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Debt-laden Greece has been experiencing a stock surge so far this year. Yahoo Finance's Scott Gamm joined 'The Final Round' to discuss.
Debt-laden Greece has been experiencing a stock surge so far this year. Yahoo Finance's Scott Gamm joined 'The Final Round' to discuss.
Stock futures hugged the flat line Tuesday evening after a mixed session on Wall Street, with traders looking ahead to a slew of earnings results from big banks.
OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market. "As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility," OPEC said in the report. The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns.
(Bloomberg) -- International Holding Co., which has transformed itself into the United Arab Emirates’ second most-valuable listed company, has become one of the biggest shareholders in Abu Dhabi’s largest property developer.Abu Dhabi-based IHC said on Monday it had bought a 45% stake in Alpha Dhabi Holding, but didn’t provide details of the transaction. With the deal, IHC will become a shareholder in Aldar Properties PJSC as Alpha Dhabi acquired a 12.2% stake in the developer last month.“The acquisition of a substantial stake in Alpha Dhabi Holding will add a significant scale to IHC,” Chief Executive Officer Syed Basar Shueb said in a statement. “The move will increase and diversify our investment vertical, as we continually seek strategic partnerships with local and international players.”IHC had started talks to buy Alpha Dhabi, then known as Trojan Holding, in March. The company has amassed a portfolio spanning real estate to utilities and health care to food services through a flurry of deals and its shares have soared more than 110% this year.Its market capitalization of about $43 billion is the second biggest in the UAE, only behind Emirates Telecommunications Group Co PJSC and higher even than the country’s biggest bank. IHC shares were up 3.4% as of 11 a.m. local time.IHC is ultimately controlled by the Royal Group, a conglomerate that lists Sheikh Tahnoon Bin Zayed Al Nahyan as chairman. Sheikh Tahnoon is the brother of Abu Dhabi’s crown prince, Mohammed bin Zayed al Nahyan, who is considered the emirate’s de facto ruler.About Alpha Dhabi:Established in 2008 with a focus in the real estate and construction sectorEmploys more than 22,000 peoplePortfolio manages entities within the construction, hospitality, industrial and capital verticals(Adds stock performance on Tuesday in 5th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The overhaul will force the Alibaba-backed group to become a financial holding firm.
(Bloomberg) -- U.S. regulators are throwing another wrench into Wall Street’s SPAC machine by cracking down on how accounting rules apply to a key element of blank-check companies.The Securities and Exchange Commission is setting forth new guidance that warrants, which are issued to early investors in the deals, might not be considered equity instruments and may instead be liabilities for accounting purposes. The move, reported earlier by Bloomberg News, threatens to disrupt filings for new special purpose acquisition companies until the issue is resolved.The accounting considerations mark the latest effort by the SEC to clamp down on the white-hot SPAC market. For months, the regulator has been raising red flags that investors aren’t being fully informed of potential risks associated with blank-check companies, which list on public stock exchanges to raise money for the purpose of buying other entities.The SEC began reaching out to accountants last week with the guidance on warrants, according to people familiar with the matter. A pipeline of hundreds of filings for new SPACs could be affected, said the people, who asked not to be identified because the conversations were private.“The SEC indicated that they will not declare any registration statements effective unless the warrant issue is addressed,” according to a client note sent by accounting firm Marcum that was reviewed by Bloomberg.In a SPAC, early investors buy units, which typically includes a share of common stock and a fraction of a warrant to purchase more stock at a later date. They’re considered a sweetener for backers and have thus far been considered equity instruments for accounting purposes. Sponsor teams -- the management of a SPAC -- are also typically given warrants as part of their reward to find a deal, on top of the founder shares.In a statement late Monday, SEC officials urged those involved in SPACs to pay attention to the accounting implications of their transactions. They said that a recent analysis of the market had shown a fact pattern in transactions in which “warrants should be classified as a liability measured at fair value, with changes in fair value each period reported in earnings.”“The evaluation of the accounting for contracts in an entity’s own equity, such as warrants issued by a SPAC, requires careful consideration of the specific facts and circumstances for each entity and each contract,” the officials said in the statement.The SEC issued its guidance after a firm asked the agency how certain accounting rules applied to SPACs, according to another person familiar with the matter. It’s unclear how many companies will be impacted by the move and not all warrants will be affected. Still, regulators consider it likely to be a widespread issue. Firms will be expected to review their statements and correct any material errors, said the person.The shift would spell a massive nuisance for accountants and lawyers, who are hired to ensure blank-check companies are in compliance with the agency. SPACs that are already public and that have struck mergers with targets may have to restate their financial results, the people familiar with the matter said.More than 550 SPACs have filed to go public on U.S. exchanges in the year to date, seeking to raise a combined $162 billion, according to data compiled by Bloomberg. That exceeds the total for all of 2020, during which SPACs raised more than every prior year combined.In an April 8 statement, John Coates, the SEC’s top official for corporate filings, warned Wall Street against viewing SPACs as a way to avoid securities laws. Claims that promoters face less legal liability than a traditional public offering are “uncertain at best,” Coates, who was one of the officials issuing Monday’s statement on accounting, said at the time.The deluge has overwhelmed those responsible for reviewing filings at the SEC, triggered a surge in liability insurance rates for blank-check companies and fueled market anxieties that the bubble is about to burst.(Updates with SEC official’s previous comment in penultimate 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.
