Good morning. Happy Friday.
The Asian/Pacific markets were mixed. Japan, China and Hong Kong remained strong; South Korea, Malaysia and Indonesia were weak. Europe, Africa and the Middle East are currently mostly up. The UK, Denmark, France, Germany, Norway, the Netherlands, Italy, Portugal and Austria are leading; Poland and Turkey are down. Futures in the States point towards a small positive open for the cash market.
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The dollar is down. Oil is flat; copper is down. Gold and silver are down slightly. Bonds are up.
Stories/News from Seeking Alpha…
Pieces of Eight
Investors are telling a story in the latest adaptation of Treasure Island, where one doesn’t have to be a buccaneer to turn a profit. The quest for precious metals has led to new heights in 2024, with gold nearly reaching $2,700/oz for the first time ever. Other shiny objects are close behind, benefiting from a Federal Reserve that has returned its cutlass to its scabbard after calling time on higher interest rates.
Long Investor Silver: Outperforming its cousin in recent weeks, spot silver (XAGUSD:CUR) has officially topped spot gold’s (XAUUSD:CUR) year-to-date return after hitting its highest level since December 2012. Silver is also used for industrial purposes, like solar panel cells and EV batteries, and is relatively cheap in ounces when compared to pricey gold. However, the YTD rally of both of the metals has been impressive – silver (+34%) and gold (+29%) – outperforming the 20% gain of the benchmark S&P 500 Index (SP500).
Other reasons for the precious metal boom have been central bank buying and safe-haven demand. Geopolitical and economic uncertainty have increased in the post-COVID era amid heavy debt loads seen across the globe, as well as wars and sanctions that have made many nations wary of the U.S. dollar. The greenback and bond yields are also big factors in the equation, while institutional and the retail crowd have not wanted to miss out on one of the year’s best momentum trades (don’t forget gold bars from Costco).
Shiver me timbers! “According to Bank of America, gold has surpassed the euro to become the second-largest reserve asset after the U.S. dollar,” wrote SA analyst Dave Kranzler, adding that demand is being boosted by the BRIC/eastern hemisphere alliance of countries. “Gold now represents 16% of global bank reserves. The dollar represents roughly 58% of central bank reserves, down from over 70% since 2002.”
Intel developments
Intel (INTC) is set to finalize an agreement with the U.S. government for $8.5B in direct funding by the end of this year under the CHIPS Act. While the talks are at an advanced stage, any takeover of the company or a portion of it could scuttle discussions. There has also been a lot of takeover speculation surrounding Intel, with the latest media report indicating that the chipmaker rebuffed an approach by Arm Holdings (ARM) for its product division. Meanwhile, Qualcomm (QCOM) is said to be interested in M&A, while Apollo (APO) offered to invest up to $5B in the company. (3 comments)
Preferred gauge
The Federal Reserve’s 50-basis-point interest rate cut has displayed policymakers’ confidence that inflation is sustainably heading towards their 2% goal. This morning, they’ll get new data in the August personal income and outlays report on any further progress. “Everything is looking good so far,” Christopher Clarke, assistant professor of economics at Washington State University, told Seeking Alpha. “I don’t see any reason on the inflation side for any more negative news.” Wednesday’s revision of Q2 GDP was also encouraging, in that the Q2 PCE figures showed no revisions. (2 comments)
Final approval
The FDA has cleared Bristol-Myers Squibb’s (BMY) novel treatment for adults with the psychiatric disorder schizophrenia. BMY shares rose over 6% on the news in early trading on Friday. Cobenfy, previously known as KarXT, was added to the pharma giant’s pipeline following its $14B acquisition of Karuna Therapeutics in March. “This drug takes the first new approach to schizophrenia treatment in decades,” declared Tiffany Farchione, director of the Division of Psychiatry, Office of Neuroscience in the FDA’s Center for Drug Evaluation and Research. (17 comments)
Today’s Economic Calendar
08:30 AM International Trade in Goods (Advance)
08:30 AM Personal Income and Outlays
08:30 AM Retail Inventories (Advance)
08:30 AM Wholesale Inventories (Advance)
10:00 AM Consumer Sentiment
01:00 PM Baker Hughes Rig Count
01:15 PM Fed’s Bowman Speech
03:00 PM Farm Prices
What else is happening…
SA Sentiment: Here’s the best way to address America’s $35T debt.
