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David Fuller and Eoin Treacy's Comment of the Day
Category - Global Middle Class

    'Reddit Raider' Favorite GameStop Soars After Latest Cohen Push

    This article by Bailey Lipschultz for Bloomberg may be of interest to subscribers. Here is a section:

    Monday’s rally came despite short interest being near the lowest level in at least a year. Roughly one-quarter of shares available for trading are currently sold short, according to data compiled by S3 Partners. That compares to a peak of more than 140% in January.

    “Shorts will continue to be squeezed out of their positions as GameStop’s stock price continues to trend upwards,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

    Shorts sellers are down nearly $6 billion in year-to-date mark-to-market losses, including $609 million in Monday’s trading alone, Dusaniwsky said by email.

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    Hiding From The Madness: An Alts Perspective On The Search For Capital Shortage

    I attended this zoom call this morning given by Dylan Grice and there were a number of interesting comments I thought subscribers might be interested in.

    Banks in Germany Tell Customers to Take Deposits Elsewhere

    This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

    Interest rates have been negative in Europe for years. But it took the flood of savings unleashed in the pandemic for banks finally to charge depositors in earnest.

    Germany’s biggest lenders, Deutsche Bank AG and Commerzbank AG, have told new customers since last year to pay a 0.5% annual rate to keep large sums of money with them. The banks say they can no longer absorb the negative interest rates the European Central Bank charges them. The more customer deposits banks have, the more they have to park with the central bank.

    That is creating an unusual incentive, where banks that usually want deposits as an inexpensive form of financing, are essentially telling customers to go away. Banks are even providing new online tools to help customers take their deposits elsewhere.

    Banks in Europe resisted passing negative rates on to customers when the ECB first introduced them in 2014, fearing backlash. Some did it only with corporate depositors, who were less likely to complain to local politicians. The banks resorted to other ways to pass on the costs of negative rates, charging higher fees, for instance.

    The pandemic has changed the equation. Savings rates skyrocketed with consumers at home. And huge relief programs from the ECB have flooded banks with excess deposits. Banks also have used the economic dislocation of the pandemic to make operational changes they have long resisted.

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    Twitter announces paid Super Follows to let you charge for tweets

    This article from The Verge may be of interest to subscribers. Here is a section:

     

    Twitter announced a pair of big upcoming features today: the ability for users to charge their followers for access to additional content, and the ability to create and join groups based around specific interests. They’re two of the more substantial changes to Twitter in a while, but they also fit snugly into models that have been popular and successful on other social platforms.

    The payment feature, called Super Follows, will allow Twitter users to charge followers and give them access to extra content. That could be bonus tweets, access to a community group, subscription to a newsletter, or a badge indicating your support. In a mockup screenshot, Twitter showed an example where a user charges $4.99 per month to receive a series of perks. Twitter sees it as a way to let creators and publishers get paid directly by their fans.

    Direct payment tools have become increasingly important for creators in particular in recent years. Patreon has been hugely successful, and other platforms including Facebook, YouTube, and even GitHub have all launched direct creator payment features. Twitter will presumably take a cut — the company has been hinting at subscriptions features that would offer it a new source of revenue — though it doesn’t appear to have said yet what that fee will be.

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    Housing Booms in Australia as Prices Surge Most in 17 Year

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    We are seeing a significant increase in demand across all price points and all suburbs,” said real estate agent Ben Collier, who handled the Paddington sale. Usually “you see different markets moving at different speeds, whereas it seems to be somewhat more uniformed right now.”

    In New Zealand, where home prices soared 13% in January from a year earlier, the problem is so acute the government will now require the central bank to consider the impact on housing prices when setting interest rates, a change the bank opposed. The Reserve Bank of New Zealand is also reimposing lending restrictions on property investors in an attempt to cool the market.

    Fears that Australia’s housing market would be flooded by distressed sales as people were thrown out of work by the pandemic have faded as the economy recovers faster than expected, and people resume paying their mortgages after being offered six-month loan holidays last year.

    Instead, a shortage of supply is helping fuel the price boom. The number of houses advertised for sale in the first three weeks of February was down 26% from a year earlier, CoreLogic said.

    “Housing inventory is around record lows for this time of the year and buyer demand is well above average,” Lawless said. “These conditions favor sellers. Buyers are likely confronting a sense of FOMO, which limits their ability to negotiate.”

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    Johnson Says Pandemic End in Sight as He Plans U.K. Recovery

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    “This road map should be cautious but also irreversible,” the prime minister told members of Parliament in London. “The end really is in sight and a wretched year will give way to a spring and a summer that will be very different and incomparably better than the picture we see around us today.”

    While U.K. leisure and travel stocks jumped as Johnson revealed his timeline, he is already facing pressure to move faster after the economy endured its deepest recession in more than 300 years. Chancellor of the Exchequer Rishi Sunak will announce more support for pandemic-hit businesses in his budget next week.

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    Email of the day - on interest rate sensitivity and overbought conditions

    At Greatest Risk from Higher Bond Yields? Eoin, we have seen some sizable sell offs in recent weeks from the hottest sectors such as Green Power, and the various Innovation Funds/ETFs as well as Electric Vehicle sector. As you'd pointed out, they are benefit from super low rates as growth is essentially free. What risk for EM though, which otherwise has been on cruise control of late? Today has seen a sizeable sell off, but is this just the first shot across the bow? Which of the EMs would you be most guarded against? What else might be at greatest risk given the run ups we have had in markets over the last 12 months?

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    China's Yield Appeal Catapults Yuan to Global FX Big League

    This article for Bloomberg may be of interest to subscribers. Here is a section:

    There have been many false dawns in China’s quest for the yuan to challenge other major currencies. But underpinning the explosion this time lies a torrent of capital flowing into China’s markets, fueled by a frantic search for returns with over $14 trillion of debt globally paying less than 0%.

    That appetite for some of the highest-yielding government bonds in the Group-of-20 countries has elevated interest in China to fever pitch and is generating demand for liquidity from investors looking to finance and hedge their investments. It’s also spurring volatility and attracting speculators who overlooked the market for years.

    “It’s certainly a top currency in terms of the flow that we’re seeing,” said Kevin Kimmel, New York-based global head of electronic FX at Citadel Securities, one of the world’s biggest market makers. “Trading activity in the yuan has increased significantly.”

    The shift comes as China continues to relinquish control -- albeit slowly -- of its tightly-managed currency, a linchpin of Beijing’s long-term plan to encourage its greater global use. China is considering easing restrictions on citizens investing in securities outside its mainland, a move that would facilitate two-way capital flows.

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    Our 2021 Global Outlook

    This report from Bridgewater may be of interest to subscribers. Here is as section: