Cheaper Cities Stand to Gain in Work-From-Home Shuffle

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The Covid-19 pandemic hit right as Ralph McLaughlin, chief economist for Haus Inc., was moving from Washington, D.C., to San Francisco. When his company gave employees the option to work anywhere, McLaughlin didn’t hesitate.

He chose to work mostly from a mountain home 145 miles from San Francisco and visit his city office “when I need to feed off the energy of co-workers,” he said. “It feels like the future of work that I’ve always dreamed of has arrived.”

Companies ranging from the largest financial firms like American Express to tech giants such as Google are relaxing their work-from-home policies. And some are taking it a step further. Facebook said this month that many of its employees can permanently work from places cheaper than its Bay Area headquarters. Twitter also extended its work-from-home privilege in perpetuity.

“In thinking about the long-term effects of the Covid-19 pandemic, remote work stands out as perhaps the biggest change agent,” said Skylar Olsen, senior principal economist at Zillow. “We may see a growing premium on homes with room for an office or other place to comfortably work.”

If so, that will likely mean more people relocating to areas where larger homes are more affordable.

To show which regions stand to benefit or lose, Bloomberg News constructed a map showing how regional prices for the U.S. metro areas changed over a decade. Areas in blue are becoming less expensive than the national average while regions in red are growing even costlier.

The map is based on data from the Bureau of Economic Analysis, which recently released regional price parity estimates. It sets the national average cost of goods and services at 100 and then shows how the cost of living in states and metropolitan areas compare with that average.

For example, the San Francisco-Oakland-Berkeley area had a price parity of 131.6 in 2018, the latest year available, which means that the region is about 31.6% more expensive than the national average.

Since 2010, populations in cities in the southern and western regions of the United States experienced rapid growth. The South leads the way with 10 of the top 15 fastest-growing large U.S. cities with 50,000 or more residents, according to new population estimates for cities and towns from the Census Bureau. Collectively, Houston, San Antonio, Austin, Fort Worth and Dallas increased by almost 933,600 people.

Meanwhile, goods and services in large metropolitan areas such as Cincinnati, Cleveland, and St. Louis, cost roughly 10% less than the country as a whole.

Among the nearly 281 million metropolitan population, 59% are in areas where real cost of living declined between 2008-2018 and 40% in areas that had a price increase. The top 15 most expensive areas are all along the U.S. coasts.

The Atlantic City, New Jersey, metro saw the largest relative drop. In Flint, Michigan, not only did the regional price parity fall 5.3% over the decade, but the area remains more than 10% cheaper than the national average.

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Alan Howard’s Hedge Fund Soars 100% in Virus-Fueled Chaos

Billionaire Alan Howard has doubled his investors’ money in the coronavirus crisis.

The macro trader has returned about 100% this year in the hedge fund that he personally runs, according to people with knowledge of the matter. Most of the gain was in March when the pandemic sent the global markets into a tailspin, the people said, asking not to be identified because the information is private.

A spokesman for Jersey-based Brevan Howard Asset Management declined to comment.

Howard’s return marks one of the most profitable money-making phases of his investing career and is the highest achieved by a major macro hedge fund this year. The no-nonsense, fast-talking trader is leading his firm’s dramatic turnaround after years of mediocre returns and an exodus of investors.

Howard’s AH Master Fund was started in 2017 to make riskier bets in order to achieve high returns. It has a handful of external investors, money from the firm’s flagship hedge fund and Howard’s own money. Every detail of the fund is kept top secret by the firm, according to people familiar with the company.

It’s not clear how exactly Howard’s fund achieved its triple-digit returns. The firm’s main hedge fund gained more than 18% in March to record its best-ever month. Returns, parts of which came from allocation to Howard, were driven by interest rate trading across directional, volatility and relative value strategies in a range of different markets, the firm wrote to clients in April.

Boom and Bust

The global pandemic has led to a raft of booms and busts in the $3 trillion hedge fund industry, with three in every four losing money in March, according to preliminary data compiled by Bloomberg. Some of the firms led by legendary investors such as Ray Dalio and Michael Hintze suffered their worst-ever losses, while many others used the crisis to churn bumper profits.

Saba Capital Management gained 36% in March, macro trader Said Haidar gained 25%, while famed oil trader Pierre Andurand saw one of his hedge funds surge almost 155%.

It’s not the first time Howard has generated eye-catching returns in his money pool. It surged 37% in May 2018, when it managed about $2.3 billion.

Brevan Howard is making a comeback after firm-wide assets dwindled to less than $8 billion at the end of last year, from more than $40 billion in 2013. After pulling money for years, investors have just started to allocate fresh capital again. The firm managed $9.6 billion at the end of April, according to a letter to investors.

