Gen. Jack Keane (Ret.) discusses the Hong Kong protests and what may happen if the U.S. completely leaves Afghanistan.
Gen. Jack Keane (Ret.) discusses the Hong Kong protests and what may happen if the U.S. completely leaves Afghanistan.
(Bloomberg) -- Discover what’s driving the global economy and what it means for policy makers, businesses, investors and you with The New Economy Daily. Sign up here.One way out of the European Central Bank’s dilemma about whether to slow pandemic bond-buying next quarter leads down a path policy makers have followed ever since quantitative easing started in 2015.Thin liquidity in the summer months has prompted the ECB to reduce the pace of purchases each year, including during the pandemic. This technical necessity -- the central bank risks overwhelming the market otherwise -- might help President Christine Lagarde negotiate a compromise in what will be a heated debate at the Governing Council’s June meeting.Read more: CB Officials Expect Heated June Decision on Crisis Program Ever since a decision in March to temporarily step up bond buying to ensure yields and credit rates remain low across the 19-nation euro area, some policy makers have argued that a strong economic rebound from lockdowns and an improving inflation outlook will allow the ECB to reverse course in the third quarter. Others prefer a more cautious approach, suggesting they’re open to even expanding the 1.85 trillion-euro ($2.2 trillion) program.Both sides might be able to agree on reaffirming the ECB’s commitment to keep financing conditions favorable, while citing the market lull should they buy less. Policy makers have already showed during this year’s Easter holidays -- purchases declined just after the commitment to boost them -- that they’re not too concerned about temporary disruptions to their plans.“They could agree to something more flexible -- adjusting the purchases gradually lower over the summer months,” said Jan von Gerich, chief strategist at Nordea Bank Abp. “Communication-wise though, it might be a challenge, since the recovery is unlikely to be on a solid foundation yet at the time of the June meeting.”Von Gerich highlighted the seven-week window between when the ECB would make that decision and August, when bond markets are normally at their quietest. That means the central bank could maintain the current pace of purchases next month and allow them to naturally fall over the summer, before making an active decision on a slower rate in September, he said.“The ECB will want to avoid fueling expectations that it will continuously do more,” said Katharina Utermoehl, senior economist at Allianz SE. “We’re looking at a strong recovery in the second half and the inflation outlook is improving. The ECB should be able to reduce purchases in the third quarter.”Inflation HurdleThe most important ingredient in June’s policy discussion will be updated projections for growth and inflation that are currently being compiled. That last set showed consumer prices growing at an average annual pace of just 1.4% in 2023, far less than the ECB’s goal of below, but close to, 2% -- and not yet back on the pre-pandemic track.While business surveys signal a sharp pickup in price pressures amid surging commodities and logistical logjams, the underlying trend has weakened again. At the same time, nominal bond yields have increased and banks have tightened lending standards.German 30-year bond yields surged to their highest level since 2019 on Tuesday, fueled by ample supply and inflationary fears. A market-derived gauge of bets on rising inflation in Germany rose to its highest level in almost seven years. Italian 10-year yields -- a key gauge of risk in Europe -- rose toward 1% for the first time since September.“I don’t see how the ECB will be able to sell a slowdown in purchases given the inflation outlook and financial conditions,” said Nick Kounis, head of macro and financial-markets research at ABN Amro Bank NV. “Their goal will be to continue buying at the current pace, but they can easily argue it’s not significant if they don’t quite manage during the summer.”Come September, the euro area’s recovery is expected to be in full swing, and policy makers might conclude there’s no need to go back to the current elevated levels. The ECB bought 80.1 billion euros worth of debt in April, the most since July.That would mean they won’t spend the full amount, an option regularly highlighted by the officials who warned in the past against risks from offering ever more monetary stimulus. Governing Council member Martins Kazaks made the point in an interview last week, also arguing there’s no reason to believe emergency bond-buying will be extended beyond its March 2022 end-date.