Feb.16 -- AdvisorShares Ranger Equity Bear ETF Advisor David Tice discusses how his bets have changed since the financial crisis. He speaks with Matt Miller on "Bloomberg Markets".
Feb.16 -- AdvisorShares Ranger Equity Bear ETF Advisor David Tice discusses how his bets have changed since the financial crisis. He speaks with Matt Miller on "Bloomberg Markets".
(Bloomberg) -- Regulators kicked off the final countdown for the London interbank offered rate Friday, ordering banks to be ready for the end of a much maligned benchmark that’s been at the heart of the international financial system for decades.The U.K. Financial Conduct Authority confirmed that the final fixings for most rates will take place at end of this year, with just a few key dollar tenors set to linger for a further 18 months.The move comes in the wake of major manipulation scandals and the drying up of trading used to inform the rates, which are linked to everything from credit cards to leveraged loans. Global regulators have made a concerted effort to wind down the benchmark in 2021, with the Federal Reserve and others pushing market participants toward a slew of alternatives.“Outside the U.S. dollar markets, this marks the end game,” said Claude Brown, a partner at Reed Smith LLP in London. “The rate that linked the world, and then shocked the world, will leave this world in 2021.”Libor is deeply embedded in financial markets. Some $200 trillion of derivatives are tied to the U.S. dollar benchmark alone and most major global banks will spend more than $100 million this year preparing for the switch. Other players -- from corporations to hedge funds -- will also be affected, with many only beginning to shift from legacy contracts.Bank of England Governor Andrew Bailey said this was now the “final chapter,” and there’s no excuse for delays.The BOE will hold executives to account for progress in the transition under the U.K.’s regulatory regime for senior managers, according to people familiar with the matter. If firms fail to take appropriate steps, there is the potential for measures such as capital sanctions, though these would come further down the line.Progress toward replacement benchmarks, such as the Secured Overnight Financing Rate in the U.S. and the Tokyo Overnight Average Rate in Japan, has been sluggish, and there are hopes Friday’s announcement could accelerate the process -- particularly in the vast global derivatives market.“This was the much anticipated final piece of clarity the market needed to really kick on,” said Kari Hallgrimsson, co-head of EMEA rates at JPMorgan Chase & Co. “We would expect liquidity for trading the new rates to keep increasing from here on out.”Friday’s decision is a cessation event and locks in the benchmark’s fallback spread calculations, which for dollar Libor will be added to SOFR, the main U.S. replacement. Where firms have adhered to International Swaps and Derivatives Association’s Libor protocol, their contracts will automatically transition to replacement rates the moment Libor ends, avoiding a cliff-edge scenario.The delay in the most-used dollar Libor tenors -- notably the three-month benchmark -- is a concession to market concerns, but regulators remain adamant that dollar Libor shouldn’t be used for new contracts after 2021. Firms should expect further engagement from their supervisors to ensure timelines are met, the FCA warned.The Fed, for its part, is intensifying its scrutiny of banks’ efforts to shed their reliance on Libor, and has begun compiling more detailed evidence on their progress.“In the months ahead, supervisors will focus on ensuring that firms are managing the remaining transition risks,” said Randal Quarles, vice chair for supervision at the Federal Reserve Board and chair of the Financial Stability Board.While speculation about the announcement’s timing jolted the eurodollar market in December, the market reaction on Friday was subdued. The spread between June 2023 and September 2023 Eurodollars widened one basis point, as did the difference between December 2021 and March 2022 short sterling contracts.The FCA also detailed proposals to deal with the most troublesome loans and securitizations that can’t be switched to replacement rates. The regulator will consult on synthetic Libor -- which doesn’t rely on bank panel data -- for the sterling and yen benchmarks, and will continue to consider the case for using these powers for some dollar Libor settings.Worries are mounting that hundreds of billions of dollars of these legacy contracts will never be able to transition, even with the extension of certain dollar Libor tenors. This will present a key challenge to banks, regulators and lawmakers in the months ahead.