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Markets Throw a Welcome Party of Sorts for Biden

A day after the Trump administration effectively acknowledged the election of Joseph R. Biden Jr., investors showed their relief by pushing the two major stock market indexes to all-time records on Tuesday.It was a welcome party of sorts for Mr. Biden, but what investors were really embracing was the end of uncertainty. President-elect Biden has vowed to push for more stimulus to bolster the economy. His selection for Treasury secretary, Janet L. Yellen, is well known from her days as Federal Reserve chair. And several new coronavirus vaccine candidates mean that the pandemic could be under control in the …

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Wall St. Is Itching to Unfollow Donald Trump on Twitter

+70

%

Change in the S&P 500 since the 2016 election

Up six percent
since election
day 2020.

+60

Election

+50

+40

BULL
MARKET

BULL
MKT.

+30

–33.9%
BEAR
MARKET

+20

–10.2%
CORRECTION

Amid the
coronavirus
pandemic

Amid fears
of interest
rate hikes

+10

–29.8%
CORRECTION

Amid Trump’s
trade war

Election

2017

2018

2019

2020

+70

%

Up six percent
since election
day 2020

Change in the S&P 500 since the 2016 election

+60

Election

+50

+40

BULL
MARKET

+30

+20

–10.2%
CORRECTION

BULL
MARKET

Amid fears
of interest
rate hikes

+10

–33.9%
BEAR
MARKET

–19.8%
CORRECTION

Amid the
coronavirus
pandemic

Amid Trump’s
trade war

Election

2017

2018

2019

2020

+70

%

Up six percent since election day 2020

Change in the S&P 500 since the 2016 election

+60

Election

+50

BULL
MARKET

+40

+30

+20

–10.2%
CORRECTION

BULL
MARKET

–33.9%
BEAR
MARKET

–19.8%

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Time to Take a Pledge: No Stocks if You’re a Member of Congress

The nation’s balance of power is at stake as both senators from Georgia face runoff elections in early January. The campaigns have been bitter, and they stand to get more so.

But here is one matter that the four candidates agree on, even if some of them have come to it begrudgingly: Owning and trading individual shares of stock has stopped making sense.

One of the two Republican incumbents, Kelly Loeffler, sold all of her stock this year. Her trading in the early days of the pandemic, in the wake of a private Senate briefing, had come under scrutiny. The other, David Perdue, sold all but three stocks after his trades also generated controversy.

Ms. Loeffler’s Democratic challenger, the Rev. Dr. Raphael Warnock, owns only mutual funds and thinks all members of Congress should do the same. Jon Ossoff, the Democrat trying to take Mr. Perdue’s seat, also supports a stock ownership ban and would sell the more than $500,000 of Apple shares he owns if he won.

The potential for the reduction of conflicts of interest, or the appearance of them, is all for the good. But here’s the other thing that many of our 535 elected representatives should learn: Shunning stock trading is a better way to build bigger balances.

I learned this the hard way, albeit with much less money than the senators are playing around with. In 1994, I was in and out of a regional bank stock, but even when a bigger institution bought the company, I didn’t make much more money than I would have in a mutual fund that owned every stock in the market. In the wake of the terrorist attacks in 2001, I bought a stock related to airport security with similarly middling results.

Then, in 2002, I went to work for The Wall Street Journal, where strict rules kept reporters away from any individual securities. In the absence of owning any stock aside from that of the newspaper’s parent company, editors could assign reporters to anything without worrying about conflicts. Hopefully, staff would also steer clear of the temptation to try to trade on information that was about to be in the articles. The New York Times had similar rules when I arrived in 2008, and they remain in place.

It was a relief, frankly. No knock on people who enjoy gambling and trade stocks as a hobby (using only money they can afford to lose), but trying to predict a stock’s performance and outsmart other investors just wasn’t my idea of a good time.

Then, as I learned more on the job about the stock market, I realized how much better my odds of long-term financial security were going to be if I didn’t trade stocks or try to beat the market. Far better to stick to mutual funds that simply owned most or all of a particular market segment.

The evidence is everywhere, and someone ought to spend 15 minutes shoving it under the nose of every member of Congress who shows up in Washington for the first time. Where to start?

Extremely active investors, as Ms. Loeffler and Mr. Perdue were, might begin with the classic 2000 paper “Trading Is Hazardous to Your Wealth,” which used the records of over 66,000 households to show that the annual returns of people who traded the most were 6.5 percentage points lower than the overall market.

Next, they could move on to what a different set of academics believed was the first-ever analysis of the actual portfolios of members of Congress between 2004 and 2008. It turned out they weren’t great at this investing thing and would have done better in basic index funds. If they had invested $100 that way, they would have ended that harrowing period with $80. Instead, the average member who felt above average ended up with $69.

Stocks bounce around a lot. Past performance is no indication of future success. If you don’t believe it, check out the Stock Pickers chart on the site of a firm called Index Fund Advisors. It re-ranks the performance of 18 household-name stocks over each of 20 years, before your very eyes.

To take this thought further, consider a bit of analysis from Dimensional Fund Advisors: If you examine the entire top 10 percent of stocks each year since 1994, fewer than a fifth, on average, make the top 10 the next year. “Investors with concentrated portfolios may actually miss out on the very stocks that deliver the best of what the market has to offer,” the firm notes.

In fact, according to a different bit of research, the best-performing 4 percent of stocks contributed the stock market’s entire net gain since 1926. Buy index funds, the logic of which is apparent in several research notes on Vanguard’s website, and you’ll get every security that makes up whatever the 4 percent might be for the next 100 years.

