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  • Watch U.S. Inflation for Hidden Price Momentum: Eco Week Ahead

    (Bloomberg) -- A flurry of U.S. economic reports this week may signal the underlying strength of growth and inflation pressures as the country’s thaw from the coronavirus crisis begins to spread.One of the most-watched reports will be the consumer price index, with March data likely to show a heady acceleration from last year’s pandemic conditions. Economists may zero in on the monthly change to gauge momentum however, with a 0.5% gain forecast.Investors are watching such figures to determine the odds of elevated price pressures becoming self-sustaining, amid possible supply-chain constraints, massive fiscal and monetary stimulus and pent-up consumer demand.The March retail sales report will likely bear out that demand theme, which has prompted economists to raise growth forecasts for this year. Their median estimate calls for a 5.5% increase in purchases after a winter weather-depressed February.Meantime, industrial production at the nation’s factories, mines and utilities is projected to rebound strongly, led by robust manufacturing. Factory production is forecast to rise 4%. While lean inventories and solid demand are bolstering order books at manufacturers, materials shortages, elevated input prices and shipping delays are complicating production efforts.At week’s end, the government will issue its housing starts report for March, which may have rebounded from February when winter storms delayed construction efforts. While home sales have shown signs of leveling off, builder backlogs remain hefty.What Bloomberg Economics Says:“Narrow pockets of elevated demand and localized supply-chain disruptions will create price spikes in a limited subset of categories. However, the more dominant factor containing inflation will come from excess labor slack and the resulting absence of rising wage pressures.”--Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger. For full analysis, click hereElsewhere, a slew of Federal Reserve and European Central Bank officials are scheduled to speak before the two central banks’ quiet periods set in and the World Trade Organization holds a meeting with vaccine makers on export restrictions. Turkey watchers will be keeping a close eye on the interest-rate decision on Thursday.Click here for what happened last week and below is our wrap of what is coming up in the global economy.U.S. and CanadaInvestors will be watching a phalanx of Fed speakers this week before they enter a pre-meeting quiet period. Chair Jerome Powell addresses the Economic Club of Washington on Wednesday, and at least seven of his colleagues are scheduled to make appearances. The Fed’s Beige Book -- a collection of economic and business activity assessments within each of the central bank’s 12 regions -- is also due.In Canada, the quarterly business sentiment survey will be the central bank’s last data point before its April 21 decision.For more, read Bloomberg Economics’ full Week Ahead for the U.S.AsiaChina’s trade data on Tuesday is set to show another surge in both exports and imports in March from a year earlier, when Covid-restrictions were still curbing commerce. On Friday, industrial production, retail sales and investment data for the same month and GDP figures for the first quarter are all projected to race higher for the same reason.Central banks in New Zealand, Singapore and South Korea all have meetings, with no changes to their main policy settings expected, according to early survey responses from economists.For more, read Bloomberg Economics’ full Week Ahead for AsiaEurope, Middle East, AfricaData in coming days will start hinting at how the region fared in the first quarter at a time of renewed lockdowns and varying efforts at vaccinations.In the U.K., gross domestic product probably rose in February, but by too small a quantum to cancel out the 2.9% drop recorded in the previous month. Meanwhile euro-zone industrial production is likely to show a decline in February, with data from national statistics offices so far pointing to a pullback in the sector.The coming week offers ECB policy makers a final chance to air views before a quiet period begins preceding their April 22 meeting. President Christine Lagarde will be among a line-up of speakers scheduled for the coming days. Executive Board member Fabio Panetta said in an interview published Sunday that two years of euro-area economic expansion may have been permanently lost.Elsewhere in Europe, Serbia’s central bank will probably keep its interest rate unchanged, while monetary officials in Ukraine may continue tightening policy as inflation surges and a deal with the International Monetary Fund remains far away.In Turkey, the new central bank governor, Sahap Kavcioglu, is expected to hold the benchmark rate at 19% at his first monetary-policy meeting on Thursday. He’s been fighting to win over investors with a commitment to tight monetary policy after his predecessor was fired following a 200 basis-point increase last month.Uganda may hold its key rate for a fifth straight meeting on Wednesday and the same day, the Bank of Namibia will probably leave its rate unchanged too after its neighbor South Africa held in March. Namibia’s benchmark is 25 basis points higher than South Africa’s, helping to protect the country’s reserves and currency peg.For more, read Bloomberg Economics’ full Week Ahead for EMEALatin AmericaThe faltering nature of recoveries in Colombia and Brazil should be laid bare by their February retail sales reports as the former again imposed restrictions to contain the virus while the latter’s national health crisis has deepened.Jobs reports in Mexico, Brazil and Peru can also be expected to underscore the damage inflicted by the pandemic. Millions of workers in the region’s two largest economies remain sidelined while the labor market in Peru’s capital, the megacity of Lima, is off last year’s lows but still far removed from pre-pandemic form.Argentina posts its March consumer prices report Thursday. Annual inflation is over 40% and some forecasts see 50% before year-end as midterm elections and stalled talks with the IMF on a $45 billion loan restructuring may serve to discourage fiscal restraint.A number of the region’s smaller economies join Brazil and Peru in reporting trade figures in the coming week. Taken as a whole, Latin America’s bigger economies saw a surge in trade surpluses in 2020 as the pandemic’s demand shock curbed imports.For more, read Bloomberg Economics’ full Week Ahead for Latin AmericaFor 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.

