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Yahoo Finance’s Adam Shapiro, Julie Hyman, Brian Cheung, JP Mangalindan, and Ethan Wolff-Mann join 'Bitcoin Billionaires' author Ben Mezrich to discuss.
Yahoo Finance’s Adam Shapiro, Julie Hyman, Brian Cheung, JP Mangalindan, and Ethan Wolff-Mann join 'Bitcoin Billionaires' author Ben Mezrich to discuss.
Gold traders may have priced in higher inflation, so the market could actually bounce higher even if the CPI numbers beat the forecast.
(Bloomberg) -- China ordered 34 internet corporations Tuesday to rectify their anti-competitive practices within the next month, signaling that Beijing’s scrutiny of its most powerful firms hasn’t ended with the conclusion of a probe into Alibaba Group Holding Ltd.Shares in Tencent Holdings Ltd. and Meituan extended losses after the State Administration for Market Regulation issued a stern statement emphasizing it will continue to eradicate abuses of information and market dominance among other violations. Also summoned to an ad-hoc meeting with the watchdog on Tuesday were industry leaders including TikTok owner ByteDance Ltd., search giant Baidu Inc. and JD.com Inc.Regulators warned internet companies to “heed Alibaba’s example,” reaffirming their intent to abolish forced exclusivity among other practices. The meeting -- organized jointly with the cyberspace and tax regulators -- came days after Beijing wrapped up a four-month probe into Alibaba by slapping a record $2.8 billion fine on the e-commerce giant for abuse of market dominance.The penalty was less severe than many feared and lifted a cloud of uncertainty hanging over founder Jack Ma’s internet empire. It also came after the Chinese central bank ordered an overhaul of his Ant Group Co. fintech titan.Alibaba’s shares have gained 7% since the start of the week, but its fellow Chinese internet giants have gyrated while investors digest the rapid-fire announcements and concerns grow that Beijing’s scrutiny will extend beyond Alibaba. On Tuesday, Tencent gave up early gains to finish down slightly while Meituan, video service Kuaishou Technology and JD all slid more than 3% in Hong Kong.“The base line of policies cannot be crossed, the red line of laws cannot be touched,” the market watchdog said in the statement on Tuesday.The investigation into Alibaba was one of the opening salvos in a campaign seemingly designed to curb the power of China’s internet leaders, which kicked off after Ma infamously rebuked “pawn shop” lenders, regulators who don’t get the internet, and the “old men” of the global banking community. Those comments set in motion an unprecedented regulatory offensive, including scuttling Ant’s $35 billion initial public offering.The 34 firms summoned Tuesday must now undergo complete rectification after conducting internal checks and inspections over the next month, and make a pledge to society to obey rules and laws, the antitrust watchdog said in its statement. Regulators will organize follow-up inspections and companies that continue to engage in abuses like forced exclusivity -- a practice that “flagrantly trampled and destroyed” market order -- will be dealt with severely.The regulator also highlighted abuses like acquisitions that squeeze out smaller rivals and burning through cash to grab market share in community group buying, currently the hottest e-commerce arena in China. Firms also need to address issues like counterfeiting, data leaks and tax evasion, according to the statement.“This is positive because the SAMR is giving the platforms one month to review their practices, rather than dish out fines and penalties without warning,” Bloomberg Intelligence senior analyst Vey-Sern Ling said. “They are using Alibaba as an example to deter misbehavior from the rest of the industry players. If these companies toe the line, industry competition can become healthier. ”(Updates with share action from the 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.