OpenAI CEO says exec departures not related to restructuring.
Helene misses main energy producing areas in Gulf of Mexico.
Citigroup (C), Apollo (APO) team up for $25B private credit program.
Oil turns sharply lower on reports Saudi Arabia set to raise output.
China stimulus propels blue-chip stocks in best week since 2008.
Super Micro (SMCI) shares tumble on word of DOJ investigation.
Major Trump Media (DJT) shareholder dumps nearly entire stake.
Southwest (LUV) takes off after guidance update, buyback plan.
Robinhood (HOOD) mulls potential launch of its own stablecoin.
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Good morning. Happy Thursday.
The Asian/Pacific markets had a fantastic day. Japan, China, Hong Kong, South Korea, New Zealand and the Philippines rallied more than 1%; India, Taiwan and Australia also did well. Europe, Africa and the Middle East are currently doing great. France, Germany, South Africa, Finland, Spain, the Netherlands, Italy, Israel, Austria and Sweden are up more than 1%. Only Norway is down much. Futures in the States point towards big gap up open for the cash market.
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The dollar is down slightly. Oil is down; copper is up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
For profit
More drama is enveloping generative artificial intelligence firm OpenAI, whose ChatGPT took the world by storm. The startup is looking to restructure and convert itself into a for-profit benefit corporation in a move that would award CEO Sam Altman an equity stake. Under the new possible format, OpenAI’s non-profit unit, which currently controls the firm, would take up a minority stake in the larger company, but the latest reports may have resurfaced some tensions.
Backdrop: Since its founding in 2015, OpenAI’s mission has been to develop cutting-edge AI technologies that would “benefit humanity as a whole, unconstrained by a need to generate financial return.” Only a few years later, the non-profit formed a “capped profit” subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models and other expensive generative AI offerings. Top talent was secured, and it began licensing its technologies commercially, but a schism was growing between Altman and the board that was skeptical of corporate expansion.
It ultimately led to Altman’s ouster a year ago, before he was reinstated within days, following heavy pressure from employees and investors like Microsoft (MSFT). Now, a newly proposed structure would do away with the approvals currently needed from the nine-person nonprofit board, and some could already be expressing their hesitations. Chief Technology Officer Mira Murati has announced her exit, as well as Chief Research Officer Bob McGrew and Vice President of Research Barret Zoph.
Bottom line: With President Greg Brockman on an extended leave, only two of OpenAI’s 11 founders remain with the company. The ChatGPT creator is also in the process of raising additional funds that would value the firm at $150B. Questions remain over whether prioritizing revenue could compromise the management of long-term AI risks, or if it’s only a matter of time before corporate rivals catch up and by being the leader they can set the tone on responsibility and governance for the emerging industry. (7 comments)
State of emergency
As Hurricane Helene strengthens, it is forecasted to strike Florida’s Big Bend coast later tonight, posing a risk to people and state energy infrastructure. Power utilities like FPL (NEE), Tampa Electric, Alabama Power, Georgia Power (SO), Dominion Energy (D) and Duke Energy (DUK) are gearing up to deal with the possible impact the current Category 4 tropical storm will bring on oil, natural gas and electricity infrastructure. On the federal front, President Biden has declared a state of emergency in Florida, fast-tracking federal funds needed to tackle the upcoming calamity.
