Alan Valdes, Director of Floor Operations at Silverbear Capital, joins Yahoo Finance's Alexis Christoforous from the floor of the New York Stock Exchange to discuss recent strength in the US dollar.
Alan Valdes, Director of Floor Operations at Silverbear Capital, joins Yahoo Finance's Alexis Christoforous from the floor of the New York Stock Exchange to discuss recent strength in the US dollar.
ZURICH (Reuters) -Credit Suisse has made further progress in winding down funds connected with Greensill Capital and is able to distribute another $1.7 billion to investors, the bank said on Tuesday. The bank said it has so far collected $2 billion from receivables redeemed when the four supply chain finance funds (SCFFs) were suspended on March 1. This, along with the cash position in the SCFFs and the earlier payout, comes to $5.4 billion - equivalent to more than half of the total assets under management when the funds were suspended, Credit Suisse said.
(Bloomberg) -- Hedge funds look steadfastly bullish on the Australian dollar despite its decline against the greenback in March. The nation’s employment data this week may provide an insight into why.The currency saw its worst performance in five months against the dollar in March, falling 1.4%, as a combination of rising Treasury yields and confirmation of the Reserve Bank of Australia’s dovish monetary policy weighed. However, signs are emerging that the Aussie could be due for a rebound after key support around the $0.75 level remained intact, a closely-watched gauge of momentum known as slow stochastics turned bullish and the economy continues to trump expectations.Leveraged funds are certainly signaling that they think the currency will strengthen. Speculators increased their net long Aussie positions to the highest since November by the end of March despite the currency’s weakness, before a modest pullback last week, according to Commodity Futures Trading Commission data.Bulls searching for catalysts to spur the currency higher may have to look no further than this week’s Australian employment data. The unemployment rate fell to an eleven-month low of 5.8% in February, and a further decline this week could boost the Aussie as confirmation the economy is on a strong footing.Gross domestic product grew by a larger-than-expected 3.1% year-over-year in the final three months of 2020.A falling unemployment rate isn’t the only positive factor for Australia’s currency. Treasury yields look to have put a near-term high in place, retreating from their recent peak despite strong U.S. employment and ISM data. In addition, iron ore prices remain close to this year’s highs, helping to support the Aussie.The Australian dollar “can appreciate further because it is undervalued relative to its fundamentals,” Commonwealth Bank of Australia strategists including Kim Mundy wrote in a recent note. “We forecast a further strengthening in commodity prices over 2021.”There are still headwinds facing the Aussie, including an expected cut in Chinese steel production and carbon border fees which could weigh on the currency, the strategists added.But the risks still appear skewed to the currency appreciating against the dollar over coming months, with a rise to $0.80 possible by June, they concluded. The Aussie traded around the $0.7620 level Monday.Below are the key Asian economic data and events due this week:Monday, April 12: India CPI and industrial production, Japan PPITuesday, April 13: Australia business confidence, China trade balance, New Zealand retail card spendingWednesday, April 14: RBNZ policy decision, Singapore 1Q GDP and MAS policy decision, Japan core machine orders, India wholesale pricesThursday, April 15: Australia employment, Bank of Korea policy decision, Indonesia trade balance, Philippine overseas remittances, India trade balanceFriday, April 16: China 1Q GDP, industrial production, retail sales and fixed assets ex-rural, New Zealand BusinessNZ manufacturing PMI, Singapore NODXFor 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) -- Air Canada reached a deal with the Canadian government for loans and equity worth nearly C$5.9 billion ($4.7 billion), a package to help the airline get through the pandemic and restore flights to remote parts of the country.The state, which sold off its ownership interest in the 1980s, will once again own a piece of Canada’s largest airline, buying C$500 million of shares at a discount. Prime Minister Justin Trudeau’s government also negotiated warrants as part of a broad financing agreement that makes Air Canada eligible for five new credit facilities totaling C$5.38 billion, according to a company statement.In return for the money, Air Canada agreed to restrict share buybacks and dividends, keep employment at April 1 levels and follow through on a deal to buy 33 Airbus SE A220s made at a factory in Quebec. Executives won’t be allowed to earn more than C$1 million. And the airline will resume service on routes its suspended to distant locations such as Gander, Newfoundland and Yellowknife, in the country’s far north.The dilution for shareholders “was greater than we had anticipated,” Kevin Chiang, an analyst at Canadian Imperial Bank of Commerce, said in a note. If all the warrants were exercised, the government would own 9.7%, he said. The long-anticipated announcement will ease tensions between the industry and Trudeau’s government, which since last March has barred most foreign travelers from entering the country and recently made the rules even tougher.Air Canada repeatedly complained that its home country was the only Group of Seven member without an aid plan specifically for the aviation sector -- although the company has used federal wage subsidies available to all industries hit by the pandemic.