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  • Stocks Advance in Countdown to US Inflation Report: Markets Wrap

    Stocks Advance in Countdown to US Inflation Report: Markets Wrap

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    (Bloomberg) — Global stocks rose as investors awaited US inflation data that will help clarify the path for Federal Reserve policy.

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    Europe’s Stoxx 600 index advanced 0.5%, while US equity futures showed the S&P 500 and Nasdaq 100 indexes were set to add to Wednesday’s gains. A gauge of Asian stocks rallied as Japanese equities hit a fresh three-decade high. Treasuries rose, while the dollar weakened against most of its Group-of-10 peers.

    The US inflation report is top of mind for traders Thursday. More evidence of cooling price pressures will support optimism around expectations for Fed interest-rate cuts, but a hot reading could spur volatility. Economists tracked by Bloomberg expect year-over-year core inflation to fall to 3.8% in the December data from 4% in the prior month.

    “Confirmation that prices are easing will boost confidence that a May cut can be expected, and that could prompt some rally in stocks and bonds,” said Stuart Cole, chief macro economist at Equiti Capital in London. “But you need to be cognizant of the underlying CPI component. If services prices are still going in the wrong direction, then this could potentially stall any rally.”

    Cryptocurrency stocks extended gains in US premarket trading after the Securities and Exchange Commission for the first time approved exchange-traded funds that invest directly in Bitcoin. The largest cryptocurrency briefly scaled $47,000 in a muted climb after the green light. The largest digital currency had already jumped over 160% in the past 12 months in anticipation of the ETFs as well as looser monetary policy.

    In other individual stock moves, Tesco Plc climbed after Britain’s biggest retailer raised its profit guidance. Marks & Spencer Group Plc dropped after reporting strong Christmas sales, but disappointing performances in its international business and the joint venture with Ocado Group Plc.

    In Asia, benchmark Japanese indexes notched fresh three-decade highs, thanks in part to the yen’s recent weakness. Strategists also said a newly introduced tax-free retirement savings program may help attract more domestic inflows to the market.

    “The recent rally shows that overall, both domestic individual investors and foreign investors have been forced to change their attitude toward Japanese stocks to a more positive one,” said Ikuo Mitsui, fund manager at Aizawa Securities Co. “There is also a sense that investors who were late to the market are buying to follow the rise in the index.”

    Investors are gearing up for a bout of turbulence in Treasuries when the US consumer price data are published later. Bond traders have trimmed bets on gains for Treasuries this month, and the swaps market shows a lower chance of expected Fed cuts by March relative to pricing late last year.

    Fed Bank of New York President John Williams said Fed officials need to see more signs of cooling in the economy before reducing rates, but noted current policy levels are adequate to bring inflation back to the central bank’s target. The tone of comments differed from those he made on Dec. 15, when he said the near-term question was whether policy was “sufficiently restrictive” to ensure inflation comes back to 2%. At the time, he also added that officials “aren’t really talking about rate cuts.”

    JPMorgan Asset Management, however, says the Fed may end up cutting interest rates more than it’s currently signaling as the US economy slows, driving a rally in shorter-maturity Treasuries.

    Oil added to gains as tensions in the Middle East persisted, while gold also advanced.

    Key events this week:

    • US CPI, initial jobless claims, Thursday

    • China CPI, PPI, trade, Friday

    • UK industrial production, Friday

    • US PPI, Friday

    • Some of the biggest US banks report fourth-quarter results, Friday

    • Minneapolis Fed President Neel Kashkari speaks, Friday

    • ECB chief economist Philip Lane speaks, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 rose 0.5% as of 9:22 a.m. London time

    • S&P 500 futures rose 0.2%

    • Nasdaq 100 futures rose 0.4%

    • Futures on the Dow Jones Industrial Average rose 0.2%

    • The MSCI Asia Pacific Index rose 1.1%

    • The MSCI Emerging Markets Index rose 0.6%

    Currencies

    • The Bloomberg Dollar Spot Index was little changed

    • The euro was little changed at $1.0967

    • The Japanese yen rose 0.1% to 145.56 per dollar

    • The offshore yuan rose 0.2% to 7.1720 per dollar

    • The British pound was little changed at $1.2751

    Cryptocurrencies

    • Bitcoin rose 0.8% to $46,312.06

    • Ether rose 3.3% to $2,611.6

    Bonds

    • The yield on 10-year Treasuries declined four basis points to 3.99%

    • Germany’s 10-year yield was little changed at 2.22%

    • Britain’s 10-year yield declined two basis points to 3.80%

    Commodities

    • Brent crude rose 1.3% to $77.78 a barrel

    • Spot gold rose 0.3% to $2,031.46 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Richard Henderson and Chiranjivi Chakraborty.

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    ©2024 Bloomberg L.P.

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  • Samsung Profit Tumbles 35% as Chip Weakness Persists

    Samsung Profit Tumbles 35% as Chip Weakness Persists

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    (Bloomberg) — Samsung Electronics Co. posted its sixth straight quarter of declining operating profit, reflecting weak consumer demand and stoking uncertainty over the timing of a broader tech recovery.

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    Korea’s largest company reported a 35% fall in operating income to 2.8 trillion won ($2.1 billion), about 24% shy of estimates. Revenue slid more than anticipated to 67 trillion won. For all of 2023, Samsung reported its slimmest operating profit in 15 years.

    The results underscore how demand for smartphones and the memory chips that power modern electronics remains sluggish given economic uncertainty. It also muddies the outlook for a market recovery that many investors had hoped would emerge in 2024. In December, rival Micron Technology Inc. delivered a better-than-projected revenue forecast that suggested datacenter construction may make up for lukewarm computing and mobile device markets.

    “This shows that the rebound is slower than we all thought,” said Tom Kang, research director at Counterpoint Technology Market Research. “Prices are not rising that fast and the demand from certain sectors is not that strong.”

    Samsung in October predicted the long-depressed $160 billion memory market will bounce back gradually in 2024, driven by a boom in AI development. Prices should start climbing out of troughs around the latter part of 2023, executives said at the time.

    The company’s shares fell 2.4% in Seoul on Tuesday. Its disappointing results stem partly from a low utilization rate in its foundry chipmaking business, said Sanjeev Rana, an analyst at CLSA Securities Korea Ltd.

    Read more on financial analysts’ reactions to Samsung’s preliminary results.

    The consumer electronics unit also took a hit from fierce competition and higher marketing costs, while profit from its smartphone business likely came in toward the lower end of analysts’ estimates, he said.

    But there are signs of recovery. South Korea’s semiconductor industry in November recorded the largest gains in years in both production and shipments. Given rising memory prices and improving demand, “it is likely that Samsung’s chip business will return to profitability within the first half of 2024,” Rana added.

    Investors will want to hear about Samsung’s longer-term investment plans, particularly in the field of AI, when executives preside over the release of its full results on Jan. 31.

    The company now aims to catch up with rival SK Hynix Inc. in the burgeoning field of high-density memory chips, where it plans to increase capacity by 2.5 times in 2024. HBM, an advanced chip that handles data more quickly, works with hardware such as Nvidia Corp.’s accelerators to speed up data processing for intensive tasks like training AI models. Hynix Chief Executive Officer Kwak Noh-Jung told reporters he expected AI demand to help double the Korean firm’s market value over three years.

    “Samsung may have to gain market share in AI chips to achieve solid profit growth in 2024,” Bloomberg Intelligence analysts Masahiro Wakasugi and Phu Pham wrote in a note after results.

    Samsung is also counting on a new lineup of devices and foldables to drive growth in 2024. The Korean company is preparing to unveil its latest gadgets in the US later this month, at a time investors worry Apple Inc.’s iPhone 15 may be running out of steam mere months after launch.

    –With assistance from Haidi Lun, Annabelle Droulers, Youkyung Lee and Mayumi Negishi.

    (Updates with stock trading in the fifth paragraph)

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    ©2024 Bloomberg L.P.

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  • Stocks Are Dragged Lower by Share Selloff in China: Markets Wrap

    Stocks Are Dragged Lower by Share Selloff in China: Markets Wrap

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    (Bloomberg) — Stocks in Asia were dragged down by losses in Hong Kong and China amid concern over tighter regulation on the gaming industry and fears the Chinese government’s efforts to bolster the economy are insufficient.

