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Former Treasury Secretary Steven Mnuchin is planning an investment fund backed by Persian Gulf wealth funds, report says

FILE PHOTO: U.S. Treasury Secretary Steven Mnuchin testifies before a Senate Finance Committee hearing on the President's FY2021 Budget on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas/File Photo

Former Treasury Secretary Steven Mnuchin is planning to launch an investment fund that will be backed by sovereign wealth funds in the Persian Gulf region and other investors, the Washington Post reported on Tuesday.

Citing two people familiar with the matter, the Washington Post said the fund will invest in areas including financial technology and entertainment, among other potential sectors. 

The United Arab Emirates, Kuwait, Qatar and Saudi Arabia control some of the Persian Gulf region's largest investment funds, according to the Sovereign Wealth Fund Institute.

Mnuchin traveled to the region frequently during his time as the head of the US Treasury, usually in relation to the treasury's mission to combat terrorism financing. 

Before his tenure in the White House, Mnuchin worked as a filmmaker and on Wall Street, including a 17 year stint at Goldman Sachs.

 

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Retail investors are flocking to Discord amid Reddit day-trader revolution

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Discord app
  • WallStreetBets captured the market's attention for weeks as Reddit traders squared off with hedge funds, but retail investors are increasingly gathering on another platform.
  • Discord has become a highly active hub for retail traders to discuss trading strategies, investing tips, and options alerts.  
  • Insider spoke with one user who said he has reaped an 850% return since August after learning from other uses, while another runs a VIP trading chat where members can pay for exclusive alerts. 
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

While Reddit's WallStreetBets forum dominated market headlines in January as day traders challenged Wall Street short sellers to pump the price of GameStop stock, an emerging class of investors are increasingly finding their way to Discord.

The mobile and desktop platform hosts over 4,000 servers tagged "trading" and over 700 tagged "stocks," according to data site Disboard.

On any given trading day, hundreds of exchanges are sent through Discord channels as investors discuss options they're buying, breaking news developments, and positions they're taking.

 "Take profits on SNDL or no??" one user posted in the server Viper Trading earlier in January. "Cannabis is the future," one member responded. Four minutes later, another replied "Hold $3.50."

One active Discord user, Martin Escobedo, tells Insider that he is up over 850% since August using trading techniques he's learned from Ace Enterprises, a Discord server that's gained over 75,000 members in just six months.

Read more: Inside Eagle Investors, the 20,000-member online community run by 2 Indiana University students that's helping spearhead the Gen Z day-trading revolution

The server is led by a team of 30 traders who discuss their daily activities during market hours in a public chat all members can view. After the close, any member can discuss the trades they made that day.

"At the beginning I was clueless. I had no idea what these guys were talking about," Escobedo told Insider. 

When he joined Discord in August, he would spend every afternoon after his day-job as a benefit specialist at a hospital devouring the various channels within Ace Enterprises. In the #education channel, investors discuss everything from basic trading definitions to advanced options techniques. Escobedo also watches Ace Enterprises founder Danny Devon discuss trading strategies on his Tik Tok live. 

On Friday, Escobedo was unsure about a Teladoc trade and messaged one of the traders in a private DM for his insight on the chart. "295 for TDOC (teladoc) will be your PT?" "Entry," the user responded.

Discord
         
Discord
Martin Escobedo (@mops) speaks with an Ace Enterprises trader in a Discord DM


 Ace Enterprises founder Danny Devan told Insider he's on a journey to "teach people how to fish," and encourages members to only trade once in a while and learn the benefits of long-term investing. 

 "There are so many other Discords that focus on alerts and telling you when to get in and when to get out," Devan said.

He explains to his members that day trading is not consistently profitable over a long period of time.

"We're not going to sit here and try to convince you you're going to be rich day trading." 

 Though in the profits-and-losses tab of the Ace Enterprises and in many other discord channels, there's an overwhelming sense that people have joined Discord with a goal in mind: to eventually reap huge gains from their efforts.  

Read more: Barclays says buy these 33 beaten-down stocks that are perfectly poised to capitalize on the reopening of the economy in the years ahead

One Ace Enterprises member posted: "I'm poor so I kinda don't want to post this but up ~5 today on my positions. Thanks especially to @dougiedee" (one of the traders). 

