ReportWire

Tag: Financial services

  • Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire’s successes

    Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire’s successes

    [ad_1]

    OMAHA, Neb. — Warren Buffett credited his longtime partner — the late Charlie Munger — with being the architect of the Berkshire Hathaway conglomerate he has received the credit for leading and warned shareholders in his annual letter Saturday not to listen to Wall Street pundits or financial advisers who urge them to trade often.

    Buffett said he always writes his letter with smart, long-term investors like his sister Bertie in mind and tries to tell them what he thinks they would like to know about Berkshire.

    “She is sensible – very sensible – instinctively knowing that pundits should always be ignored,” Buffett wrote about Bertie. “After all, if she could reliably predict tomorrow’s winners, would she freely share her valuable insights and thereby increase competitive buying? That would be like finding gold and then handing a map to the neighbors showing its location.”

    Buffett told investors that Berkshire is a safe place to park their cash as long as they don’t expect the “eye-popping performance” of its past because there are no attractively priced acquisition targets out there big enough to make a meaningful difference in the Omaha, Nebraska-based company’s results. But he said Berkshire will be ready to swoop in with its $167.6 billion whenever the casino-like stock market seizes up.

    Investor Cole Smead of Smead Capital Management said Buffett is reassuring investors that “we’ll be ready to buy things when things finally get rational” while warning about the dangers of Wall Street that “is like a denizen of thieves, and they’ll sell you what they can sell you.”

    Munger, Buffett’s longtime investing partner, died in November at age 99 — taking away one of the key sounding boards Buffett relied on over the decades as Berkshire acquired companies like See’s Candy, Geico insurance, BNSF railroad and others to reshape the failing textile mill they took over in the 1960s into the massive eclectic conglomerate Berkshire is today.

    Buffett already devoted part of last year’s annual letter to Berkshire shareholders to a tribute to Munger, but this year’s version led off with even more praise for the revered curmudgeon’s contributions to Berkshire over the years. Buffett said “Charlie was the ‘architect’ of the present Berkshire” who realized early on that it was better to buy wonderful businesses at fair prices.

    “Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades,” Buffett wrote. “In a way his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and when I blundered he never – never – reminded me of my mistake.”

    Munger’s death served as yet another reminder that Berkshire will one day have to move forward without the 93-year-old Buffett at the helm.

    Berkshire has established a succession plan and said that vice chairman Greg Abel will one day replace Buffett as CEO while the company’s two other investment managers will take over the stock portfolio. Abel has already overseen all of Berkshire’s many noninsurance businesses since 2018, and managers at those companies say investors shouldn’t worry about Abel’s ability to lead the company. To a great extent, Berkshire lets its companies run themselves on a day-to-day basis while headquarters decides where to invest all the cash they generate.

    Buffett told investors in his letter that Abel “in all respects is ready to be CEO of Berkshire tomorrow.”

    Edward Jones analyst Jim Shanahan found that comment about Abel comforting, but the question is whether he’ll be ready to take advantage of a big opportunity when there is a financial panic because Abel might be afraid that his first big investment would be a dud.

    “I have no doubt. given his operational background, that he can step in and run Berkshire today, but I don’t know if he’s ready to commit a huge amount of capital,” Shanahan said.

    CFRA Research analyst Cathy Seifert said Berkshire does have “really strong, stable, second and third tier level managers” who don’t get much attention, but investors understandably want to hear more from Abel and fellow vice chairman Ajit Jain, who runs the insurance businesses. Maybe that will happen at this year’s shareholder meeting in May.

    Buffett also recounted how Berkshire’s insurance businesses thrived last year, but its massive utilities and BNSF railroad disappointed. He also told shareholders how he never plans to sell its stakes in nearly 30% of Occidental Petroleum and 9% of five large Japanese trading houses, but he reiterated that he has no plans to buy the oil producer outright.

    Berkshire’s eclectic mix of businesses, combined with the strong performance of its investments, delivered a profit of $37.57 billion, or $26,043 per Class A share, in the fourth quarter. That’s more than double the $18.08 billion profit, or $12,355 per Class A share, that Berkshire reported a year earlier.

    But Buffett cautioned that investors should largely ignore those bottom line figures because they are swayed so much by the paper value of its investments. Instead, he has long urged investors to pay attention to Berkshire’s operating earnings that exclude investments.

    By that measure, Berkshire reported a 28% jump in operating earnings to $8.48 billion, or $5,878.21 per Class A share. That’s up from $6.63 billion, or $4,527.06 per Class A share.

    The three analysts surveyed by FactSet Research predicted that Berkshire would report quarterly operating earnings of $5,717,17 per Class A share.

    Berkshire’s stock set a series of records in recent weeks, most recently peaking at $632,820 per Class A share Friday morning as investors eagerly anticipated Buffett’s letter. Buffett is revered for his remarkably successful track record and the sage advice he has offered over the decades. His annual letter is always one of the best-read reports in the business world.

    Berkshire also spent $2.2 billion repurchasing its own shares in the fourth quarter, bringing the total to $9.2 billion for the full year.

    But the cash continues to pile up to record levels at Berkshire because Buffett can’t find any huge investments at reasonable prices.

    One of the biggest acquisitions Berkshire did make recently was the purchase of the last 20% of the Pilot truck stop business it hadn’t already bought as part of a 2017 deal. But that transaction with the Haslam family got messy last year with both Berkshire and the Haslams accusing each other of trying to manipulate Pilot’s earnings to affect the price Berkshire had to pay.

    The dueling lawsuits over that deal generated headlines with bribery allegations and other alleged misdeeds before being settled in January. Berkshire completed the purchase of the nation’s largest truck stop operator last month for only $2.6 billion.

    Buffett didn’t directly comment on that deal, but he may have been hinting at it when he recounted classic advice from 1863 urging all banks to “never deal with a rascal” that he said he’s learned the wisdom of over the years.

    “People are not that easy to read,” Buffett said. “Sincerity and empathy can easily be faked. That is as true now as it was in 1863.”

    ___

    For more AP coverage of Warren Buffett look here: https://apnews.com/hub/warren-buffett or see Berkshire Hathaway news here: https://apnews.com/hub/berkshire-hathaway-inc and follow Josh Funk online at https://www.twitter.com/funkwrite and https://www.linkedin.com/in/funkwrite

    [ad_2]

    Source link

  • Americans’ reliance on credit cards is the key to Capital One’s bid for Discover

    Americans’ reliance on credit cards is the key to Capital One’s bid for Discover

    [ad_1]

    NEW YORK — Americans have become increasingly reliant on their credit cards since the pandemic. So much so that Capital One is willing to bet more than $30 billion that they won’t break the habit.

    Capital One Financial announced Monday that it would buy Discover Financial Services for $35 billion. The combination could potentially shake up the payments industry, which is largely dominated by Visa and Mastercard.

    For customers of the companies, it might eventually mean bigger perks and more merchant acceptance of Discover cards, and potentially lead to more competition in the payments industry. But most of the benefits will be going to the companies themselves, as well as the merchants who accept these cards.

    Why is the deal important?

    Some of the biggest issuers of credit cards are banks, like JPMorgan Chase and Citigroup. But Capital One and Discover are first and foremost credit card companies — like American Express, but with different clientele. They have tens of millions of customers and target their products at Americans who do not travel heavily outside the U.S. and would like to get more value out of their everyday purchases like gas, groceries and domestic travel. In other words, people who typically don’t carry premium credit cards.

    The combined company will have more loans to customers on its credit cards than JPMorgan and Citigroup combined. The merger also gives the Discover network the ability to fight on more equal footing with Mastercard and American Express in a way that it simply hasn’t been able to in its 40-year history.

    “You want the customer or merchant to choose you as a company, either for your products or for your brand, and this deal gives them plenty of opportunity to make that case,” said Sanjay Sakhrani, a payments industry analyst with Keefe, Bruyette & Woods.

    Who uses Capital One and Discover?

    Capital One is one of the biggest credit card companies and banks in the country. It typically operates what is known in the credit card industry as a “barbell” business model — it issues credit cards to those with less-than-great credit as well as with super high credit, and little in between. The one group keeps a balance, bringing the company interest revenue, while the high-end customers spend heavily on their cards, bringing in fee revenue from merchants.

    Discover’s customers are fewer but intensely loyal to the company. The company consistently wins customer service awards, and its cash-back cards are considered among the most lucrative in the industry.

    But Discover suffers from a perception that because its payment network is smaller than Visa, Mastercard or AmEx, it is less desirable. Also, Discover is largely unavailable outside the U.S. as a payment option.

    Capital One executives said Tuesday that they would start allowing customers to use the Discover payment network shortly after the deal closes, which could happen by the end of the year. Capital One also plans to keep the Discover brand along with its cards, although the cards could be co-branded.

    What does this deal say about credit card spending?

    This deal, at its core, is a big bet that Americans will keep running up their credit card balances.

    Americans have been increasing their card balances quickly amid two years of high inflation. In the fourth quarter of 2023, Americans held $1.13 trillion on their credit cards, and aggregate household debt balances increased by $212 billion, up 1.2%, according to the latest data from the New York Federal Reserve.

    Consumers are also paying higher interest rates on those balances. The average interest rate on a bank credit card is roughly 21.5%, the highest it’s been since the Federal Reserve started tracking the data in 1994.

    Critics of Capital One have long said the company relies heavily on those who can least afford to be carrying high interest balances on their credit cards. Historically Capital One has had higher default rates and higher 30-day delinquency rates than JPMorgan, Citi, Discover and American Express.

    What’s so valuable about Discover?

    It’s virtually impossible to build a credit and debit card network from scratch in today’s market. Capital One executives described previous efforts to do so as a “chicken or egg” problem, where it’s hard to get merchants to sign up for a payment network when there are few customers, and vice versa.

    Chicago-based Discover may be small but its infrastructure makes it poised to grow, particularly as more transactions move away from cash. The U.S. credit card industry is dominated by the Visa-Mastercard duopoly with AmEx being a distance third place and Discover an even more distant fourth place. Roughly $6.8 trillion is run on Visa’s credit and debit network compared to the only $550 billion on Discover’s network.

    Owning Discover’s network would enable Capital One to get revenue from fees charged for every merchant transaction that runs on the network.

    It also turns Capital One into the rare credit card company that controls the cards, the payment network and the bank that issues the card. There’s only one other company that has accomplished this to scale: American Express.

    Will regulators approve the deal?

    It’s unclear whether the deal will pass regulatory scrutiny. Nearly every bank issues a credit card to customers but few companies are credit card companies first, and banks second. Both Discover — which was long ago the Sears Card — and Capital One started off as credit card companies that expanded into other financial offerings like checking and savings accounts.

    Bank regulators have signaled for some time that they want to give more scrutiny to large mergers in the financial services sector. The combined Discover-Capital One company will have more than $600 billion in assets, making it bigger than most large regional banks in the country.

    Consumer groups are expected to put heavy pressure on the Biden Administration to make sure the deal is good for consumers as well as shareholders. Left-leaning politicians like Sen. Sherrod Brown, the powerful Democratic chair of the Senate Banking Committee, are already calling for close scrutiny of the deal.

    “The deal also poses massive anti-trust concerns, given the vertical integration of Capital One’s credit card lending with Discover’s credit card network,” said Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition.

    [ad_2]

    By Ken Sweet | Associated Press

    Source link

  • Nigeria’s currency has fallen to a record low as inflation surges. How did things get so bad?

    Nigeria’s currency has fallen to a record low as inflation surges. How did things get so bad?

    [ad_1]

    ABUJA, Nigeria — Nigerians are facing one of the West African nation’s worst economic crises in years triggered by surging inflation, the result of monetary policies that have pushed the currency to an all-time low against the dollar. The situation has provoked anger and protests across the country.

    The latest government statistics released Thursday showed the inflation rate in January rose to 29.9%, its highest since 1996, mainly driven by food and non-alcoholic beverages. Nigeria‘s currency, the naira, further plummeted to 1,524 to $1 on Friday, reflecting a 230% loss of value in the last year.

    “My family is now living one day at a time (and) trusting God,” said trader Idris Ahmed, whose sales at a clothing store in Nigeria’s capital of Abuja have declined from an average of $46 daily to $16.

    The plummeting currency worsens an already bad situation, further eroding incomes and savings. It squeezes millions of Nigerians already struggling with hardship due to government reforms including the removal of gas subsidies that resulted in gas prices tripling.

    With a population of more than 210 million people, Nigeria is not just Africa’s most populous country but also the continent’s largest economy. Its gross domestic product is driven mainly by services such as information technology and banking, followed by manufacturing and processing businesses and then agriculture.

    The challenge is that the economy is far from sufficient for Nigeria’s booming population, relying heavily on imports to meet the daily needs of its citizens from cars to cutlery. So it is easily affected by external shocks such as the parallel foreign exchange market that determines the price of goods and services.

    Nigeria’s economy is heavily dependent on crude oil, its largest foreign exchange earner. When crude prices plunged in 2014, authorities used its scarce foreign reserves to try to stabilize the naira amid multiple exchange rates. The government also shut down the land borders to encourage local production and limited access to the dollar for importers of certain items.

    The measures, however, further destabilized the naira by facilitating a booming parallel market for the dollar. Crude oil sales that boost foreign exchange earnings have also dropped because of chronic theft and pipeline vandalism.

    Shortly after taking the reins of power in May last year, President Bola Tinubu took bold steps to fix the ailing economy and attract investors. He announced the end of costly decadeslong gas subsidies, which the government said were no longer sustainable. Meanwhile, the country’s multiple exchange rates were unified to allow market forces to determine the rate of the local naira against the dollar, which in effect devalued the currency.

    Analysts say there were no adequate measures to contain the shocks that were bound to come as a result of reforms including the provision of a subsidized transportation system and an immediate increase in wages.

    So the more than 200% increase in gas prices caused by the end of the gas subsidy started to have a knock-on effect on everything else, especially because locals rely heavily on gas-powered generators to light their households and run their businesses.

    Under the previous leadership of the Central Bank of Nigeria, policymakers tightly controlled the rate of the naira against the dollar, thereby forcing individuals and businesses in need of dollars to head to the black market, where the currency was trading at a much lower rate.

    There was also a huge backlog of accumulated foreign exchange demand on the official market — estimated to be $7 billion — due in part to limited dollar flows as foreign investments into Nigeria and the country’s sale of crude oil have declined.

    Authorities said a unified exchange rate would mean easier access to the dollar, thereby encouraging foreign investors and stabilizing the naira. But that has yet to happen because inflows have been poor. Instead, the naira has further weakened as it continues to depreciate against the dollar.

    CBN Gov. Olayemi Cardoso has said the bank has cleared $2.5 billion of the foreign exchange backlog out of the $7 billion that had been outstanding. The bank, however, found that $2.4 billion of that backlog were false claims that it would not clear, Cardoso said, leaving a balance of about $2.2 billion, which he said will be cleared “soon.”

    Tinubu, meanwhile, has directed the release of food items such as cereals from government reserves among other palliatives to help cushion the effect of the hardship. The government has also said it plans to set up a commodity board to help regulate the soaring prices of goods and services.

    On Thursday, the Nigerian leader met with state governors to deliberate on the economic crisis, part of which he blamed on the large-scale hoarding of food in some warehouses.

    “We must ensure that speculators, hoarders and rent seekers are not allowed to sabotage our efforts in ensuring the wide availability of food to all Nigerians,” Tinubu said.

    By Friday morning, local media were reporting that stores were being sealed for hoarding and charging unfair prices.

    The situation is at its worst in conflict zones in northern Nigeria, where farming communities are no longer able to cultivate what they eat as they are forced to flee violence. Pockets of protests have broken out in past weeks but security forces have been quick to impede them, even making arrests in some cases.

    In the economic hub of Lagos and other major cities, there are fewer cars and more legs on the roads as commuters are forced to trek to work. The prices of everything from food to household items increase daily.

    “Even to eat now is a problem,” said Ahmed in Abuja. “But what can we do?”

    [ad_2]

    Source link

  • Nigeria’s currency has fallen to a record low as inflation surges. How did things get so bad?

    Nigeria’s currency has fallen to a record low as inflation surges. How did things get so bad?

    [ad_1]

    ABUJA, Nigeria — Nigerians are facing one of the West African nation’s worst economic crises in years triggered by surging inflation, the result of monetary policies that have pushed the currency to an all-time low against the dollar. The situation has provoked anger and protests across the country.

    The latest government statistics released Thursday showed the inflation rate in January rose to 29.9%, its highest since 1996, mainly driven by food and non-alcoholic beverages. Nigeria‘s currency, the naira, further plummeted to 1,524 to $1 on Friday, reflecting a 230% loss of value in the last year.

    “My family is now living one day at a time (and) trusting God,” said trader Idris Ahmed, whose sales at a clothing store in Nigeria’s capital of Abuja have declined from an average of $46 daily to $16.

    The plummeting currency worsens an already bad situation, further eroding incomes and savings. It squeezes millions of Nigerians already struggling with hardship due to government reforms including the removal of gas subsidies that resulted in gas prices tripling.

    With a population of more than 210 million people, Nigeria is not just Africa’s most populous country but also the continent’s largest economy. Its gross domestic product is driven mainly by services such as information technology and banking, followed by manufacturing and processing businesses and then agriculture.

    The challenge is that the economy is far from sufficient for Nigeria’s booming population, relying heavily on imports to meet the daily needs of its citizens from cars to cutlery. So it is easily affected by external shocks such as the parallel foreign exchange market that determines the price of goods and services.

    Nigeria’s economy is heavily dependent on crude oil, its largest foreign exchange earner. When crude prices plunged in 2014, authorities used its scarce foreign reserves to try to stabilize the naira amid multiple exchange rates. The government also shut down the land borders to encourage local production and limited access to the dollar for importers of certain items.

    The measures, however, further destabilized the naira by facilitating a booming parallel market for the dollar. Crude oil sales that boost foreign exchange earnings have also dropped because of chronic theft and pipeline vandalism.

    Shortly after taking the reins of power in May last year, President Bola Tinubu took bold steps to fix the ailing economy and attract investors. He announced the end of costly decadeslong gas subsidies, which the government said were no longer sustainable. Meanwhile, the country’s multiple exchange rates were unified to allow market forces to determine the rate of the local naira against the dollar, which in effect devalued the currency.

    Analysts say there were no adequate measures to contain the shocks that were bound to come as a result of reforms including the provision of a subsidized transportation system and an immediate increase in wages.

    So the more than 200% increase in gas prices caused by the end of the gas subsidy started to have a knock-on effect on everything else, especially because locals rely heavily on gas-powered generators to light their households and run their businesses.

