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Cebu Pacific cancels 38 domestic flights due to restrictions in NCR Plus, Region 6

BUDGET carrier Cebu Pacific announced on Sunday the cancelation of its 38 domestic flights from April 5 to April 11 due to the travel restrictions in Metro Manila and Western Visayas.

Cebu Pacific canceled 28 flights between Manila and Boracay, Kalibo, Cagayan de Oro, Cebu, Coron, Lagazpi, Pagadian, and San Jose because of the extended enhanced community quarantine (ECQ) in the areas covered by the so-called National Capital Region (NCR) Plus.

“Only essential travel is allowed in and out of Metro Manila until April 11,” the budget carrier noted.

Cebu Pacific also announced that the interagency task force has approved the request of the local government of Region 6 (Western Visayas) to temporarily suspend the acceptance of incoming passengers until April 10.

Ten flights are affected, including flights from Manila to Iloilo, Roxas, and Bacolod.

The budget carrier also canceled the Cebu-Bacolod-Cebu flights and the Cebu-Caticlan-Cebu flights.

Passengers, according to Cebu Pacific, may rebook for travel within 90 days without additional cost, store the amount in a virtual wallet valid for two years, or request a refund, which may take up to seven months due to the high volume of requests.

For its part, flag carrier Philippine Airlines said its domestic flights to and from Manila will continue to operate during the extension of the enhanced community quarantine in the NCR Plus.

Allowed to travel within the ECQ period are: health/emergency frontline services personnel, government officials and frontline personnel, duly authorized humanitarian assistance actors, persons traveling for medical/humanitarian reasons, persons going to the airport for travel abroad, persons crossing zones for work or business permitted in the zone of destination, and returning or repatriated overseas Filipino workers and other returning overseas Filipinos, and locally stranded individuals. — Arjay L. Balinbin

T-bill, T-bond rates seen mixed as lockdown stays

GOVERNMENT securities on offer this week will likely end mixed as the market braces for the impact of the extended lockdown on the economy.

The Bureau of the Treasury (BTr) is set to raise P25 billion via the Treasury bills (T-bills) on Monday, broken down into P5 billion in 91-day papers, P8 billion in 182-day debt and P12 billion in 364-day instruments.

On Tuesday, the BTr will offer P35 billion of fresh five-year Treasury bonds (T-bonds).

A bond trader estimated that T-bill rates will move sideways from the yields fetched in the previous auction last week, while a second trader sees them inching down by 5 basis points (bps).

Meanwhile, the first trader said the five-year bonds could fetch a coupon between 3.375% and 3.5%, the second trader gave a 3.25-3.5% forecast range, while a third trader estimated this could range from 3.35% to 3.6%.

The first trader attributed the projected lower T-bill rates to expectations that economic managers will meet to downgrade their growth projections for the year on dimmer economic outlook.

“Despite the increased offer volume, strong demand will still be evident on risk aversion amid the continued rise in COVID-19 cases in the National Capital Region (NCR) which triggered the government to impose another round of a stringent lockdown,” Kevin S. Palma, peso sovereign debt trader at Robinsons Bank Corp., said on Sunday when sought for comment.

The government extended for one more week the hard lockdown imposed in Metro Manila, Bulacan, Cavite, Laguna and Rizal amid the sustained spike in daily infections. The end of the strict lockdown was moved to April 11 from the initial plan to end it on April 4.

The Development Budget Coordination Committee (DBCC) will have to meet again to review its macroeconomic forecasts for the year, according to Budget Secretary Wendel E. Avisado last week. However, there is still no set date and agenda for the upcoming meeting.

During the auction last week, the BTr hiked the volume of T-bills it awarded to P24 billion from P79.33 billion in bids.

It raised P7 billion from the 91-day debt, higher than the P5-billion program. The average rate of the three-month papers fell to 1.269% from the 1.336% fetched on March 22.

It borrowed another P7 billion from the 182-day T-bills, more than the P5-billion plan, at an average rate of 1.609%, down from 1.718% previously.

Lastly, the Treasury made a full P10-billion award of the one-year securities, at an average rate of 1.926%, against the 1.997% quoted previously.

The last time the BTr offered five-year bonds was on May 27 last year, when it raised P30 billion in reissued T-bonds from P118.422 billion in bids. The notes fetched an average rate of 2.676%, lower than the 4.018% previously.

“The government reimposed restrictions which will dampen growth expectations but the long-term view remains that the country will still post modest growth by the end of the year causing yields for the 5-year bonds to rise a bit. However, a prolonged lockdown may change this,” the third trader said. 

At the secondary market on Friday, the 91-, 182-, and 364-day debt were quoted at 1.284%, 1.52%, and 1.908%, while the five-year tenor was at 3.395%, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

“We don’t expect the market to be aggressive on the 5-year paper given the inflation outlook,” the first trader added.

