Raphael Stevens

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    Europe looks to contain spiraling Covid crisis, but it's 'Happy Monday' in the UK

    Medical workers monitor Covid-19 patients through CCTV camera in an additional intensive care unit (ICU) set up to cope with the pandemic at the Ambroise Pare Clinic in Paris, France, on Tuesday, March 16, 2021.Bloomberg | Bloomberg | Getty ImagesLONDON — Europe’s Covid crisis looks to be diverging further this week as the public health situation deteriorates in France and Germany, but the U.K. takes another step in the easing of its lockdown on Monday.Germany has already extended its lockdown until April 18, but German Chancellor Angela Merkel has called on German states to do more to curb infections, and suggested that the federal government could wrest some control from the regions (which have been largely free to decide their own measures) to better contain the crisis. This comes despite Merkel performing a U-turn over plans to implement a strict Easter lockdown.”We have to break this third wave,” Merkel told broadcaster ARD on Sunday. “We are obliged by law to contain the spread, and at the moment, that’s not happening.”She added that additional restrictions, such as curfews, could be needed to prevent “exponential growth” of the virus, Deutsche Welle reported. Germany reported 9,872 new cases on Monday, data from the Robert Koch Institute showed, bringing its total tally of infections to over 2.7 million. Almost 76,000 people have died from the virus, to date.On Saturday, intensive care doctors in the country called for a two-week hard lockdown in order to avoid overwhelming the health care system, and similar calls were made in France on Sunday, where cases continue to surge to worrying levels.The French government has already placed more than a dozen regions, including Paris, under a partial lockdown, but cases are rising and hospitals are struggling.On Sunday, critical care doctors in Paris warned in Le Journal du Dimanche newspaper that soaring infections could soon overwhelm the capital’s hospitals and could force them to choose which patients they have the resources to treat.France reported 37,014 new coronavirus cases on Sunday, health ministry data showed, bringing its total number of infections to over 4.5 million. Over 94,000 people have died from the virus in the country, to date.Strategists at Deutsche Bank noted Monday that “investors are becoming increasingly worried at the rising number of cases in multiple regions, which in turn is raising the prospect of further restrictions and limits on economic activity.”‘Happy Monday’While mainland Europe struggles with a rise in cases, the U.K is easing lockdown measures further from today, following its roadmap to lift all restrictions on social contact on June 21.Dubbed “Happy Monday” in the British media, Brits can now gather in groups of up to six people outdoors and team sports can begin again. The “stay at home” rule has also come to an end, but the government is advising caution and says people should continue to work from home if possible.Travel abroad remains prohibited unless for essential reasons and a £5,000 ($6,887) fine has been introduced for anyone attempting to holiday abroad. The government plans to announce later this week — earlier than planned — how it expects international travel to resume.Swimmers jump into the water at Hillingdon lido in west London as England’s third Covid-19 lockdown restrictions ease, allowing outdoor sports facilities to open on March 29, 2021.ADRIAN DENNIS | AFP | Getty ImagesOn April 12, non-essential shops, hairdressers, beauty salons and outdoor drinking and dining at pubs and restaurants will be allowed, giving Brits much-needed relief after a year of lockdowns and coronavirus losses. The country has reported over 4.3 million coronavirus cases and over 126,000 deaths.One bright spot in the country’s pandemic experience has been its vaccination rollout that began in earnest in December, making it the first country to rollout coronavirus vaccines en masse. To date, 57% of the nation’s adults having had a first dose of a coronavirus vaccine, meaning that 30 million adults have now had a first shot.The U.K.’s bold immunization program has been lauded for its speed and agility but has attracted criticism on the continent, where the rollout of shots has been more sluggish.Drugmaker AstraZeneca has been in the line of fire for delaying vaccine supplies to the bloc. So far, the EU has stopped short of preventing vaccine exports to the U.K., however, and both sides have pledged to work together to resolve a dispute over vaccine supplies. More

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    Tencent Music announces $1 billion share buyback program, its biggest ever

