Yahoo Finance Plus Ride sharing giants Uber and Lyft don't allow drivers to pick up unaccompanied minors. A new app geared towards kids solves that problem. Yahoo Finance's Julie Hyman, Adam Shapiro, Michael Block, Third Seven Advisors Market Strategist and Hop, Skip and Jump CEO, Joanna McFarland discuss.
"Market makers were heavily short puts in the range of $52,000 to $50,000, and I estimate were forced to sell nearly 2,900 bitcoin," one trader said.
(Bloomberg) -- Sanjeev Gupta’s plans to save his embattled industrial empire suffered a major setback as the U.K. opened a fraud investigation, prompting a potential financial partner to walk away.For two months, Gupta has been scrambling to refinance after the collapse of his group’s main lender, Greensill Capital, and recently looked close to winning a reprieve -- helped along by a surging commodity prices.But on Friday, the Serious Fraud Office announced a probe into Gupta’s GFG Alliance, including into the financing arrangements with Greensill. That prompted White Oak Global Advisors LLC -- which had recently offered a lifeline with terms for a 200 million-pound ($282 million) loan for Gupta’s U.K. steel business -- to walk away. White Oak was also behind funding for part of Gupta’s Australian assets, the Australian Financial Review has said.“As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” White Oak said in a statement.GFG said Friday it will co-operate fully with the SFO investigation. It declined to comment on White Oak’s decision.The fraud probe also puts other efforts to replace about $5 billion Gupta had borrowed from Greensill in question.On Thursday, Gupta had conveyed a much brighter outlook, expressing confidence of a “new future” for his sprawling group of companies. On a podcast for employees, he said it had been “relatively easy to get refinancing” for the Whyalla mill in Australia. He also said that GFG had been “inundated by offers to help and to finance,” partly due to strong commodity markets.The picture is now bleaker in the wake of the SFO investigation, which follows months of scrutiny from lawmakers and the media over Gupta and Greensill’s financing practices. GFG has come under the microscope after the collapse of Greensill in March revealed it had been a recipient of financing based on expected future invoices, for sales that were merely predicted.Trading ActivitiesThe exact scope of the SFO investigation isn’t yet clear. Bloomberg has reported four banks stopped working with Gupta’s Liberty House Group trading business, starting in 2016, amid concerns about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News has reported. In one example, the company had presented a bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.The two-month period it took from starting to covertly look into GFG and its financing by Greensill to announcing a formal probe is a quick turn-around for the SFO, which often takes years to publicly confirm it’s taking action against a company.It will now start to gather evidence, including securing devices and documents. However, it’ll likely take years for the office to make any tangible updates to the investigation, including whether it decides to charge individuals as part of the probe.The funding from Lex Greensill’s eponymous firm helped GFG expand at an astonishing rate in the past five years by targeting old, unwanted assets. His loose collection of companies now employs some 35,000 people worldwide, with steel and aluminum plants in the U.S., U.K., France, Romania and Australia.Staying afloat would enable Gupta to enjoy some of the best times his industrial businesses have seen. Steel prices are near an all-time high as demand recovers from the coronavirus pandemic and China cuts capacity to curb pollution. Aluminum, Gupta’s other major business, hit a three-year high this week amid a broad commodities boom.Still, Greensill’s collapse has already taken a major toll on Gupta’s businesses. On Thursday, his Wyelands Bank said it would be wound up if it can’t find a buyer. His steel units in France and Belgium have started creditor protection procedures, he’s approached buyers for some of his engineering assets, people familiar with the matter have said, and also sought buyers for two steel plants in France.For governments too, there is much at stake. Countries that once feted him as a savior for buying decrepit assets may have to pick up the pieces, due to the jobs at risk and some assets’ strategic importance to industry.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The British pound initially shot higher during the trading session on Friday but has been a bit noisy in the process of breaking above the hammer from the previous session.
