Category Archives: Markets

(GUA) Shares soar as Trump hints at possible US-China trade deal

(GUA) President’s positive remarks about a call with Xi Jinping, and a report that he has asked officials to draw up terms, lift marketsDonald Trump and Xi Jinping are reportedly both keen to resolve the trade dispute.

 Donald Trump and Xi Jinping are reportedly both keen to resolve the trade dispute. Photograph: Andy Wong/AP

Asian shares have surged on reports that Donald Trump wants to reach an agreement with Chinese president Xi Jinping about the trade dispute that has dogged markets for months.

The US president spoke to Xi on Thursday and later tweeted that trade talks with China were “moving along nicely” ahead of face-to-face talks between the pair at the G20 summit in Argentina later this month.

Donald J. Trump


Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!

But Bloomberg later reported that the phone call – in which Trump and Xi both expressed optimism about resolving their bitter trade disputes – prompted Trump to ask officials to begin drafting potential terms.

China’s foreign ministry said on Friday that the telephone call between the two leaders was quite positive and that the pair believed they should “enhance trade relations”.

The reports lit a fire under stock markets that have beset by fears of a full-blown trade war between the world’s two biggest economies.

The Nikkei was up 2.5% in Tokyo, the Hang Seng climbed 3.7% in Hong Kong and the Shanghai Composite was up 3.3%. In South Korea, where the export-oriented economy has showed signs of a downturn, the Kospi index had its best day for seven years, jumping 3.5%. The ASX200 in Sydney had already closed up a more modest 0.14% when news of a possible deal came through.

US stock futures rose 0.7% and the FTSE100 is set for a jump of almost 1% when it opens in London on Friday morning. France’s CAC and Germany’s DAX are expected to enjoy similar gains.

In currencies the dollar eased, signalling some relief for emerging markets, while the pound climbed above $1.30.

The US and China’s tit-for-tat tariffs on each other’s goods have rumbled on for months as Trump pledges to help create more US manufacturing jobs. The tariffs have been blamed for a weakening of China’s mighty manufacturing sector which this week showed a marked slowdown in activity.

Trump administration officials have said that trade talks with China cannot resume until Beijing comes up with specific actions it is willing take to meet US demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.

The two countries already have imposed tariffs on hundreds of billions of dollars of each other’s goods and Trump has threatened to slap tariffs on the remainder of China’s $500 billion-plus exports to the United States if the disputes cannot be resolved.

The trade dispute has also forced the yuan to fall in value but on Friday it was stronger for the first time this week, also helped by Xi’s pledge on Thursday of more support for private firms.

Tai Hui at JPMorgan Asset Management said a stabilising trade relationship between US and China and more stimulus from Beijing would be the key ingredients to revive market confidence in Asia.

“While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now,” he told Bloomberg.

(NYT) The Trump Bump in Stocks Is Weakening


If the stock market keeps dropping, President Trump could lose one of his favorite bragging rights.

Concerns about higher interest rates, Mr. Trump’s trade policies and slower economic growth outside the United States have weighed heavily on stocks this month. The Standard & Poor’s 500-stock index is down 5 percent in October and sits 5.6 percent below its record high in September.

Still the stock market remains up a lot since Election Day in 2016, something Mr. Trump has often trumpeted. And with the economy solid and unemployment low, the recent volatility in the stock market is unlikely to have much effect on the midterm elections next month.

Donald J. Trump


The Stock Market just reached an All-Time High during my Administration for the 102nd Time, a presidential record, by far, for less than two years. So much potential as Trade and Military Deals are completed.

But the stock market is one of the most prominent indicators of confidence, and recent weakness suggests investors have some doubts about Mr. Trump’s leadership. If the S. & P. 500 falls further, Mr. Trump will struggle to compare himself favorably with other presidents. Here’s how he compares with his predecessors in the nearly two-year period after they were each elected.

The S. & P. 500 is up 29.4 percent in the 710 days since Nov. 8, 2016. Over the same number of days after Barack Obama was re-elected in 2012, the benchmark posted a gain of 32.1 percent.

The performance of stocks under Mr. Trump and Mr. Obama fall far short of the rally that took place after Bill Clinton was re-elected in 1996. The S. & P. 500 soared 48 percent over the equivalent period.

It’s fun to debate how much credit presidents deserve for strong stock market performance, but it’s hard to know for sure. Investors take cues primarily from corporate earnings, forecasts of economic growth and whether stocks are expensive or cheap. Presidents typically have little direct influence over any of those. It’s hard, for instance, to tie Mr. Clinton’s policies to the innovation in the technology sector that helped stocks soar during his second term.

With Mr. Trump, there is some clear causality. The tax cuts that he enacted last year have lifted corporate earnings, which helped push the S. & P. 500 higher.

The rally since 2016 also stands out because it started when stocks were already quite highly valued. The price-to-earnings ratio of the S. & P. 500, which compares stock prices with the earnings of companies in the index, was 14 when Mr. Obama was re-elected. When Mr. Trump won, it was 18.

But some of Mr. Trump’s policies seem to have weighed on stocks and could continue to do so. His tax cuts that bolstered profits are causing the budget deficit to balloon, which is a growing source of concern among investors. The trade frictions that he has created have hurt the earnings of some companies. And if Mr. Trump’s tariffs on China weigh on that country’s economy, the effects could be felt around the world.

(BBG) Netflix Is Selling $2 Billion of Junk Bonds to Fund New Shows

(BBG) Netflix Inc. is once again turning to the junk-bond market to fund new programming as the streaming-video giant seeks to maintain its torrid subscriber growth.

The $2 billion bond offering, which will be issued in dollars and euros, comes just a week after the company reported a bigger jump in subscribers than Wall Street analysts expected. While the bonds would push the cash-burning company’s debt load above $10 billion for the first time, the company has seen its equity value skyrocket as it adds subscribers internationally.

The U.S. portion of the 10.5-year bond may yield around 6.375 percent, while the euro notes could pay 4.625 percent, according to people with knowledge of the matter. Netflix paid less than 6 percent when it last tapped the market in April, in part because underlying Treasury yields were lower.

“To me it feels a bit like a win-win situation,” said John McClain, a high-yield money manager at Diamond Hill Capital, which oversees $22.6 billion including Netflix debt. “You’re buying the highest-quality, high-yield business at yields that are fairly close to the overall market. It’s low-cost funding for them, especially relative to the cost of issuing new equity.”

Netflix said in a statement that it will use proceeds from the offering to continue to acquire and fund new content. The company said last week that it expects to burn about $3 billion in cash this year as it continues to prioritize original series and movies. Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and Wells Fargo & Co. are managing the sale, according to a person familiar with the matter who asked not to be named because the deal is private.

Impressive subscriber growth and revenues have given the Netflix leeway to continue to spend massive amounts of money to fund its programming. Last week, S&P Global Ratings upgraded the company’s credit by one level to BB-. Moody’s Investors Service raised its rating in April, when the company last issued bonds.

Moody’s said in a note Monday that it even though Netflix’s debt load keeps getting bigger, the ratings firm expects a measure of the company’s earnings to rise faster. Between now and 2020, as Netflix continues its transition from licensing shows and movies to producing its own, Moody’s forecasts the company’s total debt will fall relative to its earnings before interest, depreciation and amortization.

The company’s announcement comes a few days after Uber Technologies Inc. raised billions of dollars of cash by tapping the high-yield bond market in a private placement. Demand for the debt has been spurred by the worst supply shortage since 2008, according to JPMorgan analysts, and the higher demand kept a lid on relative borrowing costs even as the Federal Reserve hikes interest rates.

(P-S) The Big Blockchain Lie – Nouriel Roubini

(P-S) Now that cryptocurrencies such as Bitcoin have plummeted from last year’s absurdly high valuations, the techno-utopian mystique of so-called distributed-ledger technologies should be next. The promise to cure the world’s ills through “decentralization” was just a ruse to separate retail investors from their hard-earned real money.

NEW YORK – With the value of Bitcoin having fallen by around 70% since its peak late last year, the  has now gone bust. More generally, cryptocurrencies have entered a not-so-cryptic apocalypse. The value of leading coins such as Ether, EOS, Litecoin, and XRP have all fallen by over 80%, thousands of other digital currencies have plummeted by 90-99%, and the rest have been exposed as outright frauds. No one should be surprised by this: four out of five initial coin offerings (ICOs) were  to begin with.

Faced with the public spectacle of a market bloodbath, boosters have fled to the last refuge of the crypto scoundrel: a defense of “blockchain,” the distributed-ledger software underpinning all cryptocurrencies. Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped – and least useful – technology in human history.

In practice, blockchain is nothing more than a glorified spreadsheet. But it has also become the byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power that must be destroyed. Blockchain fundamentalists’ ideal world is one in which all economic activity and human interactions are subject to anarchist or libertarian decentralization. They would like the entirety of social and political life to end up on public ledgers that are supposedly “permissionless” (accessible to everyone) and “trustless” (not reliant on a credible intermediary such as a bank).

