PennyGem’s Elizabeth Keatinge tells us when a credit card payment is considered late.
PennyGem’s Elizabeth Keatinge tells us when a credit card payment is considered late.
(Bloomberg) -- Joe Biden’s tax hike proposals will deal a blow to corporate earnings growth next year, Goldman Sachs Group Inc. strategists warned, highlighting a headwind for U.S. equities following a rally that has pushed prices to record highs.The U.S. president wants to raise corporate income tax to 28% and set a 21% minimum levy on global corporate earnings. The ambitious package is set to face resistance in Congress, before a potentially revised version goes into effect next year.Goldman strategists including David J. Kostin write in a note that in the unlikely scenario that no tax reforms are adopted, the S&P 500’s annual earnings per share will grow by 12% to $203 next year. However, full adoption of the Biden proposals would cut growth to just 5% or $190.“Legislation will be heavily negotiated,” the strategists wrote, adding their current estimate for a 9% earnings per share growth assumes that taxes will rise. The strategists predict that a statutory rate hike to 28% would shave off $8 from EPS growth next year, the foreign income rate hike would cost $5, while a minimum corporate rate of 15% would erase $1.The president plans to meet with a bipartisan group of centrist lawmakers on Monday as part of his pitch to support initiatives that he said would address inequality, strengthen the U.S. economy and rebuild the country’s infrastructure. Centrist Democrats like West Virginia’s senator Joe Manchin have said that the current tax proposal goes too far.U.S. equity futures retreated on Monday, following a third straight week of gains and fresh records for the S&P 500 Index.While global stocks have rallied on the expectation that economies will rebound as vaccinations against the coronavirus progress, cash-starved governments are under pressure to raise corporate taxes following an unprecedented spending spree to cushion the blow from the steepest recession in living memory.The Biden administration has floated a proposal for a new international tax code that would hit as many as 100 global corporate giants with a levy on their revenue. A push by European Union members to tax more of the income on the countries where tech giants do business had been stalled, amid a pushback from Donald Trump’s administration.(Updates with breakdown of EPS cost in fourth paragraph, U.S futures update in 6th)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.
Sales at French luxury goods group LVMH bounced back far more quickly than expected in early 2021, carried by demand for Louis Vuitton handbags and Dior products as Chinese and U.S. shoppers made the most of an easing of COVID-19 restrictions. LVMH, the sector's biggest company and owner of more than 70 brands ranging from Moet & Chandon champagne to Guerlain cosmetics, on Tuesday posted first-quarter revenues that even exceeded 2019 levels, before the pandemic.
(Bloomberg) -- Nomura Holdings Inc. is beginning to tighten financing for some hedge fund clients following the Archegos Capital Management LP fiasco that may cost Japan’s biggest brokerage an estimated $2 billion, according to people familiar with the matter.The restrictions include curbing leverage for some clients previously granted exceptions to margin financing limits, one of the people said, declining to be identified as the details are private. A representative for the Tokyo-based firm declined to comment.Nomura is taking steps to reduce risk at its prime brokerage unit in the wake of the Archegos collapse that may result in combined losses of $10 billion for global banks, according to estimates from JPMorgan Chase & Co.The Japanese brokerage joins a swathe of high-profile lenders caught up in the failure including Credit Suisse Group AG, which disclosed a first-quarter charge of 4.4 billion Swiss francs ($4.76 billion) for its ties to the New York-based firm.Credit Suisse has also been tightening financing terms for hedge funds and family offices, in a potential revamp of new industry practices after the blowup, people with direct knowledge of the matter said last week. The Swiss bank is also planning a sweeping overhaul of the hedge fund business at the center of the incident.‘Too Early’Nomura is examining the cause of the possible losses and it’s too early to say how it might impact earnings, an executive at the firm said in March, asking not to be identified. They declined to say how much the company has unwound positions linked to Archegos, which made highly leveraged bets on stocks that imploded when the investments suddenly lost value last month.Under Kentaro Okuda, who became chief executive officer last April, Nomura’s net income reached a 19-year high for the nine months ended in December, driven by a boom in trading and investment banking at home and overseas. The brokerage said in late March that it had an estimated $2 billion claim against a U.S. client, which Bloomberg identified as Archegos. The announcement sent the stock plunging 16% on March 29.Although Nomura is yet to confirm exactly how much it will lose from Archegos, SMBC Nikko Securities Inc. analysts led by Masao Muraki have said that it may post a 95 billion yen loss in the fourth quarter as a result of the trades.The brokerage isn’t the only Japanese financial institution taking a hit from Archegos. Mitsubishi UFJ Financial Group Inc.’s securities unit is booking a $270 million loss from the debacle, while Mizuho Financial Group Inc. faces about 10 billion yen in potential losses, Bloomberg has reported.Prime-brokerage divisions cater specifically to hedge funds, lending them cash and securities and conducting their trades. The relationships can be very lucrative for investment banks as well as a significant source of revenue.(Updates with details in eighth and 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.
