WASHINGTON, Feb 6 (Reuters) - Stryker Orthopaedics Corp, a unit of Stryker Corp, has been awarded a $486 million contract for orthopedic products, the Pentagon said in a statement on Monday.
(Reporting by Washington Newsroom; Editing by Eric Walsh)
WASHINGTON, Feb 6 (Reuters) - Stryker Orthopaedics Corp, a unit of Stryker Corp, has been awarded a $486 million contract for orthopedic products, the Pentagon said in a statement on Monday.
(Reporting by Washington Newsroom; Editing by Eric Walsh)
Stocks traded mixed on Monday, with technology stocks under more pressure as investors weighed the risks that higher inflation during the pandemic recovery might weigh on high-growth names.
(Bloomberg) -- Wall Street traders like Trey Griggs are finding a new lease on life in the $2.4 trillion crypto Wild West.After two decades in energy trading, the 51-year-old was lured by a former Goldman Sachs Group Inc. colleague this February into a new world of market-making in digital currencies.Now he’s in fighting spirits -- unleashing old-school finance tricks to exploit the industry’s rampant inefficiencies, volatility and downright weirdness.“All the fun that used to be had 30 years ago in the commodity markets and is no longer fun -- that fun is now in crypto,” says the U.S. chief executive officer at GSR Markets in Houston.Griggs is among crypto newcomers deploying systematic strategies that are tried-and-tested in conventional asset classes -- price arbitrage, futures trading, options writing -- in a booming new corner of finance. As more mainstream investors get behind Bitcoin, boutique firms are joining the likes of Mike Novogratz in an ever-broadening crypto rally that keeps breaking records.For those who can stomach the price swings, the threat of exchange hacks and the byzantine market structure, complex fast-money trades are offering an alternative way to ride the digital mania.At GSR, the firm’s bread and butter is market-making, where traders pocket the spread between buy and sell orders.In stocks, that’s a nearly oligarchic business where the likes of Citadel Securities and Virtu Financial operate at lightning speed. In virtual currencies, where hundreds of exchanges offer free access at a slower pace, GSR can capitalize on the big volumes without splurging millions on high-frequency infrastructure.“Part of the tech we have is just to tell us did we actually trade or not, is this trade good or bad,” says GSR co-founder and former Goldman trader Richard Rosenblum. “We don’t want to be slower than our competitors, but it’s just not quite as much of the driver.”For every strategy in stocks, bonds or currencies rendered boring by low rates, regulation or market crowding, there’s a lucrative trade in a token lying across the hundreds of exchanges out there. Or so the thinking goes.Read More: Veterans of FX’s Wilder Days Are Loving Bitcoin’s VolatilityWhile crypto die-hards have made merry like this for years, the relentless rallies across the tokensphere this year are drawing more Wall Street converts seeking riches and new thrills.Take Mark Treinkman. After a career mostly at proprietary stock-trading shops like Chimera Securities, digital money is renewing his passion for quant trading.“I’ve been going through some of my old strategies and things that wouldn’t have worked in equities in decades have an edge in crypto still,” he says.A market-neutral strategy run by his $60 million firm BKCoin Capital gained 71% last year using investing styles that often include arbitraging different prices across exchanges and the gap between the spot and futures market.For a few minutes during trading on Wednesday, for example, the price of Ethereum Classic jumped well above $100 on the Coinbase exchange. The digital token was trading at less than $80 at other venues, offering an obvious opportunity for investors to make money simply by buying in one place and selling in another.It’s one of the best-known -- albeit diminishing -- discrepancies exploited by the likes of Alameda Research, a crypto trading firm filled with former traders from high-frequency shops. A famous example is the kimchi premium, the tendency for Bitcoin to trade higher in South Korea thanks to strong demand and the difficulty of moving money around to profit from the gap.With no one-stop prime broker to centralize trading books and offer clients leverage across venues, traders like Treinkman face plenty of challenges in their bid to arbitrage price gaps, but say the rewards are commensurate.And the opportunities pop up everywhere. For instance, when longer-dated futures in pretty much any asset class trade higher than the spot price -- known as contango -- the former almost always converges to the latter as the contracts mature.That’s popularized the crypto basis trade, where an investor goes long the spot rate and shorts the futures.When Bitcoin last peaked in mid-April, the December contracts were nearly 4% higher than August which were in turn about 2% higher than the spot reference rate, as speculators unleashed bets on rising prices. By contrast, the December oil contracts were trading beneath August’s on the same day, according to the data compiled by Bloomberg.