May 29 -- Billboard Senior Branding Correspondent Andrew Hampp discusses the battle for streaming music subscribers. He speaks on “Market Makers.”
May 29 -- Billboard Senior Branding Correspondent Andrew Hampp discusses the battle for streaming music subscribers. He speaks on “Market Makers.”
(Bloomberg) -- Iron ore’s stunning surge won’t fade anytime soon because buyers remain nervous about being caught short as global demand accelerates amid lingering supply threats, according to a veteran commodities trader.The steelmaking material soared past $230 a ton Wednesday to a fresh record for Singapore futures, amid a broadening commodities boom. While steel demand and production are strengthening, many analysts argue market fundamentals alone don’t justify such high prices. That won’t halt further gains, according to Andrew Glass, Singapore-based founder of Avatar Commodities Ltd.“Logic dictates that these are ridiculous prices but fear will continue to keep the scramble going,” said Glass, a former head of ferrous trading at mining major Anglo American Plc, who has traded commodities since the 1990s. “There is fear of not being able to secure the logistics and the resources you need -- $220 is expensive, but it’s much more expensive if you have to shut down a mill because you can’t get material.”Industrial commodities and shipping costs are spiking as buyers hurry to secure raw materials with global industries from manufacturing to construction gearing up again as the pandemic fades. That adds to strong demand from China, where elevated steel margins are providing support for high iron ore prices. They could test $250 in the coming 12-18 months, according to Oversea-Chinese Banking Corp.China’s steel and iron ore futures also jumped to record highs Wednesday. The nation’s steelmakers are ramping up production in defiance of government attempts to rein in output to control the industry’s carbon emissions, while robust profit margins are enabling mills to better accommodate surging input costs.Amazing MotivatorIron ore is “grossly overpriced at the moment, but fear is an amazing motivator and prices are a reflection of fear,” Glass said. “You’re seeing fear more broadly with gold prices up, the dollar down, there is a flight to safety, and there is a certain amount of fear feeding into commodities markets.”China relies on just two countries -- Brazil and Australia -- for 80% of its iron ore imports. Brazil is grappling with a deadly surge of the coronavirus, and there are global concerns about the Covid-19 variant that’s overwhelming India. Separately, China’s fraying ties with Australia have added another element of risk to the market.“From Brazil, those boats are 40 days away,” Glass said. “So any more problems in Brazil because of the virus, you better make sure you are well-covered. And if politics between Australia and China does get to the point of creating a problem with Australian supply, and there is a Brazil issue too, then security of supply becomes very, very important.”Iron ore in Singapore rose as much as 5.7% to reach a record $233.55 a ton and traded at $232.20 at 2:25 p.m. local time. Iron ore on China’s Dalian exchange and steel rebar in Shanghai also both advanced to fresh all-time highs.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 stock gained downside momentum at the start of this week and made an attempt to settle below the $600 level.
As people flock to gas stations in wake of the cyberattack on the Colonial Pipeline, the federal consumer agency reminded people of safe gas measures.
(Bloomberg) -- Greenlight Capital’s David Einhorn said he recommend shares of Canadian miner Teck Resources Ltd. amid strong demand for copper and other commodities.The pipeline of potential new copper capacity is low, and it takes a long time to create new mines, the hedge fund manager said Wednesday at the Sohn Investment Conference, which was held virtually this year. Demand is poised to outstrip supply in 2024, leading to higher copper prices, Einhorn said.The gathering pace of a global recovery from the pandemic has driven up the prices of commodities from copper to corn, with the Bloomberg Commodity Spot Index climbing to a decade high.Einhorn, 52, ticked off several catalysts for higher copper prices, including Bitcoin mining and a “gold rush” in electric vehicles, which contain four-times more copper than conventional cars. Vast amounts of copper wiring are also needed in roadside chargers to keep them running.Teck Resources, which Einhorn described as “overlooked,” has underperformed mining peer Freeport-McMoran Inc. over the past year. Teck trades at two-third of Freeport’s price-to-earnings multiple “and has much better growth prospects,” he said, noting that the Vancouver-based company is in the middle of an expansion project in Chile.Its stock has surged about 190% in the past year, while Freeport-McMoran has almost quintupled.Greenlight began building its Teck stake in the second-quarter of 2020, regulatory filings show. The miner’s shares, currently trading at about C$25, are worth roughly C$59 apiece with copper at $4.50 a pound, Einhorn said. Copper for July deliver is currently trading at about $4.73 a pound in New York.Greenlight, which oversaw $2.2 billion at the start of the year, gained 2.4% through April, according to a person familiar with the matter. While Einhorn’s value-investing strategy has fallen out of step with markets in recent years, he has vowed to rework his portfolio by making fewer, more concentrated bets.For more on the Sohn Investment Conference, click here for our TOPLive blog.