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    The Hang Seng Tech Index slid as much as 3.5%, putting it on course for the lowest close since November 2022. The three biggest drags on the MSCI Asia Pacific Index were Tencent Holdings Ltd., Alibaba Group Holdings Ltd. and Meituan, all Chinese tech firms. Benchmark stock indexes also fell in South Korea and Australia.

    Investor sentiment remains quite negative in China despite a rally in global stocks during the past two months of 2023, Nomura Group analysts including Chetan Seth in Singapore wrote in a client note. “In China, there have been more signs of support for the economy, but equity investors still do not appear convinced,” they said.

    European equity futures also edged lower before euro-zone retail sales and consumer confidence data that may give a better guide on the region’s economic recovery.

    US equity futures were little changed after the S&P 500 closed marginally higher Friday after payroll growth beat expectations but the service sector slowed. Japanese financial markets were shut Monday for a holiday.

    The dollar edged higher versus most of its Group-of-10 peers, while the yen strengthened ahead of Tokyo inflation data due Tuesday. Treasury 10-year futures dropped. There’s no trading of cash Treasuries in Asia due to the Japanese holiday.

    Rate-Cut Bets

    Global stocks slid the most since October last week as markets were rattled by a deluge of corporate issuance and the Federal Reserve indicated it was in no rush to cut interest rates.

    Still, markets are pricing in rate cuts by March and traders are now looking to the US inflation print due Thursday for the next major guide for the Fed outlook. The inflation data is expected to see the underlying measure ease further to 3.8% year-on-year in December from 4% in the month prior, according to a Bloomberg survey.

    For some investors, the rate-cut expectations have gone too far.

    “Even if US inflation conveniently falls back to target in H1-2024, it is hard to imagine the FOMC cutting much more aggressively than 150bps if the US economy avoids recession,” Eric Robertsen, global head of research and chief strategist at Standard Chartered Bank, wrote in a note. “The FOMC is unlikely to deliver on these market expectations, and we feel that short-end rate pricing is due for a correction.”

    Elsewhere, Boeing Co. shares will be in focus when Wall Street opens as groundings of the 737 Max 9 aircraft gathered pace globally after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.

    In commodities, oil dropped after Saudi Arabia cut official selling prices for all regions, underscoring a worsening outlook and outweighing concern over Red Sea tensions and supply disruptions in Libya.

    Key events this week:

    • Eurozone economic confidence, retail sales, consumer confidence, Monday

    • Atlanta Fed President Raphael Bostic speaks, Monday

    • US House returns from recess, Monday

    • Australia retail sales, Tuesday

    • Japan Tokyo CPI, household spending, Tuesday

    • Eurozone unemployment, Tuesday

    • World Economic Forum’s global risks report released, Wednesday

    • US wholesale inventories, Wednesday

    • Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday

    • New York Fed President John Williams speaks, Wednesday

    • US CPI, initial jobless claims, Thursday

    • China CPI, PPI, trade, Friday

    • France CPI, Friday

    • UK industrial production, Friday

    • US PPI, Friday

    • Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday

    • Minneapolis Fed President Neel Kashkari speaks, Friday

    Stocks

    • S&P 500 futures were little changed as of 6:30 a.m. London time. The S&P 500 rose 0.2% on Friday

    • Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.1%

    • Euro Stoxx 50 futures fell 0.2%

    • Hong Kong’s Hang Seng Index fell 2%

    • China’s Shanghai Composite Index fell 1%

    • Australia’s S&P/ASX 200 Index fell 0.5%

    Currencies

    • The Bloomberg Dollar Spot Index was little changed

    • The euro was unchanged at $1.0943

    • The Japanese yen rose 0.3% to 144.20 per dollar

    • The offshore yuan was little changed at 7.1668 per dollar

    • The Australian dollar was little changed at $0.6707

    • The British pound was little changed at $1.2712

    Cryptocurrencies

    • Bitcoin fell 0.2% to $44,164.12

    • Ether fell 0.8% to $2,223.26

    Bonds

    Commodities

    • West Texas Intermediate crude fell 1.5% to $72.72 a barrel

    • Spot gold fell 0.7% to $2,031.54 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Matthew Burgess.

    Most Read from Bloomberg Businessweek

    ©2024 Bloomberg L.P.

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  • HSBC takes on Revolut, Wise with new Forex app for non-customers | Bank Automation News

    HSBC takes on Revolut, Wise with new Forex app for non-customers | Bank Automation News

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    HSBC Holdings Plc is set to debut an international payments app aimed at directly challenging the dominance of fintechs like Revolut and Wise Plc that have gathered tens of millions of retail customers by offering cheap foreign exchange. Zing will initially be offered in the UK, but Europe’s largest bank is planning to roll out […]

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  • Oil Advances as Iran Warship in Red Sea Ratchets Tensions Higher

    Oil Advances as Iran Warship in Red Sea Ratchets Tensions Higher

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    (Bloomberg) — Oil rose in New Year trading after Iran sent a warship into the Red Sea, escalating Middle East tensions, and as the outlook for Chinese crude demand brightened.

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    Brent crude climbed more than 2% to near $79. The deployment of an Iranian warship comes after the US Navy said it was fired upon when responding to a distress call from a vessel in the Red Sea, the latest flashpoint on the key maritime corridor over the past few weeks. Defense and shipping stocks were also trading higher on Tuesday.

    Attacks on merchant shipping in the region have led to diversions of everything from container ships to gas carriers. The most recent impact on for oil came as two crude tankers diverted away from loading in Sudan, though one was replaced by a different vessel. Still, even as some companies and shipowners stay away, the wider impact on supply has been contained for now.

    Geopolitics threatens to inject fresh impetus into an oil market that last year fell for the first time since 2020. As 2024 gets underway, there’s been close focus on supply as high output from the US and other producers outside of OPEC and its allies counters the cartel’s output curbs.

    A bumper crude import quota from China, the world’s largest buyer, added to oil’s momentum. Private refiners and traders received an allocation for crude purchasing that nearly matched the one they received for the entire of last year, potentially boosting the outlook for the country’s consumption.

    “The latest events in the Red Sea, positive sentiment in European equity markets and the new Chinese import quotas are likely pushing crude higher,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.

    The latest cuts from the Organization of Petroleum Exporting Countries and its allies will take effect this quarter, which could then be extended further. Traders have generally been wary of the Nov. 30 pledge from OPEC+ to slash production further, remaining skeptical of its implementation.

    A Houthi delegation met with officials in Tehran after the US response to the attack on a Danish-owned container ship. AP Moller-Maersk A/S has again suspended all Red Sea transit to assess the situation in the vital waterway.

    To get Bloomberg’s Energy Daily newsletter into your inbox, click here.

    –With assistance from Jonas Ekblom.

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    ©2024 Bloomberg L.P.

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  • China Woes Cast Markets Shadow as New Year Starts: Markets Wrap

    China Woes Cast Markets Shadow as New Year Starts: Markets Wrap

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    (Bloomberg) — Chinese shares dragged down Asian equities on the first trading day of the year following weaker-than-expected factory data and a speech from President Xi Jinping that flagged the headwinds facing the economy. Crude oil rose.

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    Hong Kong’s benchmark share gauge slid as much as 1.7%, while its peers in the mainland and Taiwan also dropped. The losses drove a regional equity benchmark toward its first decline in seven days.

    Chinese factory activity shrank in December to the lowest level in six months, data published Sunday showed, while a private gauge of manufacturing released Tuesday showed a slight gain. Sluggish activity in the world’s second-largest economy also contributed to a slump in factories across Asia.

    President Xi in his annual new year address televised Sunday pledged to strengthen economic momentum and job creation, while conceding some “enterprises had a tough time” and “people had difficulty finding jobs and meeting basic needs.”

    China’s economy may face another tough year in 2024, said Mark Matthews, head of Asia research at Julius Baer. “President Xi has made it very clear that on the economic front, his priority is bringing down the size of the property sector and its importance in the economy,” he said on Bloomberg Television. “That process is painful.”

    Crude Gains

    Oil gained after Iran dispatched a warship to the Red Sea in response to the destruction of three Houthi boats by the US Navy over the weekend, a move that risks ratcheting up tensions and complicating Washington’s goal of securing a waterway that’s vital to global trade.

