Government cracks down on electronic money
Government cracks down on electronic money
A firm hired to monitor Texas' power markets says the region's grid manager overpriced electricity over two days during last month's energy crisis, resulting in $16 billion in overcharges.
(Bloomberg) -- Stocks climbed as technology shares rebounded from an earlier selloff. Treasuries stabilized. The dollar rose.Most major groups in the S&P 500 advanced, led by energy and consumer shares. The Nasdaq 100 was still in the red amid a slump in giants Tesla Inc., Apple Inc. and Amazon.com Inc. Earlier Friday, equities retreated as U.S. jobs data soared past estimates, fueling anxiety the economy will run too hot and kick up inflation. Benchmark 10-year bond yields were little changed after hitting 1.6%.The recent spike in Treasury yields has unsettled markets around the world, with high-flying technology companies bearing the brunt of the stock rout. While analysts say growth prospects for the industry remain largely unchanged, a reckoning was long in the making. The rout in Tesla this week, for example, has already wiped out nearly $90 billion from the electric-vehicle maker’s valuation.“Big tech is going to continue to dominate, but I think that it’s been just an incredible, incredible non-stop run that has to have a breather,” said Peter Mallouk, chief executive officer of Creative Planning. “What you saw this week was pretty healthy -- the market can’t go straight up. When you start to see everything going up at the same time, it just increases risk and it shows there’s no discretion.”Read: Momentum Quants Will Unleash the ‘Most Turbulent Rebalance Ever’These are some of the main moves in markets:StocksThe S&P 500 rose 0.5% as of 12:38 p.m. New York time.The Stoxx Europe 600 Index fell 0.8%.The MSCI Asia Pacific Index dipped 0.8%.The MSCI Emerging Market Index declined 1%.CurrenciesThe Bloomberg Dollar Spot Index climbed 0.4%.The euro dipped 0.4% to $1.1918.The Japanese yen depreciated 0.2% to 108.23 per dollar.BondsThe yield on 10-year Treasuries fell one basis point to 1.56%.Germany’s 10-year yield climbed one basis point to -0.30%.Britain’s 10-year yield increased three basis points to 0.756%.CommoditiesWest Texas Intermediate crude climbed 3.4% to $65.97 a barrel.Gold rose 0.2% to $1,701.53 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.
The rollercoster ride in bitcoin since the start of the year has not dampened wealth manager Jim Paulsen's enthusiasm for the cryptocurrency. Yet Paulsen, chief investment officer for Leuthold Group, which manages $1 billion, cannot own bitcoin in client portfolios due to regulatory constraints. The promise of an asset class that behaves differently than stocks or bonds is leaving portfolio and wealth managers scrambling own cryptocurrencies if they can.
A wave of electric vehicle related companies are flooding the public markets this year. This follows a slew of companies which went public last year.
