Posts

Posted on

Futures: What You Trade Determines How You’re Taxed

By Jim Forrester, CPA

Futures trading covers a vast array of trading instruments, from stock indices and U.S. Treasury bonds to precious metals, energy sources such as oil and gas, and everyday foodstuffs including meats, grains and coffee.

Some futures traders buy and sell futures contracts to establish a current price of a purchase or sale to take place at a later date, thus providing a hedge against adverse price changes. Others speculate by buying or selling based on where they expect the market to go in order to profit from the very movements the hedgers seek to avoid.

When tax time rolls around however, the Internal Revenue Service groups each of your futures trades into one of two categories: securities or commodities. The biggest difference: commodities enjoy a lower tax rate.

While it may seem commonsensical to figure out which class your trades best fit, the number of new hybrid financial products created with the passage of the Commodities Futures Modernization Act of 2000 (CFMA) effectively blurred the distinction between some securities and commodities, at least for tax purposes.

The CFMA expanded the definition of a “broad-based index” (10 or more securities) to include almost all futures and options on stock indices, including “e-minis,” treating them as commodities and favoring them with a tax break. “Narrow-based” indices (nine or fewer securities), by contrast, are considered securities and taxed at the ordinary capital gains rate.

Securities vs. Commodities

Securities futures capital gains/losses are reported either on Schedule D (Capital Gains and Losses) or as ordinary capital gains/losses on IRS Form 4797 Part II (Sales of Business Property) if you elected mark-to-market accounting. Your securities trades are taxed as short-term capital gains at the ordinary income tax rate of up to 35%.

Commodities futures capital gains/losses are reported on Form 6781 (Section 1256 Contracts), which qualifies these for an advantageous tax split: 60% at the long-term rate of 15% and 40% at the ordinary short-term rate of up to 35%, or a combined tax rate of 23%, for a tax savings of 12%.

Because of this attractive 60/40 split, most commodities traders forego mark-to-market accounting and its favorable “loss insurance” in order to reap the benefits of the lower capital gains rate.

The Exception: Single-Stock Futures

What would IRS regulations be without an exception or two, right? In the case of futures, that exception affects single-stock futures, or SSFs, also referred to as securities futures contracts.

The IRS lumps SSFs in with securities and taxes them on the same basis as their underlying stocks, options or narrow-based indices. As a result, you pay the short-term capital gain rate of 35% on single-stock futures, and not the lower rate the IRS affords to commodities futures.

To make matters more confusing, the IRS doesn’t require your broker to report SSF proceeds on your IRS Form 1099-B, which lists proceeds from stock sales. While your broker or brokers may choose to include this information on your 1099-B, if they don’t, it can be a headache to break them out, especially under the crunch of tax deadline.

Futures traders have been given a considerable tax break in recent years that reflects the changing and expanding nature of the various financial products available

. But if you don’t report correctly, you may join the majority of traders who routinely overpay to the IRS.

Before filing this year, contact a Traders Accounting tax professional. We can help you sort out your activity and file a complete return that fully complies with IRS guidelines while achieving maximum tax advantages.

Take it from experienced traders: don’t go it alone when it comes to filing with the IRS. One false move can cost you plenty, possibly even your trader tax status. We strongly recommend you seek the assistance of a trader tax professional at Traders Accounting this tax season.

Posted on

US in green premarket with COVID in focus

Major stock markets on Wall Street registered gains ahead of Thursday’s session as the coronavirus pandemic continued to loom over the United States economy. The latest news revealed AstraZeneca posted updated results of its vaccine’s interim analysis, saying that the jab is 76% effective in preventing the COVID-19. Meanwhile, billionaire philanthropist Bill Gates estimated the crisis should be over by the end of next year. The Dow Jones surged 0.34% or 110 points at 4:20 am ET, while the Nasdaq 100 rose 0.55%. At the same time, the S&P 500 climbed 0.38%. The euro stood 0.06% lower against the dollar to sell for 1.18063. Nick Note: chill out you must get through this choppy stage. It is the norm when a market has gone through a major 10% correction and the bottom is in…. Welcome to the chop shop……. chop chop chop…

Posted on

Ship stuck in Suez like a “beached whale”, firm aiming to free it says

SINGAPORE — Efforts to dislodge a 400 m (1,312 foot) long container vessel that has choked traffic along the Suez Canal resumed at high tide on Thursday, with five tugs working to drag the vessel to deeper water, according to ship-tracking data. The Ever Given vessel ran aground diagonally across the single-lane stretch of the southern canal on Tuesday morning after losing the ability to steer amid high winds and a dust storm, the Suez Canal Authority (SCA) said in a statement. It is now blocking transit in both directions through one of the world’s busiest shipping channels for goods, oil, grain and other products linking Asia and Europe. Peter Berdowski, CEO of Dutch company Boskalis, which is trying to free the ship, said it was too early to say how long the job might take.

