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There is no glory in battle worth the blood it costs.
Dwight D. Eisenhower.
Was
that it? Not only for the Israel v Iran war, but for the AI tech bubble in stocks?
In
Middle East war news, both sides seem to be signalling each other that they
want to avert a wider Middle East war. But
will Iran now try to have the last word next week?
In
the stock casinos over-priced to a perfection based on central banks cutting
interest rates back to ZIRP or even NIRP, did a very harsh reality just sucker
punch most of the AI gamblers?
Is
a tech wreck just getting underway? Did the AI bubble just run out of greater
fool buyers?
What
lies ahead if the scramble to get in, turns into a scramble to get out at any
cost?
A
very nervous week lies directly ahead.
Wall Street Ends the Week in a ‘Tech Wreck’
April 19, 2024 at 11:05 PM GMT+1
US equities sold off sharply on Friday, sending tech stocks
to their biggest weekly loss in 17 months. The S&P 500 closed down 0.9%,
dropping for the third straight week and leaving it more than 5% below its
closing high at the end of March. The Nasdaq 100 meanwhile declined 2.1%,
recording its deepest weekly drop since November 2022. At the same time, the
Cboe Volatility Index climbed close to 19. The market drop comes as the US
Federal Reserve pushes back rate cuts, fear grows of a potential rate increase
should inflation continue to stick, and the ramifications for oil prices amid
further military escalation in the Middle East. “Geopolitical and political
uncertainty join inflation, rates and the Fed in pressuring markets,” said Mark
Hackett, chief of investment research at Nationwide. The combination is
“driving a rapid and dramatic shift in the complexion of
markets and the attitude of investors.”
The
tech sector was a big part of
today’s crackup. Super Micro Computer and Nvidia plummeted, with the two AI
favorites leading the broad-based tech selloff. Super Micro, a maker of
equipment to handle artificial intelligence work, sank 23% in its biggest drop
since August, closing at its lowest in more than two months. Chipmaker Nvidia’s
10% drop made for its steepest plunge session since the start of the pandemic
in March 2020. It closed below its 50-day moving average for the first time
since November. The slump erased nearly $212 billion off its market
capitalization. “People seemed to think the AI trade would go up forever. It
got crowded and now it’s unwinding something fierce,” said Dennis Dick, a proprietary
trader at Triple D Trading. “This is just a tech wreck.”
The bad news on Wall Street this week has some thinking the big boom of
2024 has come to an end. The rally looks close to unraveling as would-be bulls turn tail and run, and money is pulled out of equities and junk
bonds at the fastest rate in more than a year. In some ways, investors face the
same risks they chose to live previously thanks to resilient corporate earnings and fast economic growth. But this week the calculus seems to have shifted.
Europe’s falling electric-vehicle sales may be proof the market isn’t ready to
stand on its own, putting governments on notice for more support until affordable EVs become
a reality. The glut is clogging up ports as factories are cutting production—a red flag for the region’s
climate goals and the risk of more mass firings after Tesla terminated
thousands this week.
More
Bloomberg
Evening Briefing: Wall Street Ends the Week in a ‘Tech Wreck’ - Bloomberg
Nasdaq falls more than 2% to post sixth straight
losing day as Nvidia craters 10%: Live updates
UPDATED FRI, APR 19 2024 4:40 PM EDT
The Nasdaq Composite fell
for a sixth straight session on Friday, notching its longest losing streak in
more than a year. The downtrend comes as Nvidia dived,
adding to recent market woes tied to geopolitical conflicts and sticky
inflation.
The tech-heavy Nasdaq pulled back
2.05% to 15,282.01, while the broad S&P 500 slipped
0.88% to 4,967.23, below the 5,000 level. Both clinched their sixth straight
negative days, streaks not seen for either since October 2022.
The Dow Jones Industrial Average rose
211.02 points, or 0.56%, to finish at 37,986.40. The 30-stock index was lifted
by a rally of more than 6% in American Express following earnings.
Netflix retreated
more than 9% even after quarterly
earnings beat on the top and bottom lines. The streamer’s
subscribers jumped 16% from the previous year, but it said it would no longer
report paid memberships starting in 2025.
Chip stocks were also under
increasing pressure in afternoon trading, a sign that investors
were rotating heavily out of the sector that led the bull market. Nvidia
slipped 10%, registering its worst day since March 2020. Super Micro Computer plunged
more than 23%.
