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Nvidia extended losses despite another strong earnings report and significantly raised sales guidance.
Nvidia extended losses despite another strong earnings report and significantly raised sales guidance.
(Bloomberg) -- For many investors, Coinbase Global Inc.’s trading debut next week will be an entry into the $2 trillion cryptocurrency market.And for those who have already gorged on Bitcoin, the arrival of the largest U.S. cryptocurrency exchange on the Nasdaq Stock Market could be what is needed to settle portfolios roiled by the asset class’s notorious volatility.There are other stocks already tied to the bits and bytes of the various blockchains. Elon Musk’s Tesla Inc. and Michael Saylor’s MicroStrategy Inc. have both notably added billions worth of Bitcoin to their treasuries. But with Coinbase’s public listing, investors will have the choice of an equity tied to cryptocurrencies that is -- so the hope goes -- less likely to suffer persistent cycles of boom and bust.“For a crypto investor that also buys stocks, it has the ability to diversify risks as there is a very profitable exchange platform that trades on another venue (stock exchange) whose flows of buyers and sellers can be less correlated than many crypto prices,” wrote Greg Foss, a veteran credit trader, Bitcoin investor and chief financial officer for Validus Power Corp., in an email reply to questions.Coinbase is planning to go public through a direct listing in which it will not raise any new capital, it said in an S-1 filing. The direct listing allows current shareholders to trade their shares without a lock-up period that is typical in an initial public offering. It was valued at about $90 billion in its final week of trading on Nasdaq’s private market, Bloomberg News reported.Still, because volume and price tend to go hand-in-hand, Coinbase’s transaction revenue, its largest segment, could remain susceptible to cryptocurrency market gyrations.“In a traditional stock portfolio it gives exposure to an exchange platform that generates trading fees on crypto,” wrote Foss. “Those fees increase with volumes and volumes typically increase with prices, so there is a beta trade there.”Coinbase said Tuesday that it expects to report a first-quarter profit of $730 million to $800 million, more than double what it earned in all of 2020. The bumper quarter for the exchange comes amid surging cryptocurrency prices. The Bloomberg Galaxy Crypto Index, tracking Bitcoin, Ether and six other cryptocurrencies advanced by more than 100% in each of the last two quarters.Coinbase may have further appeal for investors. The exchange could provide an accessible diversified investment into the space, where there’s a proliferation of cryptocurrency tokens and few passive vehicles to spread bets around, according to Gil Luria, head of institutional research at D.A. Davidson & Co.“Coinbase will win regardless of which crypto asset emerges as a winner, and their revenue is tied more to trading volumes, which are often less volatile than asset values,” Luria wrote in an email.But investors looking to add some stability to their cryptocurrency portfolios may want to exercise patience.Kevin Kelly, global head of macro strategy at research firm Delphi Digital, warns that those seeking a lower volatility investment might want to sit out Coinbase’s first week of trading.“I expect to see a lot of volatility next week once COIN begins trading, but eventually I think we’ll see it trade more in line with the direction of the broader crypto market,” Kelly wrote in an email. “However, I view it as a lower beta play on the continued expansion of crypto with less downside risk to crypto asset prices; in other words, COIN is more agnostic to crypto asset prices and may be an attractive opportunity for investors looking to gain exposure to the continued adoption of crypto without taking on similar levels of price volatility.”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.
BlackRock and Jean-Pierre Mustier's blank-check firm are among investors expressing interest in Credit Suisse's asset management arm, three sources told Reuters, as the Swiss lender explores options for the unit after a run of costly scandals. U.S. investment firm State Street Corp is also eyeing a rival bid for all or part of the Swiss bank's fund management business, while European asset managers including Germany's DWS are waiting in the wings, the sources said, speaking on condition of anonymity. Former UniCredit boss Mustier's blank-check firm Pegasus Europe, which focuses on financial services investments, is due to list in Amsterdam between the end of April and early May, two sources said.
A rebound in growth and technology stocks has investors gauging whether a months-long rally in the shares of banks, energy companies and other economically sensitive names is running on empty or simply refueling. The Russell 1000 value index started 2021 with its biggest quarterly outperformance relative to its growth counterpart in 20 years, as investors poured money into the shares of battered companies they thought would benefit most from a vaccine-generated reopening of the U.S. economy. The script has flipped since mid-March, with the Russell growth index gaining over 6% compared to a rise of just over 2% for value.
