Journal Editorial Report: The week's best and worst from Kim Strassel, Kyle Peterson and Dan Henninger. Images: Getty Images Composite: Mark Kelly
Journal Editorial Report: The week's best and worst from Kim Strassel, Kyle Peterson and Dan Henninger. Images: Getty Images Composite: Mark Kelly
(Bloomberg) -- Traders in the $21 trillion U.S. Treasury market are sending a clear signal that they intend to keep pushing yields higher until they upend financial conditions sufficiently to spark action from the Federal Reserve.Ten-year yields climbed again on Friday, heading toward last week’s one-year high and undermining stocks, after Fed Chair Jerome Powell gave just a minor nod to the recent, abrupt surge in long-term borrowing costs. He stressed that officials are focused on the long road ahead before they achieve their policy goals.Even before Powell spoke, some strategists were predicting the global borrowing benchmark rate was on course to reach 2%, a mere 40 basis points above last week’s peak. With yields on the rise again, it may not be long before mortgage-related hedging kicks in and brings that target closer. Goldman Sachs Group Inc. boosted its year-end forecast for 10-year Treasury yields on Thursday to 1.90% from 1.50%.Friday’s February payrolls report now looms as the next catalyst. Yields have already soared more than a half-point this year as a cheerier outlook for growth and inflation led traders to bring forward how soon they see the Fed lifting its policy rate. Many strategists had expected Powell to try to more forcefully tamp down yields before the Fed’s black-out period ahead of its March 17 policy decision. With no such effort emerging, market participants are left to ponder where policy makers’ pain threshold may be.“In this environment yields can certainly continue to test higher,” said Jonathan Cohn, a strategist at Credit Suisse. “How far the Fed is willing to allow stock markets to fall -- which is the poor man’s version of thinking about broad financial conditions -- is a key question.”During an appearance in a Wall Street Journal webinar Thursday, Powell said the recent bond-market swings “caught my attention.” He said he’s monitoring financial conditions and would be “concerned by disorderly conditions in markets.”Ten-year yields added 8 basis points on the day to 1.56%, and continued to creep higher in Asia hours touching 1.58%, bringing into view last week’s one-year high of 1.61%. With yields at current levels, there have been fresh concerns of convexity-related hedging flow which can undermine liquidity conditions and further roil riskier assets. Stocks slumped Thursday, with the S&P 500 Index briefly erasing its 2021 gains.Powell said he’d be concerned if there were a “persistent tightening in financial conditions that threatens the achievement of our goals.” But he didn’t mention any actions the Fed might take to curtail the climb in yields, which has lifted mortgage rates and risks dimming a bright spot in an economy still on the mend from the pandemic.Wall Street strategists have mulled options the Fed could take to push down long-term yields including: extending the duration of its bond purchases, or implementing a so-called “twist” operation -- involving selling part of the Fed’s shorter-dated holdings in favor of long-term Treasuries.“If yields continue higher too quickly, then that could be a problem for the Fed,” said Mark Zandi, chief economist at Moody’s Analytics. “It might undermine asset prices, possibly causing a major correction in stock prices and a freezing up of the housing market. This is not our base case, but it’s a concern and a risk.”Meanwhile, a market proxy for the anticipated annual inflation rate for the next half-decade exceeded 2.5% this week for the first time since 2008 -- aided by climbing oil prices.Traders are now pricing in a full quarter-point Fed rate boost in the first quarter of 2023. The Fed itself has signaled it intends to keep policy steady at least through the end of that year.”Market participants are putting the Fed to the test and saying, ‘OK, given this spike in inflation, if it’s not transient then you’re going to have to act sooner,”’ Scott Minerd, global chief investment officer of Guggenheim Partners, said in a Bloomberg Television interview.