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Yahoo Finance's Adam Shapiro and Seana Smith speak with Irving Picard, Madoff's bankruptcy trustee; and David Sheehan, chief counsel on the tenth anniversary of Bernie Madoff's arrest.
Yahoo Finance's Adam Shapiro and Seana Smith speak with Irving Picard, Madoff's bankruptcy trustee; and David Sheehan, chief counsel on the tenth anniversary of Bernie Madoff's arrest.
(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.
A wave of electric vehicle related companies are flooding the public markets this year. This follows a slew of companies which went public last year.
It appears the breakdown is underway, and this could turn into an outright collapse into mid-March.
(Bloomberg) -- Saudi Arabia just made a high-stakes wager that the glory days of U.S. shale, which transformed the global energy map in the last decade, are never coming back.By keeping a tight grip on supply at Thursday’s meeting of the OPEC+ alliance of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman showed he’s focused on boosting prices -- and confident that this time around it won’t encourage American producers to surge back and steal market share.“‘Drill, baby, drill’ is gone for ever,” said Prince Abdulaziz, who’s orchestrated the revival of the oil market after last year’s catastrophic collapse.His swagger comes mixed with a good dose of diplomatic tension: Russia, Saudi Arabia’s most important OPEC+ partner, has tried to convince Riyadh for several months to increase output, fearing that rising oil prices would ultimately awaken rival shale producers. The Saudis are certain the American industry has reformed itself.If the prince is right, OPEC+ will be able to both push prices higher now and recover market share later without worrying that rivals in Texas, Oklahoma and North Dakota will flood the market. But if Riyadh has miscalculated -- and it’s got shale wrong before -- the danger will be lower prices and production down the line.The Saudis have so far convinced their allies the strategy will work. After a quick virtual meeting on Thursday, OPEC+ agreed to prolong its production cuts, defying expectations of an output hike. Russia, however, secured an exemption for itself and Kazakhstan, and will increase output marginally in April.Brent crude jumped 5% to a one-year high of almost $68 a barrel after the decision. Front-month futures extended gains on Friday and a raft of banks updated their price forecasts, including Goldman Sachs Group Inc., which increased its estimates by $5 -- to $75 next quarter and $80 in the following three months.“This is an incredibly bold move on the part of OPEC+ to extend the oil price rally,” said KPMG Global Energy Sector Leader Regina Mayor.If history is a guide, however, trouble may be brewing. The OPEC+ coalition, which groups Saudi Arabia, Russia and almost two dozen other oil producers, has in the past underestimated its American rivals, who year after year produced more than most expected. From a low point of less than 7 million barrels a day in 2007, the U.S.’s total petroleum output more than doubled to hit an all-time high of almost 18 million barrels a day by early 2020, forcing the cartel to cede market share.Risky Move“This is a risky take,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said Friday in a Bloomberg Television interview. While U.S. oil companies probably won’t raise output this year, in 2022 “there’s nothing really stopping them, especially the small and mid-cap producers.”Sen sees prices hitting $70 a barrel as soon as next week, $80 by the end of the year and a possible climb to $100 in 2022.For now, U.S. total oil output remains constrained, hovering at 16 million barrels due to the impact of last year’s slump, which briefly saw benchmark prices trade below zero.Under pressure from shareholders, shale producers have promised restraint, putting profits before the growth they relentlessly pursued during the boom years. Although drilling has risen from the lows of 2020, it’s well below previous levels. In addition, President Joe Biden is trying to temper the worst excesses of the industry, including the indiscriminate natural gas flaring that’s a byproduct of shale’s success.Under a different oil minister, Saudi Arabia attacked shale producers in 2014 and 2015, flooding the market and forcing prices lower -- a strategy that ultimately failed. Prince Abdulaziz is doing the opposite, because oil higher prices will eventually benefit shale producers. Yet, he’s convinced the industry won’t repeat its past excesses.“Shale companies are now more focused on dividends,” Prince Abdulaziz told Bloomberg News in an interview after the OPEC+ meeting, saying that the kingdom wished the American industry well. “We’ve never had any issue with shale oil. It’s the shale companies which are themselves changing. They have had their fair share of adventure and now they are listening to the call of their shareholders.”Shale executives agree with him -- at least for now.