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Setup continue in the market and Zebra Technologies has a familiar pattern. Deep base in Coronavirus crash followed by tighter more orderly base.
Setup continue in the market and Zebra Technologies has a familiar pattern. Deep base in Coronavirus crash followed by tighter more orderly base.
(Bloomberg) -- Eric Yuan, chief executive officer of Zoom Video Communications Inc., donated more than a third of his stake in the company, filings show.Yuan gifted almost 18 million shares of the conferencing-technology firm last week. The filings didn’t specify the recipient of the stock, which was owned by a Grantor Retained Annuity Trust, or GRAT, for which Yuan is a trustee.The shares were valued at about $6 billion, based on Friday’s closing price.The distributions are consistent with the Yuans’ “typical estate planning practices,” a Zoom spokesman said in a statement.Yuan, 51, joins other members of the world’s mega-rich who’ve been transferring stock recently -- including Hong Kong billionaire Li Ka-shing, who last month gave some of his Zoom holding to his businessman son Richard. Jeff Bezos, the world’s richest person, has been donating shares of Amazon.com Inc. in support of a $10 billion pledge made last year to combat climate change.Pandemic SurgeYuan became one of the world’s wealthiest people as demand for Zoom’s main product skyrocketed during the pandemic. The stock surged almost 400% last year, but has dipped 7.8% in 2021.He’s the world’s 130th-richest person with a pre-transfer net worth of $15.1 billion, according to the Bloomberg Billionaires Index, a $9.2 billion increase since last March. The company has also brought huge gains to other shareholders, including Tiger Global Management’s Chase Coleman and Taiwanese investor Samuel Chen. Li’s Zoom stake now represents almost one-fifth of his net worth. Born in China, Yuan was refused a U.S. visa eight times before finally prevailing and moving to Silicon Valley. An early employee of rival video-conferencing group WebEx Communications, he founded Zoom in 2011, inspired in part by the challenges of maintaining a long-distance relationship when he was in college.The Wall Street Journal reported the share transfer earlier Monday.(Adds that Li Ka-shing cut his Zoom holding in fifth paragraph, details about the stake in seventh)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.
Iran has quietly moved record amounts of crude oil to top client China in recent months, while India's state refiners have added Iranian oil to their annual import plans on the assumption that U.S. sanctions on the OPEC supplier will soon ease, according to six industry sources and Refinitiv data. U.S. President Joe Biden has sought to revive talks with Iran on a nuclear deal abandoned by former President Donald Trump in 2018, although harsh economic measures remain in place that Tehran insists be lifted before negotiations resume. The National Iranian Oil Company (NIOC) has started reaching out to customers across Asia since Biden took office to assess potential demand for its crude, said the sources, who declined to be named because of the sensitivity of the matter.
(Bloomberg) -- Tech shares tumbled anew, sending the Nasaq 100 Index down 11% from its all-time high, as investors fled high-valuation stocks for companies whose fortunes are closely tied to the economic cycle.The benchmark for megacap tech dropped 2.9% and is now at the lowest since November. The S&P 500 ended lower after rising as much as 1% as tech shares in the gauge dropped 2.5%. Financial firms and materials producers kept losses from being worse. The Dow Jones Industrial Average hit an all-time high before settling for a 1% gain, buoyed by rallies in banks and Walt Disney Co. Tesla Inc. pushed its five-day rout past 20%. Blank-check companies backed by Chamath Palihapitiya tumbled.The 10-year Treasury rate jumped toward 1.6%, while the dollar strengthened. Brent crude briefly traded near $70 a barrel before pulling back. Gold slumped and Bitcoin traded above $51,000.Investors embraced the prospect for a surge in global economic growth as vaccine distribution improves and the U.S. heads toward passing a $1.9 trillion spending bill. The risks associated with rising Treasury yields remain an overhang amid fears that government aid programs could overheat economic growth.“You will see a lot of volatility in markets,” Kim Stafford, Asia Pacific head at Pacific Investment Management Co., said on Bloomberg Television. “We believe that confidence is improving, especially with vaccines coming online, so we will see an uptick in growth globally. There are a lot of reasons to be confident in the market, but a lot of this is also priced in.”There are also questions about whether equity valuations have become excessive, especially in speculative tech shares. The Nasdaq 100 Index has fallen about 8% since early February.Crash Landing on Stock Heroes of Yesteryear Is Worst in a DecadeHere are some key events to watch:The annual session of China’s National People’s Congress continues in Beijing.Japan GDP is due Tuesday.EIA crude oil inventory report is due WednesdayThe U.S. February consumer price index will offer the latest look at price pressures Wednesday.The European Central Bank holds its monetary policy meeting and President Christine Lagarde is set to do a briefing Thursday.These are some of the main moves in markets: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.