Credit Suisse has identified $2.3 billion worth of loans exposed to financial and litigation uncertainties in its Greensill-linked supply chain finance funds, it told investors on Tuesday. Switzerland's second-biggest bank has been reeling from its exposure to the collapse first of Greensill Capital and then Archegos Capital Management within a month. Its asset management unit was forced last month to shut $10 billion of supply chain finance funds that invested in bonds issued by Greensill after the UK firm lost credit insurance coverage shortly before filing for insolvency.
(Bloomberg) -- Business sentiment rose to near record levels at the start of 2021 on an improving outlook for both domestic and foreign demand, according to the Bank of Canada.The results its latest quarterly survey of executives show business conditions continuing to improve, with many firms no longer worried about pandemic uncertainty. Managers reported stronger sales outlooks, investment intentions and accelerating inflation expectations, though they indicated capacity constraints were slightly weaker at about historical averages. The central bank also highlighted, as it has been doing throughout the recovery, the unevenness of the rebound.The Bank of Canada’s composite gauge of sentiment rose to 2.9 in the first quarter, the highest since 2018 and the third highest score in data going back to 2003. That’s up from 1.3 in the fourth quarter and a decade-low of -6.9 at the height of the pandemic last year. The indicator hit a record of 3.0 in the second quarter of 2018.“Firms reported less uncertainty related to the Covid‑19 pandemic and strengthening demand from weak levels,” the central bank said in its summary of the findings. “Still, the recovery remains uneven, with firms tied to high-contact services facing ongoing challenges.”The results of the survey will only fuel expectations the Bank of Canada will start tightening its aggressive monetary policy stance as early as its April 21 policy decision, when it could begin slowing the pace of its government bond purchases. Separately, the central bank issued its quarterly survey of consumers that also found spending expectations at a record.The interviews in the Bank of Canada business outlook survey were conducted from mid-February to early March, before new economy-wide restrictions were imposed amid a third wave of Covid-19 cases. The data, though, do show signs businesses are adapting to containment measures, including a greater capacity for online sales, according to the central bank.Other HighlightsNearly two-thirds of firms indicate sales have reached or exceeded pre-pandemic levelsStill, some businesses in high-contact sectors are hurting. One‑fifth of managers said they don’t expect sales to return to pre-pandemic levels over the next 12 months60% of firms reported improving indicators of future sales, up from 41% at the end of last yearInvestment intentions are at record highs with 59% of managers saying they plan higher spending on machinery and equipment over the next 12 months.Only 6% of companies see lower employment levels over the next 12 months. 51% expect to increase staff, slightly down from 54% at end of last yearMore than half of firms see inflation at above 2%, the first time it’s past the 50% threshold since 2018The balance of opinion for both input and output price inflation is highest on record(Updates with consumer survey results in 5th 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) -- 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.
The direction of the EUR/USD on Monday is likely to be determined by trader reaction to 1.1888.
