Chile Economic Activity Posts Longest Streak of Gains Since 2021
The Imacec index, a proxy for gross domestic product, increased 0.4% from the previous month, above the 0.2% median estimate of analysts in a Bloomberg survey. Activity gained 2.5% from a year prior, the central bank reported on Monday.
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Bloomberg
25 minutes ago
- Bloomberg
President Trump's Tariffs Backfire on US Textile Exporters
The tariffs, intended to boost US manufacturing, are instead hurting small exporters like Cocona Labs by raising costs, deterring foreign buyers, and creating uncertainty across supply chains. CEO Jeff Bowman says the tariffs have stalled investments, reduced sales, and forced his team to consider moving operations abroad. (Source: Bloomberg)
Yahoo
2 hours ago
- Yahoo
Hedge Funds Flip on Green Energy and Start Betting Against Oil
(Bloomberg) -- Hedge funds are betting against oil stocks and winding back shorts on solar in a reversal of positions that dominated their energy strategies over the past four years. 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Over the same period, funds have unwound short bets against solar stocks. The analysis, which is based on a universe of some 700 hedge funds representing about $700 billion in assets — or roughly 15% of the industry's total under management — also shows that portfolio managers have stayed net long wind in the period. There has been 'a bottoming out with some of these clean energy plays,' said Todd Warren, portfolio manager at Tribeca Investment Partners Pty. That trend has 'really occurred at the same time as we've seen — in the oil patch — some concerns with regards to supply and demand balance,' he said. The analysis shows that more hedge funds were, on average, net short stocks in the S&P Global Oil Index than net long for seven of the nine months starting October 2024. By contrast, net longs exceeded net shorts in all but eight of the 45 months from January 2021 through September 2024. The development coincides with a rise in oil supply as some OPEC+ member nations act to preserve their market share. Joe Mares, a portfolio manager at Trium Capital, a hedge fund managing about $3.5 billion, notes that ratcheting up output has 'not historically been great' for the oil industry. Evidence of an economic slowdown in the US and China, combined with an expectation that global oil inventories will continue to rise through the rest of 2025, means there's growing skepticism toward the sector. Once investors take in 'the general slowdown in everything,' the question then becomes, 'who's buying the oil?' said Kerry Goh, Singapore-based chief investment officer at Kamet Capital Partners Pte. Greenwich, Connecticut-based Tall Trees Capital Management LP is short oil stocks because 'we see much lower oil prices, especially in 2026,' said Lisa Audet, the fund's founder and chief investment officer. And in the US, President Donald Trump's quest to add supply in an effort to bring down the price of oil has unsettled local producers. The Dallas Fed's latest quarterly energy survey, published on July 2, shows negative sentiment among oil companies toward the Trump administration's policy on the fossil fuel. One respondent in the anonymized study said the administration's implied price target of $50 a barrel is simply unsustainable for the industry. Another spoke of the 'chaos' caused by current US trade policies, adding the volatility will drive companies to 'lay down rigs.' Meanwhile, the outlook for solar and wind stocks is starting to improve. The analysis of Hazeltree's data shows that the average share of funds that were net short stocks in the Invesco Solar ETF dropped to 3% in June. That's the lowest percentage since April 2021, when green equities were trading near record highs. The number of funds net long stocks in the First Trust Global Wind Energy ETF reached a 30-month high in February this year. Those positions fell back in June, but net longs still dominated shorts overall. Other hedge fund managers said AI has the potential to trigger a generational swell in energy demand that is likely to give new support to renewables. 'The market is telling you that AI is the biggest thing we've seen in our entire careers,' said Karim Moussalem, chief investment officer of equities at London-based Selwood Asset Management LLP, which manages about $1.6 billion. To meet energy demand from AI, renewables will need to play a big part, not least 'because they're the fastest to market,' he said. Renewables are likely to meet more than half of the required additional generation capacity by 2035, BloombergNEF said in a report last month. In China, green stocks are now enjoying a rebound after its solar industry started addressing overcapacity concerns. After losing about half its value between the end of 2021 and 2023, the Solactive Select China Green Energy Index — which includes solar giant Longi Green Energy Technology Co. — has advanced around 19% from an April low. In the US, Trump administration attacks on green energy — including a rollback of Biden-era subsidies — have already contributed to over $22 billion of clean energy projects being canceled or delayed since January, according to an analysis from the E2 advocacy group. Yet, for a number of fund managers, the decision to slash green subsidies helps end some of the policy uncertainty that had prevented investors from moving into wind and solar. 