Exchange-traded funds (ETFs) focused on U.S. stocks have a hidden vulnerability: as much as 25 percent of the revenues of the U.S. companies the funds own are dependent on China’s economic performance, according to a Bank of America (BoA) analysis. “What happens in China doesn’t stay in China,” the report said, noting that Beijing’s crackdown...
Tag: oct 12 2021
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INVEST IN CHINA DESPITE EVERGRANDE RECKONING?
Wall Street firms have brushed aside concerns about recent upheaval in China—including the crackdown on businesses by the Chinese Communist Party—and see the country as a good bet. The New York Times reported that BlackRock, the largest asset manager on the planet, recommended that investors increase their exposure to China while bankers from J.P. Morgan and...
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SPOTLIGHT: INFLATION SPREADS
SUPPLY CHAIN CLOG COMPLICATIONS Snarls in global supply chains are due, in part, to different areas of the world addressing the latest round of COVID infections at different rates, The Wall Street Journal reported. In the West, vaccination campaigns are well under way; countries and companies have emerged from shutdowns or cutbacks and need materials...
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SPOTLIGHT: THE “BIGS” KEEP GETTING BIGGER
PRIVATE EQUITY FIRMS OFFER SKY-HIGH PRICES FOR BUYOUTS Private equity firms are bidding for acquisitions with offers that are the highest this century, in some cases offering 70 percent above share prices in effect before bidding began, the Financial Times reported. This year, takeover companies have bid an average of 45 percent above prevailing share...
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SOUTH KOREAN BATTERY MAKERS RUNNING SHORT OF MATERIALS
South Korea produces almost half of the world’s batteries for electric vehicles, but as demand for EVs is rising, the country’s battery makers are facing shortages of a range of materials, as the global commodities supercycle gains momentum (“Commodities Supercycle Underway?” 11 May, 2021). The country has relied on imports of rare earth minerals and...
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CANADA’S STRONG JOB NUMBERS. WILL INTEREST RATES RISE?
Canada gained 157,100 jobs in September, far exceeding analysts’ expectations and regaining all three million jobs lost to the COVID War, Reuters reported. The jobs report makes it much more likely the Bank of Canada (BoC) will now boost interest rates to lasso inflation, now running at 4 percent, twice the bank’s target rate. However,...
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HOTEL INDUSTRY SUFFERING FROM COVID WARS
About a billion room-nights will be booked in U.S. hotels this year, data service STR reported, a respectable gain from 2020’s 829 million but still well below 2019’s record 1.3 billion. Hidden in those larger numbers is a bit of bad news: business travel continues to decline, a trend we noted early in “Travel Succumbs...
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U.S. HOMES: PRICES SPIKE, FEWER CAN AFFORD THEM
In America, once the Land of Opportunity, renowned for its strong middle class, continues its economic divergence as the rich are getting richer and the rest keep getting poorer. It’s in the numbers. With U.S. home prices spiking, they are less affordable to Americans than at any time since the Panic of ’08. Now, the...
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IS THE DOLLAR TOO STRONG?
As the U.S. dollar grows stronger, precious metals prices go lower, since they are dollar based, it costs more to buy them. Thus, prices are slumping as The Wall Street Journal’s Dollar Index reached its highest reading in 13 months last week, having risen steadily since June and 2 percent in September alone, the WSJ...
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U.S. INVESTORS: THE BEST IS YET TO COME?
U.S. investors are paring back investments in hedges—instruments that pay a return when equity markets fall—according to the Financial Times, and taking profits in derivatives that would have protected them from a market slump. This signals investors’ belief that the worst of the markets’ recent tumble is over, the FT said. Cboe’s Skew Index, which...