The Washington Independent
The Washington Independent
Top 10 Finance News: 3rd of May 2021

Top 10 Finance News: 3rd of May 2021

May 03, 2021 | Mariella Blankenship
financenews

Table of Contents

Recovered economically in the '20s: This may be ‘The Grapes of Wrath'EU executive recommends opening Europe to foreign travelersCharlie Munger ‘hates’ bitcoin’s rise: ‘disgusting and contrary to interests of civilization’Robinhood’s Biggest Business More Than Tripled Amid Trading FrenzySpeculative fear of declining attendance is unfounded, claims a money managerThe barbarians at Japan's gate (again)Germany's Bund yield rises to new high since March 2020Credit Suisse chairman Says that he is sorry that he has lost his way outMany Black Homeowners Are Falling Further Behind on Their MortgagesHow this city's decades of racist housing policies left lasting scars and still define it

Recovered economically in the '20s: This may be ‘The Grapes of Wrath'

Some financial experts have predicted a “Roaring '20s-style recovery after the coronavirus epidemic,” but there is no way to know who will be winners and losers.

She noted in an interview with CNBC on Friday that economists sometimes use the term “Roaring '20s'90s” to describe the effects of a pandemic that she didn't have issues with it.

Former Citi Global Chief Political Analyst Close to the post-Depression boom described in F. Scott Fitzgerald's The Great Grapes of Wrath, some may profit, while others may suffer as Fordhammed, just as they did in the period portrayed in the novel The Grapes of Wrath by John Steinbeck

We will also have to do with the consequences of the pandemic for years to come.” Fordham named “Grapes of Wrath,” in “Street Signs Europe.

Following the war and the 1918 flu pandemic, the decade of the '20s became remembered as the Roaring '20s.

John also addressed VAX Populi's study, which takes a deep dive into the 27 most at-risk economies around the world and the threats they will face as a result of the pandemic.

It is widely expected that the pandemic would trigger an economic slump of roughly five to ten years to two election cycles after the fact, Ford says.

She emphasized that this would be put to the test in the forthcoming U.K. and French elections, which would determine the political climate in those countries.

However, the September German election will signal the beginning of the “European supercycle.” Echoing Chancellor Merkel, Fordham remarked that Germany's Green Party — recently enjoying a surge in popularity — would have a “huge impact” if it entered the Chancellery.

French markets will be monitoring the results of the national election for hints of a pandemic-related political event. France and the nation in general were, as she put it, doing well on the VAXPop framework, could benefit from the rise of the far-right if there is an economic downturn.

EU executive recommends opening Europe to foreign travelers

The European Union’s executive recommended on Monday that foreign citizens fully vaccinated against COVID-19 and those coming from countries with a good epidemiological situation be allowed to travel into the bloc without additional restrictions.

The 27-nation bloc currently allows citizens of seven countries to come on holidays or for other non-essential reasons and the European Commission’s proposal would expand that list.

“The (European) Commission proposes to allow entry to the EU for non-essential reasons not only for all persons coming from countries with a good epidemiological situation but also all people who have received the last recommended dose of an EU-authorised vaccine,” the executive arm said in a statement.

“This could be extended to vaccines having completed the WHO emergency use listing process. In addition, the Commission proposes to raise... the threshold related to the number of new COVID-19 cases used to determine a list of countries from which all travel should be permitted,” it also said, adding that should lead to the expansion of the list.

To limit the risk of importing new variants of the coronavirus, the Commission also offered a new “emergency break” that would allow introducing swift travel restrictions for countries where the health situation deteriorates sharply.

EU member states are due to start discussing the proposal on Tuesday. Their agreement is needed to put it into effect.

Charlie Munger ‘hates’ bitcoin’s rise: ‘disgusting and contrary to interests of civilization’

Munger’s remarks came in response to a question at Berkshire’s BRK.A, -1.29% BRK.B, -0.95% annual shareholder meeting on Saturday. Munger and Chairman Warren Buffett were asked about their feelings regarding rising cryptocurrency values given Munger’s previous characterization of bitcoin as worthless, “artificial gold.”