(Updates with investment rationale in fifth paragraph, stock performance in sixth.)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 rand’s 30% gain against the dollar since the height of the pandemic has outstripped emerging-market peers -- and the rally may not be over yet.South Africa’s currency has recovered all its losses since it slumped to a record in April last year, and then some. Strong commodity prices and the global search for yield should support the narrative for further gains in coming months. Domestic fiscal metrics -- though still far from healthy -- are improving along with terms of trade, while the government’s crackdown on corruption is also fueling positive sentiment.The rand extended its rally on Tuesday, advancing 0.3% to 14.0040 per dollar by 4:17 p.m. in Johannesburg and bringing its gain this month to 3.5%.It’s becoming easier to back South Africa’s currency, and these charts illustrate why:Bond Investors ReturnAfter record outflows from South Africa’s bond market in the first four months of the year, last week’s disappointing U.S. jobs numbers heralded a reprieve. Foreign investors bought a net 5.2 billion rand ($370 million) of South African government debt on Friday, the biggest in inflow since November, as the move lower in Treasury rates gave new impetus to the search for yield. Together with a healthy trade surplus fueled by rising commodity prices, those inflows could be rand-supportive in coming months.Technical CheerThe dollar last week tested a pivotal area at 14.40-14.50 after consolidating in the second half of April. Failure to breach resistance meant that rand bulls got the upper hand once again, as shown by the fear-greed indicator, and the pair fell to fresh cycle lows. In the longer-term, the rand seems to be in the final stages of the ABC correction of an Elliot Wave Cycle that started in 2011 and was completed in early 2020. The dollar may weaken toward the 11.50 handle, according to the pattern.Encouraging OptionsDemand for dollar topside exposure took a hit as key resistance around 14.50 held. While greenback calls still trade at a significant premium, bearish sentiment for the South African currency, as measured by one-month risk reversals, has moved to the lowest level in three weeks, with room to extend toward February range extremes.Shiny ProspectsThe correlation between the Bloomberg Industrial Metals Sub-Index and the rand has strengthened to 0.6, near its strongest level this year. Industrial metals account for about a quarter of South Africa’s export earnings, bolstering the current-account balance, for long the rand’s Achilles heel. The current account may be in surplus this year, according to the median forecast in a Bloomberg survey.Best BetThe large inflows from loans South Africa procured from the International Monetary Fund and New Development Bank amid the height of the Covid-19 pandemic have created a surplus of dollars in the local banking system. That’s lifted USDZAR basis swaps well above the long-term average, making it expensive to short the South African currency. With more inflows expected this year from a World Bank loan and Eurobond issuance, the cost of betting against the rand will remain elevated for some time.(Updates rand move in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Gold is set to snap its longest rally since January, hurt by gains in the dollar and Treasury yields after a higher-than-expected reading on U.S. inflation.U.S. consumer prices climbed in April by the most since 2009, according to Labor Department data Wednesday. Rising yields reduce the appeal of non-interest-bearing bullion, and a stronger dollar makes bullion more expensive for investors holding other currencies.Markets were already concerned that rising inflation amid surging commodity prices could prompt the Federal Reserve to boost rates earlier than expected. Gold had shrugged off that concern, rising to the highest in three months earlier this week after a report Friday showed a surprise slowdown in U.S. job growth, supporting the case for continued economic stimulus.“Gold is approximately 50% correlated with Treasuries, so it gets hit as interest rates rises,” said Jay Hatfield, president of Infrastructure Capital Management. “On top of that, the dollar is rallying. The stock market dipping on the inflation data showed that investors fear that the Fed may need to tighten soon.”Policy makers at the central bank have been unified in supporting the case for low interest rates.“The outlook is bright, but risks remain, and we are far from our goals,” Governor Lael Brainard told a virtual event Tuesday. Cleveland Fed President Loretta Mester and James Bullard of St. Louis voiced similarly dovish views.Spot gold fell 0.9% to $1,821.07 at 3:21 p.m. in New York. The metal gained for five straight sessions through Tuesday, the longest rally since Jan. 5.Futures for June delivery on the Comex declined 0.7% to settle at $1,822.80 an ounce. Spot silver, platinum and palladium slid.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Stocks fell Tuesday, with the major indexes adding to Monday's losses as inflation concerns rose.
