5 Things to Know in Crypto Today – SEC v Ripple Ruling to Test the SEC

Key Insights:

  • XRP revisited $0.50 on Thursday following the latest SEC v Ripple Court ruling that went Ripple’s way.
  • Metaverse activity continues, with Blackrock (BLK) launching a metaverse-related ETF.
  • Fed fear could reignite later today, with US inflation numbers due alongside a string of FOMC member speeches.

The Securities and Exchange Commission Loses Key Battle Against Ripple

On Thursday, the ongoing SEC v Ripple case took an unexpected turn in favor of Ripple and XRP.

This week, Investors were awaiting a swift end to the case following the Motions for Summary Judgment filings. The filings suggested a possible settlement, with the Defendants filing the Motion for Summary Judgment without a Court ruling on an SEC objection.

However, Judge Torres overruled an SEC objection on Thursday. The decision could have a material bearing on the case. Judge Torres overruled the SEC’s objection to the Court denying the SEC motion to protect the William Hinman speech-related documents under the attorney-client privilege.

The latest ruling is a big blow for the SEC and its chances of overseeing the digital asset space. The SEC had battled to shield the Hinman documents under the attorney-client privilege, with more than seven motions contesting previous Court decisions.

However, Judge Torres has ordered the SEC to turn over all the Hinman speech-related documents.

XRP rallied by 8.49% on Thursday as investors responded to the news. The broader crypto market reaction to the ruling was also positive. The total crypto market cap reversed losses to the end day at $911.4 billion, a $7.4 billion rise on the day.

XRP gets an SEC v Ripple court ruling boost.
XRPUSD 300922 Daily Chart

Big Names Bridge Virtual and Real Worlds to Keep Web3 in the Limelight

The United Arab Emirates continued its drive into the virtual space this week. On Wednesday, the Dubai Ministry of Economy unveiled its headquarters in the metaverse. Dubai and Abu Dhabi are not newcomers to the metaverse, with both setting up shop in the virtual space earlier in the year.

While the UAE continues migrating to the metaverse, other big names have also hit the news this week.

On Thursday, Warner Music Group (WMG) announced a partnership with OpenSea to provide artists with more Web3 opportunities. In the announcement, WMG said the collaboration would,

“Provide a platform for select WMG artists to build and extend their fan communities in Web3.”

Blackrock (BLK) is not wanting to be left behind as more mainstream players go virtual. Bloomberg reported that the asset manager is launching a new exchange-traded fund (ETF) targeting metaverse-related companies.

ETHW Breaks Out on News of Binance Ethereum PoW Mining Pool Launch

On Thursday, Ethereum (Proof-of-Work) (ETHW) rallied by 11.83% to end the day at $12.004. News of Binance launching an ETHW Mining Pool drove ETHW demand in a choppy session.

According to the announcement,

“All users of the ETHW Pool will enjoy zero pool fees for ETHW mining.”

However, Binance added,

“In order to protect Binance users, ETHW will go through the same strict listing review process as Binance does for any other coin/token. Supporting ETHW on Binance Pool does not guarantee the listing of ETHW. Binance does not guarantee any listings as per our internal policy.”

ETHW breakout on pool mining news.
ETHWUSD 300922 Hourly Chart

Fed Fear Remains a Clear and Present Danger for the Crypto Market

This morning, the crypto market cap is down $3.33 billion to $908.07 billion. After a bullish Thursday session, caution has hit the broader crypto market.

Later today, US economic indicators and Fed chatter will test investor resilience. US inflation, personal spending, and consumer sentiment will be in the spotlight.

While revisions to consumer sentiment figures and personal spending will draw interest, the Core PCE Price Index will be the market focal point. Fed fear stemming from the current inflation environment could reignite should inflationary pressures build further.

Economists forecast the Core PCE Price Index to rise by 4.7% year-over-year, up from 4.6% in July.

Crypto market sees modest loss ahead of key US stats and Fed chatter.
Crypto Market Cap 300922 Daily Chart

Bitcoin and Its Carbon Footprint Was Under Scrutiny Once More

A research paper from the University of New Mexico compared Bitcoin’s (BTC) carbon footprint to that of digital crude and not gold.

The paper also noted that,

“Extreme changes would be required to make BTC sustainable (eg., on the renewable mix). POW-based cryptocurrencies are on an unsustainable path. If the industry doesn’t shift its production path away from POW or move towards POS, then this class of digitally scarce goods may need to be regulated and delay will likely lead to increasing global climate damages.”

BTC had a muted reaction to the latest anti-POW paper. This morning, BTC was down 0.55% to $19,482.

BTC showed muted reaction to climate talk.
BTCUSD 300922 Daily Chart

 

5 Things to Know in Crypto Today: BTC Consolidates Near $24,000, ETH Continues Progress Towards $2,000

Key Points

  • Cryptocurrencies are mostly consolidating on Friday ahead of the release of more US data.
  • Bitcoin was last changing hands near $24,000 whilst Ethereum continues to push towards $2,000.
  • BlackRock on Thursday announced that it has launched a spot Bitcoin private trust for its US-based institutional clients.

Bitcoin Pulls Back to $24,000, Ethereum’s March Towards $2,000 Continues

After coming within a whisker of hitting the $25,000 mark on Thursday, Bitcoin is in consolidation mode near $24,000 this Friday as traders eye the release of data at 1400GMT that will provide an update on the health of the US consumer, including their expectations for inflation in the years ahead. The world’s largest cryptocurrency is broadly flat on Friday, having failed to garner a lasting boost from another downside US inflation surprise on Thursday.

The continued hawkish tone of Fed policymakers this week, who have been keen to emphasize that it remains far too soon to declare victory in the fight against inflation and that more tightening remains appropriate, has been cited as tempering the market’s optimism. But Bitcoin still looks set to end the week around 3.5% higher.

Ethereum, meanwhile, has pulled back from Thursday’s highs near $1,950, but is still holding above the $1,900 level, supported by optimism about the network’s upcoming “Merge” after a successful trial run on one of its major public testnets this week. ETH looks set to end the week nearly 12% higher and bulls continue to eye a test of $2,000. In terms of other major altcoins, the likes of BNB, XRP, ADA, SOL and DOT aren’t much changed in the last 24 hours, according to CoinMarketCap.

ETH/USD
ETH/USD continues progress towards $2,000. Source: FX Empire

Ethereum Devs Propose Tentative Mainnet Merge Dates

In wake of Thursday’s successful Goerli testnet “Merge”, developers are tentatively putting forward dates when the Ethereum mainnet merge to Proof-of-Stake from Proof-of-Work might go ahead. Developers seem to agree that the so-called Bellatrix upgrade, the upgrade that kick-starts the merge process, should go live on 6 September.

There is then likely to be 14 days until the actual merge is activated, meaning 20 September is the most likely date. But there is also chatter about activating Bellatrix on 1 September, which could mean the merge going ahead on 15 September. 16 September is also being discussed as a possibility.

Developers will finalize the above dates in a call next week. Either way, the main Ethereum blockchain is on the cusp of becoming a PoS chain, which will reduce its energy consumption by some 99.95%.

