Fox News strategic analyst Gen. Jack Keane (Ret.) on the potential fallout from the U.S. approving a possible $2 billion arms sale to Taiwan and President Trump's meeting with the emir of Qatar.
Fox News strategic analyst Gen. Jack Keane (Ret.) on the potential fallout from the U.S. approving a possible $2 billion arms sale to Taiwan and President Trump's meeting with the emir of Qatar.
(Bloomberg) -- The European Central Bank is set to reward some of the region’s biggest financial institutions with more than 1 billion euros ($1.2 billion) this year in return for keeping up the flow of credit during the pandemic.Six lenders including ING Groep NV and Deutsche Bank AG have disclosed their expected benefit from the central bank’s targeted longer-term loan programs. Together, the banks said they earned about 416 million euros in the first quarter while other lenders said they intend to book gains later in the year.Seven years after turning banking on its head with the introduction of negative interest rates, the ECB is dangling enhanced subsidies to get banks to pump cheap cash into an economy lurching from one crisis to another. The benefits help offset some of the pressure from the ECB’s other policies which have eaten into lending profits and introduced costs for client deposits.An ECB spokesman declined to comment on the payments. ECB President Christine Lagarde said in April that the program plays a “crucial role” in supporting bank lending to firms and households.The ECB has offered several rounds of such targeted long-term loans. The latest allotment was in March when it made 330.5 billion euros available to banks. The favorable rates are paid subject to conditions on the banks reaching specific targets regarding the amount of loans they make to the broader economy.The lenders benefit even more now than with similar operations in the past because the conditions were sweetened during the pandemic so that that they can borrow at an even lower rate than the ECB’s negative deposit rate. While the deposit rate acts as a charge on reserves, that’s more than outweighed by the generosity of the rate on the long-term loans.“We don’t earn the money for free,” Deutsche Bank finance chief James von Moltke told analysts on a conference call last week. “The business is executing on lending, supporting clients, that allows us to achieve those thresholds.”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) -- Central bankers in Mexico and Chile are facing above-target annual inflation and temporary food cost jumps ahead of their monetary policy meetings next week.Consumer prices in both countries rose more than expected in April, as staple goods such as tomatoes and avocados surged in Mexico while bread and cereals did the same in Chile, according to government data published Friday. Data released earlier this week also showed food costs driving Colombia’s inflation.Policy makers in Mexico and Chile are expected to hold rates steady on May 13 amid pressure to bolster their incipient economic recoveries. Both countries are battling against coronavirus outbreaks that have weighed on consumption and confidence. At the same time, annual inflation is running above target in both nations, driven by rising global commodity prices also base effects.What Bloomberg Economics Says“Higher food and fuel prices contributed to inflation in April in both Mexico and Chile. Pressure from these should be transitory and have little impact on monetary policy, although the high headline number in Mexico keeps limiting policy flexibility. Central banks are likely to put more attention to core inflation, as prices of goods continue increasing.”--Felipe Hernandez, Latin America economistMEXICO REACT: High April Inflation No Shock, But Raises ConcernsConsumer prices in Mexico rose 6.08% in April compared to a year earlier, while Chile’s annual inflation sped up to 3.3%. Both nations target annual inflation at 3%.Changing DriversChile’s higher food costs prompted Oxford Economics to raise its year-end inflation forecast to 3.4% from 3% previously, according to a research note. Banchile Inversiones also raised its December price estimate to 3.5% from 3.1% following Friday’s data.In April, Chile’s inflation was also pressured by a 1.6% jump in energy prices. Meanwhile, in Mexico, those costs dropped on the month following a period of significant increases.