Headline inflation in March may have quickened slightly and remained beyond the central bank’s target amid high food and transport costs, according to analysts in a BusinessWorld poll of 13 analysts last week. The poll resulted in a median estimate of 4.8% inflation rate.

If realized, this would be quicker than both the 4.7% in February as well as the 2.5% a year earlier. This would also mark the third straight month of inflation beyond the central bank’s 2-4% target.

The Philippine Statistics Authority will report the official March inflation data on April 6.

The Treasury wants to raise P170 billion from the local bond market in April, broken down into P100 billion in T-bills to be offered weekly and P70 billion via fortnightly auctions of T-bonds.

The government is looking to borrow P3 trillion this year from domestic and external lenders to help fund its budget deficit, which is seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga

What is Ivy style?

And is there a difference between Ivy and Preppy?

IF the US had a Harvard-Yale rivalry, and then summering in Nantucket and Martha’s Vineyard, we had Ateneo-La Salle basketball brawls and summering (“to summer” is a verb, trust me) in Calatagan or Baguio. It is the Philippines version of the Ivy League lifestyle. Both countries’ elites have the Ivy style in common.

High-end men’s haberdashery The Signet Store held a symposium last week highlighting the finer points of Ivy style, and how it arrived in the Philippines.

For some of us, our introduction to that world of Lacoste shirts and boat shoes came through Lisa Birnbach’s tongue-in-cheek WASP bible, The Official Preppy Handbook. Of course, some references were lost in the ocean crossing, and we had to make do with what we had. Ivy style enthusiast Jericho de Guzman (@pinoyprep on Instagram) acknowledged the book, but also his older brothers’ subscriptions to GQ magazine for his style. He reminisced about wearing preppy clothes in the 1980s: “If you wanted to go preppy or Ivy, you had to travel abroad, to the States, to see them.”

It’s never as simple as just nazy blazers (make the wrong move and it’s less JFK, more Miami Vice). The Official Preppy Handbook says, “Amateur historians have speculated that Preppies all dress alike because they got in the habit from wearing school uniforms. Not so. Preppies dress alike because their wardrobes are formed according to fundamental principles they absorb from their parents and their peers.” These include: conservatism (with a small “c”; apolitical), neatness, attention to detail, practicality quality, natural fibers, anglophilia, specific color blindness (pink and green), the sporting look, and androgyny.

But are preppy and Ivy the same?

Monchet Olives, founder of abanico (hand fan) company Monchet y Compania and stylish Rockwell tito, remarked the distinction between preppy and Ivy: “Preppy is really the sportswear of Ivy,” citing US President John F. Kennedy in Hyannis Port as an example. “The preppy style is associated with that type of dressed-down, as opposed to Ivy style, which is more professorial, Mr. Robinson-type dress. The tweed jacket. The pipe. The tie. The button-down. A pair of flannel slacks and weejuns.”

Ivy style can be traced back to the 1920s fashions of college students in the Ivy League, while their younger relatives gave it a louder revival via the preppy (or preparatory school) look in the late 1970s and ‘80s. As for the Philippines, it arrived here via the Commonwealth period (think seersucker suits). “That’s when the americana (blazer) became part and parcel of our look,” said Mr. Olives.

Anton Miranda, chef, writer, and stylist, summarized the tenets that make up preppy or Ivy styling. “You don’t wear Ivy to flaunt. You wear preppy or Ivy because it’s good quality. You will repeat outfits with these pieces because they’re just that good. They’re the hand-me-downs from your family.”

The speakers gave their opinions on pieces that form the backbone of an Ivy closet. Mr. Olives praises the olive-green Barbour jackets, designed for outdoorsy activities like hiking and fishing. “If there is an investment piece… that would be a Barbour jacket.”

Mr. Miranda, meanwhile, talked about the OCBD (that’s oxford cloth button-down). They come in many colors, preferably pastels and whites, and feel like a handshake from a bank trustee when worn right. “You want them to be a bit balloony. You want the sleeves to fall a little bit below the shoulder. You want it to have length to cuff your sleeves.” His preferred brands are J. Press, L.L Bean, and Ralph Lauren. For beginners, he cites Topman, Zara, and H&M, which he wore when he first started experimenting with preppy and Ivy as a youth. Mr. De Guzman, meanwhile, suggests Uniqlo for a look for less.

Mr. Olives talked about what wearing preppy or Ivy meant. “What you wear is a matter of your taste. This Ivy life or the prep life is really a matter of lifestyle.”

“Dressing is a lifestyle. If not, it’s all fashion. Fashion is big labels. And wanting to be [in] the left-to-right (as in society photos),” he said. To be Preppie or Ivy means “You’re under the radar, but you are style.”