    Sentiment in Asia was also dented after people familiar said ASML Holding NV, which makes semiconductor manufacturing equipment, canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration.

    US stock futures were little changed. The yen weakened against most of its Group-of-10 peers in thin trading as investors monitored conditions after an earthquake in Japan on Monday. US 10-year note futures dropped, while cash Treasuries are shut in Asia for a holiday in Japan. Australian bonds slipped.

    Bitcoin climbed above $45,000 for the first time in nearly two years as anticipation of an approval of an exchange-traded fund investing directly in the biggest token intensified.

    Rising Risks

    Signs of exhaustion have emerged after a more than $8 trillion surge in the S&P 500 last year. Traders have looked past Federal Reserve uncertainty, recession angst and geopolitical risks. And many who came into 2023 dreading all that have ended up scrambling to chase the rally.

    “With an especially rare S&P nine-week winning streak already in the books, the index into resistance near the 4,800 level, and daily and weekly overbought readings, too, these factors combine to say we should expect some type of a consolidation, correction, or pullback – something,” John Roque, technical analyst at 22V Research, wrote in a note.

    Meanwhile, despite the persisting weakness in China, some investors consider a slump of almost 60% is a signal to buy Chinese stocks. Almost a third of 417 respondents to Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months. That compares with just 19% in a similar August survey and is higher than the 25% who planned to boost exposure in March.

    Key events this week:

    • Eurozone S&P Global Eurozone Manufacturing PMI, Tuesday

    • UK S&P Global UK Manufacturing PMI, Tuesday

    • Germany unemployment, Wednesday

    • US FOMC minutes, ISM Manufacturing, job openings, light vehicle sales, Wednesday

    • Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Wednesday

    • China Caixin services PMI, Thursday

    • Eurozone S&P Global Eurozone Services PMI, Thursday

    • US initial jobless claims, ADP employment, Thursday

    • Eurozone CPI, PPI, Friday

    • US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday

    • Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday

    Some of the main moves in markets:

    Stocks

    • S&P 500 futures were little changed as of 2:14 p.m. Tokyo time. The S&P 500 fell 0.3% on Friday

    • Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.4%

    • Hong Kong’s Hang Seng Index fell 1.4%

    • China’s Shanghai Composite Index fell 0.1%

    • Australia’s S&P/ASX 200 Index rose 0.5%

    Currencies

    • The Bloomberg Dollar Spot Index rose 0.1%

    • The euro fell 0.2% to $1.1025

    • The Japanese yen fell 0.4% to 141.46 per dollar

    • The offshore yuan was little changed at 7.1290 per dollar

    • The Australian dollar rose 0.2% to $0.6828

    Cryptocurrencies

    • Bitcoin rose 4% to $45,353.99

    • Ether rose 2.2% to $2,390.83

    Bonds

    Commodities

    • West Texas Intermediate crude rose 1.7% to $72.85 a barrel

    • Spot gold rose 0.4% to $2,071.68 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Joanna Ossinger.

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    ©2024 Bloomberg L.P.

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  • Meet the First $100 Billion Woman in the World | Entrepreneur

    Meet the First $100 Billion Woman in the World | Entrepreneur

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    Françoise Bettencourt Meyers was already the richest woman in the world, but on Thursday, she hit a new milestone—the first female to accumulate a staggering fortune of over $100 billion ($100.2 billion, to be exact), according to the Bloomberg Billionaires Index.

    Bettencourt Meyers, the granddaughter of L’Oreal founder Eugène Schueller, is the vice-chair of L’Oréal’s board and, alongside her family, is the prime stakeholder with approximately 35% of its shares.

    Her spike in wealth came as L’Oréal SA stocks reached unparalleled heights, positioning the company to have one of its most successful years in over two decades.

    Although Bettencourt Meyers has surpassed other female billionaires, she still isn’t one of the top 10 richest people in the world. She isn’t even the wealthiest woman in France. At number 12, she trails behind her compatriot Bernard Arnault. The iconic figure behind LVMH Moet Hennessy Louis Vuitton SE is second on the Billionaire’s Index with a fortune of $179.4 billion. Elon Musk holds a comfortable lead at $238 billion.

    Related: Meet the World’s Secretive Billionaires Who Give Stealth Wealth a Whole New Meaning, from Ike Perlmutter to Philip Anschutz

    Not your typical $100 billionheiress

    Unlike other billionaires who are known for their oversized personalities and opulent lifestyles, Bettencourt Meyers, 70, is much more private and introverted—some may even consider her a recluse. She has written two books, one on the Bible and the other on Greek mythology. She is also a passionate pianist, known to practice for hours a day.

    But despite trying to stay out of the spotlight, Bettencourt Meyers made headlines for almost a decade fighting in court over some of her inheritance. As recounted in the 2017 Netflix documentary ‘L’Affaire Bettencourt,’ her mother, Lilian, plagued by Alzheimer’s disease, wanted to give a billion dollars in cash, real estate, and art to François-Marie Banier, an artist, photographer, and friend. But Bettencourt Meyers sued him after her mom’s death. He was ultimately convicted of abuse.

    Related: An Hermès Heir Wants to Give Half His $12 Billion Fortune to His Gardener—and Lawyers Are Going Nuts

    Continuing a French tradition

    Founded in 1909 by chemist Schueller, L’Oreal is now a $268 billion company. The company is part of a French tradition of hugely successful luxury goods behemoths. Aside from L’Oréal and LVMH, the European nation has also given rise to other wealthy families, such as the proprietors of Hermès International SCA and the Wertheimers, who own Chanel.

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  • Stock Futures Rise, Dollar Weakens in Thin Trading: Markets Wrap

    Stock Futures Rise, Dollar Weakens in Thin Trading: Markets Wrap

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    (Bloomberg) — US equity futures edged higher while the dollar extended losses as trading resumed after the Christmas holiday amid investor expectations for earlier and deep interest rate cuts next year.

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    Stocks in Asia were mixed in a thin trading session with markets including Hong Kong, New Zealand and Australia shut. Emerging Asian currencies rose, with South Korea’s won and Taiwan dollar leading gains against a weak dollar that fell to its lowest level in almost five months.

    Some on Wall Street are positioning for further stock gains ahead as the session kicked off the start of the “Santa Claus rally” — a seasonal trend where equities tend to climb into the first few days of the new year. The S&P 500 notched an eight-week winning run on Friday — the longest in more than five years on signs price pressures in the US were easing. Ten-year US Treasury yields slid two basis points to 3.88%.

    “As for emerging markets in Asia, ‘silent night’ says much, given that there isn’t particularly inspired trading, with Wall Street equivocating ahead of Christmas,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank. “It looks like a case of averting the China drag and hanging on to earlier Santa rallies being the best case for Boxing day – boxing in risks.”

    Stocks fell in mainland China, with the benchmark CSI 300 Index headed for its first drop in four sessions, as investor sentiment remains weak even after the authorities softened their stance following a move last week to tighten curbs on the videogame industry.

    Elsewhere, Singapore dollar was little changed after core inflation edged lower in November, giving the central bank room to extend its monetary-policy pause next month to support the economy.

    Japan’s auction of two-year sovereign debt saw tepid investor appetite, sending a gauge of demand to the weakest in a year, amid speculation the central bank will end negative interest rates in 2024. Its labor market remained relatively tight in November, keeping pressure on employers to boost wages in order to fill positions.

    The benchmark Topix index traded within tight ranges after Bank of Japan Governor Kazuo Ueda’s speech on Monday that suggested he’s in no hurry to end the ultra-easy monetary policy.

    “With the Nikkei 225 at high levels, year-end selling to lock in profits and losses is likely to weigh on the upside,” says Hideyuki Ishiguro, senior strategist at Nomura Asset Management.

    In the corporate world, Chinese gaming shares outperformed the benchmark after a number of companies announced plans to repurchase their shares following news of the latest government curbs on the sector. Cathie Wood last week made her first purchase of shares in LY Corp. in over a year, indicating a possible shift toward more positive sentiment on the operator of Yahoo! Japan and popular messaging app Line.

