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Amazon VP of Amazon Books Cameron Janes tells Yahoo Finance why the company got into the business of physical bookstores 20 years after Amazon.com got its start selling books online.
Amazon VP of Amazon Books Cameron Janes tells Yahoo Finance why the company got into the business of physical bookstores 20 years after Amazon.com got its start selling books online.
The Nasdaq's retreat from its all-time highs last month is now officially considered a correction in a bull market. The Nasdaq entered the latest bull market last March and rose more than 105% from the pandemic low a year ago. Market-leading tech and tech-adjacent megacap stocks, which account for much of the Nasdaq's total market value, thrived during the pandemic recession.
(Bloomberg) -- After the $1.5 trillion wipeout in technology shares in less than a month, Wall Street fear gauges are flashing encouraging signals for would-be dip buyers.Expectations for how much the Nasdaq 100 will move around in the coming weeks remain well below their January highs, after the biggest price swings in four months.Meanwhile the Cboe Volatility Index, or VIX, is trading under the psychological threshold of 30, even as fears over rising U.S. yields threaten fresh losses in tech-heavy equity benchmarks.While not quite a green light for stock bulls, it all suggests investors are taking the recent cross-asset rout in their stride.“What it says to me is that we have a selloff but not a panic,” said Jim Carroll, portfolio manager at Toroso Investments LLC and a specialist in volatility strategies.Stocks that have benefited from lockdowns and rich valuations fueled by low yields are getting hammered as part of the re-opening trade. For the past three weeks, fears over rising rates have sent the tech-heavy Nasdaq 100 into 10% correction territory after surging 48% last year.Yet for all the selling, volatility markets remain relatively calm. In late January when the S&P 500 was swinging less and trading around 100 points lower than it is now, the VIX closed as high as 37, compared with 25 on Friday. It was trading at 24.2 as of 12:35 p.m. on Monday in New York.Another way of thinking about it: Derivatives traders who have been building hedges in the run-up to this stock storm are seemingly reluctant to add more.Demand for protection has kept the Wall Street fear gauge almost consistently over 20 since the Covid crash even as equities hit fresh highs. Reasons range from market technicals to worries over steep asset valuations and the spreading pandemic.VIX futures “were quite elevated beforehand,” said Stefan Wintner, portfolio manager for volatility strategies at DUNN Capital Management LLC.Now, there’s a budding divergence between the slump in stocks and the more sanguine signals in derivatives markets. Take futures on the VIX. The contracts have barely budged in the past three weeks, while some have even dropped.As Dean Curnutt at Macro Risk Advisors points out, as of Friday the May VIX future was trading a point lower than its level two weeks ago, even though two-week realized volatility in the S&P 500 had jumped by some 15 percentage points.While stocks boomed to records earlier this year, billions of dollars flooded exchange-traded products that buy VIX futures in expectation of coming price swings.Now it appears traders are less inclined to bid up these stock hedges, perhaps reflecting a belief that this selloff will prove fleeting.“People were fast to buy volatility at every single pullback,” said Kris Sidial of hedge fund Ambrus Group. “You’re going to be psychologically less inclined to be bidding that volatility after you’ve been bidding it and there’s no follow-through.”With markets around the world obsessed with Treasury yields, the Federal Reserve’s Federal Open Market Committee on March 16-17 might be the next inflection point.Yet Michael Purves of Tallbacken Capital notes that there remains little anxiety in stock options around the event -- another sign of relative calm among speculators on Wall Street.“Some volatility is being priced into the FOMC,” Purves wrote in a note. “But is it enough?”(Updates with current VIX level in 7th paragraph. A previous version corrected the gauge’s Friday close.)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) -- Eric Yuan, chief executive officer of Zoom Video Communications Inc., donated more than a third of his stake in the company, filings show.Yuan gifted almost 18 million shares of the conferencing-technology firm last week. The filings didn’t specify the recipient of the stock, which was owned by a Grantor Retained Annuity Trust, or GRAT, for which Yuan is a trustee.The shares were valued at about $6 billion, based on Friday’s closing price.The distributions are consistent with the Yuans’ “typical estate planning practices,” a Zoom spokesman said in a statement.Yuan, 51, joins other members of the world’s mega-rich who’ve been transferring stock recently -- including Hong Kong billionaire Li Ka-shing, who last month gave some of his Zoom holding to his businessman son Richard. Jeff Bezos, the world’s richest person, has been donating shares of Amazon.com Inc. in support of a $10 billion pledge made last year to combat climate change.Pandemic SurgeYuan became one of the world’s wealthiest people as demand for Zoom’s main product skyrocketed during the pandemic. The stock surged almost 400% last year, but has dipped 7.8% in 2021.He’s the world’s 130th-richest person with a pre-transfer net worth of $15.1 billion, according to the Bloomberg Billionaires Index, a $9.2 billion increase since last March. The company has also brought huge gains to other shareholders, including Tiger Global Management’s Chase Coleman and Taiwanese investor Samuel Chen. Li’s Zoom stake now represents almost one-fifth of his net worth. Born in China, Yuan was refused a U.S. visa eight times before finally prevailing and moving to Silicon Valley. An early employee of rival video-conferencing group WebEx Communications, he founded Zoom in 2011, inspired in part by the challenges of maintaining a long-distance relationship when he was in college.The Wall Street Journal reported the share transfer earlier Monday.(Adds that Li Ka-shing cut his Zoom holding in fifth paragraph, details about the stake in seventh)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.