(Bloomberg) -- The U.K.’s fraud prosecutor opened a probe into Sanjeev Gupta’s GFG Alliance over suspicions of fraud and money laundering, causing a potential lender to the group to withdraw from agreements to provide new financing.The Serious Fraud Office is investigating “suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business,” according to a statement. The probe includes the financing arrangements with Greensill Capital UK Ltd. The SFO has been looking at GFG since Greensill’s collapse in March and decided to open a formal probe, according to a person familiar with the investigation.As a result, White Oak Global Advisors LLC is pulling out of discussions to provide loans to Gupta’s businesses. “As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” a spokesperson for the group in London said.The Financial Times first reported that White Oak was pulling out of financing talks. A representative for GFG declined to comment on White Oak’s decision. Last week, Bloomberg reported Gupta had agreed a 200 million pound ($282 million) facility with the San Francisco-based lender to provide working capital to his U.K. steel businesses. He had also secured the refinancing of one of his Australian units.It’s a massive setback for the tycoon, who appeared to be just on the cusp of securing a lifeline for his beleaguered metals empire. He now faces the extremely difficult task of negotiating new loans while being subject to a fraud probe.Prosecutors are starting to round in on both Gupta and Greensill, after months of scrutiny from lawmakers and the media over its financing practices. Earlier this week, the U.K. Financial Conduct Authority said it was also investigating Greensill and cooperating with counterparts in other U.K. enforcement and regulatory agencies.It’s also working with German, Australian and Swiss authorities. The FCA and SFO probes are completely separate although inevitably will involve cross-over and information sharing, according to the person familiar with the investigation.Read More: Lex Greensill Says His Investors Knew What They Were Buying“GFG Alliance will co-operate fully with the investigation,” a GFG spokesperson said. Grant Thornton, Greensill’s administrators, declined to comment.While the SFO has collected billions in fines in recent years from companies with deferred prosecution settlements, its track record in the criminal courts is patchy. Last month a trial into two Serco Group Plc directors collapsed and the agency lost a mammoth case against Barclays Plc bankers in 2020.GFG has come under the microscope after the collapse of Greensill Capital in March revealed it had been a recipient of financing based on expected future invoices, for sales that were merely predicted.What has also come to light is the activities of the tycoon’s trading business Liberty House Group. Four banks stopped working with the company, starting in 2016, after they became concerned about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News reported.Read More: As Gupta Rose From Trader to Tycoon, Several Banks Backed AwayGreensill was Gupta’s largest source of financing before its collapse. The London-based lender supplied billions of dollars in loans to GFG, many of which were packaged and sold onto investors in funds run by Credit Suisse Group AG. Greensill fell into administration after a key insurance partner didn’t renew coverage on loans made to some of its customers, including GFG.Much of the financing extended to GFG by Greensill was from the finance firm’s German banking unit. Germany’s financial watchdog shuttered Bremen-based Greensill Bank AG and asked law enforcement officials to investigate accounting irregularities at the lender in March. The bank was closed after the lender identified problems in how Greensill Bank booked assets tied to Gupta’s companies.The announcement of the probe came a day after former Prime Minister David Cameron was grilled by lawmakers over his employment by Greensill. He defended his intensive lobbying on behalf of the firm as part of a parliamentary inquiry that’s raised questions over private dealings at the top of the British government.(Updates with detail of White Oak talks collapsing.)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.
Earlier, the three major indexes rebounded after declining sharply earlier this week.
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A metal coatings plant in China's manufacturing hub has been hit by price increases of up to 30% for raw materials including steel, aluminium, thinner and paint since the Chinese New Year in February. The firm has had no choice but to pass most of these higher costs on to its clients, including those in the United States, said King Lau, who helps run Dongguan-based Kam Pin Industrial Ltd, in Guangdong province. "Our customers understand, because it is happening to many different kinds of industries including home appliances, mobile phones, vehicles," Lau said, referring to price hikes by Chinese exporters.
CEO Brian Armstrong said on the company's Q1 earnings call that Coinbase wants to be "first to list" new coins.
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The hot crypto market "actually does resemble a casino" to investors, Gundlach told Yahoo Finance.
