Bridgewater Associates founder Ray Dalio discusses the historic nature of debt cycles.
Bridgewater Associates founder Ray Dalio discusses the historic nature of debt cycles.
(Bloomberg) -- A hole in Britain’s finances is starting to worry economists and stoke concerns about the pound. This time, the vast budget deficit created by the pandemic is not the issue.The focus is gradually shifting to the current-account shortfall, the difference between money coming into the U.K. and money going out. The gap is forecast to reach its widest since World War II this year as Britain grapples with post-Brexit ties with the European Union and an imports-fueled rebound from the pandemic.That will test the willingness of foreign investors to keep on funding the spending habits of the nation by buying British assets. Data on Wednesday will likely show that the U.K. had one of its biggest trade deficits on record in the first full quarter since completing the withdrawal deal with the EU.“A big jump in the trade deficit can put into question whether it can be sustained by capital flows,” said Sonali Punhani, European Economist at Credit Suisse. “This can increase the premium investors demand to invest in U.K. assets.”The deficit is adding to the longer-term risks gathering over the pound, which also include the prospect of another Scottish independence referendum. While the currency has rallied this year amid a brightening economic outlook, strategists say further significant gains are unlikely.The current-account gap, which also includes flows of investment income, may almost double to 6.4% of economic output this year, according to the U.K.’s fiscal watchdog. The forecast reflects an export performance hobbled by Brexit and strong demand for foreign-made goods as the economy rebounds at pace from the pandemic.What Bloomberg Economics Says...“It’s well known that the U.K. is a serial borrower from the rest of the world. One of the potential consequences of recovering earlier and more quickly than the rest of the world is the U.K.’s current account deficit widens even further as export growth lags imports. That’s likely to catch the eye of investors if the U.K.’s recovery proceeds as expected.”-- Dan Hanson, senior U.K. economist.The Bank of England, which upgraded the U.K.’s economic outlook significantly last week, predicts an 8.5% surge in imports and almost no growth in exports. The International Monetary Fund says Britain will have the biggest shortfall among major industrial nations.In recent years, Britain has had no problems funding the gap. Foreigners attracted by a robust legal and financial systems and the prospect of decent investment returns have proved eager buyers of British firms and high-end London properties. They also bought U.K. equities and debt.While they may continue to regard the U.K. as a good bet -- the economy is forecast to outgrow its major peers this year -- Brexit has raised some awkward questions.The U.K. is no longer part of the EU single market, access to which was a key reason for many firms choosing to invest in Britain.The government also appears to have jettisoned the idea of trying to lure investors by turning Britain into a “Singapore of Europe” with low taxes and light-touch regulation. In his March budget, Chancellor Rishi Sunak raised taxes to levels not seen in half a century, with businesses bearing the brunt, in an effort to rein in the biggest budget deficit in peacetime.In a recent research report, RBC Capital Markets said Britain can no longer count on being a “natural haven” for foreign direct investment, with neither the pound nor U.K. equities currently trading at cheap levels.“There is no strong reason to think there will be a flood of foreign capital inflows looking to pick up bargains,” said RBC chief currency strategist Adam Cole.Cole sees the pound falling to $1.25 and 91 pence per euro by the end of this year and weakening further in 2022. Sterling is currently at $1.41 and 86 pence per euro.To be sure, large current-account deficits do not hold the fear they did in past decades, when crises were precipitated by attempts to support fixed exchange rates by exhausting gold and currency reserves. The 1967 devaluation of the pound that humiliated Harold Wilson’s Labour government followed years of balance of payments problems.Now the pound floats freely, meaning that the exchange rate can fall to a level where foreign investors once again find British assets attractive, sparing Britain an abrupt funding crisis.With British assets owned by foreigners now worth around six times the size of the economy, an adjustment may not be without pain, however. Cole at RBC points out that recent inflows have shifted toward loans and deposits -- “hot money” that could quickly leave the country if sentiment on Britain soured.“Seemingly unsustainable deficits can be sustained for a very long period and they don’t seem to matter until they do matter,” he said on Monday. “When they do, nothing else seems to matter.” 