Email of the day on AI and trading
Now that AI is playing a major part in investment and trading plans, do you subscribe to this way of trading
David Fuller and Eoin Treacy's Comment of the Day
Category - Technology
Email of the day on money flows and the Nasdaq
The Nasdaq price action seems to indicate that the top reached on March 29th 2022 (+/- the high of February 2nd) is of significance since on the 16th of June the close was below despite the intraday spike and has been trading below for the past couple of days : is it a short or just a consolidation phase after some short term overbought condition before it roars again? Rates are pausing but QT resumed after the regional bank scare and its liquidity injection - which is equivalent to rate hiking - as well as M2 continuing to decline (I am not sure that the surge in velocity of money is offsetting it). Your thoughts are welcomed.
Crypto Exchange Backed by Citadel Securities, Fidelity Goes Live
This article from Bloomberg may be of interest. Here is a section:
An expectation among regulators that crypto exchanges should be separated from broker-dealer functions, similar to the structure of traditional financial markets, will create opportunities for EDX, Nazarali said.
“We believe crypto is here to stay, but for it to evolve as an asset class it needs to adopt the rules and investor protections that exist in traditional finance,” Nazarali said in an interview. “The message we’ve got from our investors is that this creates an even bigger space for us.”
Already backed by companies including Paradigm, Sequoia Capital and Virtu Financial Inc., EDX raised new funding through additional investors including Miami International Holdings, GTS, GSR Markets, and HRT Technology. It plans to launch EDX Clearing to settle trades later this year.
The US Securities and Exchange Commission recently widened its crackdown on the crypto industry through lawsuits against two of the biggest firms, Binance and Coinbase, alleging that they acted as unregistered securities exchanges, broker-dealers and clearinghouses. The firms have denied the allegations.
Meta scientist Yann LeCun says AI won't destroy jobs forever
This article from the BBC may be of interest. Here is a section:
"Will AI take over the world? No, this is a projection of human nature on machines" he said. It would be a huge mistake to keep AI research "under lock and key", he added.
What is AI and what risks does it pose?
Warning using AI for loans and mortgages is big riskPeople who worried that AI might pose a risk to humans did so because they couldn't imagine how it could be made safe, Prof LeCun argued.
"It's as if you asked in 1930 to someone how are you going to make a turbo-jet safe? Turbo-jets were not invented yet in 1930, same as human level AI has not been invented yet."
"Turbo jets were eventually made incredibly reliable and safe," and the same would happen with AI he said.
Mexico's Nearshoring Bonanza Is Not Yet Near
This article from Bloomberg may be of interest. Here is a section:
But though the nearshoring story remains plausible, the data so far do not quite justify the exuberant optimism that North America can pull Mexico into the developed world.
Recent government trade data confirm that the US is moving away from China. Last year Chinese exports accounted for only 17% of US imports, down from 22% during President Trump’s first year in office. In 2023 they have cratered, accounting for only 13% of what the US bought from abroad in the first four months of the year.
But Mexico is not taking over. Its 15% share of US imports this year is only 1.3 percentage points higher than it was in 2017. Indeed, other Asian exporters are taking a larger chunk.
Moreover, the nearshoring boom is hard to detect in the investment numbers. Foreign direct investment into Mexico has been stronger in the last ten years than in the prior decade, but the data show no recent upsurge. Indeed, new investment — excluding reinvested earnings — seems somewhat lower.
Microsoft's Sudden AI Dominance Scrambles Tech's Power Structure
This article from Bloomberg may be of interest to subscribers. Here is a section:
Microsoft didn’t rate in the public AI discourse one short year ago, when we were all watching Top Gun: Maverick and listening to Sam Bankman-Fried. Back then most of the hand-waving on the subject was aimed in the general direction of Google, where researchers first developed the technologies behind ChatGPT and its peers. But while Google initially kept its research away from commercial products, especially its flagship search engine, Microsoft is focused on using OpenAI’s innovations to make a buttload of money ASAP.