(Bloomberg) -- The reflation trade that dominated the start of 2021 in the bond market has taken a breather, leaving investors bracing for a key set of data in the week ahead that has the potential to reaffirm expectations that price pressures will build as the economy rebounds.All eyes will be on Tuesday’s release of the U.S. consumer price index for March, which is expected to show a significant jump. The number will likely be distorted by the huge slump in year-earlier figures at the outbreak of the pandemic. But traders may be reluctant to dismiss an acceleration -- as they did to some extent with Friday’s stronger-than-projected producer price data -- if there’s a growing sense that it marks the beginning of a trend.The statistics come at a crucial time for bond bears betting on reflation. Market measures of inflation expectations, fueled by ultraloose Federal Reserve policy and immense amounts of fiscal stimulus, have stalled near multiyear highs and have yet to be backed consistently by actual data. The same goes with gauges of the yield curve, which have retreated from recent peaks. It’s not just bond positions at stake: Without follow-through from data, bets on Fed tightening as soon as late 2022 may fade, potentially sapping demand for the surprisingly resilient dollar.“We don’t have strong reflation-trade momentum at the moment because people are waiting for more data,” said Daniel Tenengauzer, head of markets strategy at Bank of New York Mellon Corp. “As the data comes in, we are probably going to see the reflation trade play out again more strongly” toward the middle of the year.Tenengauzer says every inflation reading counts from this point because “the longer inflation stays at 2.5%,” an annual CPI reading last seen before the pandemic took hold, “the more underwater you are from holding fixed income.”Ten-year Treasury yields rose Friday, while finishing below the day’s high, after the PPI report showed a 4.2% increase from March 2020. Although it was relative to a period when the pandemic caused price pressures to crash, it was the biggest annual gain since 2011. The benchmark yield has retreated since approaching 1.8% last month, the highest since January 2020.There are strong arguments on both sides of the inflation debate as the market moves from a phase where it was driven by rising expectations for price pressures, to one where investors are seeking backup from the data. There’s also a view that expectations for growth, not inflation, may end up dominating the narrative for Treasuries later this year, through higher real yields.Inflation ‘Psychosis’Fed Chair Jerome Powell, who’s scheduled to appear on “60 Minutes” Sunday and will also speak Wednesday, has said any pickup in inflation will likely be temporary. Hoisington Investment Management Co., meanwhile, said in its latest quarterly report that inflation fears are a “psychosis” that will fade.But that doesn’t mean that a jump in the consumer price index won’t spook bond investors at least briefly. The March figure is forecast to show a year-over-year increase of 2.5%, which would be the highest since January 2020 and above every point on the yield curve. It’s a development that may also undermine stocks.“The market’s been pricing in a reflation theme already since the second half of 2020, but strong, realized prints would almost add fuel to the fire,” said Shahid Ladha, head of Group-of-10 rates strategy for the Americas at BNP Paribas SA.That, in turn, would produce upside risk to yields on intermediate maturities because of the possibility that the Fed might have to tighten sooner than expected, he says.Investors are also tasked with absorbing a combined $120 billion of coupon auctions next week, including 30-year debt, as they ponder the inflation question. While expectations for an elevated CPI reading may be a concern, the past month has shown that there’s sufficient demand for Treasuries, which should help “grease future bond auctions,” Tenengauzer said.What to WatchEconomic calendar:April 12: Monthly budget statementApril 13: NFIB small business optimism; CPI; average earningsApril 14: MBA mortgage applications; import/export prices; Fed’s Beige BookApril 15: Jobless claims; retail sales; Empire manufacturing; Philadelphia Fed business outlook; industrial production; Langer consumer comfort; business inventories; NAHB housing index; TIC flowsApril 16: Building permits; housing starts; University of Michigan sentimentFed calendar:April 12: Boston Fed’s Eric RosengrenApril 13: Philadelphia Fed’s Patrick Harker; San Francisco Fed’s Mary Daly; Richmond Fed’s Thomas Barkin; Atlanta Fed’s Raphael Bostic, Cleveland Fed’s Loretta Mester and Rosengren at event on racism and the economyApril 14: Dallas Fed’s Robert Kaplan; Powell speaks to the Economic Club of Washington; Beige Book; New York Fed’s John Williams; Vice Chair Richard Clarida discusses new policy framework; BosticApril 15: Bostic; Daly; New York Fed Executive Vice President Lorie Logan; Clarida; MesterApril 16: Kaplan in two appearancesAuction schedule:April 12: 13-, 26-week bills; 3-, 10-year notesApril 13: 30-year bondsApril 15: 4-, 8-week billsFor 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 index has formed an inside move early in the session. It’s also trading on the strong side of a 50% level at 91.870 and the weak side of a 61.8% level at 92.510.
(Bloomberg) -- Abu Dhabi’s Mubadala Investment Co. has started preparations for a U.S. initial public offering of chipmaker GlobalFoundries, people with knowledge of the matter said.The sovereign wealth fund has been having initial discussions with potential advisers about a listing of GlobalFoundries that could value the business at about $20 billion, according to the people. It hasn’t yet selected underwriters, the people said, asking not to be identified because the information is private.Technology companies have already raised $20 billion in U.S. IPOs this year, according to data compiled by Bloomberg. Deliberations are at an early stage, and details of the potential deal could change, the people said. Representatives for Mubadala and GlobalFoundries declined to comment.GlobalFoundries Chief Executive Officer Thomas Caulfield, in a Bloomberg Television interview this week, said the company always reviews strategic alternatives, and the timetable for an IPO “has always been sometime in 2022.”The IPO market has been booming since last year, with firms from South Korean e-commerce operator Coupang Inc. to food-delivery service DoorDash Inc. jumping on their debuts. The technology-heavy Nasdaq Composite Index has gained 70% over the past 12 months, outpacing the 47% gain in the S&P 500 Index.Contract ChipmakersGlobalFoundries is one of the largest contract chip manufacturers, competing with market leader Taiwan Semiconductor Manufacturing Co. The company was created when Mubadala bought Advanced Micro Devices Inc.’s manufacturing facilities in 2009 and later combined them with Singapore’s Chartered Semiconductor Manufacturing Ltd.With factories in Europe and the U.S., GlobalFoundries is in a unique position as the industry gets sucked into the trade war and tension between China and the U.S. Most of the rest of foundry manufacturing of chips takes place on Taiwan or in South Korea, and U.S. and European politicians are increasingly pushing chipmakers to build more capacity outside of Asia.As the world economy begins to recover from the coronavirus pandemic, GlobalFoundries has seen a surge in demand for the tiny electronic components it manufactures for other companies.Surprise SurgeWorking and studying from home and reluctance to use public transport sparked a rally in demand for computers and cars, spurring an increase in demand that caught some in the chip industry by surprise.Caulfield and his peers contend the current spike isn’t a one-time event. The increasing use of artificial intelligence and other forms of computing in new areas will spur a multi-year expansion of industry sales, Caulfield has said.Mubadala manages about $232 billion of assets, with stakes in businesses ranging from private equity firm Silver Lake to Indian conglomerate Reliance Industries Ltd.’s retail unit. It was among a few sovereign investors that last year seized on opportunities from a dislocation in markets caused by the coronavirus pandemic.The fund is now overhauling its structure and deploying capital to double in size to nearly half a trillion dollars in the next decade, a plan that will vault it into the top ranks of the world’s sovereign wealth funds. Abu Dhabi is the capital of the United Arab Emirates, home to almost 6% of the world’s oil reserves. It’s looking to Mubadala to harness energy revenue and power broader development at a time when public finances are under strain from lower crude prices.(Updates with GlobalFoundries niche in eighth 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) -- Indonesia’s Traveloka is in advanced talks to go public through merging with Bridgetown Holdings Ltd., a blank-check firm backed by billionaires Richard Li and Peter Thiel, according to people familiar with the matter.A deal could value Southeast Asia’s online travel leader at about $5 billion, said the people who asked not to be identified because the matter is private. The potential transaction could also involve raising between $500 million and $750 million through a private investment in public equity, or PIPE, the people said. Details including the amount to be raised could change as the companies start discussions with potential investors, they added.Representatives for Bridgetown and Traveloka declined to comment.Shares in Bridgetown Holdings rose about 6% in pre-market trading in New York, extending their 13% gain on Thursday.The deal would make Jakarta-based Traveloka one of the first Southeast Asian unicorns to go public through a special purpose acquisition company, or SPAC. Grab Holdings Inc. is in advanced talks to go that route through Altimeter Capital’s first SPAC, which may value the company at about $40 billion, Bloomberg News reported last month.Read more: Traveloka Is Said to Pick JPMorgan for U.S. Listing via SPACTraveloka was valued in 2020 at around $2.75 billion, according to people familiar with the matter.Bridgetown raised about $595 million in a U.S. initial public offering in October. The company’s sponsor is a collaboration between Thiel Capital, Thiel’s personal investment vehicle based in Los Angeles, and Pacific Century Group, a Hong Kong-based investment company led by Li.Founded in 2012, Traveloka has expanded its reach across six Southeast Asian nations and also covers Australia, making it easier for consumers to book flights and hotels across countries. Like other startups in the region, the company has sought to grow its offering with complementary services, extending into finance alongside its travel, lifestyle and accommodation booking portfolio.Traveloka’s backers include Expedia Group Inc., Rocket Internet, East Ventures, Li’s FWD Group Ltd. and Singapore’s GIC Pte.(Adds pre-market trading in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The president is being urged to roll more direct aid money into his infrastructure bill.
