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5 Under-the-Radar Artificial Intelligence (AI) Stocks 2024-03-04 14:30:00+00:00 - Key Points Despite some AI giants dominating the spotlight, lesser-known AI companies are quietly emerging and surging higher. C3.ai (NYSE: AI) demonstrates consistent revenue growth, with sales up by 18% in its latest quarter, paving the way toward profitability. Both SoundHound AI (NASDAQ: SOUN) and BigBear.ai Holdings (NYSE: BBAI) have shown significant growth, with SOUN up 184% YTD and BBAI up 61%, reflecting the promising AI market opportunities. 5 stocks we like better than BigBear.ai As the world continues its relentless march into the Artificial Intelligence (AI) era, the conversation around this transformative technology remains as vibrant as ever. While some AI giants hog the limelight, a whole universe of lesser-known AI companies is quietly making waves in the industry. For investors seeking exposure to this cutting-edge sector, exploring small-cap AI stocks might offer a tantalizing opportunity, albeit with increased risk. Get BigBear.ai alerts: Sign Up Here's a fresh look at five under-the-radar AI stocks that could pique the interest of savvy investors with an increased appetite for risk in 2024. BigBear.ai operates at the intersection of AI and decision support, catering to cybersecurity and analytics domains. With a staggering YTD growth of 61%, trading at $3.46 per share, this company displays the potential of AI in driving real-time decision-making capabilities. While analysts are bullish on BBAI, with a moderate buy rating based on four ratings, the consensus price target forecasts over 13 downside. As the stock has recently experienced significant volatility and upside, the short interest has grown substantially. As of February 15, almost 20% of the float was sold short, a 6.41% increase over the previous month. Guardforce AI, once primarily known for its comprehensive cash solutions and handling services in Thailand, has pivoted to embrace AI and robotics. Leveraging its robust foundation in secure logistics, the company aims to enhance operational efficiency through innovative AI technologies. Despite experiencing major volatility, with its stock down over 60% over the previous year, year-to-date, shares are slightly in the green, up 0.6%. Over the last month, the stock increased by almost 30% as the sector gained traction. With a market capitalization of just $21 million and an average volume of 637,747 shares, shares of GFAI might continue to experience significant swings and volatility in the months and years ahead. SoundHound AI, a pioneer in voice recognition technology, has carved a niche in the AI solutions market for voice-enabled devices and mobile applications. Although the stock boasts an impressive 184% year-to-date surge, the sentiment remains relatively bearish, with 12.93% of the float sold short and recent insider selling being recorded. Although the company’s revenue, reported on February 29, increased by 80% compared to the same period the year before, earnings slightly missed analysts’ estimates, and revenue fell short of the consensus estimate. Analysts remain steadfast on the stock, with a consensus rating of moderate buy and a price target forecasting an almost 4% upside. Nonetheless, it is an impressive price target, considering the stock has already appreciated 255% over the previous month. Bullfrog AI is a digital biopharmaceutical company harnessing AI and ML for medical and healthcare data analysis. With its AI/ML platform, bfLEAP, the company is at the forefront of leveraging technology to revolutionize the healthcare industry. With a micro-cap of just $27 million and significant short interest of 11%, Bullfrog AI remains an intriguing speculative play, as the stock has an average volume of just 398,802 and a low float of just 1.43 million shares. Notably, shares of the micro-cap AI company are up over 36% year-to-date and slightly over 25% over the previous year. C3.ai, perhaps the most widely known stock on this list, is a company focused on enterprise AI software solutions. With a suite of offerings spanning predictive maintenance, fraud detection, and supply chain optimization, C3.ai caters to various industries. Although trading with a significantly larger market cap than the others mentioned above, $4.3 billion, C3.ai warrants attention for its robust growth potential and recent substantial directional move following its earnings report. Over the previous year, the stock is up close to 70% and almost 25% year-to-date, following its most recent earnings release. C3.ai's latest quarter, ending Jan. 31, saw sales increase by 18% to $78.4 million, marking four consecutive quarters of revenue growth. Government revenue doubled year-over-year. Despite ongoing losses, the company is moving closer to profitability, with a loss of 13 cents per share last quarter. Analysts predict losses will decrease from 69 cents in fiscal 2024 to 34 cents in fiscal 2025. Before you consider BigBear.ai, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and BigBear.ai wasn't on the list. While BigBear.ai currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
This financial move should be a 'last resort,' says CFP—but 1 in 5 workers has done it 2024-03-04 14:28:00+00:00 - If you're struggling to make ends meet, you may be eyeing any cash you have stashed away for the future as a solution. In fact, about 1 in 5 workers have borrowed or withdrawn money from retirement accounts, according to a recent survey from SoFi. However, withdrawing money from a workplace retirement account, such as a 401(k), is generally advised against. The money is subject to income tax, plus you'll be hit with an early withdrawal penalty if you're younger than 59½. What's more, whatever money you take out doesn't get the chance to grow at a compounding rate — a move that could cripple your portfolio down the road. "The long-term consequences of that are going to be very painful," Anne Lester, a retirement expert and author of new book "Your Best Financial Life: Save Smart Now for the Future You Want," recently told CNBC Make It. But what about a loan? After all, you're effectively borrowing your own money and paying yourself back, with interest. In a narrow set of circumstances, it can be a smart financial move, says Jared Friedman, a certified financial planner and partner at Redwood Financial Planning in Scotch Plains, New Jersey. But tread carefully. "We typically recommend it only as a last resort," Friedman says. How 401(k) loans work The specifics of a 401(k) loan will vary from employer to employer, but here's how they generally work. You can typically borrow up to $50,000 or 50% of the vested balance in your account — whichever is less. From there, you'll have a set amount of time — commonly five years, but more if you use the loan to fund a home purchase — to pay the loan back via regular, equal-sized payments. You can, however, pay the loan back ahead of schedule without penalty. Like most loans, you'll be charged a rate of interest. In this case, that's often 1% or 2% plus the prime rate, which is the rate at which banks lend to their most creditworthy customers, currently 8.5%. Unlike other loans, though, interest isn't going into the hands of an outside lender, but rather, right back into the balance of your 401(k) account. Because you're not dealing with a lender, borrowing from your own 401(k) doesn't affect your credit score, nor do you need to undergo a credit check to get one. There are some costs and inefficiencies associated with these loans. Some plan administrators will charge an origination fee for taking the loan and may tack an annual fee on top for each year you haven't paid off the balance in full. And while money in your 401(k) is put in pre-tax, the money you pay back is in post-tax dollars. Any money you then withdraw in retirement is subject to income tax, too — meaning you effectively pay taxes twice. If you're unable to pay the loan back, it converts into a distribution, meaning you'll owe income tax, plus a 10% penalty on your outstanding balance. Leave your job or retire with the loan still outstanding, and you're on the hook for the entire balance. If you can't pay it off then and there, the balance gets converted into a withdrawal. When borrowing from your 401(k) makes sense — and when it doesn't
Pure Storage and Nvidia Proves AI-Ready Infrastructure Reigns 2024-03-04 14:20:00+00:00 - Key Points Pure Storage is an enterprise flash array-based storage solutions provider to over 60% of the Fortune 500 customers and mega artificial intelligence (AI) players like Google, Amazon, Meta Platforms and Salesforce. Pure Storage AIRI solutions combine its FlashBlade/S storage solutions with Nvidia DGX systems. Pure Storage has been migrating enterprise customers to its Evergreen subscription services as it raises fiscal Q1 2025 revenue forecasts. 5 stocks we like better than Pure Storage Pure Storage Inc. NYSE: PSTG is an enterprise flash data storage solutions provider in the Computer and Technology sector benefitting from the artificial intelligence (AI) boom. AI applications require high-powered GPUs currently dominated by Nvidia Co. NASDAQ: NVDA and massive data storage capacity, which Pure Storage offers through its FlashBlade flash array storage systems. The combination of both hardware components is essential for AI-ready infrastructure (AIRI). Pure Storage and Nvidia are already partnered for AIRI built on Nvidia DGX systems utilizing its FlashBlade//S. Pure Storage shares surged 23% to all-time highs on its fiscal Q4 2024 earnings report. Get Pure Storage alerts: Sign Up Big Name Clients Pure Storage has an A-list roster of AI behemoths using its FlashBlade storage solutions, including Meta Platforms Inc. NASDAQ: META, Amazon.com Inc. NASDAQ: AMZN, Salesforce Inc. NYSE: CRM, Alphabet Inc. NASDAQ: GOOGL, and Equinix Inc NASDAQ: EQIX. Pure Storage has nearly 60% of the Fortune 500 companies as clients after adding 6 more in fiscal Q4 for a total of 349 companies. Migration to Consumption Pricing Model In its prior quarter, Pure Storage shares took a 15% haircut when the market mistook the revenue miss as a sign of demand weakness rather than a revenue recognition similar to bookings due to the migration to a subscription model. Rather than posting upfront revenues, a consumption model collects its revenues in a subscription format. It's an accounting measure that's switched over as it transitions enterprise customers from a product-centric model to the Evergreen//One consumption software-as-a-service (SaaS) subscription pricing model. The switch to a consumption pricing model enables easier onboarding of new customers with low start-up costs that grow as more storage gets consumed. This was also experienced by C3.ai Inc. NYSE: AI in 2023 when they, too, switched over. The market understood this time around that Pure Storage’s fiscal Q4 revenue number indicated a 2.5% YoY drop, but instead focused on its subscription services revenue, which had climbed 24% YoY. Check out the sector heatmap on MarketBeat. Competing with HDD Traditional HDDs are still cheaper for a larger capacity than SSDs. Pure Storage competes with HDD makers like Seagate Technology Holdings plc NASDAQ: STX for storage solutions. While FlashBlade systems are quicker with faster read/write speeds, have lower latency, take up less space and use less energy, HDDs provide more bang for the buck with much cheaper costs per terabyte. HDDs are trying to catch up in terms of speed, while SSDs are trying to catch up in terms of capacity and lower prices. Over 90% of cloud data storage is currently using HDD, but AI workloads require high-performance storage, which is a secular tailwind for Pure Storage. Strong Subscription Revenue Growth Pure Storage reported fiscal Q4 2024 EPS of 50 cents, beating consensus estimates by 6 cents. Revenues fell 2.5% YoY to $789.81 million versus $784.31 million. This was due to the continued migration of enterprise customers to the consumption model. Q4 2024 subscription services revenues rose 24% YoY to $328.9 million. Q4 2024 annual recurring