"Small gains add up bro! That's $28 bucks that you didn't have before," said @dougiedee. "You're not poor, you're just on a journey to be rich :)," replied Ace Ventures owner, Danny Devan. 

Other discord servers have private channels for paying-members only, like Asset Entities, one of the largest trading discord servers with over 115,000 users.

On a typical trading day over 15,000 users can be online at once. Roughly 4,000 users pay $25 a month to become "VIPs" and receive extensive trading alerts throughout the day covering SPACs, day-trades, penny stocks, long-term trades, options, and more.

Though Asset Entities co-founder Jackson Fairbanks is pulling in revenue from the VIP subscription, he told Insider he values the community he's built from the discord server more than anything else.

Whereas one person may not be able to spot a trend, a team of individuals can, Fairbanks said.

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The stock market could see a 10% correction before April amid exuberant positioning, but investors should use it as a buying opportunity, BofA says

Trader

'Exuberant positioning" in the stock market could indicate a 10% correction is up ahead, but it will be a buying opportunity for investors, according to Bank of America analysts. 

"We expect a buyable 5-10% Q1 correction as the big 'unknowns' coincide with exuberant positioning, record equity supply, and 'as good as it gets' earnings revisions," said a team of BofA strategists in a Tuesday note.

The S&P 500 has already gained 4% in 2021 as the market climbs to new highs. Amid the broad rally, investors desperate for more returns have been turning to more speculative investments like cryptocurrencies, SPACs, and crowd-sourced trading, said BofA.  

The number of SPAC offerings in January alone exceeded the last six years combined, while the GameStop crowd-sourced short squeeze sent the stock up 2146% on an intraday basis, the firm said. 

Read more: Ray Dalio says investors are staring down a period of weak returns as low rates inflate asset bubbles - and warns we're in the 'problem' part of the current cycle

Meanwhile, Bank of America's sell-side indicator is signaling that the stock market is on the verge of "dangerous optimism."

As these speculative investing methods combine with rising market exuberance, a correction of up to 10% may occur. But the strategists say the correction will be a "good buying opportunity."

It's a similar call to Jefferies' equity analysts who said on Monday they will be buying any dips if the market corrects.

Bank of America has a 2021 year-end price target of 3,800 for the S&P 500, a 2.8% decline from Tuesday's close.

 

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Bitcoin bull Mike Novogratz warns that ‘greed and gravity’ could pop the bubbles in Dogecoin and other meme investments

Mike Novogratz

So-called meme investments like Dogecoin are a money-losing trap for new, unsuspecting investors, according to long-standing bitcoin bull Mike Novogratz. 

As the frenzy around GameStop dies down and investors look for new speculative assets, many have turned to Dogecoin, a cryptocurrency based on the Doge meme. On Monday, Dogecoin jumped 31% to a record $0.083745 after Elon Musk and Snoop Dogg plugged the token on twitter. 

But Novogratz told the Bloomberg Old Lots podcast that those price bubbles will eventually pop, and they leave naive investors who don't know when to sell vulnerable to massive losses. 

"Meme squeezes can't sustain themselves for two simple reasons," Novogratz said, "I call it greed and gravity." 

Novogratz down how "senior people in finance" including Chamath Palihapitiya and Elon Musk were "encouraging the masses" to load up on GameStop after the stock was squeezed and traded at $400. The result? New investors spent their "hard-earned dollars" to buy the stock at $400, only to lose money when the stock crashed shortly after. 

"It was almost a certainty they'd lose all their money at that point," said Novogratz, who added it was frustrating to watch investors buy the stock at such high prices after being encouraged to do so by prominent figures in the business world.

Though some investors view speculating in meme investments like Dogecoin in small amounts as an entertaining way to learn about investing, like billionaire Mark Cuban.

Cuban tweeted on Monday that he bought a few dollars of Dogecoin for his son, and together they discuss the coin's exciting price swings.

"It gives you a better chance of winning than a lottery ticket, all while teaching the economics of supply and demand and introducing people to crypto assets," Cuban said. 