(Bloomberg) -- The European Investment Bank plans to harness the power of blockchain to sell bonds, potentially boosting use of the digital-ledger technology as a tool for the region’s debt market.The European Union’s investment arm hired Goldman Sachs Group Inc., Banco Santander SA and Societe Generale AG to explore a so-called digital bond in euros, which would be registered and settled using blockchain, according to information from a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.Investor meetings for the inaugural sale will start April 15 and continue for some weeks, the person said.The EIB has often been at the forefront of innovation in Europe’s debt capital markets, being among the first to issue green and sustainability bonds, as well as debt benchmarked against a new euro short-term rate called ESTR. The move comes after European Central Bank President Christine Lagarde said the institution she leads could launch a digital currency around the middle of this decade.A spokesperson for the EIB declined to comment further when contacted by Bloomberg News.Not MainstreamA number of issuers globally including the World Bank, China Construction Bank Corp., JPMorgan Chase & Co. and National Bank of Canada have been experimenting with blockchain-based issuance in the past few years, but its use in debt markets is still far from mainstream.The technology used for verifying and recording transactions that’s at the heart of cryptocurrencies has faced hurdles to wider adoption, and the pandemic has caused delays in some projects.Blockchain has a longer history in loans and Germany’s Schuldschein debt market. Automaker Daimler AG was the first to sell a 100 million euros ($119 million) of Schuldschein using blockchain in 2017. Telefonica SA’s German unit also used blockchain in early January to raise a 200 million-euro loan.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.
It’s a busier day ahead on the economic calendar after some key stats from the Asian session. The EUR, the GBP and the Greenback will be in focus later today.
The S&P 500 closed at another record high on Tuesday and the Nasdaq composite index jumped, as investors shook off concerns about the halt in Johnson & Johnson's COVID-19 vaccine rollout and strong U.S. inflation. The news came as U.S. data showed the consumer price index (CPI) in March rose by the most in more than 8-1/2 years, kicking off what the majority of economists expect will be a brief period of higher inflation. U.S. futures initially dropped on the J&J news, but pared losses after the CPI data.
GBP/USD settled above 1.3710 and is testing the next resistance at 1.3745.
