Activist Kimmeridge Discloses 14.7% Silverbow Stake With Options To Unlock Value

Discusses the 13D filing, activist commentary and other company analysis Houston based oil & gas company SilverBow Resources Inc (NYSE:SBOW) received a 13D filing from activist investor Kimmeridge Energy Management Company LLC on Friday afternoon disclosing a 14.7% stake in the company, which rose from 12.1% previously. Kimmeridge Energy Management is an alternative asset manager […] Discusses the 13D filing, activist commentary and other company analysis Houston based oil & gas company SilverBow Resources Inc (NYSE:SBOW) received a 13D filing from activist investor Kimmeridge Energy Management Company LLC on Friday afternoon disclosing a 14.7% stake in the company, which rose from 12.1% previously. Kimmeridge Energy Management is an alternative asset manager that focuses exclusively on the energy sector with the intention of accelerating carbon neutrality by developing environmentally responsible, low-cost energy assets. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Kimmeridge Believes Silverbow's Shares Are Undervalued The asset manager in the filing initially stated that they made the 13D filing because they believe shares are undervalued and represent an attractive investment opportunity and comes after the stock lost more than -45% of its value over the last month. Kimmeridge stated that they intend to continue to seek engagement with SBOW’s Board for a range of operational and strategic matters including the company’s: Operations Management Organizational documents Board composition Ownership Capital or corporate structure Dividend policy Strategy plans Kimmeridge also noted that they wish to communicate with other shareholders or third parties that include potential acquirers, service providers and financing sources for the company. The bottom line is that the fund manager believes there are strategic opportunities that can be pursued to maximise shareholder value through the use of asset or corporate consolidation. Kimmerdige has been amassing the current stake in the company for quite some time with the most recent sizable accumulation occurring between the 8th to the 11th of July where the fund accumulated ~578,000 shares between $27.40 and $30.05 per share. Following the accumulation of shares by Kimmeridge, on the 20th of September, SilverBow management adopted a limited-duration stockholder rights plan effective immediately which would act as a “poison pill”.  The plan intends to protect SilverBow from any single stockholder from gaining control of the company without paying a premium. The rights will be exercisable at $160. Fintel’s insider accumulation score of 76.16 is bullish on the company based on the company ranking in the top 5% of 14,554 screened stocks. This number is calculated by including the net number of insiders buying and the total shares bought as a percentage of the float over the last 90 days. SBOW has actually had 2 net insiders who have sold stock over the previous 90 days consisting of one fund purchasing stock, one fund selling stock and two company directors selling stock. Directors Gabriel Ellisor and Charles Wampler took the opportunity to trim their position of shares in the trading window post results that occurred over August. Strategic Value Partners LLC was the selling fund in the past 90 days who reduced their total share count to 4.1 million or around 18.5% total ownership of the float. The company last released a financial update to shareholders in early August when providing their second quarter update. The company grew oil & gas revenues by 160% over the year to $182.6 million. The groups adjusted EBITDA rose from $42.8 million to $85.4 million, boosted by higher oil prices over 2022.  However SBOW’s free cash flow was negative at -$2.7 million, falling from $7.4 million in the prior year. The free cash flow was constrained by significant increases in Capex over the year from $26.2 million to $74.5 million. The group's leverage ratio ended the quarter at 1.42x with management targeting a leverage ratio of about 1.0x by the end of 2022. SilverBow expects to grow production by 30% over 202 and 2023 which they believe will result in the free cash flow yield exceeding 25% in 2023. The chart to the right from Fintel’s financial metrics page for SBOW shows revenue and profitability by the energy producer over the last 5 years with the share price. Following the result, Neal Dingmann from Truist Securities highlighted to investors that he believes the company could focus exclusively on gas if materially higher prices hold out. Dignmann noted that shares continue to trade at a deep discount to peers which he believes may prompt action from one of the largest holders. The firm remained ‘buy’ rated on the stock with a $62 price target. Dingmann’s prediction came true with Kimmeridge pushing for action in the latest notice. Also in September, firm KeyBanc Capital Markets initiated coverage on the stock with an ‘overweight’ recommendation and $58 target price.  On average, SBOW has a consensus ‘buy’ rating and $75 average price target across the street. Article by Ben Ward, Fintel.....»»

Category: blogSource: valuewalkSep 26th, 2022

Dan Loeb Reveals New Disney Stake, Urges Cost-Cutting, "Board Refresh", ESPN Spinoff

Dan Loeb Reveals New Disney Stake, Urges Cost-Cutting, "Board Refresh", ESPN Spinoff Billionaire activist investor Dan Loeb unveiled a new "significant stake" by his hedge fund Third Point in Walt Disney, which he disclosed in a letter to CEO Bob Chapek, in which he urges the company to consider a spinoff of ESPN, cut costs and add new directors as part of a sweeping restructuring meant to boost shareholder value in the company which has lost a third of its market cap since October. This is not the first time Loeb has engaged with Disney, having previously owned shares in the woke mouse before selling the stake. “ESPN is a great business that currently generates significant free cash flow,” Loeb WROTE in the letter, which also cited the network’s streaming content as a benefit. “Despite these advantages, we believe that a strong case can be made that the ESPN business should be spun off to shareholders with an appropriate debt load that will alleviate leverage at the parent company.” Besides the ESPN spinoff, Loeb also called for Disney to add new board members, cut costs and continue to suspend its dividend. Bloomberg notes that while Loeb’s outreach to Chapek appeared to be friendly, his influence is likely to put pressure on Disney to justify its costs and explain why ESPN belongs with the entertainment giant. It may also pressure the company that has "gone woke" and is gradually "going broke", to reverse its outlook. While DIS shares rallied last week after earnings beat estimates, but they have been on the decline for much of the year as investors fretted about a slowdown in streaming growth. The shares bounced 1.3% to $123.77 at 11:15 a.m. in New York, having earlier jumped as much as 3.6% on the news of Third Point’s stake. * * * Loeb's full letter is below: Third Point Accumulates Position in The Walt Disney Company, Files for Hart-Scott-Rodino to Engage Directly with the Company Third Point Seeks Constructive Engagement with Disney on Numerous Issues Business Wire NEW YORK -- August 15, 2022 Third Point LLC (LSE:TPOU) (“Third Point”), a New York-based investment firm managing approximately $14 billion in assets today sent a letter to Disney (NYSE: DIS) CEO Bob Chapek, the full text of which is below. Mr. Robert A. Chapek Chief Executive Officer The Walt Disney Company 500 S. Buena Vista Street Burbank, CA 91521 August 15, 2022 Dear Bob: Congratulations on a terrific quarter and positive momentum in Parks, ESPN, and media and entertainment. We were particularly pleased to see the strength in DTC subscriber growth, the key driver of Disney’s long-term transformation towards less volatile, ultimately higher margin cashflows with a greater return on invested capital. As we wrote to our investors at the time of our initial investment in 2020, which highlighted the extraordinary potential of Disney+, we liken this evolution of the Company from “analog” theatrical releases towards digital distribution to Microsoft’s transition from selling software in plastic wrap boxes to a SaaS model. We expect to see the quality of Disney’s financial results improve as the Company’s business shifts further. We have had over two years to observe management navigate the most challenging time in Disney’s history, as you led the organization to simultaneously grow the DTC business, guide the Parks from pandemic closures to record-revenues and profits, and create quality entertainment content. This quarter’s results are an important proof point that Disney’s complex transformation is succeeding and our confidence in Disney’s current trajectory is such that we have, in recent weeks, repurchased a significant stake in the Company. We have also filed Hart-Scott-Rodino approval with the Federal Trade Commission so that we can engage with management and the Board in order to work directly and constructively with all parties, since the Company will likely require additional strategic, capital allocation, and governance changes to ensure its success. I realize some of our suggestions may already be in the works, but since we do not possess any material non-public information, we thought it might be useful to share our thinking on five important initiatives that we believe will unlock further value in the near-term. 1. Cost Cutting: Disney’s costs are among the highest in the industry, and we believe Disney significantly underearns relative to its potential. We urge the Company to embark on a cost cutting program that addresses both margins and the disposal of excess underperforming assets.         2. Dividend Policy: In a prior letter, we proposed that the Company continue the policy initiated under Covid when parks were closed to suspend payment of a cash dividend. We urge the Company to preserve this policy and use free cash flow to pay down debt, repurchase shares, or organically reinvest in the business.         3. Hulu: We believe that integrating Hulu directly into the Disney+ DTC platform will provide significant cost and revenue synergies, ultimately reigniting growth in the domestic market. We urge the Company to make every attempt to acquire Comcast’s remaining minority stake prior to the contractual deadline in early 2024. We believe that it would even be prudent for Disney to pay a modest premium to accelerate the integration but are cognizant that the seller may have an unreasonable price expectation at this time (while noting the seller has already made the decision to prematurely remove their own content from the platform.) We know this is a priority for you and hope there is a deal to be had before Comcast is contractually obligated to do so in about 18 months.         4. ESPN: ESPN is a great business that currently generates significant free cash flow, enabling the Company to pay down debt and increase strategic options down the line. In addition, we realize ESPN content is part of the bundle being offered to subscribers of other products, both in Disney’s Linear and DTC businesses. Despite these advantages, we believe that a strong case can be made that the ESPN business should be spun off to shareholders with an appropriate debt load that will alleviate leverage at the parent Company. The important questions to ask before commencing a spinoff are: Will both companies be better off? Will the needs of customers be better served? Can any synergies that exist between the two companies be replicated by contractual arrangements? Will the transaction contribute to creating long-term value for Disney shareholders? While acknowledging that broader capital structure considerations may be at issue, we believe that the answer to all four of these questions is affirmative. Employees of ESPN could be compensated in a security directly tied to their performance. ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting. Customers of ESPN and sports leagues would be better served by a focused management team driving a leadership position in sports distribution. We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.          Lastly, as a result of this transaction, both companies will attract shareholders seeking the respective qualities of each company, allowing the Disney parent multiple to expand as its earnings growth rate increases and the remaining business is no longer haunted by the specter of cord cutting. While I understand you have considered this idea in the past, we urge the Company to retain advisors to reassess the desirability of the transaction in the current environment, recognizing that a key determination would be the proforma capitalizations, cashflow and credit profile of both companies.         5. Board Refresh: Disney is a world-class company that deserves a world-class board of directors who possess diverse talents and experience with strengths in technology, advertising, and consumer engagement, as well as proven track records of leading large complex organizations and creating shareholder value. This is not meant to single out any current board members, but we believe there are gaps in talent and experience as a group that must be addressed. Third Point has identified potential board members who we believe would make essential contributions to the Company’s Board at this critical time. We would be happy to make an introduction. I look forward to discussing these topics with you, Christine, and when practicable, the Board and company advisors. Sincerely, Daniel S. Loeb Chief Executive Officer and Chief Investment Officer Third Point LLC Cc: The Walt Disney Company Board of Directors Tyler Durden Mon, 08/15/2022 - 11:16.....»»

Category: dealsSource: nytAug 15th, 2022

Mercury Systems stock pops after activist investor discloses stake

Mercury Systems Inc. shares jumped in Thursday trading after activist investor Jana Partners disclosed a fresh 6.6% stake in the component supplier to the aerospace and defense industry. Mercury stock was up 10% with about an hour to go in Thursday's trading session. In a filing with the Securities and Exchange Commission, Jana disclosed the purchase of roughly 3.7 million shares for approximately $181.1 million, with options to purchase another 173,300 shares. The activist investor said in the filing that it "intends to have discussions with the issuer's board of directors ... and management regarding maximizing value for shareholders including evaluating strategic alternatives including a sale of the Issuer, operations, capital allocation, corporate governance, board composition, and compensation practices." Even with Thursday's gains, Mercury shares have declined 36.7% so far this year, as the S&P 500 index has gained 25%.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit for more information on this news......»»

