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Pacer ETFs’ President Sean O’Hara explains the how trend-following ETFs and so-called cash-cow strategies work.
Pacer ETFs’ President Sean O’Hara explains the how trend-following ETFs and so-called cash-cow strategies work.
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PARIS (Reuters) -Renault's sales fell for a fifth straight quarter as the French carmaker struggled to shrug off the fallout from the pandemic without a major presence in booming Chinese markets and a global shortage of electronic chips hit production. Under Chief Executive Officer Luca de Meo, who took the reins last July, Renault is looking to produce fewer cars and focus on those with higher margins, a strategy that is starting to bear some fruit. Renault, which also makes Dacia and Lada cars and has a financing business, said sales were up 4.4% when stripping out currency and other effects.
(Bloomberg) -- Credit Suisse Group AG moved to contain the fallout from two of the worst hits in its recent history with a surprise capital increase and a sweeping overhaul of its business with hedge funds.Switzerland’s second-largest bank is raising $2 billion from investors to shore up capital depleted by $5.5 billion in losses from the collapse of Archegos Capital Management. Chief Executive Officer Thomas Gottstein, who until recently had brushed off concerns that Credit Suisse was taking excessive risks, struck a humble tone Thursday, vowing to slash lending in the hedge fund unit at the center of the losses by a third.Gottstein, in the role for little more than a year, is trying to persuade incoming Chairman Antonio Horta-Osorio that he’s the right person to lead Credit Suisse, after the bank was hit harder than any competitor by the collapse of Archegos, the family office of U.S. investor Bill Hwang. The timing could hardly have been worse, coming just weeks after the lender found itself at the center of the Greensill Capital scandal, when it was forced to freeze a $10 billion group of investment funds.“Clearly this loss came as a big surprise,” Gottstein said about Archegos. “Is it an isolated case? I definitely hope it is and I think it is, but we are obviously reviewing the entire bank now just to make sure that our risk processes and systems are where they should be.”Credit Suisse fell as much as 6.9% in Zurich trading and was 5.3% lower as of 1:54 p.m. local time, taking this year’s losses to about 22%. It’s the worst-performing major bank stock this year and has also suspended a share buyback and cut the dividend.Having taken on the position more than a year ago, the CEO had stumbled over other hits before Greensill shattered what was supposed to be a new era of calm. While seeking to placate investors hurt by the losses, he also now faces the fresh challenge of navigating enforcement proceedings announced by Swiss regulator Finma on Thursday.The scandals have left the CEO standing while many once powerful members of his management board had to leave. Gone are investment banking head Brian Chin and Chief Risk Officer Lara Warner, along with a raft of other senior executives including equities head Paul Galietto and the co-heads of the prime brokerage business. Asset management head Eric Varvel is also being replaced in that role by ex-UBS Group AG veteran Ulrich Koerner.The bank now plans to reduce risk at the investment bank, including cutting about $35 billion of leverage exposure at the prime brokerage unit that services hedge funds, Gottstein said in an interview with Bloomberg Television. That’s about a third of the leverage its extends in that business. Going forward, the bank plans to only service clients in that unit if they do business with other parts of Credit Suisse as well, such as the wealth management unit.Bloomberg reported earlier that Credit Suisse was planning a sweeping overhaul of the prime business in an effort to protect other parts of the investment bank, which just had a banner quarter. Yet even as Gottstein was explaining steps to prevent future losses, analysts revived a discussion that has haunted Credit Suisse for the past decade, and which executives had hoped to have put to rest with a painful restructuring under Gottstein’s predecessor -- whether it needs such a big investment bank.“Although capital has been mainly addressed, we still see questions remaining in terms of strategy and risk management,” JPMorgan Chase & Co. analysts wrote in a note to investors. “Capital has been clearly the main focus.”The bank said Thursday it expects to raise more than 1.8 billion francs by selling notes convertible into stock to core shareholders, institutional investors and high net worth individuals. The sale will help bring the bank’s CET1 ratio -- a key metric for capital -- nearer its target 13%. That number had dropped to 12.2% at the end of the first quarter.In addition to the enforcement proceedings announced by Finma, Credit Suisse said that the Swiss regulator has told it to hold more capital to guard against losses by taking a more conservative view of its risk. The bank increased its assets weighted according to risk for both Archegos and Greensill. While the capital raise came after Finma boosted capital requirements, Gottstein said the decision was the bank’s own.