    Under the previous leadership of the Central Bank of Nigeria, policymakers tightly controlled the rate of the naira against the dollar, thereby forcing individuals and businesses in need of dollars to head to the black market, where the currency was trading at a much lower rate.

    There was also a huge backlog of accumulated foreign exchange demand on the official market — estimated to be $7 billion — due in part to limited dollar flows as foreign investments into Nigeria and the country’s sale of crude oil have declined.

    Authorities said a unified exchange rate would mean easier access to the dollar, thereby encouraging foreign investors and stabilizing the naira. But that has yet to happen because inflows have been poor. Instead, the naira has further weakened as it continues to depreciate against the dollar.

    CBN Gov. Olayemi Cardoso has said the bank has cleared $2.5 billion of the foreign exchange backlog out of the $7 billion that had been outstanding. The bank, however, found that $2.4 billion of that backlog were false claims that it would not clear, Cardoso said, leaving a balance of about $2.2 billion, which he said will be cleared “soon.”

    Tinubu, meanwhile, has directed the release of food items such as cereals from government reserves among other palliatives to help cushion the effect of the hardship. The government has also said it plans to set up a commodity board to help regulate the soaring prices of goods and services.

    On Thursday, the Nigerian leader met with state governors to deliberate on the economic crisis, part of which he blamed on the large-scale hoarding of food in some warehouses.

    “We must ensure that speculators, hoarders and rent seekers are not allowed to sabotage our efforts in ensuring the wide availability of food to all Nigerians,” Tinubu said.

    By Friday morning, local media were reporting that stores were being sealed for hoarding and charging unfair prices.

    The situation is at its worst in conflict zones in northern Nigeria, where farming communities are no longer able to cultivate what they eat as they are forced to flee violence. Pockets of protests have broken out in past weeks but security forces have been quick to impede them, even making arrests in some cases.

    In the economic hub of Lagos and other major cities, there are fewer cars and more legs on the roads as commuters are forced to trek to work. The prices of everything from food to household items increase daily.

    “Even to eat now is a problem,” said Ahmed in Abuja. “But what can we do?”

    [ad_2]

    Source link

  • Stock market today: Strong profit reports support stocks a day after Wall Street’s sharp tumble

    Stock market today: Strong profit reports support stocks a day after Wall Street’s sharp tumble

    [ad_1]

    NEW YORK — U.S. stocks are holding steadier Wednesday, a day after skidding to sharp losses on worries that high interest rates may stick around for months longer than hoped.

    The S&P 500 was 0.3% higher in midday trading after tumbling 1.4% on Tuesday. A hotter-than-expected report on inflation forced investors to delay forecasts for when the Federal Reserve may begin cutting interest rates, potentially into the summer. Expectations for such cuts are a big reason stocks rallied to records recently.

    The Dow Jones Industrial Average was edging down by 10 points, or less than 0.1%, after dropping 524 points for its worst loss in nearly 11 months. The Nasdaq composite was 0.3% higher, as of 11 a.m. Eastern time.

    The smallest stocks, which took the hardest hit from worries about higher interest rates on Tuesday, bounced back more than the rest of the market. The Russell 2000 index jumped 1%.

    Helping to keep things steadier was a calmer bond market. Treasury yields were easing after shooting upward a day earlier on expectations the Fed would keep rates high for longer. The central bank has already jacked its main interest rate to the highest level since 2001 in hopes of slowing the overall economy just enough to grind high inflation down to its target.

    The yield on the 10-year Treasury edged down to 4.28% from 4.32% late Tuesday. It’s still well above its 3.85% level at the start of this month.

    DaVita jumped 6.4% for one of the S&P 500’s larger gains after the health care company reported stronger profit and revenue for the latest quarter than analysts expected.

    Most companies in the S&P 500 have been topping analysts’ forecasts for the last three months of 2023. Hopes for stronger growth in 2024 from a solid economy have been another reason the S&P 500 has set 10 records already this year.

    Lyft shares were 32.3% higher after a wild ride in off-hours trading driven by a typo in its latest earnings report. The ride-hailing company reported stronger profit and revenue than analysts expected, but its press release also said it expects a key measure of profitability to improve by 500 basis points, or 5 percentage points. Later, it said that should have been 50 basis points, or 0.5 percentage points.

    Lyft’s stock had rocketed up 60% in after-hours trading Tuesday following the typo.

    Rival Uber Technologies rose 11.8% after its board authorized a program to buy back up to $7 billion of its stock. Investors tend to like such programs because they send cash directly to shareholders and can boost per-share profits.

    Robinhood Markets gained 8.6% after it reported a profit for the latest quarter, when analysts were expecting a loss. The stock and crypto trading platform also said its total net revenue rose 24%, more than analysts expected.

    Online vacation rental booker Airbnb slid 4.6% after it reported losing $349 million in the fourth quarter due to an income tax settlement with Italy. Analysts had been expecting a profit.

    The company forecast first-quarter revenue that would meet or beat Wall Street expectations, however, Airbnb said the pace of bookings growth is likely to “moderate” from the fourth quarter into the first.

    Akamai Technologies dropped 7.9% after it reported mixed results. Its profit for the latest quarter topped analysts’ forecasts, but its revenue fell short.

    In stock markets abroad, London’s FTSE 100 rose 0.8% following a better-than-expected report on inflation in the United Kingdom.

    Hong Kong’s Hang Seng index gained 0.8% after trading reopened there, but markets remained closed in mainland China for the Lunar New Year holiday. Stocks fell elsewhere in Asia, with Japan’s Nikkei 225 down 0.7% and South Korea’s Kospi down 1.1%.

    ___

    AP Business Writers Yuri Kageyama and Matt Ott contributed.

    [ad_2]

    Source link

  • Barclays to buy retail banking arm of supermarket chain Tesco for £600 million

    Barclays to buy retail banking arm of supermarket chain Tesco for £600 million

    [ad_1]

    Tesco on Friday said it was selling the retailing banking business of Tesco Bank to Barclays for £600 million initially, and then another £100 million after the settlement of certain regulatory capital amounts and after transaction costs.

    The U.K. supermarket chain said it will use majority of a combined £1 billion, which also includes a special dividend previously announced from Tesco Bank, for a share buyback.

    It will retain insurance, ATMs, travel money and gift cards, that on a proforma basis account for roughly £80 million to £100 million in operating profit, and said the deal is mildly accretive to earnings per share.

    Barclays said it’s acquiring credit cards, unsecured personal loans, deposits and the operating infrastructure that includes £8.3 billion of unsecured lending balances with a credit quality consistent with its existing U.K. portfolios. The business it’s buying had an adjusted operating profit of approximately £85 million in the 12 months ended February 2023.

    Barclays also will enter into an exclusive strategic partnership with Tesco for an initial period of 10 years to market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, paying £50 million per year.

    Tesco
    TSCO,
    +0.89%
    shares have dropped 3% this year while Barclays
    BARC,
    -1.02%
    shares have declined by 7%.

    [ad_2]

    Source link

  • Stock market today: Asian shares are mixed, with China up after state fund says it will buy stocks

    Stock market today: Asian shares are mixed, with China up after state fund says it will buy stocks

    [ad_1]

    BANGKOK — Shares were mixed Tuesday in Asia, where Chinese stocks surged after a government investment fund said it would step up stock purchases and a report said leader Xi Jinping was set to meet with officials to discuss the markets.

    Oil prices rose and U.S. futures were mixed.

    Bloomberg reported that Xi was to be briefed by officials about the markets, underscoring the ruling Communist Party’s concern over a slump that has wiped out trillions of dollars in market value over the past several years. Citing unnamed officials, it said the timing of the briefing was uncertain. The report could not be confirmed.

    But markets jumped after it was published, with Hong Kong’s Hang Seng surging 4% to 16,133.60 in a rally led by technology shares such as e-commerce giant Alibaba, which gained 7.7% and JD.com, which was up 7.7%. Online food delivery company Meituan jumped 6.5%.

    The Shanghai Composite index climbed 3.2% to 2,789.49. In China’s smaller main market, the Shenzhen Component index soared 6.2%, while the CSI 1000, an exchange-traded fund that often is used to track so-called “snowball derivatives,” investment products that can pay big gains but also can result in exaggerated losses, advanced 7%.

    The latest salvo in the government’s campaign to prop up sagging markets came with a promise by China’s Central Huijin Investment, a sovereign fund that owns China’s state-run banks and other big government controlled enterprises, to expand its purchases of stock index funds.

    The fund periodically steps up buying of shares in big state-owned banks and other companies to counter heavy selling pressure in the Chinese markets. On Monday, benchmarks in Shanghai and the smaller market in Shenzhen bounced between small gains and big losses, while share prices of state-run banks and other big companies rose.

    Elsewhere in Asia, Tokyo’s Nikkei 225 index fell 0.5% to 36,160.66 and the Kospi in South Korea lost 0.6%, to 2,576.20.

    Australia’s S&P/ASX 200 shed 0.6% to 7,581.60

    In Bangkok, the SET gained 1%, while India’s Sensex rose 0.5%.

    On Monday, stocks slipped on Wall Street as data showed the economy remains strong, which could delay interest rate cuts investors are counting on.

    The S&P 500 fell 0.3% to 4,942.81 from the all-time high set Friday. The Dow Jones Industrial Average dropped 0.7% to 38,380.12, and the Nasdaq composite edged down by 0.2%, to 15,597.68.