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) -- A digital security firm owned by Saudi Arabia’s sovereign wealth fund has hired Riyad Capital to advise on a planned initial public offering that could value the company at about $2 billion, according to people familiar with the matter.Elm is aiming to complete the sale of shares on the Saudi stock exchange by next year, the people said, asking not to be identified as the information is private. The IPO could see the kingdom’s Public Investment Fund selling off a stake of up to 30%, they said.Deliberations are at an early stage, and details of the offering could change. Elm and the investment banking arm of Riyad Bank didn’t immediately respond to requests to comment.The PIF, as the wealth fund is known, and other government-controlled firms are pushing ahead with plans to raise money through selling stakes in a raft of companies over the next year.Two other PIF companies -- stock exchange Tadawul and Acwa Power -- are both expected to sell shares on the Saudi bourse this year, while Saudi Telecoms Co. and Saudi Basic Industries Corp. are planning to offer stakes in subsidiaries.The pipeline of deals is a sign that state-controlled firms in Saudi Arabia are increasingly looking at ways to take advantage of soaring investor demand for new offerings while also raising money to help fund efforts to diversify the economy away from oil.Crown Prince Mohammed Bin Salman said last month in an interview on Saudi TV that the PIF “shouldn’t hold on to assets.”Saying “we should dispose of any mature asset,” he gave Elm as an example of a PIF-controlled firm that could sell shares in the future.Elm traces its roots to a research company established in the 1980s. It developed several online services for the Saudi government including the Absher platform, which enables residents and citizens to carry out transactions such as traffic fine payments.The Riyadh-based company also created a system for managing the entry of foreign pilgrims into the kingdom to visit Mecca and Medina, according to information on Elm’s website.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) -- Technology shares led U.S. stocks lower as surging commodity prices stoked concern about whether inflation will derail a growth rebound in the world’s largest economy and spoil a record stock rally.The tech-heavy Nasdaq 100 Index tumbled 2.6% amid the growing anxiety over inflation, which can threaten longer-horizon revenues typical of the sector. Tesla and Apple were among the biggest decliners. The ARK Innovation ETF resumed its slide. The Dow Jones Industrial Average briefly topped 35,000 for the first time. The benchmark S&P 500 fell from an all-time high. Treasury yields edged higher as traders brace for a busy week of auctions.“Amid these new highs remember that the market doesn’t move only in one direction,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “While a full economic recovery may already be priced into the market, the weak employment data could have temporarily eased worries about too-hot inflation and the necessity of interest rate hikes to combat it.” Copper jumped to a record while iron ore futures surged more than 10%, adding to concern about inflation. West Texas Intermediate fluctuated after a cyberattack forced the closure of a key U.S. pipeline, which operators hope to reopen by the end of the week.Meanwhile, the pound climbed to its highest level since February after U.K. elections denied Scotland’s main independence party an outright majority and strengthened the grip of the Conservatives.The run-up in raw materials is intensifying debate ahead of a U.S. CPI report Wednesday that is forecast to show price pressures increased in April. The data will be closely watched by policy makers at the Federal Reserve trying to gauge the speed of the recovery after job growth significantly undershot forecasts.“People have been gravitating to value -- now you can find growth outside of tech,” said Keith Lerner, chief market strategist at Truist Advisory Services. “As inflation expectations continue to move higher, that’s more beneficial for the value side of the trade.”Read more: Inflation Debate Hits Emerging Markets as Pimco Stands Firm The MLIV Question of the Day: How Could Highest CPI in Decade Hit Assets?Here are some key events to watch this week:A range of Fed speakers are due this week, including Governor Lael Brainard on Tuesday, among othersChinese inflation data are due TuesdayOPEC monthly Oil Market Report is published with global demand forecasts and production estimates TuesdayU.S. CPI report Wednesday is forecast to show prices continued to increase in AprilBank of England Governor Andrew Bailey speaks WednesdayThese are some of the main moves in markets:StocksThe S&P 500 fell 1%, more than any closing loss since March 18 as of 4:01 p.m. New York timeThe Nasdaq 100 fell 2.6%, more than any closing loss since March 18The Dow Jones Industrial Average fell 0.1%, more than any closing loss since April 30The MSCI World index fell 0.6%, more than any closing loss since May 4CurrenciesThe Bloomberg Dollar Spot Index fell 0%, falling for the fourth straight day, the longest losing streak since April 19The euro fell 0.2% to $1.2142The British pound surged 1.1%, more than any closing gain since April 19The Japanese yen fell 0.1% to 108.76 per dollarBondsThe yield on 10-year Treasuries advanced two basis points, more than any closing gain since April 29Germany’s 10-year yield advanced zero basis points, climbing for the fourth straight day, the longest winning streak since April 29Britain’s 10-year yield advanced one basis point to 0.79%CommoditiesWest Texas Intermediate crude fell 0.1% to $65 a barrelGold futures rose 0.4%, climbing for the fourth straight day, the longest winning streak since Feb. 10For 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) -- Cboe Global Markets Inc. is seeking to list a Fidelity Bitcoin exchange-traded fund in the U.S. despite the prospect of an icy regulatory reception.Cboe proposed Monday in a filing with the U.S. Securities and Exchange Commission to list Fidelity’s Wise Origin Bitcoin Trust, saying concerns about potential manipulation of a Bitcoin exchange-traded product have been “sufficiently mitigated.”New SEC Chairman Gary Gensler told Congress last week that the cryptocurrency market “could benefit from greater investor protection.”Bitcoin ETF Approval Odds Grow Longer After Gensler CritiqueThe comments appeared to be a setback for the idea that Gensler might be more sympathetic to crypto product approvals given his familiarity with financial technology.Cboe has already petitioned for the approval of vehicles such as a VanEck Bitcoin fund, one of a number of Bitcoin ETFs seeking the green light from officials. The SEC has knocked back repeated attempts to list such products in the U.S.Crypto proponents argue the sector is evolving and that other jurisdictions like Canada allow Bitcoin ETFs, leaving U.S. investors at a disadvantage.