There are new developments in the housing market that are helping DACA immigrants become eligible for FHA loans. Joining us to talk more about that and some topes for new home buyers dealing with this market, is mortgage expert Brian Sacks.
(Bloomberg) -- Goldman Sachs Group Inc.’s chief global equity strategist says that the market is underestimating how strong the economic recovery could be this year, and that cheaper value and cyclical stocks will be the prime winners from this bounce.“The underlying trend here is pretty clear that we’re moving into a period of very synchronized global growth,” Goldman’s Peter Oppenheimer said in an interview on Bloomberg TV, adding that he expects 6.5% global growth this year amid supportive monetary and fiscal policies as well as rising commodity prices. “These conditions are still very favorable for cyclicals and value, and we think this has further to go.”Equities globally slumped last week as investors rotated out of frothier parts of the market, such as technology shares, amid concerns about a spike in government bond yields. However, the retreat in risk assets didn’t last long and investors started buying the dip on Friday, with the focus this week shifting to optimism over rapid vaccination efforts and economic reopening plans.Cheaper, or so-called value shares, outperformed companies with robust growth in February, with the MSCI World Value Index rising 4.5% in contrast to a mere 0.3% gain for the MSCI World Growth gauge. Goldman’s Oppenheimer said there’s potential for a “big catch-up” in reopening trades, such as travel and leisure, beverages, banks, commodity sectors and transport infrastructure.“These are all areas that still look cheap and can benefit a lot from the kind of strong pickup in growth we expect from the middle of the year, prompted by the faster roll-out of vaccines, particularly in the U.K., in the U.S.,” he said. High savings rates should translate into a strong rise in consumption as lockdowns get eased, he added.At the same time, Goldman continues to like some technology companies, but notes that there’s less room for upgrades to estimates as these pandemic winners are more vulnerable in terms of valuations to higher bond yields or steeper yield curve, Oppenheimer said.On the bond market selloff, Goldman’s chief global equity strategist said that stock investors will be watching the speed, level and reason behind rising yields. A move up of 40 basis points in U.S. 10-year Treasury yields within a month could lead to negative equity returns, he said. But typically, rising rates and inflation expectations are positive for equities because they reduce the implied risk of recession and deflation, Oppenheimer said.“If it’s a gradual move, I think stocks can do quite well in value and cyclicals also. If it’s a very rapid move, then you start to get the problem,” Oppenheimer said. “But if it’s a rise in nominal rates and breakevens reflecting stronger confidence in growth and inflation, that’s a lot more positive.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- China is set to reduce local government bond sales and rein in its budget deficit this year, scaling back the pandemic stimulus measures that fueled debt while helping the economy recover.The government is likely to reduce its quota for special local bonds -- mostly used for infrastructure spending -- to 3.5 trillion yuan ($541 billion) from 3.75 trillion yuan last year, according to the median estimate of 10 economists surveyed by Bloomberg. The fiscal deficit target is forecast to be cut to 3% of gross domestic product from 3.6% in 2020.Beijing is set to unveil its major economic goals on March 5, when the National People’s Congress, China’s rubber-stamp parliament, convenes for its yearly meeting. Officials have already signaled they would withdraw some of the stimulus rolled out last year that contributed to the economy’s rapid V-shaped recovery.“Curbing debt risks and capping the leverage ratio will be among policy makers’ top priorities this year after the economy rebounded,” said Bruce Pang, head of macro research at China Renaissance Securities Hong Kong.Based on Bloomberg calculations, local government debt rose to 90% of combined fiscal revenue last year, from 83% in 2019, assuming that local governments met their revenue targets in 2020.Anti-Virus BondsA decline in the quota for local special bonds would be the first since they were introduced in 2015 to fund infrastructure. Unlike general bonds that are paid back with fiscal revenue, the special bonds are repaid with income generated from specific projects.The surveyed analysts also expect no issuance of special anti-virus bonds this year, after the government sold 1 trillion yuan worth of them last year.Total government bond net issuance could plunge by 20%, or 1.7 trillion yuan, this year based on the forecasts for the deficit and bond quota, and assuming the economy will expand by 8% to 10%, according to Bloomberg calculations.China’s official government debt soared to 45.8% of GDP by the end of last year from 38.5% in the year before. The actual debt level is likely to be higher since the government doesn’t include borrowing by entities such as local government financing vehicles.Read More: China Local Governments Face Record Hidden Debt Due in 2021Taking into account the implicit debt, the real leverage ratio has already reached 60% of GDP, a threshold regarded internationally as the prudent limit, according to Ding Shuang, chief economist for Greater China at Standard Chartered Plc in Hong Kong.