The British pound initially shot higher during the trading session on Friday but has been a bit noisy in the process of breaking above the hammer from the previous session.
Anyone with a stock account can now make a savvy, albeit risky, bet on GBTC pricing disparities that were previously exclusive to big players.
(Bloomberg) -- The U.S. is about to sell 10-year inflation-linked debt next week, keeping the spotlight on a corner of the bond market that’s rarely garnered this much attention in the almost quarter-century since its debut.Heightened fears about the risk of raging consumer-price gains as growth rebounds are driving investors of all stripes to search for cover in Treasury Inflation-Protected Securities, a market that’s grown to $1.6 trillion. Traders talk of new entrants like retail buyers and global macro strategists -- what the veterans are dubbing the “tourist crowd.” Cash has also been flowing into the largest exchange-traded fund for TIPS, part of the rabid demand that’s driven inflation expectations over the next half-decade to a 16-year high.It’s all adding up to a head-spinning stretch for inflation traders. They say they’ve been caught off guard by the burst of activity, and the speed with which last year’s pandemic-induced recession is giving way in some minds to 1970s-level angst over out-of-control inflation. Barclays Plc’s Chris McReynolds likens the volatility in TIPS pricing to “watching table tennis while sitting in the middle of the table.”Leaving aside questions over whether TIPS are overstating inflation pressures, traders see opportunity at a time when forecasts for some key data, including consumer prices, have been way out of line with actual readings. Gang Hu, at hedge fund WinShore Capital Partners, says he’s seen many traders exit TIPS positions over much of this year as market-based inflation expectations climbed. He says Thursday’s $13 billion auction of inflation-linked debt will be seen as a key gauge of investor appetite and a possible opportunity for some to re-enter.“Nobody actually has a very good handle on where near-term inflation prints will land, and it’s thrown everyone off their game,” said Hu, a managing partner at the New York-based fund. “There’s a lot of noise in the recent prints and this is not over yet. There’s no way anyone can be very confident about what the next two or three prints will bring.”Fed TestThat’s spurring volatility in a part of the bond market that hasn’t typically seen such activity, with volumes swinging from week to week as above-estimate inflation readings test the Federal Reserve’s oft-repeated message that the pressure is likely to be temporary.This past week, the five-year inflation outlook, or breakeven rate, jumped to 2.82%, the highest since 2005, after a bigger-than-expected surge in consumer prices for April. The 10-year nominal Treasury yield touched the highest in more than a month this week.The signals from bonds have broad implications across markets. Stocks slumped by the most since February after the inflation data as traders pulled forward the timing for when they expect the Fed to lift rates, and a measure of consumer sentiment unexpectedly slumped this week. Fear of inflation is also driving a flurry of corporate issuance.“We’ve obviously been through a lot in this part of the market in the last 14 months -- going from, ‘Wow, this pandemic is deflationary’ to ‘Oops, there’s inflation,’ ” said McReynolds, head of U.S. inflation trading at Barclays in New York. “What’s different in this episode is the crazy volatility, with investors going from hating TIPs to loving them, to hating them again. We are probably going to be here for at least a couple of years,” with volatility elevated around consumer-price data releases.For much of its existence, the TIPS market has been a largely bearish one -- where traders were skeptical about the sustainability of any substantial price gains that did emerge. The few times that expectations did soar, they always retreated.2008 ReviewOne example: in the lead-up to the 2008 financial crisis, when the 5-year breakeven rate shot up to 2.73% amid a housing boom and soaring oil prices. But the rate soon fell off and has largely stayed below that level since.On Thursday, the New York Fed announced plans to reduce the amount of TIPS it will purchase over the next month. That tweak, along with Treasury’s previously stated plan to boost auctions of TIPS in coming quarters, may help alleviate any near-term shortage of the securities.For WinShore’s Hu, who trades global inflation-protected securities, next week’s auction is a must-watch event. The last TIPS auction, on April 22, was a sale of 5-year securities for which investor demand was the strongest since 2019.Hu says many traders are probably “waiting to see if they can buy something cheap” and currently trading in a zig-zag fashion -- purchasing TIPS when breakeven rates narrow and selling when inflation expectations go up.