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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 .af-body.af-standards 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

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 mmeisenzahl@businessinsider.com.Read 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 $44bn takeover of the company over what he claimed was a “clear material breach” of the merger agreement. As Elon Musk threatens to walk away from the Twitter deal, sending Twitter stock tumbling, investors wonder what’s next for the social media app? And what does this all mean for Twitter and Tesla shareholders? if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {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 = "//mixi.media/data/js/95481.js"; 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 .af-body.af-standards 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 Amazon.com, 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 = "//mixi.media/data/js/95481.js"; 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, JD.com 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

Suncor stock climbs after activist investor Elliott Management urges moves to unlock shareholder value

The U.S.-listed shares of Canada-based Suncor Energy Inc. ran up 5.9% toward a 3 1/2-year high after activist investor Elliott Management L.P. urged the oil and gas company to enhance its board and explore opportunities to unlock the value of its assets. In a letter to Suncor's board, Elliott said the company should add five new independent directors, conduct an objective review of its executive leadership, overhaul the operational and safety culture, increase capital returns and explore value opportunities, including a strategic review of retail. Elliott, which owns about 3.4% stake in Suncor, said it believes its plan can unlock more than $30 billion in value for shareholders, representing a potential increase of 50% or more from current values. The stock has soared 52.4% over the past 12 months through Wednesday, while the SPDR Energy Select Sector ETF has run up 49.4% and the S&P 500 was little changed.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchApr 28th, 2022

Elon Musk Exposes The Tyranny Of The Minority

On April 8, 1985, a Texas-based energy company called Mesa Petroleum launched a hostile takeover bid for the Union Oil Company of California, or Unocal. A “Poison Pill” Mesa had been founded in 1956 by legendary oilman T. Boone Pickens; and by the 1980s, Pickens had become a well-known corporate raider in the oil and […] On April 8, 1985, a Texas-based energy company called Mesa Petroleum launched a hostile takeover bid for the Union Oil Company of California, or Unocal. A “Poison Pill” Mesa had been founded in 1956 by legendary oilman T. Boone Pickens; and by the 1980s, Pickens had become a well-known corporate raider in the oil and gas industry, i.e. someone who acquires struggling companies at a discount, and then sells off their assets for a profit. 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 .af-body.af-standards 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); Q1 2022 hedge fund letters, conferences and more Pickens’ reputation was so ominous that whenever he set his sights on an acquisition target, that company’s board would usually pay him ‘greenmail’ to leave them alone. But Unocal’s Board of Directors wasn’t having any of that. So once Pickens announced his takeover offer, Unocal’s Board launched what has become known as a “poison pill”. Poison pills are corporate tactics that a company employs in order to make a hostile takeover as difficult as possible; they can take a variety of different forms, but in general they are legal remedies designed to deliberately injure the hostile bidder. Pickens sued Unocal immediately in Delaware’s Court of Chancery—a specialty court in Delaware that exclusively hears corporate cases. Pickens initially won the case; the court ruled that Unocal’s Board has the responsibility to treat all shareholders equally, and therefore it was illegal to launch a plan that would specifically injure Mesa/Pickens. But Unocal appealed. And eventually the Delaware Supreme Court overturned the initial ruling and sided with Unocal. This was a landmark corporate case, and it set a clear standard for company boards. The judges established what is now known as the ‘Unocal Standard’, which states that a corporate board CAN implement a poison pill to injure a single shareholder, but only if: 1) The shareholder represents an existential threat to the business, i.e. a corporate raider who intends to shut the company down and sell off its assets; 2) The poison pill must be proportionate to the threat. This Unocal Standard has given rise to some absurd poison pill plans over the years. The Williams Companies In March 2020, for example, another energy group called The Williams Companies saw its stock price plummet in the early days of the COVID-19 panic. So the Board decided to pre-emptively adopt a poison pill plan to make their stock unattractive to any potential activist investors… as well as to any changes that existing shareholder would want to make. According to internal documents, the directors wanted to “insulate the Board and management” from the stockholders’ wishes, and to prevent stockholders from “voting erroneously out of ignorance” for new directors. Clearly the directors had no interest in those pesky shareholders, i.e. the actual owners of the business, expressing their views. At least one director referred to this poison pill as a “nuclear weapon”. Everyone would suffer. So a few shareholders sued the company in Delaware’s Chancery Court, and the judges quickly invalidated the poison pill. The Williams Companies’ poison pill in no way met the Unocal test. First, there was no existential threat to the business. The Board was essentially launching a nuclear weapon in order to defend against some perceived hypothetical threat, as opposed to a threat that actually existed. And more importantly, their response was not proportionate to even the hypothetical threat. Moreover, in their ruling, the judges hilariously mocked the arrogance of the Board, referring to the Board’s deep “entrenchment” and “we know better” mentality. Tyranny of the Minority This is what I call the ‘Tyranny of the Minority’. It’s when a small handful of people, or sometimes even one person, holds a fanatical view that “I and I alone should be in charge.” Often this person/group doesn’t even have much of a stake, if any. So their incentives are clearly not aligned with the rest of the stakeholders, yet they have enormous power. We most recently saw this with Twitter, which, up until this weekend, was fighting against Elon Musk’s takeover offer. Twitter’s Board of Directors famously owns almost no stock in the company. Instead, they receive absurdly generous director fees… which means their incentives are completely misaligned with those of the shareholders. Unsurprisingly, Twitter’s stock price has gone nowhere. The company loses money, its content policies are a mess, and users are abandoning the platform. Yet when faced with a takeover bid that would actually benefit shareholders and put real money in people’s pockets, the directors rejected Elon and came up with their own poison pill plan. Elon Musk's Bid For Twitter Now, Elon Musk is not a corporate raider, i.e. he’s not threatening to shut the company down and sell off its assets. So he does not represent an existential threat to Twitter. This means that the Board already fails the Unocal legal test, which means their poison pill would be easily invalidated in court. My guess is that they received sobering counsel over the weekend that they had no real legal options to challenge Elon’s bid. So they’ve now changed their tune and have signaled a desire to negotiate. But it’s still a great example of the Tyranny of the Minority—a tiny, uninvested elite who have the power to decide outcomes for everyone else. And they consistently get it wrong. This is how government works too. And I’m not talking about elected officials; I’m talking about people like Anthony Fauci, who on Thursday blasted a federal judge for overturning the airline mask mandate. Fauci told CBS News that the court ruling was “disturbing” because it was “a public health matter. . . not a judicial matter.” Fauci embodies this “we know better” entrenched mentality; he believes that he shouldn’t be subject to oversight, and that he should be insulated from interference and criticism. The rest of us peasants shouldn’t be allowed to express a view on the matter. And in a way, he essentially launched his own ‘poison pill’ in 2020 to strip all the other stakeholders, i.e. everyone in the country, of their rights. Fauci decided that he and he alone should be allowed to decide what is #science and what is misinformation. And he coordinated with the world’s largest tech companies to make sure of it. Larry Fink is another example; his firm, Blackrock, manages more than $10 trillion in other people’s money, primarily through ‘passive’ exchange traded funds and mutual funds. Chances are, if you’re one of the millions of people who invested in one of Blackrock’s funds, like the iShares S&P 500 ETF, you never expressly gave Fink the power to vote on your behalf. But he has seized that power anyhow… and weaponized it to force companies into his reimagined view of woke stakeholder capitalism; he has even bragged that “at Blackrock, we are forcing behaviors” across Corporate America. This Tyranny of the Minority is growing. The media elites, the top universities, Big Tech—they all wield enormous power. Yet their views and incentives are totally misaligned with everyone else. Google, for example, recently made changes to its online Docs editor to police your writing and suggest more “inclusive” and often gender-neutral language. The good news is that it’s easy to fight back. Just stop using them. Stop investing in Blackrock’s funds (and start exercising your own corporate votes). Stop watching cable news. Stop consuming the products of woke companies who don’t have any backbone. Stop using Big Tech. After all, there are plenty of alternatives. It costs nothing, for example, to stop using Google’s search engine, and start using Brave Search. Honestly, if you’re concerned about the Tyranny of the Minority, but you’re not willing to take even the most simple step, you might want to ask yourself how strong your convictions really are. Article by Simon Black, Sovereign Man Updated on Apr 26, 2022, 11:31 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; 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: valuewalkApr 26th, 2022

Twitter Employs A Poison Pill

What’s New In Activism – Twitter Poison Pill Twitter Inc (NYSE:TWTR) has employed a poison pill in its defense against Elon Musk’s $43 billion hostile takeover bid. The company’s board unanimously approved a one-year shareholder rights plan with a 15% threshold, according to a Friday press release. The move came a day after Musk’s offer […] What’s New In Activism – Twitter Poison Pill Twitter Inc (NYSE:TWTR) has employed a poison pill in its defense against Elon Musk’s $43 billion hostile takeover bid. The company’s board unanimously approved a one-year shareholder rights plan with a 15% threshold, according to a Friday press release. The move came a day after Musk’s offer and amid rumors private equity firm Thoma Bravo was also interested in a buyout. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {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 Musk, who holds a 9.1% stake, said on Thursday that he was seeking to take Twitter private at $54.20 so that he could unlock the platform's "extraordinary potential." But the Tesla Inc (NASDAQ:TSLA) CEO may struggle to win over other investors. "I don't believe that the proposed offer by Elon Musk ($54.20) comes close to the intrinsic value of Twitter given its growth prospects," tweeted Saudi Arabian investor Prince Alwaleed bin Talal, one of Twitter's biggest shareholders. 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 April 13, 2022), globally, 105 companies have been publicly subjected to activist demands by investors that disclose activism as part of their investment strategy. That is compared to 99 in the same period last year. Source: Insightia | Activism What’s New In Proxy Voting - Net-Zero-Aligned Accounting A coalition of 34 investors, representing $7.1 trillion in assets, sent letters to leading European companies warning of increased opposition towards auditor appointments where companies fail to disclose net-zero-aligned accounting. Members of the Institutional Investors Group on Climate Change (IIGCC) wrote letters to major European companies in November 2020, outlining their expectations governing corporate climate-related accounting. On April 5, IIGCC members, including BMO Global Asset Management, Rathbones, and Sarasin & Partners, wrote to 17 European companies, asking why their boards were "unable to make the requested disclosures and what steps will be take[n] to address this omission in forthcoming audited accounts." To arrange an online demo of Insightia's Voting module, send us an email. Voting chart of the week In 2021, environmental and social shareholder proposals at U.S. energy companies achieved an average 51.1% support. That compares to just 37.3% for all U.S. companies. Source: Insightia | Voting  What’s New In Activist Shorts - Reliq Health Fights Back At White Diamond Reliq Health Technologies Inc (CVE:RHT) rejected fraud allegations by White Diamond Research, saying the short seller resorted to "demonstrably false statements and conspiracy theories." Reliq Health said on April 11 that the short report contained "defamatory, misleading, and demonstrably false statements" designed to cause a share price drop. The company called the report "spurious" and suggested this was part of a "short and distort" campaign. "Reliq is one of countless public companies who have been targeted by short selling firms employing deceptive practices to generate profits for short sellers at the expense of shareholders and to the detriment of the integrity of the public markets," said CEO Lisa Crossley. The comments seem to point to a recent Department of Justice probe into potentially illegal short selling tactics allegedly employed by multiple outfits, with firms such as Carson Block's Muddy Waters and Andrew Left's Citron Research facing questions. However, White Diamond does not believe the investigation, though wide-ranging, will have a big impact on the industry. "I think it's more of a warning to keep short sellers on their toes and make sure they do the right thing," Adam Gefvert, head analyst at White Diamond, recently told Insightia's Shorts module. 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 April 14, 2022), 17.2% of public activist short campaigns have been at European companies. That is up from 2.5% in the same period last year. Source: Insightia | Shorts Quote Of The Week “Peloton will continue to be poorly valued for as long as close-knit group of insiders, who have proven themselves incapable of creating value, continue to wield voting power far in excess of their economic interest.” - Jason Aintabi Updated on Apr 19, 2022, 1:52 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; 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: valuewalkApr 19th, 2022

