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First Mover Americas: Bitcoin Hovers Below $48K; Immutable X Soars

The latest price moves in bitcoin [BTC] and crypto markets in context for Feb. 12, 2024. First Mover is CoinDesk’s daily newsletter that contextualizes the latest actions in the crypto markets......»»

Category: forexSource: coindeskFeb 12th, 2024

The Layer-1 Landscape: Ethereum’s Struggles And Competitor Analysis

What do you do when you are popular, but you can’t handle the heat? This is the question Ethereum has been struggling with for the last two years, after much development since its launch in 2014. As the first blockchain network to deploy and popularize dApps, Ethereum has skyrocketed in popularity since 2020. In fact, […] What do you do when you are popular, but you can’t handle the heat? This is the question Ethereum has been struggling with for the last two years, after much development since its launch in 2014. As the first blockchain network to deploy and popularize dApps, Ethereum has skyrocketed in popularity since 2020. In fact, without Ethereum, decentralized finance (DeFi) wouldn’t exist today as we know it. What was once reserved for banks and exchanges, Ethereum recreated with smart contracts stored in its blockchain, linked with decentralized applications (dApps) as the end-point user interface. Overnight, it seemed that the days of banking tellers and other bureaucrats were numbered. From lending and borrowing, to gaming and NFT marketplaces, Ethereum’s dApps now store $120.91 billion worth of cryptocurrencies across 2,945 dApps. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2021 hedge fund letters, conferences and more Total value locked (TVL) in Ethereum. Its activity ramped up drastically in the summer of 2020. Source: DeFiLlama.com This is a 20,000% rise from April 2020, indicating that an entire new financial market was forming. Moreover, Ethereum's native cryptocurrency, ETH, went from $200 to over $3,000, mirroring the establishment of Finance 2.0. In fact, this growth is similar to Elon Musk's Tesla popularizing electric vehicles, reflected by the stock's appreciation by over 1,000% since January 2020. Unfortunately, there was a cost to be paid for Ethereum's explosive growth. The more people started using it, the more its network became congested, souring the experience with enormous fees and slow transaction speeds. Ethereum's Gas Fee Woes Explained As any computer network, Ethereum can handle only so much traffic. After all, there is no such thing as infinite throughput. In the blockchain world, this is particularly significant because users don't just experience a slowdown when they want to execute a transaction. On top of that, they also experience high transaction fees when making them. Even simple transactions, such as exchanging USDT for ETH on decentralized exchanges (DEXes), costs an arm and a leg, especially compared to centralized exchanges (CEXes) like Binance or Coinbase. Some of Ethereum's DEX dApps (protocols) are very expensive to use. More complex smart contract interactions, like NFT minting, can run in the hundreds of dollars at peak network congestion. Source: Crypto.com To make matters worse, because a single ETH is much more valuable than a single dollar, even tiny percentage fees translate to big expenditures, as they are denominated in Gwei (one billionth of an ETH). Additionally, the higher Ethereum’s demand due to use, the more valuable it becomes. In turn, the more popular Ethereum becomes, the more expensive it becomes to use it. Kind of a self-defeating problem to have, isn't it? Indeed, it is a very difficult problem to solve, called the blockchain trilemma. Every blockchain can be rated by its three main attributes: Decentralization: How many nodes (computers holding blockchain's entire record) are making up the network—and how is authority distributed among these nodes? Security: Based on its incentive mechanism and node count, how difficult is it to tamper with the network? Scalability: How many clients can the network serve in a fast and affordable manner without compromising decentralization or security? This is a trilemma because increasing one attribute tends to decrease the other one. Specifically, if a blockchain is more decentralized, it takes longer to confirm transactions because there are more nodes (run by validators) to run it through. Likewise, if there is less decentralization, there is more likelihood of the network being compromised because there are fewer nodes providing redundancy. In turn, if there are more nodes for greater decentralization, it is more difficult to cost-effectively scale up the network. Suffice to say, Ethereum is highly decentralized and secure, but it lacks scalability. The big question then is, what are Ethereum developers doing, headed by Vitalik Buterin, to alleviate this problem? Ethereum's Scalability Solutions Contrary to popular belief, Ethereum's upcoming transformation from proof-of-work (PoW) to proof-of-stake (PoS) consensus is not aimed at solving its volatile and high transaction fees. Both Bitcoin and Ethereum have been using energy-demanding PoW to process transactions and add new blocks (i.e. groups of transactions). However, because PoW uses computational work to prove transaction validity, such a blockchain network is an energy hog. This is best exemplified by how much less energy Ethereum will use after it transitions to PoS-only. By going full PoS by the end of 2022, Ethereum is poised to reduce its carbon footprint by a factor of 2,000x. Image credit: Ethereum Foundation. While it is nice to know that Ethereum will go green, as this will open up the doors to institutions concerned with socially responsible investing, this is a far cry from scalability. Essentially, the scalability problem is one of computing and storage of transactions, regardless of how much power is needed to make it happen. It is this computing resource that is measured as "gas". Instead, what might improve Ethereum's scalability during its 2.0 upgrade process is sharding - partitioning the network into smaller and independent chains (shards). This way, split big data chunks would allow for greater network speeds and lower fees. In Ethereum's case, this splitting will happen across 64 shards, but only some time in 2023 or 2024. In the meantime, the simplest way to increase scalability would be to increase the blockchain's block size. As the name implies, each blockchain is composed of blocks chronologically chained to make up an immutable ledger. This way, if one were to tamper with a single record on that chain, a new one would have to be created, called a hard fork. Moreover, if the size of those data blocks is increased, allowing for more transactions to be stored within a single block, this would reduce the fees. By the same token, if block time (how long it takes to add a new transaction) is also increased, this would lower fees still. In fact, this is so obvious a scalability solution that Elon Musk proposed it for Dogecoin (DOGE). Vitalik Buterin himself, the co-founder of Ethereum, stepped in and dismissed the idea, saying that it would compromise blockchain's decentralization. That's because increasing the block size would elevate hardware and internet requirements to run a node, effectively reducing their number. In the end, Ethereum's scalability resolution will come from both sharding and layer 2 networks. The latter are simply attachments to Ethereum's main chain (layer 1), just as one would attach a road to a highway to relieve it of its congestion. There are a number of such L2 networks to choose from, as they import Ethereum's dApps and grow their own affordable ecosystems. Ethereum's top 10 layer 2 networks. Some are universal, while some cater to specific niches, such as feeless NFT trading. Image credit: L2beat.com To illustrate their effectiveness, on April 7th 2022, normal ETH gas fee costs $3.73, while Arbitrum reduces it to a negligible $0.059. However, is it possible to achieve scalability without resorting to attached L2 networks? What Are Other Blockchains Up To? Ethereum may have pioneered DeFi and spawned its ample $203 billion market, but other blockchain projects were not idling. Although they are far from reaching Ethereum's DeFi dominance, Ethereum has left its gas fee doors wide open for them to step in. Ethereum hovers above other smart contract platforms as its own category. Image credit: The Block. Foremost, Ethereum alternatives are all proof-of-stake blockchains, just as Ethereum is about to be. This means they all have very low energy draw as they don't use computational transaction proofing known as mining. With that said, there are some significant differences. Algorand (ALGO) Algorand (ALGO) is a pure proof-of-stake blockchain (PPoS), so all ALGO token holders receive network rewards. In contrast, only Ethereum's validators receive transaction fees with the requirement being pretty high - 32 ETH stake or $102.2k. However, because Algorand has an exceedingly low barrier to entry, at just 1 ALGO stake ($0.78), this translates to increased network invulnerability. After all, higher stake equals greater care to not misbehave. This is exacerbated by Algorand not having a slashing mechanism (stake reduction) for malicious behavior. There was an attempt to implement it last year, but the proposal wasn't accepted. Nonetheless, because Algorand uses a two-tier architecture, in which one chain layer handles simple transactions, while the other one handles more complex ones, this makes it inherently hold a scalability solution that Ethereum seeks in external L2 networks. For this reason, Algorand vastly outcompetes Ethereum in transactions per second, at 1,000 tps vs 14 - 17 tps respectively. Furthermore, its minimum fee is only 0.001 ALGO. On the other hand, the Algorand ecosystem is a fraction of Ethereum's, with fewer than 80 dApps. This is reflected in ALGO's price performance. ALGO vs. ETH year-to-date (YTD) price performance comparison. Image credit: Trading View Terra (LUNA) Terra (LUNA) is the biggest surprise among Ethereum alternatives. A year ago, its TVL market share was merely 1.21%. Today, it is 13.45% ($30b TVL), second only to Ethereum itself. Even more surprisingly, Terra is built from another platform - Cosmos SDK - an open-source framework for building PoS blockchains. For this reason, Terra also borrows from the Cosmos' consensus engine, Tendermint Core. Without going into minutia, it was designed for enterprise-grade use, so its transaction speed can go up as much as 10,000 tps. Furthermore, Terra's gas fee is set at 0.6%. Because Terra was envisioned as a blockchain counter to Visa, the resulting gas fees are exceptionally low, ranging between $0.13 and $0.16, according to Statista. For this reason, Terra is hugely popular in South Korea, its home base. For instance, the CHAI payment app uses Terra blockchain for cheap and fast money transfers. As a cherry on top, Terra tries to make life easier for crypto users by avoiding crypto volatility. It accomplishes this with its own algorithmic stablecoin TerraUSD (UST), which is pegged to the dollar at a 1:1 ratio. This is the engine that powers Terra's ecosystem as UST's peg is dynamically maintained by expanding and contracting LUNA tokens. In turn, staking LUNA tokens to stabilize UST yields rewards as passive income. Lastly, Terra's foundation, Luna Foundation Guard (LFG), is slowly acquiring Bitcoin (BTC) to further fortify UST's peg of up to $10 billion collateral. With these tailwinds, Terra (LUNA) is the rare exception in outperforming Ethereum. LUNA vs. ETH year-to-date (YTD) price performance comparison. Image credit: Trading View Binance Smart Chain (BSC) Recently rebranded into BNB Smart Chain, this blockchain network represents the attempt by the world's largest crypto exchange - Binance - to take a bite from the expanding smart contract pie. This way, when people use it, Binance gets an additional source of income on top of its core business model. Consequently, BNB is a highly centralized network with only 21 validators, although there is a plan to increase the number to 41. Yet, this very same centralization means that it is a superior performer. Its block time is around 3 seconds, while Ethereum's is at under 5 minutes. Likewise, at peak congestion, BNB can handle up to 160 tps, with a $0.3579 average transaction fee. This can be further reduced with a 25% discount if paying for fees with the native BNB tokens. Such perks add up with the fact that Binance is the most convenient way to trade cryptos. Accordingly, BNB price closely follows Ethereum despite being on the opposite end of the decentralization spectrum. BNB vs. ETH year-to-date (YTD) price performance comparison. Image credit: Trading View Is Ethereum Too Entrenched to Be Dethroned? Similar to how the first mover advantage benefited certain social media platforms, so too did Ethereum snowball into its current DeFi king status. Its next big update to PoS will be a big test whether it can maintain this dominance. Will Ethereum eventually be labeled as the “MySpace” of the blockchain space—or something closer to “Facebook”? If the transition goes smoothly, without major bugs and code exploits, Ethereum investors can rejoice. Yet, fixing its gas fees is a long-term project, especially if its popularity is boosted again as a result of successful PoS transformation. This makes Ethereum alternatives as relevant as ever. The good news is that crypto’s adoption rate remains comparatively small, and is anticipated to grow. Perhaps there’s room for more than one smart-contract blockchain at the top of the mountain—but this will all come down to user experience and how these blockchains successfully navigate the existing ‘trilemma’. Did you enjoy this read? If so, consider subscribing to Five Minute Finance, The Tokenist’s weekly newsletter covering the most important macro trends to impact financial markets and emerging technology. Join today - it’s free. Updated on Apr 7, 2022, 1:24 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkApr 7th, 2022

JPMorgan: Institutional Investors Are Piling Into Ethereum, Leaving Bitcoin

JPMorgan: Institutional Investors Are Piling Into Ethereum, Leaving Bitcoin It's not the first time that a major bank has expressed preference for ethereum over bitcoin: back in May, when Goldman published its initiating coverage on the crypto sector (available for professional subs in the usual place), the bank was surprisingly dismissive toward bitcoin which it saw as an electricity-draining Proof-of-Work, one trick pony... ... while praising ethereum (which is well on its way to becoming a much more efficient Proof-of-Stake in its Ethereum 2.0 metamorphosis) which it summarized as having the potential to one day become the "amazon of information" to wit: It’s all about information As the value of the coin is dependent on the value of the trustworthy information, blockchain technology has gravitated toward those industries where trust is most essential—finance, law and medicine. For the Bitcoin blockchain, this information is the record of every balance sheet in the network, and the transactions between them—originally the role of banks. In the case of a smart contract—a piece of code that executes according to a pre-set rule—on Ethereum, both the terms of that contract (the code) and the state of the contract (executed or not) are the information validated on the Ethereum blockchain. As a result, the counterparty in the contract cannot claim a transfer of funds without the network forming a consensus that the contract was indeed executed. In our view the most valuable crypto assets will be those that help verify the most critical information in the economy. Over time, the decentralized nature of the network will diminish concerns about storing personal data on the blockchain. One’s digital profile could contain personal data including asset ownership, medical history and even IP rights. Since this information is immutable—it cannot be changed without consensus—the trusted information can then be tokenized and traded. A blockchain platform like Ethereum could potentially become a large market for vendors of trusted information, like Amazon is for consumer goods today. Ether beats bitcoin as a store of value Given the importance of real uses in determining store of value, ether has high chance of overtaking bitcoin as the dominant digital store of value. The Ethereum ecosystem supports smart contracts and provides developers a way to create new applications on its platform. Most decentralized finance (DeFi) applications are being built on the Ethereum network, and most non-fungible tokens (NFTs) issued today are purchased using ether. The greater number of transactions in ether versus bitcoin reflects this dominance. As cryptocurrency use in DeFi and NFTs becomes more widespread, ether will build its own first-mover advantage in applied crypto technology. Ethereum can also be used to store almost any information securely and privately on a decentralized ledger. And this information can be tokenized and traded. This means that the Ethereum platform has the potential to become a large market for trusted information. We are seeing glimpses of that today with the sale of digital art and collectibles online through the use of NFTs. But this is a tiny peek at its actual practical uses. For example, individuals can store and sell their medical data through Ethereum to pharma research companies. A digital profile on Ethereum could contain personal data including asset ownership, medical history and even IP rights. Ethereum also has the benefit of running on a decentralized global server base rather than a centralized one like Amazon or Microsoft, possibly providing a solution to concerns about sharing personal data. We bring this up because overnight the assault on bitcoin - while praising bitcoin - was repeated by that "other" big bank, JPMorgan, which concluded that institutional investors are showing "a strong preference for ethereum versus bitcoin". It made this determination by looking at both the relative futures spread to spot for the two cryptos, as well as the relative institutional open interest in bitcoin vs ethereum. Starting with bitcoin, JPM's Nick Panigirtzoglou writes that this month’s correction in crypto markets saw bitcoin futures shifting into backwardation after spending August in contango. The charts below show the 21-day rolling average of the 2nd CME Bitcoin futures spread over spot since the beginning of 2018. According to JPM, bitcoin's backwardation "is a setback for bitcoin and a reflection of weak demand by institutional investors that tend to use regulated CME futures contracts to gain exposure to bitcoin." Why is this notable? Because as JPM explains, in a normal environment when demand for Bitcoin futures is not particularly weak, Bitcoin futures trade at a positive spread over spot, i.e. the futures curve is in contango. The typically high (above 5% annualized) futures to spot spread is a function of the high “risk-free” rate or opportunity cost implicit in crypto markets. Lending USD in crypto markets typically attracts annual interest rates of 5-10%, and this high “risk-free” rate is a common component in the futures vs. spot arbitrage trade across both bitcoin and ethereum futures. This high “risk-free” rate or opportunity cost is also likely a reflection of how “crypto-rich” and “cashpoor” crypto markets still are. Adding to this elevated “risk-free” rate storage costs of around 2% per annum, as well as similarly high transaction costs given the fragmentation in crypto markets, one can easily see why futures to spot spreads of as high as 10% per annum could be justified in a normal market environment in bitcoin or ethereum futures. But when demand is particularly weak and price expectations turn bearish, the futures curve shifts into backwardation. This was the case between last May and July as shown in Figure 11 above for CME Bitcoin futures. As a result, JPMorgan believes that the return to backwardation in September is a negative signal pointing to weak demand for bitcoin by institutional investors. In contrast, the largest US bank points to the ethereum futures chart which remains in contango and if anything this contango steepened in September towards a 7% annualized pace (on a 21-day rolling average basis). This, as Panigirtzoglou summarizes, "points to much healthier demand for ethereum vs. bitcoin by institutional investors." The strong divergence in demand is also evident in JPM's futures position proxy shown below; it has been rising for ethereum and declining for bitcoin steadily since August. Tyler Durden Thu, 09/23/2021 - 14:40.....»»

Category: worldSource: nytSep 23rd, 2021

Crypto"s Ascent: The Case for Becoming the S&P"s 12th Sector

With growing popularity and acceptance and a market cap of more than $2 trillion, crypto has a chance to become the 12th sector of the S&P 500 over the next five years. “Crypto is going to become the 12th sector of the S&P 500. It’s going to happen over the next few years, watch.” ~ Kevin O’Leary, AKA “Mr. Wonderful”If you repeated the above quote to friends a few years ago, most would think you’ve lost your mind. After all, Bitcoin was once an obscure, illiquid, and untrusted digital currency started on the internet. In its early days, the world’s first digital currency was used to buy illicit drugs on the illegal and now defunct “dark web” website “The Silk Road.” Later, many adopters fell victim to crypto fraud and exchange hacks. However, as the kids like to say today, “The Internet Remains Undefeated!”Bitcoin has experienced a meteoric rise from its early days, and its momentum is reaching a fever pitch in 2024. In fact, as I wrote about earlier this month, Bitcoin has the Perfect Bull Storm. Below are five reasons crypto will become the 12th sector of the S&P 500 over the next few years:Bitcoin is a Global PhenomenonIn a world filled with political instability and central banks in a fiat printing frenzy, Bitcoin provides an oasis in the form of a decentralized network, a limited supply, and an immutable and transparent ledger. Of course, without adoption, these characteristics mean little. Adoption is widespread and aggressive - Bitcoin has surpassed all-time highs in thirty countries and is knocking on the door of all-time highs in the U.S.Stablecoin AdoptionA stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging it to a reserve of assets, often fiat currencies like the US Dollar. It reduces the price volatility usually associated with other cryptocurrencies like Bitcoin. USDC is an example of a stablecoin. USDC was launched five years ago through a partnership between Coinbase (COIN) and Circle. In a short time, USDC has a market cap of more than $28 billion, and Visa (V) allows the use of USDC to settle transactions on its payment network.Stablecoin supplies are now at $140 billion, and Reflexivity Research co-founder Will Clemente predicts that stablecoin issuers, in aggregate, will become top five holders of U.S. Treasuries by 2030.Image Source: K33 ResearchPolitical Snowballing Effect Sometimes, it takes a new generation to invoke change. Nayib Bukele (now age 42) assumed office as the President of El Salvador in 2019 after garnering 50% of the vote. In 2021, Bukele made the bold and unprecedented decision to make bitcoin legal tender, and the Latin American nation purchased 400 Bitcoins. Fast forward to El Salvador’s 2024 election, and Bukele mopped the floor with his opponents and won 84.65% of the vote to be re-elected president!Bukele’s success is empowering politicians in the U.S. and around the world to be open-minded when it comes to Bitcoin adoption.MicroStrategy’s Success Story: A Blueprint for Fortune 500 CompaniesMicroStrategy (MSTR) is a software firm founded by a visionary named Michael Saylor. Though MSTR was a public and profitable company for years, it rose to prominence when it began to invest heavily in Bitcoin as a treasury reserve asset and an alternative to the inflating dollar. While MSTR was underwater on its position at first, the company’s conviction in the strategy never wavered, and the company continued to accumulate billions in Bitcoin. Now, the Bitcoin bet is paying off for investors – in a big way. This week alone, MSTR’s Bitcoin holdings produced $500 million in gains in one day, bringing in many multiples of what its software business generates in a year.With such overwhelming success, it’s only a matter of time before other cash-rich companies take the plunge and look to ride on a “Bitcoin rail.”  Image Source: Zacks Investment ResearchETF Approval: Institutional Adoption Floodgates Swing Wide OpenIt turns out that the much-hyped launch of Bitcoin ETFs will live up to the hype. By begrudgingly approving Bitcoin ETFs, the U.S. Securities and Exchange Commission (SEC), has opened up the floodgates to institutional adoptions. Fidelity, one of the largest asset managers worldwide, is allocating 1-3% of its All-In-One ETF products to crypto. Meanwhile, the Bitwise Bitcoin ETF (BITB) has been approved for use by several wealth management platforms (with some in excess of $100B in AUM!).The demand is insatiable now, and Bitcoin is encroaching on the $60,000 mark and previous all-time highs early Wednesday.Image Source: TradingViewBottom LineWith growing popularity and acceptance and a market cap today of more than $2 trillion, the global cryptocurrency market has a chance to become the 12th sector of the S&P 500 over the next five years. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Visa Inc. (V): Free Stock Analysis Report MicroStrategy Incorporated (MSTR): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Bitwise Bitcoin ETF (BITB): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacks21 hr. 36 min. ago

