SitusAMC Managing Director Tim Rood joined Yahoo Finance Live to discuss the long-term impact COVID-19 will have on the housing sector.
SitusAMC Managing Director Tim Rood joined Yahoo Finance Live to discuss the long-term impact COVID-19 will have on the housing sector.
(Bloomberg) -- WATCH: Bitcoin touched the $50,000 level in Asia trading, riding a broad resurgence in risk assets, with Citigroup Inc. and Goldman Sachs Group Inc. warming up to the largest cryptocurrency.The digital asset climbed as much as 2.8% Tuesday, and was holding at $49,080 as of 9:05 a.m. in Hong Kong. Prices last week suffered the worst decline since March and dipped as low as $43,000 on Sunday. Bitcoin climbed to a record $58,350 on Feb. 21.Bitcoin and other cryptocurrencies are drawing increasing attention from mainstream financial institutions and Wall Street players, alongside a growing focus from goverment regulators as well, as the nascent industry’s outlook continues to be subject to furious debate. Proponents point to growing institutional adoption while detractors warn prices are in a speculative bubble.Cboe Global Markets Inc. disclosed it is seeking approval to list and trade shares of what could be the first Bitcoin exchange-traded fund in the U.S., according to a Monday regulatory filing. Meanwhile New York Attorney General Letitia James issued an investor alert on the industry, warning consumers about its susceptibility to “speculative bubbles” and abuse by criminals.In a report by Citigroup’s Global Perspectives & Solutions, strategists laid out a case for Bitcoin to play a bigger role in the global financial system, saying the cryptocurrency could become “the currency of choice for international trade” in the years ahead. Bitcoin has advantages over the current global payment system, such as its decentralized design, lack of foreign exchange exposure and traceability, the strategists said.Goldman is restarting a trading desk for cryptocurrencies, a person familiar with the effort said. The Wall Street bank will begin offering Bitcoin futures among other products by mid-March after halting a similar effort started in 2018, according to the person, who asked to to be named because the plans haven’t been announced.“The more banks that come out with constructive comments on Bitcoin, the more likely the speculative bubble will continue to grow,” said Ed Moya, senior market analyst for OANDA.Citigroup’s full-throated backing of Bitcoin shows that crypto is continuing to win over the world’s biggest financial institutions. Dan Loeb, head of Third Point LLC, said in a Twitter post that he’s been “doing a deep dive into crypto lately,” adding that “it is a real test of being intellectually open to new and controversial ideas.”While banks continue to dip their toes deeper into the world of digital assets, a small group of corporations are busy snapping up coins to add to their balance sheets. MicroStrategy Inc., announced Monday that it purchased an additional 328 Bitcoins, increasing its pile to about 90,859. The company’s holdings are now worth over $4 billion.Bitcoin plunged 21% last week as investors dumped speculative assets amid a run-up in bond yields. The volatility has raised questions about whether it can act as a store of value and hedge against inflation. Detractors have maintained the digital asset’s surge is a speculative bubble and it’s destined for a repeat of the 2017 boom and bust.“Bitcoin’s wild ride is far from over, but it seems another attempt at $50,000 could be in the cards if the bond rout is truly over,” Moya said. “Bitcoin can survive a steady rise in Treasury, but not a skyrocketing move like we saw last week.”Crypto MiningElsewhere, China’s Inner Mongolia banned cryptocurrency mining and declared it will shut all such projects by April, spurring concern the communist nation will take more steps to eradicate the power-hungry practice.The autonomous region, a favorite among the industry because of its cheap power, also banned new digital coin projects, according to a draft plan posted on the Inner Mongolia Development and Reform Commission’s website Feb. 25. The aim is to constrain growth in energy consumption to about 1.9% in 2021.The sheer amount of energy needed to mine Bitcoin and the prospect that governments will create more obstacles for the largest cryptocurrency point to the token losing “most of its value over time,” BCA Research Chief Global Strategist Peter Berezin wrote in the report released Friday.(Updates with latest Bitcoin price, additional details.)