(Bloomberg) -- Buyers of newly-minted corporate bonds are already nursing losses as inflation fears send government bond yields climbing.About four fifths of high-grade non-financial corporate bonds priced in Europe this year are quoted below their issue price, based on data compiled by Bloomberg. Last Friday, the share of post-issue losers stood at under 50%.This bleak statistic underscores the damaging effect on credit investors of the so-called reflation trade -- bets on rapid economic recovery and an associated pickup in inflation -- prompting many to seek shelter from further sovereign debt sell-offs.Investment grade bonds are more sensitive than high-yield debt to any threat of higher interest rates in response to inflation, a vulnerability known as ‘duration risk.’ That’s because they have longer life spans than lower-quality peers and carry lower risk premiums. This attribute is hitting investors hard this year.“Duration is already a problem when you see that rate-sensitive sectors underperform and this is going to increase,” said Vincent Benguigui, a portfolio manager at Federated Hermes, which oversees $625 billion. “Clearly everything is stretched.”The year-to-date total return of euro-denominated investment-grade bonds has slumped this week, to minus 0.96% from minus 0.56% on Monday. A month ago the return since the start of 2021 stood at minus 0.3%, according to Bloomberg Barclays indexes. By contrast, the less rate-sensitive junk bond market has gained 2.2%.While the threat of higher yields to compensate for a potential rise in inflation has been a thorn for high-grade investors throughout the year, a European Central Bank pledge to pick up the pace of its emergency pandemic QE program had helped funds recover some losses before this week’s sell-off pushed them further into the red.Rate risk is the main driver of corporate bond losses, as spreads on most of this year’s new issues are trading tighter than at launch, according to data compiled by Bloomberg. The average risk premium of high-grade euro bonds over safer government debt is indicated at 83 basis points, the lowest in more than three years, thanks to continued ECB purchases and bets on the economic reopening.Click here for the spread performance of all bonds issued in Europe this yearBut spreads, with little room to tighten further, seem incapable of stemming duration-driven losses.“While the extended recovery in fundamentals should provide another layer of support, higher yields in the euro government bonds space should limit euro investment grade’s ability to attract inflows and limit tightening potential once rates stabilize,” wrote Cem Keltek, a credit strategist at Commerzbank AG, in a note to clients on Thursday. “Pressure on rates and tapering prospects later in the year render long-end risk-reward unattractive.”Some hedge funds have started betting on price drops in corporate bonds amid the threat of rising interest rates and stretched valuations. Short positions in junk bonds have jumped to their highest level since 2008 and bearish bets on high-grade bonds are at their highest since early 2014.Bonds that lose value shortly after issuance could potentially discourage investors from bidding aggressively for new deals.This leaves high-grade investors with only one realistic source of return: the income made by just holding the interest-bearing bond, unless they are willing to switch to riskier parts of the credit market.“It’s more or less carry at this point,” said Martin Hasse, a portfolio manager at MM Warburg & Co., which oversees 76.2 billion euros ($92 billion). “Maybe a little tightening but not so much. High yield and subordinated notes can see more of that.”EuropeHigh yield issuers are in command of the region’s syndicated bond market on Friday, accounting for three of the day’s four deals as global credit risk sentiment improves.The financing arm of U.S. autoparts maker Dana Inc., Italian technology companies Lutech SpA and Cedacri SpA are pitching new deals that are likely to wrap up by market closeWeekly issuance is likely to reach 33.5 billion euros, according to data compiled by BloombergEuropean credit default risk fell for both investment-grade and high-yield bonds as more-tempered commodity prices helped allay investor concerns about inflation risksAsiaA rush of borrowers early in the week boosted dollar bond sales in Asia ex-Japan, with issuance doubling compared with the previous week.Bond sales rose to $8.4b from $4.2b a week earlier, the highest in three weeks, according to Bloomberg-compiled dataAt least 22 borrowers came to the market, the busiest week in 2021 since January in terms of number of issuersGLP Pte’s $850m perpetual note offering was the biggest bond sale this week, followed by a $707m offering by JSW Hydro Energy and a $650m note from Cathay Pacific AirwaysDeals slowed from mid-week, coinciding with release of data on Wednesday that showed U.S. consumer prices climbed in April by the most since 2009Yield premiums on Asia’s high-grade bonds, excluding Japan, and the cost of protection against such debt both dropped 1-2bps on