So why do so many individuals use other strategies instead? One reason could be ignorance. Or hubris born of the past decade, when stocks have mostly gone up. Also, plenty of people like gambling. And now that companies like Robinhood have lowered the transaction costs of active trading, it’s just so tempting to press one’s luck, especially when you’re bored during a pandemic.

I suspect something else is at work with the Georgia senators. Both denied using inside information they got on the job to inform their trades (and were cleared when investigators looked into it), and both said they had outside advisers trading without their knowledge.

But the success and drive that allowed Ms. Loeffler and Mr. Perdue to succeed in business and gave them the confidence to run for office could easily extend to a wrongheaded investment strategy. If you’re a person who keeps winning in life, it’s tempting to talk yourself into believing you can pick investments that outperform an index fund — or pick advisers who can do so for you, even after you compute the impact of their fees on your returns.

Congress could make this issue go away, and some members have introduced bills that would restrict stock ownership. It could also create or extend workarounds for the newly elected that would make it easier for people like Mr. Ossoff to enter public service and sell a bunch of Apple stock without generating a large tax bill.

But let’s be real. Bills like that aren’t going to be a high priority anytime soon. Better, then, that members of Congress erase any perception of impropriety on their own — and protect their portfolios to boot — by getting out of individual stocks altogether, voluntarily.

I tip my cap to the four candidates in Georgia, to varying degrees, for doing this already or getting close. I look forward to asking every new member of Congress to do the same thing come January.

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While the Pandemic Wrecked Some Businesses, Others Did Fine. Even Great.

The pandemic has turbocharged profits at some big businesses, like Amazon, which reported a 70 percent increase in earnings in the first nine months of the year. But it has devastated others, like Delta Air Lines, which lost $5.4 billion in just the third quarter.

Perhaps most surprising: Some companies that had feared for their lives in the spring, among them some rental car businesses, restaurant chains and financial firms, are now doing fine — or even excelling.

Wall Street analysts expect earnings to rebound to a record high next year. And, over all, 80 percent of companies in the S&P 500 stock index that have reported third-quarter earnings so far have exceeded analysts’ expectations, said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.

Typically, just shy of two-thirds of companies beat analysts’ quarterly forecasts. “It’s amazing,” Mr. Silverblatt said.

As the pandemic forced people to stay home and do more things online, some successful companies were perfectly positioned to take advantage of the change. Now, these businesses are becoming even more dominant.

Consider Amazon. Its profits in the first nine months were up $5.8 billion from a year earlier. They allowed the company to spend 120 percent more during the period on things like warehouses, technology and other capital investments. That spending — $25.3 billion — could make it harder for all but Amazon’s biggest competitors to keep up with its growth.

Often in the past, companies that appeared strong during an expansion struggled in the next recession, delaying a full recovery. For example, banks grew with abandon before the 2008 financial crisis but later became a drag on the economy as they repaired their balance sheets.

Tech companies were strong before the pandemic downturn — and have powered through the rout, which could help the economy recover faster this time, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities. “It’s really quite breathtaking,” he said.

When the pandemic hit, many executives understandably feared that their companies were facing an existential crisis or, at least, a very difficult recession. But a surprising number of such companies have excelled.

Mr. Cooper, a mortgage company, believed that it might face a financial squeeze in the spring when some homeowners were unable to make monthly payments. But a federal regulator provided relief to mortgage lenders, and then business was helped by a surge in refinancing. Mr. Cooper’s revenue in the first nine months of the year was up 40 percent, and its stock has climbed 341 percent from its low in April.

During recessions, consumers often decide to pull back and avoid large outlays. But this year, something different happened. Many Americans who did not lose jobs but were also not spending on travel and entertainment found themselves with more disposable income. The $1,200 stimulus payments from the government also helped.

This has been a boon for companies that initially feared a deep recession. General Motors and Ford Motor, for example, rushed to borrow billions of dollars early in the year, expecting that car sales would tumble and stay low for a while. The auto business did struggle and automakers had to close their factories for about two months, but sales started picking up this summer. For the third quarter, G.M., Ford and other automakers reported big profits.

Some large restaurant chains, after pressing for a federal bailout, have done much better than expected as drive-through customers, delivery and takeout orders bolstered sales. On Thursday, Papa John’s, whose stock is up 32 percent this year, reported surging sales, profits and cash flow and announced a new stock buyback program. Its chief executive, Rob Lynch, said the company had added “over eight million” customers this year.

Asked on a call with financial analysts Thursday if the company can hold on to such gains, Mr. Lynch said that many of the new customers were dining more frequently and that the average spending per order was larger than before the pandemic.

“So that gives us a lot of confidence that they have come in, they are enjoying their experience and they’re coming back,” Mr. Lynch said.

But there are winners and losers even within industries. Darden Restaurants, which owns Olive Garden and other brands that are more reliant on in-restaurant dining, reported a 28 percent decline in sales in the three months through the end of August. Its stock price is down 6 percent this year.

Darden is in a painful waiting game. For its results to recover, it needs big states to relax indoor dining restrictions.

“We need to get California back,” Gene Lee, Darden’s chief executive, said on a call with analysts. Olive Garden has 100 restaurants in the state, he said.

Even as much of the travel industry struggles, some companies have found a way to survive.

Hertz sought bankruptcy protection in May. And its biggest competitor, the Avis Budget Group, ran up large losses — $639 million in the first six months of the year. But Avis turned a modest $45 million profit in the third quarter.

