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Piedmont Lithium, which has an agreement to sell the metal to Tesla, is selling stock to pay for its mine.
All aboard McDonald's stock following its surprising minimum wage hike?
Inflation fears are dogging Wall Street at a time when the U.S. rebound is picking up speed.
(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.
(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.
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) -- 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) -- 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) -- 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
Earlier, the three major indexes rebounded after declining sharply earlier this week.
The S&P 500 fell initially during the Globex session on Thursday but has turned around to show stability at the 50 day EMA.
(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.
In breaking news, inflation accelerated at its fastest pace in more than 12 years for April as the U.S. economic recovery kicked into gear.
(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.
CEO Brian Armstrong said on the company’s Q1 earnings call that it would list coins on the first day that they trade.
In another bearish signal for oil demand, a variant of the coronavirus has swept through India, the world’s third-biggest importer of crude.
(Bloomberg) -- Tesla Inc.’s Chief Executive Officer Elon Musk said the electric-vehicle manufacturer is suspending purchases using Bitcoin, triggering a slide in the digital currency.In a post on Twitter Wednesday, Musk cited concerns about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” while signaling that Tesla might accept other cryptocurrencies if they are much less energy intensive. He also said the company won’t be selling any of the Bitcoin it holds.The largest cryptocurrency dropped as much as 15% to just above $46,000, before paring some of the retreat. It was down about 6% to $51,210 as of 7:03 a.m. in London on Thursday. Other tokens such Ether and Dogecoin also slid. The rush to sell briefly caused outages at some cryptocurrency exchanges. Bitcoin is still up more than fivefold in the past year.Musk’s move comes after Tesla disclosed in February that it had purchased $1.5 billion in Bitcoin and planned to accept it as a payment. That announcement added legitimacy to the cryptocurrency as an increasingly acceptable form of payment and an investment, especially coming from a large member of the S&P 500 with a high-profile CEO who commands a big following among retail investors and the general public.Tesla’s website, which had a support page dedicated to Bitcoin, noted that the token was the only cryptocurrency that Tesla accepts in the continental U.S. Musk has also tweeted frequently about Dogecoin, a cryptocurrency started as a joke in 2013 -- and he quipped about being the “Dogefather” before and during his stint hosting the “Saturday Night Live” show on May 8. He tweeted on Tuesday, “Do you want Tesla to accept Doge?”Tesla’s addition of Bitcoin to its balance sheet was the most visible catalyst during this year’s rally in the digital currency. Bitcoin jumped 16% that day, the biggest one-day gain since the Covid-19 induced financial markets volatility in March 2020.Optimism grew after Mastercard Inc., Bank of New York Mellon Corp. and other firms moved to make it easier for customers to use or invest in cryptocurrencies, fueling the mainstream resurgence that took Bitcoin from about $29,000 at the end of last year to as high as almost $65,000 in April.Bitcoin mining is consuming 66 times more electricity than it did back in late 2015, and the carbon emissions associated with it will likely face increasing scrutiny, according to a recent Citigroup Inc. report.Musk is no stranger to considering the issue of crypto’s environmental impact.Musk Splits From Cathie Wood’s Ark on Bitcoin Environmental CostCathie Wood’s Ark Investment Management LLC published a report last month saying cryptocurrency mining can drive investment in solar power and make more renewable energy available to the grid. Twitter Inc.’s Jack Dorsey retweeted a post on the white paper with the comment that Bitcoin “incentivizes renewable energy.” Musk replied to Dorsey’s tweet, saying simply, “True.”‘Confusing’Musk’s tweet on Wednesday took many in the cryptocurrency community by surprise, including Nic Carter, founding partner at Castle Island Ventures, and a leading voice among defenders of Bitcoin’s energy use.“Surely he would have done his diligence prior to accepting Bitcoin?” Carter said. “Very odd and confusing to see this quick reversal.”It’s unclear what prompted the decision and Musk and Zachary Kirkhorn, Tesla’s chief financial officer, didn’t immediately respond to an email inquiry for comment. Kirkhorn in March added the tongue-in-cheek title “Master of Coin,” according to a regulatory filing.Tesla’s first-quarter earnings were bolstered by the sale of 10% of its Bitcoin holdings. Musk said last month the disposal was intended to demonstrate the token’s liquidity, and added that he’s retained his personal investment in the cryptocurrency.Kirkhorn said on the firm’s earnings call in late April that Tesla believed in Bitcoin’s long-term value and planned to accumulate the tokens from transactions with customers.(Updates markets in the third paragraph. An earlier version of this story corrected the company name in the 11th 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) -- Converting to an ETF would solve a lot of the Grayscale Bitcoin Trust’s problems, according to the company’s chief executive officer -- but the odds are looking longer.Shares of the $36.5 billion trust closed at a record 20.5% discount relative to its holding on Wednesday as GBTC sold off more quickly than the cryptocurrency itself, according to data compiled by Bloomberg. The disconnect is largely due to the fact that shares in the largest crypto trust can’t be redeemed, unlike most traditional exchange-traded funds -- a dynamic that can lead to dramatic supply and demand imbalances.The disconnect between GBTC prices and its Bitcoin holdings would likely be repaired by converting the trust into an ETF, Grayscale Investments CEO Michael Sonnenshein said Thursday -- a process the company is “100% committed” to doing.However, Bitcoin ETF enthusiasts were dealt several blows this past week. Securities and Exchange Commission Chairman Gary Gensler told Congress last week that the cryptocurrency market “could benefit from greater investor protection,” followed by a letter from SEC staff Tuesday warning of the risks of investing in mutual funds that hold Bitcoin futures.“It is our belief looking at the arbitrage mechanism built in ETFs that any discount or premium of where shares may trade relative to the product’s net asset value would be arb’ed away,” Sonnenshein said in a Bloomberg Television interview. “There is certainly a narrative about buying shares at a discount and potentially buying Bitcoin exposure at a discount to the spot price of Bitcoin that eventually would be arb’ed away when the product or if the product is able to convert to an ETF.”GBTC has dramatically underperformed the world’s largest cryptocurrency after the trust’s outstanding shares -- which can’t be destroyed -- ballooned by hundreds of millions over the past year. GBTC is roughly up 20% so far in 2021, while Bitcoin has surged nearly 73% over that span.The discount has deepened even as Barry Silbert’s Digital Currency Group Inc., which controls Grayscale Investments, has intervened. The company said this month that it will buy up to $750 million GBTC shares, a $500 million increase to the crypto giant’s pledge in March that it would scoop up to $250 million worth of the trust.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.
Will the man who forecast bitcoin's price rise to $50K last year be heeded or ignored?
The new listing comes a day after Ethereum's founder donated $1 billion in SHIB to India Covid Relief Fund.