Category: topSource: marketwatchDec 23rd, 2021

Futures Rise As Usual, Approaching All Time High

Futures Rise As Usual, Approaching All Time High US equity futures resumed their upward climb (after Goldman quadrupled down on its call for a massive, year-end meltup driven by $15BN in inflows every single day) as major technology stocks advanced, and as investors awaited a slew of retail earnings and economic data this week to gauge the health of consumer spending while keeping an eye on runaway inflation. Better-than-estimated profit growth has led to a rally in markets, helping ease recent concerns over the hottest U.S. inflation in 30 years. At 730 a.m. ET, Dow e-minis were up 94 points, or 0.26%. S&P 500 e-minis were up 9 points, or 0.20% and about 20 points from their all time high around 4,711; while Nasdaq 100 e-minis were up 30.5 points, or 0.19%. The three major Wall Street indexes had fallen between 0.3% and 0.7% last week when the S&P 500 also snapped its longest winning streak since August 2020, amid concerns over high inflation and weakening consumer sentiment. Investors had begun pivoting into economically resilient sectors, mainly technology, towards the end of the week. Market-heavy GAMMA (fka FAAMG) stocks rose between 0.1% and 0.8% in premarket trade, with Meta Platforms Inc leading gains. On the other end, Tesla shares fell as much as 2.6% in U.S. premarket session after Elon Musk suggested over the weekend that he would sell even more stock after offloading almost $7 billion worth of shares over the past week. Tesla's declines follow a steep 15.4% drop last week after Musk offloaded a combined $6.9 billion worth of shares in the electric-car maker. Meanwhile, blank-check company Gores Guggenheim rose as much as 25% as the stock was touted among retail traders. Rivian shares were down about 2.7% in U.S. premarket trading after the electric-truck maker surged following its IPO last week. Dollar Tree Inc added 5.4% after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer. Strong corporate earnings are helping drive investors into stocks and overshadowing fears about the hottest U.S. inflation print in three decades. The sentiment found its way into calmer bond markets, where these fears had played out in the highest volatility since the onset of pandemic.   “Central banks may be becoming less accommodative, but they will be anxious not to derail the recovery or financial markets,” according to Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management and head of asset alloaction Christophe Donay. “Q3 results have offered further proof of corporate strength.” Focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot and Macy's. Their results will round off an upbeat third-quarter earnings season, which pushed Wall Street to new highs. Retail sales data for October is also due on Tuesday, and is expected to show the impact of inflation on consumer spending. Looking ahead not everyone is euphoria: in its 2022 forecast, Morgan Stanley strategists warn that inflationary headwinds may become a bigger force against U.S. stocks next year; they prefer peers in Europe and Japan. They forecast the S&P 500 will end 2022 at 4,400 -- some 6% below current levels. For bonds, they expect 10-year yields to rise to 2.10% by the end of next year on improving growth and higher real rates, up from 1.54% on Monday. “One reason we like equities in Europe and Japan is that we think inflationary challenges there are much less daunting than elsewhere,” strategists led by Andrew Sheets wrote Sunday. They also cited “more reasonable valuations, limited central bank tightening and less risk from higher taxes” vis-a-vis the U.S. In Europe, Stoxx 600 Index was little changed near a record high as rising earnings estimates supported the region’s stocks. Travel and leisure and retailers led the gains, while miners slumped. Here’s the latest on what analysts are saying about European equities: EasyJet cut to reduce from hold at Kepler Cheuvreux due to deteriorating traffic trends and a risk that it has to incentivize demand with fare discounts. Alfen Beheer loses its only buy rating as Berenberg downgrades to hold on limited near- term upside, even after last week’s sell-off in the shares. Direct Line cut to hold and Admiral raised to buy at Berenberg with the broker switching preferences in its U.K. non- life insurer coverage. B&M European is cut to underperform from sector perform at RBC with growth set to become harder to deliver for the discount retailer and better value seen elsewhere in the sector. Wood’s strategic review of its built environment business could unlock “meaningful value,” Citi writes in note upgrading the energy-services firm to buy. Earlier in the session, shares fluctuated in Hong Kong and dipped in China, where traders weighed stronger-than-expected retail sales and industrial output, central bank liquidity support and a drop in home prices. Beijing’s crackdown on real-estate leverage is among the headwinds for the world’s second-largest economy. That said, Asian equities rose for a third day as the strength in U.S. technology heavyweights Friday helped ease market worry over global inflation, reigniting appetite for growth stocks.  The MSCI Asia Pacific Index advanced as much as 0.6%, with TSMC, Tencent Holdings and Samsung Electronics among the largest contributors to the gauge’s rise. South Korea’s Kospi was the top performer among the region’s benchmarks, adding 1%.  Futures on the Nasdaq 100 climbed in Asia after the underlying measure added 1% on Friday. U.S. equities rose led by technology and communication services, with share prices remaining near all-time highs after a strong corporate earnings season.  Overall, the positive mood from last week is extending to today’s trading, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “Chip-related stocks are doing pretty well following the earnings season, which is also backing gains for the market.” The regional benchmark capped its second straight week of gains on Friday, helped by positive earnings readings. Price data from the U.S. and China remain in focus as traders fear elevated inflation could lead to tighter monetary policy. U.S. consumer sentiment unexpectedly collapsed in early November as Americans grew increasingly concerned about inflation. Japanese stocks rose after the Nikkei newspaper reported on Friday that the government plans to compile an economic stimulus package of more than 40 trillion yen ($351 billion) in fiscal measures. “Economic stimulus had been expected to be about 30 trillion yen, but a new figure of 40 trillion yen is likely to be cheered by investors,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co.  The Topix index rose 0.4% to close at 2,048.52 in Tokyo, while the Nikkei 225 advanced 0.6% to 29,776.80. Toyota Motor contributed the most to the Topix’s gain, increasing 1.1%. Out of 2,180 shares in the index, 1,051 rose and 1,029 fell, while 100 were unchanged. India’s benchmark index ended flat after wholesale prices surged higher-than-expected in October, weighing on metal and financial stocks. The S&P BSE Sensex was little changed at 60,718.71 in Mumbai, while the NSE Nifty 50 Index was flat at 18,109.45. Both gauges gained as much as 0.6% earlier on the back of an earnings season in which a majority of Nifty 50 companies reported results that beat expectations.  Both indexes, however, failed to hold onto their initial advance after wholesale prices rose 12.5% in October, more than economists’ consensus of a 11.1% advance, led by a rise in manufactured products as well as fuel and power prices. Nine of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by gauges of metal and basic materials companies.  India will release monthly trade figures after market hours. The corporate earnings season for the three months ended September finished last week with 29 of the Nifty 50 companies beating analyst estimates. Three companies made their trading debut on Monday, with chemical maker Sigachi Industries rising 267% over its IPO price. One97 Communications Ltd., the operator of digital payments app Paytm which raised $2.5b in India’s biggest IPO, is slated for Thursday. In FX, the Bloomberg Dollar Spot Index slipped with the greenback weaker against all of its Group-of-10 peers. Commodity currencies, led by Norway’s krone, were the best performers. The Treasury curve bull flattened, with yields falling by up to 2bps. The euro hovered around $1.1450; the French presidential election next year is the scheduled event carrying the highest risk for the common currency, according to options gauges. The pound steadied as traders await clues on monetary policy from BOE Governor Andrew Bailey during parliamentary testimony later Monday. U.K. economists expect a rate increase to 0.25% next month, according to a Bloomberg survey. U.K. economists have become more hawkish over the past month and now expect the Bank of England to increase interest rates in December as concerns about inflation intensify. Sweden’s krona inched up after inflation accelerated more than forecast in October. Meanwhile, the Australian dollar rose on data that China’s economy performed better than expected in October. The nation’s sovereign bonds also extended opening gains after China home prices fell again, sapping real-estate shares. Japan’s super-long government bonds underperformed amid concerns that supply may increase to finance government spending. The yen consolidated In rates, Treasury yields broadly within a basis point of Friday’s close, the curve fractionally steeper. The front-end and belly outperform, following bigger gains for Aussie front-end, which attracted buyers during Asia session. Stocks supported, with S&P 500 futures above Friday’s high.  Treasury yields were richer from front-end out to 10-year sector, which trades around 1.55%, outperforming gilts and bunds by ~1bp; long-end cheapens slightly on the day, steepening 5s30s by ~1bp.  Euro- area bonds gained, led by the periphery, following comments on inflation by ECB Chief Economist Philip Lane over the weekend. ECB’s Lane said recent price inflation is “really part of the pandemic” and people should not panic, in an interview with RTE on Saturday. The Fed begins tapered purchase schedule released Friday; schedule departed slightly from Nov. 3 plan by leaving target size of operations in 10- to 22.5-year sector unchanged while trimming 22.5- to 30-year more, which spurred outperfomance by 20-year sector In commodities, crude futures drifted lower with focus on U.S. energy policy and commentary from OPEC speakers. WTI is down 0.6%, trading either side of $80; Brent drops through Asia’s worst levels before running into support near $81. Spot gold fades Asia’s weakness to trade flat near $1,863/oz. Most base metals are in the red with LME nickel underperforming; copper trades flat.  Looking at today's calendar, it's quiet on the news front with just the US November Empire State manufacturing survey on deck. Biden will meet virtually with Chinese President Xi Jinping on Monday. Tensions between the two countries have been building over issues including Taiwan and restrictions on sales of U.S. technology to China. Market Snapshot S&P 500 futures up 0.1% to 4,685.00 STOXX Europe 600 little changed at 487.13 MXAP up 0.4% to 200.95 MXAPJ up 0.4% to 656.76 Nikkei up 0.6% to 29,776.80 Topix up 0.4% to 2,048.52 Hang Seng Index up 0.2% to 25,390.91 Shanghai Composite down 0.2% to 3,533.30 Sensex up 0.1% to 60,771.98 Australia S&P/ASX 200 up 0.4% to 7,470.11 Kospi up 1.0% to 2,999.52 Brent Futures down 0.9% to $81.46/bbl Gold spot down 0.2% to $1,860.89 U.S. Dollar Index little changed at 95.09 German 10Y yield little changed at -0.27% Euro little changed at $1.1447 Top Overnight News from Bloomberg  Federal Reserve Bank of Minneapolis President Neel Kashkari said the U.S. central bank shouldn’t overreact to elevated inflation even as it causes pain for Americans, because it is likely to prove temporary A reduction in China’s reserve requirement ratio looks increasingly unlikely after the authorities rolled over all policy loans coming due and data surprised on the upside, suggesting that bonds will have little room to gain China’s industrial output rose 3.5% in October from a year earlier, while retail sales growth accelerated to 4.9%, beating economists’ forecasts Japan’s gross domestic product contracted at an annualized pace of 3% in the three months through September from the previous quarter, the Cabinet Office reported Monday. Economists had forecast a 0.7% decline Bank of Japan Governor Haruhiko Kuroda said financial stress from the pandemic is limited to certain sectors of the economy, potentially signaling the BOJ is planning to scale back its Covid-era funding program European Central Bank President Christine Lagarde doubled down on her assessment that euro-area inflation will ease as economies rebound, falling back below the 2% target in the medium term. Yet analysts see itfaster than previously thought this year and next A short-lived reprieve for emerging- market carry trades funded in dollars looks to be over, with an upsurge in U.S. inflation making the outlook increasingly treacherous The U.K. is expanding its Covid-19 booster program to younger people as the country seeks to head off another wave of infections this winter. A third vaccine dose will be available to people aged 40 to 49 starting six months after their second shot, the government said Monday Oman said there was no need for OPEC+ to accelerate oil-production increases, signaling at least some members of the group will continue to resist U.S. pressure for more crude   A more detailed look at global markets courtesy of Newsquawk Asian equity markets began the week with a lack of firm direction as the region digested varied tier-1 economic releases including better than expected Chinese activity data and miss on Japanese GDP, with attention also on a slew of earnings results and corporate updates. ASX 200 (+0.4%) and Nikkei 225 (+0.6%) both opened higher and took impetus from last Friday’s gains on Wall Street but with upside in Australia capped as financials and energy lagged, while Japanese participants weathered the weak GDP data which showed a wider than expected quarterly contraction during Q3, when the economy was still mired by widespread state of emergency declarations in key areas including Tokyo and its surrounding prefectures. Nonetheless, Japanese stocks have taken the disappointing economic growth within their strides as it justifies the incoming stimulus package which was said to have been increased to over JPY 40tln in fiscal spending and with Japan reportedly to resume its Go To Travel campaign in mid-January. Conversely, Hang Seng (+0.2%) and Shanghai Comp. (-0.2%) were initially moderately pressured despite stronger than forecast Industrial Production and Retail Sales data from China, as well as the PBoC’s CNY 1tln MLF announcement which matched this month’s expiring MLF loans and further dampened prospects of PBoC easing. Today also saw the launch of the Beijing Stock Exchange which aims to help SMEs raise capital and included 81 companies in the first batch of listings, while participants await the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia and with US Treasury Secretary Yellen and Secretary of State Blinken set to join in on the call. Finally, 10yr JGBs are higher as they tracked a marginal rebound in T-notes and following the disappointing Japanese GDP release, but with gains capped as stocks in Tokyo remained afloat and amid the absence of BoJ purchases in the market today. Top Asian News Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Duterte Runs for Philippine Senate, Avoids Clash With Daughter Greenland Jumps in Bond Market After Classification Change Chinese Startup Meicai Is Said to Pick Banks for Hong Kong IPO European equities (+0.1%) trade with minor gains which have nudged the Stoxx 600 to a high of 487.21 in what has been a quiet start to the week. The desk will continue to monitor further lockdown restrictions across the region, however, updates from the Netherlands and Austria have done little to dent sentiment thus far. The handover from the APAC region was a mixed one as the soft GDP data from Japan was overshadowed by forthcoming stimulus efforts whilst Chinese equities were unable to garner much upside from stronger than forecast Industrial Production and Retail Sales data. Participants were also awaiting the Biden-Xi virtual meeting which is set to take place Monday evening at 19:45EST or Tuesday morning in Asia. Stateside, futures are trading with gains of a similar magnitude to their European counterparts (ES +0.1%) with not a great deal on the docket beyond the NY Fed Manufacturing print at 13:30GMT/08:30EST. Back to Europe, sectors are relatively mixed with Travel & Leisure top of the leaderboard amid gains in Deutsche Lufthansa (+1.7%) after the Co. was upgraded to neutral from sell at UBS. Oil & Gas names have been granted some reprieve following the selling pressure seen towards the latter half of last week. To the downside, Basic Resources is the standout laggard amid underlying price action in the metals space. In terms of individual movers, Ahold Delhaize (+2.4%) is one of the best performers in the Stoxx 600 after announcing a EUR 1bln buyback as of 2022, accelerated its growth/investment plan and will explore an IPO of Shell (+1.8%) is seen higher on the session after announcing that it is looking to implement a simplified structure and move its tax residency to the UK from the Netherlands. To the downside, Philips (-12.1%) sits at the foot of the Stoxx 600 as concerns continue to mount over its ventilator recall issues in the US. Finally, BBVA (-3.7%) is seen lower on the session after launching a tender offer to acquire the remaining 50.2% of Turkiye Garanti Bankasi. Top European News U.K. Expands Covid-19 Booster Program to People in Their 40s Austria Locks Down Unvaccinated as Europe Tightens Covid Curbs Cathay Crew Who Flew From Frankfurt Doing 21-Day Quarantine Telefonica Launches Tender Offer for Hybrid Notes In FX, the Aussie and Kiwi are outperforming their major peers, or making the most of ongoing Greenback consolidation off last week’s new y-t-d highs, with the former also gleaning encouragement from Chinese data overnight as ip and retail sales beat consensus. Aud/Usd is back above 0.7350 and Nzd/Usd has reclaimed 0.7050+ status as the Aud/Nzd cross hovers in the low 1.0400 zone and eyes an unusually large 1 bn option expiry at the round number. Similarly, the Norwegian and Swedish Krona are both firmer vs a somewhat leggy/lethargic Euro, but with assistance from macro releases in the form of trade and inflation respectively. Eur/Nok is probing 9.9200 and Eur/Sek is testing bids and support around 10.0000 compared to peaks near 9.9600 and 10.0330. CAD/DXY - No lasting support from crude prices for the Loonie as WTI retreats through Usd 80/brl from Usd 81.20 at best, but Usd/Cad has reversed from 1.2550+ ahead of Canadian manufacturing sales and wholesale trade that are out alongside the more timely Empire state survey. Meanwhile, the index is meandering either side of 95.000 within a 95.152-94.963 band having ‘topped out’ at 95.266 in wake of US CPI and a far from well received new 30 year issue. GBP/EUR/CHF/JPY - All narrowly mixed against the Buck and seemingly awaiting clearer direction from their US counterpart or independently, as Cable continues to straddle a key Fib level (1.3412) in advance of testimony from the BoE on the latest MPR and top tier UK data from tomorrow. Eur/Gbp is sitting even tighter around 0.8530 before talks intensify to try and resolve differences on NI Protocol, while Eur/Usd is pivoting 1.1450, Usd/Chf is rotating around 0.9200 and Usd/Jpy is holding mostly below 114.00. Note, the Euro has ECB speakers to digest (see Headline Feed at 10.01GMT for remarks from President Lagarde) and look forward to, while the Franc has not really responded to small rises in weekly Swiss sight deposits and the Yen has largely brushed aside much weaker than expected Japanese GDP and a draft document saying that the government and BoJ share a strong sense of urgency about supply shortages, whilst maintaining an appropriate combination of monetary and fiscal policies. In commodities, WTI and Brent are softer this morning, with losses in excess of 1.0% on the session thus far. Such pressure stems from demand-side updates in the wake of further COVID-19 measures being announced/implemented, most recently that Austria is entering a lockdown for the un-vaccinated and the Netherlands is to reimpose social distancing from Saturday. Furthermore, given the surge in cases seen in Germany in recent weeks the three-parties in coalition discussions intend to put forward proposals to Parliament on Thursday for renewed measures, which will reportedly include contact restrictions. On the other hand, the supply-side of the equation is cognisant of the looming imposition of further restrictions on Belarus by the EU, particularly as Leader Lukashenko last week said they would respond to any sanctions and suggested closing gas/goods transit through Belarus. Additional sanctions are, currently, scheduled to be announced this afternoon. Separately, and perhaps adding pressure, is commentary from various oil ministers the most pertinent of which has seen the UAE representative announce they are to increase production to over 5mln BPD from the current 4mln by 2030, alongside expecting a Q1-2022 oil surplus. Currently, the benchmarks are in proximity to the sessions trough which resides around USD 0.10/bbl below Friday’s low of USD 79.78/bbl in WTI, for instance. Moving to metals, spot gold and silver have been grinding higher throughout the European morning but are yet to retrace the downside seen overnight in-spite of the stronger Chinese data though this failed to spur regional or base-metal performance either. In terms of bank views, the Head of Energy Research at Goldman Sachs predicting the precious metal is set for a boom to the USD 2k level. US Event Calendar 8:30am: Nov. Empire Manufacturing, est. 22.0, prior 19.8 DB's Jim Reid concludes the overnight wrap This morning I’ve just put out a short note which I hope will win the catchiest research title of the year award. It’s called “If you think real yields are low, look at these charts…”. See here for the link. Regular readers will know my view that inflation will be structurally higher going forward and that for the rest of my career developed market real yields will likely stay negative even if nominal yields climb. This is because with debt so high, history suggests that heavy financial repression will be necessary to manage this. However, nothing could have prepared me for 2021 so far with US CPI at 6.2% YoY in October and 10-year US yields stuck below 1.6%. On a spot basis real yields are c.-4.6% and at around 70-year lows. If you think real yields are low, however, take a look at the 200-year graphs in the note to see that whenever debt has spiked historically, real yields have moved a lot lower than even today’s levels, albeit through inflation around or above 20%. These are extreme times but history offers even more extreme examples. Staying with inflation DB’s Francis Yared and I did a webinar on inflation last week and the recording can be viewed here. You’ll need Francis’s slides at hand on Regime Shifts in Inflation (link here) and mine (link here) on what history can tell us about inflation and what it means for asset prices in the future. I thought it was a really good webinar but I am slightly biased. Maisie and mum came back from a week in hospital at the weekend. Mum slept for 18 hours on Saturday leaving me to work out how the wheelchair folds up and reopens and delivering what I hoped was the right dose of morphine. It’s going to be tough living with a wheelchair for the next year as Maisie’s hip bone tries to regrow but after hearing many stories from my wife about children in the ward with life threatening conditions you realise that you’re actually pretty lucky. Before you think I’ve gone all zen, I did nearly throw the wheelchair across the room when it wouldn’t unfold. I’d missed a small lever under the seat. After a tiring last week at home and in the markets it’s a quieter week ahead in terms of the calendar, though market attention will continue to focus on the question of who might be appointed as the next Fed Chair, as well as the latest inflation statistics from a number of countries, including the UK (Wednesday). There is a reasonable amount of Fedspeak so it’ll be especially interesting to hear those on the transitory side to see if last week’s shocking print has impacting their thinking. Otherwise, geopolitics will be in focus, with today’s virtual meeting between US President Biden and Chinese President Xi, alongside continued speculation about whether the UK might trigger Article 16 of the Northern Ireland Protocol even if tensions have eased a touch in the last few days. Starting with today’s virtual meeting between President Biden and President Xi, it is set to take place at 7:45 PM Washington time, which will be 8:45 AM on Tuesday in Beijing. While both the presidents spoke over the phone twice this year, this is the first time it is being dubbed as a summit. There is some thought that tariff reductions could be on the agenda, especially given current US inflation levels but it might be a bit early for that in any relationship rebuild. We’ll know more in time for tomorrow’s EMR. The monthly Chinese data dump came in better than expected overnight with industrial output +3.5% yoy (vs. 3% expected), retail sales 4.9% yoy (vs 3.7% expected) but fixed-asset investment slightly missing at 6.1% (vs 6.2% expected). There is some discussion that the retail sales beat may be led by higher prices and also higher food sales as consumers prepare for the possibility of winter virus restriction. Asian stocks are trading mixed with the KOSPI (+1.04%) and the Nikkei (+0.48%) trading in the green while the Hang Seng (-0.08%), Shanghai Composite (-0.29%) and CSI (-0.29%) trading lower. In Japan GDP shrank by -0.8% from the last quarter (-0.2% consensus and +0.5% previous) augmenting expectations of a stimulus package by Prime Minister Fumio Kishida, which is expected to be announced at the end of this week. The Nikkei reported last Friday that the stimulus could top 40 trillion yen ($350 bn). Futures are pointing to a muted start in US & Europe with S&P 500 futures (-0.01%) and DAX futures (-0.08%) both fairly flat. Moving onto the rest of the week, there are a few decisions from EM central banks over the week ahead, including Turkey, South Africa and Indonesia (all Thursday). However, the main focus for investors will be the speculation about who might be the next Fed Chair, particularly in light of the news out last week that both incumbent Fed Chair Powell and Governor Brainard had been interviewed for the position. Powell’s current four-year term comes to an end in February, and whoever’s nominated would require senate confirmation for another term. At this point 4, 8 and 12 years ago, the announcement of who’d be nominated had already been made, but we still don’t have a date for when we might get the news. However, it may not be too far away, with President Biden saying in Glasgow on November 2 that it would be “fairly quickly”. On the data side, there’ll be an increasing amount of hard data out of the US for October, including retail sales, industrial production (both Tuesday) and housing starts (Wednesday). Meanwhile, there’ll also be some important UK data as the Bank of England mulls over their monetary policy settings ahead of their meeting next month. On Tuesday, there’s the latest employment report, and then on Wednesday, we’ll get the latest CPI reading for October. Turning to politics, it’s worth keeping an eye out for any developments on Brexit, with speculation rising that the UK government could trigger Article 16 of the Northern Ireland Protocol. Over the last 3 or 4 days the mood music has moved a little towards compromise so we’ll see if this gathers some momentum. Lastly on the earnings front, it’s the tail end of the season now, but there are still a few major companies left to report. Tomorrow we’ll hear from Walmart and Home Depot, before Wednesday brings reports from Nvidia, Cisco, Lowe’s and Target. Then on Thursday, we’ll hear from Intuit, Applied Materials and TJX. Recapping last week now and inflation had a strong stranglehold on the market narrative, as much higher-than-expected US CPI data drove Treasury yields higher, led by the belly of the curve. Global sovereign yields increased in sympathy. Quickly recapping the highlights from the pivotal CPI data: year-over-year headline CPI of 6.2% and core CPI of 4.6% were each the highest readings since the early 1990s and we’re generally getting to levels last seen consistently at the start of the 40yr disinflationary trend in the early 1980s. Price gains were shared across a broad range of components, which prompted some rabble rousing out of Democratic politicians, including President Biden. Five-year Treasury yields increased +13.5 bps as investors brought forward the expected timing of increases to the fed funds rate. Markets are pricing the first Fed rate hike by the July FOMC and 2.5 hikes through 2022. This compares with a September FOMC lift-off and fewer than 2 hikes in 2022 a week before. All told, 2yr, 5yr, and 10yr Treasury yields increased +11.7bps (+0.5bps Friday), +17.1bps (+1.0bps Friday), and +11.9bps (+2.1bps Friday) on the week. 10yr inflation breakevens hit their highest levels on record, finishing the week at 2.72%. Real yields were the only rates declining on the week, with 10yr real Treasury yields retreating -6.6bps (+0.8bps Friday) to end the week at -1.17%, just above all-time lows. Other developed sovereign bond yields followed Treasuries higher, with ten-year yields in Germany, UK, France, and Italy increasing +2.1bps (-2.8bps Friday), +6.9bps (-0.6bps Friday), +3.5bps (-2.8bps Friday), +7.8bps (-0.8bps Friday) on the week. The spectre of higher inflation and concomitant monetary policy tightening put an end to the recent S&P 500 win streak. After posting eight straight days of record highs by Tuesday, the S&P 500 retreated -0.31% this week, including -0.82% on Wednesday alone following the inflation data, but made a heroic effort to reclaim lost ground Friday, gaining +0.72%. Mega cap stocks were notable laggards, due to the increase in discount rates, with FANG+ stocks down -0.49% (+1.00% Friday). The index was also hit by a -15.44% collapse in Tesla stocks following news that Elon Musk would liquidate some of his holdings, which he duly did. European stocks proved more resilient, with the STOXX 600 (+0.68% on the week, +0.30% Friday), DAX (+0.25%, +0.07%), and CAC 40 (+0.72%, +0.45%), again posting new all-time highs to finish the week. On the virus front, Pfizer requested regulatory approval for all US adults to be eligible to receive the company’s Covid-19 booster shot, while climbing cases in Europe have prompted renewed lockdown measures and enhanced vaccination efforts across the continent. Federal Vice Chair for Supervision Quarles announced he would resign at the end of the year, as was widely anticipated. There was a steady leak of news on the impending nomination for Fed Chair, but neither Chair Powell nor Governor Brainard, the two favorites for the position, saw their chances much changed following the news. The Fed also released its bi-annual Financial Stability Report and concluded that asset prices remain vulnerable to deteriorating investor risk sentiment, virus progress, or economic recovery. Geopolitical tensions bubbled in Europe. Threats from Belarussian President Lukashenko to cut the transit of natural gas from Russia to Europe, and reports of potential Russian plans for further military excursions into Ukraine, drove European natural gas prices higher in the second half of the week. President Putin apparently warned the US and its allies that Moscow would not tolerate expansion of Western military influence in Ukraine. Tyler Durden Mon, 11/15/2021 - 07:59.....»»