    Stocks broadly felt pressure from another jump for bond yields, which rose as traders absorbed a message that the Federal Reserve will not begin cutting its main interest rate as soon as they had hoped.

    The Fed has yanked the federal funds rate to its highest level since 2001 to bring down high inflation. High rates intentionally slow the economy by making borrowing more expensive and hurting investment prices.

    Federal Reserve Chair Jerome Powell said again in an interview broadcast Sunday that the Fed may cut interest rates three times this year because inflation has been cooling. But he also indicated again in the interview on “60 Minutes” that the Fed is unlikely to begin in March, as many traders had earlier hoped.

    The yield on the 10-year Treasury was at 4.15% early Tuesday, down from 4.16% late Monday.

    A report showed U.S. services industries are more robust than economists expected, led by health care and social assistance, according to the Institute for Supply Management

    Such signals could lead the Fed to pause longer before cutting rates, because they could keep upward pressure on inflation.

    But there’s also an upside for stocks from the U.S. economy’s blasting through worries about a possible recession. The economic strength should drive growth in profits for companies, which are the other lever that dictates where stock prices go over the long term.

    In other trading Tuesday, U.S. benchmark crude oil gained 26 cents to $73.04 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, was up 29 cents at $78.28 per barrel.

    The dollar fell to 148.60 Japanese yen from 148.68 yen. The euro rose to $1.0757 from $1.0743.

    [ad_2]

    Source link

  • Swiss bank UBS reports pretax loss in 4Q, plans share buybacks after Credit Suisse deal wraps up

    Swiss bank UBS reports pretax loss in 4Q, plans share buybacks after Credit Suisse deal wraps up

    [ad_1]

    GENEVA — UBS on Tuesday reported a fourth-quarter pretax loss of more than $750 million as the Swiss banking giant continued to integrate its longtime rival Credit Suisse after a government-orchestrated merger.

    The Zurich-based lender reported losses before tax of $751 million in the quarter, which included losses of more than a half-billion dollars linked to an investment in SIX Group, which operates Switzerland’s main stock market. The net loss in the quarter came in at $278 million.

    UBS said it expects to complete the merger of Credit Suisse by the end of the second quarter this year, and the merger of the two banks’ Swiss operations by the end of the third quarter. The company plans to increase its dividend for the 2023 financial year by 27 percent, and said it would resume share buybacks in the second half of the year.

    “As we move to the next phase of our journey, we will focus on restructuring and optimizing the combined businesses,” CEO Sergio Ermotti said in a statement. “While our progress over the next three years will not be measured in a straight line, our strategy is clear.”

    The bank said net new assets came in at $22 billion during the fourth quarter, which marked a slowdown from the injection of new assets shortly after the merger was completed in June last year. For the year, UBS took in $77 billion in new assets across its wealth-management and personal and corporate banking segments.

    The bank said operating expenses jumped 43% to more than $5 billion in the quarter, largely due to expenses linked to the Credit Suisse consolidation and integration expenses, and higher compensation for financial advisors.

    Of that, UBS said it faced a $60 million charge from the U.S. Federal Deposit Insurance Corp. to recover losses to an insurance fund in connection with the failures of Silicon Valley Bank and Signature Bank in the United States last year. Woes at Credit Suisse — before the UBS merger — and the two U.S. banks unsettled global financial markets in 2023.

    UBS said revenues jumped 35% to nearly $10.9 billion in the fourth quarter.

    Underlying pretax profit of $592 million in the fourth quarter fell more than one-third compared with the third quarter, UBS said, citing “lower client activity and billable invested assets” as well as $75 million in bank-levy expenses and the cost of the FDIC assessment.

    [ad_2]

    Source link

  • Turkey has another new central bank leader. Here’s what it means for the battered economy

    Turkey has another new central bank leader. Here’s what it means for the battered economy

    [ad_1]

    ISTANBUL — Turkey has seen its fifth central bank leader depart in as many years as Hafize Gaye Erkan, the first woman in the top role, stepped down after just eight months in the job.

    She announced her resignation late Friday after recent claims of nepotism emerged in local media, allegations that Erkan, a former senior Goldman Sachs executive, strongly rejected.

    While President Recep Tayyip Erdogan has previously fired central bank governors who spurned his unorthodox belief in keeping interest rates low to fight inflation — which runs contrary to mainstream economic thinking — Erkan has blamed a “major reputation assassination campaign.”

    Her replacement, Deputy Governor Fatih Karahan, indicates that Turkey will maintain higher interest rates overseen by Finance Minister Mehmet Simsek.

    A series of rate hikes after Erdogan was reelected in May has marked a turnaround from his unconventional policies that economists say helped trigger a currency crisis and drove up the cost of living, leaving households struggling to afford basic goods.

    Here are key things to know about the central bank shakeup and what it means for Turkey’s battered economy:

    Erkan resigned after weeks of media stories about her father’s undue influence in the central bank’s Istanbul office.

    Although she received some degree of support from Erdogan, who spoke out against “unreasonable rumors “ that undermined Turkey’s economic progress, critics continued to question her leadership.

    In particular, they highlighted a magazine interview in which she said her family had moved in with her parents because they could not afford to rent a home in Istanbul due to high prices.

    Previous changes in central bank leadership has seen Erdogan row back on efforts to bring inflation under control through interest rate hikes.

    Following last May’s parliamentary and presidential elections, Simsek and Erkan were appointed to tackle the country’s economic woes through higher borrowing costs. Interest rates have gone from 8.5% in June to 45% late last month, a move widely welcomed by foreign investors who had previously turned their backs on Turkey.

    Despite such hikes, inflation remains high — consumer prices rose to an eye-watering 64.86% in January from a year earlier, according to figures released Monday, up from 64.77% seen in December.

    The Saturday appointment of Karahan, another member of Finance Minister Simsek’s team, strongly suggests there will be no reversal of economic policy this time.

    Like Erkan and Simsek, the new bank governor has plenty of experience working in the U.S. He was brought in as the bank’s deputy head at the same time Simsek took over the Finance Ministry and Erkan was appointed to lead the central bank.

    Karahan, who is in his early 40s, completed his master’s degree and doctorate in economics at the University of Pennsylvania before starting a 10-year career at the Federal Reserve Bank of New York in 2012.

    He was then appointed chief economist at Amazon, while working as a part-time lecturer at Columbia and New York universities.

    Following Karahan’s appointment on Saturday, Simsek said those running the Turkish economy were “committed to supporting the disinflation process through restoring fiscal discipline.”

    He added: “Our president has full support and confidence in our economic team and the programme we are implementing.”

    Turkey faces local elections in March that will see Erdogan attempt to retake several major cities won by the opposition in 2019, including Ankara and Istanbul.

    It’s possible that a poor showing for the president’s party could shake his resolve to stick with Simsek and his “rational” approach.

    The argument in favor of a further rate hike later this month was “compelling and would underline the central bank’s commitment to tackle inflation” while also building Karahan’s credibility, said Liam Peach, senior emerging markets economist at Capital Economics.

    However, Can Selcuki, managing partner at Istanbul Economy Research, said another rate hike seemed unlikely even though Turkey’s economy “is not out of the woods by a long shot.”

    “It’s not the governor that matters — it’s Simsek. As long as he’s in position, he will ensure the current policy’s not changed,” Selcuki said, referring to Karahan’s appointment.

    [ad_2]

    Source link

  • China markets regulator promises to protect small investors as stocks hit 5 year lows

    China markets regulator promises to protect small investors as stocks hit 5 year lows

    [ad_1]

    BANGKOK — Chinese shares gyrated on Monday, sinking to 5-year lows, after stock market regulators sought to reassure jittery investors with a promise to crack down on stock price manipulation and “malicious short selling.”

    Shares in Shanghai and the smaller market in Shenzhen, near Hong Kong, swung between big losses and small gains throughout the day. The markets have languished on heavy selling of property shares that have suffered with a slump in the real estate market.

    Market observers said there were signs the authorities had, as is often the case, ordered big institutional investors to step up buying of state-owned banks and other heavyweights.

    The Industrial & Commercial Bank of China gained 2.3%, Bank of China was up 2.6% and the Agricultural Bank of China rose 2.2%.

    But shares still mostly lost ground. The Shenzhen Component index lost 1.1% after dipping as much as 4.4%. The Shanghai Composite index shed 1% to 2,702.19, having lost 3.5% earlier.

    Wilder swings were seen in the CSI 1000 index, an exchange-traded fund that fell as much as 8.7% on Monday before regaining some of the losses to close down 6.1%. The CSI 1000 is often used to track so-called “snowball derivatives” which offer big gains but also can result in exaggerated losses.

    Chinese companies have lost billions of dollars worth of market value as investors shifted away from the markets in Hong Kong and the mainland in search of better returns.

    Apart from the troubles in the property market, where developers are struggling to restore their balance sheets after the government cracked down on excessive borrowing several years ago, a slowing of China’s economy, the world’s second largest, has also taken a toll.

    Prices have continued to fall despite various confidence-boosting measures rolled out so far, including freeing up more than 1 trillion yuan ($140 billion) for lending to developers.

    The China Securities Regulatory Commission’s announcement on Sunday appeared to be designed to reassure individual investors who account for more than half of trading volume.

    Among other things, it said the proportion of shares subject to risks from short-selling had fallen from 10.5% in 2018 to about 3.4% now. It said so far such trades had accounted for only 27.4 million yuan (about $3.5 million) a very small fraction of market turnover.