Mr. Miranda said that behind the tailoring is a life of fun. “Ivy style is about leisure. You have the time to afford leisurely activities.”

To stock up on preppy and Ivy essentials, The Signet Store’s website is having a flash sale beginning midnight on April 5 and ending at 11 p.m. on April 6. Visit thesignetstore.com for more details. — Joseph L. Garcia

Carmakers produced less than half of CARS volume

CAR companies participating in a government incentives program to support domestic parts production have manufactured less than half of the required volume so far.

Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. are participating in the Comprehensive Automotive Resurgence Strategy (CARS) program, which offers fiscal support to car companies that produce in the Philippines 200,000 units of high-volume car models over six years.

As of the end of 2020, Mitsubishi still needs to produce 143,000 Mirage units to meet the target, while Toyota needs 128,000 more of its VIOS, Board of Investments Executive Director Corieh Dichosa said in a press briefing.

The government is considering a three-year extension to the compliance period after an auto industry group asked for a review due to a pandemic-induced sales slump. Mitsubishi has a 2023 deadline for production of its Mirage compact car, while Toyota has until 2024 to produce its VIOS car.

An interagency group on the CARS program is recommending the extension, targeting the signing of an executive order by the end of June this year. The 200,000-unit requirement will be retained.

Car sales in 2020 declined 39.5% to 223,793 units, according to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and Truck Manufacturers Association.

The auto industry expects to recover back to pre-pandemic sales as late as 2023 after operations suffered from the effects of the pandemic, CAMPI President Rommel R. Gutierrez said last week.

Sales growth this year could be 30-35% compared with the 2020 figure, but the projection could be cut to 20-25% if safeguard duties on imported cars derail the sector’s recovery efforts, he said. — Jenina P. Ibañez

EU, US fashion retailers bet bras with wires and a splash of color will sell this spring

LISBON/CHICAGO —  After a year of nesting in pastel-colored loungewear, shoppers are opting for styles with floral prints, feel-good slogans, and statement jewelry to jazz up working-from-home outfits as optimism makes a comeback in spring collections, designers and retailers told Reuters.

While neutral, comfortable clothing remains more popular than in a normal spring, retailers from Neiman Marcus to Walmart and Macy’s, Inc. reported growing sales of bright, optimistic color, flowy fabrics or dresses for the first time since the start of the pandemic as shoppers prepared for a return to normal life.

“We’re seeing a return to occasion dresses and even bras with wires,” Marie Ivanoff-Smith, fashion director at department store Nordstrom, told Reuters. “As it gets warmer and more people go outside, we thought people would really want to showcase optimism and joy with prints and vibrant colors.”

So far, ditzy floral prints are up 31% in Europe and 16% in the United States from last year, according to Heuritech, a data firm analyzing millions of pictures a day on social media and catwalks.

Colors seen in catwalks for spring and summer 2021 collections were vibrant pinks and bold blues — “an energizing source of inspiration to help carry us through,” the company said in a Feb. report. While vibrant colors and floral motifs are typical of spring styles, the difference this year is that fashion lines also include nude T-shirts and what Walmart’s head of fashion editorial, Alison Hilzer, called “slouchy cardigans.”

British online fashion retailer ASOS said in an e-mail that it noticed in recent weeks its customers were “into feel-good slogans, brighter colors, and floral accessories as the weather has started to improve and they start to get ready for the summer ahead.”

“While neutral tones are still prevalent, we’re excited to inject some much-needed optimism into our wardrobes with bright accents. We’re loving yellows and greens for (spring),” an ASOS spokesperson told Reuters in an e-mail.

“Bold colors, draping, and light fabrics created a perfect complement to spring with collections from Dior, Loewe, and Dries van Noten,” said Lana Todorovich, president and chief merchandising officer at luxury retailer Neiman Marcus.

“It’s clear that the trend is also about coming out of this, although it’s still a lot about comfortable garments,” H&M CEO Helena Helmersson told Reuters on Wednesday after the Swedish retailer reported earnings.

A ‘NERVE-RACKING’ PLANNING PROCESS
Still, planning has never been harder than this year, as designers used to finishing designs months and sometimes years ahead were forced to adjust collections and marketing in line with the fluctuating circumstances of the coronavirus pandemic.

In general, fashion trend forecasting will look two years out, according to consumer product director at fashion trend analysis company Stylus, Emily Gordon-Smith. But amid the uncertainty of the pandemic, the company advised its clients to play it safe with “seasonless” clothing.

“We tend to plan six months ahead, which is nerve-racking when you think about it,” Nordstrom’s Ms. Ivanoff-Smith said.