revenue (ARR) rose 25% YoY to $1.4 billion. Q4 2024 GAAP margin was 72%, and non-GAAP margin was 73.7%. Total cash and cash equivalents were $1.5 billion. Raising the Bar Pure Storage raised its fiscal Q1 2025 revenue guidance to $680 million versus $669.5 million consensus analyst estimates. Fiscal full-year 2025 revenues are expected to be around $4.1 million versus $3.15 billion. CEO Comments Pure Storage CEO Charlie Giancarlo commented, "Our data platform strategy is revolutionizing the storage industry. It helps enterprises and service providers unify fragmented data environments into a seamless, modern, and efficient system—a system performance-ready for artificial intelligence.” Giancarlo continued, "And this can all be done now with Flash reliability, performance and economics, even at hard disk system price levels." Giancarlo also indicated that the company had landed a “notable” eight-figure Evergreen/One contract with one of the largest GPU cloud providers of AI infrastructure solutions in the world. He also noted that more and more customers are realizing their fragmented data storage environment could hinder their AI leverage ability. Pure Storage analyst ratings and price targets are at MarketBeat. Pure Storage peers and competitor stocks can be found with the MarketBeat stock screener. Daily double bottom The daily candlestick chart on PSTG illustrates the symmetrical triangle breakout pattern. This comprised of a descending upper trendline that formed at $45.22 on Feb. 9, 2024, indicating lower highs and an ascending lower trendline formed at $38.78 on Feb. 21, 2024, indicating higher lows. The daily relative strength index (RSI) surged through the overbought 70-band, rising to the 78-band. Pullback support levels are at $52.14, $47.58, $45.22 and $42.52. Before you consider Pure Storage, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Pure Storage wasn't on the list. While Pure Storage currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Mother of Michigan school shooter was found guilty in rare case. Now his father goes to trial. 2024-03-04 14:19:00+00:00 - When Jennifer Crumbley took the stand during her involuntary manslaughter trial in February, the mother of Michigan school shooter Ethan Crumbley suggested safe storage of the family's firearms was under the control of one person: her husband, James. "It was more his thing," she testified, "so I let him handle that. I didn't feel comfortable putting the lock thing on it." Despite her attempt to deflect fault onto him, as their son used a semi-automatic handgun bought by James Crumbley to kill four high school classmates in 2021, a jury ultimately found her guilty — the first time in the U.S. that a parent was held criminally responsible for a school shooting perpetrated by their child. James Crumbley, 47, now gets his day in court in the unsual case. His trial on an identical charge of four counts of involuntary manslaughter — each one representing a student who was killed — begins Tuesday with jury selection. His wife's trial was marked by dramatic testimony surrounding the day of the shooting and video from Oxford High School in suburban Detroit. Jennifer Crumbley, 45, often sobbed and hunched over in her seat as witnesses recalled the worst school shooting in Michigan's history. "It's an entirely new trial. A new set of jurors," said Mark Chutkow, a lawyer who previously led the criminal division of the U.S. Attorney's Office in Detroit and is not affiliated with the case. "Although the facts will be mostly the same, there are some advantages to the defense this time around." Similar strategy Chutkow said he expects Oakland County prosecutors to use the same "playbook" against James Crumbley as they did with his wife "because it worked." "Not only did they win a conviction, but it didn't take the jury long," Chutkow said of the deliberations, which lasted about 11 hours. As with Jennifer Crumbley, a jury must determine if James Crumbley is guilty of involuntary manslaughter by either failing to store the firearm in a way that would have obstructed his son from gaining access to the gun and ammunition, or failing to exercise "reasonable care" of his son and prevent him from carrying out the massacre. Prosecutors at Jennifer Crumbley's trial called 21 witnesses, including law enforcement, co-workers of Crumbley and school staff, in an effort to depict her as a mother who failed to notice her son's deteriorating mental health and had missed multiple warnings signs that her son was imminently planning to carry out a mass shooting. James and Jennifer Crumbley were summoned to Oxford High School the morning of the shooting about a drawing their son had made of a gun, a person who was shot and a message, including, "The thoughts won't stop. Help me." Neither parent at the meeting warned the school they had just bought him a gun, which school staff testified would have "completely changed the process that we followed." And his parents declined to take him home after the discussion was over, which prosecutors said at Jennifer Crumbley's trial were among the "many small things" that could have prevented the massacre later that day. One juror later told NBC News that she came to the conclusion that Jennifer Crumbley was criminally responsible because she was the last adult known to have custody of the weapon before it was used in the shooting. Video was shown to jurors of Jennifer Crumbley taking Ethan, then 15, to a shooting range the weekend before the massacre. When Crumbley took the stand, she testified that it was her husband who decided to buy Ethan a 9 mm Sig Sauer a day after Thanksgiving 2021. She said James Crumbley owned other guns and was tasked with storing them with a lock. During cross-examination, prosecutors suggested that while Jennifer Crumbley may have "entrusted" the responsibility of storing the 9 mm handgun to her husband after she took Ethan to the shooting range, it was "pretty clear you didn't trust James with much," noting that she had issues with him holding down a job, handling his money and even getting out of bed on time. Whether James Crumbley was equally responsible, or perhaps more so based on his wife's testimony, for keeping the firearm secured will be a major argument in his trial. James Crumbley had told investigators after the shooting that he would take Ethan to the range "all the time" to "teach him safety." The father also told investigators he had hidden the handgun in an armoire and placed the ammunition underneath jeans in another drawer. "Nobody is saying you can't own a gun, but the issue is gun safety," said Carolyn Reinach Wolf, a New York attorney who specializes in mental health among families. "Now couple that with parents knowing what is going on with their child. If you look back in these cases of mass shootings, there were always warning signs." Defense approach But James Crumbley's defense may try to portray him as a more sympathetic figure compared to his wife, whose extramarital affair and preoccupation with her own hobbies became a way for the prosecution at her trial to suggest she neglected her son's needs. In addition, one advantage for James Crumbley's defense is they can scrutinize how his wife's lawyer presented her case and tweak their messaging accordingly, Chutkow said. A recurring point made by Jennifer Crumbley's lawyer was that parents of teenagers can't be expected to know everything happening in their lives, and even a parent with the best intentions can't always foresee tragedy. "The defense may want to articulate something like that again and plant that seed in jurors' minds that 'there but for the grace of God go I,'" Chutkow said. But whether James Crumbley will take the stand as his wife did must also be carefully considered, he added. When questioned by her lawyer, Jennifer Crumbley said she regretted her son's actions but that she didn't believe she failed as a parent and that she "wouldn’t have" done anything differently in how she parented him. The juror who later spoke with NBC News said the mother's words were "very upsetting to hear" and repeated in the jury room. "I think that there are many small things that could have been done to prevent this," the juror said. Son's mental health Another key part of James Crumbley's trial will be how much he knew of Ethan's mental state and whether he failed to seek treatment for him that would have averted the rampage. At her trial, Jennifer Crumbley testified that she realized her son was feeling troubled, "depressed" and "acting sad," particularly when a best friend moved away, yet she never thought to seek the help of a mental health professional in the months before the shooting. When prosecutors presented text messages from Ethan to his mother that he was seeing demons and "the house is haunted," Jennifer Crumbley downplayed them, saying he enjoyed "messing with us" because that was his personality. Ethan Crumbley, now 17, was charged as an adult in the shooting and pleaded guilty to two dozen counts, including murder and terrorism. He was sentenced in December to life in prison without parole. While he didn't testify at his mother's trial and also won't at his father's, Ethan's texts and journal writings will again be scrutinized as they relate to the charges against James Crumbley. At Jennifer Crumbley's trial, the jury heard excerpts from Ethan's journals in which he wrote, "My parents won't listen to me about help or a therapist," and that he expressed his desire to "shoot up" his school and said he was going to get a 9 mm pistol. James Crumbley's lawyer, Mariell Lehman, tried unsuccessfully to block those journal entries from being admitted as evidence in his case as well as text messages in which the shooter told his friends that he was "mentally and physically dying," and about a time he asked his father about going to the doctor, but said he was given pills and told to "suck it up." Oakland County Circuit Court Judge Cheryl Matthews called the request "an untimely motion for reconsideration" and said she will stand by her ruling made before the mother's trial began about which journal entries and texts the jury can hear. Lehman also attempted to argue that Ethan Crumbley's psychological records would show that he did not tell his father about his mental health issues and that James Crumbley did not know his son had obtained access to the gun. But after a sealed hearing, Matthews stood by her previous ruling that those records were privileged. Chutkow said it makes sense that the judge will want to keep the evidence and what is admissible similar in both trials, as Jennifer Crumbley awaits her sentencing in April and may ultimately appeal the verdict. A gag order imposed by Matthews in 2022 bars both county prosecutors and the lawyers for the Crumbleys from speaking to the media. The judge has permitted at least two new witnesses to testify at James Crumbley's trial: the original owner of the 9 mm handgun, who sold the weapon and a cable lock to a gun store where James Crumbley bought it, and a student who was injured in the shooting. The defense attempted to argue hearing from a student would "inflame the emotions" of the jury. Matthews denied a request to move the trial outside of Oakland County because of the defense's concerns over jury impartiality, but in a win for the defense, the judge is increasing the number of peremptory challenges, or strikes, that lawyers on both sides can use to dismiss potential jurors from sitting on the case for any reason. The majority of jurors selected for Jennifer Crumbley's trial were either gun owners or were familiar with firearms. Given the publicity surrounding her trial, there will be unique issues in finding potential jurors who might not have a strong opinion about the case, said Wolf, the attorney who specializes in mental heath cases. But ultimately, she said, James Crumbley's defense will be able to show a "different perspective and history" from his wife's trial. "They can argue that he wasn't aware of certain things — whether that will be believed by the jury is the question," Wolf said. "For both parents, this was their child. He lived in their home."
