|Bid||69.27 x 800|
|Ask||69.30 x 2200|
|Day's Range||69.33 - 70.54|
|52 Week Range||48.42 - 75.24|
|Beta (3Y Monthly)||1.88|
|PE Ratio (TTM)||9.65|
|Earnings Date||Oct 15, 2019|
|Forward Dividend & Yield||2.04 (2.93%)|
|1y Target Est||81.70|
John Williams, president of the New York Fed, on Friday questioned the hesitance of the banks in an interview with the FT. “The thing we need to be focused on today is not so much the level of reserves [held at the Fed],” he said.
Citi today published a report titled ‘Energy Darwinism III – The Electrifying Path to Net Zero Carbon’ outlining how much more carbon we can put up in the atmosphere and understanding where those emissions come from, as a premise to tackling climate change. Unfortunately, this isn’t tomorrow’s problem — at current rates of carbon emissions we could hit the ‘carbon budget’ in 10 to 15 years. In this scenario, many of our cities and much of our infrastructure would be inundated raising the spectre of mass human migration and climate refugees.
Citigroup Inc has appointed Jason Rekate as its global head of corporate banking, the company said on Thursday. Rekate recently served as the bank's head of corporate banking for Japan, according to a Citi statement. The company also appointed Alan MacDonald as the chairman of corporate banking, the statement added.
Citigroup Inc has hired former Credit Suisse Group AG banker Hamish Summerfield as its global head of asset management investment banking, according to an internal memo reviewed by Reuters. The memo, dated Sept. 13 and attributed to Peter Babej, global head of Citi's financial institutions group, said that Summerfield will be based in London and take up his new position in early December.
Benchmarks closed mixed on Wednesday as the Federal Reserve cut federal funds rates by a quarter percentage point, but gave mixed signals for further cuts this year.
The Fed seeks to remain focused on analyzing incoming economic data to determine future moves. Heathy domestic economy and several streamlining efforts are likely continue supporting bank stocks.
The Fed cuts target interest rate by 25 bps to a range of 1.75-2%, a widely expected move to sustain the decade-long economic expansion amid trade concerns.
The Bank of Japan has kept monetary policy on hold but hinted at possible action in October as it frets about a slowdown in the global economy. “With the slowdown in overseas economies continuing and downside risks on the increase, we judged it’s becoming necessary to pay closer attention to the possibility of losing momentum towards our price stability goal,” said Haruhiko Kuroda, BoJ governor, in a press conference after the decision.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The Swiss National Bank offered banks additional relief from its negative interest rates, a move that could give it some leeway to cut them further if needed.With the SNB’s policy rate at minus 0.75%, the finance industry has long complained about the impact on profitability. Officials led by Thomas Jordan responded on Thursday, saying they’ll exempt more of banks’ reserves from the effects of their monetary policy.Although the Swiss Bankers Association lambasted negative rates for causing massive structural damage, the SNB chief argued the adjustment wasn’t a capitulation to pressure. The measure comes a week after the European Central Bank cut its deposit rate and introduced a tiering system.“It’s not about making concessions for the banks, it’s much more that one must assume that this low-yield environment globally will be around for some time,” Jordan said on radio station SRF 4. “Therefore, it’s important that we adjust the system so as to maintain its effectiveness on the one hand, and to guarantee the central bank’s room to maneuver on the other.”The SNB won’t impose charges on amounts as much as 25 times minimum reserves from Nov. 1, up from 20 currently, and will review the level monthly. The move could help to prevent any further easing being passed on by banks to retail savers.While the SNB kept rates on hold, a deteriorating global outlook and no-deal Brexit could put upward pressure on the haven franc, forcing a policy response.