“How are you feeling in New York? L.A.? Seattle? We realized we needed to cater to all the scenarios,” Ms. Ivanoff-Smith said. The Seattle-based department store “eased into the spring season” by starting with casual clothes and then moving into special fashions like jewelry and colorful dresses. Still, convincing consumers spoiled by comfy clothing seven days a week to go back to heels and suits may not be easy, Ms. Gordon-Smith said.

“Once consumers are embedded in a comfort-based wardrobe, it’s a very tough mindset to shift,” Ms. Gordon-Smith said. “It’ll be underpinned by a desire to dress up again, but by our predictions that’s not going to happen on a large-scale until 2022.”

‘GET OUT OF SWEATSUITS’
But as the return of spring and progressing vaccination campaigns brought some cheer, Neiman Marcus, Walmart, and Macy’s said they have already begun to see people starting to tire of cozy and comfy clothes.

“We’ve begun to see many of our iconic designers show looks and pieces that reflect a return to customers attending special occasions,” said Neiman Marcus’ Todorovich. Brands like The Row, Brunello Cucinelli and Victoria Beckham have embraced “optic whites that symbolize a sense of refresh, rebirth, and a natural reset,” she added.

“The customer mentality is wanting to get out of sweatsuits and sweatshirt pajamas and put on something that makes them feel pretty and excited to go out,” Walmart’s Hilzer said.

At Macy’s, Durand Guion, vice-president of the department store’s fashion office, said he is even starting to see a return to formal clothes and wedding gowns as states open up.

“Weddings can happen again, gatherings can happen again,” he said. “I think a lot of that momentum will just sort of continue as vaccinations take place.” — Reuters

Bank for OFWs gets MB’s first digital banking license 

THE OVERSEAS Filipino Bank (OFBank) obtained a digital banking license from the Monetary Board (MB) on March 25, making it the first official digital-only bank in the country, the Department of Finance (DoF) reported.

OFBank started its operations in June 2020 using its existing license to operate as a thrift bank, before receiving the country’s first digital banking license last month, the DoF said in a statement on Sunday.

The Bangko Sentral ng Pilipinas (BSP) issued the rules and regulations for digital banking license through Circular No. 1105 for banks that want to set up branchless and digital-only banks in the country. OFBank applied in February to convert its thrift bank license to that of a digital bank.

The lender is wholly owned by state-led Land Bank of the Philippines and was established in September 2017.

“This milestone in the country’s banking history not only fulfills President Duterte’s campaign pledge to create a bank that caters to overseas Filipinos, but will also help the Philippines leapfrog to the digital economy,” Finance Secretary Carlos G. Dominguez III said in a statement over the weekend.

OFBank currently has four digital products and services: Digital Onboarding System with Artificial Intelligence (DOBSAI); fund transfers; bills payments; and applications for multi-purpose loans.

DOBSAI allows clients to open a mobile banking deposit account using mobile phones in real time. It now has 19,887 accounts as of end-2020 with outstanding deposits worth P104.37 million.

The bank’s digital banking recorded P467 million worth of inflows from 45,997 accounts, and P372.41 million of outflows from 62,633 accounts so far.

The small bond offerings of the Bureau of the Treasury (BTr) also boosted the usage of the mobile app, it said, with 3,517 transactions worth P40.72 million done for the second series of Premyo bonds, and 380 transactions worth P8.27 million in issuance of retail Treasury bonds (RTBs).

The bank is accessible across 112 countries, while 763 merchants are connected in the mobile app via the LinkBiz.Portal.

Under the BSP’s new circular, interested parties wanting to apply for a digital banking license need to put up a minimum capital of P1 billion to establish their presence in the country. The framework also allows currently established brick and mortar lenders to convert to digital banks.

Other digital banks in the country that have yet to obtain an official digital banking license include CIMB Bank Philippines, Inc. and ING Bank N.V. Manila. — Beatrice M. Laforga

The electric nexus of Lexus

PHOTO FROM LEXUS

How the LF-Z Electrified concept car points to the brand’s future

LEXUS is about to experience a global transformation, and the brand gave a rare glimpse of what to expect in this metamorphosis.

Since the launch of the RX 400h (the world’s first luxury hybrid model) in 2005, Lexus has sold nearly two million electrified vehicles and currently offers nine models of hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs) in approximately 90 countries around the world.

And now, Lexus has unveiled the LF-Z Electrified, a concept midsize BEV that embodies the transformation of Japan’s premiere luxury automaker in terms of driving performance, styling, and technologies envisioned for realization by 2025.

FROM SPINDLE GRILLE TO SPINDLE BODY
If you think you’re missing the traditional Lexus spindle grille in the LF-Z Electrified, you need to expand your vision — literally. Whereas the grille alone presented the distinctive spindle design in previous and current Lexus models, the future execution will now include the whole car itself — the grille and the hood of the LF-Z, for instance.