(Bloomberg) -- Every major U.S. airline has now shunned the U.S. government’s $25 billion emergency pandemic loans, avoiding the strings attached to that program in favor of the credit market’s warm embrace.United Airlines Holdings Inc. announced Monday that it will raise $9 billion from institutional investors through a combination of loans and bonds. Part of that will pay off $520 million the company already borrowed from the federal government program.The U.S. Treasury Department a year ago offered loans to prop up the industry as Covid-19 froze the business, but with terms viewed as onerous. The companies had to issue warrants to the government, and agree to restrictions on dividends, stock buybacks and executive compensation. Delta Airlines Inc. and Southwest Airlines Co. both opted out last year.While United and American Airlines Group Inc. borrowed relatively small amounts, they had until next month to decide whether to fully embrace the program -- and its strict terms -- by taking several billion dollars of additional liquidity that was available to them. American bowed out by tapping institutional investors to raise $10 billion in March, and United has now also backed away.The decisions largely reflect just how robust credit markets have been because of the Federal Reserve’s pandemic support -- its pledge to buy bonds and policy makers’ signal that rates will stay low for years.“The market has been open like crazy for airlines,” said Roger King, a senior analyst at CreditSights. “They have issued debt right and left, and they have less pressure on liquidity.”In addition to repaying what it’s borrowed from the Treasury, United will use proceeds from its debt sale to refinance a $1.4 billion term loan, a $1 billion revolver and to add cash to its balance sheet given the uncertain outlook for travel.U.S.Citigroup Inc. and Bank of America Corp. are jointly building a new fixed-income trading platform, with an initial focus on collateralized loan obligations.Mega-deals were absent during the just-completed record $1.1 trillion quarter for M&A, but on Monday Microsoft Corp. announced a nearly $20 billion, all-cash purchase of Nuance Communications Inc.French telecommunications and media company Altice Europe NV announced plans to sell dollar and euro bonds to refinance more expensive debt, with expectations that it’ll raise the equivalent of 3 billion eurosReal estate data firm CoreLogic is set to sell the largest acquisition-related loan in over a year, with commitments on the $4 billion offering due TuesdayThe already small universe of distressed debt will shrink even more after Voyager Aviation wraps up a restructuring deal that involves swapping debt for equity, new securities and cashFor deal updates, click here for the New Issue MonitorFor more, click here for the Credit Daybook AmericasEuropeSSAs are likely to retain their dominance of Europe’s syndicated bond market this week, according to a Bloomberg survey, extending this year’s leading run for the sector.European Financial Stability Facility (EFSF) and BNG Bank NV are among the seven issuers set to price bonds totaling at least 7 billion euros on MondayThe U.K.’s lockdown easing takes another step forward on Monday with non-essential retailers reopening; still, U.K. credit broadly looks expensive after a significant rally since the selloff last March amid soaring business confidenceEurope’s vaccine campaign may be beset with delays, communication blunders and missteps, but in markets at least investors are united in wagering that the pandemic is on the way outAsiaEthically-focused bonds may be the flavor of the week for Asian issuers including green notes from Kia Corp. and China Water Affairs.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 investorsNo matter the asset class, the outlook is turning bleak for China’s financial markets. The nation’s stocks, bonds and currency are losing their shine after an impressive start to the yearFor 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.
China has imposed a sweeping restructuring on Jack Ma's Ant Group, the fintech conglomerate whose record $37 billion IPO was derailed by regulators in November, underscoring Beijing's determination to rein in its internet giants. The overhaul, in the works for several months, includes Ant turning itself into a financial holding firm, a move expected to curb its profitability and valuation by curtailing some of its freewheeling businesses. It comes two days after Ma's Alibaba Group Holding Ltd, of which Ant is an affiliate, was hit with a record $2.75 billion antitrust penalty as China tightens controls on the booming "platform economy".
HSBC and Huawei Technologies' Chief Financial Officer Meng Wanzhou have reached an agreement in a dispute about the publication of documents relating to U.S. fraud allegations against her, their lawyers told a Hong Kong court. The legal dispute reached the Hong Kong court last month after a British judge in February blocked the release of internal HSBC documents relating to the fraud allegations against Meng.
