After days of rallies fueled by Redditors, investment app Robinhood has restricted the trading of several highly-volatile stocks.
After days of rallies fueled by Redditors, investment app Robinhood has restricted the trading of several highly-volatile stocks.
(Bloomberg) -- Virgin Galactic Holdings Inc. tumbled Friday after its billionaire Chairman Chamath Palihapitiya offloaded shares worth about $213 million in the space-tourism company founded by Richard Branson.Palihapitiya, who has helped drive the frenzied growth of blank-check companies, disposed of 6.2 million shares at an average price of $34.32 this week, based on a filing with the U.S. Securities and Exchange Commission. He still owns 15.8 million shares with his partner Ian Osborne through investment firm Social Capital Hedosophia, amounting to about a 6.5% stake. Palihapitiya previously sold shares worth almost $100 million in December, filings show.Palihapitiya said he sold the shares to fund an investment to help fight climate change.“The details of this investment will be made public in the next few months,” he said in a statement Friday. “I remain as dedicated as ever to Virgin Galactic’s team, mission and prospects.”Read more: The king of SPACs wants you to know he’s the next Warren BuffettVirgin Galactic’s shares fell 9.9% to $27.29 in New York on Friday and have slid more than 50% since their peak in mid-February.The Las Cruces, New Mexico-based company merged with Social Capital’s first SPAC in 2019. Palihapitiya has since launched blank-check companies that have merged with businesses across health insurance, financial services and real estate including Opendoor Technologies Inc. and Clover Health Investments Corp.Opendoor fell 9.8% on Friday, while Clover Health rose 7.5% after earlier sliding. Other Palihapitiya SPACs such as Social Capital Hedosophia Holdings Corp IV and V reversed midday losses to end up for the day.Palihapitiya, 44, has made a fortune for himself and his investors through SPACs. The former Facebook Inc. executive has raised more than $4 billion via blank-check firms, using social media to talk up the investments and becoming one of the most prominent figures in the phenomenon, which has everyone from Colin Kaepernick to former House Speaker Paul Ryan racing to market their own.He’s also a lightning rod for skeptics who dismiss his success as the product of self-promotion and see blank-check companies as proof of a bubble inflated by government money-printing.A month ago, Palihapitiya said it would only be under the rarest of circumstances that he’d reduce his holdings of any SPAC.“If I could really just go for it, I wouldn’t sell a share of anything I buy because I believe in it,” he said Feb. 8 in a interview on Bloomberg Television’s “Front Row.” “But every now and then, I run into liquidity constraints, like everybody else.”At the time, Palihapitiya had just recently sold 3.8 million Virgin Galactic shares. He said he did so because his family office called needing cash for other purposes.Shares DropSocial Capital’s merger with Virgin Galactic -- where Palihapitiya is chairman -- made the Branson startup the world’s first publicly traded space-travel venture. The transaction raised about $800 million, with Palihapitiya also directly contributing $100 million.While the shares surged in the wake of the listing, they have tumbled since a February decision to delay the next flight to space. The new schedule also pushed back plans to carry Branson, 70, on a separate mission before Virgin Galactic is expected to take its first flight with passengers paying for the trip.The company on Thursday announced the departure of its chief space officer, George Whitesides, saying he has decided to pursue potential opportunities in public service. Whitesides, who served as chief executive officer for a decade until July 2020, will remain chairman of a four-person Space Advisory Board. Swami Iyer is joining Virgin Galactic later this month as president of aerospace systems.Though Virgin Galactic has hundreds of clients lined up to pay at least $250,000 for a 90-minute flight to the edge of space, it has been a slow journey since the venture was founded in 2004. Plans were put on hold for four years in 2014 after a space plane broke up mid-flight, killing one pilot and injuring another.(Updates stock 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.