The company’s comeback was made possible by cost cutting and a decision to sell 75,000 vehicles in the United States to take advantage of strong demand for used cars. (Nationally, spending on used light trucks, including sport utility vehicles, was up nearly 19 percent in the third quarter from a year earlier.)

Of course, that strategy might not keep working. Demand for rental cars is still low, and many Avis Budget locations are at airports, which are seeing precious little traffic. Other companies that have more urban and suburban locations, like Enterprise, are better positioned because they don’t depend as much on air travelers.

Image
Credit…Kyle Grillot for The New York Times

Passenger airlines are among the biggest losers of the pandemic, and they have few options to improve their prospects. Delta, United Airlines and American Airlines worked quickly to cut costs and got $50 billion in the March federal stimulus package.

After suffering from a dizzying collapse in business in the spring, airlines pinned their hopes on the typically busy summer season, which brought some relief despite a surge in virus cases in July. But that did little to ease the pain. In the third quarter, American lost $2.4 billion and United lost $1.8 billion. For all three, revenue fell more than 70 percent from the same three months last year.

With coronavirus cases at record highs and domestic air travel still down 60 percent from last year, there’s little hope that the typically slower winter season will bring a meaningful rebound. The industry is hoping Congress will authorize another round of aid to help it pay thousands of workers.

Investors, who are more likely to buy stocks if they believe companies will make more money, are signaling that they expect a broad profits recovery among the largest U.S. companies. The S&P 500 has soared nearly 57 percent from its March low and is up 8.6 percent for the year.

Those gains might seem odd given that the combined profits of the companies in that index are on track to decline 25 percent this year from a record showing in 2019. But a big chunk of that rally can be attributed to a handful of large technology stocks. Investors are also counting on the Federal Reserve to keep its benchmark interest rate low for years to come and to keep pumping money into the financial system.

Of course, many struggling businesses, including lots of restaurants, stores and services companies are not traded on the stock market. That means a surge in stock prices can give a misleadingly optimistic view of where the economy is headed.

“The economy is not as good as the market is,” said Mr. Golub of Credit Suisse.

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Why China Halted Ant’s I.P.O., Dealing Jack Ma a Blow

This was supposed to be the week that one of China’s biggest tech companies threw the most lucrative coming-out party in history, sending a swaggering message about the country’s economic might during the pandemic.

Instead, China sent a different message: No private business gets to swagger unless the government is on board with it.

Regulators pulled the plug Tuesday on the initial public offering of Ant Group, the internet finance giant, which had been all but ready to press “Go” on its $34 billion stock debut in Shanghai and Hong Kong.

The I.P.O. would have brought in more cash than did Saudi Aramco, the state-run oil giant, when it went public last year. And Ant would have raised the money on the opposite side of the planet from New York, which has long been the favored listing destination for Chinese tech groups.

But by firing a last-minute torpedo at Ant and Jack Ma, the company’s controlling shareholder and celebrity founder of the e-commerce titan Alibaba, the authorities made clear that international bragging rights mattered less than ensuring private companies know where they stand next to the state.

Ant sits at the intersection of two industries — finance and tech — that are facing intense scrutiny everywhere. American officials are circling the giants of Silicon Valley, plotting a reckoning for the power they wield over commerce and society.

Yet in China, the authorities under Xi Jinping, the country’s top leader, have brought a steely, uncompromising edge to their tactics for enforcing the Communist Party’s will.

Globe-straddling conglomerates have been leashed. A tycoon was disappeared into custody. In September, Ren Zhiqiang, a wealthy, politically connected property developer, was sentenced to 18 years in prison after he criticized Mr. Xi for the government’s handling of the coronavirus.

After Mr. Xi declared war on food waste this year, the official news media and video platforms turned against streamers who recorded themselves chowing down on extravagant spreads — a niche category of internet fame, but a remunerative one for its stars.

“What happened to Ant reinforces that sense that it’s really essential to show respect for party-state authority,” said Kellee S. Tsai, the dean of the School of Humanities and Social Science at the Hong Kong University of Science and Technology. “Capitalists have to play by the political rules of the game.”

Image
Credit…Alex Plavevski/EPA, via Shutterstock

For many businesses in China, this has been a year to be thankful — all things considered — for the government. Economic growth is bounding back. The authorities are keeping the virus largely under control.

Ant filed to go public in August, nearly a decade after the company was spun out of Alibaba. Ant’s Alipay app is used by more than 730 million people every month. It has become a major portal for personal credit, loans, investments and insurance in addition to a payment tool. But getting to this point was a long journey for Ant, one with numerous dust-ups with regulators.

More controls were already on the way. China’s banking and insurance regulator discussed new rules for online lenders in September. Tighter supervision of financial holding companies was scheduled to go into effect on Nov. 1.

Late last month, as Ant’s mega I.P.O. was coming together, Mr. Ma made an appearance at a financial conference, the Bund Summit in Shanghai. He spoke after bigwigs including Wang Qishan, China’s vice president, and Yi Gang, the central bank governor.

“Our next speaker needs little introduction,” the host said. “He says he came to the Bund Summit today to throw a bomb.”

A camera catches Mr. Ma standing up from his seat and shrugging, as if caught off guard.

“I’m not throwing any bombs,” he said once he reached the podium. “Who would dare throw a bomb?”

He then proceeded to throw several bombs. He roasted financial regulators for being obsessed with minimizing risk, even though, he said, “there is no innovation in this world without risk.” He accused China’s banks of behaving like “pawnshops” by lending only to those who could put up collateral.

The audience applauded politely as he left the stage. But state-run news outlets criticized his remarks in the days that followed.