Spot gold fell 0.7% to $1,689.87 per ounce by 1523 GMT, after hitting its lowest since June 8 at $1,683.68 earlier. The dollar climbed to a three-month peak, while the U.S. 10-year Treasury yield held close to a more than one-year high, increasing the opportunity cost of holding gold, which pays no interest. "We have an economy that is recovering and inflation is materializing; that ultimately means that yields have room to move higher," said Bart Melek, head of commodity strategies at TD Securities, adding that gold could fall further towards $1,660 as a result.
Iran has quietly moved record amounts of crude oil to top client China in recent months, while India's state refiners have added Iranian oil to their annual import plans on the assumption that U.S. sanctions on the OPEC supplier will soon ease, according to six industry sources and Refinitiv data. U.S. President Joe Biden has sought to revive talks with Iran on a nuclear deal abandoned by former President Donald Trump in 2018, although harsh economic measures remain in place that Tehran insists be lifted before negotiations resume. The National Iranian Oil Company (NIOC) has started reaching out to customers across Asia since Biden took office to assess potential demand for its crude, said the sources, who declined to be named because of the sensitivity of the matter.
Contracts on the Nasdaq ticked up after the index sank into a correction by the end of the regular session, plunging more than 10% from a recent record closing high. Shares of Tesla steadied in after-hours trading after falling another nearly 6%, bringing its March-to-date loss to almost 17%, while Apple shares sank to the lowest level since November.
When Elon Musk's Tesla became the biggest name to reveal it had added bitcoin to its coffers last month, many pundits were swift to call a corporate rush towards the booming cryptocurrency. Yet there's unlikely to be a concerted crypto charge any time soon, say many finance executives and accountants loath to risk balance sheets and reputations on a highly volatile and unpredictable asset that confounds convention. "When I did my treasury exams, the thing we were told as number one objective is to guarantee security and liquidity of the balance sheet," said Graham Robinson, a partner in international tax and treasury at PwC and adviser to the UK's Association for Corporate Treasurers.
(Bloomberg) -- Chinese state-backed funds were said to intervene on Tuesday to alleviate declines in the stock market, a sign that the rout had gone too far for policy makers. The equity benchmark erased a loss of as much as 3.2%.The funds, known as China’s “national team,” stepped in to ensure stability during the government’s key policy meeting in Beijing, according to people familiar with the matter. A Hong Kong-based trader, who declined to be identified discussing client business, said entities linked to mainland funds were actively buying shares through stock links with Hong Kong on Tuesday.The CSI 300 Index of stocks was little changed as of the midday break. Offshore investors purchased a net $514 million of Chinese shares via Hong Kong in the morning session, according to data compiled by Bloomberg. Private funds also re-entered the market, encouraged by evidence Beijing is putting a floor on losses. Some of the biggest gainers were stocks that had led the rout, such as Kweichow Moutai Co. and China Tourism Group Duty Free Corp.News of state intervention in the $10.6 trillion equity market lifted other assets in China and Hong Kong. The Hang Seng Index extended gains to 1.4%, while the offshore yuan strengthened 0.3% against the dollar. The yield on 10-year government debt was little changed at 3.26%.Historically, Beijing has supported markets when needed around significant events or dates. On Friday, the first day of the National People’s Congress, the CSI 300 ended the day down 0.3% after falling as much 2%. Evidence of intervention includes buying through trading links with Hong Kong.Authorities had in many ways encouraged the recent correction in stocks after the CSI 300 briefly surpassed its closing record last month. Officials repeatedly warned of asset bubbles and said that curbing risks in the financial system was this year’s key policy goal. Moutai, for instance, had surged 30% this year to be worth more than $500 billion, making it one of the world’s most valuable stocks.With the CSI 300 having fallen about 13% since its peak to enter a correction on Monday, and dropping below its 100-day moving average for the first time since May, it’s likely authorities decided the rout had removed enough froth.The Communist Party has long sought to cultivate a ‘slow’ bull market in equities. Routs of 10% or more in the CSI 300 have occurred twice in the past two years, before the index bounced back each time. Officials will be happy to see one-way bets subside, allowing the market to return to a more sustainable trajectory before July, when the Party marks its 100th anniversary.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.