IPO Edge, in partnership with The Palm Beach Hedge Fund Association, will host a live panel and virtual tasting with Bespoke Capital Acquisition Corp. (NASDAQ: BSPE) and Vintage Wine Estates on Thursday, April 15 at 4 PM EDT. The live event will feature Bespoke Capital CEO Mark Harms, Vintage Wine Estates President Terry Wheatley, Vintage Wine […]
(Bloomberg) -- The Bank of England’s Chief Economist Andy Haldane will step down in June, removing the the Monetary Policy Committee’s most outspoken contrarian and inflation hawk.Haldane, 53, will leave after career spanning more than three decades at the central bank to become chief executive officer at the Royal Society for Arts, Manufactures and Commerce starting in September. He will remain in place through the bank’s rate decision on June 24. He’s departing as the U.K. emerges from its worst recession in three centuries, which pushed the central bank to unleash unprecedented stimulus including 150 billion pounds ($206 billion) of bond purchases this year. Haldane alone on the nine-member policy panel voiced concerns about inflation accelerating with a rapid bounce-back in growth as Prime Minister Boris Johnson winds back restrictions to contain the Covid-19.“The most interesting element to me is that he is probably the arch-hawk on the MPC, and his removal will certainly see a more dovish tone seep into meetings,” said Stuart Cole, chief macro strategist at Equiti Capital and a former BOE economist.Bank of England Governor Andrew Bailey will appoint a successor after the bank advertises the position. While the chief economist traditionally also sits on the MPC, it’s the Treasury’s decision to name members to that panel.In recent months, Haldane has warned about the risk of excessive pessimism about the economic outlook as the pandemic winds down, terming it “Chicken Licken” economics that could undermine the recovery.While many of his colleagues point out concerns about rising unemployment and signs of sluggishness in the economy, he said he expects a “rip-roaring recovery” and on inflation said a “tiger has been stirred” that may “prove difficult to tame.”Several economists said the improving outlook for the U.K. economy has already shifted debate on the MPC away from extra stimulus and toward whether the pace of bond purchases need to slow -- or even an eventual tightening in policy.“In 2022 the BOE is likely to set out an exit strategy from its ultra-easy policy stance before hiking the bank rate in 2023,” said Kallum Pickering, senior economist at Berenberg.Haldane joined the BOE in 1989 after gaining a masters in economics from Warwick University.He logged experience at the central bank in international finance, market infrastructure and financial stability during the financial crisis before clinching his current role under previous Governor Mark Carney in 2014. That year, “Time” magazine named him one of the world’s 100 most influential people.Haldane is known for his occasionally quirky speeches. He once used Dr. Seuss to bemoan the reading age needed to understand the central bank’s communications.His words sometimes raised eyebrows, notably when he compared pre-crisis economic projections to a famously inaccurate forecast by BBC weatherman Michael Fish before a 1987 storm that killed 18 people.In 2012, he drew the ire of his future boss with a speech -- titled “The Dog and the Frisbee” -- which called for simplicity in banking regulation. Carney, who was then the Bank of Canada governor and head of the global Financial Stability Board, said the speech was “uneven” and the conclusion “not supported by the proper understanding of the facts.”Haldane has also led the government’s Industrial Strategy Council until it was dissolved a few weeks ago and is the co-founder of charity Pro-Bono Economics.“If your business is trying to predict rates and quantitative easing, it will be a bit easier without Andy’s speeches somewhat clouding the issue,” said Tony Yates, a former BOE official who worked with Haldane. “If you’re trying to get up to speed on the latest things in monetary economics and finance, then it’s less good because there won’t be Andy picking up new things and explaining them.”(Updates with context and comment from the first 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 S&P 500 and the Dow Jones indexes retreated from record levels on Monday, as investors geared up for the start of the corporate reporting season and a key inflation report later this week. A pullback in the benchmark 10-year bond yield from 14-month highs in April eased worries about higher borrowing costs, helping richly valued technology stocks gain ground and drive the S&P 500 and the Dow to record levels. Among the 11 major S&P 500 sectors, technology and communication services shares were the top decliners, after the Russell 1000 Growth index outperformed the Russell 1000 Value index for the last two consecutive weeks.