“This was not as a reaction to any request by Finma or any other regulator,” Gottstein said on a call with analysts. “It was our proactive view that, together with the board, we decided to issue these two mandatories and that will really help us also against any possible market weakness over the coming months.”The Greensill debacle is also far from over. Credit Suisse has so far returned about half the $10 billion in investor money held by the funds at the time of their suspension. While the bank marketed the funds as among the safest investments it offered, investors are left facing the prospect of steep losses as the assets are liquidated. Credit Suisse is leaning toward letting clients take the hit of expected losses in the funds, a person familiar with the discussions said earlier this month.“We have good visibility for a large portion of the remaining positions,” Gottstein said. “There are three more distinct positions which we will work through in the next months and quarters. We are not planning to do any form of step-in. We are very clearly focused on getting the cash back to our investors.”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.
Credit Suisse will raise over $2 billion to strengthen its capital base after flagging a further hit from the collapse of U.S. investment fund Archegos and a shrinking of the prime brokerage unit responsible for the multi-billion dollar debacle. The demise of Archegos and another major client, British finance firm Greensill, have plunged Credit Suisse into crisis, triggering losses, sackings and bonus cuts at a time when rivals are revelling in bumper profit from trading and dealmaking. In a further blow for Chief Executive Thomas Gottstein, Switzerland's financial regulator has opened enforcement proceedings against the bank over how it handled the risks around Archegos and Greensill.
(Bloomberg) -- There’s a slice of the Thai yield curve for everyone.Local investors are bidding up shorter-dated bonds as the spread of Covid-19 in the country convinces them to seek out the safest assets. Global funds are buying longer maturities after the yield premium over Treasuries improved and on the prospect of baht gains.Demand for both ends of the curve -- along with stabilizing U.S. Treasuries -- has helped Thailand’s debt begin to turn around after a poor start to the year. Benchmark 10-year yields have dropped more than 20 basis points to 1.90% from their peak in March, while five-year yields have declined about the same amount to 1%.“Local investors have been shortening duration due to abundant onshore liquidity and to avoid the risk of mark-to-market losses in the event of rebounding yields,” said Poon Panichpibool, a strategist at Krung Thai Bank Pcl in Bangkok.“Foreigners have been extending duration in April due to attractive Thai spreads over Treasuries, and expectations for baht appreciation as is seen from increasing short dollar calls from research houses,” he said.Thailand reported a record one-day virus tally on Friday, spurring the government to impose additional curbs including bans on some alcohol sales and the closure of schools. The rising case count looks set to delay plans to further reopen the borders to much-needed tourism.Local investors have reacted to climbing cases by shifting funds to shorter-dated government debt and away from company bonds. The spread between an index of corporate bonds over sovereign securities widened to 436 basis points this week, the highest in least 10 years, from around 300 basis points before the pandemic.Longer EndForeigners are more interested in the other end of the curve.The decline in Thai bonds earlier this year saw the extra yield offered by 10-year debt over similar-maturity Treasuries climb to more than 30 basis points, after being almost 40 basis points below them early last year. In contrast, the premium on Indonesian bonds over Treasuries has narrowed in the same period.Two more positive factors are are encouraging both local and foreign investors: the central bank’s management of bond supply and the outlook for inflation. Bank of Thailand has greatly reduced issuance of central bank debt since November to accommodate the government’s larger-than-usual financing needs, DBS Bank Ltd. said in a note.The emergence of the third virus wave is likely to damp inflationary pressures due to declining consumer and business confidence, limits on economic activity and lower labor productivity, said Kobsidthi Silpachai, head of capital market research at Kasikornbank Pcl in Bangkok.Picking the next direction for global markets looks to be getting harder than ever amid uncertainties over the pandemic. Nevertheless, the outlook for Thai bonds has been getting brighter - irrespective of which end of the curve you look at.(Updates with central bank’s debt management strategy in 10th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The owner of the MailOnline site alleges the search engine has hidden links to its coverage on certain topics.
