Bloomberg

(Bloomberg) — US equity futures struggled for direction and Treasuries extended declines as investors assessed developments in the debate over how much central bank monetary policy tightening is needed to fight inflation. 

Contracts on the S&P 500 were steady and those on the Nasdaq 100 edged lower. The latest drop in Treasuries pushed 10-year yields closer to 2.9% as traders raised bets on Federal Reserve interest-rate hikes. The dollar advanced against major peers.

Oil rose as investors assessed the future of OPEC+ unity, just as ministers from the group prepare to meet on Thursday to discuss its supply policy for July. Crude advanced about 10% in May, stoking more inflation worries. 

Concerns that central-bank rate hikes may induce a recession are keeping investors guessing about the outlook for the economy as rising food and energy costs squeeze consumers, and volatility has picked up.

“US markets, and by default, global markets, will still indulge in schizophrenic swings in market sentiment as the FOMO dip-buyers become increasingly frantic in their attempts to pick a cyclical low in equity markets,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte.

Europe’s Stoxx 600 Index slipped a day after euro-zone figures showed a record jump in consumer prices. The figures strengthens the case for the European Central Bank to lift interest rates by a half-point in July, according to Austrian central bank chief and Governing Council member Robert Holzmann. He said a lack of “decisive action” now would risk expectations about the path for consumer prices becoming unanchored, requiring tougher measures later on that could trigger a recession.

President Joe Biden used a rare meeting with Federal Reserve Chair Jerome Powell to declare that he’s respecting the central bank’s independence – while simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms. The meeting came ahead of US payroll numbers Friday. 

“There are heightened concerns around inflation and where central banks are likely to go trying to combat inflation,” Kristina Hooper, Invesco Advisers chief global markets strategist, said on Bloomberg Radio. “This has gone from just an inflation scare to a growth scare. Uncertainty has grown.”

Citigroup Inc. strategists said that after a difficult first five months of 2022, the pain may not be over yet for global equity markets. The prospect of downward revisions to earnings estimates is the latest headwind to face stock investors, already rattled by runaway inflation and the potential impact of central-bank tightening aimed at controlling it, the strategists led by Jamie Fahy wrote in a note.

In US premarket trading Wednesday, Salesforce Inc. climbed after the cloud-based customer management software company raised its annual profit forecast. ChargePoint Holdings Inc. slipped as analysts noted that the EV charging network firm’s margins came under pressure due to rising costs and supply-chain disruption.

How will markets be affected by the Fed’s quantitative tightening? QT officially starts Wednesday and is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.

Here are some key events to watch this week:

• The Federal Reserve is set to start shrinking its $8.9 trillion balance sheet Wednesday
• The Fed releases its Beige Book report on regional economic conditions Wednesday
• New York Fed President John Williams, St. Louis Fed President James Bullard speak at separate events Wednesday
• OPEC+ virtual meeting Wednesday
• Cleveland Fed President Loretta Mester discusses the economic outlook Thursday
• US May employment report Friday
• The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday

Some of the main moves in markets:

Stocks

• Futures on the S&P 500 were little changed as of 6:48 a.m. New York time
• Futures on the Nasdaq 100 fell 0.2%
• Futures on the Dow Jones Industrial Average rose 0.3%
• The Stoxx Europe 600 fell 0.3%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.2% to $1.0717
• The British pound was little changed at $1.2597
• The Japanese yen fell 0.6% to 129.42 per dollar

Bonds

• The yield on 10-year Treasuries advanced one basis point to 2.85%
• Germany’s 10-year yield declined one basis point to 1.11%
• Britain’s 10-year yield was little changed at 2.10%

Commodities

• West Texas Intermediate crude rose 1.3% to $116.13 a barrel
• Gold futures fell 0.8% to $1,834 an ounce

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©2022 Bloomberg L.P.

(Bloomberg) — Australia got its first exchanged-traded products linked to Bitcoin and Ether last month, and investors reacted with a shrug. Three ETFs (tickers: CBTC, EETH and EBTC) that launched on May 12 have seen trading volumes collapse since they started trading. The Cosmos Purpose Ethereum Access ETF (CPET), which started trading on Tuesday, saw just 2,073 shares change hands on its debut day.

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(Bloomberg) — Choix Inc., a startup that provides women with pills that induce an abortion, has raised $1 million in seed funding from venture capitalists, weeks after a report that indicated the Supreme Court was on the verge of overturning Roe v. Wade.

“Because of what is going on in this country, we wanted to be able to grow quickly,” said Cindy Adam, co-founder and chief executive officer of Choix. “We’re on a lot more people’s radar now, just because of what’s going on.” The funding came from Oregon-based Elevate Capital. Adam declined to give the startup’s valuation. 