“A couple years ago it was ‘drill, baby, drill,’” John Hess, the head of Hess Corp., said in Houston earlier this week. “Now, it’s ‘show me the money.’”Ryan Lance, the chief executive officer of ConocoPhillips, echoed the sentiment: “I hope there’s discipline in the system. The worst thing that can happen right now is U.S. producers start growing rapidly again.”As the industry cuts spending to pay shareholders fatter dividends, there’s not much left to finance increased production. Even Big Oil is scaling down its ambitions in shale. Exxon Mobil Corp. had been running 55 oil rigs in the Permian basin that straddles West Texas and southeast New Mexico, part of an effort to boost output to 1 million barrels a day by 2025. After tightening its belt, the U.S. oil giant is running just 10 rigs, and has cut its 2025 output target by nearly a third to 700,000 barrels a day.Yet, there are also signs that higher oil prices may ultimately reactivate the U.S. shale industry. With benchmark West Texas Intermediate now changing hands above $60 a barrel, some companies believe they may be able to both grow and keep shareholders happy. EOG Resources Inc., the largest producer in the Permian, has announced a big spending increase for next year. And others are following suit.But the reaction of the stock market made Prince Abdulaziz’s case: investors punished EOG for spending more on drilling, marking down its shares relative to more disciplined rivals.(Updates with comments from Energy Aspects in 10th, 11th paragraphs.)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.
Federal Reserve Chair Jerome Powell disappointed some traders by offering few signs that the central bank might expand monetary stimulus.
(Bloomberg) -- A firm hired to monitor Texas’ power markets says the region’s grid manager overpriced electricity over two days during last month’s energy crisis, resulting in $16 billion in overcharges.Amid the deep winter freeze that knocked nearly half of power generation offline, the Electric Reliability Council of Texas, known as Ercot, set the price of electricity at the $9,000-a-megawatt-hour maximum -- standard practice during a grid emergency. But Ercot left that price in place days longer than necessary, resulting in massive overcharges, according to Potomac Economics, an independent market monitor hired by the state of Texas to assess Ercot’s performance. In an unusual move, the firm recommended in a letter to regulators that the pricing be corrected and that $16 billion in charges be reversed as a result.Potomac isn’t the first to say that leaving electricity prices at the $9,000 cap for so long was a mistake. Plenty of power companies at risk of defaulting on their payments have said the same. But the market monitor is giving that opinion considerable weight and could sway regulators to let companies off the hook for some of the massive electricity charges they incurred during the crisis.The Arctic blast that crippled Texas’s grid and plunged more than 4 million homes and businesses into darkness for days has pushed many companies to the brink of insolvency and stressed the power market, which is facing a more-than $2.5 billion payment shortfall. One utility, Brazos Electric Power Cooperative, has already filed for bankruptcy, while retailers Griddy Energy LLC and Entrust Energy Inc. defaulted and have been banned from participating in the market.“The market is under quite a bit of duress,” Kenan Ogelman, Ercot’s vice president of commercial operations told Texas lawmakers Thursday. Moody’s Investors Service downgraded Ercot one notch from A1 to Aa3 and revised the grid operator’s credit outlook to “negative.”Retroactively adjusting the power price would ease the financial squeeze on some of the companies facing astronomical power bills in the wake of the energy crisis. EDF Renewable Energy and Just Energy are among those asking the Public Utility Commission to reset the power price for the days after the immediate emergency while others have also asked regulators to waive their obligation to pay until price disputes are resolved.“If we don’t act to stabilize things, a worst-case scenario is that people will go under,” said Carrie Bivens, the Ercot independent market monitor director at Potomac Economics. “It creates a cascading effect.”The erroneous charges exceed the total cost of power traded in real-time in all of 2020, said Bivens, who spent 14 years at Ercot, where she most recently was director of market operations before becoming its watchdog. “It’s a mind-blowing amount of money.”While prices neared the $9,000 cap on the first day of the blackouts, they soon dipped to $1,200 -- a fluctuation that the utility commission later attributed to a computer glitch. The panel, which oversees the state’s power system, ordered Ercot to manually set the price at the maximum to incentivize generators to feed more electricity into the grid during the period of supply scarcity. The market monitor argues that Ercot should have reset prices once rotating blackouts ended because, at the point, the emergency was over.It’s asking the