A recent street view in Manhattan, New York, USA. Expectations for an economic resumption are higher than ever due to the increased distribution of vaccines. New York = Correspondent Jae-Gil Cho
It makes sense to see the changes in the asset composition of Blackstone, the world’s largest fund manager. This is because it is one of the fastest responders to global financial market movements and can have a direct impact on market flows with its strong financial power. Blackstone has been using a strategy of focused betting on undervalued assets.
Headquartered in Wall Street, New York, Blackstone currently has total assets of $69 billion. The goal is to increase it to $1 trillion by 2026. The manager is known to have made upfront investments in Nasdaq since Wall Street was less interested in large tech stocks in the past. It is said that the investment strategy until recently was also focused on growth.
Blackstone’s investment strategy is changing drastically, the Wall Street Journal (WSJ) reported on the 21st (local time). They are selling growth stocks and buying value stocks in a big frame. It is said that it has established the principle that stocks for general media, telecommunication companies, and disposable plastic manufacturers are not bought, no matter how cheap they look.
Jonathan Gray, who is also the CEO of Blackstone and Chairman of the Hilton Hotel, said in an interview with WSJ, “Investment predicts the future, but the problem is that the future is coming faster than expected. You have to choose,” he advised.
Chairman Stephen Schwartzman, the founder of Blackstone Group, also emphasized in an interview with the Korea Economic Daily in October last year that “it is a very difficult situation due to the corona crisis, but the time will come when the airports, amusement parks, and hotels will be full again.” “You must prepare in advance.” I did. I don’t think it’s a very different context.
Below are schedules and events for US equity investors to refer to this week.
<이번주 눈여겨봐야 할 일정 및 이벤트>
-Public remarks by key Fed personnel including Chairman Jerome Powell
-Additional reaction to the government bond market due to the end of the SLR exemption for banknotes
-The bid rate of government bonds worth 183 billion dollars (especially 7-year bidding on the 25th)
-Whether the underlying PCE inflation estimate (1.5%) on the 26th is met
-Announcement of earnings for the previous quarter of GameStop, Adobe, etc. (23rd)
Below is the content of the YouTube Korea Economic Daily channel broadcast with reporter Jeong In-seol of the Ministry of International Affairs every Monday morning. You can watch it live from 8:20 am.
▶Please explain how the New York Stock Market was like the last week and how it closed on the last day.
It is not an exaggeration to say that the Fed held the stock market last week. Before Wednesday, the 17th, they waited for the results of the Fed’s Federal Open Market Committee (FOMC), and after the results came out, there was a wave of waves.
The focus of the FOMC statement and Fed Chairman Jerome Powell’s remarks ① This year, the US economy will be booming enough to grow by 6.5%. ② Because of this, inflation will reach 2.2% at the end of the year, but it is only temporary and will fall again next year. ③ The Fed will not tighten until it actually confirms the improved indicators ④ Give clear signals before tapering (reducing asset purchases) Etc.
Last week, the Nasdaq index on the New York Stock Exchange plunged and ended lower.
The mayor cheered right after the FOMC statement came out at 2 pm that day. Above all, it is thanks to the dot plot of the FOMC members that the current ultra-low interest rate will be maintained until 2023. Long-term Treasury bond yields fell and the stock market surged in the US bond market, which had been struggling with ice.
But within a day, my anxiety amplified. This is because the Fed has not taken any action on inflation or Treasury yields, and has greatly increased its growth prospects. Treasury yields jumped again and ended at 1.74% per year on Friday last week on a 10-year maturity basis. It is the highest since January of last year.
During the week, the Dow fell by 0.5% and the S&P 500 and NASDAQ fell by about 0.8%. In particular, the Russell 2000 Index, which consists only of small and medium-sized stocks, plunged by nearly 3% last week.
However, just looking at last Friday, the Dow and S&P 500 index fell slightly (6.2% of Visa Card fell on the news of the US Department of Justice’s anti-competitive activity investigation), and the Nasdaq closed 0.8% higher on the same day as the backlash from the plunge the previous day inflow.
▶ The movement of government bond interest rates is of great interest, and the Fed announced on the 19th that it will end the 31st of this month as scheduled to ease SLR (Complementary Leverage Ratio) easing for banknotes.
At the Powell press conference on the 17th, a related question also came up. At that time, Powell hurriedly said, “I will announce it within a few days.” At the time, there may have been some people who judged that there was a high possibility that he would not extend it based on his expression.
Shortly after the Fed declared a pandemic (a global pandemic of the epidemic) in March last year, the Fed exempted large banks (total assets of over $250 billion) from SLR regulations for one year. The government bonds and reserves held by banks were excluded from the calculation of equity capital. It has increased the funding capacity to make banks more active in corporate loans and the like.
US 10-year Treasury yield trends. It gradually rose from the second half of last year and started to soar this year. Trading Economics Offer
When the exemption from regulations ends at the end of this month, there have been many observations that banks trying to reset their equity capital standards will sell their Treasury bonds and eventually lead to higher Treasury yields.
Before the Fed announced the end of the SLR extension, <김현석의 월스트리트나우>Looking at, the reason for the end of the SLR △The Powell term is until February next year, but the Democratic Party of the Senate Financial Committee, which is holding a leash, is strongly insisting on the abolition of the SLR △The abolition of the SLR may not have a significant impact on the market. This was picked.
In fact, after the announcement of the end of the SLR exemption, the 10-year Treasury bond rate jumped about 4bp (1bp = 0.01% point), but it was not enough to shock. The stock market also did not move much. This is because the banknotes that made a lot of profits last year have been prepared in advance. However, the stock prices of large banks directly affected by this move have fallen.
▶The event that will have the biggest impact on the New York Stock Exchange this week is.
