Deanna Mulligan says being conservative is key.
Deanna Mulligan says being conservative is key.
(Bloomberg) -- Oil jumped the most in more than a week after a U.S. government report showed a record drop in domestic fuel inventories from the aftermath of a deep freeze that shuttered refineries in several states.Crude futures in New York climbed 2.6% on Wednesday, snapping a three-day streak of losses. U.S. gasoline inventories tumbled last week by the most since 1990 after a polar blast wiped out more than 5 million barrels a day of refining capacity in late February along the U.S. Gulf Coast, according to Energy Information Administration data. Crude stockpiles swelled with refineries still shut.See also: Record U.S. Gasoline Decline Raises Prospect of $3 Pump Prices“The market expected some noise from the storm’s lingering effects,” said Matt Sallee, portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. “Absent the magnitude of the changes, things came in pretty much as expected with the enormous product draw more than offsetting the record crude build.”The U.S. data also showed gasoline supplied, a gauge for demand, surged the most since May, supporting those who say the oil market needs more barrels from producers as OPEC+ heads into a meeting on Thursday. The group is poised to agree on a coordinated production hike to cool the rapid surge in crude prices.Oil has rallied more than 25% so far this year, shepherded by the OPEC+ alliance’s continued production curbs and expectations for demand to meaningfully rebound as Covid-19 vaccines are rolled out worldwide. That strength though has paved the way for the alliance to unleash more barrels, with OPEC Secretary-General Mohammad Barkindo saying Tuesday that both the wider economic outlook and oil-market fundamentals continue to improve. The group could return the bulk of the 1.5 million-barrel-a-day hike that’s up for debate.There are two parts to the potential production ramp-up that OPEC+ will discuss. The first is whether the cartel will proceed with a 500,000-barrel-a-day collective increase in April. The second is the question of how Saudi Arabia could phase out its extra reduction of 1 million barrels a day.“Elevated price levels will incentivize the cartel to taper their output cuts, but given the uncertainty, the market is likely to be on edge heading into tomorrow’s meeting,” TD Securities commodity strategists including Bart Melek said in a note. In the U.S., the decline in both gasoline and distillate inventories coincides with a spate of refinery outages left in the wake of the cold snap: Plants processed crude at the lowest level on record last week. While some refineries, like Motiva Enterprises LLC’s Texas site, have been able to restart key processing units, many that shut due to the freeze are still in the process of making repairs or restarting operations.Meanwhile, much of the crude production hit by the cold temperatures has been restored. Crude supplies grew by a record 21.56 million barrels, signaling weak demand from refiners at the time.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.
Calls to stop GameStop-type "market manipulation" could open the door to government regulation the crypto industry won't like.
(Bloomberg) -- For investors fretting about an end to the era of cheap and plentiful debt, China just provided another reason to worry.The nation’s top banking regulator jolted markets on Tuesday with a warning about the need to reduce leverage amid the rising risk of bubbles globally and in the local property sector. The impact on Chinese stocks was swift: the CSI 300 Index fell as much as 2.1% to lead declines in Asia, while Kweichow Moutai Co., the biggest contributor to gains during 2020’s stimulus cycle, tumbled almost 5%. China’s largest stock has lost more than $100 billion in nine days.Central banks around the world are facing the challenge of when and how to pare back stimulus as economies recover from the pandemic. Global bond markets plunged last week as traders pulled forward bets on interest rate increases, with the 10-year Treasury yield reaching the highest in a year.Deleveraging has particular resonance in China, where it is a key priority of President Xi Jinping due to the size of the nation’s debt mountain. A crackdown on leverage in 2017 sent corporate and government bond yields to multi-year highs before officials halted the drive a year later amid the worsening trade war with the U.S.Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission and Party secretary of the central bank, didn’t mince his words. “From a banking and insurance industry’s perspective, the first step is to reduce the high leverage within the financial system,” Guo said at a briefing in Beijing. Speculation in the property market is “very dangerous” and bubbles in U.S. and European financial markets may soon burst, he said.