(Bloomberg) -- Abu Dhabi sovereign wealth fund Mubadala Investment Co. said it’s “close” to an initial public offering of Emirates Global Aluminium PJSC as it studies other major deals including a role in a consortium investing in Saudi Aramco’s oil pipelines.“We’ve been thinking about this for a couple of years and waiting for the right time for that business to be IPO’d,” Chief Executive Officer Khaldoon Al Mubarak said on Monday when asked about EGA, the Middle East’s biggest producer of aluminum. “We’re very close now.”Coming off its busiest year ever, the $232 billion fund has shown little sign of slowing down in 2021, striking deals ranging from purchasing a Brazilian refinery to investing in convertible bonds of messaging app Telegram.EGA, which is equally owned by Mubadala and Investment Corp. of Dubai, has smelters in Abu Dhabi and Dubai and a bauxite mine in Guinea. Its revenue in 2020 was $5.1 billion and it made earnings before interest, tax, depreciation and amortization of $1.1 billion.The company had planned an IPO in 2018 or 2019 but it was pulled after then-U.S. President Donald Trump imposed tariffs on aluminum imports from the United Arab Emirates. His successor Joe Biden said in February that he would keep the U.S. restrictions in place, reversing Trump’s last-minute move to grant the UAE relief from the duties.“We will decide, obviously, when the appropriate market conditions are there, but the company is certainly in a very strong position and I think is well placed for an IPO,” Al Mubarak said during a virtual conference.EIG TalksMubadala is meanwhile considering other deals. It hasn’t yet decided whether to join a group led by EIG Global Energy Partners LLC that agreed on a $12.4 billion deal with Aramco.The wealth fund has teams studying the opportunity and looking at possible returns on investing in neighboring Saudi Arabia, according to Al Mubarak. It’s previously said that it was in talks with EIG.According to an announcement last Friday, the investors will buy 49% of Aramco Oil Pipelines Co., a recently-formed entity with rights to 25 years of tariff payments for crude shipped through the Saudi Arabian firm’s network. Aramco will own the rest of the shares and retain full ownership of the pipelines themselves.Read more: Mubadala Discusses GlobalFoundries IPO at $20 Billion Value Mubadala has also made no decision about a share sale of its wholly-owned chipmaker GlobalFoundries, according to Al Mubarak. Earlier this month, Bloomberg reported that the wealth fund had started preparations for a U.S. IPO that could value the business at about $20 billion.“GlobalFoundries is a strong, well-run business,” Al Mubarak said. “We have not taken a view or a decision yet.”India PushAfter an initial pause after the pandemic first hit, the wealth fund doubled down and invested more in 2020 than in any previous year, the CEO said.India emerged as one key destination for Mubadala’s money, with its investments there in 2020 eclipsing the combined total of the preceding 19 years, Al Mubarak said.The wealth fund invested $1.2 billion in Reliance Industries Ltd.’s digital upstart Jio Platforms Ltd. in 2020, a deal that gave Mubadala a 1.85% stake in the venture.“Clearly, we were underweight in terms of India” and “over the last many years we didn’t invest as much as we should,” the CEO said. “That’s changing, and as far as we’re concerned in Mubadala, we’re certainly giving it a very particular focus.”(Updates with details on EGA in fourth 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) -- Gap Inc. and Synchrony Financial are parting ways after they couldn’t reach an agreement to renew their longstanding card partnership.The clothing retailer has decided to shift the portfolio to Barclays Plc beginning in May 2022, it said in a statement Tuesday. Synchrony said in a regulatory filing that it expects to recognize a gain on the sale of the portfolio when it unloads it next April.