adplus-dvertising
Connect with us

Business

Gundlach sounds alarm on 'Superman' Powell using yield-curve control, makes bold gold call – Kitco NEWS

Published

 on


Editor’s Note: Get caught up in minutes with our speedy summary of today’s must-read news stories and expert opinions that moved the precious metals and financial markets. Sign up here!

(Kitco News) If rates continue to rise, the Federal Reserve might implement yield-curve control, warned bond king Jeffrey Gundlach.

The Fed could be promoted to use yield-curve control if rates on Treasury securities continue to move higher. Rates have been rising on long-dated Treasury yields amid growing optimism surrounding the U.S. economy reopening.

“Obviously yield-curve control is lurking in the background of the conversation,” DoubleLine Capital chief investment officer Gundlach said during a webcast on Tuesday. “I certainly do expect that Jay Powell would follow through on controlling the yield curve should the 30-year rate really get unhinged.”

Gundlach pointed out that if the yield on the 30-year Treasury rate was to rise above 2%, the Fed would be looking into measures to move yields lower.

“Jay Powell has said he will expand the balance sheet to infinity if need be,” Gundlach said. “Once they move above 2%, the Fed is going to find a blip showing up on their radar screen and they will start thinking about how high do they want rates to go.”

Gundlach’s comments come as the Fed is about to announce its interest rate decision on Wednesday afternoon, which is likely to include Fed’s first macroeconomic projections since the COVID-19 crisis began.

“Superman” Powell’s “kryptonite” is negative rates, added Gundlach, adding that quantitative easing and zero rates have not worked in the past because otherwise “we wouldn’t be back at them on steroids ten years later.” Gundlach also commented that negative rates are “fatal” to the banking system.

Gundlach is not alone in warning that the Fed might employ yield-curve control sooner or later.

“Yield caps could be imminent,” said ABN Amro senior economist Bill Diviney. “Powell is likely to be questioned in the press conference on the potential for yield caps being introduced as the next policy move. The recent recovery in yields could give greater urgency to this topic, and Powell is likely to acknowledge in the press conference that the Committee is actively discussing the matter – and may even hint that a decision is imminent.”

Guggenheim Investments chief investment officer Scott Minerd also spoke about yield-curve control as being of the tools the Fed could be forced to look at if formal QE program and forward guidance fails.

“Once the Fed transitions to yield curve control, the quantitative purchase target becomes somewhat meaningless. This has been the experience of the Bank of Japan, which, after implementing yield curve control, continued to have a purchase target of 80 trillion yen per annum. But in reality, it has bought much less, totaling just 18 trillion yen in the past year,” Minerd wrote in a note on Monday. “Yield curve control could prove an interesting tool to limit money supply growth while keeping interest rates low in the event of a sudden surge of inflation.”

Gundlach’s other key comments from the webcast included a projection that the U.S. stock market will likely fall from its “lofty” recovery levels while the U.S. economy will likely face a wave of white-collar unemployment.

U.S. stocks have been on a rally train this past month, rebounding more than 40% from March’s lows. The S&P 500 index managed to recover its losses for 2020 on Monday while the Nasdaq topped 10,000 for the first time ever on Tuesday.

Gold to reach new highs

When it comes to gold, Gundlach remains very bullish long-term, expecting for the precious metals to reach new highs.

Also, the fund manger reiterated his bearish dollar call, noting that the U.S. dollar will devalue against most other currencies.

Let’s block ads! (Why?)

728x90x4

Source link

Business

Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

Published

 on

 

TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.

Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.

Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).

SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.

The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.

WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.

SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.

SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.

The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.

___

Yuri Kageyama is on X:

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

Published

 on

 

Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.

“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.

“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”

Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.

On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.

If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.

These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.

If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.

However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.

He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.

“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.

Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.

The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.

Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.

Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.

Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.

Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.

Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”

In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.

“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:SHOP)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

Published

 on

 

TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.

The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.

The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.

RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.

The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.

RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:REI.UN)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending