A unique taxpayer-funded program in Houston, Texas aims to keep prostitutes off the streets and out of jail. Kathy Griffin Grinan has made it her mission to rehabilitate prostitutes. (June 25)
A unique taxpayer-funded program in Houston, Texas aims to keep prostitutes off the streets and out of jail. Kathy Griffin Grinan has made it her mission to rehabilitate prostitutes. (June 25)
Grab’s record-breaking deal to merge with a special purpose acquisition company (SPAC) will raise an eye-popping $4.5 billion in cash. A quick recap: Singapore-based Grab is poised to have a market value of around $39.6 billion after it combines with a SPAC called Altimeter Growth. Altimeter is basically a $500 million pot of money listed on Nasdaq that was looking for a target to merge with (which is why SPACS are sometimes called “blank check” companies).
(Bloomberg) -- Bond veteran Greg Wilensky has seen hype about a surge in inflation crushed too many times to get carried away with this year’s great reflation trade.“I’ve been managing bond portfolios for 25 years, through very large monetary programs, big deficits, and the Fed trying to raise inflation expectations,” the Janus Henderson money manager said in an interview. “As much as I can see legitimate reasons why it might happen this time -- I could have said that very often over the last 12 years too.”Wilensky’s skepticism epitomizes the cooling investor enthusiasm for bets linked to a rapid economic recovery and higher prices. Trades favoring economically-sensitive value stocks, steeper yield curves and a rebound in commodities have faltered after a stellar first quarter.The MSCI AC World Value Index has lagged its growth counterpart by about 6 percentage points since March 8. Benchmark Treasury yields have retreated some 13 basis points already this quarter, even as U.S. inflation data begin to beat expectations. And Tuesday’s strong 30-year Treasury auction suggested demand for even the most interest rate-exposed bonds is returning.One of the biggest questions money managers confront now is whether the stimulus-fueled rebound in growth and inflation -- in particular in the U.S. -- can transition to a sustainable expansion that will keep pushing equities and bond yields higher. The International Monetary Fund recently upgraded its 2021 global growth forecast to the strongest in four decades, but the outlook beyond that is less clear-cut.Envisaging a trajectory for price levels beyond this year is even harder for investors given the warping effect of coronavirus shutdowns, temporary supply bottlenecks and base effects from last year’s disinflation. A surge in five-year U.S. breakevens-- a gauge of inflation expectations -- has petered out since they hit their highest since 2008 in mid-March.Simple Math Is About to Cause an Inflation Problem: QuickTake“Inflation and rates, especially as a bond investor right now, is the call that you have to make,” said Elaine Stokes, fixed income portfolio manager at Loomis Sayles. “It’s the make-or-break call of your year.”The response to the stall for many investors has been to pare back some trades geared to the sharpest stage of the economic rebound. Vishal Khanduja, fixed income fund manager at Eaton Vance Management, has halved his portfolio’s overweight in U.S. inflation-linked bonds from the start of the year.“Inflation expectations were dislocated in 2020” in a “surgical recession,” Khanduja said. “The typical post-recession positioning that you see happen over multiple years is quickly going through the market.”Franklin Templeton’s Gulf Arab bond fund has removed its hedges against the risk of accelerating U.S. inflation, as it sees another spike in Treasury yields as “possible, not probable,” according to its Dubai-based manager.As for some traditional inflation hedges in the commodities markets, the story is about to get more complicated than the year-to-date rebound in oil and copper prices would suggest. Strategists at the BlackRock Investment Institute anticipate a divergence within the asset class, as factors such as climate risks are more fully captured in pricing.“The lift for oil from the economic restart is likely to be transitory, while some metals may benefit from structural trends such as the ‘green’ transition for years to come,” a team including Wei Li wrote in a note this week.Tremendous ChallengeMeanwhile, in the bond market, traders are not reacting to signs of inflation as one might expect. On Tuesday, data showed U.S. consumer prices climbed in March by the most in nearly nine years, yet 10-year Treasury yields fell five basis points to their lowest in three weeks.“The tremendous challenge right now, especially this year is that the quality of almost any of the numbers we’re looking at, whether it’s the short-term inflation numbers, the economic growth numbers, these things are being very much distorted by the economic volatility,” Janus Henderson’s Wilensky said.(Adds Franklin Templeton move in 10th 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) -- As Bitcoin hits records and Coinbase Global Inc. goes public, ETF issuers are betting en masse that U.S. regulators will green-light a fund tracking the largest cryptocurrency at long last.No fewer than eight applications for a Bitcoin ETF have now been filed with the Securities and Exchange Commission since late December, after billionaire Michael Novogratz’s Galaxy Digital Holdings Ltd. joined the list on Monday.It is racing with the likes of Fidelity Investments for first-mover advantage as conviction grows that the SEC will relent after years of rejected applications. With the first North American Bitcoin ETF in Canada already at $1 billion in assets, industry-watchers are wagering the agency will follow its northern neighbor’s lead.