    In this articleTME700-HKExecutives of Tencent Music Entertainment celebrate the company’s IPO outside the New York Stock Exchange (NYSE) in New York, U.S., December 12, 2018Bryan R Smith | ReutersGUANGZHOU, China — Tencent Music Entertainment Group announced plans to buy back up to $1 billion worth of shares on Monday after the U.S.-listed stock suffered a huge drop last week.The repurchases can start on Monday and will take place over the next 12 months.Tencent Music is the online music arm of Chinese technology giant Tencent which runs streaming services and apps. The company, which is listed on the New York Stock Exchange, lost about a third of its value last week amid a sell-off in Chinese technology stocks.Part of that selling came after the U.S. Securities and Exchange Commission (SEC) adopted a law which could lead to delisting of foreign firms that fall foul of the new auditing rules.But further pressure came on Friday after Archegos Capital Management was forced to liquidate positions it held in some major Chinese technology names, CNBC reported.Tencent Music will repurchase Class A ordinary shares in the form of American depositary shares, it said in a statement.”The Share Repurchase Program is a strong indication of the Board’s confidence in the Company’s business outlook and long-term strategy, and we believe it will ultimately benefit TME (Tencent Music Entertainment) and create value for its shareholders,” Tong Tao Sang, chairman of the board, said. More

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    British used car dealer Cazoo is going public in the U.S. via $7 billion SPAC deal

    In this articleAUTO-GBCVNAAMZNAJAX^SPCXCazoo founder and CEO Alex Chesterman.CazooLONDON — Cazoo announced Monday that it will go public through a merger with billionaire investor Daniel Och’s special purpose acquisition company.Cazoo, founded just three years ago, is a used car marketplace based in the U.K. The company sells and delivers its cars in Britain and continental Europe. Its competitors range from Auto Trader to Carvana.The company said it would combine with AJAX I, a U.S. blank-check firm founded by Och, in a deal valuing the business at $7 billion. Founder Alex Chesterman will stay on as Cazoo’s CEO following the SPAC merger, while Och is joining the firm’s board.”This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe,” Chesterman said in a statement Monday.”We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration.”What is a SPAC?SPACs are shell companies that are created with the sole purpose of raising funds to acquire an existing private company, so that the target firm can bypass the traditional initial public offering (IPO) process.They’ve become a hot investment vehicle on Wall Street, with SPACs in the U.S. having raised $87.9 billion so far in 2021, already exceeding the total issuance in all of last year.Once the deal closes, Cazoo will be traded publicly on the New York Stock Exchange, dealing a blow to London which is aiming to attract more high-growth tech companies to its stock exchange.Europe has largely missed out on the SPAC boom, so far. But there are growing signs of the trend emerging in the continent, with Amsterdam attracting a number of SPAC IPOs and London looking to relax stock listing rules to accommodate U.S.-structured blank-check companies.Cazoo is expected to raise $1.6 billion from the deal with AJAX I, including $805 million in a cash trust from the SPAC and a further $800 million from private investors.The latter is being led by AJAX’s sponsors and D1 Capital Partners, with additional backing from Altimeter, funds managed by BlackRock, Morgan Stanley’s Counterpoint Global fund, Fidelity and Abu Dhabi sovereign wealth fund Mubadala.Online shiftCazoo aims to fill an Amazon-shaped gap in the automotive industry. Online sales still account for a tiny slice of the overall market globally but are on the rise as e-commerce has gotten a boost from the coronavirus pandemic.Cazoo had an annual revenue run rate of more than $600 million in the first quarter. It expects sales to near $1 billion in 2021, quadrupling year-on-year. The company believes Europe’s used car market is worth $700 billion, with just 2% of sales taking place online.Used car sales, in particular, have gotten a boost from the pandemic. Carvana, which operates a similar model to Cazoo, has seen its share price increased fivefold in the last 12 months with investors viewing it as the “Amazon of cars.” More

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    Archegos, a family office, brings Nomura and Credit Suisse big losses