“Some cash products have not embraced Libor and the clock is ticking loudly,” said Priya Misra, global head of interest rate strategy at TD Securities. “A lot of them will mature by June 2023, but there will be a lot left over after that.”What Analysts Are SayingGoldman Sachs Group Inc:“Today marks an extremely significant milestone in the multi-year global transition away from Libor,” said Jason Granet, chief Libor transition officer. “With full clarity on Libor’s endgame the market can now move forward towards a smooth and efficient transition.”Eigen Technologies Ltd:“At this late stage, pure human review and legal advice is going to be too slow and inaccurate, putting the financial firms and their counterparties at economic and conduct risk,” said Chief Executive Officer Lewis Liu. “The only way out of this now is through the rapid deployment of technology.”Linklaters:This is “expected to be based on a forward-looking term version of the relevant risk-free rate plus a fixed spread calculated over the same period and in the same way as the spread adjustment implemented in ISDA’s Ibor fallbacks,” said Phoebe Coutts, a capital markets lawyer. “It will also be interesting to see which legacy uses of synthetic Libor will be permitted by the FCA, as there has been some uncertainty around which products constitute ‘tough legacy’ products.”(Adds Fed comment in 13th paragraph, additional comments from analysts)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) -- Major oil sands producers in Western Canada will idle almost half a million barrels a day of production next month, helping tighten global supplies as oil prices surge.Canadian Natural Resources Ltd.’s plans to conduct 30 days of maintenance at its Horizon oil sands upgrader in April will curtail roughly 250,000 barrels a day of light synthetic crude output, company President Tim McKay said in an interview Thursday. Work on the Horizon upgrader coincides with maintenance at other cites.Suncor Energy Inc. plans a major overhaul of its U2 crude upgrader, cutting output by 130,000 barrels a day over the entire second quarter. Syncrude Canada Ltd. will curb 70,000 barrels a day during the quarter because of maintenance in a unit.The supply cuts out of Northern Alberta, following a surprise OPEC+ decision to not increase output next month, could add more support to the recent rally in crude prices. OPEC+ had been debating whether to restore as much as 1.5 million barrels a day of output in April but decided to wait.The Saudi-led alliance closely monitors other major oil producers as it seeks to manage the entire global market, and surging production in North America was its biggest headache in recent years -- especially from U.S. shale but also from Canada.“The U.S., Saudi Arabia, Russia, Canada, Brazil and other well endowed countries with hydrocarbon reserves -- we need to work with each other, collaboratively,” Saudi Energy Minister Prince Abdulaziz bin Salman said after the group’s meeting on Thursday.Read More: Saudis Bet ‘Drill, Baby, Drill’ Is Over in Push for Pricier OilCanada’s contribution to balancing the market with less production, much like slowing output in the U.S., is not a deliberate market-management strategy but significant nonetheless.Even though the output cuts are short-term, the battered oil-sands industry shouldn’t be a concern for the Saudis in the long run either, judging from McKay’s outlook for the industry.“I can’t see much growth in the oil sands happening because there is going to be less demand in the future,” he said. “The first step is we have to get our carbon footprint down.”After years of rising output turned Canada into the world’s fourth-largest crude producer, expansion projects have nearly halted on the heels of two market crashes since 2014.Adding to its struggles, Canada’s oil industry is being shunned by some investors such as Norway’s $1.3 trillion wealth fund amid concern that the higher carbon emissions associated with oil sands extraction will worsen climate change. These forces help make future growth in the oil sands unlikely, said McKay, whose company is among the largest producers in the country.Oil sands upgraders turn the heavy bitumen produced in oil sands mines into light synthetic crude that’s similar to benchmarks West Texas Intermediate and Brent. Syncrude Sweet Premium for April gained 60 cents on Thursday to $1.50 a barrel premium to WTI, the strongest price since May, NE2 Group data show.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 president has agreed to a compromise making millions ineligible for the third checks.
As the April 15 deadline to file and pay taxes closes in, some of the accountants preparing those returns are telling the Internal Revenue Service they need more time. “In the current environment, it is simply not possible for many taxpayers and their tax advisers to meet their filing and payment obligations that are due on April 15,” according to a Thursday letter from the American Institute of Certified Public Accountants. The professional organization with more than 431,000 members wants the IRS to move the tax deadline to June 15.
