Nextdoor CEO Sarah Friar sat down for a wide-ranging conversation with Senior Reporter Melody Hahm for her "Breakouts" series, only on Yahoo Finance
Nextdoor CEO Sarah Friar sat down for a wide-ranging conversation with Senior Reporter Melody Hahm for her "Breakouts" series, only on Yahoo Finance
(Bloomberg) -- One of the best manifestations of the rotation from formerly high-flying growth stocks to value shares can be seen in the divergence of the Nasdaq 100 from the Dow Jones Industrial Average.As the 125-year-old benchmark climbed to another intraday record, the Nasdaq 100 slumped to a level traditionally seen as a correction. It’s the first time since 1993 that the Dow rose and closed within 1% of a record, while the tech-heavy gauge was down more than 10% from its high.“Investors are feeling better about the recovery and looking to own improving fundamentals within large caps outside of tech and growth where valuations are more reasonable,” said Mike Bailey, director of research at FBB Capital Partners. “The focus on better fundamentals at a reasonable price may be driving the Dow to new highs.”All but five of the 30-member Dow index traded higher Monday at the 4 p.m. close in New York, with shares of Walt Disney Co. leading with a 6.3% gain. Visa Inc., Goldman Sachs Group Inc. and Home Depot Inc. each advanced more than 2%. Meanwhile, drops in Apple Inc. and Tesla Inc. weighed on the 36-year-old Nasdaq 100.Shares of other companies that had done well in 2020’s stay-at-home environment, including Microsoft Corp. and Netflix Inc., also dented the tech-centric Nasdaq 100, as did those whose businesses helped consumers work from home during the pandemic, including Zoom Video Communications Inc., which fell almost 8%, and DocuSign Inc., down about 6%.The split-market activity on display is another manifestation of the rotation underway as investors switch into shares of companies whose fortunes are closely tied to the economic cycle. That’s been painful for high-growth, high-valuation tech shares that become less appealing amid bond-market turbulence that’s sent yields on 10-year Treasuries to 1.61%.Earlier: SPAC Froth Turns on Itself With Stocks Plunging 20% in Two WeeksThe rotation is even harsher in once-hot areas like the market for special-purpose acquisition companies, or SPACs, another 2020 craze whose allure has fizzled in recent days. A gauge tracking such firms -- IPOX SPAC Index -- declined 2.6% Monday, its fourth down day out of the last five sessions. A popular SPAC by Chamath Palihapitiya -- the Social Capital Hedosophia Holdings Corp. V, or IPOE -- fell as much as 11% at one point before closing Monday down 9%.“It feels like an attitude adjustment for tech and growth stocks,” said Bailey. “Investors have decided that these Covid winners just got too expensive and now it’s time for a valuation haircut.”(Updates prices throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Oil rose to $69 a barrel on Tuesday as investors focused on prospects for tighter supply due to extended OPEC+ output curbs and amid growing hopes of a recovery in demand. Brent crude was up 78 cents, or 1.1%, at $69.02 by 1014 GMT, after trading as low as $67.61. U.S. West Texas Intermediate (WTI) crude added 41 cents to $65.46.