Friday, credit traders saidU.S.Alibaba Group Holding Ltd.’s revenue beat estimates after China’s e-commerce leader rode a post-pandemic recovery and begins to move past a bruising antitrust investigationAs cash balances have risen toward $70 billion, financial flexibility may enable Alibaba to endure a prolonged period of macroeconomic uncertainty related to the coronavirus, as well as regulatory risk, better than hardware-centric technology peers, write Bloomberg Intelligence credit analysts Robert Schiffman and Suborna PanjaIt seemed almost certain that supply would at least match syndicate desks’ projections of $45 billion this week after Monday’s almost $28 billion bonanza, however, macro uncertainty fueled by inflation fears seems to have curbed issuanceLess than $3 billion priced on Thursday, bringing the week’s volume to $42 billionFor 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) -- At their highs, five electric-vehicle startups that went public through mergers with special purpose acquisition companies were worth $60 billion. The corrections that followed have been brutal.Three of the companies plumbed new lows this week as short-seller attacks, management turmoil and execution issues lead investors to reconsider their prospects. They’ve lost more than $40 billion of market capitalization combined from their respective peaks.The sliding valuations of Nikola Corp., Fisker Inc., Lordstown Motors Corp., Canoo Inc. and Arrival Ltd. underscore the risks surrounding the blank-check boom. Unlike in a traditional initial public offering, going public via SPAC allows companies to make forward projections to investors during their listings. This was key to ginning up interest in EV companies -- all five are still working on delivering their first vehicles to customers.Here’s a breakdown of what’s happened at each company:NikolaFounder Trevor Milton burst onto the scene last year boasting that he could “out-Elon” Tesla Inc.’s Elon Musk. Days after his battery-electric and hydrogen-powered truck maker debuted on the Nasdaq in June, it was worth almost $29 billion, rivaling Ford Motor Co. at the time.When Bloomberg News reported that Milton had exaggerated the capability of his first truck years before the company went public, it got the attention of Hindenburg Research. The small short-selling firm produced a lengthy report accusing the company of deceiving investors. The U.S. Securities and Exchange Commission opened an investigation, and Milton resigned soon after.Early this year, the company cut its projection for semi-truck production this year to 100 units, one-sixth of its earlier plan. The shares have recovered somewhat since dipping below $10 in April.FiskerThe second EV venture founded by longtime auto designer Henrik Fisker announced its reverse merger a month after Nikola’s listing. While the company was more than two years from starting production, its plan to market an under-$40,000 sport utility vehicle and outsource the manufacturing work to others turned heads. Its market value peaked at almost $8 billion in February.The catalysts for Fisker’s decline to below $3 billion this week have been less clear than some of its peers. The company appeared to lose out as investors grew more bullish about incumbent automakers’ EV prospects. Its shares are surging in early trading after an announcement late Thursday of plans to develop an EV with Foxconn Technology Group and build it in the U.S.Lordstown MotorsThen-Vice President Mike Pence attended Lordstown’s unveiling of its Endurance work truck in June at the factory the company took over from General Motors Co. While it was a risky move championing a company with just 70 full-time employees, the Trump administration was eager to embrace a startup trying to revive an Ohio plant that once employed 10,000 people.Less than six weeks later, Lordstown found a SPAC suitor. Boasts about non-binding orders gave way to another attack by Hindenburg Research, which leveled accusations similar to the ones aimed at Nikola -- that Lordstown had misled investors. The SEC has been looking into the claims. Lordstown is now valued at $1.2 billion, less than a quarter what it was worth in mid February.CanooThe startup founded by a pair of former BMW AG executives unveiled a seven-seat prototype in late 2019, struck a deal early last year to help Hyundai Motor Group develop EVs, then another agreement in August to go public. In January, the Verge reported it had met with Apple Inc. about its car ambitions.That momentum is now long gone. The company announced a hard pivot in its business plans in March, deciding to de-emphasize engineering services for other companies and the subscription business model that was part of its original pitch to investors. It has replaced top executives, including its chief financial officer, and said it hasn’t addressed material weaknesses in its financial controls identified more than a year ago. Last month, one of its co-founders resigned the CEO position.ArrivalThe company pledging to build electric vans and buses as well as so-called microfactories to manufacture them had assembled big-name backers before its SPAC deal, including BlackRock Inc., Hyundai and United Parcel Service Inc.Last week, the London-based company founded by Denis Sverdlov, a former Russian deputy minister, said it will partner with Uber Technologies Inc. to develop an EV that’s purpose-built for ride-hailing. While Arrival shares haven’t sustained the immediate gain following that announcement, the company’s valuation is the highest among the five at $10.5 billion.