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  • Elon Musk Loses $27 Billion as Historic Wealth Gains Unravel

    (Bloomberg) -- Elon Musk set records last year for one of the fastest streaks of wealth accumulation in history. The reversal is underway, and it’s steep.The Tesla Inc. chief executive officer lost $27 billion since Monday as shares of the automaker tumbled in the selloff of tech stocks. His $156.9 billion net worth still places him No. 2 on the Bloomberg Billionaires Index, but he’s now almost $20 billion behind Jeff Bezos, who he topped just last week as world’s richest person.Musk’s tumble only underscores the hard-to-fathom velocity of his ascent. Tesla shares soared 743% in 2020, boosting the value of his stake and unlocking billions of dollars in options through his historic “moonshot” compensation package.His gains accelerated into the new year. In January, he unseated Bezos as the world’s richest person. Musk’s fortune peaked later that month at $210 billion, according to the index, a ranking of the world’s 500 wealthiest people.Consistent quarterly profits, the election of President Joe Biden with his embrace of clean technologies and enthusiasm from retail investors fueled the company’s rise, but for some, its swelling valuation was emblematic of an unsustainable frothiness in tech. The Nasdaq 100 Index fell for the third straight week on Friday, its longest streak of declines since September.Bitcoin InvestmentMusk’s fortune hasn’t been solely subject to the forces buffeting the tech industry. His net worth has risen and slumped recently in tandem with the price of Bitcoin. Tesla disclosed last month it had added $1.5 billion of the cryptocurrency to its balance sheet. Musk’s fortune took a $15 billion hit two weeks later after he mused on twitter that the prices of Bitcoin and other cryptocurrencies “do seem high.”Extreme volatility has roiled many of the world’s biggest fortunes this year. Asia’s once-richest person, Chinese bottled-water tycoon Zhong Shanshan, relinquished the title to Indian billionaire Mukesh Ambani last month after losing more than $22 billion in a matter of days.Read more: Ambani Again Richest Asian as China’s Zhong Down $22 BillionQuicken Loans Inc. Chairman Dan Gilbert’s net worth surged by $25 billion on Monday after his mortgage lender Rocket Cos. was said to be the next target of Reddit day traders. His fortune has since fallen by almost $24 billion. Alphabet Inc. co-founders Sergey Brin and Larry Page are among the biggest gainers on the index this year. They’ve each added more than $13 billion to their fortunes since Jan. 1.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.

  • SoftBank strategy chief Sago to step down

    SoftBank Group's chief strategy officer, Katsunori Sago, will resign at the end of March, the company said on Friday. Sago, a Goldman Sachs alumnus and former chief investment officer of Japan Post Bank Co where he was one of "Seven Samurai" who engineered a more aggressive investing approach, took the newly created strategy job at SoftBank in 2018. The departure of one of CEO Masayoshi Son's key lieutenants comes after power consolidated around Vision Fund chief Rajeev Misra and Chief Operating Officer Marcelo Claure, and as SoftBank invests in public companies under rising star Akshay Naheta.