“We can’t exclude it might take weeks, depending on the situation,” Berdowski told the Dutch television program “Nieuwsuur.”

He said the ship’s bow and stern had been lifted up against either side of the canal. “It is like an enormous beached whale. It’s an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats and dredging of sand.”   Bernhard Schulte Shipmanagement (BSM), the technical manager of Ever Given, said dredgers were working to clear sand and mud from around the vessel to free her while tugboats in conjunction with Ever Given’s winches are working to shift it. Marine services firm GAC issued a note to clients overnight saying efforts to free the vessel using tug boats continued, but that wind conditions and the sheer size of the vessel “were hindering the operation.” Ship-tracking software shows five tugs surrounding the Ever Given and three more heading towards it. The ship’s GPS signal shows only minor changes to its position over the past 24 hours, however. Several dozen vessels, including other large container ships, tankers carrying oil and gas, and bulk vessels hauling grain have backed up at either end of the canal to create one of the worst shipping jams seen for years. Roughly 30% of the world’s shipping container volume transits through the 193 km (120 miles) Suez Canal daily, and about 12% of total global trade of all goods. Shipping experts say that if the blockage is not likely to be cleared within the next 24-48 hours, some shipping firms may be forced to re-route vessels around the southern tip of Africa, which would add roughly a week to the journey. But the chairman of the Suez Canal Authority told media that despite the blockage some cargo was able to move south and that efforts to dislodge Ever Given would continue. Consultancy Wood Mackenzie said the biggest impact was on container shipping, but there were also a total of 16 laden crude and product oil tankers due to sail through the canal and now delayed by the incident, amounting to 870,000 tonnes of crude and 670,000 tonnes of clean oil products such as gasoline, naphtha and diesel.  Nick Note: having sailed many times the Panama canal and the Suez canal.  i can tell you the Suez Canal is a bitch especially this time of year, Its very narrow and the banks are sand which are constantly caving in. And the desert winds are fierce. On my last trip through going North into the Med we got hit by a sand storm that actually pealed the paint on the pilot house. This grounding is a big shit. Most all the China goods and oil  (5 million barrels a day) into Europe passes through this shortcut. It is one of the worlds 3 vital shipping lanes.  From what i am told this dinosaur of a container ship (happens more often then they admit) lost power and the wind beached her. I have long advocated against  these super ships, weather they are oil tankers, container ships or cruise ships. They are just plain to big. Having had small cargo ships and yachts i can tell you when things go wrong they really go wrong big time. My old friend Captain Casey once told me while we where sheltering from a hurricane. That Mother Nature is the biggest bitch you will ever know. And watch out when she get mad.

Posted on

S&P 500 reverses gains and closes lower as tech sells off, Nasdaq falls 2%

The S&P 500 gave up earlier gains and closed in the red Wednesday as tech stocks sold off, continuing a market rotation out of high-flying growth names. The market suffered an ugly close where the declines in technology shares accelerated, dragging down the major averages in a rapid fashion in the final minutes. The S&P 500 fell 0.6% to 3,889.14 after rising as much as 0.8%. The tech-heavy Nasdaq Composite dropped 2% to 12,961.89, closing at its session low. Apple, Facebook and Netflix all slid more than 2%, while Tesla fell 4.8%. The Dow Jones Industrial Average dipped into the red in the final seconds of the session, closing 3.09 points lower at 32,420.06. The blue-chip benchmark jumped more than 300 points at its session high. Classic reopening plays like airlines and cruise operators rolled over in afternoon trading. Shares of cruise operators fell to session lows after Centers for Disease Control and Prevention said the sailing order limiting cruises will stay in place until Nov. 1. Norwegian Cruise Line dropped 4.9% following the news, while Royal Caribbean and Carnival fell 1.9% and 2.8%, respectively. Delta and United Airlines also ended the day lower.