“Synchrony was unable to reach contractual and economic terms with Gap that made sense for our company and our shareholders,” the Stamford, Connecticut-based firm said in the filing.Synchrony shares dropped 3.7% to $41.55 at 2:34 p.m. in New York, the second-worst performance in the 65-company S&P 500 Financials Index. The lender plans to use about $1 billion of the proceeds from the sale of the portfolio to buy back shares and invest in “higher growth programs,” according to the filing.Gap and Synchrony have offered cards together for more than two decades, and the lender counts the retailer as one of its five largest partners. The portfolio represents about 5% of the bank’s roughly $80 billion in receivables.It’s the second time Synchrony has opted not to renew a partnership with a major retailer after Walmart Inc. shifted its portfolio to Capital One Financial Corp., a move that was first announced in 2018. The decision comes just a few weeks after the lender installed Brian Doubles as its new chief executive officer, replacing its longtime leader, Margaret Keane.“This is a speed bump,” Jon Arfstrom, an analyst at RBC Capital Markets, said in a note to clients. “We do not believe this loss (and Walmart in 2018) are due to any uncompetitive positioning for Synchrony, and we believe it comes down to preferences and negotiations and bottom-line profitability.”Gap, like most of its mall-based peers, has struggled to attract customers during the coronavirus pandemic. “We faced one of the most difficult years in our company’s history,” Chief Executive Officer Sonia Syngal said last month as Gap capped its fiscal year with fourth-quarter sales that fell short of Wall Street’s expectations.What Bloomberg Intelligence Says:“Revenue and earnings from the Gap partnership have been steadily shrinking, so the retailer’s move to Barclays should reduce Synchrony’s costs and shift resources to new, high-potential cards with Venmo and Verizon.”-- David Ritter, BI fintech analystClick here to read the research.Its Banana Republic brand, which primarily sells work clothes, has been particularly weak. One bright spot for the retailer is its Athleta activewear brand, which passed $1 billion in sales in 2020.Gap said the new credit-card program will be a key component of the revamped rewards program it launched in September. Barclays will issue both private label and co-brand credit cards for Gap, with the latter using Mastercard Inc.’s payment network.“With our shared values and focus on inclusion, we look forward to working with Gap Inc. and Barclays to deliver an enhanced card program to their customers,” Linda Kirkpatrick, president of Mastercard’s North America business, said in an emailed statement.It will be Barclays’s first private-label card, and the bank has already begun investing in the systems it will need to provide the program, said Denny Nealon, CEO of the U.S. consumer bank at Barclays. The bank has also recently been investing in data and analytics and other efforts to improve technology.Barclays has been looking to diversify its card partnerships, which have long focused on airlines, cruises and hotel chains. The firm recently debuted a new card with the nonprofit AARP.“We’re absolutely thrilled to join forces with Gap, it’s an iconic American brand, its got a huge customer base,” Nealon said. “We think we can help them drive growth and success.”(Updates with executive commentary beginning 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.
A gauge of global shares rose on Tuesday, led by surging technology-related stocks, as Treasury bond yields eased on U.S. consumer price data for March that showed the pace of inflation was not spiking wildly, as some feared. The consumer price index jumped 0.6%, the largest gain since August 2012, as increased vaccinations and massive fiscal stimulus unleashed pent-up demand. "We're just going to have a temporary flame-up in prices but there will not be any structural inflation that's here to stay," said Carlo Franchini, head of institutional clients at Banca Ifigest SpA in Milan.
Singapore state investor Temasek Holdings and BlackRock, world's largest asset manager, said on Tuesday they have launched a partnership to invest in firms with products and technologies that will reduce carbon emissions. BlackRock and Temasek are committing a combined $600 million in initial capital to invest in multiple funds launched by the partnership, called 'Decarbonization Partners', which has a fundraising target of $1 billion for its first fund and will also raise third-party capital, the companies said in a joint statement.
