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Shell to sell interest in Deer Park refinery to partner Pemex

Royal Dutch Shell agreed on Monday to sell its controlling interest in a Texas refinery to partner Petroleos Mexicanos (Pemex) for about $596 million, the latest move by the European oil major to cut its global refining footprint......»»

Category: topSource: foxnewsMay 25th, 2021

Chamath Palihapitiya among SPAC sponsors asked by senators about potential conflicts of interest

The senators said industry insiders can "take advantage of ordinary investors" such as making "overly optimistic statements about target companies." Senator Elizabeth Warren (D-MA) and Founder and CEO of Social Capital, Chamath Palihapitiya. Michael Kovac/Getty Images for Vanity Fair (Palihapitiya) and Evelyn Hockstein-Pool/Getty Images (Warren) Chamath Palihapitiya and other SPAC sponsors were asked about potential conflicts of interest. The letters pointed to the alleged "range of maneuvers - some of them downright astonishing to the uninitiated." The senators said they expect a response by October 8. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Chamath Palihapitiya, once dubbed the "SPAC King," and five other blank-check company sponsors were asked by Senator Elizabeth Warren and three other Democratic legislators about conflicts of interest and business practices that disadvantage retail investors.The letters pointed to the alleged "range of maneuvers - some of them downright astonishing to the uninitiated - to win even when investors lose." "We seek information about your use of SPACs in order to understand what sort of Congressional or regulatory action may be necessary to better protect investors and market integrity and ensure a fair, orderly, and efficient marketplace," the letters added. Warren as well as Sens. Sherrod Brown, Tina Smith, and Chris Van Hollen sent identical individual letters dated September 22 to Palihapitiya, co-founder and CEO of The Social+Capital Partnership; Michael Klein, founder of M. Klein & Associates; Stephen Girsky, managing partner at VectoIQ; Tilman Fertitta, chairman and CEO of Fertitta Entertainment; Howard Lutnick, chairman and CEO of Cantor Fitzgerald; and David Hamamoto, CEO and chairman of DiamondHead Holdings.The senators said they expect a response by October 8.SPACs, or special purpose acquisition companies, are shell companies that list with the aim of merging with private companies and taking them public. Several major companies such as Virgin Galactic and DraftKings have debuted via SPACs. Touted as a faster and cheaper alternative for companies to go public compared to the traditional IPO, they have garnered support from Wall Street heavyweights as well as pop icons and professional athletes. But they also require fewer disclosures than IPOs do.SPACs, which have been around for decades, rocketed to prominence last year with the trend accelerating in 2021. Year-to-date SPAC issuance has far outpaced full-year 2020 totals."This meteoric rise is concerning," the letters said. "The SPAC process often appears to be structured to exploit retail investors to the benefit of large institutional investors such as hedge funds, venture capital insiders, and investment banks."The senators said industry insiders can "take advantage of ordinary investors throughout this process," such as making "overly optimistic statements about target companies" - something not allowed in a traditional IPO route."Statements by SPAC sponsors to convince shareholders to vote in favor of a merger may not have to meet the same disclosure standards," the senators added.The concerns raised by the lawmakers aren't the first time authorities have questioned the process of SPACs. The US Securities and Exchange Commission, under then Acting Chair Allison Herren Lee, began an inquiry in March into Wall Street's blank-check company craze by seeking voluntary information.And current Chair Gary Gensler said in July the SEC was investigating major banks over conflicts of interest in the SPAC deal-making process that exploded in the past year.Other controversies seem to follow SPACs. In August, billionaire hedge fund manager Bill Ackman's blank check firm, Pershing Square Tontine Holdings, was sued by former SEC Commissioner Robert Jackson and Yale law professor John Morley for not operating as a SPAC.Read the original article on Business Insider.....»»