“The crypto market is still dominated by retail investors who use excessive leverage and bid the premiums for futures,” said Nikita Fadeev, a fund manager at $60 million crypto unit at quant firm Fasanara Capital.Trades common in the industry also include short-term momentum and a form of statistical arbitrage, which bets on gaps between various tokens eventually closing like when Ethereum is surging but Bitcoin isn’t, Fadeev says.As assets grew, the fund recently appointed Laurent Marquis, the former co-head of derivatives at Citadel Securities, as chief risk officer, and Steve Mobbs, co-founder of quant fund Oxford Asset Management, as senior adviser.Over in Zug, Switzerland, St. Gotthard Fund Management has transformed from an old-school family office writing options on Swiss shares to a digital evangelist in its income strategy aiming to yield 8% a year. Just like in stocks, the investing style sells derivatives to take advantage of big demand to hedge price swings -- which causes the volatility priced into options to be higher than what’s likely to come to pass.For option writers like St. Gotthard, that means the premiums are much juicier, though they also come with a higher risk of having to actually pay out, like an insurer during an earthquake.“The major difference at the end of the day is how much premium retail investors are willing to pay,” says chief investment officer Daniel Egger. “On the other hand of course we’ve written calls we wished we hadn’t in those moves up.”In fact, going long crypto over the past year has proved the easiest and most profitable way to tap into the boom. And for those choosing the systematic route, competition is rising.For example, in order to get an edge in its market-making strategy, BKCoin has recently installed servers at Asian crypto exchanges, a move known as co-location in the high-frequency world of stocks. It’s a sign the industry is growing up fast.“In any emerging market we’ve seen these inefficiencies decrease over time,” said George Zarya, founder of Bequant, a crypto prime brokerage that caters to systematic traders. “There are more professional players that come in.”(Updates first chart and market value in first paragraph. An earlier version corrected the seventh paragraph under the second chart to show Fasanara does not engage in momentum and stat-arb trades but says they are common in industry.)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.
Recording buying pressures on Ethereum and some altcoins have pushed the crypto market valuation to about 2.5 trillion.
(Bloomberg) -- Cathie Wood’s Ark Innovation ETF plunged to a six-month low, with all but five of its 58 holdings retreating in a broad tech selloff.The ARKK exchange-traded fund that makes concentrated bets on tech companies aiming to disrupt industries fell 5.2% Monday, double the loss in the Nasdaq 100 Index. It’s now down more than 30% from its February peak.Hardest hit in the portfolio listed in the fund’s May 7 holdings disclosure were two biotech stocks. Twist Bioscience Corp. was the fund’s biggest laggard, plunging more than 17% on Monday, its worst one-day performance since Feb. 5. NanoString Technologies Inc. sank 12%. Tesla Inc., ARKK’s biggest holding, dropped 6.4%.Wood has added to her bets in recent downdrafts, buying Twitter Inc. in three out of five days last week as it fell 5.2% in its worst week since March. She said in a television interview that the tech selloff has only set her fund up for a strong rebound. ARKK surged almost 150% in 2020 and is down 16% this year.On the bright side, Coinbase Global Inc., which accounts for about 2.8% of the ETF’s holdings, gained 11.3% in its best day since its April 14 direct listing.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.
KUALA LUMPUR (Reuters) -Malaysia's now-defunct 1MDB state fund is suing units of Deutsche Bank, J.P. Morgan and Coutts & Co to recover billions in alleged losses from a corruption scandal at the fund, court documents seen by Reuters showed. 1MDB is claiming $1.11 billion from Deutsche Bank (Malaysia) Bhd, $800 million from J.P. Morgan (Switzerland) Ltd and $1.03 billion from a Swiss-based Coutts unit, and interest payments from all of them, according to the lawsuit. Malaysia's finance ministry said on Monday that 1MDB and a former unit had filed 22 civil suits seeking to recover more than $23 billion in assets from entities and people allegedly involved in defrauding the fund and its ex-subsidiary.
(Reuters) -Novavax Inc on Monday again delayed its timeline for ramping up COVID-19 vaccine production and said it does not expect to seek regulatory authorization for the shot in the United States, Britain and Europe until the third quarter of 2021, sending its shares tumbling. Novavax shares fell more than 9% in extended trading after closing nearly 9% lower on Monday. The pushback of regulatory filings "to Q3 (from Q2) and a downward revision to time to full production to Q4 (from Q3), represent delays to prior timelines and difficulty in growing," said Kelechi Chikere, an equity analyst at Jefferies in a Monday note.
Venezuelan state oil company PDVSA would need $58 billion in investment to revive its crude production to the levels of 1998 before ex-President Hugo Chavez came to power, equivalent to 3.4 million barrels per day (bpd), a document seen by Reuters shows. In the February 2021 document entitled "Investment Opportunities," Petroleos de Venezuela's planning and engineering division said it was seeking capital investment from Venezuelan and foreign partners, mostly to recover and upgrade oil production infrastructure "under new business models".
