Month: November 2024

AI will force tech investors to become macro aware: Wang

https://preview.redd.it/nh0jpjms192e1.png?width=800&format=png&auto=webp&s=031e7d5b77614b1477a6aa9843663e4f7d64f31e Tech investors are facing a new form of disruption. This investment cohort has historically paid little attention to macroeconomics, as ever-improving product features and innovative growth strategies have driven investment returns in high tech far more than things like aggregate growth and inflation. But artificial intelligence – and its enormous capital requirements – are ripping up this script. The proposed spending on AI infrastructure by established tech companies in the coming years is eye-watering. In 2025 alone, big tech firms including Amazon , Microsoft , Alphabet , Meta and Apple are projected to spend over $200 billion on capex – almost double what they shelled out in 2021, the year before the generative AI chatbot ChatGPT debuted. The increase in capex is almost entirely due to efforts to build out generative AI capabilities. This highlights the key difference between the AI investment surge and the high-tech boom of the prior two decades: investment today is focused more on hardware than software – and hardware is obviously more capital-intensive. If the economy slows and business prospects for these tech companies deteriorate, their executives will likely think twice about these ambitious – and entirely discretionary – spending plans. This complicates investors’ calculations of the likely returns that can be expected from this nascent technology. RISE OF THE MACHINES In the first two decades of this century, software engineers disrupted one industry after another with business models that were nimble, scalable, and had low fixed costs. A small group of whip-smart entrepreneurs bootstrapped their start-ups, found quick success with early prototypes, and then made a series of strategic pivots. Think Amazon, Netflix, and many social media companies. Fast forward to the age of generative AI, and the storyline has changed dramatically. The new business model typically revolves around very smart, complex and expensive machines that require a tremendous amount of energy to run and often take a long time to build. For example, the Taiwanese semiconductor giant TSMC’s Arizona foundry cost $40 billion and commercial production won’t commence until 2025, four years after construction began. Importantly, investment in AI is typically expected to take years to pay back. In the meantime, many factors could negatively impact the value of AI infrastructure, including concerns related to business confidence and cost inflation, as well as regulatory hurdles and geopolitical tensions that influence where companies can do business. This means tech investors can no longer easily ignore top-down concerns. NEXT GENERATION AI start-ups, unlike their counterparts in software, are also often very capital intensive, making them highly sensitive to market conditions and access to funding. Most of these young companies rely on private capital, which many venture capitalists have been eager to supply in recent years. Investments in AI and machine learning, a related field, accounted for nearly half of all VC funding in the United States in the first half of 2024. And these investments have often been enormous. In October, OpenAI raised $6.6 billion in equity capital from eight investors and another $4 billion in debt financing from nine lenders. The average size of these checks is over half a billion dollars. Checks of this size can be written at a time when the S&P 500 is hitting new record highs, the U.S. economy is growing above trend, and inflation is heading downward. But what happens when the economy inevitably softens and public stock prices dip? Or what if the cost of capital in the U.S. remains elevated? AI start-ups may then find it more challenging to fund their ambitious visions, which could, in turn, stall the pace of growth and innovation in the broad AI ecosystem. This, of course, could reduce demand for the AI infrastructure that big tech companies have invested hundreds of billions of dollars in. CYCLE SHIFT Hardware businesses also exhibit more cyclical characteristics than software. That’s because they can’t rely on continuous adjustments to meet shifts in customer demand, given the substantial inputs and manpower needed to create new products. Consider that $3.5 trillion-plus chipmaker Nvidia has now adopted a “one-year rhythm” for new products, doubling the speed from its previous product release cadence. This means these companies are subject to traditional inventory cycles: when demand exceeds current supply, inventory is drawn down and prices rise, and vice versa. Hardware businesses, unlike nimble software companies, will thus struggle to scale their capacity up or down at short notice. So both the volumes and prices of hardware will typically fluctuate, subject to economic conditions. It’s notable that semiconductor sales have been positively correlated with manufacturing PMIs for decades. This relationship started breaking down in 2022 as AI euphoria really took off. If historical patterns hold, this could mean the boom in global semiconductor sales is overdue for a correction. That’s just one example of why tech investors may need to become as macro-aware as the rest of the investment community. submitted by /u/Pllover12 [link] [comments]