Category: blogSource: zerohedgeNov 15th, 2021

Bill Ackman"s latest short is a "smart lottery ticket" bet against the Hong Kong dollar – here are 7 of his biggest trades

From making $2.6 billion during the pandemic to a failed long position in Netflix, here are the billionaire investor's biggest trades. Bill Ackman is shorting the Hong Kong dollar for his latest trade.Richard Drew/AP Billionaire investor Bill Ackman is shorting the Hong Kong dollar for his latest trade. It's a 'smart lottery ticket' bet that the currency's dollar peg will break as interest rates rise, veteran trader Boaz Weinstein said. From making $2.6 billion during the pandemic to a failed long position in Netflix, here are Ackman's biggest trades. Bill Ackman is betting against the Hong Kong dollar's peg against the greenback for his latest trade."We have a large notional short position against the Hong Kong dollar through the ownership of put options," the billionaire investor tweeted last week. "The peg no longer makes sense for Hong Kong and it is only a matter of time before it breaks."Hong Kong's currency has had its value fixed at between 7.75 and 7.85 per US dollar for nearly four decades, but the Federal Reserve's aggressive interest-rate increases this year have put pressure on that peg. Put options are derivative contracts that grant the holder the right to sell an asset at a predetermined price on a fixed date.Hong Kong's finance ministry maintains the peg to the dollar by matching the Federal Reserve's rate decisions. But Ackman says there's a growing case for it to abandon that strategy, as China grapples with a zero-COVID-fueled economic slowdown and a debt crisis in its property sector.Veteran trader Boaz Weinstein praised Ackman's latest short as a 200-to-1 'smart lottery ticket' – but others have said that it's unlikely his big bet against the Hong Kong dollar will pay off."I can see Ackman's point – Hong Kong's economy is suffering from slow growth at a time when the dollar is surging because of tightening monetary policy," SEB's chief emerging markets strategist Per Hammarlund told Insider. "But I really don't think the peg is going to break at this point."In his 30-year career at the helm of Gotham Partners and then Pershing Square Capital Management, Ackman has racked up some outsized wins – as well as some troubling losses.Here are seven of the billionaire investor's biggest trades.1. Wendy's, 2004Shortly after setting up Pershing in 2004, Ackman took a large stake in the fast-food chain Wendy's.The activist investor immediately started pressuring Wendy's to spin off its Tim Hortons coffeehouse business, which it did successfully in 2006 to raise around $670 million for its shareholders.Ackman exited his Wendy's position in 2009 for a substantial profit – although the business has seen its share price tumble in the years since the Tim Hortons spinoff.2. General Growth Properties, 2009One of Ackman's all-time greatest trades saw him rescue mall operator General Growth from collapse – and eventually sell his stake for $1.6 billion.The hedge fund manager spent $60 million to acquire General Growth shares in 2009 before persuading the struggling company to file for bankruptcy.Ackman then played a key role in the company's reorganization, selling back shares as its stock price soared until he finally exited his position in 2014.3. Herbalife, 2012Ackman called the dietary supplement firm Herbalife a pyramid scheme in 2012 – marking the start of a five-year effort to generate returns by shorting the stock.Ackman opened up a short position worth around $1 billion in Herbalife, betting it would eventually see its share price crash towards $0.But the short became one of Ackman's biggest-ever losses, as Herbalife's share price continued to rise until he eventually had to liquidate his position in 2017.4. Valeant Pharmaceuticals, 2014Pershing Square acquired 8.5% of Valeant for $180 a share in 2014, in what would become known as one of Ackman's most disastrous trades.The pharmaceuticals firm saw its share price plummet more than 90% over the next three years after facing multiple accusations of fraud and coming under investigation from the Securities and Exchange Commission.Pershing Square eventually closed its entire position in Valeant in March 2017, losing over $3 billion on the trade.5. COVID-19 response, 2020Ackman's fame shot to new heights in March 2020, when he made just $2.6 billion betting that the coronavirus pandemic would trigger a full economic shutdown in the US.Pershing Square spent $27 million buying credit protection on investment-grade and high-yield bond indexes – and then liquidated its position once the Federal Reserve started buying up corporate bonds to protect the economy.That helped the hedge fund to post a 7.9% gain in March 2020 – a month when the pandemic triggered a 17% crash in the S&P 500.6. Netflix, 2022Ackman announced a big bet on Netflix in late January – but exited that position just three months later for a $400 million loss.That sale came on a day the streaming company saw its share price plummet 35% in a single day after announcing massive subscriber losses."While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty," Pershing Square said in an April letter to investors.7. Rising interest rates, 2022But Ackman bounced back from that loss with a big bet on Federal Reserve interest-rate hikes.He said in October that Pershing Square had made $2.7 billion by spending around $400 million on interest rate-related hedges as the US central bank stepped up its tightening campaign."We've had some very significant profits from hedges, a decent percentage of which we've realized," Ackman told Interactive Investor. "We've probably made $2.7 billion of profits."Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 4th, 2022

These Healthcare Stocks Are Killing It In 2022, But More Upside Looks Likely

The healthcare sector has significantly outperformed the broader market so far this year, as demonstrated by the roughly flat return of the S&P 500 Healthcare Sector Index. The S&P 500 has plummeted more than 20% year to date. A flat return suggests the possibility of a wide dispersion within healthcare, and that’s certainly the case. […] The healthcare sector has significantly outperformed the broader market so far this year, as demonstrated by the roughly flat return of the S&P 500 Healthcare Sector Index. The S&P 500 has plummeted more than 20% year to date. A flat return suggests the possibility of a wide dispersion within healthcare, and that’s certainly the case. Some healthcare names have outperformed their index dramatically, while others have generated negative or lackluster returns. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Cardinal Health Inc (NYSE:CAH) and McKesson Corp (NYSE:MCK) are both firmly in the outperformance camp, with Cardinal up more than 50% year to date and McKesson having gained nearly 60%. Some investors may hesitate to invest in companies that have gained so much in a down market, fearing that all the upside is gone. However, a closer look suggests Cardinal and McKesson could see even more upside in the coming months. Cardinal Health Cardinal Health distributes pharmaceuticals and manufactures and distributes laboratory and medical products. It also provides data solutions to healthcare facilities. Cardinal's two operating segments are pharmaceutical and medical supply and distribution. Fundamentals are the greatest concern for Cardinal Health, as it has struggled to turn a profit in recent years despite raking in more than $181 billion in revenue for the fiscal year that ended in June 2022. Additionally, the company's balance sheet isn't particularly great, although it does de-risk the business with its $44.6 billion in liabilities balanced out by its $44 billion in assets. However, activist investment firm Elliott Management took up a significant position in Cardinal Health earlier this year, suggesting future solutions to the company's profitability issues. Since Elliott established its stake, it has shaken up the company's board. A new chief executive officer was also brought on board, furthering the potential for solutions to the previous management's execution missteps. With Elliott Management on board, we can expect significant changes to unlock value at Cardinal Health, which has already announced improvements to its governance practices. The company has also formed a new committee to review its business operations, strategy and portfolio, suggesting more changes are probably forthcoming. What Changes Can Be Expected At Cardinal Health? One critical issue that could be causing a sizable part of the profitability issues could be the lack of synergies among Cardinal's two businesses. For example, Cardinal's pharmaceutical business is part of an oligopoly with two other companies. However, while it's growing faster than its peers based on revenue, Cardinal is trading at only eight times EBITDA due to operational missteps like poor acquisition decisions. Despite the pharmaceutical segment's $16 billion in revenue in the last quarter, it was unprofitable. Some potential steps to unlock value at Cardinal Health could involve selling off non-core assets like the Nuclear and Precision Health Solutions business. The company could also unload its Cardinal Health at-Home Solutions business, which has grown significantly since its acquisition about 10 years ago. Of course, it will take some time to make decisions about the best ways to unlock value at Cardinal Health, but it seems like a brighter future is coming. With a trailing P/S of around 0.11 times, Cardinal Health also looks significantly undervalued relative to its peers. The healthcare sector's three-year average P/S is around 2.4 times. It could take a while for the bull thesis for Cardinal Health to play out, but it seems like there's nowhere to go but up from current levels. McKesson McKesson distributes pharmaceuticals and provides medical supplies, health information technology, and care management tools. The company delivers one-third of all the pharmaceuticals used in North America. The story with McKesson is significantly different from that of Cardinal Health. Its fundamentals are far healthier, and it has a solid track record of beating estimates for earnings and revenue. Additionally, McKesson is taking steps to unlock value without prompting from an activist investor. For example, the company is exiting its European business with the intent of focusing more on its businesses with higher margins. Of note, Warren Buffett's Berkshire Hathaway owns shares of McKesson, which was one of its top purchases in the second quarter. The firm held nearly 3.2 million shares of the company as of the end of June after increasing its position from 0.25% of its portfolio to 0.34%. It's no wonder that Buffett, the legendary value investor, scooped up more shares of McKesson during the second quarter, as it looks undervalued. The company trades at a P/S of about 0.22 times and a P/E of about 28.5 times, versus the healthcare sector's three-year average P/S of 2.4 times and three-year average P/E of around 48 times. The healthcare sector currently trades at a P/E of around 40 times, further demonstrating how undervalued McKesson is despite its skyrocketing share price. Cardinal Health And McKesson Both Look Solid It's important to realize that the bull theses for both Cardinal Health and McKesson could take a while to play out. The current market conditions make it incredibly challenging to pick winners right now. However, the fact that both stocks have been surging shows that other investors are recognizing the value offered by these two companies. At the end of the day, a long-term mindset is generally better because it provides opportunities to smooth out some of the market's volatility. This certainly couldn't be truer of Cardinal Health and McKesson......»»

Category: blogSource: valuewalkNov 7th, 2022

Crown Holdings stock bounces sharply off 2-year low after Carl Icahn discloses large activist stake

Shares of Crown Holdings Inc. charged up 9.5% in midday trading Thursday, after Carl Icahn disclosed an 8.5% activist stake in the maker of packaging products and equipment for consumer goods, enough to make him the second-largest shareholder according to FactSet data. In a 13D filing with the Securities and Exchange Commission, Icahn said he believed the stock was "undervalued and represented an attractive investment opportunity." Icahn beneficially owns 10.20 million Crown shares, which at current prices are worth $754.51 million; Crown's market capitalization was $8.76 billion at current prices. Icahn, and funds he represents (reporting persons), said they plans to hold talks with Crown's management and board of directors over a "variety of matters" that he believes will increase shareholder value, "including, operational, financial, corporate governance, management, capitalization, accounting, strategic direction, and share performance matters." He has also held talks with current or prospective shareholders, industry analysts and others, including competitors and sources of credit. "The reporting persons may also take other steps seeking to bring about changes to increase shareholder value," the 13D said. The stock, which closed Wednesday ($66.76) at the lowest price since July 2020, has tumbled 33.9% year to date, while the S&P 500 has lost 21.4%.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit for more information on this news......»»

Category: topSource: marketwatchNov 3rd, 2022

Starboard Value Holds A 5% Stake In Splunk: Check Out These 2 Dividend Stocks Jeffrey Smith Also Has A Sizable Stake In

The activist investor Jeffrey Smith founded Starboard Value LP in 2002, seeking to invest in deeply undervalued companies and actively engage with management teams to identify and execute on opportunities to unlock value for the benefit of all shareholders. Smith is known for his corporate takeovers, and pushed for Office Depot or ODP Corp (NASDAQ: ODP) to acquire Office Max, after accumulating a 15% stake and controlling three board seats. Also Read: Activist Investor Starboard Discloses Stake In Salesforce, Shares Soar Smith also holds a sizable stake in Splunk Inc. (NASDAQ: SPLK), at just under 5%, as reported by the Wall Street Journal. Starboard's founder will appear at an activist-investing conference on Oct. 18 and will likely detail the fund's thesis. Here are two dividend stocks that Smith is holding, as Starboard Value has a 4.3% ...Full story available on»»

Category: earningsSource: benzingaOct 18th, 2022

Futures Jump, Squeezed By Reversal In UK Fiscal Plans And Apocalyptic Trader Sentiment

