Feb.04 -- Senator Marsha Blackburn, a Republican from Tennessee, talks about President Joe Biden's relationship with China, volatility in markets, and passing a stimulus package on Capitol Hill. She speaks to Bloomberg's Kevin Cirilli.
Feb.04 -- Senator Marsha Blackburn, a Republican from Tennessee, talks about President Joe Biden's relationship with China, volatility in markets, and passing a stimulus package on Capitol Hill. She speaks to Bloomberg's Kevin Cirilli.
The bill that passed the Senate makes payments harder to get. Your tax return might help.
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.
To win Senate passage, Biden agreed to make millions ineligible for the third checks.
(Bloomberg) -- Regulators kicked off the final countdown for the London interbank offered rate Friday, ordering banks to be ready for the end of a much maligned benchmark that’s been at the heart of the international financial system for decades.The U.K. Financial Conduct Authority confirmed that the final fixings for most rates will take place at end of this year, with just a few key dollar tenors set to linger for a further 18 months.The move comes in the wake of major manipulation scandals and the drying up of trading used to inform the rates, which are linked to everything from credit cards to leveraged loans. Global regulators have made a concerted effort to wind down the benchmark in 2021, with the Federal Reserve and others pushing market participants toward a slew of alternatives.“Outside the U.S. dollar markets, this marks the end game,” said Claude Brown, a partner at Reed Smith LLP in London. “The rate that linked the world, and then shocked the world, will leave this world in 2021.”Libor is deeply embedded in financial markets. Some $200 trillion of derivatives are tied to the U.S. dollar benchmark alone and most major global banks will spend more than $100 million this year preparing for the switch. Other players -- from corporations to hedge funds -- will also be affected, with many only beginning to shift from legacy contracts.Bank of England Governor Andrew Bailey said this was now the “final chapter,” and there’s no excuse for delays.The BOE will hold executives to account for progress in the transition under the U.K.’s regulatory regime for senior managers, according to people familiar with the matter. If firms fail to take appropriate steps, there is the potential for measures such as capital sanctions, though these would come further down the line.Progress toward replacement benchmarks, such as the Secured Overnight Financing Rate in the U.S. and the Tokyo Overnight Average Rate in Japan, has been sluggish, and there are hopes Friday’s announcement could accelerate the process -- particularly in the vast global derivatives market.“This was the much anticipated final piece of clarity the market needed to really kick on,” said Kari Hallgrimsson, co-head of EMEA rates at JPMorgan Chase & Co. “We would expect liquidity for trading the new rates to keep increasing from here on out.”Friday’s decision is a cessation event and locks in the benchmark’s fallback spread calculations, which for dollar Libor will be added to SOFR, the main U.S. replacement. Where firms have adhered to International Swaps and Derivatives Association’s Libor protocol, their contracts will automatically transition to replacement rates the moment Libor ends, avoiding a cliff-edge scenario.The delay in the most-used dollar Libor tenors -- notably the three-month benchmark -- is a concession to market concerns, but regulators remain adamant that dollar Libor shouldn’t be used for new contracts after 2021. Firms should expect further engagement from their supervisors to ensure timelines are met, the FCA warned.The Fed, for its part, is intensifying its scrutiny of banks’ efforts to shed their reliance on Libor, and has begun compiling more detailed evidence on their progress.“In the months ahead, supervisors will focus on ensuring that firms are managing the remaining transition risks,” said Randal Quarles, vice chair for supervision at the Federal Reserve Board and chair of the Financial Stability Board.While speculation about the announcement’s timing jolted the eurodollar market in December, the market reaction on Friday was subdued. The spread between June 2023 and September 2023 Eurodollars widened one basis point, as did the difference between December 2021 and March 2022 short sterling contracts.The FCA also detailed proposals to deal with the most troublesome loans and securitizations that can’t be switched to replacement rates. The regulator will consult on synthetic Libor -- which doesn’t rely on bank panel data -- for the sterling and yen benchmarks, and will continue to consider the case for using these powers for some dollar Libor settings.Worries are mounting that hundreds of billions of dollars of these legacy contracts will never be able to transition, even with the extension of certain dollar Libor tenors. This will present a key challenge to banks, regulators and lawmakers in the months ahead.“Some cash products have not embraced Libor and the clock is ticking loudly,” said Priya Misra, global head of interest rate strategy at TD Securities. “A lot of them will mature by June 2023, but there will be a lot left over after that.”What Analysts Are SayingGoldman Sachs Group Inc:“Today marks an extremely significant milestone in the multi-year global transition away from Libor,” said Jason Granet, chief Libor transition officer. “With full clarity on Libor’s endgame the market can now move forward towards a smooth and efficient transition.”Eigen Technologies Ltd:“At this late stage, pure human review and legal advice is going to be too slow and inaccurate, putting the financial firms and their counterparties at economic and conduct risk,” said Chief Executive Officer Lewis Liu. “The only way out of this now is through the rapid deployment of technology.”Linklaters:This is “expected to be based on a forward-looking term version of the relevant risk-free rate plus a fixed spread calculated over the same period and in the same way as the spread adjustment implemented in ISDA’s Ibor fallbacks,” said Phoebe Coutts, a capital markets lawyer. “It will also be interesting to see which legacy uses of synthetic Libor will be permitted by the FCA, as there has been some uncertainty around which products constitute ‘tough legacy’ products.”(Adds Fed comment in 13th paragraph, additional comments from 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.