(Bloomberg) -- Dip buyers drove a rebound in stocks after an earlier bout of selling pushed the Nasdaq 100 down 10% from a record.All major groups in the S&P 500 advanced, while the tech-heavy gauge climbed more than 1.5% as giants Amazon.com Inc. and Apple Inc. erased their losses. Robinhood Markets Inc., the trading platform behind the boom-and-bust swing in GameStop Corp.’s shares, has chosen the Nasdaq for its eventual initial public offering, according to a news report. Earlier Friday, equities retreated as U.S. jobs data topped estimates, fueling anxiety the economy could run too hot and kick up inflation. Benchmark 10-year yields stabilized after hitting 1.6%.Friday’s turnaround in financial markets wiped out the S&P 500’s drop for the week. The intense volatility of the past few days was a test to stock bulls who see the recent spike in Treasury yields as an indication of brighter prospects for the economy and corporate profits. While concern over equity valuations have emerged, several analysts say that as long as data continue to improve, any selloff would present dip-buying opportunities.“Many investors are going to be buying these dips here, capital continues to be pouring into equities,” said Tony Bedikian, head of global markets at Citizens Bank. Bond yields are still “incredibly low, so equity yields are still very attractive to investors,” he added.U.S. Treasury yields have been rising because of a much stronger economic outlook and are not a cause for worry -- or a call to policy action -- said Federal Reserve Bank of St. Louis President James Bullard. His remarks follow Chairman Jerome Powell’s Thursday caution that rising yields had caught his eye and he would be “concerned by disorderly conditions in markets or persistent tightening in financial conditions.”“As a central banker I am always concerned if there is disorderly trading or something that looks panicky,” Bullard said Friday in an interview with Wharton Business Radio. “That would catch my attention. But I think we are not at that point.”These are some of the main moves in markets:StocksThe S&P 500 rose 1.9% at 4 p.m. New York time.The Stoxx Europe 600 Index slid 0.8%.The MSCI Asia Pacific Index fell 0.6%.The MSCI Emerging Market Index decreased 0.6%.CurrenciesThe Bloomberg Dollar Spot Index increased 0.4%.The euro dipped 0.4% to $1.1917.The Japanese yen depreciated 0.4% to 108.36 per dollar.BondsThe yield on 10-year Treasuries rose less than one basis point to 1.57%.Germany’s 10-year yield climbed one basis point to -0.30%.Britain’s 10-year yield increased three basis points to 0.756%.CommoditiesWest Texas Intermediate crude climbed 3.9% to $66.29 a barrel.Gold rose 0.1% to $1,698.65 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bitcoin rebounded from earlier losses amid a broader recovery in risk assets after a report showed the U.S. added more jobs than forecast last month. MicroStrategy Inc. bought more of the world’s largest cryptocurrency.The digital asset shed as much as 3.4% on Friday before trading little changed at about $48,150 as of 9:02 a.m. in New York. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other tokens, slipped more than 4.7% before turning little changed.MicroStrategy snapped up an additional 205 Bitcoins at an average price of $48,888, according to a filing. That brings the company’s holdings of Bitcoin to about 91,064 tokens, worth over $4 billion.Bitcoin is now some $10,000 below February’s record above $58,000, stoking the debate over whether the token’s investment base will widen or peter out as happened in the 2017 boom and bust.Payrolls increased 379,000 after an upwardly revised 166,000 January increase, according to a Labor Department report Friday. Economists in a Bloomberg survey projected a 200,000 February gain. The unemployment rate dropped to 6.2%.Overall risk appetite in markets took a knock Thursday after Federal Reserve Chair Jerome Powell refrained from pushing back against the recent climb in long-term borrowing costs.Long-time proponent Michael Novogratz at Galaxy Digital Holdings Ltd. remains bullish, reiterating a prediction Thursday that Bitcoin will probably hit $100,000 before the end of the year. He argued in a Bloomberg TV interview that it and other digital currencies have become “an institutional asset class” and banks are “frantically” trying to get in on the action.Bitcoin slid 21% last week but is still up more than fivefold in the past year. On one narrative, the token can hedge inflation risk and the debasement of fiat currencies -- akin to gold -- and is set become a bigger part of institutional portfolios. A rival view depicts a stimulus-fueled bubble set to pop.“We’re still at an early stage in the institutional adoption of crypto in asset allocation,” a team led by Inigo Fraser-Jenkins, head of global quantitative strategy at Sanford C. Bernstein in London, wrote in a note Friday. But the team added that a fundamental valuation of Bitcoin is “simply impossible.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Stocks turned negative after the Labor Department's February jobs report handily exceeded expectations, reaffirming the building momentum in the economic recovery, but also stoking a rise in Treasury yields and concerns over an economic overheating.