  • Warning Signs Are Emerging in Credit Markets as Yields Rise

    (Bloomberg) -- Concern is mounting in corporate credit markets globally as longer-term Treasury yields continue to rise, leading borrowers from New York to Tokyo to delay bond sales and strategists to warn of trouble ahead.Gauges of credit fear jumped in Europe for investment-grade and high yield debt on Friday. Two borrowers that had expected to sell bonds in the U.S. opted to push their offerings into next week, after a stronger-than-expected jobs report brought fresh inflation concerns and lifted the 10 year Treasury rate briefly above 1.6%. The extra yield that investors demanded to own U.S. corporate bonds increased 4 basis points on Friday to 96 basis points, the biggest jump since Nov. 12, Bloomberg Barclays index data show.In the U.S. junk market, Ronald Perelman’s Vericast Corp. withdrew a $1.775 billion bond offering after failing to reach an agreement with investors on terms. And in Asia, two state-owned firms in India withdrew planned rupee note sales on Thursday and at least three Japanese companies have put off yen debt offerings in recent days.Still, there are signs that the party isn’t over just yet for corporate bonds. In the U.S. credit derivatives market, the Markit CDX North American Investment Grade Index, which investors use to hedge against defaults on company notes, fell from a four-month high, signaling that firms trading that instrument are a bit less concerned about credit risk. Dealers expect as much as $50 billion of bond sales next week, after more than $65 billion of sales this week.But market sentiment may be shifting. On Thursday, companies selling bonds in the U.S. got orders for just 1.8 times the amount of debt for sale, far below the average of 3.2 times for this year or four times for all of last year, according to data compiled by Bloomberg.Strategists are starting to sound alarms. Bank of America Corp. cut U.S. investment-grade credit to underweight in a note dated Thursday, citing its expectations that yields will continue to rise, which will likely push credit spreads wider. The underweight is a temporary trade, strategists led by Hans Mikkelsen wrote.Citigroup Inc. warned high-grade investors to “brace for fund outflows” in a Thursday note. Spread tightening is no longer offsetting rising Treasury yields, strategists led by Daniel Sorid wrote, adding that a flight-toward shorter duration strategies may be coming.The speed at which rates have risen is a concern for Barclays Plc, which is watching for a “shift in sentiment” on credit, according to a Friday note. Spreads have been resilient so far, “but there is some risk for spreads in the near term from a more disorderly move higher in rates,” strategists Bradley Rogoff and Shobhit Gupta wrote.Sentiment soured Thursday after Federal Reserve Chairman Jerome Powell told a Wall Street Journal webinar that the recent run-up in yields was notable, but declined to be drawn on what tools might be used if disorderly conditions or any persistent tightening in financial conditions threatened the Fed’s goals. With energy prices rising and Covid-19 vaccines fueling bets that an economic rebound will spur inflation, financing costs have started to bounce back from recent lows.In Europe, issuance remains robust for now, and notwithstanding recent bouts of turmoil, selling bonds remains cheaper than it was at the beginning of the coronavirus crisis.Companies and governments have sold over 407 billion euros ($487 billion) of bonds so far this year, the region’s fastest pace of issuance ever, according to data compiled by Bloomberg.“Issuers want to take advantage of this supportive environment provided by the central banks, before the market starts to anticipate tapering,” said James Cunniffe, director for corporate syndicate at HSBC Holdings Plc. “As we enter the second quarter, we expect to see a more normalized level of supply reverting back to previous years’ volumes.”U.S.Mobile gaming company Playtika Holding Corp. sold its debut junk bond Friday.A group of unsecured lenders to Hertz Global Holdings Inc. are proposing an alternative reorganization of the rental car company that would take it public, a move that counters a plan to sell the company to two investment funds for as much as $4.2 billion.For deal updates, click here for the New Issue MonitorFor more, click here for the Credit Daybook AmericasEuropeBooming ethical debt sales have increased the market share of green, social and sustainability debt to 17% of this year’s syndicated debt volumes, from around 7% a year earlier.The much maligned London interbank offered rate is finally within sight of retirement after the U.K. Financial Conduct Authority confirmed that the final readings for most rates will take place on Dec. 31The Republic of Italy’s debut green bond was the most-subscribed deal in Europe’s primary market this week, according to data analyzed by BloombergAsiaChina’s Ji’an Chengtou Holding Group was the sole borrower selling a dollar bond on Friday.“Inflation is likely to rise sharply in developed and emerging markets in the coming months on unfavorable base effects and higher commodity prices,” said Michael Biggs, macro strategist and investment manager at GAM in London. “We do not think the rise in inflation will be sustained, but it could scare the market”Combined with relatively lower liquidity versus investment grade and potential outflows, Asia high yield is ripe for a correction, according to Ek Pon Tay, a senior portfolio manager for emerging market debt at BNP Paribas Asset ManagementIn mainland China, a recent jump in defaults has led investors to favor safer assets, which is being reflected in smaller risk premiums for local-currency top-rated corporate bonds(Updates figures throughout)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.

  • Fed Officials Play Down Higher Yields, Need for Policy Response

    (Bloomberg) -- Treasury yields are rising because of a much stronger economic outlook, Federal Reserve officials said Friday, playing down the need for a monetary policy response.“As a central banker I am always concerned if there is disorderly trading or something that looks panicky,” Federal Reserve Bank of St. Louis President James Bullard said in an interview with Wharton Business Radio. “That would catch my attention. But I think we are not at that point.”His remarks, on the final day before the central bank enters a blackout period on public comment before its March 16-17 meeting, follow Chair Jerome Powell’s Thursday caution that rising yields had caught his eye and he would be “concerned by disorderly conditions in markets or persistent tightening in financial conditions.”Treasuries yields stabilized Friday after spiking higher on a stronger-than-expected payroll report for February, but remain sharply higher than a month ago, nudging up borrowing costs on everything from mortgages to auto loans.That’s prompted speculation the Fed might lean against the move by purchasing more longer-dated securities, including by reprising a strategy from its past policy playbook called Operation Twist in which it switches out of short-dated holdings into longer ones.“I don’t see that as an option right now,” Bullard said, noting the “very strong” U.S. economic outlook and already-easy monetary policy: “So it’s not just matching up right now that we have to do anything to be even more dovish than we are.”While Treasury yields have moved sharply higher, they remain historically low and the shift should not be a cause for concern, he said.‘Natural’ Causes“It is natural for them to be going higher as growth prospects are improving -- not just improving, really, but going very, very strong growth expected in 2021 and beyond and inflation risks moving up.”The Fed is expected to hold interest rates near zero at its upcoming meeting and reiterate it will keep buying bonds at a $120 billion monthly pace until it sees substantial further progress on employment and its 2% inflation goal.Like Bullard, other Fed officials characterized the increase in bond yields as a predictable result of a welcomed improvement in the economic outlook.“The bond market is reflecting I think the strength that we’ve seen in some of the recent data. They’re looking ahead and they’re positive,” Cleveland Fed President Loretta Mester said in an interview on CNN International later on Friday. “Both real rates are higher and inflation expectations in those bond yields are higher,” she said.Minneapolis’s Neel Kashkari said he would take note if the movement in the bond market reduced the amount of support monetary policy was providing the economy by pushing real yields higher.“But we’re not seeing much movement in real yields. Most of the movement is in that inflation expectations, or inflation compensation,” he said separately during a live-streamed interview with the Washington Post.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.