Category: worldSource: nyt52 min. ago

Futures Rise On Taper, Evergrande Optimism

Futures Rise On Taper, Evergrande Optimism US index futures jumped overnight even as the Fed confirmed that a November tapering was now guaranteed and would be completed by mid-2022 with one rate hike now on deck, while maintaining the possibility to extend stimulus if necessitated by the economy. Sentiment got an additional boost from a strong showing of Evergrande stock - which closed up 17% - during the Chinese session, which peaked just after Bloomberg reported that China told Evergrande to avoid a near-term dollar bond default and which suggested that the "government wants to avoid an imminent collapse of the developer" however that quickly reversed when the WSJ reported, just one hour later, that China was making preparations for Evergrande's demise, and although that hammered stocks, the report explicitly noted that a worst-case scenario for Evergrande would mean a partial or full nationalization as "local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion." In other words, both reports are bullish: either foreign creditors are made whole (no default) as per BBG or the situation deteriorates and Evergrande is nationalized ("SOEs step in") as per WSJ. According to Bloomberg, confidence is building that markets can ride out a pullback in Fed stimulus, unlike 2013 when the taper tantrum triggered large losses in bonds and equities. "Investors are betting that the economic and profit recovery will be strong enough to outweigh a reduction in asset purchases, while ultra-low rates will continue to support riskier assets even as concerns linger about contagion from China’s real-estate woes." That's one view: the other is that the Fed has so broken the market's discounting ability we won't know just how bad tapering will get until it actually begins. “The Fed has got to be pleased that their communication on the longer way to tapering has avoided the dreaded fear of the tantrum,” Jeffrey Rosenberg, senior portfolio manager for systematic fixed income at BlackRock Inc., said on Bloomberg Television. “This is a very good outcome for the Fed in terms of signaling their intent to give the market information well ahead of the tapering decision.” Then there is the question of Evergrande: “With regards to Evergrande, all those people who are waiting for a Lehman moment in China will probably have to wait another turn,” said Ken Peng, an investment strategist at Citi Private Bank Asia Pacific. “So I wouldn’t treat this as completely bad, but there are definitely a lot of risks on the horizon.” In any case, today's action is a continuation of the best day in two months for both the Dow and the S&P which staged a strong recovery from two-month lows hit earlier in the week, and as of 745am ET, S&P 500 E-minis were up 25.25 points, or 0.6%, Dow E-minis were up 202 points, or 0.59%, while Nasdaq 100 E-minis were up 92.0 points, or 0.60%. In the premarket, electric vehicle startup Lucid Group rose 3.1% in U.S. premarket trading. PAVmed (PVM US) jumps 11% after its Lucid Diagnostics unit announced plans to list on the Global Market of the Nasdaq Stock Market.  Here are some of the biggest movers today: U.S.-listed Chinese stocks rise in premarket trading as fears of contagion from China Evergrande Group’s debt crisis ease. Blackberry (BB US) shares rise 8.7% in premarket after co.’s 2Q adjusted revenue beat the average of analysts’ estimates Eargo (EAR US) falls 57% in Thursday premarket after the hearing aid company revealed it was the target of a Justice Department criminal probe and withdrew its forecasts for the year Amplitude Healthcare Acquisition (AMHC US) doubled in U.S. premarket trading after the SPAC’s shareholders approved the previously announced business combination with Jasper Therapeutics Steelcase (SCS US) fell 4.8% Wednesday postmarket after the office products company reported revenue for the second quarter that missed the average analyst estimate Vertex Energy Inc. (VTNR US) gained 2.1% premarket after saying the planned acquisition of a refinery in Mobile, Alabama from Royal DutVTNR US Equitych Shell Plc is on schedule Synlogic (SYBX US) shares declined 9.7% premarket after it launched a stock offering launched without disclosing a size HB Fuller (FUL US) climbed 2.7% in postmarket trading after third quarter sales beat even the highest analyst estimate Europe's Stoxx 600 index rose 0.9%, lifted by carmakers, tech stocks and utilities, which helped it recover losses sparked earlier in the week by concerns about Evergrande and China’s crackdown on its property sector. The gauge held its gain after surveys of purchasing managers showed business activity in the euro area lost momentum and slowed broadly in September after demand peaked over the summer and supply-chain bottlenecks hurt services and manufacturers. Euro Area Composite PMI (September, Flash): 56.1, consensus 58.5, last 59.0. Euro Area Manufacturing PMI (September, Flash): 58.7, consensus 60.3, last 61.4. Euro Area Services PMI (September, Flash): 56.3, consensus 58.5, last 59.0. Germany Composite PMI (September, Flash): 55.3, consensus 59.2, last 60.0. France Composite PMI (September, Flash): 55.1, consensus 55.7, last 55.9. UK Composite PMI (September, Flash): 54.1, consensus 54.6, last 54.8. Commenting on Europe's PMIs, Goldman said that the Euro area composite PMI declined by 2.9pt to 56.1 in September, well below consensus expectations. The softening was broad-based across countries but primarily led by Germany. The peripheral composite flash PMI also weakened significantly in September but remain very high by historical standards (-2.4pt to 57.5). Across sectors, the September composite decline was also broad-based, with manufacturing output softening (-3.3pt to 55.6) to a similar extent as services (-2.7pt to 56.3). Supply-side issues and upward cost and price pressures continued to be widely reported. Expectations of future output growth declined by less than spot output on the back of delta variant worries and supply issues, remaining far above historically average levels. Earlier in the session, Asian stocks rose for the first time in four sessions, as Hong Kong helped lead a rally on hopes that troubled property firm China Evergrande Group will make progress on debt repayment. The MSCI Asia Pacific Index climbed as much as 0.5%, with Tencent and Meituan providing the biggest boosts. The Hang Seng jumped as much as 2.5%, led by real estate stocks as Evergrande surged more than 30%. Hong Kong shares later pared their gains. Asian markets were also cheered by gains in U.S. stocks overnight even as the Federal Reserve said it may begin scaling back stimulus this year. A $17 billion net liquidity injection from the People’s Bank of China also provided a lift, while the Fed and Bank of Japan downplayed Evergrande risks in comments accompanying policy decisions Wednesday. Evergrande’s stock closed 18% higher in Hong Kong, in a delayed reaction to news a unit of the developer had negotiated interest payments on yuan notes. A coupon payment on its 2022 dollar bond is due on Thursday “Investors are perhaps reassessing the tail risk of a disorderly fallout from Evergrande’s credit issues,” said Chetan Seth, a strategist at Nomura. “However, I am not sure if the fundamental issue around its sustainable deleveraging has been addressed. I suspect markets will likely remain quite volatile until we have some definite direction from authorities on the eventual resolution of Evergrande’s debt problems.” Stocks rose in most markets, with Australia, Taiwan, Singapore and India also among the day’s big winners. South Korea’s benchmark was the lone decliner, while Japan was closed for a holiday In rates, Treasuries were off session lows, with the 10Y trading a 1.34%, but remained under pressure in early U.S. session led by intermediate sectors, where 5Y yield touched highest since July 2. Wednesday’s dramatic yield-curve flattening move unleashed by Fed communications continued, compressing 5s30s spread to 93.8bp, lowest since May 2020. UK 10-year yield climbed 3.4bp to session high 0.833% following BOE rate decision (7-2 vote to keep bond-buying target unchanged); bunds outperformed slightly. Peripheral spreads tighten with long-end Italy outperforming. In FX, the Bloomberg Dollar Spot Index reversed an earlier gain and dropped 0.3% as the dollar weakened against all of its Group-of-10 peers apart from the yen amid a more positive sentiment. CAD, NOK and SEK are the strongest performers in G-10, JPY the laggard.  The euro and the pound briefly pared gains after weaker-than-forecast German and British PMIs. The pound rebounded from an eight-month low amid a return of global risk appetite as investors assessed whether the Bank of England will follow the Federal Reserve’s hawkish tone later Thursday. The yield differential between 10-year German and Italian debt narrowed to its tightest since April. Norway’s krone advanced after Norges Bank raised its policy rate in line with expectations and signaled a faster pace of tightening over the coming years. The franc whipsawed as the Swiss National Bank kept its policy rate and deposit rate at record lows, as expected, and reiterated its pledge to wage currency market interventions. The yen fell as a unit of China Evergrande said it had reached an agreement with bond holders over an interest payment, reducing demand for haven assets. Turkey’s lira slumped toa record low against the dollar after the central bank unexpectedly cut interest rates. In commodities, crude futures drifted lower after a rangebound Asia session. WTI was 0.25% lower, trading near $72; Brent dips into the red, so far holding above $76. Spot gold adds $3.5, gentle reversing Asia’s losses to trade near $1,771/oz. Base metals are well bid with LME aluminum leading gains. Bitcoin steadied just below $44,000. Looking at the day ahead, we get the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Market Snapshot S&P 500 futures up 0.7% to 4,413.75 STOXX Europe 600 up 1.1% to 468.32 MXAP up 0.5% to 200.57 MXAPJ up 0.9% to 645.76 Nikkei down 0.7% to 29,639.40 Topix down 1.0% to 2,043.55 Hang Seng Index up 1.2% to 24,510.98 Shanghai Composite up 0.4% to 3,642.22 Sensex up 1.4% to 59,728.37 Australia S&P/ASX 200 up 1.0% to 7,370.22 Kospi down 0.4% to 3,127.58 German 10Y yield fell 5.6 bps to -0.306% Euro up 0.4% to $1.1728 Brent Futures up 0.3% to $76.39/bbl Gold spot up 0.0% to $1,768.25 U.S. Dollar Index down 0.33% to 93.16 Top Overnight News from Bloomberg Financial regulators in Beijing issued a broad set of instructions to China Evergrande Group, telling the embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds China’s central bank net-injected the most short- term liquidity in eight months into the financial system, with markets roiled by concerns over China Evergrande Group’s debt crisis Europe’s worst energy crisis in decades could drag deep into the cold months as Russia is unlikely to boost shipments until at least November Business activity in the euro area “markedly” lost momentum in September after demand peaked over the summer and supply chain bottlenecks hurt both services and manufacturers. Surveys of purchasing managers by IHS Markit showed growth in both sectors slowing more than expected, bringing overall activity to a five-month low. Input costs, meanwhile, surged to the highest in 21 years, according to the report The U.K. private sector had its weakest month since the height of the winter lockdown and inflation pressures escalated in September, adding to evidence that the recovery is running into significant headwinds, IHS Markit said The U.K.’s record- breaking debut green bond sale has given debt chief Robert Stheeman conviction on the benefits of an environmental borrowing program. The 10 billion-pound ($13.7 billion) deal this week was the biggest-ever ethical bond sale and the country is already planning another offering next month A more detailed look at global markets courtesy of Newsquaw Asian equity markets traded mostly positive as the region took its cue from the gains in US with the improved global sentiment spurred by some easing of Evergrande concerns and with stocks also unfazed by the marginally more hawkish than anticipated FOMC announcement (detailed above). ASX 200 (+1.0%) was underpinned by outperformance in the commodity-related sectors and strength in defensives, which have more than atoned for the losses in tech and financials, as well as helped markets overlook the record daily COVID-19 infections in Victoria state. Hang Seng (+0.7%) and Shanghai Comp. (+0.6%) were also positive after another respectable liquidity operation by the PBoC and with some relief in Evergrande shares which saw early gains of more than 30% after recent reports suggested a potential restructuring by China’s government and with the Co. Chairman noting that the top priority is to help wealth investors redeem their products, although the majority of the Evergrande gains were then pared and unit China Evergrande New Energy Vehicle fully retraced the initial double-digit advances. KOSPI (-0.5%) was the laggard as it played catch up to the recent losses on its first trading day of the week and amid concerns that COVID cases could surge following the holiday period, while Japanese markets were closed in observance of the Autumnal Equinox Day. China Pumps $17 Billion Into System Amid Evergrande Concerns China Stocks From Property to Tech Jump on Evergrande Respite Philippines Holds Key Rate to Spur Growth Amid Higher Prices Taiwan’s Trade Deal Application Sets Up Showdown With China Top Asian News European equities (Stoxx 600 +0.9%) trade on the front-foot and have extended gains since the cash open with the Stoxx 600 now higher on the week after Monday’s heavy losses. From a macro perspective, price action in Europe has been undeterred by a slowdown in Eurozone PMIs which saw the composite metric slip to 56.1 from 59.0 (exp. 58.5) with IHS Markit noting “an unwelcome combination of sharply slower economic growth and steeply rising prices.” Instead, stocks in the region have taken the cue from a firmer US and Asia-Pac handover with performance in Chinese markets aided by further liquidity injections by the PBoC. Some positivity has also been observed on the Evergrande front amid mounting expectations of a potential restructuring at the company. That said, at the time of writing, it remains unclear what the company’s intentions are for repaying its USD 83.5mln onshore coupon payment. Note, ING highlights that “missing that payment today would still leave a 30-day grace period before this is registered as a default”. The most recent reports via WSJ indicate that Chinese authorities are asking local governments to begin preparations for the potential downfall of Evergrande; however, the article highlights that this is a last resort and Beijing is reluctant to step in. Nonetheless, this article has taken the shine off the mornings risk appetite, though we do remain firmer on the session. Stateside, as the dust settles on yesterday’s FOMC announcement, futures are firmer with outperformance in the RTY (+0.8% vs. ES +0.7%). Sectors in Europe are higher across the board with outperformance in Tech and Autos with the latter aided by gains in Faurecia (+4.6%) who sit at the top of the Stoxx 600 after making an unsurprising cut to its guidance, which will at least provide some clarity on the Co.’s near-term future; in sympathy, Valeo (+6.6) is also a notable gainer in the region. To the downside, Entain (+2.6%) sit at the foot of the Stoxx 600 after recent strong gains with the latest newsflow surrounding the Co. noting that MGM Resorts is considering different methods to acquire control of the BetMGM online gambling business JV, following the DraftKings offer for Entain, according to sources. The agreement between Entain and MGM gives MGM the ability to block any deal with competing businesses; MGM officials believe this grants the leverage to take full control of BetMGM without spending much. Top European News BOE Confronts Rising Prices, Slower Growth: Decision Guide La Banque Postale Eyes Retail, Asset Management M&A in Europe Activist Bluebell Raises Pressure on Glaxo CEO Walmsley Norway Delivers Rate Lift-Off With Next Hike Set for December In FX, not much bang for the Buck even though the FOMC matched the most hawkish market expectations and Fed chair Powell arguably went further by concluding in the post-meeting press conference that substantial progress on the lagging labour front is all but done. Hence, assuming the economy remains on course, tapering could start as soon as November and be completed my the middle of 2022, though he continued to play down tightening prospects irrespective of the more hawkish trajectory implied by the latest SEP dot plots that are now skewed towards at least one hike next year and a cumulative seven over the forecast horizon. However, the Greenback only managed to grind out marginally higher highs overnight, with the index reaching 93.526 vs 93.517 at best yesterday before retreating quite sharply and quickly to 93.138 in advance of jobless claims and Markit’s flash PMIs. CAD/NZD/AUD - The Loonie is leading the comeback charge in major circles and only partially assisted by WTI keeping a firm bid mostly beyond Usd 72/brl, and Usd/Cad may remain contained within 1.2796-50 ahead of Canadian retail sales given decent option expiry interest nearby and protecting the downside (1 bn between 1.2650-65 and 2.7 bn from 1.2620-00). Meanwhile, the Kiwi has secured a firmer grip on the 0.7000 handle to test 0.7050 pre-NZ trade and the Aussie is looking much more comfortable beyond 0.7250 amidst signs of improvement in the flash PMIs, albeit with the services and composite headline indices still some way short of the 50.0 mark. NOK/GBP/EUR/CHF - All firmer, and the Norwegian Crown outperforming following confirmation of the start of rate normalisation by the Norges Bank that also underscored another 25 bp hike in December and further tightening via a loftier rate path. Eur/Nok encountered some support around 10.1000 for a while, but is now below, while the Pound has rebounded against the Dollar and Euro in the run up to the BoE at midday. Cable is back up around 1.3770 and Eur/Gbp circa 0.8580 as Eur/Usd hovers in the low 1.1700 area eyeing multiple and a couple of huge option expiries (at the 1.1700 strike in 4.1 bn, 1.1730 in 1 bn, 1.1745-55 totalling 2.7 bn and 1.8 bn from 1.1790-1.1800). Note, Eurozone and UK flash PMIs did not live up to their name, but hardly impacted. Elsewhere, the Franc is lagging either side of 0.9250 vs the Buck and 1.0835 against the Euro on the back of a dovish SNB Quarterly Review that retained a high Chf valuation and necessity to maintain NIRP, with only minor change in the ordering of the language surrounding intervention. JPY - The Yen is struggling to keep its head afloat of 110.00 vs the Greenback as Treasury yields rebound and risk sentiment remains bullish pre-Japanese CPI and in thinner trading conditions due to the Autumn Equinox holiday. In commodities, WTI and Brent have been choppy throughout the morning in-spite of the broadly constructive risk appetite. Benchmarks spent much of the morning in proximity to the unchanged mark but the most recent Evergrande developments, via WSJ, have dampened sentiment and sent WTI and Brent back into negative territory for the session and printing incremental fresh lows at the time of publication. Back to crude, newsflow has once again centred around energy ministry commentary with Iraq making clear that oil exports will continue to increase. Elsewhere, gas remains at the forefront of focus particularly in the UK/Europe but developments today have been somewhat incremental. On the subject, Citi writes that Asia and Europe Nat. Gas prices could reach USD 100/MMBtu of USD 580/BOE in the winter, under their tail-risk scenario. For metals, its very much a case of more of the same with base-metals supportive, albeit off-best given Evergrande, after a robust APAC session post-FOMC. Given the gas issues, desks highlight that some companies are being forced to suspend/reduce production of items such as steel in Asian/European markets, a narrative that could become pertinent for broader prices if the situation continues. Elsewhere, spot gold and silver are both modestly firmer but remain well within the range of yesterday’s session and are yet to recovery from the pressure seen in wake of the FOMC. US Event Calendar 8:30am: Sept. Initial Jobless Claims, est. 320,000, prior 332,000; Continuing Claims, est. 2.6m, prior 2.67m 8:30am: Aug. Chicago Fed Nat Activity Index, est. 0.50, prior 0.53 9:45am: Sept. Markit US Composite PMI, prior 55.4 9:45am: Sept. Markit US Services PMI, est. 54.9, prior 55.1 9:45am: Sept. Markit US Manufacturing PMI, est. 61.0, prior 61.1 11am: Sept. Kansas City Fed Manf. Activity, est. 25, prior 29 12pm: 2Q US Household Change in Net Wor, prior $5t DB's Jim Reid concludes the overnight wrap My wife was at a parents event at school last night so I had to read three lots of bedtime stories just as the Fed were announcing their policy decision. Peppa Pig, Biff and Kipper, and somebody called Wonder Kid were interspersed with Powell’s press conference live on my phone. It’s fair to say the kids weren’t that impressed by the dot plot and just wanted to join them up. The twins (just turned 4) got their first reading book homework this week and it was a bit sad that one of them was deemed ready to have one with words whereas the other one only pictures. The latter was very upset and cried that his brother had words and he didn’t. That should create even more competitive tension! Back to the dots and yesterday’s Fed meeting was on the hawkish side in terms of the dots and also in terms of Powell’s confidence that the taper could be complete by mid-2022. Powell said that the Fed could begin tapering bond purchases as soon as the November FOMC meeting, in line with our US economists’ forecasts. He left some room for uncertainty, saying they would taper only “If the economy continues to progress broadly in line with expectations, and also the overall situation is appropriate for this.” However he made clear that “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff.” The quarterly “dot plot” showed that the 18 FOMC officials were split on whether to start raising rates next year or not. In June, the median dot indicated no rate increases until 2023, but now 6 members see a 25bps raise next year and 3 members see two such hikes. Their inflation forecasts were also revised up and DB’s Matt Luzzetti writes in his FOMC review (link here) that “If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022.” Markets took the overall meeting very much in its stride with the biggest impact probably being a yield curve flattening even if US 10yr Treasury yields traded in just over a 4bp range yesterday and finishing -2.2bps lower at 1.301%. The 5y30y curve flattened -6.7bps to 95.6bps, its flattest level since August 2020, while the 2y10y curve was -4.2bps flatter. So the market seems to believe the more hawkish the Fed gets the more likely they’ll control inflation and/or choke the recovery. The puzzle is that even if the dots are correct, real Fed funds should still be negative and very accommodative historically for all of the forecasting period. As such the market has a very dim view of the ability of the economy to withstand rate hikes or alternatively that the QE technicals are overpowering everything at the moment. In equities, the S&P 500 was up nearly +1.0% 15 minutes prior to the Fed, and then rallied a further 0.5% in the immediate aftermath before a late dip look it back to +0.95%. The late dip meant that the S&P still has not seen a 1% up day since July 23. The index’s rise was driven by cyclicals in particular with energy (+3.17%), semiconductors (-2.20%), and banks (+2.13%) leading the way. Asian markets are mostly trading higher this morning with the Hang Seng (+0.69%), Shanghai Comp (+0.58%), ASX (+1.03%) and India’s Nifty (+0.81%) all up. The Kospi (-0.36%) is trading lower though and is still catching up from the early week holidays. Japan’s markets are closed for a holiday today. Futures on the S&P 500 are up +0.25% while those on the Stoxx 50 are up +0.49%. There is no new news on the Evergrande debt crisis however markets participants are likely to pay attention to whether the group is able to make interest rate payment on its 5 year dollar note today after the group had said yesterday that it resolved a domestic bond coupon by negotiations which was also due today. As we highlighted in our CoTD flash poll conducted earlier this week, market participants are not too worried about a wider fallout from the Evergrande crisis and even the Hang Seng Properties index is up +3.93% this morning and is largely back at the levels before the big Monday sell-off of -6.69%. Overnight we have received flash PMIs for Australia which improved as parts of the country have eased the coronavirus restrictions. The services reading came in at 44.9 (vs. 42.9 last month) and the manufacturing print was even stronger at 57.3 (vs. 52.0 last month). Japan’s flash PMIs will be out tomorrow due to today’s holiday. Ahead of the Fed, markets had continued to rebound from their declines earlier in the week, with Europe’s STOXX 600 gaining +0.99% to narrowly put the index in positive territory for the week. This continues the theme of a relative outperformance among European equities compared to the US, with the STOXX 600 having outpaced the S&P 500 for 5 consecutive sessions now, though obviously by a slim margin yesterday. Sovereign bonds in Europe also posted gains, with yields on 10yr bunds (-0.7bps), OATs (-1.0bps) and BTPs (-3.2bps) all moving lower. Furthermore, there was another tightening in peripheral spreads, with the gap in Italian 10yr yields over bunds falling to 98.8bps yesterday, less than half a basis point away from its tightest level since early April. Moving to fiscal and with Democrats seemingly unable to pass the $3.5 trillion Biden budget plan by Monday, when the House is set to vote on the bipartisan infrastructure bill, Republican leadership is calling on their members to vote against the bipartisan bill in hopes of delaying the process further. While the there is still a high likelihood the measure will eventually get passed, time is becoming a factor. Congress now has just over a week to get a government funding bill through both chambers of congress as well as raise the debt ceiling by next month. Republicans have told Democrats to do the latter in a partisan manner and include it in the reconciliation process which could mean that a significant portion of the Biden economic agenda – mostly encapsulated in the $3.5 trillion over 10 year budget – may have to be cut down to get the entire Democratic caucus on board. Looking ahead, an event to watch out for today will be the Bank of England’s policy decision at 12:00 London time, where our economists write (link here) that they expect no change in the policy settings. However, they do expect a reaffirmation of the BoE’s updated forward guidance that some tightening will be needed over the next few years to keep inflation in check, even if it’s too early to expect a further hawkish pivot at this stage. Staying on the UK, two further energy suppliers (Avro Energy and Green Supplier) ceased trading yesterday amidst the surge in gas prices, with the two supplying 2.9% of domestic customers between them. We have actually seen a modest fall in European natural gas prices over the last couple of days, with the benchmark future down -4.81% since its close on Monday, although it’s worth noting that still leaves them up +75.90% since the start of August alone. There wasn’t much data to speak of yesterday, though US existing home sales fell to an annualised rate of 5.88 in August (vs. 5.89m expected). Separately, the European Commission’s advance consumer confidence reading for the Euro Area unexpectedly rose to -4.0 in September (vs. -5.9 expected). To the day ahead now, the data highlights include the September flash PMIs from around the world, while in the US there’s the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Tyler Durden Thu, 09/23/2021 - 08:13.....»»