BlackRock Launches Spot Bitcoin Private Trust, One week After Partnering With Coinbase

BlackRock on Thursday announced that it has launched a spot Bitcoin private trust for its US-based institutional clients. The world’s largest asset manager last week announced that it was partnering with Coinbase to offer cryptocurrency trading services to its clients.

BlackRock said in a post on its website that “despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities”.

Some cryptocurrency enthusiasts took the opportunity to criticize the US Securities & Exchange Commission for failing to approve a spot Bitcoin Exchange Traded Fund (ETF). “BlackRock is allowed to offer its clients spot Bitcoin exposure through a private fund… But the SEC won’t approve a spot ETF for retail… I suppose retail investors are too clumsy to make adult decisions?” Coin Bureau said in a post on Twitter.

Huobi Founder Looking to Sell 60% Stake; FTX’s Bankman Fried, Tron’s Justin Sun Possible Buyers

Cryptocurrency exchange Huobi Global’s founder Leon Li is looking to sell a 60% stake in the company, according to a Bloomberg report out this Friday. Li has reportedly already held preliminary talks with Tron blockchain founder Justin Sun and the founder of competitor cryptocurrency exchange FTX Sam Bankman-Fried, Bloomberg said.

According to CoinGecko, Huobi Global saw the seventh highest trading volumes of any cryptocurrency exchange in the world in the past 24 hours of over $1 billion. The sale could reportedly value Huobi at $3 billion and could be completed by the end of the month.

FTX has been on a buying spree amid the current cryptocurrency market downturn, snapping up Japanese exchange Liquid, Canadian exchange Bitvo and agreeing to a deal to purchase BlockFi. The firm has also considered purchasing collapsed lending platforms Celsius Network and Voyager Digital.

Private Funds May Soon Have to Disclose Crypto Exposure to US Regulators

Private funds such as hedge funds may soon have to disclose their cryptocurrency exposure to US regulators, according to an amended proposal put forth by both the US SEC and Commodity Futures Trading Commission (CFTC). Earlier this week, both US regulatory bodies voted in favor of the proposal that will force private funds to report their crypto exposure on a Form PF.

This form is submitted to regulators confidentially. SEC Chair Gary Gensler said, “I am pleased to support the proposal because, if adopted, it would improve the quality of the information we receive from all Form PF filers, with a particular focus on large hedge fund advisers”.

JPMorgan To Tokenize US Treasury and Include It in Its Crypto Strategy

Key Insights:

  • JPMorgan aims to leverage the yield-generating potential of mainstream assets.
  • This way, non-crypto assets will find use in the Bank’s DeFi plans.
  • Through institutional DeFi, the bank will impose KYC strictures on crypto’s permissionless lending pools.

The Decentralized Finance (DeFi) space is finding use in the mainstream bank market as well, with JPMorgan planning to leverage DeFi protocols to generate more profit out of non-crypto assets.

JPMorgan’s Institutional DeFi

Firstly discussing their Crypto Strategy during the CoinDesk Consensus 2022, the Head of Onyx Digital Assets at JPMorgan, Tyrone Lobban, stated that the bank has institutional-grade DeFi Plans, which include trillions of dollars worth of tokenized assets it will be making use of.

Iterating the same, Tyrone said,

“Over time, we think tokenizing US Treasurys or money market fund shares, for example, means these could all potentially be used as collateral in DeFi pools. The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms for trading, borrowing [and] lending, but with the scale of institutional assets.”

In addition to this, the bank will also include tokenized versions of investment management corporation BlackRock’s money market fund shares.

These are basically mutual funds invested in cash and highly liquid short-term debt instruments.

JPMorgan and Crypto

In the past, too, the bank has commented on the future of Crypto, DeFi, and web3 and where it could end up.

As reported by FXEmpire, a few months ago, JPMorgan had predicted that the Metaverse could become a $1 trillion market based on the growth of its individual components, including the price of a parcel of virtual land, strategic partners as well as NFTs.

The same month the bank also stated that the day Bitcoin’s market cap sits at the level of Gold’s market cap, the value of one Bitcoin would be equal to $150k.

Although since then, the king coin has seen more crashes than rallies, so for the next few months, a reach of $150k is out of the question.

Bitcoin Slides Into Support

Ethereum has lost 2.5% in the last 24 hours, and other leading altcoins from the top ten are predominantly declining, from -1% (BNB) to -7.3% (Terra). The exception was XRP, which added 5.4% during this time.

BTC Can Develop a Reversal

According to CoinMarketCap, the total capitalization of the crypto market decreased by 2.8% per day, to $1.87 trillion. The Bitcoin dominance index fell by 0.3% to 40.7%.

By Friday, the cryptocurrency fear and greed index returned to the extreme fear territory, losing 6 points to 22. US stocks failed to build on the offensive, losing all of the previous day’s gains, leading to a stronger selloff for bitcoin compared to alternative cryptocurrencies.

Graphical user interface, chart Description automatically generated

From the technical side, Bitcoin is trading near the support level, which runs through the lows of January, February and March. A formal signal to break the support will be considered a failure under the previous lows in the $38K area. The ability to develop a reversal to the offensive from these levels, on the contrary, will reinforce the importance of this moderate uptrend line.

Crypto News

The head of Ripple noted that the court with the SEC is going “much better than expected,” which provoked a wave of XRP growth, allowing the coin to resist gravity.

BlackRock CEO Larry Fink said that the largest asset management company continues to study the cryptocurrency sector.

Amazon CEO Andy Jassy said that the company has no plans to introduce payments in cryptocurrency in the near future, although it is exploring the possibilities of digital assets. At the same time, he looks to the future of cryptocurrencies and NFTs with interest and optimism.

The Bank of Canada is exploring scenarios for the coexistence of digital and fiat currencies, the first regulator to decide to use quantum computing for this study.

Bank of Japan chief executive Shinichi Uchida said the upcoming digital yen will not be used to achieve a negative interest rate. The second stage of the launch of the digital yen started on March 24th this year.

by FxPro’s Senior Market Analyst Alex Kuptsikevich.

Stablecoin Issuer Circle Secures $400 Million Funding Round

Key Insights

  • BlackRock will also serve as asset manager for stablecoin reserves.
  • Stablecoins have come under increasing scrutiny from U.S. financial regulators. 
  • USDC supply has grown by 355% in a year and is now more than 50 billion.

Institutional investment giants BlackRock and Fidelity led the $400 million funding round for Circle Internet Financial Ltd., the issuer of USD Coin (USDC). Other investors included Marshall Wace and Fin Capital, according to the announcement on April 12.

BlackRock (BLK) has also entered into a wider partnership with Circle, which includes exploring capital-market applications for the USDC stablecoin. It will also serve as a primary asset manager for the USD Coin’s cash reserves.

The new funding round, which is expected to close at the end of Q2, promotes Circle’s continued strategic growth as demand for dollar-pegged digital currencies and related financial services continue to scale globally.

Stablecoin Demand

Jeremy Allaire, co-founder, and CEO of Circle commented on this growth which is evident by observing USDC supply increases. Since the same time last year, USDC supply has grown by 356%, underlying that demand for stablecoins.

