Search

SBI Pension Funds Pvt., which manages $50 billion in assets, is considering investing in corporate and state debt due to the narrowing spreads on longer-maturity Indian government bonds. The fund's chief investment officer, Sandeep Pandey, expressed concern that the lack of term premium for longer-dated securities could impact returns for subscribers. Demand for longer-tenor papers has increased, leading to a compression in the spread between 10-year and 30-year bonds. The fund currently holds a portfolio of about one trillion rupees in corporate paper and 2.5 trillion rupees in sovereign and state debt. [Extracted from the article]

Donald Trump's media startup, Trump Media & Technology Group, is set to go public through a deal with Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC). If approved, the deal will make several insiders, including management, sponsors, and former associates, wealthy on paper. DWAC's stock has seen a significant gain this year, leaving room for further equity-based rewards. Trump himself stands to reap billions of dollars from the deal. However, there are challenges, including a lock-up period and the company's struggle to generate profit. [Extracted from the article]

Short sellers experienced significant losses in 2023, despite finding success in regional banks and vaccine makers. First Republic Bank and Moderna Inc. were the most profitable short wagers, earning short sellers $1.6 billion and $1.1 billion respectively. However, short sellers suffered major losses betting against technology firms, with Tesla Inc. causing the most pain with $12.2 billion in losses. Overall, short sellers ended the year with paper losses of nearly $195 billion, offsetting gains from the previous year's market rout. While short sellers faced challenges, there were also profitable short positions in various sectors. [Extracted from the article]

Canadian investors purchased a record amount of foreign securities, totaling C$29.4 billion ($21.8 billion), in December of last year. This marks the largest net outflow of purchases into foreign stocks and bonds since 1988. The surge in investment was driven by Canadian investors' demand for US large-cap technology shares and investment fund shares tracking broad US equity market indexes. Additionally, Canadian investment in non-US shares, particularly European equities, also contributed to the record. Conversely, foreigners showed less interest in Canadian equities but increased their investment in Canadian debt, particularly federal government bonds and money market paper. [Extracted from the article]

Amazon economists Francesco Furno and Domenico Giannone have developed a new model to identify recessions in real-time. Their measure, based on real-economy activity and financial conditions, can provide a reading for a given month on the first business day of the next one. The researchers have created separate versions for the US and Europe, although their paper does not indicate whether either economy is currently in a recession. Their method is designed to be more timely than official indicators, which often declare a recession months after it has begun. [Extracted from the article]

The Biden administration is planning to award approximately $6.3 billion in grants to help industries reduce their carbon emissions. The grants will be given to sectors such as cement, glass, chemicals, metals, and pulp and paper, which account for a significant portion of US emissions. The funding aims to support the transition to lower-carbon technologies in these industries, which is crucial for the administration's goal of cutting greenhouse gas emissions by 50% by 2030 and achieving net-zero emissions by mid-century. The Department of Energy will be responsible for distributing the grants, and details on the projects that will receive funding are expected to be announced soon. [Extracted from the article]

Donald Trump's media startup, Trump Media & Technology Group, is set to go public through a deal with Digital World Acquisition Corp (DWAC), a special purpose acquisition company (SPAC). If approved, the deal will benefit insiders, management, sponsors, and former associates who sued to block the deal, potentially earning them millions of dollars. DWAC's stock has seen a 130% gain this year, and if it continues to perform well, Trump could earn $3.4 billion. However, there are caveats, including a lock-up period for management and the company's struggle to generate profit. [Extracted from the article]