“Anyone who wants to launch a Bitcoin ETF and has been waiting wants to make sure their hat is in the ring if/when the SEC approves,” Bloomberg Intelligence analyst James Seyffart said. “So if they’re not first, they’re at least on the radar.”Bitcoin rose for a seventh straight day on Wednesday morning, hitting the highest on record and trading at about $63,900 as of 6:12 a.m. in New York. The all-time high comes as Coinbase, the largest U.S. crypto exchange, prepares to list on the Nasdaq.Whether Gary Gensler, the nominee to be next SEC chairman, will prove more open-minded toward a Bitcoin ETF than his predecessor Jay Clayton remains unclear. The agency has rejected every crypto ETF application since the first was filed in 2013 amid concerns about manipulation and criminal activity.An SEC spokesperson declined to comment.This time around, there’s more attention on the potential benefits of a Bitcoin ETF as a way to reduce market distortions.The Grayscale Bitcoin Trust (ticker GBTC) is the largest crypto product. In its current structure as an investment trust, it lacks the share creation and redemption process that helps an ETF keeps its price in line with its holdings. That makes GBTC vulnerable to dislocations like its monster premium at the end of 2020 relative to the Bitcoin it held, or the record discount it swung to earlier this year.In a report on Friday, JPMorgan Chase & Co. touted the benefits of a listed ETF over the closed-end trust to reduce tracking errors. Grayscale Investments LLC, the firm behind GBTC, has said it is “100% committed” to converting GBTC into an ETF.That means the pipeline is even larger than the eight official applications.“There’s a huge amount of pressure on the SEC to do something,” said Nic Carter, a partner at crypto-focused venture firm Castle Island Ventures. “The trust has way outgrown its structure and the lack of an arbitrage mechanism is causing a fair amount of harm to holders.”Between events like the Reddit-fueled GameStop Corp. mania and the recent blowup of Bill Hwang’s Archegos Capital Management, the SEC may have bigger priorities. But the Bitcoin ETF clock is ticking.The regulator has now acknowledged applications from VanEck Associates Corp. and WisdomTree Investments, meaning it has a limited period of time in which to approve or reject their proposals, though it can also extend its deliberations.“They would have to either approve or deny both WisdomTree and VanEck in 2021,” Seyffart said. “Personally, I just can’t see the SEC denying both of them, unless something changes.”Other ETF watchers are similarly bullish on a turning of the regulatory tide.“At some point, if we’re not already there, the SEC runs out of reasons for not approving,” said Nate Geraci, president of advisory firm The ETF Store.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.
Alibaba’s run-in with Chinese regulators has made things tense for its other technology giants.
Oil prices surged more than 4% on Wednesday, after a report from the International Energy Agency, followed by U.S. inventory data boosted optimism about returning demand for crude. Brent crude futures rose $2.70, or 4.2%, to $66.37 a barrel by 11:05 a.m. EDT (1505 GMT). U.S. West Texas Intermediate (WTI) crude futures were up $2.78, or 4.6%, to $62.96 a barrel.
(Bloomberg) -- China ordered 34 internet corporations Tuesday to rectify their anti-competitive practices within the next month, signaling that Beijing’s scrutiny of its most powerful firms hasn’t ended with the conclusion of a probe into Alibaba Group Holding Ltd.Shares in Tencent Holdings Ltd. and Meituan extended losses after the State Administration for Market Regulation issued a stern statement emphasizing it will continue to eradicate abuses of information and market dominance among other violations. Also summoned to an ad-hoc meeting with the watchdog on Tuesday were industry leaders including TikTok owner ByteDance Ltd., search giant Baidu Inc. and JD.com Inc.Regulators warned internet companies to “heed Alibaba’s example,” reaffirming their intent to abolish forced exclusivity among other practices. The meeting -- organized jointly with the cyberspace and tax regulators -- came days after Beijing wrapped up a four-month probe into Alibaba by slapping a record $2.8 billion fine on the e-commerce giant for abuse of market dominance.The penalty was less severe than many feared and lifted a cloud of uncertainty hanging over founder Jack Ma’s internet empire. It also came after the Chinese central bank ordered an overhaul of his Ant Group Co. fintech titan.Alibaba’s shares have gained 7% since the start of the week, but its fellow Chinese internet giants have gyrated while investors digest the rapid-fire announcements and concerns grow that Beijing’s scrutiny will extend beyond Alibaba. On Tuesday, Tencent gave up early gains to finish down slightly while Meituan, video service Kuaishou Technology and JD all slid more than 3% in Hong Kong.“The base line of policies cannot be crossed, the red line of laws cannot be touched,” the market watchdog said in the statement on Tuesday.The investigation into Alibaba was one of the opening salvos in a campaign seemingly designed to curb the power of China’s internet leaders, which kicked off after Ma infamously rebuked “pawn shop” lenders, regulators who don’t get the internet, and the “old men” of the global banking community. Those comments set in motion an unprecedented regulatory offensive, including scuttling Ant’s $35 billion initial public offering.The 34 firms summoned Tuesday must now undergo complete rectification after conducting internal checks and inspections over the next month, and make a pledge to society to obey rules and laws, the antitrust watchdog said in its statement. Regulators will organize follow-up inspections and companies that continue to engage in abuses like forced exclusivity -- a practice that “flagrantly trampled and destroyed” market order -- will be dealt with severely.The regulator also highlighted abuses like acquisitions that squeeze out smaller rivals and burning through cash to grab market share in community group buying, currently the hottest e-commerce arena in China. Firms also need to address issues like counterfeiting, data leaks and tax evasion, according to the statement.“This is positive because the SAMR is giving the platforms one month to review their practices, rather than dish out fines and penalties without warning,” Bloomberg Intelligence senior analyst Vey-Sern Ling said. “They are using Alibaba as an example to deter misbehavior from the rest of the industry players. If these companies toe the line, industry competition can become healthier. ”(Updates with share action from the fifth 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.