“Dollar digital currencies like USDC are fueling a global economic transformation, and Circle’s technology infrastructure sits at the center of that change. This funding round will drive the next evolution of Circle’s growth,”

BlackRock’s chief operating officer Rob Goldstein and global head of ETFs and index investments, Salim Ramji, expressed agreement in a memo to employees on April 12. We believe digital assets and blockchain technologies will become increasingly relevant for BlackRock and our clients, they stated.

Stablecoins have come under increasing scrutiny from U.S. lawmakers who are growing concerned over their reserves or backing. A physical dollar should back each coin though full audits for the industry’s leading stablecoin issuer, Tether, have yet to materialize.

Circle will now be one step ahead of its rival, with BlackRock managing those cash reserves.

Ecosystem Outlook

Circle is the world’s second-largest stablecoin issuer, with a USDC supply of 50.6 billion. Rival Tether (USDT) currently has a circulating supply of 82 billion though it has lost market share to Circle and other stablecoins over the past year or so.

The total supply of stablecoins is around $186 billion, which is approximately 10% of the entire crypto market capitalization, according to CoinMarketCap.

Stock Markets: Top 3 Things You Need To Know This Week

Keep in mind, this week is the official start of the US corporate earnings season and at the same time, there is going to be a lot of economic and inflation data being released as well as the latest headlines regarding Russia’s war in Ukraine.

It is also a short trading week with stock, bond, and commodity markets closed on Friday for Good Friday, which could bring some added volatility as we get closer to the long weekend.

SP500 Earnings

Most Wall Street traders recognize that the S&P 500 rally off the March 2020 lows was built on extremely strong US corporate earnings power. Several traders and investors are quick to remind us that prior to the Covid outbreak S&P 500 company earnings were averaging around $40/share per quarter. Fast forward to our last earnings report that showed 2021 Q4 earnings and we see an average of $55/share. In other words, there was a +38% jump in earnings from before the pandemic to our last quarterly estimates, which puts us fairly in line with the current price level of the S&P 500. The question is can US corporate earnings continue to show growth?

I worry because interest rates are starting to aggressively creep higher, wage inflation is real, energy inflation is real, the cost of doing business is obviously higher and supply chain dislocations are still creating supply-side imbalances.

China in the Spotlight

Remember, China’s lockdown in Shanghai continues. The lockdown began on March 28 in half the city but has since expanded to its entire population of around 26 million. A trucker shortage and closures of warehouses in Shanghai are also affecting nearby provinces of Zhejiang and Jiangsu, according to a recent note from Citigroup analysts.

The two provinces are major manufacturing hubs that produce about one-third of China’s total exports. Shipping experts warn the fallout will start to be felt in the months ahead as severe dislocations once again drive up shipping costs and exacerbate shortages of raw materials and other essential supplies. There are also lingering concerns about energy prices as Europe continues to debate the possibility of banning Russian oil and gas supplies. Such a move could bring another dramatic rise in prices as available global supplies get spread even more thin.

Data to Watch

The Atlanta Fed is now forecasting just +1.1% Q1 US GDP growth, whereas, three of their last four Quarterly readings were all above +6.1%. At the same time, there are a lot more investors and economists also starting to walk back their global economic growth estimates. Several sources are thinking Ukraine’s economic output will likely contract by -40% to -50%.

More economists are also forecasting a double-digit reduction in Russia’s GDP, as well as much larger reductions in countries like Belarus and Moldova. Growth estimates in the Central Europe region i.e. Bulgaria, Croatia, Hungary, Poland, and Romania are also starting to be reduced.

There was also more talk over the weekend that Russia could eventually start to default on some of its “external debt” for the first time since 1917.

As for this week, all eyes will be on Consumer Price Index, scheduled for release Tuesday morning, and the Producer Price Index scheduled for release Wednesday morning. Both will work to add a bit more color to our current inflation debate.

Also on Wednesday, we get the first batch of Q1 earnings from a few big names like JPMorgan, Black Rock, Bed, Bath & Beyond, and Delta. Then on Thursday the trade will be digesting the latest Retail Sales data and another round of earnings from names like Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanely, and United Health Group.

Keep in mind, several of the largest US banks might be reporting their biggest slowdown in investment banking revenue in years, as more and more “deals” have been getting put on the back-burner. Who knows how long this slowdown will last?

For a look at all of today’s economic events, check out our economic calendar.

$7.5 Trillion AUM Company Charles Schwab Files for Crypto Economy ETF

Key Insights:

  • Charles Schwab filed for a crypto economy ETF.
  • The ETF will be tracking the Schwab Crypto Economy Index.
  • The fund will generally track the same securities as those included in the index.

Charles Schwab, one of the biggest financial services companies, filed for a crypto economy ETF with the Securities and Exchange Commission (SEC).

Approval of this exchange-traded fund (ETF) will enable Charles Schwab’s clients to speculate on the index without holding any asset.

Another ETF

After Blackrock filed its crypto ETF in the latter half of the month, many companies are looking to make the most of the opportunity and follow suit.

Charles Schwab already handles over $7.5 trillion of assets under its management. Thus it is not surprising that the company launched a crypto economy ETF.

Unlike traditional ETFs, a crypto economy ETF will not directly track the cryptocurrencies. This is because Charles Schwab does not own any cryptocurrency.

Within the SEC filing too, the company clearly said that the Schwab Crypto Economy ETF would not be investing in cryptocurrencies or any digital assets.

Instead, the ETF is designed to track the Schwab Crypto Economy Index. This index is comprised of companies that are engaged in some of the other forms of crypto-related activities.

Companies using, buying, selling, and facilitating crypto and digital assets or conducting similar activities are referred to as companies in the “crypto economy.”

Reiterating the same the filing noted:

“The fund may, however, have indirect exposure to cryptocurrencies by virtue of its investments in companies that use one or more digital assets as part of their business activities or that hold digital assets as proprietary investments.”

Plan in Making

It isn’t surprising to see the sudden appearance of this ETF filing because not too long ago, Charles Schwab’s CEO had something positive to say about cryptocurrencies.

In an interview, CEO Walt Bettinger said,

“Crypto is hard to ignore, right? It’s fairly significant today. We have a lot of ways that clients today can invest in crypto. What we don’t offer is direct trading. We would welcome the chance, if the opportunity presents itself from a regulatory standpoint. There’s a tremendous void in that space today for a firm like Schwab. The transaction costs in crypto trading are exceptionally high, the spreads are exceptionally high.”

Furthermore, as per Schwab’s Q1 Retail Client Sentiment Survey, 16% of Charles Schwab clients said that they will invest in cryptocurrency in the first part of 2022.

Thus, filing for a crypto economy ETF makes much more sense considering what clients are leaning towards.

BlackRock is Reportedly Ready to Offer Crypto Trading Services

Asset manager BlackRock may soon start offering crypto trading services if people familiar with the matter are believed. 

Per Coindesk‘s report, three of those in the know have claimed that the world’s largest asset manager will soon start offering Bitcoin trading services to its clients.

BlackRock to Begin Crypto Trading

If this should happen, it would represent a landmark moment for the burgeoning crypto space. As the largest asset manager, BlackRock manages over $10 trillion worth of assets for its clients. It has over 1500 institutional clients ranging from sovereign wealth funds to public and corporate pensions.

According to close sources who’d rather remain anonymous, BlackRock would let clients use cryptocurrency as collateral for loans through client support trading and its credit facility. 