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) -- Borrowing costs for Indian companies spiked by the most in more than seven years last month, in a blow to firms struggling to recover from the pandemic. The average yield on top-rated three-year, five-year and 10-year corporate rupee bonds all climbed by their most since 2013 in February. A confluence of factors including higher global bond yields, and concerns that companies may be crowded out of local debt markets by the government’s near-record borrowings plans have pushed up borrowing costs up for Indian companies.Investors worried about increased volatility and the ability of the Reserve Bank of India to tame rising yields amid an upswing in rates globally are sticking to shorter tenors. While India’s economy returned to growth in the last three months of 2020, higher yields, rising oil prices and more infectious strains of Covid-19 all threaten the recovery.“We are maintaining low or very low duration in credit market to hedge against volatility,” said Dwijendra Srivastava, chief investment officer for debt at Sundaram Asset Management Co. “Sharp increases in bond yields will hit the small companies the most that drive the Indian economy, and are needed the most at this time to help push growth.”Yields on shorter-dated rupee corporate bonds have fallen somewhat this week as reflation concerns globally have receded, but they remain near an eight-month high.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) -- Ting Hsin International Group, the Taiwanese food company behind the Master Kong brand, is weighing a Hong Kong initial public offering of its restaurant business in mainland China, people with knowledge of the matter said.The firm has invited banks to pitch for a role on the listing, said the people, who asked not to be identified as the information is private. The Taiwanese company may include restaurant chains Dicos, a prominent fried chicken brand, and Master Kong Chef’s Table, which specializes in Taiwan-style beef noodles, in the Hong Kong listing, the people said. The IPO could raise about $800 million, one of the people said.Deliberations are at an early stage and the company may decide not to pursue an IPO, the people said. A representative for Ting Hsin couldn’t immediately comment.Dicos operates about 2,600 outlets across China and has more than 70,000 employees serving 600 million customers annually, according to a press release. It announced in January that it has added plant-based egg substitute JUST Egg to its menu at over 500 locations in China.The chain ranks third in China by market share among limited service restaurants, which comprise fast food and fully-takeaway outlets, according to market research provider Euromonitor International. Dicos’ 1.2% share puts it behind only Yum China Holdings Inc.’s KFC and McDonald’s Corp. in the country.Ting Hsin is a major shareholder in Tingyi (Cayman Island) Holding Corp., a Hong Kong-listed firm that sells Master Kong-branded noodles, teas and juices, and which is PepsiCo Inc.’s official partner in China.(Updates with Dicos market share 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.
(Bloomberg) -- Macy’s Inc. is tapping the junk-bond market to capitalize on record-low borrowing costs after reporting better-than-expected holiday sales and predicting that pandemic pressures will ease later this year.The department store chain is selling $500 million of senior notes due 2029 to help fund a tender offer of the same amount, according to separate statements Tuesday. It’s looking to buy back notes due in the next four years with coupons between 2.875% and 7.6%.The bond deal launched at a coupon of 5.875% after initial price discussions ranged between a low-to-mid 6% yield, according to people with knowledge of the matter, who asked not to be identified discussing a private transaction.Representatives for Macy’s and Credit Suisse Group AG, which is leading the bond sale, declined to comment.Troubled companies have been engineering reprieves for themselves by taking advantage of historically cheap funding costs in high-yield markets. Party City Holdco Inc. and Carnival Corp. have raised cash with junk bond sales over the past few weeks. Bloomberg reported in February that Macy’s was sounding out investors on a potential debt sale that would further aid the retailer through the pandemic.Macy’s shares and bonds plunged last year as the pandemic took hold in the U.S. and it was forced to temporarily close stores. Government stimulus measures and gradual re-openings helped the company’s debt rally from distressed levels, and many of the securities now trade near or above par.Macy’s, which also owns Bloomingdale’s and BlueMercury, reported all three of its brands exceeded expectations in the holiday quarter. It predicted 2021 will be a “recovery and rebuilding year,” according to a statement, “with momentum building in the back half.”The new issue may be sold as soon as Tuesday, one of the people said. JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. are also managing the offering.