(Bloomberg) -- The U.S. Securities and Exchange Commission has a blunt message for investors in mutual funds that have holdings in Bitcoin futures: Beware of the risks.While the derivatives have become increasingly popular, they’re still based on an asset that’s “highly speculative” and volatile, and which trades in a lightly regulated market, the SEC’s division of investment management said Tuesday in a statement. Investors should weigh their appetite for risk and examine the fund’s disclosures, the agency said.“Investor protection and assessing the ongoing compliance of these funds is a top priority for the staff,” the SEC said.The warning comes just weeks after Gary Gensler, who taught classes on digital assets at the Massachusetts Institute of Technology, took over as SEC chairman. His early comments have thrown cold water on speculation that the SEC would quickly approve a Bitcoin exchange-traded fund. Last week, he told lawmakers that the cryptocurrency market “could benefit from greater investor protection.”On Tuesday, the SEC said it would “consider whether, in light of the experience of mutual funds investing in the Bitcoin futures market, the Bitcoin futures market could accommodate ETFs.” The agency also said staff would:Scrutinize the Bitcoin futures market to judge whether it “appropriately” supports mutual fund investments in the derivativesLook at funds’ ability to liquidate their derivatives in the cryptocurrencyReview funds’ valuations of holdingsFor 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 fast and furious rotation into value shares is sweeping Wall Street while long-time market favorites -- technology shares -- are extending their decline.Across the world, shares tied to economic growth are outperforming as the commodity rally helps push bond-market inflation bets toward a 15-year high.A strategy that bets on U.S. equities that look undervalued and against expensive ones is rising again on Tuesday after posting its biggest rally in two months on Monday. The Nasdaq 100 fell as much as 2% at the open, compared with a 1.1% drop for the Dow Jones Industrial Average.“Renewed value leadership at the factor level and the broader risk-on rebound suggest the economic cycle is continuing rather than peaking,” Evercore ISI strategists led by Dennis Debusschere wrote in a note.The Russell 1000 Value Index has jumped more than 1.3% this month while the Nasdaq has lost money. It’s all shaking up the world of exchange-traded funds, where assets in value ETFs have firmly overtaken those of funds tracking the growth investing style, according to smart-beta data compiled by Bloomberg Intelligence.All this means quant investors who stuck with value during its historic pounding in the pandemic are getting their mojo back, while traders crowding into speculative tech-heavy corners of the market including Cathie Wood’s ARK funds are on the back foot.It’s a comeback long in the making. Value shares -- or those with low prices relative to some fundamental indicator like earnings -- are typically more dependent on the business cycle than tech stars like Tesla Inc. They have been persistent laggards in recent years, especially when last year’s lockdowns drove investors further into stay-at-home names like Zoom Video Communications Inc.But while most value revivals have proved fleeting in the post-crisis bull years, a slew of analysts now say the stars are aligned for this one to last.Higher inflation expectations have tended to favor value, since it typically comes with faster economic growth and higher bond yields, hurting tech stocks whose long-term prospects now have to be discounted at higher rates.Over the past month, the energy, materials and financial sectors have led the S&P 500. Tech has been the worst performer.Even former skeptics predict this rotation has further to go. Sanford C. Bernstein strategists, who once joked about value managers having no clients, said in a note on Friday “there is plenty of ammunition left.”“Value stocks remain the most uncrowded part of the market,” the team wrote in a note. “In the longer run, this rotation is but a blip in the persistent underperformance of value versus growth.”Because of value’s historic drawdown last year, its recent recovery has only narrowed its discount slightly, with the spread still at double the 10-year average and triple the 20-year. At Barclays Plc, strategists led by Emmanuel Cau noted value sectors like mining and financials might even be getting relatively cheaper, since their earnings -- the denominator of those multiples -- are rising faster than prices.At Versor Investments, which is among the quant funds that predicted a value comeback, founders Deepak Gurnani and Ludger Hentschel pointed out that after the dot-com bubble burst, the strategy posted strong performance between 2000 and 2004.“The positive value returns in 2021, so far, have done little to shrink the extreme value spreads created by the previous negative returns,” they wrote in a report.Meanwhile, the market shift means that investors in momentum -- an allocation style that buys recent top performers -- have been putting more money into value, after bidding up tech names in recent years. The semi-annual rebalancing of the $14 billion iShares MSCI USA Momentum Factor ETF (ticker MTUM), for instance, is expected to see a big rotation into cyclical and riskier names this month.At least one large cohort of money managers has yet to join the rally. Bank of America Corp. noted last week that the value rotation has yet to exert much influence on the returns posted by active funds. That suggests these investors may be braced for pain if instead they chased the likes of Big Tech and renewable energy at the market top.“Portfolios are still majorly composed of long duration growth assets and hence would be prone to losses if macro/inflation dynamics continue to improve,” strategists at Barclays wrote. “Cheap, economically sensitive, and an inflation hedge, value seems like the natural place to position a portfolio.”(Updates prices for U.S. market open)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 direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.2082.