(Updates with Friday’s yield move)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) -- Oil briefly moved above $65 a barrel after OPEC+ chose not to relax supply curbs even as the global economy pulls out of its pandemic-driven slump, confounding widespread expectations the group would loosen the taps.The surprise decision spurred a wave of crude price forecast upgrades by major banks. The producer alliance agreed to hold output steady in April, while Saudi Arabia said that it will maintain its 1 million barrel-a-day voluntary production cut. West Texas Intermediate rose as much as 1.9% and Brent briefly topped $68.See also: Saudis Bet ‘Drill, Baby, Drill’ Is Over in Push for Pricier OilCrude has soared this year, shepherded higher by OPEC+ restraining supplies and the vaccine-aided recovery in consumption that’s drained inventories. The group’s decision represents a victory for Riyadh, which has advocated for tight curbs to keep prices supported.“Overall, this was the most bullish outcome we could have expected,” JPMorgan Chase & Co. analysts including Natasha Kaneva wrote in a note to clients.The Organization of Petroleum Exporting Countries and its allies including Russia had been debating whether to restore as much as 1.5 million barrels a day of output. As part of the agreement, which was struck at a virtual meeting on Thursday, Russia and Kazakhstan were granted exemptions. The group’s next meeting is set for April 1 to discuss production levels for May.Saudi Arabia’s bold and unexpected gamble to restrain production is founded upon its view that, this time around, higher prices will not lead to a big increase in output by American shale drillers. Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg News in an interview after the OPEC+ meeting that shale companies are now more focused on dividends.Oil’s rapid gains this year stand to intensify the debate about the potential resurgence in inflation, and complicate the task facing the Federal Reserve as it supports the U.S. recovery. The Treasury market is already looking for signs of faster price gains, with yields rising rapidly. Crude is up more than 8% since Tuesday’s close despite a strengthening of the dollar and a steep sell-off in other major commodities, especially economic bellwether copper.See also: Here’s What Top Banks Are Saying About the Saudi-Led Oil ShockGoldman Sachs Group Inc. raised its Brent forecasts by $5 a barrel and now sees the global crude benchmark at $80 in the third quarter. JPMorgan increased its Brent projection by $2 to $3 a barrel and Australia & New Zealand Banking Group Ltd. boosted its three-month target to $70. Citigroup Inc. said crude prices could top $70 before the end of this month.Change CourseOil rising to these levels will likely increase strains within OPEC+ as some members will want to pump more to relieve under-pressure economies, Citi said in a note. Top importers such as China and India would also not be happy and the alliance is likely to change course at its next meeting, it said.The lack of fresh supply was reflected in oil’s futures curve. Brent’s prompt timespread widened to 61 cents in backwardation, a bullish structure where near-dated prices are higher than later-dated ones, from 54 cents Thursday. Gauges further along the oil futures curve also surged.More evidence of the demand recovery continued to emerge, especially in Asia. Gasoline and diesel consumption in China has extended its run above pre-virus levels this year after the faster-than-expected return of factory activity and infrastructure building following the Lunar New Year holiday.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 Nasdaq ended sharply lower on Wednesday after investors sold high-flying technology shares and pivoted to sectors viewed as more likely to benefit from an economic recovery on the back of fiscal stimulus and vaccination programs. Microsoft Corp, Apple Inc and Amazon.com Inc dropped more than 2%, weighing more than any other stocks on the S&P 500. The S&P 500 financial and industrial sector indexes reached intra-day record highs.