The numbers: Existing-home sales declined for the second straight month, reflecting the challenges buyers continue to face in the competitive real-estate market. Existing home-sales fell 3.7% to a seasonally-adjusted, annual rate of 6.01 million in March, the National Association of Realtors reported. “The sales for March would have been measurably higher, had there been more inventory,” Lawrence Yun, chief economist for the National Association of Realtors, said in the report.
The digital asset manager added large numbers of altcoins to its holdings including horizen and livepeer.
(Bloomberg) -- Credit Suisse Group AG is planning to slash lending to hedge funds by a third after the Archegos Capital blowup cost the bank $5.5 billion and forced it to tap investors for additional capital.The Swiss lender on Thursday said it’s conducting a review with a goal of “resizing and derisking prime brokerage and prime financing businesses,” confirming a Bloomberg News report two weeks ago. It plans to focus the business on clients that have relationships with other parts of the firm and will reduce lending to hedge funds by some $35 billion, Chief Financial Officer David Mathers said in an interview.The losses -- among the costliest in the bank’s 165-year history -- have wiped out more than a year of profit, prompting it to tap investors for $2 billion in fresh capital, and raised questions about Gottstein’s future after little more than a year in the role. The implosion of Bill Hwang’s family office is the latest reckoning for lenders chasing the lucrative business of catering to hedge funds, which present the potential for both outsized gains and huge losses, magnified by large borrowing.“Clearly this loss came as a big surprise,” Chief Executive Officer Thomas Gottstein said on a call with analysts. “We are taking measures that this will not reoccur, we are reducing our exposure in that business and we are doing an investigation how it exactly happened.”Prime-brokerage divisions cater specifically to hedge funds, lending them cash and securities and executing their trades, and the relationships can be vital for investment banks as well as being a significant source of revenue.Credit Suisse, one of the biggest prime brokers among European banks, has already moved to tighten financing terms with some hedge funds, and hopes changes to the unit can allow it to forgo major cuts to other parts of the investment bank, Bloomberg reported earlier.“Is it an isolated case?” Gottstein said. “I definitely hope it is and I think it is, but we are obviously reviewing the entire bank now just to make sure that our risk processes and systems are where they should be.”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.
It seems that all year I’ve been warning about valuations being out of whack with reality, especially in small-cap tech, which includes most SPACs. SPACs are being slammed as former “diamond hands” turn into weak-handed sellers who are (rightly, in most cases) trying to stop losses that are piling up in their portfolios. Speaking of SPACs, the markets are still suffering from SPAChaustion and a Coinbase Overhype Top, as I’ve also been saying for a few weeks now.
When you’re planning (and managing) your retirement finances, arguably your most important goal should be to avoid running out of money. If you can meet your needs taking out 3%, you’re in very little danger of running out of money.
Christine Brown will head compliance and operations for the trading app's crypto wing.