“Exceptional bond purchases should not go on forever,” said Patrick Armstrong, a money manager at Plurimi Wealth LLP. A summer taper “could be an elegant way to taper without causing the tantrum.”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) -- Masayoshi Son is now in the history books for delivering the largest-ever quarterly profit for a Japanese company, but he’s still having a hard time getting the respect he thinks he deserves.SoftBank Group Corp. on Wednesday reported net income of 1.93 trillion yen ($17.7 billion) for the three months ended March 31, with essentially all of that coming from Son’s successful investment in the newly public Coupang Inc. That’s nearly twice the 1 trillion yen tally from the next highest Japanese company, Toshiba Corp.Yet even as Son prepared to deliver the widely anticipated record results, his stock price suffered the steepest two-day dive in eight months. His shares have dropped 14% from their peak in March. Investors are skittish about whether SoftBank will keep buying back its own stock and profiting from a global surge in technology shares.In a presentation after results, Son argued that investors aren’t giving him credit yet for the value he’s creating at SoftBank. With holdings like Coupang and Alibaba Group Holding Ltd., the net asset value for the company is now north of 15,000 yen a share, he said, more than 60% higher than the current share price.“In simple terms, they’re undervalued,” Son said, pacing a stage in Tokyo with a black turtleneck and matching black blazer.SoftBank’s Vision Fund investment arm went from being the source of the biggest loss in SoftBank’s history a year ago to the main driver of earnings, with a 2.3 trillion yen profit in the March quarter. The rally in tech shares boosted Vision Fund profits to three consecutive records, raising the value of holdings in the likes of Uber Technologies Inc. and paving the way for public listings from startups such as Coupang and DoorDash Inc.“Our profit and revenue are both measured in trillions of yen, but just a year ago we had a record loss,” Son said at the briefing. “For SoftBank, profits and losses in trillions of yen are the new normal.”What’s really driven SoftBank shares though, has been its buybacks. Beginning in March of last year, Son announced he would sell assets and repurchase 2.5 trillion yen of his own shares.SoftBank has now spent all of the money it has allocated -- and investors have been anticipating more buybacks. But Son didn’t commit to further repurchases.“Yes, we will consider buying back our own shares,” he said, stressing there are a lot of factors that go into such a decision and it can’t just be deployed to prop up the share price.Son tried to keep the attention on his startup successes. Coupang, the South Korean e-commerce leader, contributed $24.5 billion to Vision Fund’s profit in the fourth quarter. Auto1 Group SE, a German wholesale platform for used cars which went public in February, contributed $1.8 billion of the gains, while Uber posted a $200 million loss. The Japanese conglomerate doesn’t have to sell equity holdings to book income, so most of its profits are unrealized.“The discount SoftBank is trading at, around 30%, has widened again in recent months, but it’s a far cry from the gap that Son has railed against historically,” said Kirk Boodry, an analyst at Redex Research in Tokyo. “I get his points, but the last two years have shown there can be extreme volatility in returns and little agreement on future prospects.”Son has said that SoftBank could see between 10 and 20 public listings a year. Grab Holdings Inc. will go public in the U.S by July through the largest-ever merger with a blank-check company, valuing the Southeast Asian ride-hailing and delivery giant at about $40 billion. Its Chinese counterpart Didi Chuxing has filed with the U.S. Securities and Exchange Commission for an IPO that could value the company as highly as $70 billion to $100 billion.SoftBank has a portfolio of 224 companies across three different funds as of the end of March.Son did take a victory lap in touting his returns so far. He said that limited partners in the first Vision Fund now have a blended internal rate of return of 22%, compared with negative 1% a year ago. SoftBank’s own IRR for the fund is 39%, while its IRR for the second Vision Fund is 119%.SoftBank also boosted the capital committed to its Vision Fund 2 to $30 billion, up from $20 billion.