Category: blogSource: zerohedge2 hr. 23 min. ago

Three Sure-fire Ways to Lose Money Investing in SPACs

On its face, the special purpose acquisition company, or SPAC, would seem to be one of the safest investment products ever invented by the money spinners of Wall Street. An investor ponies up $10 to purchase a “unit” that includes one share of common stock plus a fraction of a warrant, a “right,” or some […] On its face, the special purpose acquisition company, or SPAC, would seem to be one of the safest investment products ever invented by the money spinners of Wall Street. An investor ponies up $10 to purchase a “unit” that includes one share of common stock plus a fraction of a warrant, a “right,” or some other derivative freebie. Rather than handing that cash over to some wild-eyed visionary to invest in robo-helicopters or houses in the Hamptons, the investor’s capital is safely locked in a vault earning interest where it cannot be touched. Once the SPAC has raised a few hundred million through an IPO (or a couple billion if you are Bill Ackman), then the SPAC team scours the globe searching for the world’s most fantastic robo-copter designer, interplanetary tourism company, or cure for cancer. Or whatever. Once they secure their prize, SPAC investors get to vote yea or nay if the deal should go forward. Separately, each investor can elect whether to receive stock in the new corporate confection or redeem to get back their share of cash held in an ironclad trust. Either way, investors get to hang onto the warrants and sell those at a profit should the stock later soar skywards. Sounds close to foolproof, right? That’s what many hedge funds certainly thought, as they gorged on SPAC IPOs in 2020 and early 2021, using leverage to goose returns on what was essentially a treasury bill with an embedded option to convert to equity. But as the SPAC party started to get going, and more and more bold-faced names started to swan through with glittering SPACs on their arms, the SEC became nervous that things were getting out of hand. It is one thing when a balding, jowly private equity jockey pontificates about EBITDA synergies. But when Serena Williams gets amped about building rocket engines and Shaquille O’Neal contemplates nuptials with IPO-gone-wrong WeWork, there may be some headier intoxicants wafting through the air. For this reason, the SEC has unfurled more red flags than a Chinese Army parade about risks retail investors should consider with SPACs here, here, and here. Despite the apparent safety of the SPAC structure, there are still several ways that investors can get their fingers burnt with this product. Some of the more popular ways to get wiped out result from a lack of understanding of the basic structure or a compulsion to run with the herd right before it heads off a cliff. Wait for the SPAC to run up on rumors and then purchase the common stock. Theoretically, negotiations between a SPAC and a potential merger partner should be conducted in absolute confidence. Unfortunately, consummating one of these corporate marriages is not as simple as hiring a coach and a country priest. There are multiple investment banks and advisors involved. The potential deal is marketed “confidentially” to dozens of fund managers and industry players to ladle more cash into the coffers through a PIPE. And all these people are in the business of sharing information and incentivized to see the share price move up. In the case of Churchill Capital Group IV, the stock went parabolic to $58 per share on rumors of a merger with luxury electric car maker Lucid Motors but then tumbled back again to the low 20s as soon as the deal was announced. Why? Perhaps investors questioned if ascribing a valuation in the tens of billions to an auto company that has yet to produce a car was a smart thing to do? Or maybe they noticed that the institutions investing in the PIPE were picking up their shares for $15? Hard to say. But the lesson on how to invest in SPACs is clear. If you bought the IPO unit and sold anywhere between the height of $58 and the mid-$20s where it trades today, Lucid has been an extremely profitable trade. But a momentum investor who piled into the stock based on rumors in the weeks before it was announced probably got wiped out – even though the rumors, in this case, turned out to be true! Lessons learned: You are almost always better off investing in SPACs by purchasing the unit at the IPO. Avoid buying SPACs that trade at a significant premium to trust value before the company has even announced a deal that can be evaluated on its merits. Invest “alongside” famous people. Let’s be honest: stock picking is not all about dispassionately analyzing returns. There is an electric thrill about feeling part of the “smart money” and an exclusive club. What could be more exciting than telling your neighbors or, more realistically, fellow Reddit bros that you are “in business” with a star-studded name on the latest SPAC merger? When Subversive Capital Acquisition Corp. announced it was merging with JAY-Z’s vertically integrated cannabis company, the stock blazed up to $12.85 as investors visualized blasting returns alongside Rhianna, Roc Nation, and DJ Khaled. But as that buzz wore off, the stock traded down to under $4 as The Parent Company (with the apt ticker, GRAMF) smoked a considerable portion of its cash in its first quarter of operations. Former Speaker of the House Paul Ryan’s SPAC, Executive Network Partnering Corp., soared to $50 a share in its IPO debut last November, but then quickly declined back to the $10 range and has yet to announce a deal. Even investing with a storied stock picker like Bill Ackman of Pershing Square is no guarantee of success. His Pershing Square Tontine Holdings ran up to the mid-30s as rumors swirled among Reddit “tontards” that he was wooing prize assets from Bloomberg to Stripe. But the stock traded back down to $20 once Ackman announced and then subsequently unwound a convoluted deal with Universal Music Group that no one seemed to like. The supreme master of leveraging a celebrity following to send stocks soaring is Chamath Palihapitiya. He brought a series of high-flying SPAC mergers to the market while positioning himself as a populist advocating for outsider individual investors. Virgin Galactic Holdings rocketed to $60 before succumbing to gravity and spiraling under $20, while Chamath sold out his entire position. To be fair, most of Chamath’s SPACs are still trading above the IPO price. Even Clover Health, accused of deceptive disclosures and investigated by the SEC, staged a recent rally to $22 on the prospect of a short squeeze — before collapsing again to $8. The most important thing to be aware of is that most of these celebrities are not investing in anything like the same terms as you. In the Virgin Galactic deal, Chamath had purchased his 13% stake of the combined company for $0.002 per share – which was how he converted an investment of $25,000 into hundreds of millions in wealth. SPAC sponsors and promoters have an asymmetric incentive where nearly any deal is better than no deal at all. While there is nothing wrong with buying SPACs associated with celebrities, be aware that they are probably on the “comp list” to this party and won’t be on the hook if the joint gets trashed. Buy SPAC warrants without reading the fine print. For more speculative investors, SPAC warrants can seem like a tantalizing way to take advantage of the inherent volatility of the high growth, high risk “moon shot” companies with which many SPACs merge. Typically, a SPAC warrant will provide the holder with the right to purchase shares in the combined company at $11.50 per share once the merger is completed. SPAC warrants have a life of five years, giving plenty of time for the fledgling company to show its mettle. And soon after the IPO, the warrants begin trading separately, often at relatively low prices. For investors with a high degree of enthusiasm for a SPAC story but limited funds, purchasing a warrant provides far more upside leverage than buying the common stock. As with many things SPAC-related, there is a catch, however. First, investors can only exercise SPAC warrants after the merger is consummated. For this reason, they often trade below intrinsic value due to the risk that investor enthusiasm will fade in the months between deal announcement and closing. Second, SPAC warrants come with a “call” feature, which allows the company to force holders to exercise their warrants if the stock trades above a specific price for a set amount of time. In most cases, this threshold is $18, and companies have a powerful incentive to redeem the warrants to clean up their capital structure. The call feature limits the upside that SPAC warrants provide if the stock takes off. In some cases, as in Clover Health’s recent redemption announcement, the stock needs only to be trading above $10 for 20 days within 30 days — meaning that the warrants may have no intrinsic value at all! Clover’s warrants had traded as high as $11 a few weeks before the announcement. Investors who purchased those warrants in June believing that a massive short squeeze was imminent have lost most of their stake. An even greater risk is that the company calls the warrants, and the holder fails to take action, in which case the warrants expire worthlessly. So, warrants provide a valuable kicker when investing in a SPAC IPO and can be a rewarding way to bet on high conviction SPAC merger deals. But those who ignore the fine print of these complex instruments are likely to be disappointed. In the past few years, SPACs have evolved to provide ordinary investors with access to potentially industry-changing, high-growth investments — formerly the exclusive preserve of late-stage venture and crossover funds. The backers of SPACs now include a selection of the most successful names from the worlds of private equity, M&A, and venture investing. While SPAC sponsors have a “blank check” to source a deal of their choosing, investors retain the valuable right to have their capital returned if they don’t like what sponsors present. By understanding the SPAC format’s essential structure and potential pitfalls, investors can dramatically reduce the potential for a catastrophic loss of this sometimes lucrative and infallibly entertaining asset class. Crocker Coulson is CEO of AUM Media, which advises SPAC sponsors and private companies considering going public through a SPAC merger. Updated on Sep 22, 2021, 6:03 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: valuewalk17 hr. 51 min. ago

3 mixed use buildings sell in Flatbush for $3.5 million

“Free-market, tax class-protected buildings like these continue to attract aggressive buyer interest,” Matthew Cosentino, TerraCRG’s partner who leads investment sales said......»»