Read more: A wealth management research chief shares 6 stock-market sectors to buy as the country reopens and the economy experiences its 'best single year of GDP growth since 2000'

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Chamath Palihapitiya says WallStreetBets traders can do the same fundamental analysis as hedge fund managers who ‘don’t have an edge’

Chamath Palihapitiya

Chamath Palihapitiya told CNBC on Wednesday the recent frenzy of trading stemming from Reddit's WallStreetBets demonstrates that retail investors can do the same quality of analysis as hedge fund managers who "don't have an edge." 

The billionaire investor sees a "pushback against the establishment" from retail investors, many of whom watched their parents lose money during the financial crisis while large institutions on Wall Street were bailed out.

Palihapitiya said that the 2.7 million users on WallStreetBets are as important to the market as any hedge fund. And, some Redditors are doing "incredible fundamental diligence," even better than professional hedge fund analysts. 

He also lamented the lack of transparency within hedge funds who maximize gains using prime brokers, and called out "idea dinners" in the Hamptons where a select number of managers get together behind closed doors and pitch investment ideas.

Read more: We're very surprised we didn't underperform in the 4th quarter': Cathie Wood and her analysts break down their stock-selection process and the top 10 picks that contributed to the outperformance of ARK ETFs in Q4 2020

Investors on WallStreetBets are more courageous than managers, Palihapitiya said, because they discuss their ideas in public, and aren't afraid to admit losses. 

 "It takes an enormous amount of faith in the system to be that transparent, to talk about things and then for each individual to make their own mind up and to do things, whether it's to buy or to sell. And I think that what it proves is this retail phenomenon is here to stay," he added.

He predicted that in the long run, retail sophistication will catch up to institutional sophistication, but first, hedge funds should be forced to disclose the details of their trades like investors on WallStreetBets do

"My point in all of this, if you want to make the system better and healthier, force more transparency on the institutional side," Palihapitiya said. 

"Why is it allowed for somebody running a hedge fund to basically claim that they are market neutral, but be levered up? They take a $10 billion fund and their prime brokers allow them to run a hundred billion dollars of notional exposure-who thinks that that's fair?" said the investor.

"It's not fair to the retail investor because when that blows up and a hundred billion dollar hole exists in a fund, which by the way, this is exactly what happened in 2008, the government bails them out-and who is the government? All of us," he added.

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S&P 500 suffers biggest decline since October with the Fed mum on further aid

trader nyse pray

The S&P 500 faced its biggest decline since October while the Dow and Nasdaq tumbled as the Federal Reserve left its benchmark interest rate unchanged and didn't promise the economy further stimulus aid. 

The Federal Reserve acknowledged the weakening of economic data during Wednesday's FOMC meeting, suggesting that it's too soon to be discussing changes to the current stance of monetary policy.

"The data from here through the second and third quarters should be strong, but for now, however, the Fed appears to be merely watching and promoting the efforts of the new Administration and Treasury as they institute proactive fiscal support," said Rick Rieder, BlackRock's chief investment officer of global fixed income.

"The fact is that with the passage of the last fiscal stimulus package in December (after the Fed last met), and the debate heating up over the prospects and size of the next one, the focus is firmly on the fiscal side of the equation now," he added.

Retail traders continued to dominate market headlines, sending heavily-shorted stocks soaring for the third consecutive day. White House Press Secretary Jen Psaki said Wednesday that Treasury Secretary Janet Yellen is "monitoring the situation" around the GameStop-related changes in the stock market.


Here's where US indexes stood shortly after the 4:00 p.m. ET close on Wednesday:

Read more: 4 investing heavyweight firms answer the 5 most burning bitcoin questions facing investors as the cryptocurrency sees unprecedented volatility

Nokia jumped as high as 86%. The Finnish telecommunications company has become the latest legacy tech star on Reddit's WallStreetBets forum.

Here's a list of 10 highly shorted stocks that are soaring as Reddit traders wage war against top Wall Street hedge funds. 

TD Ameritrade restricted access to GameStop and AMC on Wednesday , "out of an abundance of caution amid unprecedented market conditions and other factors," according to a statement from the trading platform.

Bitcoin climbed to $31,297.06 after dropping below $30,000 after the Wednesday open. The cryptocurrency has lost nearly $200 billion in market value over the past three weeks.

