• Like 'rain': LA teachers sue Delta over fuel dump
    Reuters Videos

    Like 'rain': LA teachers sue Delta over fuel dump

    Teachers from Los Angeles County's Park Avenue Elementary School held back tears on Friday as they described the moment they were showered with jet fuel from a Delta airplane that was forced to return to LAX to make an emergency landing due to engine trouble. Attorney Gloria Allred, at a news conference on Friday announcing the litigation, said four teachers affected by the incident have sued Delta for negligence for dumping fuel in a densely populated area at low altitude earlier this week. On Friday, an airline spokesman declined to comment on pending litigation. Critics have said the jet could have dumped fuel over the ocean more safely, unless it were in an absolutely dire situation. Social media users captured video of the Boeing 777 jet, which had taken off to Shanghai with 181 people on board, emitting streams of fuel from the tips of its wings as it returned to the airport. The fuel dump caused minor injuries to at least 44 children and adults on the ground. Delta said on its website that airline cleaning crews worked with school crews to clean surfaces students may come into contact with. The crew that decided to dump the fuel, which fell on several Los Angeles area schools, didn't inform air traffic controllers they planned to do so, and the FAA is investigating. Delta previously said the fuel was dumped to reach a safe landing weight.

  • Does Market Volatility Impact Barnes Group Inc.'s (NYSE:B) Share Price?
    Simply Wall St.

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    Q4 2019 U.S. Bancorp Earnings Call

  • Monte Paschi Offers the Ultimate Comfort Blanket

    Monte Paschi Offers the Ultimate Comfort Blanket

    (Bloomberg Opinion) -- The troubled Italian lender Banca Monte dei Paschi di Siena SpA took another big step in its long path to redemption last week by selling subordinated debt for the second time in six months. An 8% coupon is expensive for the world’s oldest bank, but it can hardly complain given its years of troubles.Even though the yield is enticing, investors are still taking a gamble. They will doubtless have been encouraged by expectations that the Italian state will have their backs. Rome owns 68% of Paschi and there’s a fourth bailout on its way for the lender.The general environment for investing in Italian banks is a bit better too. Another lender, Banco BPM SpA, issued some perpetual hybrid debt on Tuesday. Paschi is deeply into junk territory yet it managed to raise a chunky 400 million euros ($444 million). This was one-third bigger than a similar 10-year Tier 2 issue in July, and at a much lower cost than the 10.5% coupon it had to offer then. It was more than twice subscribed and the yield has tightened modestly since launch.Monte Paschi’s debt coordinators showed a fair amount of skill with last week’s sale, amid another record start to bond issuance this year. Only days ago, the bank told shareholders it will have to take a big hit to profit after writing down deferred tax assets.  Still, for Monte Paschi it’s very helpful that the state aid just keeps coming. The bet by bond investors that Rome will keep doing whatever it takes may be a winning one.Reeling from an acquisition that drained it of cash just as markets peaked in 2007, Paschi has had to turn to its government three times already to replenish its capital as losses on bad loans piled up. The last round, in 2017, saw Italy effectively take over the lender while pledging to exit by 2021 under terms agreed with the European Union.The bank has made progress in cleaning up its balance sheet, but a ratio of non-performing loans of about 12.5% targeted for year-end and sluggish revenue render Paschi virtually untouchable for would-be partners. Luckily, as in the past, Italian taxpayers are on hand. Italy is in talks with Brussels to allow state-backed debt manager Amco to buy more than 10 billion euros of Paschi’s soured loans, a move that would reduce its bad debt ratio to below 5%, according to Morgan Stanley analysts.You can never be certain about Monte Paschi, a bank that hid losses with complex derivatives and was found by the European Central Bank to have inadequate governance and financial controls as recently as 2017. But another round of aid might make it look more attractive to rivals. Bond markets clearly find it palatable.To contact the authors of this story: Marcus Ashworth at mashworth4@bloomberg.netElisa Martinuzzi at emartinuzzi@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Simply Wall St.