This ends an agreement the two companies had put on hold in February.
Goldman Sachs didn't start ranking bitcoin versus global assets until late January, but its year-to-date return is double the next-closest competitor.
The hack exploits four newly-discovered flaws in Microsoft Exchange Server email software.
Stocks were mixed on Monday and Treasury yields climbed further after Congress made headway toward passing another significant COVID-19 relief package.
Spot gold fell 0.7% to $1,689.87 per ounce by 1523 GMT, after hitting its lowest since June 8 at $1,683.68 earlier. The dollar climbed to a three-month peak, while the U.S. 10-year Treasury yield held close to a more than one-year high, increasing the opportunity cost of holding gold, which pays no interest. "We have an economy that is recovering and inflation is materializing; that ultimately means that yields have room to move higher," said Bart Melek, head of commodity strategies at TD Securities, adding that gold could fall further towards $1,660 as a result.
(Bloomberg) -- The U.S. and China are pursuing divergent economic policies in the aftermath of the coronavirus recession in a role reversal from last time the world economy was recovering from a shock.One of the takeaways from the annual National People’s Congress under way in Beijing is a conservative growth goal, with a tighter fiscal-deficit target and restrained monetary settings. That’s a big contrast with Washington, where President Joe Biden is preparing a second major fiscal package after he gets final approval for his $1.9 trillion stimulus.The widening policy divergence is putting strains on exchange rates and could potentially reshape global capital flows. It stems, in part, from different policy lessons from the 2007-09 crisis.A stunted and choppy U.S. recovery left key Democrats concluding it’s vital to “go big” on stimulus and keep it flowing. For monetary policy the moral was: “Don’t hold back” and “don’t stop until the job is done,” Federal Reserve Chair Jerome Powell said last week.China’s leaders have a different take. A massive unleashing of credit growth back then led to unused infrastructure, ghost towns, excess industrial capacity and an overhang of debt. While rapid containment of the pandemic meant the economy didn’t need as much help in 2020, President Xi Jinping and his team are now winding things back to re-focus on longer-term initiatives to strengthen the technology sector and tamp down debt risks.“Each learned a lesson from the previous episode, and so it is kind of a swap of positions,” said Nathan Sheets, head of global economic research at PGIM Fixed Income and a former U.S. Treasury undersecretary for international affairs. The policy mix now makes “a compelling case for renminbi appreciation,” Sheets said.That’s a view that’s widely shared: the median forecast is for a strengthening to 6.38 against the dollar by the end of the year, from 6.5238 in Hong Kong on Monday afternoon.One of China’s financial regulators, Guo Shuqing, highlighted in a briefing just days before the opening of the annual legislative gathering that high leverage within the financial system must continue to be addressed. Guo pointed to worries about inflated property prices and the risk of overseas money pouring in to take advantage of the premiums China’s assets offer. He also indicated the nation’s lending rates will likely go up this year.While U.S. Treasury yields have surged recently, 10-year rates remain less than half those in China, where the central bank has forsworn Western-style zero interest rates or quantitative easing.“Unlike many of its peers, including the Fed, China’s central bank has continued to calibrate its policy partially with a view to prevent an excessive rise in asset prices,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. Confronted with currency-appreciation risks, China will be hoping for a “well-timed exit from the Fed’s ultra-ease stance.”That’s unlikely to come soon. Powell in three appearances the past fortnight has made clear the Fed is going to keep policy rates near zero until well into the economic recovery, when most jobless Americans are brought back into employment. He also gave no indication asset purchases will be tapered as Biden’s fiscal stimulus kicks in in coming months.As China contends with capital inflows, the U.S. is likely to be pumping out a greater supply of dollars into the global economy -- via a widening current-account deficit -- as its growth revs up, supercharged by Biden’s stimulus and the Fed’s easy stance.