Elon Musk"s proposed 100% takeover of Twitter is likely to happen after a "soap opera" that leaves the board with few options, Wedbush says

"We believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," Wedbush said. Musk acquired a 9.2% stake in Twitter.Jim Watson/AFP via Getty ImagesElon Musk's takeover proposal of Twitter will likely end in a deal, Wedbush said on Thursday.Musk offered to take over Twitter for $54.20 per share, representing a premium of about 18%."We believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," Wedbush said.Elon Musk's proposal to acquire Twitter for $54.20 per share will likely end in a deal, Wedbush analyst Dan Ives said in a note on Thursday."Ultimately we believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," Ives said, adding that it would be difficult for any other bidders to emerge with a counter-offer, and that "the Twitter board will be forced likely to accept this bid and/or run an active process to sell Twitter."Musk's takeover offer represents a premium of 18% relative to Wednesday's closing price for Twitter shares, and the offer comes after Musk already built a more than 9% stake in the social-media company earlier this year.The offer represents a 54% premium relative to the day before Musk started building his stake in Twitter in January."I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy," Musk said in a filing made with the SEC."However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company...Twitter has extraordinary potential. I will unlock it," Musk said. Twitter acknowledged that it received the offer and it will be reviewed by its board of directors. Ives expects that a deal will get done between Musk and Twitter, in what has turned into a "game of thrones" between the two parties.But many questions remain, according to Ives, including financing the deal, potential regulatory issues, and Musk's ability to balance time between Tesla and SpaceX. "But ultimately based on this filing it is a now or never bid for Twitter to accept," Ives said."The next step will be Twitter's board officially reviewing the Musk filing/letter and then its get out the popcorn time as we expect many twists and turns in the weeks ahead as Twitter and Musk walk down this marriage path," Ives said.Twitter shares were up 7% to $49.14 in early Thursday trades, well below Musk's offer price of $54.20 per share, signaling that investors are skeptical a deal will actually get done. And if a deal doesn't get done, there is the real risk that Musk becomes disinterested with his stake in the social media company and sells it, adding negative selling pressure to the stock. Read the original article on Business Insider.....»»

Category: smallbizSource: nytApr 14th, 2022

Bed Bath and Beyond added new leaders to its board in response to an activist investor. Here"s what it"s like to shop there.

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 Bed Bath and Beyond is updating stores to be less cluttered. A store in Rochester, New York had less varied merchandise and looked more organized than in the past. Customers flocked to the more disorganized clearance aisle.  Bed Bath and Beyond announced on Friday that it reached 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," Bed Bath & Beyond President and CEO Mark Tritton said in a statement.Previously, Bed Bath & Beyond announced that it would be updating its stores to achieve a less "cluttered" shopping experience. Back in February, Insider visited one of the chain's stores up 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: WSJNew CEO 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 mmeisenzahl@businessinsider.com.Read the original article on Business Insider.....»»

Category: smallbizSource: nytMar 25th, 2022

What to consider before taking your family business public

Going public has its pros and cons: Public companies can access more capital, but they also face stricter regulations and disclosure requirements. Moderating the risks of the family business going public can help it succeed in the long run.Morsa Images/Getty Images As your family business grows, it may worth considering the pros and cons of taking it public. Public companies can access more capital; they also have more regulations and disclosure requirements. Talk with your family, and be aware of potential changing priorities and goals in future generations. Most family firms do what they can to maintain control of their destiny.Still, some firms eventually find themselves at a difficult inflection point: considering whether to stay a private family business or to go public. These inflection points often occur around generational transitions, exit of family branches from ownership, or external events such as seismic shifts in an industry — and the difficulty of the decision is often compounded by the family's close emotional connection to the business.But even in the best of times, these decisions tend to be complicated."Going public as a family-owned business can open up Pandora's box," said Jennifer Pendergast. "You may start out by taking 10% of the shares public so the family still retains control, but you've opened the door to public ownership and all that comes with it."Even when a family retains effective control through ownership of voting shares, which allows them to elect the board and make other significant strategic decisions, they are still beholden to information-disclosure requirements and scrutiny of public-market investors.While most family firms view offering shares in the public markets as a negative, there are upsides to consider. Doing so gives firms access to growth capital, the opportunity to buy out disinterested shareholders, a liquid market for family-owned shares, and more rigorous governance standards.Pendergast, a clinical professor of family enterprise at the Kellogg School, offers three pieces of advice for families who may be weighing the decision to go public.Know why you're doing itWhile each family business has its own dynamics, the reasons those firms might consider going public fall broadly into two areas: strategic adjustments or changing family priorities.Companies seeking to grow aggressively, make large capital investments, or reposition themselves in relation to their competition may make the strategic decision to go public.Pendergast recently consulted to a family-owned media company. In recent years, it has become clear that the days of small regional players in media are over and that economies of scale are crucial to media firms' survival. The company had two choices: they could decide to get out of the industry, or find the capital to consolidate and grow."The New York Times, for example, is publicly traded but family-controlled," Pendergast said, "which is common in media and other industries where the business models have changed and it's no longer feasible to rely solely on private capital."Family businesses also have to contend with the potential for changing priorities and visions from generation to generation. This could mean a new generation desires to leave a business segment that doesn't align with its values or it could mean a branch of the family no longer wishes to be involved in the business.Part of the family may no longer be interested in being owners," Pendergast said. "If you can't afford to buy them out through a debt instrument — or you choose not to do it that way because it will constrain the company's ability to grow — you can use a public offering as a way to fund buying them out."She advises making sure all family stakeholders fully understand the reasons why a public offering is on the table. With alignment on the motivation, discussions can focus on the best decisions to achieve the strategic or family goals going forward.Moderate the risksKeeping private ownership of family enterprises has a lot of advantages: it allows the family to control the vision, values, strategy, and culture of the company. As a result, family-held businesses often deliver superior returns."This is largely due to these firms' ability to focus on long-term investment in people, products, and community, which leads over time to superior profitability," Pendergast said. "Family enterprises also have more stable leadership and engender greater trust from employees and customers."While a public offering may be necessary or valuable to the vitality of the organization, going public comes with risks. For one, going public may push family members who may not otherwise be interested in selling their shares to consider cashing out to investors outside the family. And, it can open the door to activist investors, as Campbell Soup had to navigate recently.But the greatest risk is loss of strategic control."Most family businesses try at all costs not to go public," Pendergast said. "Family leadership may be willing to relinquish the economic benefits of a public offering for the sake of stability and growth. But even if they choose to go public, they still want the business to maintain the hallmarks of family-owned enterprises — broad stakeholder focus, alignment with family values, and long-term vision."Family firms that choose the public route can minimize the risk of losing strategic control by preparing family members to take on leadership roles in the business, ensuring that the family controls the board, and maintaining voting control through the issuance of dual-class shares. In fact, in a data set managed by Brown-Forman collecting more than 130 NASDAQ- and NYSE-traded family-controlled firms, 55% have a family CEO and 84% a family chair.The billboard company Lamar Advertising saw the opportunities inherent in economies of scale as the industry embraced digital technology. They went public to raise capital so they could buy up smaller regional firms."They have become a national player in the industry, and while they don't have total control, there's still a Lamar family member as CEO of that business," Pendergast said. "And there likely will be in the next generation, too."Know your optionsFamily businesses have a lot of options that can help them take advantage of public ownership while retaining strategic and operational control.In addition to keeping family control over the board by issuing dual-class shares that grant the family increased voting rights — by as much as 10 votes per share in some cases — Pendergast recommends adapting the board's structure to address any potential areas of concern.This might mean changing the board composition to include a higher percentage of independent directors. This can open communication channels, which may be complicated by potentially fraught issues such as executive succession. Adding independent directors also offers the opportunity to introduce additional skill sets to the board. And independent directors send a signal to non-family shareholders that the company is committed to good governance.If there is a family CEO, Pendergast also recommends a nonfamily board chair or Lead Independent Director, who can provide additional oversight and accountability for both the family itself and the public investors."While the family may retain control, they should balance their influence by incorporating strong independent directors," said Pendergast.Similarly, only the most insightful family members should be entrusted with seats on the new board. "Family board seats should not be an honor or perk but a place where the most capable family members can influence the company direction," she said.Moreover, families should keep an eye toward balancing continuity with turnover. Research shows that family boards tend to retain directors longer than nonfamily boards. Boards that are loaded with long-serving members risk stagnating or having subsequent family generations either lose interest or reach the board unprepared to govern. Including term limits can help keep balance.Average tenures of independent directors of family-controlled firms mirror their nonfamily-controlled peers at 10 years. But family directors average 20 years' tenure."Set term limits or a retirement age," Pendergast said. "Family members who don't see opportunities to contribute will become less engaged over time, which may make them more likely to sell their holdings, reducing family-ownership stake."By taking a thoughtful approach to going public, families can experience a "best-of-both-worlds" scenario, marrying the long-term vision of the family structure with the oversight of a publicly traded company and the access to capital to grow and ensure an aligned ownership group."The good governance that you put in place for a publicly traded company is good for a family company, too. There's great value in having an engaged board with independent directors who are going to bring outside ideas and keep the family from being too insular."Read the original article on Business Insider.....»»

