CRIMINAL CAPITALI$M

N.J. Developer NRIA Told to Expect Charges by SEC, Lawyer Says

By Jacob Adelman
BARRONS
Aug. 16, 2022

The Securities and Exchange Commission has told developer National Realty Investment Advisors that it intends to file charges against the firm, according to an attorney representing the company in its bankruptcy proceedings.

Attorney S. Jason Teele said during a hearing for creditors Tuesday in NRIA’s Chapter 11 bankruptcy case that the New Jersey-based developer received a Wells notice about two months ago. The SEC sends such notices to people or companies ahead of planned enforcement actions to give them an opportunity to argue against charges being filed.

SEC Investigates National Realty Investment Advisors (NRIA) For $630 Million Fraud

July 21, 2022 / By Investment Fraud Lawyers


A cease and desist has been issued against the National Realty Investment Advisors (NRIA) by the New Jersey Bureau of Securities after the determination of a securities fraud from 2018 through 2022, amounting to approximately $630 million.

The NRIA Fund has 1,800 investors from around the country, 380 of them being from New Jersey, as revealed in the cease and desist order summary. The alleged fraud is said to involve selling membership units in the fund in the form of securities.

An investigation into the affairs of NRIA has been launched by Haselkorn & Thibaut, P.A., an investment fraud law firm. Our law firm has over 50 years of experience and represents investors across the country to recover investment losses due to broker fraud and bad investments.

People impacted by the fraud or who need advice on investment loss recovery from NRIA can call our experienced investment fraud lawyers at 1-888-902-6872 for a free consultation.
National Realty Investment Advisors is a bank


ContentsNational Realty Investment Advisors is a bank
It is under investigation by the FBI
It has acquired and developed more than 3,100 luxury residential units
It used investors’ money to pay off other investors

Acting Attorney General Matthew J. Platkin announced a cease and desist order against Secaucus-based National Realty Investment Advisors, LLC. The firm fraudulently sold $630 million worth of securities from 2018 to 2022 to at least 1,800 investors, with 380 of those coming from New Jersey. Arthur Scutaro, an executive vice president, and project manager of NRIA, is one of the company’s executives.

Despite the recent bankruptcy filing, it is unclear exactly how much money NRIA has lost on its projects. The developer, which has projects in Florida, Philadelphia, and New Jersey, has been under investigation by various federal agencies. Founder Brian Casey of The Casey Group, an independent real estate financial advisory firm, is overseeing the chapter 11 case for NRIA. If National Realty doesn’t reorganize soon, it will likely take years to repay investors.

The company acts as a middleman for real estate flippers. In exchange for its services, National Realty receives commissions from the sale of the land, loan spreads, construction fees, and maintenance fees. National Realty also charges a 3.5% fee on the equity of the project and charges monthly property-management fees of $7,500. So the average investor’s income would be a little under $1 million a year.

NRIA, a real estate investment management firm with more than $1.25 billion in AUM, filed a voluntary petition in bankruptcy court in New Jersey on June 7th. National Realty has a large portfolio of 30 completed, 3 near-completion, and 16 projects in planning stages. The total value of NRIA’s properties is $225 million, and future stabilized values are $1 billion. In other words, NRIA’s assets were worth billions when they were completed.
It is under investigation by the FBI

Investors have lost a combined $630 million since the Secaucus. New Jersey-based company started selling investment membership units to the public, promising large returns of up to 20%. However, the firm has now been under investigation by the FBI and the New Jersey Bureau of Securities. According to the Bureau, the company illegally sold $630 million in securities to investors – mainly small investors – and funneled the money to its executives and their families.

The FBI has uncovered a series of illegal activities at the bankrupt firm, which focused on townhome, condo, and multifamily development. As of March 2020, the company had more than $1.25 billion in assets under management. The private company’s website lists more than a dozen projects in Brooklyn and numerous developments outside the city. The FBI has charged one of the company’s portfolio managers, Thomas Nicholas Salzano, also known as Nick Salzano, with aggravated identity theft and wire fraud.

The company’s troubles started on Tuesday when it filed for chapter 11 protection in Newark. As of October 2016, it listed assets between $50 million and $100 million and liabilities ranging from $500 million to $1 billion. The company is also under investigation by the SEC. The investigation follows the revelation that the company misrepresented the properties to investors. The company also failed to pay investors as promised. According to HCV, Minkow recorded an 11-minute telephone conversation with NRIA’s senior project manager Brian Harrington, confirming that he was being paid with funds from new investors.