    Iron ore futures hit $140 a ton, highest in 18 months as traders keep a close eye on China’s steel outlook for the next year. Oil rose slightly after posting the largest weekly gain in more than two months, with shipping disruptions in the Red Sea in focus after a spate of Houthi attacks against vessels in the vital waterway.

    Geopolitical tensions still remain front of investors minds into the new year as tensions in the Middle East look set to increase. Iranian President Ebrahim Raisi said Israel will pay a price for killing a senior commander of its Revolutionary Guard in air strike in Damascus on Monday. The US accused Iran at the weekend of an attack on a tanker in the Indian Ocean.

    READ: Israel Sees Defense Spending Climbing $8 Billion as War Rages

    US Growth Resilience

    Global markets have been buoyed in recent months as traders bet major central banks including the Federal Reserve will aggressively cut interest rates next year as inflation falls. Bond yields have tumbled while the S&P 500 is nearing a fresh record.

    Data released last week showed signs of resilience in US growth while the Fed’s preferred underlying inflation metric barely rose in November. Additional reports Friday showed consumers were also gaining conviction that inflation in the world’s largest economy was on the right track despite a bumpy housing market recovery.

    That helped cement investor expectations for earlier and deeper interest rate cuts next year, despite pushback from several Fed policymakers. Swaps traders are betting interest rates will be eased by more than 150 basis points in 2024, double the Fed’s forecast.

    Read more: Fed’s Preferred Inflation Gauges Cool, Reinforcing Rate-Cut Tilt

    Key events this week:

    • BOJ releases summery of opinions from December meeting, Wednesday

    • China industrial profits, Wednesday

    • Norway retail sales, Wednesday

    • Japan industrial production, Thursday

    • South Korea industrial production, Thursday

    • Thailand trade, Thursday

    • Mexico unemployment, Thursday

    • Bank of Portugal releases quarterly report on banking system, Thursday

    • South Korea CPI, Friday

    • Spain CPI, Friday

    • UK nationwide house prices, Friday

    • Brazil unemployment, Friday

    • Chile unemployment, Friday

    • Colombia unemployment, Friday

    Some moves in major markets:

    Stocks

    • S&P 500 futures rose 0.1% as of 6:30 a.m. London time

    • The Shanghai Composite fell 0.7%

    • Nasdaq 100 futures rose 0.3%

    • Australia’s S&P/ASX 200 was little changed

    Currencies

    • The Bloomberg Dollar Spot Index fell 0.1%

    • The euro rose 0.2% to $1.1025

    • The Japanese yen was little changed at 142.25 per dollar

    • The offshore yuan was little changed at 7.1467 per dollar

    • The Australian dollar rose 0.3% to $0.6816

    • The British pound rose 0.1% to $1.2707

    Cryptocurrencies

    • Bitcoin fell 2% to $42,674.63

    • Ether fell 1.9% to $2,229.68

    Bonds

    • The yield on 10-year Treasuries declined two basis points to 3.88%

    • Japan’s 10-year yield advanced two basis points to 0.630%

    • Australia’s 10-year yield was unchanged at 4.01%

    Commodities

    • West Texas Intermediate crude rose 0.3% to $73.75 a barrel

    • Spot gold rose 0.5% to $2,064.35 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Akemi Terukina.

    Most Read from Bloomberg Businessweek

    ©2023 Bloomberg L.P.

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  • Stocks, US futures decline before inflation gauge: Markets Wrap

    Stocks, US futures decline before inflation gauge: Markets Wrap

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    (Bloomberg) — European stocks and US futures dipped ahead of the release of a US inflation gauge that may help shape the outlook for Federal Reserve policy.

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    Technology stocks led a decline in the Stoxx Europe 600 index. Prosus NV plunged as much as 15% after China announced new curbs on online gaming, pummeling some of the region’s largest tech shares including Tencent Holdings Ltd. Adidas AG and Puma SE slumped after a weak sales outlook from US competitor Nike Inc. Delivery Hero SE fell more than 10% after announcing job cuts.

    The US core personal consumption expenditures price index probably fell to 3.3% in November from 3.5% the previous month, according to a Bloomberg survey of economists before the numbers are released later Friday. That may bolster expectations of Fed rate cuts next year after data Thursday suggested the US economy is cooling.

    “The focus today is on core PCE tonight and one should be mindful of the razor-thin liquidity heading into the festive season as data surprise may exacerbate price movement,” said Christopher Wong, a foreign-exchange strategist at Oversea-Chinese Banking Corp. in Singapore.

    Swaps traders are pricing in around 150 basis points of Fed cuts next year, twice as much as the central bank has signaled as US GDP growth was revised lower Thursday to a 4.9% annualized reading in the third quarter. Personal consumption data also came in softer than economists had anticipated.

    File - Federal Reserve Chair Jerome H. Powell speaks at a news conference at the Federal Reserve in Washington, Nov. 1, 2023. The U.S. economy held up through 2023 despite worries at the start of the year that a recession may be inevitable. For a while, the worry was even that the economy may be too strong, which could have fed into upward pressure on inflation and forced the Federal Reserve to keep interest rates higher for longer. (AP Photo/Susan Walsh, File)File - Federal Reserve Chair Jerome H. Powell speaks at a news conference at the Federal Reserve in Washington, Nov. 1, 2023. The U.S. economy held up through 2023 despite worries at the start of the year that a recession may be inevitable. For a while, the worry was even that the economy may be too strong, which could have fed into upward pressure on inflation and forced the Federal Reserve to keep interest rates higher for longer. (AP Photo/Susan Walsh, File)

    Federal Reserve Chair Jerome H. Powell. (AP Photo/Susan Walsh) (ASSOCIATED PRESS)

    Treasury yields and the dollar were steady. Oil extended its biggest weekly gain in two months as shippers avoided the Red Sea amid increased attacks, while Angola’s exit from OPEC after 16 years put the spotlight on the group’s unity.

    Nike’s shares fell more than 10% in late trading after the company said it’s looking for as much as $2 billion in cost savings by dismissing workers and simplifying the apparel giant’s product assortment amid a weaker sales outlook.

    Key events this week:

    • US personal income and spending, new home sales, durable goods, University of Michigan consumer sentiment index, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 fell 0.1% as of 8:18 a.m. London time

    • S&P 500 futures fell 0.2%

    • Nasdaq 100 futures fell 0.3%

    • Futures on the Dow Jones Industrial Average fell 0.4%

    • The MSCI Asia Pacific Index fell 0.3%

    • The MSCI Emerging Markets Index fell 0.6%

    Currencies

    • The Bloomberg Dollar Spot Index was little changed

    • The euro was little changed at $1.1010

    • The Japanese yen fell 0.1% to 142.33 per dollar

    • The offshore yuan was little changed at 7.1432 per dollar

    • The British pound was little changed at $1.2695

    Cryptocurrencies

    • Bitcoin fell 0.7% to $43,699.65

    • Ether rose 2% to $2,293.22

    Bonds

    • The yield on 10-year Treasuries was little changed at 3.89%

    • Germany’s 10-year yield advanced two basis points to 1.98%

    • Britain’s 10-year yield was little changed at 3.53%

    Commodities

    • Brent crude rose 1.1% to $80.24 a barrel

    • Spot gold rose 0.2% to $2,050.61 an ounce

    This story was produced with the assistance of Bloomberg Automation.

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  • Nippon Steel Agrees to Buy US Steel for $14.1 Billion

    Nippon Steel Agrees to Buy US Steel for $14.1 Billion

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    (Bloomberg) — Nippon Steel Corp. will buy United States Steel Corp. for $14.1 billion to create the world’s second-largest steel company — and the biggest outside of China — with a key role in supplying American manufacturers and automakers.

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    The deal ends months of uncertainty over the future of US Steel, an icon of American industry, which has been considering bids since it rejected an offer from rival Cleveland-Cliffs Inc. in August. Nippon Steel’s all-cash offer is significantly higher than the roughly $7.25 billion Cliffs offered at the time, and a whopping 142% premium to US Steel’s share price on the last trading day before it announced its strategic review.

    For Nippon Steel, Japan’s biggest steel producer, the transaction provides a large foothold in the American steel industry when US demand is poised to benefit from rising infrastructure spending. US Steel is a key supplier to the lucrative automotive market in particular. The Japanese company has been seeking growth overseas as it faces a slowdown in demand at home, combined with a weakening yen and surge in competition across Asia.

