The CEO of Lazard, Ken Jacobs, is expected to step down and be succeeded by his deputy, Peter Orszag, as the company announced plans to cut over 300 of its 3,000 employees and after a decline in Lazard’s investments. Jacobs is unaware when he will leave but stated that Orszag is a likely replacement for the CEO role. Losing ‘star rainmakers’ and the switch to passive investing are among the challenges that Lazard has undergone. Additionally, the company’s share price has dropped almost a fifth this year and trades just above its IPO price in 2005.
A RBC Capital Markets analyst, Geoffrey Kwan, has provided insight into Canada's domestic mortgage and housing trends, noting the market hasn't yet been significantly impacted by the rise in mortgage rates. Bank investors should position themselves defensively, according to Bank of Nova Scotia analyst, Meny Grauman, ahead of sector earnings reports that begin on 29 May. Grauman has chosen Toronto-Dominion Bank as his top pick. US communications company T-Mobile suffered its second major network hack this year in May, driving corporate spending on network security and Morgan Stanley analyst Hamza Fodderwala to believe Palo Alto Networks is in a strong position to benefit.
Billionaire investor Carl Icahn has lost money every year since 2014, mostly due to hedges made against a fast-rising market to protect his investment empire against another financial crisis, according to analysis by the Financial Times. Since 2017, the prominent activist investor has lost around $9bn due to hedges which would have paid out if asset prices had collapsed. According to the analysis, Icahn lost approximately $1.8bn in 2017 on hedging positions and $7bn between 2018 and Q1 2019. Icahn has bet on a market collapse since the aftermath of the 2008 financial crisis, deploying a strategy that involved shorting broad market indices, corporations, commercial mortgages and debt securities. At times, the notional exposure of his trades surpassed $15bn. This has neutralised approximately $6bn in gains from his activist wagers.
Hong Kong stocks, including Alibaba, Tencent Holdings, and Baidu, fell following disappointing revenue growth of 2% for the fourth quarter at Alibaba, and concerns that China's post-Covid recovery is losing momentum. The Hang Seng Index slumped by 0.9%, with the Tech Index falling by 1.8%. While the Shanghai Composite Index was little changed. Goldman Sachs warned that rising government debt levels would limit China's ability to roll out additional pro-growth policies through fiscal policy. Major Asian markets were trading higher, however, with Japan's Nikkei 225 up by 1% and South Korea's Kospi rising 0.7%.
Tommy Tuberville, the former head coach of Auburn University’s football team and now Alabama Senator, speaks to Kevin Roberts about the lessons and strategies he brings from his time between the goalposts to Washington. Tuberville discusses why he left the world of sports for a political career, the issues he’s taking on—from keeping radical abortion policies out of the military to protecting women's sports. He also talks about how he keeps himself motivated and optimistic about America's future. Tuberville also discusses his biggest highs in coaching and the relationship he had with his players.
Tuberville says that he enjoyed the football aspect and the athletic aspect, but his childhood was fun. His father was a high school referee, along with being a manager of a soft drink company, and his mother worked for General Dynamics. Tuberville’s brother was in music, and his sister ended up being a professor at Ohio State. Tuberville has coached thousands of kids, met presidents, and had a chance to be on championship teams; he followed many of these guys through, whether they’re married or when they had kids and families, or where they went to the NFL.
Tuberville explains how he was called out by Senator Schumer four days in a row on the Senate floor. He says Schumer forgot what he had done for a living, and he’s been called many names before. Being called out didn’t bother Tuberville because he’s dealt with that before. Tuberville tells young people that the key to success is getting into something you really want to do, and enjoying what you’re doing.
China’s economy is growing again. So why are investors getting out?