commission to direct Ercot to correct the real-time price of electricity from 12 a.m. Feb. 18 to 9 a.m. Feb. 19. Doing so could save end-customers around $1.5 billion that otherwise would be passed through to them from electricity providers, Bevins said.But power generators that reaped substantial profits from the high prices during the crisis week are likely to push back. Vistra Corp. on Thursday submitted comments to the utility commission arguing against repricing. During a Texas senate hearing the same day, utilities South Texas Electric Cooperative and the Lower Colorado River Authority also voiced opposition.Texas Competitive Power Advocates, a trade association representing generators, said retroactively changing prices could discourage future investments in Texas’s electricity market. “Changing prices after the fact creates additional instability and uncertainty,” Michele Richmond, the group’s executive director, said in an email.Bivens acknowledged the market monitor isn’t typically in favor of repricing, but noted in her letter to the commission that the move wouldn’t result in any revenue shortfalls for generators. Instead, the new price would reflect the actual supply, demand and reserves during the period.“This isn’t some Monday morning quarterbacking,” she said in an interview. “Ercot made an error and we don’t let errors slide.”The utility commission on Wednesday adopted a prior recommendation made by the market monitor, voting to to claw back some payments to power generators for services they never actually provided during energy crisis. The commissioners also expressed support for capping the price of certain grid services -- a request made by several retailers -- but didn’t take action on it. Another commission meeting is scheduled for Friday.(Adds Ogelman quote, Moody’s downgrade in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Contractors, freelancers, and sole proprietors in the US can now access considerably larger loans from the Paycheck Protection Program (PPP), following a new rule issued by the Small Business Administration (SBA) on Wednesday. The rule allows entrepreneurs without employees to calculate their loan eligibility using gross income rather than net income, making the loans far more generous, especially for businesses with little or no profit.
It's full steam ahead for Kanye West's apparel line at Gap.
Gold fell to its lowest in nine months on Friday after better-than-expected U.S. employment data bolstered the dollar and U.S. Treasury yields, putting bullion on course for its third straight weekly decline. Spot gold was down 0.1% at $1,695.22 by 11:50 a.m. ET (1650 GMT), after falling to its lowest since June 8 at $1,686.40 in the session. "This optimism in regards to the economy moving forward continues to drive bond yields higher and that certainly has been taking the wind out of the sails of many commodity markets, including gold," said David Meger, director of metals trading at High Ridge Futures.
Blockchain payments firm Ripple has not experienced any fallout in its Asia Pacific business after being sued by the U.S. Securities and Exchange Commission (SEC), the company's chief executive officer said on Friday. In late December, the SEC charged Ripple, which is associated with cryptocurrency XRP, with conducting a $1.3 billion unregistered securities offering. After that, the top U.S. cryptocurrency exchange Coinbase shut down trading in XRP, which is the world's seventh-largest cryptocurrency by market value.
(Bloomberg) -- Traders in the $21 trillion U.S. Treasury market are sending a clear signal that they intend to keep pushing yields higher until they upend financial conditions sufficiently to spark action from the Federal Reserve.Ten-year yields climbed again on Friday, heading toward last week’s one-year high and undermining stocks, after Fed Chair Jerome Powell gave just a minor nod to the recent, abrupt surge in long-term borrowing costs. He stressed that officials are focused on the long road ahead before they achieve their policy goals.Even before Powell spoke, some strategists were predicting the global borrowing benchmark rate was on course to reach 2%, a mere 40 basis points above last week’s peak. With yields on the rise again, it may not be long before mortgage-related hedging kicks in and brings that target closer. Goldman Sachs Group Inc. boosted its year-end forecast for 10-year Treasury yields on Thursday to 1.90% from 1.50%.Friday’s February payrolls report now looms as the next catalyst. Yields have already soared more than a half-point this year as a cheerier outlook for growth and inflation led traders to bring forward how soon they see the Fed lifting its policy rate. Many strategists had expected Powell to try to more forcefully tamp down yields before the Fed’s black-out period ahead of its March 17 policy decision. With no such effort emerging, market participants are left to ponder where policy makers’ pain threshold may be.