Category: topSource: bizjournalsSep 22nd, 2021

"Many People Will Be Arrested" - Evergrande Lured Retail Investors Into Billions Of "Wealth Management Products" With Gucci Bags, Dyson Air Purifiers

"Many People Will Be Arrested" - Evergrande Lured Retail Investors Into Billions Of "Wealth Management Products" With Gucci Bags, Dyson Air Purifiers In our post detailing how Evergrande became a "too big to fail" anchor of China's shadow banking system, we noted that a key missing piece in the company's funding was selling wealth management products  - i.e., unregulated "shadow banking" products - to outside investors, as well as its own employees and their families, promising returns up to 13%. It is these WMP investors that are currently besieging the company's offices across the country in hopes of getting some of their principal back, and which include everyone from paint suppliers to decoration and construction companies. To them, Evergrande owes more than 800 billion yuan ($124 billion) due within one year, while it has only a 10th of that amount of cash on hand. It will have even less once the now officially defaulted company makes priority payments to its banks and creditors. Expanding on this striking funding source, Reuters today writes that lured by the promise of yields as high as 12, "tens of thousands of investors bought wealth management products" through China Evergrande, a transaction which was softened by gifts such as Dyson air purifiers and Gucci bags, not to mention the guarantee of China’s top-selling developer, a guarantee which we now know was worthless. And now, many investors fear they may never get their investments back after the cash-strapped property developer recently stopped repaying some investors and set off global alarm bells over its massive debt. Some have been protesting at Evergrande offices, refusing to accept the company’s plan to provide payment with discounted apartments, offices, stores and parking units, which it began to implement on Saturday. “I bought from the property managers after seeing the ad in the elevator, as I trusted Evergrande for being a Fortune Global 500 company,” said the owner of an Evergrande property in the conglomerate’s home province of Guangdong surnamed Du. “It’s immoral of Evergrande not to pay my hard-earned money back,” said the investor, who had put 650,000 yuan ($100,533) into Evergrande wealth management products (WMPs) last year at an interest rate of more than 7%. That investor is about to learn that in addition to return, there is also risk, a concept almost forgotten in today's world where central banks and authoritarian governments do everything to preserve the "wealth effect" and avoid social unrest resulting from stock price crashes. According to a sales manager of Evergrande Wealth, launched in 2016 as a peer-to-peer (P2) online lending platform that originally was used to fund its property project, more than 80,000 people – including employees, their families and friends as well as owners of Evergrande properties - bought WMPs that raised more than 100 billion yuan in the past five years. Of these investments, some 40 billion yuan are still outstanding, and will likely never be repaid. Last week, Evergrande revealed that even Ding Yumei, the wife of billionaire founder Hui Ka Yan, had bought $3 million of the company’s investment products in a show of support. As the FT adds, Evergrande financial advisers marketed the products widely, including to homeowners in its apartment blocks, while its managers persuaded subordinates to invest, the executives of Evergrande’s wealth management division said. The publication adds that one executive - who spoke during a meeting with angry investors who went to the company’s Shenzhen headquarters to try to get their money back - suggested the products were too high risk for ordinary retail investors and should not have been offered to them. Of course, it is way too late now. "My parents put the bulk of their savings, which is Rmb200,000 and not a lot by Evergrande’s standard, into its [wealth management products],” said the daughter of one investor who asked to be identified by her surname Xu. She said an Evergrande financial adviser stationed in an apartment tower built by the company in central China had persuaded her mother to invest. “They wouldn’t have trusted Evergrande’s wealth products had they not bought the developer’s apartment,” she said. “All they wanted was to ease the financial pressure from buying expensive cancer drugs [for Xu’s mother], nothing else.” Last week, Xu was one of hundreds of people who travelled to Evergrande’s Shenzhen headquarters in hopes of recovering their investment. One investor named Rosy Chen and her husband, an Evergrande employee, invested Rmb100,000 this year in a product with an advertised 11.5 per cent annual return on the urging of one of his superiors. The cash went to “supplement” the working capital of a company called Hubei Gangdun Materials, according to the investment contract. Hundreds of home buyers, retail investors and Evergrande contractors converged on the property group’s Shenzhen headquarters last week seeking repayment. Photo: AFP/Getty “At first we waited, but when we saw we were among the only families in the whole [Evergrande] division not to buy in, we decided to invest too,” said Chen. “We believed Evergrande wouldn’t cheat its own employees.” Remarkably, this hit to Chinese investors and resulting social unrest, comes as a time when China's Xi has launched a renewed pursuit of core Marxism with his "Common prosperity" initiative, which also coincides with China’s years-long effort to deleverage its economy, which has pushed companies to resort to off-balance sheet investments in search of funding. It's why we said recently that what is happening to Evergrande is a symptom of China's great deleveraging campaign, which however for a country with 350% debt/GDP is doomed to fail. The funniest thing about the whole Evergrande fiasco is that it's due to China pretending it can reduce its debt without a crash. Guys, ain't happening: at least the US accepts this and has adopted the idiocy that is MMT to justify perpetual debt increase until it all blows up pic.twitter.com/xdw4F7CTQV — zerohedge (@zerohedge) September 20, 2021 Incidentally China has only itself to blame for the Evergrande crisis. Having allowed unprecedented debt growth for much of the past decade, last year Beijing capped debt levels of property developers last year as part of its "three red lines" policy which limited how much debt growth various tiers of developers can engage in. As a result, the most indebted players like Evergrande - feeling even more pressure to find new sources of capital to ease mounting liquidity stress - ended up moving to the unregulated "shadow banking" market, and turned to employees, suppliers and clients for cash through commercial paper, trust and wealth management products. Evergrande Wealth started to sell WMPs to individuals in 2019 after a regulatory crackdown led to a collapse of the P2P lending sector, said the sales manager and another Evergrande employee who bought the WMPs. To attract investors, the sales manager offered gifts such as Dyson air purifiers and Gucci handbags to each person who bought more than 3 million yuan of WMPs during a Christmas promotion last year. A product leaflet provided by the sales manager seen by Reuters showed the WMPs are categorized as fixed-income products suitable for “conservative investors seeking steady returns”. It was anything but. In an interview with local media, one Evergrande financial adviser said the products were a type of “supply chain finance”. While the money from retail investors may in years past have gone to its suppliers, the Evergrande executives in Shenzhen receiving retail investors said this was no longer the case. Asked about Hubei Gangdun, one of the executives of Evergrande’s wealth management division said that it was just a shell company. “Proceeds from the WMPs have been used to bridge various funding gaps faced by the parent company,” the executive said. “There is no need to thoroughly examine where the money actually went. “Some WMP proceeds were used to repay previous products but sales plummeted, making it difficult for the business model to continue,” he admitted. "Many people . . . might be arrested for financial fraud if investors don’t get paid off,” he said. “Our products were not for everyone. But our grassroots salespeople didn’t consider this when making their sales pitches and they targeted everyone in order to meet their own sales targets.” Translation: Evergrande used not just Ponzi instruments, but unregulated Ponzi instruments, which are now worth nothing. In two products sold last November, a construction company in Qingdao was looking to raise up to 10 million yuan with annualized yield of 7% in one and 20 million yuan with yields ranging from 7.8% to 9.5%, depending on the investment size, in another. Minimum investments were 100,000 yuan and 300,000 yuan, respectively. According to the sale manager, to make its products especially attractive, Evergrande offered additional yield up to 1.8% to certain investors, which would push returns to above 11% for a 12-month investment, an interest rate which in a world of zero rates, indicates funding stress if nothing else. Proceeds were to be used for Qingdao Lvye International Construction Co’s working capital, the documents showed. Repayment would either come from the issuer’s income or from Evergrande Internet Information Service (Shenzhen) Co, a subsidiary that runs Evergrande Wealth and promises to cover the principal and interest if an issuer fails to repay, the prospectus said. The sales manager said the Qingdao company was working on Evergrande projects and would use the payment from Evergrande upon completion to repay investors. “It’s a de-facto Evergrande product,” he said. Other highly leveraged Chinese conglomerates including HNA Group, which declared bankruptcy early this year, and China Baoneng have used similar products. It was the overreliance of China's giant conglomerates on shadow banking - among others - that prompted us back all the way back in 2018 to predict that after HNA and Anbang, Evergrande would fail next. Anbang first, then HNA, Evergrande and Dalian Wanda — zerohedge (@zerohedge) February 23, 2018 Earlier this week, Evergrande said that six senior executives would face “severe punishment” for securing early redemptions on investment products after retail investors were told that they would not be repaid on time. Another big question is whether Evergrande ever included the 40 billion yuan of WMPs among the liabilities on its balance sheet; as the FT notes, the answer "remains unclear." “We expect part of it should be included in the total liabilities . . . however, there was no detailed disclosure in its financial statement, so it is difficult to verify,” said Cedric Lai, a senior credit analyst at Moody’s Investors Service. Nigel Stevenson of GMT Research agreed it was unclear how Evergrande accounted for the WMPs. “Once the lid is lifted on its financials, it’s possible more horrors will be discovered,” he said. In a petition to various government bodies, a group of WMP investors in Guangdong accused Evergrande of inappropriately using money that should have gone to the issuers to fund its own projects, and not sufficiently disclosing the risks. They also complained that they were misled by the stature of its chairman, Hui Ka-yan, noting that he was seated prominently during a 2019 celebration of the 70th anniversary of the founding of the People’s Republic of China. “The investors trusted Evergrande and bought Evergrande’s WMPs out of our love for and faith in the Party and government,” they wrote. Tyler Durden Tue, 09/21/2021 - 11:10.....»»

Category: blogSource: zerohedgeSep 21st, 2021

Shell to sell interest in Deer Park refinery to Pemex for $596M consideration

See the rest of the story here. Theflyonthewall.com provides the latest financial news as it breaks. Known as a leader in market intelligence, The Fl.....»»

Category: blogSource: theflyonthewallMay 24th, 2021

The stage is set for a River Farm sale, but not to a private buyer

The American Horticultural Society has agreed to enter into negotiations with Northern Virginia's regional park authority regarding its "interest in River Farm," as the AHS's attempt to sell the historic 27-acre property north of Mount Vernon has face.....»»

Category: topSource: bizjournalsMay 15th, 2021

Mark Cuban, AEG sell HDNet stake to Anthem, Steve Harvey joins as partner

Media company Anthem Sports & Entertainment has acquired a majority interest in HDNet LLC, parent of television networks AXS TV and HDNet Movies, from Mark Cuban and AEG. Anthem, which owns sports-oriented channels such as Pursuit and Fight Netwo.....»»

Category: topSource: bizjournalsSep 10th, 2019

Delta Air Lines, Inc. Looks for a Partner for Its Refinery

Delta hopes to sell a joint-venture interest in its oil refinery in order to create a better hedge against changes in jet fuel refining margins......»»

Category: topSource: foxnewsSep 12th, 2018

Delta seeks to sell PA refinery after failing to find partner, Reuters says

See the rest of the story here. Theflyonthewall.com provides the latest financial news as it breaks. Known as a leader in market intelligence, The Fl.....»»