(Bloomberg) -- Credit Suisse Group AG is planning a sweeping overhaul of the hedge fund business at the center of the Archegos Capital blow up, as the drama forces Wall Street banks to reconsider how they finance some of their most lucrative clients.The Swiss bank is weighing significant cuts to its prime brokerage arm in coming months, people familiar with the plan said. The lender has already moved to tighten financing terms with some funds, and hopes changes to the unit can allow it to forgo major cuts to other parts of the investment bank, which just had a banner quarter, the people said, asking not to be identified as the matter is private.The implosion of Bill Hwang’s family office --which has caused one of the costliest blows to Credit Suisse in its 165-year history -- is the latest reckoning for banks chasing the lucrative business of catering to hedge funds, which present the potential for both outsized gains and huge losses, magnified by large borrowing. Deutsche Bank AG sold its prime brokerage business to BNP Paribas SA in 2019 as part of a retreat from equities during the German bank’s overhaul.Credit Suisse declined to comment.Prime-brokerage divisions cater specifically to hedge funds, lending them cash and securities and executing their trades, and the relationships can be vital for investment banks as well as being a significant source of revenue. Credit Suisse is the biggest prime broker among European banks, in an industry that accounted for about $15 billion of revenue in 2020. Prime brokerage generally accounts for about a third of equities revenue across the industry most years.Since the drama, Credit Suisse has been calling clients to change margin requirements in swap agreements so they match the more restrictive terms of other prime-brokerage contracts, people with direct knowledge of the matter said. Specifically, the bank is shifting from static margining to dynamic margining, which may force clients to post more collateral and could reduce the profitability of some trades.Swaps are the derivatives Hwang used to make highly leveraged bets on stocks at Archegos and which lie at the heart of the losses.Credit Suisse is also concerned the woes at the prime brokerage business will impact morale at other parts of the securities business and that it may spark departures, the people said. The investment bank is keen to take care of top performers, the people said.Deutsche Bank sold its prime business to BNP as part of the German bank’s huge 2019 overhaul that intended to cut its investment banking business, especially in equities. The lender, which became a force on Wall Street after the financial crisis, had struggled to keep hedge funds clients in recent years after a string of missteps, and client balances declined in the run up to Chief Executive Officer Christian Sewing’s decision to sell the business.Now, at Credit Suisse, CEO Thomas Gottstein -- who signaled the bank planned to reduce risk in prime brokerage in a Swiss newspaper article -- is facing questions from his own star traders, dealmakers and private bankers on why the bank’s $4.7 billion hit from Archegos was so much bigger than any of its rivals.The bank announced a raft of changes within the investment bank because of the loss, including the departure of Brian Chin, who led the business. The head of equities sales and trading Paul Galietto, is stepping down immediately, though will stay through April to assist in the transition, according to a staff memo earlier this week reviewed by Bloomberg.The lender also announced three additional exits. Ryan Atkinson, head of credit risk for the investment bank; Ilana Ash, head of counterparty credit risk management for that unit and Manish Mehta, head of counterparty hedge fund risk, according to the memo.The bank has seen a run of missteps under the final months of Urs Rohner’s tenure as chairman. Antonio Horta-Osario is set to take over after the bank’s annual general meeting later this month. Known for disciplined cost-cutting during his time at Lloyds Banking Group Plc, he may also make further changes.Gottstein, who pledged a “clean slate” after scandals under his predecessor, is wedged between disgruntled staff and his own bosses who are increasingly taking charge. The board is pushing for a review of the bank’s wider strategy, not just the units that have run into trouble, the people 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.
Stock picking is ripe for a shift away from passive investing, which could suffer a decade of low or nonexistent returns, says Bill Smead.