It’s time to check in with the macro picture, to get an idea of just where markets are headed in the coming months. That’s what a JPMorgan global research team, headed up by Joyce Chang, has been doing. The JPM team starts by noting the sell-off in US Treasury bonds last week, pushing up yields as investors acted in response to inflationary fears. However, the rise in bond yields steadied on Friday, and Chang’s team does not believe that inflation is the great bugaboo it’s made out to be; her team sees a combination of economic growth and fiscal stimulus creating a virtuous circle of consumer spending fueling more growth. They write, “Our global economics team is now forecasting US nominal GDP to average roughly 7% growth over this year and next as targeted measures have been successful in addressing COVID-19 and economic activity is not being jeopardized. Global growth will exceed 5%...” What this means, in JPM’s view, is that the coming year should be good for stocks. Interest rates are likely to remain low, in the firm’s estimation, while inflation should moderate as the economy returns to normal. JPM’s stock analysts have been following the strategy team, and seeking out the stocks they see as winners over the next 12 months. Three of their recent picks make for an interesting lot, with Strong Buy ratings from the analyst community and over 50% upside potential. We’ve used the TipRanks database to pull the details on them. Let’s take a look. On24 (ONTF) The first JPM pick were looking at here is On24, the online streaming service that offers third parties access for scaled and personalized networked events. In other words, On24 makes its streaming service available for other companies to use in setting up interactive features, including webinars, virtual events, and multi-media experiences. The San Francisco-based company boasts a base of more than 1900 corporate users. On24’s customers engage online with more than 4 million professionals every month, for more than 42 million hours every year. As can be imagined, On24 saw a surge of customer interest and business in the past year, as virtual offices and telecommuting situations expanded – and the company has now used that as a base for going public. On24 held its IPO last month, and entered the NYSE on February 3. The opening was a success; 8.56 million shares were put on the market at $77 each, well above the $50 initial pricing. And even though the share price has fallen from its first-day close of $70.82, the company still boasts a market cap of $2.47 billion. However, shares have taken a beating since, and have dropped by 36%. The pullback could present investors with an opportunity and JPM’s Sterling Auty thinks the company is well-placed to capitalize on current trends. “The COVID-19 pandemic, we believe, has changed the face of B2B marketing and sales forever. It has forced companies to move most of their sales lead generation into the digital world where On24 is typically viewed as the best webinar/webcast provider.” the 5-star analyst wrote. “Even post-pandemic we expect the marketing motion to be hybrid with digital and in-person being equally important. That should drive further adoption of On24-like solutions, and we expect On24 to capture a material share of that opportunity.” In line with these upbeat comments, Auty initiated coverage of the stock with an Overweight (i.e., Buy) rating, and his $85 price target suggests it has room for 73% upside over the next 12 months. (To watch Auty’s track record, click here.) Sometimes, a company is just so solid and successful that Wall Street’s analysts line up right behind it – and that is the case here. The Strong Buy analyst consensus rating is unanimous, based on 8 Buy-side reviews published since the stock went public just over a month ago. The shares are currently trading for $49.25 and their $74 average price target implies an upside of 50% from that level. (See On24’s stock analysis at TipRanks.) Plug Power, Inc. (PLUG) And moving over to the reusable energy sector, we’ll take a look at a JPM ‘green power’ pick. Plug Power designs and manufactures hydrogen power cells, a technology with a great deal of potential as a possible replacement for traditional batteries. Hydrogen power cells have potential applications in the automotive sector, as power packs for alt-fuel cars, but also in just about any application that involves the storage of energy – home heating, portable electronics, and backup power systems, to name just a few. Over the past year, PLUG shares have seen a tremendous surge, rising over 800%. The stock got an additional boost after Joe Biden’s presidential election win – and his platform promises to encourage ‘Green Energy.” But the stock has pulled back sharply recently, as many over-extended growth names have. Poor 4Q20 results also help explain the recent selloff. Plug reported a deep loss of $1.12 per share, far worse than the 8-cent loss expected, or the 7-cent loss reported in the year-ago quarter. In fact, PLUG has never actually reported positive earnings. This company is supported by the quality of its technology and that tech’s potential for adoption as industry moves toward renewable energy sources – but we aren’t there yet, despite strides in that direction. The share price retreat makes PLUG an attractive proposition, according to JPM analyst Paul Coster. “In the context of the firm's many long-term growth opportunities, we believe the stock is attractively priced at present, ahead of potential positive catalysts, which include additional ‘pedestal’ customer wins, partnerships and JVs that enable the company to enter new geographies and end-market applications quickly and with modest capital commitment,” the analyst said. “At present, PLUG is a story stock, appealing to thematic investors as well as generalists seeking exposure to Renewable Energy growth, and Hydrogen in particular.” Coster’s optimistic comments come with an upgrade to PLUG’s rating - from a Neutral (i.e., Hold) to Overweight (Buy) - and a $65 price target that indicates a possible 55% upside. (To watch Coster’s track record, click here.) Plug Power has plenty of support amongst Coster’s colleagues, too. 13 recent analyst reviews break down to 11 Buys and 1 Hold and Sell, each, all aggregating to a Strong Buy consensus rating. PLUG shares sell for $39.3 and have an average price target of $62.85, which suggests a 60% one-year upside potential. (See Plug’s stock analysis at TipRanks.) Orchard Therapeutics, PLC (ORTX) The last JPM stock pick we’ll look at is Orchard Therapeutics, a biopharma research company focused on the development of gene therapies for the treatment of rare diseases. The company’s goal is to create curative treatments from the genetic modification of blood stem cells – treatments which can reverse the causative factors of the target disease with a single dosing. The company’s pipeline features two drug candidates that have received approval in the EU. The first, OTL-200, is a treatment for Metachromatic leukodystrophy (MLD), a serious metabolic disease leading to losses of sensory, motor, and cognitive functioning. Strimvelis, the second approved drug, is a gammaretroviral vector-based gene therapy, and the first such ex vivo autologous gene therapy to receive approve by the European Medicines Agency. It is a treatment for adenosine deaminase deficiency (ADA-SCID), when the patient has no available related stem cell donor. In addition to these two EU-approved drugs, Orchard has ten other drug candidates in various stages of the pipeline process, from pre-clinical research to early-phase trials. Anupam Rama, another of JPM’s 5-star analysts, took a deep dive into Orchard and was impressed with what he saw. In his coverage of the stock, he notes several key points: “Maturing data across various indications in rare genetic diseases continues to de-risk the broader ex vivo autologous gene therapy platform from both an efficacy / safety perspective… Key opportunities in MLD (including OTL-200 and other drug candidates) have sales potential each in the ~$200-400M range… Importantly, the overall benefit/risk profile of Orchard’s approach is viewed favorably in the eyes of physicians. At current levels, we believe ORTX shares under-reflect the risk-adjusted potential of the pipeline...” The high sales potential here leads Rama to rate the stock as Outperform (Buy) and to set a $15 price target, implying a robust 122% upside potential in the next 12 months. (To watch Rama’s track record, click here.) Wall Street generally is in clear agreement with JPM on this one, too. ORTX shares have 6 Buy reviews, for a unanimous Strong Buy analyst consensus rating, and the $15.17 average price target suggests a 124% upside from the current $6.76 trading price. (See Orchard’s stock analysis at TipRanks.) Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Never say that one person makes no difference. This past Thursday, stocks tumbled, bonds surged, and investors started taking inflationary risks seriously – all because one guy said what he thinks. Jerome Powell, chair of the Federal Reserve, held a press conference at which he gave both the good and the bad. He stated, again, his belief that the COVID vaccination program will allow a full reopening of the economy, and that we’ll see a resurgence in the job market. That’s the good news. The bad news, we’ll also likely see consumer prices go up in the short term – inflation. And when inflation starts rising, so do interest rates – and that’s when stocks typically slide. We’re not there yet, but the specter of it was enough this past week to put serious pressure on the stock markets. However, as the market retreat has pushed many stocks to rock-bottom prices, several Wall Street analysts believe that now may be the time to buy in. These analysts have identified three tickers whose current share prices land close to their 52-week lows. Noting that each is set to take back off on an upward trajectory, the analysts see an attractive entry point. Not to mention each has earned a Moderate or Strong Buy consensus rating, according to TipRanks database. Alteryx (AYX) We’ll start with Alteryx, an analytic software company based in California that takes advantage of the great changes brought by the information age. Data has become a commodity and an asset, and more than ever, companies now need the ability to collect, collate, sort, and analyze reams of raw information. This is exactly what Alteryx’s products allow, and the company has built on that need. In Q4, the company reported net income of 32 cents per share on $160.5 million in total revenues, beating consensus estimates. The company reported good news on the liquidity front, too, with $1 billion in cash available as of Dec 31, up 2.5% the prior year. In Q4, operating cash flow reached $58.5 million, crushing the year-before figure of $20.7 million. However, investors were wary of the lower-than-expected guidance. The company forecasted a range of between $104 million to $107 million in revenue, compared to $119 million analysts had expected. The stock tumbled 16% after the report. That was magnified by the general market turndown at the same time. Overall, AYX is down ~46% over the past 52 months. Yet, the recent sell-off could be an opportunity as the business remains sound amid these challenging times, according to 5-star analyst Daniel Ives, of Wedbush. “We still believe the company is well positioned to capture market share in the nearly ~$50B analytics, business intelligence, and data preparation market with its code-friendly end-to-end data prep and analytics platform once pandemic pressures subside…. The revenue beat was due to a product mix that tilted towards upfront revenue recognition, an improvement in churn rates and an improvement in customer spending trends," Ives opined. Ives’ comments back his Outperform (i.e. Buy) rating, and his $150 price target implies a one-year upside of 89% for the stock. (To watch Ives’ track record, click here) Overall, the 13 analyst recent reviews on Alteryx, breaking down to 10 Buys and 3 Holds, give the stock a Strong Buy analyst consensus rating. Shares are selling for $79.25 and have an average price target of $150.45. (See AYX stock analysis on TipRanks) Root, Inc. (ROOT) Switching over to the insurance sector, we’ll look at Root. This insurance company interacts with customers through its app, acting more like a tech company than a car insurance provider. But it works because the way customers interact with businesses is changing. Root also uses data analytics to set rates for customers, basing fees and premiums on measurable and measured metrics of how a customer actually drives. It’s a personalized version of car insurance, fit for the digital age. Root has also been expanding its model to the renters insurance market. Root has been trading publicly for just 4 months; the company IPO'd back in October, and it’s currently down 50% since it hit the markets. In its Q4 and Full-year 2020 results, Root showed solid gains in direct premiums, although the company still reports a net loss. For the quarter, the direct earnings premiums rose 30% year-over-year to $155 million. For all of 2020, that metric gained 71% to reach $605 million. The full-year net loss was $14.2 million. Truist's 5-star analyst Youssef Squali covers Root, and he sees the company maneuvering to preserve a favorable outlook this year and next. “ROOT's mgt continues to refine its growth strategy two quarters post IPO, and 4Q20 results/2021 outlook reflects such a process... They believe their stepped-up marketing investment should lead to accelerating policy count growth as the year progresses and provide a substantial tailwind heading into 2022. To us, this seems part of a deliberate strategy to marginally shift the balance between topline growth and profitability slightly more in favor of the latter,” Squali noted. Squali’s rating on the stock is a Buy, and his $24 price target suggests a 95% upside in the months ahead. (To watch Squali’s track record, click here) Shares in Root are selling for $12.30 each, and the average target of $22 indicates a possible upside of ~79% by year’s end. There are 5 reviews on record, including 3 to Buy and 2 to Hold, making the analyst consensus a Moderate Buy. (See ROOT stock analysis on TipRanks) Arco Platform, Ltd. (ARCE) The shift to online and remote work hasn’t just impacted the workplace. Around the world, schools and students have also had to adapt. Arco Platform is a Brazilian educational company offering content, technology, supplemental programs, and specialized services to school clients in Brazil. The company boasts over 5,400 schools on its client list, with programs and products in classrooms from kindergarten through high school – and over 405,000 students using Arco Platform learning tools. Arco will report 4Q20 and full year 2020 results later this month – but a look at the company’s November Q3 release is instructive. The company described 2020 as a “testament to the resilience of our business.” By the numbers, Arco reported strong revenue gains in 2020 – no surprise, considering the move to remote learning. Quarterly revenue of 208.7 million Brazilian reals (US$36.66 million) was up 196% year-over-year, while the top line for the first 9 months of the year, at 705.2 million reals (US$123.85 million) was up 117% yoy. Earnings for educational companies can vary through the school year, depending on the school vacation schedule. The third quarter is typically Arco’s worst of the year, with a net loss – and 2020 was no exception. But, the Q3 net loss was only 9 US cents per share – a huge improvement from the 53-cent loss reported in 3Q19. Mr. Market chopped off 38% of the company’s stock price over the past 12 months. One analyst, however, thinks this lower stock price could offer new investors an opportunity to get into ARCE on the cheap. Credit Suisse's Daniel Federle rates ARCE an Outperform (i.e. Buy) along with a $55 price target. This figure implies a 12-month upside potential of ~67%. (To watch Federle’s track record, click here) Federle is confident that the company is positioned for the next leg of growth, noting: "[The] company is structurally solid and moving in the right direction and... any eventual weak operating data point is macro related rather than any issue related to the company. We continue with the view that growth will return to its regular trajectory once COVID effects dissipate.” Turning to expansionary plans, Federle noted, “Arco mentioned that it is within their plans to launch a product focused on the B2C market, likely already in 2021. The product will be focused on offering courses (e.g. test preps) directly to students. It is important to note that this product will not be a substitute for learning systems, rather a complement. Potential success obtained in the B2C market is an upside risk to our estimates.” There are only two reviews on record for Arco, although both of them are Buys, making the analyst consensus here a Moderate Buy. Shares are trading for $33.73 and have an average price target of $51, which suggests a 51% upside from that level. (See ARCE stock analysis on TipRanks) To find good ideas for beaten-down stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Some households are collecting a big pile of federal money in 2021.