Category: blogSource: theflyonthewallFeb 1st, 2019

Fed Gives Bond-Buy Tapering Signal Without Timeline: 5 Picks

We have narrowed down our search to five U.S. corporate behemoths that have strong growth potential for the rest of 2021. These are: AAPL, MSFT, NVDA, DHR and COST. On Sep 22, Wall Street closed sharply higher ending its 4-day losing streak and recouped some of the losses it has suffered in September. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — rallied 1% each, while the small-cap-centric Russell 2000 surged 1.5%.U.S. stock markets rebounded following Fed Chairman Jerome Powell’s confirmation that a shift from the central bank’s ultra-dovish monetary policy is not immediate. The Fed will maintain its monetary stimulus and stick to a near-zero short-term benchmark interest rate at least for the time being.Powell Maintains Dovish StanceIn his statement after the conclusion of the two-day FOMC meeting, Fed Chairman Jerome Powell said “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”Fed Chairman made the point that it is “more important to do it right than fast.” “While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” he said.Powell said that the central bank’s further progress test has been met regarding its inflation target. He added “My own view is the test for substantial further progress on employment is all but met.” However, Powell made it clear “For me it wouldn’t take a knockout, great, super strong employment report. It would take a reasonably good employment report for me to feel like that test is met.”Fed’s latest dot plot for rate projection is showing nine out of18 members believing that the first rate cut will come in the second half of 2022. This number was just seven after June’s FOMC meeting. However, Powell had commented in June that dot plots should be taken with a “big grain of salt.” It is “not a great forecaster of future rate moves." Fed's policy will be guided by the actual outcome of economic variables and not by its officials' expectations about the future.Tapering Likely Priced in Market ValuationThe Fed Chairman has said repeatedly that the central bank will give enough indication to market participants before it actually starts tapering in order to minimize volatility.Although the Fed has restrained from providing any timeline as to when the tapering of the monthly $120 billion bond-buy program will start, many economists and financial researchers believe that the announcement will come in the next FOMC meeting in November and the process will start from December.Despite this, yesterday’s rally indicates that the impact of tapering seems already factored in market valuations. The central bank had taken this extraordinary measure last year to tackle an extraordinary health hazard-led economic devastation. Everyone knows that this monetary stimulus will fade out gradually with the pace of U.S. economic recovery.Therefore, a possible tapering of the Fed’s monthly $80 billion Treasury Notes and $40 billion mortgage-backed bond-buying program this year may not shake market participants’ confidence. The important point is that the Fed has taken an extremely cautious approach to tapering its quantitative easing program.Stock Selection CriteriaAt this stage, it will be prudent to invest in stocks of U.S. corporate behemoths (market capital > $100 billion) that have performed better than the market’s benchmark — the S&P 500 Index — in the past month, amid September’s volatility.The stocks must carry a favorable Zacks Rank. These companies have highly established business models spread across the world, lucrative product pipelines, globally acclaimed brand recognition and robust financial positions, which will help them to cope with a higher interest rate.Accordingly, we have narrowed down our search to five U.S. corporate behemoths that have strong growth potential for the rest of 2021. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The chart below shows the price performance of our five picks in the past month.Image Source: Zacks Investment ResearchApple Inc.'s AAPL Services and Wearables businesses are expected to drive top-line growth in fiscal 2021 and beyond. Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s new cash cow. Its focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunities in the long haul.This Zacks Rank #1 company has an expected earnings growth rate of 2.2% for next year (ending September 2022) after estimated 70.4% growth in the current year (ending September 2021). The Zacks Consensus Estimate for next year improved 6.3% over the last 60 days.Microsoft Corp. MSFT is introducing new and improved Surface devices that could encourage enterprises to stick with Windows as they move toward BYOD and cloud computing. Microsoft’s advantages in this respect are two-fold.First, the company has a very large installed base of Office users. Most legacy data are based on Office, so enterprises are usually reluctant to use other productivity solutions. Second, the BYOD model is dependent on security and cloud integration, both of which are Microsoft’s strengths.This Zacks Rank#2 company has an expected earnings growth rate of 8.4% for the current year (ending June 2022). The Zacks Consensus Estimate for current-year earnings improved 3.7% over the last 60 days.NVIDIA Corp. NVDA is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. It is also benefiting from strong growth in GeForce desktop and notebook GPUs, which are boosting gaming revenues.Moreover, a surge in Hyperscale demand remains a tailwind for the company’s Data Center business. The expansion of NVIDIA GeForce NOW is expected to drive its user base. Further, a solid uptake of artificial intelligence-based smart cockpit infotainment solutions is a boon.This Zacks Rank #2 company has an expected earnings growth rate of 68% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the last 60 days.Danaher Corp. DHR is poised to gain from Danaher Business System (“DBS”), the policy of rewarding shareholders through dividend payments, synergistic benefits from acquired assets and investment in product innovation in the quarters ahead.The company anticipates core revenue growth in the mid to high-teens range for the third quarter of 2021 and in the high-teens for 2021. The pandemic-led tailwinds are expected to boost core sales by high-single digits in the third quarter and by 10% in 2021.This Zacks Rank #2 company has an expected earnings growth rate of 50.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 30 days.Costco Wholesale Corp. COST operates membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products in a range of merchandise categories.Its growth strategies, better price management, decent membership trend and increasing penetration of e-commerce business reinforce its position. The strategy to sell products at discounted prices has helped to draw customers seeking both value and convenience. These factors have been aiding in registering impressive sales numbers.This Zacks Rank #2 company has an expected earnings growth rate of 7.9% for the current year (ending August 2022). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 30 days. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Danaher Corporation (DHR): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacks2 hr. 23 min. ago

Here Is Why Bargain Hunters Would Love Fast-paced Mover Cushman & Wakefield (CWK)

Cushman & Wakefield (CWK) made it through our 'Fast-Paced Momentum at a Bargain' screen and could be a great choice for investors looking for stocks that have gained strong momentum recently but are still trading at reasonable prices. Momentum investors typically don't time the market or "buy low and sell high." In other words, they avoid betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time.Who doesn't like betting on fast-moving trending stocks? But determining the right entry point isn't easy. Often, these stocks lose momentum once their valuation moves ahead of their future growth potential. In such a situation, investors find themselves loaded up on expensive shares with limited to no upside or even a downside. So, going all-in on momentum could be risky at times.It could be safer to invest in bargain stocks that have been witnessing price momentum recently. While the Zacks Momentum Style Score (part of the Zacks Style Scores system), which pays close attention to trends in a stock's price or earnings, is pretty useful in identifying great momentum stocks, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.Cushman & Wakefield (CWK) is one of the several great candidates that made it through the screen. While there are numerous reasons why this stock is a great choice, here are the most vital ones:Investors' growing interest in a stock is reflected in its recent price increase. A price change of 0.7% over the past four weeks positions the stock of this company well in this regard.While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. CWK meets this criterion too, as the stock gained 3.5% over the past 12 weeks.Moreover, the momentum for CWK is fast paced, as the stock currently has a beta of 1.5. This indicates that the stock moves 50% higher than the market in either direction.Given this price performance, it is no surprise that CWK has a Momentum Score of B, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped CWK earn a Zacks Rank #2 (Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>Most importantly, despite possessing fast-paced momentum features, CWK is trading at a reasonable valuation. In terms of Price-to-Sales ratio, which is considered as one of the best valuation metrics, the stock looks quite cheap now. CWK is currently trading at 0.48 times its sales. In other words, investors need to pay only 48 cents for each dollar of sales.So, CWK appears to have plenty of room to run, and that too at a fast pace.In addition to CWK, there are several other stocks that currently pass through our 'Fast-Paced Momentum at a Bargain' screen. You may consider investing in them and start looking for the newest stocks that fit these criteria.This is not the only screen that could help you find your next winning stock pick. Based on your personal investing style, you may choose from over 45 Zacks Premium Screens that are strategically created to beat the market.However, keep in mind that the key to a successful stock-picking strategy is to ensure that it produced profitable results in the past. You could easily do that with the help of the Zacks Research Wizard. In addition to allowing you to backtest the effectiveness of your strategy, the program comes loaded with some of our most successful stock-picking strategies.Click here to sign up for a free trial to the Research Wizard today. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Cushman & Wakefield PLC (CWK): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacks2 hr. 23 min. ago

Fed"s Powell says he wasn"t aware two top policymakers were actively trading stocks as he promises a review of rules

"We need to make changes, and we're going to do that as a consequence of this," Powell said. "This will be a thoroughgoing and comprehensive review." Jerome Powell. Pool/ Getty Images Fed Chair Jerome Powell said he wasn't aware of "specifics" behind stock trades made by two top policymakers while in office. He avoided saying he has confidence in Dallas and Boston Fed presidents Robert Kaplan and Eric Rosengren in a press conference Wednesday. Powell pledged to review the rules for Fed officials, saying: "We need to make changes, and we're going to do that as a consequence of this." Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Federal Reserve boss Jerome Powell has said he wasn't aware of the specific trading activity carried out by two regional Fed presidents, and brushed off the chance to back the top policymakers facing questions about apparent conflicts of interest.Powell was asked Wednesday whether he still has confidence in Dallas Fed President Eric Rosengren and Boston Fed President Robert Kaplan being able to do their jobs."In terms of having confidence and that sort of thing, I think, no one is happy. No one on the (Federal Open Market Committee) is happy to have these questions raised," he responded in a post-Fed meeting press conference.Financial disclosures first reported by The Wall Street Journal showed Kaplan and Rosengren made multimillion-dollar trades, some in popular stocks such as Apple and Tesla. These came as the Fed significantly expanded its asset purchases to provide unprecendented support for the pandemic-hit US economy.Both have expressed regret for their investment decisions and have pledged to divest their money by the end of this month to avoid any possible conflict of interest. Some advocacy groups have called for the Fed presidents to resign from their positions, arguing that their actions could make Americans lose trust in the central bank.Powell said that before media reports of their stock trades, he hadn't known of the policymakers' actions."I was not aware of the specifics of what they were doing," he said.Pointing to three existing restrictions, Powell noted Fed officials are already subject to certain rules around securities. First, ownership of certain assets, such as bank securities, is not allowed. Second, there are specific times - such as around FOMC meetings - when officials are not allowed to trade at all or to buy or sell financial assets. Third, officials must make annual financial disclosures."This has been our framework for a long time, and I guess you'd say it's served us well," Powell said. "The other thing you would say: that it is now clearly seen as not adequate to the task of really sustaining the public's trust in us.""We need to make changes and we're going to do that as a consequence of this," he added.The Fed will carry out a thoroughgoing and comprehensive review and consider ways to further tighten rules and standards, Powell promised. However, he would not be drawn on a timeline or to suggest what changes could be made.When it came to talking about his own holdings, Powell said he has owned municipal securities - which the Fed bought last year for the first time - for many years.But Powell said the holdings were a "coincidence," because he hadn't expected the Fed to buy munis to prevent a collapse in the market. He isn't an active trader, he added, saying he had cleared any conflicts of interests with ethics officials."Munis were always thought to be a pretty safe place for a Fed person to invest because the law was that the Fed would never buy municipal securities," he said.Read More: JPMORGAN: Buy these 16 housing stocks to partake in the ongoing boom, with fears of a 2008-style crash overblown despite some real risksRead the original article on Business Insider.....»»