Cisco Systems Inc. has made its largest diversification effort to date with the $28 billion acquisition of Splunk Inc. This move also marks a historic shift for Cisco, as it transitions to a net debt capital position in order to support growth and shareholder returns. The acquisition was funded through a combination of cash, commercial paper, and long-term debt, including $13.5 billion in bonds. Cisco plans to focus on disciplined capital allocation and investments in growth, rather than prioritizing debt reduction. The company has committed to spending $5 billion per year on share buybacks and $6.5 billion per year on dividend payments. Cisco's decision to take on debt is a departure from its previous net cash position, which it held for three decades. The company's CFO, Scott Herren, stated that the decision to reduce debt will depend on factors such as monetary policy and cash holdings. Cisco's integration of Splunk will focus on boosting revenue and the development of combined products. The acquisition will also help Cisco expand its capabilities in artificial intelligence and increase its recurring revenue. [Extracted from the article]

According to a survey by Bank of America Corp., concerns about a systemic credit event are increasing among fund managers due to issues in global property markets. About one in six respondents consider this to be the biggest risk facing markets, up from one in eleven in December. The disquiet is particularly focused on US commercial real estate and Chinese property markets. The Federal Reserve's potential interest rate cuts to alleviate pressure on real estate have been hindered by higher-than-expected inflation numbers. Smaller banks are at risk of default rates in their commercial real estate loan books, while larger banks are considered more stable. A 10% default rate on commercial real estate loans could result in $80 billion in additional bank losses, leaving over 300 smaller regional banks at risk of solvency runs. The Federal Reserve is working with lenders to address expected losses, and regulators are ensuring that loan-loss reserves and liquidity levels are sufficient. The survey found that nearly 40% of fund managers see US commercial real estate as the most likely source of a credit event, while 22% see Chinese real estate as the biggest threat. The turmoil has also affected German lenders with exposure to US commercial real estate. [Extracted from the article]

Hank Medina, a former investment banker at Deutsche Bank and Jefferies Financial Group, is the creator of the popular social media account @Litquidity, which posts viral memes mocking the financial sector. Medina, a Cornell University graduate, has gained over a million followers on Instagram and X. He has monetized his social media success by charging followers $1,000 for hour-long phone calls and has also started a venture capital firm called Litquidity Capital. In 2022, he joined Bain Capital Ventures as a scout. [Extracted from the article]

The UK committee advising on financial law has stated that pension trustees may consider climate change when making investment decisions, addressing concerns that this could be a breach of fiduciary duty. The committee emphasized that trustees are required to make careful decisions and should consider factors such as climate change that may not be reflected in market prices. While the guidance is aimed at pension funds, it is also relevant for legal advisers, investment consultants, fund managers, and insurers. The committee's findings are not legally binding, but ESG investors in the UK have welcomed the announcement and called for their incorporation into financial market regulation and monitoring. [Extracted from the article]

The inverse relationship between emerging-market currencies and their volatility has broken down, causing traders to be trapped in losing positions. This is due to a lack of currency rallies despite low volatility. The impasse is caused by uncertainty about when the Federal Reserve will cut interest rates, which has frozen investors and reduced volatility. Carry trades, where investors borrow in low-interest-rate environments to buy assets with higher returns, are also performing poorly. Emerging currencies and their implied volatility have historically had a negative correlation, but this trend has reversed. Investors are now switching to funding with Swiss franc and Japanese yen and investing in dollar assets. Some emerging economies have started cutting rates, putting pressure on their currencies. However, bets on emerging-market debt are expected to work better when the US rate path becomes clearer. [Extracted from the article]

Graphcore Ltd., a UK microchip maker, is reportedly considering a sale to foreign buyers due to its inability to capitalize on the artificial intelligence boom. The company, based in Bristol, has been in talks with major technology companies to secure funding to cover its increasing losses. Some investors have already increased the value of their stakes in anticipation of a deal worth over $500 million. However, any sale to foreign investors would need to undergo a review by national security officials. [Extracted from the article]

Petersen Health Care Inc., a senior living firm operating nursing homes and assisted living facilities in the US Midwest, is preparing to file for Chapter 11 bankruptcy. The company has had multiple locations put into receivership recently due to alleged debt defaults. The Covid-19 pandemic has placed significant pressures on senior living companies, including staff shortages, increased costs, and inadequate government reimbursements. [Extracted from the article]