Again, we need to keep an eye on the movement of government bond yields. The stock market’s resistance to rising Treasury yields is gradually increasing, but if interest rates jump sharply, the stock market, especially the technology-oriented Nasdaq index, continues to plunge.
Michael Schumacher, head of interest rate strategy at Wells Fargo Securities, said, “What the stock market is most paying attention to is the movement of the bond market.”
Fed executives are also the ones who will have the biggest impact on Treasury yields.
Jerome Powell Chairman of the US Central Bank (Fed)
Chairman Powell speaks publicly three times this week. On the 22nd, we will be attending the International Settlement Bank (BIS) Summit. On the 23rd, I will meet with Finance Minister Janet Yellen at the House testimony. On the 24th, I attend the Senate. According to Powell’s remarks, the stock market may fluctuate.
Other Fed figures, including Vice Chairman Richard Clarida, Director Rael Brainerd, and New York Governor John Williams, also attend the event.
However, Fed officials, including Powell, are likely not to say anything that deviates significantly from last week’s FOMC statement. Inflation following the economic recovery is a natural phenomenon.
<이번주 예정된 Fed 인사들의 연설>
-22nd (Mon) Chairman Jerome Powell / Vice-Chairman Randall Quils / Mary Daily, San Francisco Governor Yeon-eun Yeon
-23rd (Tue) Chairman Jerome Powell / Director Rael Brainerd / John Williams New York Governor Yeun Eun / James Bullard St. Louis Yeun Eun Governor
-24th (Wed) Chairman Jerome Powell / John Williams New York Governor Yeoneun Yeon-eun / Mary Daily San Francisco Yeon-eun Governor
-25th (Thursday) Vice Chairman Richard Clarida / President Rafael Bostik Atlanta Yeon Eun / Chicago President Charles Evans
▶ There is another large-scale bid for US Treasury bonds scheduled this week.
Two weeks ago, a $120 billion government bond bid was in progress, but this week, more than $180 billion is expected. The two-year maturity on the 23rd is $60 billion, the five-year maturity on the 24th is $61 billion, and the seven-year maturity on the 25th is $62 billion. Currently, the US bond market is pouring the largest volume since World War II. This is because the Treasury Department needs to raise funds to support the stimulus package.
US state debt clock installed in Manhattan, New York, USA. New York = Correspondent Jae-Gil Cho
Treasury bidding is an event that directly affects interest rates.
In particular, a 25-day 7-year bidding could be key. This is because the average bid rate reached a record low of 2.04 times as a result of issuing $62 billion worth of 7-year government bonds on the 25th of last month. On that day, the 10-year Treasury bond yield soared 16bp at a time.
If the government bond bid fails to hit the box office, interest rates may surge again, but the tender proceeded smoothly at the beginning of this month. It is an analysis that the number of institutions that want to invest in government bonds has increased again because the interest rate on government bonds has risen a lot.
<관심 모으는 금주의 미 국채 입찰 일정>
-23rd (Tue) 1pm, 2 years maturity 60 billion dollars
-24th (Wed) 1:00 p.m., 5 years maturity of $61 billion
-25th (Thursday) 1pm, 7-year maturity of $62 billion
▶If there are any economic indicators to watch out for this week?
Among this week’s economic indicators, it is necessary to watch the Manufacturing Purchasing Managers Index (PMI) on the 24th and personal income, personal consumption expenditure, and source inflation on the 26th. All as of February.
Personal consumption expenditure (PCE) can be a bit sluggish. It’s because of the winter storm that hit Texas and the northeast last month. However, a temporary sluggish consumption is an expected event. In addition, it is observed that the sluggishness itself is difficult to become a variable because there is a greater expectation that the economy will recover rapidly due to the expansion of vaccine distribution and the impact of stimulus measures.
Source PCE inflation (excluding volatile food and energy) as published by the US Department of Commerce’s Bureau of Economic Analysis (BEA) deserves a close look. This is because it is an indicator that the Fed uses as a guideline for policy decisions. This price index is different from the Consumer Price Index (CPI), which the Department of Labor publishes every month.
Fundamental PCE inflation used by the U.S. Central Bank (Fed) as an indicator of policy decisions. It is expected to rise to 2.2% this year. Provided by Fed
Market unrest could spread if core inflation rose more than expected (1.5% year-on-year) over the past month. Core inflation rose 1.5% in January.
The Fed predicted on the 17th that this core inflation will jump to 2.2% this year, then 2.0% next year and 2.1% again in 2023. In December of last year, I thought inflation would hit 1.8% this year, but the economic recovery accelerated, so I raised it by 0.4 percentage points.
▶ If there is a place to look out for among the companies that made the previous quarter’s results?
The previous quarter (mainly in the fourth fiscal quarter of last year) was almost finished, but there are still companies to watch out for. This week, GameStop and Adobe release their report cards on the 23rd.
Gamestop stock price has fluctuated sharply this year.
Gamestop stock price, which attracted attention due to the confrontation between short selling institutional investors and social media-armed individual investors, continued to fluctuate last week. It closed last Friday at $200.46 a week, which is still four to five times higher than a month ago. Earnings per share (EPS) estimate to be released after the close of the market is $1.35.
<금주 예정된 경제 지표 및 기업 실적 발표>
-22nd (Mon) Existing home sales (February)
-23rd (Tue) Gamestop, Neogen, Adobe, IHS Markit, Soymilk performance announcement
-24th (Wed) IHS Markit manufacturing and service PMI (March) / Durable goods order (February)
-The number of new unemployment benefits claims per week on the 25th (Thursday) / GDP growth rate in the fourth quarter of last year (revised)
-26th (Fri) Personal Income, Personal Consumption Expenditure (PCE), Core Inflation (February)
New York = Correspondent Jae-Gil Cho [email protected]