Categoria: Top News

According to a note from Canaccord, MicroStrategy, the enterprise software company, has seen its stock soar by nearly 1,100% since it embarked on a bold strategy to adopt Bitcoin as its primary treasury reserve asset in August 2020.

Canaccord stated that this strategic pivot, led by CEO Michael Saylor, has been a significant driver of the company’s remarkable stock performance.

They note that the transformation of MicroStrategy into a Bitcoin-centric entity has been marked by several key milestones.

The Financial Accounting Standards Board (FASB) adopted fair value accounting treatment for Bitcoin held on corporate balance sheets late last year, enhancing transparency and valuation accuracy for Bitcoin holdings.

Additionally, the approval of U.S. spot Bitcoin ETFs has facilitated Bitcoin’s evolution into an institutional asset class, further validating MicroStrategy’s strategy.

Canaccord believes these two key milestones in bitcoin’s own evolution could have been catalysts in the recent decision of life sciences company Semler Scientific (NASDAQ:SMLR) to adopt Bitcoin as its corporate treasury currency.

Canaccord adds that as MicroStrategy’s market cap has surged from approximately $1.4 billion at the start of its Bitcoin journey, its equity premium relative to its Bitcoin holdings has remained resilient.

“In addition, MSTR stock performance since adoption of its bitcoin strategy in August of 2020 (up almost 1,100%) could not have hurt either,” they wrote.

MicroStrategy’s success underscores the potential for Bitcoin to drive shareholder value in maturing companies amid high inflation and stock valuation pressures, as highlighted by Canaccord.

 With the 2024 US Presidential election approaching, Piper Sandler has examined how market perceptions of the outcome are influencing financial asset prices.

The analysis provides some interesting results, although it comes with notable exceptions and caveats.

Piper Sandler gauged the responses of 34 assets to a potential Biden victory. They found that energy and certain commodities, like gold and silver, have positively correlated returns with the perceived odds of an incumbent victory.

Interestingly, the firm noted a reduced indication that “duration, pot, and pesos” would be the preferred trade if Biden is re-elected, suggesting that common investment themes may not trade as consistently as the campaign progresses.

Based on estimates of asset class performance through recent market closes, Piper Sandler identified a long-short portfolio that maximizes expected returns assuming a Biden win.

This portfolio is long on energy, silver, and gold, while being short on tech stocks, 10-year U.S. Treasuries, health, and consumer discretionary stocks. This portfolio configuration yields a beta to the S&P 500 of zero.

However, the firm cautions that these results rest on strong assumptions and imperfect metrics.

Despite the inherent limitations, Piper Sandler said that controlling for key variables, it estimates the S&P 500 will rise by 3.1% if Biden wins and fall by 1.8% if he loses.

As we approach the second half of 2024, investors are keenly eyeing currency movements for indicators of how the forex market could shape up over the next few months. 

In this context, JPMorgan has released its forecast for the U.S. dollar. The bank’s analysis delves into the various economic forces and geopolitical developments expected to influence the dollar’s trajectory. 

JPMorgan Dollar Forecast

The bank’s medium-term view of the U.S. dollar is still bullish based on high yields, its growth cushion, and other supporting factors. 

However, the bank does note that “tactical concerns stem from nascent signs of fading US growth exceptionalism and saturated investor longs.”

“Inflation divergences will be key as central banks are inflation- rather than growth-focused,” wrote JPMorgan. “Implications from soft/ firm US inflation prints are obvious for the direction of Fed pricing, but more nuanced for USD.” The bank states that DXY has been more sensitive to inflation misses.

Factors Affecting Dollar Rates

Analysts at JPMorgan highlighted the dollar’s carry advantage despite being a defensive currency and its persistent US exceptionalism as two factors driving its bullishness on the U.S. dollar.

However, while the first pillar of USD strength (carry advantage) remains intact, the second one (persistent US exceptionalism) “appears to be in early stages of losing its sheen,” they wrote.

The bank says it is wary of these tactical risks, and has been recommending tactically reducing USD length in the past week, although still maintaining long USD exposure via options.

Elsewhere, focusing on the current picture for the U.S economy, Chris Turner, ING’s Global Head of Markets and Regional Head of Research for UK & CEE, told Investing.com that the dollar share in FX reserves has come down over the last 20 years but has been stable over recent years, while in the private sector, “the dollar’s share in global deposits and in global liabilities has been remarkably stable in the 60-70% area over recent decades.”

