CNBC/Holly Ellyatt
Pandemic caused $220 billion of global dividend cuts in 2020, research says

Global dividends fell sharply in 2020 due to the coronavirus pandemic, with the amount of investor payouts declining 12.2% to $1.26 trillion, according to new research.

As the international public health crisis spread throughout the world, prompting lockdowns and curtailing business activity, dividend cuts and cancellations totaled $220 billion between the second and fourth quarters of 2020, according to the latest Global Dividend Index from asset manager Janus Henderson.

Still, the total amount of dividends paid out between April and December 2020 was $965.2 billion, noted Janus Henderson, which analyzes dividends paid by the 1,200 largest firms by market capitalization before the start of each year.

Dividend cuts were most severe in the U.K. and Europe, the index found, with both together accounting for more than half the total reduction in payouts globally, “mainly owing to the forced curtailment on banking dividends by regulators,” Janus Henderson found.

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Yahoo Finance/Dawn Allcot
Bank of America Issues Warning About Potential Stock Market Bubble

As Bitcoin breaks the $50,000 mark and the Dow hovers in the low 30,000s, a new report from the Bank of America and EPFR Global reveals that the latest market exuberance “may precede a correction,” Bloomberg reports.

The BofA and EPFR Global data revealed that stocks had inflows of $58 billion between Feb. 3 and 10, according to Bloomberg, which indicates levels of extreme bullishness. The resulting market sentiment could “trigger a sell signal that hasn’t been set off since January 2018,” said the note from BofA strategists, as reported by Bloomberg.

Strategist Meghan Shue from Wilmington Trust said in a CNBC article that the report reveals a troubling trend. “What we have seen from that Bank of America data are record inflows into U.S. large cap, in the tech sector,” said Shue, a CNBC contributor. “But less attention is being paid to areas that we think offer better potential for future returns.”

In a note to CNBC’s “Trading Nation,” she warned, “Money is coming off the sidelines and is looking more speculative than it has in years.”

With potential new regulations on the way, which could encourage more retail investors to get into the game, along with accelerated COVID-19 vaccine distribution that could further stimulate the economy, Shue says a pullback is possible to correct for current market exuberance.

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Bloomberg/Lu Wang
Inflation Angst Is About to Rewrite the Stock Market Playbook

For bond investors, inflation is pretty much all bad news, eating into the value of future returns. For equity traders, the tidings can be less categorically awful, given the ability of certain companies to wring profits from higher prices.

While there will be plenty of stock-market casualties should price pressures perk up, history suggests the landscape isn’t devoid of opportunity. Energy shares have been persistent winners during times of high inflation over the past five decades, a study from Ned Davis Research shows.

Goldman Sachs Group Inc. recommends companies better equipped to derive earnings from sales, such as automaker Ford Motor Co. and media firm Discovery Inc. To Societe Generale SA, supply and demand imbalances suggest mining shares and fertilizer producers offer better hedges should pressures build.

No matter how sanguine Federal Reserve Chair Jerome Powell is about the topic right now, inflation will one day matter again for stocks. Just in the last few weeks, hawks have observed worrying signs in everything from a global shortage of computer chips to the biggest jump in U.S. producer prices on record.

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Gold rises as dollar eases, higher yields cap gains

Gold prices edged higher on Monday to recover from an over seven-month low touched in the previous session as the dollar weakened, although higher U.S. Treasury yields capped bullion gains.

Spot gold rose 0.3% to $1,787.31 per ounce by 0100 GMT, having touched its lowest since July 2 at $1,759.29 on Friday. U.S. gold futures gained 0.4% to $1,784.20.

The dollar eased against rivals, making gold affordable for holders of other currencies.

Benchmark U.S. Treasury yields hit a near one-year peak, increasing the opportunity cost of holding bullion, which pays no interest.

President Joe Biden’s push for a $1.9 trillion COVID-19 relief bill took a step forward on Friday as a U.S. House of Representatives committee unveiled the legislation Democrats hope to pass by late next week.

The risks of ongoing business failures in the United States “remain considerable” even as the economy emerges from the coronavirus pandemic, the Federal Reserve said on Friday in its semi-annual monetary policy report to Congress.

Bitcoin hit a market capitalization of $1 trillion as it rose to yet another record high on Friday, countering analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.

Physical gold demand in India last week surged as local prices dropped to their lowest levels since June last year, with buying expected to pick up in other Asian centres after the Chinese Lunar New Year holiday week.

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