(Bloomberg) -- Sovereign bond defaults have piled up at a dizzying clip in Latin America since the pandemic began. First, it was Ecuador’s turn, then came Argentina, followed by Suriname, then Belize, then Suriname again and Suriname one more time.In all, more than $80 billion of foreign bonds have been restructured. And there’s more pain to come.Traders are almost certain three of those countries will default yet again, bond prices suggest, and the fourth, Ecuador, is far from financial stability. Then there’s the case of Venezuela, which has been mired in default for so many years that creditors have resigned themselves to recouping just a tiny fraction of their money, if anything.All of which makes the current moment feel a bit like a flashback to the Lost Decade of the 1980s, when Latin America’s heavily indebted countries sank into default one after another and their economies fell into protracted recessions that deepened poverty. While this time is unlikely to be as bad -- in part because rising commodity prices are providing a financial lift -- no bond market in the developing world has been upended in the pandemic quite like Latin America’s.Buffeted by never-ending waves of Covid-19 and economic paralysis, the region has become Exhibit A in the study of how the virus has deepened the divide between the rich and poor nations of the world. The region’s plight is adding a sense of urgency to the calls in policy circles in Brussels and Washington to provide more relief to developing nations after the Group of 20 leading countries put a temporary moratorium on certain debts. In June, the board of the International Monetary Fund will consider a proposal to free up an additional $650 billion to lend to struggling countries.Siobhan Morden, a Wall Street analyst who’s specialized in emerging-market debt for the past three decades, says the economic fundamentals in Latin America are so weak right now that “even the strongest countries are struggling.”“It is a difficult dynamic,” says Morden, who runs Latin America fixed-income strategy at Amherst Pierpoint. On the one hand, bond investors are demanding fiscal restraint to ensure long-term debt sustainability while on the other, governments are eager to ramp up spending on much-needed social and medical programs. “The two are incompatible.”“Rating agencies and bond vigilantes are quite nervous about repayment risk,” Morden says, “and that has a lasting impact.”The reasons for that angst are plain to see. Some of the biggest names in international finance -- BlackRock, Fidelity, Ashmore, Greylock -- got burned by the defaults in Argentina and Ecuador. And returns more broadly on assets in the region have been dismal.Dollar bonds issued by Latin American governments are the worst performers of any emerging-market region tracked by JPMorgan Chase over almost any recent time period, including a 3.1% loss this year. The region’s stocks, tracked by MSCI, follow a similar trend going back as far as a decade. And several of its currencies are among the biggest decliners in the developing world this year.A recent HSBC survey of money managers illustrated how gloomy the mood is. Of the 164 surveyed, just 43% said they had overweight positions in Latin America, down from 70% in January. And it was the only region where net sentiment was negative on local currencies, external bonds and equities.To be clear, the countries that defaulted have long had weak finances, and few analysts see the region’s top economies -- Brazil, Mexico, Chile, Colombia, Peru -- sinking into financial crisis any time soon. They have solid hard-currency reserves, access to debt markets that global central bankers flooded with cash, and they’re benefiting from soaring global demand for their commodity exports.But even in these nations, signs of stress and strain are mounting.Chilean assets tumbled recently after workers won permission to tap pensions for the third time since the pandemic began. Peruvian bonds have rebounded somewhat, but are still among the worst in emerging markets this year as a Marxist candidate leads presidential opinion polls. In Colombia, the government’s attempts to increase taxes were met with deadly street protests, forcing policy makers to retreat.And in Brazil and Mexico, the region’s two powerhouses, the cost for the government to borrow in dollars has jumped relative to peer countries in other parts of the world.The two countries have been ravaged by Covid-19. Combined, they’ve lost over 600,000 lives. As a whole, the region has accounted for a third of all deaths even though it only makes up 8% of the global population. The pandemic worsened inequality and poverty, especially among women, while also triggering a 7% economic contraction in 2020, more than double the decline of any other region.To make matters worse, Latin America was already a laggard in global economic growth going into the pandemic. Mired in a prolonged bust following the go-go days of the aughts -- when an unprecedented commodities rally swelled corporate and government coffers -- the region posted an average annual expansion of just 0.8% from 2014 to 2019, a fraction of the average pace for other emerging markets.So bad were these years that some old Latin American hands had actually taken to referring to this period as the region’s second Lost Decade, following the original one in the 1980s. Seen as such, the region now faces the prospect of back-to-back decades of stagnation.Bill Rhodes remembers the first Lost Decade well.He was one of Citibank’s top bankers in Latin America at the time and he played a big role in the debt restructuring framework -- eventually known as the Brady plan -- that was hashed out.Some things were very different back then. Benchmark interest rates in the U.S. had soared above 10%, compared to the near-zero rates of today. This effectively had cut developing nations off from international financing. And most of the debt was in the form of loans from banks like Citibank -- the predecessor to Citigroup -- instead of the bonds of today.But when Rhodes looks at the impact that Covid has had on the region, he sees enough similarities between now and then to justify the use of the term, or to at least warn of the possibility.“It’s worse than in any other area in the world,” said Rhodes, who spent five decades at Citi. “That’s a very real point that people don’t pick up on enough.”