“Despite not acting at this meeting, the SNB signaled strongly that further policy easing is on the way,” economists at Citigroup including Christian Schulz said in a note.The SNB also said the franc is highly valued and reiterated its intervention pledge. The currency touched a two-year high against the euro earlier this month.The franc was up 0.3% at 1.0965 per euro at 12:33 p.m. in Zurich.Citing downside global risks, the SNB also made huge downgrades to the outlook. It now sees growth as low as 0.5% this year, from around 1.5% previously. Inflation will almost stagnate in 2020 and be just 0.6% in 2021.The Swiss policy decision comes in a busy week for central banks. On Wednesday the Federal Reserve cut its key rate for the second time this year.The Bank of Japan left policy unchanged on Thursday but said it’ll take a closer review of the economy next month. Indonesia’s central bank cut its key interest rate for a third straight month. Norway bucked the global trend with a rate hike.(Updates with Jordan comments in fourth paragraph.)\--With assistance from Jana Randow, Jan Dahinten, Patrick Winters, Leonard Kehnscherper, Paul Gordon, Harumi Ichikura and Joel Rinneby.To contact the reporter on this story: Catherine Bosley in Zurich at firstname.lastname@example.orgTo contact the editors responsible for this story: Fergal O'Brien at email@example.com, Jana RandowFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Citi has upgraded its Investment Book of Record data delivery service to support Middle Office clients operating across multiple trading cycles. The so‑called ‘multi-slot’ IBOR solution can be customised to meet the operational needs of individual clients across their front office locations in various regions, particularly informing start-of-day trading positions and cash forecasts globally.
(Bloomberg Opinion) -- The Federal Reserve’s interest-rate decision on Wednesday was never going to be easy for Chair Jerome Powell.He and his colleagues had to reach consensus on how to weigh the U.S.-China trade war against a still-solid labor market and American consumer, not to mention signs of a pickup in inflation. They had to contend with whipsawing bond markets, which were pricing in almost three quarter-point rate cuts for 2019 at the start of September but expected fewer than two ahead of the Federal Open Market Committee’s meeting.Then came repo madness.Incredibly, and seemingly out of nowhere, the usually tranquil plumbing of the financial system went haywire. And that might be putting it mildly. The rate for general collateral repurchase agreements in the more than $2 trillion repo market reached a record 10% on Tuesday. The effective fed funds rate broke policy makers’ 2.25% cap on Wednesday. This isn’t supposed to happen.And yet, this week’s developments didn’t even merit a mention in the FOMC statement. Some analysts, like Matthew Hornbach at Morgan Stanley, said it was likely the Fed would announce permanent open market operations. Jeffrey Gundlach, chief investment officer of DoubleLine Capital, said in a webcast on Tuesday that the central bank might expand its balance sheet as a way of “baby stepping” to more quantitative easing.This doesn’t mean the Fed doesn’t care, or that it won’t ultimately adopt those measures. Most likely, it just didn’t have enough time to react in a big way. Policy makers did drop the interest rate on excess reserves, or IOER, by 30 basis points to regain control over short-term rates. The IOER rate had been set at the upper bound of the fed funds range until June 2018, when the Fed raised it by only 20 basis points. It’s now down to 1.8%, while the 25-basis-point cut to the fed funds rate sets the range at 1.75% to 2%. Basically, if stress in funding markets keeps pushing short-term rates higher, the sharper cut in IOER makes it somewhat less likely that the fed funds rate will breach the upper bound.Powell eventually addressed repo markets head-on, largely at the prodding of reporters: “Going forward, we’re going to be very closely monitoring market developments and assessing their implications for the appropriate level of reserves.And we’re going to be assessing the question of when it will be appropriate to resume the organic growth of our balance sheet. And I’m sure we’ll be revisiting that question during this inter-meeting period and certainly at our next meeting.We’ve always said that the level is uncertain. That’s something we’ve tried to be very clear about. We’ve invested lots of time talking to many of the