- Oops!Something went wrong.Please try again later.
Ethereum has outperformed major digital currency rivals this year, bolstered by the surge in decentralized finance (DeFi) and the anticipation of a technical adjustment this summer, but it faces hurdles that could stall its rise. With a jump of more than 350% in its price this year, ethereum has the second-largest market capitalization after bitcoin, but not as much cache and perhaps more operational challenges that could prevent it from eclipsing its major rival. In the crypto world, the terms "ethereum" and "ether" have become synonymous.
(Bloomberg) -- It’s all very simple. The economy isn’t strong enough for the Federal Reserve to taper stimulus, therefore stay-at-home tech shares will rally. And any efforts to heal the economy are likely to drive up inflation, meaning banks and airlines will benefit.Such is the can’t-lose logic underpinning American stocks in May 2021, almost 14 months since the pandemic crashed the market and left an 8 million-job hole in the U.S. labor market. To strategists at JPMorgan Chase, now is no time to doubt equities -- as long as Fed Chair Jerome Powell and President Joe Biden are in charge of the recovery.Anyone looking for confirmation need only recall Friday’s reaction to one of the largest downside misses on record for a U.S. employment report. Small caps surged, buoyed after President Biden used Friday’s numbers as justification for his multi-trillion fiscal aid package. The Nasdaq 100 also jumped as investors took April’s jobs whiff to mean that the Fed won’t be turning off the taps anytime soon, keeping rates low and helping to sustain sky-high tech valuations.“It doesn’t hurt equities to know the Fed is still the backdrop with lower rates for longer,” Ryan Detrick, chief market strategist at LPL Financial. “The stay-at-home and the tech names are going to get a little bit of a bid here on worries about the reopening but I think it’s more of a near-term blip and the bigger cyclical names will still take the baton over the coming months.”Federal Reserve Bank of Minneapolis President Neel Kashkari said as much, telling Bloomberg Television that Friday’s print validates the central bank’s new outcome-based approach -- the idea that policy makers won’t change anything based on economic forecasts, but actual data.Every sector in the S&P 500 rallied in the aftermath, with tech vying with cyclical energy and industrial shares for the top spot. The Russell 1000 Value Index and its growth counterpart both ended Friday 0.8% higher, after value outperformed every day this week.Meanwhile, JPMorgan strategists led by Marko Kolanovic are doubling down on the reflation trade. Just days after warning that many money managers need to quickly switch gears from their deflationary playbook or risk an “inflation shock,” Kolanovic recommended clients increase their tilt toward cyclical and value assets. He advised investors to cut holdings in cash and credit, using the money to buy commodities and stocks.“We expect a strong pickup in inflation this year, which the market will likely be slow to recognize and is poorly positioned for,” Kolanovic and his colleagues wrote in a note Friday. “A combination of boomy global growth and significant bottleneck price pressures should keep inflation on an upward trajectory while most central banks remain committed to their very accommodative stances and are looking through the inflation pickups.”And even for all the hand-wringing over inflation, the latest batch of quarterly reports suggests it’s already here and helping corporate America. Faced with rising prices for everything from lumber to oil to labor and computer chips, chief executive officers have cut costs and boosted prices for their products.As a result, first-quarter income from S&P 500 companies is jumping five times as fast as sales, data compiled by Bloomberg Intelligence show. Based on actual results and analyst estimates for those yet to report, profits probably surged to an all-time high of $48.21 a share. That’s 13% above the record set in 2018 of $42.79.The next test for the equity market’s cheer comes in Wednesday’s inflation data, which is expected to show that price pressures jumped by the most on an annual basis since 2011. But given that Fed chief Powell has said that the central bank will need to see a “string” of strong data before shifting their stance, it’s likely that April’s payroll miss was a big enough blow to keep them on the sidelines.“It justifies the Fed, it keeps them from having their tapering discussion or thinking about raising rates,” said Ross Mayfield, investment strategy analyst at Robert W. Baird & Co.. “That by and large is supportive for equity markets.”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 stage is set for an explosion in the amount of stock buybacks, says Goldman Sachs.
Buffett talked Robinhood, Apple and SPACs at Berkshire Hathaway's recent annual meeting.
Families can get up to $50 off their bill to stay connected during the pandemic.