After a volatile first quarter, Q2 has kicked off in style, and the major indexes sit at – or hover near – all-time highs. The government bond market has also been steadying as yields have pulled back after rising higher earlier in the year, soothing investor fears that inflation could get out of hand. Moreover, the economic recovery seems to be gathering steam at a faster pace than anticipated. “We had been expecting the data to improve about this time, and early signals are that the recovery is absolutely on track,” said Hugh Gimber, J.P. Morgan’s global market strategist. “This is the period where the forecast of a strong recovery in growth is starting to look more like the fact of a strong recovery in growth.” Against this backdrop, the analysts at J.P. Morgan have pinpointed 2 names which they believe are set for strong growth in the year ahead; both are expected to handsomely reward investors with at least 80% of gains over the coming months. We ran them through TipRanks database to see what other Wall Street's analysts have to say about them. Tencent Music Entertainment (TME) We’ll start in China, where Tencent Music Entertainment is the offspring of China’s giant online venture company, Tencent, and Spotify, the Swedish streaming company that makes music and playlists easy. Tencent Music has seen consistently strong sales and earnings for the past year, with the top line growing year-over-year in each quarter of 2020. The Q4 report showed $1.26 billion in the top line, the highest in the last two years, along with 12 cents per share in earnings, up 33% year-over-year. Strong streaming revenue, which showed 29% growth, helped drive the results. And, Tencent Music, through its variety of apps, is the top music streaming service in the Chinese online market – as shown by the 40.4% yoy increase in paid subscribers during Q4. In its quarterly results, the company reported 4.3 million net new users in Q4, to reach 56 million active premium accounts across its apps. That said, the stock has pulled back sharply recently, as like many other high-flying growth names, worries regarding an overheated valuation have come to the fore. But pullbacks often spell opportunity, and covering the stock for JPM, Alex Yao notes the strong subscription growth, as well as the potential in the company’s other businesses, online ads and long-form audio, for monetization. “We believe TME is entering a healthy development cycle with successive growth engines: 1) music subscription remains the core revenue driver with consistent paying ratio improvement, 2) ads revenue ramps up quickly, and 3) active investments in long-form audio initiative, which could become a new growth driver in 2022 and afterwards," Yao noted. To this end, Yao puts a $36 price target on TME, suggesting a one-year upside of 84%, to back his Overweight (i.e. Buy) rating on the stock. (To watch Yao’s track record, click here) Overall, TME has a thumbs up from Wall Street. Of the 11 reviews on record, 7 are to Buy, 3 are to Hold, and 1 says Sell, making the analyst consensus a Moderate Buy. The shares are priced at $19.50, and their $30.19 average price target implies an upside of 55% for the months ahead. (See TME stock analysis on TipRanks) Y-mAbs Therapeutics (YMAB) The next JPM pick we’re looking at is Y-mAbs, a late-stage clinical biopharma company with a focus on pediatric oncology. The company is working on the development and commercialization of new antibody-based cancer therapeutics. Y-mAbs has one medication – Danyelza – approved for use to treat neuroblastoma in children age 1 and over, and a ‘broad and advanced’ pipeline of drug candidates in various stages of the clinical process, as well as five additional products in pre-clinical research stages. Having an approved drug is a ‘holy grail’ for clinical biopharmaceutical companies, and in 4Q20 Y-mAbs saw considerable income from Danyelza. The company announced at the end of December that it had agreed to sell the Priority Review Voucher for the drug to United Therapeutics for $105 million. Y-mAbs will retain the rights to 60% of the net proceeds from the sale, under an agreement with Memorial Sloan Kettering. Also in December, the company announced a license agreement with SciClone. The partnership gives Y-mAbs and Danyelza an opening for treating pediatric patients in China. The agreement includes Mainland China, Taiwan, Hong Kong, and Macau, and is worth up to $120 million for Y-mAbs. The company has entered other agreements making Danyelza available in Eastern Europe and Russia. Danyelza is Y-mAbs flagship product, but the company also has omburtamab in advanced stages of the pipeline. This drug candidate saw a setback in October last year, when the FDA refused to file the company's Biologics License Application, proposed for the treatment of pediatric patients with CNS/leptomeningeal metastasis. Y-mAbs has been in steady communication with the FDA since then, with a new target date for the BLA at the end of 2Q21 or early in 3Q21. These two drugs – one approved and one not yet – form the basis of the JPM outlook on this stock. Analyst Tessa Romero writes, “Our thesis revolves around the de-risked nature of the pediatric oncology pipeline. Our recent KOL feedback is enthusiastic about use of lead asset Danyelza in patients with high-risk neuroblastoma (NB). For second lead asset omburtamab in NB metastatic to the central nervous system (CNS/LM from NB), while the ‘Refuse to File’ last year and subsequent regulatory delays were certainly disappointing, we still see a high probability of approval for the product in the 2Q/3Q22 timeframe…” Looking ahead, Romero sees an upbeat outlook for the company: “Coupling our anticipation of a healthy launch for Danyelza, with regulatory/clinical momentum expected in the near- to mid-term, we see shares poised to rebound and see an attractive buying opportunity at current levels.” The analyst puts a $52 price target on YMAB shares, implying an upside of 86% for the year ahead, and supporting an Overweight (i.e. Buy) rating. (To watch Romero’s track record, click here) Overall, the Wall Street reviews break down 3 to 1 in favor of Buys versus Holds on Y-mAbs, giving the stock a Strong Buy consensus rating. The shares have an average price target of $61.25, suggestive of a 121% upside potential this year. (See YMAB stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
You should be able to roll over your 401(k) plan account into a Roth IRA, but be sure you first understand the tax consequences of doing so.
