla chief executive officer responded, “Indeed.”The twitter account @CryptoWhale, which calls itself a “crypto analyst” in its bio, also publishes a Medium blog on market and crypto trends.Musk has spent hours Sunday hitting back at several different users on Twitter who criticized his change of stance on Bitcoin last week, a move he said was sparked by environmental concerns over the power demands to process Bitcoin transactions. He said at the time that the company wouldn’t be selling any Bitcoin it holds.An outspoken supporter of cryptocurrencies with cult-like following on social media, Musk holds immense sway with his market-moving tweets. He has been touting Dogecoin and significantly elevated the profile of the coin, which started as a joke and now ranks the 5th largest by market value.Dogecoin is down 9.6% in the last 24 hours, trading at 47 cents late Sunday afternoon, according to data from CoinMarketCap.com.Tesla didn’t immediately respond to an email seeking comment on Musk’s tweet on Sunday.Read More: Elon Musk Just Reopened an Old Wound in the Bitcoin WorldMusk’s Sunday social-media escapades were the latest chapter in one of the zaniest weeks in a crypto world famous for its wildness. For die hards, the renewed slumps in Bitcoin and other tokens have done nothing to deter crypto enthusiasts who say digital coins could many times their current value if they transform the financial system.“We’re looking at the long-term and so these blips, they don’t faze us,” Emilie Choi, president and chief operating officer of crypto exchange Coinbase Global Inc., said last week on Bloomberg TV about the wild swings prevalent in the market. “You’re looking for the long-term opportunity and you kind of buckle up and go for it.”Seat belts were needed by anyone watching the crypto world in the past eight days. Aside from Musk’s antics that sent Doge and Bitcoin on wild rides, a host of other developments pushed around prices.Tether, the world’s largest stablecoin, disclosed a reserves breakdown that showed a large portion in unspecified commercial paper. Steve Cohen’s Point72 Asset Management announced that it would begin trading cryptocurrencies. And a longstanding critique of the space reared its head again: illicit usage.It was reported that the owners of the Colonial Pipeline paid a $5 million ransom in untraceable digital currencies to hackers that attacked its infrastructure, while Bloomberg also 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.But, “for many crypto assets such as Bitcoin and Ethereum, the long-term story has not changed,” said Simon Peters, an analyst at multi-asset investment platform eToro. “This emerging asset class continues to revolutionize many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for crypto assets remain as solid as ever.”Bitcoin was already swinging wildly on the weekend before Musk tweeted. The two days tend to be particularly volatile for cryptocurrencies, which -- unlike most traditional assets -- trade around the clock every day of the week. Bitcoin’s average swing on Saturdays and Sundays so far this year comes in at 4.95%.That type of volatility is owing to a few factors: Bitcoin’s held by relatively few people, meaning that price swings can be magnified during low-volume periods. And, the market remains hugely fragmented with dozens of platforms operating under different standards. That means cryptocurrencies lack a centralized market structure akin to that of traditional assets.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 pandemic is largely to blame for your soaring tax bill.