“We are stuck in a negative feedback loop on inflation, and we could easily have 4%-5% inflation in a year’s time, way more than the market is pricing in,” he said. “We have to throw all our forecasting models for the next three to six months out the window.”What to WatchEconomic calendar:May 17: Empire manufacturing; NAHB housing data; TIC flowsMay 18: Building permits; housing startsMay 19: MBA mortgage applications; Federal Open Market Committee minutesMay 20: Philadelphia Fed business outlook; jobless claims; Langer consumer comfort; leading indexMay 21: Markit U.S. PMIs; existing home salesFed calendar:May 17: Vice Chair Richard Clarida; Clarida with Atlanta Fed’s Raphael BosticMay 18: Dallas Fed’s Robert KaplanMay 19: St. Louis Fed’s James Bullard; Bostic interviewed at Businessweek/Bloomberg event; FOMC minutesAuction schedule:May 17: 13-, 26-week billsMay 18: 52-week bills; 42-day cash management billsMay 19: 20-year bondsMay 20: 4-, 8-week bills; 10-year TIPS reopeningFor 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) -- Industrial materials from copper to iron ore are feeling the pain as China steps up efforts to cool a blistering rally in commodities that’s fanning fears over a global surge in inflation.Iron ore futures plunged as much as 11% in Singapore and steel rebar slid as Chinese officials rolled out fresh measures for steelmakers to take the steam out of markets. Base metals have also come under pressure in recent days, with copper down 4.7% from a record high set on Monday.The measures targeting China’s steel sector come after surging raw-material costs sparked the biggest jump in Chinese factory-gate prices in more than three years in April. A sharp jump in U.S. consumer prices has also sparked worries across financial markets that rising inflation will hamper a global recovery and force the Federal Reserve to tighten policy sooner than thought.“Many fear that high inflation will force the Fed to take away the punch bowl,” which acted as one of the forces in propelling a rally in commodities from their nadir in March last year, TD Securities analysts led by Bart Melek said in a note. “Ongoing deleveraging in China should take some wind out of the sails for commodity demand.”Copper and iron ore have been among the biggest gainers in a yearlong rally in commodities as Covid-19 upended supply while stimulus measures supported economies and sparked a surge in demand, particularly in China. An accelerating global decarbonization drive has also transformed the long-term outlook for metals like copper.But signs of easing short-term supplies and softening demand may be emerging in physical markets. LME metal has flipped into contango, a market structure in which spot prices trade below those three months out. That indicates loose supply or falling demand in the near term. Right now, it’s gapped out to the weakest since early January.“Copper will still trade at a very good price, but I do think it will come under pressure,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone from London. “There are some headwinds coming.”Still, U.S. retail sales stalled in April following a sharp advance in the prior month when pandemic-relief checks provided millions of Americans with increased spending power. This could help the narrative by Fed officials this week that inflation numbers this week were an aberration and were transitory.Copper fell 1% to settle at $10,240.50 a ton at 5:53 p.m. on the London Metal Exchange, after peaking Monday at $10,747.50. Other base metals fared better on Friday, though aluminum still had a 3% weekly drop.In ferrous markets, iron ore fell 4.3% in Singapore on Friday, while futures in Dalian dropped the daily limit. Iron ore had surged to record highs recently amid the broad commodities boom.Prices slumped as Tangshan’s local government vowed to punish violations including price manipulation, and steelmakers were told that they may be suspended from doing business or have their licenses revoked if they break the law. The city, which accounts for 14% of China’s steel output, has been at the center of an industry overhaul as authorities unveiled a slew of output restrictions to control emissions.