(Bloomberg) -- The European Investment Bank plans to harness the power of blockchain to sell bonds, potentially boosting use of the digital-ledger technology as a tool for the region’s debt market.The European Union’s investment arm hired Goldman Sachs Group Inc., Banco Santander SA and Societe Generale AG to explore a so-called digital bond in euros, which would be registered and settled using blockchain, according to information from a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.Investor meetings for the inaugural sale will start April 15 and continue for some weeks, the person said.The EIB has often been at the forefront of innovation in Europe’s debt capital markets, being among the first to issue green and sustainability bonds, as well as debt benchmarked against a new euro short-term rate called ESTR. The move comes after European Central Bank President Christine Lagarde said the institution she leads could launch a digital currency around the middle of this decade.A spokesperson for the EIB declined to comment further when contacted by Bloomberg News.Not MainstreamA number of issuers globally including the World Bank, China Construction Bank Corp., JPMorgan Chase & Co. and National Bank of Canada have been experimenting with blockchain-based issuance in the past few years, but its use in debt markets is still far from mainstream.The technology used for verifying and recording transactions that’s at the heart of cryptocurrencies has faced hurdles to wider adoption, and the pandemic has caused delays in some projects.Blockchain has a longer history in loans and Germany’s Schuldschein debt market. Automaker Daimler AG was the first to sell a 100 million euros ($119 million) of Schuldschein using blockchain in 2017. Telefonica SA’s German unit also used blockchain in early January to raise a 200 million-euro loan.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Europe’s top financial watchdog has asked some of the bloc’s largest banks for additional information on their exposure to hedge funds after the recent collapse of Archegos Capital Management.The checks by the European Central Bank on lenders such as Deutsche Bank AG and BNP Paribas SA are standard practice after such a disruptive event for the industry, according to people familiar with the matter. All banks supervised by the ECB that have a significant hedge fund business are likely to face these questions, they said, asking not to be identified discussing the private information.Representatives for the ECB, Deutsche Bank and BNP declined to comment.The collapse of Archegos, a secretive family office that had made highly leveraged bets on stocks, could cause as much as $10 billion of losses for banks, analysts at JPMorgan Chase & Co. estimate. Swiss lender Credit Suisse Group AG alone has put the expected hit at 4.4 billion Swiss francs ($4.7 billion) in the first quarter.Euro-region banks, by contrast, have come away largely unscathed. Deutsche Bank had several billion dollars of exposure to Archegos when it started unraveling but the German lender quickly sold its holdings, Bloomberg News has reported. It said it won’t incur a loss as a result of the firm’s collapse.Archegos put on its trades with the help of so-called prime brokerage units at a number of investment banks, effectively borrowing large amounts to amplify returns. When the investments declined and lenders asked for more collateral, the firm collapsed and banks raced to unwind the positions with prices plummeting.Prime brokerage units make money by lending cash and securities to hedge funds and executing their trades. The business is risky but lucrative, earning European banks Barclays Plc, BNP Paribas, Credit Suisse, Societe Generale SA and UBS Group AG a combined $4 billion in 2019, according to a report from JPMorgan.“There is a need to scrutinize the reasons why the banks enabled the fund to leverage up to such an extent,” ECB executive board member Isabel Schnabel said in an interview with Der Spiegel last week. “It is a warning signal that there are considerable systemic risks that need to be better regulated.”(Adds previous comments from ECB executive in final 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) -- U.S. consumer prices climbed in March by the most in nearly nine years as the end of pandemic lockdowns triggered a rebound in travel and commuting that pushed up the cost of gasoline, car rentals and hotel stays.The consumer price index increased 0.6% from the prior month after a 0.4% gain in February, according to Labor Department data Tuesday. The jump in the cost of gas accounted for almost half the overall March advance.Excluding volatile food and energy components, the so-called core CPI increased 0.3% from February, the most in seven months. Costs of both goods and services rose last month.The annual inflation figure surged to 2.6%, a figure that was distorted by a pandemic-related decline in prices in March 2020. That effect will begin to fade within several months, helping explain why Federal Reserve policy makers see current price pressures as temporary rather than something more dangerous to the economy.The core measure rose 1.6% from 12 months ago. Prior to the pandemic, the annual core inflation metric was running north of 2%.Investors shrugged off the price data -- stocks were mixed and bonds little changed -- focusing instead on news that U.S. health officials called for a pause on the use of Johnson & Johnson’s Covid-19 vaccination because of blood clot concerns.