(Bloomberg) -- Microsoft Corp. conducted an investigation into co-founder Bill Gates’s involvement with an employee almost two decades ago after it was informed in 2019 of his attempt to start a romantic relationship with that person.The board reviewed the matter and held a “thorough investigation” with the help of an external law firm, the software giant said. It didn’t reach a conclusion to the probe because Gates had stepped down before it was completed, Microsoft said.“Microsoft received a concern in the latter half of 2019 that Bill Gates sought to initiate an intimate relationship with a company employee in the year 2000,” Microsoft said in a statement. “A committee of the Board reviewed the concern, aided by an outside law firm, to conduct a thorough investigation. Throughout the investigation, Microsoft provided extensive support to the employee who raised the concern.”Dow Jones earlier reported that Microsoft’s directors found Gates’ involvement with the female employee to be inappropriate and decided last year that he had to step down from the board, citing people familiar with the matter who weren’t identified.Microsoft didn’t provide further details on the investigation.The billionaire said in March last year that he was stepping down from the board to devote more time to philanthropy. Gates hasn’t been active in a day-to-day role since 2008, Microsoft said at that time. Gates co-founded the software company in 1975 and served as its CEO until 2000, the same year his foundation was started, and was chairman until February 2014.‘An Affair’A spokeswoman for Gates said his decision to leave the board has nothing to do with the romantic involvement with an employee.“There was an affair almost 20 years ago which ended amicably,” she said, adding that his “decision to transition off the board was in no way related to this matter.”The belated investigation into the affair came at a time that was marked by a groundswell of discussion at Microsoft about the treatment of women and Me-Too conversations in the broader industry. Since 2000, Microsoft had also put in place processes for investigating allegations and overhauled them with the goal of making them stronger, the company said.Intel Corp. Chief Executive Officer Brian Krzanich resigned after the board was informed that he had had a consensual relationship with a subordinate, even though that relationship had ended years before and predated his appointment to the top job at the company. The board conducted investigations internally and via external counsel to confirm the violation of the company’s policies and made the announcement June 2018.Gates and Melinda French Gates announced their divorce earlier this month after 27 years of marriage. Several reports, including those that emerged over the weekend, said she had raised concerns over his dealings with convicted sex offender Jeffrey Epstein.The New York Times had reported in 2019 that Gates had met with Epstein several times, and once stayed late at his New York townhouse. Epstein had died in jail two months prior while awaiting trial on federal charges related to sex trafficking.Gates’s spokeswoman denied the reports. The “characterization of his meetings with Epstein and others about philanthropy is inaccurate,” she said. “The rumors and speculation surrounding Gates’ divorce are becoming increasingly absurd.”While Gates’ dealings with Epstein weren’t a part of the scope of the Microsoft investigation, it was discussed by some board members, according to a person familiar with the matter, who asked not to be identified because the information isn’t public.Stock TransfersThe split also put a spotlight on the Gates fortune, valued at about $144 billion by the Bloomberg Billionaires Index, as well as their foundation.The Bill and Melinda Gates Foundation is the largest of its kind on the planet. With more than 1,600 employees and offices around the world, it has already distributed more than $50 billion since its inception to causes like vaccine development and women’s empowerment.Last week, Cascade Investment, the investment company created by Gates, transferred stock in Deere & Co. to his wife, bringing the total amount she’s received since they announced their divorce to more than $3 billion.The investment vehicle transferred about 2.25 million shares worth about $851 million, according to a regulatory filing. That followed similar disclosures tied to Mexican companies Coca-Cola Femsa and Grupo Televisa and about $1.8 billion of stock in Canadian National Railway Co. and AutoNation Inc.Read More: Gates Divorce Roils World’s Biggest Family Philanthropy EngineFor 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) -- Taiwan stocks slumped, extending their biggest rout in more than a year, as the government tightened restrictions on people and businesses to control its worst outbreak of the coronavirus.The Taiwan Stock Exchange Weighted Index closed the Monday session 3% lower, having slid as much as 4.2%, as authorities urged companies to allow staff to work from home or split locations after reporting a record 206 new local cases Sunday. The benchmark gauge sank 8.4% last week on concern about the impact on growth, the most since March 2020, turning Taiwan stocks into the world’s worst performers so far this month.Taipei City to Close Schools After Surge in Local CasesForced selling may add volatility to Monday’s trading, with the level of margin debt falling by a net NT$5.8 billion ($207 million) on Friday, according to exchange data compiled by Bloomberg. That took the four-day drop in leverage to NT$39.4 billion, showing traders faced margin calls by brokers to cover losses in their stock accounts.The sharp reversal in Taiwan stocks is a warning to highly leveraged investors around the world. The Taiex was the world’s best performing equity gauge in the three years through April, surging almost 80% in U.S. dollar terms, as a seemingly never-ending rally in tech shares pulled in retail investors.“In light of rising concerns over the pandemic, we expect more volatility ahead, and advise to stick to defensive names with low P/E and high dividend yield,” said Patrick Chen, CLSA’s Head of Taiwan Research. His team’s top picks include Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co.Travel and consumption-linked names were among the big losers in the market on Monday. Restaurant operators Gourmet Master Co. and Wowprime Corp. plunged almost 10% each, while shares of Formosa International Hotels Corp. and The Ambassador Hotel slumped at least 4% each.Taipei City will close high schools, elementary schools and kindergartens for two weeks through May 28 to prevent the pandemic from spreading, Mayor Ko Wen-je said at online briefing. Taiwan added 333 local Covid-19 cases on Monday, a fresh record.“Investors are worried as school closures could mean the virus is spreading fast,” said Edward Chen, chairman of First Capital Management. “However, there’s no need to panic as the Taiwanese people are vigilant in Covid prevention. It would be another story though if factory production lines are forced to stop.”Taiwan and Singapore are among the Asian regions that have seen a fresh wave of Covid-19 cases in recent days, and both have tightened virus-related restrictions. Singapore’s stock benchmark slid as much as 0.9% on Monday before erasing the loss.Taiwan’s stock exchange urged investors not to overreact. The latest development in Covid fighting is relatively controllable, and the fall in stock market last week should be already priced in the situation, the bourse said in a statement issued late Sunday night, adding that stabilizing measures will be adopted if the market becomes irrational.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.