They also would be able to trade Bitcoin using the New York-based firm investment software, Alladin.

Another of those familiar with the matter added that the firm had established a working group of around 20 people. This group evaluates Bitcoin and other digital assets on how the firm could profit from the space.

BlackRock’s Previous Pro-crypto Moves

Already, BlackRock has made several moves showing its interest in cryptocurrency. Last year, Reuters reported that the firm’s CEO, Larry Fink said that the asset manager was studying Bitcoin to see if it could offer countercyclical benefits. 

He also compared Bitcoin to Gold, stating that it has the potential to be a key asset class for long-term investments.

The firm also explored Bitcoin investments in 2021 with derivatives-based products on the Chicago Mercantile Exchange (CME). Also, being one of the major shareholders in the largest corporate holder of Bitcoin, MicroStrategy, its decision to go into Bitcoin trading is not entirely surprising.

A previous FXEmpire report revealed that the company had filed for a blockchain exchange-traded fund (ETF) to invest in companies within the blockchain and crypto technology space

After a rocky start to the year, Bitcoin’s price has gradually shed the losses it accrued earlier into the year. The asset is currently trading for $44,000 after rising by over 20% within the last 14 days.

Blackrock to Track Blockchain and Tech with new ETF

Amidst the current crypto market chaos, positive news appears to go unnoticed at present. The global financial markets remain focused on inflation and FED monetary policy, which has contributed to the crypto market sell-off.

Uncertainty brings opportunity, however, as the lines between mainstream and crypto continue to blur.

Earlier this month, we had reported Block Inc.’s (SQ2) listing on the Australian Stock Exchange (ASX). For the ASX, the 20th January listing was the first crypto-related listing. It wasn’t the best of starts, however, with negative sentiment towards cryptos leaving Block Inc. down 2.34% on its 2nd day of trading.

SQ2

Block Inc. isn’t the first crypto-related listing, however. Other listed companies include:

  • Coinbase Global Inc. (COIN), traded on the NASDAQ.
  • Bit Mining Ltd (BTCM), traded on the New York Stock Exchange.
  • HIVE Blockchain Technologies Ltd (HIVE), traded on the NASDAQ.
  • Bitfarms Ltd (BITF), traded on the NASDAQ.

For mainstream trading platforms, exchanges are also getting in on the crypto act. This week, news hit the wires of Robinhood launching its crypto wallet beta program. While Robinhood users had previously been able to trade cryptos, the launch of the wallet will eventually mean that users can also deposit and withdraw cryptos. This was previously not possible, with investors able to only buy, hold and sell.

Blackrock Files for iShares Blockchain and Tech ETF

On Friday, Blackrock filed for the registration of the iShares Blockchain and Tech ETF. The ETF “seeks to track the investment results of an index composed of U.S and non-U.S companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies”. The Fund will track the investment results of the NYSE FactSet Global Blockchain Technologies Index.

On Friday, the NYSE FactSet Global Blockchain Technologies Index slid by 10.32% to end the day at 172.33. Year-to-date, the Index was down by 24.15%

The move into the crypto ETF space is aligned with Blackrock’s apparent strategy on cryptos. According to reports over the summer of 2021, Blackrock had close to $400m invested in Bitcoin (BTC) mining stocks.

Snip - NYFSBLC 172.33 ( 10.32%) NYSE FactSet Global Blockchain Technologies Index Launch Google Fina

Earnings Week Ahead: Q4 Season Kicks Off With Delta Air Lines and Big Banks Like BlackRock, Citigroup, Wells Fargo and JPMorgan

This week will also bring us an inflation report, US-Russia talks, and a lot of Fed talks. The following is a list of earnings slated for release January 10-14, along with a few previews. Investors will carefully monitor the latest news on the rapidly spreading Omicron coronavirus variant to see how it affects earnings in 2022.

Earnings Calendar For The Week Of January 10

Monday (January 10)

TICKER COMPANY EPS FORECAST
AZZ AZZ $0.82
CMC Commercial Metals $1.29
TLRY Tilray $-0.09

 

Tuesday (January 11)

TICKER COMPANY EPS FORECAST
SNX TD Synnex Corp $2.6
ACI Albertsons $0.55

 

Wednesday (January 12)

TICKER COMPANY EPS FORECAST
INFY Infosys $0.17
JEF Jefferies Financial Group $1.4
KBH KB Home $1.77
SJR Shaw Communications $0.3
VOLT Volt Information Sciences $0.07

 

Thursday (January 13)

IN THE SPOTLIGHT: DELTA AIR LINES

Delta Air Lines, one of the major players in the United States aviation industry, is expected to report earnings per share (EPS) of $0.11 in the fourth quarter, more than doubling compared to a huge loss of $-2.53 per share seen in the same period a year ago.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, is forecast to report revenue growth of over 130% to around $9.2 billion. It is worth noting that in the last two years, the airline has beaten consensus earnings estimates just four times.

According to ZACKS Research, based on strong passenger demand during the holidays, Delta Air Lines raised its guidance for the fourth quarter of 2021. It hopes to achieve “meaningful” profitability in 2022 despite Omicron-induced woes. In the December quarter, the airline expects to make approximately $200 million in adjusted pre-tax profit, according to an SEC filing.

Compared to the same period last year, Delta expects to recover 74% of its adjusted total revenues (excluding third-party refinery sales) in the fourth quarter. In 2022, DAL expects its capacity to reach approximately 90% of its level in 2019. In 2023 and beyond, it expects to achieve pre-pandemic levels of capacity. With adjusted revenues (ex-refinery) exceeding $50 billion in 2024, the company expects earnings per share to surpass $7, ZACKS analysts noted.

“Mgmt. laid out a plan to meet and exceed pre-pandemic financial benchmarks by 2024 by building a best-in-class premium airline. The plan is sound and targets appear conservative though the near-term trajectory remains outside of mgmt.’s control. We see line of sight to the stock doubling from here,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“Why Overweight? Delta Air Lines (DAL) has some of the strongest customer satisfaction numbers among the other Legacy peers, while also commanding a higher PRASM, making it our preferred Legacy carrier. While DAL cannot escape Legacy overhangs (delayed International/corporate recovery, strained balance sheet), it should rise with the industry tide. The risk-reward looks attractive.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 13

TICKER COMPANY EPS FORECAST
TSM Taiwan Semiconductor Manufacturing $1.14

 

Friday (January 14)

IN THE SPOTLIGHT: BLACKROCK, CITIGROUP, JPMORGAN, WELLS FARGO

BLACKROCK: The world’s largest asset manager is expected to report its fourth-quarter earnings of $10.14 per share, which represents a year-on-year decline of about 0.4% from $10.18 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of nearly 15% to around $5.15 billion. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~11% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

CITIGROUP: The New York City-based investment bank is expected to report its fourth-quarter earnings of $1.87 per share, which represents a year-on-year decline of about 10% from $2.07 per share seen in the same period a year ago. But the U.S. third-largest banking institution would post revenue growth of nearly 4% to $17.06 billion.

“While the stock is cheap at 0.6x NTM BVPS, and new CEO is taking strong, proactive strategic action to boost returns closer to peers, we believe these actions will take time to play out,” noted Betsy Graseck, equity analyst at Morgan Stanley.