After Ant set the listing price for its stock, investors stampeded to place orders. More than five million people applied in Shanghai alone. The total number of shares they wanted to buy was 870 times the number being offered.

But on Monday evening, financial regulators announced that they had summoned Mr. Ma and other company executives for a meeting. In a shock announcement the next night, the Shanghai Stock Exchange called time on the I.P.O.

One wag on social media called Mr. Ma’s remarks in Shanghai “the most expensive speech in history.”

It was not a speech he had been under any obvious obligation to give. Mr. Ma retired from Alibaba last year and has no formal role in Ant’s management. His net worth has been estimated to be more than $50 billion.

Image

Credit…Aly Song/Reuters

In recent months, his public work has had to do with fighting the pandemic, improving rural education and empowering entrepreneurs in Africa. At the Shanghai summit, he was introduced as a chairman of the U.N. High-Level Panel on Digital Cooperation and a U.N. Sustainable Development Goals advocate.

By opining on financial regulation, Mr. Ma struck at a sensitive subject. In recent years, China has reined in a proliferation of fly-by-night online loan operations. The country had 5,000 such lenders not long ago, according to regulators. By the end of September, there were only six.

This week, the state news media framed the decision to suspend Ant’s I.P.O. as a prudent one taken to protect investors.

Andrew Collier, the founder and managing director of Orient Capital Research, said he believed that protecting China’s big government-run banks was a factor in the move. Banks pay Ant fees to help them extend credit to customers they might not otherwise serve, but at a cost to their own profitability.

“My personal view is that the banks were looking for an excuse to nip this in the bud and also give them adequate time to try to get their own online operations up to speed,” he said.

Mr. Collier added: “Twenty years ago, when China needed global capital more, and was also much less confident about its own scope in the world,” the leadership “would have been very loath to do this, because it would make them look indecisive.”

Today, China’s leaders care less about how their actions look overseas than about fulfilling domestic priorities. The rupture with the United States on trade, technology and other fronts has led the Communist Party to reaffirm Mr. Xi’s broad mandate to steer China through turbulent times.

“They are trying to figure out a balanced course between opening and maintaining control in this entirely new environment,” said Minxin Pei, a professor of government at Claremont McKenna College. “Coming out of Covid, even though China has done well, there’s a lot of unknowns ahead.”

“The sentiment is one of uncertainty, caution,” Mr. Pei said. “When you have Ant, which is truly gigantic, which will allow people to move money around a lot more easily, with very little transparency, really — that can worry the hell out of them.”

On Friday, Ant was in the process of refunding investors who put down money for a piece of the thwarted I.P.O.

Sha Sha, 33, an insurance broker in Hong Kong, borrowed more than $20,000 to get in on the action. She applied to buy 2,500 Hong Kong shares at around $10.30 apiece, but was allotted only 50 shares.

She had been excited to take part in such a historically significant listing. Now she is more circumspect.

“It definitely feels like there are greater uncertainties,” Ms. Sha said. “In half a year, if there are new listing plans, I will be more careful and put more thought into it.”

Cao Li contributed reporting.

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Ant Group’s I.P.O. Is Halted by Shanghai Stock Exchange

Ant Group challenged China’s state-dominated banking system by bringing easy-to-use payments, borrowing and investing to hundreds of millions of smartphones across the country. On Tuesday, Chinese officialdom reminded the company who was really in charge.

In a late-evening announcement that stunned China, the Shanghai Stock Exchange slammed the brakes on Ant’s initial public offering, which was set to be the biggest stock debut in history with investors on multiple continents and at least $34 billion in proceeds.

The stock exchange’s notice to Ant said that the company’s proposed offering might no longer meet the requirements for listing after Chinese regulators had summoned company executives, including Jack Ma, the co-founder of the e-commerce titan Alibaba and Ant’s controlling shareholder, for a meeting on Monday.

Neither the regulators nor Ant have said in detail what was discussed at the meeting. But the timing of the conversation, mere days before Ant’s shares were expected to begin trading concurrently in Shanghai and Hong Kong, suggested discord with the company or with Mr. Ma, who spun Ant out of Alibaba in 2011.

Though he is not part of Ant’s management, Mr. Ma has been a spirited champion for the company’s mission of bringing financial services to small businesses and others in China who he says have been ill-served by stodgy, government-run institutions.

Shortly after the Shanghai exchange’s announcement, Ant said it was suspending the Hong Kong leg of its listing as well. The company apologized to investors “for any inconvenience.”

“We will keep in close communications with the Shanghai Stock Exchange and relevant regulators,” the company said, “and wait for their further notice with respect to further developments of our offering and listing process.”

Shares of Alibaba, a major Ant shareholder, fell more than 6 percent on the New York Stock Exchange on Tuesday morning after news of the delay.

Over the past decade, Ant has transformed the way people in China interact with money. The company’s Alipay app has become an essential payment tool for more than 730 million users, as well as a platform for obtaining small loans and buying insurance and investment products.

Image
Credit…Mark Schiefelbein/Associated Press

But competing against China’s politically connected financial institutions always came with risks. Regulators have looked warily upon Ant’s fast growth in certain areas, fearful it might become too big to rescue in the event of a meltdown.

Ant has pivoted in response. Instead of using its own money to extend loans, the company now primarily acts as an agent for banks, introducing them to individual borrowers and small enterprises that they might not otherwise reach. It describes itself as a technology partner to banks, not a competitor or a disrupter.