Stocks were mixed on Monday and Treasury yields climbed further after Congress made headway toward passing another significant COVID-19 relief package.
(Bloomberg) -- The Chinese yuan erased all its gains against the dollar this year, the latest to fall prey to the Treasury-led global market selloff.The onshore yuan weakened as much as 0.5%, falling past the 6.5283 per dollar level it closed at last year. At its January peak, it was up 1.6% from 2020 as the economy rebounded and investors poured money into the Chinese bond market.Optimism over a global recovery from the pandemic has morphed into concerns that central banks will withdraw stimulus quicker-than-expected, leading to higher bond yields. This latest bout of market selling was spurred by the U.S. stimulus package and better Chinese exports data.“Surging U.S. Treasury yields and a USD rebound are pressuring EM Asia currencies including the renminbi,” said Ken Cheung, chief Asia currency strategist at Mizuho Bank Ltd in Hong Kong. “Foreign investors may have started to trim their emerging-market asset exposure and repatriate capital back into dollars. We turn more cautious on the CNY outlook in the near term.”Monday’s rout across markets picked up pace as Treasury 10-year yields hit 1.61%, nearing Friday’s high. A Bloomberg gauge of the dollar’s strength gained as much as 0.5% to its highest in almost four months.Trading volumes for onshore yuan rose to $48.9 billion on Monday, the highest level in over two months. Some bank clients who were previously hoarding dollars were selling off positions at higher prices, according to China-based traders, who asked not to be identified as they’re not authorized to speak publicly.The traders added they also received a higher volume of requests for forward prices on the greenback, including from clients who had just signed import orders and were looking to lock in foreign-exchange rates to guard against further yuan depreciation risks.China’s main stock benchmark entered a correction on Monday, with concerns over liquidity conditions and lofty valuations in some stocks fueling bearish sentiment.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) -- Nasdaq 100 futures climbed Tuesday after an overnight slump in technology stocks, while buying by Chinese state funds bolstered sentiment and helped Asian shares erase losses. Treasury yields eased.China’s indexes bounced off lows after state-related funds stepped in to ensure market stability, according to people familiar with the matter. Nasdaq 100 contracts outperformed a rally in U.S. futures. The tech gauge tumbled almost 3% Monday and is now down 11% from a February record. The S&P 500 shed intraday gains as the retreat in high-valuation stocks offset a rise in financial and materials shares.Elsewhere, the yen weakened beyond 109 per dollar for the first time since June. The 10-year Treasury yield was below 1.6%, with investors watching upcoming auctions to assess the outlook. Asian credit markets slumped as more deals were scrapped on concerns about the spike in rates.The risks associated with rising bond yields persist, with the U.S. benchmark trading around a 12-month high amid fears that government aid programs could push the economy into overdrive and stoke inflation. Investors are also questioning whether equity valuations have become excessive, especially in speculative tech shares, and are favoring cheaper cyclical stocks.“There’s definitely a lot of volatility in the market right now and many of the sectors that underperformed last year are rallying -- this is part of a rotation,” said Valerie Grant, senior equities portfolio manager at AllianceBernstein.Elsewhere, crude oil prices rose, and Bitcoin traded near $54,000.Here are some key events to watch:EIA crude oil inventory report is due WednesdayThe U.S. February consumer price index will offer the latest look at price pressures Wednesday.The U.S. government auctions 3-, 10- and 30-year Treasuries this week.The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing Thursday.StocksS&P 500 futures rose 0.8% as of 1:35 p.m. in Tokyo. Nasdaq 100 contracts were up 1.2%. The S&P 500 Index fell 0.5%.Topix index rose 0.8%.Australia’s S&P/ASX 200 Index rose 0.5%.Kospi index fell 0.9%.Hang Seng Index added 1.4%.CSI 300 Index was flat.CurrenciesThe yen traded at 109.19 per dollar, down 0.3%.The offshore yuan was at 6.5371 per dollar, up 0.2%.The Bloomberg Dollar Spot Index fell 0.1%.The euro traded at $1.1857.BondsThe yield on 10-year Treasuries fell about two basis points to 1.57%.Australia’s 10-year bond yield was at 1.78%.CommoditiesWest Texas Intermediate crude rose 0.7% to $64.73 a barrel.Gold was at $1,689.93 an ounce.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) -- Equity strategists are as bullish as ever, despite all the nervousness among investors about sky-high valuations and rising rates.Strategists from Goldman Sachs Group Inc. and Credit Suisse Group AG are counting on more gains from equities as investors rotate out of bonds and cash, and economic growth accelerates. Even if some stocks dip because of higher rates, there will be strong rallies in other sectors, according to Abby Joseph Cohen, senior investment strategist at Goldman Sachs.