Even so, he states that U.S. authorities cannot be complacent. “We note also that while the US current account deficit is very manageable at 3% of GDP, it is largely financed by portfolio flows into long-term debt securities,” said Turner. 

He feels that the medium-term risk for Treasuries and the dollar is that without fiscal consolidation, “investors will require higher US yields and a cheaper dollar to find Treasuries attractive.”

Furthermore, the U.S. elections are seen as having a major say in the pricing of the dollar over the next four to five years.

“A continuity Democrat administration is probably a mild dollar negative,” says Turner. “A Republican clean sweep a big dollar positive on loose fiscal and tight monetary policy. A left-field risk to the dollar is a Trump Presidency without Congress, where he could look to a weaker dollar for stimulus – that’s a policy advocated by Robert Lighthizer – a member of Trump’s trade team.”

USD to JPY Forecast

When it comes to the USD/JPY, JPMorgan says it continues to be anchored by the Fed policy rate path with upside risks from Japan being behind the curve.

“Our USD/JPY forecast for YE24 is kept at 153 since we envisage USD/JPY continues to be anchored by Fed policy rate path,” writes the bank, explaining that their forecast is based on two Fed cuts this year. However, they feel that if the US economy remains resilient and there are no Fed cuts are priced in, the USD/JPY can stabilize at 160.

“On the other hand, we are aware of the upside risks from Japan side since domestic and speculative JPY selling pressures are unlikely to wane so long as BoJ remains behind the curve, suggesting Japan’s real interest rate will likely remain in negative territory in coming years,” JPMorgan says.

USD to GBP Forecast

For the GBP, JPMorgan says that growth in the UK is improving but GBP seasonality, valuations, and positioning prompt tactical shorts. The bank also explains that sterling is a high beta cyclical currency, so the manufacturing recovery matters.

“May seasonality pressures [the] GBP/USD,” they argue. “GBP positioning has moved from max long to modestly short, but this is less stretched than other G10 peers.”

As a result, one of the bank’s trade recommendations in its macro portfolio is to sell the GBP against the U.S. dollar.

Recent updates to trade policy and the Inflation Reduction Act’s (IRA) rules on domestic content tax incentives could notably affect solar trade and promote onshoring of solar manufacturing, RBC analysts said in a Wednesday note.

They believe that the most impactful change could come from the new anti-dumping and countervailing duty investigation targeting specific Southeast Asian countries.

“After accounting for continued declines in import prices, we estimate the net impact from the potential AD/CVD tariffs and removal of the bifacial module exemption could be a ~30% increase in prices to $0.37/w and would further incentivize onshoring solar manufacturing in the U.S.,” RBC analysts wrote.

The investment bank sees First Solar (NASDAQ:FSLR) as the largest beneficiary of the potential price hikes, while other names in the value chain, such as Enphase Energy (NASDAQ:ENPH), SolarEdge Technologies (NASDAQ:SEDG), Shoals Technologies Group Inc (NASDAQ:SHLS), Array Technologies Inc (NASDAQ:ARRY) and Nextracker Inc (NASDAQ:NXT), “could be negatively impacted by lower demand,” they added.

“An analysis of solar’s competitiveness to alternative technologies highlights that adoption is price constrained, suggesting the ability to push prices higher could have negative implications for demand.”

Earlier this month, the Department of Commerce announced anti-dumping and countervailing duty investigations into crystalline silicon cells from Cambodia, Malaysia, Thailand, and Vietnam.

Alleged dumping margins range from approximately 70% to 271%, with subsidy rates above de minimis levels. If dumping or subsidization is confirmed and the International Trade Commission finds U.S. industry harm, substantial duties could be imposed.

According to RBC, tariffs could push average import prices from $0.29/w to over $0.50/w, though some manufacturers might qualify for lower rates.

While falling module prices might offset some tariff impacts, the firm still expects prices to rise to over $0.35/w. Without the investigation, prices could trend toward $0.20/w, the firm’s analysts said.

A day later, the Biden Administration announced it had removed the bifacial module exemption under Section 201, subjecting these modules to a 14.25% tariff. Bifacial modules, making up nearly all U.S. solar imports, previously bypassed this tariff.

Moreover, the administration plans to raise the solar cell import quota by 7.5 GW to 12.5 GW if imports approach current levels.

Investing.com — While the market maintains an absolute focus on NVIDIA Corporation (NASDAQ:NVDA), several other stocks are rallying unnoticed, notching solid results under the radar of the major news outlets.

