Bloomberg reports on the fiasco at Lordstown Motors, where "inaccuracies," in reporting have seen the CEO and CFO leave the company. Christine Watkins writes: Lordstown Motors Corp. announced the abrupt departure of its two top executives and said its board found evidence of inaccurate statements, intensifying the turmoil for the electric-vehicle maker and onetime SPAC star. The company said in a statement Monday that Chief Executive Officer Steve Burns and Chief Financial Officer Julio Rodriguez have resigned from the company, effective immediately. It is the latest setback for the … [Read more...]
About Jeremy Jones, CFA
Post-Pandemic: Oil Demand Expected to Rise Quickly
With parts of the world reopening, oil demand is heating up, and as the pandemic subsides, the IEA expects rising demand will accelerate. The FT reports: Oil demand is expected to exceed pre-coronavirus levels by the end of 2022, the International Energy Agency said on Friday, with the body calling on world producers to “open the taps”. Consumption declined by a record 8.6m barrels a day last year as coronavirus raged around the world. It is expected to rebound by 5.4m b/d this year as vaccines are rolled out and countries open up again. In 2022, the IEA expects a further 3.1m b/d … [Read more...]
SEC to Review Payment for Order Flow
In the FT, Philip Stafford reports on a review of a number of issues currently facing markets, including payment for order flow. He writes: The top US stock market regulator is looking to change the rules around share trading, including fees paid by large Wall Street groups to handle customers’ orders, after January’s explosion in “meme stocks” highlighted what he called “inefficiencies” in the market. Gary Gensler, chair of the Securities and Exchange Commission, said on Wednesday that he had asked the agency’s staff to make recommendations to amend a host of market structure rules — an … [Read more...]
An Economic Recovery Like No Other
The current economic recovery is like no other recovery on record. Economic activity is snapping back much faster than it ordinarily would. The reason for this is that the recession was also like no other. The severe economic contraction last Spring was man-made. There wasn’t an overheating of inflation or some other imbalance in the economy that acted as a catalyst for the downturn. Government edicts to shut down businesses and social distance caused the recession. It is no wonder then that only a few quarters into the recovery, businesses are being formed at the fastest pace on record … [Read more...]
Former Head of Fed Market Analysis: High Inflation Will Cause Problems
The former head of monetary and financial market analysis at the Fed, Brian Sack, has warned that higher inflation will be a problem for the Central Bank. Bloomberg reports: The economist who helped change the way the Federal Reserve assesses long-run inflation expectations says their current level means the central bank needs to start laying the groundwork for shrinking its massive bond-buying program. As head of monetary and financial market analysis at the Fed Board of Governors almost two decades ago, Brian Sack and his colleagues championed the use of a forward measure of inflation … [Read more...]
The Fed Has Forever Changed the Corporate Bond Market
Citigroup points out here exactly which day the Fed crossed the red line of intervening in private markets. Every economic downturn will now come with the baseline expectation that the Fed will step in to save overleveraged companies and the investors who lent to them. Citigroup estimates the Fed-put in investment-grade corporate bonds is worth about 0.30%. What about free markets and free-market capitalism? Apparently, both are a relic of a bygone era. Alex Wittenberg reports at Bloomberg: The Federal Reserve will keep its “invisible presence” in the corporate-bond market even after … [Read more...]
Can Robinhood and SoFi Bring IPOs to the Masses?
For most of history, initial public offerings have been a walled garden for many investors, who were unable to gain access to their benefits. That may start to change if Robinhood and SoFi Technologies get their way. Telis Demos reports for The Wall Street Journal: Small investors seem more influential than ever these days. So as the initial public offering market heats up, efforts to get those investors a bigger seat at the table is a hot idea. It’s also not a new one. Upstart brokerages Robinhood Markets and SoFi Technologies recently said they would give their customers access to IPOs. … [Read more...]
The Plan to Make Food Delivery Profitable, Eventually
Food delivery has not been a very profitable business in the past. In fact, net income has been elusive. Laura Forman reports in The Wall Street Journal on the plan to change that, eventually. She writes: They say those who don’t learn from history are doomed to repeat it. But in food delivery, DoorDash DASH -4.10% and Uber Eats are trying to avoid repetition. Last month, Grubhub GRUB -1.91% Chief Executive Matt Maloney called food delivery a “crummy business” in an interview with The Wall Street Journal, something he has been quoted as saying in cruder terms years earlier. Grubhub was … [Read more...]
The Reach for Return at Pension Plans and Endowments
In the last few years with bond yields so low, institutional money managers at endowments and pension funds have had to reach for return in areas they normally would eschew in order to hit their targets. Robin Wigglesworth reports on the industry's tactics, and what the future may bring at the FT, writing: Institutional money managers are grappling with a grim investing outlook, sending them on a hunt for the next big idea decades after the late David Swensen triggered a revolution when he arrived at Yale’s endowment in 1985. It is a pressing problem. Asset allocators like Swensen — who … [Read more...]
Corporate Bond Yields: What You Can Earn Today
Corporate bonds are a good place to pick up yield in the bond market. With yields on government bonds in much of Europe and Japan in negative territory, corporate bonds offer a higher-yielding alternative. Corporate bonds are a broad universe, though. There are investment-grade corporate bonds, junk bonds, foreign corporate bonds, hybrid corporate bonds, and floating-rate corporate bonds among other variations. Investment-grade corporate bonds are the largest part of the corporate bond market. How Much Do Corporate Bonds Yield Today? We break the investment-grade corporate bond … [Read more...]
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