“We are seeing this very significant rotation,” Cohen said in an interview on Bloomberg TV. “We are seeing some movement now in those sectors that do better when we come out of lockdown, and the good news on the vaccine will be helpful.”Goldman is expecting the S&P 500 to end the year at 4,300, implying a 13% increase from current levels and a new all-time high. The median S&P 500 forecast from a Bloomberg survey is 4,100 versus the index’s current level of 3,850.According to Credit Suisse’s Andrew Garthwaite, this is the beginning of a bonds-to-equity switch. Stocks and bond yields were positively correlated in February, and when that’s happened in the past, equity prices were up an average of 6% six months later, he wrote in a note on Monday.“We worry when US 10-year bond yields rise above 2%, inflation expectations go above 3% or there is a large rise in the TIPS yield,” wrote Credit Suisse strategists. For now, all of those conditions are some ways off. The bank is sticking to a year-end forecast for the MSCI All-Country World Index Ex-U.S. of 375, which implies a 13% gain from today’s levels.Goldman Sachs makes a similar case in favor of equities. “History shows that equity funds generally experience inflows when real rates are rising,” strategists led by David Kostin said in a report on Friday.The bank predicted households will be the biggest source of U.S. equity demand, estimating purchases of $350 billion this year. Corporate buying will also be strong at $300 billion amid a resurgence of stock buybacks, Goldman Sachs said.At JPMorgan Chase & Co., the rotation out of technology and into cyclicals isn’t over yet. Airlines, hotels and auto suppliers are attractive, and investors should consider shorting online retail and technology, said strategist Mislav Matejka.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) -- The U.S. and China are pursuing divergent economic policies in the aftermath of the coronavirus recession in a role reversal from last time the world economy was recovering from a shock.One of the takeaways from the annual National People’s Congress under way in Beijing is a conservative growth goal, with a tighter fiscal-deficit target and restrained monetary settings. That’s a big contrast with Washington, where President Joe Biden is preparing a second major fiscal package after he gets final approval for his $1.9 trillion stimulus.The widening policy divergence is putting strains on exchange rates and could potentially reshape global capital flows. It stems, in part, from different policy lessons from the 2007-09 crisis.A stunted and choppy U.S. recovery left key Democrats concluding it’s vital to “go big” on stimulus and keep it flowing. For monetary policy the moral was: “Don’t hold back” and “don’t stop until the job is done,” Federal Reserve Chair Jerome Powell said last week.China’s leaders have a different take. A massive unleashing of credit growth back then led to unused infrastructure, ghost towns, excess industrial capacity and an overhang of debt. While rapid containment of the pandemic meant the economy didn’t need as much help in 2020, President Xi Jinping and his team are now winding things back to re-focus on longer-term initiatives to strengthen the technology sector and tamp down debt risks.“Each learned a lesson from the previous episode, and so it is kind of a swap of positions,” said Nathan Sheets, head of global economic research at PGIM Fixed Income and a former U.S. Treasury undersecretary for international affairs. The policy mix now makes “a compelling case for renminbi appreciation,” Sheets said.That’s a view that’s widely shared: the median forecast is for a strengthening to 6.38 against the dollar by the end of the year, from 6.5238 in Hong Kong on Monday afternoon.One of China’s financial regulators, Guo Shuqing, highlighted in a briefing just days before the opening of the annual legislative gathering that high leverage within the financial system must continue to be addressed. Guo pointed to worries about inflated property prices and the risk of overseas money pouring in to take advantage of the premiums China’s assets offer. He also indicated the nation’s lending rates will likely go up this year.While U.S. Treasury yields have surged recently, 10-year rates remain less than half those in China, where the central bank has forsworn Western-style zero interest rates or quantitative easing.