Shares of Kraft Heinz are now trading at a 52-week high following praise from Warren Buffett.
The relief bill the president signed in March is giving states money for direct payments.
Automaker Stellantis and iPhone assembler Foxconn said on Monday they would announce a strategic partnership on Tuesday. Last year then Fiat Chrysler, now part of Stellantis, said it planned to set up a joint venture with Hon Hai Precision Industry, Foxconn's parent company, to build electric cars and develop internet-connected vehicles in China. Fiat Chrysler merged with France's Peugeot maker PSA at the beginning of the year to create Stellantis, the world's fourth-largest carmaker, to relaunch in China as one of its main goals.
(Bloomberg) -- Adani Green Energy Ltd., majority-owned by Indian billionaire Gautam Adani, is in advanced talks to acquire privately-held SB Energy Holdings Ltd., according to people familiar with the matter.A deal could value SB Energy, owned by SoftBank Group Corp. and Bharti Enterprises Ltd., at more than $650 million, said one of the people, who asked not to be identified as the information is private. Adani Green is exploring a buyout of the renewable energy company through an all-stock deal, another person said.Shares in Adani Green climbed as much as 5% on Monday, touching their highest level in more than a month. They have risen nearly 400% in the past year, giving the company a market value of about $24 billion.The advanced talks come after negotiations with Canada Pension Plan Investment Board to buy SB Energy from SoftBank broke down, one of the people said.An announcement could come in coming weeks, the people said. Discussions could still be delayed or fall apart, they added. A representative for SoftBank declined to comment, while representatives for Adani Green and Bharti Enterprises didn’t immediately respond to requests for comment. A spokesperson for CPPIB said they continue to look for opportunities for new investments in India, including in the renewables sector.A deal could help Adani Green to reach its planned generation capacity of 25 gigawatts by 2025. The company’s existing renewable energy portfolio has 15.4 gigawatts from across 11 states in India, according to its website.SB Energy has 4,855 megawatts of renewable capacity in India, including operational capacity of 1,400 megawatts, as of March 2021, according to a report from Care Energy. (Updates with CPPIB negotiations in fourth paragraph and context in sixth and seventh paragraphs.)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) -- Masaru Tange says the strategy that turned his company into one of Japan’s best-performing stocks may be surprising: He buys smaller firms and boosts their workers’ pay.Tange’s Shift Inc., a software tester, acquires other businesses near the bottom of the industry supply chain and raises their engineers’ salaries. He says he’s able to do this and still charge competitive prices by cutting out layers of companies that serve as middlemen in the outsourcing process. And having more workers leads to higher sales.Shift’s shares have risen more than 5,300% since it went public in 2014, the second-best performance on Tokyo’s benchmark stock index. The company’s market capitalization has surged to about $2.3 billion, pushing the value of Tange’s 33% stake to about $745 million.Tange, 46, says his business model is an attempt to remove inefficiencies in Japan’s software industry, where layers of subcontractors take cuts on orders before passing the work to another company below. It’s also, he says, a break from the M&A strategy of buying a business and looking to reduce costs.