Category: smallbizSource: nyt3 hr. 39 min. ago

FOMC Pushes Gold Prices Down

Brace yourselves, gold bulls, as the Fed clears the way for tapering and shifts interest rate liftoff to 2022. You’ve been warned. Q2 2021 hedge fund letters, conferences and more FOMC’s Newest Statement Yesterday (September 22, 2021), the FOMC published its newest statement on monetary policy. There are just a few alterations in the publication, […] Brace yourselves, gold bulls, as the Fed clears the way for tapering and shifts interest rate liftoff to 2022. You’ve been warned. 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 2021 hedge fund letters, conferences and more FOMC's Newest Statement Yesterday (September 22, 2021), the FOMC published its newest statement on monetary policy. There are just a few alterations in the publication, which mainly reflect changes in the economic environment. The Fed noted that the sectors most adversely affected by the pandemic “have improved in recent months, but the rise in COVID-19 cases has slowed their recovery”, while inflation “is elevated” (last time, the Fed wrote that “inflation has risen”). However, the most important change is, of course, the signal about a slowdown in the pace of asset purchases. The Fed acknowledged the economy’s progress towards the goals of price stability and maximum employment, and said that tapering of quantitative easing could soon be warranted: Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted. Although this is not a revolution in the Fed’s thinking and it’s not a surprise for the markets, the move is hawkish. The statement shows that the US central bank is determined to begin tapering soon despite the weak non-farm payrolls in August. The Fed didn’t provide any date, but investors could expect an announcement in October or November and effective implementation by the end of this year. Thus, the statement is negative for the gold prices. However, the silver lining is that the FOMC decided to write “moderation” instead of simply “tapering”. For me, this particular phrasing sounds softer, which gives some hope that tapering will be very gradual. So, the Fed’s monetary policy would remain accommodative for quite a long time. September Dot-Plot and Gold Now, let’s move on to the Fed’s newest economic projections that accompanied the statement. As the table below shows, the FOMC expects slower GDP growth, higher unemployment rate and higher inflation this year compared to its June’s forecasts. To be more precise, the FOMC expects that the GDP will jump 5.9% in 2021, compared to the 7% rise expected in June. It’s still an impressive surge but significantly slower than it was expected just three months ago. So, it seems that the Fed has taken the negative impact of the spread of the Delta variant of the coronavirus into account. Similarly, the unemployment rate is forecasted to decrease to 4.8% instead of to 4.5% expected in the previous projections. Meanwhile, the US central bank has also increased its inflation outlook. The FOMC members believe now that the PCE inflation will jump 4.2% this year, compared to 3.4% seen in December. The core PCE inflation is also expected to rise faster, i.e., 3.7%, versus 3% projected previously. So, the Fed expects a slowdown in the GDP growth combined with acceleration in inflation, which sounds stagflationary at the margin. These forecasts, when analyzed alone, should be positive for gold prices. However, the US central bank also updated its forecast for the interest rates. And I don’t have good news. In the latest edition of the Fundamental Gold Report (September 16, 2021), I warned readers of hawkish changes in the expected path of the federal funds rate. Given the increase in inflation since June and all the employment progress the economy made, the upcoming dot-plots could be hawkish and send gold prices lower. You have been warned. And, indeed, according to the fresh dot plot, the FOMC considers one interest rate hike next year as appropriate at the moment. On top of that, the Fed sees three additional 25-basis points increases in 2023, and three more in 2024 (and more hikes later in the future). So, instead of two hikes in 2023, we have one upward move as soon as in 2022 and three more in the following year. It means that the curve of the expected federal funds rate has become much steeper, which could make gold struggle. Implications for Gold What do the latest FOMC statement and dot-plot imply for the gold market? Well, the Fed cleared the way to taper its asset purchase program and signaled that the first interest rate hike could occur sooner than expected. Not surprisingly, the price of gold declined in response to the shift in the timeline of the interest rates liftoff, in line with my expectations. When it comes to the future, I believe that when the dust settles, gold may find some short-term relief. However, my guess is that gold will struggle until the Fed’s tightening cycle is well underway. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care Updated on Sep 23, 2021, 10:26 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: valuewalk4 hr. 7 min. ago

Chinese Real Estate Giant Evergrande Expected To Pay Off Some Debt

Wall Street got some clarification from the Fed yesterday after a long wait, which helps explain why major indices are painted green this morning. The Fed basically said the economy is doing better, and that’s good to hear.  Volatility is down, with the Cboe Volatility Index (VIX) falling back under 20 after soaring above 25 during Monday’s selloff. A dip in VIX could signal a clearer road to stock market gains, as many investors still appear to be bullish about the U.S. stock market vs. other possible places to park their cash.  In a less helpful bit of news, 351,000 Americans filed for jobless claims last week, vs. 320,000 that analysts had expected and an increase from 332,000 the previous week. That could indicate continued labor shortages for some companies and the service sectors.  Don’t Dismiss Evergrande Too Quickly Earlier, in Asia, beleaguered Chinese property developer Evergrande said it would start making payments on some of its debt. However, Beijing is sending out signals that it might let the real estate giant fail on some of its obligations, namely those held by investors overseas.  It’s interesting how the Evergrande worries have faded into the background a bit here after slamming Wall Street earlier this week. It just goes to show how important the Fed is. However, don’t dismiss the Evergrande story. For now, it seems to be in the background, but these stories have a habit of coming back. In other news, there might be interest in a scheduled meeting today with the White House on producers and users of semiconductors, of which there has been a shortage affecting everything from computers to cars. Workers have been curtailed by the pandemic while demand has increased.  Demand also is on the increase for homes, judging by the very nice quarter just reported by KB Home (NYSE: KBH). The homebuilding company had supply chain issues, but revenue still rose 47%. In other earnings news, Blackberry (NYSE: BB) shares were also rising this morning after an earnings beat.  There’s also a bunch of key earnings reports ahead later, including Costco (NASDAQ: COST) and Nike (NYSE: NKE), which could give insight into the health of both U.S. and Chinese consumers.  Next Jobs Report Could Help Determine Fed’s Taper Timing A decent September jobs report probably means the Fed could announce a slight loosening of the economy’s training wheels in November.  That’s basically what Fed Chairman Jerome Powell told us at his press conference yesterday after the Fed’s meeting, and so far, the market seems OK with that. While the major indices pulled back a bit from their peaks after Powell spoke, Wednesday was still a very strong day.  Leading sectors included Financials—which would conceivably benefit from higher rates—and Energy. Both are so-called “cyclical” sectors that tend to do better when the economy is growing, and a taper announcement might be seen as confirmation from the Fed that things are going well. Getting back to Powell, what he said in his press conference is that he thinks “the test is all but met” for a taper of the Fed’s $120 billion a month bond-buying program, but he needs to see a “decent” jobs report. The report—due Friday, Oct. 8—now arguably becomes even more important than it already was following relatively soft August jobs data that reflected the Delta variant’s impact on travel and leisure hiring.  As Powell also said, many Fed officials think the test has already been met to taper. To some analysts, the chairman’s words signaled that a taper announcement is all but baked in at the November meeting, barring some major new bearish development between now and then.  It’s unlikely most investors really believe ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzinga4 hr. 23 min. ago

The SEC wants to kick 2,000 fraud-prone penny stocks from online brokerages, including retail favorites Sears and Blockbuster

Affected stocks include the shell companies liquidating bankrupt Sears and Blockbuster as well as Luckin Coffee, which fell to accounting fraud. Jonathan Ernst/Reuters The SEC is cracking down on trading in 2,000 penny stocks, including Sears and Blockbuster, according to Reuters. Online brokers like Schwab and Fidelity have already stopped new share purchases ahead of the SEC rule. Retail investors have piled into penny or microcap stocks in the last year, egged on by the rise of online brokerages. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. The Securities and Exchange Commission is rolling out a new rule cracking down on trading in penny stocks, including Sears and Blockbuster, according to a Reuters report.The rule requires certain stocks that trade over the counter to disclose more information, such as recent financial data. That could potentially force 1,000 to 2,000 stocks to delist for some time.Online brokers including Schwab and Fidelity have already stopped new share purchases ahead of the SEC rule, according to Reuters. Shareholders will still be able to sell, but brokers are warning that liquidity will dry up.Affected stocks include the shell companies liquidating bankrupt Sears and Blockbuster as well as Luckin Coffee, the once-hyped Chinese cafe chain that fell to accounting fraud. Retail investors have piled into over-the-counter stocks, also called penny or microcap stocks, egged on by the rise of online broker platforms. Penny stock trading volume peaked at 1.9 trillion transactions in February. And even in August, volume remained more than double last year's levels, according to FINRA data cited by Reuters.The SEC argues it is ending a loophole that allowed some penny-stock companies to mislead investors by withholding key information. But Daniel Zinn, a lawyer for OTC Markets Group, which hosts the affected penny stocks, said the opposite may end up being true."We're in agreement with the SEC's goals of providing as much disclosure as possible," said Zinn. But he added that some tiny companies might not be able to pay for the cost of providing paperwork, and others may be wary of promoting trading in their stock. "In those circumstances, no quotes at all may lead to more harm than help for existing investors," said Zinn.Read the original article on Business Insider.....»»

Category: topSource: businessinsider4 hr. 23 min. ago

The UK"s Green Gilt Is Marketing Puff & A Pointless Distraction

The UK's Green Gilt Is Marketing Puff & A Pointless Distraction Authored by Bill Blain via MorningPorridge.com, “Every decent con man knows a simple truth is more powerful than an elaborate lie..” he UK attracted a record £137 bln order book for its £10 bln Green Gilt. But what does the Green Gilt achieve? Its marketing puff. It may disguise how ill-considered and ultimately self-defeating the Government’s rush to looking green has been. No matter how well intentioned a Green Gilt is – its style over substance, papering over the cracks in a confused and contradictory long-term climate-change mitigation strategy.   It fills my heart with joy and makes me proud to be British that the UK Government just received £137 billion of orders for its debut Green Bond – a record historical amount for any UK bond or Green Bond. (US Readers… disinterested sarcasm alert.) Investors were apparently tumbling over themselves to place orders, but I can’t say many will be surprised or disappointed when they got less than 7% of their order. The £10 bln Green Gilt due in 2033 (12 year) will pay a 0.875% and was priced to yield 0.8721%… which is a bit more than the comparable 11year bond was paying at the time…. The proceeds of the new Green Gilt will specifically be earmarked to support green projects including zero-emission transport and offshore wind projects. I don’t quite understand how the spending programme will actually work. I was taught Government funding could not be “hypothecated” (allocated against a specific project or asset) because that would result in political bargaining against good and bad projects, akin to US Pork Barrelling where project money is spent to buy votes. I guess the government must have a very clever super-computer allocating the nice new green coloured pixelated money into a good digital pot that only green civil servants can open to save the planet, while nasty normal money raised from unclean gilts – to fund stuff like building nuclear submarines to sell to Australia to defend Australia’s export chains to China from China – go into a more general dirty digital wallet? (US Readers – mild sarcasm alert.) It would be churlish of me to suggest the only meaningful thing the £10 bln Gilt issue actually does… is reduce the remaining amount of Gilts the UK’s Debt Management Office has to fund this year by about…. let me see if I can work it out… about £10 bln. (Oh, less the marketing and placement fees the govt paid to the banks who lead the deal after persuading Chancellor Rishi Sunak that it would be a brilliant idea for the UK to issue Green Gilts.) It’s reckoned the “greenium” (the premium) the Green Gilt achieved in terms of a lower yield was about 2.5 pence in every hundred pounds – 2.5 basis points. This translates to a saving of around $28 mm pounds in interest rate costs through the life of the bond. Effectively, doing a Green Bond means we got 47 minutes of UK government spending for free! Fantastic…. (Barf…) Oh, and Alok Sharma will be terribly pleased. He is chairing COP26 in November, and will be able to smile and point out how the UK is saving the planet by issuing Green Bonds, and that our green bond is bigger and juicer than Italy’s Green Bond…. I would have been much more impressed if Richy-Rich Sunak had stood up and made honest pledges about how well-considered and properly connected government spending on climate mitigation is a critical objective across all government spending programmes. If he’s as smart as folk seem to think, he’d have been explaining to us that difficult decisions on what can be done immediately, tomorrow and long-term need to be taken. Some of these could look counter-intuitive at first – like a greater reliance on Gas for the next 30-years as the nation’s power infrastructure is re-invented for a carbon neutral age. Such an honest approach would have been way better way than gesture politics like a Green Gilt. Regular readers will be aware Green Bonds impress me slightly less than a raindrop on a rainy day. They are marketing chuff. Some evil banker came up with the idea and persuaded issuers that investors were just desperate to buy anything labelled green, while persuading these same institutional fund managers that their investors were equally desperate to invest in green funds. And thus was spawned the market… (The reality now is retail investors and small savers are faced with a growing plethora of notionally green, but lower yielding funds.) The madness is further illustrated by the number funds now adopting “do-goodyism”. Recently a large fund active in commodities turned down one of my alternative asset ideas on the basis its “too oily for us these days”. They said they’d rather go buy wind-farms because that’s what their investors want. I pointed out that since everyone now wants to own wind-farms to show-off how green they are, the minimal yields on windmills no longer reflect a sensible risk-return, while anything oil-related (even though its effectively carbon-neutral) offers a superb return and are fully climate mitigated! The reality – as any good bond fund manager knows – is green investments depend not on what the label says, but what the money is actually doing and how it is governed and managed. When it comes to the UK’s ability to manage and govern its green spending… Lord preserve us. The way in which the UK has rushed into Green spending and Climate Change mitigation has been about as joined up as a full stop on a blank page. Let’s take the current energy crisis where the UK has “sagely” reduced our gas storage reserves to 1% of yearly need. 3 cold winter days and the UK could run out of power. “Not a problem” says Government – “we can buy it from Yoorp”. No. You can’t. Yoorp is short of gas, and Russia will keep it that way. Ah, retorts the energy minister; “we have lots of windfarms and solar power”… yes, but when there is no wind, which happens when the UK is at the centre of a blocking high sucking in the coldest polar winds from Artic Siberia, windfarms don’t work. Oh, and neither does solar when the day is 8 hours long and its cloudy. (Don’t get me started on offshore wind: looks brilliant on the plans, the due diligence data room and financial projections till you discover trying to replace a broken or cracked turbine blade offshore is massively difficult in a storm, and that booking a boat to do the work from makes it economic to leave it broken till such a time as more boats become available – like next summer, or the summer after that… An engineer could have told you that, but engineers are too clever to work in fund management.) Of course, the UK does have utterly reliable and predictable alternative clean energy resources. The oceans around us produce some of the strongest tides on the planet. They are utterly regular – around the coast there is always tidal energy surging untamed around us. Yet, trying to secure investment for tidal energy projects is a nightmare. Planners aren’t interested in climate mitigation – only on what it might do to the local lug-worm population. Investors aren’t interested – they need their green investments today, so buy wind, no matter how expensive it is. Today, tidal power is between 3-5 times more expensive than wind energy. That will change as more project are tested and succeed – but that will take time and money.. which neither private funders or government show much interest in… In their rush to look green, sound green and be seen doing green they are spending on the immediate but less optimal projects like less-efficient-than-promised wind and socially-dirty lithium rather than building a long-term base in reliable renewables include tide and nuclear, encouraging cleaner energy storage systems (better batteries made from less toxic and socially destructive elements), and missing the opportunity to hydrogenise the economy! But none of that matters, because today The Chancellor will be celebrating a record UK Green Gilt issue, and the investment banks behind it will be counting the fees.. Tyler Durden Thu, 09/23/2021 - 05:00.....»»