  • Getting A Third Covid-19 Stimulus Check Just Got Tougher — But You Might Still Influence How Big Yours Is

    Congress is nearing passage of the third economic stimulus check it will send out to you and other taxpayers as part of its Covid-19 relief bill.

  • To get the next stimulus check, you may need to hustle with your taxes

    The bill that passed the Senate makes payments harder to get. Your tax return might help.

  • Oil Soars Above $66 With Saudi Supply Gamble Buoying Crude Bulls

    (Bloomberg) -- Oil rallied to the highest in nearly two years in New York after OPEC+ shocked markets with a decision to keep supply limited as the global economy starts to recover from a pandemic-driven slump.U.S. benchmark crude futures topped $66 a barrel on Friday, while its global counterpart Brent neared the key $70 level. The producer alliance’s supply curbs and the rollout of Covid-19 vaccines have aided a stellar rebound for crude from the depths of the coronavirus-related fallout. OPEC+’s surprise decision on Thursday to keep output steady in April boosted prices further and led to strength in the market’s structure. Major banks upgraded price forecasts, with some calls for oil reaching north of $100 next year.“In some ways, even more important than the lack of oil was the message that came with it: They’re not really worried about price, not worried about tightening,” said Paul Horsnell, head of commodities research at Standard Chartered Plc. “The door is wide open to prices beyond $70.”Crude has soared more than 30% so far this year with OPEC+’s output restraint holding the market over until a full-fledged comeback in consumption. The group’s latest decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported.“Overall, this was the most bullish outcome we could have expected,” JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a note to clients.Saudi Arabia’s bold and unexpected gamble to restrain production is founded upon its view that this time around higher prices will not lead to a big increase in output by American shale drillers. Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview after the meeting that shale companies were now more focused on dividends.Oil’s rebound this year stands to intensify the debate about a potential resurgence in inflation, and complicate the task facing the Federal Reserve as it supports the U.S. recovery. The Treasury market is already looking for signs of faster price gains, with yields rising rapidly. Meanwhile, U.S. employers added more jobs than forecast in February.See also: Here’s What Top Banks Are Saying About the Saudi-Led Oil ShockGoldman Sachs Group Inc. raised its Brent forecasts by $5 a barrel and now sees the global crude benchmark at $80 in the third quarter. JPMorgan increased its Brent projection by $2 to $3 a barrel and Australia & New Zealand Banking Group Ltd. boosted its three-month target to $70. Citigroup Inc. said crude could top $70 before the end of this month.Change CourseOil rising to these levels will likely increase strains within OPEC+ as some members will want to pump more to relieve under-pressure economies, Citi said in a note. Top importers such as China and India would also not be happy and the alliance is likely to change course at its next meeting, it said.The lack of fresh supply was reflected in oil’s futures curve. Brent’s prompt timespread widened to 68 cents in backwardation -- a bullish structure where near-dated prices are higher than later-dated ones -- from 54 cents Thursday. Gauges further along the oil futures curve also surged.A closely watched measure in the oil-options market -- West Texas Intermediate’s skew on the nearest contract -- turned positive Friday for the first time in more than a year, signaling traders are willing to pay more for protection against rising crude prices.“We’ve whittled down inventories and the daily supply is significantly lower than before this agreement started,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “Saudi has done what they said they were going to do and kept supply off the market.”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.

  • Joe Biden's stimulus check changes: Do you still qualify for $1,400?

    To win Senate passage, Biden agreed to make millions ineligible for the third checks.

  • The Bottom Is in for These 3 Stocks? Analysts Say ‘Buy’