    BEFORE THIS WEEKEND, few people will have heard of Archegos Capital Management, an investment vehicle run by Bill Hwang, a former hedge-fund trader with a chequered past. But Archegos has emerged as the entity behind a fire sale of at least $20bn-worth of equities, mostly Chinese technology shares, which roiled stockmarkets late on Friday March 26th and has left at least two global banks—Nomura and Credit Suisse—facing multi-billion-dollar losses. There may yet be more bad news or aftershocks as the Archegos affair runs its course.The plotline has already taken shape. Archegos is a so-called family office. It manages the private wealth of Mr Hwang, who once worked for Tiger Management, a celebrated hedge fund. One of Archegos’s strategies was long-short equity. The main idea is to be indifferent to the direction of the overall market by buying (being long) some stocks and selling (being short) others. The hope is that the longs do better than the shorts. But when markets are volatile, as they have been in recent weeks, the strategy can come unstuck. This is what seems to have happened to Archegos.The first sign of trouble was on Friday when Goldman Sachs and Morgan Stanley, two Wall Street behemoths, began selling large blocks of shares for an unnamed client who had missed a margin call—a demand for more collateral to cover losses on trades that had gone awry. The stocks that were forcibly sold might best be categorised as “second-tier tech”. They include Baidu, a Chinese search engine, and ViacomCBS, an American media conglomerate, with a streaming service that gives it the flavour of a faddish tech stock. Their prices crashed under the weight of the selling. The price of ViacomCBS shares, for instance, fell by more than a quarter. The fire sale was evidently big. Perhaps $20bn-worth of shares was dumped on an otherwise unremarkable Friday.By Sunday it had emerged that the mystery client was Archegos. Some more familiar names were soon caught up in the drama, too. Credit Suisse said it was in the process of liquidating the positions of a client that had defaulted on margin calls, and that the related losses would be “material”. Unofficial estimates put it at $3bn-4bn. Meanwhile Nomura, a Japanese lender, said that it was on the hook for around $2bn, possibly more if stock prices fell further. These are significant losses. If not quite a lost limb, they amount to more than a flesh wound. The share price of each bank has tanked (see chart).The full reckoning will only become clear over time. But it is possible that Nomura and Credit Suisse were slower to pull the plug than their American rivals. By making the margin call on Archegos early, and then liquidating positions quickly, the Americans may have limited the damage to themselves, but left the others nursing bigger mark-to-market losses.The fire sale is already raising some disquieting questions. How was Mr Hwang, a little-known figure, able to run up such big losses? Leverage surely played a big part. But why then was he able to borrow so much from Wall Street in order to enhance the size of his bets? What makes this even more puzzling is that Mr Hwang had already blotted his copybook. In 2012 he pleaded guilty to charges of insider trading and was fined.One answer is that banks are desperately searching for profits. Rules drafted after the global financial crisis make it expensive for Wall Street banks to trade on their own account. The days when they could make much money from slow-moving, unleveraged asset managers—the “long-only” crowd—are a distant memory. Such investors mostly buy and sell stocks cheaply on electronic platforms. So Wall Street banks increasingly rely on fees and commissions from fast-trading hedge funds or family offices that act like hedge funds, such as Archegos. Fees on exotic derivatives (futures, swaps, options and so on) are especially attractive to the brokerages. The appeal for the fast-money hedge-fund crowd is that many derivatives have embedded leverage. They can make large bets without having to put up lots of their own capital upfront.In short, Wall Street can’t easily make money out of people who do not take rash bets. The problem is people who make rash bets can lose you money, too. It is probably not a coincidence that Credit Suisse and Nomura are based in countries (Switzerland and Japan, respectively) where long-term interest rates have long been stuck near or below zero. With limited opportunities to make money from lending at home, they turned to Wall Street for excitement. Unfortunately for their shareholders, they found it.Parallels are naturally being drawn between Archegos and LTCM, an ill-fated hedge fund. In 1998 LTCM was prevented from blowing up itself and the banking system by the Federal Reserve, which co-ordinated a bail-out by its brokers on Wall Street. LTCM, too, was afforded breathtaking leverage by its brokers, who were dazzled by its principal shareholders, who included John Meriwether, a star trader formerly at Salomon Brothers, and Robert Merton and Myron Scholes, Nobel-prizewinning economists. Mr Hwang is nowhere near as celebrated. And the tentacles of Archegos do not obviously stretch anything like as far into the financial system as LTCM’s. Still, the damage to Credit Suisse and Nomura is significant. More reports of losses may emerge in the coming days. And there may yet be second-round effects in the stockmarket if other hedge funds are forced by nervous brokers to unwind their leveraged trades.Archegos might be a one-off mishap, albeit a large one. But it is not too much of a stretch to link it to some broader recent market themes. Since November there has been a general shift away from tech-and-media stocks, which profited greatly from the stay-at-home economy, towards cyclical companies, such as banks, airlines and industrial firms, which benefit from reopening. This rotation has been given extra force by the run-up in Treasury yields in recent weeks. Archegos may well have been at the wrong end of this, at times violent, rotation. Events are moving unusually fast in the world economy and in financial markets. And when events move fast, some things get broken. More