(Bloomberg) -- Jack Ma’s Ant Group Co. will drastically revamp its business, bowing to demands from Chinese authorities that want to rein in the country’s fast-growing Internet giants.Ant will now effectively be supervised more like a bank, a move with far-reaching implications for its growth and ability to press ahead with a landmark initial public offering that the government abruptly delayed late last year.The overhaul outlined by regulators and the company on Monday will see Ant transform itself into a financial holding company, with authorities directing the firm to open its payments app to competitors, increase oversight of how that business fuels it crucial consumer lending operations, and ramp up data protections. It will also need to cut the outstanding value of its money-market fund Yu’ebao.The directives come as China’s regulators pledge to curb the “reckless” push of technology firms into finance and crack down on monopolies online. The twin pillars of Ma’s empire -- Ant and e-commerce giant Alibaba Group Holding Ltd. -- have been at the center of the increased scrutiny, sending a message to the country’s largest corporations and their leaders to fall in line with Beijing’s priorities.Several government agencies, including the People’s Bank of China, and regulators overseeing the banking and securities sectors met with Ant to dictate the changes. The company will plan its growth “within the national strategic context,” and make sure that it shoulders more social responsibility, Ant said in its statement.Regulators have also slapped a record $2.8 billion fine on Alibaba this month after an anti-trust probe found the e-commerce company abused its market dominance.“The darkest hour for Alibaba has passed, but I wouldn’t say so for Ant Group,” said Dong Ximiao, chief researcher at Zhongguancun Internet Finance Institute. “The latest announcement clarified the framework for Ant’s restructuring, but the tone is still harsh and some of the requirements are tougher than expected. I don’t think the overhang is removed for Ant investors at this stage.”While the revamp leaves Ant’s main businesses intact, regulators are making it harder for the firm to exploit synergies that allowed it to direct traffic from its payments service Alipay -- which has a billion users -- to other financial services including wealth management, consumer lending and even on-demand neighborhood services and delivery.Authorities now require Ant to cut off any improper linking of payments with other financial products including its Jiebei and Huabei lending services. Ant said it will fold those units into its consumer finance arm, apply for a license for personal credit reporting, and improve consumer data protection.Ant could add more credit borrowing options on Alipay instead of setting Huabei as the default or preferred option, Thomas Chong, a Hong Kong-based analyst with Jefferies Financial Group Inc., wrote in a report, adding that synergies between Huabei and Yu’ebao could be affected.“Ant’s growth prospects just became a lot more challenging, given it will be much more difficult to capitalize on its scale,” said Mark Tanner, founder of Shanghai-based consultant China Skinny. “These growth challenges, in addition to the wider concerns about the tech sector regulators, makes their IPO value and attractiveness a shadow of what it was.”Ant Chairman Eric Jing promised staff last month that the company would eventually go public. Bloomberg Intelligence analyst Francis Chan has estimated the firm’s valuation may drop about 60% from the $280 billion it was pegged at last year given the rule changes being contemplated in areas including payments.Payments FocusChanges to the payments business were among the top priorities regulators outlined, with Ant pledging to return the business “to its origin” by focusing on micro-payments and convenience for users.Earlier this year, China proposed measures to curb market concentration in online payments, which Ant and rival Tencent Holdings Ltd. have transformed with their ubiquitous mobile apps that are used by a combined 1 billion people.The central bank said in draft rules that any non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to antitrust probes.If a monopoly is confirmed, the central bank can suggest that cabinet impose restrictive measures including breaking up the entity by its business type.Mobile payments are only part of what contribute to online transactions, but they have become the most important platform in China, fueling growth in other services.Investors are also awaiting final rules aimed at curbing online consumer lending, which were unveiled late last year.Given all the changes still down the track, an Ant IPO remains “far, far away,” said Zhongguancun Internet Finance Institute’s Dong.“The PBOC statement emphasizes risks and correction, while Ant Group’s statement sounds positive to investors,” Shujin Chen, the Hong Kong-based head of financial research at Jefferies, wrote in a report. “Ant will be the first financial holding company in China, a milestone in fintech regulation. Ant sees a clearer roadmap to restructure, although some details remain unclear.”(Updates with Ant comment in fifth paragraph, analyst comment in tenth)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.
Roth accounts serve a special tax purpose — they’re funded with after-tax dollars and thus, are distributed tax-free (compared with a traditional account, where the money is contributed and grows tax-free but is taxed at withdrawal). Roth conversions are similar — investors move the money from their traditional accounts into Roth accounts and pay the tax upfront.
State mortgage programs offer thousands of dollars in student loan relief.
Bitcoin surged to a record high on Tuesday, a day ahead of Coinbase Global’s public stock listing — the latest coming-out party for cryptocurrencies. The price of Bitcoin rose as high as $63,209 before giving back some of those gains, according to Coindesk. This pattern of Bitcoin hitting new highs ahead of a major event is not new.
Bitcoin has picked up a tail wind in the lead up to Coinbase's stock listing on Nasdaq
Our call of the day from Bank of America narrows down where investors see the most risk these days. Fingers are pointing at the world's most popular cryptocurrency.