“Unlike many of its peers, including the Fed, China’s central bank has continued to calibrate its policy partially with a view to prevent an excessive rise in asset prices,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. Confronted with currency-appreciation risks, China will be hoping for a “well-timed exit from the Fed’s ultra-ease stance.”That’s unlikely to come soon. Powell in three appearances the past fortnight has made clear the Fed is going to keep policy rates near zero until well into the economic recovery, when most jobless Americans are brought back into employment. He also gave no indication asset purchases will be tapered as Biden’s fiscal stimulus kicks in in coming months.As China contends with capital inflows, the U.S. is likely to be pumping out a greater supply of dollars into the global economy -- via a widening current-account deficit -- as its growth revs up, supercharged by Biden’s stimulus and the Fed’s easy stance.“There’s been a regime break,” in the U.S. with the outsize Biden relief bill and a planned longer-term follow-up, said Robin Brooks, chief economist at the Institute of International Finance. As growth soars past 6% this year, a wider current-account deficit will be “the pressure valve” given domestic production constraints, he said.Brooks projects that deficit will hit 4% of gross domestic product this year. That would be the highest since large shortfalls during the 2002-08 period, when a broad measure of the dollar tumbled as much as 27%.Read More: Dollar Is Increasingly Overvalued as Deficit Widens, IIF Says“As our fiscal support goes into uncharted territory, it puts enormous pressure on our budget deficits -- and by inference our domestic saving rate and the current account and trade deficit, with the consequences primarily falling on the currency,” said Stephen Roach, a Yale University senior fellow and former chairman of Morgan Stanley Asia.China’s reluctance toward the kind of “go big” message of Treasury Secretary Janet Yellen dates back many years. After unleashing a fiscal package of 4 trillion yuan ($586 billion, at the time) and an unprecedented surge in broader credit after the 2008 crisis, Beijing was already by 2012 saying it wouldn’t do that again.Reticence toward across-the-board stimulus later turned into a concerted push to rein in leverage. A May 2016 front-page treatise in the People’s Daily -- the Communist Party’s mouthpiece -- blasted excessive debt as the “original sin” sowing risks across financial and real-estate markets. The anonymous article -- widely said to have been written by Vice Premier Liu He, Xi’s top economic adviser -- called stimulating the economy through easy monetary policy a “fantasy.”So with the country’s success in applying draconian restrictions to contain the coronavirus, it should come as little surprise that Beijing is returning toward its pre-pandemic focus on building domestic tech capabilities and managing down debt risks.What Bloomberg’s Economists Say...“China is increasingly shifting its attention from pandemic recovery to managing the economy in more normal conditions.”--Chang Shu, chief Asia economistFor the full report, click hereAfter ditching an annual growth target for 2020 given the turmoil caused by Covid-19, China’s leadership set a goal of a GDP increase of more than 6% this year -- conservative since it’s well below economists’ projections for this year’s expansion.In the meantime, surging American GDP gains are set to lift China’s prospects as well. Exports to the U.S. soared more than 87% in the first two months of this year compared with the pandemic-hit period a year before, faster than China’s overall rise of just under 61%.“The U.S. locomotive is back on track,” said Catherine Mann, global chief economist at Citigroup Inc.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) -- Central banks helped save the world economy from depression as the pandemic struck. Now they are dealing with the hard part: managing the recovery amid a difference of opinion with investors.Optimism that Covid-19 vaccines and continued government stimulus offer an escape from the worst health crisis in a century has sent bond yields soaring and pushed bets on rising inflation in the U.S. to the highest in a decade.That’s shifting the ground underneath monetary policy makers who promise to maintain rock bottom borrowing costs and cheap money well into the expansion. In the next two weeks, the Federal Reserve and European Central Bank as well as their counterparts in Japan, U.K, and Canada are all likely to reiterate those pledges, eager to secure a rebound in hiring and avoid the mistakes of the last crisis when some withdrew support too early.The risk now seems skewed the other way. While policy makers welcome a modest rise in bond yields as a signal of confidence in the economic outlook, they worry an unchecked jump would undercut recoveries. They argue any resurgence in inflation will be based on a temporary correction from last year’s slide and that high unemployment will continue to restrain price pressures.It’s a stark turnaround from a year ago, when the world powered down to fight the Covid-19 pandemic and central banks responded with what’s amounted to an unprecedented $9 trillion of monetary support.