Shares of hydrogen fuel cell maker Plug Power (NASDAQ:PLUG) have been hammered amid the recent tech sector meltdown, as a sharp rise in long-term yields has put significant downward pressure on growth stock valuations. From its early February highs, PLUG stock has lost almost half of its value. Source: Shutterstock That’s a steep drop in a stock that has very strong fundamentals. It’s also a great buying opportunity that will pay off handsomely in the long run. To be clear, I’m not saying PLUG stock will reverse course right now and surge back to $70. The tech sector selloff is a bloodbath, and bloodbaths like this tend to take some time to shake out.InvestorPlace - Stock Market News, Stock Advice & Trading Tips But, what I am saying is that Plug Power is a disruptive innovator with huge long-term potential, and that relative to that long-term potential, PLUG stock is significantly undervalued today. Indeed, my numbers say shares are worth close to $60 today. The Amazon of House: This Stock Is Like Buying Amazon in 1997 That means that if time is on your side, PLUG stock looks like a great buy at currently depressed prices. Silicon Valley Whiz Kid Reveals #1 Tech Stock in America Here’s a deeper look. PLUG Stock: Hammered on Short-Term Fears PLUG stock has been hammered over the past few weeks because of fears related to a sharp rise in long-term bond yields. The basic thinking is that, as long-term yields rise, equity valuations will correct lower, because stocks and bonds are competing investment vehicles, so as bond yields rise, the required rate of return on stocks rises, too. That thinking makes a ton of sense. And if yields were to rise forever, then I’d say growth stocks like PLUG stock will keep plunging. But yields aren’t going to rise forever. Instead, it looks like the 10-Year Treasury yield will max out around 2% over the next few years. Here’s the thinking. Historically, the 10-Year Treasury yield has very closely tracked the sum of the 3-Month Treasury yield (a proxy for inflation which the Fed controls with its target interest rate) plus real GDP growth. This relationship is unmistakably strong. Importantly, the 10-Year yield has historically never surpassed the 3-Month yield plus real GDP growth unless during a time of significant economic contraction (and therefore, negative GDP growth). Click to EnlargeSource: St. Louis Fed The Fed has reiterated multiple times that they will not move on interest rates anytime soon. Thus, the 3-Month Treasury yield will remain near-zero for the foreseeable future. Real GDP growth is expected to jump to 4% this year in a sharp “bounce-back” year. But normalizing out for Covid-19 noise, real GDP growth in 2022 and after is expected to hover around 2%. Thus, normalized, the 10-Year yield should settle around 2% and remain there for most of 2022 and 2023. We are at 1.5% today. By my math, then, yields have another 50 basis points to go over the next 24+ months. That’s a slow and steady grind higher. To that end, I think we’re close to the end of the surge in long-term yields. Once the bond market calms down, I fully expect growth stocks like PLUG stock to bounce back. Plug Power Is Still Leading the Hydrogen Revolution Ignoring interest noise for a second, Plug Power is still leading the multi-trillion-dollar Hydrogen Revolution. The world is pivoting toward clean energy. By 2050, we will live in a world powered end-to-end by renewable energies. One of those core energies will be hydrogen, since it has certain innate scientific advantages from being the lightest element in the universe that render it the most cost-efficient clean energy solution in end-markets where dense, always-on batteries that last forever are particularly useful (think forklifts, long-haul trucks and power for data-centers). Plug Power is the leader in hydrogen. The company has been in the game of making hydrogen fuel cells for decades now. Over that time, the company has proprietarily developed the industry’s highest-performing and lowest-cost hydrogen fuel cells. Plug Power is currently applying these industry-leading fuels cell to the materials handling end-market, where they are powering Walmart (NYSE:WMT), Home Depot (NYSE:HD), and Amazon (NASDAQ:AMZN) forklifts. But, more excitingly, Plug Power is is the early stages of applying this tech into much bigger end-markets, like green hydrogen generation, consumer autos, long-haul trucking, stationary, and more. Plug Power has already and will continue to find great success in these expansion efforts. That’s because all these end-markets required core HFC technology, and Plug Power has the best core HFC technology in the world. To that end, Plug Power is morphing into the technological backbone of the entire Hydrogen Economy. I wouldn’t be surprised if, by 2030, thousands of forklifts, trucks, data-centers, and ships are powered by Plug Power’s technology. Of course, all that means is that the fundamentals underlying PLUG power stock remain robust. This is still an innovative disruptor with enormous long-term growth potential. Plug Power Stock Has Big Upside Potential I cannot tell you exactly when the selloff in Plug Power stock will end. But, what I can tell you is that — even after factoring in higher rates — Plug Power stock is significantly undervalued relative to the company’s long-term earnings growth potential. By 2030, I see Plug Power’s technology powering big segments of the global economy. I imagine the company will dominant the materials handling market, and have sizable market share in the stationary and long-haul trucking end-markets. The company will also be a big player in green hydrogen production. Calculating the potential in all those end-markets, I see Plug Power’s revenues eclipsing $10 billion by 2030. EBITDA margins should, at scale, settle around 30%, given the company’s favorable pricing power thanks to its huge HFC tech lead. With those inputs, my valuation model outputs a fair value for PLUG stock today of about $60. That’s way above where shares trade currently. To be clear, PLUG stock may not rebound back to those levels right away. But the fundamentals eventually and inevitably always win out. Thus, whenever this stock market bloodbath does end, I do think Plug Power stock will surge higher. Bottom Line on PLUG Stock The tech sector meltdown has created multiple great buying opportunities for long-term investors. PLUG stock is one of the best stocks to buy amid this meltdown. But it’s not the best growth stock to buy on the dip. Instead, the best growth stock to buy today is a company that reminds me of a young Amazon. Indeed, I think buying this stock today could be like buying AMZN stock back in 1997 — before it soared thousands of percent. Which stock am I talking about? Click here to watch my first-ever Exponential Growth Summit to find out the name, ticker symbol, and key business details of this potential 10X stock pick. On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it. More From Hypergrowth Investing Silicon Valley Whiz Kid Reveals #1 Tech Stock in America With the Lucid Motors Merger Confirmed, CCIV Stock Is Your 10X Opportunity 7 Explosive Cryptocurrencies to Buy After the Bitcoin Halvening 15 EV Stocks to Buy as GM Goes All-Electric The post In a Year, You’ll Be Glad You Bought Plug Power Stock Today appeared first on InvestorPlace.
Following weeks of speculation, special purpose acquisition company Churchill Capital IV (NYSE:CCIV) announced it will merge with California-based Lucid Motors. Investors have been bullish on CCIV stock since the start of the year after rumors began flying about reverse merger. Source: ggTravelDiary / Shutterstock.com The shares jumped from $10 to a record high of $64.86 on Feb. 18. Now, they are near $24. It is important to remember that Lucid Motors is still a pre-revenue auto group. Lucid CEO Peter Rawlinson recently said that orders for its first vehicle, the Lucid Air, have been “overwhelming.”InvestorPlace - Stock Market News, Stock Advice & Trading Tips The first model is likely to be shipped in the summer of 2020. Its first-stage factory in Arizona is ready to produce 34,000 vehicles a year. Management hopes in a couple of years the number could reach 400,000 per year. 9 Cheap Stocks That Look Like a Bargain Now investors wonder what might be next for CCIV stock. Given the recent decline in price, the risk/return profile of the shares are better for buy-and-hold investors. If you are not a shareholder, you might regard upcoming dips in the share price as an opportunity to invest in this new company. What To Expect From the Merger Lucid Motors is vying to become leader in the luxury electric vehicle (EV) market. Over the past year, TSLA (NASDAQ:TSLA) stock is up about 300%. In general, EV market has been very hot. As a result, investors in CVIS stock have wondering if their new company could be a potential Tesla rival. The merger values Lucid Motors at $24 billion. It will also mean Lucid will have about $4.4 billion in cash, which in part can be used to expand manufacturing, Rawlinson said: Financing from the transaction will also be used to support expansion of our manufacturing facility in Arizona, which is the first greenfield purpose-built EV manufacturing facility in North America, and is already operational for pre-production builds of the Lucid Air, … [with its] projected range of over 500 miles on a single charge – ahead of all competitors on the market today. Often, the success of a black check company depends on the management team. Churchill Capital CEO Michael Klein is well-known Wall Street veteran. He has already completed several mergers. For instance two years ago, Churchill announced a merger with Clarivate Analytics, a leading global provider of comprehensive intellectual property and scientific information, analytical tools and services. In July 2020, Churchill Capital Corp III struck an $11 billion deal with healthcare company MultiPlan (NYSE:MPLN), in one of the largest deals for a SPAC. So, while CCIV stock has no operating business, the management team is experienced in the SPAC space to potentially make the next deal a success. Furthermore, Saudi Arabia’s sovereign wealth fund is a strategic investor in Lucid. Therefore, the company has access to significant amounts of capital. Despite the frothy valuation of the company, investors are excited about the prospects. Bottom Line on CCIV Stock It is too soon to know how the share price of CCIV stock will move in the coming quarters. Lucid is still a startup automotive company with exciting prospects. A successful merger could be the start of a very appealing investment, one that many will keep their eyes on. But large amounts of capital and time are required before significant revenue will be made. Given the interest of the Street in EVs as well as the background of the two companies, I believe the merger will create shareholder value in the long run. However, potential investors should still carefully study the risk/return profile of investing in the company at this point. On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Churchill Capital IV Will Likely Create Shareholder Value appeared first on InvestorPlace.