Lexus is evolving the design icon of its spindle grille into a spindle body as the overall body architecture. The aim was to create a three-dimensional design that transforms the form of the vehicle body itself into the icon of the Lexus brand.

In the rear, a clean and simple horizontal design combines with the molding that emphasizes the wheels to express a powerful stance. Also, horizontally displaying “LEXUS” in the continuous slim taillamp contributes to styling that symbolizes the next generation of the brand.

THE NEW ‘TAZUNA’ INTERIOR DESIGN
To embody to an even higher degree the company’s human-centered approach, the cockpit was designed based on the new concept of tazuna (Japanese for “rein”). Inspired by the relationship between horse and rider, who communicate through a single rein, steering wheel-mounted switches and the vehicle’s head-up display have been coordinated to create a space in which the navigation system, audio system, and driving mode selection, can be performed without movement of the driver’s line of sight or need to operate complicated switches.

The entire interior has been made a clean and high-quality space by a form that seamlessly connects the cowl to the front doors and on to the rear doors. Also, a panoramic roof uses long plates of glass that bring about a feeling of openness.

LEXUS DRIVING SIGNATURE
The LF-Z Electrified evolves the “Lexus Driving Signature,” a unique Lexus driving experience that aims for a linear response that is faithful to the driver’s intentions, including the feeling of seamlessly connecting acceleration, steering, and braking in any driving situation.

The LF-Z Electrified achieves an ideal balance by optimally positioning the battery and motors. By orienting the lithium-ion battery assembly longitudinally under the floor of the vehicle, the chassis becomes more rigid and the vehicle’s center of gravity is lowered for improved dynamics. In addition, this design helps mitigate vibrations and unpleasant noises from penetrating the passenger cabin. The Lexus DNA of quietness and ride comfort has evolved dramatically yet remains.

The new DIRECT4 four-wheel drive technology controls the front and rear drive wheels independently and can switch between front-wheel drive, rear-wheel drive, or all-wheel drive, depending on the driving situation. The system controls the distribution of driving force through the seamless orchestration and calculation of accelerator pedal and steering wheel inputs, resulting in powerful acceleration (zero-100kph in three seconds) and exhilarating cornering performance that delivers precisely what the driver expects. The use of steer-by-wire eliminates the need for a mechanical connection through the steering shaft, resulting in a more direct response and enabling the vehicle to turn with less steering angle and more precision.

ARTIFICIAL INTELLIGENCE TO ENRICH THE MOBILITY EXPERIENCE
The LF-Z Electrified’s voice recognition system uses the latest artificial intelligence (AI) to recognize, learn, and adapt to a driver’s habits and preferences, supporting tasks such as determining driving routes and even making restaurant reservations.

A digital key allows family and friends to access the car without having to hand over a conventional key, in addition to operating the vehicle with a smartphone, such as opening and closing the door locks. And by enabling service providers to access the car via the digital key, it will be possible to provide vehicle-linked services such as package delivery to the car and car sharing.

The retractable door handle automatically appears above the vehicle’s surface when a driver or passenger approaches with key in hand. The door can be unlocked and opened by touching the sensor inside the handle. Sensors scan the surrounding environment for oncoming traffic prior to passenger egress to provide an additional layer of passenger safety.

The panoramic roof uses electrochromic glass and is equipped with entertainment functions such as dimming for privacy and shade, or illumination to reflect the passing night sky. In the center of the roof is a touch panel that connects the front and rear seats, and is used for communication between passengers. The reclining rear seats are equipped with a massage function while a next-generation Mark Levinson audio system, working with an active noise cancelation feature, reproduces a quiet, concert hall-like audio experience.

LEXUS CIRCA 2025
By 2025, Lexus plans to introduce 20 new or minor-change models, including more than 10 electrified models such as BEVs, plug-in hybrid electric vehicles (PHEVs), and HEVs, in line with the needs of each country and region around the world.

Lexus aims to offer electric variants of all its models by 2025, with the sales ratio of electric vehicles exceeding that of gasoline-engine vehicles. It also plans to develop vehicles such as sports models that continue to provide the fun of driving, a car that redefines the concept of having a chauffeur, and new genres that have never before existed.

SEC warns public against Align Assets’ unauthorized investment scheme

THE Securities and Exchange Commission (SEC) issued a warning against unlicensed entity Align Assets for offering unauthorized investment schemes.

“The advisory is prompted by numerous inquiries from the public who would like to know whether or not an entity called Align Assets is registered with this commission and whether or not Align Assets has a secondary license to solicit investments/placements from the public,” the corporate regulator said.

Based in the United Kingdom, Align Assets is said to be a “decentralized” trading platform. Reports collected from the public and online sources say that the entity is not supervised or handled by a person or a group, but is instead headed by a robot or a “bot.”