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Investing.com — The economic outlook grew “somewhat more pessimistic” continued to expand in recent weeks, but consumers are starting to feel the inflation pinch as wage growth continues to normalize toward pre-pandemic historical averages, according to the Federal Reserve’s Beige Book released Wednesday.

“National economic activity continued to expand from early April to mid-May,” though overall outlooks “grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks,”  the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through May 20.

In a sign of cooling in the labor market, the majority of districts noted “better labor availability, though some shortages remained in select industries or areas,” the Fed’s beige book showed, and flagged the slowing wage growth. 

“Several districts reported that wage growth was at pre-pandemic historical averages or was normalizing toward those rates,” the report added.

Against the backdrop of cooling wage growth, retail spending was flat to up slightly, reflecting “lower discretionary spending and heightened price sensitivity among consumers,” according to the report. 

On the inflation front, meanwhile, prices increased at a modest pace over the period, the report noted, with “price growth is expected to continue at a modest pace in the near term.”

Investing.com– U.S. stocks fall Wednesday, driven by rising Treasury yields and weakness in industrials as airlines stocks fell sharply on concerns about demand after American Airlines cut its profit guidance for Q2. 

At 14:00 ET (18:00 GMT), Dow Jones Industrial Average fell 341 points, or 0.9%, S&P 500 fell 0.8%, and NASDAQ Composite dropped 0.3%. 

Industrials, energy stocks lead downside

Airlines stocks weighed heavily on industrials after American Airlines Group (NASDAQ:AAL) cut its guidance on Q2 profit, sending its shares more than 15% lower.

The downgrade guidance prompted some on Wall Street turn bearish amid worries that American Airlines is struggling to keep up with compettition from low and ultra cost carries.  

“AAL’s revenue challenges are likely to persist beyond this summer given escalating ultra-low cost carrier growth at its top hubs,” Seaport Research Partners said in Wednesday note as it cut its earnings outlook and downgraded American Airlines shares to neutral from buy. 

Delta Air Lines (NYSE:DAL), and Spirit Airlines (NYSE:SAVE) were also trading lower.

Falling energy stocks, meanwhile, also weighed on the broader sector, shrugging off jump in Marathon Oil Corporation (NYSE:MRO) after the latter agreed to be acquired by ConocoPhillips (NYSE:COP) in a $17.1B all-stock deal.  

US Treasury yields continue climb ahead of PCE data

Treasury yields continued to climb following a series of weaker than expected auction for government bonds including the $44B of 7-year notes auctioned Wednesday. 

The move in higher in Treasury yields come ahead of key inflation data this week. PCE price index data, which is the Federal Reserve’s preferred inflation gauge, is due this Friday, and is likely to factor into the central bank’s outlook on interest rates. 

Signs of sticky inflation have led several officials to suggest in recent days that they would like to see more evidence of cooling prices before starting to bring rates down from more than two-decade highs.

Salesforce due to report earnings; Dick’s Sporting Goods jumped on beat and raise

The quarterly corporate earnings season is gradually drawing to a close, but Salesforce (NYSE:CRM) is still due to report its fiscal first quarter earnings after the bell, with Wall Street likely on the lookout for updates on the business software group’s Data Cloud division.

Dick’s Sporting Goods (NYSE:DKS) stock soared 15% after the retailer raised its full-year guidance after customers spent more on new sneakers and athletic gear at its big-box stores,

Robinhood in $1B stock buyback plan, BHP walks away from Anglo deal

Trading platform Robinhood (NASDAQ:HOOD) rose 1.7% after it unveiled a stock buyback of $1 billion. 

BHP Group Ltd ADR (NYSE:BHP) was flat after deciding to end plans to acquire rival Anglo American (JO:AGLJ) after the latter refused to extend talks beyond a May 29 deadline.

(Peter Nurse, Ambar Warrick contributed to this article.)

Investing.com — U.S. stock futures point higher as traders return to their desks after a public holiday on Monday. The release of the Federal Reserve’s preferred inflation measure later in the week is due to headline this week’s economic calendar, while an ebbing stream of corporate earnings could provide a glimpse into the health of the American consumer.

1. Futures tick higher

U.S. stock futures edged into the green on Tuesday, with investors looking ahead to key inflation data during this holiday-shortened trading week.

By 03:26 ET (07:26 GMT), the S&P 500 futures contract had added 9 points or 0.2%, Nasdaq 100 futures had gained 58 points or 0.3%, and Dow futures had climbed by 40 points or 0.1%.