(Bloomberg) -- The bearish mood prevailing in China’s stock market is proving a match even for state-backed funds, and casting a cloud over the Communist Party’s biggest annual political event.The CSI 300 Index closed about 2.2% lower despite evidence that state-backed funds had intervened to shore up the market in morning trading. The news earlier helped the gauge erase losses of as much as 3.2%, before declines resumed in the afternoon. Kweichow Moutai Co., the stock that’s become an indicator of sentiment in China’s mutual fund industry, fell 1.2%.The funds, known as China’s “national team,” had stepped in order to ensure stability during the National People’s Congress in Beijing, according to people familiar with the matter. A Hong Kong-based trader, who declined to be identified discussing client business, said entities linked to mainland funds were actively buying shares through stock links with Hong Kong Tuesday morning.The CSI 300 has now plunged more than 14% from its Feb. 10 high in the biggest loss among global benchmarks tracked by Bloomberg. Declines have been led by the champions of the recent rally such as Moutai, which has fallen 26%.The China Securities Regulatory Commission, which regulates the securities industry, didn’t immediately reply to a fax seeking comment on whether state funds were behind Tuesday’s moves.Historically, Beijing has supported markets when needed around significant events or dates. On Friday, the first day of the NPC, the CSI 300 ended the day down 0.3% after falling as much 2%. Evidence of intervention includes buying through trading links with Hong Kong.Authorities had in many ways encouraged the recent correction in stocks after the CSI 300 briefly surpassed its closing record last month. Officials repeatedly warned of asset bubbles and said that curbing risks in the financial system was this year’s key policy goal. Moutai, for instance, had surged 30% this year to be worth more than $500 billion, making it one of the world’s most valuable stocks.With the CSI 300 entering a correction on Monday, and dropping below its 100-day moving average for the first time since May, it’s likely authorities decided the rout had removed enough froth. Slumps of 10% or more in the CSI 300 have occurred twice in the past two years, before the index bounced back each time. The Communist Party, which has long sought to cultivate a ‘slow’ bull market in equities, will need to do more to restore sentiment this time.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Greensill Capital filed for insolvency on Monday after losing insurance coverage for its debt repackaging business and said in its court filing that its largest client, GFG Alliance, had started to default on its debts. Greensill began to unravel last Monday when its main insurer stopped providing credit insurance on $4.1 billion of debt in portfolios it had created for clients including Swiss bank Credit Suisse. The court document supporting Greensill's insolvency application said without that insurance, Greensill was no longer able to sell notes backed by debts to investors, nor fund clients such as GFG in return.
(Bloomberg) -- The Chinese yuan erased all its gains against the dollar this year, the latest to fall prey to the Treasury-led global market selloff.The onshore yuan weakened as much as 0.5%, falling past the 6.5283 per dollar level it closed at last year. At its January peak, it was up 1.6% from 2020 as the economy rebounded and investors poured money into the Chinese bond market.Optimism over a global recovery from the pandemic has morphed into concerns that central banks will withdraw stimulus quicker-than-expected, leading to higher bond yields. This latest bout of market selling was spurred by the U.S. stimulus package and better Chinese exports data.“Surging U.S. Treasury yields and a USD rebound are pressuring EM Asia currencies including the renminbi,” said Ken Cheung, chief Asia currency strategist at Mizuho Bank Ltd in Hong Kong. “Foreign investors may have started to trim their emerging-market asset exposure and repatriate capital back into dollars. We turn more cautious on the CNY outlook in the near term.”Monday’s rout across markets picked up pace as Treasury 10-year yields hit 1.61%, nearing Friday’s high. A Bloomberg gauge of the dollar’s strength gained as much as 0.5% to its highest in almost four months.Trading volumes for onshore yuan rose to $48.9 billion on Monday, the highest level in over two months. Some bank clients who were previously hoarding dollars were selling off positions at higher prices, according to China-based traders, who asked not to be identified as they’re not authorized to speak publicly.The traders added they also received a higher volume of requests for forward prices on the greenback, including from clients who had just signed import orders and were looking to lock in foreign-exchange rates to guard against further yuan depreciation risks.China’s main stock benchmark entered a correction on Monday, with concerns over liquidity conditions and lofty valuations in some stocks fueling bearish sentiment.