WWD : The Evolution of Italy’s Manufacturing Pipeline

The Evolution of Italy’s Manufacturing Pipeline
Investments into a stronger manufacturing pipeline in Italy — and more nuanced partnerships — are expected to continue, as the industry is pressured by the increasing price and scarcity of raw materials, shipment issues and global political tensions.

MILAN — In these uncertain times, Italian entrepreneurs are following their North Star, increasingly turning to what they are confident will provide a competitive advantage — i.e., strengthening their companies’ manufacturing pipeline and supply chain.

There is no reason to question whether this will continue in 2022, as the increasing price and scarcity of raw materials, shipment issues and political tensions weigh on companies’ bottom lines and inventories.

Zegna’s first day of trading in New York on Dec. 20 was certainly newsy enough in itself, but chairman and chief executive officer Gildo Zegna was asked again and again about potential acquisitions, given the additional financial muscle provided by the public listing. The response once again was Zegna’s reiterated interest in continuing to build the company’s Made in Italy platform. “I am a firm believer that nothing in the world compares to Italian craftsmanship and quality, and our goal is to create and have access to the best fabrics, textiles and other materials through our platform,” he contended. “We need scale.”

Last summer, Zegna and Prada CEO Patrizio Bertelli also made headlines with what was surely a major new partnership between two of the most respected companies in Italy, one that could pave the way for more of the same in the industry.

As reported, Zegna and Prada joined forces to acquire a majority stake in cashmere specialist Filati Biagioli Modesto SpA, and Bertelli at the time said: “We need more skills and to be stronger. There are no doubts the luxury market will grow — it’s evolving and we are adapting our industrial organizations to offer more service.”

Both Zegna and Prada have over the years built remarkable production platforms, but their leaders realize more needs to be done in such a competitive sector and to respond to the needs of increasingly savvy and demanding customers.

Protecting the pipeline also factors into these deals through the injection of new capital into small and medium-sized companies that can at times struggle to be competitive, preserving the unique skills of artisans who have contributed to the success of the Made in Italy label and supporting the transition into more sustainable practices, which will be increasingly key.

“We see the integration of different companies and M&A activities as a positive and encouraging sign,” said Claudia D’Arpizio, a partner at Bain & Co. in Milan. “They help companies evolve and get managerial structures, which are crucial to face present and future challenges.”

One such example is Gruppo Florence, the luxury production pole established in 2020 by industry veteran Francesco Trapani through private equity fund VAM Investments together with Fondo Italiano d’Investimento and Italmobiliare. Its goal is to supply high-quality Made in Italy products to major luxury fashion brands by acquiring family-owned, small and medium-sized Italian companies. However, Trapani believes it is key for Florence to rely on the founders and leaders of these companies to stay on, safeguarding their technical and cultural know-how but helping them to guarantee prompt and flexible deliveries and solutions.

Trapani is eyeing additional acquisitions after taking stakes in companies ranging from jersey specialist Manifatture Cesari to outerwear manufacturer Giuntini and knitwear firm Mely’s. These are all solid and technically advanced firms, which “are starting to understand it’s good to be part of a bigger group,” said Trapani, and whose small and medium size can represent a risk for the established and large brands Florence works with and that need to feel safe, the executive contends, warning against a possible fragmentation of suppliers.

To be sure, luxury brands rely on the Italian manufacturing pipeline, which covers all product categories and production steps, and the level of service they demand is becoming increasingly more sophisticated, which leads to the requirement for a more structured organization.

Mauro Grange, partner of the Made in Italy Fund, which is managed by Quadrivio and Pambianco and invests in wine, food, beauty, fashion and furniture, believes entrepreneurs are now more open to investors because they want to be helped to respond to these demands and not simply sell their companies. The fund, which has invested in companies ranging from Dondup and GCDS to Ghoud and Autry, operates with a long-term view. Its objective is to preserve the brand, working with the owners. Former Gucci and Golden Goose chairman Patrizio di Marco has also become an investor in the Made in Italy Fund and was named president of Ghoud and Autry.

Grange believes the fund can help by “providing a vision and a support to make bold decisions [that the founders of a company] perhaps would not make on their own. Very often they need to see things from a different perspective and we offer an outside point of view.”

WWD : Balmain Eyes U.S. Growth; Names President, Americas

Balmain Eyes U.S. Growth; Names President, Americas
Emily V. George joins the French firm after a long career at Marc Jacobs International.

Underlining America’s potential for luxury goods growth, Balmain has recruited a seasoned fashion executive to lead expansion in its most important market.
Emily V. George, who spent most of her career at Marc Jacobs International, has joined the French fashion house as president, Americas, a new post. She began her post Monday.
“In recent years, Balmain has experienced rapid growth in the Americas, with several new boutique openings in the United States, which has grown to become the house’s most important market,” said Jean-Jacques Guével, chief executive officer of Balmain, disclosing the hire exclusively to WWD. “We’ve enjoyed our strongest e-commerce growth in that country and our American retail business realized triple-digit growth in 2021.”