“I have a strong urge to rescue these young employees,” Tange, Shift’s founder, president and chief executive officer, said in an interview. “I want to create a fair working environment through M&A.”Tange grew up in what he describes as an ordinary family in Hiroshima in southwestern Japan, where both his parents were civil servants. He established Shift in 2005 after majoring in mechanical engineering and spending more than five years working for a consulting firm.Shift started out advising companies on how to improve profits. In 2009, it entered the software testing business.Tange said he wanted to change engineers’ perception that software testing was a second-rate job, including by paying them more money.For example, for a service where the market price was 2 million yen ($18,320), Shift would charge 1.5 million yen. This would enable it to win customers. At the same time, it would raise the amount paid to the engineer to about 800,000 yen from 500,000 yen. It could do so, Tange said, by getting rid of middlemen.Shift acquired Yusuke Sato’s company in 2016. Since then, the software developer says his salary has jumped by more than 70%.“Joining Shift was a huge turning point in my career,” Sato said.Shift has 3,308 engineers as permanent employees as of the end of February, up more than 14-fold from 228 at the end of November 2015. The company acquired at least 14 firms during that period.Increasing engineers leads directly to revenue growth because it enables the company to do more business, according to Go Saito, an analyst at Credit Suisse Group AG who initiated coverage on the stock in February with an outperform rating.“Sales can be derived by multiplying the number of engineers and the unit price for engineers,” Saito wrote in a report that month. “The company has already created a framework for the skills development of engineers, enabling it to cultivate high-quality human resources.”Revenue rose to 28.7 billion yen in the 12 months ended August 2020, more than triple the level three years earlier. Profit increased to 1.6 billion yen, compared to 208 million yen three years before. Shift forecasts that sales will jump to a record 45 billion yen this fiscal year.Software engineers are underpaid in Japan compared to the U.S. and there’s a shortage of them, according to Saito. That’s one reason why Shift’s model of outsourcing software testing works, he said.“We’re the biggest in Japan in this area,” Tange said. “I do see revenue reaching 100 billion yen,” he said, referring to the company’s goal for the fiscal year ending August 2025.Shift’s soaring shares haven’t been immune to pullbacks. They’ve fallen about 22% from a record in October as investors sold high-growth technology stocks. Even after the drop, the company trades at about 87 times estimated earnings.For veteran investor Mitsushige Akino, the stock may see more volatility in coming months and could fall in market downturns. But its “fundamentals are solid and Shift is making progress on the vision it laid out,” the senior executive officer at Ichiyoshi Asset Management Co. said. “It won’t be strange to see more buying of these types of shares if investors focus once more on growth stocks.”Credit Suisse’s Saito says the key will be whether Shift is able to continue to increase its number of engineers.Whether that will happen remains to be seen, but Tange, at least, isn’t short of confidence.“We’re just getting started,” he said.(Updates numbers throughout)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 payments will reach households raising more than 65 million children, according to senior administration officials.
Citigroup has promoted Ignacio Gutiérrez-Orrantia, one of its most senior bankers in Madrid, to lead its banking, capital markets and advisory (BCMA) franchise for Europe, the Middle East and Africa, a memo seen by Reuters shows. Gutiérrez-Orrantia, 49, has been at Citi for 17 years and will replace Philip Drury, who is moving to San Francisco to lead the bank's global technology and communications advisory unit. Gutiérrez-Orrantia will join Citi's EMEA operating committee and BCMA senior leadership committees globally while also becoming the senior manager responsible for BCMA for the bank's UK legal entities.