  • SEC Begins Review of WisdomTree Bitcoin ETF as Active Applications Hit 8

    Krpytoin also filed for a bitcoin ETF on Friday.

  • Student loan forgiveness: What $10,000 in cancellation would look like by U.S. state

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  • Exxon Mobil Will Keep Paying Its Dividend, And May Be Worth 30% More

    Exxon Mobil Corp. (NYSE:XOM) is not going to lower its dividend no matter what it costs the company. That point came out loud and clear from the company’s latest earnings conference call. This means that XOM stock will continue to have a “strong” dividend yield of about 6.15%. It’s worth at least 32% more, or $74.63 per share, based on its historical dividend yield. Source: Harry Green / Shutterstock.com For the past two years (8 quarters) Exxon has paid 87 cents per share in quarterly dividends. That works out to $3.48 per share each year. Exxon clearly intends to maintain that dividend. Therefore, at today’s price (April 9) of $55.87, the dividend yield is very healthy at 6.2%. Target Price Based on Historicals Moreover, based on the company’s historical dividend yield, this is much higher than its average. For example, Morningstar reports that over the past 5 years, its trailing 5-year dividend yield has been 4.96% (almost 5%).InvestorPlace - Stock Market News, Stock Advice & Trading Tips We can use this to estimate the normalized target value for XOM stock. For example, if we divide the dividend per share of $3.48 by the average yield of 4.96%, the result is a target price of $70.16 per share. This represents a potential gain of $14.29 or about 26% more based on today’s price of $55.87. 7 Infrastructure Stocks Excited For The $2 Trillion Biden Plan We can do the same thing with the company’s earnings-per-share (EPS). Applying Morningstar’s 5-year avg. price-to-earnings (P/E) ratio of 25.62 times (over the last 5 years) to Exxon’s EPS for this year ($2.87) produces a target price of $73.53. That is over 30% above today’s price. Similarly using the Morningstar forward P/E average of 21.75 times Exxon’s $3.88 EPS for 2022 produces a target price of $84.39. Now we have three different price targets based on dividend yield and price-to-earnings. To round things out we can also derive a price based on its historical price-to-sales. Morningstar says this is 1.25 times over the last five years. Analysts predict sales of $245.5 billion for 2021, so the price target works out to $306.875 billion. This is 29.7% above Exxon’s existing market cap of $236.5 billion. In other words, XOM stock is worth nearly 30% more or $72.46 per share. That means that, on average, XOM stock is worth about 34% higher, or $75.14 per share. These ratios are based on earnings and sales estimates provided by Seeking Alpha on their Earnings tab for Exxon Mobil stock. The estimates can vary depending on which aggregation service is used. But this gives you an idea that XOM stock is undervalued based on its historical metrics. One thing to note is that although the $3.48 dividend exceeds the forecast earnings of $2.87 this year (2021). But next year analysts predict EPS of $3.88 per share, which will cover the dividend, assuming oil and gas prices stay high. Moreover, management said on the fourth-quarter 2020 conference call that cash flow from operations should cover the dividend payments this year. This coincides with their intention to maintain a “strong” dividend, mentioned 10 times on the conference call. What To Do With XOM Stock Most analysts have higher price targets for Exxon stock, but not by much. For example, TipRanks.com says that 18 analysts have an average price target of just $60.68. Similarly, Yahoo! Finance says that 25 analysts believe on average XOM stock is worth $61.18. However, Marketbeat.com reports that 24 analysts have a lower target of $52.73, whereas Seeking Alpha says that 27 analysts have an average target of $61.36. Click to EnlargeSource: Mark R. Hake, CFA You can see in the table on the right that the median analyst price target is $60.63, or 7.1% above today’s price. So, on the one hand, this is much lower than my price target using historical metrics. But on the other hand, keep in mind that my price target could take several years to achieve, whereas most analysts are just looking out one year. For example, if my 34% higher price target takes two years, the average annual return will be just 16% each year on a compounded basis. Moreover, the dividend yield is 6.15%. Therefore the total return, even if the analysts’ target price pans out will be 13.25% (i.e., 7.1% price gain plus 6.15% dividend yield). My target price produces an expected return of 21.95% (i.e., 14.8% gain plus 6.15% yield). Any way that you look at it, XOM stock looks like a good bargain here, assuming oil stays high and the stock returns to its normal historical value metrics. On the date of publication, Mark R. Hake did not hold a long or short position in any of the securities in this article. Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Exxon Mobil Will Keep Paying Its Dividend, And May Be Worth 30% More appeared first on InvestorPlace.