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Pizza Hut, KFC to sell Beyond Meat products at restaurants in China

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Beyond Meat is partnering with fast-food chains KFC and Pizza Hut to sell its plant-based meat replacements in China.

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The companies haven’t announced specific details yet, but new products are scheduled to launch in June at the restaurants’ Chinese locations.

Ticker Security Last Change Change %
BYND BEYOND MEAT INC. 128.29 +7.47 +6.18%

“We’re proud to expand our partnership with KFC into China, one of their largest markets worldwide, as well as introduce a new partnership with Pizza Hut in China,” a Beyond Meat spokesperson told FOX Business. "We'll be sharing more details soon."

A KFC store in China during the Beyond Meat test. (Yum China Holdings)

STARBUCKS TO LAUNCH BEYOND MEAT PRODUCTS IN CHINA

Both chains are owned by Yum China Holdings.

Beyond Meat has been making a push into new markets. The company already announced a limited test last month at Chinese KFC restaurants, and Starbucks has also recently launched a plant-based menu in China that features Beyond Meat products.

KFC sold plant-based chicken nuggets in the trial last month, and Yum China said pre-sale coupons for the first day sold out in less than an hour.

KFC’s branding for the Beyond Meat meatless chicken nuggets. (Yum China Holdings)

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“The test of KFC's Plant-Based Chicken Nuggets caters to the growing market in China for delicious alternative meat options on the go,” Yum China CEO Joey Wat said in a statement last month. “We believe that testing the plant-based chicken concept with one of our most iconic products will take this increasingly popular meatless trend to a new level.”

Meatless protein makers like Beyond Meat and Impossible Foods have eyed China as key to their future growth. Beyond Meat hired a former Tesla executive, Sanjay Shah, last year to lead the company’s overseas expansion.

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AstraZeneca: IMFINZI Plus Tremelimumab Showed Promising Clinical Activity In HCC Patients

AstraZeneca Plc (AZN.L,AZN) said Friday that results from the global Phase II Study 22 trial testing the company’s tremelimumab added to IMFINZI (durvalumab) demonstrated promising clinical activity and tolerability in patients with advanced hepatocellular carcinoma or HCC.

Tremelimumab is an anti-CTLA4 antibody and potential new medicine. HCC is the most common type of liver cancer.

Study 22 is an open-label, multicenter, global, four-part Phase II trial evaluating the safety and efficacy of several treatments in 433 patients with advanced HCC in the 1st- or 2nd-line setting.

AstraZeneca noted that in the primary endpoint of the trial evaluating safety, all experimental arms showed an acceptable profile and no new safety signals were identified.

Patients treated with a single, priming dose of tremelimumab 300mg added to durvalumab every four weeks (T300+D regimen) achieved a median overall survival or OS of 18.7 months in a key secondary endpoint.

The OS result for the T300+D regimen was the longest among treatments tested in the trial, which included IMFINZI monotherapy, tremelimumab monotherapy and two regimens of the two combined.

In other key secondary endpoints, objective response rate or ORR confirmed by independent central review was 24 percent with the T300+D regimen, and median duration of response or DoR was not yet reached at the time of data cut-off.

A unique T-cell profile for patients in the T300+D arm was associated with treatment response, suggesting complementary biological activity.

Kate Kelley, Associate Professor of Clinical Medicine of the Department of Medicine, University of California San Francisco, and principal investigator said, “In Study 22, we were able to induce a stronger immune response and enhance the clinical activity of IMFINZI in patients with advanced liver cancer by combining with a single dose of tremelimumab, a novel approach designed to prime the immune response using CTLA-4 inhibition at the start of therapy.”

Kelley added that the results suggested dual checkpoint blockade with tremelimumab and IMFINZI may have a role in a challenging cancer where patients have few treatment options.

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What is a dividend?

Valuable dividend stocks aid retirement planning: UBS financial adviser

UBS financial adviser Tracy Byrnes says people should watch their bond portfolios and ‘stay the course’ when adding more assets to their 401(k) accounts.

Dividends are a portion of a company’s earnings that are paid out over a specified time to shareholders.

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The payouts are set by a company’s board of directors and approved by the shareholders as the ultimate owners. The amount may fluctuate over time, based on the company's performance, and businesses with large and consistent payouts typically become known as "dividend stocks," prized as a source of regular income.

Issuing a dividend isn't required, and some corporate leaders have argued that they can deliver better returns by investing the money into new factories and stores or acquisitions, which if successful, increase the value of investors' holdings.