“We wanted a good deal, not just any deal. And getting a good deal can sometimes take a little time,” Finance Minister Chrystia Freeland said at a news conference Monday evening.Air Canada also committed to paying back customers who didn’t take flights they had booked because of Covid-19. One of the credit facilities, a C$1.4 billion line, is dedicated to financing refunds.‘Solid Guarantees’Air Canada will issue 21.6 million new shares. While the equity component is “somewhat surprising,” the package is “the money that’s needed,” said Robert Kokonis, managing director of Toronto-based aviation consulting firm AirTrav Inc.“It’s going to take a lot of aid for carriers. We’ve been through a lot. We’ve been on standby while airlines in countries around the world have received one or more aid packages,” Kokonis said.Freeland said talks are ongoing with other airlines, including WestJet Airlines Ltd., controlled by Toronto-based investment firm Onex Corp. Tour operator Transat AT Inc. also needs money and has said it’s talking to the government after a deal to be taken over by Air Canada fell apart.“Wherever and whenever the federal government provides public aid, the supported company will have to give solid guarantees, as Air Canada did, that the public interest will be respected, workers protected, and travelers’ interest defended,” Freeland said.As of March 18, government financing for the airline industry globally -- including loans and equity stakes in exchange for cash -- has totaled more than $183 billion, according to Ishka Ltd., an aviation finance and investment consultancy.Before Monday’s agreement, Canada’s most visible lifeline to the industry was a combined C$375 million in emergency loans to Sunwing Airlines Inc. and Sunwing Vacations Inc., a small vacation operator.Air Canada said it will only draw down the new credit facilities “as required”. The package includes C$2.48 billion in unsecured loans.“This program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term,” Chief Executive Officer Michael Rousseau said in a statement.(Adds analyst quote 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) -- Two of the world’s most powerful money managers are joining forces to build a business on climate-change investing and raise one of the largest venture-capital funds dedicated to carbon-cutting technologies.BlackRock Inc. and Singapore’s Temasek Holdings Pte. formed a new firm, Decarbonization Partners, to take stakes in startups that have the potential to reduce the world’s reliance on fossil fuels and meet the goal of zero-carbon emissions in three decades. They’re committing a total of $600 million to the effort, including $300 million of seed capital for a $1 billion first fund, and raising the rest from outside investors.Eventually, Decarbonization Partners aims to manage billions across multiple funds, BlackRock Chief Executive Officer Larry Fink said in an interview with Bloomberg Television, adding, “I look at this as one of the greatest investment opportunities over our lifetimes.”Although renewables are displacing coal in power generation and electric vehicles can be cost-competitive with gasoline-driven cars, there are no viable solutions for problems like large-scale storage of energy or clean alternatives to carbon-intensive cement and steel production. Hydrocarbons still dominate much of the economy because they're cheap and easy to transport.Today, the pools of money dedicated to clean tech are growing, but managers tend to focus either on the bleeding edge of innovation or cash-flowing assets such as solar arrays and wind farms. BlackRock and Temasek are zeroing in on late-stage VC, the point at which startups need greater amounts of capital to manufacture at scale and expand into new markets.“As you look at the transition to greener options, there is obviously a need to address the gulf between the cost of what’s available today and the cost curve of those solutions,” Dilhan Pillay Sandrasegara, CEO of Temasek International, said. “That’s why private capital is required, to give these solutions a chance of making it to commercialization, to where the cost curves can be brought down to the levels of non-green options or even lower.” Breakthrough Energy Ventures, founded by Bill Gates in 2015, is currently the largest VC player in sustainable energy. It has raised more than $2 billion for early-stage investing, where the risk of failure is high, and anticipates holding its stakes for 20 years or longer. Another, Energy Impact Partners, has raised $1.7 billion, mainly from power utilities and industrial companies.More money is flowing into carbon-related investing. Dealmakers Chamath Palihapitiya and Ian Osborne plan to raise at least $1 billion for a publicly traded vehicle. Venture funding for climate tech startups totaled $16 billion in 2019, up from about $400 million in 2013, according to a PwC report published last year.The first climate-investing boom between 2006 and 2011 ended poorly, with venture funds losing more than half the $25 billion invested. One notable bankruptcy was Solyndra, a solar-panel startup with financing backed by U.S. taxpayers.Decarbonization Partners will operate like a traditional VC fund, asking investors to lock up money for about a decade and targeting annualized returns of about 20%. Fink offered $5 billion as a longer-term goal for assets under management.