“The problem facing SoftBank is that the good news is already out,” Atul Goyal, senior analyst at Jefferies. “What is less visible are the potential losses on blue-chip public stock investments and derivatives. The negatives are pretty opaque and that’s where investors will be looking at during earnings.”Son’s controversial program of trading options cost him during the quarter. The company posted a 33 billion yen derivatives loss in the period. While the overall profit in the asset management arm was 46 billion yen in the period, the business still posted a full-year loss of 67 billion yen.SoftBank held a total of $19.9 billion of “highly liquid” securities as of the end of quarter, including a $6.2 billion investment in Amazon.com Inc., $3.2 billion in Facebook Inc. and $1 billion in Microsoft Corp. The operation is managed by its asset management subsidiary SB Northstar, where Son personally holds a 33% stake.The investments were accompanied by derivatives that amplified exposure, a strategy that triggered a backlash from investors. The fair value of SoftBank’s futures and options positions came to $1.6 billion at the end of March, compared with little over $1 billion the previous quarter and $2.7 billion the one before. Long call options on listed stocks have dwindled to $1.6 billion from $4.69 billion half a year ago and short call options on listed stocks declined to $84 million from $1.26 billion of value.During his presentation in Tokyo, Son admitted to mistakes with startups, naming specifically WeWork, Greensill and Katerra. But he argued that SoftBank’s successes have more than made up for such missteps. He said his attitude hasn’t changed that much from a record loss a year ago to a record profit now.“I’m not overjoyed or depressed so easily, just stay calm,” he said(Updates with Son comments in fifth 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.
The small U.S. manufacturers that rushed to produce face masks over the past year are now stuck with hundreds of millions of unsold face coverings because China is flooding the market with below-cost masks, and most may not survive the end of the pandemic. That's the thrust of a letter to President Joe Biden released Tuesday by a trade group representing 26 small manufacturers that set up production of the badly needed safety items as the health crisis took hold last year. The manufacturers said over half their production would be forced offline in 60 days if they don't get immediate federal aid, costing thousands of jobs.
With a cyberattack temporarily hobbling the critical Colonial Pipeline, the prospect of gas shortages in the Southeast is making some nervous.
Investing is all about profits, and part of generating profits is knowing when to start the game. The old adage says to buy low and sell high, and while it’s tempting just to discount cliches like that, they’ve passed into common currency because they embody a fundamental truth. Buying low is always a good start in building a portfolio. The trick, however, is recognizing the right stocks to buy low. Prices fall for a reason, and sometimes that reason is fundamental unsoundness. Fortunately, Wall Streets analysts are busy separating the wheat from the chaff among the market’s low-priced stocks, and some top stock experts have tagged several equities for big gains. We’ve used the TipRanks database to pull up the data and reviews on three stocks that are priced low now, but may be primed for gains. They’ve been getting positive reviews, and despite their share depreciation, they hold Buy ratings and show upwards of 80% upside potential. Vapotherm, Inc. (VAPO) First up, Vapotherm, is a medical device manufacturer, specializing in heated, humidified, high-flow nasal cannulas. These are therapeutic breath aids, designed to deliver oxygenated air directly to the patient’s nose. Heating and humidifying the air reduces the discomfort of delivering dry oxygen. As can be expected, during a pandemic of a respiratory illness, Vapotherm saw high sales in recent months – but the share price has pulled back since early February. Paradoxically, the two events are related. First, on the positive side, Vapotherm’s 1Q21 financial results were solid. The company’s revenue, at $32.3 million, was up 69% year-over-year, and worldwide, installations of the Precision Flow base unit was up 73% over the same period. The company’s net loss in the quarter, $5.2 million, was an improvement from the $10.2 million loss in the year-ago quarter. On the negative side, VAPO shares are down from their early-February peak. The drop is substantial; the stock has fallen 50% from its peak, and is down 34% year-to-date. The fall in share value reflects concerns that the company’s flagship product