(Bloomberg) -- That the immediate fate of emerging markets is likely to be determined by the path of the dollar and Treasury yields is barely in dispute.But what is less clear is which direction the U.S. currency and bond market will take, as investors weigh the competing forces of Covid-19 infections and the prospects of a global economic rebound. Another uncertainty is which developing economies are best-placed to ride the recovery.This week “will continue to be dominated by rate volatility, issuance and Covid resurgence,” said Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital in Dubai. “If rate volatility declines, supply is constrained and the Covid resurgence in places like India is controlled we can go tighter in spreads. Otherwise, I think we will continue to see weakness in fixed income.”Last week’s performance provided plenty of pointers. Emerging-market dollar bonds had their best week since December, while local-currency debt rose by the most in two months, according to Bloomberg Barclays indexes. Meantime, developing-nation stocks fell 0.6% amid concerns about rising inflation. Even so, a record investment in an exchange-traded fund that buys Chinese internet stocks fueled the 23rd week of inflows to emerging markets, the longest winning streak since 2015. The implied volatility for currencies declined for a second week.Chinese data will take the spotlight this week as a slew of releases including first-quarter gross domestic product will be watched for clues on the strength of its economic recovery. Inflation data from the U.S. and developing economies from India to Russia will also garner scrutiny as investors seek guidance on the path for monetary policy.Turkey’s interest-rate decision on Thursday will be in focus as the new central bank governor seeks to win over investors with a commitment to tight monetary policy after his predecessor was fired last month. The Bank of Korea is likely to hold its benchmark rate, too.On HoldTurkish policy makers will probably keep the benchmark one-week repo rate unchanged at 19% on Thursday, according to most economists surveyed by BloombergTurkey’s central bank Governor Sahap Kavcioglu said last month markets shouldn’t take for granted that he’ll cut interest rates as soon as AprilThe lira slumped 10% last month after President Recep Tayyip Erdogan’s shock decision to replace the country’s central bank chiefThe benchmark rate was raised by a larger-than-expected 200 basis points at Naci Agbal’s final rate-setting meeting as governor on March 18“President Recep Tayyip Erdogan would like the new-look central bank to lower interest rates, but market forces will likely delay the delivery of his orders,” with inflation rising and the lira weakening, Bloomberg Economics said in a reportBank of Korea is likely to hold its benchmark rate at 0.5% at its Thursday meeting. In late March Governor Lee Ju-yeol dismissed calls to tighten policy early to tackle rising financial risks, even as he said he expects faster inflation and economic growth this yearSouth Korea is scheduled to announce its unemployment rate for March on Wednesday. Bloomberg Economics forecasts the seasonally-adjusted jobless rate to slide further to 3.8% in March from 4% in the previous monthElection WatchCareer banker Guillermo Lasso won Ecuador’s presidential election runoff after a late surge in the polls, preventing a return to socialism and reassuring bondholders in the default-prone countryLasso has pledged to attract foreign investors and create jobs via policies that help the private sectorThe nation’s recently restructured dollar bonds rallied on Monday as firms turned more bullishPeru is heading to a presidential runoff in June after early results of Sunday’s election showed no candidate getting anywhere close to the threshold needed to win outrightThe sol led losses among emerging-market currencies on Monday as initial results laid bare a politically fragmented nationChina CheckData on Friday is set to show China’s economy accelerated by a record 18.3% in the first three months of 2021, according to the median estimate of analysts surveyed by BloombergBefore that, trade figures are forecast to show a continued export boom while industrial production and retail sales are also expected to jumpThe People’s Bank of China is also seen injecting cash in the banking system via medium-term lending facilities on Thursday as 100 billion yuan ($15.2 billion) of one-year loans come due. Traders will be on the watch for any additional cash injection as liquidity is expected to tighten this quarter due to a surge in local government bond sales and tax payments“Looking ahead to April and May, we expect liquidity to stay on the tight side,” said David Qu, who covers China for Bloomberg Economics. “In our view, the PBOC is trying to avoid fueling financial risks -- without putting a choke on the economy. We think the central bank will need to inject more liquidity into the banking system”What Else to WatchTraders will watch out for further escalation between Russia and Ukraine after Russia warned that growing violence in Ukraine could set off a broader military conflictJPMorgan Chase & Co. moved to market-weight from overweight on the ruble and Russian rates due to escalating geopolitical tensions and asset underperformanceThe ruble was the second-worst performing emerging-market currency last week amid the tensionIndia’s consumer inflation accelerated in March, reinforcing the central bank’s decision to hold interest rates in its monetary policy last weekThe Reserve Bank of India will probably look past the near-term surge however and continue its hold on interest rates, according to Bloomberg IntelligenceIndia’s benchmark 10-year yield fell 15 basis points last week after the RBI announced 1 trillion rupees ($13.4 trillion) of debt purchasesIndustrial production is expected to decline further in February; India will also release trade figures alongside IndonesiaThe Philippines will release February overseas remittances data on ThursdayThe Czech Republic and Poland will report March’s consumer prices data on Tuesday and Thursday, respectivelyThe koruna and the zloty were among the best-performing emerging-market currencies last weekTraders will watch a reading of Peru’s economic activity gauge for February, which is expected to add to evidence that recovering growth lost momentum early in the first quarter, in line with increasing infections and lockdowns, according to Bloomberg EconomicsIn Brazil, investors will be watching