Canadian investors purchased a record amount of foreign securities, totaling C$29.4 billion ($21.8 billion), in December of last year, with a significant portion going towards US stocks. This surge in investment coincided with a strong rally in the US stock market. Canadian investors also showed interest in global securities, particularly in the US, due to increased market optimism and expectations of a soft landing in North American economies. Additionally, Canadian investment in non-US shares contributed to the record, with outflows of C$6.3 billion primarily going towards European equities. Foreign investors, on the other hand, showed less interest in Canadian equities but invested C$11 billion in Canadian debt. [Extracted from the article]

South Korea is considering the need for more nuclear power plants in order to achieve its climate targets and reduce reliance on coal. According to a report by the Korea Energy Information Culture Agency, atomic power would need to account for 40% to 45% of electricity supply, up from the current 30%, in order for South Korea to achieve net-zero emissions by mid-century. Renewables would also need to increase to 35%, with natural gas and carbon-free sources making up the remainder. The government is considering plans to start construction on new nuclear reactors as early as this year. [Extracted from the article]

South Africa is leading a regional force called Operation Thiba, which is moving into eastern Democratic Republic of Congo to replace a United Nations force that has been unable to stabilize the region. The mission is an initiative of the 16-nation Southern African Development Community (SADC), but it is unclear how it will be funded. Rwanda has been training and funding the M23 rebel group in eastern Congo, and the new mission puts SADC on the opposite side of the conflict. The operation may strain South Africa's already depleted coffers, but President Cyril Ramaphosa sees it as a national duty. [Extracted from the article]

South Africa is leading a regional force called Operation Thiba, which is moving into eastern Democratic Republic of Congo to replace a United Nations force that has been unable to stabilize the region. The mission is an initiative of the 16-nation Southern African Development Community (SADC), but it is unclear how it will be funded. Rwanda has been training and funding the M23 rebel group in eastern Congo, and the new mission puts SADC on the opposite side of the conflict. South Africa is sending 2,900 troops to Congo at a cost of $124 million, which will likely strain its already depleted coffers. SADC approached the European Union for funding but was rebuffed, and the US Congress is hesitant to support financial assistance for a SADC force. A major concern for the mission is a lack of adequate air cover, as South Africa's air force is underfunded and has limited resources. [Extracted from the article]

A Jupiter Asset Management fund has increased its holdings of US Treasury bonds to a record high and predicts that the US economy is heading for a hard landing. The fund manager, Harry Richards, believes that the Federal Reserve may cut its benchmark interest rate by up to four percentage points during the upcoming easing cycle. Jupiter's outlook for rate cuts is more aggressive than the market as a whole, with swaps traders currently only expecting about 175 basis points of easing over the next two years. Richards also favors government bonds from South Korea and Australia, but is avoiding Japanese government debt due to interest rate divergence. [Extracted from the article]

South Africa is leading a regional force called Operation Thiba that is being deployed into eastern Democratic Republic of Congo. The mission aims to replace a United Nations force and an East African Community deployment that have been unable to stabilize the region. However, this deployment risks putting South Africa on the opposite side of the conflict from Rwanda, which has been accused of supporting rebel groups in eastern Congo. The operation will also strain South Africa's finances, as it is already contributing troops to a force fighting militants in Mozambique. The funding for Operation Thiba is unclear, and SADC has approached the European Union for funding but was rebuffed. The US Congress is also hesitant to provide financial support. Additionally, there are concerns about the lack of adequate air cover for the SADC forces due to underfunding of South Africa's air force. [Extracted from the article]