Into reality
Meta’s (META) CEO Mark Zuckerberg showcased a slew of new augmented reality products and artificial intelligence updates at the Meta Connect 2024 event. The main highlight was the Orion prototype, which Meta claimed to be its “first true holographic augmented reality glasses.” Zuckerberg also unveiled a cheaper version of its virtual reality headset called Meta Quest 3s at a price of $299 and new celebrity voices for its AI assistant. AI updates to the Ray-Ban Meta glasses were additionally teased, as well as upcoming partnerships with Spotify (SPOT) and Amazon Music (AMZN) to improve the audio content experience. (18 comments)
No more nice guy
Walt Disney (DIS) has launched a password crackdown on its Disney+ service following in the footsteps of a successful “paid sharing” initiative at rival Netflix (NFLX). Disney’s new move aims to draw a revenue stream by combatting those who are “freeloading” on the streaming system by using other paid users’ credentials. To give context, when Netflix launched its paid sharing feature, it added more than 20M subscribers to its rolls. As expected, analysts see Disney similarly benefiting from the new streaming rules.
Today’s Economic Calendar
08:30 AM Durable Goods Orders
08:30 AM GDP Q2
08:30 AM Jobless Claims
08:30 AM Corporate Profits
09:10 AM Fed’s Collins Speech
09:15 AM Fed’s Bowman Speech
09:20 AM Jerome Powell Speech
09:25 AM Fed’s Williams Speech
10:00 AM Pending Home Sales Index
10:30 AM EIA Natural Gas Report
10:30 AM Fed’s Barr Speech
10:30 AM Fed’s Cook Speech
11:00 AM Kansas City Fed Mfg Index
01:00 PM Fed’s Kashkari Speech
01:00 PM Results of $44B, 7-Year Note Auction
04:30 PM Fed Balance Sheet
06:00 PM Fed’s Cook Speech
What else is happening…
Vistra (VST) extends rally after topping Nvidia (NVDA) as top gainer.
Micron (MU) surges as guidance tops estimates on AI demand.
Golden Arches: McDonald’s (MCD) raises quarterly dividend by 6%.
New home sales dip less than expected in August after July’s jump.
UBER to launch WeRide robotaxi in UAE, no plans for U.S., China.
Union dispute: U.S. Steel (X) gains after panel rules in its favor.
China-linked Salt Typhoon group hacked into U.S. internet providers.
These stocks should benefit from a Harris or Trump winning scenarios.
New Starbucks (SBUX) CEO Brian Niccol looks to cool union tension.
U.S. and allies urge 21-day cease-fire between Israel and Hezbollah.
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Good morning. Happy Wednesday.
The Asian/Pacific markets leaned to the downside. China, Hong Kong and Taiwan did well, but South Korea, New Zealand, Indonesia, Singapore and the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. Denmark, Poland, the UAE, South Africa, Finland, Switzerland, Hungary, Portugal, Israel, Sweden and Saudi Arabia are up; Turkey and Norway are down. Futures in the States point towards a flat open for the cash market.
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The dollar is down slightly. Oil and copper are down. Gold is up; silver is down. Bonds are down.
Stories/News from Seeking Alpha…
AR to AI
Meta Platforms’ (META) Connect 2024 conference is here and investors will be watching CEO Mark Zuckerberg’s keynote speech starting at 1 PM ET. He’ll share his vision for AI and the metaverse, as well as the newest product announcements ahead of third-quarter results due next month. Meta has been spending big time on the technologies of the future, with its capex for 2024 likely to hit a record high of $37B-$40B.
Zoom in: Tech fans will be looking for updates to the Ray-Ban Meta smart glasses, with a third-generation model that’ll include a viewfinder for basic text and images. However, the real focus will be on the new augmented reality glasses dubbed “Orion,” which are expected to mate the high-powered AR tech found in the Meta Quest Pro headset with the Wayfarer type of Ray-ban frame. A less-expensive version of the Quest 3 is additionally anticipated, while there might be broader comments on the coming Quest 4 and broader Metaverse.
Meta is also expected to disclose deals it has signed with celebrities Judi Dench, Kristen Bell, and John Cena to give their voice to the company’s Llama large-language model. This feature will provide users with the option to select a voice for the tech giant’s digital assistant from a list of five celebrities, which also features Awkwafina and Keegan-Michael Key. Note that Meta just confirmed that it would not immediately join the EU’s AI agreement.