    Morgan Stanley Just Recorded A 5.8% EPS Beat: Here's What Analysts Are Forecasting Next

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  • Cyber Strife Between U.S. and Iran Is Nothing New

    Cyber Strife Between U.S. and Iran Is Nothing New

    (Bloomberg Opinion) -- Experts are warning that the U.S. should expect more cyberattacks by Iranian hackers in retaliation for the death of General Qasem Soleimani in a targeted drone strike. Maybe they’re right. But let’s not kid ourselves:  Iran would be launching lots of cyberattacks anyway.And the danger of escalation would be ever-present.So far, despite the warnings, security researchers report that little has yet materialized. But that doesn’t mean nothing major will happen. Iranian’s official and semi-official hackers are among the best in the world, and both the U.S. government and private industry are bracing for possible attacks. Crucial sites are much better protected than they were a few years ago, but no protection will ever be perfect.Infrastructure, always an attractive target, has long been a focus of Iran’s hackers, particularly the group known as APT33 or Refined Kitten. Recent news reports have singled out Refined Kitten’s constant “password-spraying,” the relatively low-tech tactic of flooding infrastructure targets with common passwords(1) in the hope that some will work. However, those attacks aren’t a response to the current crisis; they’ve been going on at least since 2018.(2)The dates matter. What’s often called the “shadow war” between the U.S. and Iran has been going on for a long time. Last June, for instance, the U.S. retaliated for Iranian attacks on oil tankers and the downing of a drone by launching cyber assaults against “an Iranian intelligence group” believed to be involved. The U.S. action also followed a spike in efforts by Iranian hackers to breach computer systems at, among others, the Energy Department and U.S. national laboratories.It’s tempting to blame the shadow war on the policies of President Donald Trump, but the battle was joined long before he took up residence in the Oval Office. The Iranian efforts are usually dated to 2009, when the “Iranian Cyber Army” successfully attacked Twitter, proclaiming on the site’s homepage “U.S.A. Think They Controlling And Managing Internet By Their Access, But They Don’t, We Control And Manage Internet By Our Power.”The hacks continued throughout the Obama administration. In 2013, for instance, Iranian hackers “infiltrated the control system of a small dam less than 20 miles from New York City.” The next year, they attacked a Las Vegas casino owned by Sheldon Adelson. In 2016, the U.S. announced indictments against seven hackers said to be working on behalf of Iran’s Revolutionary Guard who were alleged to have “conducted a coordinated cyberattack on dozens of U.S. banks, causing millions of dollars in lost business.”Moreover, Iran never needed any provocation to unleash its hacking squads. In November of 2015, the New York Times reported “a surge in sophisticated computer espionage” by hackers based in the Islamic Republic, including “a series of cyberattacks against State Department officials.” Those attacks came four months after the signing of the Iran nuclear deal.My point isn’t that the accord somehow caused the attacks, perhaps by emboldening Iran. That’s nonsense. My point is that the existence of the accord didn’t prevent the attacks or even reduce their frequency or scope. Nor should anyone have expected such a result. In the Middle East, for better or worse, the U.S. and Iran are rivals, each seeking to exercise influence in the world’s most volatile region. As every disciple of conflict theory knows, rival powers often find it in their interest to cooperate on particular issues. But the fact that rivals sometimes cooperate – as the U.S. and Iran did, for example, in the battle against Islamic State — doesn’t suddenly make them allies. Neither did the nuclear deal.From the point of view of both countries, a battle in cyberspace feels far safer than one fought out with force of arms. One might suppose that because the U.S. is the dominant online player, a fight in the digital realm would be to its liking. But there are reasons to be wary.In an important recent essay in The Atlantic, Stanford’s Amy Zegart points to the paradox of U.S. tech dominance: “The United States is simultaneously the most powerful country in cyberspace and the most vulnerable country in cyberspace,” she writes. The more widespread and complex your systems, she argues, the greater the possibilities for a hacker to find a way in: “In the virtual world, power and vulnerability are inextricably linked.”And exploiting the opponent’s online vulnerabilities is a tricky and dangerous business. Few conflicts stay in the shadows forever. The trouble is, it’s impossible to predict when or how the battle will burst into the open.  Here one is reminded of Nobel Laureate Thomas Schelling’s description of “limited war” as being like fighting while in a canoe. “A blow hard enough to hurt,” he wrote in Arms and Influence, “is in some danger of overturning the canoe.” Once both canoes capsize and everybody’s in the water, there’s no way to tell who’ll drown.So far, the cyber-blows exchanged by Iran and the U.S. haven’t been hard enough to hurt in any deep and profound sense, even during the current atmosphere of crisis. The canoes have stayed afloat. One expert interviewed by the Washington Post suggested that all we’re likely to see is “small-scale interruptions and nuisance activities with limited impact” – in a word, vandalism. That’s what happened earlier this month, when Iranian hackers successfully defaced the website of the Federal Depository Library Program with a tribute to Soleimani. And if by chance you haven’t heard of the Federal Depository Library Program, that’s the point.But the fact that the cyber war between the U.S. and Iran has remained in the shadows so far doesn’t mean it always will. No matter who wins the 2020 presidential election, the battle war won’t go away.Neither will the risk of overturning the canoe.(1) If your password is on this list, then it’s common, and you should change it.(2) Refined Kitten, like other Iranian hacker groups, has also targeted companies involved with national security. One “soft” Refined Kitten technique involves posting fake notices about jobs in the defense industry, evidently in the hope of vacuuming up information from applicants.To contact the author of this story: Stephen L. Carter at scarter01@bloomberg.netTo contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Stephen L. Carter is a Bloomberg Opinion columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park,” and his latest nonfiction book is “Invisible: The Forgotten Story of the Black Woman Lawyer Who Took Down America's Most Powerful Mobster.” For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Treasury’s 20-Year Reboot Drives Troubleshooting Across Curve

