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New China Beige Book report on first quarter recovery

The Chinese economy is on the upswing compared to previous quarters. China Beige Book CEO Leland Miller joins Yahoo Finance's Julie Hyman, Adam Shapiro, and Scott Gamm to discuss.

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  • UBS Seeks to Raise Stake in China Joint Venture to 67%

    (Bloomberg) -- UBS Group AG plans to deepen its control over its Chinese securities unit as two of its partners in the venture are seeking to sell their stakes.UBS, which in 2018 became the first foreign bank to win approval for majority control of a securities venture in the nation, is planning to snap up another 16% of the firm, boosting its control to 67%, said people familiar with the matter who asked not to be identified discussing an internal matter.UBS has been discussing the purchase with Guangdong Provincial Transportation Group Co. and China Guodian Capital Holdings Ltd., who will put their 14% and 1.99% respective holdings in the venture on sale as early as today, the people said.Unlike rivals such as Goldman Sachs Group Inc. and Credit Suisse Group AG, the Zurich-based bank currently has no intention of going for full ownership, which China allowed foreign banks to do last year. UBS has said it has a good relationship with its Chinese partner and prefers to keep the asset management arm of the Beijing government as a shareholder because of the connections it can provide in China, the people said.A media representative at UBS declined to comment. Guangdong Transportation and Guodian Capital couldn’t be reached for comments on phone numbers provided on their websites.Foreign banks have aggressive plans to expand in China -- in some case seeking to double their staffing -- as the country further opens its $54 trillion financial market. By gaining control of their firms, they are better able to set the strategic direction to boost investments. Foreign firms have had limited success with joint ventures over the past decade in China, which in many cases have been unprofitable.JPMorgan Chase & Co. in November raised its stake in its venture to 71%, buying out an additional 20% for about $27 million. In December, Goldman agreed with its partner to snap up the 49% that it doesn’t own in its venture.UBS is in the process of moving several managing directors from Hong Kong to mainland China to better compete for deals in the country.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.

  • EU watchdog urges tighter rules to prevent another Wirecard scandal

    European Union rules on company financial information need to be updated to apply the lessons of the collapse of German payments firm Wirecard, the bloc's securities watchdog said on Wednesday. The European Securities and Markets Authority (ESMA) said in a report in November there were deficiencies in how Germany's securities and accounting watchdogs cooperated regarding Wirecard, the country's biggest accounting scandal. "ESMA considers that the Wirecard case has shown, once again, that timely and effective enforcement of financial information is paramount to ensure investor protection and confidence in capital markets," ESMA Chair Steven Maijoor said in a letter to the EU's financial services chief Mairead McGuinness published on Wednesday.

  • Budget 2021: How much will it cost the UK and how will we pay?

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  • Texas Watchdog Says Grid Operator Made $16 Billion Error