Investing is a crucial part of accumulating enough money in retirement — and the best results come with proper asset allocation. Retirement tip of the week: Check the asset allocation of your retirement portfolios, and if you’ve done it recently, make it a regularly scheduled task once a year. “The time to review your asset allocation and overall retirement investment strategy should be a proactive process throughout the year,” said Jon Ulin, chief executive officer of Ulin & Co. Wealth Management.
(Bloomberg) -- The battle for control of Arm Ltd.’s China business is escalating with new lawsuits aimed at keeping the unit’s controversial chief executive in power, further complicating SoftBank Group Corp.’s efforts to sell the business to Nvidia Corp.The dispute erupted almost a year ago in June after the board voted to oust Arm China Chief Executive Officer Allen Wu for conflicts of interest, but he refused to leave. Now the Chinese unit, which remains under Wu’s control, has filed lawsuits against three senior executives the board designated to replace him, according to people familiar with the matter. The previously unreported suits could take years to resolve, suggesting Wu may remain entrenched.Wu fired the three men -- including co-CEO Phil Tang -- but they were subsequently reinstated by the board. In the new lawsuits, Arm China is suing the trio, demanding they return company property, according to the people.Arm China declined to comment on any ongoing legal cases or possible settlement talks. It did say the three executives had caused “material damages” to the company and they had been terminated for legitimate reasons.Tang didn’t return requests for comment. Arm Ltd. declined to elaborate, saying it won’t comment on pending legal matters.The complex tussle has thrown into question the future of Arm, whose semiconductor technology is the world’s most widely used for smartphones and is increasingly deployed in computers. SoftBank founder Masayoshi Son agreed to sell the British chip designer to Nvidia for $40 billion last year, but the path for completing that transaction is growing increasingly difficult.The China dispute also raises questions about Beijing’s willingness to protect foreign investment in the world’s second-largest economy. Arm Ltd. sold a majority stake in the China unit to a consortium of investors, including Beijing-backed institutions. That has complicated the British firm’s efforts to manage Arm China and Wu, who has support from local authorities in Shenzhen.Both sides appear to be at a stalemate. Wu, a Chinese-born U.S. citizen, pulled back from signing settlement agreements worth tens of millions of dollars if he would leave the company, the people said, asking not to be identified talking about legal matters. At the same time, two minority shareholders in Arm China linked to Wu have filed lawsuits to overturn his June 4 dismissal, they said.SoftBank opened negotiations with him last year and had hoped to reach some sort of resolution, they said. Instead the court battles are deepening and the Japanese company has soured over the increasingly complicated dispute, the people said. SoftBank is now resigned to letting the legal proceedings take their course and there are no current negotiations with Wu, according to one of the people.“We are going through a leadership change in China; it’s taking time to resolve,” said Arm Ltd.’s Chief Executive Officer Simon Segars in an interview with Bloomberg Television recently. “It’s hard. But we are confident that’s going to get resolved.”SoftBank and Nvidia declined to comment on the dispute in China.Arm China said in a statement that Wu’s position “is compliant with legal registration and confirmed by China law and regulations.”Read more: Arm Takes Aim at Intel Chips in Biggest Tech Overhaul in DecadeThe standoff accords a relatively unknown executive outsized influence over one of the industry’s most important pieces of technology, in the world’s biggest internet and semiconductor market. Chinese companies need unfettered access to Arm’s products to push forward with the country’s attempts to make itself more independent in chip technology, an area where it’s largely reliant on imports. Beyond resolving the stalemate, Nvidia and SoftBank also need Beijing’s signoff to seal their deal, and it’s unclear whether Wu’s presence would complicate that.Wu’s hold on Arm China is partially due to local laws which make it difficult to change control of a company unless you’re physically in control of the company stamp and registration documents. He’s refused to give them up and has used company