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Reuters

U.S. consumer confidence rises; COVID-19, unemployment shadow lingers

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WASHINGTON (Reuters) – U.S. consumer sentiment perked up in early June as households cheered the reopening of businesses and a surprise rebound in hiring, though they did not expect a significant improvement in the economy amid fears of a resurgence in COVID-19 infections.

FILE PHOTO: A shopkeeper works inside his retail store as the phase one reopening of New York City continues during the outbreak of the coronavirus disease (COVID-19) in the Brooklyn borough of New York City, New York, U.S. June 9, 2020. REUTERS/Shannon Stapleton

The survey from the University of Michigan on Friday is broadly in line with economists’ expectations that the recovery from the recession would be a long slog. The National Bureau of Economic Research, the arbiter of U.S. recessions, declared on Monday that the economy slipped into recession in February.

“While uncertainty about the future is beginning to ease, it is still higher than it was at anytime during the Great Recession,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “That raises questions about the willingness to purchase big-ticket items. If we don’t see that happen, the recovery will be slower than hoped for.”

The University of Michigan’s consumer sentiment index increased to a reading of 78.9 from 72.3 in May. It said “few consumers anticipate the reestablishment of favorable economic conditions anytime soon.” Two-thirds of consumers in the survey expected “bad times financially” during the year ahead, while half anticipated a “renewed downturn.”

In addition to concerns about a second wave of COVID-19 infections, consumers also worried that persistently high unemployment could slow the economic recovery. Though the economy created 2.5 million jobs in May, an employment gap of nearly 20 million remains since March when nonessential businesses were shuttered to slow the spread of COVID-19.

Layoffs are more than double their peak during the 2007-09 Great Recession.

Economists polled by Reuters had forecast the sentiment index would rise to 75 early this month.

While the University of Michigan survey showed consumers’ inflation expectations easing slightly in June, they remained above their pre-COVID-19 shutdown levels. Consumers’ one-year inflation expectations slipped to 3.0% from 3.2% in May. Five-year inflation expectations dipped to 2.6% this month from 2.7%.

Consumers’ inflation perceptions in the past months have been driven by higher food prices, amid meat shortages caused by COVID-19 outbreaks at processing plants.

“That provides some reassurance that the recent plunge in prices for travel-sensitive services like airline fares and motor vehicle insurance will not lead to a more widespread period of falling prices,” said Andrew Hunter, a senior U.S. economist at Capital Economics.

Stocks on Wall Street were trading higher, recouping about half of the previous session’s sharp losses. The dollar rose against a basket of currencies. U.S. Treasury prices fell.

IMPORT PRICES RISE

Deflation fears were further assuaged by a separate report from the Labor Department on Friday showing import prices rose 1.0% in May, the largest gain since February 2019, after falling 2.6% in April. Import prices, which exclude tariffs, were driven by higher costs for petroleum products and food.

The government reported this week consumer prices falling moderately in May and a solid rebound in producer prices. Deflation is a decline in the general price level, which is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.

“These gains should support June increases for CPI and PPI,” said Mike Englund, chief economist at Action Economics in Boulder, Colorado. “Trade prices should rise further in June with oil prices, alongside a lift from a drop-back in the value of the dollar, though we have an ongoing headwind from demand destruction with global shutdowns.”

The Federal Reserve, which tracks the core personal consumption expenditures price index for its 2% inflation target, sharply lowered its inflation projections on Wednesday. The U.S. central bank projected core inflation rising 1.0% this year and picking up to 1.5% in 2021. Back in December, it forecast inflation at 1.9% this year and 2% in 2021.

In May, prices for imported fuels and lubricants surged 20.5% after declining 31.0% in the prior month. Petroleum prices jumped 21.7% after plunging 32.6% in April. Imported food prices rebounded 2.2% last month after dropping 1.6% in April.

Excluding fuels, import prices gained 0.1% following a 0.5% drop in April. The cost of goods imported from China was unchanged in May. Prices declined 1.0% year-on-year, the smallest drop since March 2019.

Slideshow (2 Images)

The government also reported that export prices rose 0.5% in May as higher prices for nonagricultural products offset lower prices for agricultural goods. That followed a 3.3% drop in April. Export prices fell 6.0% on a year-on-year.

