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6 days ago
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Softbank's Son Floats Idea of US-Japan Sovereign Wealth Fund: FT
(Bloomberg) -- SoftBank founder Masayoshi Son has proposed setting up a US-Japan sovereign wealth fund aimed at making large investments in technology and infrastructure, the Financial Times reported, citing three unidentified people close to the situation. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt Son has discussed the plan with US Treasury Secretary Scott Bessent, although it hasn't been formally proposed, the report said. The joint fund would likely need about $300 billion in initial capital, with significant leverage, to be effective, one person told the FT. According to the report, the fund would be jointly owned and run by the US Treasury and Japan's finance ministry, with each holding a significant stake. The fund could also be opened to limited partner investors, potentially offering retail investors in Japan and the US a chance to participate. Bessent has been looking for revenue streams for the Treasury that don't involve raising taxes, and the fund could potentially provide a solution, a person briefed on the situation told the newspaper. A Treasury spokesperson and Softbank declined to comment to the FT. To view the source of this information, click here How Coach Handbags Became a Gen Z Status Symbol Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox Microsoft's CEO on How AI Will Remake Every Company, Including His ©2025 Bloomberg L.P. Sign in to access your portfolio
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7 days ago
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Junkiest Junk Is Offering a Warning Sign for Debt
(Bloomberg) -- For much of the year, money managers have embraced optimism and snatched up corporate bonds, sending valuations to ever more expensive levels. Now, Wall Street titans are saying it's time to focus on how bad things can get. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy UAE's AI University Aims to Become Stanford of the Gulf Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? NYC's War on Trash Gets a Glam Squad Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Josh Easterly, co-founder and co-chief investment officer of Sixth Street Partners, are among those warning that the credit market may not be pricing in enough risk. And the lowest rung of junk bonds are flashing warnings that the US economy could soon face slower growth and higher inflation, as well as the possibility of a recession. Risk premiums on junk bonds rated in the CCC tier have widened 1.56 percentage points this year, and 0.4 percentage point in the latest week. The gap between spreads on CCCs and the next tier above them, Bs, has been widening this year and in the last two weeks, signaling that the weakest bonds are lagging. The CCC widening and underperformance are red flags, said Connor Fitzgerald, fixed-income portfolio manager at Wellington Management, a firm that oversees more than $1 trillion of assets. 'I wouldn't recommend somebody make a big move into high yield today, because spreads are tight and if you think there's concern about a recession, you risk default-related losses,' Fitzgerald said in an interview. Dimon, who was early to spot risks in the mortgage market during the US housing bubble, said on Monday that credit spreads aren't accounting for the impacts of a potential downturn. He added that the chances of elevated inflation and stagflation are greater than people think and cautioned that America's asset prices remain high. Credit is a 'bad risk,' Dimon said at JPMorgan's investor day. 'The people who haven't been through a major downturn are missing the point about what can happen in credit.' Yet investors are still buying at least some junk bonds. CoreWeave Inc., an AI cloud hosting firm, sold $2 billion of five-year notes on Wednesday, finding enough demand to boost the size of the offering from $1.5 billion. And in the US investment-grade market, companies sold more than $35 billion of bonds this week, topping dealers' forecasts of around $25 billion. Corporate debt has rallied since the violent swings of April, partly because investors have had cash from maturing securities to reinvest into the credit market, said Blair Shwedo, head of fixed income sales and trading at U.S. Bank. But geopolitical tensions and tariff uncertainty could hurt demand for company debt and cause spreads to widen. Market sentiment can shift quickly. In April, days after US President Donald Trump announced the steepest tariffs for the country in a century, spreads climbed to their widest since March 2020. Soon after that, they tightened again. There are many risks ahead. US President Donald Trump on Friday threatened a 50% tariff on goods from the European Union starting next month, signaling trade wars are far from settled. The Federal Reserve's interest-rate path is also unclear, as is when, or if, economic data will start to show signs of deteriorating. 'Lack of clarity on growth and trade and geopolitics should be reflected in spreads,' said Sixth Street's Easterly, who is particularly concerned about floating-rate debt. 