This business model works just fine for many of Ant’s investors, evidently. The company’s expected market valuation after the dual listing, of more than $310 billion, would make it worth more than many global banks. Mr. Ma, who is already China’s richest man, would become even richer.

Still, Ant’s future remains at the mercy of Chinese regulators, whose views on the melding of tech and finance are still evolving.

“The regulators have long been looking at the risks in this area and how it should be regulated, but it’s all suddenly coming out at this specific time,” said Yu Baicheng, head of the Zero One Research Institute, a think tank in Beijing focused on finance and tech. “It’s definitely a statement of the regulators’ attitude.”

An article on the website of Economic Daily, an official Communist Party newspaper, praised the decision to suspend Ant’s share sale, calling it in the best interest of investors.

“Every market participant must respect and revere the rules — no exceptions,” the article said.

Besides Mr. Ma, the meeting on Monday with the regulatory agencies also included Ant’s executive chairman, Eric Jing, and its chief executive, Simon Hu. “Views regarding the health and stability of the financial sector were exchanged,” Ant said in a statement.

In another sign of the continuing scrutiny, the nation’s banking regulator, the China Banking and Insurance Regulatory Commission, on Monday issued new draft rules for online microfinance businesses. Among them were higher capital requirements for loans and tighter controls on lending across provincial lines.

The Shanghai exchange’s suspension of the Ant I.P.O. appeared to take note of the draft rules, saying that recent changes in the regulatory environment had affected Ant significantly. Bai Chengyu, an executive at the China Association of Microfinance, said the new rules could cause the entire microfinance industry to shrink.

The famously outspoken Mr. Ma did not ingratiate himself with the authorities when he said, in a recent speech in Shanghai, that financial regulators’ excessive focus on containing risk could stifle innovation.

“We cannot manage an airport the way we managed a train station,” he said. “We cannot use yesterday’s methods to manage the future.”

The head of consumer protection at China’s banking regulator, Guo Wuping, slapped back on Monday, calling out two popular features in Alipay by name in a sharply critical article in 21st Century Business Herald, a government-owned newspaper.

Mr. Guo argued that online finance products were not fundamentally different from traditional ones, and that financial technology companies should therefore be regulated in the same way as established institutions.

Huabei, a credit function in Alipay, is no different from a credit card issued by a bank, Mr. Guo wrote. And Jiebei, an Alipay loan feature, is no different from a bank loan. Ant has called Huabei and Jiebei the most widely used consumer credit products in China.

Loose regulation has allowed financial technology companies to charge higher fees than banks, Mr. Guo wrote. This, he said, “has caused some low-income people and young people to fall into debt traps, ultimately harming consumers’ rights and interests and even endangering families and society.”

Ant declined to comment on Mr. Guo’s article.

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Investing for the Future in the United States of Agita

Four years ago, I didn’t have a plan. Donald Trump was the surprise winner of the 2016 presidential election, and I wasn’t quite sure what to say to the people who were on the verge of losing their minds.

In the wee hours of Nov. 9, 2016 — as futures trading suggested that the U.S. stock market was going to fall an awful lot when it opened — I sought to encourage the discouraged. Continue to bet on capitalism, I advised. You can still count on it to deliver the same sort of long-term returns to investors that it had for decades.

Then, within hours of the opening bell in the United States, there was a reversal. Shares ended up rising that Wednesday. That calm-down column that I wrote in the middle of the night needed some revising.

So this time, I’m writing things down ahead of election night. And I’ve had daytime conversations with financial planners who had, in previous careers, worked in government jobs under both Republicans and Democrats. They offered a few helpful pointers.

First, a maxim of sorts about our collective state of anxiety — whether you’re pulling for four more years or a new occupant in the Oval Office. “Emotions are really good at raising questions and really bad at answering them,” said Zach Teutsch, a financial planner in Washington, D.C. It’s true in life, and it’s certainly true with financial decisions. Try not to make any big ones anytime soon.

Second, it’s easy to overestimate how much change is possible in the first year of any presidential term, especially for things that can hit you squarely in the wallet, like taxes, retirement rules or health care. Mr. Teutsch learned all about that during his time at the Consumer Financial Protection Bureau, where he worked from 2013 to 2017.

As Mr. Teutsch tells it, many people working in government spend their careers focused on a single problem within a specific policy area that they would love to fix. They make plans and have memos in their back pockets and are ready when the legislative, executive or judicial clouds part.

Keep up with Election 2020

“Mostly, what you do is think and wait for those brief moments when you can move the thing to fix the problem that you’ve been obsessed with,” he said. It tried his patience enough that he found another line of work.

But here’s the problem for those policy lifers and for those of us who pay the taxes that keep them employed: Only a tiny fraction of them finally get to do their thing during any presidential administration, and it isn’t possible to predict who will get their shot or how successful they will be. It would be foolish to, say, fundamentally alter your retirement savings strategy in anticipation of a change to some or another tax rule.

But what if Joe Biden wins and the Democrats regain a majority in the Senate? Don’t assume anything, warned René Bruer, who worked for Jeb Bush when he was governor of Florida and Republicans controlled both houses of the State Legislature.

“Governor Bush told us not to bet on any legislation passing or failing based on Republican politics,” said Mr. Bruer, now a financial planner in Colorado Springs. “He said it will very much surprise you.”

While it feels like a long time ago now, we should not forget the John McCain thumbs-down moment, which sank the legislation that would have gutted Obamacare in 2017. That was with one party in control of both chambers and the presidency, a reminder that even two years of control over Congress and the White House may not be enough time to fulfill a long list of legislative wishes. Now imagine chastened Republicans reframing their pitches to voters and taking back the House in 2022, again dividing the government.

