The Dow Jones has maintained early gains this Thursday afternoon heading into the closing bell.
The Dow Jones has maintained early gains this Thursday afternoon heading into the closing bell.
Gold investors are anxious to see if Powell expresses concern about a recent volatile sell-off in Treasuries and his assessment of the economy.
(Bloomberg) -- The best bet in America’s municipal-bond market is on life returning to normal.The Bloomberg Barclays index of the riskiest municipal securities backed by lease payments -- which includes those issued by the owner of Chicago’s McCormick Place convention center, the American Dream shopping mall in New Jersey and Hartford, Connecticut’s baseball stadium -- has returned more than 5% so far this year even after the recent selloff in the bond market. That’s five times more than the overall return on municipal junk bonds and stands in contrast to the losses investors have suffered on investment-grade debt.The returns reflect optimism that the end of the pandemic will herald the return of spectator sports, industry conventions and office life -- all of which have been in virtual hibernation since last March. That promises to revive the streams of revenue -- like hotel taxes -- that back local government bonds sold for civic projects.“The reopening bias is pervasive through the bond market,” said Gabe Diederich, a portfolio manager for Robert W. Baird, which holds Chicago convention center debt as part of $8 billion in muni assets under management. “It’s something investors are already shifting money toward in expectation it takes place -- very similar to the inflation trade.”The riskiest revenue bonds were among the hardest hit during the selloff that erupted in the wake of the pandemic a year ago, when investors dumped the securities in droves on speculation the projects would be roiled by the shutdown of the nation’s economy.The securities have since rebounded as the spread of the virus slows and millions of Americans get vaccinated.A 2050-maturing bond issued by the Metropolitan Pier and Exposition Authority -- which oversees Chicago’s convention center, the nation’s largest -- tumbled to as little as 90.5 cents on the dollar last year. It last traded for about 119 cents. Debt backed by the American Dream shopping mall, one of the biggest issues of unrated municipal bonds, has jumped to 112 cents from 92 cents in April.The gains come amid broader speculation that the nation’s economy will gain steam, with Congress moving toward enacting President Joe Biden’s $1.9 trillion recovery package. While that has triggered a rise in interest rates that has weighed on the broader debt market, municipal junk bonds have been relatively insulated since the higher yields make them less sensitive to rising rates.Yet even with the rise in yields, those on the highest-rated bonds are still low by historical measures. That has also helped to buoy demand for lower-rated bonds issued by borrowers that stand to benefit financially from the recovery.“They are anticipating continuing progress toward normalcy,” Diederich 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) -- Oscar Health Inc., the health insurance startup co-founded by Josh Kushner, fell 11% its trading debut after raising $1.4 billion in its upsized, above-target initial public offering.The company’s shares, which sold for $39 in the IPO, opened their first day of trading Wednesday at $36 and closed it at $34.80, giving the company a market value of about $7 billion.Oscar Health and a selling shareholder sold 37 million shares on Tuesday. It had marketed 31 million shares for $36 to $38 a share, a range that it had elevated from $32 to $34.Kushner, managing director of the venture firm Thrive Capital, is the brother of Jared Kushner, son-in-law and onetime senior adviser to former U.S. President Donald Trump.“We have been growing a lot in the last couple of years,” said Mario Schlosser, chief executive officer and co-founder of Oscar Health. “The thesis works, the company works and we want to show it to the world.”Though with cash in hand and despite being in a crowded sector, there are no plans for Oscar Health to make acquisitions at the moment, Schlosser said. “We have a ton of growth ahead of us just organically,” he said.Kushner and Thrive Capital will control the majority of the voting power, according to the filings. The New York-based company’s Class A shares are entitled to one vote while Class B shares will have 20.Google’s parent Alphabet Inc., Fidelity Management, Founders Fund, General Catalyst and Khosla Ventures are also among the company’s shareholders.Oscar Health trades on the New York Stock Exchange under the symbol OSCR. Goldman Sachs Group Inc., Morgan Stanley, Allen & Co. and Wells Fargo & Co. led the offering.(Updates with closing share price in second 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.
Some households are collecting a big pile of federal money in 2021.
The president has agreed to a compromise making millions ineligible for the third checks.
A firm hired to monitor Texas' power markets says the region's grid manager overpriced electricity over two days during last month's energy crisis, resulting in $16 billion in overcharges.
(Bloomberg) -- A firm hired to monitor Texas’ power markets says the region’s grid manager overpriced electricity over two days during last month’s energy crisis, resulting in $16 billion in overcharges.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.“The market is under quite a bit of duress,” Kenan Ogelman, Ercot’s vice president of commercial operations told Texas lawmakers Thursday. Moody’s Investors Service downgraded Ercot one notch from A1 to Aa3 and revised the grid operator’s credit outlook to “negative.”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 Ogelman quote, Moody’s downgrade in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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.