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) -- Meituan shares fell for the 10th straight session after an influential consumer group voiced criticism over issues that hurt consumer rights, fueling concerns the Chinese tech firm is facing heightened regulatory scrutiny.The Shanghai Consumer Council, a consumer rights advocacy group, blasted the food delivery giant for its practices including refunding problems and misleading content on its mobile app in a statement released late Monday. The company has vowed to submit a rectification report in the near term. Shares fell 5.3% Tuesday to HK$249, taking the slump so far this week to nearly 12%.Meituan stock has been sliding since the company became one of the latest targets of the Chinese government’s crackdown on internet companies amid concern the country’s large tech firms have grown too powerful. China’s State Administration for Market Regulation announced late last month that it has launched an investigation into the company’s suspected monopolistic practices.The shares suffered a fresh blow on Monday after chief executive officer Wang Xing’s social media posting last week of a classical poem about book burning by the emperor during the Qin dynasty went viral on the internet. Wang later deleted it and said he used the poem in reference to the company’s competitors. The topic with hashtag #MeituanSharePriceSlump# has been read more than 33 million times on popular Chinese blogging platform Weibo.com.The stock plunge this week knocked nearly $2.5 billion off the value of Wang Xing’s 11% stake in Meituan, according to the Bloomberg Billionaires Index.China’s technology sector has come under intense regulatory scrutiny in recent months, with Ant Group. Co. pulling a record $35 billion initial public offering in November as it complies with new rules. The Hang Seng Tech Index, which includes many Chinese tech giants, has tumbled about 30% from its February high. That compares with a less than 3% fall for the Nasdaq 100 Index during this period.“So many headwinds still persist in the Chinese technology sector,” Jackson Wong, asset management director at Amber Hill Capital Ltd., said by phone. “The policy worry is not just about Meituan. Tech regulations just keep coming in China. The lingering regulatory risk makes forecasting the sector’s growth really really difficult.”Wong expects funds to continue to rotate out of the tech sector into cyclical names and sees mainland market stabilization as the next catalyst. “If the sentiment recovers in the domestic market, investors could buy more Hong Kong tech stocks and regulatory fears may recede a bit. So far I haven’t seen that happening,” he added.Meituan may face persisting stock price pressure in the short term, Citigroup Inc. analysts including Alicia Yap wrote in a note commenting on the Shanghai consumer organization’s statement.User growth at internet platforms may decelerate, possibly causing revenue expansion to slow, while their costs may rise in order to comply with regulatory requirements, after the council said an overemphasis on user traffic by the firms is unhealthy, according to the note.Bernstein slashed its target price for Meituan by 21% to HK$330 on lower estimates for food delivery profitability and regulatory policy headwinds, according to a Tuesday note by analysts including Robin Zhu. It expects regulatory risks to remain an “overhang” until an official anti-monopoly ruling is handed down possibly in a few months.(Updates prices throughout and with Berstein note in the last 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) -- Cathie Wood’s miserable month looked set to continue on Tuesday, as her flagship exchange-traded fund slipped in pre-market trading and assets dropped below $20 billion to the lowest since January.The Ark Innovation ETF (ticker ARKK) slid 4% as of 7:35 a.m. New York time. Caught in a broad tech selloff, the product has fallen for nine of the past 10 sessions, a decline that accelerated on Monday in the biggest slide in about seven weeks.Tesla Inc., the fund’s biggest holding, was down 6.7% in the premarket. Roku Inc. and Teladoc Inc., also heavily weighted in the ETF, each dropped around 5%.The stock rotation out of speculative tech names is proving tough for Wood and her firm, Ark Investment Management, with investors pulling more than $500 million from the main fund in May so far.Big bets on the likes of Tesla and Bitcoin lured billions to Ark’s ETFs, but more recently investors have been souring on the kind of pricey shares the firm favors in companies with often unproven technologies.Read more: Rout Lands on Nasdaq Where Shorts Are Massing, Bulls Getting OutWith ARKK down 34% from its February peak, options activity paints an increasingly gloomy picture. The number of bearish put contracts outstanding has jumped to a record.Meanwhile, short interest remains near an all-time high, according to data from IHS Markit Ltd.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.
‘I bought the house for $125,000 and it is now worth approximately $285,000, with a total owed of $185,000.’