    [ad_2]

    Source link

  • Stock investors fear ‘no-landing’ economy could spell trouble. What’s next?.

    Stock investors fear ‘no-landing’ economy could spell trouble. What’s next?.

    [ad_1]

    While the U.S. stock market has been pricing in a “soft-landing” scenario for the economy, a blowout January jobs report, relatively strong corporate earnings, and Federal Reserve Jerome Powell’s comments during the past week could point to the possibility of “no landing,” where the economy is resilient while inflation stays on target.  

    Such a scenario could still be positive for U.S. stocks, as long as inflation remains steady, according to Richard Flax, chief investment officer at Moneyfarm. However, if inflation reaccelerates, the Fed may be hesitant to cut its policy interest rate much, which could spell trouble, Flax said in a call. 

    What the past week tells us

    Investors have just gone through the busiest week so far this year for economic data and corporate earnings reports, with stocks ending at or near their record highs.

    The Dow Jones Industrial Average
    DJIA
    finished the week with its nineth record close of 2024, according to Dow Jones Market Data. The S&P 500 index
    SPX
    scored its seventh record close this year on Friday, while the Nasdaq Composite
    COMP
    is about 2.7% lower from its peak.

    The Fed kept its policy interest rate unchanged in the range of 5.25% to 5.5% at its Wednesday meeting, as expected. However, in the subsequent press conference, Fed Chair Jerome Powell threw cold water on market expectations that the central bank may start cutting its key interest rate in March, and underscored that they want “greater confidence” in disinflation. 

    Roger Ferguson, former Fed vice chairman, said Powell introduced “a new kind of risk, the risk of no landing.” 

    In that scenario, inflation will stop falling, while the economy is strong, Ferguson said in an interview with CNBC on Thursday. However, Ferguson said he doesn’t think it is the likely outcome.   

    Traders were pricing in a 20.5% likelihood on Friday that the Fed will cut its interest rates in its March meeting, according to the CME FedWatch tool and that’s down from over 46% chance a week ago. The likelihood that the Fed will kick off its rate cutting program in May stood at 58.6% on Friday.  

    The stronger-than-expected January jobs data released on Friday further eliminates the chance of a rate cut in March, said Flax. 

    The U.S. economy added a whopping 353,000 new jobs in January while economists polled by The Wall Street Journal had forecast a 185,000 increase in new jobs. Hourly wages rose a sharp 0.6% in January, the biggest increase in almost two years.

    The past week has also been heavy with earnings reports, as several tech giants including Microsoft
    MSFT,
    +1.84%    ,
    Apple
    AAPL,
    -0.54%    ,
    Meta
    META,
    +20.32%    ,
    and Amazon
    AMZN,
    +7.87%
    reported their financial results for the fourth quarter of 2023. 

    Among the 220 S&P 500 companies that have reported their earnings so far, 68% have beaten estimates, with their earnings exceeding the expectation by a median of 7%, analysts at Fundstrat wrote in a Friday note.  

    While the reported earnings by big tech companies have been “okay,” the guidance was not, said José Torres, senior economist at Interactive Brokers.

    What has been driving the tech stocks’ rally since last year was mostly the prospect of sales from artificial intelligence products, but tech companies are not able to monetize the trend yet, Torres said in a phone interview. 

    Adding to the headwinds is a comeback of concerns around regional banks. 

    On Thursday, New York Community Bancorp Inc.’s stock triggered the steepest drop in regional-bank stocks since the collapse of Silicon Valley Bank in March 2023. New York Community Bancorp on Wednesday posted a surprise loss and signaled challenges in the commercial real estate sector with troubled loans.

    Meanwhile, the Fed’s bank term funding program, which was launched in March last year to bolster the capacity of the banking system, will expire on March 11. 

    If the Fed could start cutting its key interest rate in March, it would be “sort of like the ambulance that was going to pick regional banks up and save them,” said Torres. “Now the ambulance is coming in May at the earliest, I think that we’re in a particularly risky period from now to May,” Torres said. 

    What should investors do 

    Investors should go risk-off before May, according to Torres. “Last year, goods and commodities helped a lot on the disinflationary front. This year for disinflation to continue, we’re going to need services to start contributing to that. Then we’re going to need to see an increase in the unemployment rate,” Torres said. 

    He said he prefers U.S. Treasurys with a tenor of four years or shorter, as the long-dated ones may be susceptible to risks around the fiscal deficit and government borrowing. For stocks, he prefers the healthcare, utilities, consumer staples and energy sectors, he said. 

    Keith Buchanan, senior portfolio manager at Globalt Investments, is more optimistic. The slowdown in inflation and the relatively strong economic data and earnings “don’t really paint a picture for a risk-off scenario,” he said. “The setup for risk assets still leans towards the bullish expectation,” Buchanan added. 

    In the week ahead, investors will be watching the ISM services sector data on Monday, the U.S. trade deficit on Wednesday and weekly initial jobless benefit claims numbers on Thursday. Several Fed officials will speak as well, potentially providing more clues on the possible trajectory of rate cuts.

    [ad_2]

    Source link

  • How to navigate market risk from interest rates, the economy and politics in 2024

    How to navigate market risk from interest rates, the economy and politics in 2024

    [ad_1]

    As the U.S. Federal Reserve’s three-year reign in the headlines potentially comes to an end, an analysis of this year’s market themes can offer valuable insights for predicting trends and ensuring attractive returns in 2024.

    Beyond the central bank’s actions, pivotal factors shaping the investment landscape this year include fiscal policies, election outcomes, interest rates and earnings prospects.

    Throughout 2023, a prominent theme emerged: that equities are influenced by factors beyond monetary policy. That trend is likely to persist. 

    A decline in interest rates could significantly increase the relative valuations of equities while simultaneously reducing interest expenses, potentially transforming market dynamics. Contrary to consensus estimates, 2023 brought a more robust earnings rebound, leaving analysts optimistic about 2024.

    The 2024 U.S. presidential election, meanwhile, introduces a new element of uncertainty with the potential to cast a shadow over the market during much of the coming year. 

    Choppy trading, modest earnings growth

    Anticipating a choppy first half of the year due to sluggish economic growth, we see a better opportunity for cyclicals and small-cap stocks to rebound in the latter part of the year. As uncertainty around the election and recession fears dissipate, a broad rally that includes previously ignored cyclicals and small-caps should help propel the S&P 500
    SPX
    higher. 

    Broader macroeconomic conditions support mid-single-digit growth in earnings per share throughout 2024. Factors such as moderate economic expansion, controlled inflation and stable interest rates are expected to provide a conducive environment for companies, enabling them to sustain and potentially improve their earnings performance. We estimate EPS growth of 6.5%. This projected growth aligns with the broader market sentiment indicating a steady upward trajectory in earnings for the upcoming year, fostering investor confidence and supporting valuation expectations across various sectors.

    “ If the economy has not been in recession at the time of the first rate cut but enters one within a year, the Dow enters a bear market.”

    When it comes to U.S. stock-market performance around rate cuts, the phase of the economic cycle matters. When there has been no recession, lower rates have juiced the markets, with the Dow Jones Industrial Average
    DJIA
    rallying by an average of 23.8% one year later.

    If the economy has not been in recession at the time of the first cut but enters one within a year, the Dow has entered a bear market every time, declining by an average of 4.9% one year later. Our base case is a soft landing, but history shows how critical avoiding recession is for the bull market as the Fed prepares to ease policy.   

    Big on small-caps

    This past year has posed a hurdle for small-cap stocks due to the absence of a driving force. These stocks typically perform better as the economy emerges from a recession. While they are currently undervalued, their earnings growth has been notably lacking. If concerns about a recession diminish, a normal yield curve could serve as a potential catalyst for small-cap stocks.

    Growth vs. value

    The ongoing outperformance of megacap growth stocks that we saw in 2023 might hinge on their ability to sustain superior earnings growth, validating their current valuations. Defensive sectors in the value category, meanwhile, are notably oversold and might exhibit strong performance, particularly toward the latter part of the first quarter. Should concerns about a recession dissipate, cyclical sectors within the value category could outperform, particularly if broader market conditions turn favorable in the latter half of the year.

    Handling uncertainty

    The Fed’s enduring influence regarding the prospect of a soft landing in 2024 remains a pivotal point in the market’s focus. Considering the themes of the past year and the multifaceted influences on equities beyond monetary policy, investors are advised to navigate through uncertainties stemming from unintended fiscal shifts, upcoming elections and the impact of fluctuating interest rates. While a potentially choppy start to the year is anticipated, it could create opportunities for cyclical and small-cap stocks later in the year.

    Ed Clissold is chief of U.S. strategies at Ned Davis Research.

    Also read: Mortgage rates dip after Fed meeting. Freddie Mac expects rates to decline more.

    More: After the Fed’s comments, grab these CD rates while you still can

    [ad_2]

    Source link

  • Mark Zuckerberg could pay millions to the IRS on Meta dividends. He still might be getting ‘a major break’.

    Mark Zuckerberg could pay millions to the IRS on Meta dividends. He still might be getting ‘a major break’.

    [ad_1]

    Mark Zuckerberg delighted Meta shareholders and Wall Street this week with news of the social media giant’s first-ever dividend.

    The IRS may also be happy, now that it’s staring at millions in taxes on the Meta stock dividends bound for Zuckerberg’s portfolio.