It appears the breakdown is underway, and this could turn into an outright collapse into mid-March.
Congress is nearing passage of the third economic stimulus check it will send out to you and other taxpayers as part of its Covid-19 relief bill.
(Bloomberg) -- Major oil sands producers in Western Canada will idle about half a million barrels a day of production next month, helping tighten global supplies as oil prices surge.Canadian Natural Resources Ltd.’s plans to conduct 30 days of maintenance at its Horizon oil sands upgrader in April will curtail roughly 250,000 barrels a day of light synthetic crude output, company President Tim McKay said in an interview Thursday. Work on the Horizon upgrader coincides with maintenance at other cites.Suncor Energy Inc. plans a major overhaul of its U2 crude upgrader, cutting output by 130,000 barrels a day over the entire second quarter. Syncrude Canada Ltd. will curb 70,000 barrels a day during the quarter because of maintenance in a unit.The supply cuts out of Northern Alberta, following a surprise OPEC+ decision to not increase output next month, could add more support to the recent rally in crude prices. OPEC+ had been debating whether to restore as much as 1.5 million barrels a day of output in April but decided to wait.The Saudi-led alliance closely monitors other major oil producers as it seeks to manage the entire global market, and surging production in North America was its biggest headache in recent years -- especially from U.S. shale but also from Canada.“The U.S., Saudi Arabia, Russia, Canada, Brazil and other well endowed countries with hydrocarbon reserves -- we need to work with each other, collaboratively,” Saudi Energy Minister Prince Abdulaziz bin Salman said after the group’s meeting on Thursday.Canada’s contribution to balancing the market with less production, much like slowing output in the U.S., is not a deliberate market-management strategy but significant nonetheless.Even though the output cuts are short-term, the battered oil-sands industry shouldn’t be a concern for the Saudis in the long run either, judging from McKay’s outlook for the industry.“I can’t see much growth in the oil sands happening because there is going to be less demand in the future,” he said. “The first step is we have to get our carbon footprint down.”After years of rising output turned Canada into the world’s fourth-largest crude producer, expansion projects have nearly halted on the heels of two market crashes since 2014.Adding to its struggles, Canada’s oil industry is being shunned by some investors such as Norway’s $1.3 trillion wealth fund amid concern that the higher carbon emissions associated with oil sands extraction will worsen climate change. These forces help make future growth in the oil sands unlikely, said McKay, whose company is among the largest producers in the country.Oil sands upgraders turn the heavy bitumen produced in oil sands mines into light synthetic crude that’s similar to benchmarks West Texas Intermediate and Brent. Syncrude Sweet Premium for April gained 60 cents on Thursday to $1.50 a barrel premium to WTI, the strongest price since May, NE2 Group data show.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.
Cathie Wood's flagship ARK Invest ETF and a VanEck Vectors Social Sentiment backed by Wall Street bro Dave Portnoy are down by at least 4%. The VanEck Vectors Social Sentiment ETF was down 4.3% in Thursday afternoon trade, in its debut. Meanwhile, Wood's ARK Innovation deepened its slide into correction on Thursday, off 6.6%. Both ETFs focus on drawing interest from many of the growthy tech stocks which are in the market's crosshairs as bond yields rise, including electric-vehicle maker Tesla Inc. . On Thursday, bonds took a leg higher after Federal Reserve Chairman Jerome Powell said he was watching the rise in rates but offered no concrete steps the central bank was taking to tamp down rate moves. The 10-year Treasury yield jumped by 7 basis points in afternoon action, hitting around 1.54% and accelerating a sell-off in stocks that are viewed as pricey and that don't offer a coupon. The tech-heavy Nasdaq Composite Index was down nearly 10% from its Feb. 12 peak, meeting the commonly used definition for a correction. The Dow Jones Industrial Average was down more than 400 points, or 1.3%, and nursing a 0.8% year-to-date gain. The S&P 500 index was down 1.6% and holding on to a 2021 gain of less than 0.1%. The Nasdaq Composite was negative for the year, down 1.4%.
(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.