As Coinbase Global Inc's multi-billion dollar stock market listing accelerates cryptocurrency's leap to the top table of finance, its founder and CEO Brian Armstrong is poised to reap the benefits of the company's nine-year journey. Armstrong owns 21.7% of the San Francisco-based cryptocurrency exchange, filings show - a stake worth around $20 billion given Coinbase's projected value. Such a paper fortune might have been hard to imagine when Armstrong founded Coinbase in 2012, just four years after bitcoin was invented by the pseudonymous Satoshi Nakamoto.
(Bloomberg) -- For the euro area to achieve a jumpstart in economic growth with a consumption boom, a whole generation of citizens who hoard money rather than spend it would need to seize the day and splash out.That’s because a mass of savings built up by wealthier households stuck at home without restaurant visits or vacations during the coronavirus crisis is concentrated among older Europeans, who are less likely to open their wallets than younger counterparts.Whether that cohort of consumers will break with the norm and use their freedom to go out and spend when the pandemic abates is crucial in judging the recovery of most advanced economies. It’s most important in Europe however, which has the highest median age of any region of the world.The wall of money that could be unleashed is vast, with Barclays Plc estimating accumulated excess savings at 600 billion euros ($714 billion). But that bank is among those concerned that the clustering of that wealth among citizens known to be conservative with their cash may limit any benefits.“You should have a gradual release of savings,” said Davide Oneglia, an economist at TS Lombard. “Perhaps less pronounced than many expect, because a lot of these savings are sealed in a sector where households are particularly wealthy and less inclined to consume.”What Bloomberg Economics Says...“We estimate 300 billion euros more than might normally be expected poured into bank accounts last year. That cash pile is the biggest upside risk to our economic forecasts, if only consumers feel safe enough to spend it.”-Maeva Cousin. To read the full report click hereDeutsche Bank AG estimates pent-up demand could add about 1 percentage point to 2021 growth -- a sizable chunk for an economy the International Monetary Fund sees expanding 4.4%. UBS Group AG economist Dean Turner sees savings constituting a “substantial proportion” of the post-pandemic rebound, with consumer expenditure growth of 2.9% this year.Such a quantum would be critical to fueling a euro-area boom, not least because the region needs additional growth drivers as its recovery, hindered by slow vaccinations, lags that of the U.S. and China.Retail-sales data show spending on goods has generally held up well, even during later lockdowns. But it’s less clear how much of a rebound there will be in consumer-facing services when businesses reopen.Policy makers aren’t holding their breath. European Central Bank data show extra cash chiefly accrued to those older than 50 over the past year, while people aged 16 to 49, with a greater propensity to spend and a higher risk of unemployment, saw their financial situation deteriorate.For Gloria Sattél and Alfons Pribek, an Austrian couple whose pre-crisis spending habits included frequent restaurant meals, regular opera and theater visits, week-long spa stays twice a year and also trips to Greece, Germany and France, an end to lockdowns might not revive their old consumption habits any time soon.“We’ll be heading to the spa as soon as it opens, but beyond that we’re holding off on planning anything,” said Sattél, 78, who lives with her 81-year-old husband in central Vienna. “We’ve been generous with ourselves in the last year, but there’s money left over and there simply won’t be that many opportunities to spend it.”With such people in mind, the ECB is taking a cautious view. Its latest forecasts assume the savings rate, which nearly doubled to 25% during lockdowns last year, would eventually return to pre-crisis levels -- while excess hoarding during the period wouldn’t be substantially reduced.Cash HoardThe sheer size of the cash hoard waiting on the sidelines is giving some euro-zone officials pause for thought about the possibility of a spending binge. The Bundesbank reckons excess savings in Germany increased by 110 billion euros last year, and its counterpart in France estimates households there hoarded as much as 120 billion euros.Even so, a recent German survey suggests pent-up demand is much lower than additional savings. There’s also the issue of economic uncertainty, which may brake spending, particularly if people worry their jobs might be on the line once labor-market support programs expire.“The absolutely key factor for transforming these savings into spending and direct support for activity is confidence,” Bank of France Governor Francois Villeroy de Galhau told France Culture radio this week.European Commission data show euro-area households’ savings patterns are improving though their interest in a major purchase over the next 12 months is still only somewhat above average.“People are aware that a lot of government support underpinning the economy and the labor market specifically will have to be unwound,” said Aline Schuiling, economist at ABN Amro Bank NV. “So they’re cautious about spending money on things that aren’t essential.”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) -- Investors in GameStop Corp.’s junk-rated bonds are finally cashing in on the video-game retailer’s wild ride in the stock market.The company’s plan to go virtually debt free drove its 10% notes due in 2023 to an all-time high on Wednesday. The Grapevine, Texas-based firm will have to pay the so-called make-whole premium to retire the debt early, which is meant to compensate investors for any missed future interest payments.The notes were up 3.4 cents to 108.5 cents on the dollar as of 12:18 p.m. in New York and were the biggest gainer in the U.S. high-yield bond market, according to Trace data. Meanwhile, the shares rallied as much as 23%, snapping a seven-day losing streak.The decision to repay debt caps months of speculation among investors on whether GameStop would be able to capitalize on a stock rally fueled by an army of day traders who share tips on Reddit. The company announced earlier this month plans to sell as much as $1 billion worth of additional shares to accelerate its transformation.GameStop said it will use cash on hand to redeem the 2023 bonds, on which it has $216.4 million outstanding. Last month, the company announced it had also redeemed the remaining $73.2 million that was outstanding on its 2021 notes.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.