'Risk is not being appropriately priced today in credit.' Week In Review High-grade credit derivative indexes for North American and European credits widened in the latest week, after US President Donald Trump threatened to impose a 50% tariff on the European Union, ramping up trade war rhetoric again. Chinese developer Country Garden Holdings Co. has secured backing from nearly 75% of bondholders for its offshore restructuring. The giants of corporate America from Pfizer Inc. to Alphabet Inc. are borrowing in euros like never before as the anxiety triggered by Trump's tariff threats pushes them to hunt for alternative funding avenues in case their home market freezes up. Apollo Global Management is financing its acquisition of PowerGrid Services from Sterling Group with a nearly $1 billion debt package from Brookfield Asset Management, Blackstone Inc., and JPMorgan Chase & Co.'s direct lending businesses. US mortgage bonds weakened after Trump said he's looking at removing Fannie Mae and Freddie Mac from government backing, yet reaction was relatively muted and reflected investor faith that any changes will come slowly and won't disrupt the market. Private capital firms are increasingly using collateralized fund obligations to raise cash, as they slice and dice private portfolios into bonds with top ratings, allowing issuers to borrow cheaply against illiquid assets. Private credit firms are seeing an opportunity to finance everything from public transit systems to local utilities as the federal government and banks pull back on funding. Sunnova Energy International, a seller of rooftop solar-panel systems, is laying the groundwork for a bankruptcy filing that could happen within the coming weeks. On the Move Former Ares Management Corp. partner Scott Graves has assembled a team to help run Lane42 Investment Partners, the asset manager he launched this year with $2 billion of capital commitments from Millennium Management. Lane42 will invest across public and private credit markets and offer tailored financing for both healthy and distressed companies. Jim Boland, who spent nearly two decades at UBS, is joining Mizuho Financial Group Inc.'s team in New York. Boland will be a managing director overseeing debt capital markets, and joins from The Benchmark Company, where he has worked since 2021. Jefferies Financial Group Inc. is hiring industry veterans to bolster its emerging markets team after several high-profile traders and salespeople left in a shakeup earlier this year. Rafael Madrid, former co-head of emerging-market credit trading at Morgan Stanley, and Anton Hobbs, a London-based credit sales executive from Citigroup Inc. are set to join. Clear Street is launching a trading desk to help asset managers, hedge funds and family offices outsource some of their trading business, tapping talent from UBS Group. Barclays Plc hired Marc Warm from UBS Group as the third co-head of its global capital markets business as the British lender seeks to grow its investment banking franchise. New York-based Warm will co-head the division along with Tom Johnson and Travis Barnes. Canadian Imperial Bank of Commerce hired Manav Suri to lead commercial real estate credit in the US as it continues to bolster its structured-credit team in the country. Suri was managing director, head of real estate capital solutions, at MUFG Bank Ltd. until August 2023. Ares Management Corp. partner Bryan Southergill, who focuses on Asia credit, is leaving by the end of June. Hong Kong-based Southergill has worked on real estate-related credit investing at Ares since August 2022, and was previously a managing director on KKR's real estate team in Hong Kong. --With assistance from James Crombie and Dan Wilchins. Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Inside the First Stargate AI Data Center AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox Microsoft's CEO on How AI Will Remake Every Company, Including His ©2025 Bloomberg L.P.
Yahoo
23-05-2025
- Business
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Trump Signs Orders to Revive US Leadership in Nuclear Power
(Bloomberg) -- President Donald Trump on Friday signed orders meant to accelerate the construction of nuclear power plants, including small, untested designs that offer the promise of rapid deployment but haven't yet been built in the US. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt The effort is a bid to meet a coming surge in electricity demand and help the US reclaim its edge in nuclear energy. While the country was once the leader in deploying and producing nuclear power, it's finished building only two new reactors in the last 30 years and shuttered existing plants, even as China and Russia race to deploy them. Trump's initiative to unleash nuclear energy could give a boost to an emission-free source of power that's championed as a climate-friendly alternative to electricity generated by burning coal and natural gas. However, the president has cast nuclear energy as a complement, rather than a replacement, for fossil fuels. 