    (Bloomberg) -- A firm hired to monitor Texas’ power markets says the region’s grid manager overpriced electricity for almost two days during last month’s energy crisis, resulting in $16 billion in overcharges.Amid the deep winter freeze that knocked nearly half of power generation offline, the Electric Reliability Council of Texas, known as Ercot, set the price of electricity at the $9,000-a-megawatt-hour maximum -- standard practice during a grid emergency. But Ercot left that price in place days longer than necessary, resulting in massive overcharges, according to Potomac Economics, an independent market monitor hired by the state of Texas to assess Ercot’s performance. In an unusual move, the firm recommended in a letter to regulators that the pricing be corrected and that $16 billion in charges be reversed as a result.Potomac isn’t the first to say that leaving electricity prices at the $9,000 cap for so long was a mistake. Plenty of power companies at risk of defaulting on their payments have said the same. But the market monitor is giving that opinion considerable weight and could sway regulators to let companies off the hook for some of the massive electricity charges they incurred during the crisis.The Arctic blast that crippled Texas’s grid and plunged more than 4 million homes and businesses into darkness for days has pushed many companies to the brink of insolvency and stressed the power market, which is facing a more-than $2.5 billion payment shortfall. One utility, Brazos Electric Power Cooperative, has already filed for bankruptcy, while retailers Griddy Energy LLC and Entrust Energy Inc. defaulted and have been banned from participating in the market.Retroactively adjusting the power price would ease the financial squeeze on some of the companies facing astronomical power bills in the wake of the energy crisis. EDF Renewable Energy and Just Energy are among those asking the Public Utility Commission to reset the power price for the days after the immediate emergency while others have also asked regulators to waive their obligation to pay until price disputes are resolved.“If we don’t act to stabilize things, a worst-case scenario is that people will go under,” said Carrie Bivens, the Ercot independent market monitor director at Potomac Economics. “It creates a cascading effect.”The erroneous charges exceed the total cost of power traded in real-time in all of 2020, said Bivens, who spent 14 years at Ercot, where she most recently was director of market operations before becoming its watchdog. “It’s a mind-blowing amount of money.”While prices neared the $9,000 cap on the first day of the blackouts, they soon dipped to $1,200 -- a fluctuation that the utility commission later attributed to a computer glitch. The panel, which oversees the state’s power system, ordered Ercot to manually set the price at the maximum to incentivize generators to feed more electricity into the grid during the period of supply scarcity. The market monitor argues that Ercot should have reset prices once rotating blackouts ended because, at the point, the emergency was over.It’s asking the commission to direct Ercot to correct the real-time price of electricity from 12 a.m. Feb. 18 to 9 a.m. Feb. 19. Doing so could save end-customers around $1.5 billion that otherwise would be passed through to them from electricity providers, Bevins said.But power generators that reaped substantial profits from the high prices during the crisis week are likely to push back. Vistra Corp. on Thursday submitted comments to the utility commission arguing against repricing. During a Texas senate hearing the same day, utilities South Texas Electric Cooperative and the Lower Colorado River Authority also voiced opposition.Texas Competitive Power Advocates, a trade association representing generators, said retroactively changing prices could discourage future investments in Texas’s electricity market. “Changing prices after the fact creates additional instability and uncertainty,” Michele Richmond, the group’s executive director, said in an email.Bivens acknowledged the market monitor isn’t typically in favor of repricing, but noted in her letter to the commission that the move wouldn’t result in any revenue shortfalls for generators. Instead, the new price would reflect the actual supply, demand and reserves during the period.“This isn’t some Monday morning quarterbacking,” she said in an interview. “Ercot made an error and we don’t let errors slide.”The utility commission on Wednesday adopted a prior recommendation made by the market monitor, voting to to claw back some payments to power generators for services they never actually provided during energy crisis. The commissioners also expressed support for capping the price of certain grid services -- a request made by several retailers -- but didn’t take action on it. Another commission meeting is scheduled for Friday.(Adds Entrust to list of defaults in fourth paragraph, Vistra opposition and trade group comment in 10th and 11th, and more on monitor letter in 12th.)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.

  • Mortgage Rates Are Back Above 3%. Here’s Where They’re Headed Next.

    Mortgage rates have risen past a psychological benchmark for the first time since they fell to historic lows during the pandemic. The average rate on a 30-year fixed-rate mortgage increased to 3.02% this past week, according to Freddie Mac’s Primary Mortgage Market Survey—the first time since July that the rate has risen above 3%. “Since reaching a low point in January, mortgage rates have risen by more than 30 basis points,” wrote Freddie Mac’s chief economist, in a release.

  • Dow erases year’s gains as 10-year Treasury rises above 1.50% on back of Powell remarks

    Stock benchmarks on Thursday afternoon were sharply lower as Federal Reserve Chairman Jerome Powell said he was monitoring the recent rise in bond yields, and that the pent-up inflation expected this year was unlikely to last.

  • 10-year Treasury yield jumps above 1.50% Thursday afternoon after Powell refers to inflation's rise as transitory

    U.S. Treasury yields Thursday after Federal Reserve Chairman Jerome Powell said he was monitoring the rise in bond yields and that he would be concerned if financial conditions did tighten. "I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals," Powell said during a webinar hosted by The Wall Street Journal. The 10-year Treasury note yield climbed 7.1 basis points to 1.541%. Bond prices fall as yields rise. Many investors had said that if Powell didn't offer more explicit pushback on higher government bond rates, it could fuel Treasury market weakness. Powell stressed again that the Fed would be "patient" with higher inflation expected this year, saying it was likely to be a "one time" effect and not price gains that continue year-after-year.