Although Salzano is the only employee charged in the scandal, the investigation has spread to the entire organization, which is a huge setback for the firm’s reputation. According to Bloomberg, the firm has lost $1.6 billion since 2015. Thankfully, the FBI is not actively investigating the NRIA leadership, but it has begun to investigate all of them. While it’s never easy to work with the FBI, the company’s leadership is now being investigated, and the scandals could cause further harm to the company.
It has acquired and developed more than 3,100 luxury residential units

Since its founding in 2006, National Realty Investment Advisors has delivered exceptional results in supply-constrained and high-barrier-to-entry urban markets. The firm has acquired and developed more than 3,100 luxury residential units and managed more than 2.30 million square feet, totaling $1.125 billion. The firm continues to deliver exceptional results, particularly in the urban market. For this reason, NRIA is consistently ranked among the top investment managers in the country.

The firm’s CEO, Brian Natwick, has over 25 years of experience in the real estate investment and development industry. During that time, he worked at the international accounting firm Ernst & Young. He grew the company from a single building with 2,700 units to a multibillion-dollar portfolio with more than 34,000 units. He is also a certified public accountant.
It used investors’ money to pay off other investors

An investor rights law firm based in Chicago is investigating claims against the New Jersey-based company National Realty Investment Advisors LLC. The company allegedly used investors’ money to pay off other investors and executives. The company is allegedly guilty of fraud, investment loss, and unsuitability. The firm has since filed for bankruptcy. Investors who purchased securities from the company should consider the risks involved before making a decision.

The Securities and Exchange Commission (SEC) has filed a complaint against the company’s principals for a Ponzi scheme. The company’s officers diverted millions of dollars from investors to lavish payments. They also hired family-owned and controlled companies to perform their work. Salzano’s son served as the company’s Chief Financial Officer. Salzano’s wife received a salary for a “no-show” job. He hired family members to work for his company as construction contractors.

Securities and Exchange Commission v. Thomas Nicholas Salzano, 2:21-cv-12189 (D.N.J. filed June 7, 2021)

The Securities and Exchange Commission today charged Thomas Nicholas Salzano, of Secaucus, New Jersey, with using a sham loan document containing a forged signature in a fraudulent attempt to entice a $150,000 investment in a real estate joint venture located in New Jersey.

The FBI raided the Secaucus home of Nick Salzano, the firm’s portfolio manager. The FBI questioned him, and he eventually surrendered. He is now facing multiple federal investigations and is accused of trying to defraud investors by forging a multimillion-dollar loan guarantee from a Silicon Valley woman. During the investigation, the company’s other principals, including Brian Casey, have been placed under the microscope.

According to the complaint, NRIA used the money of nearly 2,000 investors to create shell companies and fund no-show jobs for its corporate leaders. The company did not disclose to investors how their money would be used, and investors were duped into believing that they would earn a return on their investment by investing in a real estate development firm. The company billed investors for development fees and used fake buyers to increase interest in the projects.

About The Author


Investment Fraud Lawyers
Haselkorn and Thibaut, InvestmentFraudLawyers.com, specialize in fighting for investors nationwide and have offices in Florida, New York, Arizona, and Texas. We have over 50 years of experience and a 95% success rate. Call us now for a free consultation at 1-888-614-9356 or email us at case@htattorneys.com No Recovery, no fee.

Pummelled by gas crisis, Germany's Uniper posts $12.5 billion net loss

Christoph Steitz and Tom Käckenhoff
Tue, August 16, 2022 

The logo of German energy utility company Uniper SE is pictured in the company's headquarters in Duesseldorf

FRANKFURT/DUESSELDORF (Reuters) -German utility Uniper, which secured a 15 billion euro state bailout last month, reported a net loss of 12.3 billion euros ($12.5 billion) for the first half, mainly due to lower Russian gas supplies that forced it to buy at higher prices elsewhere.

"Uniper has, for months, been playing a crucial role in stabilising Germany's gas supply - at the cost of billions in losses resulting from the sharp drop in gas deliveries from Russia," Chief Executive Klaus-Dieter Maubach said.

Shares in the company were indicated to open 2.6% lower.

Uniper, Germany's largest importer of Russian gas, said more than half of the net loss was due to significantly reduced gas deliveries from Moscow, which has cut flows via the Nord Stream 1 pipeline to just a fifth.