    Never say that one person makes no difference. This past Thursday, stocks tumbled, bonds surged, and investors started taking inflationary risks seriously – all because one guy said what he thinks. Jerome Powell, chair of the Federal Reserve, held a press conference at which he gave both the good and the bad. He stated, again, his belief that the COVID vaccination program will allow a full reopening of the economy, and that we’ll see a resurgence in the job market. That’s the good news. The bad news, we’ll also likely see consumer prices go up in the short term – inflation. And when inflation starts rising, so do interest rates – and that’s when stocks typically slide. We’re not there yet, but the specter of it was enough this past week to put serious pressure on the stock markets. However, as the market retreat has pushed many stocks to rock-bottom prices, several Wall Street analysts believe that now may be the time to buy in. These analysts have identified three tickers whose current share prices land close to their 52-week lows. Noting that each is set to take back off on an upward trajectory, the analysts see an attractive entry point. Not to mention each has earned a Moderate or Strong Buy consensus rating, according to TipRanks database. Alteryx (AYX) We’ll start with Alteryx, an analytic software company based in California that takes advantage of the great changes brought by the information age. Data has become a commodity and an asset, and more than ever, companies now need the ability to collect, collate, sort, and analyze reams of raw information. This is exactly what Alteryx’s products allow, and the company has built on that need. In Q4, the company reported net income of 32 cents per share on $160.5 million in total revenues, beating consensus estimates. The company reported good news on the liquidity front, too, with $1 billion in cash available as of Dec 31, up 2.5% the prior year. In Q4, operating cash flow reached $58.5 million, crushing the year-before figure of $20.7 million. However, investors were wary of the lower-than-expected guidance. The company forecasted a range of between $104 million to $107 million in revenue, compared to $119 million analysts had expected. The stock tumbled 16% after the report. That was magnified by the general market turndown at the same time. Overall, AYX is down ~46% over the past 52 months. Yet, the recent sell-off could be an opportunity as the business remains sound amid these challenging times, according to 5-star analyst Daniel Ives, of Wedbush. “We still believe the company is well positioned to capture market share in the nearly ~$50B analytics, business intelligence, and data preparation market with its code-friendly end-to-end data prep and analytics platform once pandemic pressures subside…. The revenue beat was due to a product mix that tilted towards upfront revenue recognition, an improvement in churn rates and an improvement in customer spending trends," Ives opined. Ives’ comments back his Outperform (i.e. Buy) rating, and his $150 price target implies a one-year upside of 89% for the stock. (To watch Ives’ track record, click here) Overall, the 13 analyst recent reviews on Alteryx, breaking down to 10 Buys and 3 Holds, give the stock a Strong Buy analyst consensus rating. Shares are selling for $79.25 and have an average price target of $150.45. (See AYX stock analysis on TipRanks) Root, Inc. (ROOT) Switching over to the insurance sector, we’ll look at Root. This insurance company interacts with customers through its app, acting more like a tech company than a car insurance provider. But it works because the way customers interact with businesses is changing. Root also uses data analytics to set rates for customers, basing fees and premiums on measurable and measured metrics of how a customer actually drives. It’s a personalized version of car insurance, fit for the digital age. Root has also been expanding its model to the renters insurance market. Root has been trading publicly for just 4 months; the company IPO'd back in October, and it’s currently down 50% since it hit the markets. In its Q4 and Full-year 2020 results, Root showed solid gains in direct premiums, although the company still reports a net loss. For the quarter, the direct earnings premiums rose 30% year-over-year to $155 million. For all of 2020, that metric gained 71% to reach $605 million. The full-year net loss was $14.2 million. Truist's 5-star analyst Youssef Squali covers Root, and he sees the company maneuvering to preserve a favorable outlook this year and next. “ROOT's mgt continues to refine its growth strategy two quarters post IPO, and 4Q20 results/2021 outlook reflects such a process... They believe their stepped-up marketing investment should lead to accelerating policy count growth as the year progresses and provide a substantial tailwind heading into 2022. To us, this seems part of a deliberate strategy to marginally shift the balance between topline growth and profitability slightly more in favor of the latter,” Squali noted. Squali’s rating on the stock is a Buy, and his $24 price target suggests a 95% upside in the months ahead. (To watch Squali’s track record, click here) Shares in Root are selling for $12.30 each, and the average target of $22 indicates a possible upside of ~79% by year’s end. There are 5 reviews on record, including 3 to Buy and 2 to Hold, making the analyst consensus a Moderate Buy. (See ROOT stock analysis on TipRanks) Arco Platform, Ltd. (ARCE) The shift to online and remote work hasn’t just impacted the workplace. Around the world, schools and students have also had to adapt. Arco Platform is a Brazilian educational company offering content, technology, supplemental programs, and specialized services to school clients in Brazil. The company boasts over 5,400 schools on its client list, with programs and products in classrooms from kindergarten through high school – and over 405,000 students using Arco Platform learning tools. Arco will report 4Q20 and full year 2020 results later this month – but a look at the company’s November Q3 release is instructive. The company described 2020 as a “testament to the resilience of our business.” By the numbers, Arco reported strong revenue gains in 2020 – no surprise, considering the move to remote learning. Quarterly revenue of 208.7 million Brazilian reals (US$36.66 million) was up 196% year-over-year, while the top line for the first 9 months of the year, at 705.2 million reals (US$123.85 million) was up 117% yoy. Earnings for educational companies can vary through the school year, depending on the school vacation schedule. The third quarter is typically Arco’s worst of the year, with a net loss – and 2020 was no exception. But, the Q3 net loss was only 9 US cents per share – a huge improvement from the 53-cent loss reported in 3Q19. Mr. Market chopped off 38% of the company’s stock price over the past 12 months. One analyst, however, thinks this lower stock price could offer new investors an opportunity to get into ARCE on the cheap. Credit Suisse's Daniel Federle rates ARCE an Outperform (i.e. Buy) along with a $55 price target. This figure implies a 12-month upside potential of ~67%. (To watch Federle’s track record, click here) Federle is confident that the company is positioned for the next leg of growth, noting: "[The] company is structurally solid and moving in the right direction and... any eventual weak operating data point is macro related rather than any issue related to the company. We continue with the view that growth will return to its regular trajectory once COVID effects dissipate.” Turning to expansionary plans, Federle noted, “Arco mentioned that it is within their plans to launch a product focused on the B2C market, likely already in 2021. The product will be focused on offering courses (e.g. test preps) directly to students. It is important to note that this product will not be a substitute for learning systems, rather a complement. Potential success obtained in the B2C market is an upside risk to our estimates.” There are only two reviews on record for Arco, although both of them are Buys, making the analyst consensus here a Moderate Buy. Shares are trading for $33.73 and have an average price target of $51, which suggests a 51% upside from that level. (See ARCE stock analysis on TipRanks) To find good ideas for beaten-down stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

