David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Coinbase Jumps to Highest Since August on Bitcoin ETF Momentum

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    Coinbase Global Inc. gains as much as 13% on Tuesday, trading at its highest intraday level since August and extending a rally driven by optimism over the potential US approval of a Bitcoin ETF. 

    Shares of the biggest US crypto exchange traded at $88.27 a share as of 2:12 p.m. in New York. The stock has more than doubled so far this year amid a broad bounce for cryptocurrency linked stocks despite regulatory challenges from a lawsuit by the US Securities and Exchange Commission. 

    On Tuesday, CBOE filed for amendments for five Bitcoin ETF applications, confirming that it reached an agreement with Coinbase on surveillance sharing agreements, a move to address concerns by the SEC over market manipulation. The filings previously had said that the exchange was “expecting” to enter into the agreement with Coinbase. 

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    Goldman Analysts' Bearish China Bank View Draws Fresh Rebuke

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    At stake was a report published by Goldman analysts including Shuo Yang last Tuesday, which highlighted margin risks and potential credit losses from banks’ exposure to local government debt. Yang, a former official at the China banking regulator, estimated that the “implied loss ratio of credit portfolio in debt investment book” could reach 25% for Merchants Bank, compared with 6% on average for lenders under its coverage.

    A representative for Goldman declined to comment.

    Shares of Merchants Bank have lost 12% in Hong Kong since Goldman cut its target price for the second time in three months with a neutral rating. The US bank now has one of the lowest target prices for the Chinese lender, according to data compiled by Bloomberg.

    Merchants Bank argued that Goldman’s report is “illogical” in the way it calculates the potential losses, “lacks basic common sense,” and also overestimates its exposure to the local government financing vehicles. 

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    Nasdaq 100 Plans Special Rebalance To Curb Dominance Of 'Magnificent Seven'

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    Based on Nasdaq 100 methodology, the combined weight of the five companies with the largest market caps will be set to 38.5%. The five-largest companies, Apple, Microsoft, Google, Amazon and Nvidia had a combined weight of 46.7%. That suggests some notable reduced weightings for these names.

    Meanwhile, no component outside the top-five market cap companies can have a Nasdaq 100 exceeding the lesser of 4.4% or the weight of the stock with the fifth-largest market valuation. That points to at least a slight decline in TSLA stock's weight.

    The official reweightings should be released on Friday, perhaps after the close. That will also include stocks that will see increased weightings.

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    Russia confirms BRICS will create a gold-backed currency

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    "Talk of BRICS gold backed currency seems like an echo chamber. They do not have the gold to back a currency meaningfully," said Marc Chandler, managing director of Bannockburn Global Forex. "Have we not learned anything from the EMU experience of monetary union without fiscal union. Color me profoundly skeptical."

    Many analysts have been speculating about a new global currency to challenge the U.S. dollar's role as the world's reserve currency. In late March, Former Goldman Sachs chief economist Jim O'Neill wrote in a paper published in the Global Policy Journal that the U.S. dollar's dominance is destabilizing global monetary policies. He added that a BRICS currency, challenging the U.S. dollar's dominance, would bring stability to the global economy.

    "Whenever the Federal Reserve Board has embarked on periods of monetary tightening, or the opposite, loosening, the consequences on the value of the dollar and the knock-on effects have been dramatic," he said.

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    Under the Surface, Cracks Are Emerging in US Labor Market

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    “It seems clear that the labor market is cooling, and if we are correct about the pending benchmark revisions, the extent to which the labor market has cooled will take many by surprise,” said Richard Moody, chief economist at Regions Financial Corp.

    The underemployment rate, a broader measure of labor-market slack than the headline unemployment rate, is at its highest level in almost a year as more Americans report working part-time for economic reasons. That number rose in June by the most since the immediate onset of the pandemic.

    While some employers continue to struggle to attract and retain workers — which has helped keep wage growth elevated — higher interest rates and a gloomy outlook may be starting to weigh on labor demand.

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    String of Global Heat Records Raises Alarm on Climate Change

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    Heat this summer has already put millions of people around the world at risk. China is experiencing a scorching new heat wave less than two weeks after temperatures broke records in Beijing. Extreme temperatures in India last month have been linked to deaths in some of its poorest regions, while last week saw a dangerous heat dome cover Texas and northern Mexico.

    The extreme weather may put more pressure on global leaders to curb greenhouse gas emissions generated from burning coal, oil and natural gas that trap heat in the atmosphere. The effects of climate change are being exacerbated by the arrival of the first El Niño in almost four years.

    It’s likely the world will exceed 1.5C of warming “in the near term,” with efforts on climate action still insufficient, the United Nations’ Intergovernmental Panel on Climate Change said in March in a report summarizing five years of its own research. Global greenhouse gas emissions need to be cut to 60% below 2019 levels by 2035, according to the report, and climate-related risks are rising with every increment of warming.

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    Musk Ultimatum to Taiwan Imperils Its Push to War-Proof Internet

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    Starlink’s performance in Ukraine also caught the attention of China’s military analysts.

    In April last year, the Beijing Institute of Tracking and Telecommunications published a report acknowledging the satellite system would create “a huge challenge for our current situational awareness and traditional defense capabilities.”

    In his comments to the Financial Times published in October, Musk said Beijing had “made clear its disapproval” of the Starlink rollout in Ukraine to help the military circumvent Russia’s severing of internet access. He added Beijing had sought assurances that he wouldn’t sell the service in China.

    Those sort of China vagaries worry politicians in Taiwan and beyond.

    “If I’m China, I would ask Elon Musk to control all the satellite receivers in Taiwan. If I can control him, in an emergency I can turn it off,” Herming Chiueh, Taiwan’s deputy minister of digital affairs, said. “That’s my perspective, because we know China better than anyone else.”

    Lincoln Hines, a China space expert and assistant professor at the US Air War College in Montgomery, Alabama, agrees Taiwan has reason to be concerned.

    “Could Taiwan really count on the goodwill of Elon Musk in a crisis? That’s a position not many countries would like to be in,” he said.

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