(Updates with early pricing discussions and coupon from third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The Federal Reserve is intensifying its scrutiny of banks’ efforts to shed their reliance on the London interbank offered rate, and has begun compiling more detailed evidence on their progress, according to multiple people with knowledge of the matter.Banks are being asked for specifics on their Libor exposure, their plans for amending contracts tied to the benchmark, and the fallback provisions being utilized to facilitate the shift to alternative rates, said the people, who requested not to be named given the sensitivity of the inquiries. The move is viewed partly as way for the Fed to telegraph the urgency of the transition, but also as a prelude to concrete supervisory action in the months ahead.Banks have less than a year before the Fed has indicated it will stop allowing them to enter into new contracts pegged to Libor, a bedrock of the financial system being phased out by global policy makers due to a lack of underlying trading and following a high-profile rigging scandal. Still, the rate -- which underpins trillions of dollar of assets -- has proven difficult to dislodge. Officials last year indicated they would delay the end of certain tenors by 18 months amid concerns over financial stability stemming in part from the industry’s lack of preparation.A spokesperson for the Fed declined to comment, while banks are prevented from discussing confidential supervisory communications.“We can expect the regulators to be identifying gaps in banks’ programs,” said Graham Broyd, founder of consultancy Broyd Partners LLC and a former member of the Alternative Reference Rates Committee, the Fed-backed body guiding the U.S. Libor transition. “Banks will need to have clear plans and actions for delivery later in the year, without which there are expected to be regulatory consequences.”Banks have received questions and requests for data in recent months both in writing and via meetings with Fed representatives, according to some of the people familiar. The inquires are targeted toward Wall Street and regional lenders, rather than smaller community banks.One banking executive said broad-brush reports on transition progress don’t cut it anymore, and officials are asking for more information with every inquiry. An executive at another bank downplayed the significance of the shift, saying global regulators have been asking about Libor exposures for a while.While the scope of the requests is new, the magnitude of the challenge facing the financial sector has long been anticipated.Speaking in 2018 about the broader industry’s efforts, Beth Hammack, global treasurer at Goldman Sachs Group Inc., noted that “it’s going to be a really painful transition to get there as there are so many people and so many products that are referencing this rate -- it’s a such a foundational part of our market.” She added that “the impact is going to be hopefully an improvement in safety and soundness.”Officials are also asking banks for details on when their Libor-based contracts mature, some of the people said.Only a fraction of the $200 trillion derivatives market has shifted to the Secured Overnight Financing Rate, dollar Libor’s anointed successor, while hundreds of billions of dollars of the most troublesome floating-rate notes and securitizations may be unable to transition at all.The probing comes after the Fed warned banks in November that entering into new Libor-linked deals after 2021 would pose significant risks, and that it would examine their practices accordingly. Policy makers also said that a failure to prepare for Libor’s end could undermine financial stability.“Regulators have periodically asked for information on the Libor transition plans for major banks, but requests for data on particular types of Libor exposures are taking on greater specificity,” said Mark Chorazak, a partner at law firm Shearman & Sterling LLP in New York. “The Federal Reserve is becoming keenly interested in quarter-to-quarter progress at particular institutions.”The Fed could potentially issue MRAs or MRIAs -- matters requiring attention or matters requiring immediate attention -- depending on the responses to its inquiries. These generally require a board-level reply including a timeline for corrective action. Investigations or enforcement action follow if the Fed isn’t satisfied.Wake-Up CallThe Federal Financial Institutions Examination Council, an interagency group of regulators, had previously said that supervisory efforts around Libor would increase in 2020 and 2021, particularly for firms with significant exposures or less developed transition processes.Still, the inquiries may serve as a wake-up call for banks, particularly some regional lenders, after what was viewed as a major concession by the Fed to delay the planned phase out of certain dollar Libor maturities until mid-2023 to allow firms to address tough legacy contracts.