An up-and-coming gold exploration company in Quebec may hit the jackpot in what could end up being a story even some of the most seasoned investors only ever dream of
(Bloomberg) -- Meituan’s stock plunged to a seven-month low after the Chinese e-commerce company’s billionaire chief executive officer shared and then deleted a poem on social media that some interpreted as a veiled criticism of Beijing.The food delivery giant fell almost 10% in Hong Kong before closing 7.1% lower to wipe out about $16 billion. Wang Xing posted a classical poem about book burning by the emperor during the Qin dynasty on social media platform Fanfou.com, according to the Hong Kong Economic Times. He deleted it on Sunday and issued a clarification that he used the poem in reference to the company’s competitors. A Meituan spokesperson confirmed both posts and declined to comment further.Investors are jittery after business figures who appeared to criticize the government have faced consequences. Wang’s rival Jack Ma angered Beijing in October last year by blasting regulators publicly over what he considered to be an antiquated approach to oversight. That speech was followed swiftly by tightened rules over consumer lending, the scuppering of Ant Group Co.’s record $35 billion initial public offering as well as an antitrust probe into Alibaba Group Holding Ltd.“To a certain extent, one can interpret the poem posted by Wang Xing as similar to Jack Ma’s criticism of the banking regulators,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “This is not a good time to be too vocal!”China’s technology sector has come under intense regulatory scrutiny in recent months amid concern the largest firms have grown too powerful. That’s weighed on the shares, with the Hang Seng Tech Index tumbling almost 30% from its February high. The antitrust watchdog has launched an investigation into suspected monopolistic practices by Meituan, including forced exclusivity arrangements.The Shanghai Consumer Council criticized Meituan on Monday for practices that hurt consumers’ rights, including refund problems and misleading content on its mobile app. The company has vowed to submit a rectification report in the near term.Meituan reported a net loss for the final quarter of 2020, which prompted the three global credit-rating agencies to downgrade their outlooks. The firm raised $10 billion selling shares and convertible bonds in Hong Kong last month, after burning through cash trying to expand its business.The shares, which have more than 50 buy ratings and no sell recommendations, have fallen for a record nine days. They’re down 42% from their February high in one of the worst performances on the Hang Seng Index.The poem Wang shared is by Tang dynasty poet Zhang Jie about the book burning that took place under emperor Qin Shi Huang.“What the CEO posted is a very famous anti-establishment poem, which shows that he might be under a lot of pressure from the ongoing investigations,” said Hao Hong, head of research at Bocom International in Hong Kong.The following is Wang’s clarification:“A poem from the Tang dynasty inspired me a lot lately: the Qin dynasty was afraid of scholars but Liu Bang and Xiang Yu, whose uprising overthrew the Qin regime, didn’t have much education. This has reminded me that the most dangerous competitors are often not those expected. Alibaba has been focusing on JD.com these years, only to see Pinduoduo exceed it in user numbers. Similarly, Ele.me looks to be the biggest rival of Meituan’s delivery business, but what could really cause a shock to the industry may be some companies and business models that haven’t come under our radar.”(Updates with Shanghai Consumers Council comment in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Iron ore futures surged more than 10% and copper extended its record run amid increasing bets they’ll be among the biggest winners from a commodities boom that’s stoking concerns about inflation around the world.While analysts struggled to pinpoint a trigger for Monday’s gains in iron ore, they cited several trends including optimism that central banks will retain supportive policies even as the global economy recovers. Expectations China will tighten environmental rules have added to the bull case for copper -- seen as vital to the green energy transition -- and fueled speculation that steelmakers may front-load iron ore purchases before new curbs kick in.The gains add to a more than yearlong surge in raw-materials prices that’s shifted into overdrive in recent weeks, with the Bloomberg Commodity Spot Index rising for 14 of the past 15 days to the highest level in almost a decade. Metals including copper pared advances later in Monday’s session as dollar losses ebbed and U.S. Treasury yields advanced.A “Goldilocks scenario” may be forming as strengthening global growth combines with restrained wage pressures and a dovish Federal Reserve, Goldman Sachs Group Inc. commodities analysts said in a May 7 report, the same day weak U.S. jobs figures added to the case for more stimulus. The risk for bulls -- and anyone betting on buoyant returns from stocks and bonds -- is that the surge in raw materials feeds through to broader measures of inflation and eventually forces central banks to tighten.For copper, the long-term outlook is also being bolstered by a likely surge in demand as governments target huge investments in renewables and electric-vehicle infrastructure. While copper’s last march to record highs in 2011 was driven by China’s economic boom, analysts expect this rally to be supported by a much broader rise in metals usage.”We’re in a new world,” Jeffrey Currie, global head of commodities research at Goldman Sachs, said in a Bloomberg TV interview. “We’re seeing a much more balanced growth between the U.S, Europe and China.”The iron ore sector “is very, very hot,” Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said in Bloomberg Television interview. “Supply is still not able to meet that strong demand.”Iron ore futures in Singapore jumped to a record above $226 a ton. Contracts in Dalian rose by the daily limit when the market opened.Copper, often viewed as a barometer of the global economy’s health, rose as much as 3.2% to a record $10,747.50 a ton on the London Metal Exchange, before erasing gains and settling 0.3% lower at $10,382. Aluminum slipped 0.4% after climbed as much as 2.5%.