The loss also includes 2.7 billion euros in impairments related to the cancelled Nord Stream 2 pipeline, which Uniper backed financially, in addition to goodwills of its Russian business Unipro.

"The most urgent task for Uniper is to find alternative gas supplies," Third Bridge analyst Allegra Dawes said, adding it expected deliveries of liquefied natural gas (LNG) via a planned Uniper-led terminal in Wilhelmshaven by the first half of 2023.

As part of the state bailout, Germany will take a 30% stake in Uniper and has pledged 9 billion euros of credit lines via state-lender KfW, 5 billion euros of which have been drawn.

"This will prevent a chain reaction that would do much more damage. Our top priority now is to swiftly implement the stabilisation package," Maubach said.

Uniper expects the package to be approved at an extraordinary general meeting in the autumn.

Uniper also said it was unable to give an outlook for 2022, only saying it expected a loss. Profits are forecast to improve next year and the aim is to leave the "loss zone" in early 2024, Chief Financial Officer Tiina Tuomela said.

($1=0.9821 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Additional reporting by Vera Eckert; Editing by Uttaresh.V and Edmund Blair)

CRIMINAL CAPITALI$M

Endo files for bankruptcy as U.S. opioid litigation drags

Tue, August 16, 2022

Aug 16 (Reuters) - Endo International Plc filed for bankruptcy on Tuesday after reaching a $6 billion deal with some of its creditors, as the U.S. drugmaker seeks to settle thousands of lawsuits over its alleged role in the country's opioid epidemic.

The pharmaceutical company is the latest to file for Chapter 11 to address opioid claims. Purdue Pharma, the maker of OxyContin, filed in September 2019, while Mallinckrodt Plc, a generic opioid manufacturer, recently emerged from bankruptcy.

"By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the company has been defending at an unsustainable cost, we will be able to move forward...," Endo's Chief Executive Officer Blaise Coleman said in a statement.

The company's Chapter 11 bankruptcy filing in the Southern District of New York showed assets and liabilities in the range of $1 billion to $10 billion.

The creditors, who will also assume some of the company's liabilities, will substantially control all of its assets, Endo said.

The company also reached a deal with U.S. state attorneys general to provide $450 million over a period of 10 years, resolving allegations that the company boosted opioid sales using deceptive marketing, and bans the marketing of its opioids forever, according to the office of Massachusetts AG.

Creditors will also establish voluntary trusts with $550 million to be funded over 10 years to settle the opioid claims, the company said.

Endo has been discussing the possibility of filing for bankruptcy protection in several recent filings.

In June, the drugmaker missed a $38 million interest payment, amid discussions with a group of unsecured bondholders who had urged the company to avoid filing for bankruptcy.

(Reporting by Jahnavi Nidumolu and Shubham Kalia in Bengaluru; Editing by Neha Arora, Rashmi Aich and Sriraj Kalluvila)

Drugmaker Endo Files for Bankrupty Over Debt, US Opioid Litigation

Eliza Ronalds-Hannon and Steven Church
Tue, August 16, 2022 


(Bloomberg) -- Drug manufacturer Endo International Plc filed for bankruptcy after being overwhelmed by litigation, including claims that it profited by helping fuel the US opioid epidemic.

The Dublin-based company said it had initiated voluntary Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of New York. It also struck an agreement with a debt-holder group that is offering $6 billion for Endo’s assets and would take over certain liabilities.

“By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the company has been defending at an unsustainable cost, we will be able to move forward,” Blaise Coleman, Endo’s president and chief executive officer was quoted as saying.

Endo’s secured creditors consented to the use of cash collateral to fund day-to-day business, a statement said.

By seeking protection from creditors, the company gains time to try to implement the restructuring plan it had been negotiating with senior lenders. The court filing also puts a temporary halt to all litigation Endo faces, allowing managers to negotiate a global deal to end the opioid lawsuits, which have been filed by states and local governments.

The company is the latest major opioid maker to seek bankruptcy protection after a wave of accusations they illegally marketed opioids tied to an epidemic of abuse that killed hundreds of thousands of Americans.

Rivals Purdue Pharma LP and Mallinckrodt Plc each used court protection to finish working out settlements with groups that accused them of making the opioid addiction epidemic worse.

Following the bankruptcy filing, Massachusets Attorney General Maura Healey said officials had agreed on a settlement of as much as $450 million with Endo and its lenders. The deal would ban promotion of its opioids and require it to turn over documents.