Balmain counts six freestanding stores in the U.S., including on Madison Avenue in New York, on Melrose Place in West Hollywood, Calif., and inside Miami’s Bal Harbour Shops and Las Vegas’ Wynn Plaza. It also boasts more than 100 wholesale doors with such retail partners as Neiman Marcus, Saks Fifth Avenue and Nordstrom.

“We are confident that Ms. George will help guide both the house and its ever-growing teams as we all work together to fully realize Balmain’s outstanding potential, while building upon Olivier Rousteing’s unique vision for this historic house,” Guével noted.
An MBA graduate from New York University, where she concentrated on retail merchandising, George started her fashion career in 2001 as a buyer for Helmut Lang’s flagship store in New York City.
In 2003, she became an account executive for men’s and women’s ready-to-wear at Marc Jacobs, steadily accruing responsibilities and territory, ultimately rising to the position of senior vice president, commercial, Americas and global sales operations, the title she held since 2018.
She was also a member of the executive committee, and oversaw the Jacobs retail business in America, comprising about 40 locations, according to her resume.
George arrives at Balmain after an eventful year that saw Rousteing mark his 10th anniversary at the house with a blowout fashion show and music festival during Paris Fashion Week. The fashion house has multiplied in size sevenfold over the last decade as the French designer added pre-collections, men’s wear and accessories — along with heat and cultural currency.
Looks from Balmain’s pre-fall 2022 collection.

The company has been staffing up with seasoned executives. Last November, it named Lily Liu president, Greater China, also a new role. Liu boasts 25 years of experience working with European luxury brands in the Chinese market, including Bottega Veneta, Lanvin and Christian Dior, according to the house.
China is Balmain’s second-largest retail market after the U.S.

WSJ : David Bowie’s Music Catalog Is Sold to Warner Chappell Music

David Bowie’s Music Catalog Is Sold to Warner Chappell Music
Deal estimated at $250 million includes all of the singer’s studio albums

Warner Chappell Music has bought the music-publishing rights to David Bowie’s music catalog from the singer’s estate.

The deal includes the late artist’s entire body of work, which includes hundreds of songs over a six-decade career. Mr. Bowie died in 2016 after a cancer diagnosis. He was 69.

Terms of the transaction weren’t disclosed, but a person familiar with the deal estimated the catalog was sold for roughly $250 million. Warner Chappell Music is the music-publishing arm of Warner Music Group. WMG -0.53%

It includes hundreds of songs from Mr. Bowie’s 26 studio albums, such as “Space Oddity,” “Changes,” “Life on Mars?,” “Starman” and “Rebel Rebel.” It also includes a posthumous album release, “Toy.”

“We are truly gratified that David Bowie’s body of music will now be in the capable hands of Warner Chappell Music Publishing,” said Allen Grubman, an attorney for the David Bowie Estate.

Mr. Bowie’s career transcended music. Albums such as 1972’s “The Rise and Fall of Ziggy Stardust and the Spiders from Mars,” along with his lively performances, made him a symbol of not just music but also art and fashion.

“These are not only extraordinary songs, but milestones that have changed the course of modern music forever,” said WCM Co-Chair and Chief Executive Guy Moot in a written statement.

The sale comes as several living artists have also sold the rights to their music at high valuations. Last month, Bruce Springsteen sold the right to his music to Sony Music Group for between $500 million and $600 million.

Madonna and her original music label, Warner Music Group, last summer said they would team up in a deal that spans her entire recorded music catalog, and will include reissued albums and new deluxe editions curated by the performer over the next few years.

In 2020, Bob Dylan sold his entire publishing catalog—more than 600 copyrights spanning 60 years—to Universal Music Publishing Group. That same year, Stevie Nicks closed a deal to sell a majority stake in her publishing catalog to music publisher Primary Wave, which purchased an 80% interest.

FT : AT&T and Verizon agree to delay 5G rollout over aviation concerns

AT&T and Verizon agree to delay 5G rollout over aviation concerns
Telecoms reverse course a day after rejecting US regulators’ request over possible aircraft interference

AT&T and Verizon have agreed to further delay the rollout of 5G wireless services in the US after additional consultation with regulators over the network’s potential interference with aviation safety, in an about-face one day after the telecoms groups vowed they would forge ahead.

Both companies said they would postpone the debut of their ultrafast wireless networks, scheduled for Wednesday, by an additional two weeks, bowing to a request from the transportation department and the Federal Aviation Administration submitted on December 31.

The move was a stunning reversal by the two telecoms, whose chief executives on Sunday pledged in a joint letter to regulators to continue with the scheduled 5G rollout, with service modifications around airports for six months.

Rich Young, a Verizon spokesperson, said the two-week delay “promises the certainty of bringing this nation our game-changing 5G network in January”.

AT&T said it had also agreed to the two-week delay, but added that it “remain[s] committed to the six-month protection zone mitigations we outlined in our letter”.

The FAA in a statement thanked the telecoms groups for agreeing the additional interval and said “we look forward to using the additional time and space to reduce flight disruptions associated with this 5G deployment”.