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) -- Billionaire George Soros’s investment firm snapped up shares of ViacomCBS, Discovery and Baidu as they were being sold off in massive blocks during the collapse of Bill Hwang’s Archegos Capital Management.Soros Fund Management bought $194 million of ViacomCBS Inc., Baidu Inc. stock valued at $77 million, as well $46 million of Vipshop Holdings Ltd. and $34 million of Tencent Music Entertainment Group during the first quarter, according to a regulatory filing released Friday. A person familiar with the fund’s trading said the company didn’t hold the shares prior to Archegos’s implosion.Archegos, the family office of former hedge fund manager Hwang, fell apart during the last week of March after amassing large leveraged positions in a concentrated portfolio of U.S. and Chinese companies. At its peak, the family office had more than $20 billion of capital and total bets exceeding $100 billion.Hwang was wiped out in just days after investments including ViacomCBS and Discovery tumbled, triggering margin calls from global banks, who then sold the stocks in the big block trades. The fiasco is expected to cost the finance industry about $10 billion, has prompted an investigation by the U.S. Securities and Exchange Commission and caused heads to roll at Credit Suisse Group AG, where the hit exceeds $5 billion.The 13F filing provides one of the first examples of how a hedge fund attempted to capitalize on the distressed remains of Archegos. It also offers an insight into Soros’s investment firm, which is run by Chief Investment Officer Dawn Fitzpatrick.She told Bloomberg in March that she was willing to jump on dislocations in the market, investing $4 billion during the pandemic-induced swoon a year ago, including buying residential mortgages on the cheap. Soros returned almost 30% in the 12 months through February and manages $27 billion across a range of strategies.“When there’s a dislocation, we’re prepared to not just double down but triple down when the facts and circumstances support that,” Fitzpatrick, 51, said in a “Front Row” interview on Bloomberg TV.Soros also increased its bet on Amazon.com Inc. and homebuilder DR Horton Inc., which is now its second-largest public equity position.The 13F, which money managers overseeing more than $100 million in U.S. equities must file quarterly, revealed that Soros held $4.5 billion of U.S. equities, down $77 million from the prior quarter.The biggest exit in the quarter was Palantir Technologies Inc. Soros sold 18.5 million shares valued at about $435 million. The firm originally revealed it owned a stake in the controversial data-mining company controlled by Peter Thiel in November, but rapidly issued a statement saying the original investment was made in 2012 and it regretted the decision.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.
China’s EV makers are not only set to grow big in their domestic market, but also have great plans to expand in Western Markets and commodity demand in these overseas markets could see huge demand for metals as a result
Not all industry participants are amused by dogecoin’s tricks.
(Bloomberg) -- The chief executive officer of a $1.7 billion Canadian private lender closed his personal bank account just days after he was questioned by investigators about receiving undisclosed payments from a client, court documents say.David Sharpe, the former CEO of Bridging Finance Inc., closed a personal checking account at the Bank of Montreal four business days after the Ontario Securities Commission questioned him about his relationship with Sean McCoshen, a Canadian entrepreneur who has proposed an Alberta-to-Alaska railway.McCoshen’s companies borrowed more than C$100 million ($82.6 million) from Bridging-managed funds. During the same period, a separate numbered company controlled by McCoshen transferred C$19.5 million into Sharpe’s personal account, the OSC has alleged. The payments took place between July 2016 and June 2019.In fact, six payments worth C$17.2 million were transferred to Sharpe within five business days of