Yet far from ushering in a utopia, blockchain has given rise to a familiar form of economic hell. A few self-serving white men (there are hardly any women or minorities in the blockchain universe) pretending to be messiahs for the world’s impoverished, marginalized, and unbanked masses claim to have created billions of dollars of wealth out of nothing. But one need only consider the massive centralization of power among cryptocurrency “miners,” exchanges, developers, and wealth holders to see that blockchain is not about decentralization and democracy; it is about greed.

For example, a small group of companies – mostly located in such bastions of democracy as Russia, Georgia, and China – control between two-thirds and three-quarters of all crypto-mining activity, and all routinely jack up transaction costs to increase their fat profit margins. Apparently, blockchain fanatics would have us put our faith in an anonymous cartel subject to no rule of law, rather than trust central banks and regulated financial intermediaries.

A similar pattern has emerged in cryptocurrency trading. Fully 99% of all transactions occur on centralized exchanges that are hacked on a regular basis. And, unlike with real money, once your crypto wealth is hacked, it is gone forever.

Moreover, the centralization of crypto development – for example, fundamentalists have named Ethereum creator Vitalik Buterin a “benevolent dictator for life” – already has given lie to the claim that “code is law,” as if the software underpinning blockchain applications is immutable. The truth is that the developers have absolute power to act as judge and jury. When something goes wrong in one of their buggy “smart” pseudo-contracts and massive hacking occurs, they simply change the code and “fork” a failing coin into another one by arbitrary fiat, revealing the entire “trustless” enterprise to have been untrustworthy from the start.

Lastly, wealth in the crypto universe is even more concentrated than it is in North Korea. Whereas a Gini coefficient of 1.0 means that a single person controls 100% of a country’s income/wealth, North Korea scores 0.86, the rather unequal United States scores 0.41, and Bitcoin scores an astonishing 0.88.

As should be clear, the claim of “decentralization” is a myth propagated by the pseudo-billionaires who control this pseudo-industry. Now that the retail investors who were suckered into the crypto market have all lost their shirts, the snake-oil salesmen who remain are sitting on piles of fake wealth that will immediately disappear if they try to liquidate their “assets.”

As for blockchain itself, there is no institution under the sun – bank, corporation, non-governmental organization, or government agency – that would put its balance sheet or register of transactions, trades, and interactions with clients and suppliers on public decentralized peer-to-peer permissionless ledgers. There is no good reason why such proprietary and highly valuable information should be recorded publicly.

Moreover, in cases where distributed-ledger technologies – so-called enterprise DLT – are actually being used, they have nothing to do with blockchain. They are private, centralized, and recorded on just a few controlled ledgers. They require permission for access, which is granted to qualified individuals. And, perhaps most important, they are based on trusted authorities that have established their credibility over time. All of which is to say, these are “blockchains” in name only.

It is telling that all “decentralized” blockchains end up being centralized, permissioned databases when they are actually put into use. As such, blockchain has not even improved upon the standard electronic spreadsheet, which was invented in 1979.

No serious institution would ever allow its transactions to be verified by an anonymous cartel operating from the shadows of the world’s authoritarian kleptocracies. So it is no surprise that whenever “blockchain” has been piloted in a traditional setting, it has either been thrown in the trash bin or turned into a private permissioned database that is nothing more than an Excel spreadsheet or a database with a misleading name.

(Economist) When does the case for long-term investment make sense?

(Economist) Paul Samuelson showed why time horizons matter less than commonly thought

ONE LUNCHTIME around 1960 a professor proposed a wager to a colleague. Flip a coin and call “heads” or “tails”. If you call right, you win $200. If you call wrong, you pay $100. This is a favourable bet for anyone who would take it. Even so, his colleague refused. He would feel the loss of $100 more than the gain of $200. But he would be happy, he said, to take 100 such bets.

The professor who offered the bet, Paul Samuelson, understood why it might be refused. A person’s capacity for risk could no more be changed than his nose, he once said. But he was irked by his colleague’s willingness to take 100 such wagers. Yes, the likelihood of losing money after that many tosses of the coin is vanishingly small. But someone who takes very many bets is also exposed to a small chance of far bigger loss. A lot of bets, reasoned Samuelson, were no safer than a single bet.

This lunchtime wager was of more than academic interest. It drew the battle lines in a debate on the merits of long-termism. Samuelson challenged the conventional wisdom that his colleague embodied. In later work, he used the bet as a parable. He showed that, under certain conditions, investors should keep the same fraction of their portfolios in risky stocks whether they are investing for one month or a hundred months. But what Samuelson’s logic assumed does not always hold. There are cases where a long-term horizon works in investors’ favour.

To understand the debate, start with the law of large numbers. It means that the more often a favourable gamble is repeated, the more likely it is that the person who takes it comes out ahead. Though a casino may lose on a single spin of the roulette wheel, over a large number of spins its profits are determined by the slight advantage in odds (the “house edge”) it enjoys. But a casino that would take a hundred $100 bets would not refuse a single bet of the same size. That was part of Samuelson’s beef. If his colleague dislikes a single bet, after 99 bets he should refuse the 100th. By this logic he should also refuse the 99th bet, after 98 bets. And so on until all bets are spurned.

Clouds on the horizon

Only a naive reading of the law of large numbers would support a belief that risk is diminished by more bets, said Samuelson. The scale of potential losses rises with the number of bets. “If it hurts much to lose $100,” he wrote, “it must certainly hurt to lose 100 x $100.” Similarly, it is foolish to believe that by holding stocks for the long haul—taking multiple bets on them—you are sure to come out ahead. It is true that stocks have usually yielded higher returns than bonds or cash over a long period. But there is no guarantee they will always do so. Indeed if stock prices follow a “random walk” (ie, an erratic and unpredictable path), long-term investing holds no advantage, said Samuelson.

This logic begins to fray if you relax the random-walk assumption. Stock prices appear to fluctuate around a discernible trend; they have a tendency, albeit weak, to revert to that trend over very long horizons. That means stocks are somewhat predictable. If they go up a long way, given enough time they are likely to fall, and vice versa. In that case, more nervous sorts of investors are able to bear a higher exposure to stocks in the long run than they would be able to in the short run.

Samuelson’s reasoning also assumes that people’s taste for risk does not vary with how rich or poor they are. In reality, attitudes change when a target level of wealth is within reach (say, to pay for retirement or a child’s education) or when outright poverty looms. When such extremes are far off, it is rational to take on more risk than when they are close. The calculus also changes with a broader reckoning of wealth. Young people, with decades of work ahead, hold most of their wealth in “human capital”, their skills and abilities. This sort of wealth is a hedge against riskier kinds of financial wealth. Indeed the more stable a person’s career earnings are, the greater the hedge. It follows that young people should hold more of their wealth in risky stocks than people who are close to retirement.

Samuelson vigorously disputed the dogma of long-termism, which says that the riskiness of stocks diminishes as time passes. It doesn’t. That is why long-dated options to insure against falling stocks are dearer than short-dated ones. The odds of winning favour risk-takers over time. But they are exposed to big losses in the times when they lose. Still, it would also be dogmatic to say that time horizon does not matter. It does—in some circumstances. What Samuelson showed is that it matters less than commonly thought.

(BBG) Hedge Fund Billionaire Rode the Worst Trade of His Life All the Way Down

(BBG) Bit by bit, the smart money deserted Edward Lampert.

Not even Lampert’s friends could understand why the hedge-fund manager, once hailed as a young Warren Buffett, clung to his spectacularly bad investment in Sears, a dying department store chain.

Granted, other hedge-fund titans have blown it, from Julian Robertson with US Airways to Bill Ackman with Herbalife. But few have ridden a disaster so publicly, over so many years, with such an iconic brand. It was hubris, many now say, and a failure to follow the investor commandment: get out in time.

Lampert, who lost many millions as Sears Holdings Corp. shares ground down to pennies, kept throwing the company lifelines. From the moment he bought into what was then called Sears, Roebuck & Co., he also maneuvered to protect his financial interests. At times, he even made money. He closed stores, fired employees and, in what will surely be long remembered as the most unseemly element of the saga, carved out some choice assets for himself.

Until, at last, the reckoning. After 13 years under Lampert’s stewardship, Sears finally seems to be hurtling toward bankruptcy, if not outright liquidation. And, once again, Wall Street is wondering what Eddie Lampert will salvage for himself and his $1.3 billion fund, ESL Investments Inc., whose future may now be in doubt.

Plugging The Holes

“He’s been doing a lot of financial engineering, but he’s just been moving around the deck chairs on the Titanic,” said Van Conway, a restructuring expert who worked on Detroit’s bankruptcy. “It looks like he’s played almost a full deck of cards by now.”

For years, bankruptcy court had been accepted by most everyone except Lampert as unavoidable. He refused to give in, proposing a plug-the-holes maneuver just two weeks ago, after years of machinations that kept the basic gears going even as the company was bleeding out.

At 56, he’s still a billionaire. A Sears bankruptcy isn’t likely to change that for the chief executive officer and chairman.