Future Slide As Hawkish Fed Concerns Return

Future Slide As Hawkish Fed Concerns Return US stock futures slumped, pointing to a weak open on Wall Street with both Tech and small-caps underperforming, as traders braced for today's revised GDP print and tomorrow's core PCE report which whisper sees coming in hotter than expected and may further push back on expectations for rate cuts. As of 7:50am, contracts on the Nasdaq 100 drop 0.5%, while S&P 500 futures down 0.4% as European stocks hovered below record high while Asia was dragged lower by Chinawhere regulators are taking steps to shrink the size of a popular quantitative trading strategy "Direct Market Access" that contributed to turmoil in the nation’s stock market this month. Bond yields are lower, and the USD is stronger, while commodities are mixed with base metals higher and energy lower. Bitcoin surged again rising just shy of $60K following record inflows into the Blackrock bitcoin ETF. The macro data focus will be on details surrounding the second estimate of Q4 GDP, as well as the latest inventory data (the more important data kicks off tomorrow with PCE and then Friday’s ISM number). Today’s price action may be more about month-end rebalancing where JPM's Quant & Derivs Strategy team thinks that we could see stocks lose as much as 1.5% on the rebalance and that rebalancing moves can occur before month-end. In premarket trading, Nvidia dropped 1.3% in premarket trading, dragging the megacap sector lower. Here are some other notable premarket movers: Ambarella (AMBA) gains 7% after the company projected revenue for the first quarter that topped the average analyst estimate at the midpoint. Array (ARRY) slips 6% following its earnings, which prompted BNP Paribas to downgrade the renewable energy equipment maker and give the stock its only negative analyst rating. Beyond Meat (BYND) soars 61% after it reported fourth-quarter sales that surpassed expectations. Bumble (BMBL) falls 10% after the online dating company issued first-quarter guidance that was weaker than forecast. The company is cutting about one-third of its workforce after a recent executive shakeup. Coupang (CPNG) jumps 8% after South Korea’s largest online retailer reported its fastest revenue growth since 2021. Credo Technology (CRDO) gains 7% after the communications equipment company reported earnings that prompted a price target raise at Cowen, which said the results signal the company is “well past the bottom” Cryptocurrency-linked stocks gained as Bitcoin advanced for a fifth day, on track for its biggest monthly increased since October 2021. The launch of spot Bitcoin exchange-traded funds in the US in early January has driven a surge in buying, overcoming concerns over slower Fed rate cuts. Bitcoin climbed above $59,000 Wednesday, up almost 40% in the month. Aside from earnings, attention will be on the latest US GDP print and tomorrow's inflation numbers and a strong line-up of central bank speakers. Investors are contending with an erosion in expectations for how much the Federal Reserve and European Central Bank will lower rates. “In December, markets priced sizeable rate cuts in 2024, but what’s happened is we have had slightly problematic inflation prints in most parts of the world,” said Guy Miller, chief market strategist at Zurich Insurance Co. “The US economy has done better than what many people expected, the labor market remains tight and wage gains have been higher than what central bankers are comfortable with.” Meanwhile, traders have moved to price only 75 basis points of US easing by year-end, in line with what Fed policymakers in December indicated is the likeliest outcome. Treasury yields dipped Wednesday, while a gauge of the dollar strengthened to the highest since Feb. 20. In Europe, the Stoxx 600 index edged 0.2% lower as investors digested the latest earnings; telecoms and insurance stocks outperforme while personal care stocks are the worst performers, led lower by Reckitt Benckiser, whose sales missed expectations and its shares tumbled 12%, the most since 2008, after the consumer goods company said its sales fell. Tech was also hit after Dutch chip gear firm ASM International slipped as it projected revenue for this quarter that fell far below market expectations.  Here are the biggest movers Wednesday: Glanbia rose as much as 7.2% on the Irish stock exchange, the most in almost a year, after publishing strong full-year results and announcing a share buyback program. Alcon rose as much as 6% after releasing results after the market close on Tuesday that were seen as positive by analysts. Highlights include the Swiss eye-care producer’s above-consensus guidance. UCB shares gained as much as 5.1%, to the highest since May 2022, after the biopharmaceutical company reported earnings for the year that beat analysts’ estimates. Citigroup noted the profit share of its Evenity osteoporosis drug is “under-appreciated.” Reckitt Benckiser shares drop as much as 10%, hitting their lowest level since March 2020, after the household-goods maker reported a surprise fall in like-for-like sales in the final quarter of 2023, missing expectations across the board. St James’s Place plunged as much as 33% after the wealth management firm reported an adjusted pretax loss for the full year, with analysts flagging an ongoing service charge issue and a sharp dividend cut. ASM International declined as much as 6.1% in Amsterdam after the chip equipment maker gave a weaker-than-expected forecast for the current quarter, showcasing the challenge in near-term demand before an expected improvement later this year. Worldline plunged as much as 17% after the French payment processor reported a net loss of €817 million for 2023 due to goodwill impairments. The results and guidance met lowered expectations, yet investors are still cautious. Just Eat Takeaway falls as much as 7.6% in Amsterdam after the food delivery firm issued guidance for 2024 revenue growth which analyst considered cautious. Earlier in the session, Asian stocks closed lower, dragged by China where the CSI 300 Index dropped as much as 1.3% to touch session low following a report that regulators are taking steps to gradually shrink the size of a popular quantitative trading strategy. Some quantitative funds that manage money for external clients were told to stop accepting new inflows and phase out existing products for “Direct Market Access.” Small-cap indexes fall more: CSI 1000 Index drops as much as 4.5% and CSI 2000 Index -6.8%. Meanwhile,  Hong Kong stocks slumped more than 1% as the city’s budget report failed to impress investors. Chinese stocks fell after a recent rally took gauges to resistance levels, with traders looking to this week’s manufacturing report and a key political meeting in Beijing next week for momentum.   “This move to deleverage could lead to an extended drop and might be a replay of the slump in January. This is hits across all gauges, as quants usually hold thousands of stocks at once, and the unexpected move leads to a wave of selling,” says Chen Zunde, fund manager ate Guangdong Fund Investment Co. Hang Seng and Shanghai Comp. were pressured amid initial developer-related concerns after a wind-up petition was filed against Country Garden, although the property sector in Hong Kong then recovered after the government announced the cancellation of all demand-side property tightening measures for residential. ASX 200 was indecisive with tech strength offset by weakness in telecoms, consumer stocks and financials, while data showed softer-than-expected monthly CPI in January and a miss on Construction Work Done for Q4. Nikkei 225 lacked conviction but remained above the 39,000 level in the absence of any pertinent catalysts. In FX, the dollar has benefited from the risk-off mood. The Bloomberg Dollar Spot Index rises 0.2% as the greenback gains versus all its G-10 rivals. The kiwi is the weakest, falling 1.2% versus the dollar after the RBNZ softened its threat of a hike amid signs inflation pressures are waning. Elsewhere, the New Zealand dollar slid more than 1% after the Reserve Bank of New Zealand delivered less hawkish comments on inflation, citing how most measures of price expectations have fallen. Meanwhile, Nigeria’s naira weakened to a fresh low after a much-bigger-than-expected 400 basis point interest rate increase by the central bank on Tuesday failed to support the currency. The naira has been sapped by a local scarcity of dollars and an outstanding backlog of demand for the greenback In rates, treasury futures hold small gains accumulated during early London session as bunds and gilts advanced, with yields richer by 1bp-2bp across the curve. Weakness in US technology shares pressures S&P 500 futures, further supporting Treasuries. 10-year Treasury yields at 4.29% are ~2bp richer on the day with bunds slightly outperforming and gilts lagging by less than 1bp in the sector; Tuesday’s notable curve-steepening move remains intact with 2s10s and 5s30s trading near top of Tuesday range. IG dollar issuance slate already includes a few names; seven issuers priced $8.5b Tuesday, leaving weekly total already above the $35b expected. Borrowers paid concessions of less than 2bps driven by order books said to be 3.3 times oversubscribed. US session highlights include 4Q GDP revision, and corporate issuance slate is expected to remain busy. In commodities, oil fell after a two-day gain as signs of higher US inventories vied with expectations that OPEC+ will extend supply cuts. WTI fell 1.1% to trade near $78. Iron ore resumed its slide, as investors remained undecided about the strength of China’s demand for steel ahead of the nation’s usual peak construction season. Spot gold falls 0.2%. Bitcoin continues to soar and currently holds just shy of the $60k mark less than $10k away from a new all time high, boosted by a record inflow into the IBIT ETF. Looking at today's calendar, US economic data includes second estimate of 4Q GDP, January advance goods trade balance and wholesale inventories (8:30am). Fed speakers scheduled include Bostic (12pm), Collins (12:15pm) and Williams (12:45pm). Market Snapshot S&P 500 futures down 0.4% to 5,071.50 STOXX Europe 600 down 0.2% to 495.55 MXAP down 0.7% to 172.05 MXAPJ down 0.8% to 523.37 Nikkei little changed at 39,208.03 Topix down 0.1% to 2,674.95 Hang Seng Index down 1.5% to 16,536.85 Shanghai Composite down 1.9% to 2,957.85 Sensex down 0.8% to 72,478.32 Australia S&P/ASX 200 little changed at 7,660.42 Kospi up 1.0% to 2,652.29 German 10Y yield little changed at 2.45% Euro down 0.4% to $1.0803 Brent Futures down 0.9% to $82.92/bbl Brent Futures down 0.9% to $82.92/bbl Gold spot down 0.2% to $2,025.50 U.S. Dollar Index up 0.35% to 104.20 Top Overnight News European stocks struggled for traction and US futures slipped as traders brace for a slew of economic data in the second half of the week that will help determine the path of monetary policy. Goldman Sachs Group Inc. Chief Executive Officer David Solomon said softer spending by consumers calls into question expectations that the US economy will avoid a recession. US President Joe Biden and Republican frontrunner Donald Trump both cruised to victory in their party’s Michigan primary elections Tuesday, with results for the two candidates indicating discontent among Democrats and Republicans for the likely nominees. Bond traders no longer expect the Federal Reserve to lower interest rates by more than 75 basis points this year, bringing their view in line with what Fed policy makers have indicated is the likeliest outcome. Europe’s biggest asset manager is joining a chorus of investors who are turning bearish on Switzerland’s franc after slowing inflation has eliminated the need for the central bank to prop up the currency. Chinese regulators are taking steps to gradually shrink the size of a popular quantitative trading strategy that contributed to turmoil in the nation’s stock market this month, according to people familiar with the matter. Earnings Baidu Inc (BIDU) Q4 2023 (USD): EPS 3.08 (exp. 2.48), Revenue 4.92bln (exp. 4.86bln) Shares -1.2% in pre-market trade eBay Inc (EBAY) - Q4 2023 (USD): Adj. EPS 1.07 (exp. 1.03), Revenue 2.56bln (exp. 2.51bln); authorised additional 2bln share repurchase programme and raises quarterly cash dividend 8% to 0.27/shr. Shares +3.2% in pre-market trade Beyond Meat (BYND) Q4 2023 (USD): Revenue 73.7mln (exp. 66.8mln), Adj. EBITDA loss 125mln (exp. loss 47mln); FY revenue view 315-345mln (exp. 344mln) Shares +55% in pre-market trade ASM International (ASM NA) – Q4 (EUR): Normalised Net 100mln (exp. 137mln, prev. 142mln Y/Y), Normalised Op. 141mln (prev. 190mln Y/Y), Revenue 633mln (exp. 647mln, prev. 725mln Y/Y), Launches 150mln share buyback. Raises dividend to 2.75/shr (prev. 2.50/shr). Guides Q1 Revenue 600-640mln. (Newswires) Shares -3.7% in European trade / peer Nvidia (-1.2% pre-market) lags Reckitt (RKT LN) - Q4 (GBP): LFL Sales -1.2% (exp. 1.75%), FY LFL Sales +3.5% (exp. 4.15%), Revenue 3.56bln (exp. 3.6bln). Sees 2024 capital expenditure to be 3-3.5% of Net Revenue. Sees 2024 adj. operating profit to grow ahead of net revenue growth. Shares -10.1% in European trade A more detailed look at global markets courtesy of Newsquawk APAC stocks traded cautiously and followed suit to the rangebound performance seen on Wall St where stocks largely ignored weak US data ahead of key events, while the region also digested a couple of data releases and the RBNZ policy announcement. ASX 200 was indecisive with tech strength offset by weakness in telecoms, consumer stocks and financials, while data showed softer-than-expected monthly CPI in January and a miss on Construction Work Done for Q4. Nikkei 225 lacked conviction but remained above the 39,000 level in the absence of any pertinent catalysts. Hang Seng and Shanghai Comp. were pressured amid initial developer-related concerns after a wind-up petition was filed against Country Garden, although the property sector in Hong Kong then recovered after the government announced the cancellation of all demand-side property tightening measures for residential. Top Asian News Hong Kong Financial Secretary Chan said in the budget address that momentum for economic recovery needs to be improved amid global challenges. Chan announced the government is to cancel all demand-side property tightening measures for residential and noted there is room to further adjust measures for the property market, while it will waive stamp duties payable on transfer of REIT units. HKMA said the maximum loan-to-value ratios will be adjusted to 70% for self-occupation residential properties valued at HKD 30mln or less, while the maximum LTV ratio will be adjusted from 50% to 60% for non-self-use residential properties. RBNZ kept the OCR unchanged at 5.50% as expected, while it slightly lowered its OCR projections and said the OCR needs to remain at a restrictive level for a sustained period. The committee remains confident that the current level of the OCR is restricting demand but also noted that headline inflation remains above the 1%-3% target band, limiting the committee's ability to tolerate upside inflation surprises. Furthermore, the RBNZ reduced its OCR forecast with the June 2024 view lowered to 5.59% from 5.67% and the March 2025 view lowered to 5.47% from 5.56%. RBNZ Governor Orr said during the press conference Q&A that they did discuss a hike in rates and there was strong consensus that the current level of rates was sufficient, while he added that many variables have given them confidence that policy is working and noted that underlying inflation is still a concern, but headline inflation is easing. China reportedly tells quants to phase out Direct Market Access (DMA) products blamed for turmoil, according to Bloomberg sources; Chinese markets extended losses following this news. PBoC governor and Shanghai party chief held a seminar on Tuesday; PBoC supports Shanghai's high-level opening up financially European bourses, (Stoxx600 -0.1%), are mixed, but with clear underperformance in the AEX (-0.7%), after poor results from chip-maker ASM International (-3.8%). European sectors hold a negative tilt; Optimised Personal Care Drug and Grocery is dragged down by Reckitt (-8.9%) post-earnings, whilst Mercedes-Benz (+1.7%) drives Autos higher. US Equity Futures (ES -0.5%, NQ -0.9%, RTY -0.8%) are entirely in the red, paring back most of the gains seen in the prior session, with underperformance in the NQ hampered by Nvidia (-1.9% pre-market). Top European News ECB's de Guindos says recent inflation outlook has been very positive and prices will continue to decline; we need to be sure that prices will move towards our 2% target FX USD is making gains vs. all peers with January PCE data tomorrow expected to come in hot. DXY has reclaimed 104 status and taken out its 100, 10 and 21DMAs as well as a cluster of highs from last week. Current high today at 104.24. EUR is hampered by the broadly firmer USD with EUR/USD oscillating around the 1.08 mark after taking out yesterday's low of 1.0812. GBP is dragged lower by the USD after yesterday's failure to test 1.27 to the upside. Session low currently sits at 1.2622 with the 22nd Feb low at 1.2612. USD/JPY remains arguably the most important pair to watch after printing a high of 150.79 with the YTD peak just above at 150.88. The further the pair climbs, the more likely is jawboning from Japanese officials and speculation over intervention. NZD is the standout laggard across the majors as the RBNZ stood pat on rates vs. a 30% chance of a hike accompanied by dovish tweaks to the OCR projections. NZD/USD has erased all of last week's gains and slipped below the 0.61 mark with the next downside support via its 100DMA at 0.6091. AUD lower in sympathy as well as the region's soft inflation metrics overnight. PBoC set USD/CNY mid-point at 7.1075 vs exp. 7.2023 (prev. 7.1057). Fixed Income USTs are marginally firmer with specifics light and perhaps some follow-through from the dovish RBNZ OCR projections in the absence of other drivers. Action which comes after Tuesday's bear-steepening. Bunds are modestly firmer with specifics light and the focus once again on supply. Bunds are eking out marginal new highs of 132.41 seemingly as US equity futures deteriorate further, but ultimately remains comfortably within yesterday's 132.02-71 range. Gilt price action is similar to that seen in EGBs with Gilts also able to eke out some very marginal gains but well within Tuesday's 97.22-98.15 bounds; a UK outing produced a wide 2.2bps tail, resulting in modest pressure in Gilts. UK sells GBP 4.0bln 4.00% 2031 Gilt: b/c 3.0x, average yield 4.085%, tail 2.2bps. Italy sells EUR 8.25bln vs exp. EUR 7.50-8.25bln 3.35% 2029 & 3.85% 2034 BTP and EUR 1.5bln vs exp. EUR 1.00-1.50bln 2031 CCTeu. Orders for Italy's new 6yr BTP Valore retail bond reaches 12bln since the start of the odder, according to bourse data cited by Reuters Commodities A downbeat session for the broader crude complex in what is seemingly a function of a firmer Dollar and a subdued risk tone. Brent May futures have slipped below USD 82.00/bbl. The firmer Dollar exerts broader pressure on precious metals, although losses are capped ahead of key US data alongside a number of Fed speakers; XAU approaches USD 2,025/oz to the downside after falling under its 50 DMA at 2,032.15/oz. Base metals are softer across the board amid the aforementioned pressure from the stronger Greenback, whilst Chinese markets overnight continued to tumble despite intervention from regulators. US Private Energy Inventory (bbls): Crude +8.4mln (exp. +2.7mln), Cushing +1.8mln, Gasoline -3.3mln (exp. -1.5mln), Distillate -0.5mln (exp. -2.1mln) Trafigura Chief Economist says oil market talk has shifted to upside risk; oil spreads show a relatively tight market, via Bloomberg TV. Citi upgrades 0-3m Palladium price targe price forecast to USD 1200/oz (prev. 950/oz) on the prospect of imminent supply cuts; bounce would present a tactical opportunity for spec selling and producer hedging; sees structural long-term downtrend. Geopolitics: Middle East US Central Command said a US aircraft and a coalition warship shot down five Houthi one-way attack unmanned aerial vehicles in the Red Sea on Tuesday, according to Reuters. "Israeli sources: The Israeli delegation returned from Doha after two days of negotiations on the detainee deal without progress", according to Sky News Arabia Geopolitics: Other China's Vice Foreign Minister Sun Weidong conducted consultations in Moscow where he met with his counterpart and the Russian Foreign Minister, while he stated that China supports Russia's BRICS presidency and stands ready to continuously strengthen strategic coordination between both sides in international multilateral platforms. Furthermore, Sun said both sides should strengthen communication and coordination in Asia-Pacific affairs, as well as jointly safeguard regional security and stability. South Korea and the US are to conduct annual military drills from March 4th-14th. US Event Calendar 07:00: Feb. MBA Mortgage Applications -5.6, prior -10.6% 08:30: 4Q GDP Annualized QoQ, est. 3.3%, prior 3.3% 4Q Personal Consumption, est. 2.7%, prior 2.8% 4Q GDP Price Index, est. 1.5%, prior 1.5% 4Q Core PCE Price Index QoQ, est. 2.0%, prior 2.0% 08:30: Jan. Retail Inventories MoM, est. 0.4%, prior 0.8% Jan. Wholesale Inventories MoM, est. 0.2%, prior 0.4% 08:30: Jan. Advance Goods Trade Balance, est. -$88.5b, prior -$88.5b, revised -$87.9b Central Bank Speakers 12:00: Fed’s Bostic Participates in Fireside Chat 12:15: Fed’s Collins Gives Remarks, Fireside Chat 12:45: Fed’s Williams Delivers Keynote Remarks DB's Jim Reid concludes the overnight wrap Henry is on duty tomorrow but given it will be a leap day I wanted to wish all those EMR readers who were born on February 29th a very happy birthday for tomorrow! The last time it fell on a workday was in 2016 so make sure your workmates shower you with 8 years' worth of gifts. The week so far has been a bit of a crawl and not the leaps of last week as we await the all important core PCE print tomorrow. Yesterday saw equities post marginal gains (S&P 500 +0.17%), with bond yields edging up across the globe. Despite the subdued tone in markets, there’ve been some important headlines on the political side overnight, as former President Donald Trump seems to be on track to record another primary victory in Michigan. Current estimates are pointing to a big winning margin for Trump (68%) against Nikki Haley (26.8%) with 70% of the vote in, and that comes ahead of Super Tuesday next week, when 15 states will be holding votes on the Republican side. So if Trump is able to keep winning those contests, then he’ll soon have a very substantial delegate lead on the way to the nomination. Overnight, the Reserve Bank of New Zealand held its official cash rate (OCR) unchanged at 5.5% - a 15-year high but on a day where there was a small chance of a hike delivered a relatively dovish stance. The central bank in its statement highlighted that “core inflation and most measures of inflation expectations have declined and the risks to the inflation outlook have become more balanced”. Following the decision, t he kiwi (-0.94%) is trading at $0.6113, after being one of the best performers in the last month with some hiking probabilities priced in. Bonds rallied with yields on the 10yr government bonds dropping -9.2bps to trade at 4.71% as we go to print. Asian equity markets are slightly lower as I type with the Nikkei (-0.10%), Hang Seng (-0.27%), CSI (-0.30%) and the Shanghai Composite (-0.67%) declining. Shares of embattled developer Country Garden fell more than -12.0% after it received a liquidation petition in a Hong Kong court over its inability to repay a HK$1.6 billion ($204 million) loan and complicating its debt revamp prospects. On the flip side the HK budget is ongoing and restrictions on the property market have been lifted and boosts to tourism have been announced. Elsewhere, the KOSPI is nearly +1.0% higher this morning after two days of declines. US equity futures are just below flat with yields on 10yr USTs down -0.98bps, standing at 4.29%. In early morning data, Australia’s CPI unexpectedly remained steady at +3.4% y/y in January (v/s +3.6% expected). YoY Core-CPI was +4.1% in January down from the +4.2% increase seen in December. When it came to yesterday, the main story was more that there wasn’t much of a story, with little movement across the major asset classes. Among equities, there were some modest movements, with the S&P 500 (+0.17%) closing just below its all-time high, having basically been in a narrow band since the Nvidia results last week. Currently it’s down -0.21% for the week, meaning it still needs to recover a bit in order to achieve a joint record of 16 weekly advances in the last 18 (currently on 15/17 for first time since 1989). Small-cap stocks continued to outperform, with the Russell 2000 up +1.34%, in contrast to the Dow Jones, which was down -0.25%. Tech stocks saw a marginal outperformance, with the NASDAQ up +0.37% and Magnificent 7 up +0.22%. It shows the signs of the times that Apple yesterday announced the closure of its electric car unit which it set up in 2014 that at one point promised autonomous driving within a reasonable timeframe. The fact that they did this partly to divert resources to AI shows how trends can change. Over in Europe the aggregate equity move was very similar, with the STOXX 600 up +0.18%, whilst the DAX (+0.76%) posted a 5th consecutive gain to reach a fresh all-time high. On the rates side, Treasuries saw a mild sell off despite a fairly well digested 7yr auction. By the close, the 10yr Treasury yield was up +2.4bps to 4.30%. That said, there were some interesting trends on inflation expectations, which have continued to move higher over recent days. For instance, while the nominal 2yr yield was down -2.6bps, the 2yr breakeven was up a further +3.6bps to 2.75%, which is its highest level since March last year. Bear in mind that the 2yr breakeven began the year at 2.02%, so we’ve seen a pretty substantial move in just two months, which goes some way to explain why investors now don’t expect the rapid rate cuts that were priced at the start of the year. The amount of Fed cuts priced in 2024 inched down to 77bps, so now essentially in line with the 75bps of cuts penciled in by the median FOMC dot back in December. Patience on rates cuts continued to be visible in the latest Fed comments, with Fed Governor Bowman (hawk) noting that the latest inflation data “suggest slower progress in bringing inflation down toward our 2 percent target”. Over in Europe, gilts saw some of the largest moves, which followed comments from BoE Deputy Governor Ramsden that “key indicators of inflation persistence remain elevated”. So 2 yr gilt yields were up +4.0bps to 4.33%, and 10yr gilt yields ended the session up +3.4bps at 4.19%, which is their highest level since late November. Elsewhere in Europe there was a similar pattern, with yields on 10yr bunds (+2.5bps) also hitting their highest level since November, at 2.46%. Elsewhere yesterday, there was a mixed tone from the latest US data. On the negative side, the Conference Board’s latest consumer confidence reading for February was down to 106.7 (vs. 115.0 expected), which is the first decline in four months. Moreover, the preliminary durable goods orders for January were down -6.1% (vs. -5.0% expected). Core capital goods orders were in line at +0.1%, but with the previous month revised down by four-tenths. That said, it wasn’t all bad news, with core capital goods shipments up +0.8% (vs. +0.1% exp) in January and the Richmond Fed’s manufacturing index up to -5 in February (vs. -9 expected), ending a run of 4 consecutive monthly declines. The stronger shipments data saw the Atlanta Fed’s GDPNow model marginally upgrade its estimate for Q1 growth to an annualised 3.25%. If realised, that would be a third consecutive quarter with growth above 3%. To the day ahead now, and data releases include the second estimate of US GDP in Q4, along with the European Commission’s economic sentiment indicator for the Euro Area in February. From central banks, we’ll hear from the Fed’s Bostic, Collins and Williams, the ECB’s Muller and the BoE’s Mann. Tyler Durden Wed, 02/28/2024 - 08:16.....»»