Spot gold sank 0.49%, to $1,841.80 per ounce. The US dollar weakened slightly against Group-of-20 currency peers and Treasury yields wavered.

West Texas Intermediate crude was up just 0.1%, to $52.67 per barrel. Brent crude, oil's international benchmark, dipped 0.67%, to $55.59 per barrel, at intraday lows.

Now read more markets coverage from Markets Insider and Business Insider:

GameStop nearly died in 2019. Now hedge funds are scrambling to deal with the company's exploding stock. Here's what's going on.

Here are 4 highlights from Larry Fink's letters to CEOs and BlackRock clients that will serve as a big boost to the red-hot ESG market in 2021

Investor Chamath Palihapitiya will donate his earnings from GameStop's rally to the Barstool Fund, which supports struggling small businesses

 

 

Read the original article on Business Insider

‘Forecast blockbuster beat: Here’s what 4 Wall Street analysts expect from Apple’s 1st-quarter earnings report

Apple Store
  • Apple reports first-quarter earnings on Wednesday after the market close.
  • Analysts expect Apple to exceed $100 billion in revenue for the first time ever. 

Apple will report first-quarter earnings on Wednesday after the closing bell in a quarter that many analysts expect to be highly robust. Analysts are predicting the tech giant to post quarterly revenue exceeding $100 billion for the first time, driven by early adopters of 5G iPhones and continued work-from-home habits.

The consensus estimate is $102.76 billion in sales for the quarter ended December 31, Apple's fiscal first quarter, according to 27 analysts estimates via Yahoo Finance.

"The Street is anticipating robust results from Apple on Wednesday after the bell with Cupertino expected to handily beat Street estimates across the board," said Wedbush's Daniel Ives. 

Here's what 4 analysts on Wall Street except from Apple's first-quarter earnings report. 

JPMorgan, Price Target $150, Overweight rating 

Analysts led by Samik Chatterje said they're forecasting a "blockbuster beat" for Apple on Wednesday.

"Apple will report its first $100bn+ revenue quarter with the momentum from early adopters of 5G iPhones as well as continuing WFH tailwinds to iPad and Mac lineup; we expect above drivers to help in reporting a large beat to sell-side consensus as implied in our (likely street-high) revenue/EPS estimate of $110 bn/ $1.56 vs. consensus $102 bn/$1.41 for F1Q (Dec-end)."

The analysts forecast Apple to sell 80 million iPhone units in the first quarter, which will support iPhone revenues of $66 billion. 

Wedbush, Price Target $175 (raised from $160), Outperform rating 

"Based on our Asia supply chain checks, we strongly believe the iPhone 12 supercycle hype has become a reality with this week giving the Street its first glimpse of underlying iPhone 12 demand and key commentary from Cook looking ahead into the next few quarters," Wedbush's Dan Ives said.

"While the Street is forecasting roughly 220 million iPhone units for FY21, we believe based on the current trajectory and in a bull case Cupertino has potential to sell north of 240 million units (~250 million could be in the cards - an eye popping figure) which would easily eclipse the previous Apple record of 231 million units sold in FY15. Importantly, with our estimation that 350 million of 950 million iPhones worldwide are currently in the window of an upgrade opportunity, we believe this will translate into an unprecedented upgrade cycle for Cook & Co. and represents a "sweep the leg" moment against the lingering bear camp." 

Read more: This actively-managed SPAC ETF amassed $60 million assets within a month of launching. Its founder breaks down how to pick blank-check firms - and shares 3 to watch in 2021

Goldman Sachs, Price Target $80, Sell Rating

"We believe the shift of consumer disposable income toward vacations, restaurants, and other outside of the home spending as re-opening occurs is likely to act as a negative catalyst for Apple's stock just as COVID lockdowns represented a tailwind," said Goldman analysts led by Rod Hall.

"We forecast revenue of $105.3bn (FactSet consensus $102.2bn), gross margin of 38.2% (consensus 38.1%), EBIT margin of 27.9% (consensus 27.6%) and EPS of $1.45 (consensus $1.40)."