“It was a bit stronger than the official consensus expectations, but it was lower than some people were worried about,” Matt Maley, chief market strategist for Miller Tabak + Co., said about the CPI report. When combined with the J&J news, “it means that the Fed can probably continue to provide plenty of stimulus going forward.”Still, the latest figures on consumer prices add fuel to an already heated debate about the path of inflation in the U.S., especially on the heels of last week’s Labor Department data showing a stronger-than-expected surge in producer prices.Some analysts and economists argue a wave of pent-up demand paired with trillions of dollars in government spending will spur a sustained upward movement in inflation. Bloomberg’s latest monthly survey shows economists continue to ratchet up growth forecasts.Read More: Bond Market’s Stalled-Out Reflation Trade Needs Actual InflationAmid supply chain bottlenecks, supply shortages and surging input costs, producers are already feeling the pinch of rising costs. While not all cost increases will be pushed through to consumers -- given a variety of different measures firms can take to offset costs -- sustained pressures in the production pipeline raise the risk of an acceleration in consumer inflation.Recent survey data highlighted developing cost pressures. The Institute for Supply Management’s latest figures showed more than half of service providers reported paying higher prices in March, the largest share since 2011. The ISM’s manufacturing survey showed about 72% of manufacturers said the same -- the second-most since 2008.Recently, some company executives have mentioned plans to raise prices for their products.Reopening InflationThe Labor Department’s data showed shelter costs, which make up about a third of the overall CPI, increased 0.3% in March. That was the biggest monthly gain since February 2020 and reflected a surge in the cost of lodging at hotels that was the biggest since 1991. Airfares also increased.The pickup in inflation translates into less take-home pay for American workers. A separate report Tuesday showed inflation-adjusted hourly earnings increased 1.5% in March from a year earlier, the smallest gain in more than a year.Digging DeeperGoods prices rose 4.1% in March from year ago, services up 1.8%Car and truck rental prices rose 11.7% from month earlier, most since June, while year-over-year increase was largest on recordFood prices climbed 0.1% from a month earlier, while energy costs jumped 5% in biggest gain since September 2017For 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) -- Online travel platform Trip.com Group Ltd. has raised about HK$8.5 billion ($1.1 billion) in its Hong Kong second listing after pricing the shares at HK$268 each.The company sold 31.6 million shares in the Hong Kong offering, according to a statement on Tuesday. The price represents a discount of about 2% to Trip.com’s closing price of $35.20 on Monday on the Nasdaq.One of Trip.com’s American depositary shares is equivalent to one ordinary share. The shares are due to start trading in Hong Kong on April 19.Trip.com’s U.S. shares have risen about 4% this year, giving the firm a market capitalization of $21 billion. It is part of a wave of U.S.-listed Chinese companies seeking a trading foothold in Hong Kong which has seen some of the country’s biggest tech giants such as Alibaba Group Holding Ltd. and JD.com Inc. raise over $36 billion since late 2019, data compiled by Bloomberg show.The second listings act as a way to hedge against the risk of being kicked off U.S. exchanges as a result of rising Sino-U.S. tensions, as well as to bring in more Asia-based investors. The U.S. Securities and Exchange Commission has said it will start implementing a law passed last year requiring overseas companies to let American regulators inspect their audits or face delisting.Recent second listings from the likes of Baidu Inc. and Bilibili Inc. fared less well than ones last year as they got caught up in a broader selloff of technology shares as investors rotated into sectors expected to benefit from a recovery of global growth. But tech names have since staged a comeback, with the Nasdaq Composite Index rising from lows hit at the beginning of March.JPMorgan Chase & Co., China International Capital Corp. and Goldman Sachs Group Inc. are joint sponsors for Trip.com’s listing.(Updates with company confirmation throughout the story.)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) -- Air Canada shares fell after the company reached a deal with the federal government for loans and equity worth nearly C$5.9 billion ($4.7 billion), making the state a shareholder of the country’s largest airline for the first time since the 1980s.Air Canada declined 2.6% to C$26.29 as of 12:39 p.m. in Toronto. Earlier it dropped more than 6.6% as the market absorbed the news that Prime Minister Justin Trudeau’s government is buying C$500 million of shares at a discount. The government will also receive warrants as part of a financing agreement that makes Air Canada eligible for five new credit facilities, according to a company statement.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%, Chiang said.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 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’“At first glance, the Canadian government’s aid package to Air Canada looks somewhat onerous,” Citigroup analysts said in a note. “On one hand, the aid certainly helps provide a more stable financial situation for the carrier. On the other, some of the requirements seem difficult.”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.(Updates share move in second paragraph and comments from Citigroup analysts)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.
(Bloomberg) -- Gap Inc. and Synchrony Financial are parting ways after they couldn’t reach an agreement to renew their longstanding card partnership.The clothing retailer has decided to shift the portfolio to Barclays Plc beginning in May 2022, it said in a statement Tuesday. Synchrony said in a regulatory filing that it expects to recognize a gain on the sale of the portfolio when it unloads it next April.“Synchrony was unable to reach contractual and economic terms with Gap that made sense for our company and our shareholders,” the Stamford, Connecticut-based firm said in the filing.Synchrony shares dropped 3.7% to $41.55 at 2:34 p.m. in New York, the second-worst performance in the 65-company S&P 500 Financials Index. The lender plans to use about $1 billion of the proceeds from the sale of the portfolio to buy back shares and invest in “higher growth programs,” according to the filing.Gap and Synchrony have offered cards together for more than two decades, and the lender counts the retailer as one of its five largest partners. The portfolio represents about 5% of the bank’s roughly $80 billion in receivables.It’s the second time Synchrony has opted not to renew a partnership with a major retailer after Walmart Inc. shifted its portfolio to Capital One Financial Corp., a move that was first announced in 2018. The decision comes just a few weeks after the lender installed Brian Doubles as its new chief executive officer, replacing its longtime leader, Margaret Keane.“This is a speed bump,” Jon Arfstrom, an analyst at RBC Capital Markets, said in a note to clients. “We do not believe this loss (and Walmart in 2018) are due to any uncompetitive positioning for Synchrony, and we believe it comes down to preferences and negotiations and bottom-line profitability.”Gap, like most of its mall-based peers, has struggled to attract customers during the coronavirus pandemic. “We faced one of the most difficult years in our company’s history,” Chief Executive Officer Sonia Syngal said last month as Gap capped its fiscal year with fourth-quarter sales that fell short of Wall Street’s expectations.What Bloomberg Intelligence Says:“Revenue and earnings from the Gap partnership have been steadily shrinking, so the retailer’s move to Barclays should reduce Synchrony’s costs and shift resources to new, high-potential cards with Venmo and Verizon.”-- David Ritter, BI fintech analystClick here to read the research.Its Banana Republic brand, which primarily sells work clothes, has been particularly weak. One bright spot for the retailer is its Athleta activewear brand, which passed $1 billion in sales in 2020.Gap said the new credit-card program will be a key component of the revamped rewards program it launched in September. Barclays will issue both private label and co-brand credit cards for Gap, with the latter using Mastercard Inc.’s payment network.“With our shared values and focus on inclusion, we look forward to working with Gap Inc. and Barclays to deliver an enhanced card program to their customers,” Linda Kirkpatrick, president of Mastercard’s North America business, said in an emailed statement.It will be Barclays’s first private-label card, and the bank has already begun investing in the systems it will need to provide the program, said Denny Nealon, CEO of the U.S. consumer bank at Barclays. The bank has also recently been investing in data and analytics and other efforts to improve technology.Barclays has been looking to diversify its card partnerships, which have long focused on airlines, cruises and hotel chains. The firm recently debuted a new card with the nonprofit AARP.“We’re absolutely thrilled to join forces with Gap, it’s an iconic American brand, its got a huge customer base,” Nealon said. “We think we can help them drive growth and success.”(Updates with executive commentary beginning in 11th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Britain’s financial markets watchdog is looking to upgrade its relationship with the U.S. and give U.K. firms permanent access to American securities and derivatives markets in the wake of Brexit.The Financial Conduct Authority is working closely with the Commodity Futures Trading Commission about a “permanent footing” for U.K. trading venues to operate in the U.S., Nausicaa Delfas, the FCA’s executive director of international, said at a conference on Tuesday.“If granted, this recognition will provide U.K. firms with the certainty they need to conduct their business in the U.S. with confidence,” Delfas said at the City & Financial Global virtual event.The FCA is also in discussions with the Securities and Exchange Commission over access to the U.S. for swap dealers, and the regulator is supporting the U.K. government’s negotiations with the U.S. on a wider trade agreement. These efforts build on agreements made before Brexit came into effect at the start of the year, which pledged to minimize disruption in transatlantic financial markets.“There is much still to be agreed, but we are supportive of an ambitious outcome on financial services that benefits both U.K. and U.S. industries whilst preserving our regulatory objectives and safeguards,” Delfas 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.