“Looks like there’s some profit-taking going on in copper and other metals after the big surge,” said Wenyu Yao, senior commodities strategist at ING Bank.Still, “there’s still quite a lot of room to go,” Evy Hambro, global head of thematic investing at BlackRock Inc., said on Bloomberg Television. “What we’re really doing is we’re testing the upper ranges of commodity markets to work out what the new price range is going to be.”There were fresh jitters on the supply side as China’s major copper smelters vowed to reduce purchases of mined concentrate this year as the country seeks to curb carbon emissions. While that could ease strains on mine supply, the smelters will need to boost scrap purchases to avoid a slump in production of refined metal.“It’s notable that the smelters don’t imply a cut to output,” Morgan Stanley analysts Susan Bates and Marius van Straaten said in an emailed note. “They appear comfortable that they can make up the reduction in concentrate purchases with a lift in the use of copper in other forms.”The iron-ore boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs and potentially front-load output ahead of more environmental restrictions.Steelmakers in the rest of the world, such as ArcelorMittal SA, are also enjoying a boom as demand bounces back from pandemic lows.“There is a chance that ex-China demand can come back to such an extent that we still see steel demand pick up globally and that will see iron ore demand remain at these elevated levels,” CBA’s Dhar said.Traders will be watching closely for how China responds. Shipmakers and household-goods manufacturers will eventually be unable to withstand elevated steel prices, the country’s state-run Xinhua News Agency reported on Sunday, citing analysis from the China Iron & Steel Association. The report said it would be difficult for steel to continue rallying.The government has scheduled nationwide inspections on steel-capacity cuts, with the National Development and Reform Commission calling on the state asset regulator and provincial level working groups to complete self-checks by May 15. Authorities will conduct on-site inspections in June and July, according to a statement Monday.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) -- China is shaping up to be the first real test of Big Tech’s ambitions in the world of carmaking, with giants from Huawei Technologies Co. to Baidu Inc. plowing almost $19 billion into electric and self-driving vehicle ventures widely seen as the future of transport.While Apple Inc. has long had plans for its own car and Alphabet Inc. has Waymo, its autonomous driving unit, the size -- and speed -- of the move by China’s tech titans puts them at the vanguard of that broader push. The lure is an industry that’s becoming increasingly high tech as it pivots away from the combustion engine, with sensors and operating systems making cars more like computers, and the prospect of autonomy re-envisioning how people use will them.As the world’s biggest market for new-energy cars, China is a key battlefield. Established automakers like Volkswagen AG and General Motors Co. are already slogging it out with local upstarts such as market darling Nio Inc. and Xpeng Inc. Over the past three months, Huawei, smartphone giant Xiaomi Corp., Baidu -- which runs China’s top search engine and a mapping app -- and even Apple’s Taiwanese manufacturing partner Foxconn have joined the fray, forging tie-ups and unveiling their own carmaking plans.Nowhere was that more on display than at last month’s Shanghai Auto Show, which has become one of the world’s premier events for showcasing the hottest new trends in the automotive sector. Visitors queued for hours to access the pavilions of Huawei and Baidu, thronging their displays and snapping pictures of sensor systems, high-tech dashboards and model vehicles. But despite the intense interest, the era of the new car is a hyper-competitive one in China, and tech giants have a lot to prove.“There’s a big element of faith in the tech companies’ bets,” said Stephen Dyer, managing director of consultancy AlixPartners in Shanghai and a former Ford Motor Co. executive. “This is a matter of creating something new that doesn’t exist now. That’s where the element of faith comes into play.”Huawei has been at the fore, recently announcing plans to invest $1 billion in EVs and its own self-driving technology, which it claims has “already surpassed” electric car pioneer Tesla Inc. in some aspects.The Shenzhen-based company, better known for its mobile-phone networks and being the subject of crippling U.S. sanctions, has unveiled its first car developed with BAIC BluePark Mew Energy Technology Co. The mid-sized Arcfox S sedan uses HI, or Huawei Inside, an intelligent automotive software package that enables it to run on autonomous driving mode in city areas for more than 1,000 kilometers (620 miles) without human intervention. Delivery is slated to start in the fourth quarter.Huawei’s auto show display attracted larger crowds than nearby China Evergrande New Energy Vehicle Group Ltd., an EV upstart that took one of the biggest stands to showcase nine models despite the fact it hasn’t sold a car under its own brand. As well as the Arcfox S sedan, a Seres SF5 coupe equipped with Huawei Inside was on display, along with Huawei’s HiFin Intelligent Antenna Solution, a new generation in-vehicle communication system plus 4D-imaging radar that’s used to monitor roads and traffic.One of the biggest challenges for new entrants to the automotive sector is how capital and resource intensive it is to make cars. How tech companies negotiate that will be key, and potentially provide opportunities for established players in the sector, with Huawei repeatedly saying its plan is not to produce its own vehicles. Rather, it’s partnering with three Chinese automakers -- BAIC Motor Corp., Chongqing Changan Automobile Co., and Guangzhou Automobile Group Co. -- to make self-driving cars that will carry its name as a sub-brand.Guangzhou Auto will jointly build a “truly unmanned car” that will be produced in 2024, President Feng Xingya said last month. The carmaker will also cooperate with Huawei on big data, smart cockpits, and hardware and electronic chips, Feng said.