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According to Yonhap News Agency: Samsung Electronics union members voted to strike.1. WTI crude oil futures trading volume was 1,335,333 lots, a decrease of 160,335 lots from the previous trading day. Open interest was 2,089,984 lots, a decrease of 16,134 lots from the previous trading day. 2. Brent crude oil futures trading volume was 251,967 lots, a decrease of 41,432 lots from the previous trading day. Open interest was 283,859 lots, a decrease of 2,651 lots from the previous trading day. 3. Natural gas futures trading volume was 353,207 lots, a decrease of 78,553 lots from the previous trading day. Open interest was 1,560,302 lots, a decrease of 8,673 lots from the previous trading day.On March 18th, Kei Fujimoto, an economist at Sumitomo Mitsui Trust, stated that the Bank of Japan (BOJ) is expected to maintain its policy rate at 0.75% this week. The BOJ will be monitoring how rising crude oil prices increase the cost of petrochemical products and other crude oil-based commodities, and how these cost pressures are transmitted to domestic prices. While rising crude oil prices will directly push up energy prices such as gasoline in the short term, this temporary fluctuation is unlikely to prompt the central bank to raise interest rates sooner than expected.1. Berenberg: The room for further rate cuts is quite limited; the Fed is expected to implement the final 25 basis point rate cut of this cycle at its June meeting. 2. Goldman Sachs: Expects 25 basis point rate cuts in September and December respectively. If the labor market weakens earlier and more severely than expected, rate cuts may be implemented sooner. 3. Deutsche Bank: Rates are expected to remain unchanged this week. Rising geopolitical uncertainty and inflation risks triggered by soaring oil prices are eroding the room for further rate cuts. 4. Credit Agricole: Rates are expected to remain unchanged until the end of the year. Some members may advocate ignoring short-term energy-driven inflation spikes, but most members tend to be more cautious. 5. Rabobank: Under Powells leadership, the Fed is likely to maintain a wait-and-see stance; if Warsh takes office, the Fed may be more aggressive, potentially pushing for rate cuts to combat economic downturn. 6. TS Lombard: Labor market concerns are resurfacing. If the energy shock subsides within weeks, coupled with the base effect of tariff inflation in the second half of the year and a rapid slowdown in rent inflation, two rate cuts are still possible this year. On March 18th, it was reported that Microsoft is considering legal action against Amazon and OpenAI over a $50 billion deal that could violate its exclusive cloud partnership agreement with OpenAI, potentially triggering a conflict between the two tech giants. The crux of the dispute lies in whether Amazon Web Services (AWS) can provide OpenAIs new commercial product, Frontier, without violating a long-standing agreement that requires all access to the companys models to be through Microsofts Azure cloud platform. Amazon and OpenAI have stated that they are building a system to circumvent the agreement. Sources familiar with the matter revealed that Microsoft executives have objected, arguing that this approach is not feasible and violates the spirit of the agreement, even if it doesnt violate its literal terms. This legal threat highlights the broader disagreement between Microsoft and OpenAI. If the dispute ultimately goes to court, OpenAIs plans for an IPO as early as this year could be jeopardized. Even after raising $110 billion last month, the company still needs to raise more cash to pay for the massive computing resources required to train and run large language models.

Blackstone's $69 Billion REIT Bans Redemptions, Harming Business

Aria Thomas

Dec 02, 2022 11:57

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Blackstone Inc halted withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday due to an increase in redemption demands, a first-of-its-kind blow to a franchise that helped it become an asset management giant.


The constraints for the day were not imposed by Blackstone (NYSE:BX), but rather because redemptions had reached specified limits. However, they heightened investor worry over the future of the REIT, which accounts for around 17% of Blackstone's revenue. The announcement resulted in a 7.1% decline in the closing price of Blackstone shares.


According to a source close to the fund, investors in the REIT are dissatisfied with Blackstone's reluctance to adjust the vehicle's valuation to that of publicly traded REITs that have been negatively affected by rising interest rates. Increasing interest rates have a negative effect on property values since they increase the cost of financing.


Blackstone has reported a net return of 9.3% for its REIT year-to-date, compared to a decline of 22.19% for the Dow Jones U.S. Select REIT Total Return Index for the same period.


Alex Snyder, portfolio manager at CenterSquare Investment Management LLC in Philadelphia, commented that some investors are wondering how Blackstone evaluates the REIT's valuation in light of this outperformance.


Snyder added, "People are selling their Blackstone REIT shares at the price at which Blackstone feels they are trading."


A spokesperson for Blackstone declined to comment on how the business evaluates the value of its REIT, but did highlight that its portfolio consists mostly of rental housing and logistics and is underpinned by a long-term fixed-rate debt structure, making it resilient.


Our business is based on performance, not cash flow, and performance is rock-solid.


The REIT's target market is wealthy individual investors. According to two individuals with knowledge of the issue, the redemptions were the result of market turmoil in Asia, which was fueled by concerns about China's economic outlook and political stability. The majority of redeeming investors, they said, were from Asia and demanded cash.


After receiving more than 2% of its monthly net asset value and 5% of its quarterly net asset value in November redemption requests, Blackstone warned investors in a letter that it will limit withdrawals from its REIT. Consequently, the REIT allowed investors to redeem $1.3 billion in November, which corresponds to around 43% of investor repurchase demands.


According to some analysts, if Blackstone's REIT cannot regain investor confidence, it risks entering into a loop of selling assets to fund redemptions. The REIT has struck a deal to sell its 49.9% ownership in two Las Vegas casinos for $1.27 billion, the firm reported on Thursday.


In a report, analysts at BMO Capital Markets stated, "The impact on Blackstone will depend on whether the REIT is able to stabilize its net asset value over time or is forced to enter a protracted run-off position, with substantial asset sales and a continuous redemption backlog — it's too early to tell."

BLOW TO BLACKSTONE'S PLANS

The REIT disruption is a setback for two of Blackstone's strategies that helped it become the world's largest alternative asset manager with $951 billion in assets: real estate investing and targeting high net worth individuals.


Blackstone established the REIT in 2017, riding the success of its real estate business, which had by then surpassed its private equity firm. As a result of his success in real estate investing, the company's president, Jonathan Gray, was appointed to the position of CEO and succeeded Stephen Schwarzman.


The REIT was also an attempt to attract rich investors who believe that private market items perform better than public market ones.


Blackstone has pushed to expand its investor base after decades of marketing its products to institutional investors such as public pension funds, insurance corporations, and sovereign wealth funds.


Credit Suisse analysts projected in a study that Blackstone's fee-related income and managed assets would be negatively impacted by the REIT's troubles. They noted, "These issues will continue to impose downward pressure on the premium valuation of Blackstone."

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