  • Ethereum Is Chasing Stardom and It’s Worth Consideration

    The discussion today may get a little wonky because of the nature of cryptocurrencies. We will focus on Ethereum USD (CCC:ETH-USD) as it’s making a legit bid for the crypto limelight. It is important to make the distinction between Ethereum the open-source platform and the ETH coin. The platform uses blockchain to create and run dapps (decentralized digital applications). These enable users to digitally and directly transact without an intermediary. And then there is the coveted Ethereum the coin. Source: Shutterstock ETH prices have soared even beating out its original cousin Bitcoin (CCC:BTC-USD). I am not a perma-bull tooting the crypto horns but I definitely get it. The reactions during my debates of this concept at parties are always the same. Most people can’t believe that Bitcoin or Ethereum are real things. The instinct is to call them fake. Fake things don’t cost $48,000 per unit. Spoiler alert, my conclusion today is that Ethereum is most definitely an investable asset. If you don’t believe me just look at the scoreboard. Each cost about$1,475 and that’s 25% off the recent high. Do you remember when Bitcoin was that low? It was only four years ago. I am not suggesting that ETH will also spike to 50k now, but it does have massive upside potential.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Why We Need Crypto Last year, the pandemic disrupted all businesses worldwide. We need to find more efficient decentralized ways to transact so we can be ready for the next crisis. Besides, it’s clearly the better way of doing business. In addition to that, there is the tangible value appreciation opportunity. A year ago, the stock market crashed but it quickly recovered and in a ferocious way. Even after the drubbing that stocks are taking this week, the S&P 500 is still up more than 20% in a year. But that’s not the best story to tell because Ethereum is up 540% for the same period. The concept of digital coins and blockchain puzzles most people, but they need to get over it. The government is another reason to push crypto forward. Central bank policies are too loose and the byproduct of that is the demolition of the currency. That is why the U.S. dollar can’t find footing for so long. Money is no longer a good place to store wealth. Hiding wealth in cryptocurrencies is smart because it is out of the reach of the government. However, the line is getting finer based on this central bank digital currencies (CBDCs) news from CoinDesk about Ripple. Critics are also eager to point out that crypto is too volatile to be a currency. It doesn’t have to be. Technology is getting to where I can carry my digital wallet and make a purchase from it in any currency. For example, the transaction on the spot liquidates a bit of Ethereum to pay in U.S. dollars. The Ethereum Market Cap Carrot The upside in Ethereum prices is huge. It has a lot to catch up to its Bitcoin cousin. This is a theory that is helping Bitcoin catch up to gold. Market cap matters to Wall Street experts and it’s almost like a self-fulfilling prophecy. Ethereum’s path is easier because Bitcoin forged it. Tesla (NASDAQ:TSLA) did the same thing for EVs and now the rest are trying to get in. Not all coins will succeed but Ethereum has momentum and is second only to BTC. Ethereum is not yet as popular as Bitcoin when in fact it has outperformed it by wide margin. They now even have a futures contract to trade it. Ethereum is more than a coin because there is a process around it (dapps). This is taking the blockchain concept and expanding its uses. A lot of people still consider it a joke when somebody invests in something like Ethereum. The joke’s on them because they missed out on 540% of upside in just one year. I don’t argue with results regardless of my personal opinion. Once investors can get over to hurdle of digital coins being fake, they can start trading them for profit. Top cryptocurrencies have been the best performing asset class by far for years. Where There Is Reward, There Are Risks Source: Charts by TradingView This is not to say that I should jump in will full size positions. Much like any other investment, I look for openings perhaps on bad days, and I take starter positions. This is high-tech stuff so it will change on a dime. Ethereum needs to avoid falling out of the limelight. These are fast-moving assets so there is no way of avoiding the volatility. It is risky, and that’s why it yields a lot of reward. Everybody needs a little bit of cryptocurrencies in their portfolio. If not that then gold is the next best substitute. We don’t need to be experts on them to invest in them. The proof is in the pudding and I’m willing to keep an open mind about them. Jaw-Dropping Statement In reality, crypto is nothing new. The concept is very similar to gold. The only reason gold has value is because we say it does. To an alien, a yellow rock is no different than a black one. People cherish gold and it’s rare, therefore it has a high price. The harder it is to get, the higher the price. That’s why Bitcoin and ETH retain values that boggle many minds. There is a finite number of these doo-hickeys and millions of people are chasing after them. The concept is that simple. It has value because enough people say it does. So next time you want to get a rise out of someone, do what I do. Tell them that Bitcoin and Ethereum are same as gold. That’s where people’s jaws drop. What’s more exciting about the digital coins are the processes that exist around them. Blockchain is one and it will shape our future. Credit card companies are embracing the change. That’s why Square (NYSE:SQ) and Paypal (NYSE:PYPL) are now the leaders and Visa (NYSE:V) and MasterCard (NYSE:MA) are the laggards. Cryptocurrencies are extremely popular but they have very hardcore opponents. Even heads of banks have been overtly against it even mocking them at times. They have since changed their tone and are warming up to the concept. Goldman Sachs reopened its Bitcoin trading desk recently. They can’t ignore something that has gotten this big this fast. On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. Nicolas Chahine is the managing director of SellSpreads.com. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Ethereum Is Chasing Stardom and It’s Worth Consideration appeared first on InvestorPlace.