    Treasury’s 20-Year Reboot Drives Troubleshooting Across Curve

    (Bloomberg) -- The U.S. Treasury’s plan to reboot its 20-year bond clarified how the government will fund a $1 trillion deficit, but also raised questions about the decision’s ramifications elsewhere in the market.Traders took a stab at providing some answers in the immediate aftermath, reshaping the yield curve. The extra yield on 30-year bonds versus 2-year notes rose almost 3 basis points on Friday, the biggest increase since late December.While some see this move auguring a steeper curve longer term, much will depend on how the Treasury Department rejiggers its lineup of issuance. And that in turn will depend on when the sales begin, and their size, analysts say.Wall Street dealers seem generally of the view that the new issue will lead to only marginal cuts, if any, to other coupon-bearing auctions. At UBS, strategist Chirag Mirani says the market pricing has already adjusted to the prospect of new supply, and he sees the recent cheapening in longer-dated Treasuries as a buying opportunity.But Jim Caron at Morgan Stanley Investment Management sees cuts closer to the front end of the curve, which should help widen the gap between short- and longer-end yields.“We like the curve steepener, so this is a welcome thing,” Caron said Friday.Most dealers anticipate the new 20-year bonds to debut in May. Waiting until around mid-year reduces the need to shave auction sizes that are historically large, which has left the Treasury well-funded for now.But the federal budget deficit is set to surpass $1 trillion, and the U.S. also has to deal with a wall of debt starting to mature later this year. As a result, any move to shrink offerings of other coupon-bearing maturities to make room for the 20-year would soon have to be reversed. And if the Treasury does take that step, bills are seen as the most likely candidate.“The key reason for Treasury to introduce the 20-year now is that it gives it a warm-up period,” said Jim Vogel, a strategist at FHN Financial. “It will be absolutely necessary later on for larger auction sizes overall,” so cuts now would only be temporary.For decades, the Treasury has sought a regular and predictable approach to issuance, which it sees as fostering investor demand and reducing the cost to taxpayers. That approach has meant that officials prefer not to make abrupt or frequent changes to their auction slate.One reason to expect a supply-driven steepening in the curve is looking shakier: The decision to reboot the 20-year, which the U.S. stopped issuing in 1986, appears to put on ice for now the prospect of even longer maturities. Treasury Secretary Steven Mnuchin has been pondering that step since he took over in 2017. The 20-year idea seemed to gain traction last quarter.There’s another key reason analysts say the Treasury can wait a few months to introduce the two-decade maturity. Its financing position is getting a boost from the Federal Reserve’s monthly purchases of $60 billion in T-bills, a program aimed at increasing reserves. As those securities mature and the central bank rolls them over, it reduces the amount the government needs to borrow from the public.“Based on the current auction sizes and projections for the deficit, it seems unlikely to us that Treasury will start issuing the 20-years in February, but they will likely announce in May the actual start of sales,” said Zachary Griffiths, a rates strategist Wells Fargo Securities. “And at that time, Treasury could start 20-years a bit smaller than its full annual run-rate plans, or if not, just cut the 30-year auctions by a few billion.”It will likely leave the 10-year alone, because its role as the world’s borrowing benchmark means it needs to be highly liquid, according to Griffiths.Well Fargo forecasts that when the 20-year is fully up and running, Treasury will sell about $39 billion quarterly, or about $150 billion to $160 billion each year. The Treasury Borrowing Advisory Committee has recommended that the government issue $140 billion annually.More information on the 20-year will come at Treasury’s next quarterly announcement of longer-dated debt sales, on Feb. 5, the department said in a statement. In its regular quarterly survey released Friday, Treasury asked dealers about the maturity, including their view on the minimum auction size and total issue size necessary to ensure benchmark liquidity.“Treasury will likely do this in a way to limit adjustments needed in other coupon maturity sizes, or even prevent any from occurring at all,” said Mark Cabana, head of U.S. interest rates strategy at Bank of America Corp.(Updates with views on the U.S. Treasury yield curve)\--With assistance from Saleha Mohsin and Elizabeth Stanton.To contact the reporters on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net;Emily Barrett in New York at ebarrett25@bloomberg.netTo contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Nick Baker, Mark TannenbaumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Sprawling Winter Storm Blows Into Northeast Over the Weekend