  • Charlie Munger Prefers Alibaba Stock to Treasury Bills. Here’s Why.

    Daily Journal Chairman Charlie Munger says a new investment in Chinese internet giant Alibaba is part of a move into stocks because returns on Treasury bills are so low.

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  • QuantumScape’s Long-term Battery Prospects Will Hold Charge

    Most Special Purpose Acquisition Companies (SPAC) are trading well below their highs. QuantumScape (NYSE:QS) is the exception. If investors ignored the massive December 2020 run-up that sent QS stock to a high of $132.73, the SPAC is trending steadily. Source: Michael Vi / Shutterstock.com Investors are hungry for electric vehicle (EV) component suppliers. Companies that offer innovations in EV batteries will fare the best. Investments in QuantumScape are a vote of confidence for the battery firm. Volkswagen Investment Lifts QS Stock QS announced that it met Volkswagen’s (OTCMKTS:VWAGY) technical milestone on March 31. This triggers a milestone payment from VW. The second and final closing will reward QS with another $100 million by VW. The $100 million investment will give the firm the additional liquidity needed for the growing firm. Chief Executive Officer Jagdeep Singh said, “we look forward to working jointly to bring solid-state lithium-metal battery technology into industrialized mass-production.”InvestorPlace - Stock Market News, Stock Advice & Trading Tips 7 Great Stocks to Buy Under $10 Investors wary of investing in a novel company having no product will want to avoid QS stock. Yet the VW-QS deal lowers the uncertainties considerably. The automotive firm needs the battery. It is a key component in its EV strategy. VW’s EV shift is ambitious. It wants battery-powered vehicles to account for 70% of European sales and 50% in both the U.S. and China. QuantumScape’s Moat QuantumScape is a leader in developing next-generation solid-state lithium-metal batteries. It has ambitious plans in revolutionizing the EV battery industry. It spent ten secretive years developing the product. In Dec. 2020, QS held a video call to present the battery performance. The company said that its single-layer pouch cells could charge to 80% capacity in only 15 minutes. None of the lithium batteries in current EVs charge that fast. Since there is no dendrite formation, QS does not need to throttle back on charging. In 2019, dendrite formations caused battery shortages in Tesla (NASDAQ:TSLA) EVs. Conversely, an ex-Tesla engineer said that “solid-state batteries are a false hope.” Experts will continue to argue the merits of QuantumScape’s prospects, given QS figured out how to store more energy by weight and volume without giving up its durability. Using ceramic materials that resist the formation of dendrites gives QS a strong moat. For now, the market is not panicking on QuantumScape’s advancements. Nio (NYSE:NIO) has battery sharing as a service workaround. This lowers the price of its EVs and gives its customers a ready-charged battery swapping solution. Tesla’s valuations did not change by much, either. Opportunity President Joe Biden’s massive $2 trillion infrastructure and stimulus plan re-ignited investor interest in EVs. The plan includes investments worth $174 billion in EV initiatives. Besides investing in TSLA or NIO stock, investors may look at Chargepoint Holdings (NYSE:CHPT) or Blink Charging (NASDAQ:BLNK). QuantumScape’s commercially available battery is still a few years away. Impatient investors may consider charging station companies in the short term. But continued coverage on QS’s prospects in the next few years should attract investors. The company will act like a biotechnology stock on the markets. Just as shareholders wait for clinical results, they will need to wait patiently for QS to bring a product to market. Experts said that the EV market is poised for record sales in 2021. Consumers have a wide variety of choices. Add the government’s pledge to electrify automobiles and the demand for EV batteries will climb. By the time QuantumScape has a product on the market, it will have billions of dollars worth of pre-orders. Most SPACs will lose money for investors. QS shares are bucking the trend. Markets have a strong demand for companies offering clean energy solutions. The battery EV is in the early phases of strong growth for the next few years. On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post QuantumScape’s Long-term Battery Prospects Will Hold Charge appeared first on InvestorPlace.