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EUR/USD stays under pressure as ECB officials support more rate cuts

Technical Analysis: EUR/USD struggles above 1.0500 EUR/USD strives to hold the key support of 1.0500. The outlook of the major currency pair remains bearish as all short- to long-term Exponential Moving Averages (EMAs) are declining. The 14-day Relative Strength Index (RSI) oscillates in the bearish range of 20.00-40.00, adding to evidence of more weakness in the near term. Looking down, the pair is expected to find a cushion near the October 2023 low at around 1.0450. On the flip side, the round-level resistance of 1.0600 will be the key barrier for the Euro bulls. submitted by /u/Denchock [link] [comments]

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Now’s the Time to Toughen Russia Oil Sanctions: Oil Strategy

Existing price cap is failing to erode the Kremlin’s war chest Cutting Moscow’s funds needs action to reduce fuel shipments Falling oil prices and an impending period of over-supply could create the perfect opportunity to toughen sanctions on Russian supplies to the point where they actually start to bite into the Kremlin’s war chest, writes Bloomberg oil strategist Julian Lee. The existing price-cap mechanism, which really hasn’t crimped Moscow’s oil income, was introduced at the urging of a US administration concerned that actually hitting Russia’s exports would send prices rocketing. That’s no longer the worry that it was two years ago when the measure was being crafted. Even with geopolitical tensions in the Middle East at the most intense for decades, Brent crude is still meandering beneath $75 a barrel and dipped below $70 in September. That’s down by more than a quarter from where it was when the price cap was devised. Sanctions imposed on individual tankers for breaches of the price cap were moderately successful. Those ships initially sat idle for months after being listed by the US, the UK or the European Union. More recently Moscow has begun to put them back to work. Their reactivation has brought no repercussions for those accepting the vessels into their ports. Perhaps it’s time it did. Sanctioned Ships at Work The number of Russian cargoes carried on sanctioned vessels has jumped since initial shipments were delivered without issue. There are now 90 oil tankers that have been sanctioned by one or more of the three administrations. Greatly increasing that number — the shadow fleet used to haul Russia’s oil is estimated at about 600 ships — and imposing real costs on using them would hit Moscow hard. If Indian, Chinese and Turkish refiners were persuaded to stop, or reduce, their imports of Russian crude hauled on shadow fleet ships, inevitably Moscow’s oil exports would fall. Taking, say, 1 million barrels a day of Russian crude off the market might actually do little more than balance supply and demand in the first half of 2025, according to the International Energy Agency. In a weak market, the price impact would be manageable. The effect on the Kremlin’s war chest would be far more damaging. There’s also plenty of spare production capacity that could offset any loss of Russian barrels. The OPEC group of oil producers theoretically could boost supply by more than 5 million barrels a day, if they chose. That’s almost twice Russia’s seaborne crude exports. Of course, they could choose not to step in. Relations between Riyadh and Moscow are a lot closer now than they were in March 2020 when the Kremlin refused to toe the Saudi line on production policy. Back then, a brief production free-for-all was brought to a sudden and dramatic end by the collapse in oil markets triggered by the Covid-19 pandemic. Now it’s far from clear whether Riyadh would choose Washington over Moscow when it comes to oil policy. Outgoing US President Joe Biden has shown in recent days that he’s prepared to step up support for Ukraine ahead of his departure from the White House. Effective sanctions targeting Russia’s oil exports would be a boon for Kyiv. If the West is serious about hitting President Vladimir Putin’s oil income it may have no better opportunity than the weeks before President-elect Donald Trump takes office. submitted by /u/Pllover12 [link] [comments]