Credit Suisse has not yet finished unwinding its Archegos positions, said one source familiar with the matter. The bank has taken a $4.7 billion hit from dealings with Archegos Capital, prompting it to overhaul the leadership of its investment bank and risk divisions. Shares in Discovery and IQIYI fell in U.S. afterhours trading after news the offers, which were pitched below the stocks' closing prices.
(Bloomberg) -- Federal Reserve officials are just as worried about an inflation rate that runs too cold as one that runs too hot.While rising prices are in the spotlight now as the economy reopens and demand surges, the longer-run trends that have suppressed costs globally could re-emerge as the pandemic ends, some policy makers warn. That would make it harder to deliver on their new strategy of running inflation above their 2% target for a time in order to achieve that goal over the longer run.“We are probably more likely to be successful with the new monetary policy regime than if we didn’t have it,” Boston Fed President Eric Rosengren said in a Bloomberg News interview this week. But based on the experience of the last decade “you have to take seriously the idea that it is not going to be that easy to get 2% inflation.”Investors are likely to hear more on the topic from Fed Chair Jerome Powell when he speaks at a event held by the Economic Club of Washington on Wednesday.Policy makers at the central bank have been pressed in recent weeks about whether an expected spike in prices -- as the U.S. rebounds from pandemic shutdowns -- will be a temporary blip or something more permanent and dangerous to the economy after a wave of unprecedented monetary and fiscal stimulus over the past year.For years, major economies including the U.S., Japan and the euro zone have struggled to raise inflation to 2% despite aggressive monetary policy actions. Aging populations, the impact of new technology and the disinflationary force of globalization are not things central banks can wish away, while rates stuck at zero -- or below -- telegraph the limits of their power.Inflation pessimism shows up in forecasts released by Fed officials’ at their March meeting as well. Even after taking account of the passage last month of President Joe Biden’s additional $1.9 trillion stimulus package in their forecasts, more than half of the 18 Fed officials estimated inflation would be around 2% or slightly below next year. A majority also forecast prices in a range of 1.9% to 2.2% for 2023.“Several participants commented that the factors that had contributed to low inflation during the previous expansion could again exert more downward pressure on inflation than expected,” minutes of the gathering showed said.March SpikeOn the other hand, a sharp jump in consumer prices last month is a reminder that the risks are two-sided. Both goods and services prices rose last month with the consumer price index rising 0.6% after a 0.4% gain in February as the end of pandemic lockdowns drove up the cost of gasoline, car rentals and hotel rooms, according to data released Tuesday.Rosengren said the Fed has never tried to shift to a new policy regime while exiting a pandemic amid aggressive fiscal stimulus. “We have to be pretty humble about how confident we are about what the inflation outcomes are going to be,” he said.Some indicators of longer-run inflation are starting to move higher, a sign that the Fed is at least getting the public’s outlook pointing in the right direction. The rate on the five-year, five-year forward swap contract for consumer-price inflation is hovering around 2.4%.That is up from a low last year of just under 1% during the peak pandemic lock down period. When adjusting for measurement differences between CPI and the Fed’s preferred measure -- the personal consumption expenditures price index -- it puts longer-run inflation pricing in at just a touch over the central bank’s 2% target.However, some market watchers -- like Fed policy makers -- see an enduring rise in inflation as a challenge.Interest-rate derivative markets don’t foresee the Fed lifting its policy rate beyond about 2% during the upcoming tightening cycle. That’s below the 2.5% Fed officials forecast last month for their long-run policy rate. This backdrop signals that traders don’t see much risk of inflation unmooring or growth getting too robust before the next downturn.“We are looking for a core CPI running closer to 1.9% or so,” after temporary base effects filter through the data, said Phoebe White, interest-rate strategist at JPMorgan Chase & Co. “That’s still pretty soft and we think the underlying trend in inflation is going to be pretty gradual to build as we look into 2022.”There are a range of forces that are likely to keep inflation low from the Fed’s perspective, including the millions of still-unemployed Americans. Slow changes in pandemic behavior -- even as vaccines roll out -- weak wage-bargaining power and an aging workforce could also keep overall demand moderate and prices muted.