Citi is exiting 13 consumer businesses in Asia and EMEA, and focusing on higher growth areas of US consumer, Asia WM, International wholesale and consumer payments. These actions could drive ROE higher than the 9% we are modelling for 2023, but we expect the stock will only start to fully reflect this once revenues begins to accelerate. Citi benefits less than peers from higher rates, and we expect some of our more rate sensitive stocks will outperform as the Fed begins to raise rates next year.”

JPMORGAN: The leading global financial services firm with assets over $2 trillion is expected to report its fourth-quarter earnings of $2.94 per share, which represents a year-on-year decline of over 20% from $3.79 per share seen in the same period a year ago. But one of the world’s oldest, largest, and best-known financial institutions would post revenue growth of just over 2% to $29.9 billion.

WELLS FARGO: The fourth-largest U.S. lender is expected to report its fourth-quarter earnings of $1.11 per share, which represents a year-on-year growth of over 70% from $0.64 per share seen in the same period a year ago. The San Francisco, California-based multinational financial services company would post revenue growth of more than 4% to $18.8 billion.

Wells Fargo (WFC) benefit to EPS from rising rates is the highest in the group, with each ~50bps increase in FF driving ~15% increase in EPS; 50bps in long-end rates drives ~7% to EPS WFC is in a strong position to monetize higher rates, as cash stands at 15% of earning assets, 7% points above pre-pandemic levels,” noted Betsy Graseck, equity analyst at Morgan Stanley.

WFC is taking action to restructure its business mix as it works to exit the Fed consent order/asset cap and reduce its expense base. Excess capital at Wells stands at 10% of market cap vs. 5% for median Large Cap Bank, enabling a net buyback yield of 10% in 2022 and a total cash return of 12%. Risks around the timing of asset cap removal and further regulatory action remain.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 14

TICKER COMPANY EPS FORECAST
C Citigroup $1.87
JPM JPMorgan Chase $2.94
BLK BlackRock $10.15
WFC Wells Fargo $1.11

 

Preview: What to Expect From BlackRock’s Q4 Earnings

The world’s largest asset manager BlackRock is expected to report its fourth-quarter earnings of $10.14 per share, which represents a year-on-year decline of about 0.4% from $10.18 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of nearly 15% to around $5.15 billion. The company has been able to beat earnings per share (EPS) estimates most of the time in the last two years.

BlackRock to report fourth-quarter 2021 earnings on Friday, January 14 2022.

According to ZACKS Research, the company expects fourth-quarter 2021 core G&A expenses to increase sequentially, reflecting seasonal increases in marketing spend, additional costs related to return to office planning, and ongoing technology costs associated with the latent cloud migrations. In the long term, the company expects its annual contract value to grow in the low to mid-teens. The projected tax rate for the fourth quarter of 2021 is 24%.

The better-than-expected number would help the stock recoup recent losses.  BlackRock’s shares rose over 26% so far this year. It closed 0.42% higher at $913.53 on Thursday.

Analyst Comments

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~11% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

BlackRock Stock Price Forecast

Nine analysts who offered stock ratings for Blackrock in the last three months forecast the average price in 12 months of $998.33 with a high forecast of $1,141.00 and a low forecast of $794.00.

The average price target represents a 9.26% change from the last price of $913.76. Of those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $1,026 with a high of $1,417 under a bull scenario and $465 under the worst-case scenario. The firm gave an “Overweight” rating on the investment manager’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $1141 from $1024. Evercore ISI lifted the price objective to $1015 from $950. UBS raised the target price to $1000 from $978.

Technical analysis also suggests it is good to buy as 100-Day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Check out FX Empire’s earnings calendar

US Congressman Says Crypto Represents the Rich and not the Poor

House of Representatives member Brad Sherman has said that crypto is for the powerful in the society, a group that includes the likes of Elon Musk, Goldman Sachs, BlackRock, Mark Zuckerberg, and others. He made this statement during the House Committee on Financial Services hearing on digital assets.

Crypto Industry Represents the Power in the Society

In his scathing remarks about crypto, he claimed that while many believe that the cryptocurrency industry is an attack on the powers in society, crypto represents these powers instead.

They believe that somehow this is new and hip, and an attack on the powers of society. The fact is that the advocates of crypto represent the powers in our society. The powers of our society on Wall Street and in Washington have spent millions, and are trying to make billions and trillions.

The congressman further stated that crypto remains the number one threat to itself, citing examples of how it’s possible for Ether to displace Bitcoin as the number one cryptocurrency. He mentioned that this isn’t possible with fiat currencies.

In the last one year, the crypto industry has grown in leaps and bounds as it enjoyed a new wave of adoption among institutional and retail investors. The market cap of the entire industry has touched as high as $3 trillion and two digital coins, BTC and ETH, are amongst the top 15 assets by market cap in the world.

Blockchain Technologies are Secured — FTX

The hearing on digital assets saw several crypto CEOs entertain questions from congress members. FTX CEO Sam Bankman-Fried was one of the most notable names at the hearing. 

Bankman-Fried spoke about the potential impacts of supercomputers on blockchain tech. According to him, supercomputers could create faster and more efficient cryptographic algorithms. He also mentioned that all major blockchains are very secure when Rep. Ritchie Torres (D-NY) asked a question related to this matter. 

US Crypto Industry Needs Regulatory Clarity

Brian Brooks, the former Acting Comptroller of the Office of the Currency, called for more clarity in crypto regulations. According to him, other countries, including the UAE and Germany, have clear-cut regulations for digital assets, but the US is still far behind.

He, therefore, urged US regulators to figure this out very fast so as to prevent crypto firms from leaving the United States for more friendly jurisdictions. 

There were also questions about volatility risks, especially from whales in the crypto market. Brian Brooks of BitFury stated that although the actions of one whale could have serious impacts on the price, what the US market needs are more liquidity and price discovery instead of less.

BlackRock Shares Rise Nearly 4% as Earnings and Revenue Tops Views; Target Price $966

BlackRock shares rose about 4% on Wednesday after the world’s largest asset manager reported better-than-expected earnings and revenue in the third quarter, primarily driven by strong demand for its actively managed and sustainable funds as well as high performance fees.

The New York-based multinational investment management corporation reported quarterly earnings of $10.95 per share, beating the Wall Street consensus estimates of 9.70 per share. The asset manager also posted revenues of $5.05 billion for the quarter ended September 2021. That was above the market expectations of $5.0 billion.

The company said a 16% increase in revenue year-over-year reflects strong organic growth and a 13% growth in technology services revenue, despite lower performance fees. There were long-term net inflows of $98 billion led by ETFs and active strategies, with total net inflows of $75 billion due to outflows from low-fee cash management and advisory assets under management (AUM).

By the end of the September quarter, BlackRock’s assets under management totalled $9.46 trillion, up from $7.81 trillion a year ago, but flat compared to the previous quarter. That was disappointing as most analysts predicted assets would exceed $10 trillion.

BlackRock shares rose about 4% to $867.81 on Wednesday. The stock rose over 20% so far this year.