funds to pay for legal fees incurred in his attempt to fight off his dismissal, the people said.Arm China said payment of legal fees “is made in compliance with company policies as well as China laws and regulations.”His ultimate goals appear to be a large cash payoff and immunity from subsequent legal action, according to people who’ve spoken with him. Inside Arm China, which is responsible for selling licenses to its chip designs and fundamental technology in the country, Wu has told local staff he’s not going anywhere. He recently gave employees Chinese New Year cash presents in a red envelope with his surname on it.Arm China said the money came from Wu personally to show his appreciation to colleagues, a tradition at Chinese New Year in the country.Hearings in the case against the three executives are expected to take place in late May, one of the people said. Separately, two minority shareholders in Arm China have sued the Chinese entity in Shenzhen to nullify the board’s decision to oust Wu. These two cases are now being merged and hearings are slated for late April, the people said.Son told investors as recently as February that he expects to close the Arm sale and “I don’t have any Plan B.”Arm, for its part is trying to make sure that its technology remains pervasive in China despite U.S. sanctions intended to curb the supply of American technology to major companies like Huawei Technologies Co. While Arm is a U.K.-based company part of its operations are in the U.S. making its products subject to controls.The Chinese government has not stated its position on the Arm China leadership struggle, but the unit has several government-backed shareholders including sovereign wealth fund China Investment Corp. and the Silk Road Fund.In his interview with Bloomberg Television, Arm Ltd. CEO Segars said that the ten-month standoff hasn’t hurt Arm’s business in China. Lack of travel for face-to-face meetings during the pandemic has prolonged the process of changing leadership in China, he said.“When we announced the deal in September, we said it would take about 18 months,” he said. “We remain confident in that timeline.”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.
Americans have tons of questions about their stimulus checks and 2020 taxes. Here’s what you need to know about 2021 COVID-relief payments and more.
(Bloomberg) -- Inflation fears that just drove the Treasury market’s biggest quarterly loss in decades are a “psychosis” that will fade over the course of the year, according to Hoisington Investment Management Co., among the biggest U.S. bond bulls.“Contrary to the conventional wisdom, disinflation is more likely than accelerating inflation,” according to latest quarterly report from the firm, which manages about $5 billion in Treasuries. After moving higher in the second quarter, the annual inflation rate “will moderate lower by year end and will undershoot the Fed Reserve’s target of 2%,” and “the inflationary psychosis that has gripped the bond market will fade away.”Hoisington, whose leadership includes founder Van Hoisington and chief economist Lacy Hunt, rode its optimism to huge returns last year. Its Wasatch-Hoisington Treasury Fund gained 20%, more than any other actively managed U.S. government bond fund, according to data compiled by Bloomberg. But this year has been a completely different story amid the carnage in Treasuries, with the fund down about 15% since Dec. 31, trailing all peers, Bloomberg data show.It’s had an annual average return of about 7.5% since its 1986 inception.While U.S. GDP is likely to grow in 2021 at the fastest pace since 1984 -- and possibly since 1950 -- several factors will restrain inflation, Hoisington said. They include:Inflation is a lagging indicator, reaching lows an average of 15 quarters after recessions endProductivity tends to rebound vigorously after recessionsSupply-chain restoration will be disinflationaryPandemic has accelerated technological advancementsGrowth numbers don’t reflect reflect the costs of rampant business failuresAs inflation “is the key determinant for the level and direction of long term Treasury yields,” yields also tend to reach cyclical lows long after the start of recessions, with an average lag of 76 months since 1990, Hoisington said. “While no two cycles are ever alike, the trend in long bond yields remains downward.”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.
While just about every financial planner out there continues to espouse the "diversify" mantra, Jason DeBolt, a former Google and current Amazon employee, has taken a decidedly different approach.