(Bloomberg) -- Australia wants to leverage off its position as a top mineral producer by boosting processing and manufacturing, part of a plan to challenge China’s dominance in the supply of products key to the clean-energy transition.The government unveiled a 10-year road map on Thursday that includes A$1.3 billion ($1 billion) of funding to help businesses capitalize on the country’s abundant natural resources and exploit opportunities in a de-carbonizing world. It encourages growth in high-value products like batteries and solar cells, as well as technologies and equipment that make mining safer and more efficient.The Modern Manufacturing Initiative comes as the U.S. and Japan look to cut their dependence on China for minerals that are vital to many manufacturing sectors. Australia is the top exporter of lithium, a key component in batteries, and is also a major source of rare earths. Beijing is reviewing its rare earths policy and there are signs it may ban the export of refining technology to nations or firms that it deems are a threat to state security.See also: Biden’s Hopes for Rare Earth Independence at Least a Decade Away“It’s a sovereign and strategic priority for Australia to ensure that we are hard-wired into this supply chain around the world,” Prime Minister Scott Morrison said at a media briefing following the announcement. It has to be “a supply chain that Australia and our partners can rely on, because these rare earths and critical minerals are what pull together the technology that we will be relying on into the future,” he said.Lynas Rare Earths Ltd. currently sends rare earths from its operations in Australia to Malaysia for processing, but has plans to build a facility close to its Mt. Weld mine in the country’s west. Lynas’ rival Iluka Resources Ltd. is also assessing options to build processing capacity. Energy Renaissance, meanwhile, and other companies are looking to establish a domestic battery manufacturing industry on Australia’s east coast.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) -- Back in 2017, when Turkey’s economy was booming faster than China’s, Renaissance Capital’s Charles Robertson predicted that it would not end well. Less than a year later, the lira crashed under an overheating economy and ballooning debt.Now, Robertson expects a repeat of that cycle within the next two years.The rally in Turkish assets made the lira the best-performing currency since a shakeup at the central bank and finance ministry in November. The gains were backed by some investors betting that President Recep Tayyip Erdogan would allow the new team to pursue conventional monetary policy after several years of failed attempts to suppress inflation while keeping interest rates low. The lira halted three days of declines on Friday, climbing after central bank Governor Naci Agbal pledged policies to permanently tame price growth.Robertson, the London-based global chief economist at Renaissance, is not convinced. Here are some of his views from an interview on Wednesday:Boom-and-Bust Cycle“My current scenario is that we go back to another boom-and-bust cycle, with interest-rate cuts in the second half of this year leading to strong credit growth in 2022, just ahead of the presidential election in 2023, and then we get another crash.”Is This Time Different?“We have seen so many times that Erdogan was persuaded that he has to do something. Each time, the cost has become higher and the gains have become more short-lived. You look at interest rates globally today and look where Turkey is. Every other mainstream emerging market has interest rates below 5% now, except Turkey.“I don’t have high trust that Erdogan has learned his lesson. His comments just a week ago again suggests that, yes, he is being responsible for now, but as soon as he gets the chance and certainly ahead of the elections in 2023, you would expect Turkey to go on the credit-growth model again.”Facing Choices“Once again Turkey has got a choice. It still has a very cheap currency; it can go down an export-led model that will support its current account and bring in the dollars and euros that can be used for investment. I’d love to see the central bank be able to take inflation under control permanently through a long period of high interest rates and at the same time a cheap currency helping exports and helping re-balance Turkey’s economy away from consumption. That would be the better long term story for Turkey, but less exciting for growth. It is kind of a growth scenario of probably 3% or 4% a year, not 6% or 7% for a few years and then a crash.”Controlling Inflation“The markets will have to see the proof in sustained positive real interest rates over time. Right now, we don’t even have positive interest rates: the central-bank rate is roughly the same as inflation. The markets can accept that inflation is going to calm down thanks to the hikes we have seen. But what the central bank has to do is to keep real rates on a forward-looking base high, and the only way they can prove to the market that they are doing that is by doing it.”Shorter Cycles“I suspect that the boom and bust cycles have to be short now, like a year or two. They can’t do a five-year boom. Yes you