For many women, abortion pills are a simple and safe way to terminate a pregnancy in the first 10 weeks. Such pills have become increasingly common, even as some states move to restrict access. Choix, which is French for “choice,” connects customers with a medical provider within 24 hours after they fill out a questionnaire. Then, for $289, it sends patients seeking an abortion mifepristone pills. The patients need to be 16 or older, and reside in California, Colorado or Illinois. Adam said Choix has worked with about 3,500 patients since it launched in October 2020, and grew quickly during the pandemic as telehealth became more popular. 

Adam, a nurse practitioner, said the new funding will help the company grow its team, currently fewer than a dozen staffers, and expand into additional states where it is able to legally operate. Choix also offers other reproductive and sexual health care services, including morning-after pills, and treatment for urinary tract infections and genital herpes.

In the coming months, Choix plans to raise an additional $500,000 or $1 million, Adam said, adding that the company has received more interest from investors since a leak of a draft opinion signaled that the Supreme Court may end the constitutional right to an abortion. 

The company joins a range of services and nonprofits attempting to offer increased access to abortion medication via the mail. Aid Access, launched by a Dutch physician, sends pills to a patient’s home from overseas. Meanwhile, Hey Jane, another venture capital-backed telehealth company that mails abortion medication, has raised $3.6 million in seed funding. 

Adam said Choix considered whether it should operate as a nonprofit, but decided to seek venture capital funding so it could ramp up its operations faster. “There’s already a lot of limited funding that independent clinics and a lot of nonprofits are going for,” she said. “We have seen an uptick in interested partners since the leak, so we are really excited about the potential for other investors.”

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(Bloomberg) — Binance Labs, the venture capital arm of the world’s biggest crypto exchange, launched a $500 million fund to invest in digital-asset projects, the latest capital injection into an industry that’s reeling from plunging prices and the collapse of the TerraUSD stablecoin. 

The announcement followed Andreessen Horowitz’s $4.5 billion raise for a crypto fund last week, the industry’s largest to date, bringing the Silicon Valley investment firm’s total digital-asset-focused efforts to $7.6 billion. The recent rout in cryptocurrency markets have been no deterrent for some venture capitalists, who still see promises in the boom-and-bust industry. 

“The best founders will still come into the space and build the most meaningful projects,” said Ken Li, an executive director at Binance Labs. 

Crypto Investing Shows Signs of Life With StarkWare, Babel Deals

The new fund is backed by institutional investors such as DST Global Partners and Breyer Capital, as well as family offices and corporations. It will invest in blockchain and web3 projects across incubation, early-stage venture and late-stage growth through a mix of token and equity investments, Li said in an interview. 

Binance Labs has invested in crypto-based game developers such as The Sandbox and STEPN, as well as blockchain startup Aptos Inc. In 2018, it made a $3 million investment in Terra, the foundational blockchain for Do Kwon’s Luna token and TerraUSD algorithmic stablecoin, which suffered from a high-profile collapse in May, leading to massive losses for investors. At the time, Changpeng Zhao, the founder and chief executive officer of Binance, sought to distance his company from the failed project, tweeting that Binance Labs invested in “hundreds of projects” over the last four years and “a few of them have fallen by the wayside.” 

“Terra is both a wake-up call for the industry as well as a lesson,” Li said. The new fund from Binance Labs will pay close attention to tokenomics and whether crypto projects have sustainable business models when making investments, according to Li. 

He said that the current market downturn has hurt valuations for later-stage startups, but that early-stage projects haven’t been affected yet. He said that he isn’t concerned about innovation declining within the industry.

“If I reflect back to the previous cycle, it was actually during the crypto winter that a lot of the founders started the projects that eventually became well-known in 2020 and 2021,” he said. 

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(Bloomberg) — Meta Platforms Inc. accused the European Union’s antitrust authority of acting like “a fishing super trawler” by netting vast amounts of “wholly irrelevant” documents in an attempt to build a case against the U.S. tech giant.

The commission was “hoovering up the whole sea bed — with the intention that it will later see what species of rare fish it finds within its vast nets,” Daniel Jowell, a lawyer for Meta, told a five-judge panel of the EU General Court in Luxembourg on Wednesday in a clash that turns the tables on regulators who often express concerns over data-collection practices of Meta’s Facebook social network. 

Meta accused the commission of refusing to engage with the firm and ignoring its suggested alternatives to render the data requests more “proportionate” and limited to what is necessary. Instead, the commission “sailed obliviously onward,” using a “mechanical application of its search terms despite being on notice of the vast number of irrelevant documents this was bound to give rise to,” Jowell told the court.