The company’s GitHub Copilot tool, which suggests new lines of code to computer programmers, was its first paid offering and has attracted more than 10,000 companies as customers. Bing, Microsoft’s also-ran search engine, came next, with a chatbot search engine that can create vacation itineraries and shopping lists. Over the past several months, Chief Executive Officer Satya Nadella has announced plans to incorporate other Copilots into Windows (where they’ll rewrite, summarize and explain content) and its Microsoft 365 office suite (where they’ll create slide decks in PowerPoint, sift through emails in Outlook and make charts based on Excel data). “There’s no point in hyping technology for technology’s sake,” Nadella says. “All of these technology shifts are only useful if they do something in the real world.”
Tesla's GM Deal Is Bad News for EV Charger Firms
This article from Bloomberg may be of interest. Here is a section:
itself, meaning patience is more than just a virtue here. Tesla built its proprietary network essentially as a loss leader to stoke demand for its EVs, and it could do that in part because of Musk’s rarified knack for persuading investors to cover his losses. The three charging companies mentioned above have a combined market cap of about $5 billion, cash on hand of $550 million and expected cash burn across this year and next of more than $600 million. Their life is complicated enough. And now this.
The path to turning a profit on public chargers is like any piece of industrial hardware: Get more people to use it so it doesn’t sit idle. The threshold for profitability with charging depends on many factors, though I’ve seen one useful estimate of 30%, or roughly seven hours of charging every day (see this). As it stands, EVgo, which is weighted more to fast-charging, said on its last earnings call that the top fifth of its charging stalls enjoyed utilization above 20%.
Jobless Claims Put FOMC Unemployment Forecast in Sight
This note from Bloomberg Economics may be of interest.
OUR TAKE: The surge in jobless claims — to the highest level since October 2021 — is in line with our analysis of WARN notices, which suggested layoffs were set to spike. It’s increasingly feasible for the unemployment rate to reach the median FOMC participant’s 4.5% projection by year-end.
Initial jobless claims for the week ended June 3 increased 28k to 261k. The reading was above the consensus (235k) and Bloomberg Economics’ projection (240k).
The surge came from Ohio (6.3k), California (5.2k), Minnesota (2.7k) and Pennsylvania (2.0k).
Given recent fraudulent applications in Massachusetts, it’s possible that other states are experiencing similar issues. However, the four-week moving average also increased by 7.5k to 237k, well above the 218k pre-pandemic average from 2019. That suggests labor-market conditions are continuing to cool.
Continuing claims declined 37k to 1,757k for the week ended May 27, remaining above the pre-pandemic average of 1,699k. The insured unemployment rate — the number of people currently receiving unemployment insurance as a percentage of the labor force — remained at 1.2%.
We expect continuing claims to move higher given the surge in initial claims and tracking of WARN notices.
Biogen Rises As 'Relatively Benign' FDA Documents Suggest An Alzheimer's Approval Is Near
This article from Dow Jones may be of interest. Here is a section:
Biogen stock bounded higher Wednesday after the Food and Drug Administration posted "relatively benign" documents, suggesting the agency likely plans to approve the company's Alzheimer's treatment.
A panel of advisors to the FDA will meet Friday to discuss the drug, Leqembi, which won accelerated approval in January. Now, the FDA will consider converting that to a traditional approval based on the results of a confirmatory study called Clarity-AD.
"Overall, the briefing documents appear relatively benign, and we think the most likely outcome is a positive vote, followed by full approval," Wedbush analyst Laura Chico said in a note to clients.
On the stock market today, Biogen stock rose 1.7% to close at 304.90. Shares bounced off their 50-day moving average, according to MarketSmith.com.
Biogen and its partner, Eisai, have a long and storied history in Alzheimer's treatment, and analysts were quick to make comparisons to the companies' first approved drug, Aduhelm.
Traders Are Leaning Toward Fed Hike by July as Bond Yields Climb
This article from Bloomberg may be of interest to subscribers. Here is a section:
The Treasury market briefly restored the full pricing of Federal Reserve tightening by July, which would be the last interest-rate hike in 2023.
The latest shift in expectations for Fed policy was accompanied by a slide bonds, with the yields on five-year Treasuries up at least 11 basis points. Selling picked up after the Bank of Canada cited stubborn inflation pressures for delivering a quarter-point hike Wednesday.
The rate on swap contracts linked to the July gathering climbed to a peak of 5.33% on Wednesday, or 25 basis points above the current effective fed funds rate of 5.08%, before easing back late in New York. The June swap showed eight basis points of tightening ahead of next week’s Fed meeting, suggesting that traders are leaning in favor of a tightening pause.