The bot conducts the trading activities. It offers investors services that convert investments to digital currency or bitcoin.

The scheme promises a three percent return every working day, or a total profit of 150% in 50 working days. Members with referrals are promised as much as five percent per direct referrals and 0.5% for indirect invites.

Align Assets is not authorized to collect or offer investments to the public since “it has not secured prior registration and/or license from the commission as prescribed under Section 8 and 20 of the Securities Regulation Code.”

The SEC also said that Align Assets is not registered with the Bangko Sentral ng Pilipinas (BSP) to engage in digital assets. The Guidelines for Virtual Currency Exchanges of the BSP requires all entities in the Philippines engaged in businesses in virtual currency to get a certificate of registration to operate as remittance and transfer company. 

Align Assets is also not registered as a crowdfunding intermediary nor as a funding portal with the SEC.

The commission reminded the public to conduct due diligence on the company before diving into investment programs. The SEC also told would-be investors to avoid investments “offering unrealistic returns.”

The SEC calls on the public to report groups or individuals who are offering unlicensed investment programs to the commission’s Enforcement and Investment Protection Department via epd@sec.gov.ph. — Keren Concepcion G. Valmonte

An alternative to ‘no alternative’: How bonds snuck up on stocks

REUTERS

A COMMON narrative in markets is that with global rates so low, equities are the only game in town for investors with an appetite for upside. But after the worst selloff in Treasuries since 1980, the edge for stocks is starting to dull.

While yields are still low relative to history, the mantra of “there is no alternative” is losing its pull with 10-year Treasury rates nearly 80 basis points (bps) higher than they started in 2021.

As a result, the so-called Fed model — which compares corporate profits to bond yields — shows that S&P 500 Index stocks are the least attractive relative to Treasuries in more than a decade. The equity benchmark’s earnings yield — how much profits you get relative to share prices — is about 1.3 percentage points above the yield on 10-year Treasuries. That’s the smallest advantage since 2010.

Minds are being changed thanks to the rapid repricing of the US economic outlook — nonfarm payrolls increased by 916,000 last month as more vaccines found arms and the government delivered trillions of dollars in fiscal aid. Meanwhile, as inflation expectations hit multi-year highs, Federal Reserve policy makers have made it clear that they won’t act preemptively to curb price pressures. Long-dated bond yields have rocketed higher as a result, breathing new life into the asset class after rates fell to all-time lows last summer.

“That we’ve had such a swift selloff in bonds while stocks have continued to hit new highs very much implies that the relative attractiveness of bonds is quickly improving,” said Dan Suzuki, Richard Bernstein Advisors LLC’s deputy chief investment officer.

Bonds may stay attractive for the next decade, according to a Bank of America analysis. The firm’s valuation framework — which it says has proved 80% prescient over 10-year intervals — forecasts returns of 2% per year over the next decade, analysts wrote in a note last month. That’s “close to levels that renders bonds compelling,” particularly if the 10-year Treasury yield hits the bank’s year-end target of 2.15%. The note yielded about 1.68% on Thursday. 

The rise in yields is also taking the shine off dividend-yield stocks. For the first time since late 2019, the S&P 500’s payout is below the yield on the benchmark note. As of Wednesday’s close, the S&P 500 had a dividend yield of 1.46%, 30 bps below the yield on 10-year Treasuries.

On Thursday, there were 231 companies in the S&P 500 with a higher dividend payout than the 10-year Treasury rate, according to data compiled by Bloomberg. That compares with 341 companies at the start of the year.

“The 10-year yield finally passed the S&P 500 dividend yield and I think if those yields rise, it becomes a more and more attractive place to park some money,” said Ross Mayfield, investment strategy analyst at Baird. “There’s probably room for yields to continue to move higher — 1.75% could be an attractive level. But if yields continue to rise, the price of those bonds is going to feel it. So it’s a tough balancing act for sure, but they’re becoming more attractive.”

Richard Bernstein’s Mr. Suzuki agrees. The Fed model and the dividend yield eclipse aren’t necessarily buy signals for bonds — yet. Should the consensus in markets play out — that the vaccine rollout will kick-start a surge in growth — then bonds have the capacity to underperform equities further even as their valuations begin to look enticing, Mr. Suzuki said.

“But clearly, one’s interest rate outlook has a lot to do with how you view the relative attractiveness of stocks and bonds. We are in the camp that interest rates will continue to trend higher in the coming years, which makes the relative attractiveness of bonds all the worse,” Mr. Suzuki said. — Bloomberg

John le Carre was so furious with Brexit he got Irish citizenship

JOHN LE CARRE — KRIMIDOEDEL/EN.WIKIPEDIA.ORG

LONDON —  John le Carre, the British novelist who cast flawed spies onto the bleak chessboard of Cold War rivalry, was so disillusioned by the 2016 Brexit vote to leave the European Union that he secured Irish citizenship shortly before he died.