“There’s been a regime break,” in the U.S. with the outsize Biden relief bill and a planned longer-term follow-up, said Robin Brooks, chief economist at the Institute of International Finance. As growth soars past 6% this year, a wider current-account deficit will be “the pressure valve” given domestic production constraints, he said.Brooks projects that deficit will hit 4% of gross domestic product this year. That would be the highest since large shortfalls during the 2002-08 period, when a broad measure of the dollar tumbled as much as 27%.Read More: Dollar Is Increasingly Overvalued as Deficit Widens, IIF Says“As our fiscal support goes into uncharted territory, it puts enormous pressure on our budget deficits -- and by inference our domestic saving rate and the current account and trade deficit, with the consequences primarily falling on the currency,” said Stephen Roach, a Yale University senior fellow and former chairman of Morgan Stanley Asia.China’s reluctance toward the kind of “go big” message of Treasury Secretary Janet Yellen dates back many years. After unleashing a fiscal package of 4 trillion yuan ($586 billion, at the time) and an unprecedented surge in broader credit after the 2008 crisis, Beijing was already by 2012 saying it wouldn’t do that again.Reticence toward across-the-board stimulus later turned into a concerted push to rein in leverage. A May 2016 front-page treatise in the People’s Daily -- the Communist Party’s mouthpiece -- blasted excessive debt as the “original sin” sowing risks across financial and real-estate markets. The anonymous article -- widely said to have been written by Vice Premier Liu He, Xi’s top economic adviser -- called stimulating the economy through easy monetary policy a “fantasy.”So with the country’s success in applying draconian restrictions to contain the coronavirus, it should come as little surprise that Beijing is returning toward its pre-pandemic focus on building domestic tech capabilities and managing down debt risks.What Bloomberg’s Economists Say...“China is increasingly shifting its attention from pandemic recovery to managing the economy in more normal conditions.”--Chang Shu, chief Asia economistFor the full report, click hereAfter ditching an annual growth target for 2020 given the turmoil caused by Covid-19, China’s leadership set a goal of a GDP increase of more than 6% this year -- conservative since it’s well below economists’ projections for this year’s expansion.In the meantime, surging American GDP gains are set to lift China’s prospects as well. Exports to the U.S. soared more than 87% in the first two months of this year compared with the pandemic-hit period a year before, faster than China’s overall rise of just under 61%.“The U.S. locomotive is back on track,” said Catherine Mann, global chief economist at Citigroup Inc.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.
Technology-related shares sold off on Monday in a big downturn that pushed the Nasdaq into a correction and offset stocks that rose on hopes the $1.9 trillion COVID-19 relief bill will spur the U.S. economic recovery. The Dow hit a record intra-day high but the big tech stocks that have led Wall Street to scale successive peaks over the past year fell, with the Nasdaq closing down 2.41%.
Stronger bond yields and a rising dollar are capping price progress for risk assets.
(Bloomberg) -- India’s record foreign-exchange reserves and a rare current-account surplus look set to cushion the nation’s currency and bonds from a global surge in interest rates.While the central bank does have its hands full managing the government’s large debt issuance, strategists see the country in a much stronger financial position now than it was during previous bouts of turmoil in world markets. They cite the rupee, which has eked out a gain this year, defying the slump seen in most emerging-market currencies, and relative stability of India’s bonds.With reserves closing in on $600 billion and a current-account surplus forecast to exceed 1% of gross domestic product, talk of India as one of five fragile emerging markets has mostly faded away. When the description was coined during the taper tantrum in 2013, inflation in India was running at around 10%.Data due March 12 is projected to show consumer prices rising at less than half that level, and well below the 6.6% average of last year. Meanwhile, benchmark 10-year bond yields have largely been capped since last year by the central bank and the nation’s stocks continue to see foreign inflows.“India’s markets are likely to be relatively immune to higher U.S. yields in the weeks ahead,” said Mitul Kotecha, chief EM Asia and Europe strategist at TD Securities Ltd. in Singapore. “India has been a key beneficiary of equity inflows into Asia and we do not see outflows persisting.”Ahead of the CPI figures, here is a series of charts highlighting points of strength in India that have been cited by analysts.Stock InflowsIndian stocks have attracted about $6 billion of foreign inflows this year, the highest in emerging Asia after China, and well above those of the country’s erstwhile “Fragile Five” peers. The prospect of strong economic growth has been underpinned by an early start to India’s coronavirus inoculation campaign, aided by domestically produced vaccines.FX ReservesIndia’s central bank has added $127 billion to its foreign-exchange kitty since the beginning of January last year, the biggest increase among major Asian economies. At the current rate of accumulation, India is on course to pass Russia and take fourth place in global rankings for reserves, behind China, Japan and Switzerland. This large well of reserves should give authorities fire power to deal with any potential capital outflows driven by external shocks, according to Kaushik Das, chief India economist at Deutsche Bank AG in Mumbai.Current AccountIndia is expected to post a current-account surplus of 1.1% of GDP in the current fiscal year, along with a