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    Stock futures fall slightly in overnight trading after S&P 500 closes at a record

    Traders work on the floor at the New York Stock Exchange.Brendan McDermid | ReutersStock futures dipped in overnight trading Sunday after a rush of broad based late buying pushed the S&P 500 to a record high in the final minutes of the previous session.Futures on the Dow Jones Industrial Average fell 110 points. S&P 500 futures and Nasdaq 100 futures both traded 0.4% lower.On Friday, all three major benchmarks rallied to their session highs into the close with the blue-chip Dow closing about 450 points higher. The S&P 500 eventually climbed 1.7% to hit a record closing high. The Nasdaq Composite wiped out a 0.8% loss and ended Friday 1.2% higher.Traders are bracing for heightened volatility during this holiday-shortened week with quarter-end rebalancing among pension funds and other big investors. The recent swift advance in bond yields could set up money managers for big adjustments in their portfolio.The Dow and the S&P 500 have risen 6.9% and 4.3%, respectively, so far in March. The tech-heavy Nasdaq, however, has dipped 0.4% this month as some investors jumped high-flying technology names amid rising yields.Investors are awaiting updates from President Joe Biden about his infrastructure plan which could cost north of $3 trillion. The president is expected to unveil his plan when he travels to Pittsburgh on Wednesday. White House press secretary Jen Psaki said Sunday Biden plans to roll out two packages in the coming months, the first covering infrastructure and the second covering health and family care.”The market isn’t placing very high odds on this infrastructure/tax blueprint coming to fruition and while Biden probably won’t get everything he’s asking for, Congressional Democrats and the White House are VERY intent on passing some substantial bills in the coming months,” Adam Crisafulli, founder of Vital Knowledge, said in a note.The stock market is closed for the Good Friday holiday, but the March jobs report is still slated for release that morning. Economists expect 630,000 jobs were added in March, and the unemployment rate fell to 6% from 6.2%, according to Dow Jones. More

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    The EU could open up a 'Pandora's box' of vaccine nationalism if it restricts exports, professor says