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Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Bloomberg: Shiba Inu (SHIB) trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards. Shiba Inu investors accumulate on the dips Shiba Inu price faces a corrective pullback after surging more than 50% in early November. However, its on-chain metrics suggest a bullish outlook ahead. Santiment’s exchange outflow data shows a massive spike, indicating that 1.67 trillion SHIB worth nearly $41 million has been withdrawn from exchanges. Historically, when SHIB experienced a similar spike in exchange outflow, the meme coin rallied massively. Shiba Inu Exchange outflow chart. Source: Santiment Santiment’s Age Consumed index also aligns with the bullish outlook. Spikes in this index suggest dormant tokens (tokens stored in wallets for a long time) are in motion and can be used to spot short-term local tops or bottoms. For Shiba Inu, history shows that the spikes were followed by a rally in meme coin prices. The most recent uptick on November 14 also forecasted that SHIB was ready for an uptrend. SHIB Age Consumed chart. Source: Santiment Shiba Inu Price Forecast: A recovery on the cards Shiba Inu price declined more than 5% after facing resistance around its weekly level of $0.000028 in the second week of November. The weekly resistance at $0.000028 coincides with the 50% price retracement level ( drawn from a March high of $0.000045 to an August low of $0.000010) at $0.000028, making it a key resistance zone. As of this week, the pullback continues, trading at around $0.000023. If Shiba Inu breaks and closes above $0.000028, it will rally to retest its end-March weekly high of $0.000032. The Relative Strength Index (RSI) on the weekly chart reads 59, above its neutral level of 50, indicating the bullish momentum is gaining traction. SHIB/USDT weekly chart However, if SHIB continues the pullback and closes below $0.000019 weekly support, it will extend the decline to retest the weekly low of $0.000016. submitted by /u/Denchock [link] [comments]

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Nvidia

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Ethereum Price Forecast: ETH could decline by 23% if descending triangle pattern is validated

Bloomberg: Ethereum is down 2% after sustaining $47.88 million in liquidations in the past 24 hours. Liquidating long and short positions accounted for $34.71 million and $13.17 million, respectively. On the 4-hour chart, ETH is trending downward toward the $3,000 psychological level. After posting a series of lower highs and lower lows, the top altcoin’s recent move is following a descending triangle pattern. ETH/USDT 4-hour chart As a result, if ETH declines below the $3,000 psychological level, it could take a 23% dive to the support level near $2,300. However, the $2,817 key level, which bulls defended for nearly four months between April and July, could help prevent such a sharp decline. The Relative Strength Index (RSI) is slightly below its neutral level, indicating bearish momentum is moderately dominant. The Stochastic Oscillator is in the oversold region, indicating strong bearish pressure and potential for a brief recovery. A daily candlestick close above $3,400 will invalidate the bearish thesis. submitted by /u/Denchock [link] [comments]

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Israeli markets seem poised for a leap on positive news. Time to take a closer look at longs. Moreover, despite everything: According to data from the Abraham Accords Research Institute, trade in the first nine months of 2024 compared to the same period last year shows impressive growth:

Israel-Morocco: +53% Israel-UAE: +4% Israel-Bahrain: +988% Israel-Egypt: +51% (Trade volumes with Egypt and Morocco remain low, but the trend is clear nonetheless.) https://preview.redd.it/0rx7edbnw32e1.jpg?width=1200&format=pjpg&auto=webp&s=2577cd67d2014f69dad1a6d920fc2c5a76ca4747 submitted by /u/XGramatik [link] [comments]

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Gold pushes higher on simmering Russia-Ukraine tensions

Bloomberg: Technical Analysis: XAU/USD extends short-term uptrend Gold recovers above a major trendline on Wednesday as it extends its short-term trend higher. Given the principle of technical analysis that “the trend is your friend,” the odds favor more upside to come. XAU/USD 4-hour Chart A break above the daily high at $2,642 will probably indicate an extension of the trend higher. The next target to the upside lies at $2,686, the September 26 high. The precious metal is in a downtrend on a medium-term but an uptrend on a long-term basis, raising risks of moves both higher or lower in line with these broader cycles. submitted by /u/Denchock [link] [comments]

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