TheChek News Flow

DAX:

MDAX:

SDAX:

The luxury brand has earmarked Feb. 3 for an event set to reinforce its push toward the mountain-geared Grenoble division.

MILAN — Moncler is zeroing in on its link with the mountains and heading to the tony Swiss ski destination of Saint Moritz with a show dedicated to its Grenoble division.

The luxury brand has earmarked Feb. 3 for a runway event and brand experience amid the imposing Swiss Alps. The exact location and timing for the show were not disclosed.

“The experience will embody the duality at the core of Moncler Grenoble: a coming together of high performance and high style,” the company said in a statement, which described the event as an “outdoor experience befitting the DNA of the brand’s quintessential mountain line.”

The announcement reflects Moncler’s broader push toward its mountain-geared Grenoble division.

In 2022 Moncler rebooted Grenoble as the brand’s “high performance” component, flanked by the fashion-forward Moncler Genius and lifestyle Moncler Collection. Late last year, as reported, it opened the first flagship store globally dedicated to the label in Saint Moritz, a mountaintop resort said to be among the favorite destinations of Moncler’s chairman and chief executive officer Remo Ruffini.

That opening came with the release of a Grenoble dedicated ad campaign featuring marquee athletes Xuetong Cai, Perrine Laffont, Richard Permin and Shaun White, all Moncler Grenoble ambassadors, lensed by Jamie Hawkesworth. Imagery was flanked by a short movie by Benn Northover.

Moncler Grenoble owes its name to the city that hosted the Olympic Games in 1968, when the brand was the French national ski team’s official supplier.

The first Grenoble collection was presented in New York in January 2010 during the city’s fashion week. The last runway event held by the brand was in February 2017, a winter ball staged at Manhattan’s Hammerstein Ballroom during New York Fashion Week.

To be sure, Moncler is not new to embracing the roving format to unveil its collections.

Last February it decamped to London Fashion Week for the yearly Moncler Genius show-cum-event, drawing 10,000 guests including Leonardo DiCaprio, Justin and Hailey Bieber, Serena Williams and FKA Twigs to the exhibition center Olympia London. The live event was centered around “The Art of Genius,” allowing the nine collaborators — Alicia Keys, Pharrell Williams, Mercedes-Benz, Palm Angels, Frgmt, Adidas Originals, Salehe Bembury, Roc Nation and Rick Owens — to bring their own vision to Moncler.

Moncler’s move is in sync with fashion and luxury brands increasingly flocking to the mountains and betting on skiwear, a burgeoning category in their lifestyle offerings. This winter brands ranging from Balenciaga and Balmain to Chanel and Louis Vuitton have all dropped skiwear collections and many more, including Fendi, Brunello Cucinelli, Bottega Veneta, Paul & Shark, Pollini and Golden Goose, among others, have hosted activations in tony destinations such as Cortina d’Ampezzo, Italy; Gstaad, Switzerland; Aspen, and Courchevel, France.

MONCLER = MONestier-de-CLERmont

Cofounder and CEO Michelle Larivee discusses expansion plans for the acupuncture business.

Acupuncture company Wthn is primed for growth.

It has closed a $5 million Series A led by L Catterton with participation from Jesse Draper’s Halogen Ventures and angel investors. The company also opened a new studio in Williamsburg, Brooklyn, studio Monday.

The company, cofounded by Michelle Larivee in 2019, was hit by stay-at-home orders due to the COVID-19 pandemic, but now is back in full expansion mode.

“[The] vision from literally Day One has always been to have a national footprint from a retail perspective,” said Larivee, also the company’s chief executive officer.

While the pandemic led the team to build out its growing line of products, which includes its bestselling Acupressure Mat Set, $78, and herbal supplements, $39, the team is now focused on both studio expansion and retail growth, according to Larivee.

New York is the focus over the next year, as the plan is to open two to three studios in 2024 starting with Williamsburg, where the company’s practitioners offer traditional Chinese medicine.