large holders of reserves to assess what they say is their demand for reserves…But yes, there’s real uncertainty, and it is certainly possible that we’ll need to resume the organic growth of the balance sheet earlier than we thought. That’s always been a possibility.”The key word he seemed to stress was “organic.” That’s because any hint of expanding the balance sheet can be misconstrued as a resumption of post-crisis quantitative easing. However, it would be a mistake to consider it the same as QE. Hornbach explained it eloquently on Bloomberg TV before the Fed’s decision:“Quantitative easing, the purpose of that is to expand reserves in the system from the status quo of the reserves that are needed to keep liquidity and the fed funds target within that range. When you start losing control of the target rate, you need to increase reserves in the system, but that’s not necessarily quantitative easing as we know it in a traditional sense. They’re not trying to ease monetary policy, they’re trying to get better control over that short-term interest rate.”That’s the type of nuance that can get lost on investors if the Fed, and those who write about it, aren’t careful.In fact, Wednesday’s interest-rate decision could be seen as something of a “hawkish cut.” Policy makers’ “dot plot” signaled sharp divisions among policy makers, as Powell predicted, with the median estimates calling for no more rate cuts through 2020. It then shows one quarter-point hike in 2021 and another in 2022, albeit with many different estimates.Five of them appeared to indicate they didn’t agree with the decision to reduce rates on Wednesday. That almost certainly includes Esther George and Eric Rosengren, who openly dissented. James Bullard dissented as well, but because he favored a 50-basis-point cut. On any other Fed day, this squabble between the hawks and doves would take center stage. After all, it’s the first decision with three dissents since 2016 and the first with dissents in both directions since mid-2013. Citigroup Inc.’s Economic Surprise Index, for one, suggests those who opposed easing policy have a point: It’s at the highest level since April 2018. President Donald Trump, to no one’s surprise, sides with Bullard. He tweeted almost immediately after the Fed decision that Powell and the central bank have no “guts.”The real test of the Fed’s mettle will be if the short-term rate markets continue to exhibit stress. The New York Fed has been the subject of market ridicule for having to cancel its first overnight repo operation in a decade on Tuesday because of technical difficulties and for being late to do so in the first place. Powell said that funding markets “have no implications for the economy or the stance of monetary policy.” That’s true — but only until they do.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Citi has claimed the top ranking in Overall U.S. Fixed Income Market Share, according to Greenwich Associates annual benchmark study. This recognition follows Citi’s top share and quality accolades in the 2018 Global Fixed Income study also conducted by Greenwich Associates and released earlier this year. Between March and May 2019, Greenwich Associates conducted 954 interviews with institutional investors active in fixed income in the United States.
The idea, bankers said, was to hatch partnerships between old companies that are replete with cash and searching for growth, and fledgling companies that are gobbling up market share and need working capital. One of the blue-chip titans that benefited from Citi's matchmaking was Kimberly Clark Corp . Such tie-ups help Citigroup bankers improve relationships with large-cap clients while also building connections with privately held companies that may one day go public, said Elinor Hoover, Citigroup’s co-head of consumer investment banking.
