Traders Market Weekly: Rates, Debt and the Fed

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    February 19-26, 2023 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… The Week
    [See the full post at: Traders Market Weekly: Rates, Debt and the Fed]


    WALL STREET is closed in honor of Monday’s national holiday
    Hopefully our president remains safe in Ukraine surprise trip
    And even though current round of presidents could do a lot better – lol
    we should prayer for our nation & leaders daily — and we did have great past ones as well 🙂


    Credit Suisse shares fresh low Tuesday following a report that Swiss financial regulator Finma is looking into whether Chairman Axel Lehmann new customers had stopped withdrawing money late last year when he said they had


    Manchester United Begins Sifting Through Numerous Bids for Club

    The English soccer giant received two public offers and several more private proposals to acquire the club from the Glazer family, which has owned it since 2005

    Three months after announcing that they were open to selling one of the most prized assets in sports, the Glazer family received a set of preliminary bids for soccer giant Manchester United before a deadline on Friday evening. Though two were made public by the bidders, several more offers poured in for both partial stakes in the club and to acquire the team outright, according to a person familiar with the process.

    United itself hasn’t commented on the sale process since the initial deadline on Friday, and the valuations of the bids aren’t known. The multiple offers—including one from the chairman of a Qatar bank and the other from a British billionaire—could put the Glazers in a position to capitalize on a hot market that has recently pushed the valuation of top sports properties to new record highs.

    The current record mark belongs to Chelsea, which sold to a group led by American investor Todd Boehly for around $5.3 billion last May. A month later, the North American record fell when a Walmart heir struck a deal to buy the Denver Broncos for $4.65 billion. Manchester United, which is listed on the New York Stock Exchange, currently has a market value of more than $4 billion.

    Manchester United’s advisers, the New York-based Raine Group, are expected to take the next week or so to sift through the proposals and eliminate those that don’t measure up.

    The two public bidders are well known to anyone who has followed the roster of wealthy interests still interested in buying sports properties at the new, elevated price levels.

    The first came from Sheikh Jassim Bin Hamad Al Thani, the chairman of the Qatar Islamic Bank and the son of the country’s former prime minister. In his proposal, he pledged to wipe out the club’s debt and upgrade United’s aging infrastructure, including the 74,000-seat Old Trafford stadium.

    The second was from Jim Ratcliffe, the chairman and founder of the Ineos petrochemical company and Britain’s richest man. A self-confessed lifelong Man United fan, Ratcliffe is already heavily involved in sports through his ownership of the OGC Nice soccer team in the French top tier, FC Lausanne-Sport in Switzerland, and the Ineos Grenadiers cycling team, among other interests. Ratcliffe also made a late, unsuccessful effort to take over Chelsea last spring.

    Whether Ratcliffe would be the sole investor is unclear.

    Another unusual factor in the bidding process has also emerged in the sale landscape. An American investment group, Elliott Management Corp. has declared itself willing to help anyone in the mix. Elliott, which had previously acquired AC Milan in Italy in 2018, has indicated to prospective bidders that it would consider financing a bid but it has no plans to make its own offer for the team, according to a person familiar with the matter. Elliott isn’t currently aligned with any particular bidder, the person said.

    Both public bids so far come with their own sets of issues, stemming mainly from their ties to other European clubs. While Sheikh Jassim’s bid is independent from Qatar’s sovereign-wealth fund, according to a person familiar with the structure, the Premier League would require him to show definitively that there was no overlap in control or influence. The sovereign-wealth fund already owns Paris Saint-Germain—the free-spending team that boasts Neymar, Kylian Mbappé, and Lionel Messi—and governance rules prohibit shared ownership of two clubs in the same competition, such as the pan-European Champions League.

    Ratcliffe would face a similar conflict if United and Nice both ended up in the Champions League or second-tier Europa League.

    That said, the Premier League has already proven itself to be accommodating when it comes to questions of operational independence for prospective owners. When the league greenlit the sale of Newcastle United to Saudi Arabia’s Public Investment Fund in 2021, it was only because it received what it called “legally binding assurances” that PIF would run the club without state influence—despite PIF’s chairman being Crown Prince Mohammed bin Salman.

    The sale process has left Manchester United fans with mixed emotions. While they are unequivocally excited to see the end of the Glazer era, 18 years after the family acquired the club for around $940 million in a massive leveraged buyout, supporters are also concerned about what a new owner might usher in.

    “There are questions about sporting integrity given the exceptionally close links between some bidders and the owners of other European clubs including PSG and Nice,” the Manchester United Supporters’ Trust said. “There are also questions about whether any bids will also be based on high levels of debt.”

    United fans have been fretting over debt ever since the Glazer takeover, which they protested from Day One. And while the Glazers led the club through domestic and international success in the late 2000s, they have come to be associated with a much longer period of decline through the 2010s. The lowest point of all came in 2021, when United became one of the primary movers behind the doomed European Super League project, which saw a dozen of the game’s most powerful clubs band together to break away from the Champions League and guarantee themselves higher revenues.

    United fans erupted in protest and even invaded Old Trafford. The Glazers eventually apologized for their part in the Super League. As it turned out, the project’s failure was a major factor in their decision to sell off the club.

    “Owners of football clubs, just as all other supporters, should be giving to their club rather than taking from it for their own benefit,” the supporters’ trust wrote in an open letter to bidders. “The present owners have taken hundreds of millions out over a prolonged period of time, during which the club has been failing. There should be no rewards for failure.”