Congress is nearing passage of the third economic stimulus check it will send out to you and other taxpayers as part of its Covid-19 relief bill.
The bill that passed the Senate makes payments harder to get. Your tax return might help.
U.S. energy firms this week added oil and natural gas rigs for a second week in a row as crude prices soared to their highest levels since 2019.
To win Senate passage, Biden agreed to make millions ineligible for the third checks.
Never say that one person makes no difference. This past Thursday, stocks tumbled, bonds surged, and investors started taking inflationary risks seriously – all because one guy said what he thinks. Jerome Powell, chair of the Federal Reserve, held a press conference at which he gave both the good and the bad. He stated, again, his belief that the COVID vaccination program will allow a full reopening of the economy, and that we’ll see a resurgence in the job market. That’s the good news. The bad news, we’ll also likely see consumer prices go up in the short term – inflation. And when inflation starts rising, so do interest rates – and that’s when stocks typically slide. We’re not there yet, but the specter of it was enough this past week to put serious pressure on the stock markets. However, as the market retreat has pushed many stocks to rock-bottom prices, several Wall Street analysts believe that now may be the time to buy in. These analysts have identified three tickers whose current share prices land close to their 52-week lows. Noting that each is set to take back off on an upward trajectory, the analysts see an attractive entry point. Not to mention each has earned a Moderate or Strong Buy consensus rating, according to TipRanks database. Alteryx (AYX) We’ll start with Alteryx, an analytic software company based in California that takes advantage of the great changes brought by the information age. Data has become a commodity and an asset, and more than ever, companies now need the ability to collect, collate, sort, and analyze reams of raw information. This is exactly what Alteryx’s products allow, and the company has built on that need. In Q4, the company reported net income of 32 cents per share on $160.5 million in total revenues, beating consensus estimates. The company reported good news on the liquidity front, too, with $1 billion in cash available as of Dec 31, up 2.5% the prior year. In Q4, operating cash flow reached $58.5 million, crushing the year-before figure of $20.7 million. However, investors were wary of the lower-than-expected guidance. The company forecasted a range of between $104 million to $107 million in revenue, compared to $119 million analysts had expected. The stock tumbled 16% after the report. That was magnified by the general market turndown at the same time. Overall, AYX is down ~46% over the past 52 months. Yet, the recent sell-off could be an opportunity as the business remains sound amid these challenging times, according to 5-star analyst Daniel Ives, of Wedbush. “We still believe the company is well positioned to capture market share in the nearly ~$50B analytics, business intelligence, and data preparation market with its code-friendly end-to-end data prep and analytics platform once pandemic pressures subside…. The revenue beat was due to a product mix that tilted towards upfront revenue recognition, an improvement in churn rates and an improvement in customer spending trends," Ives opined. Ives’ comments back his Outperform (i.e. Buy) rating, and his $150 price target implies a one-year upside of 89% for the stock. (To watch Ives’ track record, click here) Overall, the 13 analyst recent reviews on Alteryx, breaking down to 10 Buys and 3 Holds, give the stock a Strong Buy analyst consensus rating. Shares are selling for $79.25 and have an average price target of $150.45. (See AYX stock analysis on TipRanks) Root, Inc. (ROOT) Switching over to the insurance sector, we’ll look at Root. This insurance company interacts with customers through its app, acting more like a tech company than a car insurance provider. But it works because the way customers interact with businesses is changing. Root also uses data analytics to set rates for customers, basing fees and premiums on measurable and measured metrics of how a customer actually drives. It’s a personalized version of car insurance, fit for the digital age. Root has also been expanding its model to the renters insurance market. Root has been trading publicly for just 4 months; the company IPO'd back in October, and it’s currently down 50% since it hit the markets. In its Q4 and Full-year 2020 results, Root showed solid gains in direct premiums, although the company still reports a net loss. For the quarter, the direct earnings premiums rose 30% year-over-year to $155 million. For all of 2020, that metric gained 71% to reach $605 million. The full-year net loss was $14.2 million. Truist's 5-star analyst Youssef Squali covers Root, and he sees the company maneuvering to preserve a favorable outlook this year and next. “ROOT's mgt continues to refine its growth strategy two quarters post IPO, and 4Q20 results/2021 outlook reflects such a process... They believe their stepped-up marketing investment should lead to accelerating policy count growth as the year progresses and provide a substantial tailwind heading into 2022. To us, this seems part of a deliberate strategy to marginally shift the balance between topline growth and profitability slightly more in favor of the latter,” Squali noted. Squali’s rating on the stock is a Buy, and his $24 price target suggests a 95% upside in the months ahead. (To watch Squali’s track record, click here) Shares in Root are selling for $12.30 each, and the average target of $22 indicates a possible upside of ~79% by year’s end. There are 5 reviews on record, including 3 to Buy and 2 to Hold, making the analyst consensus a Moderate Buy. (See ROOT stock analysis on TipRanks) Arco Platform, Ltd. (ARCE) The shift to online and remote work hasn’t just impacted the workplace. Around the world, schools and students have also had to adapt. Arco Platform is a Brazilian educational company offering content, technology, supplemental programs, and specialized services to school clients in Brazil. The company boasts over 5,400 schools on its client list, with programs and products in classrooms from kindergarten through high school – and over 405,000 students using Arco Platform learning tools. Arco will report 4Q20 and full year 2020 results later this month – but a look at the company’s November Q3 release is instructive. The company described 2020 as a “testament to the resilience of our business.” By the numbers, Arco reported strong revenue gains in 2020 – no surprise, considering the move to remote learning. Quarterly revenue of 208.7 million Brazilian reals (US$36.66 million) was up 196% year-over-year, while the top line for the first 9 months of the year, at 705.2 million reals (US$123.85 million) was up 117% yoy. Earnings for educational companies can vary through the school year, depending on the school vacation schedule. The third quarter is typically Arco’s worst of the year, with a net loss – and 2020 was no exception. But, the Q3 net loss was only 9 US cents per share – a huge improvement from the 53-cent loss reported in 3Q19. Mr. Market chopped off 38% of the company’s stock price over the past 12 months. One analyst, however, thinks this lower stock price could offer new investors an opportunity to get into ARCE on the cheap. Credit Suisse's Daniel Federle rates ARCE an Outperform (i.e. Buy) along with a $55 price target. This figure implies a 12-month upside potential of ~67%. (To watch Federle’s track record, click here) Federle is confident that the company is positioned for the next leg of growth, noting: "[The] company is structurally solid and moving in the right direction and... any eventual weak operating data point is macro related rather than any issue related to the company. We continue with the view that growth will return to its regular trajectory once COVID effects dissipate.” Turning to expansionary plans, Federle noted, “Arco mentioned that it is within their plans to launch a product focused on the B2C market, likely already in 2021. The product will be focused on offering courses (e.g. test preps) directly to students. It is important to note that this product will not be a substitute for learning systems, rather a complement. Potential success obtained in the B2C market is an upside risk to our estimates.” There are only two reviews on record for Arco, although both of them are Buys, making the analyst consensus here a Moderate Buy. Shares are trading for $33.73 and have an average price target of $51, which suggests a 51% upside from that level. (See ARCE stock analysis on TipRanks) To find good ideas for beaten-down 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) -- Elon Musk set records last year for one of the fastest streaks of wealth accumulation in history. The reversal is underway, and it’s steep.The Tesla Inc. chief executive officer lost $27 billion since Monday as shares of the automaker tumbled in the selloff of tech stocks. His $156.9 billion net worth still places him No. 2 on the Bloomberg Billionaires Index, but he’s now almost $20 billion behind Jeff Bezos, who he topped just last week as world’s richest person.Musk’s tumble only underscores the hard-to-fathom velocity of his ascent. Tesla shares soared 743% in 2020, boosting the value of his stake and unlocking billions of dollars in options through his historic “moonshot” compensation package.His gains accelerated into the new year. In January, he unseated Bezos as the world’s richest person. Musk’s fortune peaked later that month at $210 billion, according to the index, a ranking of the world’s 500 wealthiest people.Consistent quarterly profits, the election of President Joe Biden with his embrace of clean technologies and enthusiasm from retail investors fueled the company’s rise, but for some, its swelling valuation was emblematic of an unsustainable frothiness in tech. The Nasdaq 100 Index fell for the third straight week on Friday, its longest streak of declines since September.Bitcoin InvestmentMusk’s fortune hasn’t been solely subject to the forces buffeting the