Futures Jump, Squeezed By Reversal In UK Fiscal Plans And Apocalyptic Trader Sentiment As we discussed and previewed over the weekend in "Behind Friday's Market Massacre: A Huge Burst Of Hedge Funds Shorting, Setting Up Another Squeeze", futures are indeed sharply higher to start the week as Treasury yields slumped and the dollar eased as the British peso (also called Britcoin) rallied and UK bonds surged as the new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices from next April as he set out a package of measures to get a grip on the public finances, effectively reversing pretty much all UK tax cut measures announced just a few weeks ago. Sentiment was also boosted by company results after Bank of America reported beats on the top and bottom line, rising in premarket trading while utilities and auto stocks led gains in Europe. That was indeed enough to spark a modest (for now) squeeze and as of 730am, S&P 500 futures trade higher by 1.3% and Nasdasq 100 futs rose 1.5% bouncing back from a selloff on Friday that left the technology-heavy gauge at its lowest since July 2020; Europe's Estoxx50 rose 0.7% in early London session, which sees cable higher by 1%. The BBG Dollar index was down 0.2% and the 10Y traded at 3.95%. And if all those record retail puts purchased in recent days get monetized, expect another epic meltup today. I don't think people really appreciate what's happening in the options market right now. Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open. This is the first time in history that puts were 3x calls. — Jason Goepfert (@jasongoepfert) October 16, 2022 Among notable premarket movers, Splunk rose after a Wall Street Journal report about activist investor Starboard Value building a stake of just under 5% in the application software company. Opendoor Technologies Inc. slipped after Goldman Sachs downgraded the stock to sell. US-listed Chinese stocks gained as President Xi Jinping reiterated that economic development is the party’s top priority in his speech at the Communist Party Congress, although he signaled little change in the Covid Zero strategy and housing market policies. Alibaba (BABA US) +1.9%, Pinduoduo (PDD US) +2.8%, (JD US) +3.3%, Nio (NIO US) +2.7%, Li Auto (LI US) +2%. Here are some other notable premarket movers: Opendoor Technologies (OPEN US) slides 1.8% in premarket trading after Goldman Sachs downgrades stock to sell, saying it sees the ongoing weakness in housing through next year to “depress” the online real estate platform’s earnings power and in turn limit upside in shares. Keep an eye on Fox Corp. (FOXA US) and News Corp. (NWSA US) shares after the companies said on Friday they were exploring options to recombine, while analysts suggested a deal is unlikely to solve the valuation problem for the pair. Watch PPG Industries (PPG US) shares as KeyBanc Capital Markets initiated coverage of the stock with an overweight recommendation, saying there’s probably going to be a sharp decline in costs in 1H23 that will help offset cyclical volume pressure. Keep an eye on household products stocks as Morgan Stanley is starting to warm to the sector with margins seen rebounding in 2023, while toning down its preference for beverage stocks. The broker upgrades Church & Dwight (CHD US) and Clorox (CLX US) to equal-weight from underweight, while cutting Edgewell Personal Care (EPC US) to underweight from equal-weight. Investors are focused on results due this week -- including from Bank of America which just reported stronger than expected revenues and EPS, Goldman Sachs and Tesla -- for clues about how company earnings are holding up. They’re also monitoring the possibility of more aggressive rate hikes in the US after Federal Reserve Bank of St. Louis President James Bullard on Friday left open the possibility that the central bank would raise interest rates by 75 basis points at each of its next two meetings. “I think the likelihood of them doing 75bps and more is definitely higher after the University of Michigan survey last week, reason being is that they’re late to the party of inflation control and the world economy is paying the price,” said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James. “The risk is that they break growth, but what is much more concerning is that they’re risking financial stability in parts of the market, which is a risk that needs to be priced in,” she said on Bloomberg TV. In major corporate reorganization  news, the WSJ reported that Goldman Sachs plans to recombine the bank’s asset management and private wealth businesses into one unit in yet another overhaul. Morgan Stanley's in-house permabear, Michael Wilson, echoed precisely what we said on Saturday, namely that technicals may now take the upper hand over fundamentals, with the 200-week moving average acting as a strong support to equities, while inflation expectations peak. They see a tactical rally looking likely until earnings estimates are cut or a full-blown recession arrives. Meanwhile, the outlook for consumer prices in the US continues to fuel bets that the Federal Reserve may make jumbo rate hikes at its next two meetings, weighing broadly on the outlook for global economic growth and markets. Fed officials in their latest comments suggested they were ready to hike rates higher than previously planned. Kansas City Fed President Esther George said the terminal rate may need to be higher to cool prices. San Francisco Fed’s Mary Daly said she’s “very supportive” of raising to restrictive levels and to between 4.5% and 5% “is the most likely outcome.” In European stocks, utilities, autos and insurance are the strongest performing sectors. Euro Stoxx 50 rises 0.3%. IBEX outperforms peers, adding 1.1%. Here are the most notable European movers: ITV shares jump as much as 9.7%, the most since March, after the Financial Times reported that the company is exploring options for its production arm ITV Studios, including a stake sale. Nel shares rise as much as 10%, the most since late July, after the company won a NOK600m contract to provide alkaline electrolyser equipment to Woodside Energy. shares soared as much as 35% after the online furniture seller said it has received several “non-binding indicative proposals,” including possible offers for the company. Sulzer shares climb as much as 4.4% after the Swiss company announced Suzanne Thoma will replace CEO Frédéric Lalanne, who is stepping down at the end of the month. Thoma’s experience and continuation of the company’s strategic review is viewed as a positive, according to analysts. Hargreaves Lansdown shares fall as much as 7.9% after its 1Q trading update, with its CEO announcing his intention to retire amid a lawsuit relating to a failed equity fund run by Neil Woodford. Asos shares drop as much as 13% after the online fast fashion retailer said it was in talks with banks to boost its financial flexibility, following a Sky News report that the firm’s lenders were hiring restructuring advisers, including AlixPartners. Draegerwerk shares tumble as much as 7.5% after company withdrew FY22 guidance following market close on Friday, based on its preliminary 9-month figures. Shares in bike helmet maker Mips plunge as much as 27%, the most in three years, as Handelsbanken said lower-than-expected 3Q sales from the company show the bike boom of the past years turning “into a bust” while 2023 risks becoming a “lost year.” European luxury stocks drop after Chinese President Xi Jinping signaled no change in China’s strict Covid rules at the country’s Communist Party congress in Beijing on Sunday. LVMH shares decline as much as 1.8%. As noted above, the yield on 10-year gilts fell 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293 after new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices as he set out a package of measures to get a grip on public finances in a televised statement on Monday. It’s the start of what may be a particularly torrid week for British assets, with the beleaguered Truss battling to rescue her premiership after the Bank of England ended its emergency bond-buying program on Friday and as mutinous backbenchers plot to oust her. “I think we’re in for a period where UK credibility is continually questioned and UK assets remain incredibly volatile for a significant period of time,” Benjamin Jones, Invesco Director of Macro Research, said on Bloomberg Television. “Watching the gilt market will be absolutely key in understanding if the market does believe Hunt to be more stable and if he will be able to push these policies through.” Hunt will also speak to the House of Commons at 3:30 p.m. London time and Truss is due to host a reception for the Cabinet at 10 Downing Street on Monday evening. U-turns on the government’s “mini budget” now total £32 billion, however that may not be enough as the official estimate of the black hole in the public finances is believed around £70 billion. Earlier in the session, Asian equities resumed their decline, led by tech stocks, as investors analyzed Chinese President Xi Jinping’s speech at Party Congress, in which he ruled out changes to strict Covid rules.  The MSCI Asia Pacific Index retreated as much as 1.4% before paring the drop, with TSMC and Keyence among the biggest drags after a broader US tech selloff last week. All sectors but real estate were in the red.  Taiwan’s benchmark was a notable regional loser, ending 1.2% lower as the local currency weakened following comments by Xi’s about the island. Stock gauges in Japan fell about 1% after the Bank of Japan vowed to continue with monetary easing as the yen approached a key level.  Benchmarks in Hong Kong erased losses, while gains in defense and tech stocks helped gauges in mainland China close moderately higher after Xi’s Sunday speech emphasized national security and self-reliance in core technologies. Planned steps by Chinese regulators to stem a slump in equities also buoyed sentiment. Asian stocks have underperformed US and European peers this year as the region struggles with challenges in China in addition to aggressive rate hikes by the Federal Reserve, prompting an exodus of foreign funds from emerging countries.  "The work report made no reference to future policy changes on Covid containment,” Nomura economists including Ting Lu wrote in a note, adding that they expect Chinese markets to suffer regardless due to disappointment about either no real opening or a surge in Covid infection numbers.  Concerns of aggressive tightening by the Fed were reinforced after a survey Friday showed US year-ahead inflation expectations rose in early October for the first time in seven months. “More bad news is baked into Asia, which might suggest that the risk reward is a little bit better if we can see overall the Fed starts to stabilize at some point, perhaps early next year,” Timothy Moe, chief Asia equity strategist at Goldman Sachs, said in an interview with Bloomberg TV, citing Asia’s “excessive discounting particularly in valuations.” Japanese stocks dropped, with electronics makers the biggest drag, following US peers lower after a report showed American year-ahead inflation expectations rose for the first time in seven months.  The Topix fell 1% to close at 1,879.56, while the Nikkei declined 1.2% to 26,775.79. Keyence Corp. contributed the most to the Topix Index decline, decreasing 2.9%. Out of 2,167 stocks in the index, 476 rose and 1,603 fell, while 88 were unchanged Australia stocks slid, the S&P/ASX 200 index falling 1.4% to close at 6,664.40, tracking a decline in US shares last week after inflation expectations rose. All sub-gauges slid, with energy and materials companies the worst performers.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 10,785.92. In FX, the dollar weakened against all of its G-10 peers apart from the yen, as the Bloomberg dollar spot index fell 0.2%. SEK and JPY are the weakest performers in G-10 FX, GBP and AUD outperform; the pound topped the leaderboard and UK government bonds surged on the fiscal policy u-turn. Yields on 10-year gilts fell 26 basis points to 4.05%, while sterling advanced up to 1.2% higher on the day to touch $1.1305 after the BOE confirmed it terminated its emergency bond-buying program. Hedging the pound overnight remains a costly exercise after UK Chancellor of the Exchequer Jeremy Hunt announced measures to “support fiscal sustainability”.  Commodity currencies also outperformed. The Australian and New Zealand dollars rose as traders covered shorts after Chinese President Xi warning of “dangerous storms” ahead failed to spur broader selling. The euro traded in a narrow $0.9711-57 range. Bunds and Italian bonds rose alongside Treasuries as central bank tightening bets were pared. Japan's Yen traded in a narrow range, close to 32-year lows, as traders await fresh impetus to drive it lower and assess potential action from Japanese authorities. Japan’s 30-year bond yield rose to a seven-year high. In rates, Treasuries rallied, led by the belly and richer by 5bp to 8bp across the curve with gains led by front-end and belly, richening the 2s5s30s fly by almost 5bp on the day; 10-year yields around 3.945%, richer by 7.5bp on the day and lagging gilts by additional 27bp in the sector, following a surge across gilts as BOE rate-hike premium is pared after Chancellor Hunt scraps vast portions of the expansive fiscal stimulus plan that had plunged the market into turmoil. UK yields off lows of the day, although remain richer by 35bp to 40bp across the curve into early US session. UK bonds rally across the curve, led by the long-end, as the new Chancellor is expected to make a statement on the government’s fiscal plans, with the yield on 10-year gilts falling 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293. In commodities, WTI drifts 0.2% lower to trade near $85.41 as it fluctuated after a weekly slump as fears over an economic slowdown continue to weigh on the outlook for demand. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. Bitcoin was rangebound and holding just above the USD 19k mark at present. Looking at the day today, it's a quiet day with just the Empire Manufacturing index on deck (exp. -4.3). Market Snapshot S&P 500 futures up 0.9% to 3,630.00 STOXX Europe 600 up 0.3% to 392.36 MXAP down 0.8% to 136.71 MXAPJ down 0.6% to 442.50 Nikkei down 1.2% to 26,775.79 Topix down 1.0% to 1,879.56 Hang Seng Index up 0.2% to 16,612.90 Shanghai Composite up 0.4% to 3,084.94 Sensex up 0.6% to 58,280.17 Australia S&P/ASX 200 down 1.4% to 6,664.44 Kospi up 0.3% to 2,219.71 German 10Y yield little changed at 2.27% Euro little changed at $0.9728 Brent Futures down 0.2% to $91.45/bbl Gold spot up 0.63% to $1,654,87 U.S. Dollar Index down 0.17% to 113.12 Top Overnight News from Bloomberg UK Chancellor of the Exchequer Jeremy Hunt will accelerate plans on Monday to try to bring order to the UK’s public finances and reassure markets, after Liz Truss’s economic program triggered weeks of turmoil Chinese President Xi Jinping signaled no change in direction for two main risk factors dragging down China’s economy -- strict Covid rules and housing market policies -- providing little lift to a worsening growth outlook Double-digit inflation is set to return in the UK and linger through the end of this year despite the government’s effort to cap energy bills, a survey of economists shows Speculation intensified among Tokyo’s yen watchers that Japan may be using subtle ways to slow the currency’s decline, zeroing in on the volatility seen after Thursday’s surprise US inflation data. By one estimate, authorities may have spent around 1 trillion yen ($6.7 billion) to support the currency Further rate hikes are costs without benefits, Polish Monetary Policy member Ireneusz Dabrowski says in interview with Parkiet newspaper ECB Governing Council member Martins Kazaks said interest rates should be raised beyond year- end -- a time when economists increasingly expect the euro zone to be in the midst of a recession ECB Governing Council member Olli Rehn said financial stability risks on the international markets are “clearly increasing” EU natural gas prices fell to the lowest level in more than three months as the European Commission plans to propose a temporary mechanism to prevent extreme price spikes in derivatives trading through a dynamic limit for transactions on the Dutch Title Transfer Facility, according to a draft document seen by Bloomberg News. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were negative as the region took its cue from last Friday's declines on Wall St where risk assets were pressured by inflationary concerns, while the region also digested hawkish global central bank rhetoric and China sticking to its strict zero-COVID policy. ASX 200 was led lower by the commodity-related sectors and with Australian Treasurer Chalmers flagging an increase in the cost of living due to floods in the primary food growing areas. Nikkei 225 weakened with Japan said to consider a rise in corporation tax as an option to fund the nation’s defence budget which could double in the next few years. Hang Seng and Shanghai Comp. were lower following Chinese President Xi’s speech to kick-start the Communist Party Congress in which he defended the zero-Covid policy and reaffirmed intentions for the reunification of Taiwan, while attention was also on the PBoC which rolled over CNY 500bln of MLF loans and kept the rate at 2.75% which suggests a likely pause in its benchmark rates later this week. Top Asian News Chinese will delay the release of Q3 economic indicators including GDP, according to the Stats Bureau; no new date mentioned. PBoC injected CNY 500bln via 1-year MLF with the rate kept at 2.75%, as expected. China locked down nearly 1mln people near an Apple (AAPL) iPhone factory in which Zhengzhou city ordered residents in one district to stay home, according to Bloomberg. BoJ Governor Kuroda said the BoJ is continuing with monetary easing since Japan’s headline inflation is likely to fall below 2% next fiscal year, while he added it is appropriate to continue monetary easing to ensure a shift in the deflationary norm and achieve the inflation target in a sustainable and stable manner, according to Reuters. BoJ Deputy Governor Wakatabe said it is up to the Finance Ministry to decide on whether or not to intervene in the FX market and that current FX fluctuations are clearly too rapid and too one-sided. Japanese top currency diplomat Kanda said they are ready to take decisive action if excess FX moves continue and are backed by speculative trading, while Kanda reiterated that recent JPY moves were somewhat rapid, according to Reuters. BoK Governor Rhee said he does not see interest among US officials in pursuing a plaza accord to stem the dollar strength, while Rhee also stated that the BoK needs a little bit more experience and technical capacity for forward guidance, according to Reuters. South Korean Finance Minister Choo said the government will scrap taxes on foreigners’ income from Korean treasury bonds and monetary stabilisation bonds from Monday, according to Reuters. China Delays Release of GBP Data Due Tuesday, No Reason Given Xi Says China’s Power Has Increased, Warns of ‘Dangerous Storms’ EU Agrees to New Iran Sanctions Over Human-Rights Issues Mizuho CEO Eyes Expanding Investment Banking in US: Nikkei European bourses see a choppy session but have tilted towards the green after experiencing a mixed cash open. Sectors are mostly firmer with no overaching theme - Insurance, Autos, and Utilties lead the gains whilst Chemicals, Retail and Consumer Products lag. US equity futures see gains across the board following the steep losses on Friday - with the NQ and RTY narrowly outperforming Top European News BoE Governor Bailey said they will not hesitate to raise interest rates to meet the inflation target and that the Bank had to intervene to deal with the threat to the stability of the financial system, while they think inflation should peak at around 11% and his best guess is that inflationary pressures will require a stronger response than perhaps thought in August, according to Reuters. BoE Governor Bailey said he does not comment on fiscal policy but has to emphasise sustainability, while he spoke with UK Chancellor Hunt and said that there is a meeting of minds on sustainability. Furthermore, Bailey said they are going to have to stay very focused on the risks of second-round effects on inflation, according to Reuters. UK Chancellor Hunt said taking difficult decisions now is the best way to stop interest rates from rising and that the PM hasn’t changed the destination, she has changed the way we are going to get there. Hunt also commented that the PM is in charge and the last thing they need is another Conservative leadership campaign, according to Reuters. UK Chancellor Hunt said ‘yes’ when asked if he can change the mini-Budget plans and noted that the priority will be to help struggling businesses and families, while he is leaving all possibilities open when asked about government spending and stated that tax will not be cut as quickly and some taxes will go up, according to Reuters. UK Chancellor Hunt is to make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability, via Treasury. Hunt will deliver the full medium-term fiscal plan, to be published with OBR forecasts, on 31st October. Chancellor Hunt met with BoE Governor Bailey and the DMO head on Sunday night, to brief them on these plans. UK Chancellor Hunt is to delay plans to reduce the basic rate of income tax by a year and it was also reported that the draft forecast by the OBR fiscal watchdog sees the UK will have a black hole in public finances of up to GBP 72bln by 2027/28, according to The Sunday Times. Senior Tories will hold talks this week on a “rescue mission” that could see the swift removal of Liz Truss as leader, after the new Chancellor Hunt tore up her economic package and signalled a new era of austerity, according to The Observer. Furthermore, The Times reported that Tories held secret talks on installing a new leader and Daily Mail also reported that UK lawmakers will attempt to oust UK PM Truss this week despite warnings from Downing Street that it could trigger a general election. Reportedly almost all of Kwarteng's GBP 45bln of unfunded tax reductions is set to be scrapped by Chancellor Hunt, via FT's Parker; "including income tax cut and stuff on dividends, stamp duty, foreign shoppers and IR35." US President Biden said he wasn’t the only one who thought that UK PM Truss’s original economic plan was a mistake, according to Reuters. It was also separately reported that Goldman Sachs downgraded its UK growth outlook after the government tax U-turn. Head of UK's Unison union warned the largest nationwide strike of NHS workers since the early 1980s could occur this winter if ministers ignore calls to match pay with inflation, according to FT. BoE is publishing a market notice which sets out how energy firms and commercial lenders can apply to participate in the energy markets financing scheme; open to applications today; alongside this the UK Gov't has published a release, outlining the financing scheme and specifying that the gov't will only be liable if a firm defaults on their repayment; scheme is designed to help firms facing temporary shot-term financing problems. Europe Gas Drops to 3-Month Low as EU Plans More Crisis Measures Germany Faces $85 Billion Hit as Labor Shortages Intensify Dominant Hunt Refuses to Rule Out New U-Turn on Truss Taxes ITV Jumps as Report Says It’s Exploring Options for Studios Unit FX Pound perkier on premise that new UK Chancellor will be more frugal with public finances, Cable comfortable on 1.1200 handle and EUR/GBP probing 50 DMA just shy of 0.8650. Aussie and Kiwi recover amidst less risk-off environment ahead of RBA minutes and NZ Q3 CPI; AUD/USD hovering around 0.6250 and NZD/USD just under 0.5600. Loonie, Franc and Euro all firmer vs Greenback as DXY slips from Friday's peak to pivot 113.000, USD/CAD eyeing 1.3800, USD/CHF close to parity and EUR/USD above 0.9750. Yen propped ahead of 149.00 vs Dollar as Japanese officials turn up volume of verbal intervention. PBoC set USD/CNY mid-point at 7.1095 vs exp. 7.1331 (prev. 7.1088) Major Chinese state-owned banks were seen swapping yuan for dollars in the forwards market and selling dollars in the spot market to stabilise the local currency, according to sources cited by Reuters. Fixed Income Gilts gap-up and lead the way ahead of a potential "mini-Budget" U-turn from new Chancellor Hunt, peers buoyed in turn. Specifically, Gilt Dec'22 posts upside of over 300 ticks around the 97.00 mark with the associated 10yr yield down to near 4.0%. Amidst this, SONIA is taking a dovish-turn despite the weekend's remarks from Bailey, with pricing dipping to 'just' a ~75% chance of a 100bp increase in November. Stateside, USTs are firmer by around 15ticks with the US-specific docket comparably sparse after last week's key inputs. BoE Gilt statement: As previously announced, the Bank terminated these operations and ceased all bond purchases on Friday 14 October. As intended, these operations have enabled a significant increase in the resilience of the sector. Commodities WTI and Brent futures trimmed earlier gains in downside that was exacerbated after reports China is to delay is Q3 GDP release. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. CCP National Congress Chinese President Xi declared the new core mission of the party is to lead China united in the challenge to be a powerful, modern socialist nation by 2049. Chinese President Xi said they will promote a high level of opening to the outside world and will maintain pluralistic and stable economic relations with other countries. Furthermore, Xi said they will strengthen the ability to prevent and control the epidemic, while he also commented that the next five years will be crucial for building a modern socialist power and will aim for high-quality growth, as well as support the private economy unwaveringly, according to Reuters. China Communist Party spokesman Sun said China is capable of greater miracles going forward but noted China has entered a new normal of slower growth and is more focused on fixing long-term issues than growth. Sun also stated that they all hope the pandemic will end soon but what they see now is that the pandemic is still on and that their Covid prevention policy is the best and most economically efficient, according to Reuters. Chinese government officials are backpedalling on efforts to organise a meeting between US President Biden and Chinese President Xi on the sidelines of the G20 summit next month, according to Politico. Chinese President Xi said they will firmly promote reunification efforts with Taiwan and it is up to the Chinese people to resolve the Taiwan issue, while he added they will never renounce the right to use force and said reunification of the motherland must and will certainly be achieved. Chinese Communist Party spokesman Sun said achieving reunification with Taiwan by peaceful means best meets the interest of all and the use of force is the last resort under compelling circumstances, while he added that Taiwan will plunge into a disaster if pro-independence Taiwan and external forces are left unchecked, according to Reuters. OPEC Headlines OPEC Secretary-General al-Ghais said slow economic growth reflects on oil demand and that OPEC+ took the pre-emptive decision, while he added OPEC doesn’t target a specific price but targets a balance between supply and demand. Al Ghais also stated that they do not control oil prices and that their decisions are purely technical, as well as noted that there is always space for flexibility in OPEC when asked about reviewing this month’s oil output cut. Furthermore, he commented that oil markets are going through a stage of great fluctuations, according to Reuters. Iraq said OPEC+ decisions are based on economic indicators and there is consensus in OPEC+ to be pre-emptive to deal with the current uncertainty in oil markets, while it added that the OPEC+ latest decision is based on market inputs and it is essential to achieve market stability, according to a SOMO statement cited by Reuters. UAE Energy Minister said the OPEC decision was purely technical and unanimous not political as some described, according to Reuters. Kuwait said it welcomes the recent decision by OPEC+ to cut output and said it is keen to maintain balance in the oil markets for the benefit of consumers and producers, while it added that expected slow global economic growth led to more disturbance in the balance of supply and demand in oil markets, according to Reuters. Furthermore, Kuwait appointed Badr Al Mulla as its new Oil Minister and appointed Wahab Al Rasheed as Finance Minister, according to a tweet. Oman’s Energy Ministry said OPEC+ decisions are based on purely economic considerations, as well as realities of supply and demand in the market, while the decision was important and necessary to reassure the market and support its stability, according to a Tweet. Bahrain’s Oil Minister said the OPEC+ decision was reached by consensus among all member states and that OPEC+ will study any economic developments in the future to ensure the stability of markets and global supply, according to the state news agency cited by Reuters. ECB Headlines ECB’s Knot said he is increasingly convinced that rates need to rise above neutral and once rates hit a neutral level, it makes sense to consider running off APP stock, according to Reuters. ECB's Rehn said the threat of stagflation has intensified. The stability risks of international financial markets are clearly increasing. Although the global financial crisis has been avoided for now, it is not time to breathe a sigh of relief. ECB's Lane expected to propose a 75bps hike at the upcoming ECB meeting, according to an ECB insider cited by Econostream. ECB's de Guindos expects FX rate to stabilise in the coming months, via Reuters. Some ECB officials are seeing legal basis to toughen bank TLTRO terms, according to Bloomberg sources. Geopolitics Ukrainian President Zelensky said Bakhmut and Soledar in eastern Donbas are hotspots at the front with heavy fighting, while it was separately reported that that Kyiv's Mayor Klitschko said blasts hit Kyiv's city centre, according to Reuters. Russian Defence Ministry said Russia destroyed three US-made M777 Howitzers in Ukraine’s Kharkiv region and that Russian troops repelled Ukrainian attempts to advance in the regions of Donetsk, Kherson and Mykolaiv, according to Reuters. Russian Defence Ministry said 11 people were killed and 15 were wounded after two Tajikistan citizens committed an act of terrorism at a training ground in Russia’s Belgorod. US Event Calendar Oct. 14-Oct. 21: Sept. Monthly Budget Statement, est. -$50b, prior -$64.9b 08:30: Oct. Empire Manufacturing, est. -4.2, prior -1.5 DB's Jim Reid concludes the overnight wrap After numerous weeks of immense volatility, will the fact that US payrolls and CPI are out the way and the fact that the UK has sacked its Chancellor, and is gradually backtracking, bit by bit, on its recent fiscal giveaway, lead to calmer markets? We shouldn't underestimate how much the relatively small UK market has buffeted global markets in recent weeks. The politics are slowly moving in a more market friendly direction but a very sharp sell-off in Gilts on Friday afternoon left a nasty taste as we ended the week. 30yr Gilts closed +24bps on Friday to 4.79% but were around +55bps higher from the lunchtime lows. The Bank of England won't be buying today for the first time in this mini-crisis so we'll soon have a decent idea if there are still pension fund liquidity problems. Part of the reason Gilts sold off late on Friday was a global related sell-off but part of it was a buy the fact sell the rumour trade after news leaked in the morning that the Chancellor was to be sacked. PM Truss's subsequent afternoon press conference seemed to leave the market wanting more climb downs. In fact new Chancellor Hunt did extensive media rounds over the weekend saying that nothing is off the table in terms of reviewing the mini budget and that some taxes may have to rise. Several media reports suggest that the planned 1p income tax cut next April will be delayed by a year. So it’ll be fascinating to see how UK yields open up. Over the weekend, the Bank of England (BOE) Governor Andrew Bailey stated that the central bank will not hesitate to increase interest rates to meet its inflation target as it believes that the current inflationary pressures demand a stronger policy action than announced in August. In early Asia trading, the pound (+0.52%) is rallying rising to $1.1230 on the weekend's tighter fiscal commentary. Literally as we go to print, a headline has come through saying that the UK Chancellor will make a statement today on the medium-term fiscal plan. So things are accelerating rapidly. For this week China's Party Congress that started yesterday could generate plenty of headlines, with key leadership roles and priorities for the next five years in focus (see latest below). The country's Q3 GDP and key economic activity indicators will be released tomorrow. Elsewhere, housing market indicators from the US, inflation data in the UK and economic sentiment indicators from Europe will be released. Netflix, IBM, Tesla, Bank of America, and Johnson & Johnson will be among the corporates reporting as earnings season starts to gather momentum. This could be key to sentiment in the coming weeks. Let’s go through the key economic data in a little more detail now. Starting with the US, this week will feature industrial activity indicators such as industrial production (Tues) and the Empire manufacturing index (today). For the former, our US economists expect a -0.4% print (-0.2% in August). The housing market will be in focus too, with fears over a big softening on one hand but balanced in the short-term by last week's CPI print that showed strong momentum in rents. The releases will include housing starts, building permits (both Weds) and existing home sales (Thurs). Over in Europe, the UK will continue to be in the spotlight with CPI, RPI and PPI to be released on Wednesday with the first expected at 10.1% (August CPI printed at 9.9% YoY and below July's 10.1%). Staying in the UK, October GfK consumer confidence figures will be released as well as September retail sales on Friday. Elsewhere in the region, sentiment indicators will include the ZEW survey for Germany and the Eurozone tomorrow and business and manufacturing confidence for France on Thursday. We will get the PPI for Germany on the same day. In politics, the European Council's two-day meeting will start on Thursday with topics of Ukraine, energy and the economy on the agenda. In Asia, China's Q3 GDP, industrial production and retail sales, along with other indicators, will be released tomorrow. The median estimate on Bloomberg points to a +3.4% YoY reading, up from +0.4% in Q2. On Friday we will also get the nationwide CPI from Japan and our Chief Japan economist expects core inflation excluding fresh food to show a +2.9% YoY increase (+2.8% in August) and core-core inflation excluding fresh food and energy to rise by +1.8% (+1.6% in August). Durable goods and food prices are seen as the core inflation drivers. Finally, this week will be packed with corporate Q3 results from key American and European firms as this earnings season ramps up. The tech names we will hear from include Netflix, ASML, IBM and Lam Research, with hardware makers particularly in focus amid slowing demand concerns. Other notable reporters will include Johnson & Johnson, Lockheed Martin, Tesla, Bank of America (today), Procter & Gamble, and Goldman Sachs. The day by day week ahead guide at the end has which days each report. Asian equity markets are trading in negative territory at the start of the week, following a weak close to the week in the DM world, although US futures are up as we start the week. Across the region, the Nikkei (-1.43%) is leading losses with the Hang Seng (-1.16%), the CSI (-0.45%) and the Shanghai Composite (-0.10%) also trading lower. The KOSPI is flat. Contracts on the S&P 500 (+0.43%) and the NASDAQ 100 (+0.39%) are both edging up. Over the weekend, Chinese President Xi Jinping, in his speech at the opening ceremony of the ruling Communist Party of China’s 20th National Congress, gave a defiant message to the world as he warned against “interference by outside forces” in Taiwan. At the same time, he reiterated the validity of the Zero-Covid policy while signaling that there would be no immediate loosening in restrictions despite the social and economic pain caused by the policy. Staying on China, The People’s Bank of China (PBOC) announced that it will maintain its 1-yr Medium-Term Lending Facility (MLF) interest rate at 2.75% for the second consecutive month while injecting liquidity worth 500 billion yuan into the banking system through MLF operations. So far in 2022, the MLF rate has been cut by 20bps with 10bps moves in January and August. In FX, the Japanese Yen dropped to 148.77 against the US dollar, a fresh 32-year low, before easing to settle at 148.70. Meanwhile, yields on 10yr USTs are trading just below 4% level (-2.5bps) as we go to press. Looking back on last week now, yet another upside CPI surprise ruined any chance of a near-term Fed policy pivot, driving yields higher and the curve flatter. All told 2yr Treasury yields were +19.0bps higher on the week (+3.5bps Friday) while the 10yr climbed +13.5bps (+7.3bps Friday). That left the 2s10s curve at -48bps, near its most inverted levels of the cycle, as additional tightening and a harder landing was priced in. By the end of trading, markets were pricing +142bps of tightening through the next two FOMC meetings. That’s close to our updated US Economic call of +75bp hikes in November and December, but markets are pricing some risk of +100bps in November following the blockbuster CPI, with +78.6bps priced at the end of last week. The S&P 500 staged a befuddling rally the day of the print (with a 5.5% turnaround) but ultimately retreated -1.55% (-2.37% Friday) on the week. In line with tighter expected policy, the NASDAQ underperformed, falling -3.11% (-3.08% Friday). The moves came with huge intraday swings, which had the Vix index of volatility close above 30 every day, closing the week at 32.02, just beneath the year’s high of 36.45 reached when Russia invaded Ukraine. US banks kicked earnings off in earnest on Friday. As you might expect, FICC revenues have held up given the heightened volatility, and net interest income improved with the blistering pace of Fed rate hikes, while deal making revenue has slowed given the gloomy economic outlook. All told, the S&P 500 banks advanced +2.43% on the week (+0.03% Friday), outperforming the broader index. In Europe, yields also took another leg higher, with 10yr bunds +15.2bps higher over the week (+5.9bps Friday). However, the curve steepened, with 2yr bunds gaining +9.0bps (+3.5bps Friday). The biggest story was of course in the UK, with the Chancellor gone and the partial u-turn on the budget. That led gilts to outperform bunds, where 10yr gilts gained +9.7bps (+13.7bps Friday) and 2yr gilts fell -25.4bps (+11.6bps) as some near-term crisis management hikes were priced out of the market. However as mentioned at the top 30yr Gilts were still an issue, climbing +39bps in a volatile week (+24hrs Friday). European equities fared much better than the US. The STOXX 600 pulled back just -0.09% (+0.56% Friday), with the DAX (+1.34%, +0.67% Friday) and CAC (+1.11%, +0.90% Friday) both out-performing. Tyler Durden Mon, 10/17/2022 - 07:49.....»»

