Bloomberg

(Bloomberg) — Scientists have used satellite data to identify more than 1,800 major releases of the potent greenhouse gas methane, according to a landmark study published in Science. The research validates a methodology developed in recent years to spot super-emissions from fossil fuel operations.

Large plume events account for between 8% and 12% of all releases from the oil and gas sector and many of them can be mitigated at low cost, according to the report published Friday. The methane detected by French and American researchers from 2019 and 2020 was concentrated mostly in Russia, Turkmenistan, parts of the U.S., Kazakhstan, Iran and Algeria. As many as 150 clouds were seen by satellite each month, some of which spread for hundreds of kilometers.

Learn more about the planet-warming power of methane:

Publication of the study in the prestigious journal is the most mainstream acknowledgment so far of the efficacy of using satellites to identify and estimate methane super emissions events. The approach is poised to play a critical role in detecting, attributing and ultimately halting powerful leaks and intentional releases common in fossil fuel operations.“Mitigation of ultra-emitters is largely achievable at low costs and would lead to robust net benefits in billions of U.S. dollars for the six major producing countries when incorporating recent estimates of societal costs of methane,’’ the report said. Among others, the authors include Clement Giron from Kayrros SAS, a French geoanalytics firm, and Riley Duren, chief executive officer of nonprofit Carbon Mapper.Methane is the primary component of natural gas. It has has 84 times the warming power of CO₂ in the short term if released directly into the atmosphere.

By studying oil and gas super-emission events, the scientists also found a functional relationship between large emissions and smaller, less detectable releases across energy networks. That finding is important because, when combined with new satellites scheduled to be launched in the coming years, it could help paint a more complete picture of global methane releases.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Amazon.com Inc. is likely to give the market back what Meta Platforms Inc. just took away — or at least a big chunk of it. 

The e-commerce giant is poised to add about $155 billion in market value if the stock’s premarket gain of about 11% holds through Friday’s close. That what would be among the top five single-day gains in U.S. stock market history, and would come just a day after Facebook parent Meta Platforms Inc. entered the other end of the record book with a $251 billion wipeout. 

Amazon’s move could come close to Apple Inc.’s U.S. record from last week — the iPhone maker added about $179 billion in value on the day after its earnings report. The global record for a daily gain in market capitalization was set by PetroChina Co., which added $597 billion on one day in November 2007.

The surge in Amazon’s stock price came after sales in its cloud computing business beat Wall Street estimates and the company raised the price of Amazon Prime subscriptions, alleviating some concerns about the impact of cost increases on profitability. Those elements overshadowed forecasts for sales and operating profit in the current quarter that fell short of expectations.

Amazon on Thursday suffered its worst day since March 2020, as Meta’s earnings flop raised fears about results for other big technology companies. The 7.8% decline in the regular session wiped out $119 billion in market value for the Seattle-based company.

(Adds chart on biggest market cap gains globally, updates share prices.)

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©2022 Bloomberg L.P.

(Bloomberg) — Ford Motor Co. shares fell after the automaker missed estimates for quarterly earnings and cautioned it may get off to a slow start to the year due to supply chain issues.

The carmaker posted earnings of 26 cents a share excluding some items for the last three months of 2021, trailing the 45-cent average analyst estimate. Shortages of critical components including semiconductors disrupted production and will weigh on vehicle deliveries to dealers this quarter.

“We have incredible demand for our products,” John Lawler, Ford’s chief financial officer, told reporters on a call. “It’s the supply chains that limited what we could produce and what we could provide. And we see that easing into ’22, and you’ll see that flowing through our profits.”

Ford shares fell as much as 6.8% to $18.53 before the start trading. The stock was down 4.2% this year through Thursday’s close.

Sales rose 5% to $37.7 billion in the fourth quarter, with automotive revenue accounting for $35.3 billion of that total. Some analysts had anticipated double-digit sales growth, Lawler said. The company is estimating higher commodity costs will be a $1.5 billion to $2 billion headwind this year.