“The enhanced regulatory oversight can pose real challenges to smaller banks,” said Bradley Ziff, an operating partner at management consultancy Sia Partners. “For institutions which have not yet made meaningful efforts towards the transition, the need to upgrade systems, consolidate contracts or collect data can be difficult at this point.”A representative for the ARRC, which counts banks, asset managers, insurers and industry trade organizations as members, declined to comment.“The transition away from Libor is a major undertaking that banks are preparing for and taking seriously,” said Ian McKendry, a spokesperson for the American Bankers Association. With trillions of dollars “in contracts outstanding that don’t have robust fallback language, it’s not surprising that regulators are asking financial institutions about their plans.”Major banks should have little issue addressing the Fed’s more pointed inquires, according to Anne Beaumont, a partner at law firm Friedman Kaplan Seiler & Adelman LLP.“Banks have been leading the charge in preparation,” Beaumont said. “They’re expending a lot of resources on this and have seen this coming for a long time. If they can’t respond in a substantial way at this point that would be a red flag.”(Updates with details on shift to SOFR in 11th 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 oil industry is no stranger to boom-bust cycles, but the pandemic has been its wildest ride to date, and on March 4 it’s due to take another turn when OPEC meets to consider rolling back production cuts. As the world’s cars and airplanes idled, global oil demand bottomed out in April at levels 16.4% below the previous year, dragging the price into negative territory for the first time. White-knuckling through it all has been OPEC, the 13-member cartel that dictates quotas for most of the world’s biggest oil-producing countries (notably excluding the US).
Max out your 401(k) each year, and be sure to get your 401(k) employer match, if you have one. And for you super savers, here are other ways to save for retirement.
Rocket Companies Inc (NYSE: RKT) founder Dan Gilbert’s wealth got a $25 billion booster on Tuesday as the holding company gets the attention of retail investors on Reddit’s r/WallStreetBets, according to Bloomberg Billionaire’s Index. What Happened: Gilbert, Age 59, has moved up 19 spots to No. 16 on the index that tracks 500 of the world’s richest. A large chunk of Gilbert’s fortune, 93% to be precise, is comprised of his stake in Rocket, reported Bloomberg. See also: How to Buy Rocket Companies (RKT) Stock Why It Matters: The one-day jump in Gilbert’s wealth is the largest so far in the year, noted Bloomberg. As of press time, Detroit-based Rocket Companies with subsidiaries such as Rocket Mortgage and Quicken Loans was the most discussed company on WallStreetBets, according to SwaggyStocks data. WallStreetBets investors previously carried out short squeezes in the stocks of GameStop Corp (NYSE: GME), AMC Entertainment Holdings Inc (NYSE: AMC), Nokia Oyj (NYSE: NOK), BlackBerry Ltd (NYSE: BB), and others. Rocket reported 162% revenue growth and 350% growth in net income for the fourth quarter, which beat analyst estimates. The company’s shares have shot up since last Friday. S3 Partners data indicates the Rocket has currently $1.2 billion in short interest — making it one of the most shorted stocks in the market. Price Action: Rocket shares traded nearly 8.2% lower at $38.20 in after-hours trading on Tuesday after shooting up almost 71.2% in the regular session. Photo by Steve Jennings on Wikimedia See more from BenzingaClick here for options trades from BenzingaRocket Companies Overtakes GameStop, Palantir As WallStreetBets' Top Interest© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- The main fund from Cathie Wood’s Ark Investment Management extended its drop from a February peak to 20%, highlighting a swift turnaround for the formerly high-flying stocks favored by the firm.The $24.6 billion Ark Innovation ETF (ARKK) tumbled 6.3% on Wednesday alone as growth stocks such as Pinterest Inc. and Zillow Group Inc. took a beating. The Nasdaq 100 Index lost almost 3% as traders turn away from tech in favor of so-called value stocks that had underperformed during the pandemic, bringing its losses since a peak last month to 8.1%.The rotation, along with higher bond yields that dim the allure of equities, is taking the shine off what had been one of the hottest investments on Wall Street, with ARKK growing 10-fold over the past year, including a whopping $2.37 billion inflow just last month. Since peaking on Feb. 12, ARKK’s price has now dropped by a fifth, the level that commonly defines a bear market.