• China Isn’t Using Its Currency as a Cold War Weapon

    China Isn’t Using Its Currency as a Cold War Weapon

    (Bloomberg Opinion) -- The deterioration of U.S.-China relations is fast and furious, with Washington throwing out accusations of unfair trade practices, unlawful technology transfer and an early cover-up of the coronavirus outbreak, which has claimed over 100,000 American lives. The Chinese yuan, this year’s beacon of stability, is now is now at risk of tumbling like other emerging markets currencies.On Wednesday, the offshore yuan, which trades freely, flirted with its weakest level on record, dropping as much as 0.7% to 7.1965. While Thursday morning’s yuan fix came in stronger than expected, the overall sentiment is downbeat.It’s tempting to theorize that a weaker yuan could become a powerful weapon in the new Cold War, yet there’s little evidence of foul play from the People’s Bank of China. Since mid-2017, the central bank has based its fixing on the previous day’s close, dollar movement overnight against a currency basket, and what it calls the “countercyclical factor," a catch-all metric that grants wiggle room to deviate from market fundamentals. The yuan can move in a 2% trading range around the PBOC’s daily target.Take a look at Goldman Sachs Group Inc.'s estimate of the countercyclical factor. Over the last year, the PBOC has been consistently guiding its yuan stronger, not weaker, to artificially track the dollar. For all the theatrics of getting labeled a currency manipulator, Beijing wasn’t making its exports any cheaper.What’s new this year is the PBOC’s Zen-like attitude. Rather than playing the heroic fireman, handling one crisis after another, the central bank has been largely hands-off. It has used the countercyclical factor in a meaningful way only twice since January, on Feb. 4 when China emerged from the Lunar New Year holiday to face a national lockdown, and at the end of March when the outbreak was shaking up global markets.And why should the PBOC adhere to the dollar anyway? The coronavirus downturn has only showcased America’s exceptionalism — it prints the world’s reserve currency. Haven demand for the dollar has surged, evidenced by soaring currency swap rates from the euro zone to South Korea, and the Federal Reserve’s scramble to re-establish swap lines with other central banks. Looking back to 2008, the greenback only started to weaken two months after demand for “emergency dollars” peaked, data provided by Deutsche Bank AG show.So it makes sense for China to adopt a more enlightened approach, allowing the yuan to weaken during periods of dollar strength, and catch up when global tensions recede. From the PBOC’s view, the trade-weighted yuan is certainly stronger now than it was last fall, when the central bank was in fire-fighting mode. China doesn’t want to spend another $1 trillion of its foreign reserves defending its currency. The rapid drawdown in 2015 and 2016 traumatized the Chinese for good.To be sure, the pressure of capital outflows is still there. Just look at the consistent negative value of the “net error and omissions” figures in China’s balance of payment data. However, here’s the beauty of the virus: The Chinese can’t go anywhere. They can’t come to Hong Kong to buy insurance products, and unless you’re ultra-rich (with private bankers around the world apartment-hunting for you), Manhattan real estate is off-limits. The PBOC has less to worry about than before.So now the market can test the true value of the yuan. It could easily drop below 7.30 if the phase one trade deal breaks down and the Trump administration imposes some of the tariffs it had previously threatened, estimates HSBC Holdings Plc.Long-time China bear Kyle Bass abandoned his yuan short in early 2019 for the greenback-pegged Hong Kong dollar. He didn’t profit from his yuan trade because the PBOC established powerful tools, such as selling yuan-denominated bills in the offshore market, to kill anyone betting against the currency. Now that their interests are becoming aligned, it’s time for the bears to wake up.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus: Firms warn of closures and job losses if furlough grants cut
    Yahoo Finance UK

    Coronavirus: Firms warn of closures and job losses if furlough grants cut

    One in four firms say they can't afford to pay even part of furloughed staff wages as the government prepares to ask them to help foot the bill.

  • Bloomberg

    Can China’s Spenders Lift the World?