The U.S. cannabis deal would give Florida’s dominant player a notable southwestern U.S. footprint. Trulieve (ticker: TCNNF) and Harvest Health (HRVSF) combined would be one of the largest cannabis companies in the world, in terms of sales. Combining analyst estimates for both companies puts the estimated 2021 revenue at $1.24 billion, only slightly below consensus estimates for Curaleaf (CURLF) at $1.26 billion.
In the past week, investors have had to cope with multiple conflicting signals from the markets. The April jobs report, which was expected to show almost 1 million new positions for the month, showed only 266,000. The official unemployment number ticked upward slightly to 6.1%, and hourly wages also gained – by 0.7%. That last would seem to be a positive – except that, combined with the massive government stimulus injecting cash into the economy – higher wages are seen as a portent of inflation. At first glance, it seems like an environment that would have investors cautious. Except – the Fed has signaled that it will not be winding down its easy money policies. Low interest rates have helped to fire up the bull market engine in recent years, for two reasons. First, it keeps the cost of credit low, making it easy to leverage all sorts of purchases – cars, homes… even stocks. And second, with rates low, bond yields have been unable to make any significant rise. For investors seeking a return, this makes stocks the place to go. It also creates an environment that’s conducive to IPO events. Markets have been on a steady, long-term upward trend for months; the S&P 500 has gained 44% over the last 12 months. With a return potential like that, it’s no wonder that companies are turning to the public trading markets to raise capital. When it comes to equities, a rising tide truly will lift all boats. This brings us to JPMorgan. The banking firm’s stock analysts have been looking for the equities primed to gain in current conditions. And they’ve tapped two stocks new to the public markets as likely to jump 80% or more in coming months – a solid return that investors should note. After running both tickers through TipRanks’ database, we found out that the rest of the Street is also standing squarely in the bull camp as each boasts a “Strong Buy” analyst consensus. LAVA Therapeutics (LVTX) We’ll start with a Netherlands-based biotech firm. LAVA Therapeutics has a focus on cancer treatments, and is working to develop what it calls gamma-delta bispecific T cell engagers. These compounds are intended to activate the innate and adaptive immune systems, using the body’s own response to fight tumors. LAVA’s pipeline includes four proprietary compounds, and a fifth that is being investigated in combination with Janssen. All five drug candidates are in preclinical trials. The leading candidate, LAVA-051, is scheduled to begin a Phase 1/2a clinical trial in the first half of this year, while a second candidate, LAVA-1207, will begin a Phase 1/2a trial during 2H21. These drug candidates are being developed as treatments for multiple myeloma and prostate cancer, respectively. LVTX shares entered the public markets on March 25, in an IPO that raised $100.5 million. The shares started trading at $15, and saw 6.7 million shares hit the market. Among the bulls is JPM analyst Jessica Fye, who likes the fundamental of this newly public stock. Fye rates LVTX an Overweight (i.e. Buy), and her $22 price target implies a robust upside potential of ~86% for the year ahead. (To watch Fye’s track record, click here) "Our Overweight rating is based on our positive view of the company’s proprietary platform, gamma-delta bsTCE, which redirects a specific group of T cells called gamma-delta T cells towards tumor cells. We see LAVA’s off-the-shelf bsTCEs, which can conditionally activate gamma-delta T cells in a tumor/antigen directed manner, as differentiated, potentially leading to a safer therapy and more durable benefit. To the extent that initial data for lead asset LAVA-051 begins to derisk the platform, we see upside for shares as soon as early 2022," Fye noted. In its short time on the public market, LAVA’s unique approach to cancer treatment has attracted notice from three Wall Street biotech analysts – and all three agree that this is a stock to buy, making the Strong Buy consensus rating unanimous. The shares are trading for $11.80, and their $23.67 average price target is even more bullish Fye allows, suggesting an upside of ~100% in the next 12 months. (See LVTX stock analysis on TipRanks) Zhihu (ZH) From biotech, let’s shift gears to online content. The net has given content creators a nearly unlimited field to work in, and Zhihu operates in the Chinese online content market. The company’s website is a question-and-answer forum, on the model of Quora, allowing users to pose questions to the community or offer replies. A look at some of the company’s numbers shows its size. By the end of December last year, Zhihu had a total of 43.1 million content creators, who has posted over 315 million questions and answers. The monthly average users (MAU), a key metric for any website, increased from 43.1 million in 4Q19 to 75.7 million in 4Q20. Zhihu held a US IPO on March 26, to raise capital for further operations and expansion. The company put 55 million shares on the American public markets, at $9.50 each. The IPO raised $522.5 million in gross proceeds, and Zhihu now shows a market cap of $4.58 billion. In their early trading, ZH shares faced pressure after a Securities and Exchange Commission ruling on accounting regulations. US law requires that accounting firms permit US regulators to review the financial audits of overseas companies, under threat of potential delisting from the US equity markets. The SEC ruling promises stricter enforcement of this provision. Even under this pressure, however, the Zhihu IPO was the third-largest by a Chinese company in the US markets so far this year. In an initiation of coverage report on Zhihu, JPM analyst Binbin Ding notes several factors that bode well for the stock, with two in particular standing out: “(1) Differentiated positioning. Unlike online content communities that are mostly entertainment-oriented, Zhihu is known for its depth of content and is recognized as the most trustworthy online content community in China (CIC survey). This positioning makes it the go-to platform for users seeking quality answers. (2) Diversified monetization models, including ads, membership, content-commerce solution, ecommerce and education. In particular, we believe Zhihu’s content-commerce solutions is an innovative model with significant potential growth upside…” Ding summed up, "We expect Zhihu to see a 112% top-line CAGR over 2020 to ’22E, driven by a 35% traffic CAGR and a 57% monetization CAGR. Such growth rates make Zhihu the fastest-growing digital content operator in our coverage universe." To this end, Ding gives ZH shares an Overweight (i.e. Buy) rating, along with a $16 price target that suggests room for an impressive 96% growth potential this year. (To watch Ding’s track record, click here) Ding's bullish stance on ZH is in line with Wall Street’s view. The stock has a Strong Buy consensus rating, based on 3 Buy ratings set in recent weeks. The shares are trading for $8.15, and their $15.23 average price target suggests ~87% upside for the year ahead. (See ZH 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.