“Mexico’s inflation keeps rising above forecast, though the drivers have changed”, said Marco Oviedo, chief economist for Latin America at Barclays Capital Inc. “The rise on some perishable items and services surprised us, and highlight the risk of core inflation that’s too high and sticky.”Read more: Latin American Central Banks Staring Down Spike in Energy CostsChile’s central bank has said higher energy costs will spark a temporary up-tick in inflation in coming months without deterring plans to hold the interest rate at a record low. Indeed, in a meeting with President Sebastian Pinera on Tuesday, board members underscored the need to maintain expansive policies.Likewise, Mexico’s Deputy Central Bank Governor Gerardo Esquivel said last month that he expects the price spike to be temporary, with inflation falling within the bank’s range in July. Policy makers in Latin America’s second-largest economy have cut borrowing costs to a near five-year low of 4% following the worst downturn in nearly a century.Economists in the latest Citibanamex survey expect Mexico’s central bank to keep rates unchanged at that level through next year. In Chile, analysts expect borrowing cost increases in early 2022.CHILE REACT: April Inflation Supports Slow Normalization in 2022(Updates with economist inflation estimates in 6th 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) -- The U.K.’s financial regulator handed down its first penalty over the Cum-Ex tax scandal, fining a broker 178,000 pounds ($248,000) for failings regarding its relationship with hedge-fund manager Sanjay Shah.Sapien Capital, which executed more than 6 billion pounds of trades in Danish and Belgian stocks on behalf of Shah’s Solo Capital group through 2015, had inadequate financial-crime controls in place, the Financial Conduct Authority said in a statement Thursday.Shah has emerged as a key figure in a scandal over alleged tax fraud that has engulfed multiple European countries, with investigators raking over a trading strategy that allowed investors to claim multiple refunds on a dividend tax that was paid only once. The FCA said the trading “is highly suggestive of sophisticated financial crime.”“These transactions ran money-laundering and other financial-crime risks, which Sapien incompetently failed to see,” Mark Steward, the agency’s director of enforcement and market oversight, said. The fine was reduced due to serious financial hardship.Ramesh Kumar Ahuja, Sapien Capital’s chief executive officer, declined to comment by phone. The firm told the FCA that “it is only with the benefit of hindsight that the shortcomings in relation to the Solo business have become apparent,” according to a summary of its submissions.While more than 25 bankers, traders and lawyers have been charged in Denmark and Germany, U.K. authorities have faced criticisms from the courts for the speed of their investigations.Danish prosecutors said earlier this year that Shah was the mastermind behind a a 9.6 billion-krone ($1.6 billion) tax-fraud case. Shortly after that, Shah and six others were indicted by Hamburg prosecutors over more than 50 cases of money laundering relating to Cum-Ex trades in Denmark and Belgium that went through German accounts.Shah has consistently said he did nothing wrong other than take advantage of loopholes in national laws.The FCA said Sapien had just 40 clients before adding more than 160 customers linked to Solo. The brokerage was expecting to take in as much as 700,000 pounds in brokerage fees annually.Even when Sapien couldn’t be sure about the identity of one of the Solo clients, a mix of offshore companies and pension plans, it proceeded to add the firm as a customer anyway, the FCA said. The client presented mismatched signatures as part of a bundle of documents and Sapien simply asked it to re-sign the forms, the regulator said.Inside Sapien, the mismatched signatures were known as a “touchy subject,” according to the FCA.(Updates with details on Sapien Capital’s submissions in 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.