“We have a clear real estate strategy in New York in terms of what we’re looking for, for any location, so looking at the customer demographics, looking at other adjacent businesses in the wellness space,” Larivee said.

Williamsburg was the most requested location, Larivee said, and the demographic there aligns with Wthn’s current customer base.

“Our customer is someone who really is health-first, and that doesn’t mean that they’ve tried acupuncture. In fact 60 to 70 percent of our customers have never tried acupuncture,” she said, adding that the customer base tends to skew more towards women.

After New York expansion this year, the team is looking at Boston, California, Philadelphia and D.C. for future locations.

While Larivee’s sights are set on physical expansion, particularly with the $5 million raise, she is eager to double down on the product business in the next three years or so, she said. Pain, women’s health and digestion will be key areas of interest for future products — and are also issues that drive customers to the studios.

“Our mission is all about introducing Chinese medicine to more people and through our products, we can do that sooner at a larger level,” she said, adding that it could account for a larger portion of the business than studios in the future.

Private equity firm L Catterton, which has invested in major wellness brands like Nutrafol, Peloton and CorePower Yoga, joins early investors Gwenyth Paltrow, as well as SoulCycle and Peoplehood founders Elizabeth Cutler and Julie Rice.

“Accelerated by COVID-19, demand for preventative care and wellness is stronger than ever. With their innovative products and services, Wthn is offering new solutions and creating health breakthroughs that weren’t previously possible through Western methods alone,” said Whitney Casey, L Catterton partner and transaction lead, in a statement. “In helping and reaching new clients, Wthn is creating a market and we strongly believe in the potential of their omnichannel business model to disrupt this trillion-dollar opportunity.”

Wthn’s recent growth has been accelerated by ongoing trends within the $5.6 trillion global wellness business. At WWD’s 2023 wellness forum, Larivee discussed the factors driving the growth of services like acupuncture.

“Starting with the pandemic, there’s a great study that shows that over the past three years, 70 percent of people have started to reprioritize their health differently than they did before. That’s a huge contributing factor,” she said. “We’re also seeing the rise of chronic conditions or exacerbations of conditions, such as increased stress or anxiety. Chronic pain is up 30 percent since the pandemic.”

Currently, studios make up the bulk of the business, though products are growing quickly with wholesale growth of 40 percent year-over-year. The brand is expecting to grow three times its overall size in 2024.

Bank regulation on capital has made financial system more fragile

Rule changes have stemmed flows of funds across regions, increasing stability risks

Regulators and investors are worried about the fragility of government bond and funding markets.

This is understandable. These markets are vital for financing governments, for monetary policy transmission and for the hedging of interest rate risk for banks, investors and corporations. But they are experiencing repeated bouts of instability, such as the frenzied “dash for cash” in early 2020 and the 2019 blow-up in repos, a market for interbank lending.

Such concerns have sparked a series of reforms, including new rules from the Securities and Exchange Commission requiring more trades in US Treasuries to be cleared centrally, in line with other assets such as equities, futures and swaps.

Clearing will provide some capital relief for banks, by allowing them to net off exposures. But in themselves, the new rules are no panacea. Short-term funding markets have become more fragile largely because of a recent shift in the constitution of the financial system: the segregation of bank capital by jurisdiction.

Until 2016, banks were primarily regulated at a global, consolidated level, by their home regulators. Banks could shift capital more or less seamlessly between their subsidiaries, across products and currencies, as market conditions warranted. This was particularly the case when moving capital between activities with similar implications for consolidated capital, such as positions in US, UK and European government debt.

Things changed in July that year, when the Federal Reserve began to require foreign banks with more than $50bn of US assets to set up special holding companies for their local operations. Each of these holding companies is governed by its own board of directors and is subject to the full rigours of US banking supervision, including local capital and liquidity standards as well as annual stress tests. In 2019, Europe followed suit with a similar set of rules; the biggest US and UK banks were compliant within about a year.

