The survey results coincide with U.S. inflation climbing to its highest levels since 1992.
Traditional hedge funds are willing to increase their exposure in Bitcoin and other cryptocurrency markets over the next five years, a new survey has found.
Intertrust Global, an international trust and corporate management company, polled the chief financial officers of 100 hedge funds globally about their intention to purchase crypto assets. About 98% of them responded that they expect their hedge funds to have invested 7.2% of their assets in cryptocurrencies by 2026.
The survey found that a 7.2% investment into the cryptocurrency sector would equal about $312 billion if replicated across the sector. Meanwhile, about 17% of the polled CFOs admitted that their hedge fund could have 10% of their assets allocated to cryptocurrencies such as Bitcoin (BTC).
The results appeared as Bitcoin corrected by more than 50% after rallying from $3,858 in March 2020 to almost $65,000 in April 2021, leading to speculations that it would crash further due to overvaluation.
Nevertheless, the flagship cryptocurrency held through technical supports around $30,000 and, earlier this week, rallied back above $40,000.
The Bitcoin price boom recap
A majority of Bitcoin’s gains came on the back of anti-inflation narratives that became popular in the aftermath of the coronavirus pandemic-led March 2020’s global market crash.
Global central banks responded with unprecedented monetary support, with the United States Federal Reserve launching a near-zero lending rate policy alongside a $120-billion monthly asset purchase program.
The central bank’s decision crashed yields on U.S. government bonds to record lows. Meanwhile, liquidity injections into the economy, accelerated further by the White House-led trillions of dollars worth of stimulus aid, also pushed the dollar’s value lower against its top rival fiat currencies.
Many investors turned to riskier safe-haven assets that benefited U.S. stocks, gold, silver and Bitcoin. Out of all, Bitcoin delivered the best bull runs as the Fed’s money-printing policies continued.
Many mainstream fund managers appeared at the forefront of Bitcoin’s 2020 price boom. For example, billionaire investor Paul Tudor Jones of hedge fund Tudor Investment Corporation said last year that he holds small percentages of Bitcoin. Later, another legendary investor, Stan Druckenmiller, also revealed that he is invested in the benchmark cryptocurrency to offset inflation risk.
European hedge fund management company Brevan Howard, U.S. fund firms SkyBridge Capital, Fidelity Investments and ARK Invest have also turned into some of the biggest Bitcoin backers from the traditional finance sector.
Intertrust’s survey also showed that all the surveyed executives in Europe, North America and the United Kingdom have at least 1% exposure in Bitcoin and similar cryptocurrencies. It further noted that North American hedge funds would likely have an average exposure of 10.6% in cryptocurrencies compared to those in the U.K. and Europe that anticipated 6.8% exposure.
The Intertrust survey also came as inflation in the U.S. reached 5% in May for the first time since 1992, reported the U.S. Labor Department in its monthly Consumer Price Index report.
Many analysts, including Randall Kroszner, a professor at the University of Chicago business school and a former Fed governor, noted that higher inflation would lead the Fed to withdraw its expansionary policies to some extent. The speculation over “tapering” also rose as the Federal Open Market Committee (FOMC) began its two-day meeting on Tuesday.
But so far, a majority of FOMC officials, including Fed Chair Jerome Powell, have treated the recent CPI spike as “transitory.” ANZ economist Tom Kenny noted that the U.S. central bank would, therefore, keep its policies unchanged at least until it sees improvements in the labor data.
Meanwhile, Tudor Jones said in his recent interview with CNBC that he had increased his Bitcoin holdings from 1%–2% in 2020 to 5% after noticing the Fed’s disapproval of recent inflation spikes. He noted:
“I like Bitcoin as a portfolio diversifier — say 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at the point in time. I don’t know what I will do with the other 80%. I want to wait and see what the Fed will do.”bonds government bonds pandemic coronavirus stocks cryptocurrency bitcoin crypto btc currencies crypto commodities gold
Analyst unveils new Lowe’s stock price target ahead of earnings
Here’s what could happen to Lowe’s shares next.
They are three letters that represent a multi-billion dollar industry: DIY.
Mention do-it-yourself home repairs, and some people will probably think of This Old House or the 1990s sitcom "Home Improvement," where Tim Allen portrayed the host of the fictional "Tool Time" TV program.
Others might think of HGTV, the Property Brothers Jonathan and Drew Scott, or Joanna and Chip Gaines of Magnolia Network. Whatever your particular cultural reference, rest assured that the DIY market is a revenue monster.
An estimated 75% of U.S. homeowners take on DIY projects, and 62% named saving money a top reason for their home improvement efforts. As a result, total U.S. home improvement sales amounted to $538 billion in 2021, according to Statista, and is projected to grow to $621 billion in 2025.
The number of do-it-yourselfers climbed during the COVID-19 outbreak as people had more time on their hands, interest rates were at rock bottom, and stimulus checks were flowing.