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Typically dividends are paid quarterly, but can also be awarded monthly, semi-annually or annually. A company’s board of directors will sometimes award a special dividend after an asset sale or one-off event.

Because of the time lapse between a dividend's announcement and the payment date, a period in which shares may change hands, companies set a so-called "record date" and holders of the stock on that date receive the payment.

Shares sold between the record date and the payment date are said to be trading ex-dividend, meaning the buyer won't receive the upcoming payout.

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UPS adds peak delivery surcharge to manage e-commerce demand amid coronavirus

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United Parcel Service Inc. is adding "peak" surcharges for companies that have been inundating its delivery network with too many packages and oversize items during the coronavirus pandemic, an unprecedented move to manage a summer flood of shipments and higher costs.

UPS typically imposes extra fees on merchants during the busy Christmas shopping season, but — for the first time in the e-commerce era — will add such surcharges starting May 31. The fees would apply to large online sellers like Amazon.com Inc. as well as traditional retailers like Target Corp. and Best Buy Co. that have shifted heavily to e-commerce as many stores have closed temporarily.

Delivery companies like FedEx Corp., UPS and the U.S. Postal Service are struggling with an unexpected increase in online shopping over the past 2 1/2 months as consumers buy online everything from canned foods and toilet paper to office chairs and backyard pools. Digital sales at Target and Best Buy more than doubled in the most recent quarter.

Ticker Security Last Change Change %
UPS UNITED PARCEL SERVICE INC. 100.83 +1.22 +1.22%
FDX FEDEX CORPORATION 132.68 +2.25 +1.73%

The added volumes are testing the limits of these delivery networks, which have been operating seven days a week. For FedEx and UPS, residential deliveries are also less profitable than bulk shipments to businesses, which have dried up as many offices and nonessential companies remain closed.

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UPS has said it recently has been delivering 70% of packages to homes, versus about 54% during all of 2019. It has taken on more of Amazon's package volumes after FedEx cut ties with the online giant last year.

A United Parcel Service driver stops at a traffic light inside a UPS delivery van April 24, 2020, in St. Louis. (AP Photo/Jeff Roberson)

FedEx recently limited the number of packages that about two dozen customers including Bed Bath & Beyond Inc., Nordstrom Inc. and Kohl's Corp. could ship from their stores. Those companies had repurposed stores into fulfillment centers after they were temporarily forced to shut down.

FedEx and UPS both have also imposed surcharges on international packages as a decline in passenger jets has cut into air cargo capacity. FedEx hasn't added such fees on domestic shipments.

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Starting May 31, UPS is adding surcharges on customers whose weekly volume of shipments using its lower-priced service has blown through what they were shipping in February.

The surcharge adds 30 cents on each package shipped under UPS Ground and SurePost, the service in which UPS drops packages at the Postal Service for delivery to homes. The added fee kicks in only on shippers that topped their average weekly volume in February by more than 25,000 packages.

The average revenue per domestic package was $6.44 at UPS in the first quarter.

Another surcharge adds $31.45 onto each large package shipped, which could hit items like desks, patio umbrellas and trampolines that have been popular online purchases during lockdowns across the U.S. as millions of people work from home, redecorate and try to entertain their children. That fee would apply to shippers after they ship more than 500 large packages in a week.

Ticker Security Last Change Change %
AMZN AMAZON.COM INC. 2,423.42 +13.03 +0.54%

Both surcharges will be in effect until further notice.

AMAZON TO SUSPEND DELIVERY SERVICE COMPETING WITH UPS, FEDEX

A UPS spokesman said the company routinely adjusts prices to take into account changing market conditions and added costs. "The peak surcharges reflect the current dynamic market conditions and uncertainties caused by the coronavirus, which is impacting available capacity and market demand," the spokesman said.

The fees are likely to hit large shippers the most, rather than smaller business or occasional shippers. Target, for instance, said last week that its online order volume more than tripled in April compared with last year. It rose 141% during the three months that ended May 2. Amazon's revenue rose 26% in the March quarter from a year ago, while its world-wide shipping costs rose 49%.

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Amazon is slowly returning to normal operations after the coronavirus-driven surge in demand upended its operations, prompting the company to limit shipments of nonessential items and slowed its shipping speeds. On Thursday, the Seattle company said it plans to keep most of the U.S. jobs it added to meet demand during March and April.

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"All of the large e-commerce shippers are going to get hit with this," John Haber, CEO of supply-chain consulting firm Spend Management Experts. "A lot of them will try to negotiate it out, but there hasn't been a lot of flexibility about not paying these peak surcharges."