(Bloomberg) -- A year ago, as the pandemic ravaged country after country and economies shuddered, consumers were the ones panic-buying. Today, on the rebound, it’s companies furiously trying to stock up. Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation.Copper, iron ore and steel. Corn, coffee, wheat and soybeans. Lumber, semiconductors, plastic and cardboard for packaging. The world is seemingly low on all of it. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said on a call this month. Clients are “trying to get everything they can because they see high demand,” Jennifer Rumsey, the Columbus, Indiana-based company’s president, said. “They think it’s going to extend into next year.”The difference between the big crunch of 2021 and past supply disruptions is the sheer magnitude of it, and the fact that there is — as far as anyone can tell — no clear end in sight. Big or small, few businesses are spared. Europe’s largest fleet of trucks, Girteka Logistics, says there’s been a struggle to find enough capacity. Monster Beverage Corp. of Corona, California, is dealing with an aluminum can scarcity. Hong Kong’s MOMAX Technology Ltd. is delaying production of a new product because of a dearth of semiconductors. Read More: How the World’s Companies Wound Up in a Deepening Supply Chain NightmareFurther exacerbating the situation is an unusually long and growing list of calamities that have rocked commodities in recent months. A freak accident in the Suez Canal backed up global shipping in March. Drought has wreaked havoc upon agricultural crops. A deep freeze and mass blackout wiped out energy and petrochemicals operations across the central U.S. in February. Less than two weeks ago, hackers brought down the largest fuel pipeline in the U.S., driving gasoline prices above $3 a gallon for the first time since 2014. Now India’s massive Covid-19 outbreak is threatening its biggest ports. For anyone who thinks it’s all going to end in a few months, consider the somewhat obscure U.S. economic indicator known as the Logistics Managers’ Index. The gauge is built on a monthly survey of corporate supply chiefs that asks where they see inventory, transportation and warehouse expenses — the three key components of managing supply chains — now and in 12 months. The current index is at its second-highest level in records dating back to 2016, and the future gauge shows little respite a year from now. The index has proven unnervingly accurate in the past, matching up with actual costs about 90% of the time.To Zac Rogers, who helps compile the index as an assistant professor at Colorado State University’s College of Business, it’s a paradigm shift. In the past, those three areas were optimized for low costs and reliability. Today, with e-commerce demand soaring, warehouses have moved from the cheap outskirts of urban areas to prime parking garages downtown or vacant department-store space where deliveries can be made quickly, albeit with pricier real estate, labor and utilities. Once viewed as liabilities before the pandemic, fatter inventories are in vogue. Transport costs, more volatile than the other two, won’t lighten up until demand does.“Essentially what people are telling us to expect is that it’s going to be hard to get supply up to a place where it matches demand,” Rogers said, “and because of that, we’re going to continue to see some price increases over the next 12 months.”More well-known barometers are starting to reflect the higher costs for households and companies. An index of U.S. consumer prices that excludes food and fuel jumped in April from a month earlier by the most since 1982. At the factory gate, the increase in prices charged by American producers was twice as large as economists expected. Unless companies pass that cost along to consumers and boost productivity, it'll eat into their profit margins.A growing chorus of observers are warning that inflation is bound to quicken. The threat has been enough to send tremors through world capitals, central banks, factories and supermarkets. The U.S. Federal Reserve is facing new questions about when it will hike rates to stave off inflation — and the perceived political risk already threatens to upset President Joe Biden's spending plans. “You bring all of these factors in, and it’s an environment that’s ripe for significant inflation, with limited levers” for monetary authorities to pull, said David Landau, chief product officer at BluJay Solutions, a U.K.-based logistics software and services provider.Policy makers, however, have laid out a number of reasons why they don’t expect inflationary pressures to get out of hand. Fed Governor Lael Brainard said recently that officials should be “patient through the transitory surge.” Among the reasons for calm: The big surges lately are partly blamed on skewed comparisons to the steep drops of a year ago, and many companies that have held the line on price hikes for years remain reticent about them now. What's more, U.S. retail sales stalled in April after a sharp rise in the month earlier, and commodities prices have recently retreated from multi-year highs. Read More: Fed Officials Have Six Reasons to Bet Inflation Spike Will PassCaught in the crosscurrents is Dennis Wolkin, whose family has run a business making crib mattresses for three generations. Economic expansions are usually good for baby bed sales. But the extra demand means little without the key ingredient: foam padding. There has been a run on the kind of polyurethane foam Wolkin uses — in part because of the deep freeze across the U.S. South in February, and because of “companies over-ordering and trying to hoard what they can.”“It’s gotten out of control, especially in the past month,” said Wolkin, vice president of operations at Atlanta-based Colgate Mattress, a 35-employee company that sells products at Target stores and independent retailers. “We’ve never seen anything like this.”Though polyurethane foam is 50% more expensive than it was before the Covid-19 pandemic, Wolkin would buy twice the amount he needs and look for warehouse space rather than reject orders from new customers. “Every company like us is going to overbuy,” he said.Even multinational companies with digital supply-management systems and teams of people monitoring them are just trying to cope. Whirlpool Corp. CEO Marc Bitzer told Bloomberg Television this month its supply chain is “pretty much upside down” and the appliance maker is phasing in price increases. Usually Whirlpool and other large manufacturers produce goods based on incoming orders and forecasts for those sales. Now it’s producing based on what parts are available.