Visa (NYSE:V), seeking entrance into the center of 21st century banking, has joined MasterCard (NYSE:MA) in taking a stake in fintech startup Plaid. Plaid writes application program interfaces that act as the infrastructure beneath bank accounts. This lets it power customer-facing fintech specialists like PayPal's (NASDAQ:PYPL) Venmo, Robinhood, Chime and Betterment.Source: Shutterstock Enabling new banking services could make Plaid a sort of Microsoft (NASDAQ:MSFT) for the fintech age -- an operating system for computerized banking.Plaid has attracted $310 million in financing. Its most recent funding round valued it at $2.7 billion. Other backers include Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) and American Express (NYSE:AXP).InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut it's Visa and MasterCard, which have a joint value of almost $700 billion, that are the real get. They have global scale, brand names and good reputations for security and reliability. Battling AlibabaPlaid is ranked as the eighth largest fintech startup. The list is led by credit card issuer Stripe and includes SoFi, a lender whose name will grace the new Los Angeles football stadium. Fintech companies raised a total of nearly $40 billion last year.Fintech startups are trying to get around the high costs of working with the present banking system. Visa and Mastercard are part of that. But Visa and Mastercard are also trying to get around those costs, seeing the growth of chat-based Chinese payment systems from Alibaba (NYSE:BABA) and Tencent Holding (OTCMKTS:TCEHY). * 7 Momentum Stocks to Buy On the Dip There was an assumption that Facebook's (NASDAQ:FB) Libra -- a cheaper payment system riding on FB's data network -- might be the first to escape the high costs. Both Visa and MasterCard were part of Libra's 28-member founding group announced in June. But there are increasing doubts that financial regulators will allow Libra to launch, as many fear Facebook's size. These regulators seem to have no such fears regarding the payment processors. The Fintech StackThe investment in Plaid, which already serves cryptocurrency companies like Coinbase, brings Visa and MasterCard closer to the new financial world's operating system.Fintech is building a new financial payments stack. Right now, most of the value in the stack is in the loans it creates or the investments it enables. But as the software stack evolves, history shows that it's the company at the bottom of that stack that gains the most power, as Microsoft did starting in the early 1990s.Plaid CEO Zach Perret said his goal is to create a digitized financial system. Visa executive Bill Sheedy said his strategic goal is more important than the financial investment.That strategic goal increasingly looks like a bank. Verifying users and account balances is key to enabling loans, payments and investment -- essentially all the functions of banks like JPMorgan Chase (NYSE:JPM). Visa stock's market cap exceeded that of JPMorgan just in the last year. Many Plaid customers compete directly with banks like JPMorgan. The Bottom Line for Visa Stock and PlaidWhile Visa's payment network has proven to have enormous financial power, it still faces challenges. It can charge merchants up to 3% of a transaction's cost to process through its network. The money is soaked up by processors and banks that are part of the Visa stock network.These payment networks won't work in developing nations. The cost is too high for small merchants to bear. Instead of staying with cash, many are moving to cheaper fintech alternatives that can run through customers' mobile phones.Whether these merchants will stay with Chinese and Indian payment systems, or seek Western alternatives to access Western wallets, remains an open question. The Plaid investment shows just how desperate Visa and Mastercard are to answer that question in the affirmative.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, BABA and JPM. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Momentum Stocks to Buy On the Dip * 7 Dow Titans Breaking Higher * 5 Growth Stocks to Sell as Rates Move Higher The post Visa's Investment Shows Plaid Could Replace Libra in Fintech Space appeared first on InvestorPlace.
The proposal by the Federal Deposit Insurance Corporation could potentially free $40 billion of cash across the nation's largest banks, according to a 2018 survey by the International Swaps and Derivatives Association which has been lobbying for the rule change for years. The regulator also proposed relief for banks transitioning from the London interbank offered rate (LIBOR) to the new Secured Overnight Financing Rate (SOFR), and also proposed delaying rules that would require smaller fund managers to begin posting margin for derivatives transactions to Sept. 2021, after the Basel Committee of global regulators had done the same.