Category: blogSource: zerohedge7 hr. 51 min. ago

Three Themes Coalescing – Crescat Capital

Crescat Capital’s commentary for the month of September 2021, discussing the three themes coalescing. Q2 2021 hedge fund letters, conferences and more Dear Investors: Three Themes Coalescing With unsustainable imbalances in the global economy and financial markets today, we see unprecedented opportunities to grow and protect capital in both the near and long term. Crescat […] Crescat Capital’s commentary for the month of September 2021, discussing the three themes coalescing. 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 2021 hedge fund letters, conferences and more Dear Investors: Three Themes Coalescing With unsustainable imbalances in the global economy and financial markets today, we see unprecedented opportunities to grow and protect capital in both the near and long term. Crescat is focused on investment strategies that offer uncommon value and appreciation potential. We believe that all of Crescat’s strategies offer an incredible entry point today based on the firm’s three core macro themes: China credit collapse Record overvalued US equity market top Flight to safety into deeply undervalued gold, silver, and precious metals miners We have researched and written extensively about these themes over the last several years in our investor letters. In our strong view, these are the three biggest macro imbalances and investing opportunities in the world today. The three themes are coalescing at this very moment before the world’s eyes in a likely financial market collision and Great Rotation. We believe our portfolios will be the beneficiary. Our positioning is contrary to many common investment portfolios in the world today. We think too many are over-weighted in extremely overvalued US growth stocks and FAAMG. Most are unprepared for a China monetary collapse or a US stock market downturn. We think too few are positioned for the inevitable stagflation that our models suggest is ahead. As value investors, we are comfortable accepting a reasonable amount of risk to realize the strong returns that are possible from our macro themes and valuation models. Our investment principles and models give us the confidence that the intrinsic value of our portfolios is significantly greater than the current market price at any given time. The combination of already substantial rising inflation in the US along with a China credit collapse, just as the Fed is attempting to taper, is the catalyst for all three of our themes to begin unfolding now. We are headed for a major shake-up in the world’s financial markets at a time of both historic global debt-to-GDP imbalances and record central bank money printing. A Value Approach Our stance is bold. It is highly analytical, valuation-based, and macro driven. As such we are willing to withstand a moderate amount of volatility as markets undergo a re-pricing to realize the ultimate capital appreciation that is attainable from our views. The confidence in our value-based investment process is what gives us the conviction to withstand higher volatility than the average fund manager. Our investment process uses equity and macro models to ensure that the intrinsic value of our portfolios, through discounted cash flow and relative-value methodologies, is always substantially greater than where the market is pricing them today. It is important that Crescat clients embrace a similar value-oriented and long-term mindset to have the confidence that short-term setbacks in Crescat’s strategies are not a permanent loss of capital. The market price of Crescat’s activist long precious metals holdings has fallen in August and September month to date, affecting the long side of all the firm’s strategies. We think this is a mere short-term pullback that presents an incredible buying opportunity. We have the utmost confidence that these positions can deliver extraordinary long-term gains over the next three to five years based on our valuation approach. We have an extensive model to value these holdings based on conservative assumptions. We believe our portfolio of 90+ activist precious metals companies is worth 11 times where the market is valuing them today. That is at the current gold price. They are worth even more than that in a significantly rising new gold and silver bull market that our macro models are forecasting. Pullbacks are a necessary part of the path to delivering substantial long-term returns that more than compensate for the risk. It is the macro imbalances that allow us to enter long positions cheaply and short positions dearly to ultimately deliver outsized appreciation. As value investors, we believe short-term setbacks in Crescat’s strategies offer great opportunities for both new and existing investors to deploy capital. We are firmly positioned in a diversified deep-value portfolio of the most viable new gold and silver deposits on the planet. We own these companies early in what is likely to be a long-term industry cycle for precious metals mining after a decade long bear market. Our companies hold over 300 million target gold equivalent ounces. While the world has largely shunned gold mining stocks since their last major bull market that ended in 2011, in the past year and a half, we have been busy doing private placements to fund the world’s most viable new exploration projects, thereby acquiring gold and silver for literally pennies on the dollar ahead of what we believe will be a new M&A cycle for the mining industry. We very strongly believe that the recent selloff in precious metals, due to Fed taper concerns, is way overdone and that our strategies are poised for a major turn back up in the near term. Our gold and silver holdings have improved over the last two days, and hopefully, it is the turn already. Buy the Dip in Precious Metals The pullback in Crescat’s performance over the past two months, including September month to date, has been almost entirely attributable to our long precious metals positions across all strategies. It is important to understand that these positions were also big winners for us in the prior year through July 2021. The Crescat Precious Metals Fund, our newest fund that is solely focused on this theme, delivered a 235% net return through July in a moderately down gold and silver market. That was the first 12-month period of this fund. Imagine what we should be able to do in a bull market for precious metals. Our precious metals stocks are ultra-deep value positions with incredible appreciation potential still ahead thanks to the expertise of Quinton Hennigh, PhD, Crescat’s Geologic and Technical Director, and his 30+ years of experience in the gold mining exploration industry. The last two months’ sell-off in gold and silver should mark the recent bottom or very close to it. March 2020 was what we believe was the primary bottom of what was a 10-year bear market for junior gold mining stocks. The majors have left exploration to the juniors, so these are the companies that control the world’s next big high-grade gold deposits after a decade of underinvestment in exploration and development. The fact that gold along with our mining portfolios have been catching a safe-haven bid in the market in the last two days as the China Evergrande collapse has caught the world’s attention is phenomenal! This is exactly how a safe-haven currency and the best new gold and silver deposits on the planet should act as a renewed, sober financial order of the world that should emerge as China and the US stock market go into a structural downturn if not outright meltdown. China’s "Mises Moment" The massive US$300 billion China Evergrande collapse feeds into the much bigger $52 trillion Chinese banking system. The latter in our analysis is a phony financial accounting that we can only liken to the largest Ponzi scheme in financial world history. Wall Street came out in force today trying to calm its clients by saying that Evergrande is not China’s Lehman moment. We agree, it is not. It is much bigger than that. The scale of China’s credit bubble is unimaginable. It is 4.5 times the banking bubble in the US ahead of the Global Financial Crisis in absolute as well as relative to GDP terms! US banks were only a US$11 trillion asset bubble at the time when the US GDP was at about the same level as China today. It is not even a Minsky moment. We think China is about to face what we would call a “Mises moment”. China’s unsustainable world-record credit expansion has simply gone on far too long already to where they have only one alternative to reconcile it. All paths lead to a massive currency devaluation. Ludwig von Mises, one of the venerated founders of the Austrian economics school, describes it like this: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” We think most of the financial world is not prepared at all for a China currency collapse. In our global macro fund, we are positioned for a substantial China yuan devaluation and possible de-pegging of the Hong Kong dollar. The latter is an extremely cheap put option. The yuan collapse is inevitable in our view. We have been writing about it for years and believe it is highly prudent to be positioned now. We hold an asymmetric trade with capped downside and large uncapped upside where we are long the dollar and short China’s two primary currencies, the yuan and Hong Kong dollar, through USDCNH and USDHKD call options with tier-1 US bank counterparties. US Stock Market Top In our analysis, China’s financial woes will absolutely be contagious with the US and the world. It is already happening. There is a strong chance that the US equity market has already topped out as of Sep 2 on both the S&P 500 large cap index and the Wilshire 5000 total market index. This has been arguably the most speculative US stock market in history with the highest valuation multiples to underlying fundamentals. In our strong view, there is much downside ahead for broad US stocks. We are determined to capitalize on the equity downturn with overvalued US short positions based on our equity models in our global macro and long/short funds. US stock and credit market’s historic valuations are compliments of rampant speculation underwritten by the Federal Reserve. These asset bubbles are ripe for bursting. The catalyst is the dual combination of rising inflation in the US and a credit crisis in China. We think most investment managers, including hedge funds, are afraid to short stocks and will be caught wrongfooted. Our macro and equity models give us the conviction to be short today. Our firm has an excellent track record of protecting capital during market downturns via our short positions. See our performance reports which show Crescat’s negative and low “downside capture ratio” versus the market in our global macro and long/short hedge funds respectively compared to the S&P 500 and other hedge funds over the long history of these two strategies. Crescat Global Macro’s negative downside capture ratio since inception means that on average it has made money historically when both the market and the hedge fund benchmark has been down. In fact, both funds were up substantially in March 2020, the month of the Covid crash. Gold Wins Whether Safe-Haven Flight or Inflation Hedge On China’s woes, gold should be getting the monetary metal safe-haven bid even though ultimately it is the inflation protection buying on the back of a fiat currency war that makes gold the most attractive to us. When the Fed acts with new measures to counter the strong dollar vs. yuan that would otherwise crimp the US economy, that is when precious metals should go ballistic. We need to be positioned for all of that now, and we are. The Fed is expected to announce the taper tomorrow. A fully committed taper announcement would likely only further catalyze China’s credit collapse and the US equity downturn in our opinion. That is a possibility, but we think a soft taper announcement with a lot of hedging language given China and the potential contagion effects is a more likely event. It still should not stop the US equity market downturn, and it will do nothing to help China. If it is a hard taper, it is just game-on even more so for our equity short positions and China yuan puts. Regarding precious metals, the odds are that gold has already fully priced in the taper based on its pullback over the last two months. If the Fed gives us the “soft taper”, it should allow gold to catch a huge bid and be off to the races. Current Inflation Spike Already Rivals Stagflationary 1973 and 1980 The US Consumer Price Index has risen from 0.3% annualized to 5.3% over just the last 15 months. The last two times we saw this big of a rise over this short of a time were in 1973 and 1980, the two most notorious episodes of stagflation and rising gold prices in US history. Just like in the 1970s, policy makers are trying to tell us not to worry because inflation is “transitory”. But just as then, there is a host of “non-transitory” drivers that include an incipient wage-price spiral, the lag-effect of rents to already substantially higher housing prices, global supply chain shocks from Western trade disintegration with China, and highly probable ongoing deficit spending and debt monetization in the US as far as the eye can see. The big difference between today and the 1970s stagflation is that the Fed has not done anything to fight rising inflationary pressures but instead has done everything to aid and abet them. For instance, from 1972 to 1973, the Fed had already raised its funds rate from 3.5% to 10.8%. And, from 1976 to 1980, it raised the rate from 4.7% to 17.6%. In contrast today, the Fed has kept the funds rate at 0% for the last 16 months and engaged in $4.3 trillion of quantitative easing over the last 18 months monetizing 88% of $4.9 trillion in new debt taken on by the US Treasury over the same time. Fed officials must be looking at this data and internally freaking out. That is why they are probably seriously considering tapering. Stagflation When monetary policy becomes truly extreme, like it was when the US abandoned the gold standard, for instance, we can get both inflation and a stock market crash at the same time. 1973-74 was the prime example. Gold stocks went up 5x in just two years while the S&P 500 was down 50%. At the same time, the popular but overvalued Nifty Fifty large cap growth stocks went down substantially more. Only those alive during the 1970s with money invested in the stock market truly know how shocking and substantial such a crisis can be. It could have been devasting or glorious depending on how one was invested. Gold Launches as Tech Busts Even in less extreme monetary policy situations, gold stocks can go up while widely-held overvalued equities collapse. Late 2000 through 2002 was a perfect example. Then large cap growth and tech stocks were being decimated at the same time as gold stocks began what would ultimately become a ten-year bull market albeit with a significant selloff in late 2008. These two examples are the types of markets for both gold and broad US stocks that we envision over the next two years. Gold Stocks In The Great Depression The Great Depression is yet another example of how gold and gold stocks can perform versus stocks at large in the most serious of financial times. Homestake Mining was the largest precious metals miner of the time. Fed Policy Error Fed watchers are rightly concerned about a forthcoming policy error, but the truth is that the accumulation of global economic and market imbalances and inflationary pressures after many years of taking the path of least resistance with quantitative easing and low interest rate policy has already been the gigantic policy mistake. These misjudgments are not isolated to domestic affairs but have aided and abetted massive credit bubbles in other countries too, particularly China. We believe it is only a matter of time before investors begin stampeding out of S&P 500 index funds and FAAMG stocks and into tangible assets. We think this is the time to get ahead of the curve. As Warren Buffett’s mentor, the legendary Ben Graham, said: “In the short run, the market is a voting machine that requires only money, not intelligence or emotional stability, but in the long run it’s a weighing machine.” We think a little bit of intelligence and a lot of emotional stability could go a long way right now in selling hyper-overvalued stocks at large and buying deeply undervalued gold stocks. We strongly believe the opportunity to put money to work on the recent pullback in Crescat’s strategies is phenomenal today. Performance Download PDF Version Sincerely, Kevin C. Smith, CFA Member & Chief Investment Officer Tavi Costa Member & Portfolio Manager For more information including how to invest, please contact: Marek Iwahashi Client Service Associate miwahashi@crescat.net 303-271-9997 Cassie Fischer Client Service Associate cfischer@crescat.net (303) 350-4000 Linda Carleu Smith, CPA Member & COO lsmith@crescat.net (303) 228-7371 © 2021 Crescat Capital LLC Updated on Sep 22, 2021, 11:28 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: valuewalk14 hr. 7 min. ago