Category: personnelSource: nytFeb 28th, 2024

Futures Flat Ahead Of Flood Of Economic Data

Futures Flat Ahead Of Flood Of Economic Data US equity futures pointed to modest gains, led by tech stocks - following Monday's 38bps drop which was the worst Monday since early December and the second worst Monday since last June - as investors looked ahead to economic data and commentary from Federal Reserve speakers in coming days for clues on the outlook for interest rates. As of 8:00am ET, S&P 500 futures rose 0.1% while Nasdaq 100 contracts added 0.3%. Europe’s Stoxx 600 index was also flat, hovering near its all-time high. Two-year notes led gains as Treasuries rose, retracing some of Monday’s drop. The dollar slipped, oil dipped and bitcoin soared above $57,000. It's a busy day for economic data, which includes January durable goods orders (8:30am), Case-Shiller home prices (9am), consumer confidence, Richmond Fed and Dallas Fed. In premarket trading, cryptocurrency-linked stocks rise after Bitcoin’s price reached the $57,000 level for the first time since late 2021 (Cleanspark (CLSK) +16%, Coinbase (COIN) +6, Marathon Digital (MARA) +12%). Hess shares dropped premarket after Chevron said its $53BN acquisition of Hess faces potential disruption as rivals ExxonMobil and CNOOC claim pre-emptive rights over Chevron's stake in a crucial Guyana oil project (the largest oil discovery in a decade). Discussions are ongoing, but failure to resolve this could jeopardise the Hess takeover, Chevron said. Macy’s shares were volatile after it said it plans to close 150 unproductive locations as the department-store chain seeks to fight off a pair of activist firms seeking to buy the company. Zoom shares jumped 13% in US premarket trading after the video-conferencing software company’s guidance for adjusted earnings per share was stronger than expected. Additionally, Zoom also said its board approved a buyback program. Here are some other notable premarket movers: Aaron’s slumps 25% after providing disappointing 2024 forecasts. Altice USA gains 4% after Bloomberg reported that Charter Communications is exploring a takeover of the cable provider. Cava rises 7% after the restaurant chain posted fourth-quarter sales that beat expectations as diners splurged on premium dishes. Hims & Hers Health (HIMS) soars 18% after the telehealth group’s forecast for first-quarter revenue topped the average analyst estimate. Workday shares fell 7.2% in US premarket trading after the human resources software company issued full-year subscription revenue forecast that was weaker than expected at the midpoint. The company also reported fourth-quarter results that analysts said showed less upside than usual. Unity Software shares slid 17% in US premarket trading after the video-game software development company’s forecast for revenue fell short of expectations amid a portfolio review that includes exiting some businesses. Lowe’s said its sales will fall further this year as consumers continue to hold off from sprucing up their homes amid higher mortgage rates and a drop in new construction projects. Janux Therapeutics jumps 106% after the company reported updated clinical data. PubMatic rises 27% after the advertising technology company’s fourth-quarter earnings beat expectations, with analysts highlighting a boost from new products. TransMedics gains 21% after the transplant therapy biotechnology company reported fourth-quarter revenue that beat the average analyst estimate. Readings on the US economy are in sharp focus this week, with the Fed’s favored inflation gauge due on Thursday grabbing the most attention. Markets have already dialed back expectations for early and rapid Fed easing after hotter-than-expected data on jobs and price gains, pushing out bets on a first cut to June or July. “We have always been in the camp that the Fed is unlikely to move as quickly as the market was pricing and data for the first couple of months will only confirm that the first cut will be pushed into the third quarter,” said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management Co. In response to some arguments that stocks are in another tech bubble, Citigroup strategists said they don’t regard the US equity market as being in a bubble like that of 1999-2000, and suggested the rally could spread to other sectors. Valuation multiples for stocks are well below 2000 levels and, while cash flow expectations around tech companies have increased, forecasts for other industry groups aren’t stretched. That supports the case for broader equity gains.   “We argue that ‘bubble’ is the wrong term to describe the current market setup,” the Citigroup team led by Scott Chronert wrote. “Rather, the recent rally puts pressure on fundamentals to deliver.” Elsewhere, Bitcoin climbed, rising briefly beyond $57,000 for the first time since late 2021, supported by investor demand through exchange-traded funds as well as further purchases by MicroStrategy Inc. European stocks were little changed, with mining and autos & parts shares leading gains, while personal care and media stocks are the biggest laggards; drinkmakers’ stocks rose as earnings from Aperol-maker Davide Campari-Milano exceed analyst forecasts. The moves followed sharp drops over the past year for beverage manufacturers amid worries about destocking and consumers turning to cheaper alternatives. Campari gained as much as 7.5% while Remy Cointreau (+2.2%), Pernod Ricard (+1.8%), Diageo (+1.6%) also rise. Here are the biggest movers Tuesday: Bouygues rises as much as 5.3% after the French conglomerate reported full-year results, with Morgan Stanley saying that a beat on free cash flow was the main highlight GTT shares gain as much as 9%, to touch their highest since August 2022, after the French engineering company’s guidance for 2024 Ebitda beat analysts’ consensus at the mid-point, according to data tracked by Bloomberg Flutter shares gain as much as 5.7% in London as Barclays upgrades the stock to overweight from equal-weight, seeing earnings growth over several years as the gambling operator’s US market share strengthens Abrdn rose as much as 7.8% after the UK asset manager reported adjusted operating profit above estimates, with analysts also drawing attention to stable net interest margins SIG Group shares rise as much as 3.6%, the most since February 2023, after the Swiss carton-packaging maker’s cashflow turned positive thanks a strong 4Q, according to Vontobel Puma shares advance as much as 3.9% after the sportswear brand reported full-year results. The company also said it sees weaker demand for sneakers and sports gear persisting through the first half of the year before picking up amid major sporting events Eurofins Scientific shares fall as much as 12%, the most in a year. Morgan Stanley said cashflow was disappointing from the laboratory testing services company, citing the cost of higher start-up losses and more restructuring Straumann shares decline as much as 7.1% after the Swiss dental equipment company reported operating profit was much weaker due to restructuring and impairment Croda shares fall as much as 3.6% after the British specialty chemicals firm reported FY23 results. Citi analysts say though the figures mark the end of a difficult year Rovi declines as much as 9% after the Spanish pharmaceutical company said it expects revenue to decrease by a mid-single-digit percentage in 2024. It’s the steepest drop since May last year Earlier in the session, Asian stocks declined in the absence of fresh catalysts to drive the regional benchmark’s longest stretch of weekly gains in more than a year, with shares in Japan and Hong Kong reversing earlier advances. The MSCI Asia Pacific Index fell 0.2%, reversing a rise of as much as 0.3%, with losses in technology stocks weighing on the index. Japan’s benchmarks, reversed an early advance, while stocks also fell in Korea, Taiwan and Singapore. Mainland and Hong Kong-listed Chinese shares declined, extending Monday’s slide, as attention shifts to next week’s NPC meet. Hong Kong’s benchmark dropped ahead of the budget announcement on Wednesday. Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption. ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners. Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data. Japan’s two-year yield climbed to the highest since 2011 after stronger-than-expected inflation data boosted bets the central bank will end its negative-interest-rate policy in coming months. Traders increased the probability of Bank of Japan exiting its negative rate policy by April to about 82%, up from 78% on Monday, according to swaps data compiled by Bloomberg. The yen strengthened against the dollar. The inflation report “is adding to speculation that the BOJ will end negative-rate policy as early as March and is serving as a selling catalyst for bonds,” said Kazuya Fujiwara, a fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. The data underscores persistent inflationary pressures, he said. In FX, the Bloomberg Dollar Spot Index drops as much as 0.2% before paring losses to 0.1%  while the yen stood atop the G-10 FX leader board, rising 0.3% versus the greenback after Japanese CPI topped estimates and pushed two-year JGB yields to the highest since 2011. The greenback also lagged the Australian dollar, though outperformed others incuding Sweden’s krona. In rates, treasuries held small gains across the curve after being led higher by bunds and gilts after data showed inflation in UK stores slowed to the lowest level since March 2022. 10-year US TSY yields were around 4.26%, about ~2bps lower on the day, with bunds and gilts outperforming by 0.5bp and 2bp in the sector; gilts, richer by 3bp-4bp on the day, lead gains in core European rates as BOE rate cuts are more aggressively priced. Supply remains the main theme, with $42 billion 7-year note auction at 1pm and another heavy slate of new corporate bonds anticipated after $27 billion was priced Monday.  The week's coupon issuance concludes with today's 7-year note auction, and follows small tails for 2- and 5-year notes Monday; the WI 7-year yield near 4.30% is about 19bp cheaper than January’s, which tailed by 0.3bp. The dollar IG credit issuance slate includes a handful of deals already; 18 names priced $27b across 37 tranches Monday on order books that were three times oversubscribed according to Bloomberg, spreads compressed nearly 25bps across execution and attrition rates climbed. Another busy session is is expected Tuesday, before critical inflation data later this week. In commodities, oil steadied after Monday’s gains as pockets of strength in physical markets supported wider sentiment; WTI trade near $77.60 while Brent was at $82.40. Iron ore gained after Monday’s hefty loss, as market watchers looked for signs China’s approaching construction season will bolster demand after costs of the raw material dropped. Spot gold is up 0.2%. Bitcoin surged more than 4%, hitting a fresh two-year high and rose above $57,000, extending on the sharp gains seen on Monday, with the latest ETF inflows confirming that retail interest continues to surge. Looking at today's calendar, US economic data includes January durably goods orders (8:30am), 4Q house price purchase index, December FHFA house price index and S&P CoreLogic Case-Shiller home prices (9am), February Richmond Fed manufacturing index, consumer confidence, and Richmond Fed business conditions (10am) and Dallas Fed services activity (10:30am). Fed speakers scheduled include Barr at 9:05am. Market Snapshot S&P 500 futures up 0.1% to 5,085.50 STOXX Europe 600 little changed at 495.81 MXAP up 0.3% to 173.34 MXAPJ up 0.2% to 527.76 Nikkei little changed at 39,239.52 Topix up 0.2% to 2,678.46 Hang Seng Index up 0.9% to 16,790.80 Shanghai Composite up 1.3% to 3,015.48 Sensex up 0.5% to 73,141.23 Australia S&P/ASX 200 up 0.1% to 7,663.01 Kospi down 0.8% to 2,625.05 German 10Y yield little changed at 2.43% Euro little changed at $1.0854 Brent Futures little changed at $82.57/bbl Gold spot up 0.2% to $2,035.73 U.S. Dollar Index down 0.12% to 103.71 Top overnight news Japan’s Jan CPI overshoots the Street, with headline coming in at +2.2% (vs. the Street +1.9% and vs. +2.6% in Dec) while core rises 3.5% (vs. the Street +3.3% and vs. +3.7% in Dec). BBG Chinese regulators are taking measures to keep the renminbi’s dollar exchange rate stable as Beijing seeks to bolster confidence in the country’s currency and economy ahead of a key leadership summit. FT China’s state-backed funds have poured more than 410 billion yuan ($57 billion) into onshore shares this year in a bid to prop up the market. Further purchases are expected. BBG Samsonite is weighing its options following interest from suitors including buyout firms, people familiar said. Some PE firms are considering acquiring the company and relisting it in another market — such as the US — at a higher valuation. Shares jumped in Hong Kong. BBG President Emmanuel Macron of France on Monday said “nothing should be ruled out” after he was asked about the possibility of sending Western troops to Ukraine in support of the embattled nation’s war against Russia. NYT Iran reduced its stockpile of near-weapons-grade nuclear material even as it continued expanding its overall nuclear program, the United Nations’ atomic watchdog said Monday, marking a surprise step that could ease tensions with Washington. WSJ President Biden said Monday that fighting in Gaza could stop as early as this coming weekend, the most detailed timeline to date from the White House on a cease-fire between Hamas and Israel in Gaza. WSJ Federal Reserve Bank of Kansas City President Jeffrey R. Schmid said the US central bank should be patient in cutting interest rates with inflation above its 2% target and the job market still strong. In his first major speech since taking the job six months ago, Schmid also said he’s in no hurry to stop the ongoing reduction of the Fed’s balance sheet. BBG Sixth Street wants to go big on beaten down real estate to capitalize as banks grapple with stress in their portfolios. “We don’t think this is systemic risk, but there are obviously large exposures, particularly in some of the small and regional-sized banks,” CEO Alan Waxman said. BBG Earnings Hess (HES), Chevron (CVX) - Chevron's USD 53bln acquisition of Hess faces potential disruption as rivals ExxonMobil (XOM) and CNOOC (883 HK) claim pre-emptive rights over Chevron's stake in a crucial Guyana oil project (the largest oil discovery in a decade). Discussions are ongoing, but failure to resolve this could jeopardise the Hess takeover, Chevron said. (Newswires) HES -2.9%, CVX -0.6% in pre-market trade Puma (PUM GY) - Q4 (EUR): Revenue 1.98bln (exp. 2.094bln). EBIT 94.4mln (exp. 100mln). Net 0.8mln (exp. 28mln). Adverse currencies lead to a negative impact on sales of more than EUR 400mln. Asia/Pacific sales increased by 2.8% Y/Y, supported by strong growth in Greater China and India. The rest of Asia was softer, impacted by consumer sentiment and warm weather conditions. Sales in the Americas region decreased by 2.4% Y/Y due to the devaluation of the Argentine peso. 2024 EBIT guidance 620-700mln (exp. 663mln). "Going into 2024, we see that the market environment remains challenging." (Puma) +0.5% in European trade Lowe's Companies Inc (LOW) Q4 2023 (USD): Adj. EPS 2.28 (exp. 1.68), Revenue 18.602bln (exp. 18.45bln) choppy pre-market EU antitrust regulator says it will analyse Microsoft's (MSFT) AI partnership with Mistral AI. A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed after the lacklustre handover from the US as markets braced for looming risk events. ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners. Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data. Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption. Top Asian News US intends to increase defence industrial cooperation with Japan, India, and other partners in the Indo-Pacific to build supply chain resilience in the face of threats like China, according to a Pentagon official cited by Nikkei. China's Commerce Minister Wang met with USTR Tai at the WTO conference in Abu Dhabi and expressed Beijing’s “solemn concerns” over US tariffs and Taiwan-related issues, according to SCMP. China's Commerce Minister Wang said China is highly concerned about the trade remedy investigation initiated by the European side on China's EVs and other products, while he expressed strong dissatisfaction with this investigation that lacks factual basis. China's Commerce Minister Wang said China hopes Australia will pay attention to and actively promote the resolution of specific problems encountered by Chinese enterprises in Australia, as well as actively support China's accession to CPTPP. ABC News reported that it understands China is on track to lift tariffs on Australian wine at the end of next month when a review into the wine duties concludes. Standard Chartered (2888 HK) suspended new subscriptions by clients in China under the QDII outbound investment programme citing "commercial reasons", according to Reuters. PBoC held a working meeting on Feb 26th; says they are to use all monetary tools in full and use them well. China says it will prevent fluctuations in the housing market, according to CCTV; says localities should promote balance between supply and demand in the real estate market. All cities should accurately study and judge housing demand and improve housing supply, cities should take into account local economic and social development alongside population changes. European bourses are modestly firmer having picked up a touch in limited newsflow after an uneventful open, Euro Stoxx 50 +0.3%. Breadth overall fairly narrow, though the likes of the DAX 40 +0.4% have begun to extend modestly higher. Sectors mixed with no clear theme or bias though Basic Resource names outperform while Morgan Stanley lifted Semiconductors to Overweight (prev. Neutral). Auto names, in Germany in particular, are modestly firmer after Monday's pressure. Stateside, futures remain near the unchanged mark but with a slight positive bias, ES +0.1%, in-fitting with initial action in European trade but yet to experience the modest uptick seen since in European peers. Newsflow thus far limited, updates around MSFT, HES, CVX among others. Top European News UK Chancellor Hunt is considering plans to lower national insurance instead of income tax and could also announce a duty on vapes, according to reporting by The Telegraph. FX The DXY fell below Monday's 103.71 trough to a 103.60 base amid JPY pressure post-Japanese CPI. However, USD/JPY failed to test 150.00 to the downside and has since risen a touch with the USD benefitting in-turn and towards the 103.81 peak. EUR holds near the 1.0850 mark in relatively tight parameters with specifics light and no follow through from German GfK. Cable is unchanged and within Monday's range, docket ahead for the UK is headlined by BoE's Ramsden. AUD outperforms as it resides near its 100-DMA and is yet to test the 200-DMA at 0.6555 and 0.6561 respectively, Kiwi ever so slightly softer vs the USD ahead of the RBNZ. PBoC set USD/CNY mid-point at 7.1057 vs exp. 7.1945 (prev. 7.1080). Chinese regulators are reportedly taking measures to keep the renminbi exchange rate stable as Beijing aims to bolster confidence in China's economy and currency ahead of the "Two Sessions" gathering set to begin March 4th, while measures include refraining from short-term interest rate cuts and keeping the CNY currency band against the dollar firm, according to FT. Fixed Income Session's focus has been supply. Little reaction to outings from the Netherlands, UK & Germany thus far though the overall hefty docket in addition to syndication details/announcements from Slovakia, France, Italy (Valore) & UK has kept EGBs near the unchanged mark. Bunds held a tick above Monday's Monday's 132.33 base and by extension remain above Friday's 132.05 low; BTPs similarly contained but we await further 7yr Valore (Retail) updates after Monday's first day of subscription saw a record EUR 6.4bln of demand. Gilts not 'stuck; to unchanged levels in the same way as BTPs as its own supply was via a I/L; most recently, no reaction to the DMO announcing it will be launching a new 30yr syndication from 11th March (week after the March budget). USTs a touch firmer but someway shy of Monday's 110-04 peak after lacklustre 2yr & 5yr sales, 7yr due later. Yields currently under modest pressure with no overt flattening/steepening bias. Commodities Crude is near unchanged but holding on to most of the prior day's gains amid the recent Dollar softness and ongoing geopolitics, no reaction to the most recent updates which poured some cold water on Biden's relative optimism overnight. Nat gas under pressure but within familiar ranges for Dutch TTF while its US peer is essentially flat intraday. Precious metals benefit from the softer USD and yield environment, but slipped from best as the DXY lifted from its low; base peers post modest gains with potential tailwinds from reports out of China around measures to support consumption. Russia is to ban gasoline exports for six months with the ban to be introduced from March 1st, according to Tass. Geopolitics: Middle East Hamas received a draft Paris proposal which allows for a 40-day initial halt in all military operations and for the gradual return of displaced civilians to North Gaza, except men of military age, while it proposes all Israeli women, children under 19, elderly, and sick hostages would be released in exchange for a number of Palestinian prisoners. Furthermore, Palestinian prisoners would be exchanged for the release of Israeli hostages at a ratio of 10 to 1, according to a senior source cited by Reuters. US President Biden said he hopes a ceasefire agreement between Israel and Hamas can take effect by next Monday and national security advisers told him negotiators are "close", according to AP. US President Biden said Israel has agreed not to engage in "activities" during Ramadan and has committed to enable an evacuation of significant portions of Rafah "before they go and take out remainder of Hamas", according to NBC interview US Central Command said it destroyed three unmanned surface vessels, two mobile anti-ship cruise missiles, and a one-way attack unmanned aerial vehicle in self-defence, according to Reuters. Hamas official says there are still "big gaps" that need to be bridged before a ceasefire. Thereafter, Israeli political sources report that they do not know what the basis of US President Biden's optimism regarding the imminent ceasefire is, via AJA Breaking and there is no breakthrough to announce on Gaza ceasefire, according to Qatar's Foreign Minister; remain upbeat and optimistic on mediation talks; no agreement between Israel and Hamas on any of the main issues linked to a ceasefire. Geopolitics: Other Czech PM Fiala said about 15 countries have shown interest in the Ukraine ammunition initiative and Dutch PM Rutte noted that several other countries will also contribute to the Czech-proposed ammunition initiative, according to Reuters. French President Macron said they think a Russian defeat is indispensable for Europe's security and they will be exploring ways to mobilise third countries to buy ammunition, while he added they will join the ammunition initiative. Macron also said European countries will increase sanctions on countries helping Russia to bypass European sanctions and noted that he didn't say France was not in favour of sending troops to Ukraine, while he stands by strategic ambiguity on the issue of sending troops to Ukraine and cannot rule it out. Russia's Kremlin, on French President Macron not ruling out sending European troops to Ukraine, says sending NATO member contingent to Ukraine is a very important new element; if this happens, talks would have to shift to the inevitability of conflict with NATO. Russian Security Council Secretary Patrushev met with Cuba's Raul Castro to discuss security cooperation, according to Ifax. US Event Calendar 08:30: Jan. Durable Goods Orders, est. -5.0%, prior 0% Jan. Durables-Less Transportation, est. 0.2%, prior 0.5% Jan. Cap Goods Ship Nondef Ex Air, est. 0.1%, prior 0% Jan. Cap Goods Orders Nondef Ex Air, est. 0.1%, prior 0.2% 09:00: Dec. S&P/Case-Shiller US HPI YoY, prior 5.14% Dec. S&P/CS 20 City MoM SA, est. 0.20%, prior 0.15% Dec. S&P CS Composite-20 YoY, est. 6.00%, prior 5.40% Dec. FHFA House Price Index MoM, est. 0.3%, prior 0.3% 4Q House Price Purchase Index QoQ, prior 2.1% 10:00: Feb. Conf. Board Consumer Confidenc, est. 115.0, prior 114.8 Feb. Conf. Board Expectations, prior 83.8 Feb. Conf. Board Present Situation, prior 161.3 10:00: Feb. Richmond Fed Index, est. -9, prior -15 10:30: Feb. Dallas Fed Services Activity, prior -9.3 Central Bank speakers 09:05: Fed’s Barr Speaks on Counterparty Credit Risk DB's Jim Reid concludes the overnight wrap Its been a pretty quiet start to the week in equities but with the S&P 500 (-0.38%) seeing a late minor sell-off and with Chinese equities rising this morning on speculation that the authorities bought a notable amount of domestic shares in recent weeks. Yields rising across the board has been the main source of interest though. In the process the amount of cuts priced in by the Fed’s December meeting is now the lowest since mid-November, at 79bps, around half the amount expected at the start of the year. Meanwhile, yields on 2yr Treasuries (+2.8bps) closed at 4.72%, their highest level since the Fed’s December meeting, and overnight 2yr Japanese yields have edged up to their highest since 2011 after Japanese inflation beat expectations. It was a similar story earlier in Europe yesterday with yields then rising steadily all day, even before ECB President Lagarde comments to the European Parliament just before the European equity close. These remarks showed ongoing patience, suggesting that the ECB “needs to be confident that [the current disinflationary process] will lead us sustainably to our 2% target”. Overall her comments were not that different to the last ECB statement and the yield rise was mostly done for the day before she spoke. By the close 10yr bunds (+7.7bps), OATs (+8.3bps) and BTPs (+9.1bps) all posted significant yield increases, effectively reversing Friday’s rally (-7.8bps for 10yr bunds). And at the front end of the curve, the 2yr German yield (+6.9bps) closed at 2.92%, its highest level since November. The likelihood of an ECB cut by the April meeting was down 6pp to 27%, which is the lowest since late September. Over in the US, the 10yr yield ended the day up +3.1bps at 4.28%, whilst the 2yr yield ended the day up +2.8bps at 4.72%, its highest level so far this year. Bonds reversed some of their decline late in the session, perhaps as equities dipped, with the 10yr yield having been more than 5bps higher on the day shortly after 2yr and 5yr Treasury auctions, which saw decent investor demand but with bonds being issued a touch above the pre-sale yields. The day’s yield rises occurred alongside some decent second-order data releases, with the UK CBI’s retail sales volume survey at a 10-month high of -7 (vs. -31 expected and up from a 3-year low of -50 in January). Later the Dallas Fed’s manufacturing index was up to -11.3 in February (vs. -15.0 exp.). US new home sales came in at an annualised pace of 661k in January, below the 684k expected but their highest level in three months as December was revised down from 664k to 651k. It's an interesting week for equities as the recent run is starting to get into once in a couple of generation territory. The S&P 500 has now posted 15 weekly gains in the last 17 for the first time since 1989. Moreover, if we get another positive week this week, then it would be 16 out of 18 weeks for the first time since 1971, and it would also be a joint record since the index’s formation. So even though there’s been lots of positive catalysts, from lower inflation to excitement about AI, it’s actually very unusual to see the sort of sustained rally that’s occurred over the last few months. For more info, Henry put out some charts on the current rally in his Mapping Markets publication yesterday (link here). As we started a new week equities struggled to maintain their spectacular recent momentum, with the S&P 500 -0.38% lower on Monday. The NASDAQ declined a marginal -0.13%, while the Magnificent 7 were down -0.39%, dragged lower by a -4.44% decline for Alphabet amid concerns over recent missteps with its AI model. Small-cap stocks were the strongest performers, with the Russell 2000 up +0.61%. Over in Europe the picture was more negative though, with the STOXX 600 down -0.37% as it fell back from its all-time high on Friday. Even so, it wasn’t all bad news there, as the DAX (+0.02%) eked out a new record, and Euro HY spreads reaching their tightest level in over two years. In Asia the KOSPI (-0.42%), Hang Seng (-0.36%) and Nikkei (-0.12%) are all slightly lower. Elsewhere, Chinese stocks are bucking the trend with the CSI (+0.35%) and the Shanghai Composite (+0.51%) higher after reports on Bloomberg of state buying in recent weeks. US stock futures are slightly lower as I type. Coming back to Japan, inflation slowed less than expected in January, rising +2.2% y/y (vs. +1.9% expected) even if down from the previous month’s +2.6%. The +2.0% increase in core consumer prices was slower than the 2.3% increase in December and a tenth above expectations. Core-core was two-tenths above expectations at 3.5% from 3.7% last month. As mentioned at the top, yields on 2yr JGBs Japanese (+1.0bps) have hit their highest level since 2011, trading at 0.165% as we go to print. As a result, The likelihood of BOJ exiting its negative rate policy by April has risen to about 81%, up from yesterday’s 78%. To the day ahead now, and US data releases include the Conference Board’s consumer confidence for February, the Richmond Fed’s manufacturing index for February, preliminary durable goods orders for January, and the FHFA house price index for December. Meanwhile in the Euro Area, there’s the M3 money supply for January. From central banks, we’ll hear from Fed Vice Chair for Supervision Barr, the ECB’s Elderson, and BoE Deputy Governor Ramsden. Lastly in US politics, there are Republican and Democratic primaries taking place in Michigan. Tyler Durden Tue, 02/27/2024 - 08:19.....»»