The new regimes were well-intentioned, of course: the US reforms were part of the Dodd-Frank Act, a sweeping provision aimed at preventing a repeat of the 2007-08 meltdown. But the result is that shifting capital between bank subsidiaries now requires the recommendation of the local management team, the approval of the local board, consideration of local stress tests and, at times, approval from local regulators. Capital mobility has become time-consuming, costly and uncertain.

In short, bank capital is trapped. When capital can no longer move across jurisdictions, balance sheets in each region are fixed. It is no surprise that markets have stiffened, and that policymakers now have to stabilise markets more often. The official sector is filling a role that was once left to bank capital.

The best illustration of this is in the repo market, a liquid market with trillions of dollars in daily volumes. Before 2016, repo shocks often spilled across borders. Our analysis shows that when the US market was disrupted, a dislocation normally occurred somewhere in European or UK repo, too. Contagion was global, in this respect, as banks shifted capital towards trouble-spots and out of equivalent activities elsewhere. This spread shocks across multiple jurisdictions, reducing their severity.

Now, shocks are more localised. When volatility spikes in US repo, other parts of the front end — including short-dated Treasuries — also experience disruptions. Dislocations in Europe, too, are more likely to affect multiple types of collateral. And as it is now harder for capital buffers to be deployed across borders, the hits are harder. In the US, repo shocks are 26 per cent more frequent than they were pre-2016 and 31 per cent more severe, and tend to last much longer. It’s a similar picture in Europe and the UK.

Further regulations, mandates and constraints are likely to compound this calcification of markets. Among the most significant are the Basel III reforms, due to be phased in from 2025, which look set to push up banks’ capital requirements. This would make it more expensive for banks to intermediate in government bond markets, which would in turn raise costs for participants trying to arbitrage price differences. Persistently wider spreads and lower volumes would add to price and yield volatility — which would increase banks’ regulatory requirements once more.

The US is looking especially vulnerable given that the Treasury market is on course to expand rapidly as federal deficits remain wide. More bonds outstanding implies a greater need for financing and hedging, as well as for transactions in futures and swaps. Market stability is likely to remain under pressure.

Largest US banks set to log sharp rise in bad loans

Earnings are expected to have shrunk in last quarter of 2023 due to unpaid debts and impact of high interest rates

A pile-up of bad debt threatens to sour investors’ growing optimism about the prospects for the US’s largest banks when they report fourth-quarter earnings this week.

Non-performing loans — debt tied to borrowers who have not made a payment in at least the past 90 days — are expected to have risen to a combined $24.4bn in the last three months of 2023 at the four largest US lenders — JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, according to a Bloomberg analysts’ consensus. That is up nearly $6bn since the end of 2022.

The analysts estimate bank earnings shrunk in the final three months of 2023, dragged down by those unpaid loans as well as the lingering impact of higher interest rates, which has raised the cost of deposits. In addition, in December, a number of big banks said they planned to take a one-time charge by the end of the year to pay for a special assessment being imposed by the Federal Deposit Insurance Corporation to recover the $18.5bn last year’s failures of Silicon Valley Bank and Signature cost the regulator’s insurance fund.

Cost-cutting also continues. Citigroup, which is in the middle of its largest reorganisation in years, is likely to take a charge to cover lay-offs and other related expenses. Wells Fargo last month said it was setting aside $1bn for severance costs in the fourth quarter.

In all, earnings at the six big banks, which includes Goldman Sachs and Morgan Stanley, are forecast to have dropped an average of 13 per cent in the last three months of 2023 compared with the same period a year earlier.

“Year-ahead outlooks get a lot of attention in fourth-quarter earnings calls,” said Jason Goldberg, an analyst at Barclays. “I’m expecting that banks will indicate that the recent drop in net interest income will hit its trough this year.”

Despite the expected earnings drop, investors have been buying up bank shares, which have risen 20 per cent since the end of October, according to the KBW Nasdaq Bank index. Fuelling the rally is the Federal Reserve’s signal late last year that it is probably done raising interest rates. Higher rates hit banks in 2023, raising deposit costs and lowering the value of their bond portfolios.