Under the filing the company is said to be preparing for as soon as this weekend, he and ESL — together they hold almost 50 percent of the shares — would be at the head of the line when the remnants are dispersed. As secured creditors, Lampert and the fund could get 100 cents on the dollar, along with others in the protected camp, including Wells Fargo & Co. and Citigroup Inc.

Evaporating Share Value

Lampert has maneuvered out of tight spots before, most famously when he persuaded four men who kidnapped him in January 2003 to let him go after holding him for 30 hours, blindfolded and handcuffed, in a motel bathroom. But saving sinking Sears required more than fast-talk.

His last idea was a debt restructuring that received little or no support from other creditors, who saw it as a scheme to allow ESL to be paid for Sears’s real estate, according to a person with direct knowledge of the situation. Part of this Lampert plan was to have unsecured creditors swap their debt for equity, a fool’s trade in the view of most analysts.

Related: How Sears Got Left Behind as Walmart, Amazon Took Over Retail

There’s no question Sears has cost him, and not only in reputation: He saw about $240 million worth of stock that he personally purchased evaporate as the shares tumbled. Another $287 million that he received in compensation has all but disappeared. ESL has lost $65 million just this year.

Earning Fees

The hedge fund’s assets plummeted to around $1 billion from $15 billion in 2006 as the portfolio shrank from a half-dozen to the one massive crapshoot on Sears. The big-name investors exited, and so did Goldman Sachs Group Inc. clients who had come into ESL as part of a $3.5 billion capital raise in late 2007 and early 2008.

Still, as Sears’s major debt holder, with roughly half of the company’s $5.3 billion total, ESL saw a bit of upside, extracting more than $200 million in interest payments a year.

And Lampert carved out what looked like — and in some cases might yet be — saves for himself, with spinoffs that gave him chunks of equity in new companies. One was Seritage Growth Properties, the real estate investment trust that counts Sears as its biggest tenant and of which Lampert is the largest shareholder; he created it in 2015 to hold stores that were leased back to Sears — cordoning those off from any bankruptcy proceeding. He and ESL got a majority stake in Land’s End Inc., the apparel and accessories maker he split from Sears in 2014.

‘Colossal Failure’

The Sears Canada Inc. gamble was a fumble; that spinoff began liquidating one year ago. Lampert and ESL together had almost $300 million in that stock and both rode it to zero, though they did pocket $25 million in special dividends. Lampert is the chief shareholder in the Sears Hometown and Outlet Stores Inc., a stock that has tanked along with its former parent.

All those spinoffs robbed Sears of assets when it needed them, said Mark Cohen, a former CEO of Sears Canada and frequent Lampert critic who’s an adjunct professor of retail studies at Columbia University. “This completely unconventional way of managing a business might have been an interesting alternative operating strategy were it not for the fact that it has been a colossal failure.”

Over the years of propping Sears up, Lampert threw his own money into the effort, and his friends and supporters said this wasn’t only in self interest: He wanted to keep the lights on and people employed. He and ESL were willing to lend at much lower rates than others were demanding. He had Sears pay almost $2 billion into the unfunded pension plan in the past five years.

‘Transparent Terms’

Nothing Lampert won out of Sears’s spinoffs was the result of special treatment, said Paul Holmes, a spokesman for ESL. “As we have said previously, the Land’s End and Seritage transactions were carried out on transparent terms that delivered value to all Sears shareholders and every shareholder had the same opportunity to participate.”

The defeat of a bankruptcy filing won’t dull Lampert’s passion, according to people close to him. He’ll continue to lead his low-key billionaire life, reading, riding his racing bicycles and spending time on his 288-foot yacht. (Lampert named it The Fountainhead, after the 1943 novel by Ayn Rand, whose books glorify individualism and the pursuit of riches.) And looking for deals. It hasn’t been unusual for him to walk out in the middle of dinner parties organized by his wife to hunch over his phone or a computer in another room, according to people who have attended the events, and on occasion, he hasn’t shown up for the meal at all.

Hitting Home Runs

Lampert started ESL — for Edward Scott Lampert — in 1988 after three years at Goldman. Richard Rainwater, who oversaw the Bass brothers fortune, staked him $28 million to get going.

By the time he was 43, he was a billionaire three times over. He hit home runs, the most impressive with the auto-parts retailer AutoZone and the car seller AutoNation Inc. His clients saw annualized returns of more than 20 percent after fees until 2001. Even with the Sears fiasco, an investor who has been with Lampert from the beginning would now still be enjoying an annualized return of about 12 percent.

He had what looked like another success on his hands in 2002, when he bought Kmart’s unsecured debt for around $700 million. Within two weeks, he’d orchestrated the retailer’s exit from bankruptcy and emerged as its biggest shareholder.

Kmart was throwing off cash back then, and Lampert masterminded the merger with Sears. It wasn’t immediately a disaster, but losses started piling up.


Sears rolled through four CEOs in eight years, and Lampert took over in January 2013. But he shows up at the headquarters outside Chicago only a few times a year. He prefers to beam in from his office in Florida; while he still owns a home in Connecticut he lives most of the time in a $40 million estate on Indian Creek, an island near Key Biscayne that’s home to two dozen or so of Miami’s uber wealthy.

As he cut costs to the bone, he pitted executives against one another in a battle for scarce resources in a sort of a retail Hunger Games, people who worked for him said. He ruffled feathers by being a micro manager with little interest in heeding the advice of top executives, according to one former high-ranking employee, who like others interviewed for this story asked not to be named for fear of angering Lampert. Another person recalled an uncomfortable conference call during which Lampert cut off one of his own executives, with an investor also on the line, with a quiet but dismissive, “That’s idiotic.”

Perhaps his biggest misstep was thinking he could power through the recession. He had the opportunity to cancel a massive number of leases on Sears stores in the aftermath of the financial crisis, according to people familiar with the company. Instead, he renewed them.

Rainwater, who died in 2015, had pulled his money out of the fund when Lampert decided to move beyond picking stocks to takeovers and buyouts, thinking the young man wasn’t ready. Part of it, Rainwater told the Wall Street Journal in 1991, was what he saw as the downside to Lampert’s exceptional drive: “He’s so obsessed with moving in the direction he wants to move that people get burned, trampled on, run into.”

Those words now seem prophetic.

(ECO) Navigator dispara 8% com redução da taxa Trump. Papeleira contraria maré negra em Lisboa

(ECOPapeleira nacional anunciou que os EUA vão aplicar uma taxa 1,75% sobre as vendas naquele mercado, em vez de uma taxa de 37% como chegaram a admitir. Terá um impacto de apenas dois milhões no lucro.

Dia negro na bolsa portuguesa mas não para todas as cotadas nacionais. Que o diga a Navigator, que vê os seus títulos dispararem quase 8% após ter anunciado que, afinal, a taxa anti-dumping que as autoridades americanas vão aplicar (37%) sobre as vendas de papel naquele mercado será apenas de 1,75%.

As ações da papeleira portuguesa somam 7,90% para 4,208 eurosEstão a contrair o sentimento de aversão ao risco que se verifica um pouco por todos os mercados internacionais e ao qual o PSI-20 também não escapa: o índice cede mais de 1% para 4.984,28 pontos com quase todas as cotadas abaixo da linha de água.

Mais de 1,3 milhões de ações da Navigator já tinham trocado de mãos em duas horas de negociação em Lisboa, com o nível de liquidez já acima da média diária dos últimos 12 meses (713 mil títulos por sessão), fornecendo uma ideia do apetite comprador dos investidores por estes títulos.

Este desempenho está também a impulsionar as ações da Semapa, que detém 70% da Navigator e ainda os cimentos Secil: os títulos da holding avançam 3,86% para 16,68 euros.

Papéis da Navigator voam na bolsa

A impulsionar a cotada liderada por Diogo da Silveira está a decisão do Departamento do Comércio americano de aplicar uma taxa de apenas 1,75% sobre as vendas de papel da Navigator no mercado dos EUA, bem abaixo da taxa e 37,35% que as autoridades chegaram a pensar impor. Com isto, melhoram-se as perspetivas para o lucro da empresa portuguesa: em vez de um impacto negativo de 45 milhões, a taxa deverá retirar apenas dois milhões aos resultados líquidos do ano em curso, estima a Navigator.

“São notícias positivas para Navigator”, refere o BPI CaixaBank numa nota de research desta quinta-feira. “Considerando que a tarifa foi revista consideravelmente, tendo um impacto de 0,5% na nossa estimativa para o EBITDA, vemos um potencial de subida de 7% na nossa avaliação para a Navigator. Reforçamos a nossa posição positiva sobre o título”, acrescenta o banco de investimento. O BPI atribui um preço-alvo de 5,20 euros, com recomendação “Compra”.

Em causa estava uma taxa anti-dumping de 37,34% que as autoridades norte-americanas queriam impor de forma retroativa sobre as vendas de papel da Navigator no período entre agosto de 2015 e fevereiro de 2017, valor este que foi revisto para 1,75%, após a empresa ter “invocado a existência de erros administrativos na decisão” anterior.

Na sessão de quarta-feira, os títulos da Navigator haviam tombado mais de 7%, recuperando dessas perdas no dia de hoje.