“We’re going to be testing this, we’re going to be building it, we’re going to have proof of concept and then we’ll see,” he said. “This is not tens of billions of dollars. It may lead to those types of large-scale investments, but it doesn’t need to be that large-scale.”Temasek, a state-owned investor that oversees about $230 billion, has pledged to reduce net-carbon emissions by its portfolio companies to half their 2010 level by 2030 and to zero by 2050. Because it controls Singapore Airlines, one of Temasek’s priorities is finding a sustainable and cost-effective alternative to jet fuel. Pillay and Fink described their shared interest in making green hydrogen a practical replacement for fossil fuels. Decarbonization Partners also is targeting technologies in battery storage, autonomous driving and power grid reliability, as well as materials and process innovation for industries and infrastructure.As the world’s largest asset manager, New York-based BlackRock has the reach and client relationships to marshal capital into new investment vehicles. Just last week, it raised $4.8 billion to buy renewable-power facilities and separately raised $1.5 billion from Temasek, the California State Teachers’ Retirement System and others for two exchange-traded funds. The ETFs use proprietary research and analytics to find stocks that’ll benefit in the low-carbon transition.Fink has taken a vocal stance in the fight to reduce carbon emissions, declaring climate change an investment risk and pushing for sustainability. In his annual letter to CEOs in January, he said companies must disclose plans for making their business models compatible with a net-zero economy.Read more: Fink Demands Net-Zero Disclosure as Climate Push StrengthensTemasek and BlackRock already are partners in a Chinese asset-management business and Temasek is one of BlackRock’s top shareholders. Pillay, who takes over as Temasek CEO in October, said he’ll judge the new venture’s success on two measures: the speed at which its investments help achieve carbon abatement in the economy, and profitability.“We’re not going to look at sacrificing returns,” he said. “We may have to wait longer, given the early-stage element of this partnership, but we do believe the returns will come.”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) -- Growing panic over the financial health of one of China’s largest bad-debt managers spilled into the broader market, as traders circulated a Caixin report that openly considered the worst-case scenario for the company.China Huarong Asset Management Co.’s $300 million 3.375% bond due May 2022 tumbled 13.1 cents on the dollar to 76.1 cents, while a 5% bond maturing in 2025 fell 12.1 cents to 77.3 cents, Bloomberg-compiled prices show. In a commentary dated Monday, Ling Huawei, managing editor of Caixin Media and Caixin Weekly, discussed the possibility of a China Huarong bankruptcy.The firm’s dollar bonds edged up from session lows after Bloomberg reported China’s finance ministry is mulling transferring its stake in China Huarong to a unit of the nation’s sovereign wealth fund that invests in financial companies. Some notes rose as much as 2 cents, though are still set for record closing lows.Moody’s Investors Service and Fitch Ratings said Tuesday they will review their ratings of China Huarong for a potential downgrade, following a similar announcement from rival S&P Global Ratings last week. The company is considered an investment-grade issuer by all three agencies.The selloff spread to other high-yield Chinese dollar notes on Tuesday, with some property bonds falling by a record. Asia’s investment-grade dollar debt spreads widened as much as 3 basis points, while a gauge of Asia credit risk widened for a seventh straight day, set for the longest rising streak since 2018.Chinese investment-grade dollar bond spreads widened by as much as 8 basis points, while prices on the nation’s high-yield notes fell as much as 3 cents on the dollar, according to credit traders. The CSI 300 Index of stocks fell 0.2%.“Huarong is a $22 billion curve and as a distressed situation it dwarfs anything that we have seen in the Asia credit market before,” said Owen Gallimore, head of trading strategy at Australia & New Zealand Banking Group. “This is a fatal event for a few trading desks and small funds.”Bonds linked to the company have plunged this month after China Huarong failed to publish its 2020 preliminary results by the March 31 deadline, with Caixin attributing the delay to plans for a significant financial restructuring. The stock has been suspended in Hong Kong since April 1. The company has until the end of the month to release its final earnings report. China Huarong’s biggest shareholder is the country’s Ministry of Finance.“Market speculation of a restructuring with haircuts for Huarong International bondholders is heavily damaging investor sentiment,” said Chang Wei Liang, a macro strategist at DBS Bank Ltd. in Singapore. “The continued silence of Chinese authorities on the predicament of a strategic state-owned institution as large as Huarong is also worrisome, as investors had anticipated at least a modicum of reassurance.”It’s unclear whether Chinese leaders have discussed the fate of China Huarong’s bondholders or outlined specific measures that the fund would take if it assumes control of the China Huarong stake.China Huarong has been under a shadow since its then-chairman Lai Xiaomin came under investigation in 2018. Under his watch, the company expanded into areas including securities trading, trusts and other investments, deviating from the original mandate of disposing bad debt. Lai was put to death earlier this year for bribery after a brief trial, an unusually harsh sentence for such a crime.The company is one of the four state-owned entities set up by China’s government in 1999 to help clean up a banking system riddled with bad debt. It listed in Hong Kong after a $2.5 billion initial public offering in 2015.China Huarong and its subsidiaries have some $42 billion worth of offshore and local bonds outstanding and 41% of that will come due by the end of next year, according to Bloomberg-compiled data. Dollar bonds make up about $22 billion of its outstanding notes.Because the debt load is so large and the company was previously seen as a safe bet, the securities are widely held by both local and international investors. Institutional investors such as BlackRock Inc. and Goldman Sachs Group Inc. previously disclosed they held Huarong bonds, had exposure to them via fund products or both, according to data compiled by Bloomberg.China Huarong has started trimming non-core assets amid regulatory pressure to return to its roots. Net income slumped 92% in the first half of 2020 from a year earlier as the value of some assets dropped in the wake of the Covid-19 pandemic. The company’s stock market value has tumbled to about $5 billion from $15 billion when it listed.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) -- 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.
(Bloomberg) -- Individual investors in India are rushing to buy corporate bonds from weaker borrowers, taking bigger risks to boost returns in a debt market dominated by institutional investors.Company note sales to retail investors have more than doubled from a year earlier to 67.2 billion rupees ($898 million) so far in 2021. A further 31 billion rupees of bonds that individuals can buy into are being marketed right now, and another 50 billion rupees of such debt is in the pipeline including a deal from India Grid Trust announced late last week.Many savers desperate for yield are likely to jump at the chance to buy such notes. That’s because they are struggling with persistent inflation pressure even as bank deposit rates have dropped to the lowest in more than a decade.Policy makers in India have long sought to deepen the local corporate bond market, as one of the world’s worst bad debt piles makes banks reluctant to lend and institutions avoid all but the highest-rated notes. But public debt offerings that individuals can take part in only totaled 71 billion rupees last year, equivalent to 0.8% sold by private placement to institutions.The pickings for retail investors also tend to be riskier: while about 66% of local-currency notes privately placed to professional investors so far in 2021 carry top rankings, only one of the nine issues being marketed or in the pipeline has a AAA rating.(Adds tout.)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) -- Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers.The price for a container of goods from China to the U.S. West Coast and European ports has hovered near record highs for several months, and conditions are ripe for more increases even though spot rates usually soften this time of year. What’s more, new contracts being signed by some of the biggest U.S. importers indicate the spike won’t be a short-term blip.Most large retailers and manufacturers sign annual deals with the ocean carriers to lock in their container freight rates, in private negotiations that typically take place this time each year.Along the bellwether trade lane linking Asia with North America, contract rates in recent weeks are coming in around $2,500 to $3,000 for a 40-foot container -- 25% to 50% higher than a year ago, according to George Griffiths, an editor on the global container freight-pricing team at S&P Global Platts.