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Piershale Financial Group President Mike Piershale talks to Yahoo Finance's Julie Hyman, Adam Shapiro, Brian Sozzi, and Krishna Memani, Invesco Vice Chair of Investments about the market sell-off.
Piershale Financial Group President Mike Piershale talks to Yahoo Finance's Julie Hyman, Adam Shapiro, Brian Sozzi, and Krishna Memani, Invesco Vice Chair of Investments about the market sell-off.
(Bloomberg) -- A week that could set in motion the eventual collapse of the 314-year union between England and Scotland is concentrating City trading desks on market disasters ahead.As Scots enter a May 6 vote pitched on whether there should be a second independence referendum, fund managers and sell-side strategists see potential for massive chaos across the U.K.’s economic landscape in the years to come. Yet in an echo of the early days of the Brexit poll, few are hedging for this disruptive prospect.While the stakes could hardly be higher, it’s not clear the U.K. government will agree to another referendum, even if pro-independence parties win a majority on Thursday. But with the vote stirring uneasy memories of Britain’s split from the European Union, fund managers are dusting off old playbooks for how to trade a binary risk event where timing is everything.“You’d have massive uncertainty, financial chaos and recession,” and a 10% devaluation of the pound, said Mark Nash, a money manager at Jupiter Investment Management.Nash isn’t hedging such a scenario yet -- and neither is the market. The median of forecasts in a Bloomberg survey has the pound holding at $1.39 through June.Still, a handful of investment analysts have ventured forth bearish calls.Strategists at Credit Agricole SA recommend shorting the pound versus the dollar, with political risk over Scottish independence among the reasons.Barclays Plc abandoned a call to go long on the pound versus the euro on the potential for pre-election volatility.UBS Group AG credit strategists cut their outlook on a select group of U.K. bank bonds to neutral from overweight, warning that the “long U.K. trade” in credit could unravel on referendum risk.One thing is for certain: if things escalate, money managers will need to move fast. Odds show a repeat of the 2014 referendum, where Scotland voted to remain, would be too close to call.“Markets ignore things and ignore things and ignore and then suddenly panic. I have a feeling that is quite likely to happen with the Scottish independence issue,” said Jane Foley, head of currency strategy at Rabobank. “What I’m telling our clients is to be aware that even though this may not impact the pound right now, it’d be foolhardy to ignore it because it might suddenly come into the market’s agenda.”Consequences of secession would be huge. Negotiations would be necessary over what currency an independent Scotland would use, whether it would take a share of the British national debt, and what trade arrangements it would have with the remainder of the U.K. The Scottish National Party also harbors ambitions to bring Scotland into the EU, a situation that would create huge border and trade tensions, if the problem of ring-fencing Northern Ireland in Brexit is any example.“I wonder whether markets have actually considered the full ramifications of this election,” said Julian Howard, director of multi-asset solutions at GAM Investments, whose portfolios are strategically positioned for a decline in sterling. “It would be a lot worse than Brexit as Scotland is much more closely stitched to the U.K. than Britain was into Europe. We’re talking since the 1700s rather than the 1970s.”Mr. BrexitThe domicile of financial institutions could also be contested. If they were to remain based on Edinburgh, Scottish banks would miss out on the support of the Bank of England’s quantitative easing program and become less creditworthy, according to Charlie Parker, managing director at boutique investment manager Albemarle Street Partners.It’s the kind of tail-risk event that makes careers, for those with enough foresight to get it right.At Nomura Holdings Inc., strategist Jordan Rochester was part of a team that developed a money-spinning model to help the bank call the 2014 referendum result early. His political analysis on the split from the EU then led him to be nicknamed Mr. Brexit. Now he says the pound could fall up to 6% if Scotland voted to leave, depending on how priced it was prior to the result.But even he isn’t worried about the election on Thursday itself, and says the pound could even be in line for gains if the SNP fails to win more than half of the seats, as some polls suggest. Still, the independence cause could prevail once Green votes are counted, and an actual referendum date could trigger heavy hedging.Read: Why Scotland’s Road to Independence Vote Is Rocky: QuickTake“The market will look at polling in a new referendum and treat it much more like a tighter vote than 2014 -- when it was only last-minute scares, not months in advance,” Rochester said.Westminster would likely mount resistance to any plans to seek an independence vote, refusing to grant the Scottish parliament the permission to make it legally watertight. That leaves the potential for a lengthy constitutional quagmire over whether the Scottish parliament can call a legitimate referendum on its own.Even though the prospect of an invigorated Scottish break-away movement is scary for traders, derivatives markets remain relatively calm. The term structure of sterling’s implied volatility has become inverted, signaling angst over events on Thursday -- though the cost of insuring swings is still below its 12-month average. Over the longer-term, five-year risk reversals in cable trade near their average since Bloomberg began compiling data in 2005.