Amaravati: Unbridled revenue expenditure and constricted capital expenditure have pushed Andhra Pradesh’s finances into disarray, causing a revenue deficit of a staggering Rs 26,441 crore (1,486.28 per cent over the estimate) in the year 2019-20, the Comptroller and Auditor General of India has observed.
The CAG strongly rebuked the state government over the gross financial mismanagement, particularly in failing to contain the mounting revenue deficit, and violation of the FRBM Act.
The CAG found fault with the government over the grossly decreased capital expenditure in the year 2019-20 and said it pointed to the need for a review of the fiscal strategy and creation of the fiscal space for increased capital expenditure, which in turn, would help in promoting and accelerating equitable growth.
The liabilities of the state have been increasing year-on-year and, over 80 per cent of the borrowings during 2019-20 were utilised only to balance the Revenue Account, affecting asset creation.
The CAG, in its State Finances Audit Report for the year ending March 2020, observed that the government AP needed to estimate its resources “more realistically” and manage its expenditure “judiciously”.
The CAG report was tabled in the state Legislature on Friday.
The report noted that the state failed to contain revenue deficit during 2015-20, despite receipt of post-devolution Revenue Deficit Grants (to the tune of Rs 22,112 crore) from the Centre as per the 14th Finance Commission recommendations.
Revenue deficit of Rs 26,441 crore in 2019-20 was substantially higher than the Budget estimates (Rs 1,779 crore) due to the introduction of new schemes like Amma Vodi (Rs 6,349.47 crore) and nine-hour free power supply to the agriculture sector (Rs 4,919.84 crore) during 2019-20 and a decrease in state’s own revenue of Rs 1,511 crore over the previous year, it said.
Comparatively, the state incurred a capital expenditure of only Rs 12,242 crore, including Rs 1,830.93 crore funded by the Centre, that constituted mere 7.89 per cent of the total expenditure during 2019-20 and fell way short of the Budget estimate of Rs 32,293 crore. It accounted for only 1.26 per cent of the Gross State Domestic Product and decreased by Rs 7,734 crore (38.72 per cent) from the previous year.
The report said there were instances of misclassification of revenue transactions under capital section and non-accounting of other liabilities that would have pushed up the deficits to a further extent.
The outstanding debt of the state showed an increasing trend during the five-year period 2015-20. The debt that was Rs 1,73,854 crore during 2015-16, mounted to Rs 3,01,802 crore in 2019-20, marking an increase of 73.60 per cent, the CAG observed.
The off-budget borrowing liability of Rs 26,096.98 crore has not been disclosed appropriately as part of the state budget documents.
“This has the impact of diluting public financial management and oversight role of the Legislature and placing major sources of funding of government’s crucial infrastructure projects beyond the control of the Legislature,” the CAG remarked.
“Sound budgetary management requires advance planning and accurate estimation of revenues and expenditure. There were instances of incurring excess expenditure or large savings against the provisions made during the year, which point to flaws in expenditure monitoring and control, the CAG noted.
It warned that “persistent excess expenditure” over grants approved by the state Legislature was a violation of the “will of the Legislature” and needed to be viewed seriously.
Last week, you might have seen that Medtronic plc (NYSE:MDT) released its second-quarter result to the market. The early response was not positive, with shares down 2.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to US$114 in the past week. It was a credible result overall, with revenues of US$7.8b and statutory earnings per share of US$0.97 both in line with analyst estimates, showing that Medtronic is executing in line with expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Medtronic after the latest results.
NYSE:MDT Earnings and Revenue Growth November 26th 2021
Taking into account the latest results, Medtronic’s 25 analysts currently expect revenues in 2022 to be US$32.4b, approximately in line with the last 12 months. Per-share earnings are expected to grow 12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to US$3.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$33.0b and earnings per share (EPS) of US$3.96 in 2022. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$141, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Medtronic, with the most bullish analyst valuing it at US$155 and the most bearish at US$127 per share. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It’s clear from the latest estimates that Medtronic’s rate of growth is expected to accelerate meaningfully, with the forecast 3.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annually. So it’s clear that despite the acceleration in growth, Medtronic is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$141, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Medtronic. Long-term earnings power is much more important than next year’s profits. We have forecasts for Medtronic going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Medtronic that you need to take into consideration.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
U.S. stocks plunged on Friday, with global markets rattled by a new coronavirus variant discovered in South Africa, which fanned concerns that new growth-crushing lockdowns could be imposed if the variant spreads widely.