The S&P 500 hit a record high on Tuesday and the Nasdaq jumped as investors flocked to technology-related stocks after the United States' pause in the rollout of Johnson & Johnson's COVID-19 vaccine sparked fears of a delay in a broader economic rebound. The drugmaker's shares fell 2.7% to a one-month low as calls for pausing the use of its COVID-19 vaccine after six women developed rare blood clots dealt a fresh setback to efforts to tackle the pandemic. The technology and consumer discretionary sectors, which house high-flying technology names that flourished during coronavirus-induced lockdowns last year, rose 0.6% and 0.4%, respectively.
(Bloomberg) -- Southeast Asia’s answer to Uber is set to nab the record for biggest deal in the SPAC world, yet traders are holding their applause.Singapore-based Grab Holdings Inc. said it will list on U.S. exchanges through a reverse merger with Altimeter Growth Corp. in a deal valued at nearly $40 billion that drew institutional backing from heavyweights like T. Rowe Price Group Inc. and Temasek Holdings Pte.As it stands, the blockbuster tie-up would be the largest SPAC merger ever, dwarfing the one announced between Lucid Motors Inc. and Churchill Capital IV in February, valued at $24 billion. The transaction is expected to close in July and the company will trade on the Nasdaq with the catchy symbol GRAB.But investors don’t seem much interested in seizing this special purpose acquisition company, or SPAC, opportunity.Shares of Altimeter rose on the day merger rumors surfaced, but modestly relative to others, in the latest example of SPAC market pain. After trading lower earlier Tuesday, the stock rallied into the close but still remains 15% below its January peak.Gone are the 2020 days of indiscriminate SPAC deal pops, when everyone wanted to play the deal announcement, Josef Schuster, founder of the SPAC index, told Bloomberg in an interview. Excitement came fast and easy but dissipated after a series of “lousy” showings from the companies post-deal, Schuster said, noting that the SPAC index has gone nowhere this year.“Maybe the idea is that those deals shouldn’t get a pop in the first place,” Schuster said. “If anything the market is more efficient now.”The second- and third-largest deals -- Michael Klein’s SPAC with Lucid Motors and Alec Gore’s SPAC with United Wholesale Mortgage Group, valued at $16 billion -- haven’t translated into big gains thus far. The Churchill SPAC is 66% off its peak and UWM Holdings Corp. now sits below $8 after completing its reverse-merger earlier this year.Traders reference the Churchill-Lucid announcement in late February as “peak SPAC” -- when the deal value broke, shares of the SPAC fell and catalyzed a selloff in that market that led to hundreds of pre-deal SPACs sliding under their IPO prices of $10. Meanwhile, regulators have turned up the heat on SPACs and the feverish pace of SPACs coming to market has slowed to a crawl.Read More: Do-Nothing SPACs Sag, Offering Investors a $1.1 Billion ReturnWhile history favors pre-deal SPAC performance, buying shares of companies that emerge from SPAC combinations and holding them for one year results in an annualized loss of 15% on an equal-weighted basis, according to data from Jay Ritter, a University of Florida finance professor who tracked such deals from January 2010 through October 2020.SPACs are also significantly underperforming traditional initial public offerings. This year’s SPAC listings are up about 1%, while regular listings have gained 35% on an offer-to-date basis, according to data compiled by Bloomberg.Perhaps investors keen on size should be paying attention to the biggest companies to emerge from SPACs based on market capitalization, which would ultimately determine whether they land in major index funds and exchange-traded funds. That would be DraftKings Inc. at about $23 billion, Opendoor Technologies Inc. for $11 billion and Paysafe Ltd. around $9 billion as of Monday night.Whether Grab will crack those ranks remains to be seen.(Update in fifth graph, first chart)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.