CFRA Research, Price Target $160 (raised from $145), Buy opinion

"We are upping our iPhone estimates for the Dec-Q/Mar-Q as well as for FY 21 and FY 22, as we believe AAPL's 5G devices and pent-up demand in China is spurring better than expected sales. Momentum for iPads and Macs are tracking ahead of expectations and appear as if they could persist through at least the first half, while wearables should see 20% plus growth ahead. We expect Services growth of 14%-15% in the Dec-Q and Mar-Q, but comparisons will get tough as the segment laps pandemic figures," said Angelo Zino of CFRA. 

 

 

 

 

 

 

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Legendary investor Jeremy Grantham says Biden’s $1.9 trillion stimulus plan will make the stock market bubble even worse

Jeremy Grantham

Legendary investor Jeremy Grantham warned investors during a Bloomberg interview that the $1.9 trillion in federal aid President Joe Biden is seeking from Congress will further inflate the stock market bubble.

The GMO co-founder told Erik Schatzker that he has "no doubt" some of the stimulus aid will end up in the market. He said the "sad truth" about the last stimulus bill passed in 2020 was that it didn't increase capital spending and didn't increase real production, but it certainly flowed into stocks. 

The plan that Biden is proposing contains a $1,400 boost to stimulus checks, robust state and local aid, and vaccine-distribution funds. Grantham said that if the package passed is worth $1.9 trillion, it could lead to the dangerous end of the bubble.  

"If it's as big as they talk about, this would be a very good making of a top for the market, just of the kind that the history books would enjoy," said Grantham.

"We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust," he added. 

Read more: A notorious market bear who called the dot-com bubble says he sees 'fresh deterioration' in the market indicator that first signaled the 1929 and 1987 crashes - and warns that stocks are ripe for a 70% drop

Grantham has long-warned of the ballooning bubble he sees in the US stock market. In his investor outlook letter in the beginning of January, he detailed how extreme overvaluations, explosive price increases, frenzied issuance, and "hysterically speculative investor behavior" all demonstrate that the stock market is in a bubble that not even the Fed can stop from bursting.

"When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years," Grantham told Bloomberg.

Grantham also said that the combination of fiscal stimulus and emergency Fed programs that helped inflate the bubble could increase inflation.

"If you think you live in a world where output doesn't matter and you can just create paper, sooner or later you're going to do the impossible, and that is bring back inflation," Grantham said. "Interest rates are paper. Credit is paper. Real life is factories and workers and output, and we are not looking at increased output."

He told investors to seek out stocks outside of US markets, as many other countries haven't seen the huge bull market the US has. He called emerging markets stocks "handsomely priced."

"You will not make a handsome 10- or 20-year return from U.S. growth stocks," said Grantham. "If you could do emerging, low-growth and green, you might get the jackpot."

Read more: GOLDMAN SACHS: These 22 stocks still haven't recovered to pre-pandemic levels - and are set to explode amid higher earnings in 2021 as the economy recovers

Read the original article on Business Insider

S&P 500 falls for the first time this week as US stocks edge lower

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.
  • US equities fell on Friday after closing at all-time highs and the S&P 500 fell for the first time this week.
  • GameStop finished a chaotic week in the market after retail investors thwarted short-sellers and volatility prompted a trading halt.
  • Watch major indexes update live here.

US equities fell on Friday after closing at all-time highs, as investors weighed the outlook for Biden's nearly $2 trillion stimulus bill and grew concerned amid reports the new coronavirus strain may be deadlier. The S&P 500 fell for the first time this week. 

There is some evidence the new variant of the coronavirus first identified in the UK may be up to 30% more deadly than previous variants, the UK government has said.

A key gauge of US business activity swung higher this month as strong demand lifted manufacturers and service businesses alike. IHS Markit's composite output index climbed to 58 from 55.3 in an early January reading, hitting its highest level in two months.

Credit- and debit-card spending accelerated through the first two weeks of January as stimulus passed by President Donald Trump bolstered households' balance sheets. Card spending climbed 6% from the year-ago period over the week that ended January 16, Bank of America said in a Thursday note, citing aggregated card data.