Outlook: Meta shares have soared close to 60% since the start of the year, and it has been one of the few companies whose billions of dollars poured into AI have resulted in tangible returns. As a result, what Meta might say or showcase can carry weight for the technology industry at large. “Meta Platforms is recommended as a buy due to its AI success, attractive valuation, clean balance sheet, and potential in VR technology,” Perseus Perspectives noted in Meta Platforms: Compelling Story With A Reasonable Valuation.
Peak oil?
Eyeing growth in India, Africa and the Middle East, as well as a slower adoption of EVs and greener fuels, OPEC sees global oil demand rising into 2050 and holding a nearly 30% share of the energy mix with other sources. “There is no peak oil demand on the horizon,” OPEC commented, and “over the past year, there has been further recognition that the world can only phase in new energy sources at scale when they are genuinely ready.” The group expects oil demand to reach 120.1M bbl/day in 2050 compared to 102.2M bbl/day consumed last year. (26 comments)
AI risks
Compliance officers, beware. The U.S. Department of Justice has tweaked the guidance that prosecutors use when evaluating a company’s compliance program during an investigation to include artificial intelligence risks. Under this, prosecutors would see whether a firm has done a risk assessment of the AI technology it’s using and steps taken to mitigate any dangers involved. The updated guidance also looks at how companies are encouraging employees to speak up and report misconduct, and whether they employ practices that suppress whistleblowing.
To prison
Former CEO of Alameda Research Caroline Ellison has been sentenced to two years behind bars with three years probation for her role in the fraud that led to the collapse of cryptocurrency exchange FTX. Along with the jail time, she would also have to forfeit about $11B, according to a ruling from U.S. District Judge Lewis Kaplan. Ellison received a more lenient punishment due to her cooperation with investigators, which included testifying against the founder of FTX, Sam Bankman-Fried, who had been convicted and sentenced to 25 years in prison. (8 comments)
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
10:00 AM New Home Sales
10:30 AM EIA Petroleum Status Report
11:00 AM Treasury Buyback Announcement
11:00 AM Survey of Business Uncertainty
11:30 AM Results of $28B, 2-Year FRN Auction
01:00 PM Results of $70B, 5-Year Note Auction
02:00 PM Treasury Buyback Results
04:00 PM Fed Governor Kugler’s Speech
What else is happening…
Hurricane Helene: U-Haul (UHAL) offers 30 days free self-storage.
Boeing’s changes to safety culture are long-term effort – FAA head.
Mexico will expropriate Vulcan Materials’ (VMC) port and quarry.
Gold climbs to new records on dovish Fed comments, Middle East woes.
Coca-Cola (KO) pulls the plug on another flavor: Coke Spiced.
U.S. consumer confidence slides in August to below consensus.
Colorado cannabis tax revenue drops on declining marijuana tourism.
More stimulus? China cuts another interest rate to bolster economy.
GE Vernova extends rally as Guggenheim sets Buy with $300 PT.
Moody’s dissects impact of presidential race on U.S. credit ratings.
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Good morning. Happy Tuesday.
The Asian/Pacific markets mostly did well. China and Hong Kong posted huge wins. Japan, South Korea, Taiwan and Thailand also did well. New Zealand was weak. Europe, Africa and the Middle East are currently mostly up. Poland, France, Turkey, Germany, Greece, Finland, Italy, Israel and Saudi Arabia are leading. Futures in the States point towards a positive open for the cash market.
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The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
Stimulus blitz
Chinese central bank policymakers have come out swinging. The PBOC on Tuesday slashed its reserve requirement ratio to the lowest level since at least 2020, as well as trimming its main short-term interest rate. The package also targeted the nation’s beleaguered property market, with measures to lower overall mortgage costs and a de-stocking program that eased rules for second-home purchases.
Looking for a revival: It’s all being aimed at getting the country’s growth trajectory back on track. A series of downbeat data has revealed a weak consumer and long deflationary streak amid mounting debt problems and a spiraling property crisis. A strong post-COVID pandemic bounce has never materialized, with worries about job security and much attention shifting to exports given the weaker domestic economy.