The tech sell-off came even as bond yields continued to decline from recent highs. The 10-year Treasury yield dipped 3 basis points to 1.61% Wednesday, falling for a third day after the rate hit a 14-month high last week.

One bright spot on Wednesday was the energy sector, which gained 2.5% as oil prices bounced back 6%. The material and financial sectors also outperformed, rising about 0.7% each. “Stocks encountered volatility but powered ahead in the first quarter. Cyclical stocks — those sensitive to economic momentum — continued to lead,” said Tony DeSpirito, chief investment officer of U.S. fundamental equities at BlackRock. “We think it makes sense to position for the start of a new and powerful economic cycle.” On Wednesday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen appeared for a second day for virtual Capitol Hill testimony. Talking with members of the Senate Banking Committee, Powell said he expects the economy to experience superior growth in 2021 amid a recovery from the pandemic.

“There’s going to be a very, very strong year in the most likely case,” Powell said. “There are of course risks to the upside and downside, but it should be a very strong year from a growth standpoint…Longer run we do have to raise revenue to support permanent spending that we want to do.”

Shares of Intel wiped out earlier gains and fell more than 2% even after the chip giant unveiled plans for a comeback. The firm said it would open two new factories to manufacture chips for its own use and for other companies. Investors are on edge as many regions of the world are seeing rising Covid-19 cases as highly contagious variants continue to spread. Germany and France are extending or enforcing new lockdown measures. Still, expectations for a successful reopening in the U.S. remain high as the pace of vaccinations in the country is picking up with nearly one in five adults now fully vaccinated. “The bull case for equities is persuasive in a recovering economy,” Oliver Brennan, head of research at TS Lombard, said in a note. “Earnings expectations have caught up with the pre-crisis level; risk here remains to the upside.” Nick Note: the global economy is reopening… Especially the US… Don’t let them shit you.

Posted on

Yellen suggests 28% corporate tax rate within ‘global framework’

United States Treasury Secretary Janet Yellen said on Wednesday that a corporate tax rate of 28% would be “appropriate within a global framework” in order for the US to remain competitive. Furthermore, in her testimony before the Senate Banking, Housing, & Urban Affairs Committee, the ex-Federal Reserve chairwoman dismissed the advantages of former President Donald Trump’s Tax Cuts and Jobs Act of 2017. “I don’t think it had a very substantial impact on investment spending in the United States,” Yellen told lawmakers. On Tuesday, she said that the Biden administration is examining tax hikes in order to fund an ambitious infrastructure bill that could be worth $3 trillion. Nick Note: The present corporate tax rate is a flat 21%. The new tax rate is to be negotiated. What ever… i could see the tax rate returning to 25%. Before the tax change in2018 the tax rate was 35% so this PROPOSED tax increase is a nothing Berger.

Posted on

US rises in premarket amid recovery optimism

Stock futures pointed to a higher open Wednesday morning, with each of the three major indexes on track to recover some losses from Tuesday. Contracts on the Dow gained more than 100 points, or 0.4%, as shares of component Intel (INTC) rallied after the company announced a $20 billion investment into building out its in-house chip manufacturing operations to catch up with competitors. The Nasdaq looked to open higher by more than 100 points as well, and the S&P 500 gained 0.5%. A day earlier, the Dow dropped by more than 300 points, or about 1%, for its worst session in nearly three weeks. The S&P 500 also dipped, and the Nasdaq shed more than 1% as technology stocks added to recent declines. Many of the cyclical stocks that had led markets higher for much of the last three months underperformed, and the industrials, energy and financials sectors lagged. Treasury yields steadied, and the benchmark 10-year yield retreated to about 1.62% from last week’s high of more than 1.75%. “I think what we’ve seen over the past couple days is some end-of-quarter positioning,” Tom Essaye, Sevens Report Research founder, told Yahoo Finance. “The best performers quarter-to-date are getting sold right now, some of the worst performers are rallying. That’s typical as we end a quarter.” “But then also, the outlook on COVID has dimmed a bit – not so much here in the United States, but definitely in Europe, where they seem to be experiencing a third wave,” he added. Overseas, Germany extended its stringent lockdown measures for another month, and the European Union was reportedly contemplating imposing temporary export restrictions of its COVID-19 vaccines. “The vaccine rollout there is not going so well as we know, and now you’re seeing increased lockdowns.” Investors have also been digesting remarks from a parade of Federal Reserve speakers this week. Much of the commentary has served to reinforce the central bank’s stance that any inflation appearing this year will be transitory, and not significant enough to warrant a shift in their monetary policy positioning. Last week, the Federal Reserve’s updated projection material showed the median forecast among Federal Open Market Committee participants was still to keep benchmark interest rates near zero through at least 2023. Federal Reserve Chair Jerome Powell told the U.S. House Committee on Financial Services on Tuesday that he expects a temporary increase in inflation in the coming months compared to the same period last year, but that the forthcoming rises will be short-lived since so many Americans will still be out of work as the economy recovers from the pandemic. Other members of the Federal Open Market Committee echoed similar sentiments. Federal Reserve Governor Lael Brainard said during a virtual event Tuesday that “it will take some time to achieve substantial further progress” on the Fed’s goals of achieving maximum employment and sustainable 2% inflation. She advocated “a patient approach based on outcomes rather than a preemptive approach based on the outlook” as a more efficient means of achieving the central bank’s goals, suggesting the Fed would stay the course even as prospects of spiking inflation spook some market participants. Nick Note: You are missing a bet here. Its time to get aggressive.  The mother load of all rallies is coming……. Then its wipeout city