(Bloomberg) -- Volkswagen AG raised its earnings outlook after a strong start to the year, while cautioning that the semiconductor shortage rippling through the industry will become more pronounced in the second quarter.Operating return on sales is forecast at 5.5% to 7% this year, compared with a previous range of 5% to 6.5%, Europe’s largest automaker said Thursday in a statement. VW also raised its projection for net cash flow and net liquidity.“We started the year with great momentum and are on a strong operational course,” Chief Executive Officer Herbert Diess said in the release.While demand has rebounded across the industry, manufacturers are now grappling with an acute chip shortage that’s forcing them to halt production lines and prioritize some vehicles. Diess said the company will feel more pain in the second quarter and that some lines will stop “for a few days, a few weeks,” though the fallout won’t be as pronounced as with some rivals.VW shares reversed initial gains and traded down 2.5% in Frankfurt, valuing the manufacturer at 120.6 billion euros ($145 billion).Daily BattleStellantis NV warned this week that the global semiconductor shortage will deteriorate further from the first three months of the year, while Ford Motor Co. has forecast a $2.5 billion hit to earnings from scarce chip supplies.“We’re fighting day by day,” Diess said in an interview with Bloomberg TV. “We’re doing everything to keep production running.”Still, the fallout from the disruptions might lower VW’s second-quarter return on sales to about 5%, down from 7.7% in the first three months, he said during a call with analysts.VW is at a pivotal moment in getting its electric-car push off the ground and narrow the gap to Tesla Inc. Among the new models this year are the VW ID.4 and the Audi Q4 e-tron, two crossovers about the size of Tesla’s popular Model Y, as part of the industry’s largest rollout of electric cars. Diess said that electric vehicles are actually less affected by the chip shortage, supporting the company’s efforts to tilt production more into that space.Two months after mapping out plans to build six battery factories in Europe VW is still in talks with potential partners and governments over possible partnerships to finance the projects. Decisions could be made “in the next couple of months” and include initial public offerings of “some of the activities,” Diess said. First-quarter operating profit surged to 4.8 billion euros from 900 million euros last year, when the Covid-19 pandemic shuttered showrooms and factory floors. The group’s Audi and Porsche premium brand continued to be largest profit contributors, accounting for just over half of the group’s earnings with 2.58 billion euros combined.The German carmaker targets becoming the global EV leader by 2025 at the latest and is allocating substantial financial and management firepower to boost software expertise under a new unit named Cariad. VW’s shares have soared since Diess wooed investors in March with back-to-back briefings on standardizing key technologies across VW’s 12 brands for scale effects that’ll likely elude both Tesla and established automakers.Steel PricesThe recovery in demand is helping to fuel VW’s costly electric plans. Total deliveries during the first quarter jumped 21% to 2.43 million vehicles, mainly driven by a surge in China. Deliveries of electrified models more than doubled to 133,300 vehicles, of which 59,900 were battery electric vehicle and the remainder plug-in hybrids.The Wolfsburg-based manufacturer has targeted selling roughly 600,000 purely battery-powered cars this year and is “fully on track” to comply with tightening European emission rules, Diess said.Besides the semiconductor shortage, rising prices for raw materials from steel to precious metals are also taking their toll on the car industry, Diess said. “Finding new sources, that’s going to be a challenge for 2021 for sure,” Diess said. “Demand is rising for everyone, and supply is constrained.”(Updates with comments from analyst call in seventh 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 the pullback in Federal Reserve monetary support draws inexorably closer, investors are striving to taper-proof their portfolios with 2013’s volatility still fresh in their minds.Eight years ago this month, global yields jumped and risky assets fell on a hint from then-Fed Chairman Ben Bernanke that the central bank might start trimming its crisis-era bond program. Wary of a repeat volatility spike some fund managers are turning to lower-duration high-yield debt for shelter, while others see a tantrum-less taper and are betting on emerging market assets to prevail.With economists expecting the central bank to begin paring asset purchases by the end of this year, Fed officials are sticking to the script that it’s too early to discuss any shift in pandemic policy setting. But moves by counterparts in the U.K. and Canada to slow the pace of bond buying as their economies improve have reminded traders that the Fed cannot avoid the taper forever, especially as U.S. growth surges.