'At least now we know what the rules are going to be and so people can go back to evaluating these as businesses,' Mares said. The final version of Trump's $3.4 trillion budget bill — dubbed the One Big Beautiful Bill — was actually more favorable toward some corners of the renewables market than Tall Trees Capital's Audet expected. Utility-scale solar, for example, has emerged as a relative winner, she said. For green investors, it's been 'less bad than expected,' said Nishant Gupta, founder and chief investment officer of Kanou Capital LLP, an energy transition-focused hedge fund. 'There's been more protection around US domestic production than expected.' And this year's tariff wars have coincided with a broad rebound in green stocks. Since Trump first unveiled his proposed tariffs on April 2 — dubbed Liberation Day by the White House — the main S&P index tracking clean energy stocks has added about 18%. Over the same period, the main S&P index for oil companies is down around 4%. Much of the clean-energy rebound has been driven by solar. The Invesco Solar ETF, a widely tracked exchange-traded fund packed with solar stocks, is up more than 18% since April 2. More hedge funds continue to be short stocks in the Kraneshares Electric Vehicles and Future Mobility Index ETF than long — a constant since 2021 as China has steadily displaced Western manufacturers. But the share of net shorts dropped to 2.87% in June, which is the second-lowest level in almost half a decade. At the same time, there's an expectation among fund managers that the continued rise in sales of EVs globally will reduce the need for petroleum. That matches BloombergNEF estimates, which anticipate a 25% annual increase in EV sales this year. BNEF also expects that about 40% of vehicles on the road could be electric by 2040, displacing 19 million barrels of oil a day by that year. The strategy shift among funds reflects the fact that economic growth without low-carbon energy is now inconceivable, according to Trium's Mares. 'If we are going to continue to grow both in developed and emerging economies, we're going to need a lot of energy,' he said. 'A big chunk of the marginal growth in energy over the last 10 years has come from renewables and it's hard to see why that isn't going to continue.' MethodologyBloomberg Green analyzed anonymized weekly data that around 700 hedge fund managers disclosed to Hazeltree, from January 2021 through 27 June 2025. The hedge funds in the Hazeltree database vary in terms of assets under management, and the analysis is not weighted by hedge fund assets or size of position held. Collectively, AUM for the hedge funds analyzed is around $700 billion. Total assets under management in the hedge fund industry were around $4.7 trillion at the end of the second quarter 2025, according to Hedge Fund Research. Bloomberg also interviewed hedge fund managers on their oil and energy transition bets and on trends from the data analysis. Hedge funds mostly provided their data to Hazeltree via prime brokers. There is a possibility that some positions may not be disclosed. These will not be included in Hazeltree's data or in the Bloomberg analysis. Hazeltree's data reports percentages of the hedge funds that held net long positions and net short positions for a specific stock. Bloomberg's analysis categorized roughly 230 stocks based on key ETFs or indices for a sector, and further calculated a sector-wide monthly average. In some cases, the same company could be included in different sectors. Four stocks didn't appear in the Hazeltree data provided to Bloomberg. ETFs and indices used in the analysis are S&P Global Oil Index, Invesco Solar ETF, First Trust Global Wind Energy ETF and KraneShares Electric Vehicles & Future Mobility Index ETF. --With assistance from Sheryl Tian Tong Lee, Will Mathis and Simon Casey. 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Yahoo
4 hours ago
- Yahoo
Palantir's 2,500% Run Has Bulls Scrambling to Justify Valuation