    Read More: Biden’s Steel Boom Helps Spark Bidding War for an American Icon

    US Steel’s shares jumped 26% to close at $49.59 in New York on Monday. Nippon Steel shares fell as much as 6.1% in early trading in Tokyo on Tuesday.

    Cliffs rose 9.6%, as the company indicated it is refocusing on share buybacks as a use of capital — choosing to walk away rather than doubling down on its pursuit. ArcelorMittal SA, which had also been reported as a potential buyer, gained 5.3%.

    The deal announced Monday would create a steel giant with plants stretching from Slovakia to Osaka and Pennsylvania. The combined firm would be the world’s second-biggest steelmaker with more than 86 million tons of capacity, leapfrogging European giant ArcelorMittal, according to a company presentation and Bloomberg calculations. Only China’s state-owned China Baowu Steel Group Corp. would have more.

    However, the deal is already shaping up as a political lightning rod, after the influential United Steelworkers union criticized the foreign takeover and urged US regulators to apply close scrutiny. At least three US senators said they oppose the deal.

    In a presentation, Nippon Steel said it was expanding its US presence to benefit from a growing population, cheap energy and renewed focus on building infrastructure. The company said it had secured commitments to finance the transaction from Japanese banks.

    Analysts weighed in on the deal, noting Nippon Steel’s offer was higher than market expectations. Keybanc Capital Markets analyst Phil Gibbs said in a note to clients that the implied enterprise value of about $14.9 billion was “well above recently rumored” levels, while Wolfe Research analyst Timna Tanners called Nippon Steel a “wild card” paying a “lofty price.”

    For American industry, the takeover will mark the end of an era. US Steel traces its roots back to 1901 when J. Pierpont Morgan merged a collection of assets with Andrew Carnegie’s Carnegie Steel Co.

    It has undergone a dramatic shift in recent years under CEO David B. Burritt, as its investment focus pivoted away from traditional blast-furnace production of steel from iron ore, toward more modern and less-polluting plants that remelt metal scrap instead.

    The company was catapulted into the spotlight in August after revealing it had rejected an offer from Cliffs and begun a strategic review. The announcement kicked off a dramatic few weeks, as the USW threw its support behind Cliffs’ pugnacious chief executive, while a little-known buyer startled the industry with an even larger offer, before abruptly pulling its interest days later.

    Read More: Steel CEO Who Fights With Goldman Takes on US Industry Icon

    As US Steel considered its options, analysts speculated certain buyers would be more focused on the firm’s Big River Steel plant in Arkansas, which uses the greener and more efficient electric arc furnaces, while seeking to offload the older blast furnace assets.

    However, Nippon Steel Executive Vice President Takahiro Mori said the company intends to continue with US Steel’s existing plans for the company, including completing the Big River project and continuing to operate the legacy steelmaking assets. He said the company is “supportive” of US Steel’s strategy.

    “After a few years we may think in another way, but at this moment we are just following the current plan.”

    Passing CFIUS

    The deal requires US Steel shareholder approval, and will need to clear regulators, including the Committee on Foreign Investment in the US, or CFIUS.

    Nippon Steel’s Mori said he is confident on clearing regulatory hurdles, pointing to Japan’s strong relationship with the US. “I don’t have any concern about passing CFIUS,” he said.

    A handful of US politicians had already started weighing in Monday on the deal — slamming a foreign purchaser of the iconic American company and citing concerns about what the deal means for union workers.

    The two companies have agreed that US Steel will keep its name and Pittsburgh headquarters. Nippon Steel also said it will honor all agreements US Steel has with the USW, which has repeatedly said it won’t support any foreign bidders.

    Strained Relations

    Relations between the USW and US Steel remain strained. USW President David McCall said he received a call at 6 a.m. New York time from US Steel CEO Burritt, who left a voicemail. McCall said it would have been the first time he had spoken to the executive since becoming the union’s top official in September, following the death of former president Tom Conway.

    “This is not how this is going to work,” McCall said in an interview. “We don’t know Nippon.”

    The union had a transferable right — which it had said it would pass on to Cliffs — to counterbid after an offer for US Steel as part of its collective bargaining agreement.

    However, Cliffs in a statement congratulated US Steel on the deal and wished it well with the transaction. Cliffs will refocus its capital allocation priorities towards more aggressive share buybacks, CEO Lourenco Goncalves said.

    Citigroup Inc. is acting as financial adviser to Nippon Steel, while Barclays Plc, Goldman Sachs Group Inc. and Evercore Inc. are advising US Steel.

    –With assistance from Shoko Oda and Jessica Zhou.

    (Updates with Nippon Steel share move in fourth paragraph.)

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  • Argentina’s Milei Devalues Peso by 54% in First Batch of Shock Measures

    Argentina’s Milei Devalues Peso by 54% in First Batch of Shock Measures

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    (Bloomberg) — Argentina devalued the peso by 54%, overhauled its crawling peg and announced massive spending cuts to eliminate its primary fiscal deficit next year as the first steps in President Javier Milei’s shock-therapy program.

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    The newly inaugurated administration weakened the official exchange rate to 800 pesos per dollar, Economy Minister Luis Caputo said in a televised address after the close of local markets on Tuesday. It was 366.5 per dollar before the address. The central bank will henceforth target a monthly devaluation of 2%.

    The moves were welcomed by the International Monetary Fund. The central bank is scheduled to announce new monetary measures on Wednesday.

    “There is no more money,” Caputo said repeatedly in the recorded video, adding that Argentina needs to solve its “addiction” to fiscal deficits.

    The government will slash spending equivalent to 2.9% of gross domestic product, in a radical fiscal adjustment, according to a senior economic official.

    Cuts to energy subsidies will save the 0.5% of GDP, while reductions to transport subsidies will save 0.2%, according to the government’s estimates. The administration also expects reductions in social security and pensions to save an additional 0.4% of GDP. The government plans to end indexation of pension payments, the official said.

    The finance ministry also expects tax revenue to grow by 2.2% next year.

    Other measures announced including halving the number of ministries, cutting transfers to provinces and suspending public works. At the same time, Argentina will boost certain social welfare programs, Caputo said.

    The IMF praised the new government’s “bold initial actions” shortly after Caputo’s announcement. “Their decisive implementation will help stabilize the economy and set the basis for more sustainable and private-sector led growth,” spokesperson Julie Kozack said in a statement.

    Dramatic Steps

    The dramatic first steps follow a somber inauguration speech on Sunday, when Milei warned that Argentines will have to endure months of pain while he works to pull the country from the economic crisis inherited from his predecessor. Inflation is already running at more than 140% annually, and prices are expected to jump between 20% and 40% in the months to come, the president said.

    The government had closed Argentina’s export registry Monday, a technical step that often foreshadows a currency devaluation or major policy change. The central bank also announced Monday the official currency market would operate with limited transactions — a restriction it said it will lift on Wednesday.

    The devaluation was long seen as inevitable. In the run-up to Milei’s inauguration, markets were signaling a currency drop of about 27% in the first week of the new government, while investment banks like JPMorgan Chase & Co. and local private advisory firms suggested it could weaken about 44%. Grocers had already increased prices and banks were offering sharply weaker retail exchange rates hours before the Tuesday announcement.

    Argentine authorities have for years slowed the peso’s decline in the official market through currency controls and import restrictions in an attempt to protect dwindling reserves. That hodgepodge of capital controls has spurred at least a dozen exchange rates, hampering business and restricting investment in South America’s second-largest economy. On the campaign trail, Milei pledged to scrap the currency altogether, replacing it with the US dollar.

    “We’re always worse off because our response has been to attack the consequences but not the problem,” Caputo said in his address. “What we’ve come to do is the opposite of what they always did, and that’s solve the root problem.”

    On Dec. 7, the prior administration had let the peso slip by about 5%, while simultaneously limiting the amount of greenbacks banks could hold in order to prevent them from hoarding dollars. The government had been burning reserves to keep the currency largely steady at 350 per dollar since the August primary vote, when Milei’s surprise showing sent markets into a tailspin. In parallel markets, that rate is about 1,000.