Mr. Bruer is a Marine Corps veteran who spent part of his childhood in Africa seeing people burn banks on his way to school. He actually takes some comfort in what to others feels like a heightened level of American governmental chaos.

Stocks can lose a lot of value in a short period. But over decades, they tend to deliver enough growth to allow you to achieve long-term goals, like being able to retire and live off the money. That, however, happens only if you have the courage (and discipline and leftover income) to save regularly and don’t yank money out when you think something scary is going to happen.

If you have money in stocks that you will need in the next few years, you should rethink that — but not because of what could happen on Tuesday or because of the way politics or policy might affect the markets. It’s simply better to put money you know you’ll need soon into something less volatile.

“We want growth-oriented investments in the part of someone’s portfolio that they are planning to hold for the long term, precisely so we don’t have to worry about what is going to happen in an election,” Mr. Teutsch said.

Then, focus on the things you can control. That’s the opening line of the script Mr. Bruer uses with clients who just want out of the markets for now, regardless of whether their team is going to win. Then, he asks if there is some fundamental health or career change that might necessitate a change in course.

If not, the conversation continues with some reminders and a review of the basics. “Do you have a financial and investment plan? Yes. Are your investment costs low? Yes. Diversified? Yes,” he said.

Simply reminding yourself of your own good planning can have a calming effect.

And if the stock market has been good to you — from the Obama administration into the Trump administration — maybe there is some money left over for others whose paths have been rockier. That’s one area where Mr. Teutsch hopes his clients are thinking hard about a possible change in strategy.

“After an election can be a great time to assess your social impact plan, especially around charitable strategies,” he said. “Because the world is going to need very different things depending on who wins.”

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Ant Group Set to Raise $34 Billion in World’s Biggest I.P.O.

Ant Group, the Chinese financial technology titan, is set to raise around $34 billion when its shares begin trading in Hong Kong and Shanghai in the coming weeks, which would make its initial public offering the largest on record.

The company, the parent of the Alipay mobile payment service, priced its shares around $10.30 apiece, according to documents released on Monday by stock exchanges in the two cities. At that price, the company would be worth around $310 billion, a market value comparable to that of JPMorgan Chase and more than that of many other global banks.

The money Ant raises would surpass the $29.4 billion that Saudi Arabia’s state-run oil company, Saudi Aramco, raised when it went public last year. Ant’s listing would also be larger than that of its sister company, the Chinese e-commerce giant Alibaba, which raised $25 billion when its shares started trading on the New York Stock Exchange in 2014.

For hundreds of millions of people in China, Alipay may as well be a bank. It is their credit card, debit card, mutual fund and even insurance broker — all on a single mobile platform. It is a lender to small businesses, both online and off, that might otherwise be ignored by China’s big state-run banks. Alipay has more than 730 million monthly users, more than twice the population of the United States. By comparison, PayPal has 346 million active accounts.

Like other giant internet companies, Ant says its strength lies in performing a large number of different tasks at once. The more people use Alipay to purchase lattes, for example, the more data it gathers about their spending power. Ant says this information helps it offer loans, investments and insurance policies that suit users’ needs. The data also helps Ant and its partner banks determine who is likely to pay them back.

Yet the melding of finance and tech is attracting regulators’ interest everywhere, and Ant has not been spared the scrutiny. In recent years, China has clamped down hard on fishy online lending and investing schemes. Regulatory pressures have led Ant to temper its ambitions in certain areas since it was spun off from Alibaba in 2011.

In the United States, Trump administration officials have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products, said three people with knowledge of the matter. In 2018, Ant called off a bid to buy MoneyGram, the money transfer company, after it failed to win the approval of American officials.

Today, the company emphasizes that Alipay is merely the front door through which its users gain access to financial services. The lending and investing are still mostly done by established institutions — a message that was crystallized when the company, which used to be called Ant Financial, dropped the second word from its English name this year.

Last year, Ant earned $2.7 billion in profit on $18 billion in revenue. It says it handled $17 trillion in digital payments in mainland China during the 12 months that ended in June.

Ana Swanson contributed reporting.

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The Fed’s $4 Trillion Lifeline Never Materialized. Here’s Why.

WASHINGTON — As companies furloughed millions of workers and stock prices plunged through late March, Treasury Secretary Steven Mnuchin offered a glimmer of hope: The government was about to step in with a $4 trillion bazooka.

The scope of that promise hinged on the Federal Reserve. The relief package winding through Congress at the time included a $454 billion pot of money earmarked for the Treasury to back Fed loan programs. Every one of those dollars could, in theory, be turned into as much as $10 in loans. Emergency powers would allow the central bank to create the money for lending; it just required that the Treasury insure against losses.

It was a shock-and-awe moment when lawmakers gave the package a thumbs up. Yet in the months since, the planned punch has not materialized.

The Treasury has allocated $195 billion to back Fed lending programs, less than half of the allotted sum. The programs supported by that insurance have made just $20 billion in loans, far less than the suggested trillions.

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The programs have partly fallen victim to their own success: Markets calmed as the Fed vowed to intervene, making the facilities less necessary as credit began to flow again. They have also been undercut by Mr. Mnuchin’s fear of taking credit losses, limiting the risk the government was willing to take and excluding some would-be borrowers. And they have been restrained by reticence at the central bank, which has extended its authorities into new markets, including some — like midsize business lending — that its powers are poorly designed to serve. The Fed has pushed the boundaries on its traditional role as a lender of last resort, but not far enough to hand out the sort of loans some in Congress had envisioned.