Investors have cheered Chief Executive Officer Jim Farley’s effort to accelerate Ford’s switch to electric vehicles, sending the shares up 136% last year. Ford’s market capitalization briefly topped $100 billion.

In recent weeks, the company’s valuation has fallen back to around $80 billion. 

“Financial performance is obviously critical,” Farley said in a statement.  “We’re also proud that customers see how Ford is taking EVs mainstream.”

Bloomberg News reported on Feb. 1 that Ford is considering adding up to $20 billion to its EV spending over the next decade to convert factories to battery powered models. Farley has already tripled output of its electric Mustang Mach-E in Mexico and doubled production of the F-150 Lightning going on sale this spring.

For this year, Ford forecast earnings before interest and taxes will rise 15% to 25% to as much as $12.5 billion. That compares with analysts’ estimates of $12.2 billion. Lawler projected a high-single-digit to low-double-digit percentage decline in wholesales for the first quarter due to supplier shortages. 

Crosstown rival GM earlier this week reported fourth-quarter earnings that beat analysts’ estimates, but its forecast for the year was little changed from 2021.

Read more: GM sees high costs, budget cars capping profit

Dearborn, Michigan-based Ford has seen car buyers pay up for its models as the pandemic and a shortage of semiconductors slashed inventory on dealer lots. The average sale price for Ford models in the U.S. reached almost $51,000 in the fourth quarter, up from $46,211 a year earlier, according to automotive researcher Edmunds.com.

In its home market of North America, Ford increased adjusted profit before interest and taxes by 70% in the fourth quarter to $1.82 billion, mainly due to strong demand for vehicles like the Bronco SUV and Maverick pickup. But that undershot the $2.34 billion profit projected by analysts.

Ford’s loss in China, the world’s largest car market, more than doubled in the quarter to $150 million from $66 million in the year-earlier period.

(Updates with early share trading in the fourth paragraph.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — U.S. Index futures lost a bullish momentum as concerns over inflation and monetary tightening outweighed earnings optimism driven by Amazon.com Inc. The dollar headed for the worst week since November 2020.

Contracts on the Nasdaq 100 Index traded 0.3% higher, after earlier gains of as much as 2.3%. Amazon trimmed its premarket gains that were originally driven by a price hike for Prime memberships. Europe’s Stoxx 600 fell the most in a week as rate-hike bets reduced risk appetite. Oil was on course for a seventh weekly advance. 

Friday’s volatility adds to the $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday that sparked a global technology rout and pulled down U.S. indexes. While the overall earnings picture in the world’s largest economy remains robust, concerns over Federal Reserve tightening lingers. And fears of stubborn inflation increased after data showed U.S. gasoline surged to the highest in more than seven years.

 

 

 

Amazon’s pared its premarket gains to 11%, still implying an increase of $155 billion in its market capitalization if the stock rises by the same extent during regular trading hours. 

While Meta’s sluggish numbers dominated the headlines on Thursday, the flurry of earnings releases showed they may be an exception rather than the rule. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates. Profits are coming in at 8.8% above projected levels.

Still, volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery amid stubborn inflation. The CBOE Volatility Index increased for a third day Friday, hovering just below 26.

“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other emerging-market central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”

 

 

 

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased, the mood in the stock market turned sour.

The Stoxx 600 slid 1.4% after rising as much as 0.5%. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.

Treasuries advanced, with the 10-year rate shedding two basis points. The dollar was marginally lower, heading for a 1.4% decline this week.

Investors also awaited Friday’s official jobs report from the U.S., where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

Earlier, An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday. 