Analyst Comments

“Having taken a deeper look at our long-term projections for wide-moat-rated BlackRock following the company’s release of third-quarter earnings, we’ve raised our fair value estimate to $910 per share from $880. Most of the improvement came from adjustments to our longer-term forecasts for the company’s multi-asset and alternatives segments–two areas management has targeted for higher levels of growth over the next five to 10 years,” noted Greggory Warren, Sector Strategist at Morningstar.

“While we had lifted our projections for both segments in June following BlackRock’s investor day presentations, we felt that our forecasts were a bit too conservative (especially considering the more recent rates of organic growth we’ve seen from both segments).”

BlackRock Stock Price Forecast

Eight analysts who offered stock ratings for BlackRock in the last three months forecast the average price in 12 months of $966.63 with a high forecast of $1,039.00 and a low forecast of $803.00.

The average price target represents an 11.39% change from the last price of $867.81. From those eight analysts, seven rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $1,026 with a high of $1,417 under a bull scenario and $465 under the worst-case scenario. The firm gave an “Overweight” rating on the investment manager’s stock.

Several other analysts have also updated their stock outlook. Evercore ISI lowered the target price to $950 from $956. JPMorgan cut the price objective to $1,015 from $1,052. Deutsche Bank slashed the target price to $1039 from $1117. Jefferies lowered the price target to $978 from $1075.

“Following BlackRock’s (BLK) 3Q21 results, our 4Q21 EPS declines by $0.10 (modestly higher G&A) and our 2022 EPS estimate remains unchanged. Organic base fee growth remains diversified and well above the long-term target (+9% vs ~5% target). Although investment spend is on the rise, it is fueling industry-leading organic growth through expansion of the company’s geographic footprint and investment capabilities,” noted Daniel T. Fannon, equity analyst at Jefferies.

Check out FX Empire’s earnings calendar

S&P 500 Rises With Growth Stocks; JPMorgan a Drag

The S&P 500 briefly added to gains following the release of minutes from the September Federal Reserve policy meeting.

U.S. central bankers signaled they could start reducing crisis-era support for the economy in mid-November, though they remained divided over how much of a threat high inflation poses and how soon they may need to raise interest rates, the minutes showed.

Earlier, a Labor Department report showed consumer prices increased solidly in September, further strengthening the case for a Fed interest-rate hike.

Shares of JPMorgan Chase & Co fell and were among the biggest drags on the Dow and S&P 500 even though its third-quarter earnings beat expectations, helped by global dealmaking boom and release of more loan loss reserves.

The day’s corporate results kicked off third-quarter earnings for S&P 500 companies.

“My hope is that as we work out way through earnings season that the forward-looking guidance will be good enough that we’ll close the year higher. But right now the market is in a show-me phase,” said Jim Awad, senior managing director at Clearstead Advisors LLC in New York.

Mega-caps growth names including Amazon.com Inc, Google-parent Alphabet and Microsoft Corp all rose.

According to preliminary data, the S&P 500 gained 14.20 points, or 0.33%, to end at 4,364.85 points, while the Nasdaq Composite gained 105.71 points, or 0.73%, to 14,571.64. The Dow Jones Industrial Average rose 4.35 points, or 0.01%, to 34,382.69.

BlackRock Inc also gained after the world’s largest money manager beat quarterly profit estimates as an improving economy helped boost its assets under management, driving up fee income.

Bank of America, Citigroup, Wells Fargo and Morgan Stanley will report results on Thursday, while Goldman Sachs is due to report on Friday.

Analysts expect corporate America to report strong profit growth in the third quarter but worries have been mounting over how supply chain problems, labor shortages and higher energy prices might affect businesses emerging from the pandemic.

Among other stocks, Apple Inc dipped after a report said the iPhone marker was planning to cut production of its iPhone 13.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Arun Koyyur and David Gregorio)

SP500 Is On The Edge – What’s Next?

It’s likely that legislation to fund President Biden’s $4 trillion worth of infrastructure and other spending plans will be moving through Congress around the same time. Those bills are expected to include tax increases for businesses and on capital gains. All of that combined could set markets up for a rocky December but for now, investors are turning attention back to economic data and upcoming earnings.

What to watch next week?

Turning to next week, Q3 earnings “unofficially” kick off Wednesday with earnings from big Wall Street banks, including Bank of America, Goldman Sacks, JP Morgan Chase, and Wells Fargo. Other earnings worth noting next week include Fastenal on Tuesday; BlackRock, Delta, and The Progressive Corp. on Wednesday; Alcoa, Citigroup, Dominos Pizza, Morgan Stanley, United Health Group, U.S. Bancorp, and Walgreens on Thursday; and J.B. Hunt, PNC Financial, and Prologis on Friday.

In economic data next week, it’s a packed calendar that will cover all the economic bases from jobs to inflation. Highlights include the Job Openings and Labor Turnover Survey on Tuesday; the Consumer Price Index on Wednesday; the Producer Price Index on Thursday; and Retail Sales, Empire State Manufacturing, Import/Export Prices; Business Inventories, and the preliminary read on October Consumer Sentiment.

Technical analysis

ES ##-## (Daily) 2021_10_10 (6_59_58 PM)

As we expected SP500 bounced back up last week. The market is reaching a critical point – MA50 retest. There is strong accumulation in this market, while the price holds under daily MA50. In these mixed conditions, its better to stay on the sidelines till the market finds a new direction.

If accumulation remains and the price starts building the base above daily MA50, the market will attempt to renew an uptrend. On the other hand, if futures lose accumulation and price gets rejected at MA50, SP500 might continue to drift to the downside. The cycles forecast bottom in October. But we need a price action confirmation.

Earnings Week Ahead: Most Big U.S. Banks, Delta Air Lines, UnitedHealth and Domino’s in Focus

Earnings Calendar For The Week Of October 11

Monday (October 11)

No major earnings are scheduled for release.

Tuesday (October 12)

Ticker Company EPS Forecast
TRYG Tryg KRW1.71
FAST Fastenal $0.42
PNFP Pinnacle Financial Partners $1.55

Wednesday (October 13)

IN THE SPOTLIGHT: BLACKROCK, DELTA AIR LINES

BLACKROCK: The world’s largest asset manager is expected to report its third-quarter earnings of $9.70 per share on Wednesday, which represents year-on-year growth of over 5% from $9.22 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of over 13% to around $5.0 billion. In the last four consecutive quarters, on average, the investment manager has delivered an earnings surprise of over 9%.

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~13% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

DELTA AIR LINES: The earnings per share (EPS) is expected to swing back to positive territory for the first time in seven quarters on Wednesday, more than doubling to $0.16 per share compared to a huge loss of -$3.30 per share seen in the same period a year ago.

The Airline company, which provides scheduled air transportation for passengers and cargo throughout the United States and across the world, is forecast to report revenue growth of over 170% in the third quarter to around $8.4 billion. It is worth noting that in the last two years, the airline has beaten consensus earnings estimates just three times.

“Airlines will report 3Q21 results later this month, beginning Oct 13 with Delta Air Lines’ release. We believe 3Q21 started strong, sagged in the middle and then finished strong as people started planning holiday trips,” noted Helane Becker, equity analyst at Cowen.