How Bizarre

“History never repeats itself, but it rhymes!” -Mark Twain Dear fellow investors, Q2 2021 hedge fund letters, conferences and more The group, OMC, made a very catchy song and video back in the 1990s called “How Bizarre.” It does a pretty good job of explaining today’s stock market. Brother Pele’s in the back, sweet Zina’s […] “History never repeats itself, but it rhymes!” -Mark Twain Dear fellow investors, 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 Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2021 hedge fund letters, conferences and more The group, OMC, made a very catchy song and video back in the 1990s called “How Bizarre.” It does a pretty good job of explaining today’s stock market. Brother Pele’s in the back, sweet Zina’s in the front Cruisin’ down the freeway in the hot, hot sun Suddenly red-blue lights flash us from behind Loud voice booming, “Please step out onto the line” Pele preaches words of comfort, Zina just hides her eyes Policeman taps his shades, “Is that a Chevy ’69?” How bizarre How bizarre, how bizarre Let us share some of the “bizarre red-blue lights flashing” in the S&P 500 Index: Bank of America Merrill Lynch mathematical model predicts -.8% annual 10-year returns Grantham, Mayo, Van Otterloo & Co. mathematical model predicts -6% real seven-year annualized large cap stock losses S&P 500 Index price-to-sales ratio: S&P 500 weighting in 5x price-to-sales stocks: Amazon has 55 analysts and 55 buy recommendations: Ooh, baby (Ooh, baby) It’s making me crazy (It’s making me crazy) Everytime I look around Everytime I look around (Everytime I look around) Everytime I look around It’s in my face The Financial Euphoria Episode “Every time I look around” this financial euphoria episode is “making me crazy,” because of how long it has lasted, how much the math tied to its carnage makes sense and because the anecdotal evidence has been visible for some time. We are channeling our inner Alan Greenspan, who called the tech bubble “Irrational Exuberance” in late 1996, only to look foolish for nearly four more years. As Art Cashin said recently on CNBC, the Y2K technology spending explosion elongated the tech bubble for another two years. Is the COVID-19 pandemic any different in elongating this euphoria episode? However, back then you needed to be like Zina and “hide her eyes.” Everyone who has hid their eyes, plugged their nose and over-paid for glam tech and high price-to-sales stocks have been rewarded. The similarities or rhymes with 1999-2000 are “in my face.” The thing that protected the singer from getting a ticket was his super-hot red 1969 Chevy convertible. Today, reality is being pushed back by the historically low interest rates. Warren Buffett explained in his May annual meeting that low interest rates have eliminated the gravitational pull on price-to-earnings and price-to-sales ratios. The low rates make expensive stocks look like the red ‘69 Chevy convertible. Inflation is rearing its ugly head and it looks like a 1970s redo as the chart above shows. Ironically, this is not far from when OMC made “How Bizarre.” Overpricing Treasuries relative to inflation was a curse in the 1970s. What will stop it from being a curse this time? Ring master steps out and says “the elephants left town” People jump and jive, but the clowns have stuck around TV news and camera, there’s choppers in the sky Marines, police, reporters ask where, for and why The Bizarre Stock Market You see, the clowns who damaged investors in 1999 have “stuck around.” George Gilder had a huge newsletter following in the late 1990s and investors seemed to hang on every recommendation. Motley Fool (whose Coxcomb trademark is a clown hat) blasted away on radio and in their writing. Unmentioned tech stock research analysts substituted genuine research with investment banking customer recommendations. Gilder has been replaced in 2021 by Ark disruption selections. Motley Fool has been reborn and “marines, police (SEC), reporters ask, where, for and why!” These current “bizarre” sets of experts are bound and determined to do to millennials what the prior group did to boomers. They bludgeoned boomers in the 2000-2003 bear market with the AOL chat room darlings. The millennials have Reddit and Robinhood to thank this time for the chat rooms and future carnage. Jumped into the Chevy and headed for big lights Wanna know the rest? Hey, buy the rights The nice thing about this episode of financial euphoria is that you can buy the rights to own common stocks which are outside this bizarre rhyme of the year 2000. Nobody wants oil stocks because of a big move toward ESG investing (which is also pumping up tech stock valuations). Oil prices have gone up and investors are still afraid to buy in. We view Continental Resources (CLR) like the ’69 Chevy. Folks don’t have the guts to bet on a rise in recurrent inflation and higher interest rates. Lastly, everyone forgets how much value stomped growth from 2000-2003 when these “bizarre” circumstances existed, and the “red-blue lights” were flashing. “Every time I (we) look around,” we see buyers of expensive stocks and, as always, fear stock market failure. Warm regards, William Smead The information contained in this missive represents Smead Capital Management’s opinions, and should not be construed as personalized or individualized investment advice and are subject to change. Past performance is no guarantee of future results. Bill Smead, CIO, wrote this article. It should not be assumed that investing in any securities mentioned above will or will not be profitable. Portfolio composition is subject to change at any time and references to specific securities, industries and sectors in this letter are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. In preparing this document, SCM has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. A list of all recommendations made by Smead Capital Management within the past twelve-month period is available upon request. ©2021 Smead Capital Management, Inc. All rights reserved. This Missive and others are available at www.smeadcap.com. Updated on Sep 22, 2021, 8:52 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: valuewalk16 hr. 39 min. ago

Fed Points Toward Taper, Market Bids Up 1%

The dot-plot for raising interest rates looks fairly mild across the board, which of course would follow the tapering process. We have seen buyers entering into a market stretched to the downside after Monday’s big sell-off on China economy concerns (that have since cooled off) and ahead of the Fed report on monetary policy. Chips were being put on a positive message coming from the Fed, and their gambit paid off: markets jumped to session highs on the release of a new Fed “dot plot” and a clear message about tapering asset purchases soon, likely by the next meeting in early November.Thus, though we’re still down for the week thus far, both the Dow and the S&P 500 have snapped four-day losing streaks, +1.00% and +0.95%, respectively. The Dow gained back 339 points on the day, while the S&P moved back to just under 4400. The Nasdaq followed suit on the day, +1.02% or 150 points, while the small-cap Russell 2000 outperformed the field for the day, +1.48%.In his press conference following the Fed policy meeting, Chair Jay Powell made the point that it is “more important to do it right than fast.” He was talking about when to taper the asset purchase program keeping the U.S. economy currently awash in cash. He said, “If the economy continues to progress, we could move on to the taper by next meeting.” Powell would first like to see a “decent jobs report,” by which he means for the month of September, though many on the Fed committee feel jobs goals have been met.The dot-plot for raising interest rates looks fairly mild across the board. Of course, the tapering program will have had to end already — suggestions are this could resolve by June 2022, at which point rates may begin to lift off. Nine voting Fed members want at least one hike in ’22, with three hikes expected in 2023. By 2024, we should have bottom interest rates between 1-2.75%.Gross Domestic Product (GDP) predictions are for +5.9% growth full-year 2021, slowing to +3.8% (still solid) in 2022. The Unemployment Rate is expected to drop to 4.8% in 2021 to +3.8% in 2022. By 2023, the Fed expects a +3.5% unemployment rate: in short, back to very good pre-Covid levels. These are figures that would not require a backstopping of the economy, and may be able to take incremental rate hike in stride.Existing Homes Sales for August reached 5.88 million, right in-line with expectations, down -2% month over month. Existing home supply fell -1.5%, to 1.29 million and -13% year over year. All four regions shrank somewhat last month, from -0.8% in the West to -1.4% in the Midwest and Northeast. Existing home sales by price fell -20.3% on homes priced between $100-250K; for homes over $1 million, prices rose +40% year over year.Speaking of home sales, new home developer KB Home KBH posted a bottom-line meet and a top-line miss in its Q3 earnings report after today’s closing bell: $1.60 per share was exactly in-line with the Zacks consensus, on $1.47 billion in sales, which missed the $1.56 billion estimate. Closing housing sales did not happen as fast as expected in the quarter, due to supply chain and labor shortage issues. Deliveries were +35% from a year ago.Shares of KB Home dropped around a third of a percent (after dropping -2% directly on the news), still trading +22.3% year to date. The luxury homebuilder’s average price per new home sold rose 11% to $426,800. The company has had a good track record on the earnings front, tarnished only slightly by today’s meet; it has only missed on earnings expectations once in the past five years.Questions or comments about this article and/or its author? Click here>> 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 KB Home (KBH): Free Stock Analysis Report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research 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.....»»

Category: topSource: zacks18 hr. 51 min. ago