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Representatives for Amazon, Target and Best Buy didn't immediately respond to requests for comment on the UPS surcharges.

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Dollar chains report surge in sales on coronavirus-driven demand

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(Reuters) – The top two U.S. dollar store chains reported better-than-expected quarterly sales and profit on Thursday, benefiting from a surge in demand for affordable groceries and household essentials amid the COVID-19 pandemic.

Designated as essential retailers, Dollar General Corp and Dollar Tree Inc were allowed to stay open while much of the United States remained shut under coronavirus lockdown measures, and the companies saw a rush in panic buying in late March and early April.

Rising unemployment and salary cuts have also led consumers look for cheaper alternatives for groceries and clothing they would otherwise buy at more expensive retailers.

Ticker Security Last Change Change %
DG DOLLAR GENERAL 187.44 +0.24 +0.13%
DLTR DOLLAR TREE INC. 98.93 +11.40 +13.02%

Dollar General, which reported its biggest rise in quarterly sales in at least 14 years on Thursday, said demand in stores has remained elevated but has become more volatile in recent days.

DOLLAR GENERAL TO ADD 8,000 JOBS

Its net sales rose 27.6% to $8.45 billion in the first quarter ended May 1, beating analysts' estimates of $7.61 billion. It was the company's biggest jump in sales since at least February 2006, according to Refinitiv Eikon data.

Same-store sales jumped 21.7%.

AMAZON TO KEEP MOST OF THE JOBS IT ADDED DURING PANDEMIC

Separately, Dollar Tree Inc, which uses a larger portion of its shelf space for discretionary items like holiday cards and party supplies, was hurt by a lack of Easter shopping and said sales only rose 8.2% to $6.29 billion in the first quarter.

Still, that was ahead of analysts' expectations of $6.14 billion, which sent Dollar Tree's share up over 7% before the opening bell.

MARTHA STEWART'S RETAIL ADVICE FOR CORONAVIRUS COMEBACK: 'ONLINE IS THE FUTURE'

Excluding certain items, Dollar General earned $2.56 per share, beating estimates of $1.74, while Dollar Tree reported a profit of $1.04 per share, compared to expectations of 85 cents.

Dollar General also said it expects to exceed its annual sales and profit forecasts and could resume its share buybacks as early as the second quarter.

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(Reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel)

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Nissan loses $6.2B as it prepares to slim down

Tesla cutting car prices; KFC testing a new twist on its classic chicken sandwich

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Nissan Motor Co. recorded a $6.2 billion loss in the year ended in March after it took big write-downs as part of a restructuring plan that aims to make the car maker leaner and more profitable.

Nissan said Thursday it booked Yen603 billion ($5.6 billion) in restructuring costs and impairment losses, leading to a net fiscal-year loss of Yen671 billion. Previously, Nissan had forecast a much smaller loss based on its operating performance, but it had warned that one-time charges might widen the figure.

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The company's shares rose 8.2% in Tokyo trading Thursday, before the loss announcement, as investors bet that the worst of its troubles were over.

A man walks past the global headquarters of Nissan Motor Co., Ltd. in Yokohama near Tokyo, Wednesday, May 27, 2020. (AP Photo/Koji Sasahara)

Nissan Chief Executive Makoto Uchida said the company had gone astray by seeking "excessive sales expansion." He said its new strategy is "maintaining financial discipline and focusing on net revenue per unit to achieve profitability."

TESLA TO CUT CAR PRICES IN NORTH AMERICA, CHINA

The company said it would reduce annual production capacity by 20% to about 5.4 million units a year and close a factory in Barcelona, Spain, eliminating 3,000 jobs. It said it would aim for cost savings of Yen300 billion a year, confirming an earlier Wall Street Journal report.

The auto maker said it had ample cash on hand to weather a difficult business environment. It said it raised Yen712.6 billion in April and May to respond to the coronavirus pandemic and had unused credit lines totaling about Yen1.3 trillion.

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Nissan's global sales fell 42% in April from a year earlier, but its business has begun to pick up in China, one of its core markets alongside North America and Japan under the new strategy to divide up the global car business with alliance partner Renault SA.

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China Traders Are Buying Hong Kong Stocks Like Never Before

Mainland money is flowing into Hong Kong’s stocks at an unparalleled pace, offering support to a market at the center of rising tensions between Beijing and Washington.

Eligible investors, which can range from brokers to insurers or individuals with at least 500,000 yuan ($70,000) in their trading accounts, acquired $35.3 billion of the shares so far this year, the most for the period in data going back to 2017. Buying accelerated as Beijing’s plan to impose a security law on the city sparked an equity crash on Friday. The top targets of inflows were Chinese state-owned firms.