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) -- Eric Yuan, chief executive officer of Zoom Video Communications Inc., donated more than a third of his stake in the company, filings show.Yuan gifted almost 18 million shares of the conferencing-technology firm last week. The filings didn’t specify the recipient of the stock, which was owned by a Grantor Retained Annuity Trust, or GRAT, for which Yuan is a trustee.The shares were valued at about $6 billion, based on Friday’s closing price.The distributions are consistent with the Yuans’ “typical estate planning practices,” a Zoom spokesman said in a statement.Yuan, 51, joins other members of the world’s mega-rich who’ve been transferring stock recently -- including Hong Kong billionaire Li Ka-shing, who last month gave some of his Zoom holding to his businessman son Richard. Jeff Bezos, the world’s richest person, has been donating shares of Amazon.com Inc. in support of a $10 billion pledge made last year to combat climate change.Pandemic SurgeYuan became one of the world’s wealthiest people as demand for Zoom’s main product skyrocketed during the pandemic. The stock surged almost 400% last year, but has dipped 7.8% in 2021.He’s the world’s 130th-richest person with a pre-transfer net worth of $15.1 billion, according to the Bloomberg Billionaires Index, a $9.2 billion increase since last March. The company has also brought huge gains to other shareholders, including Tiger Global Management’s Chase Coleman and Taiwanese investor Samuel Chen. Li’s Zoom stake now represents almost one-fifth of his net worth. Born in China, Yuan was refused a U.S. visa eight times before finally prevailing and moving to Silicon Valley. An early employee of rival video-conferencing group WebEx Communications, he founded Zoom in 2011, inspired in part by the challenges of maintaining a long-distance relationship when he was in college.The Wall Street Journal reported the share transfer earlier Monday.(Adds that Li Ka-shing cut his Zoom holding in fifth paragraph, details about the stake in seventh)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) -- The Nasdaq 100 Index led a surge in U.S. equity futures and bonds rebounded from Monday’s selloff.Contracts on the tech-centric Nasdaq 100 rose 2.5% while those on the S&P 500 advanced more than 1%. Shares in Tesla were up 5.7% in premarket trading, while Cathie Wood’s flagship exchange-traded fund Ark Innovation ETF, which has Tesla as its largest holding, gained 4.9%. Both are set to open higher after five straight days of declines.Markets have been gripped by volatility in tech stocks this week and the Nasdaq 100 has fallen 11% from an all-time high. Tuesday’s moves veered back to risk-on, with the dollar weakening and stocks from Asia and Europe also notching gains.Investors will be closely watching Treasury sales in the coming days, with the U.S. planning three debt auctions totaling $120 billion. The sales will test appetite for the safest debt after last month’s poorly bid auctions sent shockwaves throughout global markets and short bets climbed to a record.Prospects of accelerating growth have driven up borrowing costs in recent weeks, raising the specter of inflation and unsettling tech stocks with long-term growth horizons.But Treasury Secretary Janet Yellen offered reassurance Monday, suggesting such fears are overblown. She has repeatedly rejected concerns that U.S. fiscal stimulus is excessive given the economy’s signs of recovery, and that runaway inflation could damage the economy.“I really don’t think that’s going to happen,” she told MSNBC. Inflation before the pandemic “was too low rather than too high,” she noted.Yellen Says Stimulus Unlikely to Cause Inflation ProblemElsewhere, Bitcoin was steady around $54,000 after hitting a two-week high on more signs of institutional interest. Oil hovered around $65 a barrel.Here are some key events to watch:EIA crude oil inventory report is due WednesdayThe U.S. February consumer price index will offer the latest look at price pressures Wednesday.The U.S. government auctions 3-, 10- and 30-year Treasuries this week.The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing Thursday.StocksFutures on the S&P 500 Index advanced 1.1% as of 6:58 a.m. New York time.The Stoxx Europe 600 Index gained 0.6%.The MSCI Asia Pacific Index increased 0.5%.The MSCI Emerging Market Index climbed 0.1%.CurrenciesThe Bloomberg Dollar Spot Index sank 0.5%.The euro jumped 0.5% to $1.1904.The British pound jumped 0.4% to $1.3876.The onshore yuan strengthened 0.2% to 6.512 per dollar.The Japanese yen strengthened 0.1% to 108.77 per dollar.BondsThe yield on 10-year Treasuries declined six basis points to 1.53%.The yield on two-year Treasuries decreased less than one basis point to 0.16%.Germany’s 10-year yield fell five basis points to -0.33%.Japan’s 10-year yield increased less than one basis point to 0.127%.Britain’s 10-year yield declined five basis points to 0.709%.CommoditiesWest Texas Intermediate crude climbed 1.2% to $65.85 a barrel.Brent crude increased 1.4% to $69.21 a barrel.Gold strengthened 1.5% to $1,709.43 an ounce.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 were mixed on Monday and Treasury yields climbed further after Congress made headway toward passing another significant COVID-19 relief package.