(MorningStar) Should We Have Foreseen This Bull Market?

(MorningStar) History may not regard us kindly.

It does not speak highly of the perspicacity of post-World War II investors. In 1949, the S&P 500 traded at 6 times earnings, entering an economic boom. Labor was cheap, new technologies would spark productivity gains, and the United States had the capital. The stock market was poised to surge. Few saw the opportunity. The S&P 500 rose 353% for the decade of the 1950s, but only 5% of Americans owned equities.

Such is how the decade is remembered. Those investing at the time, however, would tell a different story. Inflation had averaged an annualized 10.3% for the three years prior to 1949, gross domestic product shrank for the year, and unemployment pushed 8%. Stagflation! Perhaps a price/earnings ratio of 6 was too conservative, but there were good reasons, besides the memory of the past 20 years of stock-market woes, for being wary in 1950.

We post-2009 investors may be similarly judged. To be sure, equity ownership is much higher than during the ’50s. But that is not because investors perceived a bargain after 2008’s plunge. On the contrary. The percentage of Americans who own common stock, both direct and indirectly (that is, through funds), is gradually declining. Retail investors have been unconvinced. Professional managers haven’t exactly pounded the table with enthusiasm, either.

What Matters
As is customary, stocks climbed the wall of worry. As is also customary, most of the public discussion was nonsense–unnecessary worries about political issues. Investment experts will talk at length about such subjects as election results, tax proposals, and budget negotiations. To the first approximation of truth, those things never matter. Nobody who listened to fears about tax-policy “uncertainty” profited from that decision, nor has anybody in 2018 benefited from the trade-war chatter.

(Your author is not immune to the disease. Earlier this year, I warned that the 2018 tax bill might trash home prices, because the mortgage-deduction benefits had been sharply reduced. That problem, shall we say, has not occurred.)

What drives stock prices are corporate profits, which lie mostly outside government control, and inflation, which is perceived to be under government supervision, but which in reality is an unherded cat. Forecasting the long-term fortunes of U.S. stocks means leaving not only the Washington Beltway but often the country entirely. The results are largely determined by global business trends.

And, in 2009, we misread what those trends would be.

Right–And Wrong
The consensus was that the U.S. economy would enter “the New Normal” (a phrase popularized by PIMCO’s Bill Gross, although he was not its inventor)–an era marked by sluggish growth and, for a while, dormant inflation. After a few years, though, the government’s efforts to stimulate the economy by “quantitative easing” and “fiscal stimulation” would likely spark inflation. The Federal Reserve would then need to tighten money supply, thereby reducing the already feeble growth.

In many respects, that outlook was correct. GDP growth has been subdued; inflation has been dormant (although for longer than was generally anticipated); and the ancillary predictions that global interest rates would remain low and China would increase its presence, economically and politically, came true. Today’s investment world is much as the economists envisioned almost a decade ago.

But they missed one very big effect: capital’s victory over labor. Historically, economic booms have been quickly followed by economic busts, because workers rapidly progressed from being delighted to have a job, to thinking that they could do better, to demanding that they be paid more, lest they leave the company. Then would come the aforementioned inflationary pressures, the Federal Reserve would raise interest rates, and the cycle would turn.

Not this time. Corporate executives managed their labor costs splendidly (or wickedly, from the workers’ perspective), thereby boosting their companies’ margins beyond all expectations. In 2014, the S&P 500’s profit margin exceeded the peak that it recorded during the previous economic cycle. It hasn’t stopped rising. This year, despite repeated predictions that margins would revert to the mean, the S&P 500’s net margin is its highest yet.

Small Top, Big Bottom 
Fat margins mean fat profits. In 2011, S&P 500 calendar-year earnings outdid those of every previous year, save for 2006. The S&P 500 then repeated that feat for each of the next six years, meaning that it posted seven-straight record (on three occasions the index also surpassed its 2006 totals) or near-record results. This year, to replay the theme, will be the S&P 500’s best yet.

The top line, as predicted by the economists, has been unimpressive. Superficially, the S&P 500’s revenue growth looks acceptable, as the index eclipsed its precrash high in 2011 and, aside from a brief 2015 blip, has been rising since then. But those figures are nominal, not real. (In contrast, the earnings statistics presented above are adjusted for inflation.) On an after-inflation basis, the index’s revenues required nine years, from 2008 until 2017, to reach a new high.

Credit to the prognosticators for getting that point right. Foreseeing that corporations would not grow their revenues as rapidly–indeed, barely at all for several years, after adjusting for inflation–as during previous recoveries was no mean feat. Doing so required a deep understanding of global economic forces, as well as the willingness to break from experience. Saying “this time is different” is a perilous task. Most market forecasters did so in 2009, and they were correct.

But they missed what would happen with the bottom line, badly.

Revisiting this topic has convinced me that our investment generation was not collectively foolish. Setting aside the needless attention paid to political squabbles–a problem that will afflict future generations, just as it has afflicted us–the economic discussions have been sensible and mostly on target. The only major factor that was missed was the improvement in corporate profitability. Unfortunately for the accuracy of forecasters, although very fortunately for equity shareholders, that one item was so important that it overwhelmed the results.

Whether the investment history is written that way remains to be seen.

(BBG) Brazil Stocks, Currency Surge as Bolsonaro Takes Commanding Lead

(BBG) Brazilian assets jumped after investor favorite Jair Bolsonaro took a commanding lead in the first round of the presidential election, garnering support that surpassed all polls.

The Ibovespa equity gauge surged 4.1 percent — the most in two years — in Sao Paulo, while the real strengthened to a two-month high. Petroleo Brasileiro SA shares gained more than 8 percent, and bonds joined the rally along with exchange-traded funds. The stark outperformance was evident on a day most emerging-market assets fell.

Traders are cheering on Bolsonaro to avoid a return to the left-wing Workers’ Party and the economic policies of the past few years, which led to the worst recession in at least a century, blew out the budget deficit and cost the country its investment-grade credit rating. While the former army captain has professed a disinterest in economics, investors are betting that advisers would steer his administration toward privatizations and other market-friendly policies.

“It’s a done deal that he’s going to be the next president of Brazil unless something very unforeseen happens,” said Bernd Berg, a strategist at Woodman Asset Management AG in Zug, Switzerland, who sees the main stock gauge rising above 100,000 and the real stronger than 3.6 per U.S. dollar in the next few weeks. “The larger-than-expected gain of conservative mandates in Congress is highly positive for Brazilian assets in the short-run as it will improve the outlook for much needed reforms in a potential center-right government.”

Brazil assets had rallied last week as polls showed Bolsonaro gaining momentum over the Workers’ Party candidate, former Sao Paulo Mayor Fernando Haddad. Those two candidates — the top vote getters in the first round — will meet in a decisive runoff election Oct. 28. Bolsonaro wound up with 46.2 percent support, short of the majority needed to win outright, compared with 29.1 percent for Haddad, electoral officials said.

In Congress, Bolsonaro’s PSL party, once tiny, will become the second-largest in the lower house, potentially giving his administration more backing than expected. Two of his sons also won election. The support among lawmakers should make painful reforms easier.

While Bolsonaro has been fairly quiet about his ideas for reviving South America’s largest economy, he has enlisted an adviser, Paulo Guedes, who is in favor of privatizations and overhauling the pension and tax systems. Though Guedes is a market darling, there have been questions about how solid his partnership with his candidate is, given that many of his proposals go against what Bolsonaro has voted for in his 30 years in Congress.

The congressman, who spent weeks in the hospital after being stabbed at a rally on Sept. 6, has also created controversy and isolated some Brazilians with rhetoric that has denigrated women, homosexuals and black people. His comments were used as evidence by some supporters that he was willing to tell it like it is, as opposed to other candidates more concerned with being politically correct. Bolsonaro also pledged a crackdown on corruption and violence in the murder-plagued country.

But investors expressed little skepticism Monday morning, sending the real up 2.2 percent to 3.7555 per dollar as of 10:41 a.m. in New York. Itau Unibanco Holding SA, Petrobras and Branco Bradesco SA were among the biggest contributors to the Ibovespa’s surge. The iShares MSCI Brazil ETF traded in New York climbed 6.5 percent. The yield on Brazil’s 1 billion euros of notes due in 2021 fell 23 basis points to 1.5 percent. U.S. bond markets are closed for the Columbus Day holiday.

State-run companies are expected to be among the biggest beneficiaries of a Bolsonaro presidency because of his adviser’s goals to privatize “everything.” Along with Petrobras, the companies include electric utility Centrais Eletricas Brasileiras SA and lender Banco do Brasil. If Bolsonaro is elected, Petrobras shares could double, according to Eduardo Cysneiros de Morais, a fund manager at Claritas Investimentos, a Principal Financial Group unit, in Sao Paulo.

“Bolsonaro’s momentum is really strong and it seems that he will have it relatively easy to win the second round,” said Tania Escobedo, a strategist at RBC Capital Markets in New York and the most accurate forecaster for the Brazilian real in the first and second quarters of this year, according to Bloomberg rankings. “That being said, the market was pretty optimistic on his prospects already and market participants positioned for this scenario.”