“China adds 30 million cars each year and the number is growing,” Huawei Deputy Chairman Eric Xu said in April. “Even if we don’t tap the market outside of China, if we can earn an average 10,000 yuan ($1,550) from each car sold in China, that’s already a very big business.”Apple appears to be considering a similar route, talking at one point with carmakers including Hyundai Motor Co. before discussions fizzled. Unlike China’s tech giants, Apple is keeping its plans largely secret. The company lost a key manager overseeing its self-driving car program in February and it’s unclear what impact that may have had on Apple’s progress on delivering a commercially viable car.The rise of smart vehicles and autonomous driving throws up a raft of possibilities for tech companies, not least access to data such as real-time insight into popular destinations and the routes taken to get there. On top of that, for some there’s the opportunity to charge for tech add-ons and system improvements, essentially treating the vehicle like a piece of computer hardware that constantly gets its software updated.“They will definitely focus on being intelligent,” said Yale Zhang, managing director of Shanghai-based consultancy Autoforesight Co. “Making a good electrified car is a ‘pass,’ while making a good intelligent car will make an ‘A-grade.’ That’s what these tech giants are good at. Their main revenue will not be from selling the car but finding other ways to earn post-sale, such as over-the-air system upgrades or software subscriptions.”Big Tech in China Is Eyeing EVs for a Reason: Hyperdrive DailyFirst MoversBaidu -- which started investing in robo-taxi technology as early as 2013 and funded Chinese EV startup WM Motors -- now plans to spend $7.7 billion over the next five years developing smart-car technology via its newly established unit Jidu Auto. The division aims to launch its first model in three years, followed by new releases every 12 to 18 months, Chief Executive Officer Xia Yiping said.“The core value of cars in the future will be how intelligent they are,” Xia said, echoing a familiar refrain. “The earlier a company plans, the more control of self-developed technologies it gains, the more advanced technology it has, the more power it will own in the market.”Jidu has a core team of about 100 staff, and will expand to as many as 3,000 personnel by the end of next year, including up to 500 software engineers, he said. The first batch of cars will be based on Zhejiang Geely Holding Group Co.’s pure EV manufacturing structure, while Jidu will collaborate with Baidu’s autonomous-driving unit Apollo, with a special focus on smart cars and the mass production of autonomous driving features. The unit will embark on its next fundraising round soon, with further investment expected from Baidu and external investors.Chinese smartphone maker Xiaomi has also announced plans to invest about $10 billion over the next decade to manufacture electric cars, though hasn’t disclosed much detail or given a timeframe for deliveries. Billionaire co-founder Lei Jun in March announced his intention to lead a new standalone division and spearhead the drive into EVs, in what he called his final major startup endeavor.“We have deep pockets for this project,” Lei, who is also Xiaomi’s chief executive officer, said when unveiling the plan. “I’m fully aware of the risks of the car-making industry. I’m also aware the project will take at least three-to-five years with tens of billions of investment.”While China’s tech giants may be late to the game and entering unfamiliar territory, that could play to their advantage, said Dyer of AlixPartners.“This isn’t an industry where you have to be the first-mover to win,” he said. “In fact, in the auto industry, the first mover typically never wins. It’s always the follower who wins. Because when you are the first mover, you’re the one paying to learn through all the mistakes.”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 voices concern on the FAAMG (Facebook, Apple, Amazon, Microsoft and Google) stock complex as the Biden administration seeks various tax increases.
Stock futures began the overnight session mixed Monday evening, with contracts on the Nasdaq extending declines.
Wall Street closed lower on Monday as inflation jitters drove investors away from market-leading growth stocks in favor of cyclicals, which stand to benefit most as the economy reopens. Industrial and healthcare shares limited the Dow's decline but the blue-chip average reversed course late in the session to snap a three-day streak of record closing highs. "The market leadership is not doing all that well this year," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
The S&P 500 and the Dow were set to open at record highs on Monday as optimism that interest rates would remain lower for longer lingered, while a surge in commodity prices lifted shares of miners, energy and steel companies. Copper miner Freeport-McMoran rose 3.4% in premarket trading, while aluminum producer Alcoa gained 3.4% and steelmaker United States Steel Corp was up 2.4% as copper prices touched a record high and aluminum scaled a new peak.