West Texas Intermediate hit a fresh seven-year high and touched $92 a barrel. Brent has surged 19% this year and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 fell 0.2% as of 7:03 a.m. New York time
• Futures on the Nasdaq 100 rose 0.3%
• Futures on the Dow Jones Industrial Average fell 0.5%
• The Stoxx Europe 600 fell 1.3%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.3% to $1.1475
• The British pound fell 0.2% to $1.3574
• The Japanese yen was little changed at 114.86 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.81%
• Germany’s 10-year yield advanced three basis points to 0.17%
• Britain’s 10-year yield declined one basis point to 1.36%

Commodities

• West Texas Intermediate crude rose 2.1% to $92.17 a barrel
• Gold futures rose 0.4% to $1,810.70 an ounce

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Russian President Vladimir Putin is in Beijing for the opening of the Winter Olympics and met with Chinese President Xi Jinping. They discussed relations between the two countries and exchanged views on strategic security. 

Russia’s foreign minister brushed off U.S. claims that Moscow plans to release a graphic, fake video purporting to show a Ukrainian attack on Russia or Russian-speaking people, as a way to justify an invasion.  

Moscow has repeatedly denied that it plans to attack Ukraine, while stationing an estimated 100,000 troops close to the border. Russia has decried the use of NATO forces near Russia’s borders. 

Key Developments

• Putin’s Financial Fortress Blunts Impact of Threatened Sanctions
• Putin Courts China’s Xi for Help in Showdown With the West
• Ukraine Briefing Spurs Greater Urgency on Sanctions in Congress
• What we know so far about potential U.S.-EU sanctions on Russia
• Where military forces are assembling around Russia and Ukraine

All times CET

Finland Bemoans EU Inaction (12:55 p.m.) 

Finland’s President Sauli Niinisto said the European Union must recognize that when its members are pulled into the Russia-Ukraine fray, it is also affected. 

Speaking to reporters in Helsinki, Niinisto referred to Russia’s demand that NATO agree not to expand eastward, which would effectively close the door to the military alliance for Finland and Sweden — although neither Nordic country has applied to join NATO. The EU’s lack of response on the subject stands in contrast to the solidarity that typically emerges quickly during financial crises, Niinisto said. 

NATO Chief Picked for Norway Central Bank (11:51 a.m.) 

Jens Stoltenberg, secretary general of the NATO military alliance, has been appointed governor of Norway’s Central Bank and will take up the post later this year.  

NATO chief since 2014, Stoltenberg has pledged to serve out his term, which ends Oct. 1. The U.S. and Germany were among countries that had asked Stoltenberg, who’s leading the alliance’s talks with Russia over its military buildup near Ukraine, to stay on, Norwegian newspapers had reported.

Kremlin Says No Basis for Putin-Zelenskiy Meeting (11:40 a.m. CET)

There’s no basis yet for a meeting between Putin and Ukrainian counterpart Volodymyr Zelenskiy on the tensions, said Kremlin spokesman Dmitry Peskov. 

“For this there needs to be an understanding what will come out of it and what will be discussed, and there isn’t one yet,” Peskov said on a conference call. The same goes for another so-called Normandy Summit that would include the leaders of France and Germany, he said. 

Turkish President Recep Tayyip Erdogan reiterated his offer to mediate between the two sides but Peskov said any visit by Putin to Turkey would be focused on bilateral issues. 

Putin, Xi See ‘No Forbidden Zones’ (11:17 a.m.) 

Putin and Xi see no limits to the Russia-China friendship and “no forbidden zones” in cooperation between their countries, the two leaders said in a joint statement after talks in Beijing — their first face-to-face meeting since 2019.  

China “treats with understanding, and supports” Russia’s demands for binding security guarantees from the U.S. and NATO, and the two states oppose further expansion of the military alliance, according to the statement.

The pair also said in the statement that Russia opposes Taiwan’s independence in any form. The two leaders described the “new type” of relations between Russia and China as superior to the Cold War-era blocs.

YouTube Blocks Separatist Accounts (10:55 a.m.)

YouTube blocked several accounts associated with separatists in two eastern Ukraine regions, Tass reported, citing media representatives of the self-proclaimed republics. 

The Luhanskinformcenter in the Luhansk People’s Republic and the Ministry of Information in the Donetsk People’s Republic were among the channels affected, Tass said. 