“We are of the view that we are going to continue to be in a lower inflationary environment both in the U.S. and globally,” said Steven Oh, head of fixed income at PineBridge Investments. “We are not necessarily going to be successful in reaching inflation targets on a sustainable basis.”The Fed also has limited tools. In its recent statement, the Fed pledged to keep rates at zero until “inflation has risen to 2% and is on track to moderately exceed 2% for some time.” But a pledge to do nothing also raises questions about the potency of policy. The U.S. central bank has a legacy of missing its 2% inflation target consistently since it was installed in 2012.“Really it’s about changing peoples’ mindsets and experience for the last ten years,” said Tiffany Wilding, economist at Newport Beach, California-based Pacific Investment Management Co.“You are going to need several periods, maybe several years, of inflation that is running above the Fed’s 2% target to really anchor those expectations, because they have moved down.”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 quarter that began with retail investors declaring the end of the status quo on Wall Street just ended with big banks tallying surprisingly massive hauls.Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- two of the most gilded names in finance -- kicked off bank earnings season with revenue windfalls from trading and dealmaking, defying warnings from within the industry that good times couldn’t last. The boon was thanks in part to the burgeoning optimism of little investors who tried to stage a trading revolution in January.Goldman Sachs earned more from trading in the first three months of the year than it had in any quarter in the past decade, while JPMorgan saw such revenue climb 25%. Stock underwriters at both firms posted the most revenue ever after helping a flood of blank-check companies -- often known by their acronym SPAC -- tap investors to build war chests for future takeovers.“Wow,” Susan Roth Katzke, an analyst at Credit Suisse Group AG, said in a note to clients about earnings at Goldman Sachs, which leans more heavily on Wall Street operations than rivals. “Impressive all around.”Goldman Sachs’s stock jumped 4.7% as of 11:30 a.m. in New York. JPMorgan’s slipped 0.3%, undermined by concern over weak demand for loans.Strong TradingFor months, executives and analysts have been cautioning that last year’s pandemic-fueled market turmoil and demand for cash that propelled trading and dealmaking were easing, and that earnings in 2021 would be characterized by tough comparisons to those year-earlier periods.Instead, traders seem to have had a Goldilocks moment as the year began.In January, retail investors organized on forums such as Reddit drove up GameStop Corp. and other so-called meme stocks that had been beaten down by mainstream finance, making day trading an international sport. Volumes stayed elevated across markets even as volatility began receding by the end of the quarter, according to Goldman’s earnings presentation.In all, Goldman’s traders boosted revenue 47% to $7.58 billion -- more than $2 billion higher than what analysts had projected. Goldman’s dealmakers were busy too, more than doubling investment-banking fees, excluding corporate lending.At JPMorgan, the firm’s stock-trading revenue jumped 47% to $3.29 billion, topping even the highest analyst estimate gathered by Bloomberg. Investment-banking fees soared 57% to $2.99 billion.Still, JPMorgan and Goldman’s results might not translate to jubilee across Wall Street. Both firms warned that they saw lower revenues from their businesses of trading currencies -- an area where Citigroup Inc. dominates. Citigroup and Bank of America Corp. are expected to post quarterly results on Thursday. Morgan Stanley reports Friday.For those minting profits, the question again is whether that will last. Goldman Sachs Chief Executive Officer David Solomon wasn’t making promises.“The first quarter was an extraordinary quarter,” he told analysts on a call. “I don’t think the expectation should be that activity will continue at that pace through the second quarter, the third quarter, the fourth quarter. But I will say activity levels continue to be elevated.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The Bank of England’s Chief Economist Andy Haldane will step down in June, removing the the Monetary Policy Committee’s most outspoken contrarian and inflation hawk.Haldane, 53, will leave after career spanning more than three decades at the central bank to become chief executive officer at the Royal Society for Arts, Manufactures and Commerce starting in September. He will remain in place through the bank’s rate decision on June 24. He’s departing as the U.K. emerges from its worst recession in three centuries, which pushed the central bank to unleash unprecedented stimulus including 150 billion pounds ($206 billion) of bond purchases this year. Haldane alone on the nine-member policy panel voiced concerns about inflation accelerating with a rapid bounce-back in growth as Prime Minister Boris Johnson winds back restrictions to contain the Covid-19.