(Bloomberg) -- S&P Global Platts apologized to oil traders for the speed at which it announced an overhaul of a price that underpins a swath of the world’s crude oil transactions.The company said the plans, which among other things involve adding U.S. crude to the key Dated Brent benchmark, took many in the market by surprise and incurred anger. Platts said it had to take the steps to ensure there’s enough oil to make up the benchmark going forward as supply from the North Sea region declines.“The suddenness of the announced changes and the lack of a further consultation have caused anger and frustration for some and we are sorry for that,” Vera Blei, head of oil markets price reporting at Platts said on a call with market participants and the media on Wednesday. “You told us that we have some work to do to rebuild relationships and trust, and that work is very much under way.”Platts first announced a consultation on the changes in December, before confirming them last week. The plan took some traders by surprise as it will involve cargoes being priced at the point of delivery -- requiring the addition of shipping costs and making other fundamental changes to what the benchmark is. The modifications matter because the Dated Brent benchmark helps price more than two-thirds of the world’s crude.Among those who had originally voiced concern about the Platts plan was Intercontinental Exchange Inc., which houses multiple contracts tied to Dated Brent.Before the revamp was announced, ICE sent Platts a letter cautioning against a speedy overhaul, according to a person familiar with the matter. The move sparked frenzied trading of some contracts last week, before both Platts and ICE issued statements clarifying their plans.ICE also said in the letter it was surprised that Platts had chosen to add U.S. crude to the benchmark, without consulting on the addition of oil from Norway’s giant Johan Sverdrup field. That crude is heavier and more sulfurous than those currently included in Dated Brent, making its addition trickier, Platts said.(Updates with Johan Sverdrup detail in final 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) -- Oscar Health Inc., the health insurance startup co-founded by Josh Kushner, fell 11% its trading debut after raising $1.4 billion in its upsized, above-target initial public offering.The company’s shares, which sold for $39 in the IPO, opened their first day of trading Wednesday at $36 and closed it at $34.80, giving the company a market value of about $7 billion.Oscar Health and a selling shareholder sold 37 million shares on Tuesday. It had marketed 31 million shares for $36 to $38 a share, a range that it had elevated from $32 to $34.Kushner, managing director of the venture firm Thrive Capital, is the brother of Jared Kushner, son-in-law and onetime senior adviser to former U.S. President Donald Trump.“We have been growing a lot in the last couple of years,” said Mario Schlosser, chief executive officer and co-founder of Oscar Health. “The thesis works, the company works and we want to show it to the world.”Though with cash in hand and despite being in a crowded sector, there are no plans for Oscar Health to make acquisitions at the moment, Schlosser said. “We have a ton of growth ahead of us just organically,” he said.Kushner and Thrive Capital will control the majority of the voting power, according to the filings. The New York-based company’s Class A shares are entitled to one vote while Class B shares will have 20.Google’s parent Alphabet Inc., Fidelity Management, Founders Fund, General Catalyst and Khosla Ventures are also among the company’s shareholders.Oscar Health trades on the New York Stock Exchange under the symbol OSCR. Goldman Sachs Group Inc., Morgan Stanley, Allen & Co. and Wells Fargo & Co. led the offering.(Updates with closing share price in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The S&P 500 firmed on Thursday after two days of losses while sentiment was fragile ahead of remarks from Federal Reserve Chair Jerome Powell on rising bond yields. The Nasdaq nearly wiped out all of its year-to-date gains and was down about 8% from its record closing high on Feb. 12. A 10% decline would confirm a correction territory.
(Bloomberg) -- Chancellor of the Exchequer Rishi Sunak unveiled his second U.K. budget as he tries to balance the need to prop up the economy while the coronavirus pandemic endures with efforts to begin reigning in the deficit.With the prospect of the economy fully reopening still months away -- Prime Minister Boris Johnson has set June 21 as the earliest that can happen -- here’s what the chancellor announced on Wednesday:More Covid AidSunak said his priority is to protect jobs through the pandemic, and promised to support people and businesses as lockdown measures are gradually lifted. He outlined 65 billion pounds ($90 billion) of new Covid support, bringing the total since the crisis began to 352 billion pounds. When capital spending announced at last year’s budget is included, the total fiscal stimulus rises to 407 billion pounds.He announced:An extension of the flagship furlough program, under which the state pays idled workers 80% of their usual wages, up to a maximum of 2,500 pounds a month. It was due to expire at the end of April but will be extended in full through the end of June, and state support will then be tapered over another three months.A fourth three-month grant for self-employed workers will be paid to cover February through April. It will be set at 80% of average trading profits and capped at 7,500 pounds. A fifth grant will also be paid, at a level that depends on the change in recipients’ turnover. More than 600,000 people who previously weren’t eligible will qualify for these