“If large-scale bond issuance continues, the debt ratio will break through the benchmark threshold,” he said.(Updates with local government debt ratio in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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(Bloomberg) -- Warren Buffett made no splashy deals in 2020, and he didn’t weigh in on some of the year’s most contentious topics in his much-anticipated annual letter. Behind the scenes, the 90-year-old billionaire was hardly inactive.Berkshire Hathaway Inc. was firing up another engine: stocks -- both buying its own and trading others. The conglomerate snapped up $24.7 billion of Berkshire shares last year, a stark record for the business sitting atop a $138 billion cash pile. It also almost doubled the volume of buying and selling of other stocks compared with 2019.The moves signal a carefully forged path in markets sent convulsing by the pandemic and then lifted by stimulus that’s paved the way for heavy retail trading and an unprecedented SPAC boom. And Buffett is sticking close to home -- ultimately becoming a net seller of shares in other companies for the first time since 2016, while his prolific repurchases of Berkshire stock continued into this year with at least $4.2 billion of buybacks through mid-February, according to a regulatory filing Saturday.“Last year we demonstrated our enthusiasm for Berkshire’s spread of properties by repurchasing the equivalent of 80,998 ‘A’ shares,” Buffett said in the letter released Saturday. “That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet.”Berkshire’s Class A shares climbed as much as 3.1% to $376,000 Monday morning, their biggest intraday gain since early November. Meyer Shields, an analyst at Keefe Bruyette & Woods, said in a note Sunday that the “positive commentary around sustained repurchases” would probably boost the stock price.The billionaire investor carefully steered clear of other major topics from the past year, mentioning the Covid-19 pandemic only once in the letter and avoiding hot topics such as politics. Investors got just the 15-page letter, which has been getting shorter in recent years, and missed out on his routine CNBC appearance Monday, the first time in 14 years that he’s not been on for an interview after the release of his letter, according to the network.Still, Buffett spent a sizable portion of Saturday’s letter delving into buybacks, a substantial shift for an investor who previously had largely shunned the practice and instead favored purchasing big businesses or stocks of other companies. He loosened the buyback policy in 2018 as Berkshire’s cash pile kept reaching new heights. And Berkshire stock, which has underperformed the broader market in recent years, continued that trend last year with shares just gaining 2.4% compared to the 16% rally in the S&P 500 Index.Buffett had long been careful with buybacks, a trait that harkens back to his days running a partnership. In his letter released in 2019 after the buyback change, he made it clear that he wants investors to be fully informed about the company before they decide to sell their shares back to the firm.What Bloomberg Intelligence Says“Berkshire is likely to stay conservative on large investments, we believe, looking to alternatives like the record $9 billion in share buybacks in each of 3Q and 4Q.”--Matthew Palazola, senior industry analystHe spent his recent letter acknowledging that there were investors, including index funds, professional managers and individuals, who were required to hold some Berkshire shares or would be likely to come and go based on their investing judgment. He’d still stick by the investors who want to invest for the long term, he added.“Charlie and I would be less than human if we did not feel a special kinship with our fifth bucket: the million-plus individual investors who simply trust us to represent their interests, whatever the future may bring,” Buffett said in his letter released Saturday, referring to long-time business partner, Charlie Munger. “They have joined us with no intent to leave, adopting a mindset similar to that held by our original partners.”Cash PileBerkshire still has more than $138 billion in cash to deploy. A portion of the never-ending cash flow will be sucked up by two of its businesses, the railroad and energy operations, and Buffett said the incremental investment will probably generate “appropriate” returns. Railroad BNSF has invested $41 billion in fixed assets, and has paid $41.8 billion in dividends to the conglomerate since its purchase in 2010, Buffett said in his letter.While the attractiveness of share buybacks might come or go based on the market’s price for Berkshire, the conglomerate still has those two large operations that continuously help reinvest funds, according to shareholder Thomas Russo. That, Russo argues, helps ease the pressure on Berkshire to do an “elephant-sized acquisition” to generate more returns.