balance-of-payments surplus of $96 billion, according to Emkay Global Financial Serviced Ltd. While the current account may swing back to a small deficit next fiscal year, healthy capital flows may keep the balance of payments positive to the tune of $45-50 billion, helping to support the rupee, according to Madhavi Arora, lead economist at Emkay.Bond ReturnsIndia’s sovereign bonds offer more stable returns than many others in emerging markets, as measured against annualized 60-day volatility in benchmark 10-year securities. The Reserve Bank of India has made over 3 trillion rupees ($41 billion) of bond purchases this fiscal year and plans to buy at least that amount next year, according to RBI Governor Shaktikanta Das, which should help to curb gains in yields.Economic GrowthIndia’s economy is projected by the International Monetary Fund to grow 11.5% in 2021, a pace that is likely to be the fastest of any major economy, which also augurs well for inflows and the rupee.Below are are the key Asian economic data and events due this week:Monday, March 8: Japan balance of paymentsTuesday, March 9: South Korea balance of payments, Japan GDP, Australia NAB Business Confidence, Taiwan CPIWednesday, March 10: China CPI, PPI; RBA’s Lowe gives speech in SydneyThursday, March 11: New Zealand food prices and house sales, Japan PPIFriday, March 12: Philippines trade, India Feb. CPI and Jan. industrial production, Thailand forex reserves, Malaysia industrial productionFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Central banks helped save the world economy from depression as the pandemic struck. Now they are dealing with the hard part: managing the recovery amid a difference of opinion with investors.Optimism that Covid-19 vaccines and continued government stimulus offer an escape from the worst health crisis in a century has sent bond yields soaring and pushed bets on rising inflation in the U.S. to the highest in a decade.That’s shifting the ground underneath monetary policy makers who promise to maintain rock bottom borrowing costs and cheap money well into the expansion. In the next two weeks, the Federal Reserve and European Central Bank as well as their counterparts in Japan, U.K, and Canada are all likely to reiterate those pledges, eager to secure a rebound in hiring and avoid the mistakes of the last crisis when some withdrew support too early.The risk now seems skewed the other way. While policy makers welcome a modest rise in bond yields as a signal of confidence in the economic outlook, they worry an unchecked jump would undercut recoveries. They argue any resurgence in inflation will be based on a temporary correction from last year’s slide and that high unemployment will continue to restrain price pressures.It’s a stark turnaround from a year ago, when the world powered down to fight the Covid-19 pandemic and central banks responded with what’s amounted to an unprecedented $9 trillion of monetary support.“Central banks are facing a new challenge,” said Rob Carnell, chief economist for Asia Pacific at ING Bank NV. “How do they keep justifying easy policy as the recovery continues and the inflation figures pick up?”Canada, ECBThe Bank of Canada is first up with a meeting on March 10 when policy makers are likely to indicate they plan to maintain plenty of stimulus well into any strong recovery. It’s a case that Governor Tiff Macklem laid out last month when he argued policy needs to help foster not only the immediate pickup but also facilitate virus-driven structural changes like digitalization.ECB President Christine Lagarde convenes officials the next day when updated forecasts will highlight how the euro-area economy is lagging the U.S. because of slow vaccine rollouts and extended virus restrictions. That puts the bloc at risk should higher global yields spill over into borrowing costs for companies and households.ECB policy makers have surprised investors by downplaying their concerns so far, saying their bond-buying program is flexible enough to address unwarranted tightening but failing to provide any evidence that they’re accelerating purchases. At the back of their minds though is likely to be the experience of 2011 when interest rates were raised twice to combat faster inflation despite a worsening financial crisis, only for the euro zone to slide into a double-dip recession.Powell PressureAt the Fed’s policy meeting on March 16-17, Chairman Jerome Powell will likely reaffirm his looser for longer stance. Powell repeatedly stressed during remarks on Thursday that the Fed was a long way from its goals and was not close to tightening policy. He also played down a likely rise in inflation this year and ducked questions on a possible response to the recent sharp rise in yields.While the move had “caught’ his attention, he said Fed policy was currently appropriate, though it has tools to respond if there is a material change in the outlook.Transcripts of the Fed’s meetings from 2015, when it last began a tightening cycle, suggested policy makers overestimated the potential for accelerating inflation and underestimated the room still left in the economy to generate jobs.What Bloomberg Economics Says...For the U.S., rising bond yields are largely a reflection of confidence in the strength of the recovery. For much of the rest of the world, the spillover of higher borrowing costs is arriving too soon. The Reserve Bank of Australia has already reacted with bigger bond buys. Others may also have to tweak their policy settings.