Shares of Carnival Cruise Lines (NYSE:CCL) have climbed approximately 20% in the last month. That puts CCL stock within hailing distance of its pre-pandemic price. I understand that the market is forward thinking, but this seems to be an example of irrational exuberance. Source: Kokoulina / Shutterstock.com As of now, over 82 million Americans have received a Covid-19 vaccine. This is evidence, not just hope, but empirical evidence that the pandemic is much better. But still, CCL seems to be a stock that’s moved too high, too fast. In this article, I’ll explain why.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Ships Are Still In Port My colleague Josh Enomoto pointed out that airline passenger volume was up to about 38% of pre-pandemic levels from Feb. 1 through Feb. 19. Undoubtedly, those numbers will look even better as they are compared to pandemic numbers in the coming months. 9 Cheap Stocks That Look Like a Bargain However, airlines were operating, albeit in dribs and drabs, throughout the pandemic. Carnival is not going to be sailing for quite some time. In January, the company stated that the Carnival Magic, Carnival Paradise and Carnival Valor will not resume operations until November 2021. Overall, the cruise line will not be resuming operation until June of this year. And that isn’t all. Here are just three headlines on Cardinal’s investor relations website: Their Princess Cruises line extended its pause of cruises on Roundtrip Southampton sailings through Sept. 25. Princess Cruises also extended its pause of cruises to select Alaska, Canada & New England and Pacific Coastal sailings. The company Seabourn line announces cancellation of every 2021 Alaska/British Columbia voyages. This simply means it’s going to be quite some time before the cruise line sees smooth sailing from a revenue perspective. Waiting On Revenue In 2020, Carnival brought in about 5.6 billion in revenue. That was a year-over-year decline of more than 70%. However, that included a first quarter in which the company was operating under pre-pandemic conditions. When you look at the following four quarters, including the first quarter of 2021 that the company reported in January, the revenue picture is even worse. Not surprisingly Carnival announced it was raising $1 billion from a public offering. Investors took a brief pause, but then CCL stock began trading at nearly a 12-month high. And it’s also important to note that CCL stock was flat to slightly negative throughout much of 2019. And keep in mind that in 2019, the company had slightly more revenue than it delivered in 2018. It would be one thing if Carnival was a pre-revenue company. But they’re not. Yet investors are buying CCL stock as if it was. That’s not a formula for success, when it’s likely that the company won’t start delivering meaningful revenue before 2022. Wait For a Better Price For CCL Stock I’m not intending to bash Carnival. The Covid-19 pandemic hit cruise lines particularly hard. As I noted above, airlines at least had a trickle of revenue. The same was true of hotels. But cruise lines were literally banned from sailing. I believe the company is being transparent with investors. It’s not their fault, and to their benefit, that investors are getting excited about CCL stock. But that doesn’t make it a good investment at this time. The stock price is approximating where the company was, revenue-wise, prior to the pandemic. However, the cruise line won’t be sailing for months. On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Carnival Is Climbing Too High Too Fast appeared first on InvestorPlace.
The discussion today may get a little wonky because of the nature of cryptocurrencies. We will focus on Ethereum USD (CCC:ETH-USD) as it’s making a legit bid for the crypto limelight. It is important to make the distinction between Ethereum the open-source platform and the ETH coin. The platform uses blockchain to create and run dapps (decentralized digital applications). These enable users to digitally and directly transact without an intermediary. And then there is the coveted Ethereum the coin. Source: Shutterstock ETH prices have soared even beating out its original cousin Bitcoin (CCC:BTC-USD). I am not a perma-bull tooting the crypto horns but I definitely get it. The reactions during my debates of this concept at parties are always the same. Most people can’t believe that Bitcoin or Ethereum are real things. The instinct is to call them fake. Fake things don’t cost $48,000 per unit. Spoiler alert, my conclusion today is that Ethereum is most definitely an investable asset. If you don’t believe me just look at the scoreboard. Each cost about$1,475 and that’s 25% off the recent high. Do you remember when Bitcoin was that low? It was only four years ago. I am not suggesting that ETH will also spike to 50k now, but it does have massive upside potential.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Why We Need Crypto Last year, the pandemic disrupted all businesses worldwide. We need to find more efficient decentralized ways to transact so we can be ready for the next crisis. Besides, it’s clearly the better way of doing business. In addition to that, there is the tangible value appreciation opportunity. A year ago, the stock market crashed but it quickly recovered and in a ferocious way. Even after the drubbing that stocks are taking this week, the S&P 500 is still up more than 20% in a year. But that’s not the best story to tell because Ethereum is up 540% for the same period. The concept of digital coins and blockchain puzzles most people, but they need to get over it. The government is another reason to push crypto forward. Central bank policies are too loose and the byproduct of that is the demolition of the currency. That is why the U.S. dollar can’t find footing for so long. Money is no longer a good place to store wealth. Hiding wealth in cryptocurrencies is smart because it is out of the reach of the government. However, the line is getting finer based on this central bank digital currencies (CBDCs) news from CoinDesk about Ripple. Critics are also eager to point out that crypto is too volatile to be a currency. It doesn’t have to be. Technology is getting to where I can carry my digital wallet and make a purchase from it in any currency. For example, the transaction on the spot liquidates a bit of Ethereum to pay in U.S. dollars. The Ethereum Market Cap Carrot The upside in Ethereum prices is huge. It has a lot to catch up to its Bitcoin cousin. This is a theory that is helping Bitcoin catch up to gold. Market cap matters to Wall Street experts and it’s almost like a self-fulfilling prophecy. Ethereum’s path is easier because Bitcoin forged it. Tesla (NASDAQ:TSLA) did the same thing for EVs and now the rest are trying to get in. Not all coins will succeed but Ethereum has momentum and is second only to BTC. Ethereum is not yet as popular as Bitcoin when in fact it has outperformed it by wide margin. They now even have a futures contract to trade it. Ethereum is more than a coin because there is a process around it (dapps). This is taking the blockchain concept and expanding its uses. A lot of people still consider it a joke when somebody invests in something like Ethereum. The joke’s on them because they missed out on 540% of upside in just one year. I don’t argue with results regardless of my personal opinion. Once investors can get over to hurdle of digital coins being fake, they can start trading them for profit. Top cryptocurrencies have been the best performing asset class by far for years. Where There Is Reward, There Are Risks Source: Charts by TradingView This is not to say that I should jump