(Bloomberg) -- Singapore saw its lead over Hong Kong shrink to just a whisker in the battle to be Asia’s biggest foreign-exchange currency hub. To keep its advantage, the island state wants to attract more companies to set up electronic trading platforms.Average daily trading in Singapore jumped 22% to a record $633 billion in April from the same period in 2016, according to the latest survey by the Bank for International Settlements. That’s just ahead of Hong Kong’s $632 billion, as the Chinese city saw a 45% surge in daily transactions.Singapore has enticed UBS Group AG, Citigroup Inc, Standard Chartered Plc and JPMorgan Chase & Co. in the past year to set up FX pricing and trading engines so that investors can reduce the time lag from routing trades elsewhere. That’s helped it take market share from Japan, while competing against Hong Kong that’s at the forefront of the yuan market.The Southeast Asian nation will need another three to five major players to build electronic trading platforms to achieve “critical mass” over the next year, according to Benny Chey, assistant managing director of development and international at the Monetary Authority of Singapore.“We have confidence that we’ll get those players as we’re already in discussions with them,” Chey said in an interview, without disclosing their identities. “Growth of trading in Asian and other emerging-market currencies will be an increasingly important market driver for Singapore.”The latest data from BIS showing a neck-to-neck race between the two rival financial centers also reflected a surge in trading of the Hong Kong dollar that month as bears were squeezed when borrowing costs suddenly advanced.“The increases in FX turnover were mainly due to hedging and arbitrage trades of clients, as well as increased hedging and funding needs of financial institutions,” the Hong Kong Monetary Authority said in an emailed response to questions. “The 2019 BIS survey results reaffirmed Hong Kong’s status as a major international financial center.”Read: Hong Kong Dollar Jumps the Most This Year as Bears Face SqueezeBIS data showed that Japan’s share of global FX trading in April dropped to 4.5% from 6.1% in 2016. Sales desks from five locations -- the U.K., U.S., Singapore, Hong Kong and Japan -- intermediated 79% of the world’s total daily currency trading.The increase in FX trading in Singapore was broad based, with growth seen in Group-of-10 currencies and emerging-market ones such as the South African rand and Mexican peso. The U.S. dollar, yen, euro, and the Australian and Singapore dollars were the most-traded currencies in the island state, the data showed.Singapore has been offering tax incentives and government grants to boost trading. Family offices are also a focus for Singapore’s central bank, according to MAS’s Chey. “The wealth accumulation and need to transfer wealth from one generation to another will help growth,” he said.Family WealthThe number of Asian billionaires will rise by 27% to 1,003 between 2018 and 2023, making up more than a third of the world’s total billionaire population, according to a March report by Knight Frank LLP.“We just need another three big players -- say Goldman, Commerzbank and HSBC for example -- and the floodgates should open,” said Wong Joo Seng, chief executive officer of currency-platform provider Spark Systems Pte, which got financial support from MAS to set up in Singapore.The heart of the challenge for Singapore is latency -- the 10th of a second extra it takes to route an order through servers in Tokyo or London or New York, where most major banks have sited their trading engines. To capture big-volume players, the government needs to persuade companies to build those expensive systems and data centers in Singapore.Citigroup, the world’s joint biggest forex trading group by market share, will provide liquidity through its Singapore FX trading engine in October. It’s also investing in a second data center, said Mark Meredith, Citi’s London-based global head of electronic trading for FX and local markets.Singapore is the fourth FX trading hub for Citi, which also has systems set up in Tokyo, New York and London.“It’s an environment that supports an increasing amount of e-commerce activity,” Meredith said of Singapore. “There’s the growth of wealth in Asia and high-net-worth individuals situated there as well.”While Singapore and Hong Kong have seen increased trading, both cities still lag significantly behind the U.K. and U.S. where investors exchange $3.58 trillion and $1.37 trillion respectively each day, according to BIS data.“Hong Kong’s growth reflects still flourishing financial activities in the Hong Kong dollar market, including IPOs and debt financing over the past few years,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank Ltd. “Growing integration between Hong Kong and mainland China could also be a source of growth in HKD trading activities.”Standard Chartered Bank is looking to build an exact replica of its FX hubs found in Tokyo, New York and London in Singapore, supporting the trading of 130 currencies, according to Michele Wee, the head of financial markets for Singapore at the lender.“We have a lot of new entrants into the market who are having conversations with us on co-locations,” Wee said of Singapore’s development as an FX hub. “It’s a work in progress.”(Adds trading market share in eighth paragraph.)\--With assistance from Gregor Stuart Hunter.To contact the reporter on this story: Ruth Carson in Singapore at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Brett MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The bombing of Saudi Aramco’s oil processing facilities has triggered a topsy-turvy period for oil markets. Crude prices have soared, lifting the shares of neglected energy producers. Energy stocks, along with financials, usually fall into the category of inexpensive equities labelled “value”. Value fund managers, the perennial underdogs of the investment world, have grounds to believe they are now alpha animals.
The executive's deep roots in Bay Area finance circles bodes well as the bank seeks to attract more of the Bay Area's wealthy.