While tech put downward pressure
on the market, investor concerns over intensification of the Middle East
conflict following Israel’s
limited strike on Iran appeared largely shaken off by Friday’s
open.
Oil prices briefly
spiked more than 3%, but swung between more modest gains and losses
in the hours since. Dow futures at one point fell more than 500 points
overnight amid fears that the attack was enough to spark a broader war.
“There was a relief sigh” as
investors realized Israel’s response was “muted” and designed to minimize
escalation, said George Ball, chairman of Sanders Morris.
Still, “investors are very much
on edge,” Ball said. “Investors are much more aware of geopolitical risks today
in their decision-making than they have been for a long time.”
A tough week
Those moves come as the S&P
500 posted its worst weekly performance since March 2023 amid growing fears
around the path of inflation and monetary policy.
With a loss of more than 3%, it
was also the large-cap benchmark’s third straight negative week. A chunk of
that downward pressure came from tech stocks, as the sector was the worst
performing in the S&P 500 in both the day and week.
The S&P 500 is now more than
5% off its 52-week high, part of a market pullback that has been largely driven
by tempered expectations for rate cuts amid sticky
prices. Economists and strategists now
see the Federal Reserve waiting until at least September to
lower the cost of borrowing money.
More
Stock
market today: Live updates (cnbc.com)
Nasdaq tumbles, Treasuries dip amid earnings, geopolitical
crosscurrents
By Stephen Culp
April
19, 2024 9:43 PM GMT+1
NEW YORK, April 19 (Reuters) - The Nasdaq and the
S&P 500 closed sharply lower on Friday and Treasury yields dipped as
investors juggled lackluster earnings, uncertainties surrounding central bank
policy and geopolitical strife.
Gold and crude oil prices advanced as market
participants kept an uneasy eye on unfolding turmoil in the Middle East.
The Dow was the lone gainer among the three major
U.S. equity indexes, while the Nasdaq, weighed down by megacap tech and
tech-related momentum stocks, slid 2.05%.
The session marked six
straight daily declines for the S&P 500 and the Nasdaq, the longest losing
streak since October 2022.
The S&P 500 and the Dow registered their steepest weekly
percentage losses since March 2023, while the Nasdaq saw its largest weekly
drop since November 2022.
Mounting tensions in the Middle East appeared to
plateau after Tehran downplayed Israel's retaliatory drone strike against Iran,
a move that seemed geared toward averting regional escalation.
"The level of concern in the Middle East is
higher than it was at any time since Oct 7," said Peter Tuz, president of
Chase Investment Counsel in Charlottesville, Virginia. "It’s close to the
forefront of a lot of peoples’ minds."
While first-quarter reporting season is still in
its early stages, expectations have dimmed. Analysts now see aggregate S&P
500 earnings growth of 2.9% year-on-year, down from the 5.1% estimate on April
1, according to LSEG.
"Next week is a big
tech earnings week and that’s probably prompting some selling," Tuz added.
"Those stocks have done so well until relatively recently and I think some
money is flowing out of them just out of concern that earnings and guidance
won’t meet expectations."
Chicago Federal Reserve President Austan Goolsbee said on Friday
that the Fed's restrictive policy is "appropriate" given economic
strength and the slower-than-expected process of bringing inflation down closer
to its 2% target.
More
Nasdaq
tumbles, Treasuries dip amid earnings, geopolitical crosscurrents | Reuters
In
other, more worrying food price inflation news.
Russian missiles destroy grain storage facilities in Odesa
region, Ukraine says
By Reuters
April 19 (Reuters) - Russian missiles hit the port of Pivdennyi in Ukraine's southern Odesa region on Friday, destroying grain storage facilities and foodstuffs they contained, President Volodymyr Zelenskiy and other officials said.
"...
they hit the Sea Port Pivdennyi. Several missiles struck port facilities, not
only Ukrainian, but Singapore’s as well," Zelenskiy said in a virtual
address to the NATO-Ukraine Council.
Ukraine's Ministry for Restoration, in a post on the Telegram messaging
app, said the strike "destroyed storage facilities and agricultural goods
which had been intended for export to Asia and Africa".
The regional governor said one person was injured in the strike, while
Ukraine's southern military command said the attack had sparked fires. Local
Telegram channels shared videos of heavy black smoke rising from what they said
was the site of the strike.