Posted on

UK private sector returns to growth in March, led by fastest increase in service activity since August 2020

Business activity across the UK private sector increased in March and the rate of expansion was the fastest for seven months, according to the latest PMI® data compiled by IHS Markit and CIPS. This was fuelled by a rise in new orders for the first time since September 2020, which survey respondents attributed to a rebound in sales ahead of easing lockdown measures, alongside stronger consumer confidence and a surge in demand for residential property services.

The headline seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index registered 56.6 in March, up sharpl y from 49.6 in February and above the crucial 50.0 no-change mark for the first time in three months. The latest reading signalled a strong rate of private sector output growth and the speed of recovery was the fastest since August 2020. For the first time since the start of the pandemic, service sector activity (index at 56.8) outpaced manufacturing production growth (55.6).

Higher levels of business activity were often linked to the prospect of looser restrictions on trade due to the coronavirus disease 2019 (COVID-19) pandemic. Moreover, the government roadmap for fewer stringency measures in the coming months contributed to the strongest rise in total new work since August 2020. Service providers noted forward bookings from domestic consumers, while some manufacturers cited advanced orders from hospitality businesses and high-street retailers. Export sales remained relatively subdued, however, with total new orders from abroad falling for the third month running.

A strong degree of pent-up domestic demand led to a renewed increase in unfinished work in March. Although only modest, the rate of backlog accumulation was the fastest since June 2018. Comment Manufacturers typically cited capacity constraints due to supply chain difficulties, while service providers commented on staff shortages and better-than-expected sales volumes. There were also reports that a surge in residential property transactions continued to lead to rising levels of unfinished work in this area of the service economy.

Efforts to rebuild business capacity and respond to rising customer demand contributed to an increase in private sector employment during March. This represented the first upturn in staffing numbers since February 2020 and the rate of job creation was the fastest for nearly two years.

The return to net employment growth was supported by higher levels of optimism towards the business outlook. Latest data indicated that expectations for the year ahead picked up for the third month running and were the strongest since this index began in July 2012.

Positive trends for output, new work and staff hiring were accompanied by another round of steep input cost inflation during March. The latest increase in average cost burdens was the sharpest since February 2017. Private sector companies continued to pass on greater operating expenses to clients, as signalled by an acceleration in the rate of output charge inflation to its highest for over three years in March.

IHS Markit / CIPS Flash UK Manufacturing PMI®

March data indicated that the recovery in UK manufacturing output regained momentum, with production growth reaching its strongest since the end of 2020. New orders also increased at the fastest pace for three months, despite another relatively subdued rise in export sales. Hopes of a sustained rebound in customer demand contributed to robust job creation and the highest level of business optimism about the year ahead outlook since April 2014.

At 57.9 in March, the seasonally adjusted IHS Markit/CIPS Flash UK Manufacturing Purchasing Managers’ Index® (PMI®) – a composite single-figure indicator of manufacturing performance – was up from 55.1 in February and the highest since November 2017.