(MW) A Hindenburg Omen is forming in the stock market. Should investors ignore it?

(MW) More new lows than new highs despite big gains in the market indexes warns that breadth is deteriorating

Courtesy Everett Collection
HINDENBURG, Burgess Meredith, Anne Bancroft, William Atherton, 1975


The Hindenburg Omen is materializing in the stock market, raising hackles among some market participants who closely watch for patterns that may portend ill for a stock market that has been knocking on the door to fresh highs.

Named after the German dirigible that notoriously exploded in 1937, the Hindenburg Omen is formulated to predict market crashes, or severe downturns, by synthesizing data, including 52-week highs and lows as well stock moving averages on the New York Stock Exchange. It was created by Jim Miekka, a blind mathematician, marksman and teacher, who died about four years ago. Miekka claimed that his indicator had been an accurate predictor of every market crash since 1987 on.

But as a number of market participants have noted, an appearance of the so-called Hindenburg Omen, hasn’t always resulted in an unraveling of the equity market.

A jump in the number of stocks hitting 52-week lows and highs on the New York Stock Exchange has been a key feature, among others, used to calculate the bearish pattern. Jason Goepfert, president of Sundial Capital Research, highlighted in a recent note cited by Bloomberg News that he has observed a clutch of such high/low moves on the NYSE and the Nasdaq, which can signal a degree of market indecision that can result in a broader market break down.

On Sept. 11, for one, there were 121 new 52-week lows put in on the NYSE, compared with 95 highs, Dow Jones market data show, despite healthy gains in the major market indexes.

A market’s propensity to produce more new lows than new highs suggests that market breadth is deteriorating, which can also be interpreted as a warning sign in stocks.

TimeS&P 500 IndexNov 17Jan 18Mar 18May 18Jul 18Sep 18


Bearish market predictions come as the S&P 500 index SPX, +0.00% is within shouting distance of a fresh record above 2,914, while the Nasdaq Composite Index COMP, +0.05% and the Dow Jones Industrial Average DJIA, +0.07%  have been in an uptrend, albeit a tenuous one that has been vulnerable to rhetoric related to concerns centered on trade relations between the U.S. and China.

The Hindenburg Omen, however, has produced a spotty record, lately.

Prominent technical analyst Tom McClellan told MarketWatch’s Tomi Kilgoreback in 2014 when another Omen appeared that “there are far more Hindenburg signals than there are scary declines.”

McClellan told MarketWatch on Friday that he has seen a cluster of 7 Hindenburg instances, including on Friday (before the close), in which 52-week highs and 52-week lows were more than 2.8% of the total of advancers plus declining shares, one key feature of the omen (see chart below):

McClellan told MarketWatch that such clusters “matter more than individual signals.”

However, he said “they are not a guarantee that trouble has to come, just a warning that things are getting hinky in a way that has mattered before.”

Hindenburg Omen back in August of 2017 formed and was spotted by Goepfert but didn’t amount to much either.

Mark Arbeter, technical analyst at Arbeter Investments LLC, said more context is usually required to genuinely interpret the bearish-sounding formation.

Arbeter wrote in a research note on Sept. 13:

It seems like spurious reasoning to me that if there are a fair amount of new highs as well as new lows, that this is bearish. There can be instances when the overall market is doing well and one sector is really weak, leading to many new 52-week lows. It happens as each individual sector is driven by its own fundamentals. Now if we see many stocks from many sectors hitting new 52-week lows, then there might be trouble ahead.

Miekka recommended caution when thinking about his own indicator, likening it in a 2010 interview with The Wall Street Journal before his death to “sort of like a funnel cloud.” He said “it doesn’t mean it is going to crash.” However, he suggested that there may be a high probability that the market is headed for a fall. “You don’t get a tornado without a funnel cloud.”

Sometimes it is hard to ignore such patterns like the Hindenburg or the Ohama Titanic Syndrome but they have thus far been poor predictors of stock-market collapses. To be sure, even a broken clock is right twice a day.

(CNBC) Shares of luxury online marketplace Farfetch surges 53 percent in IPO’s first day of trading


  • Shares of London-based luxury online marketplace Farfetch jumped more than 50 percent in their market debut Friday.
  • Farfetch Thursday night raised $885, stamping a valuation of $6.2 billion on the online giant, taking into account employee dilution.
  • The global market for personal luxury goods was estimated to be worth $307 billion in 2017.
Farfetch CEO on IPO and luxury online marketplace

Farfetch CEO on IPO and luxury online marketplace  

Farfetch sold 44.2 million shares Thursday night, raising $885 million and stamping a valuation of roughly $6.2 billion on the online giant after factoring in shares already held by employees. It priced its initial public offering a buck above its range of $17 to $19 a share, after having already upsized its IPO due to robust demand.

Farfetch opened at $27 and posted an intraday high of $30.60.

With a $6.2 billion market price and $385 million in 2017 revenue, Farfetch is trading at a richer valuation than as well as other traditional retailers.

“Marketplace” companies often trade at a higher premium than traditional retailers, because they don’t carry the risk being stuck with unwanted product, investment bankers say. Farfetch, however, continues to face steep competition from luxury retailers like and Net-a-Porter. While its marketplace business model alleviates its inventory risk, it does not stop customers from shopping on multiple websites, the bankers say.

Farfetch began as platform to help local high-end boutiques reach broader audiences and later evolved as a tool through which brands like Gucci could sell directly. It connects shoppers to over 700 brands and boutiques internationally and express ships to more than 190 countries, according to the company’s registration documents.

It was founded in 2008 by José Neves, a Portugese entrepreneur with experience in both luxury and technology, according to the company. Neves spent years courting the world’s most elite brands, in an industry ruled by a narrow set of power players, like Chanel, Richement and Hermes. Of the retailers Farfetch works with, 98 percent of have an exclusive relationship with it.

Those tight relations with luxury players stands in contrast to those they have with Amazon. Luxury labels have resisted selling on Amazon, suspicious of its ability to maintain the integrity of their brand.

The global market for personal luxury goods was estimated to be worth $307 billion in 2017, according to the Farfetch’s registration documents, citing data compiled by Bain. It is expected to reach $446 billion by 2025, according to the data.

Farfetch makes its money primarily through commissions on sales on its website, generating revenue of $385 million in fiscal 2017, a 59 percent jump over the previous year.

It continues, though, to lose money, as it goes after new customers and builds out its infrastructure. Farfetch recorded an after-tax loss of $112 million in 2017, down from a loss of $81 million the previous year.

Despite plans to continue to invest, Farfetch’s customers to have proven to be loyal, a rarity in e-commerce.

“Typically over time, customers peter out. Here, it’s almost like in this business, after they get customers they become something of an annuity. It’s more like what you would see in a software or service firm than a luxury apparel company,” said Daniel McCarthy at Theta Equity, a quantitative financial analysis firm.

Still, for Farfetch to ultimately achieve profitability, said McCarthy, it will need to sufficiently grow its sales to balance its fixed costs like administration expenses. Farfetch is also taking a number of risks, including its investments in new technology to support its “store of the future.” Meantime, the luxury market, albeit growing, has limited runway and remains vulnerable to economic dips.

Farfetch has grown through a number of partnerships, including in Asia and the Chalhoub Group in the Middle East, that have helped it broaden its distribution, offerings and capabilities. It has offices in 11 cities, including London, Tokyo and Los Angeles.

It also continues to invest in brick-and-mortar retail, buying London fashion boutique Browns in 2015. It is using Browns as one of its testing grounds for new technology in what it calls the “store of the future.” Offerings include touch-screen-enhanced mirrors and connected clothing racks.

Farfetch also launched Black and White, an infrastructure platform that luxury brands can use to develop their own e-commerce business.

(JN) Farfetch cumpriu o sonho de içar a bandeira portuguesa na bolsa de Nova Iorque

(JN) A Farfetch tornou-se esta sexta-feira a primeira empresa tecnológica portuguesa no mercado de valores mundial e içou, literalmente, a bandeira de Portugal no edifício da maior bolsa de valores do mundo, em Nova Iorque.

“Colocar a bandeira portuguesa no New York Stock Exchange (NYSE) era um dos pequenos sonhos que tínhamos e que foi realizado hoje”, disse José Neves, fundador da empresa, numa entrevista à Lusa.

O empreendedor português fez questão que a bandeira portuguesa estivesse içada neste dia em que a Farfetch se estreou no mercado de valores mundial a 27 dólares por acção e pouco depois já passava dos 30 dólares.

“Hoje foi um dia fantástico de celebração. Este dia é para equipa”, afirmou José Neves. “Eu sei que todos os nossos escritórios internacionais, incluindo os escritórios de Portugal, celebraram com muita alegria. O trabalho é deles, os resultados são deles”, adiantou, agradecendo à “equipa fantástica de três mil pessoas”, das quais metade tem nacionalidade portuguesa.

Sem adiantar números nem mercados a conquistar nas próximas etapas, José Neves afirmou que, depois desta oferta inicial pública, “começa o segundo capítulo”. “Não damos números concretos, mas vamos continuar a empregar mais pessoas e a gerar mais emprego”, garantiu.