“The most interesting element to me is that he is probably the arch-hawk on the MPC, and his removal will certainly see a more dovish tone seep into meetings,” said Stuart Cole, chief macro strategist at Equiti Capital and a former BOE economist.Bank of England Governor Andrew Bailey will appoint a successor after the bank advertises the position. While the chief economist traditionally also sits on the MPC, it’s the Treasury’s decision to name members to that panel.In recent months, Haldane has warned about the risk of excessive pessimism about the economic outlook as the pandemic winds down, terming it “Chicken Licken” economics that could undermine the recovery.While many of his colleagues point out concerns about rising unemployment and signs of sluggishness in the economy, he said he expects a “rip-roaring recovery” and on inflation said a “tiger has been stirred” that may “prove difficult to tame.”Several economists said the improving outlook for the U.K. economy has already shifted debate on the MPC away from extra stimulus and toward whether the pace of bond purchases need to slow -- or even an eventual tightening in policy.“In 2022 the BOE is likely to set out an exit strategy from its ultra-easy policy stance before hiking the bank rate in 2023,” said Kallum Pickering, senior economist at Berenberg.Haldane joined the BOE in 1989 after gaining a masters in economics from Warwick University.He logged experience at the central bank in international finance, market infrastructure and financial stability during the financial crisis before clinching his current role under previous Governor Mark Carney in 2014. That year, “Time” magazine named him one of the world’s 100 most influential people.Haldane is known for his occasionally quirky speeches. He once used Dr. Seuss to bemoan the reading age needed to understand the central bank’s communications.His words sometimes raised eyebrows, notably when he compared pre-crisis economic projections to a famously inaccurate forecast by BBC weatherman Michael Fish before a 1987 storm that killed 18 people.In 2012, he drew the ire of his future boss with a speech -- titled “The Dog and the Frisbee” -- which called for simplicity in banking regulation. Carney, who was then the Bank of Canada governor and head of the global Financial Stability Board, said the speech was “uneven” and the conclusion “not supported by the proper understanding of the facts.”Haldane has also led the government’s Industrial Strategy Council until it was dissolved a few weeks ago and is the co-founder of charity Pro-Bono Economics.“If your business is trying to predict rates and quantitative easing, it will be a bit easier without Andy’s speeches somewhat clouding the issue,” said Tony Yates, a former BOE official who worked with Haldane. “If you’re trying to get up to speed on the latest things in monetary economics and finance, then it’s less good because there won’t be Andy picking up new things and explaining them.”(Updates with context and comment from the first 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 CEO of Grab, a popular app to book taxis, order food and make payments in Southeast Asia, has always been determined to win -- from making his firm the best-funded regional start-up to defeating behemoth Uber Technologies. On Tuesday, Anthony Tan set another record when Grab Holdings agreed to list on Nasdaq through a $39.6 billion merger deal with a blank-check company, Altimeter Growth Corp. The transaction will be the world's largest merger involving a so-called special purpose acquisition company (SPAC).
(Bloomberg) -- Bond traders searching for an opportunity to challenge central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.The global trading day for bonds begins in earnest in Sydney each morning, giving developments in Australia’s $600 billion sovereign debt market an out-sized impact on sentiment. It was the scene of a dramatic “flash crash” last year when the yield program was announced, illustrating the potential for turmoil.While the Reserve Bank of Australia has largely tamed markets since then, as the economy’s recovery strengthens, wagers against the RBA’s ability to keep yields lower look poised to rise.“If inflation expectations do start to un-anchor, then I think the RBA will be one of the first central banks to be tested by bond traders,” said Shaun Roache, an economist at S&P Global Ratings in Singapore. “The RBA is a canary in the coal mine for central banks as it is ahead in its labor market recovery.”The RBA brought short-sellers quickly to heel when the global bond rout emboldened them to test its grip on yield control in February. After weeks of aggressive positioning by traders, the bank nudged up the cost of speculating on rising rates and the yield on benchmark three-year bonds fell neatly back into line with its 0.1% target.But keeping the market at bay next time may prove more difficult, as vaccination campaigns gather pace in major economies and the U.S. recovery nears an “inflection point,” emboldening traders. Pressure is already apparent in Australia’s three-year swap rate, which is increasing the costs of managing interest-rate risks for corporate borrowers.Read More: BOJ Seeks Only Tweaks to Stay Aligned with Fed, ECBIf yield control fails in Australia, it may fade away as a potential option for other monetary authorities in need of more policy ammunition. Especially because yield control’s record in Japan -- the only other country to officially employ it -- is patchy.Pinning the rate of one key bond maturity has helped the Bank of Japan reduce borrowing