Spot gold fell 0.7% to $1,689.87 per ounce by 1523 GMT, after hitting its lowest since June 8 at $1,683.68 earlier. The dollar climbed to a three-month peak, while the U.S. 10-year Treasury yield held close to a more than one-year high, increasing the opportunity cost of holding gold, which pays no interest. "We have an economy that is recovering and inflation is materializing; that ultimately means that yields have room to move higher," said Bart Melek, head of commodity strategies at TD Securities, adding that gold could fall further towards $1,660 as a result.
Iran has quietly moved record amounts of crude oil to top client China in recent months, while India's state refiners have added Iranian oil to their annual import plans on the assumption that U.S. sanctions on the OPEC supplier will soon ease, according to six industry sources and Refinitiv data. U.S. President Joe Biden has sought to revive talks with Iran on a nuclear deal abandoned by former President Donald Trump in 2018, although harsh economic measures remain in place that Tehran insists be lifted before negotiations resume. The National Iranian Oil Company (NIOC) has started reaching out to customers across Asia since Biden took office to assess potential demand for its crude, said the sources, who declined to be named because of the sensitivity of the matter.
The official news outlet of the Communist Party of China's Xinjiang region said unidentified companies from the area have filed a domestic civil lawsuit seeking unspecified compensation from a U.S.-based human rights researcher whose reports alleged forced labour is used in the region's cotton industry. The companies said researcher Adrian Zenz's reports were untrue, damaged the reputation of the industry and led to economic losses after the United States banned cotton imports from Xinjiang, according to a report on by the Xinjiang Communist Party website on Monday evening.
(Bloomberg) -- The U.S. and China are pursuing divergent economic policies in the aftermath of the coronavirus recession in a role reversal from last time the world economy was recovering from a shock.One of the takeaways from the annual National People’s Congress under way in Beijing is a conservative growth goal, with a tighter fiscal-deficit target and restrained monetary settings. That’s a big contrast with Washington, where President Joe Biden is preparing a second major fiscal package after he gets final approval for his $1.9 trillion stimulus.The widening policy divergence is putting strains on exchange rates and could potentially reshape global capital flows. It stems, in part, from different policy lessons from the 2007-09 crisis.A stunted and choppy U.S. recovery left key Democrats concluding it’s vital to “go big” on stimulus and keep it flowing. For monetary policy the moral was: “Don’t hold back” and “don’t stop until the job is done,” Federal Reserve Chair Jerome Powell said last week.China’s leaders have a different take. A massive unleashing of credit growth back then led to unused infrastructure, ghost towns, excess industrial capacity and an overhang of debt. While rapid containment of the pandemic meant the economy didn’t need as much help in 2020, President Xi Jinping and his team are now winding things back to re-focus on longer-term initiatives to strengthen the technology sector and tamp down debt risks.“Each learned a lesson from the previous episode, and so it is kind of a swap of positions,” said Nathan Sheets, head of global economic research at PGIM Fixed Income and a former U.S. Treasury undersecretary for international affairs. The policy mix now makes “a compelling case for renminbi appreciation,” Sheets said.That’s a view that’s widely shared: the median forecast is for a strengthening to 6.38 against the dollar by the end of the year, from 6.5238 in Hong Kong on Monday afternoon.One of China’s financial regulators, Guo Shuqing, highlighted in a briefing just days before the opening of the annual legislative gathering that high leverage within the financial system must continue to be addressed. Guo pointed to worries about inflated property prices and the risk of overseas money pouring in to take advantage of the premiums China’s assets offer. He also indicated the nation’s lending rates will likely go up this year.While U.S. Treasury yields have surged recently, 10-year rates remain less than half those in China, where the central bank has forsworn Western-style zero interest rates or quantitative easing.