    Since being spooked by his emergence in the August primary, investors have changed tack on the firebrand libertarian, cheering on his first steps as president-elect — namely, his decision to pick Wall Street veterans for some of the main cabinet positions while distancing himself from more radical proposals including dollarizing the economy and shuttering the central bank. As he begins his four-year term, the rally will be put to the test.

    Caputo previously served as finance chief in the administration of Mauricio Macri, when he negotiated a $16.5 billion deal with holdout bondholders, allowing Argentina to return to international capital markets. Amid a currency run in 2018, Macri tapped him to take over at the central bank, but he only served for a few months before unexpectedly stepping down amid tensions with the IMF.

    Caputo has tapped longtime colleague Santiago Bausili, a Deutsche Bank and JPMorgan Chase & Co veteran, to run Argentina’s central bank.

    —With assistance from Davison Santana and Patrick Gillespie.

    (Updates with details on new crawling peg from first paragraph)

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  • Bitcoin’s 2023 Rally Frays During Brief 7.5% Drop Toward $40,000

    Bitcoin’s 2023 Rally Frays During Brief 7.5% Drop Toward $40,000

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    (Bloomberg) — Bitcoin delivered another bout of its notorious volatility in a brief but sharp tumble toward $40,000 amid a broader crypto selloff.

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    The largest token sank as much as 7.5% to $40,521 before paring some of the losses to trade 3.7% lower at $42,165 as of 1:05 p.m. Monday in Singapore.

    Smaller tokens like Ether, XRP, Polkadot and Cardano also fell. An index of the largest 100 digital assets shed about 4%, the largest drop since Nov. 22.

    Bitcoin has been on a tear this year on expectations that regulators will give the green light for the first US exchange-traded funds investing directly in the token, widening the potential base of crypto investors. Bets that the Federal Reserve will cut interest rates in 2024 have also encouraged the rally both in Bitcoin and virtual currencies as a whole.

    “Market leverage had risen materially,” said Sydney-based Richard Galvin, co-founder at Digital Asset Capital Management. “The current fall looks like a market deleveraging as opposed to any fundamental news catalyst.”

    Coinglass data show that about $299 million worth of crypto trading positions betting on higher prices were liquidated on Dec. 11 as of 1:05 p.m. in Singapore — the highest such tally since at least mid-September.

    Awaiting the Fed

    Investors are braced this week for US inflation data and the Fed’s final policy meeting of 2023, both of which could test aggressive wagers on rate cuts. Global stocks and US equity futures wavered on Monday as a dollar gauge ticked up, a sign of cautious sentiment.

    “It makes sense to see some profit taking,” said Tony Sycamore, a market analyst at IG Australia Pty. He expects falls toward the $37,500 to $40,000 range to be “well-supported” by dip buyers.

    Bitcoin has jumped more than 150% year-to-date, energizing a wider recovery in digital-asset prices from a $1.5 trillion rout in 2022. The token remains well below its pandemic-era record of nearly $69,000 set just over two years ago.

    –With assistance from Sidhartha Shukla.

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  • TSMC November sales slump 7.5% in sign of uneven tech recovery

    TSMC November sales slump 7.5% in sign of uneven tech recovery

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    (Bloomberg) — Taiwan Semiconductor Manufacturing Co.’s sales slid back into contraction last month following October gains, showing there’s still a way to go before the global chip market stages a full recovery from a prolonged slump.

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    The world’s largest supplier of made-to-order chips recorded a 7.5% drop in revenue to NT$206 billion ($6.6 billion) in November. Revenue for the first 11 months was down 4.1% from the prior year, to NT$1.99 trillion.

    The primary chipmaker to Nvidia Corp. and Apple Inc. in October projected sales of $18.8 billion to $19.6 billion for this quarter. During its third-quarter earning call, Chief Executive Officer C. C. Wei said the company was counting on the chip market hitting bottom “very soon” but stopped short of predicting a strong rebound because of uncertainty around China, which is grappling with a moribund economy and escalating US trade sanctions.

    Read More: TSMC Foresees Long-Awaited Chip Recovery After Outlook Beat

    Employees of Taiwan Semiconductor Manufacturing Company (TSMC) prepare to perform during the company's annual sports day event in Hsinchu, Taiwan, October 14, 2023. REUTERS/Ann Wang

    TSMC’s annual sports day event in Hsinchu, Taiwan. REUTERS/Ann Wang (Ann Wang / reuters)

    Electronics makers and chip suppliers have struggled to work through a glut of unsold inventory, built up after the pandemic’s semiconductor shortage drove customers to stockpile and double or triple order. But now executives across the chip industry — from TSMC to Samsung Electronics Co. and Lenovo Group Ltd. — are saying the industry has mostly used up excess supplies.

    The demand for artificial intelligence chips is helping companies like Nvidia and Advance Micro Devices Inc. and filling up orders for TSMC’s most-advanced production nodes. On Wednesday, AMD upped its outlook for the market for AI chips to climb to more than $400 billion in the next four years — more than twice as high as a projection AMD gave in August, showing how rapidly expectations are changing for AI hardware. TSMC also manufactures AMD chips, including the latest AI chip, the MI300.

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  • Broadcom CEO Expects AI Windfall Even as Sales Growth Slows

    Broadcom CEO Expects AI Windfall Even as Sales Growth Slows

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    (Bloomberg) — Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, expects the rapid expansion of artificial intelligence computing to help offset its worst slowdown since 2020.

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    Revenue from networking semiconductors used to support AI systems now accounts for 15% of the company’s total chip sales, and that portion will grow to more than 25% in fiscal 2024, Broadcom said Thursday after releasing its quarterly results.

    The prospect of AI growth helped cheer investors, who initially sent the shares down after the report was released. Broadcom sales are growing at the slowest pace since the early days of the pandemic, with corporate customers and telecom providers reining in their spending.

    AI is a bright spot, according to Chief Executive Officer Hock Tan. Spending on computer networks needed to support those services are expected to double, he said on a conference call. So far, fellow chipmaker Nvidia Corp. has seen the biggest windfall from the AI boom, which has propelled its valuation past the $1 trillion mark this year.

    Tan’s remarks helped the shares recover after a drop of 3.6% in late trading. The stock was little changed as of 6 p.m. New York time, at $922.

    Revenue grew 4% to $9.3 billion in the fourth quarter, which ended Oct. 29. Broadcom, which just bought VMware Inc. for more than $60 billion, predicted that its 2024 revenue would be about $50 billion when including that acquisition.

    Though that number appeared to be below the two companies’ combined sales estimates, Broadcom plans to spin off two VMware units. They would account for about $2 billion in sales.

    For the 11 months remaining in fiscal 2024, VMware will contribute about $12 billion to total revenue, executives said. It will take about a year to fully integrate VMware, but growth will then accelerate as the company focuses on more high-value products, Tan said.

    In the coming year, the company expects mid- to high-single-digit percentage growth in semiconductors. That’s a slowdown from the preceding two years.

    In the fourth quarter, Broadcom’s profit was $11.06 a share, excluding some items. Analysts had predicted earnings of $10.93 a share.

    Broadcom’s chip business had sales of $7.33 billion in the fourth quarter, in line with estimates. Infrastructure software revenue was $1.97 billion, versus a projection of $1.94 billion.

    Broadcom provides key components for Apple’s iPhone, designs custom chips for Alphabet Inc.’s Google and is the biggest supplier of networking components that direct traffic between computers in data centers.

    Tan emphasized that his company’s relationship with Apple, which he refers to as his “North American customer,” will continue to be strong. Revenue from the division that provides Apple with connectivity chips will be stable next year, he said.

    Tan is also betting on software to maintain growth. The company completed the VMware deal last month, gaining a bigger foothold in so-called hybrid cloud services, which cater to companies that store data both in their own facilities and outside server farms.

    Broadcom expects the VMware integration to cost $1.3 billion through fiscal 2025, according to a filing. The chipmaker has been cutting jobs and moved its headquarters to Palo Alto, California, where VMware was based, from nearby San Jose.

    (Updates with CEO remarks starting in fourth paragraph.)