“Banks are very interest rate-driven,” said Matt Anderson, a banking industry analyst at commercial property research group Trepp. “And investors have an optimistic read on the economy in 2024.”

But even as interest rate pressures are easing, a jump in unpaid loans could continue to hold down bank profits.

The current level of non-performing loans is still below the $30bn peak of the pandemic. The big banks have indicated they think the rise in unpaid debts could slow soon. A number of banks cut the amount of money they put away for future bad loans, so-called provisions, in the third quarter.

Provisions are expected to have shrunk again in the final three months of the year. But if the money that banks are putting away for bad loans unexpectedly jumps, that could raise alarms for investors.

“Credit is still very much a wild card,” said Scott Siefers, a bank analyst at Piper Sandler. “It has been very good, but I think we are going to continue to see a deterioration from here.”

Commercial property, and in particular mortgages on less-full office buildings, had been one of the biggest factors pushing up problem debts.

More recently though, delinquencies have been rising on consumer loans, particularly credit cards and car debt. That has made some analysts nervous, especially because what the banks are putting away for loan-loss reserves now is considerably smaller than what they set aside when bad loans were rising at the start of the pandemic.

“Bank reserves are adequate right now because we are nowhere near the stress levels of back then,” said Gerard Cassidy, a bank analyst at RBC Capital Markets. “But have they reserved enough for an economic hard landing? The answer is no.”

BofA, Citi, JPMorgan and Wells will be the first of the large banks to disclose their results for the final three months of 2023 on January 12.

Goldman Sachs and Morgan Stanley, whose businesses skew more towards investment banking, trading and asset management, report results on January 16.

Brazil warns dengue cases could hit 5mn as extreme weather takes toll

Climate change and El Niño threaten ‘epidemic’ of mosquito-borne diseases in some regions, says health ministry

Health officials in Brazil have warned that the number of dengue cases in the country could hit a record 5mn this year as climate change and the El Niño weather pattern in the Pacific Ocean fuel the spread of mosquito-borne diseases.

“We have a situation that is very worrying because of climate change [and] mainly the El Niño phenomenon,” said Ethel Maciel, secretary of surveillance at the health ministry. “There will be [an acceleration] in transmission.”

The ministry’s worst-case scenario of 5mn cases would represent more than a three-fold increase from the caseload of 1.6mn recorded in 2023 that resulted in 1,079 deaths. Its average projection is for 3mn cases this year.

El Niño, a naturally occurring warming of sea surface temperatures in the Pacific Ocean, is believed by many scientists to be driving increasingly severe weather patterns worldwide. Some meteorologists say its effects are being exacerbated by climate change.

In Brazil, the current El Niño pattern has been linked to a record heatwave, extreme drought in the Amazon rainforest and prolonged heavy rains and flooding in the country’s south.

These conditions have enabled increased transmission of mosquito-borne viruses such as dengue, chikungunya and zika, which was linked to a surge in microcephaly cases — babies born with a very small head — in Brazil in 2015-16.

“The mosquito depends on heat, it grows more with heat and rain. So as long as the temperature is kept higher for a long time, the replication of the mosquito and, consequently, the virus is facilitated,” said Ester Sabino, professor at the Institute of Tropical Medicine at São Paulo university.

“We’re having higher temperatures for longer and this means that transmission occurs for a longer period of time during the year. We will probably see an increase in chikungunya cases, too.”

A potentially fatal disease, dengue can cause high fever, muscle pain and internal bleeding. It is transmitted by the Aedes aegypti mosquito, which thrives in pools of stagnant water. Chikungunya is spread by the same mosquito type and provokes similar symptoms to dengue but is caused by a different virus.

The number of reported dengue cases in Brazil rose 16 per cent in 2023 compared with the previous year. This year, the health ministry has warned of an “epidemic level” of cases in Brazil’s central-west region as well as a “potential epidemic” in the south-east.