“Central banks are facing a new challenge,” said Rob Carnell, chief economist for Asia Pacific at ING Bank NV. “How do they keep justifying easy policy as the recovery continues and the inflation figures pick up?”Canada, ECBThe Bank of Canada is first up with a meeting on March 10 when policy makers are likely to indicate they plan to maintain plenty of stimulus well into any strong recovery. It’s a case that Governor Tiff Macklem laid out last month when he argued policy needs to help foster not only the immediate pickup but also facilitate virus-driven structural changes like digitalization.ECB President Christine Lagarde convenes officials the next day when updated forecasts will highlight how the euro-area economy is lagging the U.S. because of slow vaccine rollouts and extended virus restrictions. That puts the bloc at risk should higher global yields spill over into borrowing costs for companies and households.ECB policy makers have surprised investors by downplaying their concerns so far, saying their bond-buying program is flexible enough to address unwarranted tightening but failing to provide any evidence that they’re accelerating purchases. At the back of their minds though is likely to be the experience of 2011 when interest rates were raised twice to combat faster inflation despite a worsening financial crisis, only for the euro zone to slide into a double-dip recession.Powell PressureAt the Fed’s policy meeting on March 16-17, Chairman Jerome Powell will likely reaffirm his looser for longer stance. Powell repeatedly stressed during remarks on Thursday that the Fed was a long way from its goals and was not close to tightening policy. He also played down a likely rise in inflation this year and ducked questions on a possible response to the recent sharp rise in yields.While the move had “caught’ his attention, he said Fed policy was currently appropriate, though it has tools to respond if there is a material change in the outlook.Transcripts of the Fed’s meetings from 2015, when it last began a tightening cycle, suggested policy makers overestimated the potential for accelerating inflation and underestimated the room still left in the economy to generate jobs.What Bloomberg Economics Says...For the U.S., rising bond yields are largely a reflection of confidence in the strength of the recovery. For much of the rest of the world, the spillover of higher borrowing costs is arriving too soon. The Reserve Bank of Australia has already reacted with bigger bond buys. Others may also have to tweak their policy settings.-- Tom Orlik, chief economistClick here for moreTaper TalkThe Bank of England convenes on March 18. It has lined up a further 150 billion pounds ($208 billion) of asset purchases over 2021 with plans to taper weekly buying later in the year.A hugely stimulative budget from Chancellor Rishi Sunak now has economists further discounting the prospect of negative interest rates and instead looking forward to a tightening of monetary policy.The central bank has said that won’t happen until there is clear evidence that spare capacity is being eliminated and it’s closer to sustainably achieving its 2% inflation target, but in February announced it was considering whether to alter previous guidance that it wouldn’t unwind its asset purchases until the bank rate reached 1.5%.Speaking on Monday, Governor Andrew Bailey reiterated the bank doesn’t intend to tighten monetary policy until there’s clear evidence the economy is absorbing excess capacity. He added that risks to the economy remain tilted to the downside, BOJ, PBOCThen it’s the Bank of Japan’s turn on March 18-19, when officials are scheduled to unveil details of a policy review that will look at how it controls yields, negative rates and asset buying. Governor Haruhiko Kuroda has said the central bank is seeking to make its policy framework more effective by fine tuning it rather than overhauling it.He has also signaled there won’t be any changes to the movement range around the 10-year yield target. Still, Deputy Governor Masayoshi Amamiya ssignaled on Monday that the central bank may seek ways to allow more moves in yields. While developed-world central banks will likely be unified in pledging ongoing stimulus, China’s officials are already signaling the opposite. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission -- the top banking regulator -- said on March 2. he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector, stoking expectations of policy tapering.That was followed by the government setting a conservative growth target of above 6% for the year, well below what economists forecast the nation will achieve, as Premier Li Keqiang on Friday opened the National People’s Congress in Beijing.The tension between inflation and cheap money is already forcing some emerging market central banks to move. Ukraine unexpectedly raised interest rates to counter the highest inflation in more than a year. Brazil is forecast to start raising borrowing costs on March 17 having promised in August to keep its 2% benchmark for the “foreseeable future.”