    Zuckerberg, the CEO of Meta Platforms Inc.
    META,
    +20.32%    ,
    is poised to make $700 million in dividends yearly. He owns nearly 350 million shares, according to FactSet, and the company will start paying a quarterly dividend of 50 cents a share.

    That would yield nearly $167 million in federal taxes yearly, after a qualified-dividend tax of 20% and another 3.8% tax on the investment returns of rich households, two accounting experts said.

    California income taxes of 13.3% on the dividends could cost Zuckerberg another $93.1 million, said Andrew Belnap, an accounting professor at the University of Texas at Austin’s McCombs School of Business.

    All in, that’s a combined $259.7 million in federal and state taxes annually on the Meta dividends, Belnap estimated.

    For context, U.S. taxpayers reported over $285 billion in qualified-dividend income to the IRS though mid-November 2023, according to agency statistics. Nearly 30 million tax returns reported qualified dividends through that time.

    Meta said it plans a quarterly cash dividend going forward, with the first such payment in March.

    Meta shares soared 20.5% on Friday, ending with a record-high close of $474.99. The Dow Jones Industrial Average
    DJIA,
    S&P 500
    SPX
    and Nasdaq Composite
    COMP
    all closed higher Friday.

    ‘Zuck is getting a major break’

    Meta announced the dividend payment in its earnings results Thursday, on the same week that Americans began filing their income taxes.

    A look at Zuckerberg’s dividends and their tax implications offer a peek at the debate about the varying ways wages and wealth are taxed.

    “Zuck is getting a major break,” said Andrew Schmidt, an accounting professor at North Carolina State University’s Poole School of Management who also crunched the numbers for MarketWatch.

    Approximately $167 million “seems like a high tax bill,” he said. But if Zuckerberg received the $700 million as a straight salary, Schmidt estimated he’d be looking at a roughly $259 million tax bill on the wages after they were taxed at the top marginal rate of 37%.

    Federal income tax brackets run from 10% to 37%.

    Meanwhile, the IRS taxes qualified dividends and capital gains at 0%, 15% and 20%, depending on income and household status. The net investment income tax adds another 3.8% for individuals making at least $200,000 or married couples worth $250,000.

    For federal and state taxes on the Meta dividends, Zuckerberg would face a combined rate of 37.1%, Belnap noted. “His tax rate on this is actually fairly high,” he said.

    The gap in tax rates on income derived from wages and investments “has been a big criticism with U.S. tax policy,” Schmidt said, especially as lawmakers look for ways to come up with more tax revenue.

    Regular retail investors enjoy the same preferential rates on capital gains and dividends as the top 1% of taxpayers, Schmidt added. The issue is that those dividends and stock profits are a smaller part of their income while salaries, taxed at higher rates, are a bigger proportion.

    Belnap noted that California’s state tax rules don’t provide special treatment to dividends.

    Read also: Where Trump, Biden and Haley stand on capital gains, the child tax credit and other key tax questions

    Zuckerberg received a $1 base salary in 2022, a figure that hasn’t changed in several years. He is now worth $142 billion, according to the Bloomberg Billionaires Index, making him the fifth-richest person in the world.

    Meta did not immediately respond to a request for comment.

    Taxes on the Meta dividends will not be something Zuckerberg, or any Meta shareholders big or small, need to deal with until next year’s tax season, Belnap and Schmidt observed.

    But as taxpayers amass their 1099-DIV forms on dividend income, IRS figures show that it’s mostly upper-echelon taxpayers reaping the rewards on the preferential rates for qualified dividends.

    Households worth at least $1 million accounted for 40% of the approximate $285.3 billion in qualified dividends reported through mid-November, according to agency figures.

    For less affluent investors, “it’s usually a nice supplement, but I’d say very few people are living off dividends,” Belnap said.

    [ad_2]

    Source link

  • Trump says Powell is being ‘political’ with interest rates

    Trump says Powell is being ‘political’ with interest rates

    [ad_1]

    Former President Donald Trump on Friday criticized Federal Reserve Chair Jerome Powell and said he’s playing politics with interest-rate policy.

    “It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected,” Trump said, in an interview on the Fox Business Network.

    “I think he’s political,” added Trump, the likely 2024 Republican nominee for president.

    Asked if he would reappoint Powell to a third four-year term, Trump replied “no.”

    Trump said he has a couple of choices in mind to replace Powell, but wouldn’t say who.

    Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.

    “Trump said he thinks lowering interest rates would lead to massive inflation. The conflict in the Middle East is likely to lead to “big inflation” from a spike in oil prices, he added.”

    Powell “is not going to be able to do anything,” Trump said.

    On Wednesday, Powell said he wasn’t giving a potential third term any thought. Powell’s current term expires in early 2026.

    Speculation on a third term “is not something I’m focused on,” Powell said.

    “We’re focused on doing our jobs. This year is going to be a highly consequential year for the Fed and monetary policy. We’re, all of us, very buckled down, focused on doing our jobs,” Powell said.

    Analysts say that the Fed will be criticized by both parties in the election year.

    On Sunday, Powell will appear on the CBS News program “60 Minutes” and will likely face more questions about the election.

    Earlier this week, top Democrats on the Senate Banking Committee urged the Fed to cut rates quickly, saying they were too high and hurting the housing market.

    “Keeping interest rates high will be detrimental to American workers and their families and do little to bring down prices or promote moderate economic growth,” said Sen. Sherrod Brown, a Democrat from Ohio, and the chairman of the Banking Committee, in a letter to Powell prior to Wednesday’s Fed meeting.

    At the meeting on Wednesday, the Fed kept its benchmark interest rate unchanged in a range of 5.25%-5.5%.

    Asked about the letter from the Democrats on Wednesday, Powell said Congress has given the Fed the job of stable prices. High inflation hurts people at the lower end of the income spectrum, he added.

    “It’s what society has asked us to do is to get inflation down. The tools we use to do it are interest rates,” he said.

    The Fed has penciled in three rate cuts for 2024. Powell said that a cut at the Fed’s next meeting in March was unlikely. He said the Fed wants to see more good inflation reports so it can have greater confidence that inflation is coming down to the 2% target.

    [ad_2]

    Source link

  • Etsy’s stock is having its best day in seven months after Elliott takes ‘sizable’ stake

    Etsy’s stock is having its best day in seven months after Elliott takes ‘sizable’ stake

    [ad_1]

    Investors bought up shares of Etsy Inc. on Thursday after the online crafts marketplace added to its board of directors a partner of hedge fund Elliott Investment Management L.P., which recently acquired a “sizable” stake in the company.

    Etsy
    ETSY,
    +9.31%
    said Marc Steinberg, who is responsible for public- and private-equity investments at Elliott, has been appointed to the board, effective Feb. 5, and will also join the board’s audit committee.

    “Etsy has a highly differentiated position in the e-commerce landscape and a uniquely attractive business model, supported by a distinctive and engaged community,” Steinberg said. “We became a sizable investor in Etsy and I am joining its board because I believe there is an opportunity for significant value creation.”

    Etsy’s stock shot up 8% in afternoon trading, to pare earlier gains of as much as 14.2%. The stock was headed for its best one-day gain since it climbed 9.2% on July 11.

    Elliott’s stake was acquired in recent months, as the fund’s disclosure of equity holdings through the third quarter did not list Etsy shares.

    “Marc’s appointment reflects our ongoing commitment to enhance the perspectives and expertise on the Etsy Board,” said Etsy Chairman Fred Wilson. “We look forward to benefiting from his voice in the boardroom as a seasoned and experienced investor as we continue our journey of creating a leading global e-commerce platform.”

    Etsy now has 10 board members.

    Etsy’s stock has run up 18.6% over the past three months, but has tumbled 48.5% over the past 12 months. That’s compared with the S&P 500 index’s
    SPX
    18.7% rally over the past year.

    Read (December 2023): Etsy to cut 11% of staff as CEO says company is on ‘unsustainable trajectory’

    At an investor conference in December, Chief Executive Josh Silverman said business has slowed since the post-pandemic boom, as people have “had enough of buying things” and are now spending primarily on eating out and travel. Inflation and the loss of government subsidies was also weighing on spending.

    Still, Silverman said, Etsy is now about two and a half times bigger than it was before the pandemic, and the company has more active buyers than it did at the peak of the pandemic.

    [ad_2]

    Source link

  • Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

    Oil prices jump after drone attack kills U.S. troops, escalating Mideast crisis

    [ad_1]

    Oil futures popped higher Sunday evening, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East.

    West Texas Intermediate crude for March delivery
    CL00,
    +1.22%

    CL.1,
    +1.22%

    CLH24,
    +1.22%
    was up $1.09, or 1.4%, at $79.10 a barrel on the New York Mercantile Exchange. March Brent crude
    BRN00,
    +1.15%

    BRNH24,
    +1.14%    ,
    the global benchmark, gained $1.11, or 1.3%, to trade at $84.66 a barrel on ICE Futures Europe.

    Much will ultimately depend on the U.S. response and whether Iran takes action aimed at shutting down the Strait of Hormuz, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch on Sunday afternoon.

    “We are on the cusp of this escalating, which could seriously impact the flow of crude oil,” he said.

    Three U.S. service members were killed and more than two dozen injured in a drone strike on a U.S. base in northeast Jordan, according to U.S. Central Command. They were the first U.S. fatalities in months of attacks on U.S. bases by Iran-backed militias since the start of the Israel-Hamas war in October.