grants.A six-month extension to the 20-pound a week uplift in Universal Credit social security payments, with equivalent support for working tax credit claimants in the form of a one-off payment of 500 pounds.An increase in the National Minimum Wage to 8.91 pounds/hour from April.A new program of loans of as much as 10 million pounds for struggling firms. The program replaces 3 existing plans, is open for businesses of any size, and the loans are 80% backed by the state.A three-month extension of the business-rates holiday for retail, hospitality and leisure, running through June. Then a nine-month, 2/3 discount for firms that remain closed, and a lower cap for those able to reopen. Sunak priced this measure at 6 billion pounds.A six-month extension in the temporary reduction of value-added tax for the hospitality and attractions sectors, which will now run through September. The rate is down to 5% from 20%. For the following six months, a discounted rate of 12.5% will apply.A three-month extension to the stamp duty holiday for the first 500,000 pounds of property sales. Then for three months, the holiday will apply to the first 250,000 pounds of a property purchase, before reverting to 125,000 pounds.TaxationThe chancellor also signaled there’s pain ahead as he tries to rein in a fiscal deficit that the Office for Budget Responsibility predicted will swell toward 355 billion pounds this tax year.“The amount we’ve borrowed is only comparable with the amount we borrowed during the two world wars,” Sunak said. “It is going to be the work of many governments, over many decades, to pay it back.”Sunak said it would be “irresponsible” to allow debt to rise unchecked, and announced a series of tax measures to take effect in future years.Corporation tax will rise to 25% in 2023 from 19% now. Sunak said the U.K. can do that and still retain the lowest level among the Group of Seven major economies. The chancellor introduced a small profits rate keeping the tax at 19% for businesses with profits of 50,000 pounds or less. There will be a taper above that so that only companies with profits of 250,000 pounds or more pay the full rate.The tax treatment of losses will be more generous for the next two years, allowing companies to claim more tax refunds.From next year, the thresholds at which people start paying different levels of income tax will be frozen until April 2026. Rises to 12,570 pounds and 50,270 pounds for the basic and higher thresholds will go ahead as planned next year.Sunak said he’d also freeze until April 2026 the inheritance tax thresholds, the lifetime allowance on pensions savings and the annual exempt amount in capital gains tax.From April 2022, the VAT registration threshold will also be frozen.There was also a “Super Deduction” sweetener to encourage companies to invest: For the next two years, companies that invest will be able to reduce their taxable profits by 130% of the amount they’ve invested.Alcohol and fuel duties were frozen.Leveling UpThere were several announcements that fed into the ruling Conservative Party’s “leveling up” mantra aimed at spreading prosperity nationwide:22 billion pounds of capital and loan guarantees to capitalize a new national infrastructure bank, with the aim of supporting 40 billion pounds of infrastructure investment. The bank will be located in Leeds.5 billion pounds of grants worth up to 18,000 pounds each to help nearly 700,000 eligible businesses in the retail, hospitality, accommodation, leisure and personal-care sectors reopen.The Treasury and other government departments will set up a new campus in Darlington.Eight freeports were announced for East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.1 billion pounds of “Towns Deals” was announced for 45 locations.Funding in the budget of 1.2 billion pounds for the Scottish government, 740 million pounds for the Welsh government and 410 million pounds for the Northern Ireland executive.Other AnnouncementsSunak published an independent review into U.K. stock market listing rules as part of an effort to bolster the City of London post-Brexit.The world’s first sovereign green savings bond for retail investors. The funds raised will be earmarked for projects such as renewable energy and clean transportation.A mortgage guarantee program for 95% mortgages to help people get on the property ladder.1.65 billion pounds of funding for the U.K.’s Covid vaccination drive.55 million pounds to develop vaccines against new Covid variants and to study the effects of combinations of vaccines.375 million pounds for a new public-private fund to invest in fast-growing tech start-ups.A 520 million-pound ‘Help to Grow’ program to provide small and medium-sized businesses with subsidized management training, discounted software and technology advice.A 300 million-pound summer sports recovery package to get sports such as cricket, horse racing and tennis reopened.408 million pounds of funding for museums and the arts.126 million pounds for traineeships, and an increase to 3,000 pounds in the cash incentive for hiring apprentices.150 million pounds to help community groups take over struggling local facilities such as pubs and sports clubs.A new fast-track visa program to ease entry to the U.K. for highly-skilled researchers, engineers, scientists as well as those working in the financial technology and cyber sectors.The chancellor raised the contactless payments limit for credit and debit cards to 100 pounds from 45 pounds.The Bank of England will be given a new mandate to consider net zero targets.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.
The president has agreed to a compromise making millions ineligible for the third checks.
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.