“People are worried the crowded trades will lose their momentum like they did last September” when some of the biggest tech names suffered a bout of selling, said Matt Maley, chief market strategist at Miller Tabak + Co.Yields on benchmark 10-year Treasury notes have jumped more than 50 basis points in 2021, on track for the largest quarterly increase since 2016. Consequently, it’s growing more difficult to justify sky-high valuations for highly speculative, expensive areas of the stock market.ARKK’s three largest holdings, Tesla Inc., Square Inc. and Roku Inc., have about tripled over the past year. Tesla is up close to 350%, while Square has surged about 200% and Roku is up more than 240%. On Wednesday, they all slumped.In fact, all but three stocks held by ARKK fell and three suffered losses exceeding 10%, including Stratasys Ltd., a maker of 3D printers, and Veracyte Inc., which develops molecular tests for oncology.The fund’s tilt toward long-term growth means short-term profitability isn’t a key consideration when stocks are picked. In fact, two-thirds of its current holdings didn’t make a profit in the past year. And even after the recent losses, ARKK is still slightly up for the year.Inflows to the fund have faltered in the past week, but there’s yet to be a mass exodus. ARKK took in more than $600 million combined the past two days, after losing more than $690 million last week in its worst five-day period on record.“There is growing unease in the markets and whether higher-risk asset classes can continue to climb,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “If sentiment turns, you can see substantial outflows.”(Updates prices 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.
Exxon Mobil Corp is lowering its ambitions for oil and gas output, it said Wednesday, as it focuses on cutting costs and preserving dividends to win back investors that have soured on the company after years of overspending. Exxon last year fell out of the Dow Jones index of top U.S. companies and shares fell to a two-decade low. "The priority right now is to rebuild the balance sheet," Exxon Chief Executive Darren Woods said on a media call following a virtual analysts day that emphasized the company's commitment to lower spending and reducing debt, which has ballooned to $67.6 billion from $37.8 billion two years earlier.
(Bloomberg) -- U.S. Treasuries tumbled anew on Wednesday, driving long-maturity yields to their highest levels this week and pushing up inflation expectations as traders continued to price in a quicker economic rebound from the pandemic.Benchmark 10-year Treasury yields surged as much as 10.3 basis points to 1.495%, a move reminiscent of last Thursday’s startling selloff in government debt. Meanwhile, a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% for the first time since 2008 -- aided by climbing oil prices. At least part of the trigger for the fixed-income losses came from the U.K., which said it will sell more bonds than expected as its economy emerges from a deep recession.Also in the background was Joe Biden’s announcement that enough doses of virus vaccine should be available to every American adult by the end of May, and a report Wednesday that the president would moderate certain stimulus demands to try to win support for his virus-relief bill. Rising yields have started to draw the attention of Federal Reserve officials, leaving all eyes on an appearance Thursday by Chair Jerome Powell.Among other things, “the stimulus package is likely to go through and the economy is reopening,” said Michael Franzese, managing partner at MCAP LLC in New York. “The battle is on between rates going higher super-fast and a Federal Reserve that’s trying to keep the market stable and may try to slow the momentum of the reflation and economic-rebound trade into something more manageable.”Early inklings of inflation were evident in data from the Institute for Supply Management this week: Measures of prices paid jumped to their highest levels since 2008.A large trade on Wednesday in 10-year Treasury options and accompanying futures selling also fueled the leap in yields, as did heavy corporate bond supply.The rates market is not yet done fully pricing in robust U.S. economic growth, which would entail a 10-year yield trading around 1.90%, said Mark Heppenstall, chief investment officer of Penn Mutual Asset Management in Horsham, Pennsylvania. That’s the level last seen in January 2020, two months before pandemic fears started prompting forced shutdowns in the U.S.Beyond rising nominal and breakeven rates, “the dynamic rise in the 10-year real, inflation-adjusted yield we’ve seen is the market partly adjusting to a faster-than-anticipated pace of rate normalization by the Fed,” he said.The timing of the Fed’s first rate hike, known as liftoff, and subsequent rate hikes haven’t been factored in, making Treasuries vulnerable to a further selloff in the weeks ahead, according to Heppenstall.(Adds reference to Fed rate hikes in ninth 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.