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) -- Over and over again, Federal Reserve officials have advised that any pickup in inflation this year was bound to be transitory. Traders in financial markets, however, aren’t so sure.Even before the faster-than-forecast rise in U.S. consumer prices reported Wednesday, investors had become fixated on widespread signs of cost pressures as commodities like copper and lumber surged to records and the bond market’s expectation for inflation over the next decade climbed to an eight-year high. The focus is shaking up the stock market, sending the Cboe Volatility Index to the highest since March.The most-recent round of U.S. corporate earnings calls showed the word inflation was back in vogue, with its usage rising 800% from a year ago, according to Bank of America Corp. Even last week’s payrolls report, which showed the U.S. added only about a quarter of the jobs economists expected in April, is being viewed as a sign that companies will have to boost wages to entice more unemployed workers into the labor force.“Inflation risk is what we want to watch here,” Savita Subramanian, Bank of America’s head of U.S. equity and quantitative strategy, said on Bloomberg Television on Friday. “I don’t know if it’s going to be transitory.”The U.S. consumer price index for April boosted the bond market’s five-year inflation outlook on Wednesday to the highest since 2005. Month-over-month CPI came in at 0.8%, beating economists’ estimates of 0.2%. On a year-over-year basis, CPI rose 4.2%, above estimates of 3.6%. The figures pushed the 10-year Treasury yield up five basis points to 1.67%.The growing inflation fears are a political threat to President Joe Biden’s plans for vast new spending, particularly after a disappointing jobs report on Friday.But policy makers are standing their ground. Even known Fed hawks have chimed in over recent weeks to say that inflation is unlikely to get out of control despite unprecedented government spending in response to the coronavirus pandemic. Both Fed Chairman Jerome Powell and a top Biden administration economic adviser have said that the inflation now apparent in certain pockets of the economy is “transitory.”That description raises an important question: Just how long does “transitory” mean? The answer is probably unknowable at the moment, but past recessions provide some clues.Commodities After RecessionIf the latest rise in prices is largely commodity-driven, then it’s a matter of how long those input prices keep rising. Using the 2009 economic rebound as a road map, demand for raw materials -- and ergo their prices -- soared for two years and pushed up global inflation until commodity markets topped out.Those price increases were largely driven by a massive Chinese infrastructure package. This time, the U.S. may fill the role that China played more than a decade ago as the Biden administration proposes billions of dollars in spending. By this logic, “transitory” could mean two years.Computer-Chip ShortagesHowever, raw materials like lumber and copper aren’t the only factors that potentially will push up inflation. Computer chips used in everything from cell phones to cars and refrigerators are also playing a major role.Honda Motor Co., BMW AG and other automakers have been forced to halt production due to chip shortages. Given how crucial they are, it’s no surprise that the 30-member Philadelphia Semiconductor Index has a positive correlation with 10-year breakevens, a bond-market gauge of inflation expectations that’s based on the difference in yields between nominal Treasuries and inflation-protected securities. The two indexes have been trading in tandem over the past year.It doesn’t stop there.Used CarsThe headwind to new-vehicle manufacturing posed by the shortage of computer chips led to a 10% jump in prices for used cars and trucks in April, the CPI report showed Wednesday. Pent-up demand among those who can’t afford big-ticket items can be seen in the surge in prices of used cars, says Sebastien Galy, a senior macro strategist at Nordea Investment Funds SA in Luxembourg. The Manheim Used Vehicle Value Index, which measures prices at wholesale auctions, shows they’re now 20% higher since the end of last year.“It shows that if you can’t afford a lot, then replacing your car may be the way to splurge,” Galy said.BreakevensThe bond market has sniffed out all the pricing pressure, and the inflation expectations it reflects are influential in setting investor assumptions. Ten-year breakeven rates, a proxy for the inflation expected over the next decade, are near their highest since March 2013 at about 2.57%. Five-year breakevens rose as high as 2.82% on Wednesday, the highest since 2005.To be sure, not all market participants agree with the inflation signals coming from the bond market. Goldman Sachs Group Inc. and Pacific Investment Management Co. estimate that bond traders pricing in annual inflation approaching 3% over the next handful of years are overstating the pressures bubbling up.Read More: Goldman, Pimco Detect Irrational Inflation Mania in BondsWage PressuresMeanwhile, some investors, strategists and politicians have indicated that the real message of the well-below-forecast rate of job creation last month is that costs to entice more unemployed people back to work will rise. That’s in part due to added government unemployment benefits that make their former wages less appealing. Any pressure to increase wages could feed back into the prices of goods and services, further increasing the rate of inflation.“It’s not going to be that easy to pull 8 million people off their sofas and back to work without the price of doing that having to be higher than it was before,” said Mark Holman, chief executive officer at TwentyFour Asset Management. “This is inflation risk,” said Holman who is avoiding duration risk as a result and focused on corporate debt given the growth outlook is good and default risk is low.