CNN
23-05-19 07:34
Chinese companies around the world have lost about $540bn in value since China released figures on its first-quarter economic output on 18 April. Analysts said investors have trimmed their exposure to China amid the combined pressures of rising geopolitical tensions, uncertainty over the prospects for the Chinese economy and Beijing’s crackdown on consulting firms. China’s Nasdaq Golden Dragon China Index fell by almost 5% since 18 April. Hong Kong’s Hang Seng Index also lost 5%, while the Shanghai Composite Index and the Shenzhen Component Index fell by 3% and 6.5% respectively during the same period. Meanwhile, the yuan, a barometer of investor sentiment, has fallen over 2% during April. Concerns are focused on the country’s “fundamental investability", according to Brock Silvers, CEO of Hong Kong-based Kaiyuan Capital. This refers to Chinese policy risk and geopolitical worries, including tensions between China and the US and Beijing’s clampdown on foreign consultancies.
Bank of Japan Governor Kazuo Ueda has cautioned against making "hasty policy changes", arguing that it would jeopardise Japanese efforts to achieve 2% annualised inflation. Speaking at a conference in Tokyo, he emphasised the costs of damaging "nascent developments" which were coming within reach, in a speech after data was released showing that underlying inflation rose to over 4% in April, its highest level since 1981. There has been increased speculation that the bank's policy could shift in July, with several economists predicting changes.
The decline of response rates to statistics in the UK and the US, largely due to the Covid-19 pandemic, is making it harder for data to be "smoothed and gaps must be filled", which could skew results. In the US, the JPMorgan Asset Management note revealed declining response rates to the Bureau of Labor Statistics’ current employment survey and Job Openings and Labor Turnover Survey (JOLTS). Response rates for the active sample in JOLTS only improved to 64% from 58% between releases, while in the UK, the percentage of respondents to the Labour Force Survey has been steadily falling since the pandemic. While Eurostat identified issues with under-coverage in almost half the countries it contacted through the European Union Labour Force Survey, the response rate is still unclear. With less data to work with, statisticians are unable to offer broad accuracy, and data released in different formats can lead to large backwards revisions, which poses a risk to the reliability of statistics.
A Telegraph poll of over 32,000 readers revealed that 71% of respondents believe the development of artificial intelligence (AI) technology is happening too fast. While some readers were optimistic, stating that the technology is a “freedom-enabling technology”, others were more sceptical, with one fearing that AI development could create a new era of highly skilled, highly paid elites and offer fewer employment opportunities for those without specialist, technical skills. Others worried there could be a job loss crisis, impacting particularly on young people.
The Standard & Poor's 500 index (S&P 500) has risen by 9% on the back of increasing interest in artificial intelligence, with five stocks - Microsoft, Alphabet, Nvidia, Apple and Meta Platforms - responsible for all of the average's gains, according to DataTrek Research. The sector's impact on the S&P is so profound that a report by SocGen claimed that removing from the index 20 stocks with the biggest AI connections would leave the S&P in negative territory for the year. A Goldman Sachs report suggests generative AI could expand S&P 500 profit margins by 4 percentage points.
An investigation launched last year by India's Securities and Exchange Board into offshore entities with holdings in Gautam Adani's companies has "hit a wall", according to a report by a committee appointed by the country's supreme court. Among the investigators was the US's Hindenburg Research, which this year accused Adani of stock price manipulation and fraud. The committee could not find evidence of regulatory failures but the report concludes that Sebi has drawn a blank in its investigation into 13 offshore entities it deemed suspicious, adding that bankers had declined to assist in matters relating to cross-border transactions.
Goldman Sachs is still grappling with the discrimination issues highlighted in the class action lawsuit filed by the bank’s female employees in 2010, according to a report in the Financial Times. While there are fewer signs of overt sexism, women complain of inaccessible cultures, exclusion and a lack of support. “I would’ve been better compensated if I wasn’t a mom, for guys, most of the people I interacted with, their wives didn’t work”, said one woman who recently left the bank. Among other complaints, female employees note Goldman’s culture remains less receptive to women who have no interest in sports and the difficulty of confronting controversial issues without damaging their careers, as one junior employee said. Goldman Sachs agreed to pay $215m, one of the biggest payouts in US corporate history, to settle the discrimination case.
Investors are choosing emerging market local currency bonds over dollar assets, as inflation drops and attractive yield rates are offered. From January to April, emerging market hard currency bond funds were hit with a net withdrawal of $2.65bn, while $5.23bn was invested in local currency bond funds. According to fund flow data provider EPFR Global, this year JPMorgan’s emerging market benchmark for local currency government bonds has delivered a 6.8% total return - more than three times its hard currency counterpart.
UK fintech giant, Revolut, has requested meetings with UK government ministers over stalled payments to the company. The firm has been seeking a UK banking licence for over two years, with reports that an application had been turned down by the Prudential Regulation Authority (PRA) last week. The Bank of England informed the government of its likely decision on the licence. The PRA has not yet officially told Revolut of its decision, with executives expected to meet Treasury officials to discuss economic growth. Founders of other fintech start-ups claim that the PRA is overly cautious about granting licences.
Profits at Western banks in China slumped in 2021 due to COVID-19 lockdowns and tensions between the US and China, according to data seen by the Financial Times. Credit Suisse, Deutsche Bank, Goldman Sachs and HSBC all reported losses, while Morgan Stanley's profits fell. UBS and JP Morgan were the only banks to post higher profits, although HSBC's unit lost less money than in previous years. Seven Western banks have units in China and all have been operating at losses in the country for years, investing in lossmaking outfits in the expectation they would eventually prove profitable.
Pimco has said it sees long-term opportunities in Asia's bond markets following the recent banking sector problems and economic downturn in the US, although geopolitical issues and concerns about moderating growth in China could prove risky. Pimco's Chief Investment Officer, Daniel Ivascyn, said the US economic downturn is not expected to be as severe as the one which followed the global financial crisis, however, setting portfolios up for something worse is still sensible. With China remaining one of the few markets globally without an inflation problem, there is potential for monetary easing as it looks to avoid a slowdown. Ivascyn added that Asia’s bond market would benefit if the Federal Reserve eased monetary policy, as this would spark a rally in the region’s currencies, reducing the cost to fund investments.
China's benchmark lending rates were left unchanged for the ninth consecutive month. Despite data indicating that economic momentum is subsiding following post-Covid growth, the People's Bank of China (PBOC)'s next policy move is expected to involve lowering bank cash reserves rather than cutting rates as a weakening yuan and yield differentials with the US leave little room for monetary easing. Analysts believe symbolic measures such as reserve requirement ratio cuts are more likely in 2021 given the pressure of RMB depreciation and a wide US-China interest rate differential. Easing bank cash reserves is expected to guide funding costs lower.
Reports of weak Chinese economic data and concerns over US debt ceiling talks have offset support from lower oil supplies from Canada and OPEC+ countries, leading to oil prices slipping. Brent crude futures slipped from $75.58 at close last week to $75.10 whilst US West Texas Intermediate decreased from $71.69 to $71.24 on Monday morning.
China's central bank, the People's Bank of China (PBOC), has kept its benchmark lending rates unchanged for the ninth consecutive month in May, as analysts suggest that net capital outflows risk any large-scale monetary easing measures that may hurt a sliding yuan. The hesitation comes despite a raft of data in recent weeks indicating that China’s post-coronavirus recovery has slowed. Despite financial doubts the PBOC is expected to lower the amount of cash banks must set aside to avoid additional outflows, many expect the use of other tools such as deposit rate window guidance and liquidity injections to guide funding costs lower.
Investors appear unconcerned by the impact of the prospect of a US default on its debts within the next fortnight, despite US Treasury Secretary Janet Yellen warning of a "catastrophic" financial collapse unless Republicans and the ruling Democrats agree a deal on spending and the debt ceiling. However, it is suggested bond investors and traders are less sanguine than their equity counterparts, with warning signs being seen in yields on shorter-term debt bills. Analysts have noted the US stock market's growth has been largely driven by the "mega caps", the biggest technology stocks. The New York "FANG" index, which tracks Facebook's parent, Meta, Apple, Google's Alphabet and Amazon, has surged 52% YTD. Despite this, the cost of US credit default swaps has risen and investors have withdrawn over $24bn from equity funds so far in May.
