US financial regulators are intensifying their oversight of hedge funds amid growing concern about the leverage these firms have piled on.
Treasury Secretary Janet Yellen announced Wednesday that the Financial Stability Oversight Council has relaunched a working group focused on hedge funds that will identify risks, share data and work to strengthen the financial system.
“The pandemic showed that leverage of some hedge funds can amplify stresses,” Yellen said in prepared remarks during her first meeting at the helm of FSOC.
The meeting comes just days after the implosion of a little-known hedge fund caused shockwaves on Wall Street and sizable losses for some big banks, though it was scheduled before those events occurred.
Yellen said regulators also need to address “vulnerabilities” laid bare by the “disruption” in the vast US Treasury market last year. Regulators signaled a new focus on the climate crisis, including market and credit risks from climate-related events and a “rapid transition” to a net-zero economy.
“We cannot only look back and learn the lessons of last year. We must also look ahead, at emerging risks. Climate change is obviously the big one,” Yellen said. “It is an existential threat to our environment, and it poses a tremendous risk to our country’s financial stability.”
It’s the last day of the quarter, and the stock market is trying to end the first three months of 2021 on a high note — especially the tech sector, which has some ground to make up.
With the S&P 500 up more than 5% going into today and the Dow up 8%, the Nasdaq’s measly 1.2% gain has some tech investors frowning. Tech has gotten wrecked in the past couple months as bond yields have crept higher (the 10-year Treasury yield is above 1.7% today) and Wall Street fears that higher debt prices could put unprofitable tech companies in peril.
But with bond yields sinking a bit Wednesday, tech is rallying: The Nasdaq is up 1.7% with just a couple hours left in the trading day.
The Dow is hanging onto gains with a 50-point, or 0.1%, rise. And the S&P 500 was up a more robust 0.8%.
Mark Mason, Citigroup’s chief financial officer and one of the only senior Black executives on Wall Street, condemned Georgia’s restrictive voting law on Wednesday.
“As an American, I am appalled by the recent voter suppression laws passed in the state of Georgia,” Mason wrote in a LinkedIn post. “I see it as a disgrace that our country’s efforts to keep Black Americans from engaging fully in our Constitutional right to vote continue to this day.”
Mason pledged to join the effort in making sure other states don’t follow in Georgia’s footsteps. He also expressed support for the dozens of Black executives who announced plans Wednesday to fight voter suppression efforts.
In a separate LinkedIn post, Citi executive Ed Skyler said the right to vote is the “foundation of American democracy” and the bank “strongly opposes efforts to undermine the ability of Americans to avail themselves of this fundamental right.”
Skyler, Citi’s head of global public affairs, did not specifically cite the Georgia law.
Get ready for some price shocks – but don’t fret too much. The Fed is on your side, and they’re not panicking about inflation just yet. Neither should you.
“The Fed is your friend,” said Goldman Sachs’ Ashish Shah on CNN Business’ Markets Now live show. “They want to see inflation get back to normal levels that they haven’t been able to deliver on in the past.”
Inflation has remained stubbornly low for the past couple decades, stumping economists who thought the booming jobs market after the 2008 financial crisis could cause inflation to spike.
Prices may rise some in the interim as the world gets back to normal, Shah notes. But it won’t last.
“After the last year, everyone has been shut in, hasn’t been able to take that vacation they wanted to. Now they’re going to go out and see that vacation costs a lot more than it used to,” he said. “But the Fed will be very accommodative, slow to raise rates. That’s a fantastic outcome for consumers.”
That means once the sugar rush from America’s stimulus plans and the vaccine distribution efforts take hold, prices will rise sharply but then return to normal. The Fed knows this and won’t act too quickly to raise rates, keeping your mortgage, car payments and other debt cheap.
Shiseido just bought clean skin care company Drunk Elephant for $845 million. But it’s a crowded space. How did the company gain a cult following and stand out in the crowd?
“The clean beauty business – I don’t think it’s a trend, I think it’s here to stay,” said Drunk Elephant Founder Tiffany Masterson on CNN Business’ Markets Now live show. “Consumers demand to know what’s in their products, and with our unique philosophy, it goes beyond clean.”
Masterson noted the company uses only biocompatible ingredients that are nature-friendly, but one thing you won’t see from Drunk Elephant that you see from its competitors: the words “all natural.”
“We use both synthetic and natural,” Masterson said. “I always thought bridging those two categories was the best way to get results. Our products are efficacious.”
Private-sector payroll company ADP likes what the job market is signaling.
The company reported Wednesday that private-sector American companies added 517,000 jobs last month, the best report since September 2020. But that big number didn’t tell the whole story.
“The biggest takeaway was how widespread the job gains were,” ADP Chief Economist Nela Richardson said on CNN Business’ Markets Now live show. “In March, we’re seeing an increase in momentum.”