“It is anything but efficient or normal, but that is how you have to run it right now,” Bitzer said. “I know there’s talk of a temporary blip, but we do see this elevated for a sustained period.”The strains stretch all the way back to global output of raw materials and may persist because the capacity to produce more of what’s scarce — with either additional capital or labor — is slow and expensive to ramp up. The price of lumber, copper, iron ore and steel have all surged in recent months as supplies constrict in the face of stronger demand from the U.S. and China, the world’s two largest economies.Crude oil is also on the rise, as are the prices of industrial materials from plastics to rubber and chemicals. Some of the increases are already making their ways to the store shelf. Reynolds Consumer Products Inc., the maker of the namesake aluminum foil and Hefty trash bags, is planning another round of price increases — its third in 2021 alone.Food costs are climbing, too. The world’s most consumed edible oil, processed from the fruit of oil palm trees, has jumped by more than 135% in the past year to a record. Soybeans topped $16 a bushel for the first time since 2012. Corn futures hit an eight-year high while wheat futures rose to the highest since 2013.A United Nations gauge of world food costs climbed for an 11th month in April, extending its gain to the highest in seven years. Prices are in their longest advance in more than a decade amid weather worries and a crop-buying spree in China that’s tightening supplies, threatening faster inflation.Earlier this month, the Bloomberg Commodity Spot Index touched the highest level since 2011. A big reason for the rally is a U.S. economy that’s recovering faster than most. The evidence of that is floating off the coast of California, where dozens of container ships are waiting to offload at ports from Oakland to Los Angeles. Most goods are flooding in from China, where government figures last week showed producer prices climbed by the most since 2017 in April, adding to evidence that cost pressures for that nation’s factories pose another risk if those are passed on to retailers and other customers abroad. Across the world’s manufacturing hub of East Asia, the blockages are especially acute. The dearth of semiconductors has already spread from the automotive sector to Asia’s highly complex supply chains for smartphones.Read More: World Is Short of Computer Chips. Here’s Why: QuickTakeJohn Cheng runs a consumer electronics manufacturer that makes everything from wireless magnetic smartphone chargers to smart home air purifiers. The supply choke has complicated his efforts to develop new products and enter new markets, according to Cheng, the CEO of Hong Kong-based MOMAX, which has about two-thirds of its 300 employees working in a Shenzhen factory. One example: Production of a new power bank for Apple products such as the iPhone, Airpods, iPad and Apple watch has been delayed because of the chip shortage.Instead of proving to be a short-lived disruption, the semiconductor crunch is threatening the broader electronics sector and may start to squeeze Asia’s high-performing export economies, according to Vincent Tsui of Gavekal Research. It’s “not simply the result of a few temporary glitches,” Tsui wrote in a note. “They are more structural in nature, and they affect a whole range of industries, not just automobile production.”In an indication of just how serious the chips crunch is, South Korea plans to spend roughly $450 billion to build the world’s biggest chipmaking base over the next decade.Meanwhile, running full tilt between factories and consumers are the ships, trucks and trains that move parts along a global production process and finished goods to market. Container vessels are running at capacity, pushing ocean cargo rates to record highs and clogging up ports. So much so that Columbia Sportswear Co.’s merchandise shipments were delayed for three weeks and the retailer expects its fall product lineup will arrive late as well. Executives at A.P. Moller-Maersk A/S, the world’s No. 1 container carrier, say they see only a gradual decline in seaborne freight rates for the rest of the year. And even then, they don’t expect a return to the ultra-cheap ocean cargo service of the past decade. More capacity is coming in the form of new ships on order, but they take two or three years to build.HSBC trade economist Shanella Rajanayagam estimates that the surge in container rates over the past year could raise producer prices in the euro zone by as much as 2 percent.Rail and trucking rates are elevated, too. The Cass Freight Index measure of expenditures reached a record in April — its fourth in five months. Spot prices for truckload service are on track to rise 70% in the second quarter from a year earlier, and are set to be up about 30% this year compared with 2020, Todd Fowler, a KeyBanc Capital Markets analyst, said in a May 10 note.“We expect pricing to remain elevated given lean inventories, seasonal demand and improving economic activity, all of which is underpinned by capacity constraints from truck production limitations and driver availability challenges,” Fowler said.What Bloomberg Intelligence Says:“Most modes of freight transportation have pricing power. Supply-demand imbalances should help keep rates high, albeit they should moderate for current unsustainable levels as supply chains improve. This is stressing networks, creating bottlenecks in the supply chains and capacity constraints.”--Lee Klaskow, senior analystFor London-based packaging company DS Smith Plc, challenges are coming from multiple sides. During the pandemic, customers rushed to online purchases, raising demand for its ePack boxes and other shipping materials by 700%. Then came the doubling of its supply costs to 200 euros ($243) a ton for the recycled fiber it uses to make its products.“That’s a significant cost” for a company that buys 4 to 5 million tons of used fiber annually, said Miles Roberts, DS Smith’s group chief executive, who doesn’t see the lockdown-inspired web purchasing as a temporary trend. “The e-commerce that has increased is here to stay.”At Colgate Mattress, Wolkin used to be able to order foam on Mondays and have it delivered on Thursdays. Now, his suppliers can’t promise anything. What’s clear is he can’t sustain the higher input costs forever and still maintain quality. “This is kind of a long-term issue,” Wolkin said. “Inflation is coming — at some point, you’ve got to pass this along.”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.
