Business

By Chris Taylor

NEW YORK (Reuters) – As TikTok accounts focused on money gain huge followings, stodgy financial firms are wedging themselves into youth-oriented social media platforms for a piece of the action.

Independent “FinTok” influencers like Mark Tilbury (@marktilbury, 7 million followers), Humphrey Yang (@humphreytalks, 3.3 million), Tori Dunlap (@herfirst100k, 2.1 million) and Erika Kullberg (@erikakullberg, 8.4 million) have audiences that billion-dollar asset managers can only dream of.

For staid financial companies that means learning a new language from scratch: speaking in bite-sized clips with a high-quality visual style to share lessons in a lively and engaging way.

That is quite a challenge with investing concepts that are not ‘fun,’ like retirement, diversification and compound interest.

Boston-based money manager Fidelity is among the first financial giants to dip its toes into TikTok. Since setting up its account @fidelity in June 2021, it has since amassed over 14,000 followers and almost half a million likes.

“You have a very short period of time to engage people on complex topics, and that is a challenge,” said Kelly Lannan, Fidelity’s senior vice president for emerging customers.

“But TikTok has been great, because we know that’s where the next generation of customers is. So many individuals, especially younger audiences, go there for information – even before they go to their own family members.”

Indeed, when Wells Fargo & Co asked kids where they learned to handle money, 35% said social media. That could be good or bad: It can spark their interest and curiosity, but the lessons may not be right.

When investment managers T. Rowe Price queried kids about assets they would invest in, 57% chose cryptocurrency, 38% selected traditional stocks, 22% meme stocks, and 21% NFTs.

That likely reflects the headlines they are seeing, which may present a skewed reality.

BLACKROCK ENTERS THE FRAY

Money managers can show young investors rational money behaviors and how to build long-term portfolios.

BlackRock, the first public money manager to hit $10 trillion in assets, is working on winning their trust and @blackrock has gained around 2,300 followers so far.

“TikTok is the opposite end of spectrum from the 20-page whitepapers that we are very good at producing,” laughed Rich Latour, BlackRock’s global head of content.

“But we need to target that next generation of investors, with the production values they are used to seeing, and help them wade through all the financial misinformation out there.”

Since FinTok is like its own language, BlackRock and Fidelity have put forward a few personalities who already know the lingo – younger staffers, some of whom have personal TikTok accounts, and are familiar with what content clicks with users.

Typical BlackRock fare includes popular issues like “3 Tips For Retirement,” “High Inflation,” “Why Pay Taxes?” and “ETFs Explained.”

Fidelity uses a lot of food metaphors, since everyone seems to have an appetite for that. One of its most popular posts, with over 12.6 million views: a description of how fractional investing works, using the visual of a pie.

Since Fidelity and BlackRock are TikTok newbies, both are working on establishing partnerships with FinTok influencers with massive built-in audiences. Many other financial institutions seem less certain.

But the eyeballs are convincing: Posts with the hashtag #investing have already garnered 6.5 billion views, according to a TikTok spokesperson.

Even the platform’s youngest users will eventually become working adults with investment accounts, and the nation’s biggest money managers may have no choice but to enter the FinTok world.

“Not only do I think that more companies will start to get on board, I think we all have a responsibility to be there,” Fidelity’s Lannan said.

(Editing by Lauren Young and Richard Chang; Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance.)

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By Sinéad Carew and Medha Singh

(Reuters) – Trading in shares of AMC Entertainment and GameStop was volatile on Thursday as the so-called meme stocks pared gains after rallying sharply earlier in the day as some investors looked for bargains following several days of losses.

Both companies, which released no new announcements on their websites on Thursday, have a large following among retail investors who pushed them to record levels last year when they clubbed together to force out short sellers.

Trading in the pair was anything but consistent on Thursday with cinema operator AMC closing up 8.0% at $11.20 after rising as high as $13.71. Video game retailer GameStop shares finished up 10.1% at $89.57, compared with the stock’s session high of $108.06.

Despite a blistering sell-off in equities overall recently, Thursday’s meme stock trading appeared to highlight some investors were still using a “buy-the-dip” strategy. [.N] GameStop lost 36% of its value in the last five sessions, while AMC fell 34% in the same timeframe.

“There are plenty of customers out there who continue to look for places to buy dips using very aggressive products to do so. That’s why with AMC and GME, when there’s a little kindling out there, the fire gets lit,” said Steve Sosnick, chief strategist at Interactive Brokers. “The true believers in meme stocks still have not been fully washed out.”

And the rally likely lost steam as the session wore on because some traders stepped away because the stocks in the past have been prone to such huge rallies and declines, he said.

Interactive Brokers’ clients, which include retail investors and smaller institutions, continued to be net buyers of stocks throughout the recent declines though “they have backed off memes for the most part,” Sosnick said.

GameStop is down about 40% so far in 2022 compared with a 687% gain for 2021, with the stock rising more than 2,463% at its peak last year. AMC shares are down 60.6% year-to-date compared with a 1,183% gain in 2021 and a 3,624% jump at their highest point last year.

Anthony Denier, chief executive of trading platform Webull noted that retail investors who started trading in the last few years have never experienced a bear market.

“We are now in a bear market where rallies are more akin to a ‘dead-cat bounce’,” he said. “Finding the bottom is often tried, and very rarely achieved and as a result, retail investors are feeling the fatigue of catching the falling knife.”

On the surface, Thursday’s action appeared to diverge from recent days with retail traders selling $1.9 billion worth of shares in the last two days, for the largest two-day outflow in 14 months, according to research released by JPMorgan late on Wednesday.

Cheng Peng, a quantitative and derivatives strategist at JPMorgan, said he saw no “significant directional bias by retail traders” in either AMC or GameStop on Thursday.

“Instead the buying seems to be driven by institutional investors,” said Peng, citing public order flow data.

(Reporting By Sinéad Carew and Medha Singh; editing by Bernard Orr)

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By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – Calling stable prices the “bedrock” of the economy, Federal Reserve Chair Jerome Powell said on Thursday that the U.S. central bank’s battle to control inflation would “include some pain” as the impact of higher interest rates is felt, but that the worse outcome would be for prices to continue speeding ahead.

“We fully understand and appreciate how painful inflation is,” Powell said in an interview with the Marketplace national radio program, repeating his expectation that the Fed will raise interest rates by half a percentage point at each of its next two policy meetings while pledging that if data turn the wrong way “we’re prepared to do more.”

“Nothing in the economy works, the economy doesn’t work for anybody without price stability,” Powell said. “We went through periods in our history where inflation was quite high … The process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels, and we know what that’s like. And that’s just people losing the value of their paycheck.”

The U.S. economy is facing its toughest inflation problem since the 1970s and early 1980s, when prices at one point rose at an annual rate of 14.5% and then-Fed chief Paul Volcker used punishing interest rates to twice throw the economy into recession. The unemployment rate climbed above 10%.

Powell, who was confirmed earlier on Thursday to a second four-year term as Fed chief on a bipartisan 80-19 vote in the U.S. Senate, has paid frequent homage to Volcker’s commitment to beating inflation, while also saying he believes the U.S. central bank this time can navigate the economy to a “soft landing” where inflation falls without a downturn or significant increase in joblessness.

Interest rates are rising sharply as a result of the policy steps engineered by Powell. While neither inflation nor borrowing costs are approaching Volcker-era levels, the quick run-up in the cost of food, gas, housing and other daily staples has become a politically explosive issue for President Joe Biden’s administration. Consumer prices in April were 8.3% higher than a year ago.

Biden now has filled the top two Fed jobs and seen two of his other appointees confirmed to the central bank’s seven-seat Board of Governors. The president made clear this week he was giving them full sway to try to lower inflation.

“Tackling inflation is my top domestic priority,” Biden said following Powell’s confirmation by the Senate. The Fed “will bring the skill and knowledge needed at this critical time for our economy and families across the country.”

Powell, who opened a news conference after last week’s policy meeting by saying he wanted to “restore price stability on behalf of American families,” used the radio interview on Thursday to amplify that broad message to the public.

(Reporting by Howard Schneider; Editing by Paul Simao)

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(Reuters) – Brookfield Asset Management Inc said on Thursday it will separate and list 25% of the stake in its asset management unit, months after the Toronto-based company said it was considering the move to open up growth options.

The company will initially hold a 75% stake in the new entity, with the rest distributed to its current shareholders by the year end, Brookfield said.

Both the parent company and the separated unit will trade on the New York Stock Exchange and the Toronto Stock Exchange, the company said.

In February, Brookfield Asset Management Chief Executive Officer Bruce Flatt wrote in a letter to shareholders the company was “asset-heavy” compared to most of its peers, and that dimmed its appeal to some.

The split could also potentially attract interest from investors who do not want exposure to Brookfield’s other units, such as the reinsurance business launched last year, Flatt wrote at the time.

Last year, Wells Fargo & Co also streamlined operations by selling its asset management arm to private equity firms GTCR LLC and Reverence Capital Partners for $2.1 billion.

(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri and Shinjini Ganguli)

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By Ann Saphir

(Reuters) -The Dallas Federal Reserve on Wednesday named Lorie Logan as its next president, filling the vacancy left by Robert Kaplan’s departure last fall after an outcry over the ethics of his active stocks trading during the coronavirus pandemic.

Logan, an executive vice president at the New York Fed and the manager of the Fed’s System Open Market Account, will start her new job on Aug. 22, the Dallas Fed said in a statement.

The U.S. central bank is in the midst of its most rapid policy tightening in decades to deal with inflation that is rising at its fastest pace since the early 1980s. Data released on Wednesday showed consumer prices rose at an annual pace of 8.3% in April.

Logan, 49, will join the presidents of the 11 other regional Fed banks and the Washington-based Fed Board of Governors in setting monetary policy for the world’s biggest economy. Her first policy meeting will be on Sept. 20-21.

She will be the Dallas Fed’s first permanent female chief.

A senior official in the New York Fed’s markets division since 2012, Logan currently manages the central bank’s $9 trillion portfolio of securities, cash and other assets.

Those holdings roughly doubled during the pandemic as the Fed sought to ease financial conditions and bolster the economy, and under Logan the Fed is now poised to trim those assets, beginning next month, as part of its overall bid to raise U.S. borrowing costs and slow growth.

“Lorie is a trusted colleague and dedicated public servant whose remarkable skill and experience with complex financial markets has informed our decisions and helped implement monetary policy to support the U.S. economy,” Fed Chair Jerome Powell said in the statement.

Powell has signaled that he and fellow policymakers will likely follow last week’s half-percentage-point interest rate hike with at least two more hikes of the same size at upcoming policy meetings.

The aim of the rises in borrowing costs is to slow household demand for goods and services and business demand for workers fast enough to cool price and wage pressures and bring inflation down to the Fed’s 2% target.

Fed policymakers hope that can be done without undercutting the strong labor market or sending the economy into a prolonged downturn.

As a Fed insider and a markets expert, Logan is a departure from the Dallas Fed’s last two presidents, both of whom came from outside the U.S. central bank’s system.

Meredith Black has run the Dallas Fed on an interim basis since October after Kaplan, along with Boston Fed President Eric Rosengren, retired before their terms were out. They stepped down amid revelations of personal trading even as the Fed was buying trillions of dollars of assets to stabilize markets, lifting the prices of the kinds of securities that both men were trading.

Four other Fed banks also have women leaders, including incoming Boston Fed President Susan Collins, currently provost of the University of Michigan. She will be the first Black woman to serve as a Fed bank chief when she starts on July 1.

U.S. Senator Bob Menendez and fellow lawmaker Raul Ruiz, a U.S. representative, said they were disappointed the Dallas Fed board did not pick what could have been the Fed’s first Latino policymaker.

“It missed an opportunity,” they wrote.

(Reporting by Ann Saphir in Berkeley, Calif.Editing by Paul Simao and Matthew Lewis)

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HANOI (Reuters) – The chairman of Vietnam’s Vingroup conglomerate said on Wednesday that an initial public offering (IPO) for the company’s auto unit, VinFast, may be delayed until next year due to market uncertainty.

The IPO is currently slated for the fourth quarter of this year. Vingroup Chairman Pham Nhat Vuong also told the company’s annual general meeting the conglomerate was prioritising spending on VinFast and gave an aggressive car sales target.

“We are eyeing a Q4 IPO, but there are lots of ongoing market uncertainties now… If necessary we may delay it to next year,” Vuong said.

“The IPO is not just for fundraising. It’s also about marketing and claiming VinFast’s position globally,” he said.

VinFast’s Singapore-based holding company had filed for an IPO with the U.S. securities regulators, as the company readies a $4-billion investment to build a factory in the United States.

Vuong also told the meeting the car maker was facing obstacles obtaining parts from China.

“Chip factories in Shanghai are closed – therefore chip supplies have been disrupted and the same story for other parts,” Vuong said, referring to supply chain disruptions caused by COVID-19 lockdowns in China’s business hub.

But Vuong sought to reassure shareholders the startup would go ahead with the IPO “no matter how uncertain the market”.

VinFast, which began operations in 2019, is betting big on the U.S. market, where it hopes to compete with legacy automakers and startups with two all-electric SUVs and a battery leasing model that will reduce the purchase price.

VinFast has promised to create 7,500 jobs at its planned plant in North Carolina, where it will build the battery-powered VF8 and VF9 SUVs. The company has said it plans to begin construction of the plant as soon as permits are granted with a goal of starting production by 2024.

It has previously said it plans to begin exporting the two electric vehicles to the United States later this year from its existing plant in Vietnam.

Vuong said on Wednesday VinFast aimed to sell 750,000 cars in 2026, with 150,000 cars to be produced in North Carolina and the rest from its Vietnam factory.

Vingroup is also looking at getting financing from the U.S. government to support its expansion, including potentially tapping lending from the U.S. government’s $25 billion Advanced Technology Vehicles Manufacturing loan programme.

(Reporting by Phoung Nguyen; Writing by Ed Davies; Editing by Kanupriya Kapoor)

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TOKYO (Reuters) – Toyota Motor Corp on Wednesday reported a 33% fall in quarterly profit, as a sliding yen and solid demand failed to offset the impact of production disruptions caused by a global shortage of chips and China’s COVID restrictions.

The world’s biggest automaker by sales posted an operating profit of 463.8 billion yen ($3.56 billion) in the January-March quarter, well below an average estimate of 521.1 billion yen from seven analysts surveyed by Refinitiv.

It compares with a 689.8 billion yen profit in the same period a year earlier.

($1 = 130.4100 yen)

(Reporting by Satoshi Sugiyama; Editing by Kenneth Maxwell)

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(Reuters) -Norwegian Cruise Line Holdings Ltd forecast operating cash flow to be positive for the current quarter on Tuesday, as the U.S. cruise operator benefits from higher on-board spending and prices with its full fleet back in service.

Shares of the company rose about 3% in early trade, as the company also said that booking trends remained strong despite a hit from Omicron variant of the coronavirus and the Russia-Ukraine conflict.

“We are seeing an explosive showing by consumers, particularly American consumers. Consumer spend is strong, snapping back and even exceeding where we left off in 2019,” Chief Executive Officer Frank Del Rio said on a post-earnings call.

Norwegian Cruise, which saw about 60 cancellations or modifications to sailing due to the Russia-Ukraine war, said its booking momentum was temporarily disrupted due to the crisis, but added that the impact was “short-lived.” It has also decided to remove all sailings to ports in Russia from its itineraries in 2023.

Over the past two years, cruise operators have been burning through their cash piles, as the pandemic brought the industry to a standstill. The company reported negative operating cash flow in the last few quarters, which turned slightly positive only in March.

Norwegian, which completed its phased restart of operations earlier this week with all of its ships returning to sail, said higher ticket prices and onboard revenue also helped the company see improved cash flow in the first quarter ended March 31.

However, the company still expects to post a net loss in the current quarter, as it accounted for higher costs including fuel expenses. Norwegian reported a fuel expense of $135.5 million for the first quarter.

The cruise operator also posted a bigger-than-expected loss of $1.82 per share for the reported quarter.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Shinjini Ganguli and Rashmi Aich)

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By Medha Singh

(Reuters) – Crypto assets bled nearly $800 billion in market value over the past month, touching a low of $1.4 trillion on Tuesday, according to data site CoinMarketCap, as the end of easy monetary policy diminishes appetite for risk assets.

Bitcoin, which makes up for nearly 40% of the crypto market, hit a 10-month low earlier on Tuesday, before rebounding to $31,450, just six days after touching $40,000. It was more than 54% below its Nov. 10 all-time high of $69,000.

Digital asset prices have slumped, mirroring a plunge in equities on fears of aggressive interest rate hikes across the globe to stave off decades-high inflation. The tech-heavy Nasdaq was down 28% from its November 2021 record high.

Total crypto market value was at $2.2 trillion on April 2, well off of its all-time peak of $2.9 trillion in early November, as per CoinMarketCap.

“Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may unfortunately be a rocky one, at least for the time being,” blockchain data provider Glassnode said in a note.

Signs of weakness in stablecoins, typically a safer crypto currency, further spooked investors. TerraUSD, the world’s fourth-largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.