On top of the opioid trials, which also involved peers Purdue Pharma LP and Mallinckrodt Plc, Endo was engaged in a Tennessee lawsuit it brought against competitors for patent infringement. The company also took a $1.75 billion writedown on its sterile injectables unit after concluding the value of the business had fallen.

Endo has settled some of the suits it faces, but has not announced the kind of global deal Purdue and Mallinckrodt reached before beginning their Chapter 11 cases.

3M Faces $100 Billion in Losses From Veterans' Earplug Suits, Expert Says

Steven Church
Tue, August 16, 2022 



(Bloomberg) -- 3M Co. faces more than $100 billion in losses and bankruptcy because of lawsuits brought by veterans who blame their hearing problems on faulty earplugs, according to a litigation consultant hired by lawyers suing the industrial conglomerate.

Initial results from a handful of test cases shows 3M would be swamped by losses should the more than 230,000 lawsuits related to the company’s military earplugs business go forward, the plaintiff’s adviser J.B. Heaton testified in bankruptcy court Tuesday.

“It is more and more likely within the next several years we’ll see a 3M bankruptcy, yes,” Heaton told US Bankruptcy Judge Jeffrey J. Graham during a hearing in federal court in Indianapolis.

“We strongly disagree with this unsupported and clearly flawed speculation,” company communications manager Sean Lynch said in an emailed statement. “3M has committed to provide $1 billion to a trust for claimants determined to be entitled to compensation.”

Some advocates for the suing soldiers want Graham to block 3M from paying any shareholder dividends, buying back any of its stock or spinning off any assets, if the judge also decides to halt the lawsuits.

Restricting how 3M spends its cash will protect money and other assets that could be used to compensate soldiers who have had their hearing damaged by the earplugs, the advocates said in court papers.

The company has a paid shareholders a regular dividend for at least a decade. Currently the quarterly payment is $1.49 per share.

Company lawyers disputed Heaton’s findings during the hearing, arguing that the 19 cases in which juries returned verdicts are outliers and cannot be used to extrapolate results for the other cases. Heaton, a former trial lawyer who now studies corporate litigation, acknowledged that the sample is small and that a judge may conclude $100 billion is not realistic.

3M is in federal court trying to convince Graham to halt the lawsuits while the company’s earplugs subsidiary reorganizes in bankruptcy.

Last month, the company put its Aearo Technologies unit into bankruptcy in Indianapolis as a way to resolve the claims. Under Chapter 11 rules, Aearo is automatically entitled to freeze lawsuits it faces, but because 3M itself didn’t file bankruptcy a judge must agree to give the industrial conglomerate the same protection.

The bankruptcy is Aearo Technologies LLC, 22-02890, United States Bankruptcy Court for the Southern District of Indiana (Indianapolis).

(Updates with demand from plaintiff lawyers for halt to 3M dividends in the fifth paragraph.)

The SPAC King Goes Silent With His Empire Shriveling

Bailey Lipschultz
Tue, August 16, 2022


(Bloomberg) -- The news came with little fanfare. It was late on a sleepy summer afternoon last week, and few on Wall Street even seemed to notice the pair of filings when they hit the SEC website.

In terse, boilerplate language, the documents stated that two SPACs launched by Chamath Palihapitiya needed to push back the deadlines they had set to make acquisitions.

Palihapitiya was in no mood to trumpet the news. There were no tweets, no interviews, none of the braggadocio that came with so many of his big SPAC deals, back when the market was the hot new thing in finance, a sure-fire, money-minting machine, and Palihapitiya was its undisputed king.

But if those euphoric moments two years ago represented the peak of SPAC frenzy -- a phenomenon created out of the same ingredients (unprecedented monetary and fiscal stimulus) that gave us meme stocks and Dogecoin millionaires -- then these SEC filings represented something of an unofficial end to this chapter of financial mania.

One of the two blank-check companies is Palihapitiya’s biggest ever, a $1.15 billion behemoth, and pushing back its October deadline -- to some unspecified time next year -- is a major setback. Inking a deal will likely be no easier in 2023, assuming that investors in the SPAC even opt to stick around. The only bigger SPAC that had a looming deadline this year -- Bill Ackman’s $4 billion Pershing Square Tontine Holdings -- had just pulled the plug entirely and handed the cash back to investors three weeks earlier.