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) -- Once again, the U.S. stock market suffered a major dip. And once again, buyers arrived on the scene right on time to stop the bleeding.Was that the right call this week, given the shocker of an inflation report that roiled markets on Wednesday? While only time will tell for sure, a chorus of analysts and strategists are defending their bullish positions and recommending clients take advantage of cheaper prices to buy stocks -- especially in the battered technology industry.The rationale for many echoes the Federal Reserve’s take on hot inflation reports in 2021: Price pressures will be temporary as the economy works its way back to normal following the pandemic. Victoria Fernandez, chief market strategist at Crossmark Global Investments, said the consumer-prices report did little to alter her belief that above-normal inflation will be fleeting and the fundamentals in technology stocks remain attractive.“The question is, 12 months from now are we going to see a big jump in consumer prices? And I think most people will say probably not,” she said. “When you’ve had a pullback like this for some of these big tech names, to me that is an opportunity to go in and add to them.”Inflation concerns reached a climax on Wednesday when the government reported the consumer price index jumped 4.2% year-over-year in April, the fastest rise since 2008 and well above most economists’ estimates. That can’t be written off entirely to fuel prices and base effects from suppressed prices last year. Core CPI, excluding food and energy prices, rose 0.9% from the prior month, the biggest such increase since 1982.The initial reaction was brutal: By the end of Wednesday, the S&P 500 was down as much as 4% from its last record on May 7, poised for its worst week since October. It recouped more than half the losses on Thursday and Friday to close 1.4% lower on the week, still its worst drop in almost three months. The Nasdaq 100 Index plunged 2.6% on Wednesday, extending its retreat from an April record to 7.4%, then rebounded 3% in the last two days of the week. “That just shows there is a lot of cash on the sidelines and this weakness in the market is being met with a lot of demand,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management.Treasury yields, closely watched by equity investors for signs that inflation will lead to higher borrowing costs, marched upward. The 10-year yield ended the week up five basis points at 1.63%One interesting dynamic at play: Dip buyers in tech stocks appear to be mainly day traders and other individuals, rather than hedge funds and other professional investors. Retail traders bought a daily average of $300 million in tech stocks and related exchange-traded funds, according to data from Vanda Research.Meanwhile, JPMorgan Chase & Co.’s hedge-fund clients boosted bearish wagers against growth stocks while adding money to value sectors like banks. Semiconductor stocks in particular saw cooling interest amid production constraints, with net exposure falling to the lowest level since at least the start of 2020, according to JPMorgan’s prime broker data. Software was the focus of many dip-buying calls this week. Some of the group’s formerly hot stocks like Coupa Software Inc. and Alteryx Inc. have tumbled more than 30% from highs notched earlier this year.That’s creating great opportunities for investors to buy the highest-quality software-as-a-service and cloud-computing stocks that are poised to rebound, according to Evercore ISI analyst Kirk Materne.“Each time we have seen a big valuation-induced software sell down, the returns over the next six, 12 and 24 months trounce the S&P 500,” he wrote in a note this week. “While we expect the sector to remain choppy near-term, we believe that picking away at leading SaaS/Cloud franchises makes sense for those investors taking a 3-6 months view.”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) -- Fisker Inc.’s existing agreement to develop an electric vehicle with Foxconn Technology Group will now include a factory in the U.S.The joint project -- codenamed Project PEAR -- is targeting a start of production in the U.S. by the fourth quarter of 2023, the companies said in a statement Thursday. The companies are considering multiple sites around the world to support eventual global manufacturing capacity of 250,000 units a year. The partners plan to unveil a prototype of their jointly developed car later this year.Fisker climbed 11% to $11.01 at 9:40 a.m. Friday in New York after advancing as much as 18%, the most intraday in two months. The stock was down 32% this year through Thursday. Hon Hai Precision Industry Co., the main listed arm of Foxconn, is up 14% this year in Taipei.Electric vehicles have risen in prominence in recent months, with everyone from established automakers like Geely to smartphone purveyor Xiaomi Corp. making big investments in the category. Foxconn has an EV platform that will be used to launch two light vehicles in the fourth quarter of this year, Chairman Young Liu said in February. The company has also inked a manufacturing deal with Chinese startup Byton Ltd. and been among a coterie of suppliers and assemblers linked with a potential Apple Inc. car.Read more: IPhone Maker Foxconn to Help Launch Electric Cars This YearFisker is one of a wave of startups to go public via a special purpose acquisition company, or SPAC, and seek a fast-track challenge to Tesla Inc. in the EV market. It’s also the second battery-powered-car venture founded by its namesake founder and chief executive officer, Henrik Fisker, a longtime auto designer. Fisker’s first venture, Fisker Automotive, filed for bankruptcy in 2013.China Tech Giants Bet $19 Billion on Global Electric Car FrenzyUnder the agreement, Fisker and Foxconn will jointly invest in Project PEAR -- short for Personal Electric Automotive Revolution -- with each company taking proceeds if the launch is successful. Spending on the partnership will be hefty. Liu told analysts on Friday that building 10,000 cars per month in the U.S. will require $1 billion of capital expenditure, though he declined to elaborate on how the two companies will split the costs.Foxconn has said it will decide between Mexico and Wisconsin for the site of its first electric-car plant this year. The companies didn’t disclose any specifications of the vehicle they’re developing.The companies said the jointly developed vehicle will be priced below $30,000. Taiwan-based Foxconn, best known for assembling iPhones, is the second major manufacturer with which Fisker has announced a partnership since reaching a deal to go public last year. In October, the EV startup said Magna International Inc. would help it build its debut model. The Ocean electric SUV is scheduled to start production in late 2022 at a Magna facility in Graz, Austria.(Updates shares in third 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.
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(Bloomberg) -- With the global inflation debate intensifying, equity investors are fine tuning their portfolios to guard against the impact of price pressures.A preference for companies with the greatest pricing power is one approach adopted by investors from JPMorgan Asset Management to Pictet Wealth Management. While cyclical stocks remain in favor, fund managers are becoming more selective, as pockets of the economically-sensitive asset class may have run too far, too fast.“You hide in pricing power companies -- those companies that will be able to pass higher raw material costs and wages to the end customer,” said Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management in Geneva. “Luxury, concessions companies linked to inflation are some of the sectors that will benefit, but even some cyclical or commodity companies have now more pricing power than several years ago too.”A jump in U.S. consumer prices in April by the most in a decade has intensified an already-heated debate about how long inflationary pressures can last. Higher-than-expected factory prices in China last month and the surge in commodity prices, have added to the concerns.The worries have begun to weigh on stocks. MSCI Inc.’s global equity benchmark slipped 1.6% this week, its biggest drop since February. Technology shares bore the brunt of the weakness as investors bet the return of inflation will bring with it higher interest rates that could hurt stocks with elevated valuations.Wall Street Can’t Agree If Inflation Is Good or Bad for StocksPrice SettersStocks like U.S. railroad companies and paint manufacturers have historically been good at passing on price pressures, though usually with a time lag, according to Richard Saldanha, a portfolio manager at Aviva Investors.Yet there are differing views about how much this applies right now.“Consensus believes that cyclical areas such as banks and industrials are the place to hide in an inflationary environment,” said Caroline Keen, a portfolio manager of JPMorgan Global Growth Fund. “We would counter that banks are generally not price setters and many industrial companies such as autos are struggling with cost increases, with an inability to pass these on to consumers.”Getting PriceyCyclical names are also getting more expensive. Banks now trade around 1.1 times their book value, above the sector’s 10-year average, according to data compiled by Bloomberg. The equivalent for materials stocks is even more extreme after recent surges in commodities like copper and iron ore.That has made UBS Asset Management portfolio manager Max Anderl “slightly wary” of classic inflation hedges like financials or miners after a strong rally this year. “We prefer to look at selected stocks in the IT and