(Bloomberg) -- The pound strengthened more than 1% against the dollar after the Scottish National Party’s election showing pushed back the risk of a near-term vote on independence, yet traders are bracing for further clashes over the U.K.’s future down the road.Sterling climbed by the most in almost a month to $1.4134 on Monday, its highest level since February, after the SNP fell one seat short of a parliamentary majority. Strategists from Rabobank International to Credit Agricole SA cite the push for a referendum -- which U.K. Prime Minister Boris Johnson opposes -- as a headwind that could create volatility in the months to come.“There are a lot of voices in the market that see the lack of a majority for the SNP combined with Johnson’s refusal to hold a referendum as meaning that the risks to the union are a non-issue for the pound,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “I would be more cautious on this.”Investors will now be paying attention to how SNP’s leader Nicola Sturgeon pursues the goal of changing Scotland’s constitutional future. Her party boosted its haul to 64 of the 129 seats in the Scottish Parliament and, alongside the Green party that also increased its share, would have enough to form a pro-independence majority. Johnson has said that he would not grant one any time soon, which could lead to a clash in the courts.Sterling’s rally started during Asia as investors covered short positions and Japanese banks bought the currency, traders said, before extending through London trading. U.K. government bonds led a selloff of haven sovereign assets following the vote. Ten-year yields climbed as much as four basis points to 0.81%.The U.K. prime minister did strengthen his hand across Northern England, benefiting from the country’s speedy rollout of vaccines. Britain is due to be fully re-opened by June 21 and the corresponding economic boost could be another tailwind for the pound over the coming months. One-month risk reversals, a gauge of market sentiment, show pound traders are at their most bullish versus the dollar since last month.“’What matters is the U.K. economy, the Bank of England, the dollar and risk markets,” said James Athey, a money manager at Aberdeen Standard Investments. If the dollar suffers in coming months, sterling could rise as high as $1.45, a level last seen in 2016, he said.Read more: Why Scotland’s Road to Independence Vote Is RockyFor Rabobank’s Foley, continued uncertainties over Scotland’s future could spur volatility in sterling over the next 18 months. Sturgeon has said that if Johnson wants to stop Scottish legislation on a referendum, he would have to go to the Supreme Court to challenge it. A draft Referendum Bill has already been published. While a majority voted to remain in the union in 2014, odds show that a new referendum could be much tighter.“The pound is not out of the woods just yet,” said Valentin Marinov, head of Group-of-10 foreign-exchange research at Credit Agricole. “The confrontation over independence between Holyrood and Westminster could grow more intense in the wake of the Scottish election and thus add to the downside risks for sterling once again.”(Updates prices to reflect 1% rally from 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.
(Bloomberg) -- Gas stations along the U.S. East Coast are beginning to run out of fuel as North America’s biggest petroleum pipeline races to recover from a paralyzing cyberattack that has kept it shut shut for three days.From North Carolina to Florida to Alabama, gas stations are reporting that they’ve sold out of fuel as supplies in the region dwindle and panic buying begins to set in. At least two gas stations in Tallahassee, Florida, were completely out of stock, according to employees who asked not to be named. In Asheville, North Carolina, Aubrey Clements, a clerk at an Exxon Mobil station answered the phone with “Hello, I’m currently out of gas.” Colonial Pipeline said it’s manually operating a segment of the pipeline running from North Carolina to Maryland and expects to substantially restore all service by the weekend. The restart may not come fast enough to avert immediate shortages in the southeast, where North Carolina declared a state of emergency as gas stations reported running of out gasoline.Stations in Asheville, North Carolina, are out of fuel and lines are forming at outlets that still have supplies. David Marcos, an employee at a Royal Dutch Shell Plc-owner station in the city said they ran out of gasoline and diesel earlier on MondayThe Marathon gas station in Elizabethtown, North Carolina, had roughly two dozen cars waiting to fuel up, said Chanss Arnett, an employee there. The stations in town are all packed, Arnett said over the phone, where the door bell chimes from people entering could be heard every other minute.The conduit has been shut down since late Friday, prompting frenzied moves by traders and retailers to secure alternative supplies. On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. The pipeline hasn’t suffered any physical damage and no fuel shortages have been detected, a White House official said.Colonial Chief Executive Officer Joe Blount and a top lieutenant assured Deputy Energy Secretary David Turk and state-level officials on Monday that the company has complete operational control of the pipeline and won’t restart shipments until the ransomware has been neutralized.Bases, RefineriesIn an 18-minute virtual meeting, Blount said shortages may develop in some markets but said Colonial is working with refiners, marketers and retailers to prevent those, according to a person involved with the meeting who wasn’t authorized to speak publicly about the discussion.The pipeline serves 90 U.S. military installations and 26 oil refineries, the person said. Meanwhile, President Joe Biden said Russia has “some responsibility” to address the attack.Emergency shipments of gasoline and diesel from Texas already are on the way to Atlanta and other southeast cities via trucks, and at least two Gulf Coast refineries began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks,’ a spokeswoman said.READ: How a Key U.S. Pipeline Got Knocked Out by Hackers: QuickTakeGovernment officials haven’t advised Colonial on whether it ought to pay the ransom, Deputy National Security Adviser for Cyber and Emerging Technologies Anne Neuberger said during a briefing.New