(Updates throughout with CPI data, market reaction)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) -- Energy, financial and industrials shares led U.S. stocks lower as the pullback centered in the technology sector widened while investors remained on edge over the threat of inflation.The tech-heavy Nasdaq 100 erased a loss of almost 2% to finish little changed as some dip buyers emerged. The benchmark S&P 500 dropped for a second day after setting a record high on Friday. Treasury yields edged up and the dollar traded near the lowest levels of this year.Debate rages over whether the expected jump in price pressures will be enduring enough to force the Federal Reserve into tightening policy sooner than current guidance suggests. Fed Governor Lael Brainard said policy makers must show continued patience as distortions in the post-pandemic boom sort themselves out while the economy is still far from the central bank’s objectives.“I just think that in general there’s this thought that inflation may rear its ugly head,” said JJ Kinahan, chief market strategist at TD Ameritrade. “We see a little bit higher rates, not significantly, but a bit higher rates. And I think this struggle between value and growth also continues at the same time.”Among the biggest pandemic winners, tech stocks whose valuations often depend on earnings prospects far into the future are now at the center of the inflation debate. That was epitomized in Cathie Wood’s Ark Innovation ETF, which has tumbled about 15% so far this year after surging almost 150% in 2020.Read more: Global Tech Rout Deepens as Sector Slides Further From PeaksEven after the declines, the Nasdaq Composite trades at 26 times the 12-month projected profits, while the gauge of European technology shares enjoys a valuation of 29 times.Wednesday’s U.S. inflation report along with a series of U.S. government bond auctions this week are seen as the next factors to deepen or arrest the slide. The latest reading is expected to show an accelerated pace of consumer-price increases, with the year-on-year comparison made starker by the pandemic shock in 2020.“What’s interesting about tech and the selloff is that it comes in the face of stable yields, a Fed that is likely on hold for a while and some very strong earnings,” said Michael Arone, chief investment strategist for the U.S. SPDR exchange-traded fund business at State Street Global Advisors. “Markets seem to be anticipating some time of move in rates and inflation that could potentially be problematic for the tech and growth trade.”Copper prices traded near a record, while iron also rallied. Oil rose as fuel shortages are expanding across several U.S. states in the East Coast and South as filling stations run dry amid the unprecedented pipeline disruption caused by a criminal hack.See here the ML IV Question of the Day: How Far Can Reflation Trades Go?Here are some key events to watch this week:U.S. CPI report Wednesday is forecast to show prices continued to increase in AprilBank of England Governor Andrew Bailey speaks WednesdayThese are some of the main moves in markets:StocksThe S&P 500 fell 0.9% to the lowest since April 22 as of 4 p.m. New York timeThe Nasdaq 100 fell 0.1% to the lowest since April 1The Dow Jones Industrial Average fell 1.4%, more than any closing loss since Feb. 26The MSCI World index fell 1.2%, more than any closing loss since March 4CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.2149The British pound rose 0.2% to the highest in about three yearsThe Japanese yen rose 0.1% to 108.66 per dollarBondsThe yield on 10-year Treasuries advanced two basis points, climbing for the fourth straight day, the longest winning streak since March 19Germany’s 10-year yield advanced five basis points, more than any closing gain since March 3Britain’s 10-year yield advanced five basis points, more than any closing gain since March 18CommoditiesWest Texas Intermediate crude rose 0.7% to $65 a barrelGold futures rose 0.1%, climbing for the fifth straight day, the longest winning streak since Jan. 5For 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 states suffering from the most acute gasoline shortages should start to feel relief this weekend after the nation’s largest fuel pipeline resumed operations.Fuel will begin flowing immediately but will require an armada of tanker trucks to ferry product from endpoint gasoline terminals to retail stations emptied by panicked drivers during the Colonial pipeline’s shutdown. Earlier this week, the Biden administration waived some trucker restrictions to help with the replenishment.Panicked drivers lined up for gasoline at stations across the Southeast after a ransomware attack forced the Colonial Pipeline system to shut its operations late last week. Georgia, Virginia and the Carolinas were among the most affected by empty pumps. The rush to fill up sent the national average gasoline price above $3 a gallon for the first time in six years.The most immediate effect of the pipeline’s restart may be psychological, calming fears of dwindling supplies and persuading motorists to hold off from topping up tanks, said Angela Holland, president of the Georgia Association of Convenience Stores.“Folks that get up in the morning, and they’ve got three-fourths of a tank of gas, are not going to feel like they need to top off tomorrow,” she said. Some of the association’s members reported selling three to four times their usual daily amount during the pipeline system’s shutdown.North Carolina, the first state to declare a state of emergency in the wake of Colonial’s shutdown, should register a significant change by this weekend, said Gary Harris, executive director of North Carolina Petroleum & Convenience Marketers.Major branded stations will get fuel first since they are under contract with suppliers, said Harris. “People will have to be running trucks a lot to just catch up because so much is out at this time,” he said.Waivers for weight load and driving-hours restrictions for truck drivers will help speed gasoline deliveries to retail stations. “The weekend should give people a chance to get caught up with their distributors and dealers,” said Michael O’Connor, president of the Virginia Petroleum & Convenience Marketers Association. Consumers will see a difference by Monday, he said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
After a doctor's visit, three court appearances, five trips to the bank and having her name and address published in a newspaper, Billie Simmons finally got a debit card with her chosen name. She hasn't been able to change her online banking username and her credit score is incomplete, only reflecting transactions made after she legally changed her name. Hoping to address some of these issues, Simmons has co-founded Daylight, an online banking provider focused on the LGBTQ community that is set to launch this summer.
(Bloomberg) -- Tesla Inc.’s Chief Executive Officer Elon Musk said the electric-vehicle manufacturer is suspending purchases using Bitcoin, triggering a slide in the digital currency.In a post on Twitter Wednesday, Musk cited concerns about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” while signaling that Tesla might accept other cryptocurrencies if they are much less energy intensive. He also said the company won’t be selling any of the Bitcoin it holds.The largest cryptocurrency dropped as much as 15% to just above $46,000, before paring some of the retreat. It was down about 6% to $51,210 as of 7:03 a.m. in London on Thursday. Other tokens such Ether and Dogecoin also slid. The rush to sell briefly caused outages at some cryptocurrency exchanges. Bitcoin is still up more than fivefold in the past year.Musk’s move comes after Tesla disclosed in February that it had purchased $1.5 billion in Bitcoin and planned to accept it as a payment. That announcement added legitimacy to the cryptocurrency as an increasingly acceptable form of payment and an investment, especially coming from a large member of the S&P 500 with a high-profile CEO who commands a big following among retail investors and the general public.Tesla’s website, which had a support page dedicated to Bitcoin, noted that the token was the only cryptocurrency that Tesla accepts in the continental U.S. Musk has also tweeted frequently about Dogecoin, a cryptocurrency started as a joke in 2013 -- and he quipped about being the “Dogefather” before and during his stint hosting the “Saturday Night Live” show on May 8. He tweeted on Tuesday, “Do you want Tesla to accept Doge?”Tesla’s addition of Bitcoin to its balance sheet was the most visible catalyst during this year’s rally in the digital currency. Bitcoin jumped 16% that day, the biggest one-day gain since the Covid-19 induced financial markets volatility in March 2020.Optimism grew after Mastercard Inc., Bank of New York Mellon Corp. and other firms moved to make it easier for customers to use or invest in cryptocurrencies, fueling the mainstream resurgence that took Bitcoin from about $29,000 at the end of last year to as high as almost $65,000 in April.Bitcoin mining is consuming 66 times more electricity than it did back in late 2015, and the carbon emissions associated with it will likely face increasing scrutiny, according to a recent Citigroup Inc. report.Musk is no stranger to considering the issue of crypto’s environmental impact.Musk Splits From Cathie Wood’s Ark on Bitcoin Environmental CostCathie Wood’s Ark Investment Management LLC published a report last month saying cryptocurrency mining can drive investment in solar power and make more renewable energy available to the grid. Twitter Inc.’s Jack Dorsey retweeted a post on the white paper with the comment that Bitcoin “incentivizes renewable energy.” Musk replied to Dorsey’s tweet, saying simply, “True.”‘Confusing’Musk’s tweet on Wednesday took many in the cryptocurrency community by surprise, including Nic Carter, founding partner at Castle Island Ventures, and a leading voice among defenders of Bitcoin’s energy use.“Surely he would have done his diligence prior to accepting Bitcoin?” Carter said. “Very odd and confusing to see this quick reversal.”It’s unclear what prompted the decision and Musk and Zachary Kirkhorn, Tesla’s chief financial officer, didn’t immediately respond to an email inquiry for comment. Kirkhorn in March added the tongue-in-cheek title “Master of Coin,” according to a regulatory filing.Tesla’s first-quarter earnings were bolstered by the sale of 10% of its Bitcoin holdings. Musk said last month the disposal was intended to demonstrate the token’s liquidity, and added that he’s retained his personal investment in the cryptocurrency.Kirkhorn said on the firm’s earnings call in late April that Tesla believed in Bitcoin’s long-term value and planned to accumulate the tokens from transactions with customers.(Updates markets in the third paragraph. An earlier version of this story corrected the company name in the 11th 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.
Investing is all about profits, and part of generating profits is knowing when to start the game. The old adage says to buy low and sell high, and while it’s tempting just to discount cliches like that, they’ve passed into common currency because they embody a fundamental truth. Buying low is always a good start in building a portfolio. The trick, however, is recognizing the right stocks to buy low. Prices fall for a reason, and sometimes that reason is fundamental unsoundness. Fortunately, Wall Streets analysts are busy separating the wheat from the chaff among the market’s low-priced stocks, and some top stock experts have tagged several equities for big gains. We’ve used the TipRanks database to pull up the data and reviews on three stocks that are priced low now, but may be primed for gains. They’ve been getting positive reviews, and despite their share depreciation, they hold Buy ratings and show upwards of 80% upside potential. Vapotherm, Inc. (VAPO) First up, Vapotherm, is a medical device manufacturer, specializing in heated, humidified, high-flow nasal cannulas. These are therapeutic breath aids, designed to deliver oxygenated air directly to the patient’s nose. Heating and humidifying the air reduces the discomfort of delivering dry oxygen. As can be expected, during a pandemic of a respiratory illness, Vapotherm saw high sales in recent months – but the share price has pulled back since early February. Paradoxically, the two events are related. First, on the positive side, Vapotherm’s 1Q21 financial results were solid. The company’s revenue, at $32.3 million, was up 69% year-over-year, and worldwide, installations of the Precision Flow base unit was up 73% over the same period. The company’s net loss in the quarter, $5.2 million, was an improvement from the $10.2 million loss in the year-ago quarter. On the negative side, VAPO shares are down from their early-February peak. The drop is substantial; the stock has fallen 50% from its peak, and is down 34% year-to-date. The fall in share value reflects concerns that the company’s flagship product is oversold, that customers, fearful of COVID-related respiratory emergencies, bought more units that would be needed in ordinary times. This is the case made by Piper Sandler analyst Jason Bednar. “Shares have meaningfully underperformed since early February as many investors have questioned utilization dynamics for the bolus of Precision Flow systems that were sold into hospitals last year… We understand the logic