The virus has four serotypes — or variations — and infection by one does not create immunity for the others. Brazilian health officials are particularly concerned this year because of the re-emergence of the third serotype known as DENV-3.

“For the first time in a long time we have four serotypes circulating in Brazil,” said Maciel. “Serotype three had not been present since 2007, so we will have many susceptible people.”

The World Health Organization last month described dengue fever as a “substantial public health challenge”, noting a “10-fold surge in reported cases worldwide increasing from 500,000 to 5.2mn” between 2000 and 2019.

The health body reported more than 5mn dengue cases worldwide last year. It said Brazil accounted for more than 2.9mn of the global total, according to its own data for suspected cases.

Sabino said the country’s overweighting in the number of suspected cases was probably due to Brazil’s stricter standards of notification.

The health ministry last month rolled out a dengue vaccine, but supply has been restricted to priority regions due to manufacturing bottlenecks.

UN space tsar calls for increase in junk clean-up efforts

Official says implementing voluntary guidelines more important than new global treaty

Governments and industry should speed up efforts to implement voluntary guidelines for the sustainable use of space, rather than push for a new global treaty that will be “difficult” to conclude, according to a leading UN official.

A rapid increase in rocket launches and satellites has sparked concerns over risks of dangerous collisions generating volumes of “space junk”, sparking calls for tighter regulation of activities in low earth orbit. 

“We do need a multilateral process [and] as much collaboration as possible,” said Aarti Holla-Maini, new director of the UN Office of Outer Space Affairs.

But delivering a binding treaty at a time of global tensions and international rivalry in space “will be contentious and take time”, she said. An agreement that “solves all of the problems . . . would be difficult”.

Instead, Holla-Maini said, national regulators should accelerate implementation of a suite of voluntary UN guidelines issued in 2019. This would greatly boost space sustainability, which has become a priority for many countries as satellite services become critical to digital-based infrastructure.

“There is a lot of content [in the guidelines] that could be turned into norms,” she said. These include proposals to manage activity in space safely, mitigate debris and share more data on the operation of satellites, anti-collision measures and weather patterns.

“Implementing the guidelines is the only chance we have to move in the right direction,” said Holla-Maini, who took up her role in September after 25 years in the space industry.

She said more inflation on orbital activity and debris, for example, was an important first step. “The more data that is shared the safer space is,” she said.

Nasa estimates roughly 9,000 tonnes of debris are orbiting the earth at speeds of up to 25,000km/h — old rocket bodies, defunct satellites, or fragments from exploded engines. Even the tiniest pieces of debris pose a threat. In 2016 a fleck of paint chipped a window on the International Space Station.  

Levels of launch traffic in low earth orbit (LEO) are 27 times higher than a decade ago, according to the Space Sustainability Rating, an initiative launched by the World Economic Forum. The LEO region, up to 2,000km above the earth, has been the focus of most recent activity, and also accounts for 96 per cent of space debris.

“This accumulation of debris and active satellites poses significant risks for the rest of the [space] environment,” the SSR said in a recent report.

Geopolitical tensions between the west and Russia and China are likely to complicate talks to address the new dynamics in space, experts said. The Outer Space Treaty of 1967, designed when the US and Soviet Union were vying for technological supremacy, is widely accepted to be ill suited to the rapid development of a commercial space sector. The UN itself called for a new legal framework last year.

“New treaties are complicated,” said H Ludwig Moeller, director of the European Space Policy Institute think-tank. “I would not put this on my critical path if I wanted a solution to a problem that is growing by the day. Guidelines alone do not give a direct solution, but best practices should be encouraged.”

Nearly a decade in development, the guidelines were regarded as a significant advance in international space governance. But they are not binding and now more than 70 countries and hundreds of private sector companies have activities or ambitions in space. National regulators have struggled to keep up with this changing environment. 

A recent report to the UN by the Space Generation Advisory Council, a group which brings together 25,000 young space professionals to support the multilateral agency, found that, while some governments have begun translating many of the guidelines into national law, “a number have yet to do so, which presents a potentially major gap”.