Despite bitcoin’s price slump, funds and products linked to it posted inflows of $45 million last week as investors took advantage of price weakness, according to digital asset manager Coinshares in a report released on Monday.

“Enormous amount of liquidity that has inflated some of these cryptocurrencies,” said Sebastien Galy, senior macro strategist at Nordea Asset Management. He expects crypto, also correlated to high-growth stocks, to come under pressure as several central banks tighten their monetary policy.

(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Shinjini Ganguli)

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The world is creeping closer to the warming threshold international agreements are trying to prevent, with nearly a 50-50 chance that Earth will temporarily hit that temperature mark within the next five years, teams of meteorologists across the globe predicted.

With human-made climate change continuing, there’s a 48% chance that the globe will reach a yearly average of 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels of the late 1800s at least once between now and 2026, a bright red signal in climate change negotiations and science, a team of 11 different forecast centers predicted for the World Meteorological Organization late Monday.

The odds are inching up along with the thermometer. Last year, the same forecasters put the odds at closer to 40% and a decade ago it was only 10%.

The team, coordinated by the United Kingdom’s Meteorological Office, in their five-year general outlook said there is a 93% chance that the world will set a record for hottest year by the end of 2026. They also said there’s a 93% chance that the five years from 2022 to 2026 will be the hottest on record. Forecasters also predict the devastating fire-prone megadrought in the U.S. Southwest will keep going.

“We’re going to see continued warming in line with what is expected with climate change,” said UK Met Office senior scientist Leon Hermanson, who coordinated the report.

These forecasts are big picture global and regional climate predictions on a yearly and seasonal time scale based on long term averages and state of the art computer simulations. They are different than increasingly accurate weather forecasts that predict how hot or wet a certain day will be in specific places.

But even if the world hits that mark of 1.5 degrees above pre-industrial times — the globe has already warmed about 1.1 degrees (2 degrees Fahrenheit) since the late 1800s — that’s not quite the same as the global threshold first set by international negotiators in the 2015 Paris agreement. In 2018, a major United Nations science report predicted dramatic and dangerous effects on people and the world if warming exceeds 1.5 degrees.

The global 1.5 degree threshold is about the world being that warm not for one year, but over a 20- or 30- year time period, several scientists said. This is not what the report predicts. Meteorologists can only tell if Earth hits that average mark years, maybe a decade or two, after it is actually reached there because it is a long term average, Hermanson said.

“This is a warning of what will be just average in a few years,” said Cornell University climate scientist Natalie Mahowald, who wasn’t part of the forecast teams.

The prediction makes sense given how warm the world already is and an additional tenth of a degree Celsius (nearly two-tenths of a degree Fahrenheit) is expected because of human-caused climate change in the next five years, said climate scientist Zeke Hausfather of the tech company Stripe and Berkeley Earth, who wasn’t part of the forecast teams. Add to that the likelihood of a strong El Nino — the natural periodic warming of parts of the Pacific that alter world weather — which could toss another couple tenths of a degree on top temporarily and the world gets to 1.5 degrees.

The world is in the second straight year of a La Nina, the opposite of El Nino, which has a slight global cooling effect but isn’t enough to counter the overall warming of heat-trapping gases spewed by the burning of coal, oil and natural gas, scientists said. The five-year forecast says that La Nina is likely to end late this year or in 2023.

The greenhouse effect from fossil fuels is like putting global temperatures on a rising escalator. El Nino, La Nina and a handful of other natural weather variations are like taking steps up or down on that escalator, scientists said.

On a regional scale, the Arctic will still be warming during the winter at rate three times more than the globe on average. While the American Southwest and southwestern Europe are likely to be drier than normal the next five years, wetter than normal conditions are expected for Africa’s often arid Sahel region, northern Europe, northeast Brazil and Australia, the report predicted.

The global team has been making these predictions informally for a decade and formally for about five years, with greater than 90% accuracy, Hermanson said.

NASA top climate scientist Gavin Schmidt said the figures in this report are “a little warmer” than what the U.S. NASA and National Oceanic and Atmospheric Administration use. He also had doubts about skill level on long-term regional predictions.

“Regardless of what is predicted here, we are very likely to exceed 1.5 degrees C in the next decade or so, but it doesn’t necessarily mean that we are committed to this in the long term — or that working to reduce further change is not worthwhile,” Schmidt said in an email.

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Follow AP’s climate coverage at https://apnews.com/hub/climate

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Follow Seth Borenstein on Twitter at @borenbears

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Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

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