Category: dealsSource: nytDec 20th, 2021

Shell (RDS.A) Shareholders Overwhelmingly Agree on UK Shift

Shareholders in Royal Dutch Shell (RDS.A) have approved the multinational's plan to end its dual-headed structure in favor of a single London-based entity. Royal Dutch Shell (RDS.A) shareholders have given their overwhelming backing to plans for consolidating its dual headquarters in London over The Hague. On Friday, some 99.8% of the 58% votes cast agreed to Shell’s special resolution to become a single United Kingdom (“UK”) entity.Floated last month, the proposal to become a fully incorporated UK company is Shell’s first major corporate overhaul since 2005, when it moved to a single capital structure, creating a new parent company, Royal Dutch Shell plc. The original Royal Dutch/Shell Group resulted from the 1907 alliance between U.K.-based Shell Transport and Trading Company and the Netherlands-based Royal Dutch Petroleum Company, with a 40% and 60% stake in the group, respectively.However, both companies maintained their separate and distinct identities. The unification plan proposed in 2005 by the boards of both the companies was completed in 2006, resulting in one parent company, Royal Dutch Shell plc. Reflecting the 60:40 ownership structure of the group before the unification, Royal Dutch Petroleum Company’s shareholders were given a 60% stake in the new parent company through class A shares (domiciled in the Netherlands), while the old Shell shareholders were given a 40% stake through class B shares (listed in the UK).Following November’s decision to abandon its dual-listed structure and the establishment of a new legal entity in the UK, the company will change its name to just Shell Plc, stripping the “Royal Dutch” part and ending its relationship with the Netherlands that dates back to 1890, when the Royal Dutch Petroleum Company was formed. Expectedly, the Netherlands government at that time said that it was “unpleasantly surprised” by Shell’s plans to cancel its Dutch listing, following the footsteps of consumer goods giant Unilever UL last year.In 2020, the packaged food behemoth too ditched its dual Anglo-Dutch legal structure and picked London over Rotterdam as the location of its headquarters. Unilever cited the coronavirus pandemic as a major determinant in opting for a single company structure in Britain as it would provide more leeway for mergers and acquisitions.Eventually, UL was registered as a fully British entity a year ago, ending its nine-decade run as a hybrid company. Unilever, though, kept its food and beverage division's head office in Rotterdam despite moving out its corporate base.Coming back to Shell, the relocation of its domicile to London is unlikely to cause a massive impact on the Dutch state revenues. But the move does raise some red flags regarding the country’s attractiveness to multinationals. Both Shell and Unilever had urged the government to scrap a dividend tax on big companies that they don’t have to pay in Britain. Shell was also becoming vulnerable to activist investors in the Netherlands after a landmark court ruling earlier this year asked the oil and gas major to cut emissions 45% by 2030 compared with the 2019 levels.  In an apparent attempt to soothe the Dutch nerves, the energy biggie assured that just a few management posts would shift to London. On the other hand, Britain welcomed Shell’s exercise, citing it as a “clear vote of confidence in the economy” even after its departure from the European Union.  For investors, it is seen as a positive move as it simplifies the structure and offers greater strategic flexibility. This assumes extra importance after Third Point — Daniel Loeb’s activist hedge fund that has a $500 million stake in the company — recently pursued a breakup of Shell into multiple businesses, arguing that this could unlock significant value. A new setup with a simplified business would also mean a higher ordinary share count and a possible increase in buyback authorization.Zacks Rank & Stock PickShell currently carries a Zacks Rank #3 (Hold).Some better-ranked players in the energy space are ConocoPhillips COP and Chesapeake Energy CHK. Both the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.ConocoPhillips has a projected earnings growth rate of 717.5% for the current year. The Zacks Consensus Estimate for COP’s current-year earnings has been revised 17.2% upward over the past 60 days.ConocoPhillips beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13%. COP shares have gained around 72.3% in a year.Chesapeake Energy has a projected earnings growth rate of 121.5% for the current year. CHK's consensus estimate for the current year has been revised 16.8% upward over the past 60 days.Chesapeake Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The stock has a trailing four-quarter earnings surprise of roughly 23.1%, on average. CHK shares have rallied around 48.2% in a year. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unilever PLC (UL): Free Stock Analysis Report Chesapeake Energy Corporation (CHK): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 16th, 2021

Oil & Gas Stock Roundup: RDS.A"s Corporate Overhaul, CNQ"s Buyout Hogs Attention

Apart from Royal Dutch Shell (RDS.A) and Canadian Natural Resources (CNQ), there was news from TechnipFMC (FTI), Cheniere Energy (LNG) and Chevron (CVX) during the week. It was a week when both oil and natural gas prices registered declines.On the news front, Europe’s largest energy company, Royal Dutch Shell (RDS.A), decided to unify its group structure into a single parent company based in London, while Calgary-based Canadian Natural Resources CNQ agreed to snap up smaller player Storm Resources for C$960 million.Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures lost 0.6% to close at $80.79 per barrel, while natural gas prices fell more than 13% to end at $4.791 per million British thermal units (MMBtu). In particular, the oil market extended its decline from the previous two weeks.Coming back to the week ended Nov 12, oil prices dipped after a report from the Energy Information Administration ("EIA") showed another addition to crude stockpiles. The commodity’s negative price reaction was also blamed on a stronger greenback, which weakened the dollar-denominated crude. The possible release of oil from the U.S. Strategic Petroleum Reserve into the commercial market (to cool down higher U.S. gasoline prices) contributed to the decline too.Natural gas finished down too despite a lower-than-expected increase in supplies. Higher production, a mild weather outlook (and the subsequent lull in heating/cooling demand), plus Russia’s renewed pledge to increase supplies to Europe sparked off a pullback in the fuel’s price.Recap of the Week’s Most-Important Stories1.  Royal Dutch Shell has decided to consolidate its dual headquarters in London over The Hague. In a board meeting on Monday, Shell’s directors unveiled plans to become a single UK entity.The energy major will change its name to just Shell plc, stripping the ‘Royal Dutch’ part and ending its relationship with the Netherlands that dates back to 1890. The relocation of its domicile to London is unlikely to cause a massive impact on the Dutch state revenues. But the move does raise some red flags regarding the country’s attractiveness to multinationals. On the other hand, Britain welcomed the RDS.A exercise, citing it as a “clear vote of confidence in the economy”.For investors, it is seen as a positive move as it simplifies the structure and offers greater strategic flexibility. This assumes extra importance after Third Point — Daniel Loeb’s activist hedge fund that has a $500 million stake in the company — recently pursued a breakup of Shell into multiple businesses, arguing that this could unlock significant value. A new setup with a simplified business would also mean a higher ordinary share count and a possible increase in buyback authorization. (Shell to No Longer be a Dutch Company: Here's Why)2.   Canadian Natural Resources recently entered into an agreement with Storm Resources Ltd. to acquire all of the latter's shares for C$960 million.The to-be-acquired assets involve Calgary-based oil and gas explorer Storm's holdings in the liquid-rich Montney area of northeast British Columbia. Storm currently produces 136 million cubic feet a day of natural gas and 5,600 barrels a day of natural gas liquids in the area. Per the terms of the agreement, CNQ — carrying a Zacks Rank #1 (Strong Buy) — will also assume Storm's total debt of about C$186 million.You can see the complete list of today’s Zacks #1 Rank stocks here.The latest acquisition offers production and infrastructure that complements Canadian Natural's existing assets in the area. The areas will provide an opportunity for synergies within CNQ's current diversified portfolio. Notably, the deal is expected to complete in December, subject to normal closing conditions. (Canadian Natural to Buy Storm's Montney Assets for C$960M)3   Oilfield services provider TechnipFMC FTI announced the receipt of a large award. According to FTI, a contract is considered large if the value lies in the band of $500 million and $1 billion.Per the award, TechnipFMC will get involved in supplying a subsea production system to develop the Yellowtail oil discovery in the prolific Stabroek Block, located offshore Guyana., This is the fourth award for FTI in the Stabroek Block.TechnipFMC has decided to provide engineering, project management, testing capabilities and manufacturing to deliver the overall subsea production system. FTI announced that the project’s scope comprises 12 manifolds and associated controls and tie-in equipment along with 51 enhanced vertical deepwater trees and related tooling. (TechnipFMC Inks Large Subsea Contract for Yellowtail)4.   Cheniere Energy LNG, through its wholly owned subsidiary, Cheniere Marketing, entered an agreement to supply liquefied natural gas to Sinochem Group Co. Ltd.Per the terms of the agreement, Cheniere will supply an initial volume of 0.9 million tons per annum on a free-on-board basis to China-based Sinochem. The quantity will eventually increase to 1.8 mtpa. The deal has a term of 17.5 years and will be in effect from July 2023.The deal is Cheniere’s third liquefied natural gas supply agreement in recent months, as the fuel is currently trading at record prices amid shortages in Asia and Europe, which have urged buyers to secure supplies. The agreement shows LNG’s ability to find solutions to meet consumers’ liquefied natural gas needs globally, acknowledged by the extent of the company’s platform and the reliability of its operations. (Cheniere to Supply Liquefied Natural Gas to Sinochem)5.  Chevron CVX and partners agreed to purchase carbon credits worth more than A$230 million for its Gorgon carbon capture and storage ("CCS") project in Western Australia. The move is part of Chevron’s plans to offset penalties after failing to capture enough emissions from the Gorgon CCS project. Additionally, CVX will invest A$40 million in low-carbon projects in Western Australia.Gorgon is the country's most notably single-resource natural gas project and features the largest natural gas projects globally. Expenses, which could amount to more than A$250 million, will be divided among the Gorgon project partners. Chevron operates the project with a 47.3% ownership interest.Chevron intends to fulfill the obligations by purchasing Australian carbon credit units and offsets from two international programs, the Gold Standard and the Verified Carbon Standard. The integrated oil major will continue to purchase the offsets by July 2022.Price PerformanceThe following table shows the price movement of some major oil and gas players over the past week and during the last six months.Company    Last Week    Last 6 MonthsXOM                  -0.5%                +7%CVX                   -0.4%                +7.1%COP                  -4.1%                +28.5%OXY                   -4%                   +26.9%SLB                   -2.2%                +0.2%RIG                   -4.7%                 -17.7%VLO                   -1.7%                 -4%MPC                  0.0%                  +7.9%The Energy Select Sector SPDR — a popular way to track energy companies — was down 1.2% last week. But over the past six months, the sector tracker has increased 8.7%.What’s Next in the Energy World?As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report TechnipFMC plc (FTI): Free Stock Analysis Report Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report Cheniere Energy, Inc. (LNG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 18th, 2021