The stronger PMI reading was supported by the fastest rise in employment for just over three years. Meanwhile, capacity pressures and supply shortages contributed to the quickest rise in backlogs of work across the manufacturing sector since May 2010. Longer wait times for supplier deliveries were overwhelmingly attributed to a lack of global shipping availability and customs delays. An imbalance of demand and supply pushed up raw material costs, with subsequent efforts to protect margins leading to the steepest increase in factory gate charges since January 2017.

IHS Markit / CIPS Flash UK Services PMI®

The seasonally adjusted IHS Markit/CIPS Flash UK Services PMI® Business Activity Index posted 56.8 in March, up from 49.5 in February and above the crucial 50.0 no-change mark for the first time in five months. Moreover, the rate of business activity expansion was the strongest seen since August 2020. March data also signalled a return to growth for new orders and employment across the service economy. Service providers widely commented on improving consumer confidence and signs of pent-up demand.

Expectations of rising sales after the national lockdown, and a boost to sentiment from the successful UK vaccine rollout, contributed to an increase in business optimism to its highest since January 2004.

Chris Williamson, Chief Business Economist at IHS Markit, said: “The UK economy rebounded from two months of decline in March, with business activity growing at its fastest rate since last August as children returned to schools, businesses prepared for the reopening of the economy and the vaccine roll-out boosted confidence. Companies reported an influx of new orders on a scale exceeded only once in almost four years, and business expectations for growth in the year ahead surged to the highest since comparable data were first available in 2012. Employment consequently rose for the first time since the pandemic struck as firms expanded capacity in response to the new inflows of work and brighter outlook.

“The surge in business activity is far stronger than any economists expected, according to Reuters polls, and hints at only a modest contraction of GDP during the first quarter, adding to evidence that the economy has shown far greater resilience in the third lockdown compared to the first. The encouraging readings on future expectations, job creation and new order inflows meanwhile all point to robust economic growth in the second quarter, especially if virus restrictions are lifted further.

“Worries persist though, especially in relation to near-record supply chain delays, a continued fall in exports and sharply rising prices, all of which are making life difficult for many companies. Many consumer facing companies meanwhile remain constrained by COVID-19 restrictions, which are likely to curb the overall pace of economic growth for some time to come, especially if we see a third wave of infections.”

Duncan Brock, Group Director at CIPS, said: “It’s good to see the sectors out of contraction and the economy as a whole returning to growth in March but the fastest pace of cost inflation since February 2017 will be a cause for trepidation. The boost in employment numbers is also encouraging, but the sectors have a lot of catching up to do to meet the demands of the fastest rise in backlogs since June 2018.

“Even with slow supply chains, shipping shortages and new Brexit customs burdens, businesses were buying quickly and buying more, to head off any further disruptions on the horizon. The fastest rise in new manufacturing orders in three months led to the highest levels of optimism since 2014, though EU businesses were still reluctant to commit to business, as export growth remained disappointingly weak.

“The services sector was even more hopeful with business future expectations rising to levels last seen in 2004. Dormant businesses were able to plan again with the imminent lifting of UK restrictions and consumers were securing their place in restaurants and holiday venues. Though international travel is still restricted, as long as the fastest rise in consumer costs for three years and the threat of new lockdowns doesn’t halt further progress, we can see more opportunities opening up in the coming months.”