Category: blogSource: zerohedgeOct 17th, 2022

How Crypto Hedge Funds Bet On Ether Price Movements Around The Merge

When Three Arrows Capital went out in a spectacular blaze, it shined a light on crypto hedge funds, and not in a good way. However, there are hundreds of other hedge funds focused on cryptocurrency. In fact, a large number of fund managers raced to bet on the Ethereum blockchain's Merge, which transitioned it from proof-of-work to proof-of-stake. Ethereum’s Merge has been touted as one of the most important events in the history of cryptocurrency, and apparently, crypto hedge funds have taken note. The Financial Times reported that placing bets about the future of ether around the Merge had become “one of the most crowded trades in crypto history.” Using Options To Place Bets On Ether Prices In the days and weeks before the Merge, fund managers loaded up on options on ether tokens, the native cryptocurrency of the Ethereum blockchain. Via those options trades, they placed bets on volatility or protected their funds against sudden moves leading up to the Merge. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Crypto enthusiasts had been waiting for the Merge for years. The move from proof-of-work to proof-of-stake made the Ethereum blockchain more efficient by validating transactions via users who staked their tokens rather than astronomical amounts of computing power. According to the Financial Times, a cadre of crypto traders was betting that the switch to proof-of-stake would slash the Ethereum blockchain's energy usage by up to 99% -- something that had been widely publicized to happen before the Merge. Those bets also suggested that mainstream investors may be more likely to adopt ether now that the network's energy usage has been cut dramatically. Before the switch, Ethereum used roughly the same amount of energy as Finland. Most Ether Trades Placed Via Options Leading up to the Merge, James West, CEO of crypto derivatives exchange Globe Exchange, declared that those bets amounted to "one of the most crowded trades in crypto history." He explained that many of the trades were placed in the options market, adding that "a lot of smart money" was buying—and betting that a successful transition would raise the price of ether. According to the Financial Times, the exchange Deribit, which processes 97% of the open interest on ether options on exchanges, saw the number of outstanding option contracts rise from 1.2 million at the beginning of the year to over 4.6 million by last Wednesday. Approximately 80% of those contracts were call options, amounting to a bet on prices rising but with the option rather than the requirement to buy ether at a fixed price for a certain period of time. The rest of the contracts were puts, amounting to bets on the price of ether falling. Both types of contracts provide a way to bet on price moves while offering protection in case things don't go as the trader expects. Bullish Sentiment Deribit Chief Commercial Officer Luuk Strijers told the Financial Times that the mix of options was a sign of "massive bullish sentiment." He also called attention to another popular trade around the Merge, which involved attempting to profit from massive volatility around the event—regardless of whether the price move was up or down. With the ether price down 17% over the last five days, this volatility trade is looking like the big winner, at least for now. Some traders had even more specific bets regarding ether volatility, placing bets that the cryptocurrency would rise sharply leading up to the Merge and then selloff afterward. This strategy involved selling longer-dated calls that would pay out at $3,000 and then using that transaction to purchase shorter-term call options that would pay out if ether hit $2,500. However, this strategy hasn't paid off at all. The Merge occurred on Thursday, Sept. 16, but the ether price has been tumbling since Sept. 10, covering the days before the Merge and the day after. It remains to be seen whether ether will continue to sell off following the Merge, but the cryptocurrency certainly didn't rise sharply in the days leading up to it. Tyr Capital Chief Investment Officer Ed Hindi, who serves as a market maker in crypto options, told the Financial Times that many traders who bet on a sharp rise before the Merge and a selloff afterward raced to cover their positions. The trade would work against them if the ether price climbs sharply after the Merge because it would trigger the options they had sold, but that hasn't happened so far. Hindi added that the market was "way too bullish" leading up to the Merge and "way too bearish" after. Shorting Ether Around The Merge Other traders bet that the price of ether would fall this week, potentially due to a delay in the Merge or technical problems with it. This strategy amounted to shorting ether using futures contracts to bet on a price decline, and it also offered protection against certain price movements. Data from Kaiko Research on ether's funding rate, which measures the direction of futures positions in aggregate, was at its lowest level in over a year before the Merge, averaging -0.6%. Such a low level typically suggests investors are focused on shorting the asset. Some traders hoped that owning some ether while shorting its futures might enable them to buy some additional tokens while protecting them from volatility. Investors who owned ether at the time of the Merge were entitled to extra tokens from the continuation of the proof-of-work blockchain after the event. There was a hard fork of Ethereum after the Merge, allowing a proof-of-work chain to continue after ether's transition to proof-of-stake. The new proof-of-work chain is now called ETHPoW. Before the Merge, miners who had invested large sums in equipment to mine the original ether cryptocurrency had pushed for a proof-of-work version of the blockchain to continue after the Merge because they would no longer be able to mine ether after the transition to proof-of-stake. ETHPoW Tokens Not Working Yet KPTL Arbitrage Management Founding Partner Jay Janer owned some ether while shorting its futures because he felt that trading options had become too expensive. He said that if the fork occurred, he would receive the proof-of-work token for free. However, those ETHPoW tokens have plummeted in value since the Merge, falling as low as $9.50 due to technical problems with the fork. Of course, we're still in the early days after the Merge, so it remains to be seen where the prices of ether and ETHPoW will go in the coming days and weeks. What do you think about the various bets placed on the Merge? Share your thoughts in the comments section below......»»

Category: blogSource: valuewalkSep 18th, 2022

Wix stock rises after activist investor Starboard discloses 9% stake Ltd. shares rose in the extended session Friday following a report that activist investor Starboard Value had built a 9% stake in the company, which was later confirmed. Shares rose 5% after hours, following a 3.5% decline to finish the regular session at $73.69. At first, shares rose following a Reuters report that was later confirmed by a Securities and Exchange Commission filing. Starboard said the purpose of the transaction was because it considered shares to be "undervalued and represented an attractive investment opportunity," and planned to make "suggestions for improving" Wix's financial and operation performance. Wix shares are down 53% year to date, compared with an 18% decline in the S&P 500 index Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit for more information on this news......»»

Category: topSource: marketwatchSep 17th, 2022

A college student made a $110 million profit on Bed Bath & Beyond stock in under a month. Jake Freeman shed light on his background, his massive bet, and the retail backlash to it in a Twitter Q&A.