Zelenskiy,
in a subsequent post on X, said the attack was "part of a deliberate
Russian strategy" to harm Ukraine and countries relying on its food
exports.
----
Ukraine's port infrastructure has suffered frequent Russian attacks since
Russia withdrew last summer from a U.N.-brokered deal that had guaranteed safe
shipments of Ukrainian grain. Kyiv has since established its own maritime
corridor for shipments.
Russia has also recently stepped up its use of harder-to-intercept
ballistic missiles to hit Ukraine's southern regions.
Last week, Ukraine's national rail firm imposed a ban on deliveries to
the large port of Chornomorsk, also in the Odesa region. Media reported that
Russian attacks may have damaged railway tracks to the port's grain terminals.
Russian
missiles destroy grain storage facilities in Odesa region, Ukraine says |
Reuters
Africa’s Drought Ripples Through Global Food
Trade
April 19, 2024 at 12:00
PM GMT+1
A devastating El Niño-induced drought across a swath
of southern Africa is sending ripples through global food trade.
Dry and hot weather in Malawi,
Zambia and Zimbabwe has decimated corn crops, prompting the countries to
declare a national state of disaster in recent months. South Africa, the
region’s top producer, has seen its output slashed by at least a fifth.
They’re now turning to other
producers to plug the gap. Zimbabwe, whose corn output is likely to plunge by
about 60%, is considering importing corn from Brazil for the
first time in a decade. Zambia is talking to Tanzania and Uganda about imports.
And South Africa may need to carry out significant imports of white corn for the first
time since 2017.
White corn is a staple in southern
Africa used to make meals such as pap and sadza, while the yellow variety is
used for animal feed. Unlike yellow corn, which is readily available
internationally, white isn’t.
“There's not necessarily a supply
of white corn ready to go,” said Adam Davis, chief investment officer of
agriculture-focused hedge fund Farrer Capital. Mexico has typically been a
supplier, but it’s suffering from its own drought, and it’s difficult to source
enough so quickly from the US, he said.
South Africa's Corn Harvest Could Be Smallest in Five Years
Estimates show a smaller crop for
the white and the yellow varieties
Source: Crop Estimates Committee
Note: Dates show seasons ending April 30
The fallout is also stoking a
disconnect between markets. For example, South African white corn futures have
rallied more than 40% this year, while yellow corn is down about 6% in the US.
Based in Australia, Davis’s fund scouts the globe for those kind of market
dislocations. Other ones he pointed to include the risk of tightening supplies of high-quality wheat in
Australia and western Europe, or a pork trade between the US, where prices are
relatively low, and Mexico, where the economy is doing well.
“For millennia, dislocations have
existed and there have been fortunes made on moving commodities from areas
where those commodities have been in surplus to areas where those commodities
have been scarce,” Davis said in an interview.
That’s now being amplified by
global warming in a world of increasingly instant information.
“The big change is obviously
information and how quickly information is moved between participants in the
marketplace,’’ Davis said. “We're seeing the effects of climate change in our
daily lives.”
—Agnieszka de Sousa in London
Cocoa chaos | Cocoa prices have broken through $11,000 a ton and for the world’s
chocolate makers, the crisis is here. Plants have been forced to shutter from
Malaysia to Germany and Chicago. Firms that were caught on the wrong end of the
rally are getting snarled in lawsuits. And now, a lack of liquidity also means
that the market’s next stage is likely to be riddled with erratic price moves
that raise the specter of company failures. (Read the full story here and tune in for this week’s Big Take podcast.)
Global Food Roundup: Africa's Drought Impacts Global
Food Trade - Bloomberg
Global
Inflation/Stagflation/Recession Watch.
Given our Magic Money
Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire
section of its own.
Barclays ups
mortgage interest rates after this week's inflation disappointment
April
19, 2024
Barclays has become the first major lender to raise its
mortgage rates after this week’s disappointing inflation figures led to fears that the Bank of
England might not cut interest
rates until the Autumn
The banking giant announced a
number of product changes today, including reducing some rates, but the
majority of its changes, especially for new mortgages, were up. It’s the second time in three weeks that
Barclays has announced price increases and reductions at the
same time.
The
changes come after figures yesterday showed inflation falling more slowly
than expected, to 3.2% in March. Services inflation, closely watched by the
Bank of England’s Monetary Policy Committee, remained especially sticky at
6.0%.