is oversold, that customers, fearful of COVID-related respiratory emergencies, bought more units that would be needed in ordinary times. This is the case made by Piper Sandler analyst Jason Bednar. “Shares have meaningfully underperformed since early February as many investors have questioned utilization dynamics for the bolus of Precision Flow systems that were sold into hospitals last year… We understand the logic here, particularly for those investors with a shorter time horizon, but with much of that concern seemingly already reflected in the stock at current levels we do believe the upside opportunity meaningfully outweighs the risk of further downside,” Bednar noted. The analyst added, "It’s also our view that investors who wait for utilization trends to bottom out will ultimately miss an initial move higher that could come as HVT 2.0 begins to contribute with a rollout later this year and as market expanding opportunities for HVT 2.0 in 2022 begin to take on a more defined shape (particularly EMS and home-based care)." To this end, Bednar rates VAPO an Overweight (i.e. Buy), and his $32 price target implies a robust upside of 81% in the year ahead. (To watch Bednar’s track record, click here) Overall, the unanimous Strong Buy consensus rating on this stock, supported by 4 recent analyst reviews, makes it clear that Bednar is not alone in his bullish view. The average price target here, $39, is even more optimistic, suggesting an upside of ~122% from the current trading price of $17.65. (See VAPO stock analysis on TipRanks) Emergent Biosolutions (EBS) The next stock we’re looking at, Emergent, is a biopharmaceutical company. The company has multiple products on the market, including a NARCAN nasal spray for use on opioid overdose patients, and vaccines against smallpox, anthrax, and other diseases. Emergent’s development pipeline includes a pediatric cholera vaccine, Vaxchora, currently in a Phase III trial. Several programs, including an anthrax vaccine candidate, a Chikungunya vaccine, and a seasonal flu shot, have all completed Phase II and are in preparation for Phase III. One of Emergent’s most important programs is in its Contract Development and Manufacturing service, a service extended to other pharmaceutical companies to manufacture vaccines which they have developed. Under a CDMO plan, Emergent is part of Johnson & Johnson’s manufacturing chain for a COVID-19 vaccine. That last is a key point. The J&J vaccine has been linked – at least in some reports – to serious adverse events, particularly blood clots in otherwise healthy recipients. That has caused a hold in manufacturing of the vaccine, and consequently a delay in receiving payments from J&J. Which, in turn, impacted the company’s 1Q21 financials, resulting in lower revenues and earnings than expected. Investors are concerned, and the stock has fallen 33% year-to-date. Despite the setback, Benchmark analyst Robert Wasserman keeps a Buy rating on EBS shares, along with a $120 price target. If correct, the analyst’s objective could deliver one-year returns of 101%. (To watch Wasserman’s track record, click here) "EBS remains solidly profitable, and even with the lowered expectations for J&N and AZ vaccine contracts, is expected to show solid revenue growth for this year. These shares remain a bargain in our CDMO/bioprocessing group and could offer significant upside for value-oriented investors if circumstances turn around or new business can be garnered in the near-term," Wasserman opined. Overall, the Street currently has a cautiously optimistic outlook for the stock. The analyst consensus rates EBS a Moderate Buy based on 3 Buys and 2 Holds. Shares are priced at $59.59, and the average price target of $89.67 suggests an upside potential of ~50% for the next 12 months. (See EBS stock analysis at TipRanks) Haemonetics Corporation (HAE) For the last stock on our list, we’ll stick with the medical industry. Haemonetics produces a range of products for blood and plasma collection and separation, as well as software to run the machines and service agreements for maintenance. In short, Haemonetics is a one-stop shop for blood donation centers and hospital blood banks. Blood products is a $10.5 billion market in the US alone, with plasma accounting for 80% of that, and Haemonetics has made itself an integral part of that business. Haemonetics had been recovering steadily from a revenue dip at the height of the corona crisis, and its 3Q fiscal 2021 earnings showed a solid results: top line revenue of $240 million and EPS of 62 cents. While the revenue was down 7.3% yoy, EPS was up 6.8%. Even with that, however, the