Shell (RDS.A) to No Longer be a Dutch Company: Here"s Why

For investors, the overhaul is seen as a positive move as it simplifies Royal Dutch Shell's (RDS.A) structure and offers greater strategic flexibility. Royal Dutch Shell (RDS.A) has decided to consolidate its dual headquarters in London over The Hague. In a board meeting on Monday, Shell’s directors unveiled plans to become a single United Kingdom (“UK”) entity.The proposal to become a fully incorporated UK company is Shell’s first major corporate overhaul since 2005 when it moved to a single capital structure, creating a new parent company, Royal Dutch Shell plc. The original Royal Dutch/Shell Group had resulted from the 1907 alliance between U.K.-based Shell Transport and Trading Company and the Netherlands-based Royal Dutch Petroleum Company, with a 40% and 60% stake in the group, respectively.However, both companies maintained their separate and distinct identities. The unification plan proposed in 2005 by the boards of both the companies was completed in 2006, resulting in one parent company, Royal Dutch Shell plc. Reflecting the 60:40 ownership structure of the group before the unification, Royal Dutch Petroleum Company’s shareholders were given a 60% stake in the new parent company through class A shares (domiciled in the Netherlands), while the old Shell shareholders were given a 40% stake through class B shares (listed in the UK).Following latest plans to abandon its dual listed structure and the establishment of new legal entity in the UK, the company will change its name to just Shell Plc, stripping the ‘Royal Dutch’ part and ending its relationship with the Netherlands that dates back to 1890, when the Royal Dutch Petroleum Company was formed. Expectedly, the Netherlands government said that it was “unpleasantly surprised” by Shell’s plans to cancel its Dutch listing, following the footsteps of consumer goods giant Unilever UL last year.In 2020, the packaged food behemoth too ditched its dual Anglo-Dutch legal structure and picked London over Rotterdam as the location of its headquarters. Unilever cited the coronavirus pandemic as a major determinant in opting for a single company structure in Britain as it would provide more leeway for mergers and acquisitions.Eventually, UL was registered as a fully British entity a year ago, ending its nine-decade run as a hybrid company. Unilever, though, kept its food and beverage division's head office in Rotterdam despite moving out its coroporate base.Coming back to Shell, the relocation of its domicile to London is unlikely to cause a massive impact on the Dutch state revenues. But the move does raise some red flags regarding the country’s attractiveness to multinationals. Both Shell and Unilever had urged the government to scrap a dividend tax on big companies that they don’t have to pay in Britain. Shell was also becoming vulnerable to activist investors in the Netherlands after a landmark court ruling earlier this year asked the oil and gas major to cut emissions 45% by 2030 compared with the 2019 levels.  In an apparent attempt to soothe the Dutch nerves, the energy biggie assured that just a few management posts would shift to London. On the other hand, Britain welcomed Shell’s exercise, citing it as a “clear vote of confidence in the economy” even after its departure from the European Union.  For investors, it is seen as a positive move as it simplifies the structure and offers greater strategic flexibility. This assumes extra importance after Third Point — Daniel Loeb’s activist hedge fund that has a $500 million stake in the company — recently pursued a breakup of Shell into multiple businesses, arguing that this could unlock significant value. A new setup with a simplified business would also mean a higher ordinary share count and a possible increase in buyback authorization.Zacks Rank & Stock PicksShell currently carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at the following stocks that presently flaunt a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.Ovintiv OVV: Formerly known as Encana, Ovintiv is an upstream operator, holding an attractive oil and gas production portfolio in three major North American unconventional basins: Montney, Anadarko and the Permian. Following the Newfield acquisition in 2019, OVV has achieved a higher liquids focus, greater scale and cost synergies. The oil and gas finder has also done a commendable job of cutting its expenses in a disciplined manner, which should boost free cash flow generation.The 2021 Zacks Consensus Estimate for Ovintiv indicates 1,442.9% earnings per share growth over 2020. OVV, whose shares have gained 152.1% year to date, is valued at more than $9 billion.EOG Resources EOG: It is a top-tier U.S. shale play. The United States accounts for more than 92% of the total production volumes of EOG Resources, with the Eagle Ford and Delaware Basin being the primary contributors. Internationally, EOG has operations in China and Trinidad.Houston, TX-based EOG Resources, which pays a special dividend along with a regular dividend, should benefit from its attractive growth profile, a huge inventory of drilling opportunities, upper quartile returns and a disciplined management team. Zacks’ Top Picks to Cash in on Artificial Intelligence This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Unilever PLC (UL): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis Report Ovintiv Inc. (OVV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 17th, 2021

Should Centralized Exchanges Worry About DEX Offering Apple Pay?

Both decentralized and centralized exchanges –DEX and CEX respectively– are finding new and innovative ways to facilitate transactions. As the crypto space grows steadily, some platforms –especially CEX– may want to keep an eye on DEX platforms and some of their latest payment services to make transactions easier. Q3 2021 hedge fund letters, conferences and […] Both decentralized and centralized exchanges –DEX and CEX respectively– are finding new and innovative ways to facilitate transactions. As the crypto space grows steadily, some platforms –especially CEX– may want to keep an eye on DEX platforms and some of their latest payment services to make transactions easier. 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 .af-body.af-standards 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); Q3 2021 hedge fund letters, conferences and more While some DEX’s may be setting the pace in the DEX world, centralized cryptocurrency exchange Coinbase started allowing users to buy ethereum, bitcoin, and other cryptocurrencies using Apple Pay since August this year. However, Apple Pay is breaking its way into DEX platforms thanks to increasing reputation, which is something centralized exchanges are following from close range. DEX platforms incorporating similar payment methods are an enticing view for users and the industry alike. Could Apple Pay Option Be A Killer Feature? Crypto exchanges are currently in a race to incorporate a wider variety of payment options, making transactions easier and giving investors more in terms of choice. Apple Pay is not a rare service, since most exchanges are already eager to add Google Pay options or real-time payment networks (RTN) to boost their services. However, decentralized exchanges like Pangolin offering Apple Pay are a rarity in the crypto exchange space. AvaLabs created Pangolin on the Avalanche Network as a flagship DeFi app and decentralized exchange. The introduction of these new payment methods is believed to increase crypto adoption rates, as more users will bank on the convenience they offer to have a stake in the crypto world. The impact on DEX is bound to be bigger, as integration is a key element in the crypto space since it eradicates the complexities linked with transferring funds through some less conventional means. Instead of getting DEX to make a debit card or having users create a hard wallet, withdrawal options like Apple Pay are a method users already know. Apple and other big tech giants might be looking to foray into crypto in the future, and such a move could be a boost and lead to collaborations to mainstream DeFi. The most important part of this new payment option and what it means for DEX is that users can cash out quickly and flexibly. Apple Pay is not only helping simplify cash-outs but also making them faster. In all, the more decentralized exchanges that add to the ones currently offering Apple Pay, the more transactions DEX will be able to process. DEX Potential Decentralized exchanges are a developed version of the classic centralized exchanges. The difference is that the inner workings of the platform run directly on the blockchain through on-chain smart contracts, pieces of code that eliminate intermediaries –in addition to improving both the security and the trust of everyone who moves in this sector. Smart contracts facilitate trade between individuals while avoiding having control over the assets of different users. With centralized exchanges, all operations are managed by the same entity, in addition to being the same platform that stores the assets of each of its users. Regarding alternative payment methods, opportunities for DEXs are rife, as according to Business Insider, at present, there are more than 35 DEXs in existence globally including Uniswap, Kyber, and Bancor. “The two obvious advantages of DEXs are security and sovereignty. The fact that they are decentralized means there is no one entity that can be hacked, whereas a centralized exchange is more vulnerable to exploits, which in turn could affect its users. In addition, users retain access to their wallets and hence retain control of their own crypto holdings.” DEX is only the beginning, but offering alternative payment methods like Apple Pay and Google Pay are a way to the future. With big tech companies connecting crypto users via DEX platforms, this is an essential step to further adoption. Updated on Nov 16, 2021, 11:23 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; 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: valuewalkNov 16th, 2021