Stocks traded mixed Friday as investors digested a disappointing April jobs report, which showed the U.S. economy added back far fewer jobs than expected last month despite easing stay-in-place restrictions.
While some technology stocks got a boost Friday after a disappointing U.S. jobs report, some portfolio managers say that blow-out earnings from several large technology companies over the last few weeks are not enough to keep making outsized bets on the sector. Instead, those fund managers say that they are continuing to rotate into value and cyclical stocks - whose fortunes are closely tied to economic conditions - in anticipation that the economic recovery will be longer and more gradual than originally anticipated. The notion that the U.S. jobs recovery has not yet peaked was reinforced by data from the Labor Department on Friday that showed U.S. employers hired far fewer workers than anticipated.
(Bloomberg) -- EXAMPLEDiscover what’s driving the global economy and what it means for policy makers, businesses, investors and you with The New Economy Daily. Sign up here.In the pandemic’s second year, some familiar worries -- about inflation, capital flight or public debt -- are starting to surface across the developing world. Except in one corner.In Asia, policy makers aren’t too preoccupied with these classic emerging-market problems. Their economies look increasingly like they’ve emerged.That’s largely down to lessons learned from the traumas of the past three decades –- from the late-1990s regional meltdown to the global crash of 2008 and the so-called “taper tantrum” of 2013 -- and the defenses put in place as a result.“Asian countries have used past crises to learn and build resilience,” said Sonal Varma, an economist at Nomura Holdings Inc. in Singapore.Their economies now boast hefty foreign-exchange reserves, stronger financial systems and an unassailable place as the world’s manufacturing powerhouse. Their stock markets, like those in the developed world, have posted gains during the pandemic while other emerging regions lost ground.In India, which is battling the world’s worst Covid-19 outbreak, the central bank chief has cited the buffer provided by its foreign exchange reserves, which have grown more than tenfold since 2000. “This gives us the confidence to deal with global spillovers,” Governor Shaktikanta Das said Wednesday as he introduced new support measures.Similarly, Indonesia and Thailand’s reserves are holding near records after expanding more than five- and seven-fold, respectively, over that period.All of this has left the region’s policymakers largely unfazed by the great inflation scare roiling many of their peers.With U.S. bond yields on the rise and the prices of food, energy and raw materials soaring, emerging nations like Brazil, Russia and Turkey have been forced into interest-rate hikes this year -– even though their economies are still recovering from Covid-19.By contrast, central bankers in Asia sound more like the Federal Reserve’s Jerome Powell -- arguing that any price increases will likely be modest and transitory. No emerging Asia economy has raised their benchmark interest rate so far in 2021, and only Pakistan is forecast to do so by year-end, according to Bloomberg.The region is likely to undershoot inflation targets this year like it did in 2020, TD Ameritrade analysts said in an April 19 report.Lessons LearnedAt the start of the Asian crisis in 1997, policymakers responded with fiscal consolidation and higher interest rates. The ensuing slump cost the region hundreds of billions of dollars in lost output and triggered a profound rethink of how economies should be managed.When the global crash of 2008 arrived, Asian economies were more resilient “because they responded with countercyclical fiscal and monetary stimulus,” according to a report this year by the United Nations Economic and Social Commission for Asia and the Pacific. And there’s been no major debt crisis in the region since the 90s, “thanks in part to the rapid growth of local currency bond markets.”The markets for government and corporate debt in emerging Asian economies were worth more than $20 trillion last year, up from less than $1 trillion two decades earlier.Some countries also moved to impose long-term restraints on spending -- like Indonesia, which enshrined a budget-deficit cap equal to 3% of GDP in law. When the rule was broken during the pandemic, investors broadly accepted the assurance that it would be reinstated when the emergency was past.On debt vulnerabilities and other metrics, Asian economies generally rank the strongest in Bloomberg’s emerging-market scorecard.Trade has given Asia an extra buffer throughout the pandemic, as its exports bounced back relatively fast. South Korea and Taiwan, the key suppliers to a tight global market for semiconductors, are in an especially strong position.For some analysts, those economies -- where per-capita economic output is around $30,000 -- are too wealthy to be considered emerging markets anyway. That highlights a wider problem with the term, which evolved to describe a class of financial assets and doesn’t capture distinctions between economies and societies.The group known as Emerging Asia often includes giant but poorer economies like India, as well as much richer ones like Taiwan. Others on the widely-used MSCI EM Asia index include Indonesia, South Korea, Malaysia, Pakistan, Philippines and Thailand -- as well as China, which many in the financial world place in a category of its own.