Category: worldSource: nytFeb 27th, 2024

Futures Flat After Nvidia Sparks Biggest Rally In Over A Year

Futures Flat After Nvidia Sparks Biggest Rally In Over A Year US equity futures were poised for a muted end to the week after Thursday's blowout rally which sent the S&P over 2.1% higher, its biggest one-day gain since Jan 2023, after Nvidia’s blowout earnings rekindled global euphoria about artificial intelligence (even as Google demonstrated just how racist and useless it actually is) and pushed the S&P to its highest close on record, while also sending European and Japanese markets to all time highs. At 8:00am, S&P 500 futures were unchanged while Nasdaq 100 contracts slipped 0.2% - even as NVDA rose above $800 to sport a $2 trillion market cap - after soaring 3% yesterday. Treasury yields dropped with the 10Y sliding 3bps to 4.30% and the dollar extending its losses, as oil and bitcoin also reversed recent gains. The US economic data calendar is empty for the session, while no Federal Reserve members are scheduled to speak In premarket trading, Nvidia rose 2.1% extending Thursday’s 16% jump, and set to surpass a $2 trillion market cap when it opens. Block was quoted 13% higher as the payments technology company’s results and outlook beat estimates. Intuitive Machines was set for a 45% surge after the startup’s spacecraft landed on the Moon. By contrast, Booking Holdings gave a disappointing forecast and reported headwinds from the war in Israel, sending its shares down 8.5%. Here are some other notable permarket movers: Applied Optoelectronics sinks 37% after the maker of fiber-optic networking products posted a surprise drop in revenue in the fourth quarter. Block Inc. rallies 16% after the payments technology company raised its forecast for adjusted Ebitda for 2024. Booking Holdings slips 8.1% after giving a disappointing forecast for travel reservations and gross bookings, with the war in Israel and currency fluctuations weighing on results. Carvana soars 30% after the used-car retailer topped Wall Street’s profit expectations in the final months of 2023 and said it expects improved earnings this quarter. Fluence Energy advances 7.6% as JPMorgan raises its recommendation on the energy-storage company to overweight, saying Thursday’s selloff triggered by a short report was overdone. Maravai LifeSciences climbs 30% after its revenue outlook for the year topped the average analyst estimate. MercadoLibre falls 6.7% after recording earnings per share for the fourth quarter that fell short of Wall Street’s estimates for the e-commerce company. With S&P futures trading around 5,100 Investors are taking a breather after two rampy weeks as they weigh optimism about corporate earnings and US economic resilience against elevated valuations and hawkish signals from the Federal Reserve. “We continue to remain of the view that the secular bull market remains firmly intact,” said strategist Mathieu Racheter at Julius Baer. “While the risk of a short-term market pullback has increased, as several sentiment and positioning indicators have shot up above the historical normal levels again, we would use any weakness as opportunity to increase the exposure to equities.” “The speed of the tech rally has left investors wondering whether to take profits,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “While we see merit in re-balancing portfolios, we believe that retaining strategic exposure to US large-cap technology is important, and the rise in tech stocks could go further still.” The Stoxx Europe 600 index rose 0.1% and was headed for a fifth weekly gain, amid mixed earnings after also closing at a record on Thursday. The automotive and chemicals sectors the biggest outperformers, the latter on German chemicals giant BASF’s latest results. The telecommunications subindex is the worst performer after Deutsche Telekom reported disappointing earnings. UK-based lender Standard Chartered Plc climbed more than 8% after unveiling a profit beat and share buyback. German insurer Allianz SE declined after non-life insurance earnings missed analysts’ expectations. Deutsche Telekom AG, Europe’s largest telecommunications operator, slipped after a miss in non-US earnings.Here are the most notable European movers: Standard Chartered rises as much as 8.4% following the bank’s fourth-quarter adjusted pretax profit beat, with analysts highlighting lower loan losses as well as a $1 billion buyback BASF climbs as much as 4.0% after announcing deepened cost cuts and releasing results that pointed to a future rebound in earnings, with som analysts reckoning the weakness in volumes has bottomed out Italian banking stocks climb in Milan trading on renewed speculation of possible consolidation in the industry, after newspaper Il Foglio reported that unnamed investment banks are studying the sector Magyar Telekom jumps as much as 4.4% to highest since 2009 after Hungary’s largest telecommunications company issued strong guidance especially for Ebitda AL, a key metric in the sector, Erste says Mercedes-Benz shares rise as much as 2.3%, building on Thursday’s gains, after Barclays upgraded the German carmaker to overweight in light of the “compelling” increase in shareholder returns Deutsche Lufthansa shares fall as much as 4.8%, the biggest intraday drop since December, after the group reshuffled its executive board, with the exit of its CFO seen as a negative Allianz falls as much as 3.8%, the most since May, as underlying weaknesses in the German insurance group’s fourth-quarter result overshadowed a profit jump and higher dividends Hensoldt falls as much as 8.7% after releasing results that failed to inspire enthusiasm. Oddo analysts say the company’s unchanged guidance could have disappointed investors Deutsche Telekom shares fall as much as 2.6% after the telecom operator reported Ebitda slightly below estimates, a result of lower rental sales registered in the group headquarters segment, according to analysts Trainline shares fall as much as 2.7% after the train ticketing platform was downgraded to neutral by UBS, citing a lack of near-term catalysts, even as the long-term prospects for the firm look solid The Bloomberg Dollar Spot Index extended declines into a fifth day, on course for the first weekly drop in 2024. Almost all developed-nation peers advanced on Friday, with the exception of Norwegian krone, which is the most volatile G-10 currency this week and under-performs peers. The Australian and New Zealand dollars briefly gave up gains following Waller’s comments before bouncing back after China reported slower declines in home prices in January.  Fed Governor Christopher Waller said January’s jump in consumer prices warrants caution in deciding when to start cutting interest rates. That’s after Fed Vice Chair Philip Jefferson and Governor Lisa Cook made clear they want more evidence that inflation is headed back to their 2% target before lowering borrowing costs. Earlier in the session, Asian stocks were on track for a fifth straight week of gains as investors took heart from Beijing’s recent market rescue efforts, which have spurred a strong rebound in Chinese shares. The MSCI Asia Pacific Index was set for a 1.3% increase this week and headed for its longest winning streak in a year. Trading on Friday was largely range bound as Japan was shut for a holiday after surpassing a historical high reached more than three decades ago. The upbeat sentiment in Asia comes as Chinese authorities took further steps to restore investor confidence, including restrictions on equity net sales, stock purchases by state funds and a clampdown on quant trading. Chinese stocks as a result posted their longest run of gains since July 2020 in the mainland, while a measure in Hong Kong edged closer to erasing losses this year. In rates, treasuries are slightly cheaper across the curve with losses led by the front and belly, adding to recent flattening pressure seen on 2s10s and 5s30s spreads. Treasuries are cheaper by up to 2bp across the 2-year out to the 7-year sector with 2s10s, 5s30s spreads flatter by 0.3bp and 1.2bp on the day; 10-year yields drop by 2bps to 4.305%, with bunds and gilts slightly outperforming in the sector. Friday’s US session is set to be quiet for scheduled events, with the focus on potential deal hedging by corporates and supply pressure ahead of Monday’s Treasury auction. According to Bloomberg, the dollar issuance slate is empty and follows Thursday’s five-deal $19.7b calendar led by AbbVie pricing $15b across seven tranches. Issuers paid less than 1 basis point in new issue concessions, with deals nearly five times oversubscribed on average. Monday’s session is expected to be active, which could warrant some deal-related hedging flows for Friday’s session. Solventum is a candidate for either Friday or Monday, contemplating a deal in the context of $7bn with proceeds earmarked to fund a payment to 3M. Monday also sees a US double auction of 2- and 5-year notes for combined $127b In commodities, oil prices decline, with WTI falling 1.3% to trade near $77.60. Spot gold falls 0.3%. Looking to the day ahead, we have UK February GfK consumer confidence, Germany Q4 private consumption, government spending and capital investment, and the February ifo survey, as well as the ECB’s Consumer Expectations Survey. The US economic data calendar is empty for the session; we also hear from the Fed’s Waller, the ECB’s Schnabel, and the BoE’s Greene. Market Snapshot S&P 500 futures little changed at 5,092.75 STOXX Europe 600 little changed at 495.25 MXAP little changed at 172.84 MXAPJ little changed at 528.43 Nikkei up 2.2% to 39,098.68 Topix up 1.3% to 2,660.71 Hang Seng Index down 0.1% to 16,725.86 Shanghai Composite up 0.6% to 3,004.88 Sensex little changed at 73,119.16 Australia S&P/ASX 200 up 0.4% to 7,643.59 Kospi up 0.1% to 2,667.70 German 10Y yield little changed at 2.48% Euro little changed at $1.0820 Brent Futures down 1.2% to $82.67/bbl Gold spot down 0.3% to $2,018.05 US Dollar Index little changed at 104.02 Top Overnight News China’s housing crisis is getting worse, w/Dec new home prices in 70 major cities falling 1.24% Y/Y in Jan (vs. -0.89% in Dec) while secondhand prices sank even more. WSJ Constrained on all sides, China’s central bank is aiming to squeeze more value out of its policy actions by catching markets unaware with surprise easing aimed at putting a floor under the struggling economy. A record cut to a key lending rate earlier this week announced by the People’s Bank of China was just the latest unexpected move since Governor Pan Gongsheng took office last summer. At a press briefing last month, he shocked with an outsized cut to banks’ reserve requirement ratio. BBG A bill in the U.S. Congress targeting Chinese biotech companies may end up being more "narrowly tailored", the U.S. lawmaker who proposed it said on Friday, adding that he was cautiously optimistic something could be passed this year. RTRS The US and China are discussing new debt plans to prevent a wave of EM sovereign defaults, in potentially their biggest joint economic cooperation in years, people familiar said. Any plan — which may include extending loan periods before defaults — may require buy-in from private creditors. BBG ECB Governing Council member Robert Holzmann said he doesn’t see reductions in interest rates coming before the US — suggesting he reckons any move by policymakers in Frankfurt may still be some way off. BBG Fed officials (Waller, Jefferson, Cook) signal rate cuts will arrive eventually (and likely this year), but additional disinflationary evidence will be required first. BBG Prime Minister Benjamin Netanyahu has finally unveiled Israel’s plans for Gaza after hostilities end in the enclave, submitting to his war cabinet a formal proposal that directly contradicts the objectives of the US. FT Comments this week from Fed officials and the minutes to the January FOMC meeting suggest that the first rate cut is unlikely to come as early as our previous forecast of the May meeting. We have therefore dropped our forecast of a May cut and now expect 4 cuts total in 2024 (vs. 5 previously) in June, July, September, and December, followed by 4 more cuts in 2025 (vs. 3 cuts previously), to the same terminal rate of 3.25-3.5%. GIR Intuitive Machines leapt premarket after becoming the first private firm to land a robotic spacecraft intact on the moon. NASA paid almost $118 million for the mission that ended a string of failures. BBG Mutual fund cash allocations are nearing record lows. Mutual fund PMs can express directional views on the forward path of equities through the share of their assets they choose to hold in cash. Mutual funds continued to deploy cash reserves into the equity market in 4Q23, cutting their allocation to cash from 1.9% to 1.7% of assets. Fund cash allocations now stand just 20 bp above their all-time low of 1.5% reached in December 2021. GIR Earnings Standard Chartered (2888 HK / STAN LN) - FY23 (USD): adj. Pretax 5.7bln (exp. 5.89bln, prev. 4.76bln Y/Y), adj. Op Revenue 17.4bln (exp. 18.6bln, prev. 16.3bln Y/Y). Announces USD 1bln share repurchase. Guides initial FY24-26 op. income growth at the top of the range +5-7%. Underlying profit before tax rose 27% Y/Y to 5.7bln, NII rose 23% Y/Y to 9.6bln, Q4 adj. pretax 1.08bln (exp. 989.6mln), Co. announces USD 1bln buyback. (Newswires) Index Weightings: FTSE 100 (0.8%). Shares +8.1% in European trade Allianz (ALV GY) - Q4 (EUR): Adj. EPS 6.00 (exp. 5.69, prev. 4.99 Y/Y), Op. 3.77bln Y/Y (prev. 3.96bln Y/Y). Guides initial FY24 Op. 13.8-15.8bln. Proposes to increase FY dividend to EUR 13.80 (exp. 12.08, prev. 11.40), announces buyback programme of up to EUR 1bln, to be conducted between March 2024 and year-end. Regular dividend payout ratio increased to 60% (prev. 50%). This new dividend policy shall already apply to the dividend for fiscal year 2023 (Newswires) Index Weightings: DAX (7.9% - third largest), Euro Stoxx 50 (3.0%), Stoxx 600 (1.0%) Shares -3.2% in European trade BASF (BAS GY) - Q4 (EUR): Revenue 15.9bln (exp. 16.2bln). Adj. EBIT 292mln (exp. 398mln). Sees 2024 operating profit between EUR 13.8-15.8bln (exp. 15.48bln). Guides FY24 EBITDA 8-8.6bln, FCF 0.1-0.6bln. Proposes dividend of EUR 3.40/shr for FY23. Targeting cost-saving plans of up to EUR 1bln by the end of 2026. (Newswires) Index Weightings: DAX 40 (3.6%), Euro Stoxx 50 (1.4%), Stoxx 600 (0.4%) Shares +0.5% in European trade Deutsche Telekom (DTE GY) - Q4 (EUR): Adj. Net 1.83bln (exp. 1.63bln), Adj. EBITDA 10.06bln (exp. 10.1bln), Revenue 29.4bln (exp. 28.5bln). Guides initial FY24 EPS > 1.75 (exp. 1.84), Adj. EBITDA 42.9bln. (Newswires) Index Weightings: DAX 40 (6.2%), Euro Stoxx 50 (2.3%), Stoxx 600 (0.8%) Shares -2.7% in European trade A more detailed look at global markets courtesy of Newsquawk APAC stocks mostly benefitted amid tailwinds from the tech-led surge in the US on the NVIDIA wave as its shares surged over 16% and its market cap increased by a record USD 277bln. ASX 200 finished higher with gains led by outperformance in tech, consumer stocks and financials. KOSPI kept afloat with South Korea to execute a record KRW 398tln budget in H1 to prop up domestic demand. Hang Seng and Shanghai Comp. were mixed with the tech sector facing headwinds from ongoing trade-related frictions, while the mainland was indecisive as participants digested the PBoC's liquidity injection, CSRC's denial of regulatory measures, and the latest Home Price data which showed a steeper Y/Y fall in property prices. Top Asian News US and China are in talks over innovative emerging market debt plans to prevent a surge in defaults. China has reportedly turned to private firms to hack an array of foreign governments and organisations, while files indicate China infiltrated the cyberinfrastructure and collected data of government departments in Malaysia, Thailand and Mongolia, according to FT citing a large data leak from Shanghai Anxun Information Technology. China's Embassy in the UK commented regarding UK sanctions on Chinese companies in which it stated that sanctions against relevant companies are 'unilateral actions that have no basis in international law' and it is firmly opposed to them, while it would like to inform the British side that any act that undermines China's interests will be resolutely countered by the Chinese side, according to Reuters. US export curbs on China won't extend to legacy chips which generally refers to 28-nanometer and older-generation semiconductors, according to US official cited by Nikkei. US lawmakers urged Volkswagen (VOW3 GY) to halt operations in Xinjiang after vehicles with Chinese components were held at US customs. Chinese commercial banks sold a net USD 9.8bln of FX in Jan (vs net sale of USD 4.3bln in Dec), according to FX regulator. China's CSRC vows to crack down on market manipulation and insider trading, will step up onsite inspection of listing candidates. Fitch on China says it believes rate cuts will deliver only a minor boost to economic activity. Chinese Cabinet meeting says they are to study measures to attract and utilise foreign investment on a larger scale; to study measures to prevent and resolve local debt risks European bourses, Stoxx600 (+0.1%), have not deviated much from levels seen at the open, with trade fairly tentative after the prior day’s strength. The FTSE MIB (+0.6%) is the exception, lifted by continued strength in the Italian banking sector. Sectors are mixed; Chemicals take the top spot, lifted by post-earning strength in BASF (+0.5%). Autos build on the prior day’s gains after Barclays upgraded Mercedes Benz (+1.5%). Telecoms is the clear laggard, hampered by Deutsche Telekom's (-1.7%) results. US Equity Futures (ES -0.1%, NQ -0.2%, RTY -0.6%) are subdued, paring back some of the pronounced strength in the prior session. Nvidia soared as much as 16% in the prior session and is higher by 1.8% in the pre-market. Top European News ECB's Holzmann says the main risk to rake cuts is Red Sea tensions, via Bloomberg TV; Some wage increases have been quite high. Better to cut later and faster than too early. ECB hopes for cuts but have been wrong before. Does not see circumstances for the ECB to cut before the Fed. ECB's Schnabel says monetary policy has had a weaker impact on dampening demand for services ECB's Nagel says it is too early to cut rates even if a move appears tempting; will only get a key price pressure in Q2, then "we can contemplate cut in interest rates"; price outlook is not yet clear enough. Period of rapid inflation is over, and some setbacks ahead are possible. Inflation, including "hard core" will remain markedly higher than 2% in coming months. ECB Consumer Inflation Expectations Survey (Jan) - 12-months ahead 3.3% (prev. 3.2%); 3-year ahead 2.5% (prev. 2.5%) UK Ofgem Energy Price Cap (GBP): 1,690 (exp. 1,656; prev. 1,928), -12.3% (exp. -14%) for dual-fuel households. FX DXY is pivoting around the 104.00 mark within a 103.85-104.01 range and contained within yesterday's 103.43-104.12 parameters. Uneventful trade for EUR/USD with the pair sandwiched between its 100DMA at 1.0811 and 200DMA at 1.0826. IFO did little to move the dial, whilst ECB inflation expectations posted a modest uptick for the 1yr reading. Hawkish Fed rhetoric has seen the JPY lose further ground to the dollar with focus on a potential test of the recent YTD peak at 150.88. Such a move could prompt verbal jawboning from Japanese officials. NZD is the marginal laggard across the majors following soft retail sales overnight. AUD is trivially firmer vs. the USD with the pair supported via favourable risk dynamics. PBoC set USD/CNY mid-point at 7.1064 vs exp. 7.2008 (prev. 7.1018). Fixed Income Once again, initial leads were bearish with EGBs veering lower throughout the morning. The German Ifo release which printed alongside the latest ECB Consumer Inflation survey, saw a slight increase in the 12-month view. Reaction to the data was hawkish, but not sufficient to trigger a test of 132.00. USTs are following their European peers with the pressure resulting in a slight uptick in pricing for the Fed, but very close to the Fed's own view; currently near lows at 109-10. Gilt price action is in-fitting with Bunds with specifics light so far. Overall bearish action has pressured Gilts to a 97.10 trough. Italy sells EUR 4bln vs exp. EUR 3.5-4bln 3.20% 2026 BTP Short Term and EUR 0.5-1.0bln 1.50% 2029 & EUR 2.55% 0.25-0.5bln 2041 BTPei. Commodities A weak session for crude prices this morning despite a lack of fresh or clear fundamental drivers, although sentiment has been gradually coming off best levels this morning; Brent Apr dipped back under USD 83/bbl. Precious metals also see broad weakness, despite a relatively contained Dollar and quiet news flow, whilst risk appetite has been waning from best levels in recent trade; XAU holds around USD 2020/oz; base metals are lower across the board. QatarEnergy is due to make an announcement on Sunday that will have "a significant impact" on the industry, according to Reuters sources; details light Geopolitics: Middle East US charged four mariners from an Arabian sea vessel transporting suspected Iranian-made advanced conventional weapons. "Israeli Foreign Minister: We will not be patient for a longer period in order to reach a diplomatic solution on the Lebanese front", according to Sky News Arabia Geopolitics: Other China's envoy for Korean Peninsula affairs told US's North Korea affairs official that China will continue to play a constructive role in promoting the political settlement of issues concerning the Korean Peninsula and said all parties concerned should acknowledge the core of the Korean Peninsula issue, as well as address their concerns through balanced and meaningful dialogue, according to Reuters. US event calendar Nothing major scheduled Central Bank speakers Nothing major scheduled DB's Jim Reid concludes the overnight wrap We've been discussing in recent days how Nvidia earnings was the main macro event of the week and how options were pricing in a 10.5% move in either direction in the 24-hours post earnings. This made me a bit nervous we were overselling the event but the reality is we undersold it as post earnings the company surged +16.40% yesterday, a phenomenal performance for one of the biggest companies in the world. There is no doubt it transformed the mood of the whole global risk market as well. Pretty much every global asset class is influenced by these seven stocks, something we tried to get across in our chart book. To frame the scale of its move yesterday, Nvidia added $277bn to its market capitalisation, making this the biggest single session gain in value of all time, surpassing the $197bn gain by Meta earlier this month. This saw Nvidia shoot back up to fourth place in the ranking of the world’s largest companies by market capitalisation, and the third largest in the S&P 500. Total year-to-date returns for the company now amount to +58.59%, the best out of the entire S&P 500. Nvidia’s year-to-date gains alone are equivalent to nearly 80% of the combined market capitalisation of the two largest listed companies in Europe (Novo Nordisk at $561bn and ASML at $380bn). The Philadelphia Semiconductor Index also partook in the rally closing +4.97%. For more on Nvidia, and the 2024 outlook on semiconductors, see my team’s chartbook from last week here. The Nvidia-led optimism saw the S&P 500, Nasdaq 100 and Dow Jones indices all hit new all-time highs. The S&P 500 leaped up by +2.11%, its largest gain in over a year, primarily driven by the information technology sector (+4.35%). The gains were clearly concentrated, but the equal weighted S&P 500 still posted a solid +1.03% gain, and the Russell 2000 index of small-cap stocks increased by +0.96%. Within tech, the Mag-7 gained +4.87%, while the broader NASDAQ rose +2.96%, ending the day only a tenth of a percent below its November 2021 highs. Talking of all time highs (ATHs) I did one of my favourite CoTDs yesterday where I looked at 85 countries' stock markets and showed how far away they were from their ATH in terms of percentage and years. Japan before yesterday was the furthest away at 34 plus years but that record has now been put to one side. For interest the furthest away from ATHs now are Italy, Finland, Portugal, Greece and Cryprus who all last hit their ATH around the 2000 bubble. Then there are 25 countries who last had their ATH around the GFC. You can see more on this in my CoTD here from yesterday. Please email jim-reid.thematicresearch@db.com if you want to be added to the daily chart list. All global equities benefited yesterday. Indeed European equities enjoyed the risk-on sentiment, as the STOXX 600 rose +0.82%. The German DAX strongly outperformed, jumping +1.47% to another new record, propelled forward by the information technology (+2.83%) and consumer discretionary (+2.82%) sectors. The MSCI EM index increased +0.86%. It wasn't just Nvidia that helped the mood yesterday, with data largely supportive on both sides of the Atlantic. In the US, weekly jobless claims at 201k (vs 216k expected) were a boost even if it helped keep yields elevated (see below). Continuing claims also fell more than expected to 1862k (vs 1884k). This reverses the gentle increases from previous weeks, adding to the picture of US economic resilience. Taking the edge off the day's overarching trends, the US composite PMI modestly fell 0.6 points to 51.4 (vs 51.8 expected), driven by a fall in the services component to 51.3 (vs 52.3 expected). The manufacturing component rose to 51.5 (vs 50.7 expected). With this overall supportive backdrop, Fed speakers continued to urge caution regarding Fed cuts with Vice Chair Jefferson warning of the risk of “easing too much on improving inflation” after the January “CPI highlight[ed] disinflation is likely to be bumpy.” He still said that it is “likely appropriate to cut later this year” but it was a slightly hawkish message from someone around the center of the FOMC. Philadelphia Fed president Harker made some mixed comments, saying he “would caution anyone from looking for [rates easing] right now and right away” but later suggesting that cuts could come within “a couple of meetings”. Later on, we heard a patient tone from Governor Waller, who noted that there was “no great urgency” to ease policy, as well as from Minneapolis Fed President Kashkari, who said “we still have some work to do” on inflation. Fed funds futures saw expectations of 2024 rate cuts sink to a new 3-month low of 81.5bps (-5.2bps), which is less than half what priced at the peak on January 12. As a result, 2yr Treasury yields rose +4.6bps to 4.71%, their highest since the December Fed meeting. The softer PMI data saw 10yr Treasuries waver between gains and losses, ultimately finishing the day +0.3bps at 4.32%. Yields saw a bit of volatility, but little lasting impact, around a soft 30yr TIPS auction. This saw bonds issued at a 2.20% real yield, 2.5bps above the pre-sale yield and the highest since 2010 (the last 30yr TIPS auction was back in August). In Europe, the main release was the preliminary February PMIs, which saw the composite rise 1pt to 48.9 (vs 48.4 expected). This puts the index at an 8-month high, with the overall Euro Area growth outweighing a slump in German manufacturing. This was led by the services PMI, which rose to 50.0 (vs 48.8 expected), its first time out of contractionary territory since July. Adding to this, the publication of the ECB’s January meeting accounts showed officials were of the view that the risk of cutting rates too early was the greater danger relative to holding them steady, particularly with the limited indications of a wage turnaround. This signal of patience came even as there was “increased confidence” that inflation would come back to target and with the accounts flagging the likely lowering of the ECB’s inflation forecast at the March meeting. See our economists’ full take on the accounts here . Against this backdrop, traders trimmed bets of an ECB cut. The amount of rate cuts expected by the June meeting fell -4.2bps to 25.3bps, so only just pricing in a full rate cut by June. As many as 75bps of cuts had been priced by June back in late December. Off the back of this, the 2yr bund yields rose +5.4bps, even as 10yr bund yields saw a marginal decline (-0.7bps). In the energy space, strong risk sentiment and lingering supply fears saw Brent crude prices post their highest close since early November (+0.77% to $83.67). In more encouraging news for inflation, month-ahead TTF natural gas prices fell to their lowest since May 2021 (-4.59% to EUR 22.85/MWh) as mild weather and curtailed industrial demand have left Europe with historically high gas storage as it nears the end of winter. Asian equity markets are relatively quiet after a big week. As I check my screens, the KOSPI (+0.26%) and the S&P/ASX 200 (+0.34%) are trading in the green while Chinese equities alongside the Hang Seng keep on fluctuating in and out of positive territory. Markets in Japan are closed for a public holiday which means no cash Treasury trading. US equity futures are fairly flat. Now to the day ahead. In terms of data releases, we will have UK February GfK consumer confidence, Germany Q4 private consumption, government spending and capital investment, and the February ifo survey, as well as the ECB’s Consumer Expectations Survey. We will also hear from the Fed’s Waller, the ECB’s Schnabel, and the BoE’s Greene. Tyler Durden Fri, 02/23/2024 - 08:34.....»»

Category: worldSource: nytFeb 23rd, 2024

S&P To Open Above 5000, Set To Make It 14 Weeks Higher Out Of 15, Matching Best Stretch On Record