Buffett, who over the years has previously described the crypto as “rat poison squared” and a “delusion,” with “no unique value at all,” said he would “dodge” the question, reckoning that the vast majority of investors watching the meeting online were likely bitcoin holders.

“We probably got hundreds of thousands of people watching that own bitcoin, and we probably have two people that are short. So we got a choice of making 400,000 people mad at us and unhappy…or making two people happy, and that’s just a dumb equation,” Buffett joked.

Munger, in contrast, was in no mood to hold back, saying that the question was like waving a “red flag” in front of a bull:

Bitcoin BTCUSD, 2.60%, which is notoriously volatile, has rallied over the past year, topping $60,000 for the first time in March before a pullback that took it briefly below $50,000 earlier this month. The digital asset was trading near $56,700 at midday Sunday, down around 1.7% over the last 24 hours, according to CoinDesk. Bitcoin traded at around $29,000 at the beginning of 2021 and for around $8,000 a year ago.

Robinhood’s Biggest Business More Than Tripled Amid Trading Frenzy

The Robinhood Mania of early 2021 brought Robin Markets tremendous revenue.

When customers buy and sell securities and options, Robinhood pays the brokerage for the privilege of processing a lot of those orders. That business, called payment for the order, brought in about $331 million in the fourth quarter late last week. That revenue was received three times what Robinhood made in the first quarter of 2020.

Millions of investors downloaded Robinhoods's app, eager to participate in the post-crash gold-stock mania rush on Reddit With such brisk growth in customers and earnings, investors are sure to be interested in Robinhood's upcoming initial public offering. Until January, the company's strong business had drawn in $3.4 billion in investment.

The company needed to keep investing in the momentum from Reddit. after the trade clearinghouse requested billions of dollars in additional collateral, Robinhood shut down the ability to purchase shares in GameStop Corp. and other high-volatility stocks in the last month

This was a controversial decision, and hundreds of customers took to social media to complain about it. Robinhood's ventures were unaffected by those tendencies. 7% more than in January, Robinhood's February total revenue from payments for orders was from the order flow.

Speculative fear of declining attendance is unfounded, claims a money manager

In April, there were 105 new SPACs debuting this year as opposed to the customary increase of 109, according to SPAC Research.

The markets reacted to a lot when the SEC recently reclassified SPAC warrants as liabilities, requiring most SPACs to re-assess their accounting.

It may be, though, Morgan Capital's Mark Yusko believes in the interview with CNBC this week.

Hedge funds have long-term trends, Yusko, his firm's founder and CEO, said on “CNBC ETF Edge” on Monday. High-growth, creative businesses would be more attracted to the SPAC merger than they have been in the past.

As a result of the frenetic first quarter for new issuance and the SEC crackdown, he remarked, “It's normal and to be a little conservative for you to pause.

regardless, [such] they can also be a good “the easiest,” way for retail investors to get into recently IPO'd firms, Stuart Frankel, director of institutional sales, said in the same interview in ETF Edge.

For a SPAC, you get in for $10, either opt for the bargain or abstain and you're on equal ground; for every other marketplace, the retail consumer would be excluded, said Grasso, who was a CNBC commentator when she said that, too, said he said, "

"Besides that, they are a fine option for institutional investors," he agreed

There are currently three SPAC-based exchange-traded funds available to investors: Yusko's Morgan Growth and Value Exchange-Traded Fund (SPX), which offers diversified assets, and the broad-based Defiance Next Generation Index and Manager New Issue/Grains and Index and Service (SPAK), all of which are actively operated by Tuttle (SPCX).

Investing in actively managed ETFs rather than passively held SPACs is a good approach because it's unlikely to negatively impact an actively managed portfolio, which has 180 or so of such stocks.

"The facility needs top-notch management," Lydon said. This is a segment for investors who may not have the aptitude or the wherewithal to do detailed due diligence, but who may benefit from strong performance.

The barbarians at Japan's gate (again)

Ever because Japan has become difficult for U.S. and European private equity companies to crack, it has resisted.

