Sunday, October 17News That Matters

Tag: Stocks and Bonds

A Stock Market Malaise With the Shadow of ’70s-Style Stagflation

A Stock Market Malaise With the Shadow of ’70s-Style Stagflation

Business
Vaccine mandates seem to be working, younger children may be approved for shots by Halloween, and the coronavirus appears to be in retreat. But those hopeful signs herald a messy new phase for the country’s economic recovery — and that’s putting Wall Street more on edge than it’s been in months.The Federal Reserve has signaled it could begin dialing back programs that have helped prop up the markets for the past 18 months as soon as next month, while the breakneck pace of economic growth seems to be slowing, a fact underscored by a disappointing September jobs report.And price increases that grew out of pandemic-related shutdowns and supply chain disruptions have been stubbornly persistent. A key measure of inflation released Wednesday, the Consumer Price Index, climbed 5.4 percent in Sept...

BlackRock’s Transfer of Power

Technology, World
The right to voteLarry Fink, the C.E.O. of BlackRock, which has nearly $10 trillion in assets, is widely considered to be the world’s most powerful investor. His annual letters to leaders of the nation’s largest companies are must-reads that change corporate behavior.This year, BlackRock sided with the upstart firm Engine No. 1 in its proxy fight with Exxon, helping the small, climate-focused hedge fund win two seats on Exxon’s board. That shareholder vote followed through on Fink’s promise last year to hold companies accountable if they didn’t have a credible plan to reduce their carbon emissions.Now BlackRock is offering to give up a bit of its power. Starting next year, some of its biggest institutional clients will have the ability to cast their own votes at shareholder meetings instea...
Tesla to Move Headquarters to Texas from California

Tesla to Move Headquarters to Texas from California

Business
Tesla will move its headquarters from California to Austin, Texas, where it is building a new factory, its chief executive, Elon Musk, said at the company’s annual shareholder meeting on Thursday.The move makes good on a threat that Mr. Musk issued more than a year ago when he was frustrated by local coronavirus lockdown orders that forced Tesla to pause production at its factory in Fremont, Calif. Mr. Musk on Thursday said the company would keep that factory and expand production there.“There’s a limit to how big you can scale in the Bay Area,” he said, adding that high housing prices there translate to long commutes for some employees. The Texas factory, which is near Austin and will manufacture Tesla’s Cybertruck, is minutes from downtown and from an airport, he said.Mr. Musk was an out...
Oil and Gas Prices May Stay High as Investors Chase Clean Energy

Oil and Gas Prices May Stay High as Investors Chase Clean Energy

Business
HOUSTON — Americans are spending a dollar more for a gallon of gasoline than they were a year ago. Natural gas prices have shot up more than 150 percent over the same time, threatening to raise prices of food, chemicals, plastic goods and heat this winter.The energy system is suddenly in crisis around the world as the cost of oil, natural gas and coal has climbed rapidly in recent months. In China, Britain and elsewhere, fuel shortages and panic buying have led to blackouts and long lines at filling stations.The situation in the United States is not quite as dire, but oil and gasoline prices are high enough that President Biden has been calling on foreign producers to crank up supply. He is doing so as he simultaneously pushes Congress to address climate change by moving the country away f...
The Stock Market’s Hot Summer Became a Swoon. Where Does It Go Next?

The Stock Market’s Hot Summer Became a Swoon. Where Does It Go Next?

Business
Just four weeks ago, the stock market looked unstoppable. Seven straight months of gains had left the S&P 500 index up 21 percent for the year, corporations enjoyed record profits and economists predicted the fastest growth in decades.All that changed in September.The S&P 500 suffered its worst monthly drop since the start of the pandemic, as investors jettisoned tech stocks, small companies and industrial shares in the face of a befuddling mix of signals about the next chapter of the pandemic recovery.Now, with the fourth quarter underway, slowing growth, rising inflation, supply chain snarls and the persistent threat of the coronavirus all threaten to erode investor confidence and clobber corporate profits — just as brinkmanship in Washington has all but dashed hopes for further ...
Rivian, an Electric Vehicle Start-Up, Reveals Large Losses in its I.P.O. Filing