“His talk shows a willingness to tolerate higher rates,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong. “This is a confirmation of monetary-policy stance tightening. That’s important.”A stronger economy and signs of excess have provoked stronger rhetoric from Beijing in recent weeks. The People’s Bank of China said in its latest monetary policy report it will balance the need to support growth and prevent risk. A front-page report in state media last week argued the economy is strong enough to withstand policy normalization. In January, the central bank engineered the biggest cash squeeze since 2015, after an adviser suggested a shift away from stimulus.Debt was about 280% of China’s gross domestic product in November, the highest ratio since Bloomberg started compiling the data in 2014.Beijing is set to unveil its major economic goals on March 5, when the National People’s Congress, China’s rubber-stamp parliament, convenes for its yearly meeting. While officials have stressed that changes in policy would be gradual, China’s monetary policy conditions “will visibly tighten this year,” Li-Gang Liu, managing director and chief China economist at Citigroup Inc. wrote in a report this week.The prospect that China will tighten funding conditions is derailing gains in the country’s most popular stocks. Liquor makers like Moutai are hardest hit because they are widely owned and command some of the highest valuations. The CSI 300 Index -- which in February briefly topped its record close from 2007 -- has lost 7.9% since mainland markets reopened for the new Lunar Year.Authorities are juggling curbing leverage while maintaining economic growth before the Communist Party’s 100-year anniversary this year. The central bank has successfully calmed interbank funding markets since January, when short-term rates spiked to the highest since 2015.“Deleveraging and financial risk mitigation will both stay in policy focus in 2021,” said Tianhe Ji, a strategist at BNP Paribas SA in Beijing.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) -- United Arab Emirates borrowers at the opposite ends of the credit-rating spectrum are seizing on a lull in the U.S. Treasury rout to sell bonds.Abu Dhabi wealth fund Mubadala Investment Co. is planning a dual-tranche offering denominated in euros, according to a person familiar with the matter. Mubadala issues its debt through a unit, Mamoura Diversified Global Holding PJSC, which has the third-highest credit grade from all three major rating companies.Sharjah, a sheikdom with the lowest non-junk rating at Moody’s Investors Service and S&P Global Ratings, mandated HSBC Holdings Plc this week to arrange a sale of 12- and 30-year dollar bonds.“What will be interesting to see is how much demand there is for long duration emerging-market paper now,” said Abdul Kadir Hussain, the Dubai-based head of fixed-income asset management at Arqaam Capital. “With interest-rate volatility increasing and inflation becoming a bigger risk, I think investors are getting more weary of duration.”February was the worst month for developing-nation bonds in almost a year after a spike in U.S. Treasury yields sent fixed-income markets tumbling. But it hasn’t derailed placements for now. While emerging-market sovereign and corporate sales fell 6.8% in February from the year earlier, they were still up 1.4% at $170.5 billion in the first two months.Both UAE offerings should find buyers, according to Sergey Dergachev, senior portfolio manager for emerging-market debt at Union Investment in Frankfurt.“Lower-rated sovereign and corporate credits tend to outperform due to their lower sensitivity to Treasury rates,” which should support the Sharjah deal, he said. Meanwhile, Mubadala’s sale will draw investors looking to pick up “quasi-Abu Dhabi sovereign risk,” he said.(Updates with Arqaam’s comment 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.
Walmart-owned Flipkart will sell groceries online in more Indian cities, as it seeks to compete better with Amazon and Reliance in an e-commerce market that has grown rapidly during the COVID-19 pandemic. Flipkart has already expanded online grocery sales to more than 50 Indian cities and intends to reach over 70 locations in the next six months, the company said in a statement on Tuesday. "Grocery continues to be one of the fastest-growing categories," said Manish Kumar, senior vice president at Flipkart, adding that the company had seen increased demand for the service from smaller cities in 2020.