Read More: Facebook Data Trove Probed as Europe Turns Screw on Big Tech

The EU decisions seeking information were the outcome of a long process in which antitrust officials tried to get information from Meta to investigate “seven anti-competitive practices,” Giuseppe Conte, a lawyer for the commission, told the court. The number of documents the commission received from Meta at the start “was very limited,” which is why the EU changed its approach, he said.

The commission in 2021 opened an in-depth probe into Meta to see if the firm misused a trove of data gathered from advertisers to compete against them in classified ads. It said it will also check if the company unfairly ties its Marketplace small ad service to the social network.

The cases are T-451/20 and T-452/20 Facebook Ireland v Commission.

 

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(Bloomberg) — The United States is “over-stretching” the concept of national security by imposing supply chain sanctions on China to stymie its growth, according to Chinese Foreign Ministry spokesman Zhao Lijian.

“Such moves gravely undermine the legitimate rights and interests of Chinese companies and deprive China of its right to development,” he said Wednesday at a regular press briefing in Beijing. Zhao added that such a strategy would only push the world’s two largest economies to “confrontation and conflict.”

US Commerce Secretary Gina Raimondo said Tuesday that the US is mulling adding more Chinese firms to the government’s banned entity list, which effectively blocks access to US exports, Reuters reported. The US says some firms on the blacklist have aided China’s military operations by providing resources and know-how.

Last month, the US Department of Commerce put California-based Synopsys Inc., the biggest supplier of software used to design semiconductors, under investigation for possibly passing key technology to two banned Chinese companies, according to people familiar with the matter. 

US firms are barred from selling some types of technology to Huawei Technologies Co. and Semiconductor Manufacturing International Corp. because they’ve been designated as threats to national security by the Commerce Department’s Bureau of Industry and Security. 

China said last November that President Joe Biden’s expansion of the blacklist initiated by his predecessor violated an understanding with President Xi Jinping, underscoring the breakdown in relations between the two nations, which are clashing on everything from trade to Taiwan’s sovereignty and alleged human rights abuses in Xinjiang and financial hub Hong Kong.

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(Bloomberg) — BT Group Plc’s £633 million ($797 million) sport TV joint venture with American media giant Warner Bros. Discovery Inc. will undergo antitrust scrutiny from the UK’s competition watchdog. 

The Competition and Markets Authority said Wednesday that it’s looking into whether the transaction — which sets a route for BT to sell its pay-TV unit BT Sport — could raise competition concerns. The agency will decide on whether to move to an in-depth probe by July 28.

London-based BT said last month that it was creating a new 50-50 joint venture with Warner Bros. Discovery that will combine Premier League football rights with Eurosport into a new bundle that will have a single brand in the future. BT introduced its sports broadcasting service in 2013 and has spent billions to win broadcasting rights to the European Champions League and English Premier League football matches. 

Under the terms of the deal, BT will transfer its pay-TV operating businesses to the US firm and receive £93 million cash up front as well as £540 million in the future, subject to certain earn-out conditions which it didn’t specify. Warner Bros will then get a call option to buy out BT’s interest in the business. The parties said they expected the transaction to close by the end of 2022. 

“The CMA routinely looks at any proposed joint venture of this sort, so this is a normal part of the process,” a BT spokesman said Wednesday.

BT Unveils £633 Million Sport Deal With Warner Bros Discovery

(Updates with BT response in last paragraph)

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(Bloomberg) — British sporting goods billionaire Mike Ashley swooped on another failing retailer, snapping up online brand Missguided after it entered UK insolvency proceedings. 

Ashley’s Frasers Group Plc agreed to pay £20 million ($25 million) for the intellectual property of Missguided and related companies, according to a statement Wednesday. 

Missguided was founded in 2009 and sells clothes online to young women, targeting them via its 9.2 million Instagram followers. The retailer ran into difficulties as costs soared amid rising inflation and global supply chain snarl-ups. Surging energy and food bills mean consumer sentiment is also weakening as shoppers become increasingly selective about spending any disposable income. 

The Times of London reported at the weekend that Boohoo Group Plc was in talks about a rescue deal. 

Frasers was formed after Ashley’s Sports Direct chain bought the department store group House of Fraser in 2018. Ashley has garnered a reputation for taking over failing retailers and building up stakes in rivals. 

Other Ashley investments have included video game retailer Game Digital and Jack Wills, an apparel supplier. He currently has a holding in Hugo Boss. 

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(Bloomberg) — US venture capital company General Catalyst Group Management LLC is leading a seed round for Huuva Oy that will help the cloud-kitchen company expand from Finland to Berlin. 