Trading volumes were low due to the Thanksgiving holiday in the U.S., which may have exacerbated the volatility.
However, major benchmarks fell sharply during the holiday-shortened session, with the Dow (^DJI) diving by more than 900 points — logging its worst day of the year and its third worst Thanksgiving selloff ever. Meanwhile, S&P 500 (^GSPC) sank by over 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, its biggest drop since February, and the Nasdaq (^IXIC) also fell sharply, but its losses were partly contained by a rally in stay-at-home stocks.
A new coronavirus variant has been discovered in South Africa, leading to an emergency session of the World Health Organization. Dubbed “Omicron,” scientists say the new B.1.1.529 strain is a concern, because it harbors a large number of mutations found in other variants — including the fast-spreading Delta variant that exploded over much of the summer — and it seems to be rapidly spreading.
While there’s no evidence yet, health officials are worried that the mutating variant could dilute or resist the efficacy of vaccines.
“It goes without saying that it’s still too early to say exactly how big a threat the new B.1.1.529 strain poses to the global economy,” Neil Shearing, Group Chief Economist at Capital Economics, said in a note.
Still, “the lesson from the past couple of years is that it’s the restrictions that are imposed in response to the virus – rather than the virus itself – that causes the bulk of the economic damage. So, the key question is how governments will respond in the event that the B.1.1.529 strain spreads,” Shearling wrote.
“That in turn will hinge on the extent to which it escapes the vaccines and, importantly, causes strains in national healthcare systems,” he added — underscoring that governments in the U.S. and U.K. had taken a “learn to live with the virus” approach, and thus are far less likely than other regions to impose new restrictions.
BioNTech (BNTX) said on Friday it expects more data on the new coronavirus variant in South Africa within two weeks to help its shots should be reworked, and that the company and Pfizer (PFE) — its vaccine partner — could redesign its vaccine within 6 weeks, with an aim to distribute it within 100 days.
Pfizer surged as much as 8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to record, signaling that the new variant could create demand for the vaccine.
While fears of COVID-19 dominated investors’ attention for much of 2020 and 2021, Pfizer confirms it could make variant vaccine in 100 days with the ability to make four billion doses in the first 12 months, according to Citi analyst Andrew Baum.
Travel and leisure-related stocks were among those hit the hardest early Friday, with Carnival Corp (CCL) and Royal Caribbean (RCL) down by 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in premarket trading. United Airlines (UAL), Delta Air Lines (DAL) and American Airlines were down each 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} each. Boeing slipped 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Marriott International and Hilton Worldwide fell more than 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Travel platform Expedia (EXPE) was the fifth-worst performer in the S&P 500, dropping by 11{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the shortened trading day, while home sharing site Airbnb (ABNB) was down more than 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
On the flip side, stay-at-home stocks gained Zoom (ZM) up 9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while Netflix (NFLX) bounded higher by 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
Oil prices also swooned to the lowest levels in more than two months Friday sparking fears about a slowdown in demand.
U.S. oil dropped 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} its the worst day since April 2020, with U.S. crude futures down 6.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to $73.57 per barrel on perceived fears of falling demand amid the new variant.
Bond yields have also fallen as the market’s inflation fears temporarily gave way to the desire for safe-haven assets. The yield on the benchmark 10-year U.S. Treasury note was down to 1.53{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} after closing at 1.63{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on Wednesday.
“We’re still in a place where yields are so low that the safe haven of bonds isn’t as safe as it looks,” ProShares’ Simeon Hyman told Yahoo Finance Live on Friday. “You’re making not that much today on that little bit of rally in treasuries, so it’s a tough spot.”