The credit markets have experienced a significant decline at the start of 2024, resulting in the loss of hundreds of billions of dollars in value. The combined value of high-grade and junk markets has decreased by $240 billion to $13.6 trillion, the lowest since December 13. This decline has been exacerbated by the rebalancing of bonds underlying the indexes at the end of last month. Credit-default swap indexes have also seen an increase in spreads, indicating higher credit risk. The reversal of the optimistic sentiment from late 2023 is due to central bankers' reluctance to cut interest rates and concerns about a potential wider conflict in the Middle East. The widening gap between global high-grade bond yields and sovereign debt further highlights doubts about rate cuts. The issuance of new corporate bonds is adding pressure to the market, as portfolio managers may have to sell old bonds to buy new ones. Despite the recent decline, the credit market's value is still higher than it was in late October. The market is expected to remain volatile until central banks confirm expectations of rate cuts. [Extracted from the article]

The credit markets have experienced a significant decline at the start of 2024, resulting in the loss of hundreds of billions of dollars in value. The combined value of high-grade and junk markets has decreased by $240 billion, erasing all gains made since December 13. Credit-default swap indexes have also risen to levels last seen in early December. This reversal of fortune follows the optimism of late 2023, when interest-rate cuts and economic growth were anticipated. However, central bankers are now hesitant to cut rates due to inflation concerns and the potential for a wider conflict in the Middle East. The market is expected to remain volatile until central banks confirm rate cuts. [Extracted from the article]

The US House of Representatives has passed a bill that would require TikTok's parent company, ByteDance, to sell the app or face a ban in the US due to concerns about national security risks and data security. The bill gives ByteDance six months to sell TikTok to a US or friendly country-based company. TikTok has been working with US-based tech company Oracle to address concerns about data protection. However, the bill still needs to pass in the Senate, and privacy experts argue that banning TikTok alone would not solve the larger issue of data privacy. The bill also raises concerns about censorship and the impact on other American tech companies. The Senate's slow legislative process may result in the bill not passing. [Extracted from the article]

California plans to sell $2.6 billion of bonds next week, despite the state's budget deficit. The high demand for these tax-exempt bonds is driven by investors looking to shield their income from California's high taxes and lock in yields before anticipated rate cuts by the Federal Reserve. California's bond deals can sell at yields lower than AAA-rated benchmark muni securities, indicating a strong market demand. The sale includes debt to fund various capital projects and will be underwritten by JPMorgan Chase & Co. and Wells Fargo & Co. The budget deficit and potential tax increases at the state and federal levels are factors that investors are willing to overlook in favor of tax-advantaged investments. [Extracted from the article]

Nigeria's naira has experienced significant gains in both official and parallel markets after the Central Bank of Nigeria announced that it has cleared a backlog of unmet foreign-exchange obligations totaling $7 billion. This move is seen as a fulfillment of Governor Olayemi Cardoso's commitment to stabilize the market and restore investor confidence. The clearing of the backlog is expected to boost market confidence, strengthen the naira in the medium term, and contribute to a downward trajectory on inflation. Nigeria has faced foreign-exchange scarcity due to low crude production and a lack of economic diversification, leading to unmet obligations and a decline in investor interest. The government has implemented various measures to attract investors, including allowing the naira to trade more freely and introducing additional measures to address the backlog. These efforts have resulted in increased overseas remittances and foreign-investor portfolio asset purchases. The central bank is expected to announce further rate hikes to rein in the naira and inflation. [Extracted from the article]

A report released by the Federal Trade Commission (FTC) states that large grocery retailers, including Amazon, Walmart, and Kroger, saw increased annual profits during the Covid-19 pandemic and have continued to maintain high profits since then. The report suggests that this warrants further investigation, as it indicates that larger grocery stores gained a competitive advantage over smaller rivals. The report also highlights that larger retailers, such as Walmart, imposed stricter penalties on suppliers, giving them an advantage in terms of product availability. The FTC did not allege any illegal activity by the companies involved but called for further inquiry into the rising profits. [Extracted from the article]