    (Bloomberg Opinion) -- The Chinese consumer has been one of the most important drivers of the world economy over the past decade, fueling hopes of prolonged growth and profits. So it’s worth looking at what’s happening to household balance sheets as Covid-19 wreaks havoc on a population now feeling the downside of growing personal leverage from the boom. In the last major financial crisis, big-spending Americans were hit hard, but the Chinese found new ways to open their wallets and took the rest of the global economy along for the ride. China accounted for 31% of growth in household consumption between 2010 and 2017, World Bank data show, bringing its share now to about 10%. That includes around 30% of spending on cars, luxury retail and mobile phones, and hundreds of billions of dollars on travel and tourism.Chinese consumers are the “single most important thing in the world economy,” Jim O’Neill, a former Goldman Sachs Group Inc. chief economist, told the Financial Times last year. They could be key to the next 40 years of growth, and it’s unlikely that any other country could replace them.Will they be able to spend away the global economy’s gloom this time? They’ll have their own worries to deal with first.In the quarter to March, disposable household income shrank sharply for the first time since at least 2013, putting strain on balance sheets in which new forms of credit and financial assets take up a bigger part. Consumer credit – from cards to peer-to-peer loans and other lending – has proliferated in recent years. A central bank survey showed that around 60% of household assets are parked in real estate; some 97% of liabilities are tied up in bank loans, with mortgages almost 70% of the total. As borrowings and incomes diverge, stresses on individuals and families rise. All told, households owe 63 trillion yuan ($8 trillion), or 65% of gross domestic product, according to CLSA Ltd. analysts. Leverage is more than 130% of last year’s earnings. Adjusted on a GDP per capita basis, that puts China among the highest in relation to major countries. The debt service ratio is climbing much faster compared to the U.S., Australia and Japan.Spending patterns are changing due to lockdowns, less money and changes in consumer psychology brought by the coronavirus. Online shopping has increased, of course. The gross merchandise value of essentials and goods like home hygiene products has surged. A UBS Evidence Lab survey in April showed that while people were returning to work, 54% of respondents said their incomes had declined, and 60% had reduced offline spending. Fewer than half expected a pay raise soon and just over a quarter planned to reduce their debts. Property purchases were being put on hold.That austerity is probably a good thing. Early signs already point to trouble. Credit card delinquencies are rising. Consumption loan asset-backed securities are even weaker, with overdue payments rising sharply from 6% in January to over 9% in March. That indicates a deteriorating quality of household balance sheets between prime and weaker borrowers. Non-performing consumer credit is expected to double this year.Middle-class borrowers have been China’s big spenders, but much of the incremental growth was going to come from aspiring buyers trying to enter higher socio-economic strata. Now, they won’t quite make it. If they’re hurting, who will spend? Goldman analysts point out that in China, not only is the marginal propensity to consume for lower-income urban households greater than for higher earners. It also varies widely with migrant workers spending less than those in cities, even at similar levels of income.Since China modernized its economy in recent decades, the new generations of consumers have arguably never faced a lesson in crisis management. The shock for them may be greater in some ways than what American households endured circa 2008. So far, delinquencies in the U.S. have held steady. According to the Federal Reserve Bank of New York, first-quarter national non-housing debt was flat, and fell for credit cards. While there is no doubt that U.S. consumer spending will suffer as income insecurity and joblessness rise, a social safety net is in place. China’s remains underdeveloped and an unemployment problem is brewing.How Chinese deal with these pressures will matter. Sure, it’s comforting that a large portion of wealth is stashed in hard real estate assets. But a change in property values or prices doesn’t really impact consumption of durable goods. What happens when cash flows shrink? The retail spending that the economy needs to revive won’t materialize for countless businesses, incomes will continue to decline, and the vicious circle continues. Beijing’s stimulus for individuals needs to be more robust.Whatever a new normal looks like, the individual Chinese spender may no longer be as reliable a part of it. Those looking for a consumption boost may want to turn elsewhere.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • INVESTIGATION ALERT: The Schall Law Firm Announces it is Investigating Claims Against Wells Fargo & Company and Encourages Investors with Losses of $100,000 to Contact the Firm
    Business Wire

    INVESTIGATION ALERT: The Schall Law Firm Announces it is Investigating Claims Against Wells Fargo & Company and Encourages Investors with Losses of $100,000 to Contact the Firm

    INVESTIGATION ALERT: The Schall Law Firm Announces it is Investigating Claims Against Wells Fargo & Company

  • Amazon and Walmart Are All Set to Bounce Back in India
    Motley Fool

    Amazon and Walmart Are All Set to Bounce Back in India

    Restrictions on sales of non-essential items during the COVID-19 lockdown hurt the two e-commerce giants in India.