Richardson noted that both the manufacturing and service sectors added jobs. That included 437,000 in services that had gotten decimated during the pandemic, such as leisure, travel and hospitality.
The good news for small businesses, which have been particularly hard-hit during the pandemic, was that the job gains were industry- and not size-dependent — growth was across the board at companies of all sizes.
“We do think the recovery is picking up momentum,” Richardson said. “But all of that is conditional on vaccine rollout.”
Robinhood is getting rid of the confetti animation that appears on users’ screens after they conduct their first trade and achieve other milestones.
The change comes as the app faces growing scrutiny over what critics say is a gamification of trading that masks the potential for real losses in the financial markets.
The design changes, announced in a blog post Wednesday, will roll out next week as part of “new, dynamic visual experiences that cheer on customers through the milestones in their financial journeys,” the company said.
Robinhood currently displays confetti after a number of “firsts” for each trader, including when they initially deposit money into the app, make their first trade and upgrade to a premium membership. The confetti imagery will be replaced by new graphic elements featuring shapes and colors that are comparatively more sedate.
The US Chamber of Commerce strongly criticized President Joe Biden’s proposal to pay for his $2 trillion infrastructure package by unwinding the Trump corporate tax cuts.
“We believe the proposal is dangerously misguided when it comes to how to pay for infrastructure,” Neil Bradley, the Chamber’s chief policy officer, said in a statement Wednesday that echoed comments he previously made to CNN Business.
The Biden administration wants to help cover the cost of the infrastructure program by raising the corporate tax rate from 21% to 28%. While business groups have warned against such a tax hike, a leading investor on Wall Street recently told CNN Business the US economy can definitely withstand higher taxes.
“We strongly oppose the general tax increases proposed by the administration,” Bradley said, “which will slow the economic recovery and make the US less competitive globally – the exact opposite of the goals of the infrastructure plan.”
However, the Chamber did commend the White House for zeroing in on infrastructure and called for bipartisan legislation to address this issue.
“We need a big and bold program to modernize our nation’s crumbling infrastructure and we applaud the Biden administration for making infrastructure a top priority,” Bradley said.
US markets opened modestly higher on the final day of March.
The early gains come after ADP said private sector employment in March climbed by 517,000 jobs, narrowly missing expectations.
Investors are also paying attention to the details in President Joe Biden’s $2 trillion infrastructure proposal – and plans to raise corporate taxes to pay for the ambitious program.
Volkswagen shares dropped 5% after the auto maker admitted its rebrand to “Voltswagen” was just an April Fools’ stunt.
For the month, the Dow has surged about 7%, while the Nasdaq is on track to snap a four-month winning streak.
After a miserable February, hiring rebounded this month. Private-sector companies hired 517,000 people in the United States in March, payroll company ADP reported.
That was the strongest ADP report since September 2020.
That was slightly worse than the 550,000 economists had expected — but a huge increase from the measly 117,000 jobs added to private-sector payrolls last month. February’s hiring was hurt by the miserable winter weather throughout much of the country, including the snowpocalypse that left millions of Texans without power for a week.
This month, private-sector hiring bounced back across the board, with sectors of all sizes reporting solid jobs gains. Mining and natural resources employers were the lone exception, shedding 1,000 jobs last month.
Although ADP’s report and the the Labor Department’s jobs survey aren’t always correlated, the government’s labor report is similarly expected to show hiring rebounded sharply in March.
Economists expect hiring boomed in March across the United States: The economy is forecast to add 595,000 jobs, according to a survey of economists conducted by Briefing.com. That’s up from 379,000 in February.
The unemployment rate is expected to tick down to 6% from 6.2% last month.
Correction: An earlier version of the post had an incorrect number for economists’ forecast. It was 550,000.
US stocks were set to open mostly flat ahead of President Joe Biden’s enormous infrastructure spending proposal. Wall Street wants to know the details about who benefits from it – and who pays for it.
Here’s where things stand as of 6:15 am ET:
A new report from the World Economic Forum estimates that attaining global gender parity will take nearly 136 years, up from its previous estimate of almost 100 years.
WEF measures parity in four ways: economic participation and opportunity, education, health and political empowerment. Data examined by the organization showed that the gap in political empowerment has widened significantly since its 2020 report, while economic participation has improved only slightly.
Deliveroo shares fell as much as 30% in the company’s highly anticipated London IPO on Wednesday, wiping out roughly £2.3 billion ($3.2 billion) in market value and dealing a blow to the city’s renewed efforts to attract tech company listings.
The stock was last trading at around £3.00 ($4.14), about 23% below the price at which the shares listed.
Deliveroo had set the IPO price at £3.90 ($5.36) per share, the bottom of the range it was targeting, despite saying earlier this week that it had “very significant demand from institutions across the globe.” At that price, the Amazon (AMZN)-backed food delivery company was valued at £7.6 billion ($10.5 billion).