(Adds comments from UK and Japanese central bankers)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) -- Tech shares tumbled anew, sending the Nasaq 100 Index down 11% from its all-time high, as investors fled high-valuation stocks for companies whose fortunes are closely tied to the economic cycle.The benchmark for megacap tech dropped 2.9% and is now at the lowest since November. The S&P 500 ended lower after rising as much as 1% as tech shares in the gauge dropped 2.5%. Financial firms and materials producers kept losses from being worse. The Dow Jones Industrial Average hit an all-time high before settling for a 1% gain, buoyed by rallies in banks and Walt Disney Co. Tesla Inc. pushed its five-day rout past 20%. Blank-check companies backed by Chamath Palihapitiya tumbled.The 10-year Treasury rate jumped toward 1.6%, while the dollar strengthened. Brent crude briefly traded near $70 a barrel before pulling back. Gold slumped and Bitcoin traded above $51,000.Investors embraced the prospect for a surge in global economic growth as vaccine distribution improves and the U.S. heads toward passing a $1.9 trillion spending bill. The risks associated with rising Treasury yields remain an overhang amid fears that government aid programs could overheat economic growth.“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management Co., said on Bloomberg Television. “We believe that confidence is improving, especially with vaccines coming online, so we will see an uptick in growth globally. There are a lot of reasons to be confident in the market, but a lot of this is also priced in.”There are also questions about whether equity valuations have become excessive, especially in speculative tech shares. The Nasdaq 100 Index has fallen about 8% since early February.Crash Landing on Stock Heroes of Yesteryear Is Worst in a DecadeHere are some key events to watch:The annual session of China’s National People’s Congress continues in Beijing.Japan GDP is due Tuesday.EIA crude oil inventory report is due WednesdayThe U.S. February consumer price index will offer the latest look at price pressures Wednesday.The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing Thursday.These are some of the main moves in markets: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.
Technology-related shares sold off on Monday in a big downturn that pushed the Nasdaq into a correction and offset stocks that rose on hopes the $1.9 trillion COVID-19 relief bill will spur the U.S. economic recovery. The Dow hit a record intra-day high but the big tech stocks that have led Wall Street to scale successive peaks over the past year fell, with the Nasdaq closing down 2.41%.
Stronger bond yields and a rising dollar are capping price progress for risk assets.
A growing semiconductor shortage could hamstring the EV boom in 2021. Here’s who could profit in the days ahead
(Bloomberg) -- Goldman Sachs Group Inc. is seeing substantial demand for digital assets from institutions as it works to restart its cryptocurrency trading desk.In a survey of nearly 300 clients by the firm, 40% currently have exposure to crypto, according to Matt McDermott, global head of digital assets for Goldman Sachs Global Markets Division, speaking on a podcast. The situation is different now compared with the 2017 Bitcoin bubble due to “huge” institutional demand across different industry types and from private banking clients, he said.McDermott confirmed plans reported last week for Goldman to restart its crypto trading desk, which he said will be “quite narrow initially,” with a focus on areas such as CME Group Inc. futures. He said that U.S. banks need to cope with regulations that bar them from trading physical cryptocurrencies.Cryptocurrency enthusiasts argue that digital tokens and the underlying blockchain technology are gaining acceptance among more mainstream institutions and investors. The derivatives market and new investment products have made digital assets more easily accessible. Some strategists posit that the asset class is a potential diversifier for portfolios, while others are more skeptical and blame speculators for inflating a possible bubble in Bitcoin and other cryptos.Bitcoin rose as much as 3.4% on Monday in Asia, while Ether gained as much as 5.3% to the highest since Feb. 23.Read more: Chinese Beauty App Becomes First Major Company to Buy EtherBlockchain technology offers “a real diverse set of opportunities for the financial industry and something that there’s a huge amount of momentum” for in the market, McDermott said. “We know firsthand just given the various different projects we’re working on. And we see this as a hugely exciting time exploring the potential of that technology.”As for prices, 76% of those surveyed see Bitcoin ending 2021 between $40,000 and $100,000, McDermott said. However, 22% expect it to end the year over $100,000.Read more: Does Bitcoin Boom Mean ‘Better Gold’ or Bigger Bubble? QuickTake(Adds chart.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Food-delivery company Deliveroo kicked off an initial public offering in London that could raise billions of pounds and put the U.K. market on track for its best-ever first quarter.The startup plans to raise capital by selling new stock, while existing holders also will sell shares, according to a statement Monday that didn’t provide details on the size of the planned offering. The Amazon.com Inc.