Bridging advancing funds to the railway project and other McCoshen-connected firms, according to a new document filed by the securities commission in an Ontario court.Those transactions and others are at the heart of the case, which has seen a court appoint PricewaterhouseCoopers take control of the Toronto-based firm, a private lender to small- and medium-size companies. The OSC is probing Bridging and former senior executives for allegedly mismanaging funds and failing to disclose conflicts of interest, and has claimed in court documents that Sharpe tried to mislead its investigators.Through a spokesperson, Sharpe declined to comment. McCoshen couldn’t be immediately reached for comment.Sharpe was questioned by the securities commission on Oct. 27, 2020 about his relationship with McCoshen. He closed the Bank of Montreal account on Nov. 2. In February, McCoshen dissolved the numbered company that made the transfers, the court documents say.Sharpe and his wife, Natasha Sharpe, co-founded and ran the firm together. They were fired last week by PricewaterhouseCoopers.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) -- Fuel that is so dirty that the global shipping industry banned its use last year is being burned at the highest level in three years in Mexican power plants.With the global shipping industry shunning sulfurous fuel oil to curb emissions, storage tanks in Mexico are overflowing with the stuff, a byproduct of its attempt to produce more gasoline domestically. The solution Mexico has chosen is to push more of it into electricity generation, replacing cleaner-burning natural gas. Consumption of the dirty fuel jumped by almost 50% in the past year to more than a 100,000 barrels a day in March, according to government data.The capital’s air quality has worsened, said Beatriz Olivera Villa, a consultant with Greenpeace in Mexico, in a phone interview from Mexico City. “It’s an unfortunate setback for the country.”Replacing natural gas, which it imports from the U.S., with fuel oil is certain to raise Mexico’s emissions. President Andres Manuel Lopez Obrador has pledged to reduce Mexico’s dependence on fuel imports but is faced with highly inefficient refineries. Historically, it’s been cheaper for Mexico to export the crude it produces to countries with more technologically complex refineries and to import refined fuels like gasoline.State oil company Petroleos Mexicanos produces copious amounts of fuel oil unintentionally because its refineries lack the technology to extract cleaner fuels from the sludge that is leftover during the initial process of turning crude into gasoline. Therefore, the more gasoline the country’s refineries produce, the more extra fuel oil they have to find a home for.“Mexico is creating a market to absorb the excess fuel oil from its refineries,” said Ixchel Castro, an analyst with Wood Mackenzie Ltd.Fuel oil is being burned at the six power plants owned by state utility Comision Federal de Electricidad, or CFE. This year, a government commission responsible for monitoring air quality in the metropolitan area of Mexico City, sounded the alarm twice amid high ozone levels. As a result, cement-makers as well as Pemex’s refinery in Tula and its associated power plant, had to reduce activity.Switching a power plant that uses natural gas to fire a turbine to fuel oil generates 16% more carbon dioxide, according to BloombergNEF calculations.The air-quality monitoring commission estimates the alarm for high ozone levels may sound 7-20 times this year, forcing industries to curtail activity to curb emissions. That compares with one time last year and six times in 2019. Victor Hugo Paramo Figueroa, head of the commission, said the increased use of fuel oil alone doesn’t necessarily translate into more emissions.“We have other culprits, including cars and even an eruption of the Popocatépetl volcano,” he said. “And a rainier season can disperse particles more efficiently, keeping the air quality within acceptable levels.”(Updates with ozone levels and government’s comment in last four paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The gold markets have shown themselves to be resilient after initially pulling back during the day. In fact, we find ourselves testing a significant downtrend line that could open up a huge move higher.
The hot crypto market "actually does resemble a casino" to investors, Gundlach told Yahoo Finance.