The moves could expose Alphabet’s Google, which owns YouTube, to new criticism in Russia, where it’s under increasing pressure from the government. The company is facing potentially huge fines for blocking a Russian TV channel’s account on the video service and in December was hit with a $95 million penalty for not removing content. 

Russia Blamed for German Energy Cyber Attack (11:00 a.m.)

A Russia-linked cybercrime gang was allegedly responsible for ransomware attacks that took down a swath of Germany’s fuel-distribution system this week. Hackers using “Black Cat” ransomware infected computers at Mabanaft GmbH and Oiltanking GmbH Group, say people familiar with an investigation of the breaches.

While there’s no confirmed link to the Russian state, the attacks come as the U.S., U.K. and others warn of the risk of cyberattacks as part of a campaign to put pressure on Europe for its support of Ukraine. 

Lavrov Calls U.S. Claim of Fake Video ‘Delusional’ (10:10 a.m.)

Foreign Minister Sergei Lavrov dismissed claims by the U.S. that Russia plans to produce a graphic propaganda video that purports to show a terrorist attack on Russian-speaking people.

“I read on the internet that the State Department made some statements that Russia is allegedly preparing a fake video with an apparent attack by Ukrainian soldiers on Donbas,” Lavrov said in a clip posted by Ren TV. “This kind of fantasy is delusional in my opinion, and they are more and more of them every day.”

U.S. officials warned previously that Moscow may be planning a false flag event that would create a justification for sending troops into Ukraine, and have said it used similar tactics when it occupied Crimea and fought a war with Georgia.

Carlsberg CEO Downplays Impact on Business (9:30 a.m.)

The Danish brewer Carlsberg A/S said its business won’t be hit too hard by a possible Russia-Ukraine conflict. Carlsberg gets less than 8% of its profit from the two countries, CEO Cees ‘t Hart said in a Bloomberg Television interview. A decade ago, eastern Europe accounted for almost half of the company’s earnings. 

Putin, Xi Meet; Russia will Supply Gas From Far East (9:13 a.m.) 

In their first in-person meeting since 2019, Putin told China’s Xi that Russia will supply 10 billion cubic meters of gas per year to China from Far East under a new contract. 

During the summit, timed to show solidarity on the sidelines of the Winter Olympics, Putin said conditions between the two countries were of an “unprecedented nature and an example of a dignified relationship.” 

EU Warned of New Russian Cyber Threat (8:40 a.m.) 

European Union institutions were warned Thursday of a new Russian-backed cyber threat that’s been running credential harvesting activity since mid-2021, according to an alert seen by Bloomberg News. 

The alert says it’s possible the capabilities will be used for cyberespionage purposes. No institutions have been targeted yet. The alert didn’t mention Ukraine. 

The group, known as Reuse Team or Callisto, has been involved in state-sponsored espionage and criminal activity since the early 2000s, the alert said. The group has recently targeted an EU body and was involved in a campaign that targeted a European ministry of foreign affairs in 2020. It has gathered intelligence related to foreign policy in Eastern Europe and the South Caucasus, according to a 2017 report by F-Secure, a cyber security research firm. 

Gazprom Reliability in Doubt, Von Der Leyen Says (8:31 a.m.) 

Gazprom is abiding by its contracts with the EU but unlike other suppliers isn’t shipping more gas than planned to Europe, and that’s casting doubt on its reliability, European Commission President Ursula von der Leyen said in an interview with Les Echos and Handelsblatt.

Gazprom’s behavior is “weird,” and Russia is using gas deliveries as a way to put pressure on Europe, she said.

Von der Leyen also described the EU’s sanctions package in the event of a Russian invasion of Ukraine, which includes including shutting Moscow off from foreign capital, and controlling exports of critical goods to Russia needed in areas such as artificial intelligence, weapons, quantum computing, lasers and space technologies.

Macron to Visit Russia, Ukraine Next Week (8:21 a.m.) 

French President Emmanuel Macron will travel to Moscow on Monday and Ukraine on Tuesday, an Elysee official said, as he continues an active diplomatic role in the crisis. 