SPACs, though, were only a sideshow for Ackman. For Palihapitiya, a man who has taken to calling himself the heir apparent to Warren Buffett, they represent a big chunk of his portfolio. And the collapse in their value over the past year and a half -- and, for that matter, of the value of the entire industry -- has put a dent in his net worth.

All five of his SPACs that merged with acquisition targets are now trading well below their starting price of $10. Some, like Virgin Galactic Holdings Inc., are down more than 25%. Taken from its peak price, back in February 2021, when Palihapitiya was tweeting things like “trust the process” with a screenshot of his SPAC returns, the stock is down 88%.

“The broader market obviously hasn’t been conducive to anything he’s doing,” said Matthew Tuttle, chief investment officer of Tuttle Capital Management, a Greenwich-based firm that focuses primarily on ETFs. “But I also think you’ve gotta be real careful when you’re going out and hyping stuff.”

A representative for Palihapitiya and Social Capital declined to comment.

In a post-mania world, SPACs will most likely live on as an asset class in some form or another. But a return to those go-go days seems improbable. Some SPAC watchers even argue that the market could potentially disappear entirely if the SEC moves forward with rule changes it proposed earlier this year.

The proposals would prohibit executives from making the kinds of wild claims about revenue and profit growth that have become a hallmark of the SPAC boom. And they’d effectively make going public via a SPAC as difficult as going via a traditional IPO.

“If the SEC’s rules go forward and aren’t challenged,” says Usha Rodrigues, a professor of securities law at the University of Georgia, “I don’t know if there will be future iterations of SPACs.”

$175 Billion

Palihapitiya has plenty of company as he searches for acquisition targets. Managers of more than 600 blank-check companies that collectively hold some $174 billion in cash are facing deadlines to close deals over the next 17 months, according to data compiled by SPAC Research.

That includes SPACs launched by KKR, Bill Foley and Michael Klein. Each of them raised $1.38 billion -- the three SPACs that are bigger than Palihapitiya’s -- and each has a deadline in the first half of next year.

It’s a rough environment for closing deals. Not only has the SPAC fever broken but the economy is slowing and CEOs of private companies are cooling in general to the idea of going public. (Conventional IPOs are holding up better than SPAC-style debuts, known as de-SPACs, but they’re still down more than 50% from their peak.)

Two SPACs backed by Palihapitiya and his partner Suvretta Capital have managed carry on business in recent months. ProKidney Corp., a medical technology company, debuted in the market last month. Its shares have sunk more than 20%, though, in just a matter of weeks and more than 90% of investors opted to redeem their shares for cash. On Thursday, SPAC investors are set to vote on a pact to take public Akili Interactive, the maker of a video game that seeks to treat kids with attention-deficit disorder.

Palihapitiya has had little to say publicly about either deal. The last time, in fact, he tweeted about the SPAC industry at all was in April, when he posted a chart comparing a de-SPAC index to a basket of companies that went public through IPOs -- as a way of showing the market sell-off was broader than just the SPAC collapse.

Back at the height of the boom in early 2021, he’d fire off bursts of tweets, one after the other, about his latest SPAC exploits. Like in January, when he re-tweeted a post of the performance of the SPACs he invested in and tacked on a Jay-Z lyric for emphasis.

Only one of the six stocks mentioned in the thread is trading higher today than it did at the time.

The median decline: 79%.

Most Read from Bloomberg Businessweek

World Embraces Dirtier Fuels as Gas Hits Exorbitant Heights

Yongchang Chin and Elizabeth Low

Mon, August 15, 2022 

(Bloomberg) -- With high natural gas prices showing no signs of abating and supplies becoming harder to obtain, cheaper and dirtier alternatives to the fuel are looking increasingly tempting for energy-hungry buyers.

Liquefied natural gas prices in Asia are now near $50 per million British thermal units. On an energy-equivalent basis, gas was at about double the price of diesel as of Friday, with high-sulfur fuel oil and coal cheaper still, according to data from S&P Global Commodity Insights.

In Europe, the situation is similar, with natural gas at around $60, at least triple the price of HSFO and propane, according to energy consultancy FGE.

Natural gas has become the hottest commodity as Russia, a crucial source of piped gas to Europe and LNG to Asia, maintains a stranglehold on supplies amid a global energy crunch. There’s not enough to go around, and the situation is expected to worsen with the approach of winter. At the same time, the spike in prices is making the fuel unaffordable for some nations. The result is that buyers both rich and poor are increasingly eyeing the alternatives.