Tempo, which launched its first home "studio" in February 2020, on Tuesday announced its $220 million Series C led by SoftBank Vision Fund with participation from new investor Steadfast Venture Capital, and returning investors DCM, General Catalyst, Norwest Venture Partners, and Bling Capital. T
Roth accounts serve a special tax purpose — they’re funded with after-tax dollars and thus, are distributed tax-free (compared with a traditional account, where the money is contributed and grows tax-free but is taxed at withdrawal). Roth conversions are similar — investors move the money from their traditional accounts into Roth accounts and pay the tax upfront.
ZURICH (Reuters) -Proxy adviser Glass Lewis urged Credit Suisse shareholders to oppose board member Andreas Gottschling's re-election, on grounds that as risk committee chairman he should be held accountable for problems tied to Greensill and Archegos. Switzerland's second-biggest bank has been reeling from the collapses of Greensill Capital and Archegos Capital Management, with a 4.4 billion Swiss franc ($4.75 billion) charge hitting its balance sheet after Archegos failed to meet margin commitments.
(Bloomberg) -- Asia’s top ride-hailing startups are pushing ahead with listing plans, as they seek to take advantage of a boom in equity offerings to fund expansion in everything from food delivery to autonomous driving.Beijing-based Didi Chuxing has filed confidentially with the U.S. Securities and Exchange Commission for an initial public offering that could raise several billion dollars, according to people with knowledge of the matter. Its Southeast Asian peer Grab Holdings Inc. aims to announce a merger with a blank-check company in the U.S. as soon as this week in a deal valued at more than $34 billion, the people said.These listings pave the way for some of the largest tech debuts globally this year as demand for ride services and ride-sharing jumped after pandemic-induced disruptions in Asia. Didi and Grab are also capitalizing on a rebound in tech stocks as the Nasdaq Composite Index is again charging toward an all-time high.Didi has tapped Goldman Sachs Group Inc. and Morgan Stanley as underwriters for its U.S. listing which could value the company at as much as $70 billion to $100 billion, the people said, asking not to be identified because the information is private. It is raising $1.5 billion through a revolving loan facility to shore up capital ahead of the share sale, Bloomberg News reported last week.The startup is also exploring a potential dual listing in Hong Kong at a later time, one of the people added.Didi, the Chinese version of Uber Technologies Inc., acquired its U.S. rival’s China business in 2016. The SoftBank Group Corp.-backed company is stepping up efforts to grow its presence in strategically important sectors like autonomous driving and technologies like artificial intelligence chips. It has also just raised about $1.5 billion for its on-demand trucking unit earlier this year, Bloomberg News has reported.Separately, Singapore-based Grab has attracted backing from T. Rowe Price Group Inc. and Temasek Holdings Pte for its planned merger with Altimeter Growth Corp., the people said. The firms have expressed interest in joining a private investment in public equity offering, or PIPE, to support Grab’s combination with the blank-check company, the people said. BlackRock Inc. is also in talks to participate in the PIPE, which could raise about $4 billion, they added.At a valuation of more than $34 billion, Grab’s deal could become the biggest SPAC merger ever, according to data complied by Bloomberg, and would see the startup become one of the first Southeast Asian unicorns to go public through a blank-check company.Read more: Grab’s $34 Billion SPAC Deal Puts Southeast Asia Tech on the MapDidi and Grab are set to test investor appetite for the capital-intensive ride-hailing business. Uber, which raised $8.1 billion in an IPO in 2019, saw its share dive in March 2020 as the pandemic led to lockdowns in major cities globally. The stock has since quadrupled and even reached a new high in February this year.Details of Didi and Grab’s listings could still change as deliberations continue, the people said. Representatives for Didi, Grab, Goldman Sachs and Morgan Stanley declined to comment.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.