“Unlike many of its peers, including the Fed, China’s central bank has continued to calibrate its policy partially with a view to prevent an excessive rise in asset prices,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. Confronted with currency-appreciation risks, China will be hoping for a “well-timed exit from the Fed’s ultra-ease stance.”That’s unlikely to come soon. Powell in three appearances the past fortnight has made clear the Fed is going to keep policy rates near zero until well into the economic recovery, when most jobless Americans are brought back into employment. He also gave no indication asset purchases will be tapered as Biden’s fiscal stimulus kicks in in coming months.As China contends with capital inflows, the U.S. is likely to be pumping out a greater supply of dollars into the global economy -- via a widening current-account deficit -- as its growth revs up, supercharged by Biden’s stimulus and the Fed’s easy stance.“There’s been a regime break,” in the U.S. with the outsize Biden relief bill and a planned longer-term follow-up, said Robin Brooks, chief economist at the Institute of International Finance. As growth soars past 6% this year, a wider current-account deficit will be “the pressure valve” given domestic production constraints, he said.Brooks projects that deficit will hit 4% of gross domestic product this year. That would be the highest since large shortfalls during the 2002-08 period, when a broad measure of the dollar tumbled as much as 27%.Read More: Dollar Is Increasingly Overvalued as Deficit Widens, IIF Says“As our fiscal support goes into uncharted territory, it puts enormous pressure on our budget deficits -- and by inference our domestic saving rate and the current account and trade deficit, with the consequences primarily falling on the currency,” said Stephen Roach, a Yale University senior fellow and former chairman of Morgan Stanley Asia.China’s reluctance toward the kind of “go big” message of Treasury Secretary Janet Yellen dates back many years. After unleashing a fiscal package of 4 trillion yuan ($586 billion, at the time) and an unprecedented surge in broader credit after the 2008 crisis, Beijing was already by 2012 saying it wouldn’t do that again.Reticence toward across-the-board stimulus later turned into a concerted push to rein in leverage. A May 2016 front-page treatise in the People’s Daily -- the Communist Party’s mouthpiece -- blasted excessive debt as the “original sin” sowing risks across financial and real-estate markets. The anonymous article -- widely said to have been written by Vice Premier Liu He, Xi’s top economic adviser -- called stimulating the economy through easy monetary policy a “fantasy.”So with the country’s success in applying draconian restrictions to contain the coronavirus, it should come as little surprise that Beijing is returning toward its pre-pandemic focus on building domestic tech capabilities and managing down debt risks.What Bloomberg’s Economists Say...“China is increasingly shifting its attention from pandemic recovery to managing the economy in more normal conditions.”--Chang Shu, chief Asia economistFor the full report, click hereAfter ditching an annual growth target for 2020 given the turmoil caused by Covid-19, China’s leadership set a goal of a GDP increase of more than 6% this year -- conservative since it’s well below economists’ projections for this year’s expansion.In the meantime, surging American GDP gains are set to lift China’s prospects as well. Exports to the U.S. soared more than 87% in the first two months of this year compared with the pandemic-hit period a year before, faster than China’s overall rise of just under 61%.“The U.S. locomotive is back on track,” said Catherine Mann, global chief economist at Citigroup Inc.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 gauge of global stocks rose in choppy trading on Monday as investors eyed the yield on U.S. Treasuries for signs of inflation pressures in the wake of the U.S. Senate's passage of a $1.9 trillion stimulus bill. The Japanese yen weakened 0.49% versus the greenback at 108.83 per dollar, while Sterling was last trading at $1.3813, down 0.20% on the day.