tech industry. His net worth has risen and slumped recently in tandem with the price of Bitcoin. Tesla disclosed last month it had added $1.5 billion of the cryptocurrency to its balance sheet. Musk’s fortune took a $15 billion hit two weeks later after he mused on twitter that the prices of Bitcoin and other cryptocurrencies “do seem high.”Extreme volatility has roiled many of the world’s biggest fortunes this year. Asia’s once-richest person, Chinese bottled-water tycoon Zhong Shanshan, relinquished the title to Indian billionaire Mukesh Ambani last month after losing more than $22 billion in a matter of days.Read more: Ambani Again Richest Asian as China’s Zhong Down $22 BillionQuicken Loans Inc. Chairman Dan Gilbert’s net worth surged by $25 billion on Monday after his mortgage lender Rocket Cos. was said to be the next target of Reddit day traders. His fortune has since fallen by almost $24 billion. Alphabet Inc. co-founders Sergey Brin and Larry Page are among the biggest gainers on the index this year. They’ve each added more than $13 billion to their fortunes since Jan. 1.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.
Some households are collecting a big pile of federal money in 2021.
(Bloomberg) -- It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares -- equal to a third of all hedge-fund assets -- actually out on loan, according to the International Securities Lending Association.It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock -- the so-called short interest -- the higher the fee a lender can charge.In the case of GameStop, short interest was unusually high and shares on loan were generating an annualized return of 25% to 30%, Ken Griffin testified at the Feb. 18 hearing. Griffin operates a market maker, Citadel Securities, as well as Citadel, one of the world’s largest hedge funds.“Securities lending is a way for long holders to generate additional alpha,” said Nancy Allen of DataLend, which compiles data on securities financing. “Originally, it was a way to cover costs, but over the last 10 to 15 years it’s become an investment function.”Not everyone is comfortable with the inherent conflict. In December 2019, Japan’s $1.6 trillion Government Pension Investment Fund stopped lending its international stock holdings to short sellers, calling the practice inconsistent with its responsibilities as a fiduciary. At the time, the decision cost GPIF about $100 million a year in lost revenue.The U.S. Securities and Exchange Commission has regulated short-selling since the 1930s and polices the market for abuses such as naked shorting, which involves taking a short position without borrowing shares. Proponents of legal shorting argue that its use enhances liquidity, improves pricing and serves a critical role as a bulwark against fraud and hype.Chief executives, whose pay packages often depend on share performance, routinely decry short sellers as vultures. More recently, shorting has come under fire in the emotionally charged banter on Reddit’s WallStreetBets forum. Some speculators ran up the prices of GameStop, AMC Entertainment Holdings Inc. and other meme stocks in January to punish the hedge funds that bet against them, and they delighted when the rampant buying led to bruising losses at Melvin, Maplelane Capital and Citron Research.Many of the key actors in the GameStop frenzy testified at the Feb. 18 hearing. Plotkin was grilled by committee members over Melvin’s short position. Citadel’s Griffin and others faced broader questions about short-selling. Yet no one asked about the supply of borrowed shares and there were no witnesses called from the securities-lending industry.There’s a symbiotic relationship between hedge funds and the prime-brokerage units of Wall Street firms, much of it built on securities lending. Prime brokers act as intermediaries, sourcing stocks and bonds for borrowers who want to short them and facilitate the trades. According to DataLend, securities lending generated $2.9 billion of broker-to-broker revenue in 2020, almost the same as in 2019.Demand for short positions was already expected to drop as stock prices surged to all-time highs. Now, with the threat of retribution from the Reddit crowd, it may weaken even further. Griffin said he has “no doubt” there’ll be less short-selling as a consequence of the GameStop squeeze.“I think the whole industry will have to adapt,” Plotkin said at the hearing. “I don’t think investors like myself want to be susceptible to these types of dynamics.”This could not only threaten the dealers who broker stock lending but also the holders who supply the securities and share in the revenue. They reaped $7.7 billion globally in 2020, down from a record of almost $10 billion in 2018, according to DataLend. Lending fees increased by 4.2% on a year-over-year basis in February after the GameStop onslaught, DataLend says.While securities lending accounted for $652 million, or just 4%, of BlackRock’s revenue in the fourth quarter of 2020, there’s little cost involved and the risks are low because borrowers have to put up collateral that equals or exceeds the value of the loan. At both BlackRock and State Street Corp., the second-largest custody bank, the value of securities on loan as of Dec. 31 jumped at least 20% from a year earlier, to $352 billion and $441 billion, respectively.