Market Report.
💼 Trump’s threat to start cutting Democratic-affiliated businesses if they don’t release the government shutdown seems serious.
🌱 The U.S. government is considering cancelling billions of dollars in funding for clean energy programs, including awards for auto manufacturing and carbon capture projects. Here some of those projects: $500 million for General Motors to convert a plant to EVs, $335 million for Stellantis to convert a plant to build electric trucks or $250 million for Stellantis to convert a plant to produce EV components.
🏛️ The Department of Energy has already announced plans to cancel $7.56 billion in financing for hundreds of energy projects it said would not provide sufficient returns to taxpayers. In total, the list of targeted projects could impact around $12 billion in clean energy funding, according to Semafor.
💻 A U.S. House of Representatives bipartisan Select Committee is calling for broader bans by the U.S. and its allies on chipmaking tool sales to China, rather than narrower bans on sales to specific Chinese chipmakers. Both U.S. Democratic and Republican administrations have sought to restrict China’s ability to make advanced microchips, which are crucial for fields like artificial intelligence and military modernization. An investigation done by this committee found inconsistencies in the rules issued by the U.S., Japan, and the Netherlands, allowing non-U.S. chip equipment manufacturers to sell to some Chinese firms that U.S. companies could not.
🚀 Officials say Elon Musk’s startup XAI has raised more funding than originally planned, leveraging supporters such as NVIDIA to raise $20 billion. This has been part of a recent wave of industry announcements, with OpenAI having announced contracts to use AMD chips for several years, while Meta has signed several multi-billion dollar contracts in recent months, including $29 billion in funding to data centers.
💰 Nvidia has agreed to invest up to $100 billion in OpenAI to help fund the AI startup’s massive data center buildout, while OpenAI has committed to filling those sites with millions of Nvidia chips. OpenAI has also struck similar deals with Nvidia rival AMD, as well as a $300 billion cloud computing partnership with Oracle, which is spending billions on Nvidia chips for those facilities.
🔗 The Trump administration is also connected to the AI investment web through its stake in Intel and plans to take a cut of Nvidia and AMD’s chip sales to China. Concerns of on the complex web of AI deals and investments could lead to an AI bubble that could have far-reaching economic consequences if it bursts, are rising.
📉 Jim Cramer says that OpenAI could be developing an advantage after agreement with AMD. Another bad sign perhaps, if we heed the belief that every business that Cramer recommends ends up failing.
🏦 Jamie Dimon, CEO at JPMorgan Chase & Co., remarks underscore the growing importance of AI technology in the banking and financial services industry, and JPMorgan Chase’s strategic focus on leveraging AI to drive cost savings and operational efficiencies. The bank saves about $2 billion annually from its AI investments, according to Dimon, and they are also investing heavily in AI.
💎 Gold exceeded $4,000 per ounce. “Gold is money, everything else is credit.” J.P. Morgan. Bridgewater Associates founder Ray Dalio recommends investors allocate as much as 15% of their portfolios to gold, even as the precious metal has surged to an all-time high. Dalio compared the current environment to the early 1970s, when high inflation, heavy government spending, and high debt levels eroded confidence in paper assets and fiat currencies. Dalio’s recommendation contrasts with typical financial advisor guidance, which usually suggests a low single-digit percentage allocation to alternative assets like gold. Dalio believes gold stands apart as a hedge in times of monetary debasement and geopolitical uncertainty, as it is an asset that “you don’t have to depend on somebody else to pay you money for.”
📈 DoubleLine Capital CEO Jeffrey Gundlach has also recently recommended a high weighting in gold, up to 25% of a portfolio, due to inflationary pressures and a weaker dollar.
🇬🇧 In UK, a move similar to MAGA, in British version, could engulf the Conservative Party, just as MAGA did with the Republican Party in the US. Reform UK is driving the Conservatives out of business, with current polls showing them in third place behind Labour and Reform UK. Many Conservative members are open to some kind of pact or even a full merger with Reform UK, seeing it as a way to get into power. However, Reform UK has no incentive to defer to the Conservatives. The Conservatives’ attacks on Labour’s economic competence are ringing hollow, and they are struggling to offer a positive vision to voters.
📊 Market View:
📈 Without too many advances but firm, that is how US futures present themselves today. Mini S&P 500 futures remain in the vicinity of 6,760 points, while Nasdaq 100 futures stay above the 25,000 points reached this week.
💵 The dollar continues to strengthen, approaching 99 points on its DXY index. This is weighing down currency pairs against the dollar, such as EUR/USD, which is falling to levels close to 1.16. GBP/USD is also nearing support levels, which, if broken, could lead to significant declines, currently losing ground at 1.34.
📉 Futures in Europe are not advancing after last week’s spectacular performance. DAX 40 futures remain above 24,500 points but without gains. Eurostoxx 50 futures have retraced about 60 points from last week’s highs but are still holding above 5,600 points.
🇫🇷 The French 10-year bond is cooling off after Monday’s significant rise, with its yield retreating to 3.55%.
⛽ Crude oil prices continue to rise, recovering the range formed in August and September, trading above $65, with Brent crude currently at $66.
💻 Bitcoin has sharply retraced after surpassing $126,000 last Monday, currently holding near the $121,800 mark.
🌟 Finally, the star today is gold. Gold futures contracts have significantly surpassed $4,000 per ounce, making a new historical high in recent hours, nearing $4,060.