“With the concern that supplies could become very tight this upcoming winter, various governments have recently announced they will allow more fuel oil and coal burning in power stations,” said Steve Sawyer, director of refining at industry consultant FGE. “If the flexibility to burn fuels other than natural gas is already installed, then we suspect it is already being used,” he said.

The International Energy Agency on Thursday boosted its forecast for global oil demand growth by 380,000 barrels daily to 2.1 million barrels a day on the expectation that industry and power generators will switch their fuel to oil. The extra demand that prompted the revision is “overwhelmingly concentrated” in the Middle East and Europe, said the agency.

IEA’s view was echoed by Damien Courvalin, head of energy research at Goldman Sachs, who expects gas-to-oil switching to account for 1.5 million barrels a day of additional demand this winter, compared to a million barrels a day last year. Demand will come from the power sector as well as industries, he said in a Bloomberg interview.

In Asia, Pakistan and Bangladesh are among countries with sizable facilities that can switch between natural gas and fuel oils for power generation.

Pakistan and Bangladesh “have significant oil-generated power capacity and are facing severe budget constraints to keep buying expensive LNG,” said Wood Mackenzie principal consultant Max van der Velden. “They’re trying to keep the lights on and avoiding severe economic stress by using fuel oil.”

The shift from gas is a setback in the global push for cleaner energy. Many countries turned to natural gas as part of decarbonization efforts, as it’s the cleanest fossil fuel. Dirtier alternatives from coal to liquid fuel will make it more difficult for nations to reach their climate goals.

The EU Commission will continue to enable increased coal power generation this year and next, temporarily reversing the long-term decline in coal consumption in Europe, Fitch Solutions analysts said in an Aug. 8 note. And higher LNG prices will encourage electricity generators globally to switch from gas to coal feedstock where possible.

But there are limits to how much fuel-shifting may be possible. A lack of oil-power generation capacity is one issue, as it may be difficult to bring oil or coal power plants back online.

“Restarting such plants will depend on just how well they were shut down and then maintained,” FGE’s Sawyer said. “Do not expect such plants to come on overnight.”

Most of Japan’s oil power capacity is currently idled. The plants are old and expensive to restart, will only be running for a short time, and face environmental and political pushback, according to van der Velden.

“Japan will still see year-on-year growth of fuel oil demand for the power sector, but its upsides are limited,” he said.

Still, the cost incentives of fuel switching are hard to ignore, and FGE expects more countries to push for a restart of oil-fired plants. “The process will need to start now if they are to be ready and working to help meet winter demand,” Sawyer said.

Chipmakers Are Flashing More Warnings on the Global Economy

Sam Kim
Tue, August 16, 2022 

(Bloomberg) -- Mounting concern over semiconductor demand is sending shudders through North Asia’s high-tech exporters, which historically serve as a bellwether for the international economy.

South Korean behemoths Samsung Electronics Co. and SK Hynix Inc. have signaled plans to dial back investment outlays, while across the East China Sea, the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing Co. indicated a similar expectation.

Fading tech demand highlights a darkening picture as Russia’s war on Ukraine and rising interest rates damp activity. The following charts look at the chip industry and its implications for the world economy.

In recent weeks, major chip manufacturers Micron Technology Inc. Nvidia Corp., Intel Corp. and Advanced Micro Devices Inc. have warned of weaker export orders.

Gartner Inc. predicts an abrupt end to one of the industry’s biggest boom cycles. The research firm slashed its outlook for revenue growth to just 7.4% in 2022, down from 14% seen three months earlier. Gartner then sees it falling 2.5% in 2023.

Memory chips are among the most vulnerable segments in the $500 billion semiconductor market to global economic performance, and Samsung and SK Hyinx’ sales of dynamic random access memory, or DRAM, a chip that holds bits of data, are central to Korean trade.

Next year, demand for DRAM is likely to rise 8.3%, the weakest bit growth on record, says tech researcher TrendForce Corp., which sees supply climbing 14.1%. Bit growth refers to the amount of memory produced and serves as a key barometer for global market demand.

South Korea’s exports are bolstered when demand outpaces supply in bit growth. But with supply likely to expand at almost twice the pace of demand next year, exports may be headed for a major downturn.