Japanese carmaker Toyota, which has its U.S. headquarters and a factory in Texas, said it was looking into the move by Governor Greg Abbott to roll back the mask mandate, and it doesn't contemplate any immediate changes. "The early read is – no change for us," Toyota spokesman Scott Vazin said.
A bill in Congress would give families up to $300 a month per child starting this summer.
A $232 million investment has ballooned into a $5.9 billion stake.
Bitcoin's first decade of existence was marked by scandals and wild price swings. Will the next decade be similar or is the cryptocurrency poised for bigger things?
Costco Wholesale Corporation (NASDAQ: COST) remains the wholesale leader, but smaller rival BJs Wholesale Club Holdings Inc (NYSE: BJ) is showing superior metrics. What To Know: Costco entered 2020 on a strong note but the early days of the COVID-19 pandemic quickly shifted buying habits, according to the foot traffic analytic firm Placer.ai report. Since early 2020, Costco has seen inconsistent foot traffic trends to the point where it saw year-over-year growth in just four months -- all of which were in the back half of the year. BJs, on the other hand, saw a stellar 2020 with year-over-year foot traffic growth in every month except January. The smaller wholesale chain averaged 13.8% monthly year-over-year growth in visits in the back half of 2020. The momentum continues into 2021 with an identical 13.8% growth rate in January. Related Link: Can Grocers Sustain The 'Pre-Christmas Bump'? Why It's Important: Foot traffic trends are only one part of the equation as it's possible that customers are visiting Costco less often but spending more per trip. In Costco's case, visits were down 1.7% from November 2020 to January 2021 while visits per visitor were down 28.9%. "A massive decline in visits per visitor alongside a fairly minor drop in overall visits shows that Costco may actually be stronger than it's ever been and that the brand is likely adding new members at a very high rate," according to the Placer.ai report. What's Next: BJs deserves credit for a strong 2020 performance but it's unclear if it can sustain momentum in 2021 and beyond, according to Placer.ai. The company continues to offer the compelling value that stands out amid economic uncertainty. BJs Wholesale's stock is up nearly 60% over the past year, while Costco's is up about 4.5%. See more from BenzingaClick here for options trades from BenzingaAccelerated Vaccine Timeline Will 'Inspire Confidence' In Travel Says Marriott CEOBurger King UK's Menu To Be Half Plant-Based Food By 2031© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Bond traders have been saying for years that liquidity is there in the world’s biggest bond market, except when you really need it.Last week’s startling gyrations in U.S. Treasury yields may offer fresh backing for that mantra, and prompt another bout of soul-searching in a $21 trillion market that forms the bedrock of global finance. While stocks are prone to sudden swings, such episodes are supposed to be few and far between in a government-debt market that sets the benchmark risk-free rate for much of the world.Yet jarring moves occur periodically in Treasuries, forming a bit of a mystery as no two events have been the same. Some point to heightened bank regulations in the wake of the 2008 financial crisis. Scrutiny over liquidity shortfalls intensified in October 2014 when a 12-minute crash and rebound in yields happened with no apparent trigger. Panic selling during the pandemic-fueled chaos a year ago, exacerbated when hedge funds’ leveraged wagers blew up, brought the issue to the fore again.And then came last week, when the gap between bid and offer prices for 30-year bonds hit the widest since the panic of March 2020.The latest events “are a stark reminder what happens when liquidity suddenly vanishes in the deepest, largest bond market,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors.At issue is whether this vast market is more vulnerable to sudden bouts of turbulence thanks to measures that have made it more difficult for banks to hold Treasuries. Some analysts say the tumult last week was magnified by questions over whether the Federal Reserve will extend an easing of bank capital requirements, which is set to end March 31. Put in place early on in the pandemic, the measure is seen as making it easier for banks to add Treasuries to their balance sheets.The 2014 episode triggered a deep dive into the market structure, and regulators have pushed through some changes -- such as increased transparency -- and speculation has grown that more steps to bolster the market’s structure may be ahead.