Jake Freeman, who quadrupled his fund's money by investing in Bed Bath & Beyond, discussed his work history and fondness for the retailer's products. A pair of customers in Bed Bath & Beyond.Photo by Lawrence K. Ho/Los Angeles Times via Getty Images A college student turned $25 million into more than $130 million by investing in Bed Bath & Beyond. Jake Freeman discussed his background, his massive bet, and the retail backlash to it on Twitter. The 20-year-old touted Bed Bath & Beyond's products, and its prospects if consumer demand fades. A 20-year-old college student plowed $25 million into Bed Bath & Beyond stock, then cashed out a $110 million profit less than a month later.Jake Freeman shed light on his background, his investing style, and his fondness for the homewares retailer in a Twitter Spaces conversation with Wook Capital, recorded after he revealed his stake in July.Freeman, a math and economics major at the University of Southern California, became interested in finance at the ripe age of 12. He began working in the industry at 14, and his first project was analyzing the performance and cost of tail-risk hedges on retail portfolios, he said.The college senior described his Bed Bath & Beyond bet as the "maiden voyage" for a fund he set up this summer, Freeman Capital Management.He framed the wager as "striking out on my own" after studying options and credit at work and in his free time. He declined to share how he raised $25 million, citing confidentiality agreements with his backers.Freeman, who proposed Bed Bath & Beyond slash its debt pile by offering stock warrants and convertible notes to its bondholders, trumpeted the ailing retailer's products during the Twitter Q&A.He argued that even if high inflation and rising interest rates weaken consumer spending, people would still need basic items like towels and bedsheets, and wouldn't cut them out of their lifestyles even if they rose in price.Moreover, he defended the physical locations of Bed Bath & Beyond's baby-products business, Buy Buy Baby. He underlined their value to customers whose babies won't stop crying, or are engaging in "additional babylike activities that require going to the store."The young investor also disclosed that he shops at Bed Bath & Beyond, especially when he needs to pick something up for college, or he's moving between apartments. He highlighted canisters of CO2 as one of his common purchases. "I am a fan of sparkling water," he said.Freeman offered some advice to newbie investors. He recommended they initially focus on longer-term plays, as they can focus on company fundamentals, and more easily gauge if their thesis is correct.They also have to make fewer assumptions about short-term catalysts and headwinds, and the external forces affecting stock prices matter less, he said.Elsewhere, Freeman said he decided to answer questions from retail investors because he wanted to give them similar access to him as analysts and institutional investors received. He noted that if he pursues activist plays in the future, it could be useful to persuade retail investors to vote for his proposals.On a related note, Freeman hinted that he didn't make an activist play at Bed Bath & Beyond because Ryan Cohen, the activist investor and GameStop chairman, was already pushing for changes at the company. "There is a phrase: Too many cooks in the kitchen," he said.Finally, Freeman revealed that he was taken aback by the fierce backlash to his Bed Bath & Beyond investment."I definitely was not expecting such visceral responses and strongly opinionated responses from the Reddit community," he said.The investor added he was "somewhat shocked" by the scale of the reaction, and the fact that people were contacting his friends and acquaintances for information about him.Read more: Morgan Stanley breaks down why stocks will fall at least another 13% before the end of the year — and shares the 3 sectors they think will offer the best returns in the marketRead the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 7th, 2022

Bed Bath & Beyond CFO who died after falling from NYC high rise was subject of insider trading and fraud lawsuit just before death, documents show

The lawsuit claims that Gustavo Arnal and investor Ryan Cohen collaborated in a "pump and dump" scheme to artificially inflate the company's stock. Bed Bath & Beyond CFO Gustavo Arnal (left), investor and GameStop Chairman Ryan Cohen (right)Bed Bath & Beyond, Ryan Cohen Bed Bath & Beyond Chief Financial Officer Gustavo Arnal was found dead on Friday after falling from a NYC building.  His death came less that two weeks after he was named in a federal class-action lawsuit for insider trading.  The lawsuit claims Arnal and activist investor Ryan Cohen collaborated in a "pump and dump" scheme to artificially inflate the company's stock.  The Bed Bath & Beyond Chief Financial Officer Gustavo Arnal, who was found dead on Friday after falling from the 18th floor of a New York City apartment building, recently was named in a lawsuit accusing him of fraud.The incident occurred less than two weeks after the executive, 52, was named in a federal class-action lawsuit on allegations of federal securities fraud, insider trading, and breach of fiduciary duty, according to court documents.His death also comes just days after Bed Bath & Beyond announced it is shuttering 150 stores and slashing 20% of its corporate staff.Arnal is cited in the suit along with activist investor and GameStop chairman Ryan Cohen, who the lawsuit claims collaborated with the CFO in a "fraudulent scheme to artificially inflate the price of Bed Bath & Beyond's publicly traded stock."The suit, filed in United States District Court for the District of Columbia on August 23, claims that Cohen and Arnal provided "materially false statements regarding the financial condition and holding situation" of Bed Bath & Beyond for their financial benefit. The lead plaintiff is investor Pengcheng Si."The defendants, knowing that the information they disclosed was false, took advantage of the inflated stock price and used fraudulent and misleading SEC filings to sell all their [Bed Bath & Beyond] shares and options at artificially inflated prices to unsuspecting and innocent public investors and then retained control of the profits," the suit states. On August 18, both Arnal and Cohen sold shares of the company, with Arnal selling more than 42,000 shares for an estimated $1 million, and Cohen selling the entirety of his 9.8% stake through his firm, RC Ventures, causing shares to plummet.The lawsuit claims Cohen — who is also the co-founder of Chewy and chairman of GameStop — approached the CFO about his "pump and dump" scheme in March 2022, and "convinced Gustavo that their plan would be a mutually beneficial one.""Under this arrangement, defendants would profit handsomely from the rise in price and could coordinate their selling of shares to optimize their returns," the lawsuit states. Arnal allegedly worked with JPMorgan, which is listed as a defendant in the suit on claims the bank "aided and abetted" the plan by "enabling Cohen to use JPM's accounts to effectuate such transactions and otherwise launder the proceeds of their criminal conduct."The lawsuit further notes Cohen's involvement in similar plans, such as elevating GameStop to "meme stock" status."Cohen has historically employed pump and dump schemes to raise much needed capital and has ignited several meme stocks to jaw-dropping heights," the lawsuit states. Spokespeople for Bed Bath & Beyond and RC Ventures did not immediately respond to Insider's request to comment. Read the original article on Business Insider.....»»

Category: worldSource: nytSep 4th, 2022

BloodBath & Bankuptcy? BBBY Suppliers Halt Shipments Due To Unpaid Bills

BloodBath & Bankuptcy? BBBY Suppliers Halt Shipments Due To Unpaid Bills Update (1725ET): Following its worst day on record after Ryan Cohen dumped all his shares (and sold all his calls), Bed Bath & Beyond was battered by more bad news after hours after Bloomberg reports that, according to people familiar with the matter, some suppliers are restricting or halting shipments altogether after the home-goods retailer fell behind on payments. The retailer has previously said it is struggling with cash and inventory optimization, and ordering missteps appear to have left it with a glut of goods that will have to be sold at markdowns.  Several of the firms that provide credit insurance or short-term financing to vendors have revoked coverage of Bed Bath & Beyond, drastically complicating the company’s scramble for liquidity.  BBBY shares are down a further 4-5% after-hours on the news... But still have a long way to go to catch up with the reality that bonds have been pricing-in for a while... As far as stocks go - "mark it zero" comes to mind. Bonds knew... but the question is - did Ryan Cohen know? *  *  * It is only fitting that on the day Blood, Bath and Bankruptcy Bed Bath & Beyond suffered a historic crash in its stock price, we learn from Bloomberg that the quasi-insolvent retailer hired law firm Kirkland & Ellis to help it address a debt load that’s become unmanageable amid a sales slump. Kirkland, best known for its legal advice in restructuring and bankruptcy situations, was tapped to help the retailer navigate options for raising new money, refinancing existing debt, or both, according to the report. Translation: from $30 yesterday, BBBY stock will be worthless in a few days (just in case there is confusion why Ryan Cohen pulled the plug). None of this will come as a shock to debt investors, usually far, far smarter then their equity peers, and is why much of Bed Bath & Beyond’s bonds and loans are already trading at distressed levels, even as its stock climbed as high as $30 per share earlier this week. The share price however tumbled back to $10 after hours on Thursday, after activist shareholder Ryan Cohen dumped his entire stake making $68 million in the process, while costing a similar amount to the thousands of retail investors who followed him into this melting ice cube. Alas, the stock is going much lower - in fact, $0.00 sounds like support - as the trading prices of the retailer’s debt, have plunged to half their face value or less this year, with the sharpest drop coming after the company announced dismal quarterly earnings June 29. And since the unsecured debt will be impaired, this implies there is zero value for the equity in the upcoming bankruptcy. If only BBBY had sold stock in an ATM offering at the grotesquely inflated price from earlier this week, to hapless retail investors. That way RC Ventures pump and dump would have been complete. Tyler Durden Fri, 08/19/2022 - 17:34.....»»

Category: blogSource: zerohedgeAug 19th, 2022

Meme-stock champion Ryan Cohen sold his entire Bed Bath & Beyond stake in 2 days - and bagged a $68 million profit

The GameStop chairman and activist investor spent $121 million buying the retailer's stock and bullish call options earlier this year. Ryan Cohen.Ryan Cohen Ryan Cohen sold his entire Bed Bath & Beyond stake for $189 million, netting a $68 million profit. The activist investor spent $121 million on the stock and bullish call options earlier this year. Cohen's sale drove the meme stock down as much as 46% in premarket trading on Friday. Ryan Cohen sold his entire Bed Bath & Beyond stake in two days this week, bagging a cool $68 million profit from his seven-month wager on the ailing homewares retailer. The news slashed the company's stock price by as much as 46% in premarket trading on Friday.The GameStop chairman and meme-stock champion spent $121 million to buy 7.8 million Bed Bath & Beyond shares, and call options on a further 1.7 million shares, in the first quarter of this year. He also penned a letter to the retailer's directors, calling out numerous problems and urging them to refocus, modernize, and explore a partial or full sale of the business.The Chewy cofounder and activist investor appeared to be emulating his approach to GameStop, where he built a stake in the video-game retailer, pressed its bosses to make changes, secured several seats on its board, and set about revitalizing the company. His vote of confidence spurred retail investors to snap up Bed Bath & Beyond shares too, in the hope they would skyrocket in value as GameStop's shares did in early 2021.The meme-stock crowd helped propel the shares up as much as 30% on Wednesday, after Cohen's RC Ventures investment vehicle disclosed on Tuesday that its position was intact, and its ownership had grown from 9.8% to 11.8% due to Bed Bath & Beyond's shrinking share count.However, Cohen revealed in a Thursday filing that he intended to sell his entire position, and confirmed in a later filing that on Tuesday and Wednesday, he had cashed out all of his stock and options for a total of $189 million. Bed Bath & Beyond's stock price promptly tanked, as retail investors realized Cohen wasn't sticking around to save the company.The billionaire investor and his team may have determined Bed Bath & Beyond was a lost cause, and decided to capitalize on the meme stock's breathless rally this month. After all, the company's latest earnings showed its net sales plunged 25% year-on-year, its net loss grew by seven-fold, and its cash pile shrunk by 75% in three months.Cohen didn't immediately respond to a request for comment from Insider.The GameStop chairman wasn't the only investor to cash out this week. Jake Freeman, a college student who runs Freeman Capital Management, disclosed a 6.2% stake in Bed Bath & Beyond in July, and revealed this week that he disposed of the entire position on Tuesday. He spent about $25 million on the shares, and sold them for north of $130 million, he told the Financial Times.Read more: Why you should be skeptical of new crypto coins and 4 things to look out for if you're buying up cheap crypto, according to a financial columnistRead the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 19th, 2022

Blood, Bath And Bankrupt? BBBY Hires Restructuring Advisor

Blood, Bath And Bankrupt? BBBY Hires Restructuring Advisor It is only fitting that on the day Blood, Bath and Bankruptcy Bed Bath & Beyond suffered a historic crash in its stock price, we learn from Bloomberg that the quasi-insolvent retailer hired law firm Kirkland & Ellis to help it address a debt load that’s become unmanageable amid a sales slump. Kirkland, best known for its legal advice in restructuring and bankruptcy situations, was tapped to help the retailer navigate options for raising new money, refinancing existing debt, or both, according to the report. Translation: from $30 yesterday, BBBY stock will be worthless in a few days (just in case there is confusion why Ryan Cohen pulled the plug). None of this will come as a shock to debt investors, usually far, far smarter then their equity peers, and is why much of Bed Bath & Beyond’s bonds and loans are already trading at distressed levels, even as its stock climbed as high as $30 per share earlier this week. The share price however tumbled back to $10 after hours on Thursday, after activist shareholder Ryan Cohen dumped his entire stake making $68 million in the process, while costing a similar amount to the thousands of retail investors who followed him into this melting ice cube. Alas, the stock is going much lower - in fact, $0.00 sounds like support - as the trading prices of the retailer’s debt, have plunged to half their face value or less this year, with the sharpest drop coming after the company announced dismal quarterly earnings June 29. And since the unsecured debt will be impaired, this implies there is zero value for the equity in the upcoming bankruptcy. If only BBBY had sold stock in an ATM offering at the grotesquely inflated price from earlier this week, to hapless retail investors. That way RC Ventures pump and dump would have been complete. Tyler Durden Thu, 08/18/2022 - 20:36.....»»

Category: blogSource: zerohedgeAug 18th, 2022

In Sureal Story, 20-Year-Old Student Acquires 6% Of Bed Bath & Beyond, Makes $110 Million In 3 Weeks

In Sureal Story, 20-Year-Old Student Acquires 6% Of Bed Bath & Beyond, Makes $110 Million In 3 Weeks We thought that today's story about Ryan Cohen filing to dump his entire stake in Bed Bath & Beyond after sparking a massive gamma squeeze using deep OTM call options would be the most absurd meme-related story of the day. Boy, were we wrong. In a late Wednesday article published on the FT which at first (and second, and third) read comes across as a cross between absurdist satire and a PR puff piece, we read the day's feel-good "riches to riches" story in which a 20-year-old university student, Jake Freeman, who is an applied mathematics and economics major at the University of Southern California, managed to accumulate 6.2% of the entire outstanding stock of Bed Bath & Beyond at under $5.50 share (did we mention he is a 20-year-old university student) amounting to $27 million, which he announced in an activist 13-G letter to BBBY Management on July 21, 2022, and less than a month later sold out of his entire stake - thanks to the insane gamma squeeze in the stock - not through some prime broker but through his TD Ameritrade and Interactive Brokers accounts, making $110 million in the process! For the sake of simplicity, here is what happened summarized in one chart. First things first - how the FT got the idea for the story in the first place was rather inspired: they looked at the HDS page of BBBY and found that the 4th largest holder of BBBY is a completely unknown entity called Freeman Capital, which alongside only Ken Griffen's Citadel and Federated Hermes, were the only three Top 20 holders to build out their entire stakes in the second quarter (as a reminder, shortly before the close we learned that the 2nd largest holder, Ryan Cohen's RC Ventures, filed a 144 to dump its entire 9.450MM share-equivalent stake). And while we wait for RC Ventures to liquidate its stake, we now know for a fact that the #4 top BBBY holder already sold to unwitting retail investors. What is remarkable is that at the same time Freeman disclosed its 6.21% (or 4,968,000) stake, the 20-year-old also sent out a 9 page activist letter (hardly the stuff 20-year-old college math majors write) to BBBY management explaining that the company is "facing an existential crisis for its survival" and that the company "needs to cut its cash-burn rates, drastically improve its capital structure and raise cash." The first page of the letter is below (link to the full letter here). In it... ... Jake Freeman writes that his "plan for the realignment of BBBY consists of two crucial legs: cutting debt and raising capital." He proceeds to detail his proposal for both legs, which would culminate in reducing the company's senior debt from $1.2 billion to $500 million (through an exchange offer of the current discounted debt into far less par debt), and the issuance of converts to somehow raise $1 billion in the market (how this would have worked when the stock was trading around $5 with imploding EBITDA is anyone's guess). But what was most remarkable is what Freeman said in the highlighted section: namely that the "US options market is pricing in high implied volatility for BBBY derivatives which can be leveraged and capitalized on in order to effect a realignment of BBBY's debt", in other words a debt reduction using... a gamma squeeze? Perhaps. We don't know who on the board (or management team) read Freeman's letter, or what they did next, but less than ten days after the recent teenager shipped out his "activist letter" to BBBY, the stock doubled, then tripled, quadrupled and so on, from his cost basis... at which point Freeman, quite content with the 6x return he made on his initial investment of $27 million, sold his BBBY stake north of $130 million, making more than $100 million in less than a month! By this point, readers should have some questions, like for example how did a 20-year-old get $27 million in cash to buy 6.2% of the outstanding shares of Bed Bath & Beyond, and become the 4th largest shareholder? Here, the FT comes to the rescue: Freeman’s initial stake cost about $25mn, which he said was mostly raised from friends and family. He has invested for years with his uncle, Dr Scott Freeman, a former pharmaceutical executive. The two recently built an activist stake in a publicly traded pharmaceutical company called Mind Medicine. There's more: Freeman also said he had interned for years at a New Jersey hedge fund, Volaris Capital. Just before his 17th birthday, Freeman and its founder, Vivek Kapoor, a former Credit Suisse executive, published a paper titled “Irreducible Risks of Hedging a Bond with a Default Swap”. But we digress: let's get this straight: "friends and family" handed a tiny $25 million (really, $27 million) to a 20-year-old math major at USC, whose extensive financial background is co-investing with his uncle "a former pharma executive" and interning at a hedge fund located above a Starbucks office in Milburn, NJ, yet which oddly enough is primarily focused on various options trading strategies. ... $25 million which he invested, through his hedge fund Freeman Capital Managent, LLC, which doesn't really exist except through a Sheridan, Wyoming-based commercial registered agent at 30 N Gould St. (where more than one registration scam has been discovered recently) and which was "founded" in May 2022 ... .... into just one high-beta, practically bankrupt stock just weeks after the company reported dismal earnings report according to which BBBY sales plunged by 25% in Q2 while its net loss widened to $358mn from $51mn, and its cash position had dwindled to just $107 million from $1 billion at the start of the year, or just a few weeks from insolvency, culminating a catastrophic trend of disappearing EBITDA. Surely such a concentrated, undiversified investment by a young "hedge fund" guru who doesn't even have an active Bloomberg account... ... screams "fiduciary duty", and we can only applaud the "friends and family" who handed their $25 million to this young investing wizard, who were surely expecting a few percent returns here and there, instead of a 5x return in 3 weeks. Surely. According to the FT, Freeman himself quite shocked by the outcome: “I certainly did not expect such a vicious rally upwards,” Freeman told the Financial Times in an interview on Wednesday. “I thought this was going to be a six months plus play . . . I was really shocked that it went up so fast.” So young Master Freeman was expecting the 5x return to take place in "six months" but was "really shocked" it took just 24 calendar days. Come to think of it, we would be too (or maybe not, especially since the entire idea was that of Jake's uncle Scott, M.D.... but more on that in a subsequent post. But here one additional thing is worth noting, between July 13 (when FCM BBBY HOLDINGS, LLC was registered in Wyoming by Jake Spencer Freeman) and July 20 when the 13G was filed disclosing the 5 million share stake, just 41.9 million shares traded, which means that young Master Jake was in quite a rush to build up his stake: as JC Oviedo pointed out, "to amass its stake in this time period, FCM BBBY HOLDINGS, LLC would have had to be over 11% of the average daily volume!" That's not only a ton of conviction where to put in every last penny of your "friends and family" money but one hell of a rush too. Finally, what did Freeman do after making $100 million in what may be the luckiest investment ever made by a 20-year-old? After selling the shares, Freeman went for dinner with his parents in the suburb of New York City where they live and on Wednesday he flew to Los Angeles to return to campus, he said. We, for one, can't wait to see how Freeman Capital Management makes its next 5x return in under a month next (actually we know how, and we will reveal it tomorrow). Tyler Durden Wed, 08/17/2022 - 23:01.....»»