in will full size positions. Much like any other investment, I look for openings perhaps on bad days, and I take starter positions. This is high-tech stuff so it will change on a dime. Ethereum needs to avoid falling out of the limelight. These are fast-moving assets so there is no way of avoiding the volatility. It is risky, and that’s why it yields a lot of reward. Everybody needs a little bit of cryptocurrencies in their portfolio. If not that then gold is the next best substitute. We don’t need to be experts on them to invest in them. The proof is in the pudding and I’m willing to keep an open mind about them. Jaw-Dropping Statement In reality, crypto is nothing new. The concept is very similar to gold. The only reason gold has value is because we say it does. To an alien, a yellow rock is no different than a black one. People cherish gold and it’s rare, therefore it has a high price. The harder it is to get, the higher the price. That’s why Bitcoin and ETH retain values that boggle many minds. There is a finite number of these doo-hickeys and millions of people are chasing after them. The concept is that simple. It has value because enough people say it does. So next time you want to get a rise out of someone, do what I do. Tell them that Bitcoin and Ethereum are same as gold. That’s where people’s jaws drop. What’s more exciting about the digital coins are the processes that exist around them. Blockchain is one and it will shape our future. Credit card companies are embracing the change. That’s why Square (NYSE:SQ) and Paypal (NYSE:PYPL) are now the leaders and Visa (NYSE:V) and MasterCard (NYSE:MA) are the laggards. Cryptocurrencies are extremely popular but they have very hardcore opponents. Even heads of banks have been overtly against it even mocking them at times. They have since changed their tone and are warming up to the concept. Goldman Sachs reopened its Bitcoin trading desk recently. They can’t ignore something that has gotten this big this fast. On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. Nicolas Chahine is the managing director of SellSpreads.com. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG It doesn’t matter if you have $500 in savings or $5 million. Do this now. Top Stock Picker Reveals His Next Potential 500% Winner Stock Prodigy Who Found NIO at $2… Says Buy THIS Now The post Ethereum Is Chasing Stardom and It’s Worth Consideration appeared first on InvestorPlace.
(Bloomberg) -- It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares -- equal to a third of all hedge-fund assets -- actually out on loan, according to the International Securities Lending Association.It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock -- the so-called short interest -- the higher the fee a lender can charge.In the case of GameStop, short interest was unusually high and shares on loan were generating an annualized return of 25% to 30%, Ken Griffin testified at the Feb. 18 hearing. Griffin operates a market maker, Citadel Securities, as well as Citadel, one of the world’s largest hedge funds.“Securities lending is a way for long holders to generate additional alpha,” said Nancy Allen of DataLend, which compiles data on securities financing. “Originally, it was a way to cover costs, but over the last 10 to 15 years it’s become an investment function.”Not everyone is comfortable with the inherent conflict. In December 2019, Japan’s $1.6 trillion Government Pension Investment Fund stopped lending its international stock holdings to short sellers, calling the practice inconsistent with its responsibilities as a fiduciary. At the time, the decision cost GPIF about $100 million a year in lost revenue.The U.S. Securities and Exchange Commission has regulated short-selling since the 1930s and polices the market for abuses such as naked shorting, which involves taking a short position without borrowing shares. Proponents of legal shorting argue that its use enhances liquidity, improves pricing and serves a critical role as a bulwark against fraud and hype.Chief executives, whose pay packages often depend on share performance, routinely decry short sellers as vultures. More recently, shorting has come under fire in the emotionally charged banter on Reddit’s WallStreetBets forum. Some speculators ran up the prices of GameStop, AMC Entertainment Holdings Inc. and other meme stocks in January to punish the hedge funds that bet against them, and they delighted when the rampant buying led to bruising losses at Melvin, Maplelane Capital and Citron Research.Many of the key actors in the GameStop frenzy testified at the Feb. 18 hearing. Plotkin was grilled by committee members over Melvin’s short position. Citadel’s Griffin and others faced broader questions about short-selling. Yet no one asked about the supply of borrowed shares and there were no witnesses called from the securities-lending industry.There’s a symbiotic relationship between hedge funds and the prime-brokerage units of Wall Street firms, much of it built on securities lending. Prime brokers act as intermediaries, sourcing stocks and bonds for borrowers who want to short them and facilitate the trades. According to DataLend, securities lending generated $2.9 billion of broker-to-broker revenue in 2020, almost the same as in 2019.Demand for short positions was already expected to drop as stock prices surged to all-time highs. Now, with the threat of retribution from the Reddit crowd, it may weaken even further. Griffin said he has “no doubt” there’ll be less short-selling as a consequence of the GameStop squeeze.“I think the whole industry will have to adapt,” Plotkin said at the hearing. “I don’t think investors like myself want to be susceptible to these types of dynamics.”This could not only threaten the dealers who broker stock lending but also the holders who supply the securities and share in the revenue. They reaped $7.7 billion globally in 2020, down from a record of almost $10 billion in 2018, according to DataLend. Lending fees increased by 4.2% on a year-over-year basis in February after the GameStop onslaught, DataLend says.While securities lending accounted for $652 million, or just 4%, of BlackRock’s revenue in the fourth quarter of 2020, there’s little cost involved and the risks are low because borrowers have to put up collateral that equals or exceeds the value of the loan. At both BlackRock and State Street Corp., the second-largest custody bank, the value of securities on loan as of Dec. 31 jumped at least 20% from a year earlier, to $352 billion and $441 billion, respectively.“Every little bit counts with indexes,” said John Rekenthaler, vice president of research at Morningstar. “You’re scraping nickels off the street, but there’s a whole lot of nickels.”Others could take a hit, too. Just as Robinhood Markets is able to offer zero-commission trades by selling its order flow to Citadel and other market makers, asset managers typically pass on some of their securities-lending revenue as a type of client rebate.“It’s very important to remember that institutional investors earn substantial returns from participating in the securities-lending market,” Citadel’s Griffin said at the GameStop hearing. “That accrues to the benefit of pension plans, of ETFs, of other pools of institutional lending that participate in the securities lending market.”(Adds data on lending fees after the short-interest 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.
Personal finance guru Suze Orman said the receipt of a tax refund indicates "something's radically wrong," since the money returned to filers could otherwise have accrued value over the period it stood in the government's possession.