    President Joe Biden attributed the Sunday attack to an Iran-backed militia group and said the U.S. “will hold all those responsible to account at a time and in a manner (of) our choosing.” News reports said U.S. officials were still working to conclusively identify the precise group responsible for the attack, but have assessed that one of several Iranian-backed groups is to blame.

    Some congressional Republicans called for direct retaliation on Iran.

    “We must respond to these repeated attacks by Iran & its proxies by striking directly against Iranian targets & its leadership. The Biden administration’s responses thus far have only invited more attacks. It is time to act swiftly and decisively for the whole world to see,” wrote Sen. Roger Wicker of Mississippi, the senior Republican on the Senate Armed Services Committee, in a post on X.

    Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth.

    “Crude already has the wind to its back, so this will only offer further upside,” Chris Weston, head of research at Australian brokerage Pepperstone told MarketWatch in an email.

    With the U.S. election later this year, “Biden needs to strike a balance between increasing aggression that potentially puts U.S. serviceman lives in danger and could potentially raise the cost of living…while also showing a defiant stance that shows his resolve against terror,” Weston said.

    Oil prices have seen short-lived rallies around developments in the Middle East since the start of the Israel-Hamas war, but have failed to build in a lasting geopolitical risk premium. West Texas Intermediate crude
    CL00,
    +1.22%

    CL.1,
    +1.22%    ,
    the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude
    BRN00,
    +1.15%    ,
    the global benchmark, pushed back above $80 a barrel last week.

    Attacks by Iran-backed Houthi militants on Red Sea shipping have forced a rerouting of tankers and cargo ships. For crude, that’s had implications for the physical market but hasn’t interrupted the flow of crude from the Middle East.

    A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation chokepoint, remains a top worry.

    The strait is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just two miles, separated by a two-mile buffer zone.


    Energy Information Administration

    Around 21 million barrels a day of crude moved through the waterway in the first half of 2023, equivalent to around a fifth of daily global consumption, according to the U.S. Energy Information Administration.

    The U.S. stock market has largely looked past Middle East tensions, with the S&P 500
    SPX
    returning to record territory this month, while the Dow Jones Industrial Average
    DJIA
    has also set a series of records.

    Dow futures
    YM00,
    -0.20%
    were off 94 points, or 0.3% as Asian trading got under way, while S&P 500 futures
    ES00,
    -0.22%
    fell 12 points, or 0.2%, and Nasdaq-100 futures
    NQ00,
    -0.24%
    lost 0.3%.

    Read: Stock-market rally faces Fed, tech earnings and jobs data in make-or-break week

    Away from oil, there were no signs of a significant surge in demand for instruments that traditionally serve as havens during periods of increased geopolitical tension. Futures on U.S. Treasurys
    TY00,
    +0.21%
    saw a modest rise of 0.2%, while the U.S. dollar
    DXY
    was little changed versus major rivals and gold futures
    GC00,
    +0.41%
    ticked up 0.4%.

    Escalating Middle East tensions won’t go unnoticed by traders, but probably doesn’t warrant a “solid derisking,” Weston said, particularly with investors facing a barrage of major market events in the week ahead.

    For U.S.-focused investors, the week ahead features a Federal Reserve policy meeting, earnings from tech industry heavyweights and a crucial December jobs report.

    The Middle East situation “won’t take us too far off the rates, growth track, but we have an eye on whether this escalates,” Weston said.

    —Associated Press contributed.



    [ad_2]

    Source link

  • The U.S. dollar had a strong start to 2024. Here’s why it’s unlikely to last.

    The U.S. dollar had a strong start to 2024. Here’s why it’s unlikely to last.

    [ad_1]

    The U.S. dollar has had a relatively strong start to 2024 — but some analysts believe the greenback is still more likely than not to depreciate over the course of this year. 

    The ICE U.S. Dollar Index
    DXY,
    which tracks the currency against a basket of six major rivals, has climbed about 2.1% so far this year, per Dow Jones Market Data.

    The dollar has risen as traders scale back their expectations on when the Federal Reserve will begin cutting interest rates this year, according to analysts at BofA Global Research. 

    As recently as late December, traders were pricing a likelihood as high as 90% for a rate cut in March — but those chances have since fallen to around 46% as of Friday, according to the CME FedWatch Tool. Meanwhile, the total amount of rate cuts priced in for this year, which reached as high as 170 basis points in mid-January, has now slipped to around 135 to 150 basis points.

    However, the greenback is likely to see depreciation throughout the rest of this year, analysts at the investment bank wrote in a Thursday note, adding that much of the retreat would likely happen in the second half of 2024.

    The BofA analysts said expect no recession this year and anticipate that the Federal Reserve will start cutting its key policy rate in March. Such a scenario is negative for the dollar, as the Fed’s easing would likely support risk assets with U.S. economic growth remaining resilient, according to the analysts.

    Based on historical data, the ICE U.S. Dollar Index’s performance has been mixed from the onset of the Fed’s first rate cut over the past six cycles, and has been relatively flat on average over the following quarters, the analysts said.

    “This is due in large part to the USD’s perceived ‘safe haven’ status and its negative correlation to risk, as cutting cycles have often been associated with recessions,” they wrote.

    Jonathan Petersen, senior market economist at Capital Economics, echoed that point in a Thursday note. He expects the dollar to face headwinds from strong risk appetite in global markets and falling bond yields in the U.S. over the course of the year, and anticipates the greenback will remain rangebound against most major currencies for most of 2024.

    [ad_2]

    Source link

  • What Biden’s decision to pause new U.S. LNG exports means for the energy market

    What Biden’s decision to pause new U.S. LNG exports means for the energy market

    [ad_1]

    The Biden administration’s announcement Friday that it’s pausing liquefied natural gas export approvals sparked political backlash, drew cheers from climate activists and stoked uncertainty in energy markets, but is unlikely to see the U.S. give up its title as the world’s top LNG exporter.

    The U.S. will delay its decisions on new LNG exports to non-free trade agreement countries, allowing time for the Energy Department to update the underlying analyses for LNG export authorizations, the White House said.

    Those analyses are roughly five years old and “no longer adequately account for considerations” such as potential cost increases for American consumers and manufacturers or the “latest assessment of the impact of greenhouse gas emissions,” it said.

    The Biden administration likely “realizes the role of LNG in foreign policy, but at the same time it needs to show the Democrat base that it is doing something for climate change,” said Anas Alhajji, an independent energy expert and managing partner at Energy Outlook Advisors, pointing out that the announcement comes during a presidential election year.

    “Delaying one project or stopping it may not be a big deal, but it is a problem if it becomes a trend,” he said in emailed commentary.

    Environmental groups, which have pushed for action, cheered the decision.

    The 12 impacted projects in the U.S. “would spew out as much climate-warming pollution as 223 coal plants per year, and they present explosion risks to the communities where they’re located and emit other health-harming chemicals,” the Sierra Club, an environmental group, said in a statement welcoming the decision.

    Top exporter

    The announcement is particularly important for a nation that became the world’s biggest LNG exporter in the span of less than a decade.

    The U.S. became the world’s largest LNG exporter during the first half of 2022 on the back of increases in LNG export capacity, international natural gas and LNG prices, and global demand, particularly in Europe, according to the Energy Information Administration.

    Less than a decade ago, U.S. LNG exports were negligible. The country had only started exporting LNG from the Lower 48 states in 2016, the EIA said.

    The country’s exports of LNG climbed to a fresh record in November 2023, with the EIA reporting domestic exports of 386.2 billion cubic feet, up from 384.4 bcf a month earlier. Exports in December 2016 were at just 41.8 bcf.

    U.S. LNG exports soared after 2016.


    EIA

    With 90% of U.S. LNG going to non-free trade agreement destinations, withholding licensing effectively “halts project development,” John Miller, managing director, ESG and sustainability policy at TD Cowen wrote in a Friday note.

    Equities

    LNG equities with operating facilities likely won’t benefit from the administration’s announcement, at least not immediately, until the impacts of this pause in export approvals to non-FTA countries becomes more clear, Jason Gabelman, director, sustainability & energy transition at TD Cowen said.

    U.S. companies with government approvals that have not been sanctioned, “could have a higher probability of moving forward this year, albeit modestly” as offtakers may be hesitant to sign up to new U.S. projects with LNG development getting “politicized,” he said. Among those, he pointed out approvals for proposed liquefaction units at NextDecade Corp.’s
    NEXT,
    +2.30%
    Rio Grande LNG export facility project in Brownsville, Texas.

    At the same time, it would not be a surprise if U.S. LNG companies pursuing growth that do not yet have non-FTA approval see downside pressure, said Gabelman.

    LNG projects take around 4 years to build and any delays to project sanctions today will take “multiple years to manifest in the market,” he said.

    Still, the U.S. announcement “introduces the risk of more stringent oversight that could limit new U.S. capacity” more than four years out, Gabelman said.

    Companies that supply equipment to LNG liquefaction projects include Baker Hughes Co.
    BKR,
    +0.59%
    and Chart Industries Inc.
    GTLS,
    -7.54%    ,
    said Marc Bianchi, a senior energy analyst at TD Cowen.

    Any slowing of approval would create “overhand on order growth,” he said.

    Climate change

    The White House said Friday that its decision will not impact the ability of the U.S. to continue supplying LNG to its allies in the near term but also acknowledged environmental concerns.

    “I think we’ve got to be clear eyed about the challenges that we face. The climate crisis is an existential crisis, and we’ve got to be, I think, really forward leaning into making sure that we’re taking that head on,” said Ali Zaidi, the White House national climate adviser, told reporters Friday.