Category: personnelSource: nytAug 18th, 2022

The CEO who decluttered Bed Bath and Beyond"s stores is out. We visited one location to see what the transformed shopping experience looks like.

A store in Rochester, New York had less varied merchandise and looked more organized than in the past. Bed Bath & Beyond wanted to prevent overpacked shelvesREUTERS/Emily Elconin The CEO who led Bed Bath and Beyond's retail overhaul has left the company. A key part of the strategy was widening aisles and putting fewer products on display. At a store in Rochester, New York we saw less varied merchandise and a more organized look. Bed Bath and Beyond announced on Wednesday that CEO Mark Tritton was leaving his role just months after reaching an agreement with Chewy founder and activist investor Ryan Cohen to appoint three new independent directors to its board. Cohen's firm RC Ventures owns a 9.8% stake in Bed Bath and Beyond."Our Company and Board have always been committed to evaluating all options to maximize long-term shareholder value, and we look forward to integrating our new directors' ideas to drive our continued transformation," Tritton said in a statement at the time.Previously, Bed Bath & Beyond announced that it would be updating its stores to achieve a less "cluttered" shopping experience — a strategy Tritton championed. Back in February, Insider visited one of the chain's stores in Rochester, New York to get a better sense of the company's new layout.Bed Bath and Beyond is a massive home goods store that customers rely on for everything from wedding registries to dorm room decor.Mary Meisenzahl/InsiderThe chain got a huge boost early in the pandemic as homebound Americans focused on home improvement.Mary Meisenzahl/InsiderSource: InsiderIn March 2020, Bed Bath and Beyond implemented "the biggest change in its product assortment in a generation."Mary Meisenzahl/InsiderSource: WSJCEO Mark Tritton made it his mission to reduce inventory and declutter stores.Mary Meisenzahl/InsiderSource: WSJSelling too many varieties of a single item leads to "purchase paralysis," Tritton told The Wall Street Journal.Mary Meisenzahl/InsiderSource: WSJThe chain planned to spend up to $400 million on store remodels and other upgrades, including wider aisles to better show off the merchandise the chain chose to stock.Mary Meisenzahl/InsiderSource: WSJThe plan also included minimizing and organizing merchandise so items were no longer stacked up to the ceiling.Mary Meisenzahl/InsiderThe location I visited in Rochester, New York wasn't as pared down as images of the flagship New York City store.Mary Meisenzahl/InsiderStill, the gigantic store appeared more organized, with a smaller inventory than my previous visits over the years.Mary Meisenzahl/InsiderMost shelves were stocked, but the variety of merchandise seemed less varied.Mary Meisenzahl/InsiderFor example, there were just two types of air fryers on display, but the display itself was still massive and extended nearly to the ceiling.Mary Meisenzahl/InsiderThe air fryers were an exception, though, and most displays I saw no longer extend so high up.Mary Meisenzahl/InsiderThe entire store felt a bit more open, with more space between aisles and displays.Mary Meisenzahl/InsiderThe location was mostly well stocked during my visit, but I did notice some empty shelves.Mary Meisenzahl/InsiderMinimizing inventory and launching private-label brands contributed to some of the chain's supply chain challenges, The Wall Street Journal reported.Mary Meisenzahl/InsiderSource: WSJThat became a pain point for the chain over the holiday season, when its top 200 bestselling items were in short supply, leading to a loss of $100 million in sales.Mary Meisenzahl/InsiderSource: WSJEmpty shelves seemed mostly to be limited to home items, not appliances.Mary Meisenzahl/InsiderThe empty shelves were a bit jarring in contrast to how organized the rest of the store was.Mary Meisenzahl/InsiderThe small clearance section near the checkout counters was the messiest area of the store.Mary Meisenzahl/InsiderIt was also the busiest area, showing that at least some customers may not mind the disarray the store was once known for.Mary Meisenzahl/InsiderThe checkout looked the same as always, with a messy selection of chargers, knickknacks and other seemingly random items near the register.Mary Meisenzahl/InsiderThis location also didn't have the self checkouts the chain plans to add, just the same snack assortments and registers.Mary Meisenzahl/InsiderDo you have a story to share about a retail or restaurant chain? Email this reporter at the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 29th, 2022

Elon’s Threat Is A ‘Sigh Of Relief’ For Twitter

Twitter Inc (NYSE:TWTR) stock fell on Monday after Tesla Inc (NASDAQ:TSLA) CEO Elon Musk threatened to terminate his $44bn takeover of the company over what he claimed was a “clear material breach” of the merger agreement. As Elon Musk threatens to walk away from the Twitter deal, sending Twitter stock tumbling, investors wonder what’s next […] Twitter Inc (NYSE:TWTR) stock fell on Monday after Tesla Inc (NASDAQ:TSLA) CEO Elon Musk threatened to terminate his $44bn takeover of the company over what he claimed was a “clear material breach” of the merger agreement. As Elon Musk threatens to walk away from the Twitter deal, sending Twitter stock tumbling, investors wonder what’s next for the social media app? And what does this all mean for Twitter and Tesla shareholders? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Elon's Threat To Terminate Deal Sent Twitter Stock Tumbling - What's Next? Scott Sheridan, market expert, and CEO of tastyworks comments: "I never believed Elon was serious about this acquisition to begin but Twitter called his bluff. I thought and continue to think he’s just a bully on a unique level. Whether or not this is a legitimate legal reason to end the deal is something the lawyers will need to sort out. But I think Elon’s been looking for an out ever since Twitter agreed to accept his bid of $54.20/share. Usually, breakup fees are pretty tough to get out from, but that doesn’t mean it’s impossible or Elon won’t try. I think for Twitter though, there’s probably a sigh of relief with respect to Elon personally not owning the company. For shareholders, I’m not sure this deal falling apart is a bad thing. I think the stock is probably in play now and may have other potential suitors. There is also the opportunity Twitter makes changes that ultimately unlock shareholder value." What Does This Mean For Tesla? "As for Tesla shareholders, I think the deal not going through is a good thing. This leaves Elon focused on current endeavors and removes any risk of him getting distracted by, what would be, a major investment". About tastyworks tastyworks is an online brokerage platform built specifically for options traders. The up-and-coming online broker is a subsidiary of tastytrade, one of the fastest growing online financial networks in the world. tastyworks was designed by the founders of thinkorswim with sophisticated functionality for complicated options trades and strategies in mind. It has a do-it-yourself approach and provides the technology, education, and support to succeed more easily on your own. Updated on Jun 6, 2022, 10:30 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 7th, 2022

Everbridge Beats Ancora Advisors

What’s New In Activism – Everbridge Beats Ancora Software maker Everbridge Inc (NASDAQ:EVBG) said all of its nine directors were reelected at the annual meeting, including Chairman Jaime Ellertson and three other board members targeted by 4% shareholder Ancora. However, lead director and Nominating and Corporate Governance Committee Chair Bruns Grayson received less than 50% […] What’s New In Activism – Everbridge Beats Ancora Software maker Everbridge Inc (NASDAQ:EVBG) said all of its nine directors were reelected at the annual meeting, including Chairman Jaime Ellertson and three other board members targeted by 4% shareholder Ancora. However, lead director and Nominating and Corporate Governance Committee Chair Bruns Grayson received less than 50% support from shareholders at the annual meeting. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Activist Ancora Advisors had campaigned to remove four directors after pushing for a sale to unlock extra value. On May 26, Ancora reiterated calls for Everbridge to initiate a sales process due to a lack of support for Ellertson, who received 49.3% opposition at the annual meeting. The activist went on to add, "We feel stockholders sent a clear message to the board this year that the status quo is unacceptable, and we hope this serves as a catalyst for a shake-up in the boardroom and a credible review of sale options." To arrange an online demo of Insightia's Activism module, send us an email. Activism chart of the week So far this year (as of May 26, 2022), 20 U.S.-based companies have been publicly subjected to a push for sale of company demand, compared to 13 in the same period last year. Source: Insightia | Activism What’s New In Proxy Voting - Amazon Dodges ESG Proposals, Inc. (NASDAQ:AMZN) faced a record 15 shareholder proposals at its May 25 annual meeting, asking it to report on worker health and safety, tax transparency, climate change, and racial equity. However, none of the proposals received majority backing from investors, management revealed. At the meeting, Amazon CEO Andy Jassy defended the company's human rights and health and safety policies, which were the subject of five shareholder proposals. Jassy claimed that the company has taken steps to reduce injury rates, including implementing software to predict and prevent repetitive stress injuries. Additional proposals asked Amazon to report on retirement plan options aligned with its climate goals, publish a tax transparency report, report on median gender/racial pay gaps, and reduce its plastic use. Management also revealed that shareholders backed Amazon's "say on pay" proposal, stock split, and 11 director reelections. To arrange an online demo of Insightia's Voting module, send us an email. Voting chart of the week So far this year (as of May 26, 2022), management director candidates in North America have averaged 95.3% support. This is lower than their European and Asia-Pacific counterparts, who averaged 97.1% and 97.8% support respectively. Source: Insightia | Voting What’s New In Activist Shorts - Boatman Capital v AVZ Boatman Capital Research has argued Avz Minerals Ltd (ASX:AVZ) will likely be "outmaneuvered" by a group of "powerful" Chinese battery manufacturers seeking control of its prime asset, a lithium mine in Central Africa. In a May 20 short report, Boatman flagged several issues with respect to the deals behind AVZ's ownership of the mine and said the company is heading for a legal feud with a host of entities that may be coordinating their moves to take control of the asset. At worst, AVZ will lose control of Manono and be left with just 36% of the project, said Boatman, which first targeted AVZ back in July 2019 over the same mining project. Back then, the short seller called AVZ "worthless," alleging the company was given the right to explore the Manono region as part of a scheme designed to enrich a group of unknown investors that might include Congolese officials. To arrange an online demo of Insightia's Shorts module, send us an email. Shorts chart of the week So far this year (as of May 30, 2022), 14 technology companies have been publicly subjected to an activist short campaign, compared to 25 in the same period last year. Source: Insightia | Shorts Updated on May 31, 2022, 3:04 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 31st, 2022

Futures Slide, Yields Jump And Oil Surges As Inflation Fears Return Ahead Of Biden-Powell Meeting