(Bloomberg) -- A slide in the rupee is exacerbating a slump in Indian corporate dollar notes that are now among the worst performers in Asia, just as concerns mount that companies are hedging less.The securities have lost about 0.1% in April, worse than a 0.4% gain for a broader Asian dollar bond gauge, according to a Bloomberg Barclays indexes. All the other countries in Asia have posted positive returns, except China which lost about 0.4% after the stumble by China Huarong Asset Management Co.The weaker rupee pushes up servicing costs on foreign debt. The currency has plunged about 2.4% against the dollar this month, making it Asia’s worst-performer. Spiking Covid-19 cases threaten to worsen the selloffAbout 5 out of 10 Indian firms hedge their foreign borrowings in India as compared to about 8 several years ago before the RBI eased rules on hedging, said Samir Lodha, chief executive officer at QuantArt Market Solutions, a Mumbai-based advisory firm. “The drop in the rupee this month may prompt more local companies with foreign borrowings to consider at least some low-cost hedging.”Primary Market -- Foreign Borrowings SlowThe weaker rupee is also making borrowers hesitate to tap what would otherwise be some of the lowest borrowing costs ever in the dollar bond market. Just one Indian company has settled a note this month: a $585 million deal from ReNew Power. That leaves issuance set for the lowest in six monthsLocal firms have also shunned foreign-currency loans in April after borrowings of $7.2 billion in the previous quarter“Most corporates will definitely pause their plans to issue fresh foreign-currency debt as they wait for the rupee to stabilize,” said Abhishek Goenka, founder of IFA Global, a Mumbai-based advisory firm. “Pandemic-induced currency volatility is making it difficult for borrowers to assess their foreign debt costs.”Firms may be turning more to the local credit market, even though there have been fresh obstacles there tooThey sold 47.6 billion rupees of bonds this week and still plan as much as 80.5 billion rupees more. If all those sales go through, that would be higher than in the previous two weeks combinedStill, offerings have fallen to 139.9 billion rupees ($1.9 billion) this month, the slowest start to a financial year since 2014. That’s due in part to rules that took effect April 1 strengthening the role of trustees for secured bonds backed by assetsSecondary Market -- Sovereign Rating ConcernsThe latest wave of coronavirus infections is also bad for India’s sovereign rating. The country has the lowest investment-grade score with a negative outlook at Moody’s Investors Service and Fitch Ratings“We expect a repeat of 2020’s sudden crash in economic activity in the coming months,” said Timothy Wee Lee Tan and Jason Lee, Bloomberg Intelligence analysts. “With a downgraded GDP growth outlook for FY22, India’s debt burden will be higher than the current IMF forecast, implying an elevated risk of ratings falling into speculative grade.”Any official gross domestic product downgrade may lead to pre-emptive widening of the option-adjusted spread for Indian dollar credits, with an actual offshore sovereign rating downgrade likely to push premiums up to 90 basis points wider to trade closer to Brazil and South Africa, according to Bloomberg IntelligenceDistressed Debt - ARC Rules Under ReviewReserve Bank of India formed a six-member panel Monday to review rules for Asset Reconstruction Companies or ARCs, which help India’s banking system deal with one of the world’s worst bad loan ratios among major economiesARCs have been in the spotlight in recent weeks:Mar. 18: India’s Ministry of Corporate Affairs is investigating allegations of financial irregularities at the asset reconstruction arm of Edelweiss Financial Services Ltd., according to people with direct knowledge of the matter. Edelweiss said it hasn’t received any intimation of any inspection by the ministryMar. 14: India’s central bank has rejected Yes Bank Ltd.’s proposal to set up an ARC for acquiring bad loans on conflict of interest concerns, Mint reported citing people it didn’t identifyMeanwhile, Infrastructure Leasing & Financial Services, whose default in 2018 triggered a prolonged credit crisis in the country, plans to resolve 500 billion rupees ($6.6 billion) of its debt by the end of September, Chairman Uday Kotak said last week. Investors are closely watching the debt resolution as a test case for group insolvencyKotak, who is heading the IL&FS board after government seized control of the shadow lender in 2018, expects to resolve about 62% of its 1 trillion rupees of debtAnother group facing challenges in servicing its debt is Future Group. The Indian supermarket-operator Future Retail Ltd. approved a debt resolution plan that eases some immediate concerns as a legal battle with partner Amazon.com Inc. threatens to delay an asset sale to Reliance Industries Ltd. India’s top court scheduled a final hearing in the matter to May 4Best and Worst Performing Corporate Dollar Bonds Last 12 MonthsFor 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.