(Bloomberg) -- A string of poorly-received bond auctions in the past week is driving home a message -- the Treasuries-led global rout is leaving investors scarred and governments staring at higher borrowing costs.U.S. yields resumed their rise Wednesday after a brief lull that followed a disastrous sale of seven-year Treasury notes last week. Sovereign bond offerings from Indonesia to Japan and Germany have drawn tepid demand and at least one sale was scrapped. The push for higher rates comes as central bankers attempt to ease investors’ discomfort over the pace of the recent rise.Investors are demanding higher yields to compensate for the risk of further volatility, which may complicate efforts to finance $14 trillion worth of fiscal stimulus globally. Concerns that central banks may withdraw policy support has soured sentiment, amid mounting evidence of a faster-than-anticipated economic recovery.“Investors will be increasingly differentiating countries based on their fundamentals and prospects,” said Tuuli McCully, head of Asia Pacific economics at Scotiabank. “Considering elevated debt levels in some countries, higher funding costs could dampen their economic recovery momentum further.”Clear MessageThe message from Europe and Asia Pacific markets this week is clear. Even though global bonds have stabilized somewhat, investors are still rattled by the prospect of more volatility.In Germany, a sale of 15-year bonds on Wednesday received the weakest demand since the tenor was launched last summer. Japan’s auction of 10-year debt the previous day recorded the lowest bid-to-cover since February 2016.Indonesia’s Finance Ministry agreed to sell 13.6 trillion rupiah ($951 million) of non-Islamic bonds on Tuesday, the least since March 2020, according to data compiled by Bloomberg. Including bills, the sale totaled 17 trillion rupiah, below the government’s revised target of 30 trillion rupiah.There were ominous signs even before last week’s ill-fated U.S. auction, including a drop in coverage ratios for debt sold in Thailand and Australia. Signs of distress also emerged in Italy, while New Zealand ended up accepting just over half of the bids it received for a sale as yields soared.“If there is still no reversal in sentiment, the government may need to accept higher bid yields, or cut down on planned spending,” said Frances Cheung, a rates strategist at Oversea-Chinese Banking Corp. in Singapore.Mexico’s Finance Ministry declared a local-currency sovereign debt sale void last week despite demand that was triple the amount offered. In a statement, the ministry blamed high rates due to market volatility for sinking the 3.7 billion-peso ($178 million) sale.A couple of offerings bucked the global trend. A sale of Italian green bonds racked up 76 billion euros of orders, boosted by its environmentally-friendly tag. In Russia, the Finance Ministry sold the most fixed-coupon notes since June, as mild sanctions from the U.S. failed to deter investors.The U.K. delivered an annual budget Wednesday that tried to balance the need for prolonged economic aid with calls to control the deficit, with Finance Minister Rishi Sunak saying he intends to raise the tax burden to its highest level in over 50 years. While the Debt Management Office’s projected bond sales for 2021-22 were well below the record this fiscal year, the total is higher than expected at 295.9 billion pounds ($413 billion).“We are in an uncomfortable spot where attention is shifting toward elevated asset prices,” said Eugene Leow, a rates strategist at DBS Bank Ltd. in Singapore. “Even as central banks try to reassure, there is this lingering fear that less-loose policy may be on the way.”PerspectiveFor all the jitters, optimists say that higher yields are a sign of confidence and emerging economies continue to enjoy inflows and improved current-account positions. In Asia, central banks have built up their foreign-exchange holdings by the most since 2013.“We remain of the view that fears of a 2013-like Taper Tantrum for emerging markets are overblown,” said Sameer Goel, Deutsche Bank’s global head of EM research in Singapore. “Central banks stand readier as part of fiscal-monetary coordination to quarterback term premia and the cost of capital to governments.”Central banks are clearly on their guard. Federal Reserve Governor Lael Brainard warned Tuesday that bond-market volatility could further delay any pullback in asset purchases while European Central Bank Executive Board member Fabio Panetta said the recent jump in yields “is unwelcome and must be resisted.” Still, the institution as a whole sees no need for drastic action to combat rising yields, according to officials familiar with internal discussions.While the Federal Reserve’s guidance is that a hike is unlikely until at least 2024, money markets in the U.S. are positioned for interest rates to start rising again by the end of next year.“That’s a significant difference, a big gap between the Fed’s message and where the market is, and they will push back against that,” said Kathy Jones, chief fixed income strategist at Charles Schwab & Co. in New York.(Adds details of Treasury selloff in second paragraph and U.K. budget in 12th 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.
A new compromise would make millions of Americans ineligible for the third checks.