  • Fatter unemployment checks are hurting the COVID-19 economic recovery: Goldman
    Yahoo Finance

    Fatter unemployment checks are hurting the COVID-19 economic recovery: Goldman

    Goldman Sachs make a key argument on the economic recovery in its latest piece of research.

  • Pound slides as UK Brexit negotiator says 'big gap' between two sides
    Yahoo Finance UK

    Pound slides as UK Brexit negotiator says 'big gap' between two sides

    David Frost told MPs the EU's negotiating position was 'not a mandate that is likely to produce an agreement that can be agreed with us'.

  • Business Wire

    EQUITY ALERT: Rosen Law Firm Announces Investigation of Securities Claims Against Wells Fargo & Company

    Rosen Law Firm, a global investor rights law firm, announces it is investigating potential securities claims on behalf of shareholders of Wells Fargo & Company (NYSE: WFC) resulting from allegations that Wells Fargo may have issued materially misleading business information to the investing public.

  • Is Target Stock a Buy?
    Motley Fool

    Is Target Stock a Buy?

    When it comes to the discussion of major retailers, Target (NYSE: TGT) sometimes becomes an afterthought. Particularly with regard to the COVID-19 pandemic, retail analysts have tended to focus on Target's principal competitors, Walmart, Costco, and Amazon. This probably helped Target stock over the past few months as a run on consumer staples helped to drive revenue increases.

  • Walmart Pushes Into the Used Apparel Market
    Motley Fool

    Walmart Pushes Into the Used Apparel Market

    Walmart (NYSE: WMT) shoppers can now browse pre-owned apparel when they visit the retailer's e-commerce site. "We are absolutely seeing this as an opportunity to support a bigger portion of our customers' closets," a Walmart executive told CNBC. Walmart's e-commerce business was a standout performer in its last quarterly report.

  • Amazon's COVID-19 Spending Could Dwarf Walmart's $900 Million Outlay
    Motley Fool

    Amazon's COVID-19 Spending Could Dwarf Walmart's $900 Million Outlay

    Retail giant Walmart (NYSE: WMT) had a fabulous fiscal first quarter, with sales rising 9%, and online sales up 74%. Probably the biggest revelation from Walmart's report, however, was this: Racking up all those sales in the midst of a pandemic cost Walmart $900 million in cash bonuses and pay raises, safety equipment costs, and expenses related to sanitizing and otherwise making its stores safe to shop in. In a recent earnings call, Walmart CFO Brett Biggs said it was a "reasonable assumption" that Walmart would spend another $900 million on COVID-19-related expenses this quarter as well.