“That’s showing that people are expecting this to continue, that they’re not expecting rates to come down any time soon,” Griffiths said. The container carriers “are going into this in a significant position of strength,” he said.So snarled are the nation’s supply channels that they’ve caught the attention of Federal Reserve officials who are trying to set monetary policy based on the speed of the U.S. recovery and the outlook for inflation.While there are signs of solid factory activity in the coming months, “reports of shortages in materials and labor, as well as bottlenecks in transportation, signaled some potential restraints on the pace of the manufacturing recovery,” according to minutes released Wednesday of the central bank’s Federal Open Market Committee meeting on March 16-17.“We’re going to have a conversation about inflation,” said Jim Bianco, president and founder of Bianco Research, during an interview with Bloomberg Television. “If we see it, it’s going to have to accelerate the Fed.”Multiple HurdlesThe higher shipping costs have been sparked by a combination of factors, including soaring demand amid stimulus checks, saturated ports, and too few ships, dockworkers and truckers. The problems are too broad to be remedied by any short-term fix and are creating ripple effects across U.S. supply chains.They’re causing significant headaches for business owners like Arnold Kamler, the chief executive officer of Kent Bicycles.“I’m describing our businesses here as like trying to play Whack-A-Mole,” Kamler said in an interview. “You fix one problem and then something else pops up.”The CEO of the Fairfield, New Jersey-based bike producer, which employs 225 workers and imports its parts from Asia, said his shipping costs have more than doubled in recent months. On top of that, truckers are regularly missing appointments to pick up merchandise from warehouses, while a lack of parts is keeping production from meeting demand. Kent has raised prices on its bikes four times in the past 12 months, driven in part by freight costs, raw materials and tariffs.Unprecedented RiseGordon Downes, CEO of the New York Shipping Exchange, an online cargo platform, said that larger businesses can often secure better shipping rates thanks to the size of their orders. Smaller ones, however, are at the mercy of spot rates and price increases.“Especially if you’re not in a really big shipper that has a very sophisticated negotiating process and a lot of leverage, you’re forced to accept these contracts,” Downes said.For example, price hikes and surcharges imposed on the smaller businesses that use spot rates can be attributed to anything from weather and ship congestion to the cost of fuel and raw materials.Kamler said clauses in his contracts have let the container carriers charge premiums during the peak season, which he expects to run into mid-November. If he doesn’t accept the increases, he can’t build more bicycles. “When is a contract not a contract? It is when you sign a contract with a steamship company.” Kamler said.The World Shipping Council, which represents the liner industry, said the biggest logistical difficulties are on land and that the market is driven by supply and demand.“As shipping normally represents a small cost per unit for transported goods, demand is not very price sensitive,” John Butler, president and CEO of the Washington-based council, said in an emailed statement. “So, when demand outstrips capacity to the extent we see today, rates will rise.”Jim Estill, chief executive officer of Canada’s Danby Appliances, said cargo sometimes sits at ports for as long as 10 days before getting loaded on trains or trucks. That’s leading to higher prices: A freezer that might normally sell for $350 is now going for about $70 more because of the shipping issues. “Price increases are just going through now,” he said.Peak SeasonsIn the U.S. and elsewhere, ocean shipping usually has two peak seasons each year. One comes before the Lunar New Year as companies secure inventories before Chinese factories shut down for holidays, and the other starts from late summer to prepare for Christmas shopping.There was optimism that the interim period in 2021 could clear container backlogs, but the Suez Canal blockage last month added further strains that only dashed the hopes.Problems are surfacing across the corporate landscape. Nike Inc. said revenue declined 10% in its latest quarter due to supply chain challenges, including the container shortages and U.S. port bottlenecks.Kent’s Kamler said that normally he’d be extremely stressed out by the high shipping costs and a lack of parts. “The only saving grace is that all my competitors are in the same boat,” he said.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) -- 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.
The head of Switzerland's financial regulator FINMA questioned Credit Suisse over risks in its dealings with now-insolvent finance firm Greensill Capital "months" before the bank was forced to close $10 billion of funds liked to Greensill, Swiss newspaper SonntagsZeitung reported Sunday. Alongside formal discussions on a technical level between the bank and FINMA, the watchdog's head Mark Branson personally discussed the risks with outgoing Credit Suisse Chairman Urs Rohner and Chief Executive Thomas Gottstein during a meeting on an unspecified date, the paper reported, citing information it had obtained. FINMA declined to comment.
China's Xiaomi held on to its pole position in the world's second-largest smartphone market throughout 2020.