Plug Power Pivots, But a Stock Price Reversal Is Unlikely 2024-03-04 14:10:00+00:00 - Key Points Plug Power has resolved its going-concern issue, but there is still significant concern about the share price. Short-interest and a lack of profits are weighing on the stock and dilution is likely in 2024. The stock is melting up, but a ceiling is near, and a new low could come soon. 5 stocks we like better than Plug Power Plug Power NASDAQ: PLUG shares shot up 10% following the Q4 release and FY update; however, it is not time to buy this stock in any other way than speculatively. The company turned a corner and says there is no longer concern about its ability to operate, but there is still significant concern about the share price. The Q4 details are less than what the market was looking for, cash is still a problem, and dilution will weigh on stock prices this year. The company’s ability to continue as a going concern centers on its inventory, cash flow and cash reserves. The inventory and revenue are increasing, aiding the outlook for self-sufficiency, but losses are mounting, and the cash pile is dwindling. The current cash and inventory are insufficient to offset the losses posted for 2023. Spending is expected to continue rapidly in 2024 as new projects begin and existing ones are completed, so additional capital will be needed. Get Plug Power alerts: Sign Up Dilution and Short-Sellers Cap Gains In Plug Power The additional capital will come from B. Riley, which entered into an at-the-market offering worth $1 billion in cash for Plug Power. The $1 billion is enough to see the company through to the end of the year and into the next, but will have a significantly dilutive impact on shareholder value if used in full. $1 billion is 37% of the post-release market cap, and there is no guarantee that additional funding won’t be needed in 2025. This is a factor in the short interest, which is high. The stock was nearly 30% short in mid-February, which is unlikely to change soon. The combination of no profits, weak cash position, and dwindling shareholder value have this stock on track to trend lower in 2024. The share count increased by 2.75% in 2023 and will likely increase by a high-single to low-double-digit figure in 2024. Shareholder equity is also falling, with cash down 80%, current assets down 45%, total assets down 15% and liabilities rising. Equity fell by 27% in 2023 and will likely fall significantly in 2024. Sell-Side Sentiment May Put a Floor In Plug Power The sell-side sentiment is mixed in Plug Power, but some details suggest a floor is in place for this green energy company. The analysts cut their ratings enough in 2023 and the first two months of 2024 to put PLUG on Marketbeat’s Lowest Rated Stocks and Most Downgraded Stocks lists, but they’re still holding and seeing about 75% upside at the consensus. The caveat is that the price target is down 75% compared to last year, and the freshest targets view the market as fairly valued at current levels, so an analyst-driven rally is unlikely. Institutions support the floor in price action. The institutions bought this stock on balance in all four quarters of 2023 and quarter-to-date in 2024, with buying activity ramping in Q1 2024. They own 50% of the stock, including funds and private capital, with BlackRock and Vanguard commanding nearly 20%. The largest institutional shareholder is SK Inc., a Seoul-based value investor. Plug Power is its 10th-largest holding. The Technical Outlook: Plug Power Melts Up, Resistance Ahead The price action in Plug Power is melting up. The action is aided by short-covering and news, but significant resistance is ahead. The stock may increase to $4.60 or $5.00, a solid gain for short-term traders, but a higher move is not expected. The $5 level has capped gains for several quarters and is not likely to weaken now. The most likely scenario is that this level will produce another sell signal, leading to a retest of recent lows near $2.75. Before you consider Plug Power, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Plug Power wasn't on the list. While Plug Power currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Hipgnosis cuts value of music portfolio that includes Beyoncé and Blondie hits 2024-03-04 13:36:00+00:00 - Hipgnosis, the royalties investment fund that offers investors the chance to make money from songs by artists from Beyoncé to Blondie, has cut the value of its music portfolio by more than a quarter in the latest blow for the company. The once high-flying FTSE 250 business, which earns royalties each time one of the thousands of songs to which it owns the rights is played, updated the market on Monday about its continuing strategic review. It also said it would suspend dividends for the foreseeable future and use free cash to pay down debt. Hipgnosis shares, which peaked at 129p in late 2021, fell 11% to 56p in early trading. The company was founded in 2018 by Merck Mercuriadis, a former manager of acts including Elton John, Iron Maiden, Guns N’ Roses and Beyoncé. Hipgnosis has bought catalogues from artists like Neil Young and Red Hot Chili Peppers in an effort to cash in on what it viewed as undervalued assets in the streaming era. However, in recent months it has come under pressure amid valuation concerns and a shareholder revolt against a proposed $440m (£347m) catalogue sale deal. Monday’s statement on the reduction in the fair value of the company’s portfolio followed a report by Shot Tower Capital, which was appointed by the Hipgnosis board to provide an independent valuation of the company’s assets. Shot Tower reviewed the portfolio on a bottom-up basis, analysing the royalty statement data of each of the company’s catalogues and looking at areas such as copyright interests. It gave a midpoint valuation of $1.93bn (£1.52bn) – about 26% lower than the valuation of September 2023. Shot Tower will provide further due diligence findings to the board by 25 March and Hipgnosis expects to provide a further update by 29 March. The company said on Monday after the fresh valuation that it would use its free cashflow to pay down debt and would not recommence dividends for the foreseeable future. Robert Naylor, the chair of Hipgnosis Songs Fund, said the board remained focused on identifying all options to unlock shareholder value. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The majority of shareholders voted at an extraordinary general meeting in October last year against Hipgnosis securing another five-year mandate to run as an investment trust. Investors were also unhappy with plans to sell a fifth of the catalogue of 65,000 songs for $440m at a steep discount to book value. In a further sign of the company’s need for cash as it tries to meet its debt obligations, it announced in December that it had sold 20,000 unspecified “non-core” songs for $23.1m, a 14% discount on their valuation in September.
See how much the IRS is sending for the average 2024 tax refund 2024-03-04 12:04:00+00:00 - Talking Taxes: Deadlines, bills and refunds Talking Taxes: Deadlines, bills and refunds 07:19 With many Americans still feeling squeezed by inflation, there's some good news now landing in their bank accounts, with the IRS sending average tax refunds that are bigger than a year ago. The typical tax refund through February 23 stands at $3,213, or a 4% increase from the average refund at the same time last year, according to the most recent IRS data. Taxpayers were served up a double whammy last year when millions of households who were struggling with still-high inflation received smaller tax refunds due to the expiration of pandemic benefits. For instance, at this time last year, the typical refund was 11% lower than in 2022, IRS data shows. The rebound in 2024's average refund size is due to the IRS' adjustment of many tax provisions for inflation. The standard deduction and tax brackets were set 7% higher for the 2023 tax year, the period for which taxpayers are now filing their taxes. Because of that, workers whose pay didn't keep up with last year's high inflation are on track to get bigger tax refunds, with some likely to receive up to 10% more in 2024, Jackson Hewitt chief tax information officer Mark Steber told CBS MoneyWatch earlier this year. "Strong inflation in 2022 led to significant inflation-linked tax code adjustments for tax year 2023, resulting in a more generous standard deduction, a larger maximum amount that filers can claim for the Earned Income Tax Credit (EITC), and even higher income thresholds where tax rates take effect — thereby subjecting more income to lower tax rates, all else equal," noted Oxford Economics lead U.S. economist Bernard Yaros in a recent research note about this year's tax refunds. How Americans use their tax refunds About two-thirds of U.S. adults believe they'll receive a tax refund, which typically represents a household's biggest annual influx of cash, according to a new study from Bankrate. But rather than use their refunds for splurges, many have serious plans for the cash infusion, with about half planning to use their checks to pay down debt or bolster savings, Bankrate found. Yet even with the higher average tax refund so far this year, taxpayers are still receiving less than they did two years ago, when the expanded child tax credit and other pandemic-era benefits helped boost the average refund. Still, refunds overall are higher than they were at the same time in the tax season from 2018 through 2021, IRS data shows. Tax refunds also provide an essential lift to the economy, given that many taxpayers rely on their checks to buy cars, renovate their homes or make other purchases. "Across the various categories of retail sales, we find the clearest impact from refunds to be on general merchandise stores and used-car dealerships," Yaros added. To be sure, it's still early in the tax season, as Americans have until April 15 to file their returns, and the typical tax refund could change in the following weeks.