(Bloomberg) -- Stock sales are reaping a windfall for the world’s richest shareholders.Corporate insiders including Amazon.com’s Jeff Bezos and Google co-founder Sergey Brin have ramped up stock sales recently, cashing in on a 14-month long bull market that’s helped boost fortunes to the tune of trillions.U.S. public company insiders offloaded shares worth $24.4 billion this year through the first week of May, with about half sold through trading plans, according to data compiled by Bloomberg. That’s almost as much as the $30 billion total they disposed of in the second half of 2020.Large shareholders frequently sell stock in planned intervals, often through pre-arranged trading programs. Yet the prolonged rally in equities markets has made the value of these disposals, whether planned or opportunistic, strikingly high.There are multiple reasons an investor of any size might be motivated to sell. After the pandemic-defying rally, valuations are increasingly under pressure from rising inflation. Investors are wary the post-Covid recovery could prompt tightening measures from the Federal Reserve. And President Joe Biden’s proposed tax hikes -- including a near doubling of the capital gains rate -- have created uncertainty.Bezos, EllisonWhatever the reason, the sales are flooding the market with yet more liquidity, the consequences of which will ripple through philanthropy, the art market, real estate and other niches.Bezos has sold $6.7 billion worth of Amazon shares this year. While a relative pittance for the world’s richest person, it’s more than two-thirds the value of shares he sold in 2020. Larry Ellison unloaded 7 million Oracle shares in the past week for total proceeds of $552.3 million. Charles Schwab has sold $192 million worth of shares of his eponymous brokerage this year.Brin, who has signaled that he intends to sell as many as 250,000 Alphabet Inc. shares, has disposed of $163 million worth of stock in recent days, his first sales in more than four years, filings show.Mark Zuckerberg and his charitable foundation, the Chan Zuckerberg Initiative, meanwhile, accelerated their sales of Facebook stock in the fall. Zuckerberg or his charity has divested shares at a near-daily clip since November, for a cumulative total exceeding $1.87 billion.The surging markets have exacerbated the concentration risk of the single-stock-dominated fortunes typical of many tech billionaires, said Thorne Perkin, president of Papamarkou Wellner Asset Management.“From a portfolio-management perspective, it makes sense to spread it around,” he said.Covid EconomyAlso among the biggest sellers are some noteworthy beneficiaries of the Covid economy. Zoom Video Communications founder Eric Yuan and used-car retailer Carvana Co.’s Ernest Garcia II have together received more than $1.75 billion from stock sales since March 2020, according to the Bloomberg Billionaires Index. George Kurtz, chief executive officer of cybersecurity firm CrowdStrike, has sold shares worth at least $250 million over that period.Zoom founder Yuan -- the poster child, in many ways, for the coronavirus economy -- has stepped up his sales this year as the firm’s share price slumped. In 2020, he typically offloaded about 140,000 shares a month through a trading plan, which generated more than $350 million over the course of the year.Since March, he’s sold almost 200,000 shares a month on average, yielding him about $185 million. He also donated more than a third of his stake in the San Jose-based company as part of “typical estate planning practices,” according to a spokesman. Some of the cash from his share sales fund donations to unspecified “humanitarian causes.”(Updates with Charles Schwab’s sales in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bond markets are famous for pushing their agenda, and in east Europe right now, they’re pushing for rate increases, never mind what central banks have to say on the matter.Yields on bonds of Hungary and Poland are rising faster than anywhere else in Europe. Hungary’s jumped 32 basis points last week, signaling traders are primed for rate liftoff as inflation roars back to life ahead of widespread economic re-openings this summer.Like peers in Frankfurt, central bankers in Hungary and Poland have signaled they’re in no rush to curb inflation that may turn out to be temporary, preferring to wait and foster still-fragile economic recoveries from the pandemic.Traders are less patient. In Hungary, market-implied pricing shows expectations for 130 basis points of rate hikes in two years, according to Bloomberg data.“The central bank is walking a tightrope here,” said ING economist Peter Virovacz. “If it manages to communicate in a credible way that it believes CPI would return to its 2%-4% tolerance band next year, it can wait out the spike and avoid a hawkish cycle.”The situation brings to mind the quip by political adviser James Carville that when he dies he wanted to come back as the bond market because “you can intimidate everybody.”Carville was talking about traders who pushed up yields in protest against a ballooning budget deficit in the mid-1990s, but there are parallels with the Hungarian and Polish bond selloff on concerns that an economic boom will create an inflation spiral.These latter-day vigilantes may be gaining the upper hand, with strategists at JPMorgan Chase & Co. reiterating their advice to stay underweight bonds in central and Eastern Europe.A premature end of purchase programs is a big risk for Poland, where the central bank has bought the equivalent of 48% of issuance and in Hungary where it accounts for almost a third of purchases, according to JPMorgan.QE ConundrumIf Polish policy makers bring forward their timetable for raising rates, the central bank would also have to wind down its quantitative-easing program, potentially removing the current backstop for the market.One Polish policy maker, Eugeniusz Gatnar, recently called for a rate increase in June. Yet his voice remains in the minority on the 10-person panel. Polish central bank Governor Adam Glapinski has said that rates will stay at their record low until the end of the current policymakers’ term, which ends in early 2022.Still, the inflation threat may be real: in Hungary the pace of annual consumer prices recently accelerated to 5.1%. In Poland it’s running at 4.3%. Both blew past the upper limit of the central banks’ tolerance range, and compare with an inflation reading of 4.2% in the U.S. that sent markets into a tailspin last week.“With inflation surprising to the upside and growth on the mend, we think the market narrative will increasingly focus on the sustainability of QE in CEE,” according to JPMorgan emerging market strategists including Saad Siddiqui.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.