“Every little bit counts with indexes,” said John Rekenthaler, vice president of research at Morningstar. “You’re scraping nickels off the street, but there’s a whole lot of nickels.”Others could take a hit, too. Just as Robinhood Markets is able to offer zero-commission trades by selling its order flow to Citadel and other market makers, asset managers typically pass on some of their securities-lending revenue as a type of client rebate.“It’s very important to remember that institutional investors earn substantial returns from participating in the securities-lending market,” Citadel’s Griffin said at the GameStop hearing. “That accrues to the benefit of pension plans, of ETFs, of other pools of institutional lending that participate in the securities lending market.”(Adds data on lending fees after the short-interest chart.)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) -- It’s not just in meme stocks that the fate of short sellers is a key theme. Short bets are increasingly in vogue in the $21 trillion Treasuries market, with crucial implications across asset classes.The benchmark 10-year yield reached 1.62% Friday -- the highest since February 2020 -- before dip buying from foreign investors emerged. Stronger-than-expected job creation and Federal Reserve Chair Jerome Powell’s seeming lack of concern, for now, with leaping long-term borrowing costs have emboldened traders. In one telltale sign of which way they’re leaning, demand to borrow 10-year notes in the repurchase-agreement market is so great that rates have gone negative, likely part of a move to short the maturity.The trifecta of more fiscal stimulus ahead, ultra-easy monetary policy and an accelerating vaccination campaign is helping bring a post-pandemic reality into view. There are of course risks to the bearish bond scenario. Most prominently, yields could rise to the point that they spook stocks, and tighten financial conditions generally -- a key metric the Fed is focused on for guiding policy. Even so, Wall Street analysts can’t seem to lift year-end yield forecasts fast enough.“There’s a lot of tinder being put now on this fire for higher yields,” said Margaret Kerins, global head of fixed-income strategy at BMO Capital Markets. “The question is what is the point that higher yields are too high and really put pressure on risk assets and push Powell into action” to try and tamp them down.Share prices have already shown signs of vulnerability to increasing yields, especially tech-heavy stocks. Another area at risk is the housing market -- a bright spot for the economy -- with mortgage rates jumping.The surge in yields and growing confidence in the economic recovery prompted a slew of analysts to recalibrate expectations for 10-year rates this past week. For example, TD Securities and Societe Generale lifted their year-end forecasts to 2% from 1.45% and 1.50%, respectively.Asset managers, for their part, flipped to most net short on 10-year notes since 2016, the latest Commodity Futures Trading Commission data show.Auction PressureIn the days ahead, however, BMO is eyeing 1.75% as the next key mark, a level last seen in January 2020, weeks before the pandemic sent markets into a chaotic frenzy.A fresh dose of long-end supply next week may make short positions even more attractive, especially after record-low demand for last month’s 7-year auction served as a trigger to push 10-year yields above 1.6%. The Treasury will sell a total of $62 billion in 10- and 30-year debt.With expectations for inflation and growth taking flight, traders are signaling that they anticipate the Fed may have to respond more quickly than it’s indicated. Eurodollar futures now reflect a quarter-point hike in the first quarter of 2023, but they’re starting to suggest that it could come in late 2022. Fed officials have projected they’d keep rates near zero until at least the end of 2023.So while the market is leaning toward loftier yields, the interplay between bonds and stocks is bound to be a huge focus going forward.“There’s definitely that momentum, but the question is how well risky assets adjust to the new paradigm,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. “We’ll be watching next week, when the dust settles after the payrolls data, how Treasuries react and how risky assets react to the rise in yields.”What to WatchThe economic calendarMarch 8: Wholesale trade sales/inventoriesMarch 9: NFIB small business optimismMarch 10: MBA mortgage applications; CPI; average weekly earnings; monthly budget statementMarch 11: Jobless claims; Langer consumer comfort; JOLTS job openings: household change in net worthMarch 12: PPI; University of Michigan sentimentThe Fed calendar is empty before the March 17 policy decisionThe auction calendar:March 8: 13-, 26-week billsMarch 9: 42-day cash-management bills; 3-year notesMarch 10: 10-year notesMarch 11: 4-, 8-week bills; 30-year bondsFor 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.