(Bloomberg) -- The main fund from Cathie Wood’s Ark Investment Management extended its drop from a February peak to 20%, highlighting a swift turnaround for the formerly high-flying stocks favored by the firm.The $24.6 billion Ark Innovation ETF (ARKK) tumbled 6.3% on Wednesday alone as growth stocks such as Pinterest Inc. and Zillow Group Inc. took a beating. The Nasdaq 100 Index lost almost 3% as traders turn away from tech in favor of so-called value stocks that had underperformed during the pandemic, bringing its losses since a peak last month to 8.1%.The rotation, along with higher bond yields that dim the allure of equities, is taking the shine off what had been one of the hottest investments on Wall Street, with ARKK growing 10-fold over the past year, including a whopping $2.37 billion inflow just last month. Since peaking on Feb. 12, ARKK’s price has now dropped by a fifth, the level that commonly defines a bear market.“People are worried the crowded trades will lose their momentum like they did last September” when some of the biggest tech names suffered a bout of selling, said Matt Maley, chief market strategist at Miller Tabak + Co.Yields on benchmark 10-year Treasury notes have jumped more than 50 basis points in 2021, on track for the largest quarterly increase since 2016. Consequently, it’s growing more difficult to justify sky-high valuations for highly speculative, expensive areas of the stock market.ARKK’s three largest holdings, Tesla Inc., Square Inc. and Roku Inc., have about tripled over the past year. Tesla is up close to 350%, while Square has surged about 200% and Roku is up more than 240%. On Wednesday, they all slumped.In fact, all but three stocks held by ARKK fell and three suffered losses exceeding 10%, including Stratasys Ltd., a maker of 3D printers, and Veracyte Inc., which develops molecular tests for oncology.The fund’s tilt toward long-term growth means short-term profitability isn’t a key consideration when stocks are picked. In fact, two-thirds of its current holdings didn’t make a profit in the past year. And even after the recent losses, ARKK is still slightly up for the year.Inflows to the fund have faltered in the past week, but there’s yet to be a mass exodus. ARKK took in more than $600 million combined the past two days, after losing more than $690 million last week in its worst five-day period on record.“There is growing unease in the markets and whether higher-risk asset classes can continue to climb,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “If sentiment turns, you can see substantial outflows.”(Updates prices throughout)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.
Congress is nearing passage of the third economic stimulus check it will send out to you and other taxpayers as part of its Covid-19 relief bill.
Barstool Sports founder Dave Portnoy tweeted an elaborately produced “emergency press conference” video to debut the ETF. The stunt was also an uncomfortable reminder that one man’s meta meme may be another’s market manipulator.
Growth investors should watch out. The ETF (ticker: ARKK), actively managed by Cathie Wood, founder of ARK Investment Management, was one of the star performers of 2020. It gained more than 150% by riding stay-at home stars like (TSLA) (TSLA), (ROKU) and (SQ)(SQ) to new heights.
(Bloomberg) -- Australia wants to leverage off its position as a top mineral producer by boosting processing and manufacturing, part of a plan to challenge China’s dominance in the supply of products key to the clean-energy transition.The government unveiled a 10-year road map on Thursday that includes A$1.3 billion ($1 billion) of funding to help businesses capitalize on the country’s abundant natural resources and exploit opportunities in a de-carbonizing world. It encourages growth in high-value products like batteries and solar cells, as well as technologies and equipment that make mining safer and more efficient.The Modern Manufacturing Initiative comes as the U.S. and Japan look to cut their dependence on China for minerals that are vital to many manufacturing sectors. Australia is the top exporter of lithium, a key component in batteries, and is also a major source of rare earths. Beijing is reviewing its rare earths policy and there are signs it may ban the export of refining technology to nations or firms that it deems are a threat to state security.See also: Biden’s Hopes for Rare Earth Independence at Least a Decade Away“It’s a sovereign and strategic priority for Australia to ensure that we are hard-wired into this supply chain around the world,” Prime Minister Scott Morrison said at a media briefing following the announcement. It has to be “a supply chain that Australia and our partners can rely on, because these rare earths and critical minerals are what pull together the technology that we will be relying on into the future,” he said.Lynas Rare Earths Ltd. currently sends rare earths from its operations in Australia to Malaysia for processing, but has plans to build a facility close to its Mt. Weld mine in the country’s west. Lynas’ rival Iluka Resources Ltd. is also assessing options to build processing capacity. Energy Renaissance, meanwhile, and other companies are looking to establish a domestic battery manufacturing industry on Australia’s east coast.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.
This chart shows why the S&P 500's bull market run may be both too short lived and too limited, in terms of price gains, to be over anytime soon.
Max out your 401(k) each year, and be sure to get your 401(k) employer match, if you have one. And for you super savers, here are other ways to save for retirement.
The oil industry is no stranger to boom-bust cycles, but the pandemic has been its wildest ride to date, and on March 4 it’s due to take another turn when OPEC meets to consider rolling back production cuts. As the world’s cars and airplanes idled, global oil demand bottomed out in April at levels 16.4% below the previous year, dragging the price into negative territory for the first time. White-knuckling through it all has been OPEC, the 13-member cartel that dictates quotas for most of the world’s biggest oil-producing countries (notably excluding the US).
Stellantis CEO Carlos Tavares on Wednesday said the new car company formed from the merger of Fiat Chrysler Automobiles and PSA Peugeot would be a “disruptive” force in the industry, and that both sides would provide technologies to achieve the promised 5 billion euros ($6 billion) in cost savings each year. The Italian-American carmaker and the French mass-market automotive company completed their merger on Jan. 16, creating Stellantis, the world’s fourth-largest carmaker, despite a pandemic year that saw profits plunge.