    (Bloomberg) -- A swirling mess of winter weather is roaring out of the Midwest toward the Northeast, threatening to drop a blanket of snow on upstate New York, New Hampshire and Maine, to the joy of skiers, and as much as 4 inches on Manhattan.High winds and heavy snow were moving across the Great Lakes on Friday. A winter weather advisory has been issued for New York City, Long Island and parts of New Jersey and Connecticut starting at 10 a.m. on Saturday and running until 1 a.m. Sunday.“It’s just a mess over a wide area,” Brian Hurley, a senior branch forecaster with the U.S. Weather Prediction Center in College Park, Maryland. “Every winter storm has its own nature, and this one isn’t going to wow us in the end with its snowfall amounts. But just the area of snow covered at six inches or more is pretty impressive.”Across the U.S., 1,065 flights were canceled Friday as the storm moved east, and another 76 were scrubbed for Saturday, according to FlightAware, a Houston-based airline tracking service. A Delta Air Lines flight slipped off a taxiway in Kansas City, according to the Associated Press.After the storm passes through New York, the forecast is for a mostly sunny Sunday with a high of 36 degrees Fahrenheit (2 Celsius), according to the National Weather Service.It will be the first time since Dec. 2 that the New York metropolitan region has gotten more than an inch of snow, and it follows a weekend in which temperatures reached into the high 60s Fahrenheit. Overall this season, only 2.7 inches (6.9 centimeters) of snow have fallen on Manhattan’s Central Park, or 5.7 inches less than normal.Along with the snow, areas south of the storm’s northern track could end up with a dangerous coating of ice. That condition could range across the Ohio Valley, into the Appalachian Mountains in West Virginia and Maryland and along Interstate 80 that crosses the region west to east.(Updates New York forecast in first paragraph, flights canceled in fourth)To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.netTo contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net, Reg Gale, Christine BuurmaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Biden Calls for Repeal of Law that Shields Internet Giants From Liability