    In this articleAZN-GBThe European Union could open up a “Pandora’s box” if it decides to restrict exports of coronavirus vaccines, a political analyst told CNBC last week.Vaccination drives in the 27-member bloc have been hindered by production issues. Anglo-Swedish firm AstraZeneca earlier this year cut its first-quarter target from 90 million doses to 30 million doses.The shot, developed in partnership with the University of Oxford, is favored for the vaccine rollout in the European Union.Officials have already imposed strict rules for exports. The EU will check if the receiving country has the virus under better control than Europe and whether it has limitations on vaccines or raw materials before allowing the shots to be shipped.Some EU nations, however, have concerns about the new rules and want supply chains to remain open.There’s enormous political pressure … to begin to experiment with a kind of vaccine nationalism.James CrabtreeAssociate professor in practiceEuropean Commission President Ursula von der Leyen is “really struggling” because other rich countries are doing much better on vaccinations compared to the EU, said James Crabtree, an associate professor in practice at Lee Kuan Yew School of Public Policy.”There’s enormous political pressure … to begin to experiment with a kind of vaccine nationalism,” Crabtree told CNBC’s “Street Signs Asia” on Friday.”This is, of course, very dangerous because the EU is normally one of the most responsible international actors,” he said.’Pandora’s box’He also warned that other countries may follow the EU’s lead in prioritizing vaccines for domestic populations.”If it begins to try and restrict the flow of vaccines out of EU factories, then it opens up a Pandora’s box in which countries like India may then begin to do the same,” said Crabtree.That could be very damaging given that new Covid variants are likely to keep emerging, he added.For its part, the EU’s trade chief, Valdis Dombrovskis, said it is “highly unfair” to accuse the EU of vaccine nationalism, given that it is “one of the largest vaccine exporters.”Data shows that the EU has exported 77 million doses of the shots to 33 countries since December, while 88 million have been delivered to EU countries.The bloc has also complained that London is not showing the same level of reciprocity in the distribution of vaccines. Heather Conley of the Center for Strategic and International Studies (CSIS) noted that the U.K. and EU said they are working toward a “reciprocally beneficial relationship.”Still, leaders in Europe are nervous about their political futures with some countries going to the polls in the coming year or so, said Conley, who is director of the Europe, Russia, and Eurasia Program at CSIS.”Political testiness of leaders and this hysteria about political futures will make the EU take steps that may work ultimately against their long-term interest of getting those vaccines into arms very quickly,” she told CNBC’s “Squawk Box Asia” on Friday.”I think the international harm that that would do to global vaccine production would be greater than the increased number of vaccines in the EU,” she said.A doctor administers the Astrazeneca vaccine at a mass coronavirus (COVID-19) vaccination drive-through clinic in Milan, Italy on March 15, 2021.Anadolu Agency | Anadolu Agency | Getty ImagesExperts have long warned that vaccine nationalism could be bad for public health and the economy.WHO Director-General Tedros Adhanom Ghebreyesus in January said the coronavirus will continue to mutate and thrive if the distribution of vaccines remains inequitable.”Vaccine nationalism hurts us all and is self-defeating,” Tedros said. “But on the flip side, vaccinating equitably saves lives, stabilizes health systems and would lead to a truly global economic recovery that stimulates job creation.”— CNBC’s Silvia Amaro, Chloe Taylor and Noah Higgins-Dunn contributed to this report. More

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    San Diego Comic-Con sets sights on Thanksgiving weekend, sparking backlash from fans and talent

    A sign photographed from outside the annual San Diego Comic-Con International at the San Diego Convention Center on Sunday July 15th, 2012 in San Diego, California.stevezmina1The coronavirus pandemic has crippled the live event business, particularly the lucrative comic convention industry. In a bid to raise much needed funds, San Diego Comic-Con will host a smaller version of its annual summer event in the fall.Dubbed “Comic-Con Special Edition,” this convention is slated for November 26-28 at the San Diego Convention Center.The organization’s decision to place this in-person convention over Thanksgiving weekend, an announcement it made late Saturday night, is facing harsh backlash from fans, talent and press.”So they scheduled #SDCC on the same weekend as the first chance most families will (hopefully) be fully able to celebrate Thanksgiving in two years. See you in 2022!” wrote Charles Soule, author of “Light of the Jedi” and Daredevil comics, on Twitter following the announcement.Like Soule, the majority of dissenting voices question why the organization would host this event during a major U.S. holiday. Particularly, one that many people did not have the ability to celebrate last year with family due to the ongoing Covid-19 pandemic.These voices range from fans, who travel extensively to attend the show, to talent, who appear on panels or at signings. Not to mention, journalists and other industry professionals, who are tasked with covering the event.While conventions have coincided with holidays in the past — WonderCon has taken place on Easter weekend, and Anime Expo typically occurs over the Fourth of July — hosting San Diego Comic-Con during this particular Thanksgiving has raised eyebrows.”My family missed Thanksgiving last year because of the pandemic,” wrote Dan Slott, an Eisner award-winning comic book writer, on Twitter. “This year, we’ll all be vaccinated. There’s no way I’d be attending any event instead of spending that time with them. Even if everything were magically back to normal. I can’t imagine others feeling differently.”It seems that much of the organization’s decision to host an in-person convention in 2021, stems from having to cancel previous events, resulting in a significant financial hit.”While we have been able to pivot from in-person gatherings to limited online events, the loss of revenue has had an acute impact on the organization as it has with many small businesses, necessitating reduced work schedules and reduction in pay for employees, among other issues,” said David Glanzer, spokesperson for the nonprofit organization in a statement Saturday. “Hopefully this event will shore up our financial reserves and mark a slow return to larger in-person gatherings in 2022.”Representatives for San Diego Comic-Con did not immediately respond to CNBC’s request for comment.San Diego Comic-Con has become a massive event for the entertainment industry. It is a place where studios drum up excitement for upcoming blockbuster projects and it’s used as a platform for disseminating new details to the most ardent of fans.It’s also a significant revenue driver, not just for the organization that runs it, but for the local economy. San Diego’s tourism group estimates that $88 million is directly spent by attendees during the convention and $149 million trickles into the region’s economy. Hundreds of thousands of people show up for this event annually from all over the world, and that’s not counting the on-site staff, security and custodial workers who walk the halls during the four-day weekend.November’s convention will only last three days, taking place Friday, Saturday and Sunday and likely limit the number of attendees based on local guidelines. The organization plans to offer up more information about ticket pricing, capacity restrictions and other details closer to the show’s date.”So, sure, I can see the #SDCC telling thousands of fans to forego the first post-pandemic Thanksgiving in order to stand in line at Hall H, but they’re also telling major Hollywood actors and directors to do that, too,” wrote Rus McLaughlin, senior content strategist for Oculus, on Twitter. “I’m guessing there might be some pushback there.” More