That led to City traders revising their bets on when the Bank of England
will start cutting interest rates. Where June had once been the most
likely date, August now appears more likely, and markets suggest an almost 50% chance that the first cut
will be in the Autumn or later.
The new prices include the price of a two-year fixed deal with no
product fee and a 75% LTV rising to 4.98%. A five-year fix with the same terms
is up to 4.8%.
The changes come into effect
today (Friday).
Aaron Strutt, head of PR and
communications at Mayfair-based mortgage broker Trinity Financial, noted that
the changes came after Barclays had mostly been better-priced than rivals.
According to Moneyfacts, the average 2-year
fixed residential mortgage rate today is 5.81% while the average 5-year fixed
residential mortgage rate today is 5.39%. Both are unchanged from yesterday.
Barclays
ups mortgage interest rates after this week's inflation disappointment
(msn.com)
This section will
continue until it becomes unneeded.
This weekend, the poorly attended House of Commons debate on the growing
scandal of the harm done by, and the ineffectiveness of the Covid “vaccines.” Truly scandalous that HMG is covering up this
scandal. Approx. 22 minutes.
Outrageous
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Graphene’s Light-Speed Electrons Promise Revolution in Nanoscale
Transistors
Researchers have shown that
double-layer graphene can function both as a superconductor and an
insulator, a property that could revolutionize transistor technology. This dual
functionality allows for the development of nanoscale transistors
that are highly energy-efficient.
An international research team led by
the University of Göttingen has demonstrated experimentally that electrons in
naturally occurring double-layer graphene move like particles without any mass,
in the same way that light travels. Furthermore, they have shown that the
current can be “switched” on and off, which has potential for developing tiny,
energy-efficient transistors – like the light switch in your house but at a
nanoscale. The Massachusetts Institute of Technology (MIT), USA, and the
National Institute for Materials Science (NIMS), Japan, were also involved in
the research. The results were published in the scientific journal Nature Communications.
Properties and Challenges of Graphene
Graphene
was identified in 2004 and is a single layer of carbon atoms. Among its many
unusual properties, graphene is known for its extraordinarily high electrical
conductivity due to the high and constant velocity of electrons traveling
through this material. This unique feature has made scientists dream of using
graphene for much faster and more energy-efficient transistors.
The
challenge has been that to make a transistor, the material needs to be
controlled to have a highly insulating state in addition to its highly
conductive state. In graphene, however, such a “switch” in the speed of the
carrier cannot be easily achieved. In fact, graphene usually has no insulating
state, which has limited graphene’s potential as a transistor.
Breakthrough in Graphene Transistor
Research
The
Göttingen University team has now found that two graphene layers, as found in
the naturally occurring form of double-layer graphene, combine the best of both
worlds: a structure that supports the amazingly fast motion of electrons moving
like light as if they had no mass, in addition to an insulating state.
The researchers showed that this condition can be
changed by the application of an electric field applied perpendicularly to the
material, making the double-layer graphene insulating.
This property of fast-moving electrons had been
theoretically predicted as early as 2009, but it took significantly enhanced
sample quality as enabled by materials supplied by NIMS and close collaboration
about theory with MIT, before it was possible to identify this experimentally.
While these experiments were carried out at cryogenic temperatures – at around
273° below freezing – they show the potential of bilayer graphene to make
highly efficient transistors.
More
Graphene’s
Light-Speed Electrons Promise Revolution in Nanoscale Transistors
(scitechdaily.com)
Finally,
our latest new section, the world global debt clock. Nations debts to GDP
compared.
World Debt Clocks (usdebtclock.org)
This
weekend’s music diversion. Time for another Heinichen. Approx. 8 minutes.
Johann
David Heinichen Concerto in C S 211
Johann David Heinichen Concerto in C S 211
(youtube.com)
This
weekend’s chess update. Approx. 19 minutes.
"His
Eyes Got Big" || Hikaru vs Fabi || Round 8 || FIDE Candidates (2024)
"His Eyes Got Big"
|| Hikaru vs Fabi || Round 8 || FIDE Candidates (2024) (youtube.com)
This
weekend’s final YouTube diversion, EV madness. Approx. 12 minutes.
Why
Are Electric Vehicle Fires So Hard To Put Out?
Why Are Electric Vehicle Fires So Hard To Put Out?
(youtube.com)
Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the clouds of war, it is humanity hanging on a cross of iron.
Dwight D. Eisenhower.
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