‘Sigh of Relief’Whatever the labels, the proximity of the world’s fastest-growing large economy has been a boon for neighbors, especially in the pandemic.Around the middle of last year, many Asian companies “were facing sudden stops in orders and liquidity,” said Taimur Baig, chief economist at DBS Bank Ltd. in Singapore. “As China’s factories began to hum, a sigh of relief percolated through Asia’s elaborate supply chain.”Many emerging-market investors already treat Asia differently. Ian Samson, a fund manager at Fidelity International in Hong Kong, says it’s in effect a separate bloc.“In terms of the fundamentals -- whether it’s structural growth or fiscal balances -- Asia has been outperforming Latin America” and emerging markets in Europe, Africa and the Middle East, Samson said. Asia is especially dominant in emerging-market equities, accounting for the large majority of total investment, he said -- partly because it has bigger companies, and partly because more of them are in high-growth sectors like technology.Paul Sandhu at BNP Paribas Asset Management sees Asian out-performance continuing “for the foreseeable future” -- and he points to strengths that go beyond economics to include governance. In the early phases of the pandemic, Asia “handled it better than any other economy, whether in emerging markets or developed markets,” he said.To be sure, Asia has its share of problems. Beyond India’s deadly second wave of Covid-19 infections, there have been resurgences in Thailand and the Philippines too, while vaccination campaigns are lagging.Other economic challenges include escalating private debt and longer-run question marks over central-bank independence -- issues that trouble some developed economies too. And the growing tensions between the U.S. and China create headaches for countries seeking to stay on good terms with both.Still, the region’s economies generally have more room for error than most of their counterparts, according to Baig at DBS.“No emerging economy in Asia at present is characterized by debt sustainability concerns or a dramatic collapse in investor sentiment, which seems to be the case in a number of emerging economies elsewhere,” said Baig.(Updates to add Indonesia and Thailand foreign currency reserves 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) -- Wall Street’s new overseer confirmed he won’t back down from tough battles with the financial industry as he laid out an agenda for increased regulation in numerous contentious areas.Gary Gensler, making his first appearance before Congress after being sworn in as Securities and Exchange Commission chairman, pledged Thursday to confront long-simmering issues in the stock market that led to this year’s wild price swings in shares of GameStop Corp. and fueled concerns that retail investors are getting short shrift from popular trading apps.Gensler, 63, didn’t stop there, as he also vowed to look at new rules for cryptocurrencies, corporate disclosures tied to climate risks and the derivatives that triggered the blow-up of Archegos Capital Management, Bill Hwang’s family office. Again and again, Gensler made clear that he believes tighter oversight is needed.Democrats, who spent the past four years decrying the Trump administration’s loosening of financial rules and warning of increased risks to Main Street investors, praised the SEC chief’s proactive stance.“I am very pleased,” said House Financial Services Committee Chairwoman Maxine Waters. The California Democrat added that she wanted to “put Wall Street on notice that we are watching closely.”Republicans on the panel were less enthusiastic and cautioned Gensler that additional regulations could threaten the commission-free trading that many consumers have embraced, as well as financial-market innovations and the booming markets for digital tokens.Still, Gensler mostly skirted criticism from either side of the political aisle and was given a pass when he declined to answer questions on issues like a financial transaction tax and the potential for Bitcoin exchange-traded funds. The former head of the Commodity Futures Trading Commission who also worked as a senior Treasury official under President Bill Clinton often begged off, explaining he had only been in the SEC job for several weeks.