    He added that given the number of approvals already completed, the number of projects under construction are set to double existing capacity with approvals beyond that set to double capacity yet again.

    “So there’s a long runway here, and we’re taking a step back and thinking, OK, let’s take a hard look before that runway continues to build out,” he said.

    Rob Thummel, senior portfolio manager at Tortoise, argued that U.S. LNG exports actually reduce global carbon emissions as natural gas typically “displaces coal to generate electricity in countries such as China and India.”

    They also improve global energy security as U.S. natural gas is becoming Europe’s primary energy supplier, replacing Russia, he said.

    In a statement Friday, Sen. Joe Manchin, a West Virginia Democrat and chairman of the U.S. Senate Energy and Natural Resources Committee, said that if the Biden administration has facts to prove that additional LNG export capacity would hurt Americans, it needs to make that information public. But if the pause is “another political ploy to pander to keep-it-in-the-ground climate activists,” he said he would “do everything in my power to end this pause immediately.

    Manchin plans to hold a hearing on the decision in the coming weeks.

    Market impact

    The U.S. decision to delay new LNG export permits is unlikely to have an impact on domestic natural-gas supplies or prices, said Energy Outlook Advisors’ Alhajji.

    Still, the EIA noted in its Annual Energy Outlook released in March of last year that it remains uncertain as to how LNG export capacity will affect domestic prices, consumption and supply.

    LNG prices and the rate at which new LNG export terminals can be constructed help determine LNG export volumes, the EIA said, and higher LNG exports can result in upward pressure on U.S. natural-gas prices, while lower U.S. LNG exports can pressure prices.

    On Friday, natural gas for February delivery
    NG00,
    +0.23%

    NGG24,
    +0.26%
    settled at $2.71 per million British thermal units, up 7.7% for the week.

    Meanwhile, the U.S. is likely to keep its position as the world’s top LNG exporter, according to Tortoise’s Thummel.

    The U.S. is the currently the largest LNG exporter at almost 12 bcf per day, with Qatar coming in second, he said.

    Qatar is expanding its LNG export capacity and is expected to have the ability to export almost 20 bcf per day by 2028, he said. The EIA reported recently that Qatar has averaged 10.3 bcf per day in exports during the last 10 years.  

    That would mark sizable growth. But the EIA reported in November that LNG export capacity from North America is likely to more than double from around 11.4 bcf per day to 24.3 bcf per day by the end of 2027.

    The EIA said North America’s LNG export capacity is likely to more than double by 2027.


    EIA

    Given expected growth in U.S. LNG export capacity, the U.S. is likely to “remain the largest exporter of LNG in the world” despite the U.S. announcement, said Thummel.

    —Victor Reklaitis contributed.

    [ad_2]

    Source link

  • 3 things to know about how the Fed might roll back quantitative tightening

    3 things to know about how the Fed might roll back quantitative tightening

    [ad_1]

    The notion that the Federal Reserve will soon slow, or perhaps even end, its program of quantitative tightening is increasingly being talked about on Wall Street like a foregone conclusion.

    But while investors wait to hear more on the subject from Fed Chair Jerome Powell during next week’s post-meeting press conference, they could be forgiven for asking themselves some questions.

    What might an imminent taper of the Fed’s balance-sheet runoff look like? Why has it suddenly become so urgent? What might it mean for the six or so interest-rate cuts investors are expecting from the Fed this year, as well as for markets more broadly?

    We aim to answer these questions below.

    What inspired talk of tapering QT?

    It wasn’t until the minutes from the Federal Reserve’s December policy meeting were published earlier this month that investors started to take the notion of the Fed declaring “mission accomplished” on QT seriously.

    The minutes revealed that a number of senior Fed officials felt it was nearly time to “begin to discuss” the technical factors that would govern the Fed’s decision to slow the runoff of maturing bonds from its balance sheet.

    Shortly after the minutes’ release, several senior Fed officials came forward to discuss the importance of ending the balance-sheet runoff. Dallas Fed President Lorie Logan, the first senior Fed official to expand on what was noted in the minutes, said earlier this month that the Fed should start to slow the pace of its balance-sheet shrinkage once assets locked up in the Fed’s reverse-repo facility fell below a certain level.

    According to Logan, senior Fed officials had been unsettled by the drain of $2 trillion in assets from the RRP facility last year.

    But there was another issue that was also likely bothering monetary policymakers heading into the Fed’s December meeting.

    Sudden spikes in overnight repo rates late last year drew uncomfortable comparisons to the repo-market crisis of September 2019, which foreshadowed the end of the Fed’s previous attempt at tapering its balance sheet, according to TS Lombard’s Steve Blitz.

    See: Something strange is happening in the financial plumbing under Wall Street

    See: One of Wall Street’s most important lending rates will stay elevated for weeks, Barclays says

    TS LOMBARD

    What is the Fed’s ‘lowest comfortable level of reserves’?

    A re-run of the repo-market crisis of 2019 is what the Fed is presumably trying to avoid. Economists are so concerned the central bank might accidentally bump up against the lower bound for reserves in the banking system, that they have come up with a name for the concept: They’re calling it the “lowest comfortable level of reserves.”

    According to this idea, strain in overnight-financing markets should emerge once reserves in the banking system retreat below a certain threshold. This would, in turn, likely force the central bank to scale back or even reverse quantitative tightening immediately, according to several economists.

    In order to avoid such a risk, Jefferies economist Thomas Simons said in a note to clients earlier this month that he expects the Fed will announce plans to start tapering QT after its March meeting.

    Across Wall Street, most economists expect the Fed will begin by tapering the pace at which Treasurys are redeemed from its balance sheet — perhaps cutting it in half to start, from $60 billion a month to $30 billion a month. Reducing the pace at which mortgage-backed securities are running off won’t matter as much until prepayments begin to climb.

    Going even further, economists at Evercore ISI said in a report shared with MarketWatch earlier this week that they expect the tapering to begin around the middle of 2024 and continue potentially through 2025, until the Fed has succeeded in reducing the size of its balance sheet to about $7 trillion.

    The balance sheet presently stands at $7.7 trillion, according to data published by the Fed. It peaked at nearly $9 trillion in April 2022.

    However, one key issue may complicate the Fed’s efforts to ascertain the “LCLoR.” According to Jefferies’ Simons, the amount of banking-system reserves counted as liabilities on the Fed’s balance sheet has been more or less steady since the Fed started its latest round of balance-sheet tapering. It stood at roughly $3.3 trillion recently, according to Fed data cited by Jefferies.

    Why stop at $7 trillion if bank reserves haven’t been all that heavily impacted by QT anyway? It’s probably worth noting that, whatever happens, nobody on Wall Street expects the Fed would attempt to shrink the size of its balance sheet back toward pre-crisis levels, when the amount of bonds on its balance sheet was miniscule compared to today.

    Why? Because there is simply too much debt sloshing around the global financial system to justify such a withdrawal of support, according to Steven Ricchiuto, chief economist at Mizuho Americas.

    “The Fed is not in a position to remove all that extra liquidity because now the system needs it just to function,” Ricchiuto said.

    What does this mean for markets?

    Because quantitative tightening is a hawkish policy stance, its rolling back should be bullish for stocks and bonds. But there are other considerations that could impact the outcome, market strategists said.

    Not only would a reduction in the pace of the Fed’s monthly runoff introduce a fresh dovish tilt to the Fed’s monetary policy, but by reducing the amount of bonds it allows to roll off its balance sheet every month, the Fed would become more active in the Treasury market, said James St. Aubin, chief investment officer at Sierra Investment Management, during an interview.

    There are also a few contextual factors that could impact how the equity market reacts. For example, as St. Aubin pointed out, context is equally as important as the nature of the decision itself. Should the Fed decide to end QT abruptly because the U.S. economy is sliding into a recession, then the decision could hurt stocks.

    Another issue, raised by a different market strategist, is the notion that the Fed could decide to start tapering QT in lieu of cutting interest rates — or at least in lieu of cutting them as quickly as investors expect. This could buy the central bank more time to press its battle against inflation while mitigating the risks that it could hurt the economy by keeping policy uncomfortably tight for too long, economists said.

    Ben Jeffery, U.S. interest-rate strategist at BMO, said in a recent note to clients that, based on Logan’s comments from earlier this month, he would lean toward this being the most likely scenario. Additionally, he said, tapering QT could potentially impact the Treasury’s refunding announcement due in May.

    Jeffery calculated that the Fed tapering QT by $20 billion beginning in April would save the Treasury from issuing nearly $250 billion in bonds compared to if the Fed had continued with its balance-sheet runoff apace.

    This should lead to lower Treasury yields, all else being equal. And lower long-dated Treasury yields are typically seen as beneficial for stocks, according to Callie Cox, a U.S. equity strategist at eToro.

    Although, once again, the outcome for markets would likely depend on the specific context.

    “Higher yields probably aren’t a good thing for stock investors these days, but in particular environments, higher yields and less Fed intervention could hint that the economy is healing,” Cox said.

    [ad_2]

    Source link

  • China's central bank says it will cut its reserve requirements for banks to help spur more lending and boost the economy

    China's central bank says it will cut its reserve requirements for banks to help spur more lending and boost the economy

    [ad_1]

    China’s central bank says it will cut its reserve requirements for banks to help spur more lending and boost the economy

    [ad_2]

    Source link