(Bloomberg) -- Palantir Technologies Inc.'s meteoric rise is pushing the company's valuation further into record territory, forcing bullish investors to bank on increasingly robust future growth to justify its current level. New York Warns of $34 Billion Budget Hole, Biggest Since 2009 Crisis Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion Three Deaths Reported as NYC Legionnaires' Outbreak Spreads A New Stage for the Theater That Gave America Shakespeare in the Park Chicago Schools' Bond Penalty Widens as $734 Million Gap Looms Shares of the defense maker closed at another all-time high Friday, bringing gains since its 2021 debut to near 2,500%. The stock is up almost 150% this year, a rally underpinned by the company's growing use of artificial intelligence, business ties to the US government and most recently, a stellar earnings report. That surge has made Palantir eye-wateringly expensive compared to its peers: trading at 245 times forward earnings, it is the most richly-valued company in the S&P 500 Index. By comparison, chipmaker Nvidia Corp., another big gainer, trades at just 35 times forward earnings. Palantir is 'turning into a bit of a difficult valuation story to sell, but it's a great company,' said Mark Giarelli of Morningstar Investment Service, who has sell-equivalent rating on the stock. The valuation 'causes heartburn, but that's the story right now.' Plenty of Wall Street pros and retail investors alike are happy to hang on for now, wary of missing out on further upside. Still, it's getting hard for them to ignore the increasingly high bar Palantir must meet to justify its performance over the longer term. Damian Reimertz of Bloomberg Intelligence estimates the company would need to generate $60 billion over the next 12 months to trade at a comparable valuation to its peers. That calculation — based on a comparison of the software companies' enterprise value-to-sales ratio — is many times higher than the $4 billion in revenues Wall Street expects Palantir to earn in fiscal 2025 or the $5.7 billion analysts forecast for next year. Valuation is also a sticking point for Gil Luria, managing director and head of technology research at DA Davidson & Co. Luria praised Palantir's quarterly results and called it 'the best story in all of software' in a recent note. But he estimates that the company would have to grow at 50% annually for the next five years and maintain a 50% margin in order to get its forward price to earnings ratio down to 30, in line with the likes of Microsoft Corp. and Advanced Micro Devices Inc. Palantir's adjusted earnings per share are expected to grow at a 56% rate this year, falling to 31% and 33% in the next two years, respectively. In a broader sign of Wall Street's unease, more than twice as many analysts assign the stock sell or hold ratings than buy, according to data compiled by Bloomberg. Still, Palantir's shares have become a must-own for portfolio managers concerned with beating performance benchmarks, said David Wagner of Aptus Capital Advisors, which holds shares of the company. 'There's a lot of investors that just can't ignore it,' said Wagner. 'They don't believe in the stock, but they're tired of it just hurting them on a relative performance standpoint.' 'Squint Your Eyes' Palantir bulls are betting that the company's business performance will support its stock price over the long term, a path taken by many of today's Big Tech elite. Online streamer Netflix Inc., for instance, traded north of 280 times forward earnings at a 2015 peak, and now stands at a forward P/E of 40. 'Definitely Palantir is part of that AI craze, but not everything that goes to a valuation of 200 is a bubble,' said Que Nguyen, chief investment officer of equity strategies at Research Affiliates, referring to Netflix. Brent Bracelin at Piper Sandler boosted his price target on shares to $182 from $170 following earnings and maintained his overweight rating. He is counting on the company to continue growing aggressively and sustain high free cash flow margins through 2030, aided by a market for defense spending estimated at $1 trillion in the US alone. 'You have to squint your eyes. You kind of have to believe that these audacious growth goals can be achieved,' he said. Of course, there are numerous examples of stock rallies that cooled when companies couldn't meet Wall Street's elevated expectations. Shares of Tesla Inc. are down nearly 20% this year, in part because the company's results aren't keeping pace with its lofty valuation of about 148 times forward earnings. While Palantir aced its most recent earnings report, its high valuation could exacerbate a selloff if the company stumbles in the future, said Morningstar's Giarelli. 'Palantir is trading at such a high multiple relative to everyone else that there's just so much gravity underneath their stock chart,' he said. 'There's a lot of room below the stock chart for it to reprice in a negative way because it's had such a stellar run.' For Mark Malek, chief investment officer at Siebert Financial, valuations remain a concern. Still, Palantir's potential for growth has kept him holding on to the stock. 'It's uncomfortable to buy it at these levels, but we're not afraid to buy when stocks are overvalued,' he said. 'Where else are you finding 30% growth rates out there?' The Pizza Oven Startup With a Plan to Own Every Piece of the Pie Digital Nomads Are Transforming Medellín's Housing Russia's Secret War and the Plot to Kill a German CEO The Game Starts at 8. 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