(Bloomberg Opinion) -- The main takeaway from the biggest-ever surge in oil prices after an attack wiped out about half of Saudi Arabia’s output capacity over the weekend is that it may not truly matter. The global stock market as measured by the MSCI All-Country World Index fell to its lowest — wait for it — since Wednesday. And while there was a flight to safety, the yield on the benchmark 10-year U.S. Treasury note only dropped to its lowest since Thursday.Those moves may seem less than proportionate to the attack, which resulted in the sudden loss of 5.7 million barrels of oil a day, more than the 4.3 million lost during the 1990 Gulf War or the 5.6 million during the 1979 Islamic Revolution. But losing such a large amount of production in an $84.8 trillion global economy isn’t the same as when the economy was just $37.9 trillion in 1990 or $27.4 trillion in 1979. The relatively muted moves also underscore how the global energy market has become more diversified, with the U.S. now a net exporter of crude oil and refined products. And while this may change if Saudi production doesn’t come back online as quickly as forecast or if geopolitical risks escalate as a result of the attack, West Texas Intermediate crude prices — at about $63 a barrel on Monday, up more than $8 on the day — are still less than the $66.60 they reached in April and less than last year’s high of $76.90 in October. Looked at another way, oil prices are up only 48% from last year’s low on Christmas Eve. That may sound like a big move, but DataTrek Research notes that every U.S. economic downturn since 1970 has been preceded by a doubling of oil prices in the previous 12 months. Based on that, the firm figures that oil wouldn’t be a problem for the economy until it reached $80 a barrel.LPL Senior Market Strategist Ryan Detrick points out that the last 10 times West Texas Intermediate crude futures surged more than 10%, the S&P 500 rose eight times. That fits the glass-half-full narrative, which is that with the U.S. a net exporter, higher oil prices might even spark investment in its energy-related industries. Even so, it’s not as if the world is desperate for oil. As my Bloomberg Opinion colleague Julian Lee pointed out, it was just a few days ago that OPEC and its allies were bemoaning the excessive inventories still sloshing around the world after more than two and a half years of supply restrictions.STAGFLATION AHEAD?The big surge in oil prices had the bond market sending a rare and unusual signal Monday. On the one hand, U.S. Treasury yields fell as investors sought haven assets in case the attack escalates into a broad geopolitical crisis that further weighs on economic growth. On the other, breakeven rates on five-year Treasuries, a measure of what traders expect the rate of inflation to be over the life of the securities, rose to the highest since July. Of course, it’s still early days, but so-called stagflation, in which economic growth slows to a stall and inflation accelerates, is a deadly combination for markets as seen in the 1970s. Federal Reserve Chairman Jerome Powell is sure to get questions on what the oil spike means at his press conference on Wednesday after the central bank’s policy meeting where it’s expected to cut interest rates for the second time since July. Even before the jump in oil prices, investors were becoming jittery about evidence of faster inflation. The Labor Department said last week that the core U.S. consumer price index rose 0.3 percent in August, the first time it has risen that much for three consecutive months since the 1990s. If the report signals that the slowdown in inflation earlier this year truly was “transitory,” as Powell has described it, it could call into question the need for further rate cuts as well as the historic low in bond yields.INDIA LOSES THE MOSTOne place where the surge in oil prices is likely to have a big impact is India. The rupee was the biggest loser in the currency market Monday, weakening as much as 1.06% and extending its decline over the past two months to 4.26%. The currency suffered a disproportionate hit not only because India is one of the world’s biggest importers of oil, but because it also suffers from a deficit in its current account, which is the broadest measure of trade because it includes investment. Economists estimate that every dollar increase in the price of oil adds about $2 billion to India’s costs to import crude. The timing is also not good, with the rupee already under pressure on concern that foreign funds may continue to head for the exits after economic growth slipped below trend of two consecutive months. Foreign funds pulled $2.3 billion from Indian shares in August, the biggest outflow since October. “If crude prices stay up, the Reserve Bank of India may not be able to deliver more than 25 basis points of cuts,” Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership in Mumbai, told Bloomberg News. As the “I” in the BRIC acronym that also includes Brazil, Russia and China, any lasting strength in Indian markets has the potential to lift emerging-market assets globally; the opposite can also happen.ONE LESS BEARIt didn’t receive a lot of attention, perhaps because the news broke late Friday after markets had closed and then the Saudi oil attacks happened, but one prominent bear on the stock market has capitulated. Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist, raised his year-end target for the S&P 500 Index to 3,050 from 2,850, going from the fourth-bearish among Wall Street prognosticators tracked by Bloomberg to one of the few who still see gains for the rest of 2019, according to Bloomberg News’s Lu Wang. The new target represents a 1.4% increase from Friday’s closing level of 3,007.39. Levkovich’s newfound optimism is built on a scenario in which a glut of supply has dwindled, setting the stage for a recovery in production. Industries such as semiconductors have suffered profit declines amid excessive inventory, and earnings among S&P 500 companies are expected to fall 3% in the third quarter before rebounding to a growth pace of 3.8% in the fourth, analyst estimates compiled by Bloomberg showed. “A required inventory correction is ending, with production likely to pick up modestly just to meet end-market demand,” Levkovich wrote in a note to clients. As a result, fourth-quarter “earnings estimates may not need additional trimming.” Wang notes how strategists have been forced to play catch up with a market that has risen about 20% this year. Based on the last Bloomberg survey in mid-August, all but six of 21 strategists have seen the benchmark exceed their year-end targets.MARKET PLUMBING GOES HAYWIREThe repurchase, or repo, market may be tremendously opaque, but few things are more important when it comes to making sure markets broadly are running smoothly. That’s why it’s often referred to as the market’s plumbing system. So when there’s a glitch in the repo market, it pays to take notice — like now. ICAP pricing shows that the rate on overnight repurchase agreements soared by 1.53 percentage points to 3.80%, the largest daily increase since December, according to Bloomberg News’s Alexandra Harris. The spike may be a sign that the Federal Reserve is having trouble controlling short-term interest rates. Market participants are watching to see how long these elevated levels persist, as any prolonged pressure could signal unruly funding markets at the end of the year, Harris reports. A combination of factors seem to be behind the move higher, including the settlement of the mid-month Treasury coupon auctions, which pushed more collateral into the repo market. At the same time, cash is leaving the funding space as corporations withdraw from banks and money-market funds to make their quarterly tax payments. The surge suggests the next few months could be volatile given the expected increase in Treasury borrowing, bloated dealer balance sheets, regulatory issues and a banking system where reserves are already scarce.TEA LEAVESData from the Treasury Department last week showed that the U.S. budget deficit surpassed $1 trillion in the first 11 months of the fiscal year through August. That means the U.S. needs to do a lot of borrowing to finance the shortfall. One big source of demand is foreign central banks and investors. They have piled into U.S. debt this year, increasing their holdings by $380 billion, or 6.08%, through June to $6.64 trillion, Treasury data show. Both the absolute and percentage increase is the most for any full year since 2012. The Treasury will give an update on foreign purchases on Tuesday, but with U.S. debt yielding so much more than the rest of the world on average, July should be another banner month. U.S. Treasuries on average yield about 1.83 percentage points more than government debt anywhere else. As recently as 2013, Treasuries yielded less than their peers on average.DON’T MISS Ultra-Low Rates Are No Panacea for Stocks: Robert Burgess Does the World Have Enough Oil to Cope With Attacks?: Julian Lee Blindsided Bond Traders Can’t Count on Fed Dots: Brian Chappatta An Oil Shock Was Just What We Needed in Fed Week: John Authers Companies Aren’t Putting Trump’s America First: Matthew WinklerTo contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Citigroup will issue its third quarter results via press release at approximately 8:00 AM on Tuesday, October 15, 2019. At 10:00 AM , results will be reviewed via live webcast and teleconference.