“I appreciate the dodge,” Representative Anthony Gonzalez, an Ohio Republican, told Gensler at one point. “This is not your first rodeo, obviously.”Here are some of the topics Gensler discussed in roughly four hours of testimony:Archegos SecrecyGensler provided an early look at how he might deal with what’s arguably one of the SEC’s biggest blind spots: a lack of knowledge about the undisclosed security-based swaps that Archegos used to make massive bets on companies.The SEC will consider adjusting some of its rules that require investors to publicly report large stock holdings so they will also cover swaps, Gensler said.Such a move, Gensler told lawmakers, “would be positive.” He also indicated that the agency would consider revising its margin rules for swaps, which have been approved but are not yet in effect.Crypto RulesA former professor at the Massachusetts Institute of Technology who taught a class on blockchain technology, Gensler was asked often about his views on cryptocurrencies. While many token-enthusiasts have heralded his appointment and assume Gensler will pave the way for new investments, he instead took a moderate stance.Gensler said the market “could benefit from greater investor protection.” He also urged Congress to work on legislation that gives the SEC oversight of crypto trading venues.“Right now the exchanges do not have a regulatory framework,” he said. He also reminded lawmakers that Bitcoin is not supervised by the SEC because it is considered a commodity rather than a security.“There’s a lot of authority that the SEC currently has in the securities space and there are a number of cryptocurrencies that fall within that jurisdiction,” Gensler said. “But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.”Gensler didn’t weigh in on whether the SEC intends to approve a Bitcoin ETF, one of the most consequential issues facing the industry.His comments may have cooled rallies for some of the hottest cryptocurrencies, with Dogecoin declining for the first time in five trading sessions and Ether snapping a 10-day streak that had seen it jump almost 50%. Bitcoin dropped from the highest levels of the day to trade around $56,000.GameStop FrenzyGensler said he’s pushing the SEC to finish a report by summer on the GameStop mania. The review is likely to touch heavily on brokerages like Robinhood Markets that have reshaped trading with slick mobile apps. Gensler acknowledged that the agency may need to “freshen up” some of its regulations.Another issue the SEC will look at is “gamification,” Gensler said, noting that the use of video game-like interfaces and behavioral prompts on apps is growing more common in finance.He said there’s no doubt in his mind that such features prompt consumers to trade more, which increases the risk of losing money. He added that this is particularly the case when retail investors are buying and selling options. Gensler has directed the SEC to seek public comment on gamification, a review that could lead to new rules.Apps “have made it easier to open accounts” but “we’ve lost that human in the middle saying, ‘is this appropriate,”’ Gensler noted.Market-Maker DominanceGensler fielded many questions about firms such as Citadel Securities and Virtu Financial Inc. that dominate the business of executing retail stock orders. That prompted him to reiterate multiple times that he thinks the industry is too concentrated among a few big players -- a situation that he said can lead to outsize profits for a handful of companies and bad outcomes for consumers.The market-makers pay retail brokers like Robinhood for the right to handle clients’ orders, an arrangement known as payment for order flow that Democrats argue poses conflicts. But the practice has also facilitated commission-free trades, something lawmakers’ constituents love.Gensler said at one point that he agrees there are “inherent” conflicts tied to payment for order flow and that the SEC is looking closely at whether it needs to revamp regulations. A crackdown could be particularly impactful on Robinhood, which plans an initial public offering later this year and makes lots of revenue from payment for order flow.In a Friday interview with CNBC, Gensler added to his remarks, saying boosting “disclosure alone may not do it” when it comes to regulating payment for order flow. He also said that it’s “not clear” that investors are getting best execution on their stock trades when market-makers handle orders.(Updates with comments on payment for order flow in last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
There was a slight pullback in oil prices following Wednesday’s highs, but the rally is still very much on and bullish sentiment is palpable as summer driving season nears