-- Tom Orlik, chief economistClick here for moreTaper TalkThe Bank of England convenes on March 18. It has lined up a further 150 billion pounds ($208 billion) of asset purchases over 2021 with plans to taper weekly buying later in the year.A hugely stimulative budget from Chancellor Rishi Sunak now has economists further discounting the prospect of negative interest rates and instead looking forward to a tightening of monetary policy.The central bank has said that won’t happen until there is clear evidence that spare capacity is being eliminated and it’s closer to sustainably achieving its 2% inflation target, but in February announced it was considering whether to alter previous guidance that it wouldn’t unwind its asset purchases until the bank rate reached 1.5%.Speaking on Monday, Governor Andrew Bailey reiterated the bank doesn’t intend to tighten monetary policy until there’s clear evidence the economy is absorbing excess capacity. He added that risks to the economy remain tilted to the downside, BOJ, PBOCThen it’s the Bank of Japan’s turn on March 18-19, when officials are scheduled to unveil details of a policy review that will look at how it controls yields, negative rates and asset buying. Governor Haruhiko Kuroda has said the central bank is seeking to make its policy framework more effective by fine tuning it rather than overhauling it.He has also signaled there won’t be any changes to the movement range around the 10-year yield target. Still, Deputy Governor Masayoshi Amamiya ssignaled on Monday that the central bank may seek ways to allow more moves in yields. While developed-world central banks will likely be unified in pledging ongoing stimulus, China’s officials are already signaling the opposite. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission -- the top banking regulator -- said on March 2. he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector, stoking expectations of policy tapering.That was followed by the government setting a conservative growth target of above 6% for the year, well below what economists forecast the nation will achieve, as Premier Li Keqiang on Friday opened the National People’s Congress in Beijing.The tension between inflation and cheap money is already forcing some emerging market central banks to move. Ukraine unexpectedly raised interest rates to counter the highest inflation in more than a year. Brazil is forecast to start raising borrowing costs on March 17 having promised in August to keep its 2% benchmark for the “foreseeable future.”(Adds comments from UK and Japanese central bankers)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 soared past fiscal breakeven prices for the Middle East’s four biggest producers after OPEC+ kept output largely unchanged and an attack on a highly protected Saudi Arabian oil facility.The late Sunday attack on an oil storage tank farm sent the global crude benchmark above $70 a barrel, days after the shock move by the OPEC+ cartel sparked a rally.If oil prices stay at current levels, “we would see fiscal surpluses for the larger Gulf Cooperation Council economies,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “This provides more fiscal space to support economic activity and recovery.”Analysts at Goldman Sachs Group Inc. and JPMorgan Chase & Co. raised their Brent price forecasts after the OPEC decision.On Monday, Dubai-based lender Emirates NBD PJSC revised its average oil price upward to $67.50 per barrel this year, leading to narrower budget deficits, “assuming spending remains unchanged and governments continue to prioritize deficit reduction over boosting growth.”Budget deficits in the Arab Gulf, where economies are reliant on oil, widened after prices crashed in 2020. OPEC+ agreed last year to take about 10% of global supply off the market to stem the plunge. While the group has slowly rolled back some of those cuts, it is curtailing more than 7 million barrels of daily production.Still, Brent prices have averaged just below $60 so far this year -- below the breakeven level for most Gulf countries. Saudi Arabia, the Arab world’s largest economy and OPEC’s biggest producer, has posted successive budget shortfalls in the past seven years, a trend the International Monetary Fund predicted would continue through 2024.And the OPEC+ decision may be eroded.“Compliance with OPEC restrictions may deteriorate, resulting in a smaller decline in average crude oil production this year relative to 2020,” wrote Khatija Haque, head of research and chief economist at Emirates NBD. “OPEC+ may decide to increase production more aggressively later this year, and governments could choose to increase spending to support the economic recovery in the non-oil sectors this year.”(Updates with missile attacks on Saudi facility from first paragraph, Emirates NBD report in fifth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
As institutional appetite for bitcoin grows, "incumbent banks" will look for ways to satisfy that demand, a Goldman Sachs industry lead says.