(Bloomberg) -- Stock investors in China are ignoring a spate of recent bullish earnings as worries about further liquidity tightening continue to weigh on market sentiment.A 1200% jump in Tesla Inc.-supplier Sichuan Yahua Industrial Group Co.’s first-quarter earnings guidance was followed by a slump of as much as 7.7% in its shares on Tuesday. In the previous session, Suofeiya Home Collection Co. plunged the 10% daily limit after the furniture maker forecast a turnaround to profit. Wanhua Chemical Group Co. also saw its stock lose 6.4% amid a broad selloff in materials shares, even after the company said earnings likely more than quadruped in the first quarter.“The market has reacted negatively to positive earnings because with sentiment as weak as it is right now, funds are not willing to wait around for more good news to come,”said Yan Kaiwen, an analyst at China Fortune Securities Co. “They are opting to cash out sooner while the fundamentals still look good, rather than later.”Analysts widely expected Chinese companies to report a strong rebound in earnings from last year’s low base. The broad market rally from pandemic lows to a 13-year high in February meant that many of these positives were already priced in. The solid scorecards are now providing traders with a chance to sell, as sentiment remains weak since the CSI 300 Index entered a correction last month on concerns over rich valuations and tightening of liquidity by authorities.Measures to reduce cash circulating in the economy have started to show their effect, with the increase in aggregate social financing, the broadest measure of credit, missing expectations last month. The figures were released after the central bank asked banks in late March to curtail loan growth for the rest of this year following a surge in the first two months that stoked bubble risks.The CSI 300 Index fell for a third day on Tuesday, losing 0.2% to close at its lowest level since March 25.READ: China Stocks Rebound Seen Fleeting as Liquidity Fears Linger On(Adds CSI’s move in the last 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 full-size luxury EQS sedan will launch on Thursday and could completely change the public perception of Mercedes, Deutsche Bank analysts said.
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage. The costs of homeownership are rising quickly across the country, so you’re not alone in feeling burdened.
The investing game is rarely plain sailing. While no doubt investors would like the choices that make up their portfolio to always go up, the reality is more complicated. There are periods when even shares of the world’s most successful companies have been on a downward trajectory for one reason or another. While it’s no fun watching a stock you own drift to the bottom, any savvy investor knows that if the company’s fundamentals are sound to begin with, the pullback is often a gift in disguise. This is where the chance for strong returns really comes into play. “Buy the Dip” is not a cliché without reason. With this in mind, we scoured the TipRanks database and picked out 3 names which have been heading south recently, specifically ones pinpointed by those in the know as representing a buying opportunity. What’s more, all 3 are rated Strong Buys by the analyst consensus and projected to rake in at least 70% of gains over the next 12 months. Here are the details. Flexion Therapeutics (FLXN) Let’s first take a look at Flexion, a pharma company specializing in the development and commercialization of therapies for the treatment of musculoskeletal pain. The company has two drugs currently in early-stage clinical trials but one which has already been approved by the FDA; Zilretta is an extended-release corticosteroid for the management of osteoarthritis knee pain. The drug was granted regulatory approval in 2017, and Flexion owns the exclusive worldwide rights. FLXN stock has found 2021 hard going and is down by 30% year-to-date. However, the “recent weakness,” says Northland analyst Carl Byrnes has created a “unique buying opportunity.” Like many biopharmas, Flexion’s marketing efforts took a hit during the height of the pandemic last year, as shutdowns and restrictions impacted its operations. However, Byrnes anticipates Zilretta to exhibit “stellar growth in 2021 and beyond.” “We remain highly confident that the demand for ZILRETTA will continue to strengthen, bolstered by product awareness and positive clinical experiences of both patients and HCP, augmented by improvements in HCP interactions and deferral of total knee arthroplasty (TKA) surgical procedures,” the analyst said. Byrnes expects Zilretta’s 2021 sales to surge by 45% year-over-year to $125 million, and then increase by a further 50% to $187.5 million the following year. That revenue growth will go hand in hand with massive share appreciation; Byrne’s price target is $35, suggesting upside of ~339% over the next 12 months. Needless to say Byrne’s rating is an Outperform (i.e. Buy). (To watch Byrnes’ track record, click here) Barring one lone Hold, all of Byrne’s colleagues