(Bloomberg) -- Cathie Wood’s Ark Innovation ETF looked set for another difficult day on Tuesday as it extended losses in early trading after suffering its worst drop in seven weeks.The ARKK exchange-traded fund fell 2.9% as of 5:38 a.m. in New York. The product, which makes concentrated bets on tech companies aiming to disrupt industries, plunged 5.2% on Monday to a six-month low with all but five of its 58 holdings retreating in a broad tech selloff.That was double the loss of the Nasdaq 100 Index, and took ARKK’s decline from a February peak to 34%.Wood has doubled down on some of her favorite bets in recent downdrafts, buying Twitter Inc. in three out of five days last week as it fell 5.2% in the worst week since March. She said in a television interview that the tech selloff has only set her fund up for a strong rebound. ARKK surged almost 150% in 2020 and is down 16% this year.While all of ARKK’s major holdings retreated on Monday -- Tesla Inc., its biggest exposure, dropped 6.4% -- the hardest-hit names in the portfolio were two biotech stocks. Twist Bioscience Corp. was the fund’s biggest laggard, plunging more than 17% for its worst one-day performance since Feb. 5. NanoString Technologies Inc. sank 12%.On the bright side, Coinbase Global Inc., which accounts for about 3% of the ETF’s holdings, gained 11.3% in the best day since its April 14 direct listing.Wood’s firm, Ark Investment Management, added 33,300 Coinbase shares on Monday, according to Bloomberg’s calculations of data from the company’s daily trading update. The asset manager also sold 30.4% of its Apple Inc. holdings, the data show.(Updates Tuesday move. An earlier version corrected the second paragraph to show 5.2% drop was Monday.)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.
Are we seeing some signs of danger in the markets? At first glance, it wouldn’t seem so. The S&P 500 is sitting just below its record high, as is the Dow Jones average. The big tech giants – Amazon, Apple, Alphabet, Facebook, and Microsoft – all posted great results in their recent earnings reports. And yet, they are leading the declines in the NASDAQ. According to Morgan Stanley equity strategist Michael Wilson, we’re in for a volatile ride, at least in the near-term. "With the S&P 500 making new highs every day, few seem worried... rather than getting excited about reopening, we are getting more concerned about execution risk and what’s already priced in,” Wilson noted. “Whatever correction the market experiences this year, we are likely to make higher highs next year. The goal as an investor is to navigate the... transition, avoid the stocks with the biggest drawdowns and be in position to capture the next leg." So, let’s take this advice, and look for ways to protect the portfolio in the short term while staking a position for the longer term. That’s a strategy which will naturally draw investors toward dividend stocks, the classic defensive play. We’ve used the TipRanks database to pull up two dividend players that combine a Strong Buy sentiment from Wall Street with a yield of at least 7%. Let's take a closer look. New Residential Investment (NRZ) We’ll start with a real estate investment trust (REIT), since these companies have a reputation as solid dividend payers. That’s in part an artifact of their position in regard to tax regulation; they are required to return a certain percentage of profits directly to shareholders, and the dividend is often a convenient vehicle for compliance. New Residential Investment is typical of its sector, holding a $6 billion investment portfolio, of which just over half is mortgage servicing rights. In its recent 1Q21 financial release, New Residential showed a net income of $301 million, up from $101 million at the end of Q4. The company declared a quarterly dividend of 20 cents per share; the payments totaled $82.9 million. At the declared rate, the dividend annualizes to 80 cents per common share, for a yield of 7.5%. This compares favorably to the ~2% yield found among S&P-listed companies. NRZ shares are up 77% in the past 12 months, gaining as the company switched from net losses at the height of the corona crisis to profitability in the last four quarters. To take advantage of the share appreciation, and to raise additional capital, the company announced a public offering of shares in April. The sale generated gross proceeds of $522.4 million on 51.7 million shares sold. The funds raised were used to acquire Caliber Home Loans, with plans to integrate the acquisition into NRZ’s wholly owned mortgage origination service. The transaction is expected to close in Q3 of this year. Covering the stock for BTIG, analyst Eric Hagen writes: “[We] think the company has the capital to be acquisitive in bulk sales transactions as some originators potentially look to offload more thinly capitalized MSRs if