Founded last year, Huuva builds and operates delivery-only restaurants in neighborhoods outside city centers with scant food offerings. It licenses menus from established brands, allowing clients to order meals from a range of restaurants in the same delivery.

“It means no more fighting with the family whether to get sushi, pizza, salad or Indian,” Ville Leppala, co-founder and chief executive officer, said in an interview. “We want to take a good selection of restaurants beyond city centers, allowing us to run a profitable business in an area where a traditional restaurant wouldn’t be able to turn a profit.”

The 4.9 million-euro ($5.3 million) equity investment will enable a fast ramp up in Finland from its current six locations and an expansion to Berlin next month. Huuva is aiming for five kitchens in the German capital by the end of the year. The Helsinki-based company runs its kitchens with the help of software for efficiency gains, Leppala said, adding that the company targets monthly revenue growth of 20% to 30%.

Other backers in the funding round included Lifeline Ventures as well as angel investors such as Ilkka Paananen, the founder of game-maker Supercell. They also took part in a pre-seed round that raised 1.05 million euros in the autumn. Founders Leppala and Ville Lehto still own a majority of the company. Leppala declined to provide a valuation, saying it was “typical” and “in line with peers.”

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(Bloomberg) — Stocks and US equity futures edged higher and bond yields extended their advance amid a debate about the scale of tightening of monetary policy to fight inflation.

Europe’s Stoxx 600 Index climbed 0.3% as investors weighed cheaper valuations a day after figures showed a record jump in euro-zone consumer prices. Among individual moves, bootmaker Dr. Martens Plc climbed after its pretax profit beat estimates. Contracts on the S&P 500 and the Nasdaq 100 both rose around 0.2%.

European bonds fell and Treasuries extended a decline, pushing 10-year yields closer to 2.9% as traders raised bets on Federal Reserve interest-rate hikes. The dollar advanced against major peers.

Oil rose as investors assessed the future of OPEC+ unity, just as ministers from the group prepare to meet on Thursday to discuss its supply policy for July. Crude advanced about 10% in May, stoking more inflation worries. 

Concerns that central-bank rate hikes may induce a recession are keeping investors guessing about the outlook for the economy as rising food and energy costs squeeze consumers, and volatility has picked up.

“It’s times like these when investors need a crystal ball,” wrote LPL Financial strategists Jeff Buchbinder and Ryan Detrick. “We fully acknowledge how tough it is to see the bull case for stocks right now, and a retest of recent lows is certainly possible, but this week we lay out the bull case for the second half of the year. It starts with inflation.”

Asian equities traded mixed, with stocks climbing in Japan as the yen weakened toward 130 per dollar. A pullback in technology stocks and reopening challenges were a drag in Hong Kong. Sluggish Chinese manufacturing data and the government’s pursuit of Covid Zero weighed on shares and the yuan.

President Joe Biden used a rare meeting with Federal Reserve Chair Jerome Powell to declare that he’s respecting the central bank’s independence – while simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms. The meeting came ahead of US payroll numbers Friday. 

“There are heightened concerns around inflation and where central banks are likely to go trying to combat inflation,” Kristina Hooper, Invesco Advisers chief global markets strategist, said on Bloomberg Radio. “This has gone from just an inflation scare to a growth scare. Uncertainty has grown.”

How will markets be affected by the Fed’s quantitative tightening? QT officially starts Wednesday and is the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.

Here are some key events to watch this week:

• The Federal Reserve is set to start shrinking its $8.9 trillion balance sheet Wednesday
• The Fed releases its Beige Book report on regional economic conditions Wednesday
• New York Fed President John Williams, St. Louis Fed President James Bullard speak at separate events Wednesday
• OPEC+ virtual meeting Wednesday
• Cleveland Fed President Loretta Mester discusses the economic outlook Thursday
• US May employment report Friday
• The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.2% as of 8:26 a.m. London time
• Futures on the S&P 500 rose 0.3%
• Futures on the Nasdaq 100 rose 0.1%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The MSCI Asia Pacific Index fell 0.1%
• The MSCI Emerging Markets Index fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro was little changed at $1.0725
• The Japanese yen fell 0.6% to 129.46 per dollar
• The offshore yuan fell 0.3% to 6.6954 per dollar
• The British pound was little changed at $1.2601

Bonds

• The yield on 10-year Treasuries advanced four basis points to 2.88%
• Germany’s 10-year yield advanced two basis points to 1.14%
• Britain’s 10-year yield advanced two basis points to 2.12%

Commodities

• Brent crude rose 1.4% to $117.24 a barrel
• Spot gold was little changed

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.