can borrow for a bit but you blow up yourself pretty quickly. (In the past) banks had sufficient deposits to lend out, but now they don’t. If they want to lend, a great deal of money is borrowed from abroad, and that then starts to ramp up the external debt quickly and then markets get worried (and) the lira starts to come under pressure quite quickly.”Hawkish Talk“I don’t think there is anything they can do now. There is nothing verbal they can say, and actually hiking rates too much would be a mistake because it is not necessary for the economy. I think inflation is going to come down; it would be silly to hike rates more now. The best they can do is to show over years the model has changed.”Outlook for the Lira“My guess is that the lira is going to be around 7 per dollar by June because the central bank will continue to be responsible throughout the first half of 2021, and my assumption is that by December we’ll see pressure from Erdogan to cut rates. And we will be at the beginning of the market losing faith again in the central bank’s credibility.”Developing-World Models“Egypt is still paying really high real rates today because it has taken so long to prove to the market that Egypt is changing. It has been costly for Egypt, and it will be quite costly for Turkey to prove this too. Turkey has to provide to foreign and domestic investors a good positive real return on bonds at least for two to three years before the markets will believe the model has changed.”What to Buy“For bond investors, I think it has been a decent trade since November but you put your money there for a few months. It is a bit like riding Bitcoin; a few months in you make a decent return and you get out because you can’t have that much confidence in the longer term. I think the Turkish lira bonds are good value now, but I would be selling them perhaps first half of next year. The question I would have in the second half of this year: when do I sell?”To Be Sure“I’d love to be wrong, for the sake of the Turks and their savings and their relative standing in the world. Turkey has an opportunity to change. Turkey is a well-developed industrial economy with a good, educated work force. It could be a solid -- perhaps the best -- growth story in the European time zone for the next 10 years with the right policies.”(Updates with lira and central bank comments in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bitcoin’s appeal as a hedge against inflation is being put to the test, with the largest cryptocurrency slumping along with other risk assets after Jerome Powell failed to ease investor concern about rising price pressures.The digital token fell as much as 6.7% and traded at about $47,900 as of 2:38 p.m. in New York, after the Federal Reserve chairman said he is monitoring financial conditions and would be “concerned” by disorderly markets, but stopped short of offering specific steps -- which sent Treasury yields higher and stocks lower.“Once it feels like the market is in risk-off mode, which it clearly is, because if you’re selling everything except for energy, that’s very risk-off,” said Arthur Hogan, chief market strategist at National Securities Corp. “It really doesn’t matter whether you are Bitcoin or Ark or semis or banks -- every thing’s being thrown over the transom.”Bitcoin surged to more than $58,000 last month, with advocates such as MicroStrategy Inc. Chief Executive Officer Michael Saylor touting the token as alternative to cash because of the risk of rising inflation from government and central bank stimulus. Shares of the enterprise software maker, which has purchased over 90,000 Bitcoins, tumbled as much as 17% on Thursday. Critics say Bitcoin is in a giant, stimulus-fueled bubble that’s destined to burst like the 2017 boom and bust cycle. Bitcoin slid 21% last week but is still up more than fivefold in the past year. 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 turned negative after the Labor Department's February jobs report handily exceeded expectations, reaffirming the building momentum in the economic recovery, but also stoking a rise in Treasury yields and concerns over an economic overheating.
It started 125 years ago with this strange new technology, but now electric vehicles are set to become a $912 billion industry. Here’s who’s set to benefit in 2021
Rates are the highest since last summer, but experts think the increases will slow.
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).