At issue between the telecoms and regulators is potential interference from high-speed wireless service with sensitive aircraft equipment used for flight take-offs and landings.

Both sides agreed to a one-month delay of 5G service from their initial launch date of December 5 2021 to undertake further safety reviews, trading counterproposals in the weeks since.

AT&T and Verizon will implement their planned 5G service modifications around airports in the first half of 2022 in addition to the two-week launch delay, said a person familiar with the matter.

Terms of the service modification, according to the letter sent on Sunday by the chief executives, included blocking 5G spectrum usage around airport runways and reducing connectivity within about a mile of take-off and landing. These are similar to service restrictions in France, where 5G networks are live.

FT : Quantum advantage is the next goal in the race for a new computer age

Quantum advantage is the next goal in the race for a new computer age
Companies are jostling to be the first to find a practical application for quantum computers

The race is on to find the first practical use for quantum computing. It is likely to pale in comparison to the ultimate potential of the technology: to power a computer that can take on any problem at blistering speed. But many in the field believe a less ambitious milestone will be reached within two years, triggering a rush to be the first to bring it into the mainstream.

Since 1982, when physicist Richard Feynman first outlined how the weird properties of quantum mechanics could be harnessed to revolutionise computing, much of the attention has been fixed on the point at which a quantum system far outstrips today’s “classical” systems — something known as quantum supremacy.

Google claimed to have reached this milestone two years ago. However, its demonstration did not take on a practical problem — a calculation that would have been impossible for a classical computer to solve — and IBM and others soon showed that classical computers could be adapted to counter some of the supposed advantages of Google’s system.

Since then, many researchers have shifted their focus to something less ambitious. Known as quantum advantage, this is the point at which a system employs the technology to bring a step-change in solving a practical computing task.

The first practical application based on quantum advantage will officially launch the quantum age, predicted Peter Chapman, chief executive of IonQ, which in 2021 became the first quantum computing company to be listed on Wall Street. He compared it to the VisiCalc spreadsheet program, which at a stroke in 1979 “made the PC usable for business” and launched the PC era of computing.

The prospect of finding a practical application for the technology has galvanised the industry in recent months and triggered a competition to be first, said Matt Johnson, chief executive of QC Ware, a quantum software company. “The challenge is to be among the first to help enterprise customers get quantum speed-up,” he said.

The industry’s shift in gear has been prompted by improvements to quantum hardware systems that were announced late in 2021, along with projections of the kind of systems that will be available two years from now.

The hardware has seen a 10-fold improvement over the past two years, according to Will Oliver, a professor at the Massachusetts Institute of Technology. Speaking at the recent Q2B practical quantum computing conference in Silicon Valley, he said this had raised a new question for the industry: whether it was getting close to producing “commercially relevant algorithms”.

Today’s quantum machines are known as NISQ systems, short for noisy intermediate-scale quantum. Their number of quantum bits, or qubits, is still limited, and the qubits are unable to hold their quantum states for more than a few microseconds, something that introduces errors, or “noise”, into calculations. Yet even these could be harnessed to bring small but important advances to solving real-world problems, according to people working on the technology.

“If you’re using it to detect cancer, and you can have a 2 per cent better detection rate, are you going to use the lesser one for your patients?” said Christopher Savoie, chief executive of Zapata, a quantum software company.

IBM in November released its first system employing 127 qubits and confirmed a road map that it said would see this rise to more than 1,000 qubits in two years’ time.

“The ability to demonstrate quantum advantage in the next two years is possible,” said Dario Gil, head of research at IBM. While conceding that “it’s an open question” if the remaining technical challenges can be overcome, he said the hardware advances and improvements in the design of algorithms opened the way to reducing the noise in today’s systems to a level where they are useful.

Others say they are on a similar path. Rigetti Computing, a start-up that is planning to go public through a sale to a special purpose acquisition company, announced an 80-qubit system in December, based on a new modular design that yokes together two 40-qubit processors.

Using this new architecture, “we anticipate having systems of around 1,000 qubits in 2024, and 4,000 qubits in 2026”, said Chad Rigetti, the company’s chief executive. “We expect those systems to carry us through the milestones of narrow and then broad quantum advantage.”

The latest hardware, while not itself capable of supporting breakthrough applications, will put more powerful tools into the hands of researchers. This will accelerate understanding of how to program practical systems, he and others said.

IBM said it had 27 quantum systems in use, and that 170 organisations, including many companies, were now using them for research.

“Our machines are now at the speed and scale and performance where they can encode and represent practical instances of problems, rather than toy instances of problems,” said Rigetti. That made it possible to benchmark their performance in solving practical problems against today’s fastest classical computers, giving researchers their first real understanding of the path to quantum advantage, he added.

One widely anticipated use for quantum computers — simulating complex molecules, opening the way to breakthroughs in things such as drug discovery and new battery technology — is likely to be beyond the scope of the first practical systems, according to experts in the field.

Unless there is a “eureka moment”, computers capable of these kinds of simulations are at least three years away, said Ilyas Khan, chief executive of Quantinuum, the company formed by the recent merger of Cambridge Quantum and Honeywell’s quantum computing division.