York PricesThe national average retail gasoline price rose to $2.967 a gallon on Monday, a 2.4% increase from Friday, according to AAA. The premium for wholesale gasoline in the New York area expanded to its widest in three months.The attack came just as the nation’s energy industry was preparing to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year in lockdown. Depending on the duration of the disruption, retail prices could spike, further stoking fears of inflation as commodity prices rally worldwide.DarkSide said in a post on the dark web that it wasn’t to blame and hinted that an affiliate group may have been behind the attack. The group promised to do a better job of screening customers that buy its malware.Gasoline futures that initially surged as much as 4.2% in overnight trading surrendered most of those gains on Monday.Learn more about how emergency powers can counter fuel-supply disruptions.Convenience-store chains in places like Atlanta and Savannah, Georgia, began clamoring for emergency fuel deliveries on Friday afternoon, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc.Water-Borne SuppliesLandlocked cities face the greatest danger of fuel shortages compared with those with access to water-borne deliveries, Boyd said. If the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders. Sun Coast, which operates about 900 trucks, has delivered emergency supplies during 75 major storms over the past 15 years, including during hurricanes Harvey and Irma in 2017.Gasoline for June delivery settled little changed at $2.1334 a gallon in New York. Futures prices have gained more than 50% this year, helped by the recovery from the worst effects of the pandemic.Tankers BookedPrior to Colonial’s Monday statement, traders were seeking vessels to deliver fuel to coastal terminals. Four vessels were provisionally chartered to send diesel or gasoline from Europe to the U.S. Atlantic Coast, according to Danish oil-product tanker company Torm A/S.Some tankers are also being secured to temporarily store gasoline along the Gulf Coast, according to market participants who asked not to be identified because the information isn’t public. Meanwhile, Total SE scaled back activity in a key unit at its Port Arthur, Texas, refinery because of the Colonial shutdown, according to a person familiar with operations. Citgo Petroleum Corp. took similar measures at its Lake Charles, La., plant.Increased SecurityColonial halted all operations on its system late Friday after suffering a ransomware attack that affected some of its IT systems.The event is just the latest example of critical infrastructure being targeted by ransomware. Hackers are increasingly attempting to infiltrate essential services such as electric grids and hospitals. The escalating threats prompted the White House to respond last month with a plan to increase security at utilities and their suppliers. Pipelines are a specific concern because of the central role they play in the U.S. economy.“It’s an all-hands-on-deck effort right now,” said U.S. Commerce Secretary Gina Raimondo. “We are working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions in supply.”The White House pulled together an inter-agency task force to address the breach, including exploring options for lessening its impact, according to an official. Biden can invoke an array of emergency powers to ensure supplies keep flowing to big cities and airports along the East Coast.Rules EasedSome rules curbing domestic transportation of fuel have been eased to help deal with any shortages. That doesn’t extend to waiving Jones Act, a measure that would allow foreign tankers to help shuffle more petroleum products between U.S. ports.Colonial has the capacity to send about 2.5 million barrels (105 million gallons) a day from Houston as far as North Carolina, and another 900,000 barrels a day to New York.Extortion FeeRansomware cases involve hackers seeding networks with malicious software that encrypts the data and leaves the machines locked until the victims pay the extortion fee. This would be the biggest attack of its kind on a U.S. fuel pipeline.With gasoline inventories ample, pump prices weren’t expected to tick much higher until Memorial Day at the end of May, which is traditionally viewed as the start of the U.S. summer driving season. If the pipeline doesn’t restart soon it will accelerate the move higher.“Atlanta will be one of the earlier sore spots, along with eastern Tennessee, and perhaps the Carolinas,” said Patrick DeHaan, head of petroleum analysis at GasBuddy.The Northeast can secure gasoline shipments from Europe but it will come at an increasing cost the longer the pipeline stays shut. The fuel’s premium to crude in northwest Europe had jumped by more than 5% in intra-day trading earlier on Monday but was still down week-on-week.In the meantime, fuel producers including Marathon Petroleum Corp. are weighing alternatives for how to ship their products to the Northeast.One potential route is the Kinder Morgan-operated Plantation Pipeline, even though it only extends as far north Washington D.C. and has a capacity of 720,000 barrels a day, far short of Colonial’s. Kinder said Sunday it’s working with customers to accommodate additional barrels during Colonial’s outage, and that Plantation is deferring where possible any non-essential maintenance that might otherwise reduce flow rates.While all of the major segments of Colonial’s system remain offline, some smaller so-called laterals connecting specific fuel terminals to delivery points are in service, the company said earlier.Inventories offer minimal cover, ClearView Energy Partners said in a research note. Tankers leaving Rotterdam could take up to 14 days to make the trip to the New York Harbor. The Midwest could theoretically send some of its supplies to the East Coast via rail and barge, but the region’s inventories are tighter than in previous years, ClearView said.“The Colonial outage comes at a critical juncture for the recovering U.S. economy: the start of the summer driving season,” ClearView said. “We therefore think lawmakers could begin a ‘blame game’ immediately, and a sustained disruption that leads to a significant pump price spike could increase prospects of domestic policy interventions.”(Updates with comments from gas stations in paragraph 2)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.