for news on the nation’s 2021 budget gridlock, a significant local drivers this monthFebruary retail sales data on Tuesday, and unemployment figures on Friday will offer more information on how rising coronavirus cases has affected the economy.Colombia will post retail sales figures for February on ThursdayThe nation has had to return to lockdowns to fight the spread of Covid-19, which may imply downside risk for March, according to Bloomberg EconomicsBloomberg Economics expects Argentina’s March CPI data to show persistent inflationary pressure, despite price and currency controlsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The European Investment Bank plans to harness the power of blockchain to sell bonds, potentially boosting use of the digital-ledger technology as a tool for the region’s debt market.The European Union’s investment arm hired Goldman Sachs Group Inc., Banco Santander SA and Societe Generale AG to explore a so-called digital bond in euros, which would be registered and settled using blockchain, according to information from a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.Investor meetings for the inaugural sale will start April 15 and continue for some weeks, the person said.The EIB has often been at the forefront of innovation in Europe’s debt capital markets, being among the first to issue green and sustainability bonds, as well as debt benchmarked against a new euro short-term rate called ESTR. The move comes after European Central Bank President Christine Lagarde said the institution she leads could launch a digital currency around the middle of this decade.A spokesperson for the EIB declined to comment further when contacted by Bloomberg News.Not MainstreamA number of issuers globally including the World Bank, China Construction Bank Corp., JPMorgan Chase & Co. and National Bank of Canada have been experimenting with blockchain-based issuance in the past few years, but its use in debt markets is still far from mainstream.The technology used for verifying and recording transactions that’s at the heart of cryptocurrencies has faced hurdles to wider adoption, and the pandemic has caused delays in some projects.Blockchain has a longer history in loans and Germany’s Schuldschein debt market. Automaker Daimler AG was the first to sell a 100 million euros ($119 million) of Schuldschein using blockchain in 2017. Telefonica SA’s German unit also used blockchain in early January to raise a 200 million-euro loan.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Malaysian corporate dollar bonds are the worst performers in Southeast Asia this year but are clawing back some ground as economic growth looks set to outpace neighbors.The securities have returned about 0.9% this month, cutting their loss for the year to 3.5%. While that’s still worse in 2021 than Thailand, the Philippines and a broad Asian dollar debt index, there are signs that the Malaysian notes could still rebound furtherHard-currency bond issuance from Malaysian companies is limited and yields are “attractive,” according to Joevin Teo, head of Asian fixed income at Amundi Asset Management in Singapore. The average yield on the securities has risen about half a percentage point this year to 2.7% amid reflationary pressures globally, a Bloomberg Barclays index showsMalaysia’s economy will likely expand by about 18.3% this quarter from the year-earlier-period, topping growth by other nations in the region, according to the median forecast of economists surveyed by Bloomberg. For the full-year, economists expect growth of 5.5%, beating Indonesia and ThailandThe relative performance of Malaysian company dollar bonds will be heavily influenced by the direction of U.S. yields this year, given the smaller average spread cushion on the debt than some peers. That makes returns on the notes, which are some of the highest rated in Southeast Asia, more vulnerable to rising ratesFor Southeast Asian bond pipeline, click hereIslamic Finance - Malaysia’s SukukMalaysia is considering the sale of a possible dollar-denominated sustainable sukuk, which would mark the first U.S. currency sovereign Sukuk from Southeast Asia this yearInvestors in Malaysia’s government dollar Sukuks have lost 3.3% on average this year, the worst performance globally among such securities, partly because the country has some of the longest such securities in the world. Ones maturing in 2045 and 2046 have gained more than 2 cents this month as longer-dated benchmark yields have retreatedPhilippine - Bond BuybackTwo of the largest listed companies in the Philippines are capitalizing on the selloff in bonds this year to buy back their own debtSan Miguel, SM Investments to Redeem Bonds EarlySan Miguel Corp. will redeem the outstanding amount of an $800 million note due in 2023. The bond has been the worst performer among the beer maker’s dollar securities this year, returning 0.9% compared with an average of 4% for all U.S. currency bonds issued by group companies, according to the data compiled by BloombergSM Investments Corp. will exercise early redemption option on its 3.33 billion peso-denominated securities ($69 million) due 2024 at 102% of principal. The notes have returned 4.36% this year, the best among 4 local-currency callable bonds issued by the companyIndonesia - Tightening SpreadsAfter narrowing last week, spreads on Indonesian company dollar notes are now about 49 basis points tighter than a broader Asian index. For Indonesia’s credit wrap, click hereFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Roth accounts serve a special tax purpose — they’re funded with after-tax dollars and thus, are distributed tax-free (compared with a traditional account, where the money is contributed and grows tax-free but is taxed at withdrawal). Roth conversions are similar — investors move the money from their traditional accounts into Roth accounts and pay the tax upfront.
The S&P 500 and the Dow Jones indexes were set to open lower on Monday after closing at record levels in the previous session, as investors geared up for the start of the earnings season and a key inflation report this week. A pullback in the benchmark 10-year bond yield from 14-month highs in April eased worries about higher borrowing costs, helping richly valued technology stocks gain ground and drive the S&P 500 and the Dow to record levels.
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JPMorgan, Goldman Sachs and other banks are set to kick off earnings season. Here's how the charts look going into the reports.