here, particularly for those investors with a shorter time horizon, but with much of that concern seemingly already reflected in the stock at current levels we do believe the upside opportunity meaningfully outweighs the risk of further downside,” Bednar noted. The analyst added, "It’s also our view that investors who wait for utilization trends to bottom out will ultimately miss an initial move higher that could come as HVT 2.0 begins to contribute with a rollout later this year and as market expanding opportunities for HVT 2.0 in 2022 begin to take on a more defined shape (particularly EMS and home-based care)." To this end, Bednar rates VAPO an Overweight (i.e. Buy), and his $32 price target implies a robust upside of 81% in the year ahead. (To watch Bednar’s track record, click here) Overall, the unanimous Strong Buy consensus rating on this stock, supported by 4 recent analyst reviews, makes it clear that Bednar is not alone in his bullish view. The average price target here, $39, is even more optimistic, suggesting an upside of ~122% from the current trading price of $17.65. (See VAPO stock analysis on TipRanks) Emergent Biosolutions (EBS) The next stock we’re looking at, Emergent, is a biopharmaceutical company. The company has multiple products on the market, including a NARCAN nasal spray for use on opioid overdose patients, and vaccines against smallpox, anthrax, and other diseases. Emergent’s development pipeline includes a pediatric cholera vaccine, Vaxchora, currently in a Phase III trial. Several programs, including an anthrax vaccine candidate, a Chikungunya vaccine, and a seasonal flu shot, have all completed Phase II and are in preparation for Phase III. One of Emergent’s most important programs is in its Contract Development and Manufacturing service, a service extended to other pharmaceutical companies to manufacture vaccines which they have developed. Under a CDMO plan, Emergent is part of Johnson & Johnson’s manufacturing chain for a COVID-19 vaccine. That last is a key point. The J&J vaccine has been linked – at least in some reports – to serious adverse events, particularly blood clots in otherwise healthy recipients. That has caused a hold in manufacturing of the vaccine, and consequently a delay in receiving payments from J&J. Which, in turn, impacted the company’s 1Q21 financials, resulting in lower revenues and earnings than expected. Investors are concerned, and the stock has fallen 33% year-to-date. Despite the setback, Benchmark analyst Robert Wasserman keeps a Buy rating on EBS shares, along with a $120 price target. If correct, the analyst’s objective could deliver one-year returns of 101%. (To watch Wasserman’s track record, click here) "EBS remains solidly profitable, and even with the lowered expectations for J&N and AZ vaccine contracts, is expected to show solid revenue growth for this year. These shares remain a bargain in our CDMO/bioprocessing group and could offer significant upside for value-oriented investors if circumstances turn around or new business can be garnered in the near-term," Wasserman opined. Overall, the Street currently has a cautiously optimistic outlook for the stock. The analyst consensus rates EBS a Moderate Buy based on 3 Buys and 2 Holds. Shares are priced at $59.59, and the average price target of $89.67 suggests an upside potential of ~50% for the next 12 months. (See EBS stock analysis at TipRanks) Haemonetics Corporation (HAE) For the last stock on our list, we’ll stick with the medical industry. Haemonetics produces a range of products for blood and plasma collection and separation, as well as software to run the machines and service agreements for maintenance. In short, Haemonetics is a one-stop shop for blood donation centers and hospital blood banks. Blood products is a $10.5 billion market in the US alone, with plasma accounting for 80% of that, and Haemonetics has made itself an integral part of that business. Haemonetics had been recovering steadily from a revenue dip at the height of the corona crisis, and its 3Q fiscal 2021 earnings showed a solid results: top line revenue of $240 million and EPS of 62 cents. While the revenue was down 7.3% yoy, EPS was up 6.8%. Even with that, however, the stock dropped sharply between April 15 and April 20, losing 42% of its value in that short time. The reason was simple. One of Haemonetics’ largest customers, CSL Pharma, announced that it does not plan to renew its contract with HAE. That contract, for supply, use, and maintenance of Haemonetics’ PCS2 plasma collection system, was worth $117 million and made up approximately 12% of the company’s top line. The cancellation comes with a one-time charge of $32 million in other related losses. Fortunately for HAE, the CSL contract does not expire until June of 2022, giving the company time to plan and prepare. Covering the stock for JMP Securities, analyst David Turkaly noted: “The advance notice gives HAE some time (~15 months) to prepare for the expiration, and we note that management has consistently strengthened its financial position using levers such as complexity reduction and product optimization to derive significant cost savings, and more of these will likely be employed ahead to help offset the customer loss.” The analyst continued, "While this disappointing decision could impact HAE's plasma positioning with other fractionators, we continue to believe that giving customers the ability to collect more plasma in less time is a very compelling value proposition - and HAE still has contracts and maintains significant market share with many of the most relevant plasma players." Accordingly, Turkaly rates HAE an Outperform (i.e. Buy), and sets a $110 price target. This figure implies an upside of 86% from current levels. (To watch Turkaly’s track record, click here) All in all, HAE has a Moderate Buy consensus rating, based on 7 reviews that break down 5 to 2 in favor the Buys over the Holds. The stock is trading for $59.02 and carries an average price target of $108.67, which suggests ~84% one-year upside. (See HAE stock analysis at TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The Japanese tech investor smashed profit records in its home country, capping a wild year in which it rode roller-coaster stock markets from the lows at the beginning of the pandemic to recent highs.
Economists are puzzled by the hiring problems that John Deere, long one of Iowa's premier employers, is having at a time when thousands are unemployed
With a cyberattack temporarily hobbling the critical Colonial Pipeline, the prospect of gas shortages in the Southeast is making some nervous.