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  • UK consults on plans to regulate tech firms critical to finance | Bank Automation News

    UK consults on plans to regulate tech firms critical to finance | Bank Automation News

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    The UK has started consulting on its proposals to oversee the cloud computing and data analytics services that banks depend on, a push that could see parts of firms like Amazon.com Inc., Alphabet Inc. and Microsoft Corp. come under the remit of the country’s financial regulators. The proposals include “requirements on technology and cyber resilience” […]

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  • Stocks, Treasuries Drop as Japan Rattles Markets: Markets Wrap

    Stocks, Treasuries Drop as Japan Rattles Markets: Markets Wrap

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    (Bloomberg) — Stocks fell and bond yields rose amid speculation that the Bank of Japan will soon scrap the world’s last negative interest-rate regime.

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    The yen strengthened 1% against the dollar and Japan’s 10-year yield jumped as much as 13 basis points. Investors are speculating that higher rates could come earlier than expected following comments from BOJ Governor Kazuo Ueda on more challenging policy ahead and a weak auction of long-term debt.

    Global markets moved in response, with European stocks opening lower. The yield on 10-year US Treasuries added seven basis points and the dollar fell for the first time in four days.

    “When it comes to the last 24 hours, markets have seen a sharp reversal in tone, with bond yields seeing a significant increase overnight and equities losing ground,” said Jim Reid at Deutsche Bank AG.

    “The main catalyst for this have been comments from Bank of Japan officials, which have suddenly seen investors ramp up the chances that the BoJ could bring an end to their negative interest rate policy.”

    Overnight-indexed swaps at one point on Thursday showed an almost 45% chance that the BOJ would end the policy this month.

    Traders are also focused on Friday’s US jobs report after private payrolls data that fell short of estimates in a sign of softening in the employment market.

    Fed policymakers meet next week for the last time in 2023. While no change is expected in their target for the federal funds rate, they are scheduled to release quarterly forecasts that could alter market-implied expectations. Those bets have been gravitating toward more easing next year in response to weaker-than-forecast economic data.

    “Inflation fears are melting,” said Prashant Newnaha, a rates strategist at TD Securities. “Central banks believe they have clearly done enough and may need to cut, otherwise real rates may be too high and restrictive.”

    Oil stabilized after a five-day run of losses on signs that global supplies are eclipsing demand despite plans by OPEC+ to rein in its production into 2024. A key gauge for prices of raw materials earlier tumbled to the lowest level since August 2021.

    Elsewhere, gold extended Wednesday’s gains, while bitcoin traded just below $44,000, a level not seen since June last year.

    Key events this week:

    • Eurozone GDP, Thursday

    • Germany industrial production, Thursday

    • US wholesale inventories, initial jobless claims, Thursday

    • Germany CPI, Friday

    • Japan household spending, GDP, Friday

    • Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday

    • US jobs report, University of Michigan consumer sentiment, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 fell 0.2% as of 8:03 a.m. London time

    • S&P 500 futures were little changed

    • Nasdaq 100 futures were little changed

    • Futures on the Dow Jones Industrial Average were little changed

    • The MSCI Asia Pacific Index fell 0.4%

    • The MSCI Emerging Markets Index fell 0.5%

    Currencies

    • The Bloomberg Dollar Spot Index fell 0.2%

    • The euro rose 0.1% to $1.0778

    • The Japanese yen rose 1.1% to 145.64 per dollar

    • The offshore yuan rose 0.2% to 7.1609 per dollar

    • The British pound rose 0.2% to $1.2581

    Cryptocurrencies

    • Bitcoin was little changed at $43,828.74

    • Ether rose 0.6% to $2,260.95

    Bonds

    • The yield on 10-year Treasuries advanced six basis points to 4.16%

    • Germany’s 10-year yield advanced two basis points to 2.22%

    • Britain’s 10-year yield advanced six basis points to 4.00%

    Commodities

    • Brent crude rose 0.9% to $74.94 a barrel

    • Spot gold rose 0.2% to $2,029.03 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Rita Nazareth, Jing Jin and Yumi Teso.

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  • AMD CEO Debuts Nvidia Chip Rival, Gives Eye-Popping Forecast

    AMD CEO Debuts Nvidia Chip Rival, Gives Eye-Popping Forecast

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    (Bloomberg) — Advanced Micro Devices Inc., taking aim at a burgeoning market dominated by Nvidia Corp., unveiled new so-called accelerator chips that it said will be able to run artificial intelligence software faster than rival products.

    Most Read from Bloomberg

    The company introduced a long-anticipated lineup called the MI300 at an event Wednesday held in San Jose, California. Chief Executive Officer Lisa Su also gave an eye-popping forecast for the size of the AI chip industry, saying it could climb to more than $400 billion in the next four years. That’s more than twice as high as a projection AMD gave in August, showing how rapidly expectations are changing for AI hardware.

    The launch is one of the most important in AMD’s five-decade history, setting up a showdown with Nvidia in the red-hot market for AI accelerators. Such chips help develop AI models by bombarding them with data, a task they handle more adeptly than traditional computer processors.

    Building AI systems that rival human intelligence — considered the holy grail of computing — is now within reach, Su said in an interview. But deployment of the technology is still only just beginning. It will take time to assess the impact on productivity and other aspects of the economy, she said.

    “The truth is we’re so early,” Su said. “This is not a fad. I believe it.”

    AMD is showing increasing confidence that the MI300 lineup can win over some of the biggest names in technology, potentially diverting billions in spending toward the company. Customers using the processors will include Microsoft Corp., Oracle Corp. and Meta Platforms Inc., AMD said.

    Nvidia shares dropped 2.3% to $455.03 in New York on Wednesday, a sign investors see the new chip as a threat. Still, AMD shares didn’t see a commensurate increase. On a day when tech stocks were generally down, the shares fell 1.3% to $116.82.

    Surging demand for Nvidia chips by data center operators helped propel that company’s shares this year, sending its market value past $1.1 trillion. The big question is how long it will essentially have the accelerator market to itself.

    AMD sees an opening: Large language models — used by AI chatbots such as OpenAI’s ChatGPT — need a huge amount of computer memory, and that’s where the chipmaker believes it has an advantage.

    The new AMD chip has more than 150 billion transistors and 2.4 times as much memory as Nvidia’s H100, the current market leader. It also has 1.6 as much memory bandwidth, further boosting performance, AMD said.

    Su said that the new chip is equal to Nvidia’s H100 in its ability to train AI software and much better at inference — the process of running that software once it’s ready for real-world use.

    While the company expressed confidence in its product’s performance, Su said it won’t just be a competition between two companies. Many others will vie for market share too.

    At the same time, Nvidia is developing its own next-generation chips. The H100 will be succeeded by the H200 in the first half of next year, giving access to a new high-speed type of memory. That should match at least some of what AMD’s offering. And then Nvidia is expected to come out with a whole new architecture for the processor later in the year.

    AMD’s prediction that AI processors will grow into a $400 billion market underscores the boundless optimism in the artificial intelligence industry. That compares with $597 billion for the entire chip industry in 2022, according to IDC.

    As recently as August, AMD had offered a more modest forecast of $150 billion over the same period. But it will take the company a while to grab a large piece of that market. AMD has said that its own revenue from accelerators will top $2 billion in 2024, with analysts estimating that the chipmaker’s total sales will reach about $26.5 billion.

    The chips are based on the type of semiconductors called graphics processing units, or GPUs, which have typically been used by video gamers to get the most realistic experience. Their ability to perform a certain type of calculation rapidly by doing many of computations simultaneously has made them the go-to choice for training AI software.

    (Updates with CEO’s comments starting in fifth paragraph.)

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  • McKinsey sees AI adding up to $340B to Wall Street profit | Bank Automation News

    McKinsey sees AI adding up to $340B to Wall Street profit | Bank Automation News

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    Banks using generative artificial intelligence tools could boost their earnings by as much as $340 billion annually through increased productivity, according to consultants hoping to help the industry adapt in this fast-moving area. This would amount to a 9% to 15% increase in operating profits, according to a McKinsey Global Institute report published Tuesday. Corporate […]

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  • Bonds Retreat as Doubts Over Rate Cuts Creep In: Markets Wrap

    Bonds Retreat as Doubts Over Rate Cuts Creep In: Markets Wrap

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    (Bloomberg) — Stocks and bonds retreated as traders pause after November’s blockbluster rally and debate the case for interest rate cuts. Bitcoin surged past $41,000, while gold briefly touched an all time high.