Instead, he and others said much of the attention in the short term had shifted to trying to use quantum systems in tandem with classical computers to improve machine learning, the technique behind much of today’s artificial intelligence. The huge data sets that already exist to support machine learning, together with the scale and complexity of the problems, made this field ripe for a quantum breakthrough, said Rigetti.

Recent work in designing more efficient quantum algorithms has focused on things such as solving optimisation problems, and in picking out a singular item from a large data set — techniques that could be used for better weather modelling, or for identifying potential credit card fraud. Goldman Sachs has been among the banks to work on using the technology to improve options pricing, while Volkswagen has researched ways to optimise its manufacturing processes.

Whether the first practical use of quantum computing comes from one of these companies, or one of the other banks, pharmaceutical companies or manufacturers trying to apply the technology, few doubt that the race is now on.

FT : Hedge funds struggle to lure new money as performance lags

Hedge funds struggle to lure new money as performance lags
Sharp gains for US tech stocks and choppy markets lead to ‘huge dispersion’ among managers

Big rallies in US tech behemoths and a series of painful market jolts have disrupted many hedge funds’ attempts to lure back investors who have deserted the sector in recent years.

Hedge funds gained 8.7 per cent on average from January to November 2021, according to data provider HFR. That marks their third consecutive year of gains, but trails by some distance the US S&P 500 index’s 24 per cent total return over that period.

Managers have lagged behind the benchmark US equities index because they tend to hold relatively small positions in tech giants such as Apple, Google parent Alphabet and Tesla, heavyweights in the S&P 500 that have rallied strongly in 2021. Hedge funds have also found it difficult to make money as some bets have been disrupted by often-hostile retail investors.

Inflows into hedge funds have, in turn, proved meagre with performance concerns adding to investor questions about returns and fees.

Patrick Ghali, managing partner at Sussex Partners, which advises clients on hedge fund investments, said there had been a “huge dispersion” in hedge fund performance in 2021. A fund betting on a company’s falling share price might correctly predict a poor set of earnings but then “you might get your face ripped off . . . if retail traders come into the stock”, added Ghali.

Hedge funds have suffered a slow exodus of clients in recent years, with investors more often drawn to the higher returns supposedly on offer in private equity and private debt funds.

However, 2020 marked a rare banner year for the sector. Funds largely survived the market chaos early in the year when the pandemic began to hit markets and went on to post an average gain of 11.8 per cent, widely seen as a strong result in a difficult environment. That raised hopes that investors, who have been growing concerned about high valuations in public and private markets, would flood back in.

But while investors have started to come back, the sums committed so far are relatively modest, and 2021’s returns have not helped.

Investors put a net $24bn into the $4tn hedge fund industry in the first nine months of 2021, according to HFR. That compares with a total of more than $110bn of outflows over the past three years.

Calpers, the $500bn public pension plan, recently told the Financial Times it had no plans to move back into hedge funds after selling out in 2014, citing “problematic” fees.

One big concern is the sector’s lack of so-called “alpha” — industry jargon for performance due to a manager’s clever trades rather than overall market moves. This well-touted ability to pick out the best securities to buy or bet against is the sector’s strongest selling point, but as a strategy it has fared poorly compared with simply buying a cheap index-tracking fund.

Hedge fund managers argue their portfolios are not designed to match an index but rather to do well in all market conditions, but the size of the underperformance last year has nevertheless raised some concerns. Goldman Sachs analysts noted that while hedge funds did not necessarily aim to beat the S&P 500, last year’s returns were also “weak on an absolute basis”.

Hedge fund trades have been hit by a series of market jolts, including the GameStop frenzy, sharp moves in bond yields, and a clampdown on China’s education industry. Managers have also complained that stocks have failed to react to earnings news in the way they have in previous years.

“Alpha [was] terrible,” said Salvatore Cordaro, co-chief executive of investment company Investcorp-Tages, which invests in hedge funds, although he noted that rising markets had “compensated a bit”.

The current trading environment is “extremely treacherous”, wrote Paul Singer’s Elliott Management in a letter to investors seen by the FT, adding that “the most successful ‘strategy’” was to buy “almost anything” using lots of borrowing and follow the latest trends.

Chase Coleman, a ‘Tiger cub’ who previously worked at Julian Robertson’s Tiger Management, gained just 4 per cent in the first 11 months of 2021, after losing about 8 per cent in November in Tiger Global, one of the most successful hedge funds ever.

A low volatility version of Bridgewater’s Pure Alpha lost 3.8 per cent in November, although after gains last month it was up 3.2 per cent in 2021 to late December. Ross Turner’s Pelham Long/Short fund was down about 7 per cent last year to November after suffering losses that month. Melvin Capital, hit during the GameStop frenzy, was down about 40 per cent to November.

Some funds, however, have prospered. Multi-manager fund Citadel gained 24.3 per cent to late December, while rival Millennium was up 12.2 per cent to the end of November. Daniel Loeb’s Third Point gained 23 per cent last year to the end of November, helped by a punchy bet on alternative intelligence lending platform Upstart Holdings and other positions.