Target Stock Has a Plan to Compound Your Investment 2024-03-04 12:01:00+00:00 - Key Points Target stock has been beaten down in the past couple of years after some big financial plans by management. What seems to be a negative is an opportunity in disguise for those who know how to look. The new capital cycle for the stock is attracting analysts to boost their price targets. 5 stocks we like better than Ulta Beauty Investing in stocks differs from buying bonds and other vehicles like commodities because they are exposed to two different cycles. Bonds perform based on the credit cycle set by the Federal Reserve (the Fed), and commodities perform based on the demand and supply cycle they also encounter; stocks, well, a bit of both and then some. Consumer stocks are exposed to both the credit and demand and supply cycles of their underlying products or services. Still, they depend on the capital cycle management takes on throughout the other two cycles. Some companies must invest a lot of capital during a particular cycle phase, only to see it generate returns on the other end of the spectrum, which can hurt or benefit stock prices. Get Ulta Beauty alerts: Sign Up This is why today, Target NYSE: TGT is the perfect stock to consider looking at for a cycle upswing, for reasons that management thoroughly prepared shareholders for. The returns on investment in this business are at cyclical lows, but that could soon turn into new highs for profitability. Analysts have taken notice of this upcoming trend, and price action favors the idea. Target - Is Former Glory Still a Thing? Target stock was a stellar performer in the 2019 to 2021 cycle, where it rose by as much as 267% despite the United States (the only place the company operates) being in the middle of the worst economic environment it has experienced since the financial crisis of 2008. So, what did the company do during these bullish years? Seeing that their net income rose by as much as 48% during the time, with a massive 221% jump in free cash flow (operating cash flow minus capital expenditures), management decided to take a controversial route. You can see how well Target’s financials did here. But apart from this analysis, you will notice how, from 2022 until today, the picture took a wild turn for the “worse.” The stock sold off from its previous high, down to a low of $103 a share; that’s a 62% decline, by the way! The decline in the stock can be attributed to a similar 60% contraction in net income, accompanied by a more than 100% fall in free cash flow, which was a loss of $1.5 billion in 2023. Most investors will naturally shy away from a stock burning down profits and cash flow like that, but here’s a second thought. Most companies would have just paid a dividend, bought back stock, and even paid themselves a big bonus for such an outstanding performance. Not Target, though; they wanted to lock in their newfound position in the market and ensure that shareholders keep seeing the compounding effects they are used to seeing in Warren Buffett stocks. In its annual report, Target describes its plans to spend $5.2 billion 2023 out of its operating cash flows. A nationwide initiative to redesign and restructure its existing stores allows Target to handle its stratospheric growth in demand more efficiently and efficiently. Target Looking Far Ahead These new store designs will act as a hub for logistics, posing a margin expansion opportunity by reducing costs across many stores. They are also making space for a few tenants to move in and drive even more traffic to their locations. Ulta Beauty NASDAQ: ULTA and Starbucks NASDAQ: SBUX will now be found in most Target stores upon these redesigns. Understanding the positive effects that these changes will likely have on the stock, analysts at Oppenheimer and Wells Fargo NYSE: WFC recently boosted their price targets. At a respective recommendation for the $170 and $165 price target, these firms see an upside of 11% and 8% from where the stock trades today. This, of course, comes as an added bonus to the annual dividend yield of nearly 3%, which is an additional testament to how well-managed the business is. Another stock that suffered a similar fate to Target is Walt Disney NYSE: DIS, which burned a lot of free cash flow into streaming initiatives that didn’t necessarily pay out how shareholders expected, but that stock is now well on its way back to generating the types of margins that drive value investors straight to buying. On a free cash flow yield basis, calculated as free cash flow divided by total equity, Target used to generate up to 38% for an outstanding metric head and shoulders above the industry. Today, this metric sits at a ten-year low due to these heavy investments. Still, while some see this as a negative, it's actually an opportunity in disguise. Once these property redesigns are done, profits start being made from the investments, and free cash flow and capital return to those high historical figures; the stock carries a high probability of following suit to its previous highs. Before you consider Ulta Beauty, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Ulta Beauty wasn't on the list. While Ulta Beauty currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Disney Stock is Ridiculously Cheap Now That the Worst is Past 2024-03-04 12:00:00+00:00 - Key Points Disney stock has been beaten down on overly bearish assumptions of where the company's financials could be headed, wrongly so. Management could soon be praised for the massive investments they made in 2019, the ones that wrecked margins but are now expanding them like never before. Wall Street analysts see higher upside ahead, but that's only the tip of the iceberg. 5 stocks we like better than Target With the new business cycle coming to the United States stock market, specific stocks will likely attract most of the attention from investors looking for a value bargain to multiply their wealth in the coming years. Hopefully, after the recent rallies in the stock indices, which are hitting new all-time highs, you’ve taken some profit and are liquid enough to hunt for the next opportunity. For reasons that will soon become clear, stocks like Walt Disney NYSE: DIS offer you skewed – in your favor – risk to reward scale today. After a dismal performance from 2021 to 2023, the stock became an acquisition target when it sat at only 38% of its all-time high price of $203 a share. The stock follows the rest of the market to bring you a new yearly high. Get Target alerts: Sign Up Some analysts in Wall Street see the writing on the wall for Disney stock. They are laying out their bullish opinions to reflect just how much upside there could be shortly for this company; this is especially the case when you dig deeper into what caused the stock to crash, as well as what is recently causing it to recover. The Worst in the Rearview Mirror for Disney That is where everything negative to be said about the company is now, in the rearview mirror. Starting with a dividend cut – to zero – during the peak months of the COVID-19 pandemic, Disney spooked some investors away from it. But even more than that, management decided to burn through piles of cash into ventures that didn’t necessarily play out. Now, the view is different. Disney management wants to cut costs by as much as $2 billion to return the company to its previous profitability and former glory. Amazingly, the company generated net income margins up to 20% before the pandemic, which is multiple times higher than the metric today. Looking at the 2015 to 2020 period, you will notice that Disney generated between 15% and 20% in net income margins, accompanied by double-digit returns on invested capital (ROIC) rates. Because ROIC is the stuff that drives stock prices in the long term, Disney was a sure bet as far as compounding your wealth. The picture completely changes when you expand this timeframe to the post-COVID era, 2021, to the present, which shows a significantly less profitable business with below 5% net income margins and low single-digit ROIC rates. This entirely different company is headed for disaster, or at least that’s what the bears want you to believe. If you want the truth, Disney is only one of the few consumer discretionary stocks punished for reinvesting vast sums of cash, equaling nearly $15 billion in 2019 and a steady outflow of investment of $4 to $5 billion after that. All of this investment effort went into one project: Streaming. Most investors didn’t realize how long this new branch of Disney would take to pay off, a reality that dragged margins lower as costs to set up this business grew more prominent. However, that is all in the past, as management has closed its recent financial quarter with some positive remarks for the future. Disney a Brighter Future According to its quarterly earnings press release, Disney grew its earnings per share by nearly 50%, all while being on track to reduce costs by as much as $7.5 billion this year. On a free cash flow basis (operating cash flow minus capital expenditures), an expected $8 billion served to fuel stock buybacks and dividend reinstatement. Now that the Federal Reserve (the Fed) is set to cut interest rates later this year, stocks exposed to the Consumer Discretionary Select Sector SPDR Fund NYSEARCA: XLY could see a catch-up to the broader S&P 500, an index the sector underperformed by as much as 4% in the past quarter. Across the world, another stock buying back as much as $35 billion in its stock is Alibaba Group NYSE: BABA, solely due to management believing the stock to be significantly cheaper than its actual value. Also believing the stock to be a ridiculous bargain today, Disney management announced a buyback program of up to $3 billion, 1.5% of the company’s market capitalization. Who else thinks the stock is cheaper than where it should be? Analysts at The Goldman Sachs Group Inc. NYSE: GS and Wells Fargo NYSE: WFC see a respective price target of $120 and $128 each, calling for an equaling 8% and 15% upside from today’s prices. Can Disney return to making its 15% to 20% net margins? It would be interesting to see where the stock goes. If management can pull off a 10x in this metric, could the stock also 10x? Before you consider Target, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Target wasn't on the list. While Target currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Siemens to invest £100m in Chippenham rail factory site in Wiltshire 2024-03-04 11:32:00+00:00 - Siemens will invest £100m in a new manufacturing centre to replace its Chippenham rail signalling factory in Wiltshire. The German technology company announced on Monday it would build a facility on the site of the existing Chippenham factory, which has been designing and manufacturing signalling and control systems for railways since the 19th century. The Chippenham project is expected to open in 2026 and will be Siemens’ second big investment in a UK manufacturing site in recent years, after it invested £200m in a new train factory in Goole, east Yorkshire, which will open this year. Siemens said the 800 staff who work on the site will be transferred over to the new facility with no impact on production. The site, established in 1897 by signalling contractor Evans O’Donnell, was bought by Westinghouse Brake and Signal Company in 1900 and has produced systems and equipment for the UK and overseas railways ever since. Siemens bought the site in 2013 and continued to design and produce railway systems there, including those used on the Elizabeth line that passes through London. It is now providing digital signalling equipment to modernise the east coast mainline from London to Edinburgh. Rob Morris, the joint CEO of Siemens Mobility UK and Ireland, said: “This investment is a strong commitment to Chippenham and our country. “Siemens Mobility’s Chippenham site, along with our 30 sites across the country, has been transforming rail, travel and transport in Britain – and it will continue to do so with cloud-based rail technology connecting the real and the digital worlds, digitalising rail.” The government said on Sunday it would invest £360m in several manufacturing and research projects in sectors where the UK is, or could be, world-leading. This includes £200m for aerospace research and development schemes aimed at developing zero-carbon aircraft technology, while £120m is being spent on supporting low-carbon manufacturing through the government’s green industries growth accelerator. The latest investment follows the publication of the government’s 47-page advanced manufacturing plan last November, which sets out its long-term proposals for increasing manufacturing output. It is backed by £4.5bn in funding over the next five years, which was announced at the autumn statement. Hunt said: “We’re sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing, securing the highly skilled jobs of the future and delivering the long-term change our country needs to deliver a brighter future for Britain.” However, Labour’s shadow business secretary, Jonathan Reynolds, criticised the government’s latest funding announcements, saying it was “incapable of providing the long-term stability manufacturing needs to thrive”. He added: “Recycled announcements won’t be enough to turn around the lowest business investment in the G7.”