Posted on

Bostic doesn’t see Fed raising rates before 2023

(Bloomberg) — A strong recovery from the Covid-19 recession is likely to prompt Federal Reserve Chair Jerome Powell and his colleagues to lift interest rates in 2023, but that isn’t going to show up in their forecasts this week, a survey showed. Economists surveyed by Bloomberg News see two quarter-point hikes in 2023. But they also expect the U.S. central bank’s own forecast, released at the same time as its policy statement at 2 p.m. in Washington on Wednesday, will show the median Fed official projecting rates staying on hold near zero throughout that year. Such a result would match the Fed’s December projections, even though U.S. lawmakers have backed almost $3 trillion in fiscal stimulus since then, including $1.9 trillion that President Joe Biden signed into law on Thursday, which — together with accelerating vaccinations — is boosting the economic outlook. “The Fed is now probing the unknown as a powerful trio of massive fiscal stimulus, monetary support and pent-up demand impact an economy released by the widespread dissemination of vaccines,” economist Lynn Reaser of Point Loma Nazarene University said in a survey response The Federal Open Market Committee is almost certain to keep rates near zero and pledge to continue its asset purchases at the current $120 billion monthly pace at its second meeting of the year. Powell has repeatedly stressed that the U.S. labor market remains far from the Fed’s goal of full employment, making it too soon to discuss winding down Fed support as the world marks the one-year anniversary of the pandemic. Even so, three-quarters of the economists forecast the central bank will have to raise rates by the end of 2023, where the median respondent has estimated about 50 basis points of tightening. By contrast, the median in Bloomberg’s December survey had no change in rates until 2024 or later. “While the economic projections will change, we do not expect rate expectations to move much at all. In fact, while a few dots may drift higher on the dot plot, we expect the center of the Committee to hold the line in terms of not acknowledging any change in the exit timeline.” The committee, making its first quarterly economic forecasts of the year, will raise its estimates of 2021 growth and edge up the inflation call, while not bringing forward a winding down of asset purchases or interest-rate hikes, in the view of the 41 economists, who were surveyed March 5-10. The Fed’s closely watched forecasts are likely to show gross domestic product increasing 5.8% in 2021, the survey found, up from 4.2% in the Fed’s December projections. Inflation is seen slightly higher than three months ago, with the unemployment rate falling to 5.0% at year’s end, the same as in the December projections. The FOMC is likely to continue to forecast near-zero rates through 2023, though it’s a close call, with a third of economists surveyed looking for a median Fed projection of higher rates by then. In December, one official penciled in a quarter-point increase during 2022, with five seeing hikes in 2023. “Having a forecast of rising rates seems very unlikely when we are just beginning to discuss how much inflation will move up, for how long, how much the unemployment rate will drop,” said Nathaniel Karp, BBVA chief U.S. economist. “The Fed has to see it, feel it, not just dream about it.” A sharp rise in U.S. Treasury yields in the past month as economic-growth forecasts picked up has caught the eye of the central bank. Powell and others have attributed the increases to improving prospects and said they don’t appear to be troubling. The FOMC is unlikely to highlight the risk of tightening financial conditions in its statement or strengthen its forward guidance on interest rates or bond buying, the survey found. The committee has pledged to continue the current pace of asset purchases until there’s “substantial further progress” on employment and its 2% inflation goal. “The FOMC will remain in wait-and-see mode for the time being, with no major change in the statement, rate-hike timing, or inflation projections expected at this meeting,” said Scott Anderson, Bank of the West chief economist, in a survey response. Powell has said the economy isn’t close to achieving the necessary progress to trigger a shift in bond buying and that he will signal any tapering well in advance. That isn’t seen happening until 2022 in the view of a narrow majority of economists. Most of the surveyed economists also don’t expect any near-term change, such as a shift to buying long-term Treasuries. Even less likely would be altering the mix of Treasury and mortgage-backed securities, or placing a numerical target on Treasury yields, known as yield-curve control, they said. Powell’s current term as chair is scheduled to end next February. His highly accommodative policies could win him a second stint, according to the economists. About three-quarters expect him to continue in the job, which is about the same finding in the prior survey. The central bank has occasionally made a technical change to its interest rate on excess reserves, which would not affect monetary policy. Most economists are not looking for a change in March, however. Nick Note: Hear me well. THEIR IS NO INFLATION ITS A REFLATION as the world comes out of lockdown. Credit the vaccine. Our job is to get their first…. Hedge funds especially ones in technology companies, currencies and bond funds have been getting killed. They are desperately trying to hold the stock market hostage. as you are seeing they have failed since the begging of the month. The lid will soon blow off our favorite market. Do not be confused by the blizzard of bullshit they are blowing… The Fed will keep a lid on rates for at lease 3 years into the future.

Posted on

Pension funds have to buy bonds to rebalance portfolios

  • Bond yields could head lower into next week, as pensions and other big investors buy bonds to rebalance their portfolios for the end of the quarter.
  • Big investors would also have to shave down stock positions, to bring their asset allocations in line, after the nearly 5% first quarter gain in the S&P 500.
  • Stocks normally might be under pressure from the selling, but strategists say their performance lately has been tied to bond yields, and falling yields could draw in buyers, especially to growth stocks.