LAWRENCE A. CUNNINGHAM'S QUALITY INVESTING As the old joke goes, St. Peter had some bad news for an oil prospector who appeared at the pearly gates of heaven: “You’re qualified for admission,” said St.
(Bloomberg) -- Daniel Dines struggled with life in the U.S. after leaving his native Romania in 2001 to work for Microsoft Corp., but the experience created the foundation for one of the world’s biggest fortunes.The software programmer returned to his homeland in 2005 to start the business known today as UiPath Inc., an automation-software maker that debuts Wednesday after raising $1.3 billion in a U.S. initial public offering. Dines, the company’s chief executive officer, controls a stake worth more than $6 billion, according to data compiled by Bloomberg.“For someone coming in his 20s to the U.S. from Europe, it was a big challenge for me to adapt to the States, even though professionally speaking my experience at Microsoft was great,” Dines, 49, said last year at the annual Montgomery Summit technology conference.As a result, “I had a crazy idea to go back and start a company,” he added.‘Hidden Advantage’UiPath, which was valued at $7 billion in 2019, is now worth about $30 billion after its shares priced at $56, above a marketed range. That puts Dines among the world’s 500 richest, according to the Bloomberg Billionaires Index. A company representative declined to comment.“Starting a company from a small place with no market has a hidden advantage: It forces you to think globally from day one,” Dines said in a letter included in UiPath’s registry filings for its listing. He had already indicated his company was preparing for a listing back in early 2020.The company’s software performs many low-skilled tasks that businesses once outsourced to humans in cheaper-wage countries such as India or the Philippines. Known as robotic process automation technology, the technique takes over repetitive, routine data-entry and processing tasks. Some of its software has been used in hospitals and health-care projects to help with Covid-19, according to UiPath’s website.Dines, who studied math and computer science at the University of Bucharest, grew up in Romania while the nation was still ruled by dictator Nicolae Ceausescu. He founded the company as DeskOver and renamed it UiPath in 2015, running it out of an apartment in the capital before relocating its headquarters to New York in 2017.Funding RoundUiPath raised $750 million in a funding round led by Alkeon Capital and Coatue that gave it a value of $35 billion, according to a February statement. Altimeter Capital Management, Dragoneer, IVP, Sequoia Capital, Tiger Global Management and funds advised by T. Rowe Price Associates also chimed in.Dines owns all of the company’s Class B shares, which carry 35 votes apiece compared with one each for Class A stock. He will continue to control UiPath after the IPO and sold shares in the offering worth about $75 million, according to filings.“You have to become a public company at some point to allow your employees to get more liquidity, give them stock options,” he said in an interview with Bloomberg last year. “We’re almost there.”(Adds details of share sale in 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.
A deep freeze that swept parts of the United States last quarter knocked out nearly half of Texas power plants and sent prices for natural gas and electricity to record levels. Kinder Morgan benefited from the shortage as it released gas and sold electricity at prices that were hundreds of times higher than normal for several days.
Young British investors are twice as likely to buy cryptocurrencies such as bitcoin as they are to buy stocks, a survey by U.S. financial group Charles Schwab indicated on Thursday. In the survey, 51% of investors aged between 18 and 37 traded or owned cryptocurrencies, double the number of those - 25% - buying or holding equities. Exposing the gap in generations when it comes to investing, a mere 8% of investors aged over 55 aged trade cryptocurrencies.