    Equity indices in the Asia-Pacific region ended Tuesday on a mixed note.

    Japan’s Nikkei: -0.2%,
    Hong Kong’s Hang Seng: -1.7%,
    China’s Shanghai Composite: +0.5%,
    India’s Sensex: UNCH,
    South Korea’s Kospi: +0.2%,
    Australia’s ASX All Ordinaries: -0.1%.


    Japan’s February flash Manufacturing PMI 47.4 (expected 49.3; last 48.9) and flash Services PMI 53.6 (expected 51.5; last 52.3)

    South Korea’s February Consumer Confidence 90.2 (last 90.7)

    New Zealand’s Q4 Input PPI 0.5% qtr/qtr (expected 2.4%; last 0.8%) and Output PPI 0.9% qtr/qtr (expected 2.1%; last 1.6%). February flash Manufacturing PMI 50.1 (last 50.0) and flash Services PMI 49.2 (last 48.6)

    Japan’s Manufacturing PMI contracted for the fourth consecutive time in the flash reading for February while Australia’s reading remained in expansionary territory for the 34th month in a row.

    South Korea’s exports through the first 20 days of February were down 2.3% yr/yr with chip exports falling 43.9% yr/yr.

    The Reserve Bank of Australia’s latest policy minutes showed a debate over the size of a rate hike and an acknowledgement that private sector wages will show an above-forecast increase for Q4.


    Major European indices trade in the red.

    STOXX Europe 600: -0.1%,
    Germany’s DAX: -0.4%,
    U.K.’s FTSE 100: -0.2%,
    France’s CAC 40: -0.4%,
    Italy’s FTSE MIB: -0.7%,
    Spain’s IBEX 35: -0.4%.


    Eurozone’s February ZEW Economic Sentiment 29.7 (expected 22.3; last 16.7). February flash Manufacturing PMI 48.5 (expected 49.3; last 48.8) and flash Services PMI 53.0 (expected 51.0; last 50.8)

    Germany’s February ZEW Economic Sentiment 28.1 (expected 22.0; last 16.9) and ZEW Current Conditions -45.1 (expected -50.0; last -58.6). February flash Manufacturing PMI 46.5 (expected 47.8; last 47.3) and flash Services PMI 51.3 (expected 51.0; last 50.7).

    U.K.’s February flash Manufacturing PMI 49.2 (expected 47.5; last 47.0) and flash Services PMI 53.3 (expected 49.2; last 48.7). February CBI Industrial Trends Orders -16 (expected -14; last -17)
    France’s February flash Manufacturing PMI 47.9 (expected 50.9; last 50.5) and flash Services PMI 52.8 (expected 49.9; last 49.4)

    Swiss January trade surplus CHF5.078 bln (expected surplus of CHF3.750 bln; last surplus of CHF2.767 bln)
    In news:

    Germany, France, and the U.K. reported better than expected flash Services PMI readings for February while Manufacturing PMI readings from Germany and France missed expectations, pointing to continued contraction.


    Credit Suisse is being investigated by Swiss authorities after the firm’s chairman said in December that outflows have stabilized.


    Russian President Putin said that his country’s participation in the New START nuclear treaty will be suspended.


    2-yr Treasury note yield is up three basis points to 4.66%
    10-yr note yield is up six basis points to 3.88%.

    These rising rates are another drag on equity investor sentiment along with added geopolitical tension, which stems from contentious finger pointing between U.S., Chinese, and Russian political officials regarding the Ukraine war.

    The U.S. Dollar Index is up 0.1% to 103.99.

    WTI crude oil futures are up 0.6% to $77.04/bbl and natural gas futures are down 2.4% to $2.22/mmbtu.


    Data out Today:
    9:45 ET: Preliminary February IHS Markit Manufacturing PMI (prior 46.9) and preliminary IHS Markit Services PMI (prior 46.8)
    10:00 ET: January Existing Home Sales (prior 4.02 mln)


    Treasury Auctions:
    13:00 ET: $42 bln 2-yr Treasury note auction results


    Meta Platforms (META 175.76, +2.88, +1.7%): testing Meta Verified to help creators establish their presence; UK collective lawsuit against Meta (META) was rejected, according to Reuters.


    Home Depot (HD 305.37, -12.58, -4.0%): beats by $0.01, reports revs in-line; guides FY24 (Jan) EPS below consensus, revs in-line; investing $1 bln in associate compensation; raises dividend

    Walmart (WMT 140.29, -6.15, -4.2%): beats by $0.20, beats on revs; comps +8.3% above guidance; guides Q1 EPS below consensus; guides FY24 EPS below consensus

    Williams Cos (WMB 31.50, +0.24, +0.8%): beats by $0.03, misses on revs; raises dividend

    Huntsman (HUN 29.51, -1.15, -3.8%): misses by $0.10, beats on revs; raises quarterly dividend by 12%

    Teck Resources (TECK 46.91, +2.79, +6.3%): announces reorganization of its business to separate Teck into two independent companies: Tech Metals Corp and Elk Valley Resources Ltd.; misses by CAD0.20, misses on revs; reaffirms FY23 production guidance

    Medtronic (MDT 86.89, +2.09, +2.5%): beats by $0.03, beats on revs; raises low end of FY23 EPS guidance range

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