Earlier, the three major indexes rebounded after declining sharply earlier this week.
A metal coatings plant in China's manufacturing hub has been hit by price increases of up to 30% for raw materials including steel, aluminium, thinner and paint since the Chinese New Year in February. The firm has had no choice but to pass most of these higher costs on to its clients, including those in the United States, said King Lau, who helps run Dongguan-based Kam Pin Industrial Ltd, in Guangdong province. "Our customers understand, because it is happening to many different kinds of industries including home appliances, mobile phones, vehicles," Lau said, referring to price hikes by Chinese exporters.
The direction of the June Comex gold market on Friday is likely to be determined by trader reaction to $1827.40.
(Bloomberg) -- There’s an unwritten rule in global bond markets: never short Germany.But when Europe’s safest asset is in the midst of a retreat that threatens to push yields on bunds above 0% for the first time in more than two years, a paradigm shift may be underway.Toronto-Dominion Bank was forced to close its recommendation for investors to buy German bonds last week, after yields climbed above their stop-loss level. NatWest Markets are calling for investors to sell bunds, hailing the end of the “supercycle” that has seen the securities rally for the best part of two decades. Goldman Sachs Group Inc. and ING Groep NV are among banks who see yields rising to 0% by the end of the year.“The accelerating selloff in Germany is probably the defining feature of the market right now,” said Richard McGuire, head of rates strategy at Rabobank International.As the vaccine rollout gathers pace across the region, bets are on for a remarkable economic comeback -- and an accompanying spike in inflation. That, and the prospect of reduced bond buying by the European central bank, has eroded the haven appeal of bunds, while simultaneously threatening to sap appetite for high-yielding notes of debt-loaded nations like Italy.“The two cannot coexist happily with each other,” McGuire said. “There is a tension between bund yields rising as the market prices out ECB support and, at the same time, it putting upward pressure on peripheral borrowing costs.”Long-term investors have had to pay up for the privilege of holding German debt, which is seen as some of the safest that money can buy -- a reflection of its scarcity and the ECB’s extraordinary package of stimulus measures. That process was turbo-charged by the pandemic, pushing 10-year yields down to within touching distance of minus 1% last year.But expectations are growing that the ECB could start tapering its pandemic program this summer, potentially removing a key pillar of support, even as borrowing needs remain high. While quantitative easing helped cover the growing deficits of Italy and Spain during the pandemic so far, that might not be the case this year, HSBC Holdings Plc said.There’s also a political dimension to the rising yields.The growing strength of Germany’s Green party is feeding through into bets elections later this year could trigger a break with the nation’s traditional fiscal caution. Germany has historically maintained a so-called debt brake over the years, keeping the budget balanced and bond issuance limited.The 30-year swap spread -- which is sensitive to expectations of bond supply -- narrowed last week by the most in more than a year as investors prepare for increased spending and less monetary support.“It’s a quiet revolution,” wrote Giles Gale, head of European rates strategy at NatWest. Although the ECB “are buying at a stonking pace, they aren’t soaking up all the gross supply.”Reflation FrenzyWhile U.S. Treasuries have been caught in the reflation frenzy since the start of February, the fact that yields are catching up in Germany -- a bastion of tepid price increases -- is sending ripples across markets.The world’s stock of negative-yielding investment grade debt -- of which Europe made up the bulk -- has fallen to around 12 trillion dollars, the lowest level since June last year. As a share of outstanding debt, it’s now below 20%, compared with more than 30% at its peak in 2019.In equities, investors are rotating out of more expensive growth stocks and into cheaper value securities, according to Kasper Elmgreen, head of equities at Amundi SA.And European corporate bonds