A growing semiconductor shortage could hamstring the EV boom in 2021. Here’s who could profit in the days ahead
Top news and what to watch in the markets on Monday, March 8, 2021.
(Bloomberg) -- Europe’s vaccine blunders are alarming some of the world’s top investors, who see economic growth imperiled by a slow pace of business reopenings.While the region’s stocks are riding the global rally and faring well against the selloff in U.S. big tech, prolonged lockdowns threaten the economic recovery. Investors are taking notice. European equity funds have recorded three weeks of outflows, with Bank of America Corp. and BlackRock Investment Institute warning that the continued virus outbreak could hurt trading strategies in the single-currency bloc.“The Europeans desperately need to accelerate the pace of their vaccine rollout if they want to get a handle on the virus,” said Seema Shah, the London-based chief strategist at Principal Global Investors Ltd., which manages $544 billion. “Bureaucracy and confused messaging from governments has weighed on the process.”Principal prefers U.S. equities over Europe, citing President Joe Biden’s $1.9 trillion pandemic relief bill as economic fuel. Europe’s recovery fund “pales in comparison,” she said.Plagued by political infighting, supply disruptions and public resistance, continental Europe is far behind in distributing the vaccine. The EU has administered 8 doses per 100 people, compared with 33 for the U.K. and 25 for the U.S., according to Bloomberg’s Coronavirus Vaccine Tracker. A delay of one to two months in reopening could cost the EU economy between 50 billion and 100 billion euros in lost output, according to calculations by Bloomberg Economics. “At the risk of sounding like doomsdayers, we unfortunately have to repeat that the sluggish pace of vaccination continues to jeopardize the recovery in the eurozone,” wrote Peter Vanden Houte, chief economist at ING Belgium SA in Brussels.There is some progress. In Germany, the infection rate in people over the age of 80 has plummeted by about 80% since late December as doctors prioritize giving shots to the elderly. Thanks to new supply pacts and increased production, the EU may be able to vaccinate 75% of its adult population by the end of August, about two months earlier than previously forecast, according to London-based research firm Airfinity Ltd.In the eyes of investors, that could still be too late. “These are the critical summer months,” wrote Bank of America strategists including Athanasios Vamvakidis. “Losing a second tourist season is a risk for the EU.”The bank expects the euro to weaken to $1.15 by year-end from a current level of $1.19, citing “American exceptionalism” as the driving force. The U.S. is vaccinating people faster and its total fiscal support is up to six times greater than the EU’s recovery fund. Plus, American shoppers have saved more money to spend after the pandemic, Bank of America strategists said. The rally has left European stocks looking expensive relative to the U.K., and by some measures stocks are already pricing in a full recovery. The Euro Stoxx 50 index is trading at 18 times estimated earnings, compared with 14 times for the FTSE 100.The Stoxx 600 Travel and Leisure Index is near pre-pandemic levels, despite depressed earnings and warnings that business travel won’t return anytime soon. Deutsche Lufthansa AG said it could take until the middle of the decade for business to fully recover.“Valuations are very high,” said Miguel Angel Garcia, chief investment officer at Diaphanum Valores in Madrid. “We have reduced our exposure to European equities recently and are currently underweight.” Of course, there’s a bull case for some sectors, even in a slow growth environment. Banks are the third-biggest industry weighting in the Stoxx 600 and stand to profit from rising bonds yields and booming markets for IPOs. “At a security level, we are finding plenty of opportunities,” said Suzanne Hutchins, a portfolio manager at Newton Investment Management. On an index basis, “European equities are more challenged.”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 top cryptocurrency is changing hands near $50,500 at press time, representing a 4% gain on the day.
Friday’s price action suggests the direction of the March U.S. Dollar Index on Monday will be determined by trader reaction to 92.310.