It’s also important to note the timing of the monetary stimulus package, which is aimed at restoring confidence and may help China approach its full-year growth target of “around 5%.” A week ago, the Federal Reserve initiated a new easing cycle with a jumbo 50-basis point rate cut, potentially giving the PBOC room to ease in the face of deflationary pressure. It had likely been hesitant until now as higher American interest rates generally weaken foreign currencies, and if going at easing alone, China could have witnessed capital flight to the U.S.
Market movement: Chinese investors applauded the latest stimulus blitz, which included 800B yuan ($114B) of stock market liquidity and allowed funds and brokers to tap central bank facilities to buy equities. China’s blue-chip CSI 300 Index (SHSZ300) soared 4.3% on the news, after falling to a five-year low earlier this month. The broader Shanghai Composite (SHCOMP) and Hang Seng Index (HSI) also advanced significantly, each climbing 4.1% by the end of the session.
Game of monopoly
The Department of Justice is reportedly planning to file an antitrust lawsuit against Visa (V), alleging that the company illegally monopolized the U.S. debit card market. The news sent its shares down 2% premarket on Tuesday. The lawsuit from the DOJ’s antitrust division also claims that Visa entered into exclusive contracts to hinder the growth of rival payment processors and block technology firms from entering the market. The case is the result of a sweeping DOJ investigation, launched over three years ago, into potential anticompetitive practices in Visa debit card transactions. (6 comments)
Price isn’t right
A Senate committee hearing scheduled this morning has all the makings of a showdown as Novo Nordisk (NVO) CEO Lars Fruergaard Jørgensen will be the sole witness to testify on the prices of diabetes and weight loss drugs Ozempic and Wegovy. The committee is chaired by Sen. Bernie Sanders (I-Vt.), a well-known critic of Big Pharma who has contended that Ozempic could be sold for $100 per month with Novo still making a profit. Jørgensen, however, is set to argue that Novo is not the problem, and will place the blame on pharmacy benefit managers. (5 comments)
Rejected
Boeing’s (BA) “best and final contract offer” will not be put to a vote by its largest union this week, as negotiators claim the proposal was made public without any discussion and does not go far enough to address workers’ concerns. The planemaker sweetened its offer to include a 30% pay hike, a $6,000 ratification bonus and the reinstatement of a performance-linked bonus. “Your negotiating committee did not have any input on this offer,” the union told its members. Separately, nearly 5,000 workers at Textron’s (TXT) aviation unit have gone on strike after rejecting its contract offer. (4 comments)
Today’s Economic Calendar
09:00 AM Case-Shiller Home Price Index
09:00 AM Fed’s Bowman Speech
09:00 AM FHFA House Price Index
10:00 AM Consumer Confidence
10:00 AM Richmond Fed Mfg. Index
11:00 AM Treasury Buyback Announcement
01:00 PM Results of $69B, 2-Year Note Auction
01:00 PM Money Supply
02:00 PM Treasury Buyback Results
What else is happening…
The latest SA Sentiment Survey is still open; See the results here.
Trump warns Deere of huge tariffs if production moves to Mexico.
Chicago Fed’s Goolsbee sees ‘many more’ rate cuts over next year.
Report: FTC expected to greenlight Chevron (CVX)-Hess (HES) deal.
BGC’s FMX Futures Exchange launches in challenge to CME (CME).
Amazon-backed Anthropic in talks to raise money at $40B valuation:
Exxon (XOM) sued for allegedly misleading public on plastic recyclability.
Nike (NKE) on J.P. Morgan’s Negative Catalyst Watch ahead of earnings.
Coinbase (COIN) asks court to overturn SEC’s crypto rulemaking denial.
GameStop (GME) adds to hefty cash position after $400M equity offering.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets mostly did well. China, South Korea, India, Taiwan, Indonesia and the Philippines posted gains; Australia and New Zealand closed down. Europe, Africa and the Middle East currently lean to the upside. Germany, Greece, South Africa, Spain, Portugal and Israel are up; Denmark is down. Futures in the States point towards a positive open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is up. Oil is flat; copper is down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Saving Intel
Once considered to be a major force in Silicon Valley, Intel (INTC) in recent times has been marred with technological and financial struggles. It has prompted thousands of layoffs, a suspension of its dividend, and a pause in factory projects amid a costly foundry buildout. Shares of the company have even lost over half of their value in 2024, so it’s no surprise that rivals are looking to scoop up some company assets at cheaper prices.