History shows mainland buying tends to pick up when Hong Kong shares drop. Onshore investors bought the dip in March when the Hang Seng Index fell to its lowest in more than three years. State-backed funds have also stood by to help steady Hong Kong’s markets around key political events, such as in 2017 when Xi Jinping visited the city to mark 20 years of Chinese rule.

Nervousness is building in Hong Kong’s financial markets after China confirmed plans for new national security laws that critics say would curtail the rights and freedoms of the city’s citizens. The U.S. is considering a range of sanctions on Chinese officials and businesses in response, as well as whether to declare that the former colony has lost its autonomy from Beijing. Protests are planned in Hong Kong for Wednesday.

Hong Kong equities stabilized Tuesday, with the Hang Seng rebounding 1.9% and a gauge of volatility dropping 5.6%, the most in a week. The city’s chief executive, Carrie Lam said Tuesday that the national security law can bolster business confidence, citing the Hang Seng rebound. She added that concerns over the law are unwarranted.

Chinese investors now own about 2.9% of the total market value of Hong Kong stocks eligible for cross-border trading, the highest since Hong Kong exchange data became available in March 2017, according to Bloomberg calculations. Chinese buyers’ top three targets since Friday’s slide have been Industrial & Commercial Bank of China Ltd., Ping An Healthcare and Technology Co. and China Construction Bank Corp., according to data compiled by Bloomberg.

It’s unclear whether China’s state-directed funds have been involved in recent days’ buying or whether they earmarked any cash to stabilize the market. Such funds have regularly intervened to manage swings in China’s $7.4 trillion equity market, especially around politically sensitive dates.

Some onshore money managers say they are taking note of a widening valuation gap with yuan-denominated shares, mainly focusing on large financial companies.

“As long as we stick with Hong Kong-listed companies with businesses on the mainland, the risks are completely manageable,” said Du Kejun, a partner at Beijing Gelei Asset Management Center LP. “It’s hard to evaluate what the impact of the law will have on the island, and if things will be better or worse than a year ago. I’d stay away from Hong Kong landlords and other locally based companies.”

The MSCI Hong Kong Index, which unlike the Hang Seng Index doesn’t include mainland firms, has fallen 21% in the past 12 months, led by real estate firms.

Read more:
  • How China Pounced on Hong Kong While Covid Overwhelmed the World
  • Hong Kong Stocks Trade Like a Frontier Market as Pressure Rises
  • Tencent-Backed Meituan Joins $100 Billion Club After Sales Beat
  • When Stocks Crash, China Turns to Its ‘National Team’: QuickTake

One of the main attractions of Hong Kong stocks for mainland investors is low valuations. The Hang Seng China Enterprises Index of Chinese firms listed in the city trades at eight times the next 12 months’ projected earnings, compared to 11 times for the Shanghai Composite Index.

Chen Jiahe, chief investment officer of the family office firm Novem Arcae Technologies Co., said he wanted to buy more Hong Kong-listed Chinese stocks last week but ran short of funds.

“We actually had to sell some of our A-share holdings to buy Hong Kong stocks,” he said. “And we’ll buy more if the market declines further and reinvest all dividends.”

— With assistance by Jeanny Yu, Amanda Wang, April Ma, and Fu Yin Ip

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Fed’s Bullard Sees Jobless Rate Returning Below 10% by Year-End

Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. economy will recover from the highest unemployment since the 1930s with a rapid rebound that will push the jobless rate below 10% by December.

Bullard, in a television interview Tuesday with Fox Business Network, said the business shutdowns imposed due to Covid-19 can’t go on too long without risking much worse economic outcomes.

“Growth right now is probably the worst it’s ever been” with much of Wall Street predicting a “minus 40%” contraction in second-quarter economic growth, Bullard said. “The third quarter very likely, right behind the worst quarter, will be the best quarter of all time on the growth perspective.”

Although the jobless rate was 14.7% last month, “I think we will be under double digits by the end of the year,” he said.

The St. Louis Fed president’s view is more optimistic than much of Wall Street. Economists surveyed by Bloomberg expect unemployment to be 10.3% in the fourth quarter.

Businesses can shut down for 90 or 120 days but need to resume operations after that or risk being permanently closed, which would bring lasting damage to the economy, Bullard said.

“What you are risking here is that this morphs into a financial crisis, which makes things much worse” and that “morphs into a depression scenario.”

Bullard doesn’t vote on monetary policy this year. He and other Fed officials have said the central bank will keep interest rates near zero for an indefinite period while the economy recovers.

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