Signs are rising that trade is already starting to deteriorate. Korea’s technology exports slipped in July for the first time in more than two years, with memory chips leading the falls. Semiconductor inventories piled up in June at the fastest pace in more than six years.

Among potential victims will be Samsung, the world’s biggest memory-chip producer and a linchpin of Korea’s trade-reliant economy.

Samsung recorded rapid sales growth when demand was strong relative to supply. As the chip outlook turns gloomy, shares of Samsung have been declining this year, with occasional rebounds on better-than-expected profits.

Samsung and SK Hynix control roughly two thirds of the global memory market, meaning they have the power to narrow the gap between supply and demand.

Memory is loosely tied to other types of semiconductors, built by firms such as TSMC that produces chips in iPhones, and Nvidia, whose graphics cards are used in everything from games to crypto mining and artificial intelligence.

The Philadelphia Semiconductor Index, which includes these firms, has ebbed and flowed together with memory demand in recent years.

Korean exports have long correlated with global trade, meaning their decline will add to signs of trouble for a world economy facing headwinds from geopolitical risks to higher borrowing costs.

Micron Technology, the world’s third-largest memory maker, last week issued a warning about deteriorating demand, triggering a selloff in global chip stocks.

Korea’s stock market has been among leading indicators of the country’s trade performance, with investors dumping shares well before exports slump.

“The trend is important for Asia as its economic cycle is very dependent on tech exports,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA. “Fewer new orders and the large inventory pile-up mean Asia’s tech sector will see a long destocking cycle and a shrinking profit margin.”

The International Monetary Fund last month downgraded its global growth forecast and said 2023 may be tougher than this year.

Deutsche Bank AG sees a U.S. recession starting in mid-2023 and Wells Fargo & Co. expects one in early 2023. A Bloomberg Economics model sees a 100% probability of a US recession within the next 24 months.

NOT ENOUGH!GENERAL STRIKE!

Exclusive-Biden's emergency board recommends up to 7% rail worker pay raises

Tue, August 16, 2022 

WASHINGTON (Reuters) - U.S. President Joe Biden's emergency board tasked with helping major freight railroads and unions end a contract negotiation stalemate on Tuesday proposed annual wage increases of between 4% and 7% through 2024, according to a report seen by Reuters.

The board also recommended in its 119-page report a 3% increase for 2020 and 3.5% for 2021, when the rail workers did not have a contract, along with five $1,000 annual bonuses and an additional paid day off.

Talks between major freight railroads, including Union Pacific, Berkshire Hathaway-owned BNSF, and CSX, and unions representing 115,000 workers have dragged on for more than two years.

(Reporting by David Shepardson and Lisa Baertlein; Editing by Leslie Adler)

Investors No Longer ‘Apocalyptically’ Bearish, BofA Survey Shows

INVESTORS ARE PENSIONS AND PRIVATE EQUITY


Sagarika Jaisinghani
Tue, August 16, 2022 




(Bloomberg) -- Investors are pulling back from their record pessimism about stocks amid speculation that inflation has peaked, marking a break in the “apocalyptically bearish” sentiment that had been gripping markets, Bank of America Corp.’s monthly fund manager survey showed.

Global growth and profit expectations rebounded from all-time lows hit last month, while 88% of investors participating in the survey now expect lower inflation in the next 12 months, strategists led by Michael Hartnett wrote in a note Tuesday. Investor allocation to stocks also rose from “dire” lows hit in July, according to the global survey, which included 250 participants with $752 billion under management in the week through Aug. 11.

“Sentiment remains bearish, but no longer apocalyptically bearish as hopes rise that inflation and rates shocks end in coming quarters,” Hartnett said.

US stocks have rallied since mid-June after a better-than-expected corporate earnings season and optimism that a slight cooling in US inflation will prompt the Federal Reserve to reduce the pace of its interest-rate hikes in time to avoid a recession.

The technology-heavy Nasdaq 100 is now up 23% since a low in June as rate-sensitive growth stocks led the charge higher. Investors anticipate that trend to hold: For the first time since August 2020, the survey participants expect growth stocks to outperform cheaper or so-called value in the next 12 months, according to Bank of America.

While JPMorgan Chase & Co. strategists -- among the most prominent top-ranked bulls -- said there’s room for growth stocks to extend the rebound, more bearish voices including Morgan Stanley’s Michael Wilson say the gains are just a pause in the bear market and that disappointing earnings are likely to spark another selloff.