The latest noises coming out from China suggest XPeng (XPEV) is keen to produce its own chips in-house. According to Chinese news outlet 36kr, using a small team of less than 10 engineers, the Chinese EV maker is developing its own autonomous driving chip. The production started a few months ago and is taking place in both the US and China. Xia Heng, XPeng’s Co-President and Chief Technology & Operation Advisor Benny Katibian, whose prior jobs include leading the tech dept at Qualcomm's ADAS team, are at the helm of the new project. “Industry sources indicate XPeng is actively recruiting chip engineers,” said Deutsche Bank’s Edison Yu, who believes this suggests “there are plans to grow this effort moving forward.” “In our view,” Yu further noted, “We do not expect any near-term changes as both XPILOT 3.5 and 4.0 will use Nvidia chips (Xavier and Orin), but believe similar to Tesla/NIO, XPeng wants to ultimately use a custom designed chip purpose built to train its neural net (to use in XPILOT 5.0) rather than a general purpose chip, in order to maximize performance/ efficiency and lower cost.” Yu thinks local rival Nio, is “likely” fast at work on a similar project after poaching Xiaomi's chip division manager. Looking at the wider picture, Yu believes it is all part of an effort by the industry/government to lower the dependence on foreign chips. Earlier this year, backed by BYD and Great Wall Motor, Horizon Robotics raised $900 million in a Series C round. The 5-year-old, local start-up was recently selected by SAIC (GM and VW’s main JV Chinese partner) to supply its ADAS/AD chipset. Horizon is targeting the shipment of 1 million chips this year and Yu believes it is a good example of the local industry’s chip manufacturing ambitions. To this end, Yu rates XPEV shares a Buy along with a $48 price target. The implication for investors? Upside of 39%. (To watch Yu’s track record, click here) XPEV stock has a resounding “yes” on Wall Street. 6 Buys and 1 Hold assigned in the last three months add up to a Strong Buy analyst consensus. At $49.50, the average price target implies upside potential of 43.5%. (See XPEV stock analysis on TipRanks) To find good ideas for EV stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Alphabet Inc. Chief Executive Sundar Pichai sold another chunk of shares this week, valued at nearly $7 million, as the stock surged to record highs.
The regulatory troubles that have beset Jack Ma since November may be nearing their end, culminating in a hefty fine slapped on the Chinese tech entrepreneur's biggest brand. What Happened: China fined Ma's Alibaba Group Holding Ltd (NYSE: BABA) a record $2.8 billion after a monopoly probe found that the company had abused its dominant market position, Reuters reported. The regulator also ordered Alibaba to make "thorough rectifications" to strengthen internal compliance and protect consumer rights. The Chinese government said that Alibaba had used anti-competitive practices in its online retail market. According to state-run Xinhua news agency, the penalty came from the State Administration for Market Regulation, which had been investigating it since December. The size of the penalty was determined after regulators decided to fine Alibaba 4% of its 2019 sales of 455.7 billion yuan. The fine is more than double the $975 million fine that China issued to QUALCOMM, Inc. (NASDAQ: QCOM) in 2015 for anticompetitive practices. In a press statement, Alibaba said, "Alibaba accepts the penalty with sincerity and will ensure its compliance with determination." "To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation," the company added. Alibaba will hold a conference call on Monday to discuss the penalty. Why It Matters: The outspoken Ma has long been the most visible figure of China's economic rise and stands out in a culture where getting attention at high levels is perilous. Alibaba, in particular, has been under scrutiny since last October when Ma criticized China's banking sector as operating with a “pawnshop mentality." The government scuttled the planned blockbuster Ant Group IPO shortly after Ma made the comments. Chinese regulators are increasing their pressure on Ma and his powerhouse companies, Ant Group Co., Alibaba Group Holding Ltd. and Alibaba's media holdings. Last year, the People's Bank of China, the country's central bank, instructed Ant Group to "rectify" how it does business. Ma's Alibaba Group and other leading tech companies in China have been scrutinized by regulators over their growing influence in the country. Technology firms in China have been hiring legal experts and setting aside funds for potential fines amid the antitrust and data privacy crackdown by regulators. Photo courtesy: World Economic Forum via Wikimedia See more from BenzingaClick here for options trades from BenzingaWhy Authorities Are Putting The Brakes on Johnson & Johnson's Vaccine In Several States'Godzilla vs. Kong' Smashes Pandemic-Era Box Office With .5 Million Debut© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.