“We believe 4Q21 guidance will reflect a strong peak, likely >2019 levels while off-peak is likely to lag 2019 levels. Stocks to own include United Airlines (UAL), Alaska Air Group (ALK), Allegiant Travel (ALGT) & Southwest Airlines (LUV).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 13

Ticker Company EPS Forecast
JPM JPMorgan Chase $3.00
BLK BlackRock $9.60
INFY Infosys $0.17
WIT Wipro $0.07
FRC First Republic Bank $1.84
DAL Delta Air Lines $0.16

Thursday (October 14)

IN THE SPOTLIGHT: UNITEDHEALTH, DOMINO’S PIZZA

UNITEDHEALTH: Minnesota-based health insurer is expected to report its third-quarter earnings of $4.41 per share, which represents year-over-year growth of over 25% from $3.51 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 11%. The largest insurance company by Net Premiums would post revenue growth of about 10% to around $72.0 billion.

UnitedHealth Group is the number one Medicare Advantage player with ~28% market share, the number two Medicare PDP player with ~20% market share, and the number two commercial player with ~15% market share,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country. With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

DOMINO’S: The world’s largest pizza company is expected to report its third-quarter earnings of $3.11 per share, which represents year-over-year growth of about 25% from $2.49 per share seen in the same quarter a year ago.

The company has beaten consensus earnings per share (EPS) estimates only twice in the last four quarters. The largest pizza chain in the world would post revenue growth of about 7% to around $1.03 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 14

Ticker Company EPS Forecast
UNH UnitedHealth $4.41
BAC Bank Of America $0.71
WFC Wells Fargo $1.00
MS Morgan Stanley $1.69
C Citigroup $1.74
USB US Bancorp $1.15
WBA Walgreens Boots Alliance $1.02
AA Alcoa $1.75
DCT DCT Industrial Trust $0.02
TSM Taiwan Semiconductor Mfg $1.04
DPZ Dominos Pizza $3.11
CMC Commercial Metals $1.19

Friday (October 15)

IN THE SPOTLIGHT: GOLDMAN SACHS

The New York-based leading global investment bank is expected to report its third-quarter earnings of $10.11 per share, which represents year-over-year growth of over 4% from $9.68 per share seen in the same quarter a year ago.

It is worth noting that in the last two years, the world’s leading investment manager has surpassed market consensus expectations for profit and revenue most of the time. The world’s leading investment manager would post revenue growth of over 4% to around $11.25 billion.

“Reason to Buy: Organic growth, solid capital position and steady capital deployment activities continue to enhance Goldman’s prospects. Business diversification offers long-term earnings stability,” noted analysts at ZACKS Research.

“Reason to Sell: Geopolitical concerns and volatile client-activity levels may hinder the top-line growth of Goldman. Further, legal hassles and higher dependence on overseas revenues remain other headwinds.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE OCTOBER 15

Ticker Company EPS Forecast
GS Goldman Sachs $10.11
PNC PNC $3.38
TFC Truist Financial Corp $1.09
HON Honeywell International $2.01
GE General Electric $0.51
PLD ProLogis $0.47
VFC VF $1.16
JBHT J B Hunt Transport Services $1.79
GNTX Gentex $0.42
MAN ManpowerGroup $1.91
SXT Sensient Technologies $0.80
ABCB Ameris Bancorp $1.17
ACKAY Arcelik ADR $0.68
BMI Badger Meter $0.50

 

Preview: What to Expect From BlackRock’s Earnings on Wednesday

The world’s largest asset manager BlackRock is expected to report its third-quarter earnings of $9.70 per share on Wednesday, which represents year-on-year growth of over 5% from $9.22 per share seen in the same period a year ago.

The New York-based multinational investment management corporation would post revenue growth of over 13% to around $5.0 billion. In the last four consecutive quarters, on average, the investment manager has delivered an earnings surprise of over 9%.

In the near future, the company expects discretionary money market fee waivers to remain at current levels. In 2021, the adjusted operating margin is anticipated to be similar to that of 2020. It expects low to mid-teens growth in annual contract value over the long term, according to ZACKS Research.

The better-than-expected number would help the stock recoup recent losses.  BlackRock’s shares rose over 16% so far this year. The stock rose about 1% to $848.68 in pre-market trading on Friday.

Analyst Comments

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~13% EPS CAGR (2020-23e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

Blackrock Stock Price Forecast

Nine analysts who offered stock ratings for Blackrock in the last three months forecast the average price in 12 months of $1,007.11 with a high forecast of $1,117.00 and a low forecast of $803.00.

The average price target represents a 19.56% change from the last price of $842.35. From those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $1,021 with a high of $1,428 under a bull scenario and $472 under the worst-case scenario. The firm gave an “Overweight” rating on the investment manager’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $1,052 from $1,029. Evercore ISI lifted the target price to $998 from $970. Jefferies upped the target price to $1075 from $1001.

Check out FX Empire’s earnings calendar

PBOC Promises to Protect Consumers as China Evergrande Teeters

Once the epitome of an era of helter-skelter borrowing and building in China, Evergrande has now become the poster child of a crackdown on developers’ debts that has left investors large and small sweating their exposure.

In a letter to investors seen by Reuters, the Shenzhen Financial Regulatory Bureau said “relevant departments of the Shenzhen government have gathered public opinions about Evergrande Wealth and are launching a thorough investigation into related issues of the company.”

It is also urging China Evergrande and Evergrande Wealth to work to repay investors, the letter said, which was sent following investor demands for an inquiry.

The People’s Bank of China (PBOC) made no mention of Evergrande in a statement posted to its website, which contained just a line on housing along with promises to make its monetary policy flexible, targeted and appropriate.

But at a delicate moment for the world’s most indebted developer, which missed a bond interest payment last week and has another due this week, its pledge to “safeguard the legitimate rights of housing consumers” hinted at the sort of response markets had begun to hope for.

With liabilities of $305 billion, Evergrande has sparked concerns its problems could spread through China’s financial system and reverberate around the world – a worry that has eased as damage has so far been concentrated in the property sector.

The PBOC’s broad-ranging statement was issued after the third quarter meeting of its Monetary Policy Committee. Its housing line echoed comments from Evergrande’s leadership that point to containment efforts and prioritizing small investors in properties ahead of foreign holders of Evergrande debts.

“We expect that any impact to the banking system will be manageable and that the government will instead focus on the social fallout of unfinished housing units,” said Sheldon Chan, who manages T. Rowe Price’s Asia credit bond strategy.

Suppliers exposed to Evergrande payables and domestic bondholders would also take priority over dollar bond holders, he said.

Evergrande dollar bonds have been trading accordingly, and remained on Monday at distressed levels around 30 cents on the dollar.

Research firm Morningstar listed BlackRock, UBS, Ashmore Group and BlueBay Asset managers as bondholders with exposure to Evergrande in a Friday report which said funds at HSBC and TCW had closed positions.

Ashmore, BlackRock, BlueBay, HSBC, TCW and UBS declined to comment.

Evergrande’s stock rose 8%, though at HK$2.55 it isn’t far above last week’s decade-low of HK$2.06 and stock borrowing costs have surged as short sellers pile in.

Shares of Evergrande’s electric car unit fell heavily after it warned of an uncertain future.

Work on a soccer stadium Evergrande is building in Guangzhou is proceeding as normal, the company said on Monday.

The focus now turns to whether a coupon payment of $47.5 million due on Wednesday is made, and then to whether China can contain the economic damage if Evergrande collapses.

Its struggles so far to pay suppliers and sell assets have already begun to dent confidence among homebuyers and force sector-wide price cuts, signaling that consolidation – at the very least – looms for the real estate industry.

“Evergrande’s potential credit event, in our view, is part of a ‘survival of the fittest’ test in China’s property sector,” Deutsche Bank strategist Linan Liu said in a note to clients.

“Allowing orderly exits by weaker players in the property sector, while painful, is necessary to improve overall leverage conditions in the sector and bring about a soft landing.”

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Ryan Woo in Beijing, Anne Marie Roantree in Hong Kong and Tom Westbrook in Singapore Writing by Tom Westbrook Editing by Stephen Coates, Mark Potter and Nick Zieminski)

China Evergrande’s Rising Default Risks Shift Focus to Possible Beijing Rescue

Analysts played down the threat of Evergrande’s troubles becoming the country’s “Lehman moment,” though concerns about the spillover risks of a messy collapse of what was once China’s top-selling property developer have roiled markets.

In an effort to revive battered confidence in the firm, Evergrande Chairman Hui Ka Yuan said in a letter to staff the company is confident it will “walk out of its darkest moment” and deliver property projects as pledged.

In the letter, coinciding with China’s mid-autumn festival, the chairman of the debt-laden property developer, also said Evergrande will fulfil responsibilities to property buyers, investors, partners and financial institutions.

“I firmly believe that with your concerted effort and hard work, Evergrande will walk out of its darkest moment, resume full-scale constructions as soon as possible,” said Hui, without elaborating how the company could achieve these objectives.

Investors in Evergrande, however, remained on edge.

Its shares fell as much as 7%, having tumbled 10% in the previous day, on fears its $305 billion in debt could trigger widespread losses in China’s financial system in the event of a collapse. The stock ended down 0.4%.

Other property stocks such as Sunac, China’s No. 4 developer, and state-backed Greentown China on Tuesday recouped some of their hefty losses in the previous session. The Hong Kong property sector index rose nearly 3%.

“We are uncertain of how far and how strong the ripple effect would be on the housing market and the developer industry,” analysts at Deutsche Bank said in a recent note. “We think investors should remain on the sideline until there is more clarity.”

Fund giant BlackRock and investment banks HSBC and UBS have been among the largest buyers of Evergrande’s debt, Morningstar data showed.

BlackRock added 31.3 million notes of Evergrande’s debt between January and August 2021, while HSBC increased its position by 40% through July, according to Morningstar. UBS increased its position by 25% through May, the latest date available in the fund tracker’s database showed.

The Chinese government has been largely quiet on the crisis at Evergrande in recent weeks.

“There must be negotiations behind the scenes about a systemic recapitalization (of Evergrande) by state proxies,” said Andrew Collier, managing director of Hong Kong-based Orient Capital Research.

“If one piece of Evergrande’s debt is allowed to default, it would trigger questions about all of their remaining debt from investors and the government doesn’t want a wider crisis like that,” he said.

World stocks stabilised somewhat on Tuesday and oil prices recovered from the previous day’s heavy selling, as investors grew more confident that contagion from the distress of Evergrande would be limited.

Hedge fund managers contacted by Reuters said they were not yet concerned about any contagion risk into other equities markets.

“From our perspective, we … do not see any potential fundamental long-term effects on our portfolio companies,” said one London-based hedge fund professional. However, “there could likely be a lot of volatility around this one in the short term.”

A default by Evergrande has been widely anticipated by some corners of the market.

“I would characterize Evergrande as a telegraphed and controlled detonation,” said Samy Muaddi, the portfolio manager of the $5.1 billion T. Rowe Price Emerging Markets Bond fund, who does not have a position in the company. “If an investor was still investing in Evergrande they were investing against Chinese policy makers, which is a good way to lose.”

However, the spillover concerns at least in the property sector remained. S&P Global Ratings downgraded Sinic Holdings to ‘CCC+’ on Tuesday, citing the Chinese developer’s failure “to communicate a clear repayment plan”.

Hong Kong-listed shares of small-sized Chinese developer Sinic plunged 87% on Monday, wiping $1.5 billion off its market value before trading was suspended.

A major test for Evergrande comes this week, with the firm due to pay $83.5 million in interest relating to its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes.

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

“I think (Evergrande’s) equity will be wiped out, the debt looks like it is in trouble and the Chinese government is going to break up this company,” said Andrew Left, founder of Citron Research and one of the world’s best known short-sellers.

“But I don’t think that this is going to be the straw that breaks the global economy’s back,” said Left, who in June 2012 published a report that said Evergrande was insolvent and had defrauded investors.

Evergrande missed interest payments due Monday to at least two of its largest bank creditors, Bloomberg reported on Tuesday, citing people familiar with the matter.

SPILLOVER RISKS

The Chinese government will help Evergrande at least get some capital, but it may have to sell some stakes to a third party, such as a state-owned enterprise, Dutch bank ING said in a research note.

“The spin-off of non-core businesses, for example, those that are not residential real estate type businesses, will probably be done first,” wrote Iris Pang, ING’s Chief Economist, Greater China.

“After that could come sales of stakes that are at the core of Evergrande’s business,” Pang said.

Citi analysts in a research note said that regulators may “buy time to digest” Evergrande’s non-performing loan problem by guiding banks not to withdraw credit and extend the interest payment deadline.

Still, Citi said that while Evergrande’s default crunch was a potential systemic risk to China’s financial system, it was not shaping up as “China’s Lehman moment.”

At the same time, the U.S. market is in a better position to absorb a potential global shock from a major company default compared with the years prior to the 2007-2009 financial crisis, Securities and Exchange Commission (SEC) chair Gary Gensler said on Tuesday.

In any default scenario, Evergrande, teetering between a messy meltdown, a managed collapse or the less likely prospect of a bailout by Beijing, will need to restructure the bonds, but analysts expect a low recovery ratio for investors.

S&P Global Ratings said in a report on Monday it does not expect Beijing to provide any direct support to Evergrande.

“We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” the rating agency said.

“Evergrande failing alone would unlikely result in such a scenario,” S&P said.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Svea Herbst-Bayliss, Clare Jim, Tom Westbrook, Alun John, Anshuman Daga, and David Randall; Writing by Megan Davies and Sumeet Chatterjee; Editing by Stephen Coates, Shri Navaratnam and Nick Zieminski)

Wall Street Group to Revive Talks With China to Find Common Ground – Bloomberg News

Barrick Gold Corp Chairman John Thornton, who is also a veteran of Goldman Sachs Group Inc, is in Beijing meeting with high-ranking Chinese officials, Bloomberg said, citing two people with knowledge of the matter.

According to Bloomberg, Thornton is one of the chairs of the influential group dubbed China-U.S. Financial Roundtable that was conceived during escalating tensions between the U.S. and China in 2018, with the talks featuring emissaries from U.S. finance and senior Chinese regulatory officials.

Previous meetings between Chinese officials and Wall Street banks have included participants such as BlackRock, Vanguard, JPMorgan and Fidelity.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Kim Coghill)