David Cornwell, known to the world as John le Carre, discovered his Irish roots and gained Irish citizenship before he died aged 89 last year.

His son, Nicholas, told the BBC that Mr. Le Carre’s disillusionment with modern Britain and Brexit in particular had driven the quest for Irish citizenship. In one photograph, his son said, Mr. Le Carre wraps himself in an Irish flag and grins.

Mr. Le Carre’s novels cast post-imperial Britain — and its spies — as incompetent, ruthless, and often corrupt, and his later novels show a growing anger at the foreign policy of the United States and the actions of its powerful corporations.

On Brexit, Mr. Le Carre did not mince his words, comparing it to the 1956 Suez crisis which confirmed post-imperial Britain’s loss of global power. “This is without doubt the greatest catastrophe and the greatest idiocy that Britain has perpetrated since the invasion of Suez,” Mr. Le Carre said of Brexit. “Nobody is to blame but the Brits themselves — not the Irish, not the Europeans.”

“The idea, to me, that at the moment we should imagine we can substitute access to the biggest trade union in the world with access to the American market is terrifying,” he said.

In the June 23, 2016 referendum, 17.4 million voters, or 51.9%, backed leaving the EU while 16.1 million voters, or 48.1%, backed staying. Supporters see Brexit as an escape from a doomed Franco-German project that has stagnated while the United States and China surged ahead. Opponents say Brexit will weaken the West, further reduce Britain’s global clout, make people poorer and lessen its cosmopolitanism. — Reuters

Dream team

Will this harvest of foreign exotics soon make its way into the country?

THE PREVIOUS months may have reflected a significant decrease in overall car sales due to the pandemic, but most car manufacturers have not slowed down in churning out new models to tease the appetite of hopeful motorists. So, what new, innovative cars are we looking forward to, and do we wish to be offered in the Philippines this 2021? Allow me to run through a few.

PEUGEOT 508 SPORT ENGINEERED

If you remember, a while back I wrote about Peugeot’s global announcement that it was coming out with a very special and new Sport Engineered line. Well, the time has finally come for Peugeot to showcase the beginning of its latest aesthetics, led by efficiency, via its Peugeot 508 Sport Engineered model. Offered both in the form of a saloon and as an estate car, the 508 PSE will become the fastest car in the Peugeot range so far. It’s expected to show off some great sport tuning thanks to input from Peugeot’s specialized Sport tuning division. With a 200hp petrol engine further strengthened by two 110hp electric motors, the new Peugeot 508 Sport Engineered vehicle will definitely become the apple of many an enthusiast’s eye!

PORSCHE 911 GT3

Have you seen the Porsche 911’s hot-looking and track-focused GT3? It’s an awesome, 510hp sportscar that, unlike the rest of the 911 range, is powered by a four-liter, naturally aspirated engine. We hear it’s going to be solid fun to drive this thing around the track; and even more so in its manual transmission variant. The 911 has always been one of my all-time favorites of the Porsche models, and I can’t wait to see this one on our roads!

BMW iX

The BMW iX is truly exciting because it will be BMW’s first, fully electric compact SUV. The anticipated drive range of this vehicle is set at approximately 300 miles per full charge; and it will be powered by two electric motors that also enable the compact SUV to run on full-time all-wheel drive (AWD). The vehicle is based on BMW’s Vision iNext concept that was showcased back in 2018. And the production model is expected to look just as futuristic, while incorporating a spacious cabin decorated with carbon-fiber reinforced, plastic body panels.

VOLVO XC40 RECHARGE

The Volvo XC40 Recharge is the Scandinavian brand’s fully electric SUV, and the company says it can take you as far as 418 km on a single, full battery charge. It uses a one-pedal drive system and is powered by twin electric motors that can be fast-charged to 80% capacity in just 40 minutes. That makes this vehicle realistically viable for driving within the city, and with zero tailpipe emissions at that. Doesn’t this make it the absolute ideal model for a city car? Imagine: safety at the forefront, combined with cleaner city air. This is my perfect automobile combo for highly populated areas!

MERCEDES BENZ S-CLASS

The seventh-generation Mercedes Benz S-Class is an amazingly future-proof car that takes connectivity, digitization, electrification and the quest for driving autonomy all to the next level. Although it still relies on an internal combustion engine as its main source of power — in the form of a three-liter, inline six that spits out 429hp — it is also boosted by a mild hybrid system that adds an additional 22hp to the mix. Furthermore, there is rumor that a 580e plug-in hybrid variant will be released later in the year.