costs in general and also allowed it to slow the pace of bond purchases. But it has come at a cost. The nation’s debt market is lambasted as dysfunctional and an economic recovery strong enough to revive inflation looks as far away as ever.Widening GapBeneath the surface, problems are building Down Under too. While the RBA has its thumb on one specific bond line, there is a large gulf between the yield on this security and those maturing slightly later. There’s also a widening gap to rates on the suite of derivatives linked to three-year yields that flow through into borrowing costs for companies and consumers.The three-year swap rate surged through February and March, rising to four times the RBA’s target for three-year bonds amid pressure from higher U.S. yields and a rebounding economy at home.Australia’s bond futures tell a similar story. The yield implied by three-year futures doubled in the two weeks to Feb. 26 and remains elevated, even after retreating from its high point.“Lack of liquidity, a central bank that’s digging its heels in -- all that, for us, means there’s going to be more volatility in Aussie rates,” said Kellie Wood, a fixed-income portfolio manager at Schroders Plc’s Australian unit. “The RBA has succeeded in terms of round one. But we are starting to see cracks,” said Wood, who expects the market to challenge the 0.1% target again.Stephen Miller, an investment consultant at GSFM, an arm of Canada’s CI Financial Corp., agrees that higher yields may arrive in Australia sooner than the RBA thinks. “It will be powerless if the U.S. curve shifts upwards and other rates markets follow,” said Miller.Read More: Debate Over Next Move in Bonds Has Never Been FiercerNot everyone is prepared to bet against the RBA.For Fidelity International’s Anthony Doyle, taking on the RBA may be a recipe for steep losses if past lessons from the European Central Bank and U.S. Federal Reserve are anything to go by.Nine years ago, then ECB President Mario Draghi vowed to do “whatever it takes” to save the euro, leading to quantitative easing and bond purchases that are still in place. The Fed said more than a year ago that it would buy unlimited amounts of Treasuries to keep borrowing costs at rock-bottom levels, and it’s still holding firm.Holding the Cards“I don’t think it’s ever wise to fight anyone that has a printing press,” said Doyle, a cross-asset investment specialist at Fidelity in Sydney. “The RBA as a house holds all the cards. If they want yields lower, they’ll get it.”This caution is shared by JPMorgan Asset Management’s Kerry Craig.For now, the central bank “definitely has enough dry powder,” said Craig, a strategist in Melbourne. But he is concerned that with monetary policy and markets around the world moving in sync, “you can only fight so much if U.S. rates or global rates go higher -- it’s going to drag Australian ones up.”Yet Governor Philip Lowe isn’t doing everything he could to damp doubts over the RBA’s resolve. His reluctance to make an early switch in the yield target to bonds maturing in November 2024, from ones due in April 2024, is fueling debate about how soon the policy could be wound back.Lowe said at the conclusion of the latest board meeting on April 6 that a decision would be made later this year, without being more specific. He also indicated that the RBA expected to maintain “highly supportive monetary conditions” until at least 2024, even though the number of Australians with a job has returned to pre-pandemic levels.“We don’t think they’ll extend yield-curve control” beyond the current April 2024 bond, said Wood, who warned of potential taper tantrums.Lowe’s February win against short sellers, and a slide in yields at home and abroad over recent weeks, has given the RBA space to breathe. But it’s likely only a matter of time before bond traders come back for round two.“Everybody’s watching how this is going to unfold,” said S&P’s Roache. “The RBA may not want this role, but it is taking quite a starring role I think among global central banks.”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.
ZURICH (Reuters) -Proxy adviser Glass Lewis urged Credit Suisse shareholders to oppose board member Andreas Gottschling's re-election, on grounds that as risk committee chairman he should be held accountable for problems tied to Greensill and Archegos. Switzerland's second-biggest bank has been reeling from the collapses of Greensill Capital and Archegos Capital Management, with a 4.4 billion Swiss franc ($4.75 billion) charge hitting its balance sheet after Archegos failed to meet margin commitments.
U.S. stock indexes rose on Wednesday after upbeat earnings reports from Goldman Sachs and JPMorgan boosted investor expectations of a strong rebound for corporate America amid swift COVID-19 vaccinations. Goldman Sachs Group Inc rose 3.3% after it reported a massive jump in first-quarter profit, capitalizing on record levels of global dealmaking activity. JPMorgan Chase & Co's shares fell 1.1% even as the largest U.S. bank's earnings jumped almost 400% in the first quarter, as it released more than $5 billion in reserves it had set aside to cover coronavirus-driven loan defaults.
The IRS commissioner says the child credit payments will arrive on time after all.