(Bloomberg) -- A record plunge in gasoline stockpiles last week is threatening to raise pump prices across America above $3 a gallon for the first time in six years.Inventories fell by 13.6 million barrels -- the most in weekly data that goes back to 1990 -- after a deep freeze paralyzed much of the Gulf Coast refining sector, according to the U.S. Energy Information Administration. Demand for the fuel meanwhile rose by the most since May.Even before the cold blast crimped gasoline production, restraint from OPEC and the U.S. shale patch had sent crude futures -- and in turn fuel prices -- skyrocketing. The higher costs are hitting just as demand is rebounding with states lifting pandemic restrictions and coronavirus vaccines becoming more widely available.If more gasoline supplies aren’t added to the market soon, prices at the pump could average $3 a gallon this summer for the first time since 2014, said Patrick DeHaan, head of a petroleum analysts at GasBuddy in a tweet. The national average was at $2.74 a gallon Wednesday, according to AAA.It may take at least another week to completely restart everything shut by the storm. Six of 16 refineries in Texas shut because of the winter storm have restarted all impacted units and are in the process of ramping up production.The margin of profit on refining crude oil into gasoline and diesel, known as the crack spread, is trending near its highest since February of 2020, with the exception of the day crude futures fell below zero. Gasoline futures in New York are nearing $2 per gallon for the first time since May 2019 after surging almost 40% so far this year.“We might see some localized shortages, and gas prices could go up,” said Trisha Curtis, chief executive officer of oil analysis firm PetroNerds in Denver. “We would expect production to return with refining margins still climbing.” Many refineries were running below capacity during the pandemic to avoid swelling inventories with unused product. Refinery utilization may increase as refineries ramp back up ahead of the summer holiday.“Folks are going to the national parks and the state parks for road trips now,” Horace Hobbs, chief economist at refiner Phillips 66, said this week at the CeraWeek virtual energy conference. “That uses a lot of gasoline.”(Updates with current gasoline price in the fourth 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.
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.
(Bloomberg) -- Texas regulators declined to rescind $16 billion in alleged overcharges for electricity during last month’s blackouts, leaving the state’s power market facing a potential financial crisis.“Decisions were made about these prices in real time based, on information available to everybody,” said Arthur D’Andrea, chair of the Public Utility Commission of Texas during a meeting Friday. “It is nearly impossible to unscramble this sort of egg.”The state’s independent market monitor had recommended that $16 billion in charges be reversed, saying that the Electric Reliability Council of Texas, known as Ercot, overpriced power for two days during the crisis.Retroactively adjusting those prices could have offered sweeping relief to companies facing astronomical bills in the wake of the grid emergency. With many generators crippled by the cold, electricity prices skyrocketed, squeezing anyone who had to buy power on the wholesale market. The grid operator now faces a $2.5 billion shortfall as more than a dozen companies face default. At least one utility has already filed for bankruptcy.While utility commissioners didn’t close the door repricing in the future, they didn’t embrace the idea.“Repricing the energy -- I would be more inclined to say we’re not going to do that,” said Commissioner Shelly Botkin. D’Andrea agreed, adding, “It looks like you’re protecting consumers. I promise you’re not.”The commission also declined to vote on a request to retroactively adjust the price of certain grid services during the emergency, a move that would have offered relief to distressed companied and potentially saved consumers $2 billion, according to the market monitor. So-called ancillary services, which help maintain the flow of electricity on the system, jumped above $20,000 a megawatt-hour during the crisis. Retail electricity providers and others had asked for those charges to be capped at $9,000.Texas’s biggest power generators have generally opposed any kind of repricing. But ahead of Friday’s meeting, Vistra Corp. told regulators in a filing that energy prices on Feb. 18 and 19 -- the days after the rolling outages ended -- should be changed “to an equitable calculation of the market clearing price.”“Vistra continues to believe that the Commission should not take an arbitrary, piecemeal approach to repricing,” the company said in its filing. “But acting without allowing all market participants to engage is likely to create another set of parties that will be adversely affected by the new pricing structure.”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.
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.