  • How stimulus checks can give you a $14,000 windfall this year

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  • Biggest Players in the Short-Selling Game Are Getting a Pass

    (Bloomberg) -- It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares -- equal to a third of all hedge-fund assets -- actually out on loan, according to the International Securities Lending Association.It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock -- the so-called short interest -- the higher the fee a lender can charge.In the case of GameStop, short interest was unusually high and shares on loan were generating an annualized return of 25% to 30%, Ken Griffin testified at the Feb. 18 hearing. Griffin operates a market maker, Citadel Securities, as well as Citadel, one of the world’s largest hedge funds.“Securities lending is a way for long holders to generate additional alpha,” said Nancy Allen of DataLend, which compiles data on securities financing. “Originally, it was a way to cover costs, but over the last 10 to 15 years it’s become an investment function.”Not everyone is comfortable with the inherent conflict. In December 2019, Japan’s $1.6 trillion Government Pension Investment Fund stopped lending its international stock holdings to short sellers, calling the practice inconsistent with its responsibilities as a fiduciary. At the time, the decision cost GPIF about $100 million a year in lost revenue.The U.S. Securities and Exchange Commission has regulated short-selling since the 1930s and polices the market for abuses such as naked shorting, which involves taking a short position without borrowing shares. Proponents of legal shorting argue that its use enhances liquidity, improves pricing and serves a critical role as a bulwark against fraud and hype.Chief executives, whose pay packages often depend on share performance, routinely decry short sellers as vultures. More recently, shorting has come under fire in the emotionally charged banter on Reddit’s WallStreetBets forum. Some speculators ran up the prices of GameStop, AMC Entertainment Holdings Inc. and other meme stocks in January to punish the hedge funds that bet against them, and they delighted when the rampant buying led to bruising losses at Melvin, Maplelane Capital and Citron Research.Many of the key actors in the GameStop frenzy testified at the Feb. 18 hearing. Plotkin was grilled by committee members over Melvin’s short position. Citadel’s Griffin and others faced broader questions about short-selling. Yet no one asked about the supply of borrowed shares and there were no witnesses called from the securities-lending industry.There’s a symbiotic relationship between hedge funds and the prime-brokerage units of Wall Street firms, much of it built on securities lending. Prime brokers act as intermediaries, sourcing stocks and bonds for borrowers who want to short them and facilitate the trades. According to DataLend, securities lending generated $2.9 billion of broker-to-broker revenue in 2020, almost the same as in 2019.Demand for short positions was already expected to drop as stock prices surged to all-time highs. Now, with the threat of retribution from the Reddit crowd, it may weaken even further. Griffin said he has “no doubt” there’ll be less short-selling as a consequence of the GameStop squeeze.“I think the whole industry will have to adapt,” Plotkin said at the hearing. “I don’t think investors like myself want to be susceptible to these types of dynamics.”This could not only threaten the dealers who broker stock lending but also the holders who supply the securities and share in the revenue. They reaped $7.7 billion globally in 2020, down from a record of almost $10 billion in 2018, according to DataLend. Lending fees increased by 4.2% on a year-over-year basis in February after the GameStop onslaught, DataLend says.While securities lending accounted for $652 million, or just 4%, of BlackRock’s revenue in the fourth quarter of 2020, there’s little cost involved and the risks are low because borrowers have to put up collateral that equals or exceeds the value of the loan. At both BlackRock and State Street Corp., the second-largest custody bank, the value of securities on loan as of Dec. 31 jumped at least 20% from a year earlier, to $352 billion and $441 billion, respectively.“Every little bit counts with indexes,” said John Rekenthaler, vice president of research at Morningstar. “You’re scraping nickels off the street, but there’s a whole lot of nickels.”Others could take a hit, too. Just as Robinhood Markets is able to offer zero-commission trades by selling its order flow to Citadel and other market makers, asset managers typically pass on some of their securities-lending revenue as a type of client rebate.“It’s very important to remember that institutional investors earn substantial returns from participating in the securities-lending market,” Citadel’s Griffin said at the GameStop hearing. “That accrues to the benefit of pension plans, of ETFs, of other pools of institutional lending that participate in the securities lending market.”(Adds data on lending fees after the short-interest chart.)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.

  • Suze Orman: Something's ‘radically wrong’ if you’re getting a tax refund

    Personal finance guru Suze Orman said the receipt of a tax refund indicates "something's radically wrong," since the money returned to filers could otherwise have accrued value over the period it stood in the government's possession.