Banks, which benefit from the higher interest rates, were broadly weaker as bond yields declined. Bank of America sinks 5.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, Wells Fargo drops 6.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, Citigroup loses 4.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, JPMorgan declines 4.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, Goldman Sachs sheds 3.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and Morgan Stanley tumbled 4.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
__
1:00 p.m. ET: Stocks slump on Black Friday, as new variant spooks investors
Here were the main moves in markets as of 1:00 p.m. ET:
S&P 500 (^GSPC): -106.65 (-2.27{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,594.81
Dow (^DJI): -903.59 (-2.52{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 34,900.79
Nasdaq (^IXIC): -353.57 (-2.23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,491.66
Crude (CL=F): +$9.73 (-12.41{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $68.66 a barrel
Gold (GC=F): -$1.10 (-0.06{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,785.40 per ounce
10-year Treasury (^TNX): -1.4 bps to yield 1.54{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
11:15 a.m. ET: Carnival, travel slumps on fears of South African Covid variant
Cruise lines stocks continues to retreat as covid fears swelled. Carnival Corp (CCL) shed more than 12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while Royal Caribbean (RCL) sunk more than 11{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
11:10 a.m. ET: Stocks slump midday
Here’s where markets were trading midday:
S&P 500 (^GSPC): -93.46 (-1.99{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,608.00
Dow (^DJI): -913.69 (-2.55{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 34,890.69
Nasdaq (^IXIC): -318.08 (-2.02{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,523.46
Crude (CL=F): -$9.24 (-11.79{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $69.15 a barrel
Gold (GC=F): $13.30 (0.75{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,797.60 per ounce
10-year Treasury (^TNX): -1.49 bps to yield 1.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
10:30 a.m. ET: The end of the interest rate differential play?
Friday’s decidedly risk-off tone is calling into question the level of aggressiveness with which the Federal Reserve may pull back on its stimulus. Only a day ago, some thought the rapid surge in prices could prompt the Fed to speed up a taper — or even hike rates faster.
What a difference a day makes. Marc Chandler at Bannockburn Global FX, pointed out in a research note that the rise of a new variant is scrambling Fed expectations versus the European Central Bank and the Bank of Japan:
The dollar’s rally has been fueled by the prospect of a divergence of monetary policy that favored the Fed over the ECB and BOJ. Indeed, since the November 10 surprise jump in the October CPI to above 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, we had emphasized the likelihood that the Fed would have to taper quicker to give it the flexibility to lift rates earlier if needed. Since then, 4-5 Fed officials and several large banks have also underscored this possibility. However, this scenario is being called into question today, which is evident in the swaps markets and the Fed funds futures.
9:30 a.m. ET: Stocks open sink
Here’s where markets were trading just before the opening bell:
S&P 500 (^GSPC): -66.85 (-1.42{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,634.61
Dow (^DJI): -848.78 (-2.37{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 34,955.60
Nasdaq (^IXIC): -133.91 (-0.83{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 15,708.01
Crude (CL=F): -$5.34 (-6.81{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $73.05 a barrel
Gold (GC=F): $21.20 (1.19{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,805.50 per ounce
10-year Treasury (^TNX): -1.52 bps to yield 1.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
NEW YORK, NEW YORK – SEPTEMBER 30: Traders work on the floor of the New York Stock Exchange (NYSE) on September 30, 2021 in New York City. In afternoon trading the Dow was down over 250 points as investors continue to worry about inflation, wages and supply chain issues. (Photo by Spencer Platt/Getty Images)
VANCOUVER, British Columbia, Nov. 26, 2021 (GLOBE NEWSWIRE) — Pender Growth Fund Inc. (the “Company” or “Pender”) today announced its financial and operational results for the three months and nine months ended September 30, 2021.
Financial Highlights (Unaudited)
Net income was $75,339,050 for the three months ended September 30, 2021 (September 30, 2020 – $2,730,979) primarily the result of positive investment performance in the quarter.