Stock markets on Wall Street were closed for Memorial Day on Monday.

Highlighting the economic calendar this week is May’s personal consumption expenditures price index on Friday, widely known as the Federal Reserve’s preferred measure of inflation. Fed officials have recently suggested that they would like to see more proof that price gains in the U.S. are sustainably cooling toward the central bank’s stated 2% target before rolling out any potential interest rate cuts this year.

2. Consumer confidence data ahead

A relatively light schedule of economic releases Tuesday will feature the latest reading of the Conference Board’s consumer confidence survey.

Analysts expect the May figure, which is viewed as a potential leading indicator of consumer spending, to fall slightly to a mark of 96.0, down from 97.0 in the previous month.

The number sank to its lowest level more than 1-1/2 years in April as Americans fretted over elevated prices for essentials like food and gas, as well as income and the availability of jobs.

“Confidence retreated further in April [….] as consumers became less positive about the current labor market situation,” Dana Peterson, Chief Economist at the Conference Board, said in a statement.

3. Earnings season ebbs

The quarterly parade of earnings continues to slow, although several companies are still gearing up to their unveil their latest returns in the coming days.

Among them is Salesforce (NYSE:CRM), who will report following the close of markets on Wednesday. Analysts at Goldman Sachs have said that they expect the business software group to roughly meet Wall Street expectations thanks in part to a recovery in spending by small- and medium-sized businesses.

Elsewhere, members-only retailer Costco Wholesale Corp (NASDAQ:COST) and beauty store chain Ulta Beauty (NASDAQ:ULTA) are tipped to provide a further glimpse into the state of the U.S. shopper when they report after the bell on Thursday. Consumers have recently showed signs that they are paring back expenditures on nonessential items in response to sticky inflation and higher interest rates.

4. Alibaba Health surges

Hong Kong-listed shares of Alibaba Health Information Technology (HK:0241) spiked on Tuesday after the firm clocked a jump in its annual earnings on improved margins and strong demand for healthcare services and pharmaceuticals on its platforms.

The company, which was acquired by e-commerce giant Alibaba Group (NYSE:BABA) in 2014, posted a nearly 91% surge in adjusted net profit to 1.44 billion yuan ($200 million) for the year to March 31.

Revenue rose about 1% to 27.03 billion yuan, as sales appeared to be stagnating after COVID-led demand sparked stellar sales growth over the past three years. But Alibaba Health benefited from improved margins, especially on its online healthcare services, as well as pharmaceutical sales.

5. Oil muted

Crude prices hovered around the flatline, rebounding from recent losses ahead of a meeting by major producers to decide future output levels.

By 03:23 ET, the U.S. crude futures (WTI) inched up 0.2% to $78.72 a barrel, while the Brent contract traded down by 0.1% at $82.83 per barrel. Oil prices rose over 1% on Monday in muted trade owing to public holidays in the U.K. and the U.S., after sinking to the lowest levels since early-February last week.

All eyes are now on the next meeting of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, which is set to take place online on June 2. Much of the focus will be on whether the cartel will extend its current voluntary production cuts of 2.2 million barrels per day into the second half of the year.

The U.S. Securities and Exchange Commission (SEC) approved the first spot Ethereum (ETH) exchange-traded funds (ETFs) last week. Ethereum price has surged in the anticipation of this decision with crypto experts now saying that the bull run has just started.

The wave of positive regulatory news did not stop there as the House of Representatives passed its first crypto bill, and the UK gave the green light to crypto exchange-traded products.

Signs that an approval was imminent appeared earlier in the week when several exchanges amended their filings to exclude staking. 

According to Kaiko Research’s latest analysis, the market had been gradually pricing out an ETF approval over the past month amid growing uncertainty around ETH’s regulatory status.

“With these approvals, the SEC implicitly stated that ETH (without staking) is a commodity rather than a security. This isn’t just about access to ETH but has significant and likely positive ramifications on how all similar tokens will be regulated in the U.S. with respect to trading, custody, transfer, etc.,” Kaiko Research added.

ETH implied volatility for the nearest expiry surged from less than 60% on May 20 to nearly 90% on May 22 before retreating by the end of the week. This dramatic shift in sentiment was also evident in derivatives markets. 

Ethereum price hit a 2-month high on Monday as bulls try to break above the strong resistance zone that is surrounding the $4,000 level. 