  • ‘This is the single worst time to be a passive investor’: veteran investor

    Stock picking is ripe for a shift away from passive investing, which could suffer a decade of low or nonexistent returns, says Bill Smead.

  • Churchill Capital IV Stock May Continue to Recover in the Near-Term

    Two factors knocked the wind out of Churchill Capital IV (NYSE:CCIV) stock. First, when the rumors of this SPAC’s (special purpose acquisition company) merger with Lucid Motors became fact, investors sold on the news. That’s why the stock, which skyrocketed more than six-fold ahead of the announcement, plunged in late February. Source: T. Schneider / Shutterstock.com Second, the EV stock correction, which started around the same time. With investors bidding up the sector many times in 2020 and early 2021, it seemed nothing was going to stop this popular investing trend. But, rising interest rates, and concerns about valuation, convinced many it was time to hit the “sell” button. Yet, now, the dust has settled on both these issues. The sector is far from back to its recent highs. But, major names are starting to mount a rebound. And, that includes CCIV stock. Finding support at around $22 per share, the EV SPAC stock is starting to trend higher once again.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Sure, it may be too early to call this the start of a recovery. Concerns over whether it can beat out incumbents like Tesla (NASDAQ:TSLA), and dominate the luxury EV market, remain on the table. But, recent news is helping to back up the bull case. If more positive developments come out, it may be enough to send it back above $30 per share. Subsequent News Could Sustain Upward Price Moves for CCIV Stock Better-than-expected delivery numbers have helped Tesla stock start to recover. Recent delivery numbers are also helping to support shares in China-based EV maker Nio (NYSE:NIO). But, for an early-stage electric name like this one, what’s going to help sustain a recovery for its stock price? 7 Great Stocks to Buy Under $10 Recently disseminated information, such as details of its manufacturing capabilities, and its reservation numbers, may be starting to renew confidence that it can someday dominate the premium EV space. As I discussed previously, Lucid has more than enough “ingredients of success” on its side. These additional signs of progress are just icing on the cake. Of course, it’s not guaranteed that Lucid is destined to become the king of high-end EVs. Tesla already has established itself in this space. With an existing economic moat, it may still have an edge over this upstart. Yet, it may not be wise to assume Tesla is unsinkable. It may have many advantages when it comes to large-scale manufacturing. But, its moves to expand its user base may Lucid an opening for a large piece of the luxury market. Lucid vs. Tesla Will Lucid Motors start eating Tesla’s lunch? Or, does the established EV maker have the power to prevent this from happening? First, let’s look at the side of this argument that’s bearish on Lucid’s prospects. Recently, a Seeking Alpha contributor made the case why this company isn’t the next Tesla. Believing Lucid’s “destined for failure,” the commentator lists many ways why this company won’t usurp the EV top dog. Chief reasons include a more competitive environment, plus its relative inexperience in large-scale production. Given this company still needs to prove itself, both are valid points. Plus, as the bearish commentator pointed out as well, buying in at today’s implied post-merger valuation ($30 billion) makes little sense, given the stock’s priced on what could happen, rather than what has happened. Okay, how about the more bullish case. That is, Lucid lives up to Wall Street’s current expectations, and turns Tesla into a relative dinosaur? On Apr 6, InvestorPlace’s Josh Enomoto pointed out how Lucid could beat out Tesla when it comes to the higher end of the premium market. Namely, while Tesla is trying to become a mass market vehicle, Lucid is focusing just on making EVs for the rich. This could pay off, as per Enomoto’s thesis, current economic factors do not bode well for the middle-income bracket. There’s Enough in Play to Send This SPAC Higher Ahead of Its Merger Adding to Enomoto’s thesis above, I can see another way Tesla’s mass-market strategy could backfire, in a way that benefits Lucid. I’m talking about the risk Tesla loses some of its brand cache, as it expands its customer base with lower-priced models. If Teslas become more of a mass-market car, its current owner base could ditch it for something that better conveys high social status. This may allow the EV upstart to grab a major share of the premium market, and live up to expectations. Of course, it’s a bit too early to say it’s set in stone Lucid will beat Tesla at its own game. But, with more pointing to this SPAC deal paying off for investors, there’s enough in motion to help send CCIV stock back towards $30 per share and above ahead of the deal close. On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article. Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Churchill Capital IV Stock May Continue to Recover in the Near-Term appeared first on InvestorPlace.