Lawmakers, President Trump and administration officials are now clamoring to repurpose the unused funds, an effort that has taken on more urgency as the economic recovery slows and the chances of another fiscal package remain unclear. The various programs are set to expire on Dec. 31 unless Mr. Mnuchin and Jerome H. Powell, the Fed chair, extend them.

Here’s how that $454 billion failed to turn into $4 trillion, and why the Fed and Treasury are under pressure to do more with the money.

The Fed can lend to private entities to keep markets functioning in times of stress, and in the early days of the crisis it rolled out a far-reaching set of programs meant to soothe panicked investors.

But the Fed’s vast power comes with strings attached. Treasury must approve of any lending programs it wants to set up. The programs must lend to solvent entities and be broad-based, rather than targeting one or two individual firms. If the borrowers are risky, the Fed requires insurance from either the private sector or the Treasury Department.

Early in the crisis, the Treasury used existing money to back market-focused stabilization programs. But that funding source was finite, and as Mr. Mnuchin negotiated with Congress, he pushed for money to back a broader spate of Fed lending efforts.

The central bank itself made a major announcement on March 23, as the package was being negotiated. It said it was making plans to funnel money into a wide array of desperate hands, not just into Wall Street’s plumbing. Officials would set up an effort to lend to small and medium-size businesses, the Fed said, and another that would keep corporate bonds flowing. It would go on to expand that program to include some recently downgraded bonds, so-called fallen angels, and to add a bond-buying program for state and local governments.

Congress allocated $454 billion in support of the programs as part of the economic relief package signed into law on March 27. When the Congressional Budget Office estimated the budget effects of that funding, it did not count the cost toward the federal deficit, since borrowers would repay on the Fed’s loans, and fees and earnings should offset losses.

Mr. Mnuchin and congressional leaders did not settle on that sum for a very precise economic reason, a senior Treasury official said, but they knew conditions were bad and wanted to go big.

Overdoing it would cost nothing, and the size of the pot allowed Mr. Mnuchin to say that the partners could pump “up to $4 trillion” into the economy.

It was like nuclear deterrence for financial markets: Promise that the government had enough liquidity-blasting superpower to conquer any threat, and people would stop running for safer places to put their money. Crisis averted, there would be no need to actually use the ammunition.

Still, the huge dollar figure stoked hopes among lawmakers and would-be loan recipients — ones that have been disappointed.

Key markets began to mend themselves as soon as the Fed promised to step in as a backstop. Companies and local governments have been able to raise funds by selling debt to private investors at low rates.

Corporate bond issuance had ground to a standstill before the Fed stepped in, but companies have raised $1.5 trillion since it did, Daleep Singh, an official at the New York Fed, said on Tuesday. That is double the pace last year. The companies raising money are major employers and producers, and if they lacked access to credit it would spell trouble for the economy.

While self-induced obsolescence partly explains why the programs have not been used, it’s not the whole story. The Main Street program, the one meant to make loans to midsize businesses, is expected to see muted use even if conditions deteriorate again. In the program that buys state and local debt, rates are high and payback periods are shorter than many had hoped.

Continued lobbying suggests that if the programs were shaped differently, more companies and governments might use them.

The relatively conservative design owes to risk aversion on Mr. Mnuchin’s part: He was initially hesitant to take any losses and has remained cautious. They also trace to the Fed’s identity as a lender of last resort.

Walter Bagehot, a 19th-century British journalist who wrote the closest thing the Fed has to a Bible, said central banks should lend freely at a penalty rate and against good collateral during times of crisis.

In short: Step in when you must, but don’t replace the private sector or gamble on lost causes.

That dictum is baked into the Fed’s legal authority. The law that allows it to make emergency loans instructs officials to ensure that borrowers are “unable to secure adequate credit accommodations from other banking institutions.” The Fed specified in its own regulation that loan facilities should charge more than the market does in normal conditions — it wants to be a last-ditch option, not one borrowers would tap first.

The Fed has stretched its “last resort” boundaries. The Main Street program works through banks to make loans, so it is more of a credit-providing partnership than a pure market backstop, for instance.

Yet Bagehot’s dictum still informs the Fed’s efforts, which is especially easy to see in the municipal program. State finance groups and some politicians have been pushing the central bank to offer better conditions than are available in the market — which now has very low rates — to help governments borrow money for next to nothing in times of need.

The Fed and Treasury have resisted, arguing that the program has achieved its goal by helping the market to work.

Congress is not uniformly on board with wanting a more aggressive Fed that might become a first option for credit. Senator Patrick J. Toomey of Pennsylvania, a Republican on the committee that oversees the central bank, has repeatedly underlined that the Fed is a backstop.

And replacing private creditors during times of crisis would put central bankers — who are neither elected nor especially accountable — in the position of picking economic winners and losers, a role that worries the Fed.

Such choices are inherently political and polarizing. Already, many of the same people who criticize stringency in the state and local programs regularly argue that the programs intended to help companies should have come with more strings attached.

And it could become a slippery slope. If the Fed shoulders more responsibility for saving private and smaller public entities, Congress might punt problems toward the central bank before solving them democratically down the road.

“It’s opening Pandora’s box,” said David Beckworth, a senior research fellow at the Mercatus Center at George Mason University.

Being too careful could also carry an economic risk if it meant that the Fed failed to provide help where needed. The midsize business segment, which employs millions of people, has had few pandemic relief options. Struggling states and cities are also huge employers.