Net income per Share for the three months ended September 30, 2021 was $9.89 (September 30, 2020 – $0.35).
Shareholders’ equity per Class C common share (“Share”) was $17.31 as at September 30, 2021 (December 31, 2020 – $6.11).
The Company’s total shareholders’ equity was $131.9 million as at September 30, 2021, an increase from December 31, 2020 ($47.3 million) that was primarily the result of positive investment performance during the period.
Shares outstanding were 7,616,529, a decrease from December 31, 2020 (7,740,129) that was the result of share repurchases under the Company’s Normal Course Issuer Bid (“NCIB”) which was renewed on February 11, 2021.
At September 30, 2021, 85.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the investment portfolio is in private companies and 14.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} is in publicly-listed companies.
Management Expense Ratio (“MER”) was 4.30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} for the quarter ended September 30, 2021, up from 2.96{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over the same period in the prior period, primarily due to the increase in management fees as a result of the increase in total Net Assets, plus, additional financing expenses.
Portfolio Highlights
We believe that the Company is particularly well-positioned today to pursue its investment objectives in the context of current market volatility and valuations in micro and small cap stocks in North America.
During the period we continued to be active in public markets where we saw what we believed to be strong opportunities both in longer-term compounders and potentially shorter-term close the discount situations. With the continued strength in small cap markets, we have been decreasing some positions and continue to work on new opportunities to deploy capital at attractive rates of return.
As always, this quarter we worked closely with our private portfolio companies and certain of our public portfolio companies. We are pleased to see private technology companies from within our portfolio flourish and build value, including having the opportunity to go public.
In particular, Copperleaf Technologies Inc., a portfolio company we own both directly and indirectly through our investment in Pender Private Investments Inc., listed on the TSX at $15.00 per share under the symbol “CPLF” in early October.
At September 30, 2021, the Company held approximately 97{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} or 16.7 million Legacy Shares of Pender Private Investments Inc. (“PPI”), formerly the Working Opportunity Fund (EVCC) Ltd. (“WOF”). These shares were acquired from shareholders of WOF (“Exiting Shareholders”) under the previously announced transaction (the “WOF” Transaction”). The scheduled second payment for the remaining 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the proceeds from the sale of their shares has been issued to former WOF shareholders.
Under the Legacy Shares rights, PPI is required to redeem them, on a pro rata basis at NAV, upon PPI‘s receipt of cash proceeds for the sale of any of its portfolio investments. PPI recently received cash proceeds for its divestment of Redlen Technologies Inc. and Teradici Corporation, and redeemed approximately 58.49{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of Legacy Shares on a pro rata basis. In October, the Company received a total of $63,197,947 on redemption of 9.8 million of the Legacy Shares it held. This redemption triggered a requirement for the Company to pay an additional cash payment of $21,136,513, or $1.2661 per share, to the Exiting Shareholders and the Company made the payment effective October 13, 2021.
Other Highlights
On February 11, 2021, the Company launched a new NCIB, under which the Company may purchase a maximum of 700,866 shares, or 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the Company’s public float on launch date, in the year ending February 11, 2022. During the period we continued to acquire shares of the Company in the market under our NCIB because we believe the shares are trading at a discount to their intrinsic value.
We encourage you to refer to the Company’s MD&A and quarterly unaudited financial statements for the September 30, 2021 and the annual audited financial statements for the year-ended December 31, 2020 as well as other disclosures available under the Company’s profile at www.sedar.com for additional information.
Recent Developments
Redlen Technologies Inc, (“Redlen”)
On September 9, 2021, Redlen, one of PPI’s key long-term private investees, reached an agreement with Canon Inc. (“Canon”) to conclude a share transfer agreement, with the goal of enabling Canon to accelerate the development of Photon Counting CT systems and continue to contribute to the advancement of diagnostic imaging. The acquisition was completed on September 28, 2021, resulting in PPI’s divestment of Redlen, as Redlen became a wholly owned subsidiary of Canon.