  • Bond Traders Go All-In on U.S. Treasury Market’s Big Short Bet

    (Bloomberg) -- It’s not just in meme stocks that the fate of short sellers is a key theme. Short bets are increasingly in vogue in the $21 trillion Treasuries market, with crucial implications across asset classes.The benchmark 10-year yield reached 1.62% Friday -- the highest since February 2020 -- before dip buying from foreign investors emerged. Stronger-than-expected job creation and Federal Reserve Chair Jerome Powell’s seeming lack of concern, for now, with leaping long-term borrowing costs have emboldened traders. In one telltale sign of which way they’re leaning, demand to borrow 10-year notes in the repurchase-agreement market is so great that rates have gone negative, likely part of a move to short the maturity.The trifecta of more fiscal stimulus ahead, ultra-easy monetary policy and an accelerating vaccination campaign is helping bring a post-pandemic reality into view. There are of course risks to the bearish bond scenario. Most prominently, yields could rise to the point that they spook stocks, and tighten financial conditions generally -- a key metric the Fed is focused on for guiding policy. Even so, Wall Street analysts can’t seem to lift year-end yield forecasts fast enough.“There’s a lot of tinder being put now on this fire for higher yields,” said Margaret Kerins, global head of fixed-income strategy at BMO Capital Markets. “The question is what is the point that higher yields are too high and really put pressure on risk assets and push Powell into action” to try and tamp them down.Share prices have already shown signs of vulnerability to increasing yields, especially tech-heavy stocks. Another area at risk is the housing market -- a bright spot for the economy -- with mortgage rates jumping.The surge in yields and growing confidence in the economic recovery prompted a slew of analysts to recalibrate expectations for 10-year rates this past week. For example, TD Securities and Societe Generale lifted their year-end forecasts to 2% from 1.45% and 1.50%, respectively.Asset managers, for their part, flipped to most net short on 10-year notes since 2016, the latest Commodity Futures Trading Commission data show.Auction PressureIn the days ahead, however, BMO is eyeing 1.75% as the next key mark, a level last seen in January 2020, weeks before the pandemic sent markets into a chaotic frenzy.A fresh dose of long-end supply next week may make short positions even more attractive, especially after record-low demand for last month’s 7-year auction served as a trigger to push 10-year yields above 1.6%. The Treasury will sell a total of $62 billion in 10- and 30-year debt.With expectations for inflation and growth taking flight, traders are signaling that they anticipate the Fed may have to respond more quickly than it’s indicated. Eurodollar futures now reflect a quarter-point hike in the first quarter of 2023, but they’re starting to suggest that it could come in late 2022. Fed officials have projected they’d keep rates near zero until at least the end of 2023.So while the market is leaning toward loftier yields, the interplay between bonds and stocks is bound to be a huge focus going forward.“There’s definitely that momentum, but the question is how well risky assets adjust to the new paradigm,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “We’ll be watching next week, when the dust settles after the payrolls data, how Treasuries react and how risky assets react to the rise in yields.”What to WatchThe economic calendarMarch 8: Wholesale trade sales/inventoriesMarch 9: NFIB small business optimismMarch 10: MBA mortgage applications; CPI; average weekly earnings; monthly budget statementMarch 11: Jobless claims; Langer consumer comfort; JOLTS job openings: household change in net worthMarch 12: PPI; University of Michigan sentimentThe Fed calendar is empty before the March 17 policy decisionThe auction calendar:March 8: 13-, 26-week billsMarch 9: 42-day cash-management bills; 3-year notesMarch 10: 10-year notesMarch 11: 4-, 8-week bills; 30-year bondsFor 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.

  • Why Cathie Wood Is Bullish On DraftKings

    Ark Funds CEO and Founder Cathie Wood joined Benzinga’s “Raz Report” this week and discussed the history of Ark Funds. Wood also shared some of the reasons why Ark Funds owns several positions, including in DraftKings Inc (NASDAQ: DKNG). Wood on DraftKings: Wood told Benzinga that DraftKings is becoming accepted as a platform for sports betting as the public grows more comfortable with the activity. “We do think sports betting is losing its taint,” Wood said. The fund manager sees more states turning toward legalizing sports betting, especially as many face huge deficits, Wood said. Wood used New Jersey as an example of the success states can have. The state is a mature market and DraftKings’ revenue was up 100% in the state. “New Jersey was very telling to us," she said. Ark Funds: DraftKings was added to two different Ark Funds beginning in February. Ark Next Generation Internet ETF (NYSE: ARKW) owns around 1.4 milion shares of DraftKings worth $88.1 million. Ark Fintech Innovation ETF (NYSE: ARKF) owns around 546,000 shares of DraftKings worth $33.8 million. DraftKings represents around 1.2% and 0.8% of ARKW and ARKF, respectively. Price Action: Shares of DraftKings finished the week down 6.24% at $59.52. Related Link: DraftKings And Dish Network Partner On Sports Betting, TV Integration See more from BenzingaClick here for options trades from BenzingaFuboTV Shares Pop On Caesars Partnership, Access To Additional States For Sports BettingHorizon Acquisition Corp SPAC Jumps 20% On Potential Sportradar Merger© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Day-trading Reddit readers nearly crashed the stock market. Now they’ve been packaged into a new ETF.

    An ETF that's backed in part by Dave Portnoy, self-proclaimed head of the hordes of retail investors who have upended markets in recent weeks, raises questions about market manipulation.

