A new recession is officially underway. Here's what you should be doing today.
A new recession is officially underway. Here's what you should be doing today.
Major global stock indexes scaled new peaks on Wednesday after upbeat U.S. and European earnings pointed to a strong recovery from the coronavirus pandemic, while the dollar dipped to three-week lows as Treasury yields held below recent highs. High-flying growth stocks declined on Wall Street, sending the benchmark S&P 500 and Nasdaq lower in afternoon trade, while underpriced value stocks rose, lifting the Dow to a new record. U.S. import prices increased more than expected in March, lifted by higher costs for petroleum products and tight supply chains in the latest data to show inflation is heating up as economies reopen.
Credit Suisse has identified $2.3 billion worth of loans exposed to financial and litigation uncertainties in its Greensill-linked supply chain finance funds, it told investors on Tuesday. Switzerland's second-biggest bank has been reeling from its exposure to the collapse first of Greensill Capital and then Archegos Capital Management within a month. Its asset management unit was forced last month to shut $10 billion of supply chain finance funds that invested in bonds issued by Greensill after the UK firm lost credit insurance coverage shortly before filing for insolvency.
(Bloomberg) -- U.S. stocks retreated after climbing to an all-time high. Treasuries fell with the dollar. Oil rallied.PayPal Holdings Inc. and Nvidia Corp. paced losses among tech companies in the S&P 500, which had fluctuated for much of Wednesday’s session as traders sifted through earnings from some of the world’s biggest banks. Bitcoin slid in the wake of the debut by cryptocurrency company Coinbase Global Inc. on the Nasdaq.Read: Goldman, JPMorgan Traders Show the Reddit Crowd How It’s DoneWith equities lingering near a record, investors are looking to the earnings season for further catalysts. Expectations of a strong profit rebound have helped markets rally, setting the bar high as reporting gets underway. More broadly, investors are monitoring vaccine developments for any threats to the economic recovery. The Federal Reserve said in its Beige Book that activity has picked up pace amid an improvement in consumer spending.“You’re going to see this tug-of-war continue within markets as investors weigh the prospects of a strengthening economy with the risk of rising inflationary pressures,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors.A quarter that began with retail investors declaring the end of the status quo on Wall Street just ended with big banks tallying surprisingly massive hauls. Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- two of the most gilded names in finance -- kicked off bank earnings season with revenue windfalls from trading and dealmaking, defying warnings from within the industry that good times couldn’t last.Goldman Sachs’s stock jumped, while JPMorgan’s slipped -- undermined by concern over weak demand for loans.Some key events to watch this week:U.S. data including initial jobless claims, industrial production and retail sales come Thursday.China economic growth, industrial production and retail sales figures are on Friday.These are some of the main moves in financial markets:StocksThe S&P 500 fell 0.4% at 4 p.m. New York time.The Stoxx Europe 600 Index gained 0.2%.The MSCI Asia Pacific Index advanced 0.7%.CurrenciesThe Bloomberg Dollar Spot Index fell 0.2%.The euro climbed 0.3% to $1.1979.The Japanese yen appreciated 0.2% to 108.89 per dollar.BondsThe yield on two-year Treasuries rose less than one basis point to 0.16%.The yield on 10-year Treasuries rose two basis points to 1.63%.The yield on 30-year Treasuries climbed two basis points to 2.31%.CommoditiesWest Texas Intermediate crude gained 4.5% to $62.89 a barrel.Gold weakened 0.5% to $1,736.65 an ounce.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.
Wall Street indexes closed mixed on Wednesday, with the Nasdaq Composite and S&P 500 falling despite another record intraday high for the latter and big banks' stellar results on the first day of earnings season. Shares of Goldman Sachs Group Inc and Wells Fargo & Co rose 2.3% and 5.5% respectively on bumper first-quarter profits. Goldman capitalized on record levels of global dealmaking activity, and Wells reduced bad loan provisions and got a grip on costs tied to its sales practices scandal.
Grab’s record-breaking deal to merge with a special purpose acquisition company (SPAC) will raise an eye-popping $4.5 billion in cash. A quick recap: Singapore-based Grab is poised to have a market value of around $39.6 billion after it combines with a SPAC called Altimeter Growth. Altimeter is basically a $500 million pot of money listed on Nasdaq that was looking for a target to merge with (which is why SPACS are sometimes called “blank check” companies).