Asia Stocks Rise on Tech, Traders Await China Meet: Markets Wrap 2024-03-04 10:35:00+00:00 - (Bloomberg) -- Stocks in Asia broadly advanced on rallies in some of the world’s largest technology companies during a week that includes Federal Reserve boss Jerome Powell’s congressional testimony and China’s National People’s Congress. Most Read from Bloomberg Technology shares were the biggest gainers in Asia, with Taiwan Semiconductor Manufacturing Co. rising as much as 6.2% and SK Hynix Inc. climbing 5%. The blue-chip gauge Nikkei-225 Stock Average in Japan also surpassed 40,000 for the first time while South Korea’s Kospi index rose as much as 1.5%. Their advances followed the strong rallies in US peers on Friday. “The Nikkei 225’s 40,000 is certainly a key psychological level, which could offer some resistance for the index and bring volatility,” said Charu Chanana, strategist at Saxo Capital Markets based in Singapore. “But when structural factors remain in favor, and yen weakness continues, it is likely to be more a bullish signal rather than fueling any concerns of Japanese stocks being overbought.” Chinese stocks edged lower as the nation’s equities and the yuan are in focus ahead of the 14th National People’s Congress, an annual parliamentary gathering in Beijing, that will begin Tuesday as markets await more stimulus measures to aid a soft economy. A cut to key mortgage rates and encouraging state funds to buy shares have done little to spur confidence as policy makers battle a property crisis, stubborn deflation and angry retail investors caught in a $7 trillion stock rout. Oil steadied near the highest level this year after OPEC+ extended its production cuts to stave off a global crude surplus. US crude traded around $80 a barrel in Asia, holding the level it hit for the first time in almost four months on Friday. Story continues Treasury yields edged higher in Asian trading after the rate on the policy sensitive two-year fell nine basis points Friday following weaker than expected activity data and cautious comments from Fed officials. The dollar traded in tight ranges against its Group-of-10 peers, while the South Korean won strengthened to the highest level in a week amid improving exports. In credit, Adani Group began marketing it first dollar bond since a report by short seller Hindenburg Research in an attempt to rebuild investor confidence. Powell’s Testimony The rally in US markets will likely hinge on jobs data and Powell’s testimony this week as bets for the start of the Fed’s easing cycle were refined amid recent data indicating a resilient US economy. Swaps traders now see the first cut in July, compared with the May estimate they were pricing at the beginning of last month, according to data compiled by Bloomberg. “We don’t expect the chair to stray very far from the Fed’s recent messaging — officials are in a “wait-and-see” mode as there’s still a lot of ambiguity in the data,” John Briggs, global head of desk strategy at NatWest Markets wrote in a note. Government bond yields “have pushed toward their highs of recent ranges, and we think further large corrections towards higher yields is a lot less likely from here.” The stock rally is showing little signs of slowing as US corporate earnings grew nearly 8% in the fourth quarter, helping offset macroeconomic uncertainty. Meantime, the frenzy around artificial-intelligence has blindsided Wall Street forecasters, spurring a race among strategists to keep up with a stock market rally that’s already blowing past their expectations when 2024 began. Bank of America ratcheted up its forecast for the S&P 500 to 5,400 by year-end amid a surprising profit margin resilience, Savita Subramanian wrote in a note to clients. Elsewhere this week, traders will be keeping an eye on Tokyo inflation, Australian growth data and a policy decision from the European Central Bank. The so-called Super Tuesday Republican and Democratic party primary votes, US jobs data and earnings from US consumer discretionary stocks are also due. Key events this week: ECB Governing Council member Robert Holzmann speaks, Monday Fed’s Patrick Harker speaks, Monday Japan’s Tokyo CPI, Tuesday BOJ Governor Kazuo Ueda speaks, Tuesday China Caixin services PMI, Tuesday China kicks off its 14th National People’s Congress, Tuesday Eurozone S&P Global Services PMI, PPI, Tuesday US factory orders, ISM services, S&P Global Services PMI, Tuesday More than a dozen US states hold Republican and Democratic primaries, Tuesday Australia GDP, Wednesday UK Chancellor Jeremy Hunt unveils annual budget, Wednesday Eurozone retail sales, Wednesday Fed Chair Jerome Powell testifies before House committee, Wednesday Fed issues Beige Book survey of regional economic conditions, Wednesday Fed’s Neel Kashkari, Mary Daly speak, Wednesday China trade, forex reserves, Thursday BOJ board member Junko Nakagawa speaks, Thursday ECB rate decision, Thursday US initial jobless claims, trade, Thursday Fed Chair Jerome Powell testifies before Senate committee, Thursday Fed’s Loretta Mester speaks, Thursday US President Joe Biden delivers the State of the Union address, Thursday Eurozone GDP, Friday US nonfarm payrolls, unemployment, Friday Fed’s John Williams speaks, Friday Some of the main moves in markets: Stocks S&P 500 futures were little changed as of 11:31 a.m. Tokyo time Nikkei 225 futures (OSE) rose 0.5% Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.2% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures rose 0.2% Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.0844 The Japanese yen was little changed at 150.16 per dollar The offshore yuan was little changed at 7.2109 per dollar The Australian dollar was little changed at $0.6522 Cryptocurrencies Bitcoin rose 1.2% to $63,640.49 Ether rose 0.3% to $3,489.35 Bonds The yield on 10-year Treasuries advanced one basis point to 4.19% Japan’s 10-year yield was unchanged at 0.710% Australia’s 10-year yield declined five basis points to 4.09% Commodities West Texas Intermediate crude was little changed Spot gold was little changed This story was produced with the assistance of Bloomberg Automation. --With assistance from Aya Wagatsuma and Winnie Hsu. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
First over-the-counter birth control pill coming to U.S. stores 2024-03-04 09:26:00+00:00 - Opill will be first over-the-counter birth control pill sold in stores The first over-the-counter birth control pill will be available on pharmacy and store shelves nationwide and online later this month, and will cost about $20 for a 30-day supply, Perrigo, its manufacturer announced on Monday. Now available for pre-order from some online retailers, the product, Opill, was approved by the U.S. Food and Drug Administration for OTC use for all ages in July, making it the first daily birth control cleared for sale without a prescription in the U.S. The product will come in a variety of sizes, including one-month three-month and six-month packs, with suggested retail prices of $19.99, $49.99 and $89.99, respectively, according to Perrigo. The company plans to offer a cost-assistance program in coming weeks to help qualified low-income, uninsured individuals obtain the product at low or no cost, it said. First approved by the FDA in 1973 to be used as a prescription drug, HRA Pharma, a subsidiary of Perrigo, acquired the rights to Opill from Pfizer in 2014. "Progestin-only pills have been a trusted contraceptive option for decades, yet obtaining a prescription for birth control pills creates unnecessary barriers for many," Dr. Melissa J. Kottke, stated in a news release. "Creating additional opportunities for contraceptive access is critical in helping people reach their reproductive goals, added the Atlanta-based obstetrician-gynecologist, who served as a paid consultant to Perrigo during the FDA approval process. The product is 98% effective when taken as directed, according to the consumer products company, headquartered in Dublin, Ireland, and Grand Rapids, Michigan. Almost half of the 6.1 million pregnancies in the U.S. each year are unintended, according to the FDA.
Macy's receives a higher buyout offer of $6.6 billion after rejecting investors' earlier bid 2024-03-04 08:51:00+00:00 - Macy's has received a higher buyout offer from two investment firms, Arkhouse Management and Brigade Capital Management, weeks after the department store chain rejected their prior takeover bid by saying it had a "lack of compelling value." Shares of Macy's rose 3.4% in premarket trading. Arkhouse and Brigade on Sunday said they are now offering a deal valued at $6.6 billion. Their all-cash buyout deal offers $24 each for the remaining shares that the firms don't already own, a 14% increase from their prior offer of $21 per share. Macy's, which rejected their earlier offer in January, last week unveiled its own blueprint for revitalizing its struggling business, with its plans including closing 150 underperforming stores over the next three years. The retailer's new CEO, Tony Spring, said the closures will allow the business to focus on better-performing Macy's locations, with investments in customer service and updated product lines. In their Sunday statement, Arkhouse managing partners Gavriel Kahane and Jonathon Blackwell criticized Macy's new plan, saying it "failed to inspire investors." Since unveiling the plan to shutter 150 Macy's locations, the stock has declined 6.7%. Macy's on Sunday confirmed that it had received the "revised, unsolicited, non-binding" proposal. The New York-based company said that its board would carefully review the offer, and that it did not intend to comment further until the evaluation was complete. —With reporting by the Associated Press.