agree. With 9 Buys, FLXN stock boasts a Strong Buy consensus rating. While not as optimistic as Byrne’s objective, the $20.22 average price target is still set to yield returns of an impressive 153% within the 12-month time frame. (See FLXN stock analysis on TipRanks) Protara Therapeutics (TARA) Staying in the pharma industry, next up we have Protara. Unlike Flexion, the cancer and rare disease-focused biotech has no therapies approved yet. However, the picture should soon become clear regarding the timing of a BLA (biologics license application) for TARA-002, the company’s investigational cell therapy for a rare pediatric indication - lymphatic malformations (LM). TARA-002 is based on the immunopotentiator OK-432, currently approved as Picibanil in Japan and Taiwan for the treatment of multiple cancer indications as well as LM. Currently, Protara is seeking to get the FDA’s acceptance that TARA-002 is comparable to OK-432. If everything goes according to plan, the company anticipates potential BLA filing in H2:2021 and potential approval in H1:2022. Protara shares have tumbled 40% year-to-date. That said, Guggenheim analyst Etzer Darout believes the stock is significantly undervalued. “We estimate risk-adjusted peak sales of ~$170M (75% PoS) in the US alone (biologics exclusivity to 2034-2035),” the 5-star analyst said. “The company has outlined a ‘no additional study scenario’ that estimates a US launch in 2022 and an ‘additional registration study’ scenario that estimates a 2023 launch and we see current levels as a buying opportunity ahead of regulatory clarity on LM.” Furthermore, Tara is expected to submit an IND (investigational new drug) for a Phase 1 trial for TARA-002 in 2H21 for the treatment of non-muscle invasive bladder cancer (NMIBC). Darout notes 80% (~65K) of all newly diagnosed bladder cancer patients suffer from this specific condition including ~45% “that are high grade with high unmet need.” The company also owns IV Choline, a Phase 3-ready asset, for which the FDA has already granted both Orphan Drug Designation and Fast Track Designation for IFALD (intestinal failure-associated liver disease). Based on all of the above, Darout rates TARA a Buy and has a $48 price target for the shares. The implication for investors? Upside of a strong 225%. (To watch Darout’s track record, click here) Overall, with 3 recent Buy ratings under its belt, TARA gets a Strong Buy from the analyst consensus view. The stock is backed by an optimistic average price target, too; at $43.67, the shares are anticipated to appreciate by ~198% in the year ahead. (See TARA stock analysis on TipRanks) Green Thumb Industries (GTBIF) Last but not least is Green Thumb, a leading US cannabis MSO (multi state operator). This Chicago-based company is one of the stalwarts of the rising cannabis sector, boasting the second highest market-cap in the industry and exhibiting impressive growth over the last year. In 2020, revenue increased by 157% from 2019, to reach $556.6 million. That said, despite delivering another excellent quarterly statement in March, and being well-positioned to capitalize on additional states legalizing cannabis, the stock has pulled back recently after the company was hit by a damning Chicago Tribune article. According to Chicago Tribune, the company is being investigated by the fed over "pay to play" payments regarding the procurement of cannabis licenses in Illinois. Countering the claims, GTBIF management said the allegations are unfounded and that there is no factual evidence to support them. Furthermore, the company pointed out it has not even been contacted by the authorities regarding the matter. Who to believe, then? It’s an easy choice, according to Roth Capital’s Scott Fortune. “We believe these tenuous claims create an opportunity to own the best-in-class operator currently off 25% from recent highs,” the 5-atar analyst opined. “In our view, the GTI business and track record of execution is not at risk in terms of the seemingly baseless accusations. We will continue to monitor any new additional incremental evidence potentially surfacing but believe the allegations are unfounded. We believe the upside opportunity remains compelling at these levels.” Going by Fortune’s $45 price target, shares will be changing hands for a 70% premium a year from now. Fortune’s rating remains a Buy. (To watch Fortune’s track record, click here) The negative news has done little to dampen enthusiasm around this stock on Wall Street. The analyst consensus rates GTBIF a Strong Buy, based on a unanimous 12 Buys. The average price target, at $47.71, suggests an upside of 79% over the next 12 months. (See GTBIF stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The crypto markets are very young, and we expect many more companies to compete for the profits Coinbase (COIN) enjoys today. As the cryptocurrency market matures, we expect Coinbase’s transaction margins to drop precipitously. The race-to-zero phenomenon that took place in late 2019 with stock trading fees will likely make its way to the crypto trading space.