“The difficulty with assessing the impact of these events on markets is that even if we know they are on the horizon, we don’t know when markets will react and if in the end the status quo will prevail,” said Sheena Shah, currency strategist at Morgan Stanley. Her firm sees a 30% chance of a referendum by the end of 2024. “There are so many unknowns and follow-up hurdles.”(Updates options pricing in penultimate 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) -- Volatility gripped financial markets as a rout in some of the largest tech companies dragged down stocks. The dollar rose.Megacaps such Apple Inc., Tesla Inc. and Amazon.com Inc. sent the Nasdaq 100 slumping, while the S&P 500 pared losses amid gains in commodity, financial and industrial shares. Treasury Secretary Janet Yellen rattled markets with a comment economists regarded as self evident -- that rates will likely rise as government spending ramps up and the economy responds with faster growth. Later in the day, Yellen said she wasn’t predicting or recommending rate hikes.The debate on whether government spending could boost inflation comes at a time when stock valuations are hovering near the highest levels in two decades. Hedge funds have been bailing from equities at a pace not seen since the financial crisis, while shares have struggled to gain traction despite blowout corporate earnings.“We’ve had this spectacular run-up, and I think we’ve seen momentum just run out of steam,” said Fiona Cincotta, senior financial markets analyst at City Index. “Despite earnings being encouraging, they haven’t managed to push those indices higher. Moving out of growth and into cyclicals is the place we’re going to have more movement.”Earlier Tuesday, a sharp drop in equity futures left traders scrambling for an explanation. Some of them speculated on military tensions between China and Taiwan, Singapore’s tougher coronavirus restrictions and Ferrari NV’s decision to postpone financial targets.Investors also monitored the latest economic readings, with the U.S. trade deficit widening to a new record in March. Meanwhile, a senior White House economic aide demurred on the question of whether President Joe Biden will nominate Fed Chair Jerome Powell for a second four-year term, saying the decision on selecting the next central bank chief will come after a thorough “process.”Here are some key events to watch this week:U.S. ADP employment change is due WednesdayChicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic ClubBank of England rate decision ThursdayThe April U.S. employment report is released on FridayThese are some of the main moves in markets:StocksThe S&P 500 fell 0.7% as of 4 p.m. New York timeThe Nasdaq 100 fell 1.85%The Dow Jones Industrial Average was little changedThe MSCI World index fell 0.8%CurrenciesThe Bloomberg Dollar Spot Index rose 0.3%The euro fell 0.4% to $1.2017The British pound fell 0.2% to $1.3887The Japanese yen fell 0.2% to 109.29 per dollarBondsThe yield on 10-year Treasuries declined one basis point to 1.58%Germany’s 10-year yield declined three basis points to -0.24%Britain’s 10-year yield declined five basis points to 0.79%CommoditiesWest Texas Intermediate crude rose 2.3% to $66 a barrelGold futures fell 0.7% to $1,779 an ounceFor 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.
Crude oil prices could spike higher if the EIA drawdown is higher than expected, especially if it exceeds the API’s 7.7 million barrel draw.
The Nasdaq fell in afternoon trading on Wednesday, extending the previous session's sell-off, while the U.S. dollar eased off a more than two-week high hit earlier in the day. Amazon.com and Microsoft were the biggest drags on the Nasdaq, while the S&P 500 was flat as gains in energy and other economically sensitive shares provided some support. The Nasdaq fell sharply on Tuesday after U.S. Treasury Secretary Janet Yellen said that rate hikes may be needed to stop the economy from overheating.
General Motors Co and Chief Executive Mary Barra were forced by the semiconductor supply-chain crunch to slash production and sell fewer vehicles at higher prices. The result: Fatter margins, far stronger than expected first-quarter profit and a healthy boost for GM shares. Last week officials at Daimler AG and Ford Motor Co made similar comments.
Cathie Wood's ARK Innovation exchange-traded fund is significantly oversold and due for a bounce, but if it doesn't come the popular fund risks suffering a “waterfall” decline, says one chart watcher.
It appears that Shark Tank investor Kevin O’Leary no longer thinks bitcoin is “garbage.” The chairman of O’Shares ETF told Yahoo Finance Live that he’s allocated 3% of his portfolio to the world’s largest cryptocurrency after his native Canada, and a handful of other countries, eased restrictions on institutional buying of the asset.