S&P To Open Above 5000, Set To Make It 14 Weeks Higher Out Of 15, Matching Best Stretch On Record US futures ticked higher again on Friday morning ahead of the release of CPI revision data (previewed here), assuring that the S&P 500 cash index will rise above the historic 5,000 level when it breaks for trading. S&P 500 futures traded 0.2% higher as 7:50am in New York, while contracts for the Nasdaq 100 Index gained 0.3% as Big Tech stocks made more advances in premarket trading. While Asian stocks fell, weighed by Hong Kong, as China was closed for holidays, European stocks gained paced by the Estoxx 50, where energy sector leads as WTI crude oil futures hold most of Thursday’s 3.2% advance. Meanwhile 10Y interest rates rose again, hitting 4.18%, leaving their yield up about 17 basis points in the past five days, as the US dollar and oil traded flat. Today, we get receive CPI revisions (updated seasonal factors and weights) where few expect any major changes but according to JPM, expect “headline inflation rates for recent months to be lowered somewhat on net." The next key data point will be the regular US inflation print due Tuesday. With the S&P set to close well above 4958, it will make it 14 up weeks out of the past 15... ... and it will match the best 15-week stretches in history according to Sentiment Trader. In premarket trading, Expedia Group shares fell after the online travel agency reported fourth-quarter gross bookings that slightly missed estimates, and named Ariane Gorin chief executive officer of the online travel company, while Pinterest made steep losses after the social-media company’s revenue fell short of estimates. Affirm Holdings (AFRM US) sank 10% after the buy-now, pay-later firm’s 2024 forecast for annual transaction volume came in below expectations. Analysts noted that the guidance appeared conservative as they do not see a slowdown in volumes in the second-half of the year. Cryptocurrency-linked stocks rallied as Bitcoin rises past the $46,000 mark. Stocks gaining include: Marathon Digital (MARA) +11%, Riot Platforms +9% Cloudflare (NET) soars 27% after reporting revenue that beat expectations, with analysts noting that sales were boosted by large new deals and renewals. Masonite International (DOOR) soars 35% after agreeing to be bought by Owens Corning (OC). PepsiCo (PEP) slips nearly 1% after providing a full-year sales forecast light of analysts’ estimates. Take-Two Interactive (TTWO US) fell 8.9% after the video-game company slashed its full-year net bookings forecast below consensus estimates. Analysts flagged softness in NBA 2K24 sales and the pushback of a planned release to next year, though were still confident in GTA VI releasing in FY25. Cryptocurrency-linked companies rallied on Friday as Bitcoin surged past the $47,000 mark after the latest flow data revealed the 2nd biggest net inflow on record into bitcoin ETFs as GBTC outflows trickle to a halt. The BLS will release its annual revisions to its consumer price index at 8:30 a.m. New York time. Last year, the update was significant enough to cast doubt on overall inflation progress and traders were speculating again that the recalculations might sway views over when the Federal Reserve will cut interest rates (full review here). “This could have important implications for the Fed,” wrote analysts at Rabobank in a research note. “It could increase or decrease the confidence that the FOMC has in a sustainable return to 2% inflation.” Back to markets, on Thursday the S&P 500 briefly hit 5,000 for the first time after a massive buy program lifted the market as if just for that one reason, before closing little changed. US equities have posted only one weekly drop since late October and the gauge has more than doubled from its March 2020 pandemic-low — driven by expectations for a soft economic landing and optimism about the impact of artificial-intelligence. “The equity market is responding to the positive data story and quite incredibly continues to march on,” said Charles Diebel, at Mediolanum International. “If growth holds up and there is a soft or no landing, that’s good for equities. And if something bad happens, the Fed will cut rates.” Despite some soft earnings this season, US stocks have been buoyed by the technology sector and strong economic data, which has kept the benchmark rallying this year. The fun may be ending however: according to Bank of America’s Michael Hartnett, the rally is getting close to triggering sell signals. The bank’s custom bull-and-bear indicator is nearing a reading that could be interpreted as a contrarian signal to sell, he said. Europe's Stoxx 600 was little changed after contrasting updates from heavyweights Hermes and L’Oreal. L’Oreal shares tumbled 7% as Chinese shoppers reined in travel spending, while Tesco advanced after Barclays said it will acquire much of the supermarket chain’s banking business. Hermes rallied after reporting surging sales at the end of last year.  Here are some of the biggest European movers on Friday: Hermes shares gain as much as 6.1% to hit a fresh all-time high after the maker of Birkin handbags posted sales figures which exceeded expectations for the fourth quarter, raising hopes of further growth due to its exposure to ultra-rich clients. Tesco shares rise as much as 2.4% after Barclays said it will acquire the grocer’s retail banking unit, which includes credit cards, unsecured personal loans, deposits and the operating infrastructure. Barclays shares fall 1.4% Ubisoft shares soar as much as 17% after the French video-game company said its bookings in the current quarter will be “sharply up,” boosted by a slew of launches such as Skull & Bones and Prince of Persia: The Lost Crown. Yara shares jump as much as 7.9% after the Norway-based fertilizer maker beat fourth-quarter adjusted Ebitda estimates. Sector peers OCI and K+S also gain. Carl Zeiss Meditec shares surge as much as 13% after the German medical optics company reported Ebit for the first quarter that beat the average analyst estimate. The results were “decent,” given the low expectations, Bernstein analysts said. Hexatronic shares jump as much as 36% after the Swedish fiber-optics firm reported its latest earnings described by Redeye as much better than feared, with cash flow particularly strong. AMS-Osram shares gain as much as 19%. The company reported a good profitability outlook despite soft demand, which should be week received, according to Vontobel. Coloplast shares jump as much as 11% after the Danish ostomy and continence care company reported stronger-than-expected margin in the first quarter. The Ebit margin is “solidly in the middle of the full-year guidance range,” according to Bernstein analysts. L’Oreal shares slide as much as 7.7% after the beauty company’s like-for-like sales miss stoked concerns over a slowdown in its luxury and Asian businesses. Deutsche PBB shares drop as much as 3.9%, hitting another all-time low amid concerns about exposure to commercial real estate, which have also hit its European peers this week. Delivery Hero shares fall as much as 6.5% after Bloomberg reported that its major rivals in Southeast Asia, Grab and GoTo, have restarted talks for a merger. EMS-Chemie shares fall as much as 5.4%, the most since April, after the Swiss chemical firm’s outlook disappointed, with analysts pointing to a tough operating backdrop. Verbund shares decline as much as 9.5% to hit its lowest level since April 2021, after the power producer warned that earnings in FY24 will be significantly below market expectations because of the rapid drop in wholesale electricity prices and emission allowances, as well as a smaller contribution from its Grid segment. Legal & General shares dip as much as 3.7% after Citi analyst Andrew Baker opens a 30-day downside catalyst watch. Earlier in the session, Asian stocks fell weighed by Hong Kong, while many markets including China, Taiwan, South Korea, Indonesia, the Philippines and Vietnam were shut for public holidays. The MSCI Asia Pacific Index slipped as much as 0.4%, dropping for a second day, as investors turned cautious about Chinese markets ahead of the multi-day Lunar New Year holiday. Alibaba and Toyota were among the biggest drags. The Hang Seng dropped 0.8% and Hang Seng China Enterprises Index slid 1.1%, both falling a third straight day. Mainland markets were already shut for the holiday, which meant an absence of southbound flows as a potential support. Meanwhile, Japan's Nikkei 225 breached 37,000 for the first time since February 1990 amid a weaker currency and earnings updates. In Australia, the ASX 200 was rangebound amid light catalysts, while RBA Governor Bullock reiterated a focus on bringing inflation down but noted that the Board hasn't ruled in or out a further rate hike and even touched upon cuts. Stocks dropped in Hong Kong as there is “no further positive policy from the mainland, and no stock connect inflows,” said Steven Leung, executive director at UOB Kay Hian Hong Kong. There seemed to be limited buying interest in Hong Kong “other than that from the southbound stock connect recently.” In rates, treasuries were steady, with US 10-year yields rising 1bps to 4.17%. Bunds and gilts have pared most of an earlier fall. The Bloomberg Dollar Spot Index is flat. The kiwi tops the G-10 FX pile, rising 0.7% versus the greenback after economists at ANZ said the RBNZ will resume hiking interest rates later this month.             In rates, treasuries were marginally cheaper on the day, still inside weekly ranges, with yields higher by 1bp-2bp across the curve. US 10-year around 4.17% is ~1bp wider vs bunds and gilts in the sector; US 5s30s is little changed with corresponding German and UK curves flatter by ~3bp on the day. By contrast, core European rates see curve-flattening as German and UK long end outperform.   In commodities, oil prices edge up, with WTI rising 0.2% to trade near $76.30. Spot gold falls 0.1%. Bitcoin jumps 2.9%. Market Snapshot S&P 500 futures little changed at 5,019.50 STOXX Europe 600 little changed at 485.36 MXAP down 0.1% to 167.34 MXAPJ down 0.2% to 511.59 Nikkei little changed at 36,897.42 Topix down 0.2% to 2,557.88 Hang Seng Index down 0.8% to 15,746.58 Shanghai Composite up 1.3% to 2,865.90 Sensex up 0.3% to 71,615.71 Australia S&P/ASX 200 little changed at 7,644.84 Kospi up 0.4% to 2,620.32 German 10Y yield little changed at 2.36% Euro little changed at $1.0775 Brent Futures little changed at $81.66/bbl Gold spot down 0.1% to $2,032.52 U.S. Dollar Index little changed at 104.15 Top Overnight News The Biden administration is considering restrictions on imports of Chinese “smart cars” and related components that would go beyond tariffs to address growing US concerns about data security, according to people familiar with the matter. BBG China’s property crisis is starting to ripple across the world. “For Sale” signs on buildings from Mayfair to Toronto are popping up as hard-pressed Chinese investors and creditors try to raise cash. Sales prices will help put hard numbers on just how much trouble the wider industry is in. BBG China’s new yuan loans for Jan were ahead of plan at CNY4.92B (vs. the Street CNY4.5B and up from CNY1.1T in Dec) while aggregate financing spiked to CNY6.5T (nearly CNY1T above plan). SCMP Financial conditions in Japan will remain easy for the time being even after the Bank of Japan puts an end to the world’s last negative rate regime, Governor Kazuo Ueda said. BBG Barclays has agreed to buy the bulk of Tesco’s banking business in a £600mn deal, as UK supermarket chains accelerate their retreat from an ill-fated expansion into financial services. Barclays said on Friday that it would take on Tesco Bank’s credit cards and unsecured personal loans, totaling about £8.3bn of lending balances. It has also signed a 10-year distribution deal to sell financial products under the Tesco brand. FT BOE policymaker Jonathan Haskel, who voted to raise interest rates last week, said he is encouraged by signs that Britain's inflation pressures might be on the wane but he would need more evidence of a cool-down before changing his stance. RTRS Joe Biden’s attempt to address suggestions he has a memory issue backfired with a new gaffe when he confused the leaders of Egypt and Mexico. Biden had summoned reporters to respond to a DOJ report fueling concerns about his age and insisted that his memory was “fine.” BBG New York City’s housing crunch is the worst it has been in more than 50 years. The portion of rentals that were vacant and available dropped to a startling 1.4 percent in 2023, according to city data released on Thursday. It was the lowest vacancy rate since 1968 and shows just how drastically home construction lags behind the demand from people who want to live in the city. NYT The special counsel investigating President Biden said in a report released on Thursday that Mr. Biden had “willfully” retained and disclosed classified material after leaving the vice presidency in 2017 but concluded that “no criminal charges are warranted.” NYT A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed and were mostly subdued in holiday-thinned conditions ahead of the Lunar New Year. ASX 200 was rangebound amid light catalysts, while RBA Governor Bullock reiterated a focus on bringing inflation down but noted that the Board hasn't ruled in or out a further rate hike and even touched upon cuts. Nikkei 225 breached 37,000 for the first time since February 1990 amid a weaker currency and earnings updates. Hang Seng was pressured amid losses in property and tech in a shortened trading session and with mainland participants already away for Chinese New Year celebrations. Top Asian News US President Biden's administration is said to consider restrictions on China EVs to address data security concerns, while the move would be an additional hurdle beyond tariffs to keep out Chinese smart cars, according to Bloomberg. BoJ Governor Ueda said the chances are high for accommodative conditions to stay even if negative rates are abandoned, while he added they will pay heed to the health of the balance sheet if exit from stimulus policy draws near. RBA Governor Bullock said the Board is focused on bringing inflation down and recent developments in inflation are encouraging but they have some way to go to meet the inflation target and noted while there are some encouraging signs, Australia’s inflation challenge is not over. Bullock also stated the Board hasn’t ruled out a further increase in interest rates but neither has it ruled it in, while she added that inflation doesn't need to be in the 2%-3% band for them to think about rate cuts and if consumption slows more quickly than expected, it will be an opportunity to cut rates. European bourses are mixed and trading around the unchanged mark, following a mostly higher APAC lead, with slight underperformance in the CAC 40, hampered by losses in L’Oreal (-6.2%) post-earnings. European sectors are mixed; Healthcare is propped up by gains in Carl Zeiss Meditec (+9.4%) after it reported strong results. Utilities are on the back foot, after Enel (-0.9%) received a downgrade at RBC. US Equity Futures (ES U/C, NQ +0.2%, RTY +0.3) are on a mixed footing, with overall price action mirroring that seen in Europe; Expedia (-13.9%) is lower after it reported a deeper than expected loss in FCF; Take-Two Interactive (-8.6%) suffers after cutting Net Bookings guidance. Top European News UK's Ofgem says they are considering new rules to reduce the consumer cost which arises from supplier failures, costs claimed under a solar levy would be a liability of the failed supplier. Franklin Templeton's Head of European Fixed Income Zahn says BoE probably needs to cut rates sooner than peers; says he is overweight UK Government bonds. FX The Dollar is contained within yesterday's 103.95-104.43 range and in close proximity to the 100DMA at 104.17 ahead of US CPI revisions. A dovish release could see a breach of 104.00 and a test of several DMAs with the 200DMA at 103.60; whilst a hawkish release could see a retest of the recent YTD peak at 104.60. EUR is yet to break out of yesterday's 1.0741-1.0788 range. Likely to remain at the whim of the USD. Upside sees 100DMA at 1.0787. Steadier trade for USD/JPY after printing a fresh YTD high at 149.57 overnight. Technicians highlight the importance of a close above the 76.4% fib of the Nov-Dec'24 move at 149.17. Resistance ahead of 150.00 comes via 27th Nov. high at 149.67. The Kiwi is the G10 outperformer after ANZ bank forecasted that the RBNZ is to raise the OCR in Feb and April; currently 0.614 PBoC set USD/CNY mid-point at 7.1036 vs exp. 7.1996 (prev. 7.1063). Mexican Central Bank kept its interest rate at 11.25%, as expected, with the decision unanimous and it removed the previous guidance about needing to hold the key rate for some time. Fixed Income USTs are at the unchanged mark as relief from the well-received 30yr auction, making it three from three for the week, proved fleeting with focus switching from supply to the US CPI seasonal adjustment; currently flat in 110-22 to 110-30 bounds. Bunds are contained/incrementally softer with specifics light into the US main event. Yields are mixed and exhibit no clear bias given the overall tone but the session's 133.23-133.61 bound includes a new WTD & YTD trough. Gilt price action is in-fitting with peers into the US session. BoE's hawkish dissenter Haskel spoke pre-open and largely echoed the extensive remarks from peer Mann on Thursday; made a new WTD & YTD trough of 97.45. Commodities Crude is holding near yesterday's highs which saw the contracts settle higher by almost USD 2.50/bbl apiece amid broadening concerns of a widening Middle East conflict as Israel and Hamas have yet to come to a ceasefire agreement; Brent Apr trades around 81.75/bbl (81.36-81.84/bbl range). Horizontal trade across precious metals amid light newsflow and a contained Dollar; XAU dipped back under its 50 DMA (USD 2,033.84/oz) but remains within yesterday's range (USD 2,020.25-2,038.79/oz). Mostly softer trade across base metals, in part amid the buoyant Dollar, whilst Chinese markets have also shut for some 10 days amid the Chinese New Year celebrations. Earnings PepsiCo Inc (PEP) - Q4 2023 (USD): core EPS 1.78 (exp. 1.72), Revenue 27.9bln (exp. 28.4bln); plans to buyback around USD 1bln in shares. Shares -1.7% in pre-market trade Expedia Group Inc (EXPE) - Q4 2023 (USD): Adj. EPS 1.72 (exp. 1.68), Revenue 2.89bln (exp. 2.88bln). Negative free cash flow USD 415mln (exp. negative USD 192.6mln). Gross bookings USD 21.67bln (exp. 22.0bln). Announces CEO transition plan with Ariane Gorin to succeed Peter Kern as CEO. (Newswires) Shares -14.1% in pre-market trade Take-Two Interactive Software Inc (TTWO) - Q3 2024 (USD): EPS -0.54, Revenue 1.37bln (exp. 1.34bln); currently working on a significant cost reduction programme across the entire business to maximise margins. Cuts FY24 net bookings view to 5.25-5.3bln (prev. 5.45-5.55bln, exp. 5.48bln). (Newswires) Shares -8.5% in pre-market trade Hermes (RMS FP) - Q4 (EUR): Revenue 3.36bln (exp. 3.29bln). Sales at constant FX +17.5% (exp. +13.7%). FY recurring operating income 5.65bln (exp. 5.52bln). Proposes exceptional dividend of EUR 10/shr. Q4 Americas revenue +21.6% (exp. 12.1%). Q4 total Europe revenue +18.6% Y/Y. Q4 total Asia revenue +14.8% Y/Y. Confirms guidance. Executive Chairman says the Co. is very confident about the Chinese market; sees no interruptions in US trends (Newswires) Shares +4.5% in European trade L'Oreal (OR FP) - Q4 2023 (EUR): Sales 10.61bln (exp. 10.89bln), +6.9% (exp. +9.56%). Q4: North Asia comp. sales -6.2%(exp. +7.29%). Europe sales 3.27bln, +11.6%. North America sales 2.84bln, +9.4%. Luxe sales 4.1bln, +0.4% (exp. +4.42%). Consumer product sales 3.7bln, +7.7%. Professional products sales 1.23bln, +6.4%. Dermatological beauty sale 1.5bln, +27.3%. FY23: EPS 12.08 (exp. 13.15), +7.3%. Sales 41.18bln (exp. 44.5bln), +7.3%. Operating margin 19.8%. Op. 8.1bln (exp. 9.08bln, prev. 7.4bln Y/Y). Notes of the stagnating beauty market in China. (FT/Newswires) Shares -5.8% in European trade Ubisoft (UBI FP) - Q3 2023-24 (EUR): Sales 606mln (exp. 697mln, prev. 773mln), Net Bookings 626mln (prev. 727mln). Q4 Net Bookings seen "sharply up", leading to a record annual net bookings figure. Reaffirms FY targets. “Moving forward, we're gearing up for a very promising line-up for fiscal year 2025, including the upcoming release of Star Wars Outlaws' in 2024" (Newswires/ Ubisoft) Shares +17.5% in European trade Geopolitics: Middle East US President Biden said the conduct of Israel's response in the Gaza strip has been over the top and he is pushing very hard now to get a sustained pause in Gaza. White House said negotiations are ongoing regarding a hostage release and ceasefire deal, while it added that Secretary of State Blinken made it clear the US has concerns regarding Rafah operations. The White House also said that President Biden and German Chancellor Scholz will discuss Ukraine, the Middle East and the Red Sea shipping attacks. US Central Command said its forces conducted seven self-defence strikes against four Houthi unmanned surface vessels on Thursday and conducted strikes against seven mobile anti-cruise missiles that were prepared to launch against ships in the Red Sea. "Iranian militias move weapons and ammunition from Deir Ezzor to fortified Hezbollah positions on the Syrian-Lebanese border in anticipation of US strikes", according to Sky News Arabia Geopolitics: Other Russian President Putin said Russia has not yet achieved its goals in Ukraine and suggested the US should encourage Ukraine to resume talks, while he was said to sincerely believe that Russia has a historic claim to land in Ukraine. Putin said the US and Russia hold contacts at different levels and that Russia has no interest in Poland, Latvia or anywhere else, as well as noting that WSJ reporter Evan Gershkovich may be freed if the special services agree. Furthermore, he said those in power in the West have come to realise it is impossible to inflict strategic defeat on Russia and are wondering what to do next, while he added that they are ready for this dialogue. US Event Calendar Revisions: CPI Central Bank Speakers 13:30: Fed’s Logan Speaks in Moderated Q&A DB's Jim Reid concludes the overnight wrap     Tyler Durden Fri, 02/09/2024 - 08:23.....»»

Category: worldSource: nytFeb 9th, 2024

Bitcoin Witness Seesaw Trading in Early 2024: 5 Stocks in Focus

Five crypto-centric stocks in focus are: NVDA, CME, HOOD, COIN, SQ. The cryptocurrency market started 2024 on a positive note after an impressive rally last year. The much-hyped reformation in the cryptocurrency space took place on Jan 10. The U.S. Securities and Exchange Commission (SEC) approved rule changes to allow the creation of spot bitcoin exchange-traded funds (ETFs).As many as,11 spot bitcoin ETFs are likely to be launched this year. Following the news, the price of bitcoin (BTC) jumped above the technical barrier of 47,000 to reach 47.893.70. However, Bitcoin’s price has fallen sharply since then.On Jan 22, Bitcoin traded lower by nearly 3%, hitting its lowest level of $39,854.61 since December 2023. Nevertheless, bitcoin regained some lost glory in the last seven trading days as its price rose 0.6%.Bitcoin continues to hold a lot of potential. The SEC’s latest decision is likely to turn out to be a landmark, positioning the entire crypto space as an integral component of mainstream finance. The game-changing decision of the SEC will allow individuals, money managers and other financial institutions to get exposure to the world’s largest cryptocurrency without having to own it.Moreover, the next Bitcoin halving will occur in the first half of 2024. When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoins. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to reduced supply.Stocks in FocusNVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. As a leading designer of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.NVIDIA’s expected earnings growth rate for the current year is 63.1% (ending January 2025). The Zacks Consensus Estimate for its current-year earnings has improved 1.8% over the last 30 days. NVDA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.CME Group Inc.’s CME options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro-Bitcoin and Ethereum futures contracts.CME Group has an expected earnings growth rate of 2.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 60 days. CME currently carries a Zacks Rank #2.Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.Coinbase Global has an expected earnings growth rate of 49.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 36.4% over the last 30 days. COIN currently carries a Zacks Rank #3 (Hold).Robinhood Markets Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.Robinhood Markets has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. HOOD currently carries a Zacks Rank #3.Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.Block has an expected earnings growth rate of 53.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last seven days. SQ currently carries a Zacks Rank #3.The chart below shows the price performance of our five picks in the past three months.Image Source: Zacks Investment Research Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s credited with a “watershed medical breakthrough” and is developing a bustling pipeline of other projects that could make a world of difference for patients suffering from diseases involving the liver, lungs, and blood. This is a timely investment that you can catch while it emerges from its bear market lows. It could rival or surpass other recent Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CME Group Inc. (CME): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Block, Inc. (SQ): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksFeb 7th, 2024

Buy Bitcoin on the Dip for Solid Returns: 5 Stocks in Focus

Five crypto-centric stocks in focus are: NVDA, COIN, CME, SQ, HOOD. The cryptocurrency market started 2024 on a positive note after an impressive rally last year. The much-hyped reformation in the cryptocurrency space took place on Jan 10. The U.S. Securities and Exchange Commission (SEC) approved rule changes to allow the creation of spot bitcoin exchange-traded funds (ETFs). As many as,11 spot bitcoin ETF’s are expected to be launched this year.The game-changing decision of the SEC will allow individuals, money managers and other financial institutions to get exposure to the world’s largest cryptocurrency without having to own it. For a long time, the SEC was reluctant to approve the so-called spot bitcoin ETFs. However, the situation changed after the SEC lost a lawsuit to Grayscale in August 2023.Following the news, the price of bitcoin (BTC) jumped above the technical barrier of 47,000 to reach 47.893.70. However, Bitcoin price has since fallen sharply. On Jan 22, Bitcoin traded lower by nearly 3% at $39,854.61, hitting its lowest level since December 2023.Nevertheless, bitcoin continues to hold a lot of potential. The SEC’s latest decision is likely to turn out to be a landmark, positioning the entire crypto space as an integral component of mainstream finance.Technically, the Fed is set to initiate the first cut in interest rate in 2024 since March 2020, which saw the advent of the coronavirus pandemic. A lower interest rate regime should be very helpful for high-growth sectors like technology and cryptocurrency. Meanwhile, the largest thrust for the crypto space has come from institutional investors.Moreover, the next Bitcoin Halving will occur in the first half of 2024. When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoins. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to reduced supply.Stocks in FocusNVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. As a leading designer of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.NVIDIA’s expected earnings growth rate for the current year is 63.1% (ending January 2025). The Zacks Consensus Estimate for its current-year earnings has improved 1.1% over the last 30 days. NVDA currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.Coinbase Global has an expected earnings growth rate of 35.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.6% over the last 30 days. COIN currently carries a Zacks Rank #2 (Buy).Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.Block has an expected earnings growth rate of 53.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. SQ currently carries a Zacks Rank #3 (Hold).Robinhood Markets Inc. HOOD operates a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies. HOOD buys and sells Bitcoin, Ethereum, Dogecoin, and other cryptocurrencies using its Robinhood Crypto platform.Robinhood Markets has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days. HOOD currently carries a Zacks Rank #3.CME Group Inc.’s CME options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro-Bitcoin and Ethereum futures contracts.CME Group has an expected earnings growth rate of 2.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days. CME currently carries a Zacks Rank #3.The chart below shows the price performance of five above-mentioned stocks in the past month.Image Source: Zacks Investment ResearchWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CME Group Inc. (CME): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Block, Inc. (SQ): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 23rd, 2024

Key players prepare for bitcoin ETF approval as BlackRock, ARK, and others reveal fees for customers

BlackRock's fees will start at 0.20%, and VanEck has gone for 0.25%, according to the latest filings with the SEC. The token topped $45,000 Monday. Getty Bitcoin ETF applicants including BlackRock, VanEck, Fidelity and others have revealed their customer fees. S-1 filings from key players show BlackRock, for one, plans to charge 0.20%, while VanEck's hovers at 0.25%. The SEC could approve up to 13 spot bitcoin ETFs in the coming days.  The latest regulatory filings show major Wall Street players including BlackRock, ARK Invest, and Fidelity have announced customer fees for their pending spot bitcoin ETF products, which are line for approval by the Securities and Exchange Commission potentially this week. BlackRock plans to start its fee at 0.20% for its first 12 months until the fund hits $5 billion. Then it will rise to 0.30%, according to its S-1 filing. That's cheaper than Fidelity's, which set its fee at 0.39%. Valkyrie plans to charge 0.80%, according to a CoinDesk report.Invesco and Galaxy's fund, meanwhile, won't charge any fee for the first six months, then will implement a 0.59% fee. WisdomTree will charge 0.50%, while Cathie Wood's ARK Invest and its custodian 21Shares will charge 0.25%, the same as VanEck's fee. The SEC could approve as many as 13 firms' applications by this week's January 10 deadline. Speaking with CoinDesk, sources said the fees will be critical in determining the popularity and attractiveness to potential investors. "From a pure competitive standpoint, expense ratio matters greatly in this particular category," Nate Geraci, the president of investment firm The ETF Store, wrote in an X post.Bitcoin moved more than 2% higher on Monday to hover above $45,090. It's up more than 5.2% in the last five days, adding to its triple-digit gains in 2023.  Investors are also looking ahead to the bitcoin halving event, anticipated around April this year. After halving, bitcoin miners will be rewarded half as many tokens for their efforts.The cryptocurrency has jumped to all-time highs following each of the prior three halving events. Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 8th, 2024

5 Crypto-Centric Stocks to Watch in 2024 After a Solid 2023

We have narrowed our search to five crypto-centric stocks with strong potential for 2024. These are NVDA, IBKR, CME, SQ and COIN. The cryptocurrency market witnessed an impressive turnaround in 2023 after a highly disappointing 2022. Bitcoin (BTC), the largest cryptocurrency worldwide, soared 157% last year. Other major cryptocurrencies such as Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE) and BNB (BNB) also saw massive price hikes.The space is likely to remain buoyant in 2024. U.S. stock markets have soared amid a clear indication from the Fed’s December FOMC meeting that the current interest rate hike cycle, which elevated the Fed fund rate to a 22-year high of 5.25-5.50% from 0-0.25% in March 2022, has finally ended. Moreover, the December FOMC meeting dot-plot showed that on average, Fed officials are expecting at least three rate cuts of 25 basis points each in 2024.A lower interest rate regime will be very helpful for high-growth sectors like technology and cryptocurrency. Meanwhile, the largest thrust for the crypto space has come from institutional investors.Speculation that the Securities and Exchange Commission is set to approve a Bitcoin exchange-traded fund has also raised investors’ optimism. The agency is expected to respond to the application filed by ARK Investments and 21Shares by Jan 10, while financial bigwig BlackRock Inc.’s (BLK) proposal is expected to be addressed by Mar 15.Moreover, the next Bitcoin Halving will occur in the first half of 2024. When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoins. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to reduced supply.Stocks to WatchWe have narrowed our search to five crypto-centric stocks with strong potential for 2024.NVIDIA Corp. NVDA is a semiconductor industry giant and one of the biggest success stories of 2023. As a leading designer of graphic processing units (GPUs), the NVDA stock usually soars on a booming crypto market. This is because GPUs are pivotal to data centers, artificial intelligence, and the creation of crypto assets.NVIDIA’s expected earnings growth rate for next year is 62% (ending January 2025). The Zacks Consensus Estimate for its next-year earnings has improved 1% over the past 30 days. NVDA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Coinbase Global Inc. COIN provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.Coinbase Global has an expected earnings growth rate of 30.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 30 days. COIN currently carries a Zacks Rank #2.Block Inc. SQ is an online digital and mobile payment platform for consumers and merchants and is the parent company of Square and Cash App. The users of Cash App can buy, sell, send and receive Bitcoin. In addition, SQ’s decentralized tbd platform allows developers to build decentralized finance applications to run on programmable blockchains. SQ is also one of the largest Bitcoin investors.Block has an expected earnings growth rate of 53.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.5% over the past 60 days. SQ currently carries a Zacks Rank #3 (Hold).Interactive Brokers Group Inc. IBKR is a global automated electronic broker. IBKR executes, processes and trades in cryptocurrencies. IBKR’s commodities futures trading desk also offers customers a chance to trade cryptocurrency futures.Interactive Brokers Group has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.7% over the past 90 days. IBKR currently carries a Zacks Rank #3.CME Group Inc.’s CME options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers bitcoin and ether options based on the exchange's cash-settled standard and micro BTC and ETH futures contracts.CME Group has an expected earnings growth rate of 3.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 30 days. CME currently carries a Zacks Rank #3.The chart below shows the price performance of the abovementioned stocks in the past three months.Image Source: Zacks Investment Research Just Released: Zacks Top 10 Stocks for 2024 Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CME Group Inc. (CME): Free Stock Analysis Report Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Block, Inc. (SQ): Free Stock Analysis Report Coinbase Global, Inc. (COIN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 4th, 2024

Global Bonds & Stocks Suffer Biggest Rout To Start A Year Since 1999

Global Bonds & Stocks Suffer Biggest Rout To Start A Year Since 1999 2024's tumble in stocks and bonds was the biggest global rout to start the year since 1999 (and yesterday was the biggest daily drop in global capitalization since Dec 2022)... And while stocks and bonds tanked, the dollar soared... Source: Bloomberg The dollar has not fallen at the start of a calendar year since 2012, but the start of 2024 is the biggest rally since 1997... And the trend of weak economic data continues with ISM Manufacturing in contraction (below 50) for the 15th straight month, and JOLTS data confirming cracks starting to appear in the labor market... Source: Bloomberg The FOMC Minutes today were significantly less dovish than the market (and Jay Powell) suggested and March rate-cut odds faded modestly... Source: Bloomberg No bounce at all in stocks after yesterday's ugliness is putting the weekly win streak at risk of ending at nine. Small Caps were clubbed like a baby seal today (down almost 3%) and Nasdaq extended yesterday's loses (down around 1% today). The Dow remains the least ugly horse in 2024's glue factory... MAG7 couldn't catch any bid at all today... Source: Bloomberg And 'most shorted' stocks puked at the open and didn't bounce/squeeze at all... Source: Bloomberg S&P is down for the first two days of the year for the first time since 2015 and suffered the worst return start to a year since 2019 (which was after the end-2018 crash that Powell rescued stocks from)... The Russell 2000 has crashed back to a critical level (its 21DMA), down over 5% from its highs last week... Source: Bloomberg Goldman noted that US equities were only rescued yesterday by a large BUY imbalance on the close (which seemed to suggest retail/household $ deployments into the market to start the year)... Source: Bloomberg And one more tidbit before we move on to bond-land, healthcare dramatically outperformed MegCap Tech by the second most in the last 12 months... Source: Bloomberg Treasury yields tumbled in the afternoon as IG issuance dried up and rate-locks were lifted. On the day the belly outperformed (5Y-10Y -2bps) which left the 2Y yield just a smidge higher on the week... Source: Bloomberg 10Y Yield tested above 4.00% but quickly fell back. That is a 10bps plunge intraday fore the 10Y yield... Source: Bloomberg Perhaps today's most notable market mover was crypto which saw a significant flash-crash around 0630ET, led by a 7% plunge in Bitcoin, from $45,500 to $41,000 before bouncing back... Source: Bloomberg Ethereum also puked and is now underwater for the year, while bitcoin is a little stronger still... Source: Bloomberg Oil prices ripped back higher today as reality bit that MidEast violence was anything but calming down... Source: Bloomberg Gold dropped back again as the dollar rallied... Source: Bloomberg Finally, today was deja vu all over again in equity futures-land... Which European is doing all the selling? SNB? (Look at AAPL- their biggest holding). Tyler Durden Wed, 01/03/2024 - 16:00.....»»