“He doesn’t really have to find the elephant because he has two elephants already corralled that need to be fed,” said Russo, who oversees a portfolio including Berkshire at investment adviser Gardner Russo & Gardner. “One of them is Burlington Northern and one of them is Berkshire Hathaway Energy. He can deploy tens of billions of dollars on an ongoing basis, bringing both up to standard,” and then still have funds to deploy in an acquisition.One of Berkshire’s top three most valuable assets these days is actually a $120 billion holding of Apple Inc. shares, an investment he likened in importance to the railroad. Berkshire has ended up with an even larger portion of the company’s shares thanks in part to Apple’s own appetite for buybacks, Buffett acknowledged in the letter.“He’s redefined what an elephant can be,” said James Armstrong, who manages assets including Berkshire shares as president of Henry H. Armstrong Associates. “An elephant can be thought of as a 5.4% interest in Apple.”Some of Berkshire’s major tweaks to its $281 billion stock portfolio last year were done to reposition its holdings. Throughout 2020, Buffett’s company cut its holdings in banks, insurance and finance firms -- an exposure that constituted more than 41% of the portfolio at the end of 2019 -- to just 24% of the portfolio by the end of last year. He also dumped his airline stocks earlier in the pandemic.Chevron, VerizonThe company did find stocks to buy last year, including two large stakes in Chevron Corp. and Verizon Communications Inc., plus some purchases of pharmaceutical companies. Berkshire also bought $6 billion worth of stock in five of Japan’s biggest trading companies.“He’s been a net seller, however, more recently it seems like he’s identified some opportunities, buying blocks of Japanese industrial stocks” and some health care stocks, Jim Shanahan, an analyst at Edward D. Jones & Co., said in an interview. “He is finding some value given all the limitations. He can’t put a substantial amount of capital to work into any individual stock unless it’s a large one. But being willing to consider investments in a basket of similar companies creates a little bit more opportunity for them too.”Buffett made little mention in this year’s letter about one of the looming questions over the conglomerate: Succession. The investor, who’s received his coronavirus vaccine, proved he’s still willing to travel by announcing he’ll head to Los Angeles to film this year’s annual meeting alongside Munger, 97, who wasn’t able to make it to last year’s event in Omaha, Nebraska.“This year our meeting will be held in Los Angeles ... and Charlie will be on stage with me offering answers and observations throughout the 3 1/2-hour question period,” Buffett said in the letter. “I missed him last year and, more important, you clearly missed him.”(Updates with shares in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Forbes lists Kyle Busch as the highest-paid NASCAR driver in 2020, with total earnings of $17.8 million from his salary, race prizes and endorsements and licensing. Net worth: $80 million Read: The...
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Late last week, a $1.9 trillion coronavirus relief package passed a House vote and is now heading to the Senate. Perhaps the most highly anticipated relief measure featured in the new bill is a third round of stimulus checks, this time worth up to $1,400 apiece. The relief bill also includes a $400 weekly boost to unemployment benefits through Aug. 29.
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Vector Acquisition (NASDAQ: VACQ), a previously little-known special purpose acquisition vehicle, or SPAC, that went public three months ago, roared to life on Monday, surging 36.5% by noon EST -- and pulled the rest of America's nascent "new space industry" higher with it. The reason: At long last, Vector is bringing space company Rocket Lab public. In addition to Vector, as of noon, we saw shares of Virgin Galactic (NYSE: SPCE) up 4%, Holicity (NASDAQ: HOL) up 15.6%, and Stable Road Acquisition (NASDAQ: SRAC) up 19%.
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The largest and oldest electric power cooperative in Texas filed for bankruptcy protection in Houston on Monday, citing a disputed $1.8 billion debt to the state's grid operator. Brazos Electric Power Cooperative Inc, which supplies electricity to more than 660,000 consumers across the state, is one of dozens of providers facing enormous charges stemming from a severe cold snap last month. The fallout threatens utilities and power marketers, which collectively face billions of dollars in blackout-related charges, executives said.