  • Consumer Brands Are Getting Squeezed by China Tensions. Here Are 14 to Watch.

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  • Budget Carrier Startup Avelo Airlines Launches With $19 Fares

    Avelo Airlines, a startup budget carrier, will inaugurate service on April 28 from its base at Hollywood Burbank Airport in California. What’s Happening: The start-up airline will offer nonstop service to smaller airports in 11 West Coast locations, using 189-seat Boeing 737-800 aircraft accommodating 189 seats. To launch its service, Avelo is offering a promotion with one-way fares beginning at $19. “After more than 20 years of steadily shrinking consumer choice, the American flying public wants and deserves more options and lower fares,” said Avelo Founder and CEO Andrew Levy, former chief financial officer at United Airlines Holdings Inc (NYSE: UAL) and former president, chief financial officer and chief operating officer at Allegiant Travel Company (NASDAQ: ALGT). Related Link: French Government Gives .7B Infusion To Ailing Air France: What You Need To Know Why It Matters: Avelo is the second start-up U.S. carrier launching this year, joining Breeze Airways as a newcomer to the skies. Avelo is also entering an industry that is more than eager to move beyond the financial trauma created by the COVID-19 pandemic. Several major carriers have announced new routes and the resumption of pandemic-paused services, and two companies — Frontier Airlines and Sun Country Airlines — have also announced plans for initial public offerings. Related Link: American Airlines Flight Encounters UFO Over New Mexico (Photo courtesy Avelo Airlines) See more from BenzingaClick here for options trades from BenzingaDMX, Rapper With Troubled Life, Dies At 50Wall Street Crime And Punishment: Joseph P. Kennedy, The Crooked Dynasty Patriarch© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Stimulus check update: When will ‘plus-up’ payments arrive? Answers to your COVID relief questions

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  • Judge hands Amazon a setback in New York lawsuit over COVID-19 shortfalls

    NEW YORK (Reuters) -A federal judge on Friday ruled against Amazon.com Inc as the company defends against New York Attorney General Letitia James' lawsuit claiming it prioritized profit over worker safety during the COVID-19 pandemic at two New York City warehouses. U.S. District Judge Jed Rakoff in Manhattan granted James' request to return her lawsuit to a New York state court, and rejected Amazon's bid to move it to Brooklyn federal court, where the online retailer had sued James to stop her from suing.

  • XPeng to Produce Its Own Chips; Analyst Weighs In

    The latest noises coming out from China suggest XPeng (XPEV) is keen to produce its own chips in-house. According to Chinese news outlet 36kr, using a small team of less than 10 engineers, the Chinese EV maker is developing its own autonomous driving chip. The production started a few months ago and is taking place in both the US and China. Xia Heng, XPeng’s Co-President and Chief Technology & Operation Advisor Benny Katibian, whose prior jobs include leading the tech dept at Qualcomm's ADAS team, are at the helm of the new project. “Industry sources indicate XPeng is actively recruiting chip engineers,” said Deutsche Bank’s Edison Yu, who believes this suggests “there are plans to grow this effort moving forward.” “In our view,” Yu further noted, “We do not expect any near-term changes as both XPILOT 3.5 and 4.0 will use Nvidia chips (Xavier and Orin), but believe similar to Tesla/NIO, XPeng wants to ultimately use a custom designed chip purpose built to train its neural net (to use in XPILOT 5.0) rather than a general purpose chip, in order to maximize performance/ efficiency and lower cost.” Yu thinks local rival Nio, is “likely” fast at work on a similar project after poaching Xiaomi's chip division manager. Looking at the wider picture, Yu believes it is all part of an effort by the industry/government to lower the dependence on foreign chips. Earlier this year, backed by BYD and Great Wall Motor, Horizon Robotics raised $900 million in a Series C round. The 5-year-old, local start-up was recently selected by SAIC (GM and VW’s main JV Chinese partner) to supply its ADAS/AD chipset. Horizon is targeting the shipment of 1 million chips this year and Yu believes it is a good example of the local industry’s chip manufacturing ambitions. To this end, Yu rates XPEV shares a Buy along with a $48 price target. The implication for investors? Upside of 39%. (To watch Yu’s track record, click here) XPEV stock has a resounding “yes” on Wall Street. 6 Buys and 1 Hold assigned in the last three months add up to a Strong Buy analyst consensus. At $49.50, the average price target implies upside potential of 43.5%. (See XPEV stock analysis on TipRanks) To find good ideas for EV 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 analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