Pension funds and other major investors should be big buyers of bonds during the next week or so, as they rebalance their holdings to make up for the bond market’s first quarter sell-off. Wells Fargo’s Michael Schumacher estimates corporate pension funds will have to make up a gap in bond holdings of about $125 billion, the biggest shortfall in about a decade. Schumacher, director of rates at Wells, said not all of that activity will come before quarter end, but he expects to see about $25 billion in buying to make up for that gap by March 31. What happens to stocks is less clear. Normally, stocks would be under selling pressure as big investors rebalance by also reducing holdings because of the stock market’s positive performance. The S&P 500 is up 4.9% so far this quarter, and the same investors would be trimming holdings in equities, as they add to bonds. But the stock market has been held hostage recently by rising interest rates, and whenever the yields have stabilized, stocks have done better. As yields slipped Monday, stocks rallied, especially the Nasdaq which has been hurt most by rising yields. “That’s the tug of war that’s going on. On the one hand, you know there’s stock to sell because of the rebalance, but on the other hand the market has been very, very sensitive to yields that are stable to lower,” said Julian Emanuel, head of equity and derivatives strategy at BTIG. “That could be one of the catalysts that break stocks out of the trading range.”

The bond market sell-off has been swift. The 10-year Treasury yield started the year at 0.93% and reached a high of 1.75% last week. On Monday, the yield slipped to 1.68%. That move lower was positive for stocks. The S&P 500 was up 0.7% to 3,940, while the Nasdaq jumped 1.2% to 13,377.

The FANG names – Facebook, Amazon, Netflix and Google parent Alphabet – were all higher Monday, as was Apple, another tech stock punished as interest rates rose. Emanuel has said the selling in FANG has been overdone, and he expects growth stocks to benefit from the quarter end decline in rates. “We are firmly in the camp that despite the fact we think value over growth works in the long term, in the near term, upside is definitely going to be led by a moderation in the decline in bond yields spurring outperformance in large cap tech, specifically FANG,” he said. Emanuel said the stock market could actually be at an inflection point. “Between now and the beginning of April, we think the market is going to make its intentions known,” he said. “Whether it’s broad upside led by the laggards with financials participating or this whole idea of even if bond yields behave that the bloom is off the near term rose for the cyclical value trade,” he said. “…It could be a substantial movement on the order of 10% one way or the other.” Schumacher said the activity should drive yields lower, at least temporarily. “We should have yields coming down and a little bit of stabilization for a few weeks, and then I would suspect they’ll be back to their old tricks and start climbing again,” he said.. Nick Note: let me make it simple for you. The Fed like central banks the world over are buying debt by the truck load to keep rates low. In fact just like is happening the world over they will ALL drive rates negative. As far as your grandchildren inheriting debt… FUCK THEM… they can go to low debt countries where their is no running water, no sewage, no lights, no roads and no military never mind internet infrastructure…. The $50,000 in debt they will inherit over a lifetime is nothing for the military, hospital system, police protection, supply system, ports, airports, pipelines, college education system and endless safe food supply…… all lumped together i call it the  greatest infrastructure the world has ever known we will leave them.

Posted on

Pfizer CEO reveals plans to become leader in mRNA

(Reuters) -Pfizer Inc plans to tap the mRNA technology to make new vaccines for other viruses following the success of its COVID-19 shot, which was developed jointly with German partner BioNTech SE, the Wall Street Journal reported on Tuesday. The drugmaker said it was ready to pursue mRNA on its own following its experience in the past year working on the COVID-19 vaccine, the WSJ reported, citing an interview with Pfizer Chief Executive Officer Albert Bourla. It did not, however, disclose any details about the viruses it was targeting.

The success of the technology is prompting drug developers to consider its use in other areas of medicine beyond vaccines, attracting billions of dollars in investment.

Pfizer and BioNTech did not immediately respond to Reuters requests for comment. Pfizer/BioNTech and Moderna’s COVID-19 vaccines, authorized for emergency use in the United States, use mRNA technology. Nick Note: A star is born and not some actor liar, music whore, clown, ball playing neanderthal  gorilla… But the real heroes are  people vewith brains curing disease, making global communications systems, engineering food systems,,,,, and providing energy for the world. Unfortunately like the birds they are attracted to some fool singing a song… some ape-man with big mussels or a bad boy criminal  who makes their nipples hard. While geniuses are called nerds and shunned.   So when they come back to you broke and with a couple kids remember its their bad decisions that put them in the sorry ass life they really deser..