Nobuaki Kurumatani is leaving after the firm received an offer from his former employer, CVC.
Exchange executives worldwide say the direct listing could spur adoption and acceptance of crypto.
ZURICH (Reuters) -Proxy adviser Glass Lewis urged Credit Suisse shareholders to oppose board member Andreas Gottschling's re-election, on grounds that as risk committee chairman he should be held accountable for problems tied to Greensill and Archegos. Switzerland's second-biggest bank has been reeling from the collapses of Greensill Capital and Archegos Capital Management, with a 4.4 billion Swiss franc ($4.75 billion) charge hitting its balance sheet after Archegos failed to meet margin commitments.
(Bloomberg) -- GameStop Corp. climbed Wednesday after it took a step to retire nearly all its existing debt as part of its transformation from a brick-and-mortar retailer into an e-commerce marketplace.The stock rallied 18% to $166.53, snapping a seven-day slide, for its biggest jump in 2 1/2 weeks. The video-game retailer said late on Tuesday it’s redeeming $216.4 million of senior notes, following a move to retire $73.2 million in debt last month.More than 21 million shares changed hands Wednesday, double what had been seen over the past two weeks. While trading volume has slowed from the eye-popping activity over recent weeks, Gamestop shares are still up nearly 800% this year, bringing the company’s valuation to almost $12 billion.The video-game retailer is in the midst of a turnaround, spearheaded by activist investor Ryan Cohen, shifting from a brick-and-mortar company and into an e-commerce marketplace able to compete with the likes of Amazon.com Inc..Earlier this month, the company announced plans to offer as much as $1 billion in additional shares. The extra cash cushioning, combined with fewer debt obligations may contribute to more favorable terms for the company in dealings with suppliers and partners.“Debt retirement is what they should have focused on in the first place,” Wedbush analyst Michael Pachter said in an email. “That puts them in a very secure financial position.”Read more: GameStop’s Other Trade Pays Off With Takeout of Junk Bonds (1)Volume Pick-UpBullish options on the video-game retailer were more heavily traded in Wednesday’s session than recent weeks. The increase in small-lot calls could signal a return of the same group of investors who were behind January’s epic short squeeze, according to Susquehanna derivatives strategist Chris Murphy.GameStop’s rally stood out from peers that have captivated retail investors as meme stocks were mixed Wednesday. While movie-theater operator AMC Entertainment Holdings Inc. climbed, cannabis stock Sundial Growers Inc. and Palantir Technologies Inc. dipped.GameStop has been hit by the video-game industry’s shift to online distribution. The company reported disappointing fourth-quarter earnings last month.(Updates share movement and adds details on options trading in 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.
(Bloomberg) -- The Bank of England’s Chief Economist Andy Haldane will step down in June, removing the the Monetary Policy Committee’s most outspoken contrarian and inflation hawk.Haldane, 53, will leave after career spanning more than three decades at the central bank to become chief executive officer at the Royal Society for Arts, Manufactures and Commerce starting in September. He will remain in place through the bank’s rate decision on June 24. He’s departing as the U.K. emerges from its worst recession in three centuries, which pushed the central bank to unleash unprecedented stimulus including 150 billion pounds ($206 billion) of bond purchases this year. Haldane alone on the nine-member policy panel voiced concerns about inflation accelerating with a rapid bounce-back in growth as Prime Minister Boris Johnson winds back restrictions to contain the Covid-19.“The most interesting element to me is that he is probably the arch-hawk on the MPC, and his removal will certainly see a more dovish tone seep into meetings,” said Stuart Cole, chief macro strategist at Equiti Capital and a former BOE economist.Bank of England Governor Andrew Bailey will appoint a successor after the bank advertises the position. While the chief economist traditionally also sits on the MPC, it’s the Treasury’s decision to name members to that panel.In recent months, Haldane has warned about the risk of excessive pessimism about the economic outlook as the pandemic winds down, terming it “Chicken Licken” economics that could undermine the recovery.While many of his colleagues point out concerns about rising unemployment and signs of sluggishness in the economy, he said he expects a “rip-roaring recovery” and on inflation said a “tiger has been stirred” that may “prove difficult to tame.”Several economists said the improving outlook for the U.K. economy has already shifted debate on the MPC away from extra stimulus and toward whether the pace of bond purchases need to slow -- or even an eventual tightening in policy.