Prices for agricultural exports declined 0.5%, pulled down by weaker prices for corn, dairy products and soybeans. That more than offset higher prices for meat, vegetables and cotton. Agricultural export prices fell 3.5% year-on-year.

Nonagricultural export prices rose 0.6%, boosted by higher prices for industrial supplies and materials, which overcame decreases in prices for capital goods, consumer goods, automotive vehicles, and nonagricultural foods.

Reporting By Lucia Mutikani; Editing by Alex Richardson and Andrea Ricci

Source: http://feeds.reuters.com/~r/reuters/topNews/~3/bVSTzIXUVmA/u-s-consumer-confidence-rises-covid-19-unemployment-shadow-lingers-idUSKBN23J1ZY

Blockchain

India to have a ‘window’ for Bitcoin, says minister amid crypto ban FUD

The Ministry of Finance of India continues to form a careful position on private cryptocurrencies.

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The minister of finance of India, Nirmala Sitharaman, has given a ray of hope for the Indian cryptocurrency community as more fear, uncertainty and doubt circulate regarding a supposedly impending ban on digital assets. 

In a Saturday interview with India Today, Sitharaman emphasized that the ministry does not plan to shut off Indian innovations associated with Bitcoin (BTC) and its underlying blockchain technology.

“From our side, we are very clear that we are not shutting all options off. We will allow certain windows for people use, so that experiments on the blockchain, Bitcoins or cryptocurrency […] and fintech, which depend on such experiments, will have that window available for them. We are not going to shut it off,” she said.

Sitharaman said that the ministry is finalizing a cabinet note on crypto as India continues formulating its official stance on the asset class. “It is nearing completion, and then it will be taken to the cabinet. The Supreme Court had commented on cryptocurrency. We are very clear that the Reserve Bank of India will take a call on an official cryptocurrency,” she said.

After India’s supreme court lifted a crypto banking ban one year ago, reports of a new ban started circulating in early 2021. In February, another anonymous Indian official claimed that the government was about to introduce a complete ban on crypto, giving investors up to six months to liquidate their holdings.

On Sunday, Reuters published a report citing an anonymous senior government official who claimed that India is preparing to enforce a blanket ban on crypto and impose major penalties on rule-breakers. As part of an alleged bill, India is planning to criminalize “possession, issuance, mining, trading and transferring crypto-assets,” the source claimed.

Despite reports of a ban from anonymous sources continuing to surface, Sitharaman said in early March that the ministry wants to form a “calibrated” stance on digital assets. 

Nischal Shetty, founder of local crypto exchange WazirX, seemed optimistic about Sitharaman’s comments in a tweet, stating that it is time for the Indian crypto community to build. 

The RBI and the Ministry of Finance did not immediately respond to Cointelegraph’s request for comment.

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Source: https://cointelegraph.com/news/india-to-have-a-window-for-bitcoin-says-minister-amid-crypto-ban-fud

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Reuters

Fintech banker McLaughlin hunts bigger deal after upsized SPAC IPO

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NEW YORK (Reuters) – The blank check firm co-founded by one of the most prominent U.S. financial technology investment bankers will broaden its search for merger partners to companies worth up to $10 billion after pricing a larger initial public offering (IPO).

Steve McLaughlin started FT Partners in 2001 and since then, the fintech-focused investment bank has worked on mergers and acquisitions and public and private fundraising for the likes of BlackRock Inc, StoneCo Ltd and GreenSky Inc.

An alumnus of Goldman Sachs, McLaughlin and FT Partners have also been involved in advising a half-dozen firms in mergers with so-called special purpose acquisition companies (SPACs), most recently mobile bank MoneyLion’s $2.9 billion combination with Fusion Acquisition Corp.

Alongside Gene Yoon, founder of technology-focused investment firm Bregal Sagemount, McLaughlin is now sponsoring his own SPAC. Independence Holdings Corp. priced a $435 million IPO on Monday, having increased the number of units sold due to investor demand.

SPACs are shell companies that raise funds from investors to take a private company public.