O empresário referiu que desde a fundação da empresa, em 2007, estes 11 anos serviram para criar relacionamentos “fantásticos” com as marcas e “estabelecer a presença internacional” da Farfetch, que se encontra agora nos principais mercados de luxo.

A Farfetch é uma plataforma global no sector da moda de uma indústria que factura mais de 300 mil milhões de dólares anuais, a indústria de luxo.

Segundo o gestor, actualmente apenas 9% das vendas de luxo acontecem na Internet, mas o número vai mudar para 25% nos próximos dez anos, que representam 100 mil milhões de dólares (85 mil milhões de euros), um crescimento “exponencial”. “Penso que a oportunidade para o sector de luxo ‘online’ é enorme”, considerou o empresário.

A Farfetch orgulha-se de ser o único ‘marketplace’ do mercado de luxo e não ter concorrentes nesse modelo de negócio, mas admite ter de disputar a atenção do cliente, que pode comprar em diversos ‘sites’, mas que não oferecem o mesmo serviço.

Além de ser a única que não vende nada seu, o crescimento da Farfetch na primeira metade do ano de 2018 foi de 60%, o que deu a esta empresa luso-britânica mais quota de mercado.

O que se segue são “mais dez anos de crescimento, de inovação e continuar a construir uma empresa que é gerida com base num sentido de cultura e de valores muito fortes”, sustentou José Neves.

Um dos valores que a Farfetch agora assume é ser uma inspiração para outras empresas. “Espero que este lançamento em bolsa seja uma inspiração para outros empreendedores em Portugal. As ‘startup’ portuguesas estão a ter muito sucesso”, declarou José Neves, numa alusão ao programa de aceleração de ‘startup’ da Farfetch, o Dream Assembly, que dá aos empreendedores participantes conhecimentos e contactos na indústria de luxo.

(BBG) S&P, Dow Soar to Record Highs as Trade Fears Abate: Markets Wrap

(BBG) U.S. stock benchmarks reached new highs Thursday on news from China about tariff and currency moves that could ease trade tensions. Treasury yields remained near their highest level this year. The dollar slid.

The S&P 500 Index soared to a record close — led by the technology, health-care and financial sectors — lodging its biggest gain in over a month. The Dow Jones Industrial Average also reached a new pinnacle, with 28 of 30 constituents flashing green. Most European and Asian shares also gained.

Trade conflicts that had stocks gyrating early in the week have since cooled off. China is said to be planning to cut the average tariff rate it charges on imports from the majority of its trading partners as soon as next month. On Wednesday, Premier Li Keqiang his government wouldn’t devalue the currency in order to boost its exports amid the trade war.

The yield on 10-year Treasuries held above 3 percent, near its high for the year. The greenback weakened after a report said the U.S. and Canada are unlikely to reach a deal on Nafta in Washington this week; jobless data was solid but did little to change the mood. The pound surged after August retail sales came in higher than expected.

“The dollar has generally strengthened on tariff fears, especially against EM currencies,” Pravit Chintawongvanich, an equity derivatives strategist at Wells Fargo Securities, said by phone. “What you’re seeing today is the opposite of that. EM equities and DM equities ex-U.S. are catching up. Today is a continuation of the risk-on theme we’ve seen in the last couple days.”

Equity markets have so far remained resilient in the face of rising bond yields, suggesting investors are comfortable with the outlook for corporate earnings and global growth even as borrowing costs rise along with trade tensions. Ahead of the Fed meeting next week some other central banks topped the agenda on Thursday, with Norway’s policy makers raisinginterest rates for the first time in seven years as the SNB kept deposit rates unchanged.

Elsewhere, emerging-market assets continued to rally off the lows seen earlier this month, with the rand among the leading developing-world currencies as the South African Reserve Bank held its key interest rate at a two-year low. Norway’s krone retreated as investors saw the central bank’s rate trajectory as dovish, while the Swiss franc strengthened.

West Texas crude dropped after U.S. President Donald Trump resumed his criticism of OPEC on Twitter.

Terminal users can read our Markets Live blog.

Here are some key events coming up this week:

  • The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.

These are the main moves in markets:


  • The S&P 500 Index gained 0.8 percent as of 4 p.m. New York time to its highest on record.
  • The Dow Jones Industrial Average rose 1 percent, also reaching a record high.
  • The Stoxx Europe 600 Index jumped 0.7 percent.
  • The U.K.’s FTSE 100 Index climbed 0.5 percent.
  • The MSCI Emerging Market Index jumped 0.9 percent to the highest in more than two weeks.


  • The Bloomberg Dollar Spot Index decreased 0.4 percent to the lowest in eight weeks.
  • The euro climbed 0.9 percent to $1.1779.
  • The British pound rose 1 percent to $1.3271.
  • The Japanese yen sank 0.1 percent to 112.41 per dollar.


  • The yield on 10-year Treasuries rose less than one basis point to 3.07 percent, the highest in more than four months.
  • Germany’s 10-year yield decreased two basis points to 0.47 percent.
  • Britain’s 10-year yield fell two basis points to 1.585 percent.


  • The Bloomberg Commodity Index rose 0.6 percent, approaching a six-week high.
  • West Texas Intermediate crude fell 0.4 percent to $70.80 a barrel.
  • LME copper fell 0.6 percent to $6,082.00 a metric ton.
  • Gold rose 0.3 percent to $1,207.28 an ounce.

(CNBC) Jamie Dimon says cyber warfare is the biggest risk to the financial system


  • The “biggest vulnerability” for the financial system is the threat of cyberattacks, J.P. Morgan’s Jamie Dimon said on Thursday.

Biggest vulnerability today is cyber, JPMorgan CEO says

Biggest vulnerability today is cyber, JPMorgan CEO says  

Banks may be in sound condition post-Lehman Brothers, but the financial system could crack again if hit with a devastating cyber attack, J.P. Morgan Chief Executive Jamie Dimon warned on Thursday.

“I think the biggest vulnerability is cyber, just for about everybody” he told CNBC’s Indian affiliate CNBC TV-18 on Thursday. “I think we have to focus on it, the United States government has to focus on it.”

“We have to make sure because cyber — terrorist and cyber countries — they could cause real damage. We’re already spending a lot of money and J.P. Morgan is secure but we should really worry about that,” Dimon told CNBC-TV18’s Shereen Bhan in New Delhi.

Dimon put inflation running too hot as his second biggest concern, warning the reactionary raising of interest rates from the U.S. Federal Reserve could be the cause of a “traditional” recession.

Industry experts have placed increasing importance on the threat of cyber warfare as attacks become more sophisticated.

Jamie Dimon, chief executive officer of JPMorgan Chase & Co

Eric Piermont | AFP | Getty Images
Jamie Dimon, chief executive officer of JPMorgan Chase & Co

In the past, western officials have warned of increasing suspicious cyber activity originating from countries of concern including Russia, Iran and North Korea.

Earlier this year, America’s Department of Homeland Security and Federal Bureau of Investigation, alongside the U.K.’s National Cyber Security Center, released a joint technical alert warning of the threat of malicious digital activity being carried out by the Kremlin.

Meanwhile, authorities are worried about the heightened threat of cyberattacks from Iran on the U.S. and Europe, especially as the country becomes increasingly ostracized by the U.S., which has reintroduced sanctions on Tehran.

(BBG) We’re Living in What May Be the Most Boring Bull Market Ever

(BBG)  In an age of index funds and private companies, even a boom can feel blah.

To the extent anyone on Wall Street cares—and many will tell you they don’t—records in stocks are good for one thing: advertising. Talk all you want about rates of return or piling it up for retirement, but nothing beats a headline about an all-time high for bringing customers in the door.

And in they have come. Cheered by what’s become by some measures the longest bull market on record, U.S. investors have plowed money into U.S. stock exchange-traded funds at a rate of almost $12 billion a month since the start of 2017, five times as much as seven years ago. There are signs of stress—like the recent sell-off in Asia—but so far they appear in U.S. investors’ peripheral vision. Anyone buying stock in an American company right now must be comfortable paying two or three times annual sales per share, a level of shareholder generosity that hasn’t been seen since the dying throes of the dot-com bubble.

When we tell our grandchildren about this bull market, we’ll start by describing its demise, in the crash of 2019, or 2020, or 2025. But we don’t know the end of this story yet. What will we say of the rest? That dips were bought and passive investingruled, perhaps, and that a handful of tech megacaps—most of them decades old—grew to planetary size. But if the decade is remembered for anything, it could also be as the era when equities returned close to 20 percent a year on average from the March 2009 bottom and the stock market, somehow, got boring.

Which is to say, this isn’t like the boom of the late 1990s. Rarely do companies have initial public offerings where their stocks double on the first day of trading. The tip-dispensing cabbies of the bubble era are driving Ubers now, and any money they have to invest is going into ETFs, not individual stocks.