What does a weekend meltdown in bitcoin prices portend for U.S. stocks? Bitcoin (BTCUSD) is supposed to be an asset that isn’t highly correlated with equity markets, or any other traditional asset for that matter, but some analysts have pointed out that the cryptocurrency has traded in closer step with parts of the market amid the recent turbulence in equities as investors attempt to assess the most effective strategies for playing an economy recovering from the worst pandemic in more than a century. In a blog post on Sunday, Mott Capital’s Michael Kramer said that bitcoin’s recent breakdown could signal that risk appetite on Wall Street is in transition — presumably in a bearish direction.
A Swiss parliamentary committee will discuss the fallout from billions of dollars worth of losses at Credit Suisse amid risk-management failures, bringing political scrutiny to bear on the financial sector, a Sunday paper reported. "It's the politicians' turn on the Credit Suisse issue," the SonntagsZeitung quoted Prisca Birrer-Heimo, a Social Democrat member of the lower house's economic affairs committee, as saying ahead of committee hearings set for Monday and Tuesday. Credit Suisse declined to comment on the report.
George Soros reportedly snapped up stocks that took a hit amid the collapse of Archegos Capital Management in March. What Happened: Billionaire George Soros' investment firm Soros Fund Management bought shares of CBS Corporation (NASDAQ: VIAC), DISCOVERY COMMUNICATIONS INC (NASDAQ: DISCA) and Baidu Inc (NASDAQ: BIDU) as these stocks were at a discount after Bill Hwang's Archegos Capital Management collapsed, Bloomberg reports. Soros bought $194 million in ViacomCBS shares and $77 million in Baidu shares, the report said. The firm also bought $46 million worth of Vipshop Holdings Ltd (NYSE: VIPS) shares and $34 million of Tencent Music Entertainment Group's (NYSE: TME) shares. A person familiar with the fund's trading told Bloomberg that the company didn't hold the shares before Archegos' implosion. Why It Matters: Hwang ran a family office that imploded in March and caused massive losses at a few big banks when Archegos couldn't meet margin calls. Archegos had more than $20 billion of capital and total bets exceeding $100 billion. Hwang was very successful with his family office until he began to overutilize leverage, or borrowed money, to chase higher returns in the market. The problem with this strategy comes when investments start to lose money, and the banks lending the investor money begin to get nervous and initiate margin calls. Subsequently, shares of Archegos investments ViacomCBS, Discovery and others temporarily crashed during the Archegos unwinding. Global banks lost nearly $10 billion from the Archegos fallout. Credit Suisse Group AG (NYSE: CS), Nomura Holdings Inc (TYO: 8604) and Morgan Stanley (NYSE: MS) were among the hardest hit. Image Credit: CC BY 2.5, Wikimedia Commons See more from BenzingaClick here for options trades from BenzingaAT&T, Discovery In Talks To Merge Media Assets: Bloomberg© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
An exchange-traded fund driven by artificial intelligence has just loaded up on shares in Tesla — and it has a history of correctly predicting the stock’s price swings.
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Top news and what to watch in the markets on Monday, May 17, 2021.
Elon Musk continued to whipsaw the price of bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.