London-based quant group Qube Research & Technologies gained about 20 per cent last year and has doubled in size during the pandemic to about $5bn. New York-based Wasserstein Debt Opportunities, which trades junk bonds, made 57.6 per cent to November.

“Good managers have done well, but there have been many landmines along the way,” said Tiger Williams, founder of outsourced trading company Williams Trading.

But some stockpickers have thrown in the towel. Intrinsic Value Investors, a $1.3bn long-only company, told clients in the autumn it would return their money. Founding partner Adriaan de Mol van Otterloo told the FT that “valuations are not attractive to make new investments”. Hedge fund DSAM is also returning money to clients.

The emergence of the Omicron coronavirus strain proved yet another obstacle. Omicron “derailed what was until then a positive trading month”, wrote Roy Niederhoffer’s New York-based quantitative fund company Niederhoffer Capital in a note to investors seen by the FT. Its Diversified fund lost 5.9 per cent in November but was still up 21.4 per cent last year as of late December. Leda Braga’s Systematic BlueTrend lost 8.1 per cent in November, reducing gains in 2021 to 1.3 per cent.

Some managers have been left to reflect on what might have been. Big upheavals during autumn in government bonds, as investors bet that central banks would increase rates to curb inflation, hit Chris Rokos’s Rokos Capital, one of the world’s biggest macro funds, which lost 25 per cent to the end of November.

And while Crispin Odey’s European fund was up 25 per cent in 2021 through November, it had been up more than 100 per cent in early October, before suffering large losses.

“People like Chris Rokos got their heads handed to them” in October, Odey told the FT. “I got my head handed to me, but I got in early” into the trade, which limited overall losses, he added.

FT : Will overdose deaths force an end to the US ‘war on drugs’?

Will overdose deaths force an end to the US ‘war on drugs’?
With more than 270 people dying every day, authorities are under pressure to treat, rather than prosecute, users

Rosalind Pichardo didn’t just get her nickname “Mama Sunshine” because of her cheery disposition. For several hundred drug users in Kensington, a rundown neighbourhood in Philadelphia, she has been their lifeline: bringing each of them back from the edge of death after they overdosed.

“I revived a guy who OD’ed on the street this morning on my way to work,” says Pichardo, speaking matter of factly outside her workplace — Prevention Point — one of the largest needle exchange sites in the US. “Unfortunately, overdoses happen everyday in this neighbourhood.”

It is not just Philadelphia. On average more than 270 people — the equivalent of 10 or 12 high school classes — overdosed and died in the US every day in the year to April 2021. This added up to a new record toll of more than 100,000 lives in a country caught in the grip of an addiction crisis. Almost two-thirds of those deaths were caused by fentanyl, a synthetic opioid which can be 50 times as potent as heroin and has recently displaced other legally prescribed painkillers as the biggest driver of fatal overdoses.

Health experts say that some of those who died probably didn’t even know they were consuming fentanyl, which has become a common contaminant in a range of street drugs from counterfeit pills to cocaine. Many overdose victims are recovering addicts who relapsed during the pandemic, they add.

The mounting death toll has alarmed US policymakers, who had hoped that a crackdown on doctor and pharmacy “shopping” by prescription painkiller users and multibillion dollar settlements with pharmaceutical companies would ease an opioid crisis that has claimed more than 500,000 lives over the past decade.

Instead, the crisis has worsened. And is accelerating a shift by some state and federal authorities to address the problem as a public health issue rather than a criminal justice one: to accept illegal drug use takes place, aim to minimise its effects via harm reduction policies and save lives.

Such a move away from the five-decade-old “war on drugs” is politically risky for the Democrats in particular, as Republicans step up attacks on the Biden administration alleging it is soft on crime ahead of midterm elections in November. But health experts say that continuing to prioritise enforcement over treatment will translate into tens of thousands more deaths.

The most contentious issue is the use of supervised injection sites, with many conservative politicians and some community leaders opposed to schemes which they argue encourage drug use.


In November, New York City opened the nation’s first supervised injection sites to be officially approved by city authorities, ignoring a federal law which prohibits their operation for the use, sale or storing of drugs. The Biden administration now faces a critical decision: change the law and further embrace harm reduction efforts or do nothing and embolden opponents who want to close such sites.

Dr Rahul Gupta, director of the White House Office of National Drug Control Policy, has said he wants to evaluate the science and data behind supervised injection sites, hinting that a change in policy is under consideration. “We want to learn and we want to make sure that every possible door we can open up to help people and connect them to treatment is available to us,” he told CNN in December.

“If you’re looking to save lives and you’ve reached a historic unprecedented level of deaths, then you cannot avoid looking at any and every option in order to save those lives,” he added.

For Joy Brunson-Nsubuga, a clinical addiction specialist who has helped introduce treatments such as methadone to clinics around the country, the need is clear. “People are not getting the care that they need because of the [stigmas around addiction],” she says. “[That is] leading to us losing individuals in our community that we could have saved.”