“In this environment yields can certainly continue to test higher,” said Jonathan Cohn, a strategist at Credit Suisse. “How far the Fed is willing to allow stock markets to fall -- which is the poor man’s version of thinking about broad financial conditions -- is a key question.”During an appearance in a Wall Street Journal webinar Thursday, Powell said the recent bond-market swings “caught my attention.” He said he’s monitoring financial conditions and would be “concerned by disorderly conditions in markets.”Ten-year yields added 8 basis points on the day to 1.56%, and continued to creep higher in Asia hours touching 1.58%, bringing into view last week’s one-year high of 1.61%. With yields at current levels, there have been fresh concerns of convexity-related hedging flow which can undermine liquidity conditions and further roil riskier assets. Stocks slumped Thursday, with the S&P 500 Index briefly erasing its 2021 gains.Powell said he’d be concerned if there were a “persistent tightening in financial conditions that threatens the achievement of our goals.” But he didn’t mention any actions the Fed might take to curtail the climb in yields, which has lifted mortgage rates and risks dimming a bright spot in an economy still on the mend from the pandemic.Wall Street strategists have mulled options the Fed could take to push down long-term yields including: extending the duration of its bond purchases, or implementing a so-called “twist” operation -- involving selling part of the Fed’s shorter-dated holdings in favor of long-term Treasuries.“If yields continue higher too quickly, then that could be a problem for the Fed,” said Mark Zandi, chief economist at Moody’s Analytics. “It might undermine asset prices, possibly causing a major correction in stock prices and a freezing up of the housing market. This is not our base case, but it’s a concern and a risk.”Meanwhile, a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% this week for the first time since 2008 -- aided by climbing oil prices.Traders are now pricing in a full quarter-point Fed rate boost in the first quarter of 2023. The Fed itself has signaled it intends to keep policy steady at least through the end of that year.”Market participants are putting the Fed to the test and saying, ‘OK, given this spike in inflation, if it’s not transient then you’re going to have to act sooner,”’ Scott Minerd, global chief investment officer of Guggenheim Partners, said in a Bloomberg Television interview.(Updates with Friday’s yield move)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.
Stocks traded lower on Thursday after another technology-led selloff on Wednesday. A new report on weekly unemployment claims came in better than expected, helping boost sentiment after a disappointing print on private payroll growth came in just a day earlier.
Payments will be harder to get this time, but it might help to file your tax return soon.
(Bloomberg) -- A lawmaker is calling for an investigation of a $54.2 million, after-hours purchase of Oshkosh Corp. stock the day before the company won a blockbuster contract to build trucks for the U.S. Postal Service.The transaction of 524,400 shares is bigger than Oshkosh trading volume for some entire days. The block itself amounted to almost 1% of the company’s publicly available shares and 74% of the firm’s 20-day average volume, according to data compiled by Bloomberg.Oshkosh shares surged as much as 16% the next day, Feb. 23, and have risen further since. The holdings would be worth $59.6 million at Friday’s closing price of $113.65, or more than $5 million above the purchase price. The parties involved in the trade couldn’t be determined.“It definitely stinks and needs to be looked into at the highest levels,” Representative Tim Ryan, an Ohio Democrat who is fighting the award to Oshkosh, said in an interview. “If that is not suspicious, I don’t know what is. Somebody clearly knew something.”Ryan said he will ask the Securities and Exchange Commission to investigate. Representatives of the agency didn’t immediately respond to an emailed request for comment after normal business hours.The Postal Service awarded the Wisconsin-based maker of military trucks a 10-year contract for as many as 165,000 vehicles worth as much as $6 billion.Ryan is backing the losing bid of Workhorse Group Inc. which has a 10% stake in Lordstown Motors Corp., which makes electric vehicles at a facility in Ryan’s congressional district.An Oshkosh representative didn’t respond to a voicemail and and email seeking comment.The move to award Oshkosh the contract stunned Wall Street analysts who had predicted Workhorse’s proposal to make electric trucks would win at least some of the order. Workhorse is considering challenging the award.Trades outside of normal market hours can have a significant impact on share prices because market activity is thinner.Ryan, who said he is drafting a letter to the SEC, has joined with Ohio Democrats Marcy Kaptur and Senator Sherrod Brown in calling for the Biden administration to halt and review the Postal Service award to Oshkosh.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.
