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Tag: Siemens Energy AG

  • CNBC Daily Open: Despite cool inflation, don’t expect rate cuts

    CNBC Daily Open: Despite cool inflation, don’t expect rate cuts

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    The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.

    Valerie Plesch| Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Back in the green
    U.S. stocks ticked up Wednesday as another report showed inflation’s cooling. Despite that, Treasury yields rose. The pan-European Stoxx 600 index added 0.42%. Britain’s FTSE 100 climbed 0.62%, on encouraging inflation news in the U.K., to turn positive for the year. Separately, Siemens Energy jumped 8.78% after securing guarantees from the German government.

    More good news on inflation
    U.K.’s consumer price index plunged from 6.7% in September to 4.6% in October on an annual basis, though it remained the same month on month. Both figures were below economists’ estimates. Core CPI, which excludes food, energy, alcohol and tobacco prices, rose 5.7% for the year. With those numbers, it’s likely the Bank of England will continue leaving interest rates unchanged.

    ‘Planet Earth is big enough’
    U.S. President Joe Biden met Chinese President Xi Jinping yesterday on the sidelines of the Asia-Pacific Economic Cooperation conference. The two leaders struck a conciliatory tone at the start of the summit. “We have to ensure that competition does not veer into conflict,” Biden said. And Xi, in his opening remarks, said, “Planet Earth is big enough for the two countries to succeed.”

    AT1 bond demand ‘a signal’
    UBS began selling additional tier one bonds last week. AT1 bonds were wiped out when UBS was forced to take over Credit Suisse earlier this year, causing controversy among bondholders. Still, there was “incredible” market demand for them, said CEO Sergio Ermotti, which “is a signal to the Swiss financial system” that confidence is being restored.

    [PRO] Where will cash go?
    With the high interest rates and bond yields in recent months, money market funds and Treasurys have attracted investors’ cash, sucking them away from stocks. But with October’s CPI coming in so cool that analysts are comfortable declaring a soft landing, stocks have begun rallying again. What, then, happens to all the cash parked in those funds?

    The bottom line

    After a very encouraging consumer price index reading on Tuesday, we have more evidence that inflation’s truly cooling.

    Wholesale prices in October, as measured by the producer price index, fell 0.5% for the month against the expected 0.1% increase. That’s the biggest decline in more than three years. When producer prices fall, it takes a while for those lower prices to seep into the general consumer economy, so it’s plausible we’ll see CPI continue dropping in the months ahead.

    Major U.S. indexes rose — slightly — on that encouraging news. The S&P 500 increased 0.16% and the Nasdaq Composite edged up 0.07%. The Dow Jones Industrial Average gained 0.47% for its fourth consecutive winning session.

    The stock market rally over the past two days, it seems, was fueled by investors’ expectations that lower inflation readings will prompt the Federal Reserve to cut rates sooner rather than later. Investors think there’s a 31% chance the Fed will slash rates by a full percentage point by the end of next year, according to the CME FedWatch tool.

    But that flurry of cuts is two times as aggressive as the timeline the Fed itself penciled in two months ago, noted CNBC’s Jeff Cox. And that, to put it mildly, “may be at least a tad optimistic,” Cox wrote.

    Investor optimism, ironically, may be counterproductive as well. Expectations of a rate cut forced down Treasury yields Tuesday (though they rose again yesterday). Treasury yields tend to serve as the benchmark for loans and other assets, so when they drop, financial conditions loosen — exactly what the Fed doesn’t want to see.

    “Financial conditions have eased considerably as markets project the end of Fed rate hikes, perhaps not the perfect underpinning for a Fed that professes to keeping rates higher for longer,” said Quincy Krosby, chief global strategist at LPL Financial.

    Indeed, “this is at least the 7th time in this cycle that markets [anticipate] … a potential dovish pivot,” wrote Deutsche Bank macro strategist Henry Allen. (Spoiler alert: Investors have, without exception, been disappointed the previous times as the Fed refused to budge.)