'We're signing tremendous executive orders today that really will make us the real power in this industry,' Trump said as he issued the directives in the Oval Office, adding that nuclear technology 'has come a long way, both in safety and costs.' Trump was joined by Interior Secretary Doug Burgum, Defense Secretary Pete Hegseth and energy industry executives including Constellation Energy Corp. CEO Joseph Dominguez and Jake DeWitte of Oklo Inc. The initiative represents the latest bid by an American president to jump start the domestic nuclear industry, which has languished in recent decades. Former President Joe Biden last year laid out a plan to triple US nuclear capacity by 2050, and Trump's new plan aims to quadruple it. It also comes as technology companies are clamoring for power to supply energy-hungry data centers. The effort is likely to give a boost to companies developing small reactors, including Last Energy Inc., Oklo, TerraPower LLC and NuScale Power Corp. One of the orders also aims to get 10 large, conventional reactors under construction by 2030, potentially benefiting Westinghouse Electric Co., whose gigawatt-scale AP1000 design was the last commercial nuclear unit built in the US and has been embraced worldwide. Trump's nuclear initiative also would encourage the use of government financing to support the restart of shuttered nuclear plants, target 5 gigawatts worth of upgrades at existing sites and help spur the completion of others — potentially aiding South Carolina utility Santee Cooper's bid to resume building two reactors at its V.C. Summer plant, where soaring costs prompted the company to halt construction in 2017. However, Trump's nuclear push comes as lawmakers move to phase out a government subsidy that's seen as critical to helping propel construction of new reactors and support existing plants. Developers have said the change would create a significant barrier to building nuclear plants. Under a bill that passed the House early Thursday, new and expanded advanced nuclear projects would be eligible to receive clean energy tax credits only as long as they begin construction by the end of 2028, while tax credits for existing nuclear power plants would expire at the end of 2031. Trump's initiative aims to spur construction of at least one reactor at US military installations. That would allow nuclear energy to power and operate critical defense facilities and AI data centers, a senior White House official said. And, because that approach doesn't involve commercial plants, it lets developers bypass the customary approval process through the Nuclear Regulatory Commission. In the meantime, the NRC would also get an overhaul. Trump is ordering a reorganization of the agency and a culling of its workforce in consultation with the president's Department of Government Efficiency cost-cutting program, along with fixed timelines for license approvals and 'a wholesale revision' of its regulations. While some developers have decried the lengthy and expensive process to secure NRC approval for proposed designs and renew licenses for existing facilities, some nuclear power advocates worry the effort may backfire by sparking regulatory upheaval and uncertainty. If new reactor designs can't be fully vetted within the president's proposed 18-month deadline, they warn, the models could even be rejected altogether, an outcome that would likely undermine Trump's deployment goals. Trump is also ordering the NRC reconsider radiation limits, saying its reliance on safety models assuming there is no safe exposure threshold has led to 'a myopic policy of minimizing even trivial risks.' Some energy experts have expressed alarm about the president's plan to strengthen the domestic supply chain for nuclear fuel, potentially creating a market for reprocessed radioactive material and surplus plutonium stockpiles. Former US Energy Secretary Ernest Moniz this week warned that the proposal may lead 'to the creation of additional stocks of weapons-usable materials.' Related: Trump Seizes Wartime Powers in Battle for More Fossil Fuels The president is also embracing the Energy Department's Loan Programs Office as a potential source of financing for nuclear projects. Under Trump's orders, the office would be directed to prioritize activities and resources for restarting shuttered plants, increasing output at existing sites, completing construction of unfinished reactors and building new advanced-nuclear units. Constellation's Dominguez said current permitting processes waste time, especially as data center operators and hyperscalers seek out 24/7 power supply. 'We need to do this for America,' he said alongside Trump. Reactors currently supply almost a tenth of the world's power, including about 100 gigawatts of capacity in the US. Advocates say the industry needs to grow threefold by 2050 to help avoid the most catastrophic consequences of climate change. Like wind and solar plants, nuclear generates electricity without producing the greenhouse gas emissions that drive global warming. But reactors also have the advantage of running around the clock, delivering the non-stop power that's in-demand from artificial intelligence companies and data center operators. The US was at the vanguard of installing nuclear power plants for decades, but China is now the world's top builder, with roughly 30 reactors under construction. Russia, meanwhile, has spent years honing its own technology and has exported reactors to buyers in India, Iran and elsewhere. --With assistance from Ari Natter and Klara Auerbach. (Updates with new details on orders and comment from executive) Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Anthropic Is Trying to Win the AI Race Without Losing Its Soul ©2025 Bloomberg L.P.