(Bloomberg) -- Saudi Aramco’s profit soared in the first quarter following a recovery in global oil and gas markets, though free cash flow remained too low to fully cover dividend payments.The world’s biggest energy company kept its quarterly payout, almost all of which goes to the Saudi Arabian government, at $18.75 billion. The money is vital for the kingdom as it tries to narrow a budget deficit that ballooned last year, with the coronavirus pandemic sinking oil prices and shutting down local businesses.The bumper results follow those last week of Big Oil rivals such as Royal Dutch Shell Plc and BP Plc, whose earnings are back to pre-pandemic levels as major economies reopen and more people are vaccinated. Brent crude has gained over 30% this year to top $68 a barrel.“There are more reasons to be optimistic that better days are coming,” Chief Executive Officer Amin Nasser said in a statement Tuesday. “The momentum provided by the global economic recovery has strengthened energy markets.”Net income for the quarter was 78.6 billion riyals ($21 billion), up 24% year-on-year and higher than analysts’ average estimate of roughly $19 billion. Free cash flow was $18.3 billion. The company expects capital expenditure to be $35 billion in 2021, a figure unchanged from its forecast in March.Aramco, based in Dhahran in eastern Saudi Arabia, saw its debt load spike after earnings collapsed last year with the spread of the pandemic and it opted to maintain the $75 billion annual dividend.Gearing UnchangedGearing, a measure of net debt to equity, increased from minus 5% in early 2020 to 23% by the end of the year as Aramco borrowed to fund the dividend and buy a $69 billion stake in chemicals maker Saudi Basic Industries Corp. from the kingdom’s sovereign wealth fund. The debt ratio remained the same at the end of March, but may fall this quarter because a U.S.-led group agreed to invest $12.4 billion in Aramco’s oil pipelines. The Saudi company is also considering selling a stake linked to its natural-gas pipelines.“Saudi Aramco’s cash-generation outlook is improving with higher benchmark oil prices, suggesting the company may be able to cover this year’s $75 billion dividend with free cash flow,” Bloomberg Intelligence analysts Salih Yilmaz and Rob Barnett said in a note. “Any excess free cash could be used to de-leverage.”Aramco’s downstream business, which now includes contributions from Sabic, swung to a profit as higher commodity prices boosted margins for refined products such as transport fuels and plastics. The unit’s earnings before interest and tax were $4.4 billion, compared with a loss of $5 billion a year earlier.The downstream arm, which Aramco wants to expand further, posted full-year losses in 2019 and 2020.The upstream business, mainly consisting of oil and gas production, saw earnings before interest and tax rise 6.4% to $40 billion. While it was buoyed by higher energy prices, Saudi Arabia’s OPEC commitments meant Aramco reduced crude output during the quarter to an average of 8.6 million barrels a day. That’s the lowest in a decade.The Organization of Petroleum Exporting Countries and its allies -- a 23-nation grouping known as OPEC+ -- began unprecedented supply cuts last year to bolster prices. Saudi Arabia, the cartel’s de facto leader along with Russia, is implementing extra curbs on top of what OPEC requires, though it plans to end them by July.Despite the production decline, Aramco’s capital expenditure is mostly directed toward pumping more oil. Upstream capex rose by 19%, while downstream spending dropped 15%. The company has been instructed by the Energy Ministry to expand oil-output capacity to 13 million barrels a day from 12 million.The Saudi government may sell more of Aramco over the next two years as it looks to transfer cash to the sovereign wealth fund, which aims to become one of the world’s largest with $2 trillion of assets.The kingdom is in talks to divest a 1% stake, worth around $19 billion, to a “leading” energy company, Crown Prince Mohammed Bin Salman said last month. It may also sell additional Aramco shares on the local stock exchange, he said. The government raised almost $30 billion in 2019 when it listed 2% of the firm on the Riyadh bourse.Aramco’s shares rose 0.7% to 35.65 riyals in the Saudi capital, extending their gain this year to 1.9%.(Updates share price in final 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 cryptocurrency that no one was meant to take seriously spiked to just under 70¢ before losing a little ground.
Since January, the price of Bitcoin has surged 89%. But another major cryptocurrency has posted even larger returns.