Oil & Gas Stock Roundup: A Whole Lot of Big Oil Earnings

Energy supermajors ExxonMobil (XOM), Chevron (CVX), TotalEnergies (TTE) and Eni (E) turned in a better-than-expected third-quarter earnings helped by higher commodity prices. The only exception was Royal Dutch Shell (RDS.A), which reported an underwhelming bottom line. It was a week when both oil and natural gas prices registered small declines.On the news front, integrated supermajors ExxonMobil XOM, Chevron CVX, Royal Dutch Shell (RDS.A), TotalEnergies TTE and Eni E reported September-quarter earnings.Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures lost 0.2% to close at $83.57 per barrel, while natural gas prices fell 0.6% to end at $5.426 per million British thermal units (MMBtu). In particular, the oil market was down slightly after rising for nine weeks in a row.Coming back to the week ended Oct 29, the oil rally took a break after a report from the Energy Information Administration ("EIA") showed a surprise addition to crude stockpiles. The commodity’s negative price reaction was also blamed on an increased probability of talks aimed at reviving the Iranian nuclear deal that could eventually increase the nation’s oil exports.Natural gas finished down too despite a lower-than-expected increase in supplies. A bearish turn in weather forecasts primarily sparked off a pullback in the fuel’s price.Recap of the Week’s Most-Important Stories1.  Energy major ExxonMobil’s third-quarter 2021 earnings per share of $1.58 — excluding identified items — beat the Zacks Consensus Estimate by a penny. The better-than-expected earnings were due to improved realized oil and natural gas prices, and higher refining and chemical margins. The company also informed that it will launch up to a $10-billion share repurchase program next year. ExxonMobil will conduct the stock buyback program over 12 to 24 months.The Zacks Rank #1 (Strong Buy) company’s upstream segment reported quarterly earnings of $4 billion against a loss of $383 million in the year-ago comparable quarter. Meanwhile, the downstream unit recorded a profit of $1.3 billion against a loss of $231 million a year ago. ExxonMobil’s chemical business recorded a $2.1-billion profit, skyrocketing from earnings of $661 million in the year-ago quarter.You can see the complete list of today’s Zacks #1 Rank stocks here.Ahead of the earnings release, the company announced its fourth-quarter dividend of 88 cents per share, reflecting an increase from 87 cents in the third quarter of this year. Following the increase, the integrated energy giant’s annual dividend for 2021 is $3.49 per share, higher than $3.48 in 2020. (ExxonMobil Tops Q3 Earnings Estimates, Plans $10B Buyback)2.   Smaller rival Chevron reported adjusted third-quarter earnings per share of $2.96, comfortably beating the Zacks Consensus Estimate of $2.21. The company’s impressive earnings reflects higher commodity prices and production, plus an increase in refined products’ sales.The company recorded $8.6 billion in cash flow from operations, more than doubling from $3.5 billion a year ago. The soaring cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was a record $6.7 billion.In the third quarter, Chevron paid $2.6 billion in dividends and bought back $625 million worth of its shares. The company spent $2.8 billion in capital and exploratory expenditures during the quarter compared to the year-ago period’s $2.6 billion. Some 84% of the total outlays pertained to upstream projects. As of Sep 30, the San Ramon, CA-based company had $6 billion in cash and cash equivalents and total debt of $37.3 billion with a debt-to-total capitalization of about 21.6%. (Chevron Q3 Earnings Top, Sets Free Cash Flow Record)3   Europe’s largest oil company Royal Dutch Shell reported third-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.06. The bottom line came in below the Zacks Consensus Estimate of $1.41 due to lower production.As of Sep 30, 2021, the company, which upped its carbon reduction target, had $38.1 billion in cash and $95.4 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 25.6%, down from 31.4% a year ago. Shell’s cash flow from operations increased 54% from the year-earlier level. Meanwhile, the group raked in $12.2 billion in free cash flow during the third quarter, up from $7.6 billion a year ago.Meanwhile, Third Point, Daniel Loeb’s activist hedge fund, which has a $500 million stake in the company, is pursuing a breakup of Shell into multiple businesses, arguing that this could unlock significant value. (Shell Misses on Q3 Earnings, Targeted by Hedge Fund)4.   French multinational TotalEnergies reported third-quarter 2021 operating earnings of $1.76 (€1.49) per share, beating the Zacks Consensus Estimate of $1.56 by 12.8%. The outperformance stems from an increase in commodity prices and global economic recovery.Operating income was $5,374 million, up 268.3% from the year-ago period due to higher commodity prices. Interest expenses for the reported quarter were $454 million, down 17.3% from $549 million in the year-ago period. In third-quarter 2021, TotalEnergies acquired $126 million worth of assets and sold assets valued at $1,084 million. During the quarter, it acquired a 10% interest in the Lapa block in Brazil.Cash and cash equivalents as of Sep 30, 2021 were $28.9 billion compared with $30.6 billion in the corresponding period of 2020. Net debt to capital was 22.1% at quarter-end, down from 26.1% at third-quarter 2020 end. Cash flow from operating activities at second-quarter end was $5,640 million, up 29.6% year over year. (TotalEnergies Q3 Earnings Beat Estimates, Sales Up Y/Y)5.  Eni reported third-quarter 2021 adjusted earnings from continuing operations of 93 cents per American Depository Receipt (ADR), beating the Zacks Consensus Estimate of 81 cents. The strong quarterly results were attributed to higher realizations of average liquids and natural gas prices. Improved refinery throughputs also backed the outperformance.As of Sep 30, Eni had long-term debt of €21,369 million and cash and cash equivalents of €7,364 million. Its debt to capitalization was 39.3%. For the reported quarter, net cash generated by operating activities amounted to €2,933 million. Capital expenditure totaled €1,232 million.The company projects its 2021 cash flow from operations, before changes in working capital at replacement cost, to grow to approximately €12 billion. The Italy-based integrated energy player reaffirmed its hydrocarbon production target for 2021 at 1.7 million oil-equivalent barrels per day (MMBOE/d). For the December quarter, the energy giant projects hydrocarbon production at 1.76 MMBOE/d. The company continues to project organic capital expenditure for this year at €6 billion. (Eni Q3 Earnings Beat Estimates on Refinery Throughputs)Price PerformanceThe following table shows the price movement of some major oil and gas players over the past week and during the last six months.Company    Last Week    Last 6 MonthsXOM                 +2.1%             +14.7%CVX                  +1.5%             +11.1%COP                  -1%                +45.9%OXY                   -1.2%             +37.3%SLB                   -4.9%             +23.1%RIG                    -9.5%             +9.6%VLO                    -4.5%             +5.5%MPC                   -2.4%             +20.9%The Energy Select Sector SPDR — a popular way to track energy companies — edged down 0.8% last week. The worst performer was offshore driller Transocean RIG whose stock lost 9.5%.But over the past six months, the sector tracker has increased 18.4%. Upstream biggie ConocoPhillips COP was the major gainer during the period, experiencing a 45.9% price appreciation.What’s Next in the Energy World?As the global oil consumption outlook strengthens amid tightening fundamentals, market participants will closely track the regular releases to watch for signs that could further validate the upward momentum. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar.Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to trends in U.S. crude production, is closely followed too. News related to coronavirus vaccine approval/rollout/distribution will be of utmost importance. Finally, there will be 2021 Q3 earnings, with a host of S&P 500 names coming up with quarterly results. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Transocean Ltd. (RIG): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 3rd, 2021

Shell (RDS.A) Misses on Q3 Earnings, Targeted by Hedge Fund

Royal Dutch Shell (RDS.A) generated cash flow from operations of $16 billion, returned $1.8 billion to its shareholders through dividends and spent $4.6 billion cash on capital projects. Europe’s largest oil company Royal Dutch Shell plc (RDS.A) reported third-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) — of $1.06. The bottom line came in below the Zacks Consensus Estimate of $1.41 due to lower production.However, the energy major’s bottom line compared favorably with the year-earlier quarter's earnings of 24 cents per ADS, backed by stronger commodity prices.The Hague-based Shell reported revenues of $$61.6 billion, which improved 37.7% from the third-quarter 2020 sales of $44.7 billion.Meanwhile, Third Point, Daniel Loeb’s activist hedge fund, which has a $500 million stake in the company, is pursuing a breakup of Shell into multiple businesses, arguing this could unlock significant value. Royal Dutch Shell PLC Price, Consensus and EPS Surprise Royal Dutch Shell PLC price-consensus-eps-surprise-chart | Royal Dutch Shell PLC Quote Operational PerformanceUpstream: The segment recorded a profit of $1.7 billion (excluding items) during the quarter, turning around from a loss of $884 million (adjusted) reported in the year-ago period. This primarily reflects the impact of higher oil and gas prices, partly offset by lower volumes.At $67.10 per barrel, the group’s worldwide realized liquids prices were 73.5% above the year-earlier levels while natural gas prices soared 204.5%Shell’s upstream volumes averaged 2,081 thousand oil-equivalent barrels per day (MBOE/d), down 5.5% from the year-ago period mainly due to disruptions in U.S. Gulf of Mexico production after Hurricane Ida swept through the region. Liquids production totaled 1,497 thousand barrels per day (down 1.5% year over year) and natural gas output came in at 3,387 million standard cubic feet per day (down 14.5%).Oil Products: In this segment, the Anglo-Dutch super-major reported adjusted income of $1.2 billion, 27.9% lower than the year-ago period. The unfavorable comparison was due to lower sales volumes and refinery processing. Meanwhile, refinery utilization came in at 71%, up 6% from the September-end quarter of 2020.Integrated Gas: The unit reported adjusted income of $1.7 billion, jumping from $768 million in the July-September quarter of 2020. Results were primarily impacted by higher realized commodity prices. On a somewhat bearish note, LNG liquefaction volumes decreased 5.3% from the third quarter of 2020 to 7.39 million tons. Meanwhile, the total Integrated Gas production increased 11.1% year over year to 938 MBOE/d.Chemicals: The segment recorded a profit of $395 million (excluding items) during the quarter compared to the year-ago earnings of $227 million on the back of higher realized margins in base chemicals. Financial PerformanceAs of Sep 30, 2021, the Zacks Rank #1 (Strong Buy) company, which upped its carbon reduction target, had $38.1 billion in cash and $95.4 billion in debt (including short-term debt). Net debt-to-capitalization was approximately 25.6%, down from 31.4% a year ago.You can see the complete list of today’s Zacks #1 Rank stocks here.During the quarter under review, Shell generated cash flow from operations of $16 billion, returned $1.8 billion to its shareholders through dividends and spent $4.6 billion cash on capital projects.The company’s cash flow from operations increased 54% from the year-earlier level. Meanwhile, the group raked in $12.2 billion in free cash flow during the third quarter, up from $7.6 billion a year ago.GuidanceShell expects fourth-quarter 2021 upstream volumes of 2,100-2,350 MBOE/d, while Integrated Gas production is expected between 940 MBOE/d and 980 MBOE/d. The company also foresees Oil Products sales volumes of 4,200-5,200 thousand barrels per day, Chemicals sales volumes of 3,500-3,900 thousand tons and refinery utilization in the range of 68-76%.Earnings Schedules of Other Oil SupermajorsAmong the big integrated players, ExxonMobil XOM and Chevron CVX are scheduled to release their results tomorrow, while continental rival BP plc BP will come up with third-quarter numbers early next week. Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksOct 28th, 2021

Rabo: The Slow And The Furious (Democrats)