Yahoo
23-05-2025
- Business
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Trump Targets Samsung, Apple Phones With 25% Tariff Threat
(Bloomberg) -- President Donald Trump said that the tariffs he threatened against Apple Inc. earlier Friday would also be aimed at a wider range of device makers, including Samsung Electronics Co., to spur them into moving manufacturing of their products to the US. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt 'It would be more,' Trump said when asked at the White House whether his tariff threat would only apply to Apple. 'It would be also Samsung and anybody that makes that product, otherwise it wouldn't be fair.' Trump indicated that the import levies would be 'appropriately done' and ready for implementation by the end of June but provided no other details. The president's remarks clarified his social media post from earlier in the day warning that Apple would face tariffs of 25% if the company failed to shift production of its iconic iPhone to the US from overseas. The warning came days after a Tuesday meeting between Trump and Apple Chief Executive Officer Tim Cook at the White House, a US official said. 'He said he's going to India to build plants. I said, that's OK to go to India, but you're not going to sell into here without tariffs, and that's the way it is,' Trump said. Apple's stock fell 3% in New York trading. Separately Friday, Trump also threatened a 50% tariff on the European Union that would go into effect June 1, which weighed on the broader market. Trump's demand for US-based manufacturing pose a stark challenge to Apple and South Korea-based Samsung, whose supply chains for their devices have been concentrated in Asia for years. The US lacks the rich ecosystem of suppliers, manufacturing and engineering know-how that — for now — can only be found in the region. Representatives from Apple didn't immediately respond to requests for comment. Samsung and Alphabet Inc., whose Android software runs Samsung mobile devices, declined to comment. Trump's warning on Friday took shape after Apple signaled earlier this month that new tariffs would bring as much as $900 million in higher costs in the current quarter. To limit the impact of import levies on goods made in China, Apple had already planned to transfer the bulk of its US-bound iPhone production to facilities in India — a move that had drawn increasing Trump ire. Last week, during his trip to the Middle East, Trump said he had asked Cook to stop building plants in India to make devices for the US, pushing the iPhone maker to add domestic production as it pivots away from China. 'I had a little problem with Tim Cook yesterday,' Trump said of his conversation. 'He is building all over India. I don't want you building in India.' Apple said earlier this year that it plans to spend $500 billion in the US over the next four years, which will include work on a new server manufacturing facility in Houston, a supplier academy in Michigan and additional spending with its existing suppliers in the country. But that stops short of the full shift to US-based production envisioned by Trump. Moving manufacturing of its signature iPhone and other devices to the US would be an enormous and expensive undertaking for Cupertino, California-based Apple. During his remarks on Friday, Trump warned companies against passing costs of tariffs to their customers. 'I don't want the consumer to pay,' he told reporters in the Oval Office. Smartphones, computers and many other electronics have been exempted for now from the so-called reciprocal tariffs that Trump imposed on goods from virtually every US trading partner. Yet that exception may be short-lived, as the Trump administration considers sector-wide tariffs on semiconductors that could affect a broad range of devices. Timing for chips-related levies remains fluid and it's unclear whether Trump was referring specifically Friday to those deliberations. 'This is a clear negative,' KeyBanc Capital Markets analyst Brandon Nispel said in a note. 'For Apple, it seems as if it must now raise prices on iPhones, which will likely occur with the launch of the iPhone 17. However, in the near term, it likely implies a more significant gross margin impact.' The change threatens to cut Apple's gross margin by 3 to 3.5 percentage points in fiscal 2026, according to Bloomberg Intelligence. But moving iPhone production to the US would likely still be far more costly than paying the tariff. And analysts have estimated that US-made phones would ultimately cost consumers thousands of dollars apiece. (Updates with Trump warning on costs in sixth-to-last paragraph.) Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Anthropic Is Trying to Win the AI Race Without Losing Its Soul ©2025 Bloomberg L.P. Sign in to access your portfolio
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23-05-2025
- Business
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Bad Week for Wall Street's Old Guard as Crypto Burns the Haters