Nasir Jones’ QueensBridge Venture Partners invested in 2013. A source familiar with the matter confirmed QueensBridge is still on the Coinbase cap table.
The oil reserves of international oil companies have collapsed over the last 5 years, and now the stability of the entire oil market is under threat
The previously unpublished ED analysis, obtained by Yahoo Finance, reveals how many student loan borrowers would benefit from various levels of forgiveness, specifically borrowers in default.
(Bloomberg) -- China’s yuan is unlikely to escape its current bout of weakness, even with help from U.S. Treasury Secretary Janet Yellen.While Yellen’s decision not to name China as a currency manipulator removes a flash point, analysts say that tension between the two countries have moved to strategic issues such as technology leadership. The yuan is also weighed down by other factors including slowing capital flows and a narrowing yield spread with the dollar.“It takes away one source of pressure, but other areas of tensions with the U.S. remain,” said Dariusz Kowalczyk, chief China economist at Credit Agricole CIB. “The headline will likely provide only temporary support, given that other factors are in the driver’s seat for now.”The onshore yuan was steady at 6.5477 to the dollar as of 5:30 p.m. Shanghai time. China hasn’t used its exchange rate as a tool to address external influences such as trade disputes, Zhao Lijian, a spokesperson with the Ministry of Foreign Affairs said at a briefing on Tuesday. The semiannual U.S. foreign-exchange report is expected this month. Here are more views on the development:Tariffs Remain“The event doesn’t suggest any improvement in China-U.S. bilateral relationship and/or a lowering of bilateral tariffs,” said Becky Liu, head of China macro strategy at Standard Chartered Plc in Hong Kong. “It simply reflects a changed strategy of the new U.S. administration –- that is, by working with U.S. allies to contain China in joint efforts instead of dealing with China matters bilaterally.”The U.S. still has tariffs placed on China that have already kicked in and are unlikely to be lifted in the near term, said Tommy Xie, head of Greater China research at Oversea-Chinese Banking Corp. “Things are still overshadowed by the upcoming U.S. bill on strategic competition, which will be considered on April 21,” he said.Less Confrontation“The tag was announced the previous time due to political tensions even though China didn’t meet the criteria of a currency manipulator,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. “It doesn’t make sense for the U.S. to keep challenging China on the issue of foreign exchange unilaterally, rather the U.S. is showing it prefers to address individual topics separately rather than a full-scale confrontation. The currency problem is no longer a core issue of U.S.-China relations.”“It shows that interaction between China and the U.S. is becoming more rational and more compliant with market rules, which is good for yuan in the short-term,” said Ji Tianhe, head of FXLM strategy at BNP Paribas SA in Beijing. “But it doesn’t affect the overall trend in the second and third quarters. This can be read as the currency exchange-rate issue is no longer the core issue of the Sino-U.S. conflict.”“It can reduce volatility in the currency and make it better for financial markets,” said David Loevinger, an analyst at TCW Group Inc. in Los Angeles, and a former China specialist at the U.S. Treasury. “This administration is much more focused in a constant set of rules. The U.S. Treasury has set the criteria and China doesn’t meet the criteria.”No Positive EffectTensions only add pressure on the yuan if they flare up but won’t positively influence the currency if they simmer, according to Gao Qi, a currency strategist at Scotiabank. “The yuan is likely to range-trade while following a broad dollar movement as U.S.-China tensions stay under control for now,” he said.“Meanwhile, a forming golden cross may indicate some upside potential for” USD/CNH, he said, referring to the 50-day moving average indicator rising over the 100-day moving average.Pressure From Yields“The yuan is under pressure due to the higher Treasury yields -- we have calculated that renminbi spot is the most correlated currency in the world with the level of the 10-year UST yield, and we continue to expect the yield to trend higher,” Credit Agricole’s Kowalczyk said.“The yuan is also suffering from a decline in foreign interest in Chinese bonds, and CGBs in particular. We expect foreign inflows to be much lower this and next year than what we had anticipated,” due to FTSE Russell’s decision to extend the inclusion of Chinese bonds to a three-year period from 12 months, he said.(Adds comment from Chinese official 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.