Futures Slide, Yields Jump And Oil Surges As Inflation Fears Return Ahead Of Biden-Powell Meeting After posting solid gains on Monday when cash markets were closed in the US for Memorial Day, boosted by optimism that China's  covid lockdowns are effectively over, and briefly topping 4,200 - after sliding into a bear market below 3,855 just over a week earlier - on Tuesday US equity futures fell as oil’s surge following a partial ban on crude imports from Russia added to concerns over the pace of monetary tightening, exacerbated by the latest data out of Europe which found that inflation had hit a record 8.1% in May.  As of 7:15am ET, S&P futures were down 0.4% while Nasdaq futures rose 0.1% erasing earlier losses. European bourses appeared likely to snap four days of gains, easing back from a one-month high while Treasury yields climbed sharply across the curve, joining Monday’s selloff in German bunds and European bonds. The dollar advanced and bitcoin continued its solid rebound, trading just south of $32,000. Traders will be on the lookout for any surprise announcement out of the White House after 1:15pm when Joe Biden holds an Oval Office meeting with Fed Chair Jerome Powell and Janet Yellen. As noted last night, Brent oil rose to above $124 a barrel after the European Union agreed to pursue a partial embargo on Russian oil in response to the invasion of Ukraine, exacerbating inflation concerns; crude also got a boost from China easing coronavirus restrictions, helping demand. With the price of oil soaring, energy stocks also jumped in premarket trading; Exxon gained as much as 1.5% while Chevron rose as much as 1.4%, Marathon Oil +2.9%, Coterra Energy +3.7%; smaller stocks like Camber Energy +8.8% and Imperial Petroleum rose 15%, leading advance. US-listed Chinese stocks jumped, on track to wipe out their monthly losses, as easing in lockdown measures in major cities and better-than-expected economic data gave investors reasons to cheer. Shares of e-commerce giant Alibaba Group Holding Ltd. were up 4.4% in premarket trading. Among other large-cap Chinese internet stocks, Inc. advanced 6.7% and Baidu Inc. gained 7%. Cryptocurrency stocks also rose in premarket trading as Bitcoin trades above $31,500, with investors and strategists saying the digital currency is showing signs of bottoming out. Bitcoin, the largest cryptocurrency, advanced 1.2% as of 4:30 a.m. in New York. Crypto stocks that were rising in premarket trading include: Riot Blockchain +9%, Marathon Digital +8.1%, Bit Digital +6.1%, MicroStrategy +9.4%, Ebang +3.4%, Coinbase +5.3%, Silvergate Capital +5.2%. “It’s very hard to have conviction at the moment,” Mike Bell, global market strategist at JPMorgan Asset Management, said in an interview with Bloomberg Television. “We think it makes sense to be neutral on stocks and pretty neutral on bonds actually.” The possibility that Russia could retaliate to the EU move on oil by disrupting gas flows “would make me be careful about being overweight risk assets at the moment,” he said. U.S. stocks are set for a slightly positive return in May despite a dramatic month in markets, which saw seven trading days in which the S&P 500 Index posted a move bigger than 2%. Global stocks are also on track to end the month with modest gains amid skepticism about whether the market is near a trough and as volatility stays elevated. Fears that central bank rate hikes will induce a recession, stubbornly high inflation and uncertainty around how China will boost its flailing economy are keeping investors watchful. On the other hand, attractive valuations, coupled with hopes that inflation may be peaking has made investors buy up stocks. In Europe, Stoxx 600 Index was set to snap four days of gains, retreating from a one-month high, with technology stocks among the heaviest decliners. The UK's FTSE 100 outperforms, adding 0.4%, CAC 40 lags, dropping 0.6%. Travel, real estate and construction are the worst-performing sectors. Among individual stock moves in Europe, Deutsche Bank AG slipped after the lender and its asset management unit had their Frankfurt offices raided by police. Credit Suisse Group AG dropped after a Reuters report that the bank is weighing options to strengthen its capital. Unilever Plc jumped as activist investor Nelson Peltz joined its board. Royal DSM NV soared after agreeing to form a fragrances giant by combining with Firmenich. Asian stocks rose Tuesday, helped by a rally in Chinese shares after Shanghai further eased virus curbs and the nation’s factory activity showed signs of improvement.  The MSCI Asia Pacific Index climbed as much as 0.5% Tuesday, on track for the first monthly advance this year, even as investors sold US Treasuries on renewed inflation concerns. Chinese stocks capped their longest winning streak since June. “Asia has seen the worst earnings revision of any region in the world,” David Wong, senior investment strategist for equities at AllianceBernstein, told Bloomberg Television. “When the news is really bleak, that is when one wants to establish a position in Chinese equities,” he said. “It is very clear that the policy support is on its way.” Tech and communication services shares were among the biggest sectoral gainers on Tuesday.  Asia stocks are on track to eke out a gain of less than a percentage point in May as the easing of China’s lockdowns improves the growth outlook for the region. Still, the impact of aggressive monetary-policy tightening on US growth and higher energy and food costs globally are weighing on sentiment in the equity market as traders struggle to assess the earnings fallout. Japanese stocks dropped after data showed the nation’s factory output dropped in April for the first time in three months as China’s Covid-related lockdowns further disrupted supply chains.  Benchmark gauges were also lower as 22 Japanese companies were set to be deleted from MSCI global standard indexes at Tuesday’s close. The Topix Index fell 0.5% to 1,912.67 on Tuesday, while the Nikkei declined 0.3% to 27,279.80. Nippon Telegraph & Telephone Corp. contributed the most to the Topix’s drop, as the telecom-services provider slumped 2%. Among the 2,171 companies in the index, shares in 1,369 fell, 720 rose and 82 were unchanged. “Until after the FOMC in June, stocks will continue to sway,” said Shingo Ide, chief equity strategist at NLI Research Institute, said referring to the US Federal Reserve.   India’s benchmark equities index clocked its biggest monthly decline since February, as a surge in crude oil prices raised prospects of tighter central bank action to keep a lid on inflation. The S&P BSE Sensex slipped 0.6% to 55,566.41 in Mumbai, taking its monthly decline to 2.6%. The NSE Nifty 50 Index dropped 0.5% on Tuesday. Mortgage lender Housing Development Finance Corp. fell 2.6% and was the biggest drag on the Sensex, which had 16 of the 30 member stocks trading lower.  Of the 19 sectoral indexes compiled by BSE Ltd., 10 declined, led by a measure of power companies.    The price of Brent crude, a major import for India, climbed for a ninth consecutive session to trade around $124 a barrel. “The primary focus in the coming weeks will be on central banks’ policy measures to stabilize inflation,” Mitul Shah, head of research at Reliance Securities Ltd. wrote in a note. “Changes in oil prices and amendments to import and export duties might play a role in assessing the market’s trajectory.” Similarly, in Australia the S&P/ASX 200 index fell 1% to close at 7,211.20, with all sectors ending the session lower. The benchmark dropped 3% in May, notching its largest monthly decline since January. Suncorp was among the worst performers Tuesday after it was downgraded at Morgan Stanley. De Grey Mining rose after an update on its Mallina Gold Project. In New Zealand, the S&P/NZX 50 index rose 1.5% to 11,308.34. With rate hikes in full swing in the US and the UK, the ECB is preparing to lift borrowing costs for the first time in more than a decade to combat the 19-member currency bloc’s unprecedented price spike. In the US, Federal Reserve Governor Christopher Waller said he wants to keep raising interest rates in half-percentage point steps until inflation is easing back toward the central bank’s goal. In rates, Treasuries are off worst levels of the day although yields remain cheaper by 5bp-7bp across the curve as opening gap higher holds. 10-year TSY yields around 2.815%, cheaper by 7.7bp on the day, while intermediate-led losses widen 2s7s30s fly by ~4.5bp; bund yields around 2bp cheaper vs Monday close, following hot euro- zone inflation prints. European bonds also pressure Treasuries lower after euro-zone inflation accelerated to a fresh all-time high and ECB hike premium was added across front-end. Italian bond yields rose by up to 6bps after data showed that euro-zone consumer prices jumped 8.1% from a year earlier in May, exceeding the 7.8% median estimate in a Bloomberg survey. Comments from Fed’s Waller on Monday -- backing half-point hike at several meetings --  saw Treasury yields reset higher from the reopen, following US Memorial Day holiday.Front-end weakness reflects Fed hike premium returning in US swaps, with around 188bp of hikes now priced in for December FOMC vs 182bp at Friday’s close. In FX, the Bloomberg Dollar Spot Index rose 0.2% as the greenback outperformed all Group-of-10 peers apart from the Norwegian krone, though the gauge is still set for its first monthly fall in three. The euro erased Monday’s gain after data showed that euro-zone consumer prices jumped 8.1% from a year earlier in May, exceeding the 7.8% median estimate in a Bloomberg survey. Norway’s krone rallied after the central bank said it will reduce its daily foreign currency purchases on behalf of the government to the equivalent of 1.5 billion kroner ($160 million) next month. Norway has been benefiting from stronger revenue from oil and gas production as the war in Ukraine contributed to higher petroleum prices. Sterling slipped against the broadly stronger dollar. UK business confidence rose for the first time in three months in May, with more companies planning to increase prices. Cable may see its first month of gains since December. The yen fell as Treasury yields surged. Japanese government bonds also took a hit from selling in US bonds while a two-year note auction went smoothly. Australian and New Zealand bonds extended an opening fall as cash Treasuries dropped on return from a long weekend. Dollar strength weighed on the Aussie and kiwi. In commodities, Brent rises 2% to trade around $124 after European Union leaders agreed to pursue a partial ban on Russian oil. Spot gold falls roughly $4 to trade at $1,852/oz. Base metals are mixed; LME nickel falls 1.7% while LME zinc gains 0.9%. Looking at the day ahead, the data highlights will include the flash CPI reading for May from the Euro Area, as well as the country readings from France and Italy. On top of that, we’ll get German unemployment for May, UK mortgage approvals for April, and Canada’s Q1 GDP. Over in the US, there’s then the FHFA house price index for March, the Conference Board’s consumer confidence indicator for May, the MNI Chicago PMI for May and the Dallas Fed’s manufacturing activity for May. Otherwise, central bank speakers include the ECB’s Villeroy, Visco and Makhlouf. Market Snapshot S&P 500 futures little changed at 4,159.50 STOXX Europe 600 little changed at 446.27 MXAP up 0.5% to 169.92 MXAPJ up 0.9% to 559.23 Nikkei down 0.3% to 27,279.80 Topix down 0.5% to 1,912.67 Hang Seng Index up 1.4% to 21,415.20 Shanghai Composite up 1.2% to 3,186.43 Sensex little changed at 55,914.64 Australia S&P/ASX 200 down 1.0% to 7,211.17 Kospi up 0.6% to 2,685.90 German 10Y yield little changed at 1.05% Euro down 0.3% to $1.0743 Brent Futures up 1.6% to $123.60/bbl Gold spot up 0.1% to $1,856.27 U.S. Dollar Index little changed at 101.63 Top Overnight News from Bloomberg ECB Governing Council member Francois Villeroy de Galhau said the latest acceleration in inflation warrants a “gradual but resolute” normalization of monetary policy The ECB’s interest- rate hiking must proceed in an “orderly” way to avoid threatening the integrity of the euro zone, Governing Council member Ignazio Visco said German joblessness dropped the least in more than a year, pointing to labor-market vulnerabilities as the war in Ukraine and surging inflation weigh on Europe’s largest economy China’s factories still struggled in May, but the slower pace of contraction suggests that the worst of the current economic fallout may be coming to an end as the country starts to ease up on its tough lockdowns A debt crisis in China’s property industry has sparked a record wave of defaults and dragged more developer bonds down to distressed levels A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mixed as most indices lacked firm direction amid month-end and mixed data. ASX 200 was subdued by tech underperformance and after a deluge of data releases. Nikkei 225 traded rangebound with the index restricted after Industrial Production data missed forecasts. Hang Seng and Shanghai Comp were initially indecisive following the Chinese PMI data which printed above estimates but remained at a contraction, although risk appetite gradually picked amid further support measures and improved COVID situation in China. Top Asian News China's Cabinet issued a series of policies to stabilise the economy, according to a Cabinet document cited by Reuters. China is to accelerate the issuance of local government special bonds and add new types of infrastructure and energy projects to the project pool eligible for fundraising, while it is to step up VAT credit rebates, boost fiscal spending and will guide actual lending rates lower. China reported 97 new COVID-19 cases on May 30th which was the first time infections were below 100 since March 2nd, according to Bloomberg. Shanghai official said the city is moving into a normalised epidemic control phase and looks to resume normal life. The official added that malls and shops will be able to reopen with capacity capped at 75% although the reopening of high-density venues such as gyms will be slower, while all workers in low-risk areas should be able to return to work from June 1st, according to Reuters. Hong Kong Chief Executive Lam said they will likely begin the third stage of easing COVID-19 restrictions in late June, according to Bloomberg. RBNZ Deputy Governor Hawkesby said the central bank needs to keep decreasing stimulus and tighten conditions beyond the neutral of 2.0%. European bourses are mixed, Euro Stoxx 50 -0.8%, with sentiment cautious after a mixed APAC handover and in wake of hot EZ CPI before Powell's meeting with Biden. Note, the FTSE 100 and AEX are bucking the trend given their exposure to Unilever after Trian Fund Management confirmed a 1.5% stake. US futures are pressured, ES -0.6%, succumbing to the broader risk moves after relatively steady initial trade as sentiment remains cautious with multiple factors in play. IATA Chief says that demand is very strong and traffic will likely return to 2019 levels nearer to 2023 than 2024. Question does remain regarding the impact of inflation on disposable incomes and travel demand. Higher oil prices will result in higher ticket prices; rule of thumb is a 10% change in ticket prices can impact demand by 1%. Top European News Senior Tory MPs said UK PM Johnson is likely to face a no-confidence vote as leader of the Conservative Party if they lose two parliamentary by-elections next month, according to FT. Pressure is increasing for the ECB to hike rates after German CPI rose to its highest in half a century, according to The Times. ECB’s Visco Insists on ‘Orderly’ Rate-Hike Pace to Avoid Stress UK Mortgage Approvals Fall to 65,974 in April Vs. Est. 70,500 UK Could Reopen Top Gas Storage to Endure Energy Crisis BNP Paribas Aims to Hire 7,000 People in France in 2022 Russia’s Biggest Lender Sberbank Targeted in EU Sanctions Plan FX Buck bounces into month end as US Treasury yields rebound amidst rally in crude prices and hawkish Fed commentary, DXY towards top of firmer 101.800-410 range. Kiwi undermined by downbeat NBNZ business survey findings and recession warning from RBNZ; NZD/USD hovering just above 0.6500 and AUD/NZD back over 1.1000. Euro fades from Fib resistance irrespective of Eurozone inflation exceeding consensus, EUR/USD down through 1.0750 vs circa 1.0787 at best on Monday. Yen hampered by mixed Japanese data and UST retreat, but back above 128.00 and retracement level (128.27 Fib retracement). Aussie limits losses alongside recovering Yuan after better than feared Chinese PMIs and economic stability policies from the Cabinet, AUD/USD stays within sight of 0.7200, USD/CNH reverses from 6.6900+ and USD/CNY from just shy of 6.6750. Petro currencies cushioned by oil gains after EU embargo on some Russian exports; USD/CAD beneath 1.2700, EUR/NOK probes 10.1000 with added impetus as Norges Bank plans to trim daily FX purchases in June. Fixed Income Bonds succumb to more downside pressure as oil soars, inflation data exceeds consensus and Central Bank hawks get more aggressive. Bunds only just hold above 152.00, Gilts lose 117.00+ status and 10 year T-note retreats through 120-00 ahead of cash re-open from 3-day holiday weekend. Bobl supply snapped up at final sale of current 5 year batch and end of month Italian offerings relatively well received, albeit at much higher gross yields. BoJ maintains bond-buying operations for June at May levels. Commodities WTI and Brent are bid as China's COVID situation remains fluid, but with incremental improvements, alongside EU leaders reaching a watered-down Russian sanctions package. Currently, the benchmarks are holding comfortably above USD 119/bbl and in proximity to the top-end of the sessions range. Reminder, given the US market holiday there was no settlement on Monday. IEA's Birol says oil market could get tight in the summer and sees bottlenecks with diesel, gasoline, and kerosene, especially in Europe. Spot gold is modestly pressured but yet to stray much from the USD 1850/oz mark while base metals are mixed as sentiment slips. Central Banks ECB's Visco says rate hikes will need to be gradual given uncertainties, recent widening in the IT/GE spread shows the need to strengthen public finances and lower debt. Need to ensure tha t normalisation does not lead to unwarranted fragmentation in the Eurozone. ECB's Villeroy says the May inflation numbers confirm expectations for an increase and need for progressive monetary normalisation. Speaking in relation to the French inflation data. US Event Calendar 09:00: 1Q House Price Purchase Index QoQ, prior 3.3% 09:00: March S&P/Case-Shiller US HPI YoY, prior 19.80% 09:00: March S&P/CS 20 City MoM SA, est. 1.90%, prior 2.39% 09:00: March S&P CS Composite-20 YoY, est. 19.80%, prior 20.20% 09:00: March FHFA House Price Index MoM, est. 2.0%, prior 2.1% 09:45: May MNI Chicago PMI, est. 55.0, prior 56.4 10:00: May Conf. Board Expectations, prior 77.2 10:00: May Conf. Board Present Situation, prior 152.6 10:00: May Conf. Board Consumer Confidenc, est. 103.8, prior 107.3 10:30: May Dallas Fed Manf. Activity, est. 1.5, prior 1.1 DB's Jim Reid concludes the overnight wrap Yesterday we published our May market participant survey with 560 filling in across the globe. The highlights were that property was seen as the best inflation hedge with crypto only winning favour with 1%. 61% think a recession will be necessary to rein in inflation but less think the Fed will be brave enough to take us there. A majority think the ECB will have to throw in a 50bps hike at some point in this cycle but only around a quarter think the Fed will do a 75bps hike. Only a quarter think equities have now bottomed over a horizon of the next 3-6 months but responders have reduced their view of bubbles in the market from the last time we asked. Finally inflation expectations continue to edge up. See the link here for lots of interesting observations and thanks again for your continued support. It may have been a quieter session over the last 24 hours with the US on holiday, but inflation concerns were put firmly back on the agenda thanks to another upside surprise in German inflation, as well as a further rise in oil prices that sent Brent Crude back above $120/bbl (it was as low as $102 three weeks ago). That led to a fresh selloff in sovereign bonds, as well as growing speculation about more hawkish central banks, which marks a shift in the dominant narrative over the last couple of weeks, when growing fears of a recession had led to a rally in sovereign bonds, not least since there were growing doubts about the extent to which central banks would be able to take policy into restrictive territory, if at all. In reality though, that German inflation print for May provided significant ammunition to the hawkish side of the argument, with the EU-harmonised reading coming in above every estimate on Bloomberg at +8.7% (vs. +8.1% expected). For reference, that leaves German CPI at its highest level since the 1950s (using the numbers for West Germany before reunification), and that holds even if you use the national definition of CPI, which rose to a slightly lower +7.9% (vs. +7.6% expected). It was a similar story from Spain earlier in the day, which reported inflation on the EU-harmonised measure at +8.5% (vs. +8.3% expected). Speaking to our German economist Stefan Schneider he thinks temporary energy tax reductions should reduce the annual rate to below 7% in June but it’s likely that it’ll be back above 7% by September when this and other charges roll-off, and then only modestly fall into year-end. That’s a long period of high inflation where second round effect and wage pressures can build. With upside surprises from both Germany and Spain yesterday, that’ll heighten interest in this morning’s flash CPI print for the entire Euro Area, not least since the next ECB meeting is just 9 days away. Indeed, those bumper inflation readings have only added to expectations that the ECB will follow the Fed in moving by a larger-than-usual 50bps rather than 25bps once they start hiking. Overnight index swaps reacted accordingly, and are now pricing in a +33bps move higher in rates by the July meeting, which is the highest to date and leaves it just a few basis points away from being closer to 50bps than 25bps. On top of that, the amount of hikes priced in for the year as a whole rose to 114bps, which again is the highest to date. Ahead of that meeting, there were some further comments from policymakers, with the ECB’s Chief Economist Lane saying in an interview that “increases of 25 basis points in the July and September meetings are a benchmark pace.” Interestingly he didn’t rule out the possibility of a 50bp move, saying that “The discussion will be had”, but also said that their “current assessment … calls for a gradual approach to normalisation.” Against that backdrop, there was a significant selloff in European sovereign bonds, with yields on 10yr bunds (+9.4bps), OATs (+8.5bps) and BTPs (+9.9bps) all moving higher. The prospect of tighter policy meant those rises in yields were more pronounced at the front end of the curve, with 2yr German yields up +10.9bps to 0.43%, which is a level unseen in over a decade. The only major exception to that pattern were Swedish government bonds, where 10yr yields were down -6.2bps after the country’s economy contracted by a larger-than-expected -0.8% in Q1, which was above the -0.4% contraction in the flash estimate from April. Whilst Treasury markets were closed for the US Memorial Day holiday, Fed funds futures provided a sense that the direction of travel was similar in the US to Europe, since the implied fed funds rate by the December FOMC meeting ticked up +7bps. Furthermore, we also had a speech from Fed Governor Waller, who commented that he was in favour of “tightening policy by another 50 basis points for several meetings”, and said that he was “not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target”. Up to now, there’s been a pretty strong signal from Fed Chair Powell and others that 50bps were likely at the next two meetings (in June and July), but in September there’s been speculation they might begin to slow down to a 25bp pace, with futures currently pricing in something in between the two at present. In Asia, US sovereign yields are playing catch-up after reopening with 2yr through to 10yr yields 8-11bps higher across the curve. The main other story yesterday was a significant rise in oil prices, with Brent Crude up +1.97% on the day to close at $121.15/bbl, whilst WTI rose +1.82% to $117.17/bbl. That marks an 8th consecutive daily increase in Brent Crude prices, and leaves it at its highest closing level in over two months, and will not be welcome news for policymakers already grappling with higher energy prices. Part of that increase has come amidst the easing of Covid restrictions in China, but the prospect of an EU embargo on Russian oil has also played a role. Indeed, following an extraordinary European Council summit, EU leaders agreed late last night, a political deal to impose a partial ban on most Russian oil imports. Under a compromise plan, the 27-nation bloc has decided to cut 90% of oil imports from Russia by the end of 2022 with EU leaders agreeing to exempt Hungary from Russian oil embargo. The embargo will cover seaborne oil and partially exempt pipeline oil thus providing an important concession to the landlocked nation. Following this, oil prices are building on yesterday's gains with Brent and WTI up just under 1.5% as I type. Asian equity markets are mostly treading water this morning but with China higher. The Nikkei (+0.13%), Hang Seng (+0.24%) and Kospi (+0.11%) are slightly higher with the Shanghai Composite (+0.75%) and CSI (+0.98%) leading gains after China’s official factory activity contracted at a slower pace. The official manufacturing PMI advanced to 49.6 in May (vs 49.0 expected) from 47.4, as COVID-19 curbs in major manufacturing hubs were eased. This is still three months below 50 now. In line with the weakness in the factory sector, services sector activity remained soft, but did bounce. The non-manufacturing PMI came in at 47.8 in May, up from 41.9 in April. US equities were closed for the holiday yesterday, but in spite of the prospect of faster rate hikes being back on the table, futures still managed to put in a decent performance, with those on the S&P 500 up over +0.5% around the time of the European close. That's dipped to +0.2% as I type though. European indices made gains, with the STOXX 600 up +0.59% thanks to an outperformance among the more cyclical sectors, and the index built on its +2.98% advance last week. Those gains were seen across the continent, with the DAX (+0.79%), the CAC 40 (+0.72%) and the FTSE 100 (+0.19%) all moving higher on the day. Finally, there wasn’t much other data yesterday, although the European Commission’s economic sentiment indicator for the Euro Area stabilised in May having fallen in all but one month since October. The measure came in at 105.0 (vs. 104.9 expected), up from a revised 104.9 in April. To the day ahead now, and the data highlights will include the flash CPI reading for May from the Euro Area, as well as the country readings from France and Italy. On top of that, we’ll get German unemployment for May, UK mortgage approvals for April, and Canada’s Q1 GDP. Over in the US, there’s then the FHFA house price index for March, the Conference Board’s consumer confidence indicator for May, the MNI Chicago PMI for May and the Dallas Fed’s manufacturing activity for May. Otherwise, central bank speakers include the ECB’s Villeroy, Visco and Makhlouf. Tyler Durden Tue, 05/31/2022 - 07:51.....»»

Category: worldSource: nytMay 31st, 2022