That was good news for home improvement retailers like Lowe's, which saw its stock price soar in 2021 thanks to higher demand.
Unfortunately, rising interest rates, inflation, and job uncertainty have increased, denting demand and causing investors to wonder what could happen to Lowe's shares next.
Pullback in DIY spending
Young homeowners are more likely to attempt do-it-yourself projects because they tend to have less disposable income and believe that the DIY approach will be less costly than hiring a contractor.
The most common types of DIY projects are home interior projects, such as painting, flooring, and décor, which are taken on by 31% of homeowners surveyed.
Lowe's, which reports quarterly earnings on Feb. 27, is the second-biggest name in the home improvement game, behind Home Depot (HD) - Get Free Report, which is slated to release updated earnings results on Feb. 19.
Lowe's posted better-than-expected third-quarter earnings in November but trimmed its full-year profit forecast, echoing Home Depot's warning that consumers were spending less on big-ticket items- those worth more than $1,000- heading into the holidays.
"While we've seen a more cautious consumer for some time now, this quarter, we saw some of these consumers increasingly prioritizing experiences over goods, spending on travel and entertainment," Chairman and CEO Marvin Ellison said during a conference call with analysts at the time.
Ellison reminded the analysts that DIY customers drive 75% of the company's revenue while professionals only account for 25% of sales, as opposed to the broader market where the market is roughly fifty-fifty. "As a result, whenever the DIY customer becomes cautious, it disproportionately affects us."
Given that backdrop, analysts surveyed by FactSet expect Lowe's to report earnings of $1.68 per share on sales of $18.3 billion, down from earnings of $2.28 per share and revenue totaling $22.45 billion one year ago.
Lowe's CEO 'Bullish' on home improvement
Ellison said that Lowe's remained bullish on the home improvement industry's medium- to long-term outlook.
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"We expect home prices to be supported by a persistent supply-demand imbalance of housing, while at the same time, 250,000 millennial household formations are expected per year through 2025, and their parents and grandparents, the baby boomers, increasingly prefer to age in place in their own homes," he said.
Nevertheless, on Feb. 5, Truist lowered its price target on Lowe's stock to $244 from $252.
Analyst Scot Ciccarelli told investors in a research note that he is reducing his margin assumptions for fiscal years 2024 and 2025 and cutting his earnings estimates to $12.80 and $14.20 a share from $13.35 and $14.75, respectively.
He did, however, keep his buy rating on the company.
"For the medium-term, we are becoming increasingly bullish on the home improvement sector given general spending resilience, home equity increases, easing comparisons, and the recent positive inflection in Private Residential Fixed Investment PFRI data," he said.
Ciccarelli said that he believed consumer spending remains fairly steady due to healthy personal balance sheets and strong employment.
In addition, while the tightening cycle should slow spending, it shouldn’t derail it, he said.
The analyst said that while Lowe's comparable store sales have decelerated notably over the last two quarters—down roughly 7% to 8%-- he believes the company will also get to compare against these easier results in the second half of the calendar year.
Ciccarelli added, "We remain buyers and think that LOW can move sharply higher if we are indeed at the early stages of an easing cycle."bankruptcy covid-19 stimulus stocks interest rates consumer spending stimulus
Cathie Wood sells a major tech stock (again)
The tech-heavy Nasdaq Composite index has soared 33% over the past year.
Cathie Wood, head of Ark Investment Management, has achieved rock-star status in the money-management world, even drawing a nickname from her followers – Mama Cathie.
Presumably, she’s watching protectively over her investor-children. But her returns don’t indicate that she’s been the dearest mommy.
Wood’s flagship Ark Innovation ETF, (ARKK) - Get Free Report, with $7.5 billion in assets, has generated a return of just 5% for the last 12 months. And the annualized return is negative 32% for the past three years and a mere positive 2% for five years.
That’s not too impressive, as the S&P 500 posted positive returns of 21% for one year, 11% for three years, and 15% for five years. Wood’s goal is at least 15% annual returns over five years.
Cathie Wood’s Year for the Ages
She did have one stupendous year, leading Ark Innovation to a return of 153% in 2020. That and clear presentations of her investment philosophy in ubiquitous media appearances help explain her popularity.
Wood’s investment strategy isn’t difficult to digest. Ark’s ETFs generally buy young, small stocks in the high-technology categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. She sees those sectors as game changers for the global economy.
As you might expect, these stocks are quite volatile, so the Ark funds are subject to quite a rollercoaster ride. And Wood frequently trades in and out of her top names.
Investment research giant Morningstar is unimpressed with Wood and Ark Innovation ETF.
“ARK Innovation has dubious ability to successfully navigate the challenging territory it explores,” wrote Morningstar analyst Robby Greengold.
The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But Ark’s ability to spot the winners among them and navigate their myriad risks is less so. The strategy’s booms and busts have culminated in middling total returns and extreme volatility since its 2014 inception.”
Greengold isn’t enamored with Wood’s investment style. “Her reliance on her instincts to construct the portfolio is a liability,” he said.
It’s not an investment-by-the-books portfolio. “The strategy narrowly invests in stocks with paltry current earnings, elevated valuations, and highly correlated stock prices,” Greengold said. “Their extreme volatility underscores their highly uncertain futures.”
Wood has defended herself from Morningstar’s criticism. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said.
“We do not fit into their style boxes. And I think style boxes will become a thing of the past as technology blurs the lines between and among sectors.”
Cathie Wood sells Nvidia stock, buys more of others
On Friday, Ark Genomic Revolution ETF (ARKG) - Get Free Report unloaded 3,022 shares of the semiconductor titan Nvidia (NVDA) - Get Free Report worth $2 million as of that day’s close. Ark’s previous move with Nvidia's stock was a sale on Jan. 22. Wood has periodically sold Nvidia since last May.
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Last September, she called it a “really expensive and very obvious” stock, according to Bloomberg.
The shares have more than tripled over the past year amid enthusiasm for the company’s connection to artificial intelligence.
Nvidia is the largest producer of highly powerful and energy-efficient graphic processing units (GPUs) used to train and run AI apps.
On the buy side, Ark funds picked up stock of electric vehicle giant Tesla (TSLA) - Get Free Report for the seventh day in a row, snatching 114,811 shares Friday, valued at $21.6 million as of that day’s close.
Tesla has lost 29% over the past six months amid weak earnings, production problems, and controversy surrounding Chief Executive Elon Musk’s compensation.
Wood has repeatedly purchased Tesla shares when they have dropped in recent years, voicing support for Musk and his mission to provide non-polluting autos. Tesla is the second biggest holding in Ark Innovation ETF, after Coinbase (COIN) - Get Free Report.
Ark funds also grabbed 47,926 shares of online securities brokerage Robinhood Markets on Friday, valued at $509,000 as of that day’s close. Robinhood stock has slid 11% over the last month.
After a brief spurt following its initial public offering in July 2021, the stock has struggled and is now down 72% from the IPO.
It has dropped 20% in the past 12 months but remains up 77% from its April 2019 IPO. Demand for the company’s products soared during the pandemic but has slowed since then. Zoom is the fourth biggest holding in Ark Innovation.sp 500 stocks pandemic blockchain etf oil
United’s crackdown on flight attendant behavior comes at a particularly bad time
The airline sent out an internal memo to the 26,000 flight attendants working for it.
When going to the bathroom on a plane, one will often come across a flight attendant sitting in the jump seat while scrolling through a phone, partially because improved in-flight Wi-Fi access has allowed some of the flight crew to check their notifications during slow moments on the job.
While some airlines do not have a problem with some members of the flight crew doing this when they're not needed in the cabin (pilots are a no-go for the obvious reason), others are instead choosing to take a hard stand on any device use while passengers are on the plane.
"Use of a personal electronic device and/or accessories is not permitted while customers are on board the aircraft, with the exception of crew rest," United Airlines (UAL) - Get Free Report said in an internal memo sent out to its 26,000 flight attendants that was first reported by airline website View From The Wing.
The airline further said that those found in repeated violation of the newly-communicated policy will be "subject to performance discipline up to and including termination."
'Customers look to flight attendants for great service...'
According to United's higher-ups, this is meant to project a professional image and leave customers feeling that they can come to any uniformed flight attendant they see aboard their flight.
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"Customers look to flight attendants for great service," the memo reportedly reads. "How comfortable would you be asking someone for help if they were engrossed in their cell phone? What impression would that give you? Even in public, you should always remain approachable in uniform and display courtesy to customers and other employees."
While the new policy comes at a time when many travelers are complaining about what they perceive as a decline in service amid the rush of post-pandemic travel, airlines have also been struggling to attract workers and keep current ones working for them amid multiple job action movements.
Airlines struggle to fill staffing needs as many flight attendants walk out
In May 2023, United promised to hire 15,000 new workers by the end of 2023 and fill a total of 50,000 roles by 2026. United flight attendants held a "day of action" at all of the airline's bases in December amid stalled negotiations around salary increases and better work conditions. The negotiations have been going on for the last 26 months but the sides are yet to reach an agreement.
"We believe the industry capacity aspirations for 2023 and beyond are simply unachievable," United CEO Scott Kirby said of staffing goals during a January 2023 earnings call. "That means the system simply can't handle the volume today, much less the anticipated growth."
Over the last year, multiple flight attendants have also walked out and published viral social media videos in which they describe the problems that ultimately pushed them to quit.
“It's aviation, nothing is guaranteed," former Australian flight attendant Ashlee Jane says in her TikTok video. “Your shift for that day is not even guaranteed. Whatever you have tomorrow it is not guaranteed. You might just be going in for a day shift, next minute you might be away for four days."stocks pandemic
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