The first deal I reported on in 2012 when I started covering the Japanese PE industry was the investment firm KKR's offer to buy out Renes.

An American investment consortium loathed seeing a loss-making firm shift management of ownership to the USIC, which involved the Japanese Agency for Natural Resources and Energy purchase the loss-making firm. Japan's buyout business at the time painted a grim picture at the time

many of these [deals done by KKR and other PE investors] a decade later represent the dramatic shifts in Japan's corporate environment over the last decade.

This week, Bain has bought a controlling stake in the metals unit of Hitachi for $7.5 billion. This is a good win for those involved, and it suggests that another buyout will happen in the future.

The future of Bain, it seems, is once again centered on the Japanese giant, Toshiba. Other fund managers including KKR and CVC Capital Partners are also reported to be watching the Tokyo-listed asset. Japan has just agreed to the biggest PE-led buyout to date.

They have not seen any PE-assisted buyouts of this magnitude yet. In 2017, business-driven acquisitions such as these reached their height due to activist shareholders and governance reform. Foreign buyers had a strong influence on transaction-level buyouts in both 2017 and 2018, according to PitchBook. When Bain bought Toshiba Memory Systems' memory division in 2018, it was a $18 billion-plus deal.

There are several reasons driving the deals between Hitachi Metal and Toshiba. Over the past decade, Hitachi has shifted to digital services. Because of their deep attachment to corporations, Japanese buyout firms have made frequent use of their stock holdings as an integral part of a transaction. According to The Carlyle Group's president, who was interviewed by Reuters in March 2018, recent transactions also mark just the "the tip of the iceberg" of Japanese mergers and acquisitions (M&A).

Toshiba's investment by a success is due in part to Japanese government initiatives that make corporate boards more open and accountable, especially minority investors more secure. There was recently considerable pressure put on Toshiba from activist investors Effimimo and Farallon Capital, resulting in the investigation of possible improprieties on voting tallies.

As the number of business openings in Japan expands, the number of investment-oriented companies is increasing, as well. The Swedish athletic apparel firm, EQT, recently opened an office in Tokyo as part of its attempts to further its strategy in the Asia-Pacific market. Meanwhile, PAG recently announced two new joint directors for the Hong Kong-Taiwan operation in an attempt to speed up investments in the Pacific Rim.

This shows how the market is coming to recognize those who have found the most traction in Japan.

These firms, namely Bain, KKR, and Carlyle, have established strong ties to the Japanese market, with local headquarters, heads who speak Japanese, and local investors.

Because of all the new conditions that have been made possible in this market, Japan continues to be a different challenge for PEs to work in today. Many international companies are finding that they only get ahead by remaining native and waiting for the tide to turn.

Germany's Bund yield rises to new high since March 2020

3 Bond yields in Europe rose to their highest since the beginning of March and in anticipation of another sell-off by ministers yesterday's government officials.

German bonds and yields moved inversely to prices in April.

The stock market sell-off intensified when German inflation surged above the ECB's target and preliminary first-quarter growth numbers were announced on Thursday.

Expectations of higher growth and inflation to reignite in the U.S. have pushed government borrowing costs up in both Europe and America.

Investors are keeping wary of signs that the monetary stimulus may start to diminish, which still influences bond yields.

Over the weekend, when they had less of a day-to-to-day yield impact, 10-weighted Bund yields rose over the recent months from 0.162% to 0.173% on March 1st.

Italy's 10-year yield has risen to 0.03% since September 2020.

According to Arne Petas, an analyst at AFS, Monday's movement is just consistent with previous moves.

Recovery is picking up, vaccines are reopening, he said.

others investors lost faith in eurozone bond yields rising due to the ECB saying that Thursday's sell-off may be a new and the start of a new trend

Also, market uncertainty is expected before the ECB makes their decision to further accelerate their ongoing bond purchases at their meeting in June.

When the pace of the coronavirus vaccinations gets high enough, the ECB will phase out the emergency measures

The German retail rise of the day on Monday came as a result of the expiration of some unmet sales expectations. L0NMQ8

But manufacturing in the Eurozone came in slightly ahead of expectations but for the first time since 1997.