Rivian, an Electric Vehicle Start-Up, Reveals Large Losses in its I.P.O. Filing

Technology
Investors keep a close eye on how much cash young, fast-growing companies are consuming, in case they run out. Rivian’s operations used up $850 million in the first half of this year, roughly the same amount as in all of last year. It said it had $3.7 billion of cash in hand at the end of June, which includes money it raised when it issued $2.7 billion worth of preferred stock in January. It also borrowed $2.5 billion through “convertible promissory notes” in July.Updated Oct. 1, 2021, 9:18 p.m. ETRivian has over $10 billion in investments from Amazon, Ford Motor and several Wall Street firms. The filing said Amazon had plowed $1.35 billion into Rivian through stock investments and $490 million by purchasing the notes sold in July. Ford’s investments total $1.24 billion. T. Rowe Price...
Stock, Bond and Real Estate Prices Are All Uncomfortably High

Stock, Bond and Real Estate Prices Are All Uncomfortably High

Business
Stories about the futility of trying to beat the markets are worth paying close attention to, but they are generally not as lively as tales of an acquaintance’s making a killing on Robinhood or through flipping houses, and so are not usually as contagious.Updated Oct. 1, 2021, 9:18 p.m. ETTo see how investor opinion about popular models has fared over time, at the Yale School of Management I have been directing stock market confidence surveys of institutional and high-income individual investors.Consider this survey question: “If the Dow dropped 3 percent tomorrow, I would guess that the day after tomorrow the Dow would: 1. Increase, 2. Decrease, 3. Stay the same, or 4. No opinion.” The answer “1. Increase” usually dominates. There have been a few exceptions, as in the years leading u...
Kaplan and Rosengren, Fed Presidents Under Fire for Trades, Will Step Down

Kaplan and Rosengren, Fed Presidents Under Fire for Trades, Will Step Down

Business
Two Federal Reserve officials embroiled in controversy for trading securities that could have benefited from the central bank’s 2020 intervention in financial markets announced on Monday that they would leave their positions.Robert S. Kaplan, who heads the Federal Reserve Bank of Dallas, will retire on Oct. 8, according to a statement released Monday afternoon. Mr. Kaplan’s statement acknowledged the controversy as the reason for his departure. Eric S. Rosengren, the president of the Boston Fed, will retire this Thursday, accelerating his planned retirement by nine months. Mr. Rosengren cited health reasons for his early departure.The resignations followed the Fed’s announcement this month that Chair Jerome H. Powell had ordered a review of the central bank’s ethics rules in light of the c...
China Evergrande Bond Payment Remains Uncertain

China Evergrande Bond Payment Remains Uncertain

Business
China Evergrande, the property giant whose financial troubles roiled global markets earlier this week, left investors in a state of uncertainty again on Thursday with the fate of an $83 million interest payment still unresolved.The payment, on Evergrande’s dollar-denominated bonds, was due Thursday. By the end of the business day in New York, the company had still not said publicly whether it had made the payment or planned to.One bondholder, speaking on condition of anonymity to discuss the matter, said they had not been paid. But, this person noted, the company’s debt covenants provide it with a 30-day grace period before the missed payment results in a default, which means the limbo debtholders find themselves in could continue.The concern extends to property owners and policymakers in ...
Global Markets Swoon as Worries Mount Over Superpowers’ Plans

Global Markets Swoon as Worries Mount Over Superpowers’ Plans

Business
Investors on three continents dumped stocks on Monday, fretting that the governments of the world’s two largest economies — China and the United States — would act in ways that could undercut the nascent global economic recovery.The Chinese government’s reluctance to step in and save a highly indebted property developer just days before a big interest payment is due signaled to investors that Beijing might break with its longstanding policy of bailing out its homegrown stars.And in the United States, the globe’s No. 1 economy, investors worried that the Federal Reserve would soon begin cutting back its huge purchases of government bonds, which had helped drive stocks to a series of record highs since the coronavirus pandemic hit.The sell-off started in Asia and spread to Europe — where exp...