    In short: While it’s undeniable inflation’s dropping, there’s no guarantee rates will fall in tandem. It might be better to be pleasantly surprised than to be disappointed.

    — CNBC’s Jeff Cox contributed to this report.

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  • Saudi oil giant Aramco announces pilot project to suck CO2 out of the air, but some scientists are skeptical

    Saudi oil giant Aramco announces pilot project to suck CO2 out of the air, but some scientists are skeptical

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    Saudi Aramco said strong market conditions helped to push its second quarter net income to $48.4 billion, up from $25.5 billion a year earlier.

    Maxim Shemetov | Reuters

    Saudi oil giant Aramco on Monday announced a partnership with Siemens Energy AG to develop a small-scale direct air-capture “test unit” in an attempt to manage emissions.

    The test unit will be built in Dhahran, Saudi Arabia and finished in 2024, according to a statement from Aramco on Monday.

    Direct air-capture, or DAC, works by extracting carbon dioxide that has already been emitted into the atmosphere. The extracted CO2 can then be condensed into solid stone-like formations or liquefied to be stored underground.

    DAC is the most expensive method of carbon capture, according to the International Energy Agency. It’s generally cheaper to remove CO2 at the source, before it’s emitted into the air.

    The big price tag attached to DAC along with questions of its efficacy have made some climate scientists skeptical of its viability as a long-term emissions reduction strategy.

    “From a physics point of view, we just made the problem thousands of times harder,” said Jonathan Foley who leads the climate solutions nonprofit Project Drawdown. “Imagine trying to remove 400 things out of a million and do it in the air. Then, efficiently liquefy this stuff and put it below ground. That’s a huge engineering marvel…to do it at the scale of billions of tons is science fiction right now.”

    Foley added that DAC machines themselves take a lot of energy to get running, which eats away at whatever carbon reduction they do achieve.

    But despite obstacles to scaling DAC, many companies, especially tech giants, are pouring investments into developing the technology. For example, Amazon announced last month that it would provide funding for the world’s largest deployment of DAC, and a coalition of tech companies led by Stripe has launched a public benefit company called Frontier to invest in carbon-capture startups and projects.

    Extracting carbon from the atmosphere is attractive to companies with large carbon footprints, because it would allow them to keep emitting with a reversal mechanism after the fact.

    “Fossil fuel companies would love to be able to keep emitting from fossil operations while offsetting those emissions via cost-effective direct air capture projects — that’s kind of a perfect world for them, if they can get there,” said Cara Horowitz, the executive director of UCLA’s Emmet Institute on Climate Change and the Environment.

    “And even if they can’t get there, investing in the development of DAC allows them to tout efforts to achieve net-zero goals in ways that don’t involve reducing use of fossil fuels.”

    So far, experts say, the technology is unproven at scale.

    “I would love a machine like this to actually work. Wouldn’t that be great? You just turn on a machine that sucks everything out of the sky,” said Foley. “But sorry, it’s a lot easier not to emit it than it is to take it back out again. That’s just thermodynamics.”

    The DAC collaboration between Aramco and Siemens Energy is still in early phases.

    A Siemens Energy spokesperson told CNBC that once the test unit is complete next year, the companies will consider taking the technology into an official pilot phase. Only after that would they pursue scaling it commercially.

    Given DAC’s adolescence, both oil companies are invested in other clean energy technology projects.

    The spokesperson for Siemens Energy said that the company has invested in hydrogen, wind, nuclear fusion and others. Meanwhile, Aramco also has projects in hydrogen and geothermal energy.

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  • CNBC Daily Open: Skimming off the froth

    CNBC Daily Open: Skimming off the froth

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    Traders work the floor of the New York Stock Exchange in New York City on May 31, 2023. 

    Spencer Platt | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Oh, snap
    Major U.S. indexes     fell across the board Friday and snapped their multiweek winning streaks. Stock markets in Europe traded lower too. Asia-Pacific markets were mostly lower Monday, with South Korea’s Kospi being the only major index that traded higher, climbing 0.5%, as of publication