Teradici Corporation (“Teradici”)
During the quarter, Teradici, one of PPI’s key long-term private investees, entered into a definitive agreement to be acquired by HP Inc. (“HP”) with the goal of enhancing HP’s capabilities in the Personal Systems category by delivering new computer models and software-enabled digital services tailored for hybrid work. The acquisition was completed on October 1, 2021, resulting in PPI’s divestment of this holding.
Copperleaf Technologies Inc. (“Copperleaf”)
As at September 30, 2021, the Company held 12.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of Copperleaf’s issued and outstanding shares, both directly and through its investment in PPI. On October 7, 2021, Copperleaf’s common shares began trading on the TSX under the symbol “CPLF”. The company raised $161.1 million at $15.00 per common share.
About the Company The Company’s objective is to achieve long-term capital appreciation for its investors. The Company utilizes its small capital base and long-term horizon to invest in unique situations, primarily small cap, special situations, and illiquid public and private companies. The Company trades on the TSX Venture Exchange under the symbol “PTF”. The Company posts its Reporting Nav on its website, generally within five business days of each month end.
Tony Rautava PenderFund Capital Management Ltd. (604) 653-9625 Toll Free: (866) 377-4743
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Information
This news release may contain forward-looking statements (within the meaning of applicable securities laws) relating to the business of the Company and the environment in which it operates. Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “estimate” and other similar expressions. These statements are based on the Company’s expectations, estimates, forecasts and projections and include, without limitation, statements regarding the benefits of the WOF Transaction, the Company’s belief that its shares trade at a discount to their intrinsic value, investment and liquidation opportunities in the public markets, and future investment opportunities. The forward-looking statements in this news release are based on certain assumptions; they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the risk that valuations of micro and small cap public companies will change, the general volatility of public markets as well as factors discussed under the heading “Risk Factors” in the Company’s annual information form and MD&A available at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Stocks, US Treasury yields and oil sink as new COVID-19 strain rattles markets.
By Sunil JagtianiBloomberg
Published On 26 Nov 2021
Stocks, Treasury yields and oil sank Friday while the yen jumped as a new Covid-19 strain discovered in southern Africa sent a wave of caution across global markets.
An Asia-Pacific equity gauge was set for the worst slide since March, with Japan and Hong Kong underperforming and travel shares among the biggest decliners. U.S. and European futures fell and the 10-year Treasury yield dropped to 1.56{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
The World Health Organization and scientists in South Africa are studying the recently identified variant described as very different to previous versions and of serious concern. The U.K. and Israel banned flights from South Africa and some neighboring countries. Hong Kong confirmed two cases of the strain.
The dollar was at a 16-month high, while South Africa’s rand weakened and commodity currencies retreated. Crude shed 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and gold rose. U.S. markets, closed Thursday for Thanksgiving, will have a shortened Black Friday session.
The detection of the strain comes on top of concerns in markets about high inflation and the prospect of quicker exit from ultra-loose monetary settings. Global shares are up about 16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} this year, weathering a plethora of risks after investors poured almost $900 billion into equity exchange-traded and long-only funds in 2021 — topping the combined total from the past 19 years.
“It’s a scary headline” about the virus variant, so it may have caused a knee-jerk reaction, said Kyle Rodda, an analyst at IG Markets Ltd. He added that “North America off the desks means there’s a wall of buyers missing” and that thinner markets make for more pronounced moves.
Variant ‘playbook’
December futures on the Cboe Volatility Index, a gauge of implied equity swings for the S&P 500, advanced as traders braced for turbulence when U.S. markets reopen.
Justin Tang, head of Asian research at United First Partners, pointed out that “the world has gone through this before with delta,” adding “there is already a playbook for such situations” and that “mutations are expected and not something unknown.”
Meanwhile, Goldman Sachs Group Inc. economists said they expect the Fed to tighten policy faster than previously anticipated, including doubling the pace at which it tapers bond purchases to $30 billion a month from January. They see an interest-rate liftoff from near zero in June.