Bank of America strategists also said they “remain patient bears.” With their base case calling for rising rates and falling earnings, they would take profits should the S&P 500 climb above 4,328 points -- less than 1% above its latest close, Hartnett wrote.

This week’s MLIV Pulse survey takes a hard look at inflation. Please follow this link to participate.

The survey showed that investors expect the Fed to change course this year only if the key personal-consumption expenditures price index drops to below 4%, well short of where it is now.

The number of investors expecting a global recession in the next 12 months rose to a net 58%, the highest since May 2020. Exposure to cash fell to 5.7%, but remained well above the long-term average of 4.8%, the data showed.

Investors view persistently high inflation as the biggest tail risk, followed by a global recession, hawkish central banks and systemic credit events. In relative terms, investors are once again net overweight equities versus bonds, according to the survey.

The bank’s custom bull & bear indicator remains “max bearish,” which is seen as a contrarian signal for a short-term rally.

Other survey highlights include:

Investors are long stagflation plays including commodities, cash and defensives, while being short European and emerging market stocks and the consumer sector


Big August rotation to US stocks, technology and consumer, and out of staples, utilities and the UK


Investors see the G7 announcing an energy price cap as the most likely outcome of the energy crisis in Europe


Most crowded trades are long US dollar, long oil and commodities, long cash, long FAANG stocks, short US Treasuries and short EM debt

PRISON NATION U$A

'Big Short' fund manager Burry dumps portfolio, buys prison stock

Mon, August 15, 2022 
By David Randall

NEW YORK (Reuters) - Scion Asset Management fund manager Michael Burry, who rose to fame with timely bets against housing ahead of the 2008 financial crisis, in the last quarter dumped a dozen bullish positions and replaced them with a new stake in prison company Geo Group Inc, according to filings released on Monday.

Shares of Geo Group rose 12% on Monday, the largest one-day rally in the company since June 2021, according to Refinitv data. At current prices, Burry's position is worth approximately $3.9 million. Shares of the company, which has a market value of $852 million, are down 1.6% for the year to date.

Burry, who frequently deletes his tweets, suggested on Twitter on Sunday that the 18% gain in the tech-heavy Nasdaq Composite Index since the start of the third quarter is likely to reverse.

"Can't shake that silly pre-Enron, pre-9/11, pre-WorldCom feeling," he wrote, referring to three events which contributed to an approximately 75% decline in the Nasdaq between February 2000 and September 2002.

Filings known as 13-f are one of the few quarterly disclosures that hedge fund managers make of their long positions -- bets that a stock will rise -- and may not reflect current holdings. Fund managers are not required to disclose short positions, which profit when a company's shares fall.

Among the stocks that Burry sold are a stake in Facebook parent Meta Platforms that was worth $12.9 million at the end of the quarter, a $19.7 million stake in Cigna Corp, and a $23.1 million stake in Bristol-Myers Squibb Co.

The Nasdaq Composite was recently up 0.43% Monday, leaving it down 16.3% for the year to date.

Michael Burry's Hedge Fund Added One Stock And Dumped All the Rest

Amelia Pollard and Claire Ballentine
Mon, August 15, 2022 a

Michael Burry's Hedge Fund Added One Stock And Dumped All the Rest


(Bloomberg) -- Michael Burry’s Scion Asset Management jettisoned 11 US equities in the second quarter and ended the period with just one.

The hedge fund exited positions including Alphabet Inc. and Facebook parent Meta Platforms Inc., while adding private-prison operator Geo Group Inc., which was Scion’s only long stock holding as of June 30, according to a regulatory filing Monday.

Scion held 501,360 shares of Boca Raton, Florida-based Geo Group, which surged 11% to $7.60 on Monday, extending its gain since the end of the second quarter to more than 15%.

Scion held as much as $165 million of US stocks at the end of the first quarter.

Burry, 51, who rose to prominence after a winning wager against mortgages in the run-up to the 2008 financial crisis, has become a cult figure on social media in recent months, with ominous predictions of a looming downturn. In a May tweet, he raised the specter of a crash similar to the one 14 years ago.

He declined to comment on the filing.

The disclosure, required for all money managers overseeing more than $100 million of US equities, only shows holdings in stocks that trade on the nation’s exchanges. It doesn’t reveal non-US traded securities or short positions. Such filings are also historical, providing a snapshot of a fund’s holdings at the end of a quarter, and may not reflect current investments.