-backed company was valued at more than $7 billion in its latest funding round.Deliveroo will list with a dual-class share structure, effective for three years, to provide Chief Executive Officer Will Shu with the stability to execute long-term plans, the company said last week. As such, the stock is ineligible for the London Stock Exchange’s premium segment and can’t be included in benchmark indexes such as the FTSE 100, despite its expected size.This year, 13 firms have raised 4.3 billion pounds ($5.9 billion) in London, data compiled by Bloomberg show. And Deliveroo is anticipated to add billions to this tally before the end of the month, meaning the U.K. IPO market could be on course to surpass its biggest first quarter on record in 2006, when proceeds reached 6.4 billion pounds.London-based Deliveroo’s planned offering follows the publication of a government-backed report last week that made a slew of recommendations to reform U.K. listing rules. The proposals include allowing dual-class share structures on the premium segment of the LSE, but it could be months before these are effective, confining the company to the standard listing segment for now.Deliveroo’s Class A shares, to be offered in the IPO, will have one vote each, while Shu will hold all of the Class B shares that carry 20 votes each. On the third anniversary of the IPO, the Class B stock will automatically convert into Class A.Such structures could be gaining traction among U.K.-based technology startup founders. E-commerce operator THG Plc set up a golden share, which allows its founder to fend off unwanted takeover bids for three years, in its 1.88 billion-pound offering in September, London’s biggest since mid-2017. The stock has risen more than 30% since then.Dual-class shares are more common in the U.S., used by the likes of Google parent Alphabet Inc. and Facebook Inc., where the weighted voting rights are kept in perpetuity. Some investors have balked at bringing the practice to the U.K., saying it dilutes corporate governance norms by allowing founders to retain control after taking their companies public. Both THG and Deliveroo put in a sunset clause, meaning a time limit, on this share structure, mitigating the risks for post-IPO shareholders.Lockdown WinnerAfter initially struggling at the start of lockdowns, Deliveroo got a boost as restaurants stopped providing service indoors, pushing more and more customers to order takeout meals and even groceries. Bloomberg News reported the startup’s plans to tap public markets in September.“Covid has accelerated the transition of food online,” Shu said in an interview, adding that the company is “confident about the behavior of the new consumer base,” even after coronavirus restrictions lift. “We can be confident that the growth trajectory will continue,” he said.The company’s gross transaction value -- the total amount of transactions processed on its platform -- grew by 64.3% to 4.1 billion pounds in 2020, compared with the previous year, while underlying gross profit nearly doubled to 357.5 million pounds, according to the statement. Deliveroo reported reported a loss of 9.6 million pounds last year before interest, taxes, depreciation and amortization.Across Europe, beneficiaries of the pandemic-fueled migration to online services are cashing in via IPOs. Poland’s InPost SA, which operates automated parcel lockers for deliveries, surged in its Amsterdam debut in late January, while digital used-car dealer Auto1 Group SE raised 1.8 billion euros in Frankfurt last month.Why Dual-Class Shares Catch On, Over Investor Worries: QuickTakeLondon has been Europe’s busiest venue this year. Deals include British bootmaker Dr. Martens Plc, which soared in its debut last month, while virtual greeting-card and gifting firm Moonpig Group Plc floated in February. Foreign issuers are also lining up to list: Trustpilot, a Denmark-based online platform for consumer reviews, has laid out plans for a U.K. IPO, while Russia’s largest dollar-store chain Fix Price made its trading debut in the City on Friday after a $1.7 billion offering.Founded in 2013, Deliveroo has 115,000 food merchant partners and more than 100,000 delivery riders in the U.K. and overseas, according to Monday’s statement. The company said it plans to create a fund to help restaurants and grocers in rebuilding their businesses after the pandemic, and also will give its “longest-serving and hardest-working riders” individual payments of as much as 10,000 pounds. Deliveroo will also make 50 million pounds of shares available to its customers as part of a “community offer.”Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators on the offering, while Bank of America Corp., Citigroup Inc., Jefferies and Numis Securities Ltd. are joint bookrunners.(Adds CEO comments in the tenth 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.