A $1.5 Trillion ‘ESG’ Debt Market Has Started Bleeding Clients 2024-03-04 08:00:00+00:00 - (Bloomberg) -- In the world’s second-biggest ESG debt market, corporate clients are starting to walk away. Most Read from Bloomberg Extra regulatory requirements, fewer financial incentives and the risk of being accused of greenwashing are putting off clients who just a few years ago were champing at the bit to attach an environmental, social or governance label to their financing, according to bankers and lawyers close to the market. The products in question are so-called sustainability-linked loans, a market that BloombergNEF has estimated is worth $1.5 trillion, making it second in size only to the global market for green bonds. Largely unfettered by regulations, borrowers and financiers have been relatively free to construct their own standards for SLLs. But as financial watchdogs start to erect guardrails around ESG labeling, a broader market retreat appears to be underway. Last year, issuance of SLLs plummeted 56% to $203 billion, according to data compiled by Bloomberg. Though 2023 was a tough year across debt markets, the decline for SLLs was almost twice as precipitous as it was for green loans. What’s more, green loan sales have roared back to life in 2024, while SLL issuance has continued to decline, having plunged 74% so far this year, the Bloomberg data show. Rachel Richardson, head of ESG at London-based law firm Macfarlanes, says this year might be “a bit of a crunch point for both borrowers and lenders” in the market for sustainability-linked loans. “When it comes to refinancing SLLs from three or four years ago, both borrowers and lenders are going to have to have a really hard think about where the market was then — in its total infancy — and where the market is now,” Richardson said. The question then becomes “whether it’s still appropriate for them to continue borrowing via an SLL.” Story continues A key factor behind the slide in SLL issuance is the enforcement of a European Union regulation requiring companies to document their ESG claims, according to one of the bankers Bloomberg interviewed, who asked not to be named discussing private deliberations. The Corporate Sustainability Reporting Directive is now forcing companies that do business in the bloc to provide vast amounts of data to back up virtually every sustainability statement they make. Though CSRD wasn’t written to regulate SLLs, corporate clients are increasingly pointing to the directive as a disincentive to tap the SLL market, given the heightened risk of being accused of greenwashing, the banker said. It’s the latest sign of trouble in the least transparent corner of ESG deal-making. Last year, the Financial Conduct Authority issued a stern warning targeting the SLL market, which it said risked being the subject of “accusations of greenwashing.” Click here to see which banks are most active in the SLL market today. Another disincentive for issuers is the virtual disappearance of the SLL greenium — the premium, or lower coupon, that ESG borrowers once enjoyed — according to bankers Bloomberg interviewed. The 10 basis points an SLL borrower was once able to save has now been largely eroded by the cost of annual audits associated with SLLs, one banker explained. “Some people will feel an SLL is no longer appropriate” in part because “they don’t want to stomach the extra costs of the second-party opinions and assurance,” Richardson said. In practice, many clients who a few years ago had attached sustainability labels to revolving credit facilities now appear to be rolling over those RCFs as regular loans, according to one of the bankers Bloomberg interviewed. Another SLL banker spoke of a growing trend among clients not to honor so-called rendezvous clauses. Under these, borrowers who agreed that regular loans would become SLLs once sustainability targets are more achievable aren’t actually following through on those agreements, the banker said. The size of this silent corner of the SLL market is unknown, but substantial, the banker said. What Is a Sustainability-Linked Loan: An SLL is a loan — mostly in the form of a revolving credit facility — that requires the borrower to live up to sustainability requirements expressed as so-called key performance indicators. SLLs are similar to sustainability-linked bonds in their structure, but come with far less public documentation as they tend to be bilateral agreements between borrowers and their bankers. Borrowers often publicly tout their ability to do SLLs as proof that their sustainability claims are legitimate. Banks have tended to include such products in their overall sustainable financing targets, though a growing number of lenders has ceased to do so, due to the perceived risk of being accused of greenwashing, Bloomberg has previously reported. The products remain unregulated, but the Loan Markets Association last year published updated voluntary guidelines urging borrowers and bankers doing SLLs to only use KPIs that are “relevant, core and material” and to ensure that KPIs are also “measurable and quantifiable.” It also advocated the use of external verification. The guidance only applies to SLL deals struck after March 9, 2023. The sustainability-linked loan market came into being about seven years ago as ESG was morphing into a must-have label spurring its own boom in capital markets. And with virtually no specific ESG regulations, adding the label to products was a low-risk undertaking. Between 2018 and 2021, the SLL market soared more than 960% to $516 billion of annual deals, according to data provided by BloombergNEF. Green bonds, which must abide by so-called use-of-proceeds clauses, grew a more modest 250% in the same period to just over $640 billion worth of annual deals. The 2021 arrival of more comprehensive ESG investing regulations laid the foundations for some of the exuberance around SLLs to subside. When the end of the pandemic then set off a cycle of inflation, higher interest rates and a spike in energy demand exacerbated by the war in Ukraine, sustainability-linked products woke up to a completely new reality. According to Richardson at Macfarlanes, some of the SLL deals that went through four years ago are actually “pretty weak from an ESG perspective.” So the SLL market is now “taking stock of what is acceptable,” she said. Read More: ESG-Linked Loans Key Culprit in US Sustainable Debt Drop --With assistance from Jacqueline Poh. (Adds reference to BNEF analysis in final paragraph.) Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
3 passengers on Alaska Airlines Flight 1282 where door plug blew out sue the airline and Boeing for $1 billion 2024-03-04 07:39:00+00:00 - Three passengers on the Alaska Airlines plane that had to make an emergency landing after a door plug blew off mid-flight are suing the airline and Boeing for $1 billion, claiming negligence caused the incident. A complaint was filed Feb. 20 in Multnomah County, Oregon, on behalf of Kyle Rinker, Amanda Strickland and Kevin Kwok, all of whom were on board Alaska Flight 1282 when an unused exit door detached from the aircraft minutes into a scheduled trip from Portland to Ontario, California, in early January. Multnomah County includes Portland. The lawsuit seeks both compensatory and punitive damages, to be determined at trial, from Boeing, the corporate giant that manufactured the 737 Max 9 jet flown by Alaska Airlines. "As a direct result of the frightful, death-threatening failure of the Boeing aircraft, Mr. Kwok, Mr. Rinker, and Ms. Strickland suffered severe mental, emotional, and psychological injuries, including post-traumatic stress, and physical injuries," the lawsuit says, noting how the sudden pressure change inside the cabin "caused some passengers' ears to bleed." Jonathan W. Johnson, LLC, an aviation law firm based in Atlanta that filed the complaint on behalf of Kwok, Rinker and Strickland, said in a news release that it hopes "to hold Boeing accountable for its negligence which had caused extreme panic, fear, and post-traumatic stress." It called the blow-out on flight 1282 " a preventable incident" that not only threatened the lives of passengers and crew on board that specific plane, but others manufactured by Boeing that were found during subsequent investigations to have similar defects. The lawsuit alleges the incident on Flight 1282 is "just one terrible chapter in the evolving story of Boeing and Alaska Airlines placing profits above safety." Alaska Airlines Flight 1282 took off from Portland International Airport just before 5 p.m. PT on Jan. 5, according to the flight tracking website FlightAware, and returned safely to same origin spot as part of an emergency landing around 40 minutes later. The aircraft was about six minutes into its planned trip to California, and flying at 16,000 feet, when one of the exit doors came loose. Social media video obtained by CBS News at the time showed a gaping hole in the side of the plane, which at the time was carrying 174 passengers and six crew members. Although the plane landed safely back in Portland, several passengers suffered minor injuries and lost phones and other personal belongings that were sucked out of the hole in the aircraft. One passenger, a teenager originally seated with his mother in the row beside the affected door panel, had his shirt ripped off by the strength of the wind barreling through, another passenger, Kelly Bartlett, told CBS News senior transportation and national correspondent Kris an Cleave after it happened. Preliminary results of an investigation by the National Transportation and Safety Board into the incident found that four key bolts meant to hold the door plug in place were missing from the aircraft. The agency said in a report released in early February that "four bolts that prevent upward movement of the MED plug were missing before the MED plug moved upward off the stop pads." In the wake of the incident, Alaska Airlines and United Airlines canceled flights on Boeing 737 Max 9 planes as inspections got underway. Both airlines said they found loose hardware on grounded planes of that model. The Federal Aviation Administration ultimately ordered a temporary global grounding of all Boeing 737 Max 9 jets for "immediate inspection," and is conducting an ongoing probe into the aircraft to figure out what went wrong on flight 1282, and whether Boeing "failed to ensure" that its aircrafts "were in a condition for safe operation in compliance with FAA regulations." "This incident should have never happened and it cannot happen again," the agency said in a statement in January. "The FAA is continuing to support the National Transportation Safety Board's investigation into the Jan. 5 door plug incident." Boeing is facing another class-action lawsuit brought by passengers on the Alaska Airlines flight, which alleges that the Jan. 5 incident "physically injured some passengers and emotionally traumatized most if not all on board." Alaska Airlines has not been named as a defendant in that suit. CBS News contacted both Boeing and Alaska Airlines for comment on the latest $1 billion suit. The airline said it could not "comment on pending ligation or the ongoing NTSB investigation," while Boeing said, "We don't have anything to add."