(Bloomberg) — To many on Wall Street, it's still heresy. An asset born from anti-establishment myth, tainted by fraud and bad actors, not only survives — it thrives. Never mind the endless grift, exchange hacks, and more. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt And yet this week, as the Treasury market rebelled against Donald Trump's 'big beautiful bill' — bringing the equity market rebound to a halt — crypto looked like the adult in the room. While stocks, government bonds and corporate credit sold off on fiscal fears, Bitcoin rallied almost 5% amid a market pattern with no real precedent. Another insult to orthodoxy: crypto deepened its institutional street cred as DC policymakers normalized dollar-linked tokens for mainstream use. Treasuries — long the ballast of diversified portfolios — proved a big loser in a week marked by rising fears of fiscal profligacy. By contrast, Bitcoin briefly surpassed $112,000 for the first time, poised for its sixth weekly gain in seven. None of this is to say Bitcoin is safe or a reliable diversifier. But facts are facts. Allocators are starting to believe, with the largest ETF tracking the world's original digital currency nabbing $10 billion this year. Like it or not, the number keeps going up. 'It's hard to keep fighting it, or at least not acknowledging it as a viable asset class,' said Rich Weiss, the 65-year-old chief investment officer for multi-asset strategies at American Century Investment Management. 'Maybe that's enough to get haters like me to jump on the train because in our business, you cannot fight the tape forever.' It was a week that losses piled up across old-school markets — stocks, bonds and credit posted the worst synchronized selloff since March, going by the major exchange-traded funds tracking them. The dollar slipped, on course for a fifth straight monthly decline — the worst streak in almost five years. Traders instead flocked to an asset whose connection to the economic cycle is tenuous. That may have been a virtue this week. Bond yields rose globally — 30-year rates touched 5.09% — amid concern sovereign finances are being stressed by President Trump's push for deglobalization. In the US, fears were fanned by a poorly received 20-year bond auction, Moody's downgrade of the country's credit rating and House passage of a multi-trillion-dollar tax plan few see doing much to tame the deficit. 'It's the initial rumblings. It's the market warning the US government that something has to change,' said David Schassler, head of multi-asset solutions for investment manager VanEck. 'If we're going to be in a situation where there's going to be a flight out of the dollar, fixed income and stocks at the same time, then you want to bias your portfolio towards decentralized assets.' Crypto isn't subverting the political or financial system. It's getting plugged in through legislation, ETFs, custodians, model portfolios, and more. And that's fueling faith in digital assets as a strategic allocation. As stablecoin legislation advanced in Congress and Trump welcomed meme-coin enthusiasts to a private dinner in Washington, Bitcoin rose five straight days before paring gains Friday. The online currency is now up 16% in 2025, compared with losses of around 1% in the S&P 500 and 3% in the iShares ETF (TLT) tied to long-dated Treasuries. This week marked the second time in a month that Bitcoin rallied while traditional asset classes retreated — a cluster of divergences with no precedent in Bloomberg's dataset going back to 2010. Particularly notable was the parting in prices between crypto and equities, which tend to reflect similar risk appetites, according to Owen Lamont, a portfolio manager at Acadian Asset Management. With stock investors in retreat — perhaps anticipating higher inflation and borrowing costs courtesy of Trump's tax policy — Bitcoin sailed along, reaching levels that some see as unsustainable. 'It's like there's a crypto thing, which is crazy, and the US stock market, which is like pretty normal,' Lamont said. 'It is indisputable that we have an extremely high policy uncertainty. And policy uncertainty is not generally a good thing for the stock market or the economy.' The split in sentiment was also visible in the ETF space. Crypto enthusiasts continued to pile in, with BlackRock Inc.'s iShares Bitcoin Trust ETF (IBIT) luring more than $2 billion of fresh money during the week through Thursday. Over the same stretch, traders pulled back from the riskier edges of the stock market, as ProShares' triple-leveraged Nasdaq 100 ETF (TQQQ) — a popular vehicle among day traders — saw sharp outflows amid a broader retreat from aggressive equity bets. Flows into crypto may reflect a broader belief: that investors must look further afield for gains, as larger public markets show their age. Wealthy investors are pouring hundreds of billions of dollars into private and illiquid assets after a 16-year bull market in stocks that has taken valuations to the highest since the dot-com bubble. Momentum behind digital-asset adoption is building. A Bloomberg analysis of regulatory filings shows that over the past year, the number of institutional investors — ranging from family offices and endowments to hedge funds and pensions — engaged in IBIT has doubled. As for American Century's Weiss, he's still on the sidelines for now, deterred by Bitcoin's notorious volatility and lack of intuitive valuation methods. 'You have to have a risk tolerance level in the short term like Superman to be able to hold onto that thing,' he said. 'To me, it still comes off like something you'd want to put in your gambling portfolio, not necessarily your retirement money.' Yet while still heresy to many, this week it held up. And in a market built on belief, that behavior may be enough to earn legitimacy. —With assistance from Matt Mancuso and Denise Cochran. Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Inside the First Stargate AI Data Center Microsoft's CEO on How AI Will Remake Every Company, Including His Anthropic Is Trying to Win the AI Race Without Losing Its Soul ©2025 Bloomberg L.P. 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