That’s what it’s like now: a market with fewer human voices, where the hum of computers is the background music to math projects with names like smart beta and risk parity. It’s a land ruled by giants. Three, to be exact—VanguardState Street, and BlackRock, which manage 80 percent of the $2.8 trillion invested in U.S. stock ETFs. IPOs, once the life of the market party, have turned into inconveniences in a world dominated by passive funds, occasions for reordering delicately balanced indexes.

In any case, companies are staying away from public markets in droves. From an annual rate of almost 700 new listings in the last half of the 1990s, the average has fallen 75 percent. While deals are up from last year and hope is running high that the spigot will open again, such expectations have been repeatedly dashed. “What we are really witnessing is an eclipse not of public corporations, but of the public markets as the place where young successful American companies seek their funding,” says a recent study by academics Craig Doidge, Kathleen Kahle, G. Andrew Karolyi, and René Stulz. They found there were 11 public firms for every million Americans in 2016, compared with 22 in 1975.

There’s no shortage of theories on what’s causing this, spanning everything from old-fashioned accounting rules to how the internet has made it easier to raise money from private investors, but the hardships of being a public company are frequently cited as the main culprit. While retail investors may have put more of their money on autopilot, hedge funds and other big investors seeking to carve out an edge can still make the life of a chief executive officer miserable. The number of so-called activist investorsmaking demands on public companies swelled past 500 for the first time in the first half of 2018. That’s nearly double the level of five years ago, according to research consultant Activist Insight.

Few topics get the pros’ dander up like this one. If you’re looking for an anomalous era, look at the 1990s, when every 22-year-old with a Java compiler ran a half-billion-dollar company. People paid dearly for euphoria back then. If the market is more discriminating today, good for it.

Still, the market’s image has dimmed. It’s seen by many as a channel for social blight. Companies may spend a trillion dollars this year on share repurchases—money that critics say should be used to build factories and create jobs (though those investments are up, too). People sense they’re getting screwed as all the country’s economic bounty flows to the top. At times in the past 10 years, the difference between annualized returns in the S&P 500 and growth in wages has been the widest for any bull market since the Lyndon Johnson administration.

Ten years after the worst meltdown since the Great Depression, all this is preventing rehabilitation of the idea of public company stewardship. If the sweet spot for entrepreneurship is somewhere around 30 years old, today’s best and brightest is an age cohort that graduated into the financial crisis. While this group’s Gen X forebears may remember a time when markets could be fun, now they’re a drag, a cesspool of high-frequency traders and at chronic risk of tipping over. What’s the point of going public when venture firms will hand you all the money you want?

That’s the big change: access to capital that doesn’t require a public listing. Right now, venture firms have about half a trillion dollars under management, roughly equivalent to all the money raised in IPOs over the last 10 years. Companies that would’ve gone public within a few years of being created in the 1990s aren’t even thinking about it now.

Disdain for public markets reached a kind of apotheosis last month with the story of Tesla Inc. CEO Elon Musk’s dalliance with going private. Tesla sits at the fulcrum of many of these market strains. Up about 40 percent a year since 2010, it’s a relatively recent IPO upon which the market confers a princely valuation. It’s also a favorite target of short sellers, who bet on the price of a stock falling, to the point where Musk was willing to forgo all the benefits he gets from public markets and consider leaving them. Technology companies trading at 100 times next year’s earnings didn’t used to consider going private. Apparently, they do now.

There’s talk of making markets more friendly to companies. Last month the Trump administration directed securities regulators to study a longer reporting cycle for corporate results. Instead of every quarter, earnings would be disclosed every six months. Job creation and greater flexibility were touted as possible benefits. And Jay Clayton, the Trump-appointed chairman of the U.S. Securities and Exchange Commission, wants to look at loosening restrictions on who’s allowed to trade shares in companies that have yet to go public.

Either proposal can be framed as a way of making equity investments a little less boring and predictable. Yet it’s strange to think that a market that’s created more than $20 trillion in value in less than a decade should need more strategies to burnish its image. If companies are so sick of the stock market after a run like this, the mind reels to consider what they’ll think after the crash of 2019, or 2020, or 2025.

BOTTOM LINE – Even as investors are willing to pay high prices for equities, companies have been slow to go public, and the stock market has lost much of its cultural buzz.

(BBG) Crypto’s 80% Plunge Is Now Worse Than the Dot-Com Crash

(BBG) The Great Crypto Crash of 2018 looks more and more like one for the record books.

As virtual currencies plumbed new depths on Wednesday, the MVIS CryptoCompare Digital Assets 10 Index extended its collapse from a January high to 80 percent. The tumble has now surpassed the Nasdaq Composite Index’s 78 percent peak-to-trough decline after the dot-com bubble burst in 2000.

Like their predecessors during the Internet-stock boom almost two decades ago, cryptocurrency investors who bet big on a seemingly revolutionary technology are suffering a painful reality check, particularly those in many secondary tokens, so-called alt-coins.

“It just shows what a massive, speculative bubble the whole crypto thing was — as many of us at the time warned,” said Neil Wilson, chief market analyst in London for, a foreign-exchange trading platform. “It’s a very likely a winner takes all market — Bitcoin currently most likely.”

Wednesday’s losses were led by Ether, the second-largest virtual currency. It fell 6 percent to $171.15 at 7:50 a.m. in New York, extending this month’s retreat to 40 percent. Bitcoin was little changed, while the MVIS CryptoCompare index fell 3.8 percent. The value of all virtual currencies tracked by sank to $187 billion, a 10-month low.

Digital Gold

The virtual-currency mania of 2017 — fueled by hopes that Bitcoin would become “digital gold” and that blockchain-powered tokens would reshape industries from finance to food — has quickly given way to concerns about excessive hype, security flaws, market manipulation, tighter regulation and slower-than-anticipated adoption by Wall Street.

Crypto bulls dismiss negative comparisons to the dot-com era by pointing to the Nasdaq Composite’s recovery to fresh highs 15 years later, and to the internet’s enormous impact on society. They also note that Bitcoin has rebounded from past crashes of similar magnitude.

But even if the optimists prove right and cryptocurrencies eventually transform the world, this year’s selloff has underscored that progress is unlikely to be smooth.

Read more: A QuickTake on cryptocurrrencies

One silver lining of the crypto slump is that ramifications for the global economy are likely to be minimal. While the market has lost more than $640 billion of value since peaking in January, that’s a far cry from the trillions erased from Nasdaq Composite stocks during the dot-com bust.

The crypto industry’s links with the traditional financial system also remain weak. That’s been a disappointment for bulls, but it’s good news for everyone else at a time when digital assets are tumbling.

“Until you can pay your taxes in cryptos, it’s just a pointless investment vehicle,” said’s Wilson. “Some people will make loads of money but most won’t.”

(CNBC) Bitcoin falls after Goldman reportedly drops crypto trading plans


  • Goldman Sachs is dropping its plan to open a trading desk for cryptocurrencies, Business Insider says, citing people familiar with the matter.
  • Bitcoin fell roughly 5 percent to below $7,000 following the report, and the rest of the top five cryptocurrencies by market cap were all down by more than 12 percent.
  • “To the extent that they represent the institutional herd, this is a negative,” Brian Kelly of BKCM says.
Goldman Sachs reportedly ditches plans to trade cryptocurrencies

Goldman Sachs reportedly ditches plans to trade cryptocurrencies  

Bitcoin slipped below $7,000 Wednesday after a report that Goldman Sachs is abandoning plans to open a trading desk for cryptocurrencies.

The world’s largest digital currency fell roughly 6 percent to a low of $6,866.06, according to data from CoinDesk.

Goldman still sees the regulatory environment as ambiguous, according to Business Insider, which cited people familiar with the matter. The Wall Street giant has been considering the launch of a new trading operation focused on bitcoin and other digital currencies for the past year. The bank’s CEO Lloyd Blankfein tweeted in October that Goldman was “still thinking about bitcoin.”

“No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold,” Blankfein said at the time.

Executives now say more steps need to be taken, most of them outside the bank’s control, before a regulated institution would be allowed to trade cryptocurrencies, according to Business Insider.

Goldman would not confirm the report to CNBC, and repeated its only public comment on the matter.

“In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering,” Goldman Sachs said in a statement.

Brian Kelly, founder and CEO of crypto hedge fund BKCM, said while this doesn’t have an impact on actual bitcoin trading volume short-term, the report pours cold water on long-term sentiment.

“They were not a part of the ecosystem yet, but to the extent that they represent the institutional herd, this is a negative,” Kelly said.

Bitcoin has been selling in a narrow corridor around $7,000 for the past month. Late Tuesday night, it drove up to $7,400, its highest point since the first week of August, according to data from CoinDesk.

Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, said that price level represented a selling trigger for some investors who had been waiting for prices to recover.

“Until there’s additional institutional investor interest to drive demand in pricing, many active managers in the space are going to continue to buy low and sell high,” DiPasquale said.

Institutional interest has been a barometer for prices, especially this summer. Rumors of the first-ever bitcoin ETF being approved drove prices over $8,000 in July. Prices later slipped back below $7,000 after the Securities and Exchange Commission rejected the bitcoin exchange-traded funds from ProShares and other crypto ETF plans by GraniteShares, Direxion and the Winklevoss brothers.