“The biggest threat to the market is rates volatility jumping higher, like we saw at the end of February,” said Pilar Gomez-Bravo, investment officer and director of fixed income at MFS Investment Management in London. “The valuations of risky assets are high, so you don’t have a lot of room for complacency.”Gomez-Bravo favors junk bonds as an asset class less vulnerable to a reset in yields than their investment-grade peers, which have much higher duration or sensitivity to interest rates. Leveraged loans are an even better choice and some “stressed” debt securities should be less correlated to broader market repricings, according to Jefferies Financial Group Inc. credit strategist Sherif Hamid.Investment-grade bonds are already under pressure with the largest exchange-traded fund for high-grade credit experiencing its longest stretch of outflows since 2013, according to data compiled by Bloomberg.Taper TemplateBonds took the brunt of the 2013 turmoil, with Treasury yields jumping 50 basis points in the month after Bernanke spoke. Over the same period the MSCI Emerging Markets Index slumped 14% and the Nasdaq 100 fell 4%. However, the tech-heavy gauge now trades on 26 times forward earnings, compared to just 15 times then.This time around, BlackRock Inc. -- the world’s largest asset manager -- suggests that much of the move in the bond market may have already taken place, and emerging market assets should hold up much better.“We still think yields can move somewhat higher but tactically we think the big repricing of the activity restart is now mostly done,” said Ben Powell, chief Asia Pacific investment strategist for the BlackRock Investment Institute.The 10-year Treasury yield is up about 65 basis points this year and traded around 1.57% on Friday. The Bloomberg Barclays U.S. Treasury Total Return Index is down over 3% year-to-date.According to BlackRock, the combination of an economic recovery, heavy stimulus and a broadly stable dollar should be enough to spare risk assets -- including those from developing countries -- much of the impact of a gradual easing of central bank support.The firm is overweight both developed- and emerging-market equities, “and on the fixed-income side we actually upgraded EM local currency debt last week,” Powell said.Jackson HoleGauges of implied volatility in currencies, Treasuries and U.S. equities have retreated after a modest rise at the end of February suggesting investors don’t see an immediate risk of a Fed taper announcement. But trader activity in the options market points to Jackson Hole -- the annual gathering of central bankers in August -- as a likely candidate for taper talk to begin.Meanwhile, investors should parse minutes of Federal Open Market Committee meetings where past experience suggests discussions of tapering will appear first, according to Win Thin, Brown Brothers Harriman & Co.’s global head of currency strategy. Minutes for the April meeting will be released on May 19.“Suffice to say that Chair Powell will take great pains not to surprise the markets with a decision to taper,” Thin wrote Thursday. “Rather, it will be well-telegraphed and the minutes are the first place markets should look.”(Updates pricing in tenth 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) -- Bank of England Governor Andrew Bailey issued a stark warning to those investing in cryptocurrencies: “Buy them only if you’re prepared to lose all your money.”‘In response to a question about financial stability, Bailey said the central bank was well positioned to respond to any threats that might arise. However, he objected to the use of the phrase cryptocurrency and took the opportunity to push back on their growing popularity.“I’m afraid crypto and currency are two words that don’t go together for me,” he said at a press conference Thursday. “They have no intrinsic value.”Bailey has long been dismissive of the assets, and his comments follow yet another period of speculative excesses for a market Nouriel Roubini once described as the “mother of all bubbles.”While in the past, trillions of dollars in stimulus by governments and central banks might have triggered a rush into gold for the inflation-wary and risky stocks for the intrepid, a deluge of cash this time round is flooding into the crypto market. It’s even pushed up the price of digital tokens previously considered a joke, like Dogecoin.The BOE last month said it would join forces with the U.K. Treasury to weigh the potential creation of its own central bank digital currency, joining authorities from China to Sweden exploring the next big step in the future of money. If approved, the U.K.’s digital currency would exist alongside cash and bank deposits, rather than replacing them, they 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.
Bill Gates transferred stakes in several companies to Melinda Gates on the day the power couple announced their divorce
Everyone has a different idea of what wealth is. You could ask 20-somethings what they think wealth is, and they might describe extravagant houses or a private jet. Someone older might mention lucrative investments. Everyone seems to have a different … Continue reading → The post What Is the Financial Definition of Wealth? appeared first on SmartAsset Blog.
As the US economy continues to open up, the April jobs report from the US Bureau of Labor Statistics shows the boom in delivery jobs has taken a tumble. The industry covers workers who deliver and pick up packaged good, employed by companies like Amazon, Fedex, and DHL. When the Covid-19 pandemic halted the world and people stayed home, the demand for online retailers, online grocers, delivery firms shifted into high-gear.