Rabo: The Slow And The Furious (Democrats) By Michael Every of Rabobank The Fed’s Beige Book yesterday mentioned “shortages” just slightly less than in the prior month, while making clear that most firms were experiencing exactly that in goods and labor, along with expectations of further increases in prices, or at least an extended period of currently-elevated prices. I guess that qualifies as ‘business as usual’ today, which underlines how the human mind, and the market’s ADHD, adapt faster than the physical economy. On which, the will-they/won’t-they/how-much-if-so US fiscal package, to unlock the $1.2 trillion infrastructure deal, sees reports that Senator Manchin is sticking to a figure of just $1.5 trillion; Senator Sinema won’t allow any increase in top tax rates, again meaning $1.5 trillion; the White House says there are lots of options for other things to tax, but it looks like free community college is no longer on the table anyway; and, potentially log-jamming everything, there are even suggestions Senator Manchin may leave the Democratic Party and caucus as an independent with the Republicans, which would flip the Senate. That leaves slow progress towards whatever remnant of the originally $3.5 trillion package remains - and furious Democrats. Meanwhile, 160 Republicans have written a letter to President Biden proposing he focus on supply chains and infrastructure, and lift Covid restrictions accordingly; the White House is weighing the use of the National Guard to replace missing truck drivers – which will not replace missing truck chassis slowing things down; and a California Governor Newsom executive order to find new land to put shipping containers and lift the weight allowance trucks can carry won’t solve the same chassis argument applies, or that weightier trucks take more time to load, and surely the rest of the US will have to agree the same weight-limit, or else a new bottleneck occurs at the California state border(?) In short, things are going to stay slow and furious on this front too.       From a different perspective, the Dean of the College of International and Security Studies at the Marshall Centre has tweeted, cc-ing The Heritage Foundation Vice-President and the former commanding general of the US Army in Europe: “We have shortages in the US & there are ships waiting to be unloaded unable to enter our ports. This is what “globalization” has wrought. We need to de-couple from China and re-shore our critical supply chains ASAP.” This is political/strategic logic we predicted would emerge in the US in our ‘In Deep Ship’ report. However, we never claimed it would come from *politicians*, and it obviously won’t come from US corporations. Yet once the national security guys see it, it eventually percolates upwards S-L-O-W-L-Y. Unless geopolitics accelerates it. Likewise, a recent Forbes op-ed argued ‘Dwindling US merchant fleet is a crisis waiting to happen’, and “What the nation really needs is a bigger domestically-owned and operated commercial fleet that can be made available for defence-related cargoes in an emergency. The most practical way to accomplish this would be to mandate that a certain percentage of imports and exports be carried on US-flagged vessels.” Industry arguments have also been made that re-flagging a US-owed but Panama-registered ship back home would cost around $13,500 a day in higher crewing costs, so $5m a year. That’s a bill of $500m if 100 ships were told to. And that’s literally pocket change for the Pentagon. So changes can be fast if things get furious. But, of course, this won’t help supply chains now. Not unrelated to all of this, even if not everyone sees the link, the the UK announced a free-trade deal with New Zealand. 97% of tariffs on Kiwi exports will be eliminated on day one, with dairy, beef and lamb to follow in later years. The Guardian, previously saying this deal was not making progress because the UK was seen as a bad actor, now underlines it will have no benefit for UK GDP (because New Zealand is so small): no post-Brexit sour grapes there. The key points are that this is a big win for Kiwi farmers, and for New Zealand’s ability to diversify its exports in order to become more geopolitically resilient. For the UK, it unpicks a lock that may allow entry into the CPTPP, and more trade with both the land of milk and manuka honey, and the Indo-Pacific, where H.M.S. BoJo (and the odd aircraft carrier) appears headed. As I said at the beginning, in markets things can of course be fast and furious. Bitcoin, for example, is having another moment, hitting a fresh all-time high of $66,000 (and, yes, at one point I believe someone saw it at $66,666.66) due to the excitement of the launch of its first ETF. So now you can indirectly own a libertarian asset whose logical appeal is if you own the real thing, like physical gold vs. gold ETFs. We are back to $300,000 Thai banana plants that produce 50 new plants rather than destroying 50 rivals. In FX, CNY is also continuing to push higher against the dollar, with market bulls doing their usual job of chasing their own tails. In doing so, they are paying no heed at all to Evergrande, where talks to offload a stake in some of its assets have failed, which can only say very bad things about the quality of said assets. Worse, sales of its apartments have recently slumped 97%, drying up liquidity almost entirely. Its shares start trading again today after a three-week freeze is lifted, and it has a 8.25% note due tomorrow currently trading at 23.6 cents on the dollar. In rates, US 10-year yields are back at 1.66% as they start to creep back towards the closing 2021 high of 1.74%, as 2-year yields have actually drifted lower at 39bp vs. a high of 44bp last week. Did my comment on the US labour market finally having a moment again hit home? I doubt it! Surely a yield-curve steepening trend is the fast and the ludicrous, unless one presumes that central banks are not going to act in the face of a genuine recovery, rather than the obvious risks that they are going to act in the face of a stalling recovery being choked off by a supply-side inflation shock? But what do I know? I didn’t buy Thai banana plants when they cost $5 in 2019.   Finally, a New York Times article about a cancelled speech at MIT, that pinnacle of global STEM excellence, contains the following quote: “This idea of intellectual debate and rigor as the pinnacle of intellectualism comes from a world in which white men dominated.” Culture wars aside, it’s true that a great deal of ”intellectualism” is arrant, arrogant nonsense: like the economics that plugs ‘nothing can ever go wrong’ long, complex, supply chains based on selective editing of Ricardo and Smith, and editing out of political-economy. Engineering hasn’t usually had the same problem, because if you ‘assume’ too much, the bridge literally falls down. It’s also true that in a Gramscian sense, one should always try to invert words to see where power lies: the semantic opposite of ‘social security’ is ‘private insecurity’, for example. But on that same ground, is the pinnacle of “new MIT intellectualism” to be the absence of debate and a lack of rigor, i.e., lazy group think? It seems to me that is the only thing we don’t have a shortage of; and isn’t our physical infrastructure bad enough already? Anyway, let’s see if it is a fast or a slow, and a happy or an angry day in markets. Tyler Durden Thu, 10/21/2021 - 10:36.....»»