After having been instructed by their own government to slash oil imports from Saudi Arabia, Indian state refiners have reversed crude import cuts after India received critical medical aid from the Arabian oil giant
(Bloomberg) -- Market contagion surrounding China Huarong Asset Management Co. is fading less than six weeks after credit investors reeled at the prospect of a default by one of the country’s most important state-owned companies.But while the tentative recovery is good news for Beijing’s attempts to instill more credit-market discipline without triggering a financial crisis, it could be a bad omen for any China Huarong bondholders still counting on a government bailout to make them whole.Spreads on investment-grade dollar bonds have tightened after hitting a nine-month high at the height of the panic, and yields on offshore junk notes are lower than at the end of March, according to Bloomberg Barclays indexes. Tencent Holdings Ltd. recently secured $4.15 billion in one of Asia’s biggest dollar bond deals of the year, while Bank of China Ltd. units raised the equivalent of $2.35 billion in a multi-currency bond sale.The same is true of other indicators of stress in China’s financial system. While rising corporate defaults spilled over to the country’s money markets in November, there are no such signs of concern now. Banks are having no trouble borrowing from each other, judging by the declining cost of one-year interbank debt. The overnight repo rate fell below 1.5% last week for the first time in two months.Some market watchers say the relative calm could embolden Beijing to impose losses on China Huarong’s creditors.“Markets are getting a signal as loud and clear as one blasted from loudspeakers: China’s policy stance of ‘no debt guarantees’ has been extended beyond local government SOEs to large, national-level SOEs,” DBS strategists led by Taimur Baig wrote in a May 3 note. “Markets should know that these are not mere platitudes, if Huarong serves as an example.”Reducing moral hazard has become a priority for President Xi Jinping as he seeks to make the nation’s state-owned companies more efficient and better run. Ensuring the equity and bond markets reward and punish firms for their corporate behavior, rather than relying on the cumbersome state system, is a relatively new approach. There are signs it is working. SOEs have replaced their private counterparts as the country’s biggest source of defaults.Allowing a debt restructuring at China Huarong, one of the country’s biggest financial conglomerates, would send a strong signal of the government’s resolve. The company’s dollar bonds due 2025 traded at well above par at the end of March, despite the trial and swift execution of its chairman Lai Xiaomin in January for bribery. They’re now priced at about 80 cents on the dollar. Recent high profile defaults by two university-linked companies, Peking University Founder Group Corp. and Tsinghua Unigroup Co., have served as additional warnings to investors dabbling in borrowers with ambiguous ties to the state.Even after the rout in China Huarong’s bonds, some investors are still betting Beijing will stand behind the company. It has so far met all of its debt obligations on time and has said it is operating normally with sufficient liquidity. A China Huarong vice president recently said downgrades by international rating agencies “have no factual basis” and are “too pessimistic.” The comments, which were carried in the state-run Shanghai Securities News, were viewed by some observers as a signal of continued state support.The nation’s banking and insurance regulator has also said China Huarong has ample liquidity, though it has yet to provide clarity about the company’s future or what penalty bondholders might pay, if any, to help fix its debt issues.Curtailing implicit guarantees won’t be easy for China, given that they also backstop the nation’s stocks and currency. But there are signs of a broad shift. The “national team” of state-backed funds has become less influential in the equity market, while China allowed the yuan to weaken past the key support level of 7 per dollar in 2019 for the first time in more than a decade.Of course, there’s no guarantee that credit markets would remain calm if China Huarong announced a restructuring or default. Given the firm’s sprawling and complex business, investors have little clarity over how such an event might ripple through China’s $54 trillion financial system. And because China Huarong hasn’t released its 2020 financial results, the state of its balance sheet remains a mystery.Still, the fact that signs of a broader credit-market panic have subsided without major intervention from Beijing are likely to be of comfort to officials seeking to tackle China’s moral hazard problem.“It is a success as good as can be for policymakers, without using a heavy-handed approach,” wrote the DBS strategists.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.
According to a federal indictment, Mustafa Qadiri, 38, fraudulently obtained millions of dollars to buy luxurious cars and take lavish vacations.