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    'Red hot' economy would withstand 10-year Treasury yields at 3%, market bull Ed Yardeni predicts

    In this articleUS10YWall Street bull Ed Yardeni expects inflation to make a comeback.Yardeni predicts current market conditions will push the benchmark 10-year Treasury Note yield between 2.5% and 3% within the next 12 to 18 months.”[It’s] not enough to really clobber the economy or the stock market,” the Yardeni Research president told CNBC’s “Trading Nation” on Friday. “That’s not a calamity. It’s not a catastrophe. It is the bond vigilantes in some ways indicating some concern about inflation.”Yardeni coined the phrase bond vigilantes in the early 1980s to describe investors who want higher yields for government bonds as compensation for rising inflation.In this case, bond vigilantes are reacting to trillions of dollars in coronavirus aid pouring into the economy. They’re skeptical of Federal Reserve Chief Jerome Powell and Treasury Secretary Janet Yellen’s view inflation will be transient.For now, Yardeni is in the transient camp.”Most of the problem would be because of the so-called comparison effect where we’re comparing inflation to a year ago in terms of price levels, and price levels a year ago were depressed,” he noted. “If we get to 2.5%, even higher numbers say 2.8%, on a year-over-year basis in coming months, it would be correct to interpret that as more of a sign of how prices were a year ago than a take-off of inflation.”The Street breathed a sigh of relief on Friday on key economic data showing tame inflation. Core personal consumption expenditures climbed 1.4% year over year versus the consensus estimate of 1.5%. It pushed the 10-year yield lower to 1.67%.Yardeni calls the results backward looking.”We’re going to have to get March, April, May kind of numbers to get a sense of what inflation is running as a result of the after effects of the pandemic,” said Yardeni, who spent decades on the Street running strategy for firms including Prudential and Deutsche Bank.Even though he views inflation as the biggest market risk right now, he expects surging productivity and technological innovation will play a big role in lowering cost pressures.’Red hot’ economy”We have an economy that’s hot, and it’s going to be red hot as a result of the stimulus checks that are now being deposited in people’s accounts,” he said. “That being the case, I think earnings are going to be awesome.”His S&P 500 year-end target is 4,300, an 8% gain from Friday’s close. For 2022, it’s 4,800.”If we get into the fall and then later into the year and we’re still seeing inflation stubborn and hanging around 2.5 [percent] and actually moving higher, then I think we have to consider the possibility that we have more of a problem than was anticipated,” Yardeni said.Disclaimer More