Political minefield for Biden
Since 1971 the “war on drugs” has cost the US an estimated $1tn — spent largely on locking up offenders — without solving America’s illegal drug problem. In contrast, advocates of supervised injection sites say they have prevented more than 17,000 overdoses in Canada since 2017. They argue that such schemes pay for themselves, with every $1 spent on the sites generating $2.33 in healthcare savings, according to a study published in the Journal of Drug Issues.

Since 2015, some US city and state authorities have been distributing Narcan nasal sprays, which can help resuscitate those who have overdosed, and fentanyl test strips, which enable drug users to test if a drug is contaminated.

Although safe injection sites are a key feature of overdose prevention in Canada, Europe and Australia, they have proved divisive in the US. In 2019 the Trump administration blocked the opening of what would have been the first such facility in Philadelphia. Days before Christmas protesters picketed outside one of the newly opened sites in Harlem where Republican lawmakers have introduced legislation to Congress to defund the projects, which were backed by the outgoing New York City mayor, Bill de Blasio, a Democrat.

Supporters say such sites save lives, improve health outcomes and nudge addicts towards recovery. Critics counter that they provide an official seal of approval for illegal drug taking.

Despite its support for other harm reduction measures, the Biden administration is yet to overturn the federal government’s opposition to supervised injection sites. The US attorney’s office was scheduled to file a response this Wednesday to a fresh lawsuit mounted by the Philadelphia project which is calling for the Trump ban to be overturned. But both parties agreed a 60-day extension to the deadline, last week.

If the US attorney’s office decides to end the federal government’s opposition to supervised injection sites it would provide a green light to similar projects in several states, according to legal experts. But it could also open a new front for Republicans to attack a Democratic administration, which they already accuse of not cracking down hard enough on the Mexican drug cartels that control the fentanyl trade.

“There is a long history of the ‘war on drugs’ and famously President Reagan’s wife Nancy led a campaign ‘Just Say No’. This [supervised injection sites] is clearly the opposite of saying ‘no’, it is acquiescence,” says Howard Husock, senior fellow at the American Enterprise Institute, a right leaning Washington-based think-tank. “The social conservatives could make hay with this.”

‘The worst that I have seen’
Overstretched hospitals in Philadelphia and other US cities have been dealing with the fentanyl crisis on top of the coronavirus pandemic. Now, some health experts are urging state and federal authorities to do whatever it takes to solve the overdose crisis.

“It is the worst that I have seen. Almost every day in the work that I do I hear about someone who has lost a sibling, a friend or a loved one. It is just devastating,” says Jeanmarie Perrone, professor of emergency medicine at the University of Pennsylvania Hospital.

Perrone says heroin users, some of whom graduated on to the drug after becoming hooked on prescription painkillers, are now turning to fentanyl. And other illegal drugs are now being deliberately laced with fentanyl — which is cheap to make, easy to transport and highly addictive, making it more lucrative for the cartels — often with tragic consequences.

Overdose deaths hit a record 1,214 in Philadelphia in 2020, a 6 per cent increase on 2019. Fentanyl was involved in 81 per cent of them.

“It’s like drowning,” says Perrone, who has become used to treating overdose victims in the emergency department. “Fentanyl depresses the respiratory effort and people stop breathing. They go a few minutes without oxygen, the heart rate slows and they have a cardiac arrest.”

Most of the staff and volunteers at Prevention Point — which was used by 25,000 people last year and annually dispenses over 6.5m syringes — know people who have succumbed to fentanyl.

The organisation’s executive director José Benitez, led the unsuccessful push to open the supervised injection site in 2019. “There is one data point that really stands out,” he says of the dispute over allowing such schemes, “no one has [ever] died of an overdose at a safe injection site.”

Fentanyl is ‘killing people all over the place’
Tonja Myles, an ordained minister in Baton Rouge, Louisiana, has spent almost 30 years working with people struggling with addiction. She echoes the view of many health experts, that persuading drug users to seek treatment is more important now than ever before because of the rise of fentanyl.

“People used to say, well [the opioid epidemic] is just a white, middle-class thing, but, no, it’s everybody, because nobody is safe. [Fentanyl’s] crossing all barriers,” she says. “[Fentanyl] doesn’t care if you’re black, white, rich or poor, from the kerbside to the country club, it’s killing people all over the place.”

East Baton Rouge Parish has one of the highest rates — at least 307 in 2021 — of fatal overdoses in the country. Molly was 37 when she overdosed in April 2020 on fentanyl-laced heroin. It was the second such tragedy to hit her family: in 2015, her father Randy found his eldest son, Mike, dead at home from a heroin overdose. Both siblings had struggled for years with opioid addiction, going in and out of treatment programmes.

“If I mapped out his life, from the time he was 15 till the day he died, all he was doing was going in and out of rehab . . . and Molly was just kind of following his same path,” says Randy, a 70-year-old Baton Rouge construction worker, who asked not to use his real name. “I think a lot of places are money hungry, they get them in and out. You felt like they were supposed to be helping them but kicking them out ain’t helping them.”


Jon Daily, the head of the overdose prevention task force within the East Baton Rouge District Attorney’s Office, has been following fentanyl’s deadly rise since it first took hold in Louisiana in 2019.