Here's where US indexes stood at the 4 p.m. ET close on Friday:

Read more: GOLDMAN SACHS: Buy these 26 renewable-energy stocks best-positioned to benefit from increased spending as governments aim for net-zero emissions

GameStop surged as much as 78% on Friday as investors looking to thwart short-sellers piled further into the stock and triggered a trading halt.

Shares of GameStop have staged a gravity-defying rally in recent weeks, with shares up as much as 307% year-to-date based on Friday's intra-day high.

Short-seller Andrew Left of Citron Research tweeted that he is ending his bearish commentary on GameStop after he said an "angry mob" of investors harassed him and his family over the past 48 hours.

Canada-based Horizons ETF Management announced Friday that it filed its final prospectus to launch the Horizons Psychedelic Stock Index ETF (PSYK). It will be the first-ever psychedelics ETF and begins trading on the Canadian NEO exchange next Wednesday.

Bitcoin recovered to $33,817 Friday afternoon after tumbling to around $28,000 in the early morning hours. Comments from Janet Yellen and a report of a 'double spend' gave bitcoin investors a tumultuous week

Gold fell 0.61%, to $1,854.60 per ounce. The dollar weakened against a basket of Group-of-20 currencies and Treasury yields fell slightly.

Oil prices fell but remained above the $50 support level. West Texas Intermediate crude dropped as much as 1.86%, to $52.14 per barrel. Brent crude, oil's international standard, declined 1.52%, to $55.25 per barrel.

Now read more markets coverage from Markets Insider and Business Insider:

From stimulus checks to larger food stamps, here's everything that's in Biden's 3rd wave of executive actions

Microsoft's president defends its controversial PAC to employees in a leaked recording

Elon Musk says he'll throw $100 million into carbon capture tech. VCs including Vinod Khosla told us these 4 startups are leading the way.

Read the original article on Business Insider

David Einhorn’s Greenlight Capital says Tesla short position was its biggest loser of 2020 – and says owning the EV-maker’s ‘silly’ stock is a fad

FILE PHOTO: David Einhorn, President, Greenlight Capital, Inc. speaks during the 2019 Sohn Investment Conference in New York City, U.S., May 6, 2019. REUTERS/Brendan McDermid/File Photo
David Einhorn, President, Greenlight Capital, Inc. speaks during the 2019 Sohn Investment Conference in New York
  • Greenlight Capital said in a quarterly investor letter that its Tesla short position was its biggest loser of 2020. 
  • Founder David Einhorn has long held a short wager against Tesla. 
  • The firm said owning the stock is a "fad." 
  • Watch Tesla trade live here

A short-position in Tesla was Greenlight Capital's biggest loser in 2020, according to the hedge fund's fourth-quarter investor letter published Thursday. 

Greenlight's portfolio was crushed by losses from its position betting against Tesla in 2020, which saw the EV maker soar 740%. As a result of the stock's boom, the hedge fund said it adjusted its position ahead of Tesla's inclusion in the S&P 500. 

Greenlight founder David Einhorn has had a long-time short wager against Tesla, and even feuded with Elon Musk in 2019. He's not the only Tesla short-seller who had a difficult 2020: Jim Chanos said in December his short position was "painful" and he reduced the size of his bet against the EV maker's stock. 

Greenlight's letter didn't hold back against its critique of the stock. Greenlight said Tesla cars are not a "fad" but owning the stock is. The firm also tore into Tesla's valuation, which has ballooned to more than $800 billion. As of Thursday, Tesla is trading at a price-to-earnings multiple of 1,699 times. 

"The fad is in owning TSLA stock. We have quipped before that twice a silly stock price is not twice as silly, it's still just silly. But what about 20 times a silly price?" said Greenlight. "Of course, there is the possibility that we are just wrong and bad at measuring silliness. But setting that aside, we think that the answer is that certain stocks are held exclusively by valuation indifferent investors."

The firm also highlighted that during the 2000 internet bubble Cisco Systems Inc maxed out at 29 times revenue, which is lower than Tesla's current price to revenue ratio of 33. 

Shares of Tesla fell as much as 1% on Thursday to $841 before paring some losses.

Read more: GOLDMAN SACHS: These 22 stocks still haven't recovered to pre-pandemic levels - and are set to explode amid higher earnings in 2021 as the economy recovers

Read the original article on Business Insider