Category: blogSource: zerohedgeOct 21st, 2021

Futures Slide On Stagflation Fears As 10Y Yields Spike

Futures Slide On Stagflation Fears As 10Y Yields Spike US index futures dropped after IBM and Tesla fell after their quarterly results, with investors turned cautious awaiting more reports to see the see the adverse impact of supply chain disruption and labor shortages on companies even as jitters remained over elevated inflation and the outlook for China’s property sector. The dollar reversed an overnight drop, while Treasuries fell pushing the 10Y yield to a 5-month high of 1.68%. At 745 a.m. ET, Dow e-minis were down 98 points, or 0.3%, S&P 500 e-minis were down 14 points, or 0.31%, and Nasdaq 100 e-minis were down 49.25 points, or 0.32%. In the premarket, Tesla fell 1% in premarket trading as it said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue. AT&T rose 1% in pre-market trading after exceeding Wall Street’s expectations for profit and wireless subscriber growth. PayPal Holdings also climbed as it explores a $45 billion acquisition of social media company Pinterest Inc., in what could be the biggest technology deal of the year. Dow gained 1.1% after it posted a more than a five-fold jump in third-quarter profit as economic recovery boosted prices for chemicals. IBM plunged 4.7% after it missed market estimates for quarterly revenue as its managed infrastructure business suffered from a decline in orders. Some other notable premarket movers: Digital World Acquisition (DWAC US) surges 30% after the blank-check company agreed to merge with Trump Media & Technology. Former U.S. President Donald Trump says the new company plans to start a social media firm called Truth Social. Denny’s (DENN US) rises 1.4% as the restaurant chain is upgraded to buy from hold at Truist Securities, which sees upside to 3Q estimates, partly due to expanding operating hours. ESS Tech (GWH US) adds 4.6% as Piper Sandler says the stock offers a compelling entry point for investors seeking exposure to energy storage, initiating coverage at overweight. As Bloomberg notes, corporate results have tempered but not dissipated worries that cost pressures could slow the pandemic recovery. Among S&P 500 companies that have disclosed results, 84% have posted earnings that topped expectations, a hair away from the best showing ever. Yet, the firms that surpassed profit forecasts got almost nothing to show for it in the market. And misses got punisheddearly, by the widest margin since Bloomberg started tracking the data in 2017. European equities faded early losses but remain in small negative territory. Euro Stoxx 50 is 0.4% lower having dropped ~0.8% at the open. IBEX lags peers. Miners led a retreat in Europe’s Stocks 600 index, while industrial commodities including copper and iron ore reversed earlier gains; retail and banks were also among the weakest sectors. Concerns about the inflationary impact of higher prices have risen in recent days, with everyone from Federal Reserve officials to Tesla weighing in on cost pressures. Unilever Plc pushed rising raw material costs onto consumers, increasing prices by the most in almost a decade. Meanwhile, Hermes International said sales surged last quarter, showing resilience compared to rival luxury-goods makers. European autos dropped after Volvo Group warned that the global semiconductor shortage and supply-chain challenges will continue to cap truckmaking. Here are some of the biggest European movers today: Soitec shares gain as much as 7.3% in Paris, the stock’s best day since June, after reporting 2Q results and raising its full- year sales forecast. BioMerieux shares rise as much as 5.9%. Sales in 3Q were well ahead of expectations on strong U.S. demand for BioFire respiratory panels, Jefferies (hold) writes in a note. Randstad shares rise as much as 4.7%, the most intraday since Dec. 2020, with RBC (sector perform) saying the staffing firm’s 3Q earnings topped estimates. Sodexo shares rise as much as 4.8% after activist investor Sachem Head took a stake in the French catering co., saying the investment is passive and that Sodexo is going “activist on itself.” Zur Rose shares fall as much as 8.1% after the Swiss online pharmacy cut its growth guidance and posted 3Q sales that Jefferies says missed consensus expectations. Nordic Semi shares drop as much as 7% before recovering some losses, after results; Mirabaud Securities says any weakness in the stock is a “great buying opportunity.” Eurofins shares drop as much as 7.5%, the most in nearly a year, after the laboratory-testing company left its 2021 Ebitda and free cash flow guidance unchanged, which Morgan Stanley says implies a lower Ebitda margin versus previous guidance. Bankinter shares fell as much as 6.6%, most intraday since December. Jefferies highlighted the weaker trend for the Spanish lender’s 3Q net interest income. Earlier in the session, Asian equities fell in late-afternoon trading as investors sold Japanese and Hong Kong-listed tech shares, which helped trigger broader risk aversion among investors. Ailing China Evergrande Group sank on a worsening cash squeeze, while other developers rallied after regulators said their funding needs are being met. The MSCI Asia Pacific Index slid as much as 0.8%, with Japanese equities slumping by the most in over two weeks as the yen -- typically seen as a safe haven -- strengthened against the dollar, likely boosted by technical factors. Toyota Motor and Alibaba were the biggest drags on the regional benchmark as higher bond yields weighed on sentiment toward the tech sector. The story “shapes up to be worries about higher inflation and the follow-on policy response,” said Ilya Spivak, head of Greater Asia at DailyFX. Bucking the downtrend were Chinese developers, which shrugged off China Evergrande Group’s scrapping of a divestment plan and climbed after regulators said risks in the real estate market are controllable and reasonable funding needs are being met. China was one of the region’s top-performing equity markets.  Still, Asian stocks continue to feel pressure from higher U.S. bond yields as the 10-year rate surpassed 1.6%. In addition, earlier optimism about earnings is being muted by the outlook for inflation and supply-chain bottlenecks. Chinese growth, global supply constraints and inflation are “acting as a bit of a brake on markets,” said Shane Oliver, head of investment strategy & chief economist at AMP Capital. However, with U.S. equities trading near a record high, investors are “a bit confused,” he said. Japanese equities fell by the most in over two weeks, extending losses in afternoon trading as the yen strengthened against the dollar. Electronics and auto makers were the biggest drags on the Topix, which fell 1.3%, with all 33 industry groups in the red. Tokyo Electron and Fast Retailing were the largest contributors to a 1.9% loss in the Nikkei 225. S&P 500 futures and the MSCI Asia Pacific Index similarly extended drops. “There has been a general turn in equity market sentiment evident by the afternoon decline in U.S. equity futures and main regional equity indexes,” said Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank Ltd. “The reversal in risk-sensitive FX pairs like the AUD is reflecting this u-turn.” The Japanese currency gained 0.2% to 114.05 per U.S. dollar, while the Australian dollar weakened. The yen is still down 9.5% against the greenback this year, the worst among major currencies. Yen Faces Year-End Slump as U.S. Yield Premium Spikes With Oil The gain in the yen on Thursday probably followed technical indicators suggesting the currency was oversold and positioning seen as skewed, said Shusuke Yamada, head of Japan foreign exchange and rates strategy at Bank of America in Tokyo. The rally may be short-lived, as rising oil prices are expected to worsen Japan’s terms of trade, and monetary policies between Japan and overseas are likely to diverge further In FX, the Bloomberg Dollar Spot Index reversed an earlier loss to rise as much as 0.2% as the greenback advanced versus all its Group- of-10 peers apart from the yen; risk-sensitive currencies, led by the New Zealand dollar, were the worst performers. The pound weakened against the dollar and was little changed versus the euro into the European session. U.K. government borrowing came in significantly lower than official forecasts, but a surge in debt costs sent a warning to the government ahead of the budget next week. The U.K.’s green gilt may price today, subject to market conditions, after being delayed earlier this week. The Australian and New Zealand dollars reversed intraday gains on sales against the yen following losses in regional stock indexes. A kiwi bond auction attracted strong demand. The yen headed for a second session of gains as a selloff in Japanese equities fuels haven bids. Government bonds consolidated. In rates, the Treasury curve flattened modestly as yields on shorter-dated notes inched up, while those on longer ones fell; the bund curve shifted as yields rose about 1bp across the curve. Yields were richer by less than 1bp across long-end of the curve, flattening 2s10s, 5s30s spreads by ~1bp each; 10-year yields rose to a 5 month high of 1.68%, outperforming bunds by 2bp and gilts by 4bp on the day. Long end USTs outperform, richening ~2bps versus both bunds and gilts. Peripheral spreads tighten slightly. U.S. breakevens are elevated ahead of $19b 5Y TIPS new issue auction at 1pm ET. In commodities, oil slipped from 7 year highs, falling amid a broad-based retreat in industrial commodities, though trader focus was glued to a surging market structure as inventories decline in the U.S.; Oil’s refining renaissance is under threat from the natural gas crisis; American drivers will continue to face historically high fuel prices. WTI was lower by 0.5% to trade near $83 while Brent declined 0.8% before finding support near $85. Spot gold is range-bound near $1,785/oz. Base metals are mixed. LME nickel and copper are deep in the red while zinc gains 1.5%.  Bitcoin was volatile and dropped sharply after hitting an all time high just above $66,500. Looking at the day ahead now, and data releases from the US include the weekly initial jobless claims, existing home sales for September, the Conference Board’s leading index for September, and the Philadelphia Fed’s business outlook for October. Central bank speakers will include the Fed’s Waller and the ECB’s Visco, while the Central Bank of Turkey will be making its latest monetary policy decision. Otherwise, earnings releases include Intel, Danaher, AT&T and Union Pacific. Market Snapshot S&P 500 futures down 0.3% to 4,515.25 STOXX Europe 600 down 0.2% to 469.02 MXAP down 0.7% to 199.61 MXAPJ down 0.4% to 659.34 Nikkei down 1.9% to 28,708.58 Topix down 1.3% to 2,000.81 Hang Seng Index down 0.5% to 26,017.53 Shanghai Composite up 0.2% to 3,594.78 Sensex down 1.1% to 60,560.47 Australia S&P/ASX 200 little changed at 7,415.37 Kospi down 0.2% to 3,007.33 Brent Futures down 1.0% to $84.98/bbl Gold spot up 0.2% to $1,785.09 U.S. Dollar Index up 0.11% to 93.67 German 10Y yield up 0.7 bps to -0.119% Euro down 0.1% to $1.1639 Top Overnight News from Bloomberg China Evergrande Group scrapped talks to offload a stake in its property-management arm and said real estate sales plunged about 97% during peak home-buying season, worsening its liquidity crisis on the eve of a dollar-bond deadline that could tip the company into default. Its shares plunged as much as 14% on Thursday. China’s goods imports from the U.S. have only reached about 53% of the $200 billion worth of additional products and services it promised to buy under the trade deal signed last year, far behind its purchasing target. Signs that policy makers are accelerating toward an interest-rate hike have traders fumbling around to figure out what that means for sterling. Money managers at Jupiter Asset Management and Aberdeen Asset Management turned neutral in recent days, following similar moves by Amundi SA and William Blair Investment Management. The price on eight out of 10 bonds sold in the first three quarters of this year by European investment-grade borrowers fell after issuance, wiping almost 23.5 billion euros ($27.3 billion) from portfolios. The Turkish lira is looking vulnerable as speculation grows that policy makers will cut interest rates again despite the deteriorating inflation outlook. Option traders see a more than 60% chance that the currency will weaken to an all-time-low of 9.50 per U.S. dollar over the next month, according to Bloomberg pricing. That’s the next key psychological threshold for a market trading largely in uncharted territory ahead of Thursday’s decision. A more detailed look at global markets courtesy of Newsquawk Asia-Pac indices traded somewhat mixed after the similar performance stateside where the broader market extended on gains in which the DJIA touched a fresh record high and the S&P 500 also briefly approached within 5 points of its all-time peak as attention remained on earnings, although the Nasdaq lagged with tech and duration-sensitive stocks pressured by higher longer-term yields. ASX 200 (+0.1%) was positive as Victoria state approaches the end of the lockdown at midnight and with the index led by outperformance in mining stocks and real estate. However, gains were capped amid weakness in energy as shares in Woodside Petroleum and Santos were pressured following their quarterly production results in which both posted a decline in output from a year ago, albeit with a jump in revenue due to the rampant energy prices, while Woodside also flagged a 27% drop in Wheatstone gas reserves. Nikkei 225 (-1.9%) felt the pressure from the pullback in USD/JPY and with focus shifting to upcoming elections whereby election consulting firm J.A.G Japan sees the LDP losing 40 seats but win enough to maintain a majority with a projected 236 seats at the 465-strong Lower House. Hang Seng (-0.5%) and Shanghai Comp. (+0.2%) were varied despite another respectable PBoC liquidity effort with the mood slightly clouded as Evergrande concerns persisted with Co. shares suffering double-digit percentage losses after it resumed trade for the first time in three weeks and after its deal to sell a stake in Evergrande Property Services fell through, while reports that Modern Land China cancelled its USD 250mln bond repayment plan on liquidity issues added to the ongoing default concerns although it was later reported that Evergrande secured a three-month extension on USD 260mln Jumbo Fortune bond which matured on October 3rd. Finally, 10yr JGBs traded flat with the underperformance in Japanese stocks helping government bonds overlook the pressure in global counterparts and continued losses in T-note futures following the weak 20yr auction stateside, although demand for JGBs was limited by the absence of BoJ purchases. Top Asian News China Vows to Keep Property Curbs, Evergrande Risk Seen Limited Abu Dhabi Funds Hunt for Asian Unicorns Ahead of IPOs: ECM Watch Biden’s Pick for China Envoy Draws Sharp Lines With Beijing Carlyle, KKR Among Firms Said to Mull $2 Billion Tricor Bid Bourses in Europe have held onto the downside bias seen since the