“While the scale and speed of flows associated with the COVID shock are likely pretty far out in the tail of the probability distribution, the crisis highlighted vulnerabilities in the critically important Treasury market that warrant careful analysis,” Fed Governor Lael Brainard said Monday in prepared remarks to the Institute of International Bankers.There are plenty of potential culprits in last week’s bond-market tumble -- which has since mostly reversed -- from improving economic readings to more technical drivers. Ultra-loose Fed policy and the prospect of fresh U.S. fiscal stimulus have investors betting on quicker growth and inflation. Add to that a wave of convexity hedgers, and unwinding by big trend-following investors -- such as commodity trading advisers.Based on Bloomberg’s U.S. Government Securities Liquidity Index, a gauge of how far yields are deviating from a fair-value model, liquidity conditions worsened recently, though it was nothing like what was seen in March.For Zoltan Pozsar, a strategist at Credit Suisse, the action began in Asia with bond investors reacting to perceived hawkish signs from the central banks of Australia and New Zealand. That sentiment then carried over into the U.S. as carry trades and other levered positions in the bond market were wiped out. A disastrous auction of seven-year notes on Thursday added fuel to the unraveling.Last week’s drama “brings to mind other notable episodes in recent years in which a deterioration in the Treasury market microstructure was primarily to blame,” JPMorgan & Chase Co. strategist Henry St John wrote in a note with colleagues.One key gauge of Treasury liquidity -- market depth, or the ability to trade without substantially moving prices -- plunged in March 2020 to levels not seen since the 2008 crisis, according to data compiled by JPMorgan. That severe degree of liquidity shortfall didn’t resurface last week.The bond-market rout only briefly took a toll on share prices last week, with equities surging to start this week, following a sharp retreat in Treasury yields amid month-end buying.The Fed cut rates to nearly zero in March 2020, launched a raft of emergency lending facilities and ramped up bond buying to ensure low borrowing costs and smooth market functioning. That breakdown in functioning has sparked calls for change from regulators and market participants alike.GLOBAL INSIGHT: Recovery? Yes. Tantrum? No. Yield Driver ModelFor now, Treasuries have settled down. Pozsar notes that the jump in yields has provided an opportunity for some value investors to swoop in and pick up extra yield, effectively helping offset the impact of the leveraged investors who scrambled for the exits last week.“Some levered players were shaken out of their positions,” Pozsar said in a forthcoming episode of Bloomberg’s Odd Lots podcast. “It’s not comfortable -- especially if you’re on the wrong side of the trade -- but I don’t think that we should be going down a path where we should redesign the Treasury market.”Why Liquidity Is a Simple Idea But Hard to Nail Down: QuickTake(Updates with details on Bloomberg’s liquidity index in 10th paragraph, and a 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) -- In what would be a blow to steak lovers the world over, Australian beef may slip off global menus if cattle producers Down Under can’t hasten the pace of a nationwide herd rebuild.With herd sizes near the lowest since the early 1990s, the nation’s beef producers face the possibility of losing their No. 2 exporter position behind Brazil simply because they don’t have the stock available to service a global market as demand picks up steam up post-Covid-19.The risks of that are growing as some farmers continue to send female cattle to the slaughterhouse instead of keeping them to expand herds. The latest