Bitcoin (CRYPTO: BTC) may be headed for the $100,000 mark by the end of this month, according to Mike McGlone, a Bloomberg analyst. What Happened: McGlone, who previously ascribed a $50,000 plus level for the cryptocurrency, said in a March outlook report that if the Grayscale Bitcoin Trust (OTC: GBTC) closing at its steepest discount ever is an indicator, then it may “signal [Bitcoin’s] march to $100,000.” The Greyscale premium, a metric watched closely, ended February with a 2.7% discount. McGlone pointed to March 2017, when BTC backed up to nearly $1,000 on the way to its peak near $20,000 in December of that year. “Sharp reductions in the GBTC premium have often marked bottoms in Bitcoin,” wrote McGlone. “The increasing probability of [exchange-traded] funds in the U.S., on the back of launches in Canada are adding pressure to the trust price, but we see sustaining the upward trajectory as the more likely outcome.” Bitcoin traded 8.48% lower at $47,120.70 at press time. GBTC closed 10.31% lower at $41.40 on Thursday. Why It Matters: The Grayscale premium is a reference to the difference between the value of the holdings of GBTC versus the market price of its holdings. McGlone also noted the increased replacement of Gold in portfolios with BTC. “In 2020, the benchmark crypto gained legitimacy with declining volatility vs. the opposite in most assets. In 2021, we see little to stop the process of old-guard gold allocators simply focusing on prudent diversification,” wrote the analyst. On Thursday, Kraken CEO Jesse Powell said that BTC could replace all of the world’s currencies and hit a million-dollar price target within the next ten years. “The younger demographic is certainly taking notice of it and they see it as a better version of gold,” said Powell. Read Next: 'Morons:' Crypto Enthusiasts Burn Banksy's Real Artwork To Turn It Into Digital Token See more from BenzingaClick here for options trades from BenzingaHow Square's Purchase of Jay Z's Tidal Could Popularize Blockchain'Morons:' Crypto Enthusiasts Burn Banksy's Real Artwork To Turn It Into Digital Token© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
(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.
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.
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.
(Bloomberg) -- 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.Amid the deep winter freeze that knocked nearly half of power generation offline, the Electric Reliability Council of Texas, known as Ercot, set the price of electricity at the $9,000-a-megawatt-hour maximum -- standard practice during a grid emergency. But Ercot left that price in place days longer than necessary, resulting in massive overcharges, according to Potomac Economics, an independent market monitor hired by the state of Texas to assess Ercot’s performance. In an unusual move, the firm recommended in a letter to regulators that the pricing be corrected and that $16 billion in charges be reversed as a result.Potomac isn’t the first to say that leaving electricity prices at the $9,000 cap for so long was a mistake. Plenty of power companies at risk of defaulting on their payments have said the same. But the market monitor is giving that opinion considerable weight and could sway regulators to let companies off the hook for some of the massive electricity charges they incurred during the crisis.The Arctic blast that crippled Texas’s grid and plunged more than 4 million homes and businesses into darkness for days has pushed many companies to the brink of insolvency and stressed the power market, which is facing a more-than $2.5 billion payment shortfall. One utility, Brazos Electric Power Cooperative, has already filed for bankruptcy, while retailers Griddy Energy LLC and Entrust Energy Inc. defaulted and have been banned from participating in the market.“The market is under quite a bit of duress,” Kenan Ogelman, Ercot’s vice president of commercial operations told Texas lawmakers Thursday. Moody’s Investors Service downgraded Ercot one notch from A1 to Aa3 and revised the grid operator’s credit outlook to “negative.”Retroactively adjusting the power price would ease the financial squeeze on some of the companies facing astronomical power bills in the wake of the energy crisis. EDF Renewable Energy and Just Energy are among those asking the Public Utility Commission to reset the power price for the days after the immediate emergency while others have also asked regulators to waive their obligation to pay until price disputes are resolved.