Julius Baer, a top Swiss private bank, is facing challenges after a series of missteps and the departure of its CEO. The bank had significant exposure to a single client, Austrian real estate tycoon Rene Benko, whose empire collapsed. This has raised concerns about Baer's risk management and echoes the missteps that led to the downfall of Credit Suisse. Swiss financial authorities are now investigating Baer, and the bank is working to repair the damage and restore confidence. It is considering a new leader and exploring possible acquisitions to boost its assets under management. [Extracted from the article]

Apple Inc.'s stock has fallen below a critical psychological threshold, entering a technical correction for the first time since August. Traders are closely watching the stock, which failed to hold the $180 support level and traded for less than $170 at various points during Tuesday's session. There are concerns about Apple's growth prospects, declining sales in China, regulatory scrutiny of its App Store, and tepid demand for its products. Short sellers have taken advantage of the situation, and there are worries that technology shares may face pressure in the coming months. However, Apple's correlation to the S&P 500 is not as tight as some may think, and the stock market can continue to rise as long as Apple's stock doesn't break its multi-year uptrend. [Extracted from the article]

Rishi Sunak, the UK's Prime Minister, sparked outrage in the House of Commons with a comment about Labour Party leader Keir Starmer's stance on gender identity. The mother of a murdered transgender teenager, Esther Ghey, was present in the public gallery when opposition lawmakers demanded an apology from Sunak. Ghey's daughter's murder was cited as having "hostility to transgender identity" as an aggravating factor in the case. Sunak's comment came during a heated exchange with Starmer, in which he accused him of flip-flopping on spending plans. The remark drew immediate condemnation among MPs, but Sunak's spokesperson stated that he would not be apologizing for the comment. [Extracted from the article]

Rishi Sunak, the UK's Prime Minister, sparked outrage in Parliament with a comment about Labour Party leader Keir Starmer's stance on gender identity. The mother of a murdered transgender teenager, Esther Ghey, was present in the public gallery when opposition lawmakers demanded an apology from Sunak. The comment referred to Starmer's response to a question about the definition of a woman, and it drew condemnation from MPs, particularly given Ghey's presence. Sunak's spokeswoman stated that the prime minister would not be apologizing for the remark. [Extracted from the article]

Sinclair Broadcast Group purchased 21 regional sports networks from Walt Disney Co. in 2019 for $9.6 billion, hoping to build a larger sports conglomerate and develop a digital streaming service. However, Sinclair failed to anticipate the impact of cord cutting and the rise of streaming platforms, which led to a decline in cable-TV subscribers and eroded profits. The company's plan to obtain direct-to-consumer rights and gambling rights from sports teams also faced challenges. As a result, Sinclair's subsidiary, Diamond Sports Group, filed for Chapter 11 bankruptcy in 2023. Recently, Diamond reached a restructuring deal with Amazon.com Inc., making Prime Video its primary streaming platform, but the deal is still pending court approval. [Extracted from the article]

Sinclair Broadcast Group purchased 21 regional sports networks from Walt Disney Co. in 2019 for $9.6 billion, hoping to build a larger sports conglomerate and develop a digital streaming service. However, Sinclair failed to anticipate the impact of cord cutting and the rise of streaming platforms, which led to a decline in cable-TV subscribers and eroded profits. The company's plan to obtain direct-to-consumer rights and gambling rights from sports teams also faced challenges. As a result, Sinclair's subsidiary, Diamond Sports Group, filed for Chapter 11 bankruptcy in 2023. Recently, Diamond reached a restructuring deal with Amazon.com Inc., making Prime Video its primary streaming platform, but the deal is still pending court approval. [Extracted from the article]

Tucker Carlson, an online commentator and former Fox News host, has interviewed Russian President Vladimir Putin during a trip to Moscow. The interview, which focuses on the war in Ukraine, is expected to be released soon. Carlson, known for his conservative views and support for Donald Trump, is the first US journalist to conduct a formal interview with Putin since the Russian invasion of Ukraine in 2022. The Kremlin has been criticized for cracking down on critical reporting about the war, including the imprisonment of a Wall Street Journal reporter. [Extracted from the article]