stock dropped sharply between April 15 and April 20, losing 42% of its value in that short time. The reason was simple. One of Haemonetics’ largest customers, CSL Pharma, announced that it does not plan to renew its contract with HAE. That contract, for supply, use, and maintenance of Haemonetics’ PCS2 plasma collection system, was worth $117 million and made up approximately 12% of the company’s top line. The cancellation comes with a one-time charge of $32 million in other related losses. Fortunately for HAE, the CSL contract does not expire until June of 2022, giving the company time to plan and prepare. Covering the stock for JMP Securities, analyst David Turkaly noted: “The advance notice gives HAE some time (~15 months) to prepare for the expiration, and we note that management has consistently strengthened its financial position using levers such as complexity reduction and product optimization to derive significant cost savings, and more of these will likely be employed ahead to help offset the customer loss.” The analyst continued, "While this disappointing decision could impact HAE's plasma positioning with other fractionators, we continue to believe that giving customers the ability to collect more plasma in less time is a very compelling value proposition - and HAE still has contracts and maintains significant market share with many of the most relevant plasma players." Accordingly, Turkaly rates HAE an Outperform (i.e. Buy), and sets a $110 price target. This figure implies an upside of 86% from current levels. (To watch Turkaly’s track record, click here) All in all, HAE has a Moderate Buy consensus rating, based on 7 reviews that break down 5 to 2 in favor the Buys over the Holds. The stock is trading for $59.02 and carries an average price target of $108.67, which suggests ~84% one-year upside. (See HAE stock analysis at TipRanks) To find good ideas for 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.
Need more relief? The White House says that's up to Speaker Pelosi and company.
Wendy's light its up in the first quarter. Here's why.
Economists are puzzled by the hiring problems that John Deere, long one of Iowa's premier employers, is having at a time when thousands are unemployed
(Bloomberg) -- Few things evoke fear in equity markets like a margin call. On Wednesday that fear turned into panic in Taiwan, offering another warning for the world on what can happen when leverage unwinds.The trading day started out quiet in Taipei’s $2 trillion stock bourse. But before the morning was over, the local benchmark index had plummeted almost 9% in the worst one-day performance in its 54-year history.There were reasons to sell. New data showed a worsening Covid-19 outbreak in an island where almost no one is vaccinated. A deepening slump in global tech shares also undermined the appeal of a market dominated by the industry. But the swiftness of the plunge that followed suggests bigger forces were at play.For months, bull market skeptics around the world have warned that surging leverage is making equity markets riskier -- and the blowup of Archegos Capital Management in March served as a reminder of that. Yet stocks have continued to rise, with the MSCI All-Country World Index closing at a record as recently as Friday. In the U.S., margin debt topped $822 billion by the end of March -- the latest available data. That’s up 72% year on year.On a smaller scale, the same happened in Taiwan. Armed with conviction, and with history on their side, investors took on increasing amounts of leverage. The result was a 46% expansion in margin debt this year to about NT$274 billion ($9.8 billion) two weeks ago, the highest since 2011. By comparison, the Taiwan benchmark was up just 19% in that period, an indication that people were taking out loans faster than stocks were appreciating.Local investors had little reason to fear losses. Taiwan’s economy became one of the biggest winners from U.S.-China rivalry. Its chipmakers flourished as Washington sought to hobble Beijing’s efforts to build a domestic chip industry. During President Donald Trump’s four-year term, the Taiex benchmark became the world’s best performing stock gauge, gaining more than 90% in U.S. dollar terms.Gains extended this year as the pandemic created a shortage of chips, with the index rising for seven straight months through April.The euphoria began to unravel this week as the threat of inflation sank the Nasdaq, with tech stocks around the world following suit. As the Taiex slid 3.8% on Tuesday in Taiwan, the level of margin debt fell by NT$12.6 billion, the most since October 2018. That suggests traders faced margin calls by brokers to cover losses in their stock accounts.Wednesday’s record rout is likely to have spurred a bigger unwinding of leverage. (Comparatives are skewed by the widening of daily price limits for individual stocks in 2015.)