Yet those entities may be past the point of needing debt — all the Fed can offer — and require grants instead. And it is worth noting that just because the Fed and Treasury are not rewriting their programs to support broader use now does not mean the Fed would stand back if conditions were to worsen.

If that happens, “it’s going to stop pointing to the fact that it has a fire hose,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania. “It’s going to take it out and turn it on.”

Alan Rappeport contributed reporting.

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Oil Industry Turns to Mergers and Acquisitions to Survive

HOUSTON — The once mighty oil and gas industry is flailing, desperately trying to survive a pandemic that has sharply reduced demand for its products.

Most companies have cut back drilling, laid off workers and written off assets. Now some are seeking out merger and acquisition targets to reduce costs. ConocoPhillips announced on Monday that it was acquiring Concho Resources for $9.7 billion, the biggest deal in the industry since oil prices collapsed in March.

The acquisition, days after the completion of Chevron’s takeover of Noble Energy, would create one of the country’s biggest shale drillers and signals an accelerating industry consolidation as oil prices languish around $40 a barrel, just above the levels many businesses need to break even. Just last month Devon Energy said it would buy WPX Energy for $2.6 billion.

But many investors are not sure such deal making will be enough to protect the industry from a sharp decline. The share prices of ConocoPhillips and Concho closed down by about 3 percent on Monday. The big problem is that the fortunes of oil companies are fundamentally tied to oil and natural gas prices, which remain stubbornly low. Few experts expect a full recovery of oil demand before 2022, and some analysts have gone so far as to declare that oil demand might have peaked in 2019 and could slide in the years to come as the popularity of electric cars grows.

“There’s a lot more red ink than there is black gold,” said Michael Lynch, president of Strategic Energy and Economic Research, who periodically advises the Organization of the Petroleum Exporting Countries. “Companies are trying to hunker down and weather the storm. Most people don’t think the oil price will recover for a couple of years.”

More than 50 North American oil and gas companies with debts totaling more than $50 billion have sought bankruptcy protection this year. Among the casualties was Chesapeake Energy, a shale pioneer based in Oklahoma City. More failures could come in the next two years as companies are required to repay tens of billions of dollars in debt.

Oil companies are facing daunting uncertainties, particularly as concerns over climate change mount and governments impose tougher regulations to reduce greenhouse gas emissions caused by the burning of fossil fuels. Small companies fear a crackdown on methane leaks and tightening regulations, especially if former Vice President Joseph R. Biden Jr. becomes president and Democrats take control of the Senate.

European oil companies have already begun pivoting away from oil and gas, plotting investments in renewable energy like wind and solar to attract new investors. While those companies have had limited success so far, American companies have for the most part stuck with their traditional businesses. They have adapted to low oil and gas prices by slashing investments by 30 percent or more. The oil and gas rig count has dropped by 569 since last fall, to only 282 operating across the country.

Oil companies are hoarding cash and renegotiating contracts with service companies that drill and complete wells. Rig rental rates are down roughly 10 percent, pressuring the companies that do the field work. More than 100,000 American oil workers have lost their jobs in recent months.

ConocoPhillips, the largest American independent oil company, has been something of an outlier, recently raising its dividend and buying back shares. Nevertheless, ConocoPhillips’s stock price has dropped by roughly half so far this year.

The company is a major producer in the Bakken shale field of North Dakota and the Eagle Ford shale field in South Texas. By acquiring Concho, it will become a major player in the world’s most lucrative shale field, the Permian Basin, which straddles West Texas and New Mexico.

With Concho’s 550,000 acres in the Permian, ConocoPhillips will more than triple its 170,000-acre position in the basin, which became the world’s most productive oil field last year.

Concho is little known outside Texas but became a major oil producer after it bought RSP Permian for $9.5 billion in 2018. Concho produced more than 300,000 barrels in the second quarter.

“Together ConocoPhillips and Concho will have unmatched scale and quality,” said Ryan M. Lance, ConocoPhillips’s chairman and chief executive, referring to their joint balance sheet, resource reserves and personnel.

The deal would help make ConocoPhillips one of the largest players in the Permian, putting it in the same league as companies that are much bigger than it over all.

“The combination is remarkable,” said Robert Clarke, a vice president and oil analyst at Wood Mackenzie, a research and consulting firm. “Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive program.”

As the shale industry grew over the last decade or so, many smaller companies poured billions of dollars into the Permian and other parts of the country. Now, the process appears to be headed in the opposite direction as the industry retrenches and becomes smaller.

Investment in U.S. shale oil has dropped to an estimated $45 billion this year from roughly $100 billion annually in 2018 and 2019, according to the International Energy Agency. In its annual report released this month, the Paris-based organization said a shakeout was underway.

“The influence of large players is set to grow as acreage is consolidated by larger industry players, and the focus on growth is set to be supplanted over time by a focus on returns,” the report said. “The exuberance and breakneck growth of the early years may be replaced by something a little steadier.”

American oil production fell to 11.2 million barrels a day in September from 13 million at the beginning of the year. The Energy Department expects production to fall an additional 200,000 barrels a day by mid-2021 as companies drill fewer new wells to replace older ones.

The industry has no choice but to cut back. Americans drove 12.3 percent fewer miles in August than they did a year earlier, according to the Transportation Department.

Globally, daily oil consumption was down more than 6 percent in September from a year earlier, according to the Energy Department. Oil production continues to outpace demand, keeping inventory levels high and prices low.

And the pandemic is not yet under control in many parts of the world. If sustained, the recent increase in coronavirus infections in the United States, Europe and elsewhere could reduce demand for oil and gas even further in the coming months.