“If we don’t act to stabilize things, a worst-case scenario is that people will go under,” said Carrie Bivens, the Ercot independent market monitor director at Potomac Economics. “It creates a cascading effect.”The erroneous charges exceed the total cost of power traded in real-time in all of 2020, said Bivens, who spent 14 years at Ercot, where she most recently was director of market operations before becoming its watchdog. “It’s a mind-blowing amount of money.”While prices neared the $9,000 cap on the first day of the blackouts, they soon dipped to $1,200 -- a fluctuation that the utility commission later attributed to a computer glitch. The panel, which oversees the state’s power system, ordered Ercot to manually set the price at the maximum to incentivize generators to feed more electricity into the grid during the period of supply scarcity. The market monitor argues that Ercot should have reset prices once rotating blackouts ended because, at the point, the emergency was over.It’s asking the commission to direct Ercot to correct the real-time price of electricity from 12 a.m. Feb. 18 to 9 a.m. Feb. 19. Doing so could save end-customers around $1.5 billion that otherwise would be passed through to them from electricity providers, Bevins said.But power generators that reaped substantial profits from the high prices during the crisis week are likely to push back. Vistra Corp. on Thursday submitted comments to the utility commission arguing against repricing. During a Texas senate hearing the same day, utilities South Texas Electric Cooperative and the Lower Colorado River Authority also voiced opposition.Texas Competitive Power Advocates, a trade association representing generators, said retroactively changing prices could discourage future investments in Texas’s electricity market. “Changing prices after the fact creates additional instability and uncertainty,” Michele Richmond, the group’s executive director, said in an email.Bivens acknowledged the market monitor isn’t typically in favor of repricing, but noted in her letter to the commission that the move wouldn’t result in any revenue shortfalls for generators. Instead, the new price would reflect the actual supply, demand and reserves during the period.“This isn’t some Monday morning quarterbacking,” she said in an interview. “Ercot made an error and we don’t let errors slide.”The utility commission on Wednesday adopted a prior recommendation made by the market monitor, voting to to claw back some payments to power generators for services they never actually provided during energy crisis. The commissioners also expressed support for capping the price of certain grid services -- a request made by several retailers -- but didn’t take action on it. Another commission meeting is scheduled for Friday.(Adds Ogelman quote, Moody’s downgrade 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.
It appears the breakdown is underway, and this could turn into an outright collapse into mid-March.
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) -- 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.
Prominent gold advocate and Bitcoin skeptic Peter Schiff has criticized billionaire investors Mark Cuban and Kevin O’Leary for turning positive on Bitcoin. What Happened: “Bubbles typically peak when rational investors capitulate,” said Schiff on Twitter, calling them the newest skeptics to “join the cult.” Congratulations to those who bought Bitcoin early, pumped up the price, and who've been dumping into the hype. You succeeded in getting Wall Street to buy into the mania. When I first learned about #Bitcoin I didn't think smart investors would be dumb enough to buy. I was wrong. — Peter Schiff (@PeterSchiff) March 1, 2021 Schiff’s criticism comes after Kevin O’Leary announced he would be allocating 3% of his portfolio to the digital asset while also looking at investing in the most energy-efficient Bitcoin mining companies. Earlier this week, Mark Cuban commented on some of Schiff’s most recent remarks saying, “Gold is dead Peter. Move on.” Why It Matters: Schiff has often criticized Bitcoin as an asset class, calling it inferior to gold as a store of value. His most recent comments on Twitter invited criticism from Mark Cuban, who commented that gold is hyped just as much as cryptocurrencies. “As tech continues to get better/cheaper/faster there will be new applications and maybe even something that supersedes what we know as crypto today. But gold won't ever change. Which is why it will die as a SOV (Store of Value),” said Cuban on Twitter. According to Schiff, the fact that gold won’t ever change is part of its appeal to investors. Jeffrey Gundlach, a well-known gold bull, commented earlier today that Bitcoin is up over 467% in the past 12 months while gold is down by 11% for the same period. The price of gold is down 11% over the past twelve months. The S&P 500 is up 27% over the past twelve months. Bitcoin is up 467% over the past twelve months. Great dispersions often precede great reversions. We shall see. — Jeffrey Gundlach (@TruthGundlach) March 4, 2021 According to him, dispersions of this size between asset classes often come before reversions to the mean. Price Action: After a volatile week, the market-leading cryptocurrency was trading at $48,171 at the time of writing. Earlier this week, Bitcoin recorded a low of $43,867 and a high of $52,535. Image: Dmitry Demidko via Unsplash See more from BenzingaClick here for options trades from BenzingaFantom Is Top Performing Cryptocurrency Again: Here's What You Need To KnowGoldman Sachs To Restart Crypto Desk After Abandoning The Idea In 2018© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
The team will soon be accepting the crypto as part of a deal with payment services provider BitPay.