  • Whether you’re retiring in 30 years or 5 years, you still need to do this one thing religiously

    Investing is a crucial part of accumulating enough money in retirement — and the best results come with proper asset allocation. Retirement tip of the week: Check the asset allocation of your retirement portfolios, and if you’ve done it recently, make it a regularly scheduled task once a year. “The time to review your asset allocation and overall retirement investment strategy should be a proactive process throughout the year,” said Jon Ulin, chief executive officer of Ulin & Co. Wealth Management.

  • Arm Battle With China CEO Escalates, Complicating SoftBank Sale

    (Bloomberg) -- The battle for control of Arm Ltd.’s China business is escalating with new lawsuits aimed at keeping the unit’s controversial chief executive in power, further complicating SoftBank Group Corp.’s efforts to sell the business to Nvidia Corp.The dispute erupted almost a year ago in June after the board voted to oust Arm China Chief Executive Officer Allen Wu for conflicts of interest, but he refused to leave. Now the Chinese unit, which remains under Wu’s control, has filed lawsuits against three senior executives the board designated to replace him, according to people familiar with the matter. The previously unreported suits could take years to resolve, suggesting Wu may remain entrenched.Wu fired the three men -- including co-CEO Phil Tang -- but they were subsequently reinstated by the board. In the new lawsuits, Arm China is suing the trio, demanding they return company property, according to the people.Arm China declined to comment on any ongoing legal cases or possible settlement talks. It did say the three executives had caused “material damages” to the company and they had been terminated for legitimate reasons.Tang didn’t return requests for comment. Arm Ltd. declined to elaborate, saying it won’t comment on pending legal matters.The complex tussle has thrown into question the future of Arm, whose semiconductor technology is the world’s most widely used for smartphones and is increasingly deployed in computers. SoftBank founder Masayoshi Son agreed to sell the British chip designer to Nvidia for $40 billion last year, but the path for completing that transaction is growing increasingly difficult.The China dispute also raises questions about Beijing’s willingness to protect foreign investment in the world’s second-largest economy. Arm Ltd. sold a majority stake in the China unit to a consortium of investors, including Beijing-backed institutions. That has complicated the British firm’s efforts to manage Arm China and Wu, who has support from local authorities in Shenzhen.Both sides appear to be at a stalemate. Wu, a Chinese-born U.S. citizen, pulled back from signing settlement agreements worth tens of millions of dollars if he would leave the company, the people said, asking not to be identified talking about legal matters. At the same time, two minority shareholders in Arm China linked to Wu have filed lawsuits to overturn his June 4 dismissal, they said.SoftBank opened negotiations with him last year and had hoped to reach some sort of resolution, they said. Instead the court battles are deepening and the Japanese company has soured over the increasingly complicated dispute, the people said. SoftBank is now resigned to letting the legal proceedings take their course and there are no current negotiations with Wu, according to one of the people.“We are going through a leadership change in China; it’s taking time to resolve,” said Arm Ltd.’s Chief Executive Officer Simon Segars in an interview with Bloomberg Television recently. “It’s hard. But we are confident that’s going to get resolved.”SoftBank and Nvidia declined to comment on the dispute in China.Arm China said in a statement that Wu’s position “is compliant with legal registration and confirmed by China law and regulations.”Read more: Arm Takes Aim at Intel Chips in Biggest Tech Overhaul in DecadeThe standoff accords a relatively unknown executive outsized influence over one of the industry’s most important pieces of technology, in the world’s biggest internet and semiconductor market. Chinese companies need unfettered access to Arm’s products to push forward with the country’s attempts to make itself more independent in chip technology, an area where it’s largely reliant on imports. Beyond resolving the stalemate, Nvidia and SoftBank also need Beijing’s signoff to seal their deal, and it’s unclear whether Wu’s presence would complicate that.Wu’s hold on Arm China is partially due to local laws which make it difficult to change control of a company unless you’re physically in control of the company stamp and registration documents. He’s refused to give them up and has used company funds to pay for legal fees incurred in his attempt to fight off his dismissal, the people said.Arm China said payment of legal fees “is made in compliance with company policies as well as China laws and regulations.”His ultimate goals appear to be a large cash payoff and immunity from subsequent legal action, according to people who’ve spoken with him. Inside Arm China, which is responsible for selling licenses to its chip designs and fundamental technology in the country, Wu has told local staff he’s not going anywhere. He recently gave employees Chinese New Year cash presents in a red envelope with his surname on it.Arm China said the money came from Wu personally to show his appreciation to colleagues, a tradition at Chinese New Year in the country.Hearings in the case against the three executives are expected to take place in late May, one of the people said. Separately, two minority shareholders in Arm China have sued the Chinese entity in Shenzhen to nullify the board’s decision to oust Wu. These two cases are now being merged and hearings are slated for late April, the people said.Son told investors as recently as February that he expects to close the Arm sale and “I don’t have any Plan B.”Arm, for its part is trying to make sure that its technology remains pervasive in China despite U.S. sanctions intended to curb the supply of American technology to major companies like Huawei Technologies Co. While Arm is a U.K.-based company part of its operations are in the U.S. making its products subject to controls.The Chinese government has not stated its position on the Arm China leadership struggle, but the unit has several government-backed shareholders including sovereign wealth fund China Investment Corp. and the Silk Road Fund.In his interview with Bloomberg Television, Arm Ltd. CEO Segars said that the ten-month standoff hasn’t hurt Arm’s business in China. Lack of travel for face-to-face meetings during the pandemic has prolonged the process of changing leadership in China, he said.“When we announced the deal in September, we said it would take about 18 months,” he said. “We remain confident in that timeline.”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.