BofA’s Subramanian Is Latest on Wall Street to Boost S&P 500 Target 2024-03-04 05:13:00+00:00 - (Bloomberg) -- Bank of America Corp.’s Savita Subramanian is the latest equity strategist to ratchet up her target for the S&P 500 Index to among the highest on Wall Street after this year’s rally left forecasters blindsided. Most Read from Bloomberg Subramanian now expects the benchmark to end the year at 5,400, compared with her earlier target of 5,000 — implying a gain of about 5% from Friday’s close. Indicators are flashing bullish signals on stronger earnings growth ahead and “surprising” profit margin resilience, she said. “Bull markets end with euphoria — we’re not there yet,” Subramanian, the bank’s head of US equity and quantitative strategy, wrote in a note to clients on Sunday. “Sentiment has improved, but areas of euphoria are limited.” BofA’s 5,400 price target for the S&P 500 in 2024 now ranks as one of the most bullish on Wall Street, according to about two dozen sell-side strategists tracked by Bloomberg. She joins the ranks of Ed Yardeni of Yardeni Research and Jonathan Golub of UBS Group AG, who both hold the same year-end outlook. The artificial-intelligence frenzy has surprised Wall Street forecasters and spurred a race among strategists to keep up with a stock market rally that’s already blowing past their expectations. In recent weeks, Piper Sandler & Co., UBS and Barclays Plc have all boosted their targets. Goldman Sachs Group Inc. and UBS have both already raised their outlooks twice since December, following the Federal Reserve’s dovish policy shift. The S&P 500 closed above the significant 5,100 milestone on Friday for the first time in history, with the index already beating the average year-end forecast of 4,899.40. Leading indicators argue for upside to BofA’s earnings-per-share forecast of $235, with the consensus’s $243 seeming like a “reasonable” expectation for stronger economic growth and higher profits, the firm’s strategists said. Story continues The S&P 500 has climbed 7.7% to start the year after rising 24% in 2023. Fourth-quarter earnings season reaffirmed that corporate profits are improving. Out of the 98% of the benchmark’s market capitalization that have reported so far, 76% have beaten expectations. Investors have broadly rewarded the stocks that beat on both profit and sales expectations, with those shares outperforming the benchmark by a median of 1.5% within a day of results, according to data compiled by Bloomberg Intelligence. That said, Subramanian sees risk of a near-term pullback on growing bullish sentiment across Wall Street. Take the firm’s Sell Side Indicator, which tracks the average recommended allocation to stocks by US sell-side strategists. It edged higher last month, moving closer to flashing a contrarian “sell” signal than a “buy” for the first time since April 2022. Read more: What to Remember If the Stock Market Takes a Dive Piper Sandler’s Michael Kantrowitz, who had the most bearish US stock outlook on Wall Street in 2023, lifted his S&P 500 forecast to 5,250 last month. That surpasses calls from some of his bullish peers, including John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, and Thomas Lee, head of research at Fundstrat Global Advisors, who both see the S&P 500 hitting 5,200 by year-end. Even Morgan Stanley’s Mike Wilson — among the most prominent bearish voices on Wall Street — is now expecting gains in the US equity market to broaden into less loved corners than the big tech companies that have dominated the rally so far. His 2024 target is still 4,500, implying a roughly 12% drop from Friday’s close. While Subramanian argues that the S&P 500’s rally has remained concentrated by a handful of megacap shares, she expects leadership to broaden as the gap between earnings growth of the so-called Magnificent Seven stocks — Nvidia Corp., Microsoft Corp., Meta Platforms Inc., Amazon.com Inc., Apple Inc., Alphabet Inc. and Tesla Inc. — and the rest of the S&P 500 will begin to narrow. Although Nvidia, Meta, Amazon and Microsoft exceeded earnings expectations, Tesla and Alphabet disappointed, while Apple flagged weakness in China. Investors are largely anticipating earnings due later this week for further clues on the health of the consumer, including results from Target Corp., Kroger Co., Gap Inc. and Foot Locker Inc. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
Apple buying Rivian? Nissan with Fisker? Tesla rivals’ woes spark speculation as EV growth slows 2024-03-04 04:17:00+00:00 - Tesla rivals Rivian, Lucid, and Fisker were riding high a few years ago. Amid surging investor interest, the electric-vehicle makers commanded hefty market caps and spoke of bright futures. Things look far less promising today. The EV sector faces a growth slowdown, and even market leader Tesla has warned of challenging months ahead. For its less-established rivals, "challenging" doesn't quite cover it. Last month, Rivian announced a disappointing quarter and outlook and said it would cut its salaried workforce by roughly 10%. Its market cap has plunged to $11 billion from a 2021 peak of $153 billion. Gene Munster, managing partner of Deepwater Asset Management, addressed the idea this week of Apple—which recently canned its own EV project—buying Rivian, noting the low valuation. Apple “needs to break into some new market," he told CNBC. “They need to do something big, and potentially Rivian would be just the answer to that.” Of course, that would be an unusual move for Apple. Its most expensive acquisition to date was $3 billion for headphone maker Beats Electronics in 2014. Amazon, which buys delivery vans from Rivian, is the EV maker’s largest shareholder, with about 16% of its hard-hit shares. Last month, Musk said of Rivian, “They need to cut costs massively, and the exec team needs to live in the factory or they will die.” He suggested the company had about six quarters before going bankrupt. A ‘general EV slump’ Lucid, meanwhile, has seen its market cap plummet from a peak of $91.4 billion in 2001 to a $7.6 billion today. Last month, it said it would build only about 9,000 EVs this year—far below the 90,000 it predicted for 2024 three years ago. Its struggles led to speculation last year that Saudi Arabia’s sovereign wealth fund, which holds about 60% of the EV maker, would acquire the rest of it. That didn’t happen. As for Fisker, its market cap stands at $258 million, down from $4.1 billion in 2021. Last month, it received a notice from the New York Stock Exchange for noncompliance as its stock closed at under $1 on average for 30 trading days consecutively. And the National Highway Traffic Safety Administration is investigating claims of “unintended vehicle movement” in Fisker’s Ocean SUV, which recently received a much-watched poor review from influential YouTuber Marques Brownlee (aka MKBHD). Story continues Reuters, citing unnamed sources, reported this week that the Fisker is in advanced talks with Nissan about a partnership—and a financial lifeline. Under the deal, the Japanese automaker would invest $400 million in Fisker's truck platform and build its planned Alaska pickup starting in 2026. “I believe that we have a future—otherwise I wouldn’t be here,” Fisker CEO Henrik Fisker told Yahoo Finance this week, declining to address the Nissan matter head-on. “And I believe we’re gonna manage to get out of this, I would say, general EV slump that there is out there.” This story was originally featured on Fortune.com
British American Tobacco: Buy, Sell, or Hold? 2024-03-04 04:05:00+00:00 - There's no way to sugarcoat the trade-off being made by British American Tobacco (NYSE: BTI) shareholders. You're getting a massive 9.7% dividend yield, but you are taking on a huge amount of risk for that outsize yield. The big problem is that there is no easy fix to what ails this cigarette giant. Still, it is making progress on key initiatives. Here's a quick look at British American Tobacco and whether it is a buy, sell, or hold. What does British American Tobacco do? As its name implies, British American Tobacco makes tobacco products, mostly cigarettes. Smoking causes cancer and, broadly speaking, people are increasingly shunning the habit. That's the big story behind this stock and why investors have such a dour view of it that the dividend yield is getting close to double-digit territory. Image source: Getty Images. But British American Tobacco doesn't just make cigarettes; it also makes non-cigarette products. That includes things like pouches, vaping products, and heated tobacco offerings. Basically, management is cognizant of the decline in cigarette smoking and is working to find new adjacent businesses to offset that decline. The success of this effort is likely to determine whether British American Tobacco survives over the long term. Your personal buy, sell, or hold decision will depend greatly on your view of the race between the cigarette segment's deterioration and the growth of the company's non-cigarette offerings. Sell British American Tobacco In 2023, British American Tobacco sold 8.2% fewer cigarettes than it did in 2022. That's not good -- and it isn't a fluke, either. In 2022, the company sold 5.3% fewer cigarettes than it did in 2021. In 2021, volume was roughly flat (down 0.1%), but that was largely a result of the coronavirus pandemic. In 2020, volume was lower year over year by 4.6%. And in 2019, volume fell 4.7%. Even in the best recent year, volume was down just a little bit. That's a terrible trend and there's no sign it's going to change. Story continues You probably wouldn't buy a food maker, another type of consumer staples company, where volumes were on a steady downward trajectory, so why would you buy a tobacco maker suffering from such a trend? It would be one thing if cigarettes were a tiny part of British American Tobacco's business, but this product accounts for well over 85% of revenue. Buy British American Tobacco That said, given the nature of its products, British American Tobacco has been able to offset volume declines with price increases, so there doesn't appear to be a near-term risk to the dividend. If you have a short time horizon, it might make sense to buy the stock for its hefty yield. That's probably not going to be a large group of people, given that dividend investors are often trying to generate income to live off of over the long term. However, there's another positive here. The company has been building up its non-cigarette business. It's modestly sized relative to cigarettes, but it is growing. And as of the fourth quarter of 2023, it was profitable. British American Tobacco reached that goal two years ahead of schedule, which is impressive. This segment is nowhere near large enough to replace tobacco, but management is executing well. The longer it can bleed the cigarette business for cash, the more time it has to grow the new products it hopes will replace it. If you think it can get to a point where non-cigarette businesses do more than just offset the cigarette declines, British American Tobacco stock might be an interesting -- though high-risk -- purchase for you. Hold British American Tobacco The argument for holding British American Tobacco is basically the same as the reason a new investor might want to buy it: You believe that the company can eventually build up its new products to the point where cigarettes no longer account for the majority of its revenue. It isn't clear that this can be achieved in time to keep the dividend from being cut, but management does appear to be making important progress. If you choose to stick around and collect the huge yield, you will want to pay very close attention to British American Tobacco's segment-level results. If growth in the non-cigarette business starts to stall, the risk here will increase dramatically. Not right for most investors At the end of the day, most investors should avoid companies that are clearly facing long-term secular headwinds in their most important businesses, which is exactly what British American Tobacco is trying to work through. Unless you believe strongly that it will be able to replace cigarettes or have a very short time horizon, you'll probably want to stay on the sidelines here. And if you do buy British American Tobacco stock or choose to hold on to the shares you already own, make sure to watch the company like a hawk. At some point constantly raising prices to make up for volume declines is likely to start exacerbating those declines. Should you invest $1,000 in British American Tobacco right now? Before you buy stock in British American Tobacco, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and British American Tobacco wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*. See the 10 stocks *Stock Advisor returns as of February 26, 2024 Reuben Brewer has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy. British American Tobacco: Buy, Sell, or Hold? was originally published by The Motley Fool