The trips will follow three calls in the past week between Macron and Vladimir Putin to discuss the Ukrainian situation.    

U.S. Lawmakers Briefed by Top Security Team (11:00 p.m.) 

U.S. lawmakers are rushing to draft a new round of potential sanctions on Russia intended as a deterrent to any aggression against Ukraine. The sense of urgency in Congress escalated following day-long briefings Thursday by top national security officials. 

Negotiations had been slowed as Democrats and the Biden administration resisted Republican efforts to impose more sanctions on Russia now. Both sides agree on the need for more punishing penalties should Russia invade Ukraine, which the Kremlin denies it plans to do. 

 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Stay on top of the electric car revolution by signing up to our Hyperdrive newsletter here.

Elon Musk had some thoughts about robots during Tesla’s most recent earnings call. He predicted Tesla’s humanoid bot, known as Optimus among employees, could turn out to be more significant than the company’s electric cars.

“The foundation of the economy is labor,” Musk said on the call. “So what happens if you don’t actually have a labor shortage? I’m not sure what an economy even means at that point.”

It seems unlikely Optimus will scramble the global economy beyond recognition anytime soon — that might have to wait until Teslas drive themselves and humans populate Mars. But Musk is not alone in holding out hope that machines can save us from labor shortages. I’ve written in the past about a pair of tech startups working to solve hiring headaches for the logistics industry: Outrider Technologies is developing autonomous yard trucks to move trailers from dock to dock at warehouses, and Phantom Auto makes remote operations systems for forklifts, yard trucks and delivery bots.

Both companies are hustling to prove their technology can be a part of the solution to a labor crunch that has gone from chronic to acute during the pandemic, with little relief in sight. Outrider announced in November that Georgia-Pacific had completed more than 1,000 moves using its autonomous yard trucks (with safety drivers aboard) at a Chicagoland distribution center. The paper maker is one of 11 customers in Outrider’s pilot program. Outrider CEO Andrew Smith’s plan is to pull the safety drivers and begin commercial operations sometime in 2023.

From there, Smith says the transition to automated fleets will be swift. By 2027, he predicts most new yard trucks will be capable of moving around autonomously and Outrider will have thousands operating in the field. “We provide inflation-fighting technology,” Smith said. “Our goal is, as fast as possible, to address these bottlenecks where our customers cannot find people.”

Last month, Phantom Auto announced it had raised $42 million in funding from logistics giants ArcBest and NFI Industries, both of which plan to begin selling remote-operable forklifts to customers later this year. NFI plans to begin using its first units at a facility in Texas next week and to deploy 1,500 within the next few years, according to Phantom Auto co-founder Elliot Katz. ArcBest, which entered a joint-development agreement with Phantom to build and sell forklifts that can run both autonomously and with remote operators, also intends to deploy thousands of its machines.

Phantom Auto’s technology still requires humans to operate the forklifts, but it can help unlock labor markets by allowing people to work on job sites from thousands of miles away. The idea is especially enticing in the U.K., where Brexit and Covid have hit the supply chain with a double whammy. From the middle of 2019 to mid-2021, the number of forklift drivers in Britain fell by 32%, according to a report by the trade group Logistics UK.

“People are scratching their heads on how are we going to get people from the population centers to the distribution networks,” says Alex Veitch, general manager for public policy at Logistics UK. “People don’t want to live in the Midlands near the distribution centers. There’s not a lot there, so remote operation would be fantastic.”

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — U.S. Index futures lost a bullish momentum as concerns over inflation and monetary tightening outweighed earnings optimism driven by Amazon.com Inc. The dollar headed for the worst week since November 2020.

Contracts on the S&P 500 Index erased gains and those on the Dow Jones Industrial Average list 0.4%. Nasdaq 100 Index futures held some gains as Amazon climbed in early trading after posting a big beat on cloud-computing profit and raising the price of Prime memberships. Europe’s Stoxx 600 fell as growing rate-hike bets reduced risk appetite. Oil was on course for a seventh weekly advance. 