official data show the ratio of female cattle processed as a proportion of total slaughter -- an indicator for whether a herd is in restocking phase -- at 48.2%, not enough to qualify for a technical rebuild, classified at 47% and under.While there’s still time to get that ratio down, it needs to happen now as restocking is a years-long process from calf to slaughter and the industry faces a range of headwinds, said Matt Dalgleish, manager of commodity market insights at Thomas Elder Markets. “We’ve got to get those numbers back up so that we don’t lose market share into the export markets,” he added.Australia’s beef industry has seen some turbulent times after years of drought forced farmers, who were unable to support herds on parched pastures, to cull hoards of cattle. The resultant oversupply on the market caused Australian cattle prices to plummet in 2019 to half the levels seen today.Ranchers are also facing a less certain future with the rise of alternative-protein demand as environmental and health concerns drive consumers to products like faux meat burgers or nuggets.After rains replenished pastures last year and with the herd rebuild season underway, farmers held onto livestock, squeezing supplies and sending prices soaring to records. Those prices will probably remain at “exceptionally high levels” according to Rural Bank’s 2021 outlook.Farmers have to contend between keeping their cattle for the rebuild, or sending them for slaughter to “cash in” now -- a tempting offer for some looking to pay off large debts incurred during drought years for outsized feed grain purchases to keep the animals alive, Dalgleish said.Prices for Australian cattle used to track South American countries, but drought conditions during 2014–15 tightened supply Down Under, which saw prices spike and never properly recover. Weaker Brazilian real and Argentine peso in recent years also gave those producers extra leverage. With the Australian dollar gaining to almost 80 U.S. cents, the Aussie product is becoming out of reach for many importers. Prices have even overtaken the U.S., which traditionally holds the title for the world’s most expensive beef. The government forecaster Abares sees U.S. and Brazil expanding shipments through 2022-23 to high-value markets, notably China. The high prices have also elicited a response from Indonesia, where strikes by local meat sellers over Australian beef costs prompted the government to warn that it will look to other suppliers, according to Australian media reports. Indonesia is Australia’s largest export market for cattle and beef offal.Though Australia accounts for only 4% of global beef production, the country is one of the world’s largest shippers, with major markets in China, Japan and South Korea. Export volumes fell 15% last year as record prices hurt demand.Australia’s position in those markets is increasingly at risk, compounded by free trade agreements that see higher tariffs on the nation’s shipments versus American beef, according to Dalgleish. “The trade situation is such that the U.S. product is being more favored,” he said.For Australia’s cows that, unlike cattle in the U.S., mainly feed on grass instead of grains, climate change could add pressure to rebuild stock fast. With drought never far around the corner, coupled with higher frequency of extreme weather events, it’s crucial to bulk up herd sizes while pastures are green.“Australia’s likely to be back in drought in a couple of years,” Dalgleish said. “It kind of doesn’t leave us a great deal of time to build up to those high twenties in millions of head numbers -- 28, 29 million head. And then you’re kind of stuck again, depending on how prolonged the drought scenarios are looking. We could be back down at record herd levels, and low supply again.”(Updates with estimates from Abares in 10th 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.
Commercial electric-vehicle maker Workhorse meets with the USPS Wednesday to discuss its contract bid loss to Oshkosh.
Bitcoin passed its tenth anniversary of the release of its whitepaper, first introducing it to the world, in 2018. But assessments of the cryptocurrency's impact in the last decade or so have mostly been negative. Is bitcoin useless?