media sectors that continue to show exceptionally strong fundamentals but have corrected sharply in this factor rotation,” he said.Ricardo Gil, head of asset allocation at Trea Asset Management in Madrid, has chosen to exit industrial shares in favor of oil stocks and some banks.Idiosyncratic IdeasAnother approach is to sidestep the debate altogether and focus on single stock ideas or non-inflation related investment themes.With reflation bets triggering a sector rotation, equity correlations are falling, which is good news for fund managers looking to beat indexes through stock picking. If most equities are moving in different directions, it’s easier to choose one that stands out from the crowd.The S&P 500 Index’s three-month realized correlation -- a gauge of how closely the top stocks in the U.S. benchmark move relative to each other -- remains well below the average of the last 10 years.“Our way to cope is being overweight in equity alternatives such as Merger Arbitrage and CTAs and focus on idiosyncratic ideas rather than broader sectors,” said Bantleon AG portfolio manager Oliver Scharping.Transitory ShockStill, not everyone believes the world is set for a new era of higher prices and JPMorgan’s Keen isn’t making significant changes to her portfolio despite the recent inflation concerns.The portfolio manager sees inflation as transitory due to year-over-year base effects and temporary supply chain bottlenecks and is conscious of structural deflationary forces that remain in place such as technology, high debt levels and poor demographics.“Loan growth remains muted and fiscal stimulus comes with offsetting tax increases,” Keen said. “So far we have seen no evidence to suggest that we are entering a new inflationary regime.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.
WASHINGTON (Reuters) -The completion of 7-Eleven's purchase of thousands of Speedway gas and convenience stores is potentially illegal and may raise competitive concerns in hundreds of local U.S. markets, two top U.S. Federal Trade Commission officials said as a dispute between the agency and companies broke into the open on Friday. Marathon Petroleum Co, which owned the Speedway chain, and 7-Eleven, owned by Japan's Seven & I Holdings Co Ltd, announced Friday they had closed the $21 billion deal involving some 3,800 stores in 36 states.
Oil prices rebounded on Friday morning as inflation fears fade and the global supply glut slowly drains, although the IEA did revise its demand projection downward
(Bloomberg) -- Oil slumped the most in over a month alongside a commodities downturn as growing inflation concerns raise the specter of a less accommodative U.S. Federal Reserve.West Texas Intermediate futures fell 3.4% on Thursday to the lowest since the end of April. Prices paid to U.S. producers rose in April by more than forecast, adding to signs of rising inflationary pressures that have gripped broader markets recently. Elsewhere, China’s Premier Li Keqiang urged the country to deal effectively with the commodity price surge and its impact, according to a state television report, echoing previous comments from officials.The latest data “are cementing the view we’re going to have markets that are just fixated on inflation,” said Edward Moya, senior market analyst at Oanda Corp. “All these pricing pressures are ramping up those rate-increase bets. For crude, we’re trying to get a sense of what the path of the dollar’s going to be, and that’s uncertain.”Meanwhile, the Colonial Pipeline -- a key source of gasoline for the East Coast -- is returning to service after a cyberattack last week, adding on Thursday that each of its markets should receive product from its system by mid-day. Still, the pipeline remains running at less than half of its capacity, according to people familiar with the matter.Still, there were some glimmers of hope for the oil market. India’s largest oil refiner is shopping for crude again after a one-month hiatus, providing some optimism that the South Asian country’s demand hasn’t been stalled by a rampant virus resurgence. Indian Oil Corp. issued three tenders to buy crude for loading in the next two months. Going forward, the bullishness of the company’s move will depend on how much it actually ends up purchasing.See also: India’s Top Refiner Shops for Oil Again After Month-Long HiatusWhile the Colonial Pipeline has restarted, fuel shortages are still lingering. The Biden Administration has temporarily eased a U.S. shipping requirement so a single foreign tanker could transport gasoline and jet fuel to the East Coast. A White House official said that the Jones Act waiver was applied to one tanker, but other requests are under consideration.Further resumption of flows on the pipeline will bring relief to motorists after panic-buying emptied out some gas stations and retail prices topped $3 a gallon. In futures markets, the spread between crude and gasoline slumped toward $24 a barrel after topping as much as $27 a barrel earlier this week.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.
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