origination volume slows more meaningfully. It confirmed the $500 million of capital raised in connection to the Caliber deal was about $0.15 dilutive to NAV, so book is around $11.20. The stock is less than 0.93x book, and about 6.5x forward earnings assuming a 15% ROTCE.” Hagen rates NRZ a Buy, and his $13 price target implies a 25% upside for the year ahead. (To watch Hagen’s track record, click here) Hagen is no outlier in his bullish opinion here. Of the 10 recent analyst commentaries on this stock, 9 recommend it to Buy, against a single Hold. The $12.69 average price target is almost as bullish as Hagen’s, and suggests an upside of ~22% from the current trading price of $10.38. (See NRZ stock analysis on TipRanks) Enterprise Products Partners (EPD) We’ll switch gears now, and take a look at an energy company. Specifically, a midstream company. Enterprise Products Partners controls over 50,000 miles of pipelines, along with facilities capable of storing 160 million barrels worth of oil and 14 billion cubic feet of natural gas. In addition, Enterprise has shipping terminals in the state of Texas, on the Gulf Coast. As the US economy has reopened, demand for fuel has increased – which in turn increased the flow of fuel through Enterprise’s system. The company’s financials have been rebounding since the second half of last year, and the recent 1Q21 report showed $9.1 billion at the top line, the best result in the last two years. EPS came in at 61 cents per share, flat year-over-year, but higher than the last three quarters. Enterprise declared a Q2 dividend of 45 cents per common share, the second quarter in a row at this level. The current payment is backed by the company’s $1.7 billion in distributable cash flow. The annualized payment of $1.80 per common share gives a yield of 7.7%. Among the bulls is Raymond James analyst Justin Jenkins, who sets a Strong Buy rating on EPD shares, along with a $26 price target. (To watch Jenkins’ track record, click here) Backing his stance, Jenkins writes: “While Enterprise (EPD) has not been immune to energy industry challenges, the asset base has continued to show resilience in the difficult environment. Looking forward, EPD's unique combination of integration, balance sheet strength, and ROIC track record remains best in class, in our view. We see EPD as arguably best positioned to withstand the volatile landscape... This is a compelling opportunity for entry into ownership of one of the best positioned MLPs…” Overall, Wall Street’s analysts are sanguine about EPD’s path forward, as evidenced by the unanimous Strong Buy consensus rating, supported by 8 Buy recommendations. The average price target, at $28.75, is more bullish than Jenkins’ and suggests a one-year growth potential of 24% for EPD. (See EPD’s stock analysis at TipRanks) To find good ideas for dividend 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.
(Bloomberg) -- Gas stations along the U.S. East Coast are beginning to run out of fuel as North America’s biggest petroleum pipeline races to recover from a paralyzing cyberattack that has kept it shut for days.From Virginia to Florida and Alabama, stations are reporting that they’ve sold out of gasoline as supplies in the region dwindle and panic buying sets in. An estimated 7% of gas stations in Virginia were out of fuel as of late Monday, according to GasBuddy analyst Patrick DeHaan.The White House said in a statement it is monitoring the situation and directing government agencies to help alleviate any shortages. Colonial Pipeline Co. said it’s manually operating a segment of the pipeline running from North Carolina to Maryland and expects to substantially restore all service by the weekend.The Colonial pipeline has been shut down since late Friday. On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. While President Joe Biden stopped short of blaming the Kremlin for the attack, he said “there is evidence” the hackers or the software they used are “in Russia.”Colonial Chief Executive Officer Joe Blount and a top lieutenant assured Deputy Energy Secretary David Turk and state-level officials that the company has complete operational control of the pipeline and won’t restart shipments until the ransomware has been neutralized.The dwindling supplies come just as the nation’s energy industry was preparing to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year of restrictions. Depending on the duration of the disruption, retail prices could spike, further stoking fears of inflation as commodity prices rally worldwide.The U.S. East Coast is losing around 1.2 million barrels a day of gasoline supply due to the disruption, according to a note from industry consultant FGE.In Asheville, North Carolina, Aubrey Clements, a clerk at an Exxon Mobil station answered the phone with “Hello, I’m currently out of gas.” The Marathon gas station in Elizabethtown, North Carolina, had roughly two dozen cars waiting to fuel up, said an employee there. Drivers pulling into a station with a sign offering unleaded gasoline for $2.649 per gallon in Manning, South Carolina, were met with pumps covered in yellow and red “out of service” bags.Shortages are also hitting the aviation industry, forcing American Airlines Group Inc. to add additional stops to two long-haul flights originating from Charlotte, North Carolina. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks,’ a spokeswoman said.In an 18-minute virtual meeting, Blount said Colonial is working with refiners, marketers and retailers to prevent shortages, according to a person involved with the meeting who wasn’t authorized to speak publicly about the discussion. The pipeline serves 90 U.S. military installations and 26 oil refineries, the person said.The shutdown has prompted frenzied moves by traders and retailers to secure alternative supplies. Oil tanker charter rates skyrocketed in the U.S. with refiners scrambling for ships to store fuel that has nowhere to go.Emergency shipments of gasoline and diesel from Texas are already on the way to Atlanta and other southeastern cities via trucks, and at least two Gulf Coast refineries began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus.The national average retail gasoline price rose to $2.967 a gallon on Monday, a 2.4% increase from Friday, according to AAA. The premium for wholesale gasoline in the New York area expanded to its widest in three months.Gasoline futures that initially surged as much as 4.2% earlier this week have since declined. Futures prices had gained more than 50% this year, helped by the recovery from the pandemic.The event is just the latest example of critical infrastructure being targeted by ransomware. Hackers are increasingly attempting to infiltrate essential services such as electric grids and hospitals. The escalating threats prompted the White House to respond last month with a plan to increase security at utilities and their suppliers. Pipelines are a specific concern because of the central role they play in the U.S. economy.Ransomware cases involve hackers seeding networks with malicious software that encrypts the data and leaves the machines locked until the victims pay the extortion fee. This would be the biggest attack of its kind on a U.S. fuel pipeline.DarkSide said in a post on the dark web that it wasn’t to blame and hinted that an affiliate group may have been behind the attack. The group promised to do a better job of screening customers that buy its malware.Government officials haven’t advised Colonial on whether it ought to pay the ransom, Deputy National Security Adviser for Cyber and Emerging Technologies Anne Neuberger said during a briefing.Learn more about how emergency powers can counter fuel-supply disruptions.“It’s an all-hands-on-deck effort right now,” said U.S. Commerce Secretary Gina Raimondo. “We are working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions in supply.”The White House pulled together an inter-agency task force to address the breach, including exploring options for lessening its impact, according to an official. Biden can invoke an array of emergency powers to ensure supplies keep flowing to big cities and airports along the East Coast.Some rules curbing domestic transportation of fuel have been eased to help deal with any shortages. That doesn’t extend to waiving the Jones Act, a measure that would allow foreign tankers to help shuffle more petroleum products between U.S. ports.The Northeast can secure gasoline shipments from Europe but it will come at an increasing cost the longer the pipeline stays shut. In the meantime, fuel producers including Marathon Petroleum Corp. are weighing alternatives for how to ship their products to the Northeast.Landlocked cities face the greatest danger of fuel shortages compared with those with access to water-borne deliveries, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc. If the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders.(Adds Virginia situation in second 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.
NEW YORK/LONDON/SINGAPORE (Reuters) -Cryptocurrency ethereum climbed to a new peak for a third straight day on Monday on continued optimism about further growth in decentralized finance or "DeFi", although some analysts said it was overvalued at current levels. Ethereum has soared this year, fuelled by the boom in DeFi, which are platforms that facilitate crypto-denominated lending outside traditional banking. Many DeFi applications are embedded in the ethereum blockchain.
Ether prices on the Ethereum blockchain have been steadily and quietly carving out new highs as buzz in the crypto has centered predominantly on the fervor around more speculative assets like dogecoin in recent weeks.