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  • Bitcoin Could Reach $1 Million or More, Kraken CEO Says

    (Bloomberg) -- As the leader of crypto exchange Kraken, Jesse Powell is bound to be bullish on Bitcoin. Yet he’s projecting a disruptive future that would stretch the imagination of even the most ardent crypto fans.In a Bloomberg Television interview, Powell said Bitcoin could reach $1 million in the next decade, adding that supporters say it could eventually replace all of the major fiat currencies.“We can only speculate, but when you measure it in terms of dollars, you have to think it’s going to infinity,” he said. “The true believers will tell you that it’s going all the way to the moon, to Mars and eventually, will be the world’s currency.”The CEO also said San Francisco-based Kraken is considering going public, possibly next year.Extreme predictions are nothing new in the world of Bitcoin, where adherents stand to profit from convincing a wider audience that crypto is a legitimate asset class, rather than a speculative fad. The dollar remains the world’s reserve currency and is the benchmark for global trade, though its value has softened in the past year.Powell said Bitcoin bulls see it one day exceeding the combined market cap of the dollar, euro and other currencies.The dollar “is only 50 years old and it’s already showing extreme signs of weakness, and I think people will start measuring the price of things in terms of Bitcoin,” he said.The digital currency slipped 3% in early U.S. trading on Thursday, hovering around $49,000. Prices have surged almost 600% since the start of 2020 on the back of wider mainstream adoption, with bulls seeing it as both an inflation hedge and speculative asset.Critics argue that Bitcoin is in a giant, stimulus-fueled bubble destined to burst like the 2017 boom and bust cycle.Kraken benefits from higher prices as it reaps fees from increased trading. Bloomberg reported last month that the exchange was in talks to raise new funding, which would double the company’s valuation to more than $10 billion.“Personally, I think $10 billion is a low valuation,” Powell said. “I wouldn’t be interested in selling shares at that price.”The CEO did acknowledge the potential for wild market swings, saying prices can “move up or down 50% on any given day.” That kind of volatility has long been one of the negatives of Bitcoin, relegating the market to one of speculation, rather than a means of doing business.“If you are buying into Bitcoin out of speculation, you should be committed to holding for five years,” Powell said. “You have to have strong convictions to hold.”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.

  • Getting A Third Covid-19 Stimulus Check Just Got Tougher — But You Might Still Influence How Big Yours Is

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  • Exclusive: India merchants almost halt exports to Iran as its rupee reserves fall - officials

    Indian merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran's dwindling rupee reserves with Indian banks, six industry officials told Reuters. "Exporters are avoiding dealing with Iran since payments are getting delayed for months," said a Mumbai-based dealer with a global trading house. Iran's rupee reserves in India's UCO and IDBI Bank, the two lenders authorised to facilitate rupee trade, have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.

  • Tesla Megabull Ron Baron Says It Was 'Painful' To Sell 1.7M Shares

    Longtime Tesla Inc (NASDAQ: TSLA) bull Ron Baron acknowledged Thursday morning his fund Baron Capital sold 1.7 million shares of the electric automaker despite his long-held belief the stock has a path to $2,000. What Happened: Baron Capital invested $387 million in Tesla's stock back in 2014 and the position has grown to be worth $5.5 billion in February, Baron said on CNBC's "Squawk Box." Over the past six months, the fund has sold 1.7 million out of its 8-million share position between $450 and $900 a share with an average price of $666.70. Baron said many of his friends were skeptical with his original 2014 thesis that Tesla's stock would return 20 times. "We persisted," Baron said. "And at the time we invested, it was unlikely in most people's opinions that electric cars were going to dominate." Related Link: Ark More Convinced On Tesla's Autonomous Strategy And Cathie Wood Says A New Price Target Is Coming Soon Why It's Important: The decision to authorize a sale of a stock he believes still has tremendous upside potential was due strictly to profit-taking as the stock's surge means it accounted for an outsized representation in the fund portfolio, Baron said. The fund also used some of the proceeds from the sale to pay down part of a line of credit. Baron said it was "painful" to sell close to 2 million shares of Tesla's stock as the company's prospects of eventually selling 20 million cars a year is a more realistic outcome. Tesla has so many opportunities ahead, such as the ability to monetize each of the 20 million cars sold by charging a monthly $100 fee for autonomous driving features. "That alone is worth the present price of the stock in 10 years," he said. See also: How to Invest in Tesla Stock What's Next: The billionaire himself said he has not sold a single share he personally owns and is unlikely to do so "for another 10 years." Tesla's stock traded around $657 a share at publication time. See more from BenzingaClick here for options trades from BenzingaExclusive: Grayscale CEO 'Wouldn't Rule Out' Future Bitcoin ETF Launch In US© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Oil Prices Spike on OPEC Surprise. How to Play It.