cash open, but with losses less pronounced (Euro Stoxx 50 -0.4%; Stoxx 600 -0.2%) despite a distinct lack of news flow in the EU morning, and as Chinese property woes weighed on APAC markets, but with earnings seasons picking up globally. US equity futures are also softer with modest and broad-based losses ranging from 0.2-0.3%. Back to Europe, the Netherland’s AEX (+0.3%) outperforms as Unilever (+3.3%) also lifts the Personal & Household Goods sector (current outperformer) following its earnings, whereby underlying sales growth of +2.5%, as +4.1% price growth offset a -1.5% decline in volumes, whilst the group noted: "Cost inflation remains at strongly elevated levels, and this will continue into next year". The AEX is also lifted by Randstad (+4.5%) post earnings after underlying EBITDA topped forecasts. Sectors in Europe are mixed with a slight defensive bias. On the downside, there is clear underperformance in Basic Resources as base metals pull back, whilst Oil & Gas names similarly make their way down the ranks. In terms of individual movers. ABB (-5%) resides at the foot of the SMI (+0.2%) as the group sees revenue growth hampered by supply constraints. Nonetheless, flows into Food & Beverages supports heavy-weight Nestle (+1.0%) which in turn supports the Swiss index. Other earnings-related movers include Barclays (-0.4%), SAP (+1.5%), Carrefour (+1.5%), Nordea (-1.8%), and Swedbank (+2.7%). Top European News Volvo Warns More Chip Woes Ahead Will Curtail Truck Production Hermes Advances After Dispelling Worries on China Demand Stagflation Risk Still Means Quick Rate Hikes for Czech Banker Weidmann Exit Could Pave Way for Bundesbank’s First Female Chief In FX, the Dollar has regained some composure across the board amidst a downturn in broad risk sentiment, but also further retracement in US Treasuries from bull-flattening to bear-steepening in wake of an abject 20 year auction that hardly bodes well for the announcement of next week’s 2, 5 and 7 year issuance, or Usd 19 bn 5 year TIPS supply due later today. In index terms, a firmer base and platform around 94.500 appears to be forming between 93.494-701 parameters ahead of initial claims, the Philly Fed and more housing data as the focus switches to existing home sales, while latest Fed speak comes via Daly and Waller. However, the DXY and Greenback in general may encounter technical resistance as the former eyes upside chart levels at 93.884 (23.6% Fib of September’s move) and 93.917 (21 DMA), while a major basket component is also looking in better shape than it has been of late as the Yen reclaims more lost ground from Wednesday’s near 4 year lows to retest 114.00 in the run up to Japanese CPI tomorrow. NZD/AUD/NOK - No real surprise to see the high beta Antipodeans bear the brunt of their US rival’s revival and the Kiwi unwind some of its post-NZ CPI outperformance irrespective of the nation’s FTA accord in principle with the UK, while the Aussie has also taken a deterioration in NAB quarterly business business confidence into consideration. Nzd/Usd is back below 0.7200 and Aud/Usd has retreated through 0.7500 after stalling just shy of 0.7550 before comments from RBA Governor Lowe and the flash PMIs. Elsewhere, the Norwegian Crown has largely shrugged off the latest Norges Bank lending survey showing steady demand for credit from households and non-financial institutions, but seems somewhat aggrieved by the pullback in Brent from just above Usd 86/brl to under Usd 85 at one stage given that Eur/Nok is hovering closer to the top of a 9.7325-9.6625 range. EUR/CHF/GBP/CAD - All softer against their US counterpart, albeit to varying degrees as the Euro retains a relatively secure grip around 1.1650, the Franc straddles 0.9200, Pound pivots 1.3800 and Loonie tries to contain declines into 1.2350 having reversed from yesterday’s post-Canadian CPI peaks alongside WTI, with the spotlight turning towards retail sales on Friday after a passing glance at new housing prices. SEK/EM - Some traction for the Swedish Krona in a tight band mostly sub-10.0000 vs the Euro from a fall in the nsa jobless rate, but the Turkish Lira seems jittery following a drop in consumer confidence and pre-CBRT as another 100 bp rate cut is widely expected, and the SA Rand is on a weaker footing ahead of a speech by the Energy Minister along with Eskom’s CEO. Meanwhile, the Cnh and Cnh have lost a bit more momentum against the backdrop of ongoing stress in China’s property market, and regardless of calls from the Commerce Ministry for the US and China to work together to create conditions for the implementation of the Phase One trade deal, or fees on interbank transactions relating to derivatives for SMEs being halved. In commodities, WTI and Brent Dec futures have gradually drifted from the overnight session peaks of USD 83.96/bbl and USD 86.10/bbl respectively. The downturn in prices seems to have initially been a function of risk sentiment, with APAC markets posting losses and Europe also opening on the back foot. At the time of writing, the benchmark resides around under USD 83/bbl for the former and sub-USD 85/bbl for the latter. Participants at this point are on the lookout for state interventions in a bid to keep prices from running. Over in China, it’s worth keeping an eye on the COVID situation – with China's Beijing Daily stating "citizens and friends are not required to leave the country, do not gather, do not travel or travel to overseas and domestic medium- and high-risk areas", thus translating to lower activity. That being said, yesterday’s commentary from the Saudi Energy Minister indicated how adamant OPEC is to further open the taps. UBS sees Brent at USD 90/bbl in December and March, before levelling off to USD 85/bbl for the remainder of 2022 vs prev. USD 80/bbl across all timelines. Elsewhere, spot gold and silver are relatively flat around USD 1,785 and USD 22.25 with nothing new nor interesting to report thus far, and with the precious metals moving in tandem with the Buck. Base metals meanwhile are softer across the board as global market risk remains cautious, with LME copper trading on either side of USD 10k/t. US Event Calendar 8:30am: Oct. Continuing Claims, est. 2.55m, prior 2.59m 8:30am: Oct. Initial Jobless Claims, est. 297,000, prior 293,000 8:30am: Oct. Philadelphia Fed Business Outl, est. 25.0, prior 30.7 9:45am: Oct. Langer Consumer Comfort, prior 51.2 10am: Sept. Existing Home Sales MoM, est. 3.6%, prior -2.0% 10am: Sept. Leading Index, est. 0.4%, prior 0.9% 10am: Sept. Home Resales with Condos, est. 6.09m, prior 5.88m DB's Jim Reid concludes the overnight wrap I watched the first of the new series of Succession last night. I like this program as it makes me think I’ve got a totally normal and non-dysfunctional family. It’s a good benchmark to have. There are few dysfunctional worries in equities at the moment as even with the pandemic moving back onto investors’ radars, the resurgence in risk appetite showed no sign of diminishing yesterday, with the S&P 500 (+0.37%) closing just a whisker below early September’s record high. It’s an impressive turnaround from where the narrative was just a few weeks ago, when the index had fallen by over -5% from its peak as concerns from Evergrande to a debt ceiling crunch set the agenda. But the removal of both risks from the immediate horizon along with another round of positive earnings reports have swept away those anxieties. And this has come even as investors have become increasingly sceptical about the transitory inflation narrative, as well as fresh signs that Covid-19 might be a serious issue once again this winter. Starting with the good news, US equities led the way yesterday as a number of global indices closed in on their all-time highs. As mentioned the S&P 500 rallied to close just -0.02% beneath its record, which came as part of a broad-based advance that saw over 75% of the index move higher. Elsewhere, the Dow Jones (+0.43%) also closed just below its all-time high back in August. After the close, Tesla fell short of revenue estimates but beat on earnings, despite materials shortages and port backlogs that have prevented production from reaching full capacity, a common refrain by now. Overall 17 out of 23 S&P 500 companies beat expectations yesterday, meaning that the US Q3 season beat tally is now 67 out of 80. Meanwhile in Europe, equities similarly saw advances across the board, with the STOXX 600 (+0.32%) hitting its highest level in over a month, as it moved to just 1.2% beneath its record back in August. For sovereign bonds it was a more mixed picture, with 10yr Treasury yields moving higher again as concerns about inflation continued to mount. By the close of trade, the 10yr yield had risen +2.0bps to 1.57%, which was driven by a +4.6bps increase in inflation breakevens to 2.60%, their highest level since 2012. That came as oil prices hit fresh multi-year highs after the US EIA reported that crude oil inventories were down -431k barrels, and gasoline inventories were down -5.37m barrels, which puts the level of gasoline inventories at their lowest since November 2019. That saw both WTI (+1.10%) and Brent crude (+0.87%) reverse their earlier losses, with WTI closing at a post-2014 high of $83.87/bbl, whilst Brent hit a post-2018 high of $85.82/bbl. Yields on 2yr Treasuries fell -1.0bps however, after Fed Vice Chair Quarles and President Mester joined Governor Waller in pushing back against the more aggressive path of Fed rate hikes that has recently been priced in. Even so however, money markets are still implying around 1.75 hikes in 2022, about one more hike than was priced a month ago. Separately in Europe, sovereign bonds posted a much stronger performance, with yields on 10yr bunds (-2.0bps), OATs (-2.6bps) and BTPs (-3.4bps) all moving lower. Overnight in Asia stocks are trading higher this morning with the Shanghai Composite (+0.46%), CSI (+0.35%) and KOSPI (+0.23%) all advancing, whilst the Hang Seng (-0.20%) and the Nikkei (-0.45%) have been dragged lower by healthcare and IT respectively. Meanwhile Evergrande Group (-12.60%) fell sharply in Hong Kong after news that it ended talks on the sale of a majority stake in its property services division to Hopson Development. And we’ve also seen a second day of sharp moves lower in Chinese coal futures (-11.0%) as the government is mulling measures to curb speculation. And there have also been a number of fresh Covid cases in China, with 21 new cases reported yesterday, as the city of Lanzhou moved to shut down schools in response. Elsewhere in Asia, with just 10 days now until Japan’s general election, a poll by Kyodo News found that the ruling Liberal Democratic Party would likely maintain its parliamentary majority. Futures markets are indicating a slow start for markets in the US and Europe, with those on the S&P 500 (-0.09%) and the DAX (-0.05%) both pointing lower. As we’ve been mentioning this week, the Covid-19 pandemic is increasingly returning onto the market radar, with the number of global cases having begun to tick up again. This has been reflected in a number of countries tightening up restrictions, and yesterday saw Russian President Putin approve a government proposal that October 31 to November 7 would be “non-working days”. In the Czech Republic, it was announced that mask-wearing would be compulsory in all indoor spaces from next week, and New York City moved to mandate all municipal workers to get vaccinated, with no alternative negative test result option now available. In Singapore, it was announced that virus restrictions would be extended for another month, which includes a limit on outdoor gatherings to 2 people and a default to work from home. Finally in the UK, the weekly average of cases has risen above 45k per day, up from just under 30k in mid-September. There is lots of talk about the need to put in place some additional restrictions but it feels we’re a fair way from that in terms of government-mandated ones. From central banks, it was announced yesterday that Bundesbank president Weidmann would be stepping down on December 31, leaving his position after just over a decade. He said that he was leaving for personal reasons, and in his letter to the Bundesbank staff, said that “it will be crucial not to look one-sidedly at deflationary risks, but not to lose sight of prospective inflationary dangers either.” It’ll be up to the next government to decide on the new appointment. Staying on Europe, our economists have just released an update to their GDP forecasts, with downgrades to their near-term expectations as supply shortages for goods and energy have created headwinds for the recovery. They now see 2021 growth at +4.9% (down -0.1pp from their previous forecast), whilst 2022 has been downgraded to 4.0% (-0.5pp). Alongside that, they’ve also included the latest oil and gas price movements into their inflation forecasts, and now project Euro Area 2022 HICP at 2.3%, although they don’t see this above-target inflation persisting, with their 2023 HICP forecast remaining unchanged at 1.5%. You can read the full note here. Speaking of inflation, we had a couple of inflation releases yesterday, including the UK’s CPI data for September, which came in slightly beneath expectations at 3.1% (vs. 3.2% expected), whilst core CPI also fell to 2.9% vs. 3.0% expected). As we discussed earlier this week though, there was some downward pressure from base effects, since in September 2020 we had a recovery in restaurant and cafe prices after the government’s Eat Out to Help Out scheme in August ended, and that bounce back has now dropped out of the annual comparisons. UK inflation will rise a fair amount in the months ahead. Otherwise, we also had the CPI release from Canada for September, which rose to 4.4% (vs. 4.3% expected), which is its highest reading since February 2003. Finally, bitcoin hit an all-time high, with the cryptocurrency up +2.92% to close at a record $65,996, which was slightly down from its intraday peak of $66,976. Bitcoin has surged over recent weeks, and as it stands it’s up +49.3% so far this month at time of writing, which would mark its strongest monthly performance so far this year. This latest move has occurred along with the first trading of options on Bitcoin-linked ETFs, which the US first listed the day prior. To the day ahead now, and data releases from the US include the weekly initial jobless claims, existing home sales for September, the Conference Board’s leading index for September, and the Philadelphia Fed’s business outlook for October. Central bank speakers will include the Fed’s Waller and the ECB’s Visco, while the Central Bank of Turkey will be making its latest monetary policy decision. Otherwise, earnings releases include Intel, Danaher, AT&T and Union Pacific. Tyler Durden Thu, 10/21/2021 - 08:20.....»»

Category: blogSource: zerohedgeOct 21st, 2021

"Big Short" investor Michael Burry reveals his bet against Tesla stock - and discloses an unexpected SPAC stake

Burry's Scion Asset Management held bearish put options on over 800,000 shares of Elon Musk's company at the end of March. Michael Burry. Getty Images/.....»»

Category: dealsSource: nytMay 17th, 2021