Bonds & Interest Rates

Japan’s Nikkei index tumbles 3% over US rate rise concerns

TOKYO — Japan’s benchmark Nikkei Stock Average dropped to a one-month low on Monday morning after indications that the U.S. Federal Reserve could move away from ultra-easy monetary policies sooner than expected.

The Nikkei index at one point fell over 1,000 points, or 3.5%, to reach its lowest level since May 20. The benchmark declined below the 28,000 mark with shares in 97% of the index’s 225 companies trading lower. The broader Topix index was down over 2% while the startup-heavy Mothers market fell 1.6%.

Tokyo’s fall tracks a retreat by Wall Street’s main indexes last week, with the Dow Jones Industrial Average declining over 500 points, or 1.6%, on Friday.

The sell-off in stocks accelerated after remarks from St. Louis Federal Reserve President James Bullard on Friday that an initial rate increase could happen in late 2022 as inflation risks rise.

Forecasts from the Federal Open Market Committee earlier last week suggested that its first post-pandemic interest rate hike could come in 2023.

Investors have reacted strongly to the possibility of rate rises sooner than has been expected. In March, the Fed had signaled there would be no rate hike until at least 2024…. CLICK for complete article

My best short term trading week of the year

 

I’ve taken a lot of small losses this year, trying to fade what I thought was irrational bullish enthusiasm – so it felt good to cash in some winning tickets this week. I’ll tell you more about that in the Short Term Trading section below, but first:

Did we just have a classic Soros Inflection Point? Did the markets over-react?

The consensus view was that the Fed meeting would be a non-event. But since that meeting, the US Dollar has had its best week since March of last year, gold is down $100, the long bond had ripped higher, the yield curve has flattened with a vengeance, and the Dow has tumbled to a 3-month low. Not exactly a non-event.

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Coca-Cola loses $4 billion after Ronaldo drinks water instead

 

Cristiano Ronaldo’s gesture for people to drink water instead of Coke at a Euro 2020 press conference may have cost the soda company $4 billion in market value.

Coca-Cola shares dropped from $56.17  to $55.22 after Ronaldo moved two Coke bottles out of view and picked up a bottle of water before Portugal’s match against Hungary on Monday.

Market value for the company dropped from $242 billion to $238 billion – a $4 billion plunge.

“Agua!” the soccer superstar exclaimed. Agua means water in Portuguese.

Coca-Cola is one of the sponsors for the UEFA EURO 2020 tournament and a statement from the company reviewed by the Guardian said, “everyone is entitled to their drink preferences.”

A Euro 2020 spokesperson reportedly said, “Players are offered water, alongside Coca-Cola and Coca-Cola Zero Sugar, on arrival at our press conference.”

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KEY POINTS
  • Paul Tudor Jones said he would “go all in on the inflation trades” if the Federal Reserve is nonchalant this week regarding rising consumer prices.
  • “I’d probably buy commodities, buy crypto, buy gold,” the billionaire hedge fund manager said.
  • “If they course correct,” he continued, “then you’re going to get a taper tantrum.”
  • The Fed’s two-day policy meeting is scheduled to conclude Wednesday.

Billionaire hedge fund manager Paul Tudor Jones told CNBC on Monday he’s paying close attention to this week’s Federal Reserve policy meeting in light of recent economic data showing higher consumer prices.

“If they treat these numbers — which were material events, they were very material — if they treat them with nonchalance, I think it’s just a green light to bet heavily on every inflation trade,” Jones said on “Squawk Box.”

“If they say, ‘We’re on path, things are good,’ then I would just go all in on the inflation trades. I’d probably buy commodities, buy crypto, buy gold,” added Jones, who called the stock market crash in 1987 and is founder and chief investment officer of Tudor Investment.

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Mark Cuban-backed banking app Dave going public via $4 billion SPAC

 

KEY POINTS
  • Banking app Dave announced Monday that the company will make its market debut through a SPAC merger with VPC Impact Acquisition Holdings III.
  • The company has attracted institutional investors including Tiger Global who now value the fintech start-up at $4 billion, more than triple its last reported private valuation.
  • It plans to list on the New York Stock Exchange under ticker symbol DAVE.

Banking app Dave announced Monday that the company will make its market debut through a SPAC merger with VPC Impact Acquisition Holdings III.

The agreement values Dave at $4 billion and is expected to close in the second half of this year. Upon completion of the deal, it intends to list on the New York Stock Exchange under ticker symbol DAVE.

The company, ranked No. 26 on last year’s CNBC Disruptor 50 list, was most recently valued at $1 billion in August 2019, according to PitchBook data.

Victory Park Capital, a global investment firm headquartered in Chicago, has a long track record of debt and equity financing transactions in fintech, and has been a longstanding investor in Dave, most recently providing a $100 million credit facility to the company in January 2021. VPCC completed its initial public offering in March 2021.

Dave — shorthand for the hero in the David vs. Goliath tale — is designed to eliminate many of the features customers can’t stand about legacy banks. The company started with overdraft fees. For a $1-per-month membership fee, users can access checking accounts with no fees and up to $100 in overdraft protection without fees or interest. Members who sign up for direct deposit also get automated budgeting and the ability to build up their credit scores through the reporting of rent and utility payments to credit bureaus.

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