In China, regulators have asked Didi Global Inc.’s top executives to devise a plan to delist from U.S. bourses, people familiar with the matter said. That may revive fears about Beijing’s intentions for its giant technology industry. A gauge of Chinese tech stocks slid.
The Chinese economy continued to slow in November with car and homes sales dropping again as a housing market crisis dragged on, according to Bloomberg’s aggregate index of eight early indicators.
For more market analysis, read our MLIV blog.
Here are some key events this week:
Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday Some of the main moves in markets:
Stocks
S&P 500 futures fell 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} as of 5 a.m. in London. The S&P 500 rose 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on Wednesday
Nasdaq 100 futures fell 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. The Nasdaq 100 rose 0.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} on Wednesday
Japan’s Topix index dropped 2.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Australia’s S&P/ASX 200 index fell 1.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
South Korea’s Kospi index shed 1.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Hong Kong’s Hang Seng index declined 2.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
China’s Shanghai Composite index lost 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Euro Stoxx 50 futures tumbled 2.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Currencies
The Bloomberg Dollar Spot Index rose 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
The euro was at $1.1223, up 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
The Japanese yen was at 114.72 per dollar, up 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
The offshore yuan was at 6.3934 per dollar, down 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Bonds
The U.S. 10-year Treasury yield fell eight basis points to 1.56{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Australia’s 10-year bond yield fell nine basis points to 1.78{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Commodities
West Texas Intermediate crude fell 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to $76.06 a barrel
Gold was at $1,797.75 an ounce, up 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
The company — one of America’s last remaining true dollar stores — said Tuesday it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The change is a sign of the pressures low-cost retailers face holding down prices during a period of rising inflation.
Dollar Tree(DLTR) said in a quarterly earnings release Tuesday that its decision to raise prices to $1.25 permanently, however, was “not a reaction to short-term or transitory market conditions.”
Selling stuff strictly for $1 hampered Dollar Tree, the company said, and forced it stop selling some “customer favorites.” Raising prices will give Dollar Tree more flexibility to reintroduce those items, expand its selection and bring new products and sizes to its stores.
Dollar Tree also said that hiking prices will help the company increase its profit margins by “mitigating historically high merchandise cost increases,” including freight and distribution costs, as well as wage increases.
“This is the appropriate time to shift away from the constraints of the $1 price point,” CEO Michael Witynski said in a statement.
The end of dollar stores
Dollar Tree carries primarily seasonal goods, toys, stationary, home decor, kitchenware and party items.
It caters to suburban, middle-income shoppers, unlike Dollar General(DG), its more rural-focused rival. Family Dollar — owned by Dollar Tree — targets mostly low-income shoppers in cities.
Dollar Tree has sold products at $1 for 35 years and was the last of the major dollar store chains to actually be a dollar store. (The company was called “Only $1.00” in the late part of the 20th century, before changing its name to Dollar Tree in 1993.)
Dollar Tree had started moving away from only offering goods for $1 in recent years, in part as a response to pressure on Wall Street to raise prices. Dollar Tree has lagged Dollar General and other discount chains.
In 2019, an activist investor took a stake in the company and pressed the chain to raise prices. The group ended its fight after Dollar Tree announced it planned to test different prices.
In September, Dollar Tree said it planned to begin selling items at $1.25 and $1.50 at some stores for the first time. It also said it would add $3 and $5 items to more stores, expanding on a prior strategy to offer these prices at select locations.
Since that announcement, a different activist investor built a stake in Dollar Tree and has tapped a former Dollar General CEO to push for changes at the company.
Although Dollar Tree said its decision to permanently raise prices was not a reaction to short-term inflation, one analyst was unconvinced.
“The pace of rollout, along with [the] engaged investor, Mantle Ridge, clearly suggests otherwise,” Kelly Bania, an analyst at BMO Capital Markets, said in a note to clients Tuesday.
NYSE:MDT Earnings and Revenue Growth November 26th 2021