(Bloomberg) -- Middle Eastern logistics firm Tristar Transport has pulled its initial public offering in Dubai, dealing a blow to the city’s attempts to revive a stock market where just one company has listed in three years.Tristar has informed Dubai’s main bourse that the IPO has been withdrawn, Chief Executive Eugene Mayne told Bloomberg in an interview. The deal was likely withdrawn “largely due to a mismatch in valuation expectations and investor education,” he said.Tristar had set the price range for the offering at 2.20 dirhams to 2.70 dirhams per share. The firm was offering up to 24% of its shares in the IPO, valuing it at as much as 3.24 billion dirhams ($882 million), and the sale was scheduled to end on Thursday.“We have strong cash flow and cash balances, we have capital for growth,” Mayne said, adding that the firm is not in a hurry to tap the IPO market again in the short term.Setback for DubaiThe deal’s collapse is another setback for Dubai’s stock exchange after the recent delistings of major companies. Tristar’s IPO would have been only the second listing in three years in the Middle East’s financial hub.The bourse was already under pressure from shrinking volumes, with the total value of shares traded in the Dubai Financial Market PJSC at about $18 billion last year. That put it far behind Saudi Arabia’s exchange, which saw $557 billion worth of shares change hands in 2020, a jump of 137% from the previous year.Tristar’s valuation, on a relative basis, “is on the higher side -- at upper range of the price band -- when comparing with some of the global, regional peers in the logistics, transportation sector,” said Harshjit Oza, head of research at Abu Dhabi-based International Securities.Tristar had initially planned to sell shares in London, but those plans were scuttled after a fraud at London-listed firm NMC Health Plc revealed $6 billion of hidden debt, increasing worries among global investors about governance and transparency issues at Gulf firms.Bank of America Corp. and Citigroup Inc. are the global coordinators for the sale. First Abu Dhabi Bank PJSC, HSBC Bank Middle East Limited, Societe Generale SA and Kuwait Financial Centre KPSC are also involved in the sale. Moelis & Co is the financial adviser for the sale.Tristar operates in 21 countries across three continents, and provides transportation and storage services to customers including Abu Dhabi National Oil Co., Total SA and Dow Inc.(Updates with CEO comments)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) -- Amazon.com Inc. pledged to increase the number of women and Black employees in its senior ranks as part of an unusually detailed set of diversity commitments for a company that has rarely publicly discussed the makeup of its workforce.The e-commerce company outlined a set of hiring and promotion targets for 2021, including a 30% rise in the number of women in senior technical jobs and doubling the number of high-level Black employees in the U.S. In a note to employees posted Wednesday on the company’s blog, Amazon human resources chief Beth Galetti also committed to more frequent internal reporting on diversity matters, ensuring participation in companywide inclusion training and inspecting any significant demographic differences in performance reviews and attrition on individual Amazon teams.Diversity and inclusion historically hasn’t been among the public priorities at Amazon, a company reluctant to air internal issues of any sort. That silence didn’t insulate Amazon from criticism. For years, a frequent barb was to point out that Chief Executive Officer Jeff Bezos’s senior circle of leaders featured more men named Jeff than women. The company in recent years has added more diverse leaders to its top leadership council, which is called the S-team. Two Jeffs have also since retired.Amazon on Wednesday also disclosed more detailed data on the makeup of its workforce, outlining the racial and gender breakdown of Amazon’s frontline employees, corporate staff and senior managers. The data confirm that the company’s warehouse workers and other low-level employees are far more representative of the U.S. population than Amazon’s office workers, who skew more White and male. Amazon is the second-largest private sector U.S. employer behind Walmart Inc., with some 1.3 million employees worldwide.Black employees made up 26.5% of the company’s U.S. workforce in 2020, according to the data released Wednesday. Latino workers were 22.8% of employees while those described as Asian were at 13.6%. White employees were 32.1% of the workforce.Among U.S. senior leaders, however, White employees made up 70.7%, followed by Asian employees at 20%, Latino workers at 3.9% and Black employees at 3.8%. Women made up just 22.8% of the senior leadership.The company stopped short of releasing data on the gender and racial breakdown of its technical employees, statistics that Amazon’s peers among the largest U.S. technology companies have made public for years.The data, which show single-digit percentage increases in the portion of female employees and people of color at Amazon in recent years, is encouraging for a company of Amazon’s size and a testament to the work of recruiting teams often led by people of color, said Katharine Zaleski, co-founder of the diversity recruiting and retention platform PowerToFly.“Unfortunately I don’t see any retention data in this report and that’s one of the pillars of growing a diverse organization,” she said. “You can get people in the door but if there’s no retention data around whether they can thrive and be promoted then it’s hard to grow recruiting percentages for underrepresented groups.”Amazon’s diversity data release follows pressure from shareholders to conduct an independent audit to see how the business affects marginalized groups. In a resolution targeting Amazon, the New York State Common Retirement Fund, the third-largest U.S. public plan, cited alleged discrimination against the company’s Black and Latinx workers, low wages and exposure to dangerous working conditions, including Covid-19, as well as air pollution from distribution facilities located in minority neighborhoods.Amazon asked the Securities and Exchange Commission to block the proposal. The regulator last week denied their request, meaning shareholders will get the opportunity to vote on the nonbinding resolution at the company’s annual meeting later this year. Shareholders have targeted other businesses, including banks and pharmaceutical firms, with similar audit demands.Amazon had previously released the gender and racial data on its workforce it’s required to report to the federal government, but stopped disclosing the statistics in 2017. The company has said it plans to publicly release the data contained in its federal EEO-1 form later this year.A recent report from Vox highlighted concerns raised over the years from employees who suspected the company promoted Black employees less frequently than their peers. Andy Jassy, who is set to succeed Bezos as CEO later this year, defended the company, but acknowledged Amazon had work to do on diversity.“This is some of the most important work we have ever done, and we are committed to building a more inclusive and diverse Amazon for the long term,” said Galetti, who has the title of senior vice president of People eXperience and Technology.(Updated with information about shareholder pressure in the 10th 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.