    Biden Calls for Repeal of Law that Shields Internet Giants From Liability

    (Bloomberg) -- Democratic presidential candidate Joe Biden called for the repeal of Section 230, part of a U.S. law that protects internet companies from liability for content their users post online.In an interview with the New York Times editorial board, Biden said companies should be responsible for libel on their platforms. The former vice president focused his ire on Facebook Inc., the largest social-media company, and Chief Executive Officer Mark Zuckerberg.Section 230, a provision of the Communications Decency Act passed in 1996, “should be revoked, immediately,” Biden said.The rule has allowed internet giants to take a hands-off approach to content on their sites, but has also spurred free expression online. Overturning Section 230 could make internet companies far more cautious about what they let users write on their platforms. Smaller websites could be hurt the most.Read more: The 26 Words That Helped Make the Internet a MessTechnology companies have lobbied to protect Section 230, but there have been successful efforts to weaken it already. Congress passed a sex trafficking law in 2018 that chipped away some of the protections.Biden’s remarks to the New York Times, published Friday, came as part of the newspaper’s presidential endorsement process. He focused particularly on Facebook. “It is propagating falsehoods they know to be false,“ Biden said. “You guys still have editors. I’m sitting with them. Not a joke. There is no editorial impact at all on Facebook. None. None whatsoever. It’s irresponsible.”“I’ve never been a fan of Facebook, as you probably know,” Biden added. “I’ve never been a big Zuckerberg fan. I think he’s a real problem.”Other Democratic presidential candidates have expressed concern about Section 230. At tech industry conference SXSW, Amy Klobuchar said, “It is something else that we should definitely look at as we look at how we can create more accountability.”Biden also said the U.S. should embrace some privacy protections like those in Europe, where citizens have more rights to remove negative content about them posted online.To contact the reporter on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.netTo contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Amazon Is Left Out of Mega-Cap Tech Surge to Records

    Amazon Is Left Out of Mega-Cap Tech Surge to Records

    (Bloomberg) -- Major technology and internet companies have long fueled the U.S. stock market’s climb to record levels, but that trend has come with one notable exception: Amazon.com Inc., which has languished in a fairly narrow trading range for months.Amazon shares haven’t notched an all-time high since September 2018, in contrast to mega-cap peers like Apple, Microsoft, Alphabet and Facebook, which have been hitting records on a near-daily basis. Many of these names experienced pronounced draw-downs over the past year and a half, mostly due to disappointing earnings reports or outlooks. But they regained their momentum last year, as their growth assuaged investor caution. Amazon, however, remains about 8.5% below its own peak.Because of its long-term prospects, Amazon is about as close as a stock can be to a consensus choice among Wall Street firms. Over the near term, though, it is “the most hotly debated among investors” as “debates persist on both AWS and next day shipping efforts,” according to UBS analyst Eric Sheridan, referring to its Amazon Web Services cloud-computing business.Since the start of 2019, Amazon shares are up about 24%, below the 32% rise of the S&P 500, as well as the much larger gains seen in other bellwethers. Microsoft and Facebook are both up more than 60% since the start of last year, while Apple has doubled. The rally resulted in trillion-dollar valuations for Apple, Microsoft and Google-parent Alphabet, a milestone that Amazon briefly eclipsed in 2018.The underperformance reflects concerns over Amazon’s earnings trends, even as it has continued to grow revenue at a double-digit clip. Major investments into initiatives like one-day shipping are seen as headwinds, and shares “may be range bound ‘tactically’” given the impact of this spending, Morgan Stanley wrote on Thursday. The firm added that “near-term profitability is likely to still disappoint” because of these investments, even as it sees the effect as temporary and one-day shipping deepening Amazon’s competitive moat within e-commerce.Another key issue is the waning dominance of Amazon Web Services, which has long been a major driver for earnings and margins, but has faced growing competition from rivals like Alphabet and especially Microsoft. According to Bloomberg Intelligence, which cited IDC data, Amazon Web Services was 12 times larger than Microsoft’s cloud business in 2014. By 2018, the most recent year for which data is available, it was just four times larger.James Bach, an analyst at Bloomberg Intelligence, wrote that Amazon was particularly facing “stiffer competition” with government contracts. “Microsoft’s extensive sales experience, installed base within U.S. agencies and broad range of edge-computing products all make a compelling offering,” he wrote. Microsoft is “uniquely positioned to claim market share as federal agencies upgrade and secure IT systems.”In October, Microsoft beat out Amazon for a $10 billion Pentagon cloud contract, a deal Amazon had been seen as the favorite to win. The company subsequently claimed it lost the contract because of political interference by President Donald Trump, and filed a lawsuit challenging its validity.Amazon earlier this week named a new sales chief for AWS. Deutsche Bank wrote that the “magnitude of personnel changes” at AWS, along with rising competition, underscored the “increased risk of further deceleration” at the business.Separately, Morgan Stanley this week wrote that a quarterly survey of chief investment officers suggested some cause for caution about AWS growth. “Quarterly survey results can be volatile, but AWS saw a notable [quarter-over-quarter] drop in net expected budget share gains” over the next three years, analyst Brian Nowak wrote. “It will be important to continue to monitor these metrics going forward as we think about AWS forward growth.”Amazon is expected to report fourth-quarter results later this month. According to data compiled by Bloomberg, Wall Street is looking for revenue growth of nearly 19% and expecting net income to fall by nearly a third. AWS revenue is seen growing more than 30% on a year-over-year basis, according to a Bloomberg MODL estimate.Wall Street remains almost unanimously positive on the stock. According to data compiled by Bloomberg, 53 firms recommend buying the stock, compared with the four with a hold rating. None advocate selling the shares.To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm, Janet FreundFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Read This Before You Buy Texas Instruments Incorporated (NASDAQ:TXN) Because Of Its P/E Ratio
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    Volatility-Targeting Funds Leverage Up at Fastest Since ‘18 Rout