(Bloomberg) -- Intel Corp. ducked getting hit with another multibillion-dollar damage award after a federal jury in Texas cleared it of claims it was infringing patents formerly owned by NXP Semiconductors NV on ways to speed up computers.Intel doesn’t infringe two patents owned by closely held VLSI Technology LLC, according to the federal jury in Waco, Texas. The trial was held in the same courthouse where a different jury told Intel to pay VLSI $2.18 billion over other patents last month.This was the second of three trials in suits VLSI lodged against Intel over patents that until early 2019 were owned by Dutch chipmaker NXP Semiconductors. A third trial, also before U.S. District Judge Alan Albright, is scheduled to begin in June.In the most recent trial, VLSI was seeking $3 billion in damages, saying the inventions were critical to Intel’s ability to make chips faster and with fewer energy requirements. That’s more than 3,000 times what the patents were valued at in past acquisitions, Intel’s lawyers argued.Intel denied using any of the inventions, saying its own engineers have spent decades developing the chips that are used in everything from laptops to military fighter planes. It also argued that the patents didn’t cover new ideas even two decades ago, when they were issued.Intel said in a statement that it was pleased the jury “rejected VLSI’s meritless claims that Intel’s cutting-edge processors infringe expired patents on MP3 player technology.”VLSI was seeking damages for a period beginning March 1, 2019, just before the suit was filed. One of the patents, issued in 2002, expired in November; while the other was issued in 2003 and expires in May, according to data compiled by Bloomberg Law.Intel reported $20.9 billion in net income on $77.9 billion in revenue last year.VLSI was created in 2016 by the Softbank Group Corp.-owned Fortress Investment Group, according to an antitrust lawsuit Intel and Apple Inc. filed against Fortress. Fortress has “deployed patents in waves of lawsuits against their targets without regard for the merits of the claims,” Intel and Apple said in the complaint, which is pending in federal court in California.A federal judge had initially tossed the antitrust case, but Apple and Intel amended their complaint a week after the $2.18 billion verdict, arguing that trial and VLSI’s demand for billions more over other patents is evidence of Fortress’s anticompetitive activities. Fortress is scheduled to respond by April 26.Intel said the cases show the need for legislation “to prevent such ‘litigation investors’ and their shell companies from using low-quality purchased patents to extract exorbitant damages from productive American businesses.”VLSI has no products and its only potential revenue is its litigation against Intel. VLSI lawyer Morgan Chu of Irell & Manella told the jury not to be distracted by that issue.“This was technology that had looked over the horizon, changed the way Intel designed their chips,” Chu told the jurors in closing arguments. The damages request “is a large number but it’s a large number because Intel is the dominant company selling this infringing product.”The patents originated with SigmaTel Inc., which was bought by Freescale Semiconductor Inc. for $110 million in 2008, which in turn was bought by NXP in 2015 in a $12 billion deal. In Freescale’s purchase, SigmaTel’s “intangible assets,” which included a portfolio of hundreds of patents, were valued at $7 million, said Intel lawyer William Lee of WilmerHale in Boston.VLSI brought “unfair and unfounded claims that were created for litigation, and a $3 billion claim that was created for by a paid-for expert,” Lee said in closing arguments, calling the damages demand “objectively unreasonable.”NXP isn’t a party to the case, though in the first trial Lee said that the chipmaker would receive a cut of any damage award. The Eindhoven, Netherlands-based company said it doesn’t comment on ongoing litigation as a matter of corporate policy.During the trial, Intel witnesses highlighted the Santa Clara, California-based company’s long history in developing the chips that power devices that have transformed all aspects of society, and its efforts for the next generation of electronics.Intel has announced billions of dollars in spending on new factories and creating a foundry business to make chips for other companies, part of an aggressive push to regain its manufacturing lead. The move has the support of the Biden administration, which is calling for more U.S.-based chip manufacturing as a result of a global shortage of computer chips caused in part by the pandemic and the world’s reliance on two Asian companies.The patents were the subject of litigation between SigmaTel and Chinese chipmaker Actions Semiconductor Co. in a dispute that settled in 2007. The only other litigation involving these patents are the lawsuits against Intel, Bloomberg Law data show.The case is VLSI Technology LLC. v. Intel Corp., 21-299, U.S. District Court for the Western District of Texas (Waco).(Updates with Intel comment in 6th and 11th 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.
The recent decline in mortgage rates has led to an increase in refinancing activity, giving homeowners another chance to reduce their monthly payments.
Searches for the phrase, 'When is the housing market going to crash?' are up 2,450% over the past month.