Category: worldSource: nytJan 3rd, 2024

"We have no intention of selling": El Salvador"s millennial president touts the country"s bitcoin investment as the token soars

Nayib Bukele said if El Salvador sold all its bitcoin at current prices, it would recover 100% of its investment and see a profit more than $3,600,000. Salvadoran President Nayib Bukele gestures during a speech for his second anniversary in power on June 1, 2021 in San Salvador, El Salvador.Emerson Flores/APHOTOGRAFIA/Getty Images El Salvador's president Nayib Bukele praised his country's bitcoin investment on Monday. "Of course, we have no intention of selling; that has never been our objective," he said. The token touched $42,000 Monday, it's highest level in 20 months. Bitcoin breached $42,000 on Monday for the first time in 20 months, and El Salvador's millennial president Nayib Bukele took to X to tout his country's investment in the crypto amid the big gains. In a post on X early Monday, Bukele shared a screenshot of what he said was El Salvador's bitcoin portfolio. "El Salvador's #Bitcoin investments are in the black!" he said. At the cryptocurrency's current price following its recent climb, the country would notch a profit of more than $3.6 million. —Nayib Bukele (@nayibbukele) December 4, 2023  The 42-year-old leader said the country would not be exiting its position anytime soon, as that would run counter to long-term objectives."Of course, we have no intention of selling; that has never been our objective," Bukele said. "We are fully aware that the price will continue to fluctuate in the future, this doesn't affect our long-term strategy."He added that "naysayers" including journalists should offer apologies for doubting the country's investment decision. As for the bitcoin itself, investors' expectations for the Federal Reserve to ease interest rates have fueled a rally of more than 150% year-to-date.Crypto-linked equities, too, have seen similar, triple-digit gains. Names including Coinbase, MicroStrategy, and Riot Platforms have all surged over 200%.Meanwhile, the potential approval of a spot bitcoin ETF has added to the optimism, along with the looming bitcoin halving event expected in April 2024. Read the original article on Business Insider.....»»

Category: worldSource: nytDec 4th, 2023

Cryptoverse: "Layer two" tokens enjoy new life as bitcoin soars

Cryptoverse: "Layer two" tokens enjoy new life as bitcoin soars.....»»

Category: topSource: yahooNov 28th, 2023

Futures Drop On China Weakness As Gold Soars To 6 Month High

Futures Drop On China Weakness As Gold Soars To 6 Month High US equity futures and global markets are in the red, amid a broader risk-off tone to start the week as a renewed slowdown in China’s industrial profits growth dented sentiment in global financial markets, as they were seen as a sign of weak domestic demand and a reminder of the country’s economic slowdown. As of 7:35am, S&P and Nasdaq futures were both down 0.1%, off the worst levels of the session. 10-year TSY yields climbed as much as five basis points to 4.51%, the highest in more than a week, before reversing the entire move; gold climbed to the highest since May, rising over $2,100 while the dollar was little changed and bitcoin slumped under $37,000. Oil was down a fourth day before this week’s delayed OPEC+ meeting. Retail Sales numbers for Black Friday showing +2.5% YoY gain with online sales +7.5% to a record $9.8bn; this could be driven by discount/bargain hunting. Today we will get the October new home sales data, with economists expecting a decline after September’s surprise surge in sales volumes as higher mortgage rates and increased inventories of existing homes weigh on sales. The Dallas Fed manufacturing activity index is also due later for November. In premarket trading, Foot Locker dropped 3% after the sports apparel retailer was downgraded to sell at Citi, which sees third-quarter earnings per share missing estimates. Here are some other notable premarket movers: Crown Castle gains 4% after a report that activist investor Elliott Investment Management plans to push for changes at the wireless tower owner. Shopify jumps 4% after the e-commerce company said merchants set a Black Friday record with a combined $4.1 billion in sales. GE HealthCare Technologies drops 3% as UBS gives the stock its only sell rating. Today's cautious start comes despite the VIX index falling belkow 13, its lowest level since January 2020, as markets have been buoyed by a growing assumption that further interest-rate hikes from the Fed and ECB are unlikely. In earnings due this week, Crowdstrike Holdings Inc. will underscore how businesses are prioritizing cybersecurity after recent high-profile corporate hacks, while Salesforce and Dell are expected to post slower sales growth as overall corporate expenditure tightens. A slowdown in China’s industrial profit growth added to concern about deflation in the world’s second-largest economy. Fresh economic data this week will help traders gauge whether the gains for stocks and bonds seen so far this month can extend into December. Statistics include euro-zone inflation figures, China PMIs and US personal consumption numbers on Thursday, and US and euro-area PMIs on Friday. “There’s not much fundamental reason for high market optimism,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG. “A lot of clients I am talking to are getting more pessimistic about long-term growth prospects.” Meanwhile, after the bounce back in Treasuries this month, many US debt watchers say the path is clearing for a real revival in the market. The Bloomberg US Treasury Index is showing a positive return for the year after spending chunks of 2023 underwater, helped by of slowing inflation and measured jobs growth. In Europe the Stoxx 600 was down 0.1% as traders brace for inflation data due later in the week. Energy stocks are the worst performers, tracking losses in oil prices as Brent crude futures fall 1.8% to trade below $79.20. Real estate and telecom stocks are the biggest gainers, while energy and autos shares lag. BASF drops after a downgrade from Morgan Stanley while Bpost slumps after Belgian newspaper L’Echo reported the company is set to lose its newspaper and periodical delivery contracts. Turkish banks got a boost after Bank of America issued a broad buy reconmmendation on the group. Here are some of Monday’s biggest movers: Rightmove shares rise as much as 7% after the real estate portal said its revenue is tracking marginally ahead of expectations since July, helped by higher revenue by per advertiser. That’s despite a becalmed UK housing market, analysts noted. Its long-term revenue and profit guidance met analyst expectations. Elior shares rise as much as 7.7%, to the highest since July, after Deutsche Bank upgraded the French caterer to buy from hold, saying “the worst is probably over” and the focus is shifting to accretive growth and de-leveraging. Shaftesbury shares gain as much as 2.6% after the London landlord said customers reported sales in aggregate 12% above 2022 levels and 16% above 2019 levels in the period from July 1 to Nov. 15, according to a trading update. Turkish Banks’ shares surged the most in a month after Bank of America issued an across-the-board buy recommendation on major private-sector lenders, predicting they would benefit from the central bank’s pivot back to orthodox monetary policy. Julius Baer shares fall as much as 2.9% after the wealth manager said it is reviewing a lending business after confirming an exposure of 606 million Swiss francs to a single client. BASF shares fall as much as 2.9% after being cut to underweight from equal-weight at Morgan Stanley. The broker highlights a structural shift in the global chemicals cost curve that it says doesn’t appear to be fully discounted. BPost shares fell as much as 14% after L’Echo newspaper reported on Saturday that the company was set to lose its newspaper and periodicals delivery contracts. Frontier Developments shares sink as much as 24% after the UK video-game maker cut its revenue forecast for the fiscal year ending May next year, saying sales from a newly released real-time strategy game missed projections. Entain shares fall as much as 2.9% as Goldman says its buy rating on the Ladbrokes bookmaker parent was “wrong” and changes it to sell. Goldman is only sell-rated firm among 21 tracked by Bloomberg. Earlier in the session, Asian stocks fell, led by declines in China after data showed profit growth at the nation’s industrial companies slowed, adding to concerns over the region’s largest economy. The MSCI Asia Pacific Index dropped 0.4%, with TSMC and Alibaba among the biggest drags. Stocks in Japan, Taiwan, Australia and Singapore also slipped. Markets in India and the Philippines were closed for holidays. China’s benchmark CSI 300 Index fell more than 1% after a report that industrial profit growth slowed for a second-straight month. The nation’s economy remains fragile despite continued measures from authorities to stimulate consumption and support the ailing real estate sector. Hang Seng and Shanghai Comp declined following soft Chinese Industrial Profits and amid shadow banking concerns after Chinese authorities opened a probe into struggling shadow bank Zhongzhi, while the PBoC’s notice to strengthen financial support for private companies did little to spur risk sentiment. Nikkei 225 wiped out its opening gains after hitting resistance just above the 33,800 level and as participants digested Japanese Services PPI which showed a slight acceleration. ASX 200 finished lower as weakness in the defensive and mining-related sectors overshadowed the gains in tech. In FX, the Bloomberg Dollar Spot Index slipped 0.1%, edging closer to a 2 1/2-month low touched last week; USD/JPY fell as much as 0.4% amid month-end trading flows, with market participants citing possible month-end demand for yen from Japanese exporters. In rates, treasuries were little changed; the 10-year yield was flat at 4.465% after edging up as much as 5bps higher to 4.51%, its highest in more than a week. US TSYs trailed bunds and gilts outperforming by 4bp and 2.5bp in the sector; curve spreads are also within 1bp of Friday close levels. Core European bonds outperform, led by gilts after dovish comments from BOE Governor Andrew Bailey, who said recent inflation figures were “very good news.” Main focal point of US session is supply as two coupon auctions are slated — 2-year and 5-year notes.  Compressed auction cycle begins with $54b 2-year note sale at 11:30am and $55b 5-year at 1pm; WI 2-year yield is around 4.910%, 14.5bp richer than last month’s, which stopped on the screws; WI 5-year at around 4.46% is ~44bp richer than previous. In commodities, oil fell for a fourth day as traders looked ahead to this week’s delayed OPEC+ meeting. Gold closed above $2,000 an ounce on Friday, capping a second weekly gain and bolstering confidence that higher prices are justified. The metal has been lifted in the second half of November by weaker US economic data that added to expectations for early rate cuts by the Fed next year.  The narrative for iron ore keeps swinging between China property stimulus (bullish) and Beijing’s resolve to clamp down on speculation (bearish). Today’s macro data focus is new home sales and Dallas Fed; later this week we receive consumer confidence, GDP/PCE, and ISM-Mfg. Market Snapshot S&P 500 futures down 0.2% to 4,558.00 STOXX Europe 600 down 0.2% to 458.86 MXAP down 0.3% to 161.05 MXAPJ down 0.3% to 501.89 Nikkei down 0.5% to 33,447.67 Topix down 0.4% to 2,381.76 Hang Seng Index down 0.2% to 17,525.06 Shanghai Composite down 0.3% to 3,031.70 Sensex little changed at 65,970.04 Australia S&P/ASX 200 down 0.8% to 6,987.64 Kospi little changed at 2,495.66 German 10Y yield little changed at 2.64% Euro little changed at $1.0947 Brent Futures down 0.9% to $79.89/bbl Brent Futures down 0.9% to $79.89/bbl Gold spot up 0.7% to $2,015.01 U.S. Dollar Index little changed at 103.33 Top Overnight News Taiwan’s presidential election coming up on Jan 13 risks reigniting tensions with China as opposition parties more friendly to Beijing fail to unite, clearing a path for the current pro-independence Democratic Progressive Party to stay in power. WaPo The Beijing Stock Exchange has de facto implemented a new policy that prevents major shareholders of companies listed on its bourse from selling stock, worried that such sales could douse a long-desired rally, three people familiar with the matter said. RTRS US and Germany are starting to place pressure on Ukraine to negotiate an end to the war with Russia based approximately on the current battlelines. London Times Russia launched its largest drone attack of the war in the early hours of Saturday morning, targeting Kyiv in what Ukrainian officials fear is the start of a winter campaign aimed at destroying the country’s energy infrastructure. FT OPEC+ is close to resolving a dispute over 2024 production quotas with certain African members, potentially paving the way for incremental action on curbing supply at the upcoming 11/30 meeting. RTRS Bank of England Governor Andrew Bailey suggested that interest-rate cuts are unlikely for the “foreseeable future” as he warned that the second half of the inflation battle will be “hard work.” BBG A healthcare hiring boom is helping offset weaker job growth in other areas of the softening U.S. economy, boosting its chances of skirting a recession. The industry could serve as a strong job generator for years to come as an aging population and Covid-19 fuel widespread worker shortages and greater needs for healthcare services. WSJ An upcoming sale of shares in OpenAI is set to test how much the past week’s leadership chaos has cost the company and its backers, though big investors are bullish about securing a high valuation. The employee stock sale, which had been planned before the sacking last week of chief executive Sam Altman and expected to value the company at $86bn, will continue as planned, according to two investors with direct knowledge of the matter. FT Mastercard said overall spending rose ~2.5% Y/Y (ex-autos) on Black Friday, with in-store up a bit more than 1% while online climbed 8.5% (the 8.5% online spending increase isn’t that far from the +7.5% number published by Adobe). CNN A more detailed look at global markets courtesy of Newsquawk APAC stocks declined heading into month-end and after newsflow over the weekend was mainly dominated by geopolitical headlines with a question mark hanging over whether the Israel-Hamas truce will be extended beyond the initial four-day agreement. ASX 200 finished lower as weakness in the defensive and mining-related sectors overshadowed the gains in tech. Nikkei 225 wiped out its opening gains after hitting resistance just above the 33,800 level and as participants digested Japanese Services PPI which showed a slight acceleration. Hang Seng and Shanghai Comp declined following soft Chinese Industrial Profits and amid shadow banking concerns after Chinese authorities opened a probe into struggling shadow bank Zhongzhi, while the PBoC’s notice to strengthen financial support for private companies did little to spur risk sentiment. Top Asian News PBoC issued a notice to strengthen financial support for private companies and will encourage institutional investors to actively and scientifically allocate private companies business process modelling, development and support. PBoC said it is to support private enterprises in listing and financing, mergers and acquisitions and restructuring, while it also said to use monetary policy tools and fiscal subsidies to incentivise financial institutions to service private companies and will reasonably meet the financing needs of private property companies. China's Global Times noted multiple central government departments pledged to support private enterprises' growth and outlined 25 concrete measures to ensure their financing needs and bolster their technological innovations. Chinese authorities opened a probe into struggling shadow bank Zhongzhi after it recently warned of severe insolvency. Japanese Foreign Minister Kamikawa said they sought an immediate lifting of the Japanese maritime product ban by China in a meeting with Chinese Foreign Minister Wang and were able to have a meaningful exchange on common challenges such as climate change and North Korea. They also shared the common view that Japan and China should hold security talks in the near future, while it was also reported that China, Japan and South Korea agreed to boost ties and seek a summit, according to Reuters. Australia’s government will introduce a bill this week that would give the RBA’s independent expert members more responsibility for setting interest rates with a new specialist monetary policy board. Furthermore, the bill would implement the recommendations of the RBA review announced in April including switching to fewer meetings in a year and a dual mandate of price stability and full employment, according to Reuters. In relevant news, Australia named BoE's Andrew Hauser as RBA Deputy Governor who is expected to start before the first RBA board meeting next year, according to Reuters. China to hold CCP Politburo meeting on November 27th, according to state media. Beijing Stock Exchange has reportedly de facto implemented a new policy preventing major shareholders of Cos from selling stock, via Reuters citing sources; amid concerns that sales could extinguish the desired rally. European bourses are in the red, Euro Stoxx 50 -0.2%, with trade ultimately indecisive; whilst the FTSE 100 -0.3% underperforms amid energy action. Sectors are mixed, but with a clear negative tilt; Energy resides at the foot of the pile hampered by crude benchmarks while Telecoms outperform. Stateside, futures are subdued with clear underperformance in the Russell -0.5% vs. -0.1% in the ES & NQ. Black Friday US online sales rose 7.5% Y/Y to USD 9.8bln, while shopper traffic to physical stores rose 2%-5% Y/Y, according to CNBC citing Adobe Analytics. Online sales are boosted by demand for electronics, smartwatches, TVs and audio equipment, according to Bloomberg; UK Retail footfall +7.9% W/W in Black Friday week, +2.0% Y/Y, via MRI Software. Deutsche Bank sees the S&P500 ending 2024 at 5,100 (vs Friday's close of 4,559.34). Top European News UK PM Sunak reportedly eyes more tax cuts in spring as he weighs the UK election date, while he also stated in an interview that claims the UK is headed for austerity are unfounded, according to Bloomberg. UK PM Sunak is to highlight almost GBP 30bln of investment pledges by international companies at the Global Investment Summit on Monday which will create thousands of jobs across the UK in the most innovative sectors, including tech, life sciences, renewables, housing and infrastructure, according to the UK government website. UK Lords’ economic affairs committee is advocating for a revision in the accountability mechanisms for the BoE, according to the Times. This call for change is driven by the significant expansion in the Bank's powers and objectives since it gained operational independence 25 years ago. National Infrastructure Commission chair Armitt warned that UK PM Sunak’s funding plan to get private developers to fund an expensive tunnel under London to connect the HS2 line to Euston is set to fail and that the government needs to be ready to fund the core civil engineering for the final miles of the project, according to FT. ECB’s Nagel called on the German government to resolve the budget situation and create budget clarity soon, according to Bloomberg. Nagel also said the ECB's rates were slowing inflation but added that inflation is not yet back down to a level where they want it. EU’s commissioner for jobs and social rights Schmit said EU consumers will have to pay higher prices to cover the costs to provide better rights for gig workers but added that price increases will not kill the industry’s business model, according to FT. BoE Governor Bailey says a lot of the recent fall of inflation is due to the unwinding of energy cost surge, according to ChronicleLive; getting inflation back down to 2% will be hard work. FX Greenback remains top heavy, but DXY derives some support from firmer US Treasury yields within a 103.22-53 range. Loonie undermined by renewed weakness in oil as USD/CAD climbs from 1.3623 to 1.3661. Aussie probes 200-DMA vs Buck and touches 0.6600 on hawkish RBA vibes, Sterling regains 1.2600+ status after another pushback against rate cuts by BoE Governor Bailey. Euro consolidates gains on 1.0900 handle and Yen pares declines from 149.67 in the wake of a pick-up in Japanese producer prices. PBoC set USD/CNY mid-point at 7.1159 vs exp. 7.1461 (prev. 7.1151). Fixed Income Bonds regain recovery momentum after a pull-back and bout of consolidation. Bunds pick up the baton from Gilts within 130.56-16 and 95.90-39 respective ranges. T-note lags between 108-14/06 parameters ahead of front-loaded refunding auctions, US new home sales data and the Dallas Fed Manufacturing Business Index. German gov't spokesperson expects the Cabinet to agree on a supplementary 2023 budget this afternoon. Commodities Crude benchmarks continue to slump, with light newsflow unable to change sentiment; Energy Intel’s Bakr reports African states have not reached a resolution yet with regards to their baselines ahead of the OPEC+ meeting on Thursday. WTI & Brent Jan'24 are under marked pressure, at session lows of USD 74.07/bbl and USD 79.13/bbl respectively. Base Metals are mixed with overall sentiment tentative, whilst Precious Metals remain propped up, with spot Gold holding above the USD 2000/oz level. Iraq’s Oil Ministry said UAE-based Crescent Petroleum won the rights to two oil fields in the country’s 5th oil and gas leasing round, while another company won rights to the Howaiza oil field, according to Reuters. African states have not reached a resolution yet with regards to their baselines and the OPEC+ meeting is still due to take place on November 30th, according to Energy Intel's Bakr. Panama’s Trade Ministry said Canada’s First Quantum sent notifications of intent to begin arbitration proceedings amid protests demanding to scrap the miner’s contract to run a key mine. China's State Planner conducts a survey on price indices for steel and iron ore. Geopolitics Israeli authorities released 39 Palestinian prisoners including 6 women and 33 children as part of the exchange deal with Hamas and Hamas released 17 hostages on Saturday, while it was also reported that more Palestinians were released from Israeli prisons and that Hamas released another 17 captives including 14 Israeli civilians on Sunday which took the total number of prisoners released by Israel to 117 and the total number of captives released by Hamas to 58. The release of hostages was reportedly delayed by seven hours on Saturday after allegations from Hamas including that Israel was not allowing humanitarian aid to reach parts of northern Gaza, while it was separately reported that Israeli media quoted an unnamed security source on Saturday that had warned the military offensive in Gaza would resume unless hostages were released by midnight. Israeli PM Netanyahu spoke with US President Biden and told him Israel will resume the Gaza operation in full force at the end of the truce but would welcome extending the truce if it facilitated the release of ten additional hostages daily, according to Reuters. Hamas announced in a statement on Sunday that it is seeking to extend the truce with Israel if there are serious efforts made to increase the number of Palestinian detainees released from Israel, according to Reuters. Hamas armed wing said on Sunday that 4 of its leaders were killed including the commander of the North Gaza brigade. It was separately reported that the Palestinian Red Crescent said a Palestinian farmer was killed and another was injured on Sunday after they were targeted by Israeli forces in the Maghazi refugee camp in Gaza, while the Palestinian health ministry said two Palestinians were killed by Israeli occupation forces in Nablus and Jenin early on Sunday. US President Biden said a 4-year-old American hostage was released by Hamas and they expect additional Americans to be released by Hamas but do not have firm news, while he noted that his goal is to keep the pause in fighting going beyond Monday. US Secretary of State Blinken held a call with Egypt’s Foreign Minister to discuss obstacles threatening Israel’s truce with Hamas and ways to reach a comprehensive ceasefire, according to a statement by Egypt’s foreign ministry cited by Reuters. Qatar’s PM said Hamas must locate dozens of more hostages held in Gaza by civilians and gangs to extend the truce, according to FT. Turkish President Erdogan and Iranian President Raisi discussed in a phone call the importance of taking a stance against Israeli brutality in Palestinian territories, according to Reuters. Syria’s army said air defences intercepted Israeli missiles flying from Golan Heights which put Damascus Airport out of service, according to Reuters. Unidentified armed individuals have seized an Israeli-linked tanker carrying a cargo of phosphoric acid in the Gulf of Aden on Sunday, according to Reuters citing the vessel management company and a US official. It was later reported that a US warship responded to a distress call from a chemical tanker taken in the Middle East and the tanker is now safe, while Houthis reportedly fired two ballistic missiles at a US destroyer on Sunday evening which failed to hit the target following the US Navy rescue of the Israeli-linked tanker. Israeli PM Netanyahu's office confirms receipt of the list of detainees held by Hamas to be released in the fourth batch; notes of major problems in the list of those scheduled to be released and intensive negotiations to change it, Al Arabiya reports. Subsequently, Israel is waiting for Hamas' response to extend the truce for two days in exchange for the release of 20 Israelis, via Al Arabiya. "The Israeli army opened fire east of the Maghazi refugee camp in the central Gaza Strip", according to Al Arabiya (Translated via Google); US Event Calendar 10:00: Oct. New Home Sales MoM, est. -4.7%, prior 12.3% 10:00: Oct. New Home Sales, est. 723,000, prior 759,000 10:30: Nov. Dallas Fed Manf. Activity, est. -16.0, prior -19.2 DB's Jim Reid concludes the overnight wrap I went out to play golf yesterday and came back to find the house fully decorated for Xmas. A bit early but we're off skiing in only 2 and a half weeks. I also learnt that a fortune has been spent on a new posh huge artificial tree. I've been told that over the long-run it will be more economical. I've entered it all into a spreadsheet and I think the break even point is 2033! My best hope of an earlier breakeven is a burst of tree hyperinflation. From 2033 to 2024, and this morning we've just published our 2024 World Outlook entitled "The Race Against Time...". See it here. Over the last 2-3 years we’ve had a fairly consistent macro narrative, viewing this as a classic policy-led boom-bust cycle that would culminate in a US recession towards the end of 2023. We think our narrative still holds even if the exact timing is more uncertain. Monetary policy famously operates with lags which are highly uncertain in their timing and impact. A US recession before this point would have been early historically relative to the start of the hiking cycle. T he race against time narrative refers to the fact that funding has dried up or tightened considerably over the last couple of years for various parts of economies as rates have risen. Can lending standards loosen, and can yields fall, quickly enough to avoid a funding accident that could see contagion? Non-linearity risk that can turn a mild downturn into a deeper recession remains high . We expect global growth at 2.4% in 2024 (from 3.2% in 2023), with 2.5% generally seen as the upper bound of being deemed to be in a global recession. Even this pace of global growth relies heavily on the EM world with India (+6.0%) and China (+4.7%) big contributors. The lag of policy will help trigger a mild US recession in H1 2024 with 175bps of Fed cuts and 0.6% GDP expected in 2024. The Euro Area is on course for nearly two years of stagnation by mid-2024 when the recovery slowly starts (2024 GDP of 0.2%). The ECB will likely cut 100bps from June to YE 2024. Germany’s 2024 growth has been downgraded around half a percent to -0.2% in the week of this publication due to the Constitutional Court hearing. We also have all our 2024 asset class forecasts updated in the doc. While our economic forecasts for the DM world suggest a sober outlook at best, the next 12 months could see more evidence that AI will revolutionise productivity growth later this decade. So the medium-term future looks more promising than it has done for some time. So try to remember that as the world flirts with recession in 2024. This week has a few data points that will sharpen the forecasts further for economists especially in the US where the personal income and spending data (Thursday) will include the all i mportant core PCE which is of course the Fed's preferred measure of inflation. Elsewhere in the US the highlights are the second reading of Q3 GDP on Wednesday, the ISM manufacturing and Auto Sales (Friday), and Chicago PMI (Thursday). There's also a 2 and 5yr auction today and a 7yr equivalent tomorrow. Supply has been a big mover in recent weeks in both directions so although this is relatively short duration it will give some idea of demand, something that will be consistently needed over the next few months and quarters. In Europe, all eyes will be on the preliminary CPI reports for November on Wednesday and Thursday. There will also be labour market data across key economies in the region on Thursday, and a few sentiment gauges, including consumer confidence indices for Germany and France (tomorrow), as well as the final manufacturing PMIs on Friday. In China, the most important releases will be the November PMIs on Thursday as well as the Caixin manufacturing gauge on Friday after the October prints disappointed. Consensus only expects a slight pick up. It's a busy week in Japan with various labour market and economic activity gauges that you can see in the day-by-day calendar at the end as usual. Central bank speakers include Fed Chair Powell (Friday), ECB President Lagarde (today) and BoE Governor Bailey (Wednesday). More are noted in the day-by-day calendar. Elsewhere the delayed OPEC+ meeting that was expected yesterday is now planned for Thursday. That follows oil price volatility in recent weeks with Brent crude currently hovering near $80.5/bbl, down from nearly $97/bbl at the end of September. Also on Thursday, COP28 will kick off in Dubai, lasting a couple of weeks. So expect plenty of climate headlines. Finally expect more reports of how Black Friday and Cyber Monday went in terms of US retail sales. So far for Black Friday, Mastercard have said sales (ex-autos) were 'only' up +2.5% YoY but split +1.1% for in-store and +8.5% for online. Adobe have confirmed the online sales momentum by suggesting they were up +7.5% and at a record. The only thing i would say is that I've been receiving so many pre-Black Friday emails alerting me to early -60% discounts here and -40% discounts there. So I suspect these sales are happening earlier than they use to so you probably have to look at sales across a longer period now. Asian equity markets are largely lower at the start of the week with the CSI 300 (-1.20%) leading losses followed by the Hang Seng (-0.99%) and the Shanghai Composite (-0.76%) driven by weakness in China’s property stocks. In addition, Chinese industrial profits decreased -7.8% in the January-to-October period from a -9.0% decline in September. The YoY number fell to +2.7% from +11.9% previously. This was probably a bit disappointing given the base effects were impacted by Covid a year ago. Elsewhere, the Nikkei (-0.51%) and KOSPI (-0.20%) are also lower alongside S&P 500 (-0.28%) and NASDAQ 100 (-0.45%) futures. Yields on 10yr USTs (+2.7bps) have moved higher, trading at 4.495% as I type. Finally in terms of Asia data, Japan’s services PPI hit a 45-month high of 2.3% y/y in October (v/s +2.1% expected) after a downwardly revised rate of +2.0% the previous month. Looking back at last week now and markets continued their strong performance with risk assets advancing across the board. In fact, a global 60:40 portfolio of equities and bonds is on track for its best monthly performance in three years since we got the positive vaccine news in November 2020. And on Friday we even saw the VIX index of volatility close at a post-pandemic low of 12.46pts, which gives you a sense of how buoyant markets are right now. In several respects it was a quiet week, with US markets closed on Thursday for the Thanksgiving holiday, followed by a half-day on Friday. But there was no sign of the more positive sentiment abating, with the S&P 500 up +1.00% (+0.06% Friday) to a 3-month high, whilst the STOXX 600 was up +0.91% (+0.33% Friday) to a 2-month high. Likewise in credit, US HY spreads tightened for a 5th week running, falling -14bps (-5bps Friday) to 375bps. Meanwhile in Europe, the iTraxx crossover index fell -12.2bps (-0.4bps Friday) to its tightest level since April 2022 . The boost in risk appetite meant that the sovereign bond rally stumbled by the end of last week, with investors growing a bit more doubtful about the prospect of near-term rate cuts. That wasn’t helped by the latest US data prints, with the University of Michigan’s indicator of long-term inflation expectations remaining at a 12-year high of 3.2% on the final numbers for November. That doubt about rate cuts was then given further support on Friday from the US flash PMIs, with the composite reading for November remaining at 50.7 (vs. 50.4 expected). Alongside that, central bankers themselves continued to push back on the chance of easier policy anytime soon, and markets lowered the chance of a Fed rate cut by May from 77% to 51% over the week . Against this backdrop, US Treasury yields moved higher last week, with the 10yr yield up +3.1bps (+6.2bps Friday) to 4.47%. There was a similar selloff in Europe too, with yields on 10yr bunds up +5.6bps (+2.5bps Friday) to 2.64%, whilst 10yr gilts saw a sizeable +17.9bps move (+2.7bps Friday) to 4.28%. That followed a fiscal easing from the UK government in the Autumn statement, an upside surprise in the flash PMIs, and then a stronger-than-expected reading on Friday in the GfK’s consumer confidence data. Meanwhile in Germany, the Ifo’s business climate indicator for November came in at a 4-month high of 87.3 (vs. 87.5 expected). However the shock of the Constitutional Court ruling last week will likely impact this going forward and as we saw at the top, this has led our economists to downgrade growth 0.5pp for 2024 versus their thoughts prior to this. Finally, in commodities, oil lost ground for a 5th consecutive week, with Brent crude down -0.04% (-1.03% Friday) to $80.58/bbl. That comes ahead of this week’s meeting of the OPEC+ group, which is now set to happen on Thursday as discussed above. WTI also lost ground, falling -0.46% (-2.02% Friday) to $75.54/bbl. Tyler Durden Mon, 11/27/2023 - 08:21.....»»