Within a few months, he made enough for a down payment on a second home, in sunny Tampa, Fla. “I looked her up, and it all sounded really good,” he tells Barron’s. “I started investing with ARK just three days later.” The “her” is Cathie Wood, who founded ARK Investment Management seven years ago, and joins our list of the 100 Most Influential Women in U.S. Finance this year. It isn’t just that ARK’s actively managed funds have done well, although they have—phenomenally so: Last year, five of its seven ETFs returned an average of 141%; three were the top performers among all U.S. funds.
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.
Some households are collecting a big pile of federal money in 2021.
Virgin Galactic Holdings Inc. Chairman Chamath Palihapitiya sold off a chunk of his shares this week, and played a part of the plunge in prices.
(Bloomberg) -- Trouble may be brewing in China for Bitcoin’s raucous and divisive rally as the nation pushes ahead with a world-leading effort to create a digital version of its currency.That’s because the eventual rollout of the virtual yuan could roil cryptocurrency markets if Chinese officials tighten regulations at the same time, according to Phillip Gillespie, chief executive of crypto market maker and liquidity provider B2C2 Japan, which mainly works with institutional investors.“Once a digital yuan is introduced, that’s going to be one of the biggest risks in crypto,” Gillespie, who previously worked in currency markets for Goldman Sachs Group Inc., said in an interview. “Panic selling” is possible if the new rules end up sucking liquidity from trading platforms for digital coins, he said.Central banks’ power to issue virtual money and proscribe rivals is one of the key risks for the crypto sector. Chinese citizens are already banned from converting yuan to tokens but the practice continues under the table using Tether, a digital coin that claims a stable value pegged to the dollar. The money parked in Tether then gets routed to Bitcoin and other tokens.Tokyo-based Gillespie sees potential for an outright ban on Tether, which could raise the stakes for anyone minded to continue using it.A draft People’s Bank of China law setting the stage for a virtual yuan includes a provision prohibiting individuals and entities from making and selling tokens. In recent days, China’s Inner Mongolia banned the power-hungry practice of cryptocurrency mining.Representatives of the People’s Bank of China didn’t reply to a fax seeking comment on the prospect of regulatory changes. While there’s no launch date yet, the PBOC is likely to be the first major central bank to issue a virtual currency after years of work on the project.Tether officials have downplayed the concern, saying that central bank digital currencies won’t mean the end of stablecoins.“Tether’s success has provided a blueprint for how a CBDC could work,” said Paolo Ardoino, chief technology officer for Tether and Bitfinex, an affiliated exchange. “Furthermore, CBDC’s are unlikely to be available on public blockchains such as Ethereum or Bitcoin. This last mile may be left to privately-issued stablecoins.”Still, Gillespie points out that Tether is “this massive amount of fuel for Bitcoin purchases” and few people realize the potential for disruption. A “tremendous amount of liquidity” is coming from exchanges tapping Chinese demand, he added.Tether QuestionsBitcoin surged fivefold in the past year and hit a record above $58,000 last month before dropping back about $10,000. The rally has split opinion, with some arguing a new asset class is emerging and others seeing pure gambling by retail investors and speculative pros in the Wild West of finance.Tether is an equally controversial token deep in the plumbing of the nascent cryptocurrency market. Traders use it to park money as they shift from virtual to fiat cash.More than $18 billion of Tether moved overseas from East Asian addresses over a one-year period, including spikes suggesting Chinese origin, according to an August report from Chainalysis, which analyzes the blockchain network technology underlying tokens. The report indicated citizens may be using Tether to dodge rules that limit capital transfers abroad.Questions about Tether continue to swirl. The companies behind it were banned from doing business in New York last month as part of a settlement with state officials who found that they hid losses and lied about reserves.‘Liquidity Shock’A recent report from JPMorgan Chase & Co. said there’d likely be “a severe liquidity shock to the broader cryptocurrency market” if issues arose that affected the “willingness or ability of both domestic and foreign investors to use Tether.”“All the volume goes through Tether,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital. “As regulators become more and more restrictive on stablecoins, that could be very negative for the market because that could mean less liquidity.”B2C2 Japan’s Gillespie said Tether is “such a risky asset” and a “massive liquidity shock” is possible if China does ban it. “What would happen is there’s going to be massive panic selling,” he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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.