(Bloomberg) -- Elon Musk set records last year for one of the fastest streaks of wealth accumulation in history. The reversal is underway, and it’s steep.The Tesla Inc. chief executive officer lost $27 billion since Monday as shares of the automaker tumbled in the selloff of tech stocks. His $156.9 billion net worth still places him No. 2 on the Bloomberg Billionaires Index, but he’s now almost $20 billion behind Jeff Bezos, who he topped just last week as world’s richest person.Musk’s tumble only underscores the hard-to-fathom velocity of his ascent. Tesla shares soared 743% in 2020, boosting the value of his stake and unlocking billions of dollars in options through his historic “moonshot” compensation package.His gains accelerated into the new year. In January, he unseated Bezos as the world’s richest person. Musk’s fortune peaked later that month at $210 billion, according to the index, a ranking of the world’s 500 wealthiest people.Consistent quarterly profits, the election of President Joe Biden with his embrace of clean technologies and enthusiasm from retail investors fueled the company’s rise, but for some, its swelling valuation was emblematic of an unsustainable frothiness in tech. The Nasdaq 100 Index fell for the third straight week on Friday, its longest streak of declines since September.Bitcoin InvestmentMusk’s fortune hasn’t been solely subject to the forces buffeting the tech industry. His net worth has risen and slumped recently in tandem with the price of Bitcoin. Tesla disclosed last month it had added $1.5 billion of the cryptocurrency to its balance sheet. Musk’s fortune took a $15 billion hit two weeks later after he mused on twitter that the prices of Bitcoin and other cryptocurrencies “do seem high.”Extreme volatility has roiled many of the world’s biggest fortunes this year. Asia’s once-richest person, Chinese bottled-water tycoon Zhong Shanshan, relinquished the title to Indian billionaire Mukesh Ambani last month after losing more than $22 billion in a matter of days.Read more: Ambani Again Richest Asian as China’s Zhong Down $22 BillionQuicken Loans Inc. Chairman Dan Gilbert’s net worth surged by $25 billion on Monday after his mortgage lender Rocket Cos. was said to be the next target of Reddit day traders. His fortune has since fallen by almost $24 billion. Alphabet Inc. co-founders Sergey Brin and Larry Page are among the biggest gainers on the index this year. They’ve each added more than $13 billion to their fortunes since Jan. 1.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) -- It’s not just in meme stocks that the fate of short sellers is a key theme. Short bets are increasingly in vogue in the $21 trillion Treasuries market, with crucial implications across asset classes.The benchmark 10-year yield reached 1.62% Friday -- the highest since February 2020 -- before dip buying from foreign investors emerged. Stronger-than-expected job creation and Federal Reserve Chair Jerome Powell’s seeming lack of concern, for now, with leaping long-term borrowing costs have emboldened traders. In one telltale sign of which way they’re leaning, demand to borrow 10-year notes in the repurchase-agreement market is so great that rates have gone negative, likely part of a move to short the maturity.The trifecta of more fiscal stimulus ahead, ultra-easy monetary policy and an accelerating vaccination campaign is helping bring a post-pandemic reality into view. There are of course risks to the bearish bond scenario. Most prominently, yields could rise to the point that they spook stocks, and tighten financial conditions generally -- a key metric the Fed is focused on for guiding policy. Even so, Wall Street analysts can’t seem to lift year-end yield forecasts fast enough.“There’s a lot of tinder being put now on this fire for higher yields,” said Margaret Kerins, global head of fixed-income strategy at BMO Capital Markets. “The question is what is the point that higher yields are too high and really put pressure on risk assets and push Powell into action” to try and tamp them down.Share prices have already shown signs of vulnerability to increasing yields, especially tech-heavy stocks. Another area at risk is the housing market -- a bright spot for the economy -- with mortgage rates jumping.The surge in yields and growing confidence in the economic recovery prompted a slew of analysts to recalibrate expectations for 10-year rates this past week. For example, TD Securities and Societe Generale lifted their year-end forecasts to 2% from 1.45% and 1.50%, respectively.Asset managers, for their part, flipped to most net short on 10-year notes since 2016, the latest Commodity Futures Trading Commission data show.Auction PressureIn the days ahead, however, BMO is eyeing 1.75% as the next key mark, a level last seen in January 2020, weeks before the pandemic sent markets into a chaotic frenzy.A fresh dose of long-end supply next week may make short positions even more attractive, especially after record-low demand for last month’s 7-year auction served as a trigger to push 10-year yields above 1.6%. The Treasury will sell a total of $62 billion in 10- and 30-year debt.With expectations for inflation and growth taking flight, traders are signaling that they anticipate the Fed may have to respond more quickly than it’s indicated. Eurodollar futures now reflect a quarter-point hike in the first quarter of 2023, but they’re starting to suggest that it could come in late 2022. Fed officials have projected they’d keep rates near zero until at least the end of 2023.So while the market is leaning toward loftier yields, the interplay between bonds and stocks is bound to be a huge focus going forward.“There’s definitely that momentum, but the question is how well risky assets adjust to the new paradigm,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “We’ll be watching next week, when the dust settles after the payrolls data, how Treasuries react and how risky assets react to the rise in yields.”What to WatchThe economic calendarMarch 8: Wholesale trade sales/inventoriesMarch 9: NFIB small business optimismMarch 10: MBA mortgage applications; CPI; average weekly earnings; monthly budget statementMarch 11: Jobless claims; Langer consumer comfort; JOLTS job openings: household change in net worthMarch 12: PPI; University of Michigan sentimentThe Fed calendar is empty before the March 17 policy decisionThe auction calendar:March 8: 13-, 26-week billsMarch 9: 42-day cash-management bills; 3-year notesMarch 10: 10-year notesMarch 11: 4-, 8-week bills; 30-year bondsFor 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.
ARK Investment founder Cathie Wood says her new Tesla price target is coming soon. What will it be? Barron's hazards a back-of-the-envelope guess.