You could be entitled to additional money, based on your 2020 income tax return.
Tech investor Cathie Wood tells CNBC she isn't unsettled by the popular ARK Innovation ETF's rough start to May.
The cryptocurrency lacks the mainstream appeal of Bitcoin, but it still has a substantial online community behind it. And that community may be the basis of new financial markets.
The residential construction sector is pumping the brakes, judging by April's jobs numbers, despite the strong demand for homes.
Vlad Tenev, CEO of Robinhood Markets, speaking at a “fireside chat” on Thursday, attempts to dispel any lingering speculation that the brokerage may be a so-called dogecoin whale, maintaining a massive stockpile of the crypto for its own benefit.
(Bloomberg) -- Coinbase Global Inc. sank to a record low as investors fled high-flying market newcomers.The operator of the largest U.S. cryptocurrency exchange slumped 6% to $256.76 on Thursday, dropping for a fourth straight day. That left the shares just above the $250 reference price for its April direct listing. An exchange-traded fund that tracks shares of companies that recently went public plunged for an eighth day, the longest slide since 2015. Virgin Galactic Holdings Inc. and Opendoor Technologies Inc., companies that came to market through blank-check offerings, each sank at least 3.8%.“We saw a mini-bubble in SPACs, IPOs, crypto, clean-tech and hyper-growth in late 2020 and early 2021 and many of these asset classes are nursing bad hangovers,” said Mike Bailey, director of research at FBB Capital Partners.Coinbase’s slide comes as investors pour into extremely speculative cryptocurrencies such as Dogecoin and Binance Coin -- tokens that the exchange doesn’t offer. Most of its traffic had come from Bitcoin trades, but the price of the largest crypto coin has been mired in a narrow band for weeks. Coinbase started trading at $381 on April 14 before briefly topping $400. It’s now down 22% from the close on its first day.Nasdaq had set a reference price of $250 a share on April 13 for Coinbase’s direct listing, a number that’s a requirement for the stock to begin trading, but not a direct indicator of the company’s potential market capitalization.“What has really hurt Coinbase, now that their direct listing has taken off, you’re seeing expectations that other exchanges are coming on board,” said Edward Moya, senior market analyst at Oanda. “There’s this belief this could be as good as it gets for Coinbase in the short-term.”The Renaissance IPO ETF dropped 4.2% on Thursday, bringing its year-to-date loss to about 14%.(Updates prices.)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 crypto run this time has two features the 2017 version didn’t—institutional adoption and actual applications.
HELP ME RETIRE Dear MarketWatch, My wife and I recently sold our home. After paying capital gain taxes, we look to net about $1 million. We are both in our late 60s. My wife is retired, and I work part time in my profession, currently grossing approximately $50,000 a year.
Ethereum has outperformed major digital currency rivals this year, bolstered by the surge in decentralized finance (DeFi) and the anticipation of a technical adjustment this summer, but it faces hurdles that could stall its rise. With a jump of more than 350% in its price this year, ethereum has the second-largest market capitalization after bitcoin, but not as much cache and perhaps more operational challenges that could prevent it from eclipsing its major rival. In the crypto world, the terms "ethereum" and "ether" have become synonymous.
A mass of attention has been brought to semiconductor companies as supply-chain constraints have reduced the availability of everything from cars to laptops to gaming consoles. The largest chipmakers and foundries — Intel (INTC) Nvidia (NVDA) Advanced Micro Devices (AMD) Taiwan Semiconductor Manufacturing (TSM) Globalfoundries and Qualcomm (QCOM) — have gotten most of the headlines. As the challenges are sorted out, it has become clear that semiconductors are a hot commodity, and for investors, that could be considered an opportunity.
Barron’s spoke with an economist, a bond manager, and a stock manager about why stocks are higher, and why a rally in fixed income faded.