Friday’s volatility adds to the $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday that sparked a global technology rout and pulled down U.S. indexes. While the overall earnings picture in the world’s largest economy remains robust, concerns over Federal Reserve tightening lingers. And fears of stubborn inflation increased after data showed U.S. gasoline surged to the highest in more than seven years.

 

 

 

Amazon’s 11% premarket gains implied an increase of $155 billion in its market capitalization if the stock rises by the same extent during regular trading hours. Snap Inc. soared as much as 55% as its first-quarter revenue forecast beat estimates.

While Meta’s sluggish numbers dominated the headlines on Thursday, the flurry of earnings releases showed they may be an exception rather than the rule. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates. Profits are coming in at 8.8% above projected levels.

Still, volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery amid stubborn inflation. The CBOE Volatility Index increased for a third day Friday, hovering just below 26.

“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other emerging-market central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”

 

 

 

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased, the mood in the stock market turned sour.

The Stoxx 600 slid 1.1% after rising as much as 0.5%. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.

Treasuries advanced, with the 10-year rate shedding one basis point. The dollar was marginally lower, heading for a 1.4% decline this week.

Investors also awaited Friday’s official jobs report from the U.S., where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday. 

West Texas Intermediate hit a fresh seven-year high and touched $92 a barrel. Brent has surged 19% this year and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 fell less than 0.1% as of 6:30 a.m. New York time
• Futures on the Nasdaq 100 rose 0.6%
• Futures on the Dow Jones Industrial Average fell 0.4%
• The Stoxx Europe 600 fell 1.1%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.1466
• The British pound fell 0.3% to $1.3562
• The Japanese yen was little changed at 114.87 per dollar

Bonds

• The yield on 10-year Treasuries declined one basis point to 1.82%
• Germany’s 10-year yield advanced three basis points to 0.18%
• Britain’s 10-year yield was little changed at 1.37%

Commodities

• West Texas Intermediate crude rose 1.8% to $91.92 a barrel, after climbing as high as $92.16
• Gold futures rose 0.4% to $1,811.70 an ounce

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Snap Inc. and Pinterest Inc. surged Friday after upbeat results eased fears that a slowdown at rival Facebook reflected an industrywide social media slump. 

Both companies topped Wall Street predictions with sales and earnings, with Snap even posting a surprise profit — its first as a publicly held business. That sent shares of Snap rocketing up 47% in premarket trading while Pinterest gained 14%.

Shares of both companies had plunged Thursday after Facebook owner Meta Platforms Inc. reported disappointing earnings. Apple Inc.’s change to its data-collection rules has made it harder for social media networks to sell advertising — their main source of revenue.

But the latest results suggest that Snap and Pinterest weren’t dealt as hard a blow. In Snap’s case, the company benefited from augmented-reality tools that are attractive to marketers. At Pinterest, Chief Financial Officer Todd Morgenfeld said there hasn’t been a material impact on revenue from Apple’s changes.

But it’s possible that Pinterest could be impacted at some point in the future, Morgenfeld said.

“The changes in the privacy and regulatory environment are generally unhelpful in our ability to deliver performance advertising results,” he said in an interview. “We’re not immune to these issues impacting our business over time.”

For now, the message to investors is clear: Facebook’s problems aren’t everybody’s problems. Pinterest posted adjusted earnings of 49 cents a share, handily beating the average estimate of 42 cents. Revenue also topped predictions at the company, which uses a pinboard interface to provide a visual search service.

It’s been developing AR features for shopping as well, and 2021 marked the company’s first profitable year.

Snap’s fourth-quarter sales increased 42% to $1.3 billion, compared with an average estimate of $1.2 billion. Net income amounted to 1 cent a share, compared with projections for a loss of 9 cents.

The company’s Snapchat service, a mobile app for sending disappearing messages and watching videos, had 319 million daily active users in the period. That beat analysts’ expectations for 316 million, according to data compiled by Bloomberg.