Ark Funds CEO and Founder Cathie Wood joined Benzinga’s “Raz Report” this week and discussed the history of Ark Funds. Wood also shared some of the reasons why Ark Funds owns several positions, including in DraftKings Inc (NASDAQ: DKNG). Wood on DraftKings: Wood told Benzinga that DraftKings is becoming accepted as a platform for sports betting as the public grows more comfortable with the activity. “We do think sports betting is losing its taint,” Wood said. The fund manager sees more states turning toward legalizing sports betting, especially as many face huge deficits, Wood said. Wood used New Jersey as an example of the success states can have. The state is a mature market and DraftKings’ revenue was up 100% in the state. “New Jersey was very telling to us," she said. Ark Funds: DraftKings was added to two different Ark Funds beginning in February. Ark Next Generation Internet ETF (NYSE: ARKW) owns around 1.4 milion shares of DraftKings worth $88.1 million. Ark Fintech Innovation ETF (NYSE: ARKF) owns around 546,000 shares of DraftKings worth $33.8 million. DraftKings represents around 1.2% and 0.8% of ARKW and ARKF, respectively. Price Action: Shares of DraftKings finished the week down 6.24% at $59.52. Related Link: DraftKings And Dish Network Partner On Sports Betting, TV Integration See more from BenzingaClick here for options trades from BenzingaFuboTV Shares Pop On Caesars Partnership, Access To Additional States For Sports BettingHorizon Acquisition Corp SPAC Jumps 20% On Potential Sportradar Merger© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Personal finance guru Suze Orman said the receipt of a tax refund indicates "something's radically wrong," since the money returned to filers could otherwise have accrued value over the period it stood in the government's possession.
An ETF that's backed in part by Dave Portnoy, self-proclaimed head of the hordes of retail investors who have upended markets in recent weeks, raises questions about market manipulation.
What Happened: Annual Bitcoin volatility will drop below that of Amazon Inc. (NASDAQ: AMZN) in a few years if past patterns prevail, according to analysts from Bloomberg. In a Crypto Market Outlook report, analysts found that the Bitcoin volatility regression line is on track to dip below Amazon’s reading by 2022. The 260-day risk measure is currently at 60% for Bitcoin as compared to 40% for Amazon. “Similar to the early days of the benchmark crypto, in the first few years that Amazon traded publicly, its volatility averaged over 100%,” said the analysts. Why It Matters: Bitcoin’s supply and demand dynamics play an important role in the price discovery of the leading digital asset. It has a fixed mining schedule which sets it apart from most other assets and markets with uncertain supply and demand. The Bloomberg analysts find this to be a unique factor in determining the cryptocurrency’s future price trajectory. “Representing innovative technology made possible due to the internet, we see little to reverse Bitcoin's path toward a global digital store-of-value and its market cap to keep rising, likely surpassing Amazon,” noted the analysts. Bitcoin is known to be a historically volatile asset class. However, as research from the report suggests its rising volatility is only likely to continue until it reaches a new price threshold with greater market depth – possibly around $100,000. “Once the crypto settles in at a new threshold...volatility should drop, we believe”, said the analysts, adding, “The way we see it, something unexpected has to trip up this technical indicator.” Price Action: The market-leading cryptocurrency was trading at $48,494 at press time, down by 2.38% in the past 24-hours. Image: Ishant Mishra via Unsplash See more from BenzingaClick here for options trades from BenzingaWealth Managers Like Jim Paulsen Regret Not Having More Cryptocurrency In Portfolio: ReutersKraken CEO Says Bitcoin Hitting M In 10 Years 'Very Reasonable'© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Now might be "a golden opportunity" to own the "secular tech winners" for the next 12 to 18 months, according to Wedbush analyst Daniel Ives.