(Bloomberg) -- Whatever caused the tech selloff, and inflation angst looks to be the likeliest culprit, evidence has been gathering for weeks that traders were bracing for declines.Short interest in the Nasdaq 100 exchange-traded fund, in free fall as recently as March, was surging before the index had its biggest plunge since March. Flows to the ETF were negative in April and would’ve been this month, too, if not for a jump on Friday. All told, about half a billion dollars has been drained from the QQQs this year.As the Nasdaq 100 -- trading at more than 5 times annual revenue -- dropped more than 2.5%, volatility in tech stocks jumped by the most since early March. With inflation expectations leaping to the highest level since 2006, everything from the biggest megacap tech stocks to the frothiest small fry was slammed. Futures on the Nasdaq 100 slid as much as 1.4% in early Asian trading on Tuesday.“Inflationary pressures are becoming harder to ignore,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors. “Although the jury is still out on whether this is merely a temporary issue, the prospect of inflation is leading investors to seek out areas that are better insulated from the threat of rising prices.”Duck and CoverThe breadth of the tech plunge made Monday particularly painful for bulls. Cathie Wood’s ARK Innovation ETF (ticker ARKK) sank 5.2% to the lowest since November as its biggest holdings nosedived, with the likes of Tesla Inc., Roku Inc. and Teladoc Health Inc. skidding. After an eye-watering 150% gain in 2020, ARKK has dropped 16% so far this year.But damage wasn’t limited to tech’s speculative fringe. The New York Stock Exchange FANG Index fell 3.6%, putting the gauge on track for its worst month since March 2020. With inflation threatening to break higher, the cohort’s expensive valuations are growing increasingly harder to justify. Alphabet shares are trading at eight times revenue, the highest in more than a decade, according to data compiled by Bloomberg, while Facebook’s price-to-sales multiple is nine -- nearly twice that of the average Nasdaq 100 company.Roaring BearsBears boosted bets against tech stocks as the industry’s leadership faltered amid a flight to the reflation trade. Short interest on the biggest ETF tracking the Nasdaq 100, or QQQ, increased to 3.6% of the stock outstanding, the highest level since August and up from 0.9% in December. The spike in bearish wagers stood out in a market where shorts have collapsed amid the S&P 500’s 88% rally since the pandemic trough in March 2020.Meanwhile, after several years of one-way flows, investors are starting to pull cash from the $161 billion Invesco QQQ Trust Series 1 ETF. The fund has bled roughly $425 million so far in 2021, after absorbing nearly $17 billion in 2020 -- the second-biggest haul on record. The ETF is on track for its first yearly outflow since 2016.Troubling TechnicalsCharts on the Nasdaq 100 look precarious. In the short term, the gauge is approaching its average price over the 100 days, a trend line that sits within 0.1% of the index’s current level and has served as support during the selloff in last November and again in March. A sustained breakdown in late 2018 and March 2020 foreshadowed losses that exceeded 20% from peak to trough.Viewed from a wider lens, the picture is no better. Plot the Nasdaq’s relative altitude versus the S&P 500 shows the ratio has fallen back below its 2000 peak again. Its failure in March to hold above that resistance was flagged by DoubleLine Capital LP founder Jeffrey Gundlach as a sign that another collapse may be in store.Cooling CallsWhile none of the data shows significant jumps in bearish sentiment, it’s consistent with a backdrop in which the extreme bullishness that has marked the last 14 months shows signs of subsiding. That may make sense after the index’s 92% gain since its pandemic low.The largest companies, loosely known as Faamg, last September saw day traders flocking to bullish options for quick profits. That demand has since waned, with their combined call open interest falling almost a third from the peak, data compiled by Bloomberg show.(Adds Nasdaq futures move in the third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
A new professional service out of Wyoming can make sure your bitcoin (BTCUSD) billions or $100 million in “non-fungible tokens” pass to your heirs with the minimum of risk, fuss and, yep, federal, state or other taxes. This assumes, of course, that the digital currency mania—currently valued at around $2.4 trillion, or roughly as much as the entire German stock market — lasts longer than you do. “The IRS is going to view anyone’s digital asset holdings, whether it’s cryptocurrencies, NFTs etc., as property in the same way that they will view your stocks, or art, or wine,” explains Joel Revill, a former Wall Street banker now running Wyoming-based wealth management company Two Ocean.
Who bought all those A shares? Large institutional investors will be disclosing their equity holdings for March 31 in the coming days.
President Biden has proposed taxing capital gains like ordinary income for those with incomes over $1,000,000. In addition to paying for his agenda, this proposal will make the federal income tax fairer, by ensuring that the wealthy pay their appropriate share of the tax bill, and more efficient, by eliminating the incentive to transform high-taxed ordinary income to low-taxed or untaxed capital gains.
Dogecoin's stratospheric run was in jeopardy early Sunday, with the popular crypto unwinding a chunk of its recent rally.
(Bloomberg) -- Honest Co.’s shares tumbled again on Monday, extending a slide just days after the consumer-goods company started by actress Jessica Alba made a splashy debut in the public markets.A decline of as much as 13% sent the shares as low as $16.52, approaching the initial public offering price of $16 on May 4. After soaring 44% on its first day of trading, the stock declined more than 7% in the next two sessions and was on pace Monday for its third straight drop.The slump is an inauspicious start for a company looking to capitalize on elevated demand for packaged-goods and cleaning supplies during the pandemic. Alba, who co-founded the direct-to-consumer brand in 2011 and now serves as chief creative officer, brought some Hollywood glamour to the IPO last week with multiple media appearances.There have been hints that the pandemic boom is starting to subside for packaged goods, with some peers reporting higher costs and uneven demand trends recently. Data and research company New Constructs called Honest “overvalued” and said the stock is “worth no more than $7” a share.Honest didn’t immediately reply to a request for comment.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.