New ruling in SEC’s Coinbase insider trading lawsuit comes as a blow to the crypto industry as judge finds secondary token sales were securities 2024-03-04 03:17:00+00:00 - As the legal debate continues over whether sales of cryptocurrencies constitute securities, all eyes have been on a court case involving a Coinbase employee sharing insider information with his brother and a friend. While the main defendant, former Coinbase employee Ishan Wahi, and his brother have reached settlements with both the Department of Justice and the Securities and Exchange Commission, the friend—Sameer Ramani—remains at large. On Friday, a federal judge in the Western District Court of Washington issued a ruling in the case against Ramani. The ruling, which agreed in part to the SEC's request for a default judgment, could have serious implications for both Ramani and the broader crypto industry. In the decision, Judge Tana Lin ruled that the case fell under the SEC's jurisdiction because the crypto assets at issue were securities, even though they were traded on Coinbase, a secondary market. As courts grapple with the question of when crypto assets are securities, the decision is the strongest decision yet by a federal judge to support Chair Gary Gensler's argument that the vast majority of the industry's activity falls under its remit. Howey and its discontents Since the rise of cryptocurrencies like Bitcoin and Ether, regulators have wrestled with how to classify digital assets. Should they fall under the category of securities like bonds and stocks, or commodities like gold and wheat? Currently, the only cryptocurrency with regulatory clarity is Bitcoin, which the Commodity Futures Trading Commission declared to be a commodity in 2015. Other assets have remained in a gray zone. As a result, when exchanges like Coinbase offer cryptocurrencies for trading, they have operated under legal risk, despite declaring their belief that certain crypto assets should not be classified as securities. Starting with SEC Chair Jay Clayton, and continuing under Gensler, the SEC has pursued a campaign of enforcement actions against crypto firms, arguing the firms are issuing or selling unregistered securities. With high-profile cases against companies like Ripple, Coinbase, and Binance, the SEC has sought to expand its jurisdiction over the vast majority of crypto assets, taking advantage of a lack of legislative movement in Congress. Story continues Federal judges in the various cases have so far taken different stances on the securities question, adding to the uncertainty. In July, Judge Analisa Torres in the Southern District of New York sent shockwaves through the industry when she issued a ruling on the long-awaited Ripple case, arguing that direct sales of its XRP token to institutional investors like hedge funds constituted unregistered securities, while secondary sales on platforms like exchanges did not. Later that month, Judge Jed Rakoff, also of the Southern District of New York, disagreed with her logic. In a ruling denying a motion to dismiss by the defendants, a crypto firm called Terraform Labs, he wrote that he rejected the approach. "The Court declines to draw a distinction between these coins based on their manner of sale, such that coins sold directly to institutional investors are considered securities and those sold through secondary market transactions to retail investors are not," he wrote. In December, Rakoff ruled in favor of the SEC and agreed that four crypto tokens offered by Terraform Labs constituted unregistered securities. The matter has grown more complicated in two high-profile lawsuits brought by the SEC against major crypto exchanges, Coinbase and Binance. Unlike Ripple and Terraform Labs, the question with the two exchanges hinges solely on the trading of tokens on their venues, rather than the issuance. Under U.S. case law, the definition of a security is drawn from a Supreme Court precedent called the Howey test, which defined a security as the investment of money in a common enterprise with the expectation of profits derived from the efforts of others. Both companies have sought to dismiss the cases, with their lawyers arguing that under Howey, securities must include an actual investment contract, which does not exist when purchasing crypto assets on an exchange. A third exchange, Kraken, employed the same logic when seeking to dismiss its own lawsuit by the SEC. Judges have yet to rule on the motions by Coinbase and Binance, and a hearing for Kraken's motion is scheduled for June. Insider trading The SEC's Coinbase insider trading lawsuit is a more complicated case because none of the defendants are crypto firms, but instead, individuals accused of using insider information for personal gain. In two cases brought by the SEC and Department of Justice, prosecutors argued that a Coinbase employee, Ishan Wahi, shared confidential information with his brother and friend, who were able to net more than $1.5 million in trades. From the beginning, the SEC's lawsuit has drawn concern from the crypto industry. To establish jurisdiction for the case, the SEC argued that the defendants were trading unregistered securities on Coinbase—in this instance, little-known tokens such as AMP and DDX, and not major cryptocurrencies like Ether and Solana. Prominent crypto firms including Coinbase and Paradigm filed "friend of the court" briefs to challenge the SEC. Wahi and his brother settled with both the SEC and the DOJ, avoiding the risk of a judge ruling in the SEC's favor on the question of the security status of the tokens. That wasn't the case with their friend, Ramani, who the SEC believes to be in India, leading the agency to seek a default judgment on the case. On Friday, Lin ruled in favor of the SEC, agreeing that sales of the crypto assets constituted securities, even when sold on secondary markets. In her decision, she argued that the tokens were broadly promoted by issuers, therefore creating an expectation of increased value. Furthermore, the issuers facilitated trading on secondary trading markets like Coinbase. "The Court’s analysis remains the same even to the extent Ramani traded tokens on the secondary market," Lin wrote, arguing that the promotional statements apply equally to tokens bought by an investor, whether directly from an issuer or on a trading platform. "Each issuer continued to make such representation regarding the profitability of their tokens even as the tokens were traded on secondary markets." As a result, Lin ruled that every crypto asset that Ramani purchased and traded constituted investment contracts. Unlike Rakoff's ruling in the Terraform case, Lin's decision is significant because it involves secondary transactions, rather than sales directly from an issuer. At the same time, because it was a default judgment, there was no defense presented by the opposite side, as with the SEC's lawsuits against the major crypto exchanges. Notably, the lawsuit is in the Western District Court of Washington, which is in the same appeals circuit as the Kraken lawsuit, which is being litigated in the Northern District Court of California. If one of the cases is appealed to the circuit court, the ruling from the three-judge panel will likely apply to the other case, although it is improbable that the Ramani case would be appealed because it was a default judgment. Regardless, because multiple lawsuits are being heard in different circuits across the country, the question of whether crypto assets constitute securities is likely to make its way to the Supreme Court. A spokesperson for the SEC, Ramani, and Ramani's lawyer did not immediately respond to a request for comment. This story was originally featured on Fortune.com
Stock market today: Japan’s Nikkei tops 40,000, as investors await China political meeting 2024-03-04 03:14:45+00:00 - HONG KONG (AP) — Asian stocks were mostly higher Monday ahead of China’s top annual political gathering, while Japan’s benchmark surpassed the 40,000 level for the first time. U.S. futures fell and oil prices were mixed. Japan’s Nikkei 225 share index rose to 40,314.64 but fell back slightly. It was up 0.5% to 40,150.00 by early afternoon. It followed an advance last week on Wall Street that pushed U.S. stocks to new heights. Shares in Japan have tracked gains in other markets driven by expectations for strong demand for technology associated with artificial intelligence. They’ve also been boosted by the Bank of Japan’s easy credit policy, which is pumping money into the economy to help support growth, and by a weak Japanese yen, which has inflated profits of exporters. This week the spotlight is mainly on China’s National People’s Congress, the country’s most important political event. It opens Tuesday, and investors are watching for updates on specific policies to help support the slowing economy, resolve troubles in the property market and stabilize financial markets. Hong Kong’s Hang Seng fell 0.2% to 16,558.00 and the Shanghai Composite index rose 0.2% to 3,033.63. Elsewhere in Asia, the Kospi in Seoul surged 1.2% to 2,672.94 after a private-sector survey showed the country’s manufacturing activity expanded at a slower pace in February compared to the month before, as overseas demand weakened. Australia’s S&P/ASX 200 was down 0.1% at 7,598.00, and in Bangkok the SET edged 0.1% lower. On Friday, the S&P 500 rose 0.8%, to 5,137.08 a day after setting an all-time high. It has climbed in 16 of the last 18 weeks because of excitement about cooling inflation and a mostly resilient U.S. economy. The Dow Jones Industrial Average gained 0.2%, to 39,087.38. Technology stocks led the market, and the Nasdaq composite jumped 1.1%, to 16,274.94 a day after surpassing its prior record set in 2021. Dell Technologies helped drive the stock market after jumping 31.6%. It reported stronger profit and revenue for the latest quarter than analysts expected, highlighting demand for its AI-optimized servers. A crescendo of demand for artificial-intelligence technology has helped catapult stocks higher over the last year. Dell has more than tripled in the last 12 months, while Nvidia has surged more than 260%. The mood was much darker in the banking industry, where New York Community Bancorp tumbled 25.9%. It warned investors last week that it found weakness in how it internally reviews loans, caused by ineffective oversight, risk assessment and monitoring activities. Much attention has been on smaller regional banks after last year’s crisis in the industry led to the collapses of several lenders. While NYCB faces many issues that are specific to it, the worry has been that banks across the industry face challenges from loans made for real-estate projects. They’re under pressure in part because the Federal Reserve has hiked its main interest rate to the highest level since 2001, which can squeeze the financial system. The hope has been that the Fed will cut interest rates several times this year to offer some relief for banks and the broader economy. The Fed has indicated it may do so if inflation continues to cool decisively toward its 2% target. But a string of stronger reports on the economy than expected have made traders push back forecasts for when the cuts could begin. The hope now is that the Fed could start in June after traders shelved earlier expectations for March. In the bond market, the yield on the 10-year Treasury fell to 4.20% from 4.25% late Thursday. In other trading, U.S. benchmark crude oil lost 2 cents to $79.95 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gained 11 cents to $83.66 per barrel. The U.S. dollar rose to 150.16 Japanese yen from 150.08 yen. The euro was up to $1.0845 from $1.0841.