“For a long time, Ethereum was cornered between narratives, often pursuing trends. We are finally seeing its relative market share catching up to its fundamentals. Bull runs are fueled by attention, inflows, and narratives, and Ethereum has been scoring points on all three fronts lately,” Kiril Nikolov, DeFi Strategist at Nexo, told Investing.com.

Nikolov anticipates “inflows will be at least proportional to the asset’s market cap in terms of size, or approximately 30-40% of those achieved by the spot Bitcoin ETFs in the U.S.”

“As long as inflows outpace Grayscale outflows, the remainder of the year could be incredible for Ethereum.”

A break above the 2024 high would open the door for a quick move towards the record high in ETH/USD, which was set in 2021. The next resistance zone is located near the $6,000 level. 

Within just three days, ETH perpetual futures funding rates surged from their lowest level in over a year to a multi-month high. Open interest also reached an all-time high of $11 billion, suggesting strong capital inflows into the space.

The ETH to BTC ratio, measuring the two assets’ relative performance, surged from 0.044 to 0.055, though it remains below February highs. The rally was broad-based, with both U.S. and offshore spot markets seeing strong net buying since May 21. Offshore exchanges had been registering net selling until then.

Looking ahead, the launch of ETH ETFs could bring selling pressure from likely outflows or redemptions due to Grayscale’s ETHE, which has been trading at a discount between 6% and 26% over the past three months. 

ETHE currently holds over $11 billion in assets under management, making it the largest ETH investment vehicle. During the first month of bitcoin ETF trading, GBTC saw outflows amounting to $6.5 billion, roughly 23% of its AUM as of launch day.

Should a similar magnitude of outflows occur with ETHE, this would translate to $110 million in average daily outflows, or 30% of ETH’s average daily volume on Coinbase (NASDAQ:COIN). However, GBTC’s outflows were offset and surpassed by inflows from other BTC ETFs by the end of January.

“The overall market impact of ETHE’s redemptions is still uncertain, especially considering the lackluster launch of Hong Kong ETFs,” Kaiko Research stated. 

“Additionally, ETH’s market depth on centralized exchanges is about $226 million, still 42% below its pre-FTX average levels, and only 40% is concentrated on US exchanges compared to around 50% in early 2023.”

Investing.com — The Nasdaq closed above 17,000 for the first time ever Tuesday, underpinned by a surge in Nvidia amid ongoing AI-led optimism.   

At 16:00 ET (20:00 GMT),NASDAQ Composite rose 0.6% to close at a record of 17,019.88, the Dow Jones Industrial Average fell 216 points, or 0.6%, while S&P 500 rose 0.1%.

Tech continues to lead as Nvidia shines, Apple rally fades

Nvidia (NASDAQ:NVDA) stock rose 7%, with the tech giant’s market value surpassing $2.5 trillion since its quarterly results, solidifying its position as the third most valuable company on Wall Street.

Nvidia’s latest following quarterly results and guidance last week that surprised on the upside and underscored the ongoing AI-led demand for chips. 

“We think the AI investment cycle remains early (as long as AI apps demonstrate ROI) with a new inference infrastructure buildout similar to the scale of all datacenters globally once uptake is ubiquitous,” Macquarie said in Tuesday note. 

Demand for AI was given further credence over the weekend after Elon Musk’s xAI said it had raised $6 billion to fund AI development.  

Apple (NASDAQ:AAPL) stock gave up gains to close flat even as the iPhone maker’s smartphone shipments in China were 52% higher in April than a year ago, according to data from a research firm affiliated with the Chinese government.

U.S. Cellular soars on sale of wireless business to T-Mobile; Draft Kings, Flutter slump; Gamestop

United States Cellular Corporation (NYSE:USM) rose 12% after the company said it had agreed to sell its wireless operations and 30% of spectrum assets to T-Mobile for $4.4B. The 

Sport-betting companies including DraftKings (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT) were nursing heavy losses after after the Illinois Senate passed a bill that includes a sports-betting tax hike.

GameStop Corp (NYSE:GME) jumped 25% after the market said Friday that it raised $933 million from its previously announced 45 million share offering, boosting its finances.  

Treasury yields rise as consumer confidence unexpectedly jumps; PCE eyed

Treasury yields were higher as expectations that there is still a ways to go until the Fed begins cutting rates were strengthen following data pointing to a stronger consumer. 

Consumer confidence unexpectedly rose in May, the Conference Board survey released Tuesday, pointing to strength in the consumer, which drives the bulk of U.S. economic growth.