(Bloomberg) -- Saudi Arabia just made a high-stakes wager that the glory days of U.S. shale, which transformed the global energy map in the last decade, are never coming back.By keeping a tight grip on supply at Thursday’s meeting of the OPEC+ alliance of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman showed he’s focused on boosting prices -- and confident that this time around it won’t encourage American producers to surge back and steal market share.“‘Drill, baby, drill’ is gone for ever,” said Prince Abdulaziz, who’s orchestrated the revival of the oil market after last year’s catastrophic collapse.His swagger comes mixed with a good dose of diplomatic tension: Russia, Saudi Arabia’s most important OPEC+ partner, has tried to convince Riyadh for several months to increase output, fearing that rising oil prices would ultimately awaken rival shale producers. The Saudis are certain the American industry has reformed itself.If the prince is right, OPEC+ will be able to both push prices higher now and recover market share later without worrying that rivals in Texas, Oklahoma and North Dakota will flood the market. But if Riyadh has miscalculated -- and it’s got shale wrong before -- the danger will be lower prices and production down the line.The Saudis have so far convinced their allies the strategy will work. After a quick virtual meeting on Thursday, OPEC+ agreed to prolong its production cuts, defying expectations of an output hike. Russia, however, secured an exemption for itself and Kazakhstan, and will increase output marginally in April.Brent crude jumped 5% to a one-year high of almost $68 a barrel after the decision. Front-month futures extended gains on Friday and a raft of banks updated their price forecasts, including Goldman Sachs Group Inc., which increased its estimates by $5 -- to $75 next quarter and $80 in the following three months.“This is an incredibly bold move on the part of OPEC+ to extend the oil price rally,” said KPMG Global Energy Sector Leader Regina Mayor.If history is a guide, however, trouble may be brewing. The OPEC+ coalition, which groups Saudi Arabia, Russia and almost two dozen other oil producers, has in the past underestimated its American rivals, who year after year produced more than most expected. From a low point of less than 7 million barrels a day in 2007, the U.S.’s total petroleum output more than doubled to hit an all-time high of almost 18 million barrels a day by early 2020, forcing the cartel to cede market share.Risky Move“This is a risky take,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said Friday in a Bloomberg Television interview. While U.S. oil companies probably won’t raise output this year, in 2022 “there’s nothing really stopping them, especially the small and mid-cap producers.”Sen sees prices hitting $70 a barrel as soon as next week, $80 by the end of the year and a possible climb to $100 in 2022.For now, U.S. total oil output remains constrained, hovering at 16 million barrels due to the impact of last year’s slump, which briefly saw benchmark prices trade below zero.Under pressure from shareholders, shale producers have promised restraint, putting profits before the growth they relentlessly pursued during the boom years. Although drilling has risen from the lows of 2020, it’s well below previous levels. In addition, President Joe Biden is trying to temper the worst excesses of the industry, including the indiscriminate natural gas flaring that’s a byproduct of shale’s success.Under a different oil minister, Saudi Arabia attacked shale producers in 2014 and 2015, flooding the market and forcing prices lower -- a strategy that ultimately failed. Prince Abdulaziz is doing the opposite, because oil higher prices will eventually benefit shale producers. Yet, he’s convinced the industry won’t repeat its past excesses.“Shale companies are now more focused on dividends,” Prince Abdulaziz told Bloomberg News in an interview after the OPEC+ meeting, saying that the kingdom wished the American industry well. “We’ve never had any issue with shale oil. It’s the shale companies which are themselves changing. They have had their fair share of adventure and now they are listening to the call of their shareholders.”Shale executives agree with him -- at least for now.“A couple years ago it was ‘drill, baby, drill,’” John Hess, the head of Hess Corp., said in Houston earlier this week. “Now, it’s ‘show me the money.’”Ryan Lance, the chief executive officer of ConocoPhillips, echoed the sentiment: “I hope there’s discipline in the system. The worst thing that can happen right now is U.S. producers start growing rapidly again.”As the industry cuts spending to pay shareholders fatter dividends, there’s not much left to finance increased production. Even Big Oil is scaling down its ambitions in shale. Exxon Mobil Corp. had been running 55 oil rigs in the Permian basin that straddles West Texas and southeast New Mexico, part of an effort to boost output to 1 million barrels a day by 2025. After tightening its belt, the U.S. oil giant is running just 10 rigs, and has cut its 2025 output target by nearly a third to 700,000 barrels a day.Yet, there are also signs that higher oil prices may ultimately reactivate the U.S. shale industry. With benchmark West Texas Intermediate now changing hands above $60 a barrel, some companies believe they may be able to both grow and keep shareholders happy. EOG Resources Inc., the largest producer in the Permian, has announced a big spending increase for next year. And others are following suit.But the reaction of the stock market made Prince Abdulaziz’s case: investors punished EOG for spending more on drilling, marking down its shares relative to more disciplined rivals.(Updates with comments from Energy Aspects in 10th, 11th paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Federal Reserve Chair Jerome Powell disappointed some traders by offering few signs that the central bank might expand monetary stimulus.