Word on the Street: Reports have surfaced that Qualcomm (QCOM) has approached Intel about a potential takeover. While a deal is said to be far from certain, a transaction like this could benefit from the billions in government grants and low-cost loans lined up for Intel, but face scrutiny from antitrust regulators. If not the entire company, Qualcomm is also said to have been considering various parts of Intel’s design operations, particularly its client PC design division.
That’s not all. Apollo Global Management (APO) seems to have thrown its hat in the ring as well. According to Bloomberg, Apollo has offered to invest about $5B into Intel, with the latter currently considering the proposal. Broadcom’s (AVGO) name has also come up, with advisors continuing to consider potential bids for the chipmaker to make the most of the current situation.
Good idea? “Antitrust concerns exist but may be manageable, particularly if the foundry business is spun off as planned,” Kumquat Research writes in Intel And Qualcomm: A Solid Merger Match. “Aside from the unrealistic $90B price tag, the merger is likely to encounter significant regulatory, financial, and integration challenge,” counters KM Capital, pointing to discounted cash flow. “I do not want to be boastful, but Intel’s stock has lost more than 30% of its value since I have shared my ‘Strong Sell’ recommendation back in May.” Take the latest SA Sentiment Survey.
Nuclear restart
In a move that can unlock financing for the industry, major global banks, including Bank of America (BAC), Barclays (BCS), Citi (C), Morgan Stanley (MS), and Goldman Sachs (GS) are set to pledge increased support for nuclear energy. While nuclear project funding complexities and risks remain, experts say that a public show of support has been long-awaited, given the critical role nuclear energy can play in the overall global energy transition. Remember, Microsoft just signed a 20-year deal to revive the Three Mile Island nuclear plant to power its data centers.
Connected risks
It’s not only TikTok. The Biden administration today is expected to roll out a ban on Chinese software and hardware used in connected and autonomous vehicles due to national security concerns. “You can imagine the most catastrophic outcome theoretically if you had a couple million cars on the road and the software were disabled,” Commerce Secretary Gina Raimondo said previously, while an auto trade group was quoted as saying that any such changes of equipment would take time. The proposed U.S. ban would come after the White House announced it would put 100% duty on imported Chinese electric vehicles. (74 comments)
Bare-bones
Congressional leaders on Sunday announced a bipartisan short-term spending bill that was described by House Speaker Mike Johnson as “very narrow, bare-bones.” It should pass by the end of the week and would avoid a potential government shutdown when the new budget year starts on Oct. 1. Notably, to reach a consensus on the stop-gap bill, Johnson abandoned a push to mandate proof of citizenship when people register to vote. “As history has taught and current polling affirms, shutting the government down less than 40 days from a fateful election would be an act of political malpractice,” Johnson said in a statement.
Today’s Economic Calendar
8:00 Fed’s Bostic: Economic Outlook
8:30 Chicago Fed National Activity Index
9:45 PMI Composite Flash
10:15 Fed’s Goolsbee: Monetary Policy
1:00 PM Fed’s Kashkari Speech
What else is happening…
Samsung, TSMC (TSM) are said to weigh Middle East megafactories.
General Motors (GM) to lay off 1,700 workers at Kansas plant.
Musk says SpaceX to launch 5 uncrewed Starships to Mars.
People’s Bank of China injects cash, cuts 14-day reverse repo rate.
Google’s emails presented as key evidence in antitrust trial.
Gold tops $2,600/oz barrier, but could a correction be coming?
J&J unit seeks third Chapter 11 filing to settle talc claims.
Boeing defense head Colbert exits in first shake-up for new CEO.
SEC approves options trading on BlackRock’s spot bitcoin ETF.
Trump rejects Harris’ invitation for another debate on CNN.
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