Prominent gold advocate and Bitcoin skeptic Peter Schiff has criticized billionaire investors Mark Cuban and Kevin O’Leary for turning positive on Bitcoin. What Happened: “Bubbles typically peak when rational investors capitulate,” said Schiff on Twitter, calling them the newest skeptics to “join the cult.” Congratulations to those who bought Bitcoin early, pumped up the price, and who've been dumping into the hype. You succeeded in getting Wall Street to buy into the mania. When I first learned about #Bitcoin I didn't think smart investors would be dumb enough to buy. I was wrong. — Peter Schiff (@PeterSchiff) March 1, 2021 Schiff’s criticism comes after Kevin O’Leary announced he would be allocating 3% of his portfolio to the digital asset while also looking at investing in the most energy-efficient Bitcoin mining companies. Earlier this week, Mark Cuban commented on some of Schiff’s most recent remarks saying, “Gold is dead Peter. Move on.” Why It Matters: Schiff has often criticized Bitcoin as an asset class, calling it inferior to gold as a store of value. His most recent comments on Twitter invited criticism from Mark Cuban, who commented that gold is hyped just as much as cryptocurrencies. “As tech continues to get better/cheaper/faster there will be new applications and maybe even something that supersedes what we know as crypto today. But gold won't ever change. Which is why it will die as a SOV (Store of Value),” said Cuban on Twitter. According to Schiff, the fact that gold won’t ever change is part of its appeal to investors. Jeffrey Gundlach, a well-known gold bull, commented earlier today that Bitcoin is up over 467% in the past 12 months while gold is down by 11% for the same period. The price of gold is down 11% over the past twelve months. The S&P 500 is up 27% over the past twelve months. Bitcoin is up 467% over the past twelve months. Great dispersions often precede great reversions. We shall see. — Jeffrey Gundlach (@TruthGundlach) March 4, 2021 According to him, dispersions of this size between asset classes often come before reversions to the mean. Price Action: After a volatile week, the market-leading cryptocurrency was trading at $48,171 at the time of writing. Earlier this week, Bitcoin recorded a low of $43,867 and a high of $52,535. Image: Dmitry Demidko via Unsplash See more from BenzingaClick here for options trades from BenzingaFantom Is Top Performing Cryptocurrency Again: Here's What You Need To KnowGoldman Sachs To Restart Crypto Desk After Abandoning The Idea In 2018© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
The team will soon be accepting the crypto as part of a deal with payment services provider BitPay.
Workhorse Group Inc. said Thursday that it met with U.S. Postal Service representatives on March 3, to discuss why the electric vehicle maker missed out on a Next Generation Delivery Vehicle contract, which was awarded to Oshkosh Corp. Workhorse said it can't disclose details of the discussion at this time, but said it plans to share information when permitted. The stock slumped 3.4% in premarket trading. Missing out on the USPS contract had sent Workhorse's stock plunging 47.5% on Feb. 23 to $16.46, and the stock has lost another 9.4% since to close Wednesday at $14.92, the lowest close since June 29, 2020. "Yesterday's meeting with the USPS marked the first step in what we expect may be a prolonged process to explore our options and possibly pursue further action related to our NGDV bid," said Chief Executive Duane Hughes. "We will continue to follow the proper due course procedures as defined by the USPS and will also look to other options available to us." He said legal and corporate advisory firms were retained to identify and pursue its options. Workhorse's stock has lost 32.4% over the past three months through Wednesday, while Oshkosh shares have rallied 28.6% and the S&P 500 has gained 3.3%.
(Bloomberg) -- A new exchange-traded fund seeking to ride the companies most loved by investors online has found plenty of its own positive sentiment in its first day of trading.About $438 million worth of shares in the VanEck Vectors Social Sentiment ETF (ticker BUZZ) changed hands on Thursday, making it the third best ETF debut on record, according to data compiled by Bloomberg.“Normally, this kind of blow-the-roof-off volume for the first day is for ETFs that open up a new asset class like gold or Bitcoin,” said Eric Balchunas, ETF analyst for Bloomberg Intelligence.The fund, which has been promoted by Barstool Sports Inc. founder Dave Portnoy, follows an index that uses AI to scan online sources like blogs and social media to identify the 75 most favorably mentioned equities.Because of its criteria for inclusion, the hottest names among the day-trading crowd like GameStop Corp. and AMC Entertainment Holdings Inc. don’t actually make it into the gauge. Its top holdings currently are Ford Motor Co., Twitter Inc. and DraftKings Inc.Nonetheless, the rapid uptake suggests VanEck has succeeded in tapping into the increasingly powerful retail investing cohort.“Given the explosion of individual, younger retail traders, it makes sense to see a pile of volume,” said Dave Lutz, macro strategist at JonesTrading. “Whether it is the WSB crowd embracing Dave Portnoy’s marketing of the ETF, or institutions playing it to bet on the direction of the trend (or hedge) -- we won’t know for a bit. I suspect it’s a bit of both.”The fund opened at $24.40. It was down 1% at $24.15 at 12:02 p.m.(Updates with latest figures, analyst comments.)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.
Investors looking to recover from last week's bond-market selloff may want to brace for another bout of volatility.
GameStop shares closed up 6.4% at $131.93 after earlier hitting $147.87, their highest since a surge in the heavily shorted stock late last month. One analyst and some Twitter users pointed to a cryptic tweet by Ryan Cohen, a major shareholder of GameStop and founder of e-commerce firm Chewy.com, as a plausible reason for the move, although Reuters could not independently determine causation. The late afternoon rally in GameStop began roughly around the time that Cohen tweeted what appeared to be a screenshot with the puppet dog advertising mascot of Pets.com, a famous casualty of the dotcom bubble two decades ago.
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.