(Bloomberg) -- U.S. Treasuries tumbled anew on Wednesday, driving long-maturity yields to their highest levels this week and pushing up inflation expectations as traders continued to price in a quicker economic rebound from the pandemic.Benchmark 10-year Treasury yields surged as much as 10.3 basis points to 1.495%, a move reminiscent of last Thursday’s startling selloff in government debt. Meanwhile, a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% for the first time since 2008 -- aided by climbing oil prices. At least part of the trigger for the fixed-income losses came from the U.K., which said it will sell more bonds than expected as its economy emerges from a deep recession.Also in the background was Joe Biden’s announcement that enough doses of virus vaccine should be available to every American adult by the end of May, and a report Wednesday that the president would moderate certain stimulus demands to try to win support for his virus-relief bill. Rising yields have started to draw the attention of Federal Reserve officials, leaving all eyes on an appearance Thursday by Chair Jerome Powell.Among other things, “the stimulus package is likely to go through and the economy is reopening,” said Michael Franzese, managing partner at MCAP LLC in New York. “The battle is on between rates going higher super-fast and a Federal Reserve that’s trying to keep the market stable and may try to slow the momentum of the reflation and economic-rebound trade into something more manageable.”Early inklings of inflation were evident in data from the Institute for Supply Management this week: Measures of prices paid jumped to their highest levels since 2008.A large trade on Wednesday in 10-year Treasury options and accompanying futures selling also fueled the leap in yields, as did heavy corporate bond supply.The rates market is not yet done fully pricing in robust U.S. economic growth, which would entail a 10-year yield trading around 1.90%, said Mark Heppenstall, chief investment officer of Penn Mutual Asset Management in Horsham, Pennsylvania. That’s the level last seen in January 2020, two months before pandemic fears started prompting forced shutdowns in the U.S.Beyond rising nominal and breakeven rates, “the dynamic rise in the 10-year real, inflation-adjusted yield we’ve seen is the market partly adjusting to a faster-than-anticipated pace of rate normalization by the Fed,” he said.The timing of the Fed’s first rate hike, known as liftoff, and subsequent rate hikes haven’t been factored in, making Treasuries vulnerable to a further selloff in the weeks ahead, according to Heppenstall.(Adds reference to Fed rate hikes in ninth 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.
FEATURE Investors dumped their holdings in cloud-based software stocks on Wednesday, taking profits in last year’s hottest names and shifting cash to other sectors expected to benefit from an economic recovery late this year.
Rocket Companies Inc (NYSE: RKT) founder Dan Gilbert’s wealth got a $25 billion booster on Tuesday as the holding company gets the attention of retail investors on Reddit’s r/WallStreetBets, according to Bloomberg Billionaire’s Index. What Happened: Gilbert, Age 59, has moved up 19 spots to No. 16 on the index that tracks 500 of the world’s richest. A large chunk of Gilbert’s fortune, 93% to be precise, is comprised of his stake in Rocket, reported Bloomberg. See also: How to Buy Rocket Companies (RKT) Stock Why It Matters: The one-day jump in Gilbert’s wealth is the largest so far in the year, noted Bloomberg. As of press time, Detroit-based Rocket Companies with subsidiaries such as Rocket Mortgage and Quicken Loans was the most discussed company on WallStreetBets, according to SwaggyStocks data. WallStreetBets investors previously carried out short squeezes in the stocks of GameStop Corp (NYSE: GME), AMC Entertainment Holdings Inc (NYSE: AMC), Nokia Oyj (NYSE: NOK), BlackBerry Ltd (NYSE: BB), and others. Rocket reported 162% revenue growth and 350% growth in net income for the fourth quarter, which beat analyst estimates. The company’s shares have shot up since last Friday. S3 Partners data indicates the Rocket has currently $1.2 billion in short interest — making it one of the most shorted stocks in the market. Price Action: Rocket shares traded nearly 8.2% lower at $38.20 in after-hours trading on Tuesday after shooting up almost 71.2% in the regular session. Photo by Steve Jennings on Wikimedia See more from BenzingaClick here for options trades from BenzingaRocket Companies Overtakes GameStop, Palantir As WallStreetBets' Top Interest© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
U.S. stocks closed lower Wednesday, as benchmark bond yields climbed nearer to their highs of 2021 and a slate of fresh economic data came in mixed, despite progress on the vaccination front.