Also, moves occurred in a day with limited trading, since it was a public holiday in London as well as in China and Japan.

Focus returns to the U.S. on Monday where preliminary ISM non-PM (ISM Non-New Orders) activity report is expected to show slight growth. full disclosure

Credit Suisse chairman Says that he is sorry that he has lost his way out

As he was Credit Suisse AG Chairman, he felt compelled to express his regrets.

The Swiss bank has now acknowledged financial losses resulting from the liquidation of Archegos and Greensill after eight weeks of turmoil.

Rohner apologized for recent operational and financial setbacks on Friday at the bank's annual meeting, saying, "Those recent weeks have sullied the previous years for all time." This is sadly not the first time we've disappointed our customers, and they are probably disappointed with us as well. I mean no disrespect by this.

That was a more troubled departure for the former M&A lawyer who left Credit Suisse last year, who faced a coalition of shareholders who tried to have him dismissed after they found out he was involved in a hacking controversy. Over the decade, the bank's shares have fallen 73%, while rival bank UBS stock has fallen by 19%.

Incoming chairman Antonio Horta-Osorio commented that the latest setbacks at the Swiss bank have eclipsed the three-or-and-a-half decades of his previous experiences at banks. Following the twin bank failures, he promised to do a rigorous evaluation of the “strategic options”.

Several famous investors reportedly removed their support for the risk committee chairman, Andreas Gottschli, after the $5.5 billion fiasco with Archegos.

Any losses incurred by ArcheAge, the family office of US investor Bill Hwang, are more difficult to carry, due to Credit Suisse having a much higher position in the debt securities market. The situation has turned sour for Credit Suisse, which was beset by the Greensill Capital fiasco a short time ago, had to freeze investment funds just as it started a new one.

Rohner offered her regrets: “It's true, I particularly regret leaving the bank under these sad conditions, hard times. Of course, our employees feel hurt.”

Many Black Homeowners Are Falling Further Behind on Their Mortgages

Black borrowers are behind on mortgage payments according to new federal studies.

According to the Federal Reserve of Philadelphia, homeownership for Black people was about 11% overall and they applied for forbearance in April. Hispanics as homeowners had an 8.4% rate

The mortgage forgiveness program outlined in the March 2020 stimulus bill is meant to be a short-term solution.

It has worked like that in the past. As of mid-April, the share of homeowners in forbearance had fallen to about one in eight weeks to approximately over nine in ten homeowners got into the program at the height of its usage.

How this city's decades of racist housing policies left lasting scars and still define it

The historic Four Corners, where University Avenue separates the city's predominantly Black neighborhood from Cameron.

Is marked as the city's dividing line by race because it borders a majority-white neighborhood and is hemmed in on all sides by minority neighborhoods.

Lafayette has long had a primarily white and black population. The decades of concentrated racism have proved that left-sided economic policies can produce long-forgotten decades of results.

The bishops argue that we can't focus on one thing while ignoring the facts of history when considering Lafayette's demographics.

America's original fault is the reason why we're in this mess

Lafayette's most odious practice was implementing a pair of laws in 1923 that excluded non- only half a square mile of land for blacks and fined anyone moving into an area of their own race or setting up a business in areas meant solely designated for one race.

In the year prior, there was a time when Black citizens in the US cities had statues erected to make it clear that they were second-class citizens.

Even before the racist zoning ordinance was passed, there were complaints about the city's Board of white citizens from those whose homes were placed in "Black-only" areas. These complaints resulted in the measure being quickly rescinded.

“They hoisted a signal and told us, ‘Guess what? This is what we are anticipating for the future,' said the chair of the Department of political science at the University of Louisiana at Lafayette.

Mariella Blankenship | Mariella is an SEO writer who helps companies improve their Google search rankings. Her work has appeared in a variety of e-zine publications. She writes articles for site-reference newletter.com on a daily basis about SEO techniques. Her articles strive to strike a balance between being insightful and meeting SEO requirements–but never at the cost of being enjoyable to read.

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