“The crackdown in the early 2000s on the doctor shopping and pill dumping has been effective in that it’s decreased the overdoses from prescription pills,” says Daily, a former drug user. “But it’s only fuelled the trade in illicitly manufactured fentanyl, which is what’s killing everybody.”

The use of fentanyl is being driven by Mexican drug cartels, which are flooding the US with the drug. This year, the US Drug Enforcement Administration has seized approximately 1,500 pounds of fentanyl — an amount which, the agency says, is enough to kill every American.

Jaime Arredondo, a researcher with the Canadian Institute for Substance Use Research, refuses to use the term “war on drugs”. He believes Mexico is a victim of demand from the north, and that the problems caused by fentanyl require a public health strategy.

“It’s very reductionist to see it just as a security issue,” he adds, “instead we should also be looking at the health issues.”

Policy shift or wishful thinking?
Translating that into political change has for years seemed unlikely. Yet, there is optimism among health experts that the Biden administration will overturn years of national government opposition to funding supervised injection sites. In April, it signalled a pivot in policy towards support for harm reduction schemes when it announced federal money could be used for the first time to buy fentanyl test strips. It has also made it easier to access medications — such as methadone and buprenorphine — to treat addiction and called on Congress to back an $11bn budget request to expand access to substance abuse programmes.

But the administration is not backing away from enforcement and plans to make permanent a Trump-era decision to ban fentanyl substances.

Adoption of harm reduction remains piecemeal across the US and still faces legal barriers. Possession of fentanyl test strips, for instance, remains illegal in as many as 30 states, where existing laws ban drug paraphernalia which includes controlled substances testing. Some state laws still restrict access to Narcan due to concerns that providing easy access to the overdose treatment could increase opioid use — an opinion that runs counter to a study by the Boston University School of medicine.

“Encouraging even more drug abuse has to be the stupidest idea that has ever been proposed to combat the addiction crisis,” says Lee Zeldin, a Republican congressman representing New York.

Republicans in New York state have called on Biden to direct the Department of Justice to close down the “illegal” injection sites. So far Biden, a co-author of several tough anti-drug measures while a senator, has not offered public support to safe injection sites.

In December, the National Institute on Drug Abuse, a federal government research institute, published a report on supervised injection sites which concluded that they “may represent a novel way of addressing some of the challenges presented by the overdose crisis”. The report also found that they could contribute to a reduction in deaths and improve public health.

“We have a horrible situation right now, with so many people dying. And we need to do everything that we can to minimise that,” says Nora Volkow, director of the NIDA.

She says there needs to be a shift away from the prevalent culture in the US of criminalising the user, which does not deter drug taking. More treatment options and widespread availability of Narcan and fentanyl test strips, she adds, would be important harm reduction measures. However, Volkow stops short of advocating safe injection sites, saying more research and further study of any pilot sites is needed.

Advocates disagree, saying that studies of similar sites opened in Switzerland and Australia more than two decades ago provide that research and that there is no time to waste in the US. But they are hopeful that reform is on the way.

“In the Biden administration you’ve seen a little more understanding and embracing of harm reduction approaches than we have ever had in the country,” says Prevention Point’s Benitez. “I think we are just now getting a cultural shift and it’s looking like policy changes are coming down the road.”

FT : Rokos made £900m gain in early days of pandemic

Rokos made £900m gain in early days of pandemic
Fund’s stellar performance has since soured amid bond market turbulence

UK hedge fund manager Chris Rokos and his partners made more than £900m in profits during the initial wave of the pandemic, after a stellar performance that has since soured amid bond market turbulence.

Rokos Capital Management, one of the world’s biggest macro hedge fund firms, generated £914m in profits in the 12 months to March 31 2021, income that is available to be divided up among the hedge fund’s partners, according to a filing with Companies House. Rokos, previously a co-founder of rival Brevan Howard, earned £509m, the largest share of the profit.

The windfall came after Rokos’s fund delivered returns of 44 per cent in 2020, its best annual performance to date. The firm did not immediately comment on its latest financials.

The fortunes of the fund changed in the months that followed, when several bouts of severe volatility in the debt market dealt a strong blow to its performance.

The fund posted negative returns of 25 per cent from January to November 2021. A person familiar with the fund’s record described the performance as “disappointing”, following a “bumper” year. The figures were first reported by Bloomberg.

Macro funds notched up returns of minus 1 per cent last year on average, according to Goldman Sachs, as a number of managers struggled to gauge the effects of higher inflation on bond markets.

Mayfair-based Rokos, which specialises in betting on how broad economic trends will affect global markets, was wrongfooted early in 2021 when a sudden jolt higher in inflation expectations triggered a drop across equity and bond markets.

Rokos was hit again in October, when concerns over elevated global inflation prompted bets that central banks would need to speed up their exit from aggressive stimulus measures that had propped up the world economy since the depths of the coronavirus crisis in 2020.

At the same time, investors began worrying that policymakers might overcompensate in their bid to counter rapid price growth, denting the longer-term economic outlook.