“In 2022 the BOE is likely to set out an exit strategy from its ultra-easy policy stance before hiking the bank rate in 2023,” said Kallum Pickering, senior economist at Berenberg.Haldane joined the BOE in 1989 after gaining a masters in economics from Warwick University.He logged experience at the central bank in international finance, market infrastructure and financial stability during the financial crisis before clinching his current role under previous Governor Mark Carney in 2014. That year, “Time” magazine named him one of the world’s 100 most influential people.Haldane is known for his occasionally quirky speeches. He once used Dr. Seuss to bemoan the reading age needed to understand the central bank’s communications.His words sometimes raised eyebrows, notably when he compared pre-crisis economic projections to a famously inaccurate forecast by BBC weatherman Michael Fish before a 1987 storm that killed 18 people.In 2012, he drew the ire of his future boss with a speech -- titled “The Dog and the Frisbee” -- which called for simplicity in banking regulation. Carney, who was then the Bank of Canada governor and head of the global Financial Stability Board, said the speech was “uneven” and the conclusion “not supported by the proper understanding of the facts.”Haldane has also led the government’s Industrial Strategy Council until it was dissolved a few weeks ago and is the co-founder of charity Pro-Bono Economics.“If your business is trying to predict rates and quantitative easing, it will be a bit easier without Andy’s speeches somewhat clouding the issue,” said Tony Yates, a former BOE official who worked with Haldane. “If you’re trying to get up to speed on the latest things in monetary economics and finance, then it’s less good because there won’t be Andy picking up new things and explaining them.”(Updates with context and comment from the first 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.
Goldman Sachs Group Inc surged past Wall Street expectations for first-quarter profit on Wednesday, as the U.S. investment banking giant capitalized on record levels of global dealmaking and a coronavirus-driven boom in equity trading. An unprecedented boom in private firms merging with listed shell companies to go public helped Goldman earn handsome fees from such deals, resulting in a 73% jump in revenue from investment banking to $3.77 billion. Revenue from equities trading jumped 68% to $3.69 billion as heightened trading by ordinary investors fed stock market volatility.
Fed Chairman Jerome Powell said that he has not yet met with President Joe Biden, illustrating the administration’s caution in approaching matters at the independent central bank.
(Bloomberg) -- Air Canada shares fell after the company reached a deal with the federal government for loans and equity worth nearly C$5.9 billion ($4.7 billion), making the state a shareholder of the country’s largest airline for the first time since the 1980s.Air Canada declined 2.6% to C$26.29 as of 12:39 p.m. in Toronto. Earlier it dropped more than 6.6% as the market absorbed the news that Prime Minister Justin Trudeau’s government is buying C$500 million of shares at a discount. The government will also receive warrants as part of a financing agreement that makes Air Canada eligible for five new credit facilities, according to a company statement.The dilution for shareholders “was greater than we had anticipated,” Kevin Chiang, an analyst at Canadian Imperial Bank of Commerce, said in a note. If all the warrants were exercised, the government would own 9.7%, Chiang said.In return for the money, Air Canada agreed to restrict share buybacks and dividends, keep employment at April 1 levels and follow through on a deal to buy 33 Airbus SE A220s made at a factory in Quebec. Executives won’t be allowed to earn more than C$1 million. And the airline will resume service on routes its suspended to distant locations such as Gander, Newfoundland and Yellowknife, in the country’s far north.The long-anticipated announcement will ease tensions between the industry and Trudeau’s government, which since last March has barred most foreign travelers from entering the country and recently made the rules even tougher.Air Canada repeatedly complained that its home country was the only Group of Seven member without an aid plan specifically for the aviation sector -- although the company has used federal wage subsidies available to all industries hit by the pandemic.“We wanted a good deal, not just any deal. And getting a good deal can sometimes take a little time,” Finance Minister Chrystia Freeland said at a news conference Monday evening.Air Canada also committed to paying back customers who didn’t take flights they had booked because of Covid-19. One of the credit facilities, a C$1.4 billion line, is dedicated to financing refunds.