  • Why Alibaba Just Got Hit With A Record $2.87 Billion Fine In China

    The regulatory troubles that have beset Jack Ma since November may be nearing their end, culminating in a hefty fine slapped on the Chinese tech entrepreneur's biggest brand. What Happened: China fined Ma's Alibaba Group Holding Ltd (NYSE: BABA) a record $2.8 billion after a monopoly probe found that the company had abused its dominant market position, Reuters reported. The regulator also ordered Alibaba to make "thorough rectifications" to strengthen internal compliance and protect consumer rights. The Chinese government said that Alibaba had used anti-competitive practices in its online retail market. According to state-run Xinhua news agency, the penalty came from the State Administration for Market Regulation, which had been investigating it since December. The size of the penalty was determined after regulators decided to fine Alibaba 4% of its 2019 sales of 455.7 billion yuan. The fine is more than double the $975 million fine that China issued to QUALCOMM, Inc. (NASDAQ: QCOM) in 2015 for anticompetitive practices. In a press statement, Alibaba said, "Alibaba accepts the penalty with sincerity and will ensure its compliance with determination." "To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation," the company added. Alibaba will hold a conference call on Monday to discuss the penalty. Why It Matters: The outspoken Ma has long been the most visible figure of China's economic rise and stands out in a culture where getting attention at high levels is perilous. Alibaba, in particular, has been under scrutiny since last October when Ma criticized China's banking sector as operating with a “pawnshop mentality." The government scuttled the planned blockbuster Ant Group IPO shortly after Ma made the comments. Chinese regulators are increasing their pressure on Ma and his powerhouse companies, Ant Group Co., Alibaba Group Holding Ltd. and Alibaba's media holdings. Last year, the People's Bank of China, the country's central bank, instructed Ant Group to "rectify" how it does business. Ma's Alibaba Group and other leading tech companies in China have been scrutinized by regulators over their growing influence in the country. Technology firms in China have been hiring legal experts and setting aside funds for potential fines amid the antitrust and data privacy crackdown by regulators. Photo courtesy: World Economic Forum via Wikimedia See more from BenzingaClick here for options trades from BenzingaWhy Authorities Are Putting The Brakes on Johnson & Johnson's Vaccine In Several States'Godzilla vs. Kong' Smashes Pandemic-Era Box Office With .5 Million Debut© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.