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) -- A new exchange-traded fund seeking to ride the companies most loved by investors online has found plenty of its own positive sentiment in its first day of trading.About $438 million worth of shares in the VanEck Vectors Social Sentiment ETF (ticker BUZZ) changed hands on Thursday, making it the third best ETF debut on record, according to data compiled by Bloomberg.“Normally, this kind of blow-the-roof-off volume for the first day is for ETFs that open up a new asset class like gold or Bitcoin,” said Eric Balchunas, ETF analyst for Bloomberg Intelligence.The fund, which has been promoted by Barstool Sports Inc. founder Dave Portnoy, follows an index that uses AI to scan online sources like blogs and social media to identify the 75 most favorably mentioned equities.Because of its criteria for inclusion, the hottest names among the day-trading crowd like GameStop Corp. and AMC Entertainment Holdings Inc. don’t actually make it into the gauge. Its top holdings currently are Ford Motor Co., Twitter Inc. and DraftKings Inc.Nonetheless, the rapid uptake suggests VanEck has succeeded in tapping into the increasingly powerful retail investing cohort.“Given the explosion of individual, younger retail traders, it makes sense to see a pile of volume,” said Dave Lutz, macro strategist at JonesTrading. “Whether it is the WSB crowd embracing Dave Portnoy’s marketing of the ETF, or institutions playing it to bet on the direction of the trend (or hedge) -- we won’t know for a bit. I suspect it’s a bit of both.”The fund opened at $24.40. It was down 1% at $24.15 at 12:02 p.m.(Updates with latest figures, analyst 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.
Virgin Galactic Holdings Inc. Chairman Chamath Palihapitiya sold off a chunk of his shares this week, and played a part of the plunge in prices.
A firm hired to monitor Texas' power markets says the region's grid manager overpriced electricity over two days during last month's energy crisis, resulting in $16 billion in overcharges.
Powell and his policymakers have until March 17 to regain control of monetary policy or they could face a creditability issue.
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.
Mortgage rates have risen past a psychological benchmark for the first time since they fell to historic lows during the pandemic. The average rate on a 30-year fixed-rate mortgage increased to 3.02% this past week, according to Freddie Mac’s Primary Mortgage Market Survey—the first time since July that the rate has risen above 3%. “Since reaching a low point in January, mortgage rates have risen by more than 30 basis points,” wrote Freddie Mac’s chief economist, in a release.
GameStop shares closed up 6.4% at $131.93 after earlier hitting $147.87, their highest since a surge in the heavily shorted stock late last month. One analyst and some Twitter users pointed to a cryptic tweet by Ryan Cohen, a major shareholder of GameStop and founder of e-commerce firm Chewy.com, as a plausible reason for the move, although Reuters could not independently determine causation. The late afternoon rally in GameStop began roughly around the time that Cohen tweeted what appeared to be a screenshot with the puppet dog advertising mascot of Pets.com, a famous casualty of the dotcom bubble two decades ago.
(Bloomberg) -- As the leader of crypto exchange Kraken, Jesse Powell is bound to be bullish on Bitcoin. Yet he’s projecting a disruptive future that would stretch the imagination of even the most ardent crypto fans.In a Bloomberg Television interview, Powell said Bitcoin could reach $1 million in the next decade, adding that supporters say it could eventually replace all of the major fiat currencies.“We can only speculate, but when you measure it in terms of dollars, you have to think it’s going to infinity,” he said. “The true believers will tell you that it’s going all the way to the moon, to Mars and eventually, will be the world’s currency.”The CEO also said San Francisco-based Kraken is considering going public, possibly next year.Extreme predictions are nothing new in the world of Bitcoin, where adherents stand to profit from convincing a wider audience that crypto is a legitimate asset class, rather than a speculative fad. The dollar remains the world’s reserve currency and is the benchmark for global trade, though its value has softened in the past year.Powell said Bitcoin bulls see it one day exceeding the combined market cap of the dollar, euro and other currencies.The dollar “is only 50 years old and it’s already showing extreme signs of weakness, and I think people will start measuring the price of things in terms of Bitcoin,” he said.The digital currency slipped 3% in early U.S. trading on Thursday, hovering around $49,000. Prices have surged almost 600% since the start of 2020 on the back of wider mainstream adoption, with bulls seeing it as both an inflation hedge and speculative asset.Critics argue that Bitcoin is in a giant, stimulus-fueled bubble destined to burst like the 2017 boom and bust cycle.Kraken benefits from higher prices as it reaps fees from increased trading. Bloomberg reported last month that the exchange was in talks to raise new funding, which would double the company’s valuation to more than $10 billion.“Personally, I think $10 billion is a low valuation,” Powell said. “I wouldn’t be interested in selling shares at that price.”The CEO did acknowledge the potential for wild market swings, saying prices can “move up or down 50% on any given day.” That kind of volatility has long been one of the negatives of Bitcoin, relegating the market to one of speculation, rather than a means of doing business.“If you are buying into Bitcoin out of speculation, you should be committed to holding for five years,” Powell said. “You have to have strong convictions to hold.”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.