Shorter-term bonds, which are highly sensitive to monetary policy expectations, sold off sharply in October, pushing the yields on those assets higher. Longer-term bond yields rose more modestly over the period.

This flattening of the so-called yield curve disrupted a popular hedge fund bet that long-term yields will rise more quickly than shorter-term ones as the world economy continues to recover from the pandemic.

The painful run for Rokos in 2021 comes as the industry has struggled to attract new capital, given concerns over often lacklustre performance among managers this year, a big shift into private equity and debt, and questions over funds’ fee structures.

>>> US Close Dow +0.68% S&P +0.64% Nasdaq +1.20% Russell +1.21% VIX 16.60 -3.60%

Closing Stock Market Summary

The major indices had a great start to 2022 on Monday, featuring record closes in the S&P 500 (+0.6%) and Dow Jones Industrial Average (+0.7%). The Nasdaq Composite (+1.2%) and Russell 2000 (+1.2%) tied for the lead with 1.2% gains.  

The outperformance of the Nasdaq was attributed to a 13.5% gain in Tesla (TSLA 1199.78, +143.00, +13.5%), which reported record Q4 deliveries, and sizable gains in Apple (AAPL 182.01, +4.44, +2.5%), Amazon.com (AMZN 3408.09, +73.75, +2.2%), and NVIDIA (NVDA 301.21, +7.10, +2.4%).

Apple became the first U.S. company to reach a $3.0 trillion market capitalization while Amazon and the small-caps may have adhered to the January effect. The latter is a view that beaten-down stocks outperform to begin the year with the conclusion of tax-loss selling pressure.

The S&P 500 consumer discretionary sector, which is home to TSLA and AMZN, advanced 2.8%, but it was outdone by the energy sector (+3.1%) amid higher oil prices ($76.05/bbl, +0.76, +1.0%). The financials (+1.2%) and information technology (+1.2%) sectors followed suit, with the former keying off a big jump in longer-dated Treasury yields. 

The mega-caps, to emphasize, made a huge difference for the large-cap indices since the S&P 500 Equal Weight Index increased just 0.1% and six of the 11 S&P 500 sectors closed lower. The materials (-1.4%), health care (-1.0%), and real estate (-1.0%) sectors each declined by at least 1.0%.  

Shares of Pfizer (PFE 56.65, -2.40, -4.1%) and BioNTech (BNTX 231.85, -25.95, -10.1%) declined noticeably amid an expected decision from the FDA, which approved their COVID-19 vaccine for kids aged 12-15. The FDA also shortened the time between the second dose and booster dose to at least five months (down from six months). 

In the Treasury market, the 10-yr yield rose 12 basis points to 1.63%, with selling interest influenced by the positive showing in the stock market and potentially due to an improving perspective on the economy. The 2-yr yield rose six basis points to 0.79%. The U.S. Dollar Index increased 0.3% to 96.21.

Reviewing Monday's economic data:

  • Total construction spending increased 0.4% month-over-month in November ( consensus +0.6%) following an upwardly revised 0.4% increase (from 0.2%) in October. Total private construction increased 0.6% month-over-month while total public construction spending decreased 0.2%. On a year-over-year basis, total construction spending was up 9.3%.
    • The key takeaway from the report is the strength seen in new single-family construction, which is a reflection of the persistently strong housing demand amid a scarcity of supply in the existing home market.
  • The preliminary December IHS Markit Manufacturing PMI decreased to 57.7 from a revised final reading of 58.3 (from 57.8) in November.

Looking ahead, investors will receive the ISM Manufacturing Index for December and the JOLTS - Job Openings report for November on Tuesday.

  • Nasdaq Composite +1.2% YTD
  • Russell 2000 +1.2% YTD
  • Dow Jones Industrial Average +0.7% YTD
  • S&P 500 +0.6% YTD

>>> US After Hours Summary: Quiet after hours; BLKB announces a good size acquis

After Hours Summary: Quiet after hours; BLKB announces a good size acquisition but stock not moving

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: None

Companies trading higher in after hours in reaction to news: WKEY +10.1% (to invest up to $10 mln to perform Bitcoin mining), LQDA +6.4% (names new CEO), HRTG +3.2% (authorizes $25 mln share repurchase program), MARA +1% (reports bitcoin production and miner installation updates), DLR +0.5% (to acquire Teraco, a major colocation provider in Africa, for $3.5 bln), ALG +0.1% (increases dividend), GEF +0.1% (to divest its 50% share in Flexible Packaging JV for $123 mln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: CNM -7.6% (stock offering), ITCI -6.8% (commences $400 mln public offering), AFCG -5.2% (launches 3 mln share public offering), WMG -2.9% (announces sale of 8.56 mln shares by Access Industries), WBX -1.4% (introduces Quasar 2 solution), AMBC -0.4% (acquires three admitted insurance carriers), CABO -0.3% (enters JV focused on fiber broadband networks to rural and underserved mkts), QSR -0.1% (to open hundreds of Popeyes restaurants across South Korea in the coming years), MX -0.1% (names new CFO)