  • Americans, It Turns Out, Would Rather Visit a Store Than Buy Food Online

    Americans, It Turns Out, Would Rather Visit a Store Than Buy Food Online

    (Bloomberg) -- Bonnie Russolillo is one of millions of Americans forced by the pandemic to buy groceries online. The experience was better than she expected—the broccoli crowns were perfect and she was mostly pleased with the substitutions for out-of-stock items.But here’s the bad news for companies that have spent billions building web supermarkets: Russolillo and shoppers like her prefer to walk the aisles themselves. “If I feel it’s safe, I’d much rather do my own shopping,” says Russolillo, who is 62 and lives on Long Island. “It’s much different than going online and looking at pictures.” Online grocery sales have surged as much as 200% this year, according to Earnest Research, part of a broader boom in home cooking now that thousands of restaurants are closed. The $840 billion grocery industry has been one of the few bright spots amid a pandemic that has infected about 1.7 million Americans, killed almost 100,000 and crushed the economy. Walmart Inc., Amazon.com Inc. and startup Instacart Inc. are all reaping the rewards, and some e-commerce prognosticators say the online grocery industry has finally hit an inflection point promised for decades.But how much of that spending shift will stick is guesswork. It’s difficult to predict lasting behavior changes from a fear-fueled surge—growth peaked more than a month ago. Problems with online food shopping also persist. The operations are expensive to run, and limits on capacity and inventory abound right now with supply chains upended. The shopping experience can be clunky and confusing, especially for older consumers. And one thing the pandemic hasn’t changed is that Americans still like to squeeze their cantaloupes and eyeball their rib-eyes.Russolillo and her husband Ray learned the hard way that ordering produce online is a lot trickier than buying a box of cereal or a bag of dog food. “The picture showed a bunch of bananas. So we ordered what we thought was one bunch of bananas,” Ray says. “The delivery came and we got one banana. Who buys just one banana?”In the pandemic’s early days it seemed as though buying online groceries would become routine—or at least pick up a sizable number of converts. “The customer demand we expected over the next two-to-four years has happened in the last two-to-four weeks,” Instacart Chief Executive Officer Apoorva Mehta said in early April, a time when most Americans were under strict stay-at-home orders. Visits to Walmart’s online grocery site that month soared more than fourfold, according to data tracker SimilarWeb, fueling the retailer’s fastest quarterly sales growth in almost 20 years.  But even in cities hardest hit by the pandemic, more than 7 in 10 people have continued to visit stores for groceries and other essentials, according to surveys by the consulting firm McKinsey & Co. In states with more relaxed restrictions, the figure is more than 8 in 10. Over one-third of shoppers say they’ll decrease their use of web groceries or stop ordering food online altogether when shelter-in-place restrictions ease in their area, according to a survey conducted for Bloomberg by CivicScience.“We’ve already hit the high water mark and people are getting back to some normal habits,” says Kurt Jetta, founder of research firm TABS Analytics, who has been studying the grocery industry for 25 years. “People really like going to the grocery store.”Consider Stacy Yore in Boca Raton, Florida. To call her a discerning grocery shopper would be an understatement. She likes her bananas on the small side with just a touch of green. She knows marbling enhances steak’s flavor, but prefers to pick out a lean cut herself for health reasons. And grapes, don’t get Yore started: “They have to be a particular shade of yellowish green. If they’re just green they’re sour but if they’re yellowish green they’re ripe and sweet and delicious.”“The delivery came and we got one banana. Who buys just one banana?”Despite the pandemic and the needs of her aging mother, she still goes to the store because she doesn’t trust Amazon, Instacart or Walmart to get it right. “If someone brought me something that wasn’t ripe I would not be happy,” Yore says.She’s not alone. Among those who use online grocery pickup services, only half include produce in their orders primarily due to concerns over quality, according to Field Agent, an industry researcher. Fresh food is the thing that consumers are most likely to buy in physical stores exclusively once the pandemic subsides, according to research from Evercore ISI. Items like bottled water, pet food and other bulky, non-perishable household staples have better prospects online, due to the hassle of lugging them out of stores.Groceries are a critical battleground in the retail wars. Walmart started out selling only general merchandise but embraced groceries to lure shoppers into its stores regularly. Amazon has pushed into grocery over the past decade as a way to reach the delivery frequency needed to offset the billions it spends on shipping.The pandemic poured rocket fuel on grocery delivery as stores curtailed hours and customer counts, and who cares when the truck shows up if we’re home all day? Even the founder of notorious dot-com flame-out Webvan is now back for another stab at the business.Limited demand and the high cost of last-mile delivery serve as the main obstacles for successful online grocery ventures. It works in densely populated cities like New York because couriers there can make multiple deliveries per hour. The suburbs are much trickier, and volume is key to bringing the costs down.Walmart, the nation’s biggest grocer, has largely avoided the unfavorable economics of home delivery by focusing on curbside pickup, now available at more than 3,600 of its 4,750 U.S. stores. The free service appeals to suburban and rural consumers because they can schedule it when convenient, rather than being beholden to a random delivery window.Despite Amazon’s dominance in e-commerce, fresh food is the one area where Walmart maintains a clear edge over its rival. More than half of purchases made on Walmart’s website were groceries in the first quarter, according to researcher M Science, up from 38% at the end of last year. Indeed, Walmart has been so successful with groceries that profit margins have suffered, so the company recently merged its food-shopping app with the main app so customers can put a few higher-margin non-food items in their carts next to the bananas and bread.As retailers jostle, the next few months will be critical in assessing the lasting effects of the pandemic on shopping habits. Recent data is muddied by the stockpiling of late March and early April, as well as government stimulus checks that buttressed consumer spending as millions of jobs evaporated. Signs of strain are emerging: Shoppers used credit cards to pay for 46% of grocery transactions in April, up from 27% in December, suggesting people have less money to pay for basic needs, says Ted Rossman, an analyst at Bankrate.com.The key question is the same as when Webvan went bust 20 years ago: Will there be sufficient demand to justify the costs?“What drove the rapid increase in online grocery’s penetration? It was fear—fear of catching the virus,” says David Bishop, a partner at retail sales and marketing firm Brick Meets Click. “Anyone who is rooting for online to stay at this rate, unfortunately, is rooting for the virus.” For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Got $3,000? These 5 Beaten-Down Stocks Are Begging to Be Bought
    Motley Fool

    Got $3,000? These 5 Beaten-Down Stocks Are Begging to Be Bought

    No matter how dire things may have appeared in previous bear markets, bull-market rallies eventually erase all evidence of downward moves in the stock market. Also keep in mind that you don't have to be rich to generate a handsome return from the stock market. With the exception of the oil and gas industry, there's probably not a harder-hit industry lately than bank stocks.