A growing semiconductor shortage could hamstring the EV boom in 2021. Here’s who could profit in the days ahead
(Bloomberg) -- Equity strategists are as bullish as ever, despite all the nervousness among investors about sky-high valuations and rising rates.Strategists from Goldman Sachs Group Inc. and Credit Suisse Group AG are counting on more gains from equities as investors rotate out of bonds and cash, and economic growth accelerates. Even if some stocks dip because of higher rates, there will be strong rallies in other sectors, according to Abby Joseph Cohen, senior investment strategist at Goldman Sachs.“We are seeing this very significant rotation,” Cohen said in an interview on Bloomberg TV. “We are seeing some movement now in those sectors that do better when we come out of lockdown, and the good news on the vaccine will be helpful.”Goldman is expecting the S&P 500 to end the year at 4,300, implying a 13% increase from current levels and a new all-time high. The median S&P 500 forecast from a Bloomberg survey is 4,100 versus the index’s current level of 3,850.According to Credit Suisse’s Andrew Garthwaite, this is the beginning of a bonds-to-equity switch. Stocks and bond yields were positively correlated in February, and when that’s happened in the past, equity prices were up an average of 6% six months later, he wrote in a note on Monday.“We worry when US 10-year bond yields rise above 2%, inflation expectations go above 3% or there is a large rise in the TIPS yield,” wrote Credit Suisse strategists. For now, all of those conditions are some ways off. The bank is sticking to a year-end forecast for the MSCI All-Country World Index Ex-U.S. of 375, which implies a 13% gain from today’s levels.Goldman Sachs makes a similar case in favor of equities. “History shows that equity funds generally experience inflows when real rates are rising,” strategists led by David Kostin said in a report on Friday.The bank predicted households will be the biggest source of U.S. equity demand, estimating purchases of $350 billion this year. Corporate buying will also be strong at $300 billion amid a resurgence of stock buybacks, Goldman Sachs said.At JPMorgan Chase & Co., the rotation out of technology and into cyclicals isn’t over yet. Airlines, hotels and auto suppliers are attractive, and investors should consider shorting online retail and technology, said strategist Mislav Matejka.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) -- Tech shares tumbled anew, sending the Nasaq 100 Index down 11% from its all-time high, as investors fled high-valuation stocks for companies whose fortunes are closely tied to the economic cycle.The benchmark for megacap tech dropped 2.9% and is now at the lowest since November. The S&P 500 ended lower after rising as much as 1% as tech shares in the gauge dropped 2.5%. Financial firms and materials producers kept losses from being worse. The Dow Jones Industrial Average hit an all-time high before settling for a 1% gain, buoyed by rallies in banks and Walt Disney Co. Tesla Inc. pushed its five-day rout past 20%. Blank-check companies backed by Chamath Palihapitiya tumbled.The 10-year Treasury rate jumped toward 1.6%, while the dollar strengthened. Brent crude briefly traded near $70 a barrel before pulling back. Gold slumped and Bitcoin traded above $51,000.Investors embraced the prospect for a surge in global economic growth as vaccine distribution improves and the U.S. heads toward passing a $1.9 trillion spending bill. The risks associated with rising Treasury yields remain an overhang amid fears that government aid programs could overheat economic growth.“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management Co., said on Bloomberg Television. “We believe that confidence is improving, especially with vaccines coming online, so we will see an uptick in growth globally. There are a lot of reasons to be confident in the market, but a lot of this is also priced in.”There are also questions about whether equity valuations have become excessive, especially in speculative tech shares. The Nasdaq 100 Index has fallen about 8% since early February.Crash Landing on Stock Heroes of Yesteryear Is Worst in a DecadeHere are some key events to watch:The annual session of China’s National People’s Congress continues in Beijing.Japan GDP is due Tuesday.EIA crude oil inventory report is due WednesdayThe U.S. February consumer price index will offer the latest look at price pressures Wednesday.The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing Thursday.These are some of the main moves in markets: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.
When Elon Musk's Tesla became the biggest name to reveal it had added bitcoin to its coffers last month, many pundits were swift to call a corporate rush towards the booming cryptocurrency. Yet there's unlikely to be a concerted crypto charge any time soon, say many finance executives and accountants loath to risk balance sheets and reputations on a highly volatile and unpredictable asset that confounds convention. "When I did my treasury exams, the thing we were told as number one objective is to guarantee security and liquidity of the balance sheet," said Graham Robinson, a partner in international tax and treasury at PwC and adviser to the UK's Association for Corporate Treasurers.
Stronger bond yields and a rising dollar are capping price progress for risk assets.