(Bloomberg) -- Discover what’s driving the global economy and what it means for policy makers, businesses, investors and you with The New Economy Daily. Sign up here.U.S. job growth significantly undershot forecasts in April, suggesting that difficulty attracting workers is slowing momentum in the labor market and challenging the economic recovery.Payrolls rose 266,000 from a month earlier, according to a Labor Department report Friday that represented one of the largest downside misses on record. Economists in a Bloomberg survey projected a 1 million hiring surge in April.The unemployment rate edged up to 6.1%, though the labor-force participation rate also increased.The report stunned investors as Treasury yields plunged and the dollar turned sharply lower. U.S. stocks rose on expectations that monetary policy will remain conducive to economic growth for a sustained period. The eurodollar market pushed back its pricing for a Federal Reserve rate increase to mid-2023.Follow reaction in real-time here on Bloomberg’s TOPLive blogThe disappointing payrolls print leaves overall employment more than 8 million short of its pre-pandemic level and is consistent with recent comments from company officials highlighting challenges in filling open positions.“It’s a lot faster to lay off workers than it is to hire them back,” said Sarah House, senior economist at Wells Fargo & Co. “While we are seeing some workers come back into the labor force it just isn’t fast enough.”While job gains accelerated in leisure and hospitality, employment at temporary-help agencies and transportation and warehousing declined sharply.Fed Chair Jerome Powell said last week the dichotomy between a large number of unfilled positions and millions of unemployed likely reflects a combination of a skills gap, child care obligations and lingering virus fears.What Bloomberg Economics Says...“April payrolls fell dramatically short of expectations, as a clumsy reopening of the economy appears rife with frictions, such as skills-mismatches, parents unable to return to the workforce amid a significant share of schools not yet open, and far from complete vaccination efforts.”-- Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger, economistsFor the full note, click hereMassive fiscal stimulus including the latest $1.9 trillion package passed by President Joe Biden in March may also be impacting the pace of job growth. Some firms indicate enhanced unemployment benefits and the latest round of pandemic-relief checks are discouraging a return to work even as job openings approach a record.A sustained period of tepid job gains could support calls for further government spending.In an interview with Bloomberg Television, Minneapolis Fed President Neel Kashkari said the data justified why the Fed is continuing to deliver its own stimulus. “Today’s jobs report is just an example of we have a long way to go and let’s not prematurely declare victory,” he said.On an unadjusted basis, payrolls rose by more than 1 million last month. Seasonal adjustments usually call for a large hiring gain in April, which may in part explain why the headline number fell short of forecasts.Another reason for the more moderate employment gain is problems in the nation’s supply chains. For instance, motor vehicle production has been severely hampered by shortages of semiconductors. The jobs report showed manufacturing payrolls declined 18,000 in April, driven by a sharp fall in jobs at automakers.Average hourly earnings rose 0.7% in April from a month earlier, to $30.17, the jobs report showed. The wage data for April suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages, the Labor Department said in a statement.A separate measure of compensation that isn’t subjected to shifts in industry employment -- the employment cost index -- rose 0.9% in the first quarter. That was the largest quarterly gain since 2007, according to the Labor Department’s data last week.“While the jobs numbers themselves were certainly disappointing, I think there are a few nuggets in here that are positive development,” House said.Participation RateLabor force participation, a measure of the percentage of Americans either working or looking for work, rose to 61.7% in April from 61.5%, likely supported by increased vaccinations that helped fuel the reopenings of many retail establishments, restaurants and leisure-facing businesses.Average weekly hours increased to match the highest in records dating back to 2006. The gain in the workweek, increased pay and the improvement in hiring helped boost aggregate weekly payrolls 1.2% in April after a 1.3% gain a month earlier.Workforce participation for men age 25 to 54 increased last month, while edging lower for women.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.
Barry Silbert, a power player in the digital-asset sector, said he's betting against dogecoin and is urging investors in one of the hottest trades in 2021 to convert their doge holdings into bitcoin.
As U.S. stocks head into a seasonally rocky stretch, investors are gauging to what extent markets have anticipated a number of factors that could sway asset prices, from massive government stimulus to looming inflation. Though equities remain near all-time highs, some sectors have gotten off to an uneven start this month, with the tech-heavy Nasdaq Composite down more than 2% so far this week while the Dow Jones Industrial Average rose to a record on Thursday. While retail investors have been net buyers of stocks for 10 straight weeks, hedge funds have been sellers, client data from BofA Global Research showed, with the four-week average of net sales of equities by hedge funds hitting their highest levels since the firm began tracking the data in 2008.