“Margin trading boosted the Taiex over the past few months, which may add to declines if they face margin calls,” said MasterLink Securities Investment Advisory President Paul Cheng.The fear of further losses was evident in a stock market where individual investors account for about 60% of transactions. The derivatives market burst with activity: more than 1.75 million options tracking the Taiex changed hands on Wednesday, the third-busiest day since 2016. Traders snapped up bearish contracts even as dozens of short-term options expired, with the price of one put surging as much as 7,757%.KGI Securities’ trader Kevin Lee, who has been a local stocks trader for a decade, said clients started to panic as the morning wore on.“There were non-stop orders coming in,” Lee said. “Investors were crazy as there were lots of news during trading hours and we didn’t know if they were true or not.”By the end of the day, the index had pared its losses to 4.1%. But the damage to investor confidence was already done.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 fast-food chain raised its annual forecast for earnings on Wednesday wagering that more customers would be trying its bacon-filled breakfast menu
Some of your favorite consumer brands want more of your money because of surging inflation.
Legally, the term is “expatriate.” The problem for Americans living in another country is that they must continue paying tax on their worldwide income. Merely departing the United States isn’t enough to end worldwide taxation, because U.S. citizens are taxed no matter where they reside.
Exec departs after a 14-year career.
(Bloomberg) -- Cathie Wood’s miserable month continued on Tuesday, as her flagship exchange-traded fund extended declines and its assets dropped below $20 billion to the lowest since January.The Ark Innovation ETF (ticker ARKK) slid 1% as of 9:47 a.m. in New York. Caught in a broad tech selloff, the product has fallen for nine of the past 10 sessions, a retreat that accelerated on Monday in the biggest slide in about seven weeks.Tesla Inc., the fund’s biggest holding, was down 3.5% on Tuesday. Teladoc Inc., also heavily weighted in the ETF, dropped less than 1%.The stock rotation out of expensive-looking tech names is proving tough for Wood and her firm, Ark Investment Management, with investors pulling more than $500 million from the main fund in May so far.Big bets on the likes of Tesla and Bitcoin lured billions to Ark’s products, but more recently investors have been souring on the kind of pricey shares the money manager favors in companies with often unproven technologies. Other speculative corners of the market have also suffered, with an ETF tracking special-purpose acquisition companies slumping 20% this year.Read more: Rout Lands on Nasdaq Where Shorts Are Massing, Bulls Getting OutWith ARKK down some 34% from its February peak, options activity paints an increasingly gloomy picture. The number of bearish put contracts outstanding has jumped to a record. Short interest remains near an all-time high, according to data from IHS Markit Ltd.(Updates price moves 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.
Chipotle just dropped the hammer on its rivals by lifting its hourly minimum wage to $15 an hour.
Since the start of 2021, Bitcoin is up 98%. However, it isn't even close to what Ethereum has returned.
State after state, America's largest cannabis companies are paying up for land grabs as more states legalize marijuana.
Every single guest on television recommends the same thing: Stay away from growth stocks and concentrate on commodities, industrials and financials. Remember, this is based on the 10-day moving average of the net of the advance/decline line and Nasdaq's breadth has been red for seven of the last 10 trading days.
(Reuters) -Colonial Pipeline said on Wednesday it has begun to restart the nation's largest pipeline network, six days after a ransomware attack prompted it to shut the line, triggering fuel shortages and panic buying in the southeastern United States. It will take several days for the fuel delivery supply chain to return to normal, Colonial said even as people in southeastern states scrambled to fill their tanks as stations ran out of gas. Observers reported fistfights erupting over fuel supplies in North Carolina and other places.
A tech stock rout has swept through Wall Street this week. Here's why.