More brands are experimenting with AR to offer customizable advertising and shopping experiences — say, to let consumers try on clothes or beauty products virtually. Snap argues that such innovations will be increasingly attractive to users of its app, which is particularly popular among teenagers and young adults.

Still, the new restrictions on iPhone data collection have been a cloud over Snap. Apple started requiring all apps to get users’ explicit permission to track their activity across the internet — a request many customers deny. Snap executives previously said its users were opting into tracking more often than some of the industry’s reported averages, but the full effect of the changes was unknown. 

Supply chain woes and labor shortages also could hamper growth. Advertisers in the consumer packaged goods and restaurant industries have been affected most severely, according to Snap Chief Business Officer Jeremi Gorman.

She said the company’s sales team worked to help advertisers adjust to Apple’s new privacy restrictions, including by providing their own measurement tools.

“We grew our community, expanded our product offerings and demonstrated the power of our augmented reality platform,” Snap Chief Executive Officer Evan Spiegel said in prepared remarks. “We faced some fresh challenges in 2021, but posted strong results.”

(Updates with premarket trading in first and second paragraphs.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Nasdaq 100 Index futures rallied and Amazon.com Inc. led premarket gains in New York as earnings optimism returned to the U.S. technology sector. The dollar headed for the worst week since November 2020.

Contracts on the tech-heavy gauge rose 0.8% as Amazon jumped 13% in early trading after posting a big beat on cloud-computing profit and raising the price of Prime memberships. The broader U.S. futures market was mixed. Europe’s Stoxx 600 fell as growing rate-hike bets reduced risk appetite. Oil was on course for a seventh weekly advance. 

The relief for equity investors comes after a $251 billion wipeout for Facebook owner Meta Platforms Inc. on Thursday sparked a global technology rout and pulled down U.S. indexes. Despite some weaker reports, the overall earnings picture in the world’s largest economy remains robust, providing investors a cushion against concerns ranging from Federal Reserve tightening to stubborn inflation.

 

 

 

Amazon’s premarket gains implied an increase of $184 billion in its market capitalization if the stock rises by the same extent during regular trading hours. Snap Inc. soared 55% as its first-quarter revenue forecast beat estimates.

While Meta’s sluggish numbers dominated the headlines on Thursday, the flurry of earnings releases showed they may be an exception rather than the rule. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates. Profits are coming in at 8.8% above projected levels.

Still, volatility has become the hallmark of global markets this year. Investors are trying to come to grips with less favorable monetary conditions and a moderating global recovery amid stubborn inflation. The CBOE Volatility Index increased for a third day Friday, hovering above 25.

“The first half this year we are now experiencing a rates shock,” Tracy Chen, portfolio manager at Brandywine Global Investment Management, said on Bloomberg Television. “If the Fed and BOE and other emerging-market central banks are too aggressive in hiking interest rates, potentially we are going to face kind of a recession risk in the second half, or at least more slowdown in the economy.”

 

 

 

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased, the mood in the stock market turned sour.

The Stoxx 600 slid 1% after rising as much as 0.5%. Makers of cars and parts were the worst-performing industry group, while gains for technology shares surrendered gains.

Treasuries advanced, with the 10-year rate shedding two basis points. The dollar was marginally lower, heading for a 1.4% decline this week.

Investors also awaited Friday’s official jobs report from the U.S., where they focused on wage growth to gauge the health of the economy and the potential for a further surge in inflation.

The looming jobs report “is a reminder that expectations for Fed policy are the key influence on this market right now,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. A hot inflation print next week would “rekindle hawkish Fed concerns,” he added.

An Asia-Pacific equity gauge pushed higher partly on a 3% jump in Hong Kong, which was catching up with global markets after reopening from a holiday. 

West Texas Intermediate hit a fresh seven-year high and surpassed $91 a barrel. Brent has surged 19% this year and banks including Goldman Sachs Group Inc. forecast it’ll reach $100.