It started 125 years ago with this strange new technology, but now electric vehicles are set to become a $912 billion industry. Here’s who’s set to benefit in 2021
(Bloomberg) -- Stocks and bonds sold off after Federal Reserve Chairman Jerome Powell underwhelmed markets by refraining from pushing back more forcefully against the recent spike in Treasury yields.The S&P 500 briefly erased its 2021 gains, notching its lowest close in about five weeks. Benchmark 10-year bond rates topped 1.5% and the dollar climbed. The Nasdaq 100 extended losses from a February peak to almost 10%, and the Russell 2000 of small caps slid 2.8%. Reddit users appeared to rush back into GameStop Corp., with the video-game retailer soaring.Powell said in an online event Thursday that he’d be “concerned” by disorderly markets, but stopped short of offering steps to curb heightened volatility. The surge in Treasury yields has triggered fears about elevated stock valuations after a torrid equity rally from the depths of the pandemic. While bulls have decided to view the jump in rates as a sign of economic strength that could lift corporate profits, there’s been mounting concern over a potential inflation pickup. For Bleakley Advisory Group’s Peter Boockvar, the Fed has put itself in a “tough situation.”“We are again seeing a market that is taking control of monetary policy from the Fed,” said Boockvar, the firm’s chief investment officer. “Long rates are rising right now because Powell is again very dovish. The more dovish they get in the face of market expectations of higher inflation, the more financial tightening we’ll see.”Stock-Market Momentum Comeuppance Gets No Sympathy From the FedDespite the lingering uncertainties about the impacts of rising bond yields, such fears are “misplaced,” according to Candice Bangsund, portfolio manager of global asset allocation at Fiera Capital.“As long as the back-up in bond yields reflects stronger growth expectations (versus tighter monetary policy), then the long-term bull market will not be at risk,” she said. “The latest normalization in bond yields should be viewed as an encouraging sign that growth is healing, while the prospect for a hawkish turn from the Federal Reserve is clearly not in the cards today.”The U.S. Senate voted to take up a $1.9 trillion relief bill backed by President Joe Biden, setting off a debate expected to end this weekend with approval of the nation’s sixth stimulus since the pandemic-triggered lockdowns that began a year ago.Elsewhere, Bitcoin’s appeal as a hedge against inflation was put to the test, with the largest cryptocurrency joining a slump in other risk assets. Oil surged after the OPEC+ alliance surprised traders with its decision to keep output unchanged, signaling a tighter crude market in the months ahead.Some key events to watch this week:The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.These are some of the main moves in markets:StocksThe S&P 500 sank 1.3% at 4 p.m. New York time.The Stoxx Europe 600 Index fell 0.4%.The MSCI Asia Pacific Index dipped 2.5%.The MSCI Emerging Market Index declined 2.6%.CurrenciesThe Bloomberg Dollar Spot Index rose 0.7%.The euro decreased 0.8% to $1.1971.The Japanese yen depreciated 0.8% to 107.92 per dollar.BondsThe yield on 10-year Treasuries rose six basis points to 1.54%.Germany’s 10-year yield fell two basis points to -0.31%.Britain’s 10-year yield decreased five basis points to 0.731%.CommoditiesWest Texas Intermediate crude jumped 4.8% to $64.24 a barrel.Gold fell 0.8% to $1,698.21 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.
Fed Chairman Jerome Powell said Thursday that the central bank will be 'patient' in keeping interest rates near zero, even if inflationary pressures start to rise.
Gold investors are anxious to see if Powell expresses concern about a recent volatile sell-off in Treasuries and his assessment of the economy.
Stocks traded lower on Thursday after another technology-led selloff on Wednesday. A new report on weekly unemployment claims came in better than expected, helping boost sentiment after a disappointing print on private payroll growth came in just a day earlier.
It's full steam ahead for Kanye West's apparel line at Gap.
Rising 10-year yield isn't necessarily a bad thing for stocks, according to BMO Capital Markets Chief Investment Strategist Brian Belski.