    (Bloomberg) -- A breed of systematic trader acutely sensitive to volatility is charging into U.S. stocks at the kind of pace last seen before “volmageddon” rocked Wall Street almost two years ago.Volatility-targeting funds are doubling down on equities after geopolitical turmoil that threatened to derail the bull market in the end barely slowed it down. These players buy and sell based on price swings, and their leverage -- a measure of exposure to stocks -- now sits at its 81st percentile since 2011, according to Morgan Stanley.That might be a cause for hand-wringing in some quarters of the market, as it echoes the run-up to February 2018, before a swift de-risking by systematic players is thought to have intensified a market plunge. Algorithmic traders are often seen as weak hands because many strategies are at the mercy of signals that can flip on a dime.“Considering that systematic strategies are very levered, traditional investors’ gross and net exposures are very high, and retail traders are also more levered-up -- that leaves us susceptible to a real draw-down,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA, a Swiss wealth manager that oversees 2.5 billion Swiss francs ($2.6 billion).Fortunately, conditions look very different from 2018, Nomura’s Masanari Takada wrote in a note today. Pointing to a lack of fear in the VIX options market, the quant strategist says any short-term dips would likely be treated by investors as buying opportunities.Meanwhile, the trigger fingers of vol-targeting funds, which by one estimate hold around $400 billion, may be firmer than thought after an extended stretch of tranquility, according to Deutsche Bank AG strategists led by Binky Chadha. These strategies typically load up on stocks when markets are calm and sell when volatility hits.“They would need to see a large and sustained spike in vol for their selling thresholds to be hit,” the team wrote.Animal SpiritsStill, there’s little doubt that equity positioning by systematic strategies is stretched. The leverage of short-term trend-followers known as CTAs is at the 78th percentile since 2011, according to Morgan Stanley.And animal spirits are in the air, with Bank of America Corp. strategists led by Michael Hartnett writing this week they’re staying “irrationally bullish until peak positioning and peak liquidity incite a spike in bond yields and a 4-8% equity correction.”The possibility that CTAs sell en masse on a change in market dynamics “cannot be ignored,” Nomura’s Takada wrote in an email.“If any unpredictable but tiny shock causes a correction in the upward momentum of a U.S. stock price index like the S&P 500, systematic trend-followers are likely to rush into exiting from their current bullish trades simultaneously,” he said.\--With assistance from Justina Lee.To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.netTo contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Yakob Peterseil, Sam PotterFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • State Street (STT) Q4 Earnings Top Estimates on Cost Savings

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  • SkyWest (SKYW) Soars to 52-Week High, Time to Cash Out?

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