Category: dealsSource: nytNov 27th, 2023

Energy Vault Holdings, Inc. (NYSE:NRGV) Q3 2023 Earnings Call Transcript

Energy Vault Holdings, Inc. (NYSE:NRGV) Q3 2023 Earnings Call Transcript November 11, 2023 Operator: Good day, and welcome to the Energy Vault Third Quarter 2023 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Laurence Alexander. Please go ahead, sir. Laurence Alexander: […] Energy Vault Holdings, Inc. (NYSE:NRGV) Q3 2023 Earnings Call Transcript November 11, 2023 Operator: Good day, and welcome to the Energy Vault Third Quarter 2023 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Laurence Alexander. Please go ahead, sir. Laurence Alexander: Thank you. Hello, and welcome to Energy Vault’s Third Quarter 2023 Earnings Conference Call. As a reminder, Energy Vault’s third quarter earnings press release is available now on our Investor website. A replay of this call will be available later today on the Investor Relations website. This call is now being recorded. If you object in any way, please disconnect now. Please note that Energy Vault’s earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results to be a variety of factors. We caution everyone to be guided in their own analysis of Energy Vault by referring to our 10-Q. A close up image of a technician changing a battery cell in a lithium-based battery. This filing is for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor disclaimer and the non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. As previously announced, I’m delighted to introduce Bernie Colson, our new VP of Investor Relations, who is on this call and will be hosting these calls in the future. Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer; and Jan van Gaalen, our Chief Financial Officer. At this time, I’d like to hand the call over to Robert Piconi. Robert Piconi: Thank you, Laurence, and welcome to everybody to our third quarter earnings call. I’m really happy to share these results as you hopefully got a chance to see reporting record revenue in our young life here as a company in excess of $172 million as a direct result of our project execution performance that I’ll talk about later. But I think a significant number in just looking at revenue for a second in terms of meeting our expectations here in our second half ramp. And just to remind you, our largest quarter before this, so it was actually $100 million in our fourth quarter of last year and our first year of revenue. So, really happy with the results in executing for customers. Obviously, this revenue recognition is a result of that and of the teams on the ground across the various sites where we are executing a very large steep ramp here to meet customer needs and expectations. The other thing, as I’ll mention, we announced this morning, you would have seen our first turnover of our hybrid battery system in Southern California. It’s one of the largest ones in Southern California, 275 megawatt hour. Again, another milestone for the company here in this year, which is about execution across a lot of the deals we continue to announce as we did last year in multi-gigawatt hours and continue to announce this year. But I want to share with you where I’m calling in from, which is China and speaking to you live from Shanghai, where I have a keynote speech later on today, I’ll be participating on a panel as well. So it’s quite early in the morning here. And the conference here is focused on carbon neutrality and a Green Investment Conference hosted by some of the local government organizations and also various energy-related partners. But even more exciting since I’ve been here are my visits to our first site in Rudong this week. I’m a company by one of our Board members, Larry Paulson, who is here with me. Larry is no stranger to a lot of international assignments given his background at Qualcomm and Nokia and serving on our Board here as our lead independent. But it’s really just hard to put into words the broad excitement here locally, and that’s not only at the site and within all of our meetings we’ve had thus far. But even in coming into the conference last night where they had a kick-off and the tremendous focus here on this first system, the impact and some of the other announcements that we made on Monday morning yesterday with some of the new projects announced here. It’s really exciting to be a part of some of the largest renewable build-outs in the world with our efficient and reliable and very economical storage system here in our EVx. China Tianying is our local partner and a leader in China and environmental services and waste management has been doing incredible work and collaborating with our technical team in these final commissioning phases. And I just can’t say enough about their expertise in engineering and construction and optimizing how we’re implementing the technology specific for the local market. They had to fight through two months to three months COVID shutdowns one right away as they got started in the first part of 2022, but also at the end of 2022. So it’s been a little bit of a wild 18 months for them, but they managed to catch up for the most part or some of the expectations we had set as when we’re going to be up and running here. And just their focus and execution has been impressive. It’s not really surprising to me given my experience the last 30 years across a few different industries coming to China. But really tremendous to see their leadership, in particular, in this space of green energy toward the goals that have been set here and on a path to try to accelerate those and really sort of ignoring the noise from a geopolitical perspective and just focusing on our partnership and delivering together. This technology of gravity, as you might imagine, is pretty well understood here given the massive installed base of gravity-based pump hydro systems, very much fit for purpose given our system like in most large countries, can be made with 100% local content. And as is the case here will be the case in other large countries as well. I spent some time with our local Energy Vault team here as well that’s working with China Tianying or they referred to as CNTY. And just very excited to be here on the ground and including some of the folks that have come from the U.S. to support this and what would be another first of a kind for Energy Vault here in only our second year of revenue. Regarding the grid interconnection and as we announced, I’m happy to share that we started that process in September at the end of the last quarter, as we announced yesterday morning, while also, and very importantly, completing the installation of a four kilometer 2.5 mile 35 kilovolt overhead electric line that connects the system to the grid. So all of that work completed, I saw that a little bit later yesterday here local time. And I hope that in the future, many of you will be able to see this just amazing engineering achievement in person, if your travels get to Shanghai, it’s located about two hours outside and would be happy to hopefully coincide some visits with some of our other partners here. Versus other forms of long duration and long technical life storage, EVx is playing out to be more economical, scalable and also a sustainable alternative to the existing pump hydroelectric plants that represent, as we all know, more than 90% of all energy storage capacity still globally. We will, of course, continue to update you as we get closer and closer to full homologation within the state grid interconnection process. It is underway with the provincial authorities and also we’ll start to share some of the initial performance metrics as they become available. As we articulated a bit in our announcement yesterday, the five new EVx gravity systems announced and this is all part of a mandatory government policy in China for renewable power plant projects to include energy storage. So it’s mandated here that at 20% of the power capacity of the generation plan of the wind or solar, 20% must be storage and typically, that’s running at four hours [indiscernible]. And we’re seeing this firsthand now how this central mandated policy is positively influencing the growth opportunities as demonstrated by the large multi-gigawatt hour project expansion announced locally here by CNTY, even before the first system here in Rudong is fully operational. So that should give you a sense of not only I think the anticipation and the confidence people have, but also the market demand and the need that’s there and how this fit-for-purpose technology can fit very well for China. CNTY announced these signings for an additional five deployments that total about 1.2 gigawatt hour. This brings the total the announced deployments that are underweight in China here to seven, which totals a little more than 3.2 gigawatt hours. So those are some pretty large numbers and here in just the first 18 months of our partnership. And you can imagine if those are announced, there’s a lot of other things underway here. I’ve had a lot of very good meetings with China Tianying understand those developments. And of course, for Energy Vault and in particular, for investors, all of these projects will be driving recurring high-margin royalties to Energy Vault for the lifetime of these systems at 5%. This model is an ideal one for China and countries, I’d say, like China with strong construction and infrastructure growth and experience ability to source essentially all of these materials locally, which they can in China. And then a strong and unmet, I’d say, market demand for storage coincide with commitments to net carbon neutrality, which China has for the first time in the last few years, been quite vocal about and thus, these large renewable deployments. So getting the final completion of the Rudong system, I think it’s a testament here to the strategic fit of our technology to China and one that would deliver on high-margin royalties over time in what is and we’ll remain the largest energy storage market in the world, at least as far as we can look forward. In closing out on that, encouraging to see our strategy playing out here locally with just a great partner, a unique model and a differentiated solution now that’s starting to scale. Our gravity solutions are proprietary here, and this licensing model fits very well and lets us achieve in China, what I think is very difficult for others, given either their single technology focus or an ability to have a scalable or licensable technology and business model. So this versatility of our gravity technology, as we’ve announced other licensing and technology deals also outside of China is showing quite strong. And noting also that these first deployments are four hours in duration for our long duration system technology. So our long technical life of our gravity system as well as the circular economic environmental benefit our lower operating expense over time. That plays very well and shows the flexibility of this technology to still be not only viable, but commercially viable even at four hours. So the business model is allowing us to participate meaningfully in this opportunity here in this very large market and with future attractive margins for the royalty streams. And we look forward to assisting our partners here and realizing more EVx initiatives here in China that I’m sure will be announced here to come. Sticking with gravity before jumping into some of the other project updates, we are seeing more near-term demand now in activity more intensely in both emerging storage markets like South Africa and India. But also right here in the U.S. market with large utilities that have unique needs that actually can be uniquely met by various applications of our leading position in gravity energy storage systems. I look forward to sharing more with all of you in the coming months as we work with our customers and giving you more visibility into these opportunities. I know many of you investors that might be listening in here have written me about understanding the development of gravity. And generally, I think of long duration, which I think no secret that that market is developing in a little bit slower way. As far as long duration goes, I think, very encouraging for us that it’s being deployed in this case in China for four hour systems. But generally, we have a lot of other applications of our technology that we’re working with customers on, given our expertise and innovation. And I would say from a global perspective, I think we have some of the best expertise relative to civil and structural engineering because of the way we’ve had to develop the technology and specifically focused on economics and reducing that cost. Moving on quickly here to some other projects. I know we’ve repeated this at every call this year. But this priority is about customer execution and executing on the large funnel of opportunities and those that have actually been converted to bookings that are underway now and very excited about that as we have been all year. If you recall last year, we announced about 1.7 gigawatt hour of projects across short, long and ultra-long with the green hydrogen deal with Pacific Gas and Electric. And all of those are scheduled to be implemented in anywhere from nine months to 18 months from the contract signing. So all under very aggressive time lines. I know all of you have been watching Energy Vault to see, hey, they clearly have closed deals and large deals with some of the largest either IPPs like Jupiter and AlGreen Power or the largest utilities like Pacific Gas & Electric, Nevada Energy. But could we execute? It was never in doubt from my side, the team that we’ve assembled. However, it’s now starting to manifest itself, especially given the revenue that we reported this year. As I briefly mentioned earlier, our first hybrid battery and Peaker Plant Energy Storage project in Stanton California with Wellhead is now fully in service and added maximum capacity. This is a very large 275-megawatt hour project that has already been California ISO qualified and delivered in an exceptionally short period of time as compared to other projects within five months of site mobilization, which is pretty amazing, especially given the footprint we had. We were under some pretty extreme energy density requirements for this project and with a very residential neighborhood there. So I think a good example of our ability to execute in this case, fast turnaround complex projects in challenging time lines. And it’s really what we believe is a key differentiation factor that we’re very focused on. So not only about having very innovative solutions from a technology perspective, obviously, having a team that can go execute those scalable, repeatable, but very focused about being known for our ability to execute and execute well, which just has tremendous value. There’s no shortage of demand in our market as we know in energy storage. But what can be a variable in some cases are things like managing complex supply chains and when problems come up, and they always do when you’re managing different suppliers, how you deal with that problem, how you come up with solutions, work with partners, involve the customer, be transparent and really attack it operationally with a daily management approach. And that is something that is just as, I think, an important differentiating factor as having the best technology or a very economical solution. So we’re looking forward to the formal on-site ribbon cutting on December 6th and hope some of you on this call that are listening-in will be able to attend. And I guess just to finish since it is our first project we’re turning over here in the U.S. from the press release, I really can’t that any better than to have the words of our customer that was quoted the CEO of Wellhead Hell Dittmer, who’s just a tremendous operator tremendous gentleman, very experienced of 40 years to 50 years in the California market. I think one of the most respected people in the market, in particular, in California. And just to quote what he said and I quote here, only a few days after mechanical completion, the system delivered full power to the grid, validating the quality of the design and execution. Energy Vault did an excellent job of providing a solution that met both the challenging energy density requirements and the equipment delivery time frame to enable the project to go forward. We are a satisfied customer, and we appreciate Energy Vault’s expertise, creative thinking and collaborative partnership and bringing its project to fruition. But I really couldn’t imagine a better outcome for our first project turnover. Not surprised, given the deep industry execution and technology development experience of our team. We do not limit our thinking and what we’re capable to do. And I think in posting the number we did this quarter and only our second year hopefully reflects that. Special thanks to the leadership provided here, Akshay Ladwa, Marco Terruzzin and the teams across the Board and all the support teams here that helped us for the way in supply chain as well. We continue to execute on our other projects that are underway. If you’ve — and I know all of you have done the math on our guidance and looking at we have to achieve, I think, posting what we did shows we’re on our way to doing that. But we have some very tight compressed schedules to deliver. While in some cases, some of our customers have delayed site access and mobilization. They have not changed their expectations on delivery time, and we worked with them very well to come up with plans and commercial ways to deal with that, so we can meet those time lines. Our system with Jupiter. We have two that are underway are approaching mechanical completion. Energy has actually one of the largest systems they have ever delivered underway, 440 megawatt hour that we’re going to be doing in record time frame here, and we’ll talk more about that there after we do it. In addition, we have our first green hydrogen project underway with Pacific Gas & Electric. Recall that’s one of the largest ones is the largest one announced in the U.S., which provides 48-hour can provide up to 72-hour there that we have capabilities to using green hydrogen. And we’ve integrated a little bit of lithium ion there to support grid forming and some ancillary services there. We’re really excited about that. That also has a very tight turnaround scheduled to be live in June of next year 2024. Just to mention about the DOE here and shifting gears. They’re placing a heavy emphasis as we’re talking about green hydrogen on the whole supply and value chain recently announcing awards of $7 billion to build these green hydrogen hubs. Some of the people named in those include some of our partners in the green hydrogen ecosystem. And our PG&E project is an example of where the DOE is playing their next focus, which is on the demand side. And driving that demand side, there’s already $1 billion announced for some demand-side initiative that’s going to be underway. And we will be looking at how we can take advantage of those things as they develop. So just closing in here on PG&E, it’s sort of a tip of the spear for us as we look at these opportunities for building out economical microgrids to support backup power. Not only backing up utilities that have commitments to supply our homes, but also looking at mission-critical needs for energy, whether that be in the data centers, the new hyperscalers that are taking off here with bitcoin mining and things. And just other larger commercial and industrial energy users that cannot risk even short disruptions in power. Very difficult to do economically, given existing tech. However, as we have always done in some of these opportunities, we’re using our technology and integrating other things very creatively to put in place things that can be economical to essentially put something together to drive and meet this — what today is an unmet need given some of the economics. Moving to some of the commercial side. I’ve mentioned some of the additional gravity into systems that was our announcement yesterday, specifically in the China market. And overall, our near-term opportunities continue to grow at a good pace this year. Our awards have expanded by over 153%, and that’s a little over 9 gigawatt hours or about roughly $3.3 billion in year-to-date bookings and signed contracts with 800megawatt hour, bringing that total to just over $840 million. So a big book of business there to execute on, and in particular, to highlight that awards category. That means that’s our project. It’s a matter of getting that converted into formal contracts and NTP. So a lot there to mine and would like to be converting that here as quickly as we can, and the team is focused on that. Going forward a bit as we progress through the fourth quarter and entering 2024, we are focused on turning that growing commercial funnel into contracts and will help build our revenue and our backlog. We continue with a focus on stringent financial and pricing discipline to generate value for the company, for our shareholders and really over a long term. So we take a very long-term lens on that. While as a new company, we are susceptible to some lumpiness, let’s call it, as we know, especially when we’re doing projects with where we’re performing the EPC role. So there’s fluctuations both in revenue based on revenue recognition rules under POC accounting. There’s also fluctuations in working capital based on those cash flows. But one thing that’s not changing is the demand in the energy storage industry and the domestic demand here there, I should say, there in the U.S. and that was accelerated post the IRA, gives us a lot of flexibility in the projects and the contract in which we sign to drive both revenue and gross margin growth. As many of our previously announced investments and partnerships, both commercially and for example, for domestic U.S. battery content reinforced this approach. We remain committed to this. Obviously, it’s super critical as we go forward. It is a very competitive market. It puts a lot of onus on us to continue to innovate, to be differentiated, to differentiate also by our execution and delivering for customers. Always great to have projects under our belt so we can have any prospective customers, talk to some of the customers that have worked with us. Hal Dittmer and Wellhead will be one of those, of course, going forward, and we look forward to continuing on that focus on high-growth, high-margin commercial opportunities. Before getting finally to the financials here, I’m very proud to report that after filing and going through a first third-party process in 2022 in our first year of revenue of an S&P process looking at our sustainability score. In 2023, we just received the results, and our score increased from a rating of 17 up to 51. In 2023 that is not necessarily a percentage rating. But to let you know where that stands, that ranks us number two in our market in clean energy transition companies. And we finished 33 out of a total of 551 companies overall. It puts us roughly in about the 94th percentile. So we aren’t spiking any football here on this. We’re happy with our progress. We have more work to do as we develop and evolve. And just like we seek to do in everything we do in terms of technology development, how we develop our people in the company. Also in our sustainability, we seek to be a leader here in how we’re thinking about our carbon footprint across all of our solutions. So we’re going to be continuing to update this annually on our progress. But suffice to say happy with our improvement here year-over-year and we’re continuing to put a lot of focus there, given the expectations, both that I think others have of us, but that we have of ourselves most importantly. So I want to thank the entire Energy Vault team for this significant accomplishment and our continued work to improve here in the broader global goals toward net carbon neutrality. Okay. With that, why don’t I turn it over to Jan Kees, who will now go over some of the details that we just announced in our financials. Jan Kees? Jan Kees van Gaalen: Yes. Thank you, Rob, and good afternoon, everybody. Our financial results are highlighted by our record third quarter revenue of more than $172 million, more than 3 times sequential quarter-to-quarter growth after more than the prior 4 times sequential between Q1 and Q2. This revenue reflects continued construction progress and execution across our battery projects in the United States under a build, commission and transfer model. As you can see from the earnings release, we maintain our full year revenue guidance of $325 million to $425 million and remain confident in achieving it. Our gross margin was 4.2% in the third quarter, impacted by some temporary unfavorable timing in two regards. First, we delivered a lot of hardware in Q3 that we will be realizing the value-add margin from in Q4 and the POC accounting. And second, some high-margin licensing transactions shifted out from the third quarter to the fourth quarter. However, as you can see from the earnings release, we maintain our full year gross margin guidance of 10% to 15% and remain confident we can achieve it. Our adjusted EBITDA is trending well as it has improved 43% sequentially to a negative $10.3 million. The key noncash items that we added back were $10.7 million of stock-based compensation and $1.9 million in net interest income. We continue to anticipate adjusted EBITDA and operating expenses to stay within our guidance range as we remain acutely focused on managing costs. We are driven to optimize our cost structure to realize profitability as soon as possible as the business continues to scale up, and we remain very optimistic regarding our progress towards positive adjusted EBITDA. Operating loss was $22.7 million, an improvement over the second quarter of 2023 of $5.7 million, driven by continued focus on operating expenses and business costs. As of September 30, 2023, we had $132.2 million in cash equivalents and restricted cash, leaving us well positioned to continue our growth strategy and execute on our projects. The primary uses of cash are cash operating expenses and working capital needs associated with equipment purchases for our energy storage projects. As these projects achieve milestones and ultimately begin to generate revenue and gross margin. Some of that cash will return to our balance sheet. Considering these factors, for the year-end 2023, we expect our cash to remain at similar levels that we exited in Q3 or $132 million, given the expected project turnovers. In addition to the strong cash position, we expect to reduce the restricted cash portion significantly before the end of the fourth quarter. Please keep in mind that we maintain a bonding capacity in excess of $1 billion to facilitate additional growth projects as we desire. And with that, I’ll hand the call back to Rob. Robert Piconi: Yes. Thanks, Jan Kees. Just in closing here and before we get to some questions and just reflecting. As you do, I think, every quarter and look back and we’re getting here to the end of our year, really just encouraging to see our strategy and how it’s playing out. I think, successfully across the world is something in light of some of the other newer energy storage companies and some of the things that are coming out here just recently. But a few key points I want to highlight here for investors and for those that will be listening in. I guess the first one, and to remind everyone, we are the only and remain the only storage company that’s executing and implementing a portfolio of short, long and ultra-long duration technologies across some of the largest utilities and IPPs in the world. And I think that that point of our customer sets and who we’re focused on and the people choosing us is fundamental and important. This is a manifestation of our strategy in the real world and expanding our ability to address the largest scope of this energy storage market opportunity. Obviously, participating in various segments because of our multi-technology, multi duration focus given the strong capabilities we have on the team. And thus, in participating in those with a very resilient profitability as a portfolio of solutions that spans these most important durations right now. And some of the new applications that still need to have economical solutions that we’re very, very focused on it very mission-critical. Second, we’re being chosen not only for our technology differentiation economics, but for the deep industry experience of our people and our team. And really, as we saw even in this last quarter, moving having earth to deliver for our customers, hence the large revenue rec we had in the quarter and taking delivery, as Jan Kees mentioned, a lot of the hardware that’s going to front up all the execution we’re in the middle of now for this quarter, which is significant. We’re also thirdly, uniquely monetizing our technology, and in particular, innovative gravity technology in ways no other energy storage company is doing in the market for long duration, which as I mentioned earlier, is still developing with a few alternatives, I would say, very few alternatives that are technology ready in the market. We continue to need, I think, as an industry, a lot of focus here in development, and I’m the biggest fan of all of our energy storage colleagues here that are working on new technologies to help with our clean energy transition around the world. Fourth, we are uniquely also playing broadly on a global stage. No coincidence that I’m calling in here from China given everything we have going on and what’s been recently announced. And in this case, participating in the largest market in the world with a long-term royalty structure here that we established over a year ago and a first mover advantage is a government-approved technology to complement pumped hydro here and lithium-ion. And with the earlier investor base from the likes of Saudi Aramco, obviously, from the Middle East, BHP for Australia and Korea Zinc as well, Atlas Renewable, who partnered with us here also for the China market. I’m very excited by the upcoming regional developments that we’re seeing and involved in and supported by the same investors. I’d also say from a FIB perspective, our energy solutions approach to solving customer problems is playing out as we did in providing the only sustainable solution for the multi-day application that Pacific Gas & Electric was trying to solve for the 48-hour backup system in the microgrid that was required. They did not want to continue to use diesel gen not only for the GHGs but for the noise and just the disruption it caused. And are in process now of bringing them a unique green hydrogen hybrid solution enabled through our hardware and our software expertise and our energy management system. And then finally, and as I do here on these calls, our most important factor in differentiation that we now see manifesting itself as we turn over our first energy systems to customers on time and meeting or exceeding expectations is our people. The innovation, creativity, the customer focus, that passion really to deliver for our customers that can continue to come through. I continue to be impressed, but also with critical core values around our culture, which number one on our list is humility as we work as a team, work with our customers, understanding that there’s a lot we can still learn, understanding a lot that we can bring in that maybe doesn’t exist here and reflect as we improve and continuously improve ourselves. That is a core value of the company, as I mentioned, and one that we continue to leverage here as we get with the stretch here as we’re getting into the final of our Q4. In the end, these results with our customers will tell our story, which will reward our investors for larger and more predictable cash flows. I know we’re all interested in those as we continue our growth in development as a global leader in energy storage. With that, operator, we are now ready for questions. See also 25 Best Cities Where You Can Retire On $3,000 A Month and 15 Largest Troop Contributors to UN Peacekeeping. Q&A Session Follow Energy Vault Holdings Inc. Follow Energy Vault Holdings Inc. We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Stephen Gengaro with Stifel. Please go ahead. Stephen Gengaro: Good evening or good morning may be. Not sure. Thanks for taking the questions. So I think, first, what would be interesting from my perspective is when you think about the projects that you’ve announced and kind of what’s in your backlog. I know some of these recent projects are royalty/licensing arrangements, right? But when we think about that, is there a way to sort of think about how the current backlog unfolds as far as the type of revenue you could see next year? Robert Piconi: Yes. By the way, it is the question, as you look at our backlog, in particular, Stephen, that awards category. So I think our speed to convert those will shed more light if we’ve got the 800megawatt hour there, but we have a lot of other awards in there that are in process, various phases of contracting. And some of those with CODs next year, some of them with CODs into 2025 that we’ll have revenue recognition. So I think the first thing I would look at there is just the size of that bucket of awards. I think is an important one. We also saw, I think, a good conversion from our short listings bucket into awards. So we’ve added to that and as well as converting an additional project for Texas in to a booking as well. So I think that is a space to focus on in terms of awards. And then the timing of that conversion, we’re in the process of putting that together for our 2024 budgeting process, which is internal, and then will be external. We’ll be sharing and setting those expectations at our Q4 earnings, which will be in February. Stephen Gengaro: Thanks. You mentioned on the call progress toward reaching EBITDA positive. Is that a full year 2024 goal? Or is it going to happen in a quarter? Robert Piconi: Well, we’re absolutely expecting some quarterly hits of adjusted EBITDA positive. And what we’re working on is just based on revenue recognition. So it’s really just a POC accounting of rev rec and then timing of those projects to see if the full year 2024 can actually also be adjusted EBITDA positive. We are working on that. And if you look at our OpEx, Stephen, so I’d ask you to — if you take a look at that, we’re not sort of sitting idly here waiting for growth to happen and that we’re going to somehow grow our way to profitability. That was never sort of our plan in a sense. And we are always looking at as we’re executing this royalty, this license and royalty model for gravity, for example. And as we’re looking at our learnings from our first, let’s say, 18 months of operation and delivering our first project as you see there in the OpEx, we are optimizing and driving efficiency, and that’s part of our clear driver to get to cash flow positive here even a little bit earlier than we may have been thinking about at the beginning of the year. And that’s just a reflect of our focus on delivering for investors, but also on getting accretive with cash flow. We feel very good about our cash position, no debt. We’re getting rid of all the final restrictions, most of which should be done by the end of the year that are just a reflection of the first projects where we restricted a little bit of that cash. But we have a great model in place. Now as Jan Kees referenced, we have over $1 billion in non-collateralized project funding or performance bonding capabilities now that we’ve built up. So that just enables us to execute our projects without having to tie up the cash lease associated with any letters of credit or other mechanisms. Hopefully, that’s helpful. Stephen Gengaro: That’s helpful. And just one more for me, if you don’t mind. As the first EVx system goes close to kind of full completion operation in China. Do you have any kind of conversations with potential customers in other parts of the world are in China that there’s a little bit — is there any kind of wait and see like I want to see one of these up and operating and functioning? Is there any of that when you talk to customers? Or is it more just — you’ve obviously had success already with new awards. But is there any of adding conversations with potential customers for the technology? Robert Piconi: Absolutely. And I would say despite even these announcements, which are massive, right? Over 3 gigawatt hour in China alone, you can imagine there’s a set of customers that want to see Rudong up and operating and get some of the first performance metrics. And that’s not just in China, I would say that globally. So it’s a great question and it is, I think, in a lot of cases, there’s customers doing their planning right now for some of their longer duration needs. As you’re aware, there’s — the long duration market generally is still developing at a much different type of pace, where the short duration whereas a lot of the economics are right now. But generally, we have customers that are absolutely looking at some of the initial performance metrics that are going to come out. However, we do have others that are progressing, and I mentioned in my comments, South Africa, India and even in the U.S., where we’re progressing things along. And we are seeing, I’d say, in particular, in the last quarter, us having the discussions and getting to proposals now and costing out systems that I expect to be announcing here in the near term. So that’s very, very encouraging on the gravity side. But absolutely, there is a segment of customers that we’re in discussions with that want us to share the metrics, the performance metrics as they come up there. Stephen Gengaro: Excellent. Thank you for the color. Robert Piconi: Yes. Thank you. Operator: The next question will come from Chris Ellinghaus with Siebert Williams and Shank. Christopher Ellinghaus: Hey, everybody. How are you? Robert Piconi: Hi, Chris......»»

