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Technology earnings send Nasdaq to record high The buy everything gnomes were out in force overnight, with US stocks markets closing at or near record highs despite Durable Goods missing. The main culprit was transport, with the automotive sector’s…

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Technology earnings send Nasdaq to record high

The buy everything gnomes were out in force overnight, with US stocks markets closing at or near record highs despite Durable Goods missing. The main culprit was transport, with the automotive sector’s chip-shortage woes appearing in the numbers. Financial markets, though, quickly put it behind them as transitory.

With US yields remaining benign, the US 10-year comfortably nestled in its 1.55% happy place; there was no reason not to keep buying equities. The heavyweight earnings calendar this week expected to reaffirm that the US recovery, and parts elsewhere, is solidly on track. Notably, the US dollar crept higher overnight, and I suspect that the reason is tomorrow’s FOMC rate decision. Nobody really believes that the Fed will change its forward guidance, but “just in case”, investors appear to be loading up on the US dollar as a hedge. The greenback is likely to resume its gentle retreat if the FOMC passes without incident.

US GDP is looming on the horizon this week as well, with plenty of pundits suggesting that an annualised 7.0% growth rate isn’t out of the question. I’ll not disagree with that premise, but I am struggling to see how US 10-years can stay anchored around 1.55% in that scenario. For now, the market is telling me I am wrong, and the market is always correct until it changes its mind and decides it isn’t. King Canute, I am not, although sometimes I do feel like an island.

Germany’s IFO rose overnight, shrugging off vaccine concerns. That is in line with the solidity of last week’s pan-Europe PMI data, and Europe has become the street’s favourite cyclical recovery place. With 25% of Europeans now jabbed and its vaccination programme set to accelerate in the next two months, the premise has merit. Only a sudden steepening of the US yield curve will likely knock that off track.

South Korean Adv GDP for Q1 QoQ outperformed this morning, rising by 1.60%. It gives markets more evidence that the global recovery is on track, even if it will be a K-shaped one with a capital K. Electronics, unsurprisingly, led the way, but evidence of increased activity was noted across most sectors, including domestic consumption.

China Industrial Profits for March rose 92.30% YoY. Although the baseline effects of last year’s Covid-19 lockdowns flatter the headline, the data reinforces that the factory of the world’s growth remains steadfast. With some economics saying that the pace of recovery is slowing behind the headline data, that underlying premise will receive a more vigorous examination from the official PMI data released on Friday.

The tragic Covid-19 situation in India is world news, and rightly so. However, data emerging yesterday suggests that new cases are peaking in Mumbai and New Delhi. Both the Indian rupee and Indian equities have made recoveries over the past two sessions, and one expects this news to account for much of those gains. Although the Indian situation remains dire, the nascent recovery by local financial markets is a reminder that a seemingly bottomless ocean of investor money is looking for a home in a zero per cent world. Only a rapidly steepening US yield curve will upset the buy-the-dip applecart that has served the world so well over the past year.

US earnings session hits top gear this evening, with a who’s who of corporate heavyweights announcing Q1 results. Most attention, though with be on the technology titans Microsoft and Alphabet. Apart from the headline numbers, which should be spectacular, most attention will be focused on their growth outlooks and whether those expectations are reined in as the world reopens in key economies. With such rich valuations, any revised downward guidance will likely be punished by investors. For the same reason, earnings at or near expectations will probably be punished as well but do remember what I said about buying the dip.

Turning to cryptos, one of the world’s largest bitcoin traders, Tesla Motor Inc, announced quarterly earnings yesterday. Its share price fell yesterday in a classic “buy the rumour, sell the fact” scenario, something big-tech may also face this week. It made its usual money from selling environmental credits and sold some electric cars, charged by clean electricity produced in coal-fuelled power stations. Notably, it booked over USD100 million on Bitcoin, and its CFO reiterated their faith in the crypto (he/she had 100 million reasons to, I guess) That was enough to turbo-charge bitcoin’s rally yesterday, the “mainstream asset” finishing 5.30% higher at USD53,250.00 of US fiat currency back by US taxpayer revenues.

As I had pondered yesterday, Tesla’s CFO had indeed tweeted something that had sparked the recovery. Mr Musk tweeted, “What does the future hold?” I have not had a chance to consult with my millennial daughters, but apparently, that means buying as much of every crypto as you can, as quickly as you can. The market has answered the call, of course. For my part, the bitcoin chart shows that bitcoin had fallen out of a rising wedge at USD56,000.00; despite the noise, the technical target remains USD42,000.00 or thereabouts. The wedge base is at USD58,000.00 today, so a daily close above there will tell me I am wrong, although it will be behind a long queue of crypto believers.

Finally, the Bank of Japan has announced its latest policy decision just now. In an 8-1 decision, the Board held its policy rate unchanged at -0/10%, with no change to its yield curve control programme, entirely as expected. GDP forecasts rose ever so slightly to 4.0% for 2021, although Core CPI guidance was revised downwards to 0.10% from 0.50%. BOJ President Kuroda said the 2.0% inflation target would not be achieved during his term. The quarterly report forecast only a moderate recovery. Combined with the Covid-19 states of emergency around the country, Japanese investors have given the uninspiring quarterly report and comments a thumbs down, with Japanese equities retreating.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

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This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

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Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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Star Wars icon gives his support to Disney, Bob Iger

Disney shareholders have a huge decision to make on April 3.