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    The 10-year Treasury yield added four basis points to 4.24%, while European stocks and US futures posted modest losses. Gold surpassed $2,130 an ounce before giving up gains for the day.

    A slew of economic reports this week are expected to shed light on the state of the US labor market and whether markets are prematurely excited that softer economic conditions can open the door to Federal Reserve rate cuts.

    “Rates seem to price more the positive news than not,” Mauro Valle, head of fixed income at Generali Investments Partners, wrote in a note. “It’s unlikely to see another movement for lower yields in the final weeks of the year.”

    The latest reading on US job openings (or JOLTS) for October is due to be published tomorrow, followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday.

    Gold slid from its intraday high, trading around $2,063 an ounce. Bitcoin climbed past the $41,000 level to the highest since April 2022.

    “As long as those rate conditions stay where they are, gold will remain supported over the next three to four weeks,” Eric Robertsen, global head of research and chief strategist at Standard Chartered Bank, said on Bloomberg Television.

    Indian equities were headed for a fresh record after Prime Minister Narendra Modi’s victories in three key state elections boosted expectations of policy continuity.

    Shares of distressed developer China Evergrande Group surged as much as 22% after a Hong Kong court again postponed a decision on whether the world’s most-indebted property developer should be wound up.

    Key events this week:

    • Riskbank November meeting minutes released, Monday

    • US factory orders, durable goods, Monday

    • Reserve Bank of Australia rate decision, Tuesday

    • Japan’s Tokyo CPI, Tuesday

    • China Caixin services PMI, Tuesday

    • South Korea CPI, GDP, Tuesday

    • Eurozone PMIs, Tuesday

    • Australia GDP, Wednesday

    • Eurozone retail sales, Wednesday

    • Bank of Canada rate decision, Wednesday

    • China trade, FX reserves, Thursday

    • Eurozone GDP, Thursday

    • Germany industrial production, Thursday

    • US wholesale inventories, initial jobless claims, Thursday

    • Japan household spending, GDP, Friday

    • US non-farm payrolls, University of Michigan consumer sentiment, Friday

    Some of the main moves in markets:

    Stocks

    • The Stoxx Europe 600 fell 0.2% as of 9:45 a.m. London time

    • S&P 500 futures fell 0.3%

    • Nasdaq 100 futures fell 0.3%

    • Futures on the Dow Jones Industrial Average fell 0.2%

    • The MSCI Asia Pacific Index was little changed

    • The MSCI Emerging Markets Index was little changed

    Currencies

    • The Bloomberg Dollar Spot Index rose 0.1%

    • The euro was little changed at $1.0878

    • The Japanese yen rose 0.1% to 146.66 per dollar

    • The offshore yuan fell 0.2% to 7.1401 per dollar

    • The British pound fell 0.2% to $1.2680

    Cryptocurrencies

    • Bitcoin rose 4.9% to $41,687.05

    • Ether rose 3.5% to $2,259.54

    Bonds

    • The yield on 10-year Treasuries advanced four basis points to 4.24%

    • Germany’s 10-year yield was little changed at 2.37%

    • Britain’s 10-year yield advanced four basis points to 4.18%

    Commodities

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from Alex Nicholson.

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    ©2023 Bloomberg L.P.

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  • Hedge fund veteran slams green ‘echo chamber’ after closing firm

    Hedge fund veteran slams green ‘echo chamber’ after closing firm

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    (Bloomberg) — Jeff Ubben, the veteran hedge fund manager who’s just closed his sustainable investing firm, is calling out what he’s dubbed the “echo chamber” of traditional climate summitry.

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    The 62-year-old, whose Inclusive Capital Partners told clients last week it was selling investments and returning their money after not being “rewarded” by markets, said he’s worried about what he describes as entrenched points of view preventing progress in climate talks.

    The tone has historically has been “so divisive,” Ubben said in an interview. But “we all need to work together.”

    Ubben has long been an advocate of bringing big oil to the table. He joined Exxon Mobil Corp.’s board in 2021, the same year as activist fund Engine No. 1 secured three seats. He’s now on the advisory committee of COP28 in Dubai, which is hosting more oil executives than any other United Nations climate summit.

    The setting of this year’s Conference of the Parties has drawn warnings from climate activists that the event risks becoming a deal-making venue for oil majors and the finance industry, with such vested interests compromising a strong final climate agreement. This year’s COP will likely be the best-attended ever, with more than 100,000 delegates, according to a provisional list compiled by the UN Framework Convention on Climate Change. That’s roughly twice as many as attended last year’s COP in Egypt.

    Sultan Al Jaber, president of the COP28 summit and head of the United Arab Emirates’ national oil company, Adnoc, has denied reports that he’s using his position at the talks to strike oil and gas deals. He also says he wants as many interests as possible represented to ensure a “successful” outcome.

    On Saturday, Exxon was one of 50 oil and gas producers at COP28 to pledge to cut emissions from their own operations. Darren Woods, the first Exxon chief executive ever to attend a COP summit since the gatherings began in the early 1990s, said in an interview that there’s “a much more diverse group of people recognizing” that climate change is a “hard problem” to solve.

    Woods also said there’s now a greater recognition that the energy transition will require a breadth of technologies, which “opens the door for us.”

    The deal struck by oil and gas producers will be controversial given none of the companies is actually agreeing to reduce production. But they will pledge to stem releases of methane, one of the most dangerous greenhouse gases, to near zero by 2030 to stop routine flaring of natural gas.

    Ubben said getting “companies like Exxon invited” was a clear goal because carbon-emitting companies “haven’t been part of the conversation” thus far.

    Instead, “it’s been this echo chamber of diplomats going to these conferences and putting out flowery language and goals, but it doesn’t have traction,” Ubben said. “There’s no money behind it, which is why company balance sheets are so important.”

    Ubben launched Inclusive Capital three years ago during a boom in green investing, and after two decades of running activist hedge fund ValueAct Capital. At the time, he told investors his new venture would back companies focused on tackling problems ranging from environmental damage to food scarcity, and his goal was to raise $8 billion for that purpose.

    Inclusive Capital had $2.6 billion of assets, including borrowed money, at the end of last year, a March regulatory filing shows. Its closure coincides with one of the worst years for climate investing, as higher borrowing costs and supply-chain bottlenecks batter capital-intensive green companies.

    Despite historic subsidies into climate technologies in the US, China and Europe, the S&P Global Clean Energy Index is down about 30% this year, while the S&P Global Oil Index is broadly unchanged over the period.

    When Ubben created Inclusive Capital, the plan was to “collaborate with companies whose core businesses address essential societal needs with a focus on reducing negative externalities,” according to the memo handed to clients informing them of its closure. But it’s a strategy that “unfortunately hasn’t been rewarded in the public markets,” the memo read.

    In reality, over the past three years, the “exact opposite” has played out, it continued. “Shares of companies pursuing capital-intensive projects needed to drive lower greenhouse gas emissions have been ‘sold off’ in the public markets as being too risky or too far out in terms of any potential reward.”

    For now, there’s little to indicate that markets are about to shift tack. In fact, Bloomberg’s recent Markets Live Pulse survey shows that the slump that’s dragged down green stocks is expected to continue into 2024.

    Oil companies like Exxon, meanwhile, are also seeing their share prices decline as the spike in demand fanned by the energy crisis fades. Exxon’s share price is down roughly 14% from a September high. Chevron Corp. is down 15% in the same period.

    A key goal of the COP28 talks is to get governments to agree to a tripling of global renewable energy capacity by 2030. That would require investments equivalent to around a 10th of the world’s 2022 gross domestic product, according to BloombergNEF.

    For investors trying to calibrate their climate strategies, the outlook remains challenging.

    “Energy use is going to grow,” Ubben said. “And we need to keep energy affordable for those people that want the right to develop.”

    Bloomberg Philanthropies regularly partners with the COP Presidency to promote climate action. Michael R. Bloomberg, the founder and majority owner of Bloomberg LP, parent company of Bloomberg News, is the UN secretary general’s special envoy for climate ambition and solutions.

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    ©2023 Bloomberg L.P.

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