Category: topSource: insidermonkeyNov 12th, 2023

Elon Musk started a price war that Tesla can"t win

Tesla has spent the past year slashing its prices to try and drive away the competition. That's a losing strategy. Elon Musk has started slashing prices on Tesla's electric cars. That's going to come back to burn him.Mike Windle/Getty Images; Jenny Chang-Rodriguez/InsiderElon Musk has started an electric-vehicle price war that Tesla can't finish.Under increasing pressure from new competition, Tesla spent the past year slashing the average price of its models by roughly 25%. The Model 3 fell from $48,000 to $44,380. The luxury Model S, meanwhile, plunged from a high of $130,000 to $96,380. The cars, as they say, have been priced to move.It's an unusual business strategy, to put it mildly. "I can't think of another point in the history of automotive when a brand that wasn't going out of business cut prices 20% a year," Mark Schirmer, the director of communications at the research firm Cox Automotive, told me. Tesla is hoping that lower prices will drive up sales and slow the advance of the company's rivals — maybe even scare some of them out of the market altogether.But that's not what's happening. Lower prices are not translating into higher sales. The number of cars Tesla delivered to customers in the third quarter actually declined. Revenue is dropping, and the company's once fat profit margins are getting squeezed — down to 17.9% in the third quarter, compared with 25.1% a year ago. Competitors aren't being driven out of business, either. Once totally dominant in the EV space, Tesla's share of the US market has fallen from 62% at the beginning of the year to only 50% today.To make matters worse, the public's appetite for EVs isn't growing as fast as automakers expected. That means Tesla has set off a protracted battle for a piece of a pie that's growing crumb by crumb."If you do the price war, you have to make sure you have enough volume to increase and maintain profitability," John Zhang, a professor of marketing at the Wharton School, said. "It has to be a continuous battle. This war you have to wage all the way. And you need to plan ahead. That's how you win."Conversely, some experts will tell you that price wars are unwinnable — that they're a race to the bottom that serves only to kill profitability for the entire industry. And in an industry where the underlying technology — and, thus, the costs of production — are changing rapidly, no one can be sure where the bottom is. Winnable or not, Musk chose a terrible time to pick a fight. As legacy automakers walk the tightrope to our electric future, they can rely on sales of their traditional combustion-engine vehicles to provide them with a safety net. Tesla has no safety net. For Musk, it's go electric, or bust.Tesla creates a cash problem — againMusk's decision to offer deep discounts on his vehicles was an act of pure desperation. That became apparent earlier this month when Tesla reported its third-quarter numbers. The results were frightful across the board: Tesla missed Wall Street's expectations on revenue, vehicle deliveries, and free cash flow, which was down to $848 million from $3.4 billion a year before. Most importantly, the company reported that its gross margins — a measure of the company's profitability after costs — continued to shrink. This horrified investors who had just gotten used to Tesla making money.Over the past two years, despite Tesla's addition of more moderately priced vehicles such as the Model 3 sedan and the Model Y compact SUV, its margins have grown to be some of the fattest in the car business. That has bolstered the argument that Tesla wasn't a traditional car company such as Ford or GM and deserved its much, much higher stock price. Naturally, this is a status Musk would like Tesla to keep, so he's promised to do everything he can to cut costs. (On the conference call on third-quarter earnings, he said it's like "'Game of Thrones,' but with pennies.")Unfortunately, cost cuts can't be spoken into existence, not even by Musk. In the third quarter, Tesla's capital expenditures actually ballooned to their highest level in a year — $2.4 billion, up from $1.8 billion a year ago. If prices are going down, and costs are going up, even the most fervent of Musk's Wall Street believers will tell you that margins don't have a prayer. Months into his pricing campaign, Musk has nothing to show for it, and no plans to change. Musk gave no indication of when this cash drought would end or how margins would improve. He could not say when the company's Cybertruck would be available to the public and even admitted that Tesla had "dug its own grave" trying to build the new vehicle. He also could not provide details on when there would be a meaningful update to the aging models that currently make up Tesla's fleet. But there was one thing Musk was clear on: Prices need to keep coming down. In a call that Wall Street widely acknowledged as one of Tesla's worst in some time, it was like a mantra Musk repeated over and over again, with a certainty borne more of faith than facts."So I just can't emphasize again how important cost is," Musk said. "It's not an optional thing for most people. It is a necessary thing. We have to make our cars more affordable so that people can buy them."The only real hope Musk offered investors was a suggestion that driverless-car technology would (eventually, someday) offset Tesla's falling prices. But how exactly the math would work on that trade-off was unclear. Months into his pricing campaign, Musk has nothing to show for it, and no plans to change. The market responded to Musk's disappearing profits by dragging Tesla's stock down 15%.The whole EV market is in a cash bleedTesla's dismal results illuminated Musk's short-term reason for the desperate pricing strategy. But the underlying reason is even more alarming: Despite increasing demand and bountiful government investment, the world's transition from gas to electric cars is not going as smoothly as automakers expected.Experts will tell you with certainty that EVs are the future and that internal-combustion engines will eventually disappear from America's driveways and parking lots. But the march to electrified highways isn't proceeding in a straight line. There are two main reasons that consumer appetite for EVs hasn't been as robust as automakers initially expected. One is the uneven way new technologies are adopted; it inevitably takes awhile to sell people on even the most amazing innovation. The other is the slowing global economy. Customers around the world have become more price-sensitive, which is bad news for EVs: While the average selling price of an electric vehicle is going down — from $65,000 last year to $53,633 in July — it's still higher than the average selling price for new vehicles overall, which hovers around $48,451.While other automakers like Ford and BMW can coast on older models, Tesla doesn't have that option.Frederic J. Brown/AFP via Getty ImagesTraditional carmakers, from Ford and GM to BMW and Mercedes, have responded to the EV price challenge by doing what they do best: building the gas cars that customers still want. "Ford is able to balance production of gas, hybrid, and electric vehicles to match the speed of EV adoption in a way that others can't," John Lawler, Ford's chief financial officer, said during the company's latest earnings call. "That's obviously good for customers, who get the products they want — and good for us, too, because disciplined capital allocation and not chasing scale at all costs maximizes profitability and cash flow."But while the traditional automakers can coast on their older models, Tesla doesn't have that option. Cue the price cuts."Musk's starting a price war," Schirmer of Cox Automotive said. "I do think there was nothing else he could do, in that he doesn't have anything really new to compete against these other companies. He says it isn't because he has a demand problem. But I've been in this business a long time, and I have never seen anyone cut prices without having a demand problem."Musk's goal to undercut the rest of the market on price is no secret — and it's made other car companies none too happy. Given the uncertainty around the future of EVs, almost every other automaker is reluctant to slash prices on their models because doing so would make continued investment in EV tech an even tougher business case to make. In April, Ford CEO Jim Farley said Tesla's cuts could start an unsustainable price war. But the company still felt forced to cut the price of its Mustang Mach-E SUV at least twice this year. If Elon was smart, he would not drop the price. Instead, he should justify the cost of ownership. Many auto executives are refusing to engage in Musk's fight because they know from experience that the best way to win a price war is not to get into one in the first place. "We have no interest in sinking prices to gain market share," BMW CEO Oliver Zipse said in a recent call with investors. "That's not our strategy."There are other, more imaginative, more savvy ways to entice customers without a fire sale. During the 2008 recession, rather than slashing prices, Hyundai tried to figure out what was holding customers back from buying a new car. Turns out, it was worries over getting laid off. So Hyundai offered customers a guarantee: Anyone who bought a car and then lost their job could sell it back to the company. That's the kind of creative work-around that gets a car company through hard times unscathed. It's an exercise in market research and advertising. Tesla has given little indication that it does the former and has flatly rejected doing the latter. Musk has always maintained that his outsize public profile makes advertising for Tesla a waste."Rationally, he doesn't have to drop prices so fast. He can only delay the competition," Navdeep Sodhi, a managing director at the pricing consultancy Sodhi Pricing, said. "If Elon was smart, he would not drop the price. Instead, he should justify the cost of ownership."Part of the point of advertising — and the reason investors are pushing Tesla to start spending money on it — is to educate customers about why Tesla's vehicles are worth their higher price tags. According to Sodhi, Tesla has a compelling argument to make about how much money EVs can save customers over time. Why slash prices if you can persuade customers to pay more? Building a market for a product such as an electric vehicle is a marathon, not a sprint. Traditional carmakers expect to lose money on their EVs for the foreseeable future. Tesla just became profitable in 2021. If it slides back into the red because of its price cuts, expect investors to run in another direction.A losing battleIf the short-term point of Tesla's price cuts is to maintain its market share and sell more cars, it's not working. At the same time, the move could damage Tesla in the long term. When companies play with price, Zhang said, they're playing with customer expectations. Once customers get used to paying $40,000 for a standard EV, they're not going to go back to $60,000. In a price war, you may prompt a few more people to buy from you today, but you'll be sacrificing millions of dollars in future sales. Making cars is an expensive business, and if the price cuts don't generate more demand, Tesla's fortune could change rather quickly. Then there are all the customers who paid that $60,000 in the past. Learning that they could have saved thousands of dollars if they'd waited a few months to make their purchase has a negative impact on brand loyalty. In China, Tesla's price cuts even sparked protests among owners who paid more for their vehicles.But Musk isn't thinking about the future. He needs the money he hopes to make from price cuts — and he needs it now. Making cars is an expensive business, and if the price cuts don't generate more demand, Tesla's fortune could change rather quickly. "If you have a factory that makes something and you're not selling it, you're losing huge money in automotive," Schirmer said.This is a moment when you want an experienced team of automotive executives at the helm of your company. Instead, Tesla is onboarding a new chief financial officer. Zach Kirkhorn — a Tesla veteran of 13 years who presided over the most profitable quarters in the company's history — stepped down as chief financial officer in August. According to company documents, his severance package included the kind of payoff and strict nondisparagement requirements that reek of a C-suite firing.In the end, price cuts won't be enough to drive sales. If Tesla is going to keep its business healthy, it needs to appeal to new customers beyond Musk fans and early adopters. It needs to conduct research and launch advertising that makes the right argument, to the right customers, that one of Tesla's four models is the right car for them. Discounting the sticker price may drive a few sales. But in the long run, you can't build a global automotive juggernaut without cash flow. Musk himself has admitted that Tesla narrowly evaded death by cash burn in both 2008 and 2018.Waging price war during a downturn is a challenge unlike any Tesla has faced before. The company has survived for years on a first-mover advantage, on being small and nimble, and on the willingness of investors to bail it out. But today's Tesla is increasingly a normal car company, with normal car-company problems. Musk's unfulfilled promises of robo-taxis and unmatched artificial intelligence may dazzle the market for a while, but they're not driving the sales Tesla needs to win the price war it started. The company has a growing fleet of competition, an expensive manufacturing process, and shareholders who have grown used to fat profits. If cutting prices is all Tesla can do to survive this new reality, it will continue to bleed money every time the rubber hits the road. And at some point, turning it around may no longer be an option.Linette Lopez is a senior correspondent at Insider.Read the original article on Business Insider.....»»

Category: personnelSource: nytNov 12th, 2023

There"s A "Crisis Brewing": Powell & Piss-Poor Auction Spark Chaos In Credit Markets, Crypto Soars

There's A "Crisis Brewing": Powell & Piss-Poor Auction Spark Chaos In Credit Markets, Crypto Soars Well that was a day... Almost time to trot out the 'deer in headlights'... A double-whammy of a 30Y TSY auction bloodbath and Powell's considerably more hawkish-than-expected tone prompted bonds and stocks to be clubbed like a baby seal as the dollar soared... Source: Bloomberg Did Powell finally notice that his words at the FOMC about how the market is tightening financial conditions for them prompted a dramatic easing of financial conditions... Source: Bloomberg Powell broke the multi-decade win-streak in S&P and Nasdaq... Powell learns the S&P was about to have the longest winning streak since 2004 pic.twitter.com/VyvDqHDdVj — zerohedge (@zerohedge) November 9, 2023 Weakness in stocks hit at the cash open - after creeping higher overnight - the auction's spike in yields sent stocks lower and then just as dip-buyers stepped in, Powell punched them in the face, taking stocks to the day's lows... "Most Shorted" stocks were monkey-hammered lower, erasing the entire post-FOMC/Payrolls squeeze... Source: Bloomberg Regional Banks continue to give back the post-Bill-Gross "knife-catch" rally... Treasury yields were higher across the whole curve with the long-end underperforming... Source: Bloomberg This was the biggest daily jump in the 30Y Yield since March 2020... Source: Bloomberg The 2Y Yield broke back above 5.00% Source: Bloomberg As one veteran bond trader MSG'd us: "this is a shitshow, liquidity is disastrous and the auction is the canary in the coalmine... there's a crisis brewing under everyone's nose." Treasury Liquidity is indeed a "disaster"... Source: Bloomberg But we note, 'they' have an excuse ready. As The FT reported that a ransomware attack on the Industrial and Commercial Bank of China has disrupted the US Treasury market, according to market participants. The attack prevented ICBC from settling Treasury trades on behalf of other market participants, according to traders and banks. “This is a large party on [the Fixed Income Clearing Corporation], so certainly of major concern,” said an executive at a large bank that clears US Treasuries. “And potentially impacting liquidity of US Treasuries.” ICBC was starting to restore services as of Thursday afternoon, according to some of the people briefed on the incident. The problem is - for this narrative - that Treasury liquidity worsened this afternoon - AFTER ICBC was back... Source: Bloomberg Usage of The Fed's Reverse Repo facility dropped back below $1 trillion today for the first time since Aug 2021... Source: Bloomberg As we highlighted in a very detailed recent report, the accelerating drain in reverse repo is the only thing keeping the wheels in the bond market from coming off. The alternative, well... The sovereign CDS market continues to accelerate its fears about USA credit risk... Source: Bloomberg Powell's comments pushed the market's odds of a first rate-cut back from June to July (after the FOMC and payrolls pulled it closer)... Source: Bloomberg And the dollar rallied above last week's payrolls levels, but remains down from the FOMC... Source: Bloomberg The other big mover today was crypto with bitcoin exploding higher on ETF approval hopes (among other things), and Ethereum spiking on BlackRock ETF filing. Source: Bloomberg Bitcoin surged to almost $38,000 - erasing all losses since the Terra stablecoin crisis started over 18 months ago... Source: Bloomberg Most notably there appeared to be a regime change in the ETH/BTC cross... Source: Bloomberg Oil prices managed to hold on to modest gains with WTI testing a $77 handle at the highs but falling back to its lows in the afternoon... Perhaps more notably, gold managed gains despite the surge in the dollar with futures finding support at $1950... Finally, the market now seems convinced that global developed country central planners are done hiking rates. As Bloomberg's hawk/dove indicator shows, we are on the cusp of pricing in rate-cuts globally... Source: Bloomberg It’s mostly US and Europe, but also includes the UK, Australia and Japan, but as Bloomberg's Garfield Reynolds reports, for the first time in six years, developed-market swaps aren’t pricing in a rate hike in the next six months. Tyler Durden Thu, 11/09/2023 - 16:00.....»»

Category: personnelSource: nytNov 9th, 2023

Bitcoin may see a "supply shock" as available tokens hit their lowest level since 2018 with a potential ETF likely to jolt demand, analyst says

There's a dwindling amount of bitcoin available to trade on crypto exchanges, and an ETF approval would further boost demand. Namthip Muanthongthae/Getty Images The supply of available bitcoin to trade on crypto exchanges is at its lowest level in five years. That could set up a supply shock with potential approval of a spot bitcoin ETF looming, an analyst said. Bitcoin hit $35,000 earlier this week, reaching the highest level in 17 months, amid ETF optimism. The world's largest cryptocurrency by market capitalization might run into a shortage of liquid supply, especially with potential approval of a spot bitcoin ETF poised to boost demand.The amount of available bitcoin tokens to buy and sell on crypto exchanges has dropped to 2.3 million, the lowest since April 2018, according to Glassnode data. That's down from 2.6 million a year ago."To me, that's suggestive of a potential supply shock," Matt Weller, global head of research at Forex.com, told CoinDesk TV on Thursday. "Essentially, there's not too much bitcoin actively liquid in the market that's available for trade."Bitcoin balance on exchanges and price of bitcoinCoinDesk, GlassnodeThe supply crunch could set up bitcoin for another price spike. Earlier this week, bitcoin hit $35,000, the highest since May 2022, on hopes that a spot bitcoin ETF would get regulatory approval soon.Such an ETF would boost demand for bitcoin, further squeezing the limited supply."With lower supply in the market, it only takes a small bump in demand — like what we've seen with speculation around the ETF — to really drive price higher at a rapid rate," Weller said.Contributing to the constrained supply is that millions of bitcoin are being held by original "die hard" crypto investors. Weller estimated that about 3 million bitcoin tokens haven't been traded in 10 years.But if the price of bitcoin soars, that could relieve supply by nudging some investors to sell.Unlike a regular currency, the supply of bitcoin was designed to be finite, capped at 21 million tokens. There are currently 19.5 million tokens in circulation.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 27th, 2023

Photos show how SpaceX"s Starship evolved from a trash-can-shaped prototype to the most powerful rocket ever built

SpaceX's Starship rocket design has evolved quite a bit in the last decade and contributed to its success at launch. See photos from over the years. Side-by-side images show two iterations of Starship, the Starhopper on the right and the Starship megarocket on the left.SpaceX/InsiderSpaceX's mega-rocket Starship is due to try to reach orbit again after blowing up on its first try.If Starship succeeds, it'll be a victory for Elon Musk and SpaceX that's over a decade in the making.Here's how Starship has evolved, from the first concept to today.Elon Musk is expecting SpaceX's Starship mega-rocket to take to the skies again, months after the ship blew up on its first-ever attempt to reach orbit.If it succeeds, Starship could quickly become the most powerful rocket in operation, a monumental feat over a decade in the making.SpaceX founder and CEO Musk introduced the early concepts of Starship in 2012, which back then was known as the Mars Colony Transporter.Here's how the new launch system has evolved, from its first iteration as the Mars Colony Transporter, to the BFR ("Big Fucking Rocket"), to today's Starship-Super Heavy, in pictures.What is Starship?SpaceX's Starship stacked atop its Super Heavy booster near Brownsville, Texas.SpaceX/Handout via ReutersStarship is a futuristic-looking spaceship that's designed to stack atop a towering Super Heavy booster, making the world's first fully reusable launch system.It should be able to heave more cargo than any previous rocket to Earth's orbit, the moon, and Mars.But first Starship has to prove it can reach orbit at all.On its first attempt, in April, Starship failed to separate from the Super Heavy booster 24 miles above ground, ultimately tumbling, until it exploded.However, this was just the latest in a series of multiple explosions over the years.2016: Musk reveals the first design for his "Interplanetary Space Transporter"An artist's impression shows a 2016 design of what would eventually become the Starship spaceship, shown here on sixth-largest moon of Saturn, Enceladus SpaceXAt an international space technology event in 2016, Musk finally revealed the long-awaited prototype design of SpaceX's biggest rocket yet.Originally teased under the name Mars Colonial Transporter, Starship's first rocket design was called "Interplanetary Space Transporter" as SpaceX realized its ambitions went beyond transport to Mars."This system really gives you freedom to go anywhere you want in the solar system," Musk said at the event, per Popular Science.The 2016 design put forward a carbon fiber hulled rocket, with expandable legs that could deploy during landing.2017: the BFR era (Big Fucking/Falcon Spaceship)An artist's impression shows the 2019 design of SpaceXBy 2017, the design started to look somewhat more like its final Starship form. This version was named BFR.SpaceX's president Gwynne Shotwell eventually announced BFR stood for "Big Falcon Rocket", a nod to the company's other rocket. But it was widely reported at the time the acronym originally referred to a very different name used colloquially in-house as "Big Fucking Rocket." However, Musk has never publicly confirmed this.More recognizable as a Starship, its landing legs were gone, replaced by the characteristic arrow-like fins sticking out of the side of the rocket — though it has three fins instead of two.The biggest difference with the final design is that in 2017, the rocket was still due to be molded out of carbon fiber. But that was soon going to change.2019: Starhopper reaches 492 ft in flightSpaceX's Mars Starship prototype "Starhopper" hovers over its launchpad during a test flight in Boca ChicaTrevor Mahlmann/ReutersThe first Starship prototype wasn't really a Starship at all. Dubbed "Starhopper," the stout craft was only ever meant to test the power of the Raptor engine SpaceX was developing for Starship.The little Starhopper showed the engine's might in 2019, when it leapt 492 feet in the air and successfully landed back down.2019: Starship Mk1 blows up on its first testConstruction cranes help mate the upper and lower sections of SpaceX's Starship Mk 1 prototype for the first time on September 27, 2019.Elon Musk/SpaceX; TwitterMusk unveiled the first bonafide Starship prototype in 2019. But this design would not fare well.The biggest leap made between the BFR concept and the Mk1 Starship was that the new prototype was made of steel, a material choice that has become the mainstay of the Starship rockets."The carbon fiber is $135 a kilogram," where about 35% of it is scrapped, "so you're starting to approach almost $200 a kilogram. The steel is $3 a kilogram," Musk told Popular Mechanics in 2019.Musk then ambitiously announced the rocket would be ready to fly within two to three months.The first Starship, though, did not last long. On the first liquid nitrogen pressure test, designed to simulate and execute the pressure during a real launch, Starship Mk1 burst apart.2020 and 2021: Starship 8 soars nearly 8 miles in the air and Starship 15 sticks the landingStarship serial no. 8, or SN8 — a rocket ship prototype — sits at SpaceX's launch site in Boca Chica, Texas, on November 10, 2020.SpaceXThe next few Starships were more successful than the first, flying miles into the air above SpaceX's facilities in Boca Chica, Texas.The first full-fledged Starship prototype to really catch some air was called Starship serial no. 8, or SN8. It soared 7.8 miles high, then cut its engines and belly-flopped toward the ground, proving the spaceship could fly. Even so, that prototype slammed into the landing pad and exploded.It took three more prototypes blowing up before a Starship finally stuck the landing in May 2021. That prototype was called SN15.Musk's long-term plan is for Starship to be a reusable rocket, and for the first time, SN15 showed the spaceship could touch down back on its landing pad unscathed.With these prototypes' successes, SpaceX was ready to move to its next step: launching the rocket atop its Super Heavy booster.But that maiden flight wouldn't happen for another two years.2023: Starship's first fully integrated test flight starts in a rain of debris and ends in a fireballStarship minutes before its launch on April 17, 2023.SpaceXThe next landmark trial for Starship was for the spaceship to take its fully integrated form — stacked on top of its Super Heavy Booster.The spaceship took off atop its booster, aiming to reach orbit for the first time, in April 2023. The rocket's fully integrated maiden flight test, however, did not end exactly as hoped.Though the rocket successfully took off, the booster was eventually unable to separate from the spaceship, leaving the rocket to tumble out of control and eventually burst mid-air.Side-by-side images shows Starship taking off and bursting mid air in April 2023. SpaceXIt later came to light that, in addition to the separation failure, SpaceX had miscalculated just how resistant its concrete launchpad would be against the dozens of Raptor engines in the booster.Reports suggest the rocket blew a crater through the launchpad, blasting sand, concrete, and debris far afield, some of which was said to have landed in a small town 5 miles away.2023 take 2? Musk plans for another flight of Starship shortlyA vent and heat shields were added between the spaceship and the booster.SpaceX/InsiderMusk is undeterred and aims to fly the next iteration of his rocket shortly.Since its last flight, SpaceX has made at least 1,000 changes to the rocket design, Musk previously told reporter Ashlee Vance, the most noticeable of which is the introduction of a vent between the spaceship and the booster.Engineers also have devised a risky maneuver — one designed to help prevent the explosive error of the last test. The Starship spaceship will fire up its own engines as its booster is still pushing it forward.This will be the rocket's most ambitious test flight yet.Musk has previously said he's ready to launch again, though his ambitions have been slowed by the regulatory approval process.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 25th, 2023