Despite the recent selloff in electric-vehicle stocks like Tesla and Nio, there is still intense investor interest in the sector, with demand for electric-vehicles expected to climb dramatically over the next decades.
(Bloomberg) -- Trouble may be brewing in China for Bitcoin’s raucous and divisive rally as the nation pushes ahead with a world-leading effort to create a digital version of its currency.That’s because the eventual rollout of the virtual yuan could roil cryptocurrency markets if Chinese officials tighten regulations at the same time, according to Phillip Gillespie, chief executive of crypto market maker and liquidity provider B2C2 Japan, which mainly works with institutional investors.“Once a digital yuan is introduced, that’s going to be one of the biggest risks in crypto,” Gillespie, who previously worked in currency markets for Goldman Sachs Group Inc., said in an interview. “Panic selling” is possible if the new rules end up sucking liquidity from trading platforms for digital coins, he said.Central banks’ power to issue virtual money and proscribe rivals is one of the key risks for the crypto sector. Chinese citizens are already banned from converting yuan to tokens but the practice continues under the table using Tether, a digital coin that claims a stable value pegged to the dollar. The money parked in Tether then gets routed to Bitcoin and other tokens.Tokyo-based Gillespie sees potential for an outright ban on Tether, which could raise the stakes for anyone minded to continue using it.A draft People’s Bank of China law setting the stage for a virtual yuan includes a provision prohibiting individuals and entities from making and selling tokens. In recent days, China’s Inner Mongolia banned the power-hungry practice of cryptocurrency mining.Representatives of the People’s Bank of China didn’t reply to a fax seeking comment on the prospect of regulatory changes. While there’s no launch date yet, the PBOC is likely to be the first major central bank to issue a virtual currency after years of work on the project.Tether officials have downplayed the concern, saying that central bank digital currencies won’t mean the end of stablecoins.“Tether’s success has provided a blueprint for how a CBDC could work,” said Paolo Ardoino, chief technology officer for Tether and Bitfinex, an affiliated exchange. “Furthermore, CBDC’s are unlikely to be available on public blockchains such as Ethereum or Bitcoin. This last mile may be left to privately-issued stablecoins.”Still, Gillespie points out that Tether is “this massive amount of fuel for Bitcoin purchases” and few people realize the potential for disruption. A “tremendous amount of liquidity” is coming from exchanges tapping Chinese demand, he added.Tether QuestionsBitcoin surged fivefold in the past year and hit a record above $58,000 last month before dropping back about $10,000. The rally has split opinion, with some arguing a new asset class is emerging and others seeing pure gambling by retail investors and speculative pros in the Wild West of finance.Tether is an equally controversial token deep in the plumbing of the nascent cryptocurrency market. Traders use it to park money as they shift from virtual to fiat cash.More than $18 billion of Tether moved overseas from East Asian addresses over a one-year period, including spikes suggesting Chinese origin, according to an August report from Chainalysis, which analyzes the blockchain network technology underlying tokens. The report indicated citizens may be using Tether to dodge rules that limit capital transfers abroad.Questions about Tether continue to swirl. The companies behind it were banned from doing business in New York last month as part of a settlement with state officials who found that they hid losses and lied about reserves.‘Liquidity Shock’A recent report from JPMorgan Chase & Co. said there’d likely be “a severe liquidity shock to the broader cryptocurrency market” if issues arose that affected the “willingness or ability of both domestic and foreign investors to use Tether.”“All the volume goes through Tether,” said Todd Morakis, co-founder of digital-finance product and service provider JST Capital. “As regulators become more and more restrictive on stablecoins, that could be very negative for the market because that could mean less liquidity.”B2C2 Japan’s Gillespie said Tether is “such a risky asset” and a “massive liquidity shock” is possible if China does ban it. “What would happen is there’s going to be massive panic selling,” he 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.