Pulling in extra cash and fully exercising the greenshoe, a share allotment potentially sold in the days after an IPO prices, McLaughlin told Reuters on Tuesday, will allow Independence to target larger fintech companies, beyond the $5 billion maximum size previously considered.

He added a deal involving a company that processes payments between businesses, or one providing financial management services, would be likely for Independence.

“We provide an incredibly attractive option for a company as we’ve successfully taken many companies through this complex process, so we can give comfort to founders and investors along the way,” McLaughlin said.

Despite heightened investor interest in cryptocurrencies, McLaughlin said Independence wouldn’t be investing in a firm in that industry because most businesses are still too early in their development.

He added it was highly unlikely that Independence would end up merging with a client of his investment bank.

Source: Reuters – Fintech banker McLaughlin hunts bigger deal after upsized SPAC IPO

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Reuters

Former Disney executives Mayer and Staggs plan new SPAC – source

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(Reuters) – Former Walt Disney Co executives Kevin Mayer and Thomas Staggs plan to raise $300 million in an initial public offering for a new special purpose acquisition company (SPAC), a person familiar with the matter said on Thursday.

The duo’s first SPAC, Forest Road Acquisition Corp, agreed a three-way merger last week with fitness companies Beachbody LLC and Myx Fitness LLC that was valued at around $2.9 billion.

Former basketball star Shaquille O’Neal, who is also on the board of directors at pizza chain Papa John’s International Inc, and Martin Luther King III, the oldest son of civil rights leader Martin Luther King Jr, are working for Forest Road II as a strategic advisor and a director, respectively, the source said.

Mayer and Staggs will serve as co-chief executives and co-chairmen of the new SPAC, the source said. They had worked with the first Forest Road SPAC as a strategic advisor and director, respectively.

The source requested anonymity ahead of a regulatory disclosure on the SPAC IPO.

Mayer was Disney’s top streaming executive before he left the media giant last year to become the chief executive of popular video app TikTok. He departed the company three months after joining. Staggs worked at Disney for 26 years and held various roles including chief operating officer.

SPACs are shell companies that raise funds to take a private company public. They have gained immense popularity since last year, as they allow companies to go public by eschewing traditional IPOs.

A string of high-profile SPACs have been raised in the last 12 months, including by financial investors William Ackman and Barry Sternlicht, former U.S. House Speaker Paul Ryan and ex-NFL quarterback Colin Kaepernick.

Source: Reuters – Former Disney executives Mayer and Staggs plan new SPAC-source

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Reuters

Global firms raise $546 billion in January as SPAC frenzy continues

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(Reuters) – Companies raised $546 billion from new bond and share issues in January, as a flood of central bank money-printing and recovering stock markets brought record numbers of new listings, SPAC deals and share sales, Refinitiv data showed on Wednesday.

The numbers included $106.15 billion in initial public offerings (IPOs), SPACs and secondary offerings, with the amount of money raised by SPACs alone soaring 20 times to $24.26 billion from a year earlier, the data showed.

Companies also raised nearly $439.9 billion in corporate debt in January, a 5% fall since the same period last year, but still the second largest January in 25 years.

A SPAC, a shell company that raises money in an IPO before later merging with a privately held company to take the latter public, has become many investors structure of choice over the past year.

January’s haul was already 30% of a total $79 billion raised by SPACs in the whole of 2020.

Traditional IPO volumes in the United States, however, remained higher than SPACs in January, hitting a 25-year high of $33.9 billion.

Some 47% new bond and share issues were U.S. offerings in January this year, with China second with $23.96 billion.

Nasdaq was the clear winner among exchanges, with 167 issues raising $41.12 billion, followed by the New York Stock Exchange and the Hong Kong Exchange a close third, with both raking in a little more than $18 billion respectively.

That was in stark contrast to European financial hubs London and Frankfurt, which raised $4.29 billion and $1.72 billion respectively.

Chinese online video company Kuaishou Technology is the biggest IPO globally so far this year, raising $5.42 billion in Hong Kong, followed by Polish parcel locker business InPost SA which raised $3.40 billion in Amsterdam.

Source: Reuters – Global firms raise $546 billion in January as SPAC frenzy continues

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