    Oil prices shot as much as 5% higher on Thursday as OPEC and its allies agreed to extend most of their production cuts through April, a sign that high prices could be here to stay. Oil company stocks jumped, too, often much more than the commodity, because prices this high will give many of them operating leverage. Because capital costs are high in the industry, oil company margins expand considerably once prices rise above $50 and companies have fully paid for the cost of the equipment and labor they need to extract oil.

  • China’s Top Stock Funds Trashed by $111 Billion Moutai Wipeout

    (Bloomberg) -- The most popular stock trade in China is unraveling, tarnishing the reputations of some of the country’s most successful money managers and undermining the outlook for the world’s second-largest equity market.Until three weeks ago, buying the nation’s beloved liquor maker Kweichow Moutai Co. was a surefire way for the $3 trillion mutual fund industry to mint money and attract bumper inflows. The stock soared 30% year-to-date through its Feb. 10 record, after gaining almost 70% in 2020 -- and doubling in the year before that.Many funds, flush with a record amount of cash, didn’t have a choice if they wanted to keep their clients and attract new investors. Buying Moutai was the simplest and most effective way to top rankings -- until it wasn’t. The stock began tumbling after the Lunar New Year break, and kept falling. It’s now down 22% since its peak, including a drop of as much as 6% Thursday, and has lost more than $111 billion in value.One of the most high-profile casualties is E Fund Management Co.’s Zhang Kun, the first in China to oversee 100 billion yuan ($15 billion). Zhang’s E Fund Blue Chip Selected Mixed Fund is down 12% in 10 trading days after returning 95% last year largely due to a big bet on baijiu, the Chinese white spirit. The fund had 9.6% of its assets invested in Moutai as of December. Another fund run by Zhang has lost 23%. Zhang didn’t immediately reply to a request for comment.The fund manager has received “verbal abuse” in recent weeks by investors who were previously fans, according to a report Wednesday in China’s state tabloid Global Times. He was known as “Prince Charming” or “Brother Kun” among his investors, who now refer to him on social media as “Kun Gou” or “Kun the dog” -- an offensive term in Chinese.Other copycat money managers will be feeling the pain: recent data showed two-thirds of mutual fund assets were invested in only 100 stocks, while the top 400 stocks lured 93% of total funds. Although China’s onshore market contains more than 4,000 stocks, Moutai is by far the largest with a market value of about $390 billion.Moutai accounts for 27% of the loss in the FTSE China A50 Index of the nation’s largest companies since Feb. 10. When added together with fellow spirit makers Wuliangye Yibin Co. and Luzhou Laojiao Co., the three comprise more than half of the gauge’s decline.Concern had been growing about the stretched valuations of Moutai and its peers, especially as gains accelerated. A gauge tracking consumer staples, including liquor makers, traded at a record 36 times projected 12-month earnings in February.Read how China is warning against ‘entertaining’ investors with fund pitchesTo be sure, the company’s shares have faced plenty of risks in the past. The stock tumbled about 8% in a single day in July after the People’s Daily criticized the high price of the company’s liquor. In 2017, Xinhua News Agency said the stock was rising too fast, triggering a selloff. Back in 2013, the stock plunged when Xi Jinping came to power and clamped down on lavish spending by party cadres.But this time around, authorities have grown increasingly concerned about risks to the financial system posed by excess liquidity. On Tuesday, China’s top banking regulator jolted markets with a warning about the need to reduce leverage amid the rising risk of bubbles globally and in the local property sector. With Moutai being the best-known proxy for liquidity-fueled bets and momentum, fund managers will likely need to find a new strategy to protect their returns.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.