(Bloomberg) -- Greensill Capital filed for administration in the U.K., capping a stunning collapse for the supply-chain finance company after key backers walked away over concerns about the valuation of its assets.A hearing was held in London on Monday to review the submission, according to court documents. Lex Greensill’s eponymous company had been readying the filing since last week, after Credit Suisse Group AG froze and then later started winding down $10 billion of funds that bought products from Greensill. That decision set off a chain of events that also saw regulators in Germany shut down its local bank.Greensill remains in talks with Apollo-backed Athene Holding Ltd. on the sale of its operating business, though any transaction will likely be at a fraction of the $7 billion valuation that the company had sought in fundraising talks last year when it was considering plans to go public. Athene is offering about $60 million for Greensill’s IT and intellectual property, the court documents showed.Greensill unraveled in a matter of days once the lack of confidence began to sweep across the financial world. At the heart of the trouble are loans made by its supply-chain finance business. Greensill backers from Credit Suisse to Softbank Group Corp. and GAM Holding Corp. signaled doubts about the debt, upending the multi-billion-dollar empire. It also emerged that Softbank’s Vision fund had substantially written down its $1.5 billion holding in Greensill late last year.Grant Thornton has been appointed as joint administrators, and is “in continued discussion with an interested party in relation to the purchase of certain Greensill Capital assets,” the firm said in an emailed statement. Bloomberg reported last week that Greensill was in the process of filing for insolvency.Read more: Greensill Crisis of Confidence Worsens as GAM Winds Down FundGrant Thornton was also named as administrators to Greensill in Australia and is working closely with the U.K. administrators, it said in a statement on Tuesday.Some of the most high-profile drama took place in Germany, where regulator BaFin shuttered Greensill Bank AG and asked law enforcement officials to investigate accounting irregularities. BaFin spent months probing the bank’s exposure to companies linked to U.K. industrialist Sanjeev Gupta. Greensill said it was always transparent with auditors and regulators about its approach to classifying assets.About 90% of Greensill’s revenues were derived from non-investment grade borrowers, according to filings from the court. The largest of those clients is Gupta, according to the documents. In a letter dated Feb. 7, Gupta’s GFG Alliance told Greensill that if it ceased to provide working capital for the firm, it would collapse into insolvency.Pressure on Greensill ratcheted up as it lost its allies, with Credit Suisse freezing and then deciding to liquidate the family of funds that invest in Greensill-sourced loans, citing “uncertainty” about the valuations of some of the debt. The Swiss bank also last week demanded repayment of a $140 million loan it had made to Greensill. The firm was unable to do this and was therefore cash insolvent, the filings showed.GAM also said it will begin shuttering its $842 million GAM Greensill Supply Chain Finance Fund and return investors’ money as it sought to end its dealings with the firm.Separately, Apollo earlier on Monday agreed to acquire the about 65% it didn’t already own of Athene in a deal that values the firm at about $11 billion.(Updates with administrators in Australia in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Tucked away among the Ford, Dodge and Chevy sedans, the 12,000-gallon storage container and the inoperable Caterpillar tractor being auctioned off by the U.S. government is an unusual item: 0.7501 of a Bitcoin.The U.S. General Services Administration typically uses its auctions to sell surplus federal equipment to the general public. With lot 4KQSCI21105001, which goes up for auction in a week, the government is offering an amount of Bitcoin worth about $38,000 at Monday’s price.The government doesn’t say where its surplus digital currency came from. And while it’s a far cry from the 30,000 Bitcoins auctioned off by the U.S. Marshals Service in 2014 after they were seized from the Silk Road marketplace, the GSA auction is one more indication of how Bitcoin is becoming more and more mainstream.On Wall Street, too, there is a newfound openness to the world’s most valuable digital currency: Custody banking giant Bank of New York Mellon Corp. said it will hold, transfer and issue digital currencies, while Mastercard Inc. announced plans to let cardholders transact in certain cryptocurrencies on its network. A Morgan Stanley unit known for picking growth stocks is considering adding Bitcoin to its possible bets and, last week, a person close to Goldman Sachs Group Inc. said the bank plans to reopen a trading desk for cryptocurrencies.The Bitcoins auctioned off by the U.S. Marshals Service in 2014 were estimated at the time to be worth about $19 million, though the winning bid -- by venture capitalist Tim Draper -- wasn’t disclosed. Those coins would be worth $1.5 billion today as the cryptocurrency’s price has skyrocketed to almost $51,000.The GSA auction is scheduled to be held from March 15 to 17.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.