  • Bitcoin Volatility On Path To Drop Below Amazon's, Analysts Say

    What Happened: Annual Bitcoin volatility will drop below that of Amazon Inc. (NASDAQ: AMZN) in a few years if past patterns prevail, according to analysts from Bloomberg. In a Crypto Market Outlook report, analysts found that the Bitcoin volatility regression line is on track to dip below Amazon’s reading by 2022. The 260-day risk measure is currently at 60% for Bitcoin as compared to 40% for Amazon. “Similar to the early days of the benchmark crypto, in the first few years that Amazon traded publicly, its volatility averaged over 100%,” said the analysts. Why It Matters: Bitcoin’s supply and demand dynamics play an important role in the price discovery of the leading digital asset. It has a fixed mining schedule which sets it apart from most other assets and markets with uncertain supply and demand. The Bloomberg analysts find this to be a unique factor in determining the cryptocurrency’s future price trajectory. “Representing innovative technology made possible due to the internet, we see little to reverse Bitcoin's path toward a global digital store-of-value and its market cap to keep rising, likely surpassing Amazon,” noted the analysts. Bitcoin is known to be a historically volatile asset class. However, as research from the report suggests its rising volatility is only likely to continue until it reaches a new price threshold with greater market depth – possibly around $100,000. “Once the crypto settles in at a new threshold...volatility should drop, we believe”, said the analysts, adding, “The way we see it, something unexpected has to trip up this technical indicator.” Price Action: The market-leading cryptocurrency was trading at $48,494 at press time, down by 2.38% in the past 24-hours. Image: Ishant Mishra via Unsplash See more from BenzingaClick here for options trades from BenzingaWealth Managers Like Jim Paulsen Regret Not Having More Cryptocurrency In Portfolio: ReutersKraken CEO Says Bitcoin Hitting M In 10 Years 'Very Reasonable'© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Investors may have a ‘buy’ signal, as these big tech stocks have dropped up to 32% in only three weeks

    Now might be "a golden opportunity" to own the "secular tech winners" for the next 12 to 18 months, according to Wedbush analyst Daniel Ives.

  • Buy these 3 battery stocks to play the electric-vehicle party, but stay away from this company, says UBS

    Despite the recent selloff in electric-vehicle stocks like Tesla and Nio, there is still intense investor interest in the sector, with demand for electric-vehicles expected to climb dramatically over the next decades.

  • China’s Plan for Digital Yuan Imperils Bitcoin’s Biggest Markets

    (Bloomberg) -- Trouble may be brewing in China for Bitcoin’s raucous and divisive rally as the nation pushes ahead with a world-leading effort to create a digital version of its currency.That’s because the eventual rollout of the virtual yuan could roil cryptocurrency markets if Chinese officials tighten regulations at the same time, according to Phillip Gillespie, chief executive of crypto market maker and liquidity provider B2C2 Japan, which mainly works with institutional investors.“Once a digital yuan is introduced, that’s going to be one of the biggest risks in crypto,” Gillespie, who previously worked in currency markets for Goldman Sachs Group Inc., said in an interview. “Panic selling” is possible if the new rules end up sucking liquidity from trading platforms for digital coins, he said.Central banks’ power to issue virtual money and proscribe rivals is one of the key risks for the crypto sector. Chinese citizens are already banned from converting yuan to tokens but the practice continues under the table using Tether, a digital coin that claims a stable value pegged to the dollar. The money parked in Tether then gets routed to Bitcoin and other tokens.Tokyo-based Gillespie sees potential for an outright ban on Tether, which could raise the stakes for anyone minded to continue using it.A draft People’s Bank of China law setting the stage for a virtual yuan includes a provision prohibiting individuals and entities from making and selling tokens. In recent days, China’s Inner Mongolia banned the power-hungry practice of cryptocurrency mining.Representatives of the People’s Bank of China didn’t reply to a fax seeking comment on the prospect of regulatory changes. While there’s no launch date yet, the PBOC is likely to be the first major central bank to issue a virtual currency after years of work on the project.Tether officials have downplayed the concern, saying that central bank digital currencies won’t mean the end of stablecoins.“Tether’s success has provided a blueprint for how a CBDC could work,” said Paolo Ardoino, chief technology officer for Tether and Bitfinex, an affiliated exchange. “Furthermore, CBDC’s are unlikely to be available on public blockchains such as Ethereum or Bitcoin. This last mile may be left to privately-issued stablecoins.”Still, Gillespie points out that Tether is “this massive amount of fuel for Bitcoin purchases” and few people realize the potential for disruption. A “tremendous amount of liquidity” is coming from exchanges tapping Chinese demand, he added.Tether QuestionsBitcoin surged fivefold in the past year and hit a record above $58,000 last month before dropping back about $10,000. The rally has split opinion, with some arguing a new asset class is emerging and others seeing pure gambling by retail investors and speculative pros in the Wild West of finance.Tether is an equally controversial token deep in the plumbing of the nascent cryptocurrency market. Traders use it to park money as they shift from virtual to fiat cash.More than $18 billion of Tether moved overseas from East Asian addresses over a one-year period, including spikes suggesting Chinese origin, according to an August report from Chainalysis, which analyzes the blockchain network technology underlying tokens. The report indicated citizens may be using Tether to dodge rules that limit capital transfers abroad.Questions about Tether continue to swirl. The companies behind it were banned from doing business in New York last month as part of a settlement with state officials who found that they hid losses and lied about reserves.‘Liquidity Shock’A recent report from JPMorgan Chase & Co. said there’d likely be “a severe liquidity shock to the broader cryptocurrency market” if issues arose that affected the “willingness or ability of both domestic and foreign investors to use Tether.”“All the volume goes through Tether,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital. “As regulators become more and more restrictive on stablecoins, that could be very negative for the market because that could mean less liquidity.”B2C2 Japan’s Gillespie said Tether is “such a risky asset” and a “massive liquidity shock” is possible if China does ban it. “What would happen is there’s going to be massive panic selling,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.