‘Solid Guarantees’“At first glance, the Canadian government’s aid package to Air Canada looks somewhat onerous,” Citigroup analysts said in a note. “On one hand, the aid certainly helps provide a more stable financial situation for the carrier. On the other, some of the requirements seem difficult.”While the equity component is “somewhat surprising,” the package is “the money that’s needed,” said Robert Kokonis, managing director of Toronto-based aviation consulting firm AirTrav Inc.“It’s going to take a lot of aid for carriers. We’ve been through a lot. We’ve been on standby while airlines in countries around the world have received one or more aid packages,” Kokonis said.Freeland said talks are ongoing with other airlines, including WestJet Airlines Ltd., controlled by Toronto-based investment firm Onex Corp. Tour operator Transat AT Inc. also needs money and has said it’s talking to the government after a deal to be taken over by Air Canada fell apart.“Wherever and whenever the federal government provides public aid, the supported company will have to give solid guarantees, as Air Canada did, that the public interest will be respected, workers protected, and travelers’ interest defended,” Freeland said.As of March 18, government financing for the airline industry globally -- including loans and equity stakes in exchange for cash -- has totaled more than $183 billion, according to Ishka Ltd., an aviation finance and investment consultancy.Before Monday’s agreement, Canada’s most visible lifeline to the industry was a combined C$375 million in emergency loans to Sunwing Airlines Inc. and Sunwing Vacations Inc., a small vacation operator.Air Canada said it will only draw down the new credit facilities “as required”. The package includes C$2.48 billion in unsecured loans.“This program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term,” Chief Executive Officer Michael Rousseau said in a statement.(Updates share move in second paragraph and comments from Citigroup analysts)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.
Global stock markets pushed to record highs on Wednesday as bond yields eased, after data showed U.S. inflation was not rising too fast as the economy re-opens. With fears receding for now that a strong inflation reading might endanger the Federal Reserve's accommodative stance, European shares opened 0.1% higher. Gains were capped after Johnson & Johnson said it would delay rolling out its COVID-19 vaccine to Europe, after U.S. health agencies recommended pausing its use in the country after six women developed rare blood clots.
(Bloomberg) -- Britain’s financial markets watchdog is looking to upgrade its relationship with the U.S. and give U.K. firms permanent access to American securities and derivatives markets in the wake of Brexit.The Financial Conduct Authority is working closely with the Commodity Futures Trading Commission about a “permanent footing” for U.K. trading venues to operate in the U.S., Nausicaa Delfas, the FCA’s executive director of international, said at a conference on Tuesday.“If granted, this recognition will provide U.K. firms with the certainty they need to conduct their business in the U.S. with confidence,” Delfas said at the City & Financial Global virtual event.The FCA is also in discussions with the Securities and Exchange Commission over access to the U.S. for swap dealers, and the regulator is supporting the U.K. government’s negotiations with the U.S. on a wider trade agreement. These efforts build on agreements made before Brexit came into effect at the start of the year, which pledged to minimize disruption in transatlantic financial markets.“There is much still to be agreed, but we are supportive of an ambitious outcome on financial services that benefits both U.K. and U.S. industries whilst preserving our regulatory objectives and safeguards,” Delfas 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) -- Canadian investment firm RF Capital Group Inc. jumped to its highest point since October 2019 after rival Canaccord Genuity Group Inc. said it’s willing to “substantially” raise its takeover offer.Toronto-based RF Capital rose as much as 12% to C$2.40 in Toronto after Canaccord Chief Executive Officer Dan Daviau told Bloomberg his firm is ready to boost its bid to seal a deal. RF rebuffed Canaccord’s initial proposal of C$2.30 per share.“We’re prepared to increase our price substantially, but we don’t know what price they’re looking for because they won’t talk to us,” Daviau said in an interview. A transaction would unite two of Canada’s largest remaining independent firms in wealth management, a part of the industry that’s dominated by the country’s large banks.The updated proposal would include improved terms for RF Capital’s investment advisers, Daviau said, allowing them to cash out some holdings of shares held in escrow. He declined to say what price Canaccord would be willing to pay. The current proposal values RF at C$367 million ($292 million).Richardson ControlCanaccord has little prospect of taking control of RF without winning the support of the Richardson family, whose closely held conglomerate, James Richardson & Sons Ltd., owns 44% of RF Capital, according to data compiled by Bloomberg.RF Capital’s minority shareholders “should be provided an opportunity to consider the proposal,” Canaccord said Wednesday in a written statement. “Canaccord Genuity is exploring legal options available, as well as options of taking our offer directly to RCG shareholders.”RF Capital shares gained nearly 8% Wednesday as of 12:48 p.m. Wednesday and are up 31% since Canaccord’s interest became public in March.Canaccord has said that combining the firms would provide RF Capital’s investors with better value for their shares and open opportunities for RF’s wealth advisers. By publicly disclosing the proposal, Daviau is making an open appeal to those advisers, who form an influential bloc within RF because they collectively own 31% of the shares.RF has repeatedly rejected Daviau’s approach. “After consideration, the Board has again determined that pursuing your proposal is not in the best interests of RF Capital Group Inc.,” Chairman Donald Wright said in a letter posted on the company’s website, without elaborating.Canaccord’s wealth unit had C$85.2 billion in client assets as of Dec. 31, according to an investor presentation. RF had C$32.7 billion in assets under administration as of March 31.Until last year, RF Capital operated under the name GMP Capital. It used to be a major player in investment banking and trading in Canada’s junior energy and mining markets, but it sold its capital markets business to Stifel Financial Corp. in 2019 to focus on wealth management and investment advice.(Updates with share price move and other new information)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 IRS commissioner says the child credit payments will arrive on time after all.
(Bloomberg) -- Indonesia offered higher yields to sell the most bonds in two months, testing appetite for emerging-market assets as the government continues to build up a buffer for stimulus spending.The finance ministry sold 21.68 trillion rupiah ($1.48 billion) of non-Islamic debt, excluding T-bills on Tuesday. That’s the biggest since the sale in mid-February and compared with just 3.75 trillion rupiah at the previous conventional debt auction two weeks ago. The larger amount sold saw the bid-to-cover ratio plunge to 1.86, the lowest in a year.“Domestic yields are still more than 100 basis points lower than a year ago but clearly markets feel there is a need to re-price,” said Philip McNicholas, Asean FX and rates strategist at Bloomberg Intelligence. “It is also possible this is taken as a sign of desperation to fund by the market.”The bigger debt sales by Indonesia, seen as a bellwether for risk appetite, suggest that investors are returning to emerging markets as Treasury yields slid in recent weeks. Still, the higher yields demanded suggest that global funds continue to see a risk of higher U.S. yields in the months ahead.Indonesia’s 10-year yield fell three basis points to 6.57% on Wednesday.“The incoming bids were healthier than before, but the below-target acceptance reflects misalignment in appropriate yields levels as seen by the government versus current market level,” said Frances Cheung, rates strategist at Oversea-Chinese Banking Corp. in Singapore.Weekly FlowsThere are signs that demand may improve. For one, purchases by overseas investors accounted for 8.4% of total debt sold, up from about 4.3% at the previous offering. The nation’s bonds also saw the first back-to-back weekly inflow since February as Treasury yields declined from their March 30 peak.Emerging-market bonds are likely to see inflows as investors look for alternatives to U.S. high-yield credit, according to BNP Paribas Asset Management.Just two weeks ago, Indonesia’s finance ministry said it wasn’t in a rush to meet its debt sale target due to a large cash balance.Auction DetailsThe difference between the highest awarded yields and average awarded yields, or tails, have widened across the tenors, suggesting the finance ministry accepted higher borrowing costs.The table below shows the difference between cut-off yields and average awarded yields in basis points.(Adds foreign participation, inflow in 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.
Before sitting back and letting the IRS do the work, experts say some people should at least consider filing an amended return.
The S&P 500 hit a record high on Tuesday and the Nasdaq jumped as investors flocked to technology-related stocks after the United States' pause in the rollout of Johnson & Johnson's COVID-19 vaccine sparked fears of a delay in a broader economic rebound. The drugmaker's shares fell 2.7% to a one-month low as calls for pausing the use of its COVID-19 vaccine after six women developed rare blood clots dealt a fresh setback to efforts to tackle the pandemic. The technology and consumer discretionary sectors, which house high-flying technology names that flourished during coronavirus-induced lockdowns last year, rose 0.6% and 0.4%, respectively.