Ark Funds CEO and Founder Cathie Wood joined Benzinga’s “Raz Report” this week and discussed the history of Ark Funds. Wood also shared some of the reasons why Ark Funds owns several positions, including in DraftKings Inc (NASDAQ: DKNG). Wood on DraftKings: Wood told Benzinga that DraftKings is becoming accepted as a platform for sports betting as the public grows more comfortable with the activity. “We do think sports betting is losing its taint,” Wood said. The fund manager sees more states turning toward legalizing sports betting, especially as many face huge deficits, Wood said. Wood used New Jersey as an example of the success states can have. The state is a mature market and DraftKings’ revenue was up 100% in the state. “New Jersey was very telling to us," she said. Ark Funds: DraftKings was added to two different Ark Funds beginning in February. Ark Next Generation Internet ETF (NYSE: ARKW) owns around 1.4 milion shares of DraftKings worth $88.1 million. Ark Fintech Innovation ETF (NYSE: ARKF) owns around 546,000 shares of DraftKings worth $33.8 million. DraftKings represents around 1.2% and 0.8% of ARKW and ARKF, respectively. Price Action: Shares of DraftKings finished the week down 6.24% at $59.52. Related Link: DraftKings And Dish Network Partner On Sports Betting, TV Integration See more from BenzingaClick here for options trades from BenzingaFuboTV Shares Pop On Caesars Partnership, Access To Additional States For Sports BettingHorizon Acquisition Corp SPAC Jumps 20% On Potential Sportradar Merger© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Coverage of the OPEC+ group's decision Thursday to not increase crude production even after a more than $45 increase in prices since April inevitably featured one of two words: "shocking" or "stunning." Diesel markets may have played a role in the path that OPEC took. Expectations going into the meeting were that OPEC, led by Saudi Arabia, would decide along with the OPEC+ group to put more barrels onto the market. The most closely watched models on global supply and demand all show demand outstripping supply now, a situation that all agreed was necessary to bring global crude inventories down to a more normal level. The question was how far it needed to go. Singapore-based analyst Vandana Hari, writing in VandaInsights, said OPEC+ "had been widely expected to boost supply by 1.0-1.5 million b/d." Instead, the number was zero. The supply/demand models show the current imbalance blowing out by the third quarter of the year, which begins in less than three months. Since any restoration of reduced production wouldn't start until April anyway, getting ready for that third quarter would need to begin in the second quarter to ramp up in time to put more barrels onto the market. In an interview with Bloomberg Television, Amrita Sen, the chief oil analyst at Energy Aspects, said of the decision that "there is some risk of overtightening. "Saudi Arabia needs to start talking about how they will bring back the barrels in the third quarter," she said. The decision to do nothing caught oil markets by surprise. The price of West Texas Intermediate crude rose $2.55/barrel Thursday, a gain of 2.56%, to settle at $63.83. The lowest settlement for WTI since the pandemic began was $11.57/b on April 21, meaning that the Thursday price, which is the post-pandemic high, marks an increase of more than 550%. (The widely reported negative price on WTI from April was not a settlement price but recorded in intraday trades.) Not only is Thursday's settlement a post-pandemic high, it is the highest settlement since April 25, 2019. The bull market continued apace on Friday. At 6:15 a.m., WTI was up another $1.44 to $65.27/b. What role did diesel play in the decision? In an article published in S&P Global Platts, editor Paul Hickin said Saudi Arabia may have been looking at some data on diesel inventories to help propel its decision. Hickin referred to "a pool of excess diesel" as being a reason that "should keep oil watchers on high alert." Citing data from Platts Analytics, Hickin wrote that "global diesel inventories are back close to the highs reached last spring and summer as COVID-19 lockdowns persist." He also noted data from Insights Global that inventories of diesel and gasoil — a middle distillate like diesel — are approximately 13% more than a year ago. The picture in the U.S. is more complicated. A large factor hanging over the diesel market in the U.S. is the status of the Texas refining sector, which shut down huge amounts of operations during the mid-February cold snap. The weekly statistical report from the Energy Information Administration released Wednesday reported that U.S. refinery production of ultra low sulfur diesel (ULSD) fell last week to a level not seen since early 2010. The ULSD output of 2.748 million b/d was about 26% less than it was the last full week before the deep freeze. In the geographic sector known as PADD 3, which includes the Gulf Coast, the drop in ULSD output over the last two weeks exceeded 44%. But even with inventories of ULSD in the U.S. down more than 10% since where they were two weeks ago, they are still not far off the five-year average of stocks for the end of February. Another indicator of the level of inventories is the relationship of ULSD prices down the calendar. In a balanced market, the price for the first month delivery of ULSD will be the lowest along the curve, with prices out on the curve rising to reflect the cost of storage and the time value of money. That is a structure known as contango. The inverse is backwardation, in which the front month is the most expensive because in a tight market, it is the most desirable barrel. ULSD flipped into backwardation at the start of February, after spending the entire pandemic in an often deep contango as inventories soared over the spring and summer. But even though there is backwardation in the diesel market on the CME commodity exchange, the 12-month curve hasn't moved significantly in recent weeks, a signal that inventories are not tightening further. That may seem academic to diesel buyers who, based on the weekly Department of Energy/EIA average retail diesel price, are paying $3.072/g in the U.S. That is 17 consecutive weeks of increases in that price, which is now at its highest level since the start of 2020. The 17 weeks is also a record in the history of the data series that goes back to 1994. Even if inventories of diesel restrained OPEC from putting more oil onto the market, that doesn't mean diesel is not riding higher on the back of the surge in markets. At approximately 6:45 a.m. Eastern time Friday, the price of ULSD on the CME was up 4 cents per gallon to $1.9360/g, a gain of 2.11%. It is notable that the Friday increase for ULSD percentage-wise was running behind that of crude. In the last several weeks, the spread between diesel and Brent crude on CME has fluctuated in a narrow band, suggesting no particular strength or weakness in diesel relative to crude. The one piece of good news for diesel buyers is that the market for diesel in Houston has not soared beyond the rest of the world. A tight market created by the refinery outages was likely to show up first in the spot market for diesel traded in Houston and then rapidly make its way into wholesale prices. But the wholesale rack price for ULSD in Houston, according to the SONAR ULSDR.HOU data series, after peaking at $2.077/g on Feb. 26, declined to $2.016/g on Thursday. That is a sign that there is a return to normalcy in the market and that further reports on Gulf Coast production may be positive. (By Friday, it had rebounded to near that February 26 level, but that was on the back of the increase in the CME ULSD price.) More articles by John Kingston Great commodity price surge not just about oil and may be impacting trucking Drilling Deep: battery technology racing ahead; so is the price of diesel Reflecting strong trucking market, TA sold huge amounts of diesel in Q4 2020 See more from BenzingaClick here for options trades from BenzingaMedically Necessary: FDA Way Behind On Facility InspectionsAir Cargo 2021: The Good, The Bad And The Ugly© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Despite the recent selloff in electric-vehicle stocks like Tesla and Nio, there is still intense investor interest in the sector, with demand for electric-vehicles expected to climb dramatically over the next decades.
What Happened: Annual Bitcoin volatility will drop below that of Amazon Inc. (NASDAQ: AMZN) in a few years if past patterns prevail, according to analysts from Bloomberg. In a Crypto Market Outlook report, analysts found that the Bitcoin volatility regression line is on track to dip below Amazon’s reading by 2022. The 260-day risk measure is currently at 60% for Bitcoin as compared to 40% for Amazon. “Similar to the early days of the benchmark crypto, in the first few years that Amazon traded publicly, its volatility averaged over 100%,” said the analysts. Why It Matters: Bitcoin’s supply and demand dynamics play an important role in the price discovery of the leading digital asset. It has a fixed mining schedule which sets it apart from most other assets and markets with uncertain supply and demand. The Bloomberg analysts find this to be a unique factor in determining the cryptocurrency’s future price trajectory. “Representing innovative technology made possible due to the internet, we see little to reverse Bitcoin's path toward a global digital store-of-value and its market cap to keep rising, likely surpassing Amazon,” noted the analysts. Bitcoin is known to be a historically volatile asset class. However, as research from the report suggests its rising volatility is only likely to continue until it reaches a new price threshold with greater market depth – possibly around $100,000. “Once the crypto settles in at a new threshold...volatility should drop, we believe”, said the analysts, adding, “The way we see it, something unexpected has to trip up this technical indicator.” Price Action: The market-leading cryptocurrency was trading at $48,494 at press time, down by 2.38% in the past 24-hours. Image: Ishant Mishra via Unsplash See more from BenzingaClick here for options trades from BenzingaWealth Managers Like Jim Paulsen Regret Not Having More Cryptocurrency In Portfolio: ReutersKraken CEO Says Bitcoin Hitting M In 10 Years 'Very Reasonable'© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.