(Bloomberg) -- The European Central Bank is set to reward some of the region’s biggest financial institutions with more than 1 billion euros ($1.2 billion) this year in return for keeping up the flow of credit during the pandemic.Six lenders including ING Groep NV and Deutsche Bank AG have disclosed their expected benefit from the central bank’s targeted longer-term loan programs. Together, the banks said they earned about 416 million euros in the first quarter while other lenders said they intend to book gains later in the year.Seven years after turning banking on its head with the introduction of negative interest rates, the ECB is dangling enhanced subsidies to get banks to pump cheap cash into an economy lurching from one crisis to another. The benefits help offset some of the pressure from the ECB’s other policies which have eaten into lending profits and introduced costs for client deposits.An ECB spokesman declined to comment on the payments. ECB President Christine Lagarde said in April that the program plays a “crucial role” in supporting bank lending to firms and households.The ECB has offered several rounds of such targeted long-term loans. The latest allotment was in March when it made 330.5 billion euros available to banks. The favorable rates are paid subject to conditions on the banks reaching specific targets regarding the amount of loans they make to the broader economy.The lenders benefit even more now than with similar operations in the past because the conditions were sweetened during the pandemic so that that they can borrow at an even lower rate than the ECB’s negative deposit rate. While the deposit rate acts as a charge on reserves, that’s more than outweighed by the generosity of the rate on the long-term loans.“We don’t earn the money for free,” Deutsche Bank finance chief James von Moltke told analysts on a conference call last week. “The business is executing on lending, supporting clients, that allows us to achieve those thresholds.”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 takes every cent I earn to get by and pay debt service. If I were to retire today, I would draw $1,200 a month in Social Security, or $1,400 a month if drawing against my ex-husband’s account (we were married 23 years). See: Confused about Social Security — including spousal benefits, claiming strategies and how death and divorce affect your monthly income?
(Bloomberg) -- Stocks climbed to a record after surprisingly weak jobs data eased fears about higher inflation and a cutback in stimulus. The dollar slumped, while Treasuries were little changed.All major groups in the S&P 500 rose, with energy, real-estate and industrial shares leading the charge. Earlier in the day, technology led equity gains as softer economic data drove investors into the perceived safety of pandemic darlings -- megacaps flush with cash and stay-at-home stocks. A gauge of giant growth companies such as Apple Inc. and Amazon.com Inc. pared most of its advance.The long-awaited employment data rattled markets, with payrolls up only 266,000 in April, trailing the projected 1 million surge. For several analysts, the figures may give a boost to President Joe Biden’s $6 trillion economic agenda and another reason for the Federal Reserve to keep its accommodative stance. Treasury Secretary Janet Yellen said the report “underscores the long-haul climb back to recovery,” while retaining her expectation of a return to full employment next year.“Today’s report suggests that the jobs recovery may not be quite as rapid as many had expected,” said Mike Bell, global market strategist at JPMorgan Asset Management. “If this slower pace of job gains persists, then the Fed is likely to start raising rates later than markets had been expecting. While less good for the economy than a booming labor market, a ‘Goldilocks’ jobs recovery that is neither too hot nor too cold could continue to support equity markets.”Federal Reserve Bank of Minneapolis President Neel Kashkari told Bloomberg Television he has “zero sympathy” for critics on Wall Street, who slam the central bank’s aggressive support of the U.S. economy while millions of Americans remain out of work.“We need to rebuild this labor market and put them back to work. Then there will be plenty of time to normalize monetary policy,” he said.These are some of the main moves in markets:StocksThe S&P 500 rose 0.7% as of 4 p.m. New York timeThe Nasdaq 100 rose 0.8%The Dow Jones Industrial Average rose 0.7%The MSCI World index rose 0.9%CurrenciesThe Bloomberg Dollar Spot Index fell 0.7%The euro rose 0.8% to $1.2167The British pound rose 0.8% to $1.4002The Japanese yen rose 0.4% to 108.60 per dollarBondsThe yield on 10-year Treasuries was little changed at 1.57%Germany’s 10-year yield advanced one basis point to -0.22%Britain’s 10-year yield declined two basis points to 0.77%CommoditiesWest Texas Intermediate crude rose 0.2% to $65 a barrelGold futures rose 1% to $1,833 an ounceFor 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) -- Copper soared this week to an all-time high, continuing a sizzling rally that’s seen prices double in the past year.The previous copper record was set in 2011, around the peak of the commodities supercycle sparked by China’s rise to economic heavyweight status — fueled by massive amounts of raw materials. This time, investors are betting that copper’s vital role in the world’s shift to green energy will mean surging demand and even higher prices. Copper futures rose as high as $10,440 a ton in London on Friday. What’s the big deal about copper?Through human history, copper has played a critical role in many of civilization’s greatest advances: from early monetary systems to municipal plumbing, from the rise of trains, planes and cars to the devices and networks that underpin the information age.The reddish brown metal is mostly unrivaled as an electrical