(Bloomberg) -- Investors are piling back into some of the fringe corners of the cryptocurrency world, with the frenzy sending Dogecoin surging more than 50% again and crashing Robinhood’s trading app.Other so-called altcoins also took off, with Dash spiking 18% over a 24-hour period through the European morning on Wednesday and Ethereum Classic rising almost 45%. In the world of DeFi, tokens such as Force DAO and Tierion surged more than 1,000% on Tuesday, according to CoinMarketCap.com data. Meanwhile, Robinhood said it resolved earlier issues with crypto trading on its platform.“You have money looking for a home and this is one of those areas of the market where there is speculation happening, there is significant appreciation happening in a short period of time,” said Chad Oviatt, director of investment management at Huntington Private Bank. “You get that excitement there.”The rallies defied easy explanation and continued a trend that’s seen the value of all digital tokens surge past $2.3 trillion. Doge, created as a joke in 2013, has been used in marketing gimmicks -- the latest by the Oakland A’s baseball team, which offered two seats to games this week for 100 Dogecoin. The Gemini crypto exchange backed by Tyler and Cameron Winklevoss said it now supports Doge, and will soon enable trading of it.Dogecoin’s red-hot advance from around 0.002 cents a year ago -- when it was worth about $300 million -- has captured the interest of many on Wall Street. It’s even caught the attention of the Federal Reserve -- the central bank’s chairman last week answered “some of the asset prices are high” when asked if things like GameStop Corp.’s and Dogecoin’s supercharged rallies created threats to financial stability.As a sign of Dogecoin’s rising popularity, the Robinhood app is among the top 10 downloads at the Apple App Store. Meanwhile, Coinbase Global, the largest U.S. crypto exchange -- which doesn’t offer Doge trading -- saw its shares fall 4.6% Tuesday, its lowest close since its market debut last month.“It’s pretty amazing that something that started out as a joke has become so popular,” said Matt Maley, chief market strategist for Miller Tabak + Co.Though interest in digital assets has picked up in recent months as more traditional firms who were long hesitant to the crypto space warm up to cryptocurrencies, it’s alternative coins that have captured the most attention in recent days. Bitcoin has taken a backseat following record-setting rallies from Ether and Doge, wrote Edward Moya, senior market analyst at Oanda.“The Dogecoin bubble should have popped by now, but institutional interest is trying to take advantage of this momentum and that could support another push higher,” he said in a note. “Dogecoin is surging because many cryptocurrency traders do not want to miss out on any buzz that stems from Elon Musk’s hosting of Saturday Night Live.”Elsewhere, a new Ether ETF trading in Canada called the CI Galaxy Ethereum ETF (ETHX) broke its record volume on Tuesday. It’s up more than 20% in the first two days of the week.Bitcoin rose modestly on Wednesday, snapping a three-day losing streak. It was up 0.8% to $55,213 as of 9:29 a.m. in London on Wednesday.Meanwhile, many -- including famed crypto investor Mike Novogratz -- have warned that the rallies could be unsustainable. Novogratz, chief executive officer of Galaxy Digital Holdings, said recently he’d be “very, very worried” were one of his friends to invest in Doge.“It seems that investors are careening from one hot dot to another, like a pinball game,” said Mike Bailey, director of research at FBB Capital Partners. “My sense is this speculative wave will suffer the same fate as the GME and other Robinhood ‘flash-in-the-pan’ stocks. Cryptocurrencies may have become a new asset class, like precious metals, but surges such as these seem unsustainable.”(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.
Though mortgage rates are at their lowest levels in months, refinance activity is quieter.
A year into the pandemic, some homeowners say loan servicers aren't giving them clear information about mortgage forbearance.
Wealthy investor Mike Novogratz says that the run-up in dogecoin is a reflection of the disenchantment of younger investors in the current state of financial markets and the economy and cautioned that trying to bet on the parody coin at these current levels is dangerous.
Caesars Entertainment Inc. shares spiked in after-hours trading Tuesday after the casino company revealed another big loss in the first quarter, but outlined a strong rebound in the works in Las Vegas.
The trading app experienced issues with crypto trading, and users are furious.
Prices are on the rise, but there are ways you can lessen the impact on your wallet.
The housing market is red hot at the moment, with the Case-Shiller index soaring. But Morgan Stanley has some good reasons why the current situation isn't a bubble.
In July, the IRS will begin sending monthly payments of $250 or $300 to low- and moderate-income families who qualify for the child tax credit.
In one of the more light-hearted moments of Berkshire Hathaway's annual shareholders meeting on Saturday, Ajit Jain, vice chairman of Insurance Operations, was asked if he'd be willing to underwrite the insurance to cover Elon Musk's SpaceX mission to Mars, assuming Musk asked.