For more market analysis, read our MLIV blog.

What to watch this week:

• U.S. payrolls report for January, Friday
• Winter Olympics kick off in China, Russia’s President Vladimir Putin due to attend opening ceremony, Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 rose 0.1% as of 6:05 a.m. New York time
• Futures on the Nasdaq 100 rose 0.8%
• Futures on the Dow Jones Industrial Average fell 0.3%
• The Stoxx Europe 600 fell 1%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.1463
• The British pound fell 0.3% to $1.3558
• The Japanese yen was little changed at 114.95 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.81%
• Germany’s 10-year yield advanced two basis points to 0.16%
• Britain’s 10-year yield was little changed at 1.37%

Commodities

• West Texas Intermediate crude rose 1.4% to $91.56 a barrel
• Gold futures rose 0.5% to $1,813.10 an ounce

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — The biggest test of Texas’s newly fortified power grid will arrive around sunrise Friday, when electricity demand may set a record as waking residents crank up their heaters in the sub-freezing cold. 

The state’s electrical system, which collapsed nearly a year ago during a brutal cold snap and left more than 200 people dead, is expected to pass the trial. But success isn’t guaranteed. Critics have warned for months that grid managers and utilities haven’t done enough to winterize the system, while Governor Greg Abbott and other politicians have tried to reassure Texans the state is ready. 

Outages struck only a few pockets of the sprawling state by early Friday. Natural gas has continued to flow through the pipelines that feed many of the state’s power plants, with limited disruptions. And wind turbines, whose poor performance during last year’s deep freeze has become the focus of Abbott’s scorn, supplied far more power than expected, keeping electric heaters humming.

Sub-freezing temperatures dipped further overnight, and were expected to reach their lows around dawn. The Electric Reliability Council of Texas, which runs the power grid, said electricity demand could set a winter record of 73.5 gigawatts, close to the state’s summer high of 74.8 gigawatts. Typically, a gigawatt is enough to power about 200,000 Texas homes.

Abbott said Thursday the system was prepared. “The Texas power grid is the most reliable and resilient it’s ever been,” he said at a press conference.

About 15,000 homes and businesses were without power by about 4:30 a.m. local time Friday, down from more than 30,000 late Thursday, according to PowerOutage.us, which tracks outages reported on utility websites. 

“These are localized outages that are not related to system-wide reliability issues,” Peter Lake, chairman of the Public Utility Commission of Texas, said earlier at a media briefing. “The grid remains strong, reliable, and it is performing well in this winter-weather event.”

See: Texas Had All Year to Prep for Cold, and It’s Not Ready  

Texas has been bracing for the worst in this latest storm, which is part of a massive cold front that stretches to Maine. Many schools, universities and churches have closed, while grocery stores have been left depleted as residents stocked up on food. Even sea turtles off the Texas coast are under threat from the cold.

Temperatures in the Panhandle region fell to about zero degrees (-18 Celsius) early Friday, while Dallas was at 21 degrees, according to the U.S. National Weather Service. However, the storm is moving through fairly quickly, and temperatures are set to rise this weekend. That would be a key difference from last year’s storm, which lingered for days.

“It’s obviously quite cold, but the duration of that cold won’t be very long,” said William Iwasko, a meteorologist with the weather service’s Lubbock office.

Some natural gas wells have frozen in Texas and neighboring Oklahoma, shutting about 5% of overall domestic output during the peak demand season for the furnace and power-plant fuel, according to Jade Patterson, an analyst at BloombergNEF. The interruptions will take as long as five days to restore once temperatures moderate, he said.

Meanwhile, wind has provided an unexpected benefit to the state’s electrical grid, according to Ercot. On Thursday morning, wind accounted for about 30% of the grid’s electricity supply.

“We expected significant icing in the western part of the state,” Ercot Interim Chief Executive Officer Brad Jones said in the briefing. “That has not occurred as severely as expected.”

(Updates power outages in sixth paragraph, current conditions in ninth.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.