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Disney's  (DIS)  been facing some headwinds up top, but its leadership just got backing from one of the company's more prominent investors.

Star Wars creator George Lucas put out of statement in support of the company's current leadership team, led by CEO Bob Iger, ahead of the April 3 shareholders meeting which will see investors vote on the company's 12-member board.

"Creating magic is not for amateurs," Lucas said in a statement. "When I sold Lucasfilm just over a decade ago, I was delighted to become a Disney shareholder because of my long-time admiration for its iconic brand and Bob Iger’s leadership. When Bob recently returned to the company during a difficult time, I was relieved. No one knows Disney better. I remain a significant shareholder because I have full faith and confidence in the power of Disney and Bob’s track record of driving long-term value. I have voted all of my shares for Disney’s 12 directors and urge other shareholders to do the same."

Related: Disney stands against Nelson Peltz as leadership succession plan heats up

Lucasfilm was acquired by Disney for $4 billion in 2012 — notably under the first term of Iger. He received over 37 million in shares of Disney during the acquisition.

Lucas' statement seems to be an attempt to push investors away from the criticism coming from The Trian Partners investment group, led by Nelson Peltz. The group, owns about $3 million in shares of the media giant, is pushing two candidates for positions on the board, which are Peltz and former Disney CFO Jay Rasulo.

HOLLYWOOD, CALIFORNIA - JUNE 14: George Lucas attends the Los Angeles Premiere of LucasFilms' "Indiana Jones and the Dial of Destiny" at Dolby Theatre on June 14, 2023 in Hollywood, California. (Photo by Axelle/Bauer-Griffin/FilmMagic)

Axelle/Bauer-Griffin/Getty Images

Peltz and Co. have called out a pair of Disney directors — Michael Froman and Maria Elena Lagomasino — for their lack of experience in the media space.

Related: Women's basketball is gaining ground, but is March Madness ready to rival the men's game?

Blackwells Capital is also pushing three of its candidates to take seats during the early April shareholder meeting, though Reuters has reported that the firm has been supportive of the company's current direction.

Disney has struggled in recent years amid the changes in media and the effects of the pandemic — which triggered the return of Iger at the helm in late 2022. After going through mass layoffs in the spring of 2023 and focusing on key growth brands, the company has seen a steady recovery with its stock up over 25% year-to-date and around 40% for the last six months.

Related: Veteran fund manager picks favorite stocks for 2024

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Government

Student loan borrowers may finally get answers to loan forgiveness issues

A major student loan service company has been invited to face Congress over its alleged servicing failures.

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U.S. Sen. Elizabeth Warren (D-MA) wants answers from one of the top student loan service companies in the country for allegedly botching its student loan forgiveness process involving the federal Public Service Loan Forgiveness program, leaving borrowers confused and without answers.

The senator sent a letter to Mohela CEO Scott Giles on March 18 inviting him to testify before Congress at a hearing on April 10 titled “MOHELA’s Performance as a Student Loan Servicer.” During the hearing, Giles will have to answer for why his company allegedly failed to send billing statements to student loan borrowers in a timely manner and miscalculated monthly payments for borrowers when it was time for them to repay their loans in September last year.

Related: Here's who qualifies for Biden's student loan debt relief starting next month

Also, in the letter, Warren highlighted a report that claimed that Mohela failed to perform basic servicing functions for borrowers eligible for PSLF, which led to over 800,000 public service workers facing delays in receiving student debt relief. The report also accuses the company of using a “‘call deflection’ scheme” to keep customers away from speaking to a customer service representative and instead redirecting them to parts of their website.

“Your company has contributed to student loan borrowers’ difficulties by mishandling borrowers’ return to repayment following the COVID-19 pandemic-related pause on payments, interest, and collections and by impeding public servants’ access to PSLF relief,” wrote Warren in the letter.

The move from Warren comes after the U.S. Department of Education withheld $7.2 million in payments to its servicer Mohela in October as punishment because it failed to issue timely billing statements to 2.5 million borrowers which resulted in 800,000 borrowers becoming delinquent on their loans. The department ordered Mohela to put those affected by the issues into forbearance until the mess was resolved.

U.S. President Joe Biden is joined by Education Secretary Miguel Cardona (L) as he announces new actions to protect borrowers after the Supreme Court struck down his student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023 in Washington, DC. 

Chip Somodevilla/Getty Images

Mohela is also currently facing two class-action lawsuits, one filed in December last year and another in January this year, for its alleged “failure to timely process and render decisions for student loan borrowers enrolled in the Public Service Loan Forgiveness program.”

In response to recent criticism surrounding its alleged issues and failures regarding the PSLF program, Mohela claimed in a statement to the Missouri Independent that it “does not have authority to process loan forgiveness until authorization is provided by FSA, which can take months to occur.”

The company also claimed that there are “false accusations” inside of the bombshell report, which was released in February, that details the company’s servicing failures.

“It is unfortunate and irresponsible that information is being spun to create a false narrative in an attempt to mislead the public. False accusations are being disingenuously branded as an investigative report,” said Mohela. 

Related: Amazon just made a major announcement that will bring you big savings — and we have all the details

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