NISSAN ARIYA

It was at the 46th Tokyo Motor Show (TMS 2019) that Nissan HQ unveiled its impressive electric crossover — the Nissan Ariya. It is one of the company’s icons of the latest design direction which it likes to call “Timeless Japanese Futurism.” And at the time, their Senior Vice-President for Global Design Alfonso Albaisa described it as “a concept which we will soon be able to drive.” True enough, the Ariya soon became Nissan’s first-ever, all-electric crossover SUV available as a production vehicle.

The Ariya offers the most spacious cabin in its class — with a flat, open floor and slim-profile Zero Gravity seats, that result in enormous legroom. It is almost as if its interior is no longer simply a car cabin, but rather transformed into a pleasant living space for the driver and passengers to enjoy.

MAZDA MX-30

After stating for years that it was not yet time to penetrate the electric realm, Mazda fascinated TMS 2019 guests with the revelation of its very first mass production EV — the Mazda MX-30 electric hatchback crossover. Carrying its proprietary e-SkyActiv powertrain that draws power from a lithium-ion battery with a total battery capacity of 35.5kWh, the MX-30 puts forward the company’s new “Human Modern” concept for EVs, while still maintaining the same human-centric philosophy and jinba ittai (“horse and rider as one”) driving dynamics that the company has long been known to value.

The MX-30 presents an open-feeling cabin that wishes to set the mind free — designed with rear-hinged suicide doors, which they like to call “freestyle doors,” and is made from sustainable materials (including airy fibers made from recycled plastic bottles, and Heritage Cork trim, laid out in the center console). It’s already available as a production car in Europe, and I truly wish it would find its way to the Philippines.

RANGE ROVER

A new Range Rover is due to be launched soon, and it’s expected to showcase an ultra-high-technology cabin and a plethora of innovative, driver-assistance technology. Both petrol and diesel variants will be assisted by electric motors, qualifying them as mild hybrids. A fully-electric variant is also expected to emerge, making use of technology co-developed with BMW.

ROLLS-ROYCE GHOST

The new Rolls-Royce Ghost has already been hailed as many a governing body’s 2021 luxury car of the year. It has been completely redesigned, and is lighter, stronger, and more refined than ever. It has an additional 200 pounds of sound-insulating material and, of course, lives up to its legendary “magic carpet ride.” What’s best is that this model — using its powerful 6.75-liter, twin-turbocharged V12 engine — is able to combine ultra-luxury and exhilarating performance into a single vehicle — a combination long thought to be too difficult to achieve.

SOCResources unit to launch second tower of Anuva Residences

By Keren Concepcion G. Valmonte

THE real estate arm of SOCResources, Inc., SOC Land Development Corp., plans to launch and begin constructing the second tower of its four-tower condominium project in Muntinlupa CIty.

“We did very well the moment the [quarantine] restrictions were lifted, that is why our second tower is 70% sold,” Edgardo P. Reyes, SOCResources chairman, told BusinessWorld in a Zoom interview.

Construction for the project’s second tower Anuva Residences will begin in the coming months, which was initially delayed because of the pandemic. Pre-selling of the units in the third and fourth towers, “which will carry some additional improvements,” will be offered soon.

Mr. Reyes said Anuva Residences boasts of “real true suburban living,” featuring swimming pools, basketball courts, a clubhouse, and a skylounge on each tower. The development stands on some two hectares of land, 75% of which is said to be left for open space.

“It’s a product that would normally cost you tens of thousands [per square meter] than what we’re selling it for,” Mr. Reyes said.

With the development’s first tower Anala already 90% occupied, the property developer is looking to make the project more attractive to buyers.

“You can see our buyers are not speculators who rent it out. They actually occupy their units, the majority of them, so we have a thriving community and we believe that we need to give them additional amenities to serve their needs,” Mr. Reyes said.

The company is planning to add a small strip mall, and a better entrance to the development to welcome residents to the facilities.

Plans for expansion and construction of SOC Land’s real estate developments, which include house and lot project Althea Residences in Laguna, are said to be internally funded by the company.

In 2020, the company said it lost some buyers due to the effects of the health crisis. However, SOC Land noted that it “recouped everything” it lost over its “good value proposition.”

Expansions for the next year would, however, still depend on what is going to happen in the next six months in light of the pandemic.

“If we handle it well and we come out of it well, that’s fine. We have the capital and the resources necessary to take full advantage of the opportunities,” Mr. Reyes said.

The company previously disclosed that its Laguna-based project, Althea Residences, had begun constructing its second phase. It is expected to be completed in eight months.

SOC Land also plans to add more projects adjacent to its existing developments, to offer more townhouses.

“We are very responsible developers and we aim to be one of the best, if not the biggest,” Mr. Reyes said.

On Wednesday, the last trading day of last week, shares of SOCResources went up by 1.45% or P0.01 to close at P0.70.

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