  • Coronavirus: UK government warned self-employed face 'total income cliff-edge'
    Yahoo Finance UK

    Coronavirus: UK government warned self-employed face 'total income cliff-edge'

    Business chiefs and MPs say self-employed support should be extended like the furlough scheme, but the Treasury says it is 'under review.'

  • Walmart partners with fashion consignment marketplace thredUP

    Walmart partners with fashion consignment marketplace thredUP

    Walmart is continuing its foray into fashion e-commerce, announcing a strategic partnership with fashion resale marketplace thredUP to list a large number of items on Walmart’s digital storefront. With this partnership over 750,000 items from thredUP will be available on walmart.com/thredup, starting today.

  • Investing.com

    Dollar Strengthens as U.S.-China Tensions Rise

    Protests occurred in Hong Kong Wednesday as the national security law - which critics have called a direct attempt to curtail the city's unique freedoms - underwent a second reading in the city’s Legislative Council.

  • The ECB and Brussels Put the EUR in Focus as Geopolitics Tests Risk Sentiment
    FX Empire

    The ECB and Brussels Put the EUR in Focus as Geopolitics Tests Risk Sentiment

    As market jitters over the U.S and China resurface, the ECB and the EU Commission will be in focus later this morning…

  • Bloomberg

    Ambani Prepares Facebook-Backed Unit for Overseas IPO

    (Bloomberg) -- Reliance Industries Ltd. is working with banks on early preparations for an overseas listing of its digital and wireless business, people with knowledge of the matter said, after the unit attracted more than $10 billion of investment in a month.The conglomerate backed by Mukesh Ambani, Asia’s richest man, is preparing Jio Platforms Ltd. for an initial public offering outside of India, the people said. The offering could happen in the next 12 to 24 months and the company hasn’t decided on a listing venue, one of the people said. There’s also no final decision on timeline and size, according to the people, who asked not to be identified as the discussions are private.KKR & Co. last week became the latest investor piling into Jio Platforms after Ambani sealed deals with Facebook Inc., Silver Lake Partners and General Atlantic recently. An overseas listing could potentially give the digital business a higher valuation and allow existing investors to exit, the people said.Read: Asia’s Richest Man Lures $10 Billion of Investment in WeeksA representative for Reliance Industries declined to comment.Jio Platforms combines Reliance’s digital assets with its wireless carrier, Reliance Jio Infocomm Ltd., into a holding company aimed at becoming a top e-commerce and payments operator in India’s vast consumer market.Investors are betting on Jio’s access to India’s huge consumer market, and its potential to shake up traditional industries in the country -- from retail to education and payments -- with its technology. India is the only major open Internet market where foreign technology giants such as Amazon.com Inc., Walmart Inc. and Google’s parent Alphabet Inc. can compete for market share.Started in 2016, Reliance Jio is now India’s largest wireless carrier. The operator stormed past rivals by building a nationwide 4G network, then offering free calling and data services at prices established competitors with older networks could not match without losing money. Ambani was weighing an IPO of Reliance Jio three years ago after a $31 billion investment spree, Bloomberg News reported in 2017.Shares of Reliance Industries have fallen about 5% this year, giving the conglomerate a market value of about $120 billion.(Updates to add Reliance’s share performance in the last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters

    China's Dada Nexus to kick off $500 million U.S. IPO this week -sources

    Chinese delivery firm Dada Nexus Ltd will launch the investor roadshow for its U.S. initial public offering as early as Wednesday, according to people familiar with the matter, braving U.S.-China tensions over Chinese companies pursuing their stock market debut in New York. The U.S. Senate passed legislation last week that could prevent some Chinese companies from listing on U.S. exchanges unless they follow standards for U.S. audits and regulations. Nasdaq Inc also tightened listing restrictions for companies from China and other countries.

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