are feeling the effects too. The latest jump in yields has pushed about 80% of high-grade notes sold this year below their issue price, based on data compiled by Bloomberg. That’s up from earlier this month when the share of post-issuance losers stood at just under 50%.Traders have accumulated the largest short position in junk bonds since 2008 and high-grade short-selling has risen to its highest level since early 2014.The pickup in reflation bets in markets matches the outlook among economists surveyed by Bloomberg. The latest data show them raising their forecasts for consumer-price growth in the euro to 2.3% in the fourth quarter from 2.2% previously, and clearly above the ECB’s medium-term target of just under 2%.Positive bund yields would also have a psychological impact.In BofA Global Research’s latest European credit investor survey, 15% of respondents said the rally in corporate bonds will be done when 10-year German yields turn positive, making it the second most-cited bearish trigger after central bank tapering.“Everyone is at peak inflation panic,” said Charles Diebel, a money manager at Mediolanum SpA. “It’s psychologically important.”This Week:German, French and Spanish bond auctions totaling about 29 billion euros. The U.K. Will sell 3-, 15- and 20-year giltsPreliminary manufacturing and services PMIs for May in euro-area, Germany, France and U.K. will be in focus on FridayECB President Christine Lagarde speaks twice, as does chief economist Philip LaneFor 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) -- Sanjeev Gupta’s plans to save his embattled industrial empire suffered a major setback as the U.K. opened a fraud investigation, prompting a potential financial partner to walk away.For two months, Gupta has been scrambling to refinance after the collapse of his group’s main lender, Greensill Capital, and recently looked close to winning a reprieve -- helped along by a surging commodity prices.But on Friday, the Serious Fraud Office announced a probe into Gupta’s GFG Alliance, including into the financing arrangements with Greensill. That prompted White Oak Global Advisors LLC -- which had recently offered a lifeline with terms for a 200 million-pound ($282 million) loan for Gupta’s U.K. steel business -- to walk away. White Oak was also behind funding for part of Gupta’s Australian assets, the Australian Financial Review has said.“As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” White Oak said in a statement.GFG said Friday it will co-operate fully with the SFO investigation. It declined to comment on White Oak’s decision.The fraud probe also puts other efforts to replace about $5 billion Gupta had borrowed from Greensill in question.On Thursday, Gupta had conveyed a much brighter outlook, expressing confidence of a “new future” for his sprawling group of companies. On a podcast for employees, he said it had been “relatively easy to get refinancing” for the Whyalla mill in Australia. He also said that GFG had been “inundated by offers to help and to finance,” partly due to strong commodity markets.The picture is now bleaker in the wake of the SFO investigation, which follows months of scrutiny from lawmakers and the media over Gupta and Greensill’s financing practices. GFG has come under the microscope after the collapse of Greensill in March revealed it had been a recipient of financing based on expected future invoices, for sales that were merely predicted.Trading ActivitiesThe exact scope of the SFO investigation isn’t yet clear. Bloomberg has reported four banks stopped working with Gupta’s Liberty House Group trading business, starting in 2016, amid concerns about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News has reported. In one example, the company had presented a bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.The two-month period it took from starting to covertly look into GFG and its financing by Greensill to announcing a formal probe is a quick turn-around for the SFO, which often takes years to publicly confirm it’s taking action against a company.It will now start to gather evidence, including securing devices and documents. However, it’ll likely take years for the office to make any tangible updates to the investigation, including whether it decides to charge individuals as part of the probe.The funding from Lex Greensill’s eponymous firm helped GFG expand at an astonishing rate in the past five years by targeting old, unwanted assets. His loose collection of companies now employs some 35,000 people worldwide, with steel and aluminum plants in the U.S., U.K., France, Romania and Australia.Staying afloat would enable Gupta to enjoy some of the best times his industrial businesses have seen. Steel prices are near an all-time high as demand recovers from the coronavirus pandemic and China cuts capacity to curb pollution. Aluminum, Gupta’s other major business, hit a three-year high this week amid a broad commodities boom.Still, Greensill’s collapse has already taken a major toll on Gupta’s businesses. On Thursday, his Wyelands Bank said it would be wound up if it can’t find a buyer. His steel units in France and Belgium have started creditor protection procedures, he’s approached buyers for some of his engineering assets, people familiar with the matter have said, and also sought buyers for two steel plants in France.For governments too, there is much at stake. Countries that once feted him as a savior for buying decrepit assets may have to pick up the pieces, due to the jobs at risk and some assets’ strategic importance to 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.
(Bloomberg) -- Fisker Inc.’s existing agreement to develop an electric vehicle with Foxconn Technology Group will now include a factory in the U.S.The joint project -- codenamed Project PEAR -- is targeting a start of production in the U.S. by the fourth quarter of 2023, the companies said in a statement Thursday. The companies are considering multiple sites around the world to support eventual global manufacturing capacity of 250,000 units a year. The partners plan to unveil a prototype of their jointly developed car later this year.Fisker climbed 11% to $11.01 at 9:40 a.m. Friday in New York after advancing as much as 18%, the most intraday in two months. The stock was down 32% this year through Thursday. Hon Hai Precision Industry Co., the main listed arm of Foxconn, is up 14% this year in Taipei.Electric vehicles have risen in prominence in recent months, with everyone from established automakers like Geely to smartphone purveyor Xiaomi Corp. making big investments in the category. Foxconn has an EV platform that will be used to launch two light vehicles in the fourth quarter of this year, Chairman Young Liu said in February. The company has also inked a manufacturing deal with Chinese startup Byton Ltd. and been among a coterie of suppliers and assemblers linked with a potential Apple Inc. car.Read more: IPhone Maker Foxconn to Help Launch Electric Cars This YearFisker is one of a wave of startups to go public via a special purpose acquisition company, or SPAC, and seek a fast-track challenge to Tesla Inc. in the EV market. It’s also the second battery-powered-car venture founded by its namesake founder and chief executive officer, Henrik Fisker, a longtime auto designer. Fisker’s first venture, Fisker Automotive, filed for bankruptcy in 2013.China Tech Giants Bet $19 Billion on Global Electric Car FrenzyUnder the agreement, Fisker and Foxconn will jointly invest in Project PEAR -- short for Personal Electric Automotive Revolution -- with each company taking proceeds if the launch is successful. Spending on the partnership will be hefty. Liu told analysts on Friday that building 10,000 cars per month in the U.S. will require $1 billion of capital expenditure, though he declined to elaborate on how the two companies will split the costs.Foxconn has said it will decide between Mexico and Wisconsin for the site of its first electric-car plant this year. The companies didn’t disclose any specifications of the vehicle they’re developing.The companies said the jointly developed vehicle will be priced below $30,000. Taiwan-based Foxconn, best known for assembling iPhones, is the second major manufacturer with which Fisker has announced a partnership since reaching a deal to go public last year. In October, the EV startup said Magna International Inc. would help it build its debut model. The Ocean electric SUV is scheduled to start production in late 2022 at a Magna facility in Graz, Austria.(Updates shares in third 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.
Meme-stock favorite AMC has skyrocketed this year, but one veteran media analyst says the movie studios' pressure on the exclusivity window means AMC is very overpriced.