and thermal conductor, while also being durable and easy to work with. Today, a vast array of uses in all corners of heavy industry, construction and manufacturing mean it’s a famously reliable indicator for trends in the global economy.The copper market was one of the first to react as the Covid-19 coronavirus emerged in Wuhan, with prices slumping by more than a quarter between January and March last year. Then as China’s unprecedented steps to control the domestic spread of the virus started to yield results, copper rapidly rebounded -- and it hasn’t looked back since.But it’s not just China driving the rally. While the country accounts for half of the world’s copper consumption and has played an integral part in copper’s surge, demand there has actually softened this year. Yet prices continue to drive higher.Why is copper surging now?It’s partly due to evidence of recoveries in other major industrial economies, with manufacturing output surging in places like the U.S., Germany and Japan. But investors have also been piling into copper on a bet that global efforts to cut carbon emissions are going to mean the world needs a lot more of the metal, putting a strain on supply. New mine production may be slow to arrive, as mines are hard to find and expensive to develop.Electric vehicles contain about four times as much copper as a conventional car, and vast amounts of copper wiring will be needed in roadside chargers to keep them running. Bringing electricity from offshore wind farms to national power grids is also a copper-intensive exercise.Governments around the world have announced ambitious infrastructure investment plans, much of which involves construction, green energy, or both.Are things that use copper getting more expensive?Increasingly, yes. Major manufacturers have been hiking prices for air-conditioning units and fridges over the past few months, and they’re warning there may be more to come.Still, copper is often used in small quantities in complex consumer goods, and so the doubling in prices over the past year won’t be nearly as painful for consumers as an equivalent jump in food or fuel prices would be. Similarly, governments rolling out big spending programs might not be too worried about a rise in copper alone.But with other raw materials rising too, there are growing signs that they’ll get less bang for their buck as the cost of big-ticket items like wind turbines rise.What does it mean for the economy?There are mounting concerns that the broad rally in everything from lumber to steel will force central bankers to step in to stop inflation in raw-materials markets spiralling out of control.In turn, the stellar economic rebound that’s driving the commodities rally may start to stall as businesses are hit by higher interest rates, compressed margins, and waning demand from consumers. The key question for policymakers at the Federal Reserve — and traders on Wall Street — is whether the broad spike in commodities prices will be temporary.Could the rally fizzle out?In the case of copper, there are some signs that spot demand is starting to cool, particularly in China, and some analysts and traders say the record prices aren’t justified by today’s fundamentals.The view among policymakers is that the rise in commodities prices will prove short-lived, as consumers will focus their spending on services and experiences as economies open up, easing the strain on demand for commodities-intensive items such as second homes, electronics and appliances seen during lockdown.For copper though, it’s not just about strong demand today. In fact, a lot of expected spending on renewables and electric-vehicle infrastructure is yet to really materialize. When it does, it could transform the outlook for copper usage in countries such as Germany and the U.S.How high could copper go?Trafigura Group, the world’s top copper trader, and Goldman Sachs Group Inc. both say prices could hit $15,000 a ton in the coming years, on the back of a global surge in demand due to the shift to green energy. Bank of America says $20,000 could even be possible if drastic issues arise on the supply side.The copper market itself may also be facing a big shift. Trafigura predicts that demand growth in China will be eclipsed by rising consumption in the rest of the world over the coming decade, in a dramatic reversal of the recent trend. That could help underpin a new “supercycle” in the copper market, driving prices higher for years on the back of a step-change in global demand.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.
U.S. stock funds now are riding a river of new cash from investors — and that is not a bullish sign. In fact, fund flows are a contrarian indicator: the U.S. stock market in the past has performed better when there is a net outflow of cash. The evidence is summarized in the chart below, which plots net inflows of cash to U.S. stock funds (both open-end and exchange-traded funds) by year over the past decade.
Everyone has a different idea of what wealth is. You could ask 20-somethings what they think wealth is, and they might describe extravagant houses or a private jet. Someone older might mention lucrative investments. Everyone seems to have a different … Continue reading → The post What Is the Financial Definition of Wealth? appeared first on SmartAsset Blog.
The 39-year-old landlord, who was born and raised in Toronto, Canada, reached $1 million Canadian dollars, or approximately US$791,000, in 2019, though he felt he had reached financial independence even sooner. Chad found the FIRE Movement, made it to $1 million CAD before 40, and became a firefighter and sheepherder along the way. The former network administrator and his partner, Catherine, who is a Ph.D. student and research coordinator, save between 50% and 80% of their income every year and live off of $27,000 in annual expenses.