Bitcoin prices have struggled to recover to their high near $20,000 hit in December. The entire market capitalization for all cryptocurrencies is down roughly 63 percent this year, according to data from

Cryptocurrencies other than bitcoin known as “alt coins” fared even worse on Wednesday. Ethereum, the second largest cryptocurrency was down 13 percent, XRP fell 11 percent, while bitcoin cash and EOS were down 13 and 16 percent respectively.

(Reuters) EMERGING MARKETS-Currency storms rage on, stocks wipeout nears $1 trillion


* Biggest fall on Indonesia’s stock market in five years

* Rand tumbles to more than two-year low, bonds hit hard

* All eyes on Argentina after latest peso drubbing

* Turkish lira sags again but not the worst of the moves

LONDON, Sept 5 (Reuters) – Emerging markets storms raged fiercely on Wednesday, with South Africa’s rand at the centre of fresh currency tumult and losses since January for the world’s biggest EM stock index nearing $1 trillion again.

It was another torrid session in both Asia and fragile EMEA markets. Indonesia’s stock market had suffered its worst day in over five years as its currency pains worsened while Chinese equities fell almost 2 percent in Shanghai.

The rand then slumped to a more than 2-year low in a fresh 1.5 percent drop as traders also dumped its bonds and the most globally traded EM currency, the Mexican peso, too.

The latest peg for the spreading angst had been another 3 percent overnight drop for Argentina’s peso after news that it was trying to engineer a rapid injection of support from the International Monetary Fund.

Trade war and general economic health worries were raw too, with investors wary of the threat of fresh U.S. tariffs on another $200 billion worth of Chinese goods that could take effect after a public comment period ends on Thursday.

“Given the magnitude of the move in Argentina, I think the focus is still on that and on possible contagion,” said North Asset Management EM portfolio manager Peter Kisler.

There was no evidence of wide-spread contagion yet he added, though what global stock markets do next could be crucial.

The day’s falls across markets left MSCI’s 24-country EM stocks index down for a sixth straight day and down almost 20 percent from late January, a move that has wiped over $950 billion off its combined worth at the time.

The biggest individual move saw Indonesian stocks slump almost 5 percent at one point in the biggest fall since 2013 as the rupiah currency wobbled around its lowest levels since the Asian financial crisis in 1998.

The central bank said it had “decisively intervened” in FX and bond markets in morning trade.

“EM equities have really been underperforming developed markets. This will end sooner or later, but my feeling is that development markets will catch up to EM rather than that EM will bounce significantly.”

Financial flow numbers released by the Institute of International Finance on Tuesday had also underlined the nerves among EM investors.

Foreign money inflows to emerging markets shrank to just $2.2 billion in August from almost $14 billion in July, they showed, with net outflows from emerging debt of almost $5 billion during the month.

South Africa had said Tuesday its economy returned to recession in the second-quarter of this year with the second straight quarter of contraction, even before the worst of the emerging currency shock hit over the summer.

Elsewhere in Asia, India’s rupee had skidded further overnight to new record lows and Malaysia’s ringitt fell to its lowest in 9 months.

(BBG) Deutsche Bank Is Said to Be Removed From Euro Stoxx 50 Index

(BBG) Years of losses and strategic drift have cost Deutsche Bank AG a seat among Europe’s elite companies.

Germany’s largest lender has dropped out of the Euro Stoxx 50 index for the first time since its inception in 1998, according to documents seen by Bloomberg. The index, compiled by Deutsche Boerse AG, provides a cross-section of the biggest and most liquid stocks in the euro area.

A loss of confidence in the lender’s ability to restore profitability after a string of scandals and fines has caused a sharp decline in Deutsche Bank’s market value. It has lost money for the last three years, and a growing number of analysts are voicing doubts about Chief Executive Officer Christian Sewing’s latest turnaround plan.

Deutsche Bank’s shares peaked in 2007 and have lost some 90 percent since then. They are down over 37 percent this year alone, but were up 0.7 percent by 11.00 a.m. in Frankfurt on Tuesday.

Benchmark Factor

Inclusion in widely-tracked indexes is becoming more important for companies in a world increasingly dominated by ‘‘passive’’ investment funds. Such funds accounted for 30 percent of all Europe-focused equity investment funds at the end of 2017, according to the Bank for International Settlements. The Euro Stoxx 50 alone is tracked by exchange-traded funds with assets of more than 40 billion euros ($46 billion), data compiled by Bloomberg show. Expulsion from the index will force passive investors to sell as they realign portfolios to include the index’s new constituents.

Stocks dropping out of a benchmark index on average have underperformed the respective gauge by 5.6 percent during the month before the announcement and another 3 percent between the announcement and the actual index change, data collected by LBBW analyst Uwe Streich show. Streich said the main problem for the bank was “reputational.”

“Exiting the Euro Stoxx 50 seems to contradict the bank’s self-image as one of the euro zone’s biggest banks,” he said. “Re-entry will be very difficult.”

The index change is set to take effect on September 24.

In a statement that didn’t directly acknowledge its exclusion, Deutsche Bank said: “Management is firmly committed to executing its announced strategy to improve our bank’s profitability. We expect that this will support the valuation of Deutsche Bank by the market, and therefore increase market capitalization.”

The bank said its commitment and strategy are “unaffected by the announcement of the index provider.”

A Deutsche Boerse spokesman couldn’t immediately comment.

Germany’s second-largest listed lender, Commerzbank AG, risks suffering a similar fate by falling out of the DAX Index, which includes the country’s largest and most liquid stocks. Deutsche Boerse is slated to announce the new composition of the DAX on Wednesday after the market’s close.

The two potential index exits “tell the story of how far behind the curve German banks are,” Andreas Meyer, a portfolio manager at Hamburg-based Aramea Asset Management AG, told Bloomberg in August. “While other European banks keep growing, Germany’s banks are occupied with themselves, unaware of how the competition is attacking them on their home turf.”

(Economist) Bitcoin and other cryptocurrencies are useless

(Economist) For blockchains, the jury is still out

AN OLD saying holds that markets are ruled by either greed or fear. Greed once governed cryptocurrencies. The price of Bitcoin, the best-known, rose from about $900 in December 2016 to $19,000 a year later. Recently, fear has been in charge. Bitcoin’s price has fallen back to around $7,000; the prices of other cryptocurrencies, which followed it on the way up, have collapsed, too. No one knows where prices will go from here. Calling the bottom in a speculative mania is as foolish as calling the top. It is particularly hard with cryptocurrencies because, as our Technology Quarterly this week points out, there is no sensible way to reach any particular valuation.

It was not supposed to be this way. Bitcoin, the first and still the most popular cryptocurrency, began life as a techno-anarchist project to create an online version of cash, a way for people to transact without the possibility of interference from malicious governments or banks. A decade on, it is barely used for its intended purpose. Users must wrestle with complicated software and give up all the consumer protections they are used to. Few vendors accept it. Security is poor. Other cryptocurrencies are used even less.

With few uses to anchor their value, and little in the way of regulation, cryptocurrencies have instead become a focus for speculation. Some people have made fortunes as cryptocurrency prices have zoomed and dived; many early punters have cashed out. Others have lost money. It seems unlikely that this latest boom-bust cycle will be the last.

Economists define a currency as something that can be at once a medium of exchange, a store of value and a unit of account. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria. That does not mean they are going to go away (though scrutiny from regulators concerned about the fraud and sharp practice that is rife in the industry may dampen excitement in future). But as things stand there is little reason to think that cryptocurrencies will remain more than an overcomplicated, untrustworthy casino.

Can blockchains—the underlying technology that powers cryptocurrencies—do better? These are best thought of as an idiosyncratic form of database, in which records are copied among all the system’s users rather than maintained by a central authority, and where entries cannot be altered once written. Proponents believe these features can help solve all sorts of problems, from streamlining bank payments and guaranteeing the provenance of medicines to securing property rights and providing unforgeable identity documents for refugees.

Nothing to lose but your blockchains

Those are big claims. Many are made by cryptocurrency speculators, who hope that stoking excitement around blockchains will boost the value of their related cryptocurrency holdings. Yet firms that deploy blockchains often end up throwing out many of the features that make them distinctive. And shuttling data continuously between users makes them slower than conventional databases.

As these limitations become more widely known, the hype is starting to cool. A few organisations, such as SWIFT, a bank-payment network, and Stripe, an online-payments firm, have abandoned blockchain projects, concluding that the costs outweigh the benefits. Most other projects are still experimental, though that does not stop wild claims. Sierra Leone, for instance, was widely reported to have conducted a “blockchain-powered” election earlier this year. It had not.

Just because blockchains have been overhyped does not mean they are useless. Their ability to bind their users into an agreed way of working may prove helpful in arenas where there is no central authority, such as international trade. But they are no panacea against the usual dangers of large technology projects: cost, complexity and overcooked expectations. Cryptocurrencies have fallen far short of their ambitious goals. Blockchain advocates have yet to prove that the underlying technology can live up to the grand claims made for it.