Tesla Inc (NASDAQ: TSLA) could create a “positive momentum” if its sold its Bitcoin (CRYPTO: BTC) holdings and initiated a buyback of its stock, according to Gary Black, a private investor and former CEO of Aegon Asset Management. What Happened: Black aired his views on social media Thursday in a series of tweets. “Imagine the positive momentum [Tesla] would create if they announced the sale of their [Bitcoin] position, and authorized a [Tesla] stock buyback instead.” wrote Black. See also: How to Invest in Tesla Stock The investor acknowledged that the prospect was “unlikely” but shareholders would support such a move. Investors who say #btc has less risk than govt bonds or gold haven’t done their research. Govt bonds have ~2% risk, defined as monthly volatility of returns. Gold ~3% risk. US equities ~6% risk. #btc has ~20% risk, further out on the risk curve than almost any other asset class. pic.twitter.com/OjMyWYU0Oa — Gary Black (@garyblack00) March 4, 2021 According to Black, if you asked 100 institutional investors in the Elon Musk-led company if they would prefer to invest $1.5 billion of excess cash in BTC or in Tesla stock, 95/100 would choose the stock. Why It Matters: Black isn’t the only analyst crying foul over Tesla’s investment in BTC. Last month, GLJ Research analyst Gordon Johnson said the automaker had “run out of viable internal uses” of its capital. “We see this as a sign of desperation from a CEO whose company is facing real competition for the first time ever,” wrote Johnson. Tesla had purchased .5 billion worth of BTC in February, amid increased institutional support for the cryptocurrency. Jack Dorsey-led Square Inc (NASDAQ: SQ) and Tesla combined have spent over billion to buy 151,919 BTC. Those coins are worth almost $7.19 billion as of press time when BTC traded 6.99% lower at $47,347.62. MicroStrategy Incorporated (NASDAQ: MSTR) meanwhile holds 90,531 BTC, purchased at an average price of $2.171 billion, as of late February now worth about almost $4.286 billion. Price Action: Tesla shares fell 3.43% in after-hours trading on Thursday to $600.10 after closing 4.86% lower at $621.44. Click here to check out Benzinga’s EV Hub for the latest electric vehicles news. Latest Ratings for TSLA DateFirmActionFromTo Feb 2021Morgan StanleyMaintainsOverweight Feb 2021Piper SandlerMaintainsOverweight Jan 2021Deutsche BankMaintainsBuy View More Analyst Ratings for TSLA View the Latest Analyst Ratings See more from BenzingaClick here for options trades from BenzingaAnalyst Who Predicted ,000 Bitcoin Sees Key Metric Indicating 'March To 0,000'How Square's Purchase of Jay Z's Tidal Could Popularize Blockchain© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(Bloomberg) -- Strong Chinese crop demand will carry through the “medium term,” reinforcing expectations for another record year of earnings and bolstering prospects past 2021, according to Archer-Daniels-Midland Co.’s chief financial officer.“I am confident in the momentum from 2020 continuing, this year and beyond,” Chief Financial Officer Ray Young said during Bank of America’s Global Agriculture & Materials Conference on Wednesday. “This is not a one-year phenomenon.”China has been scooping up huge amounts of U.S. crops to feed a hog herd that’s recovering from a deadly pig disease. That pushed combined American corn and soybean exports to an all-time high in the fourth quarter, helping ADM deliver deliver record earnings per share last year on an adjusted basis. Young reiterated the company’s forecast for a record in 2021.“The main reason China is aggressively buying agricultural products from around the world is just fundamental demand,” Young said. “And that’s the primary driver as to why China was aggressively importing last year and we expect them to be aggressively importing this year.”ADM in January reported $3.59 a share in adjusted earnings for 2020. The company’s shares reached an all-time high last week.Young said he expects recent outbreaks of African swine fever in Chinese hogs will be contained. China’s agriculture ministry this week reported an outbreak of the deadly virus that devastated the herd beginning in 2018.With the virus held in check, China will import 100 million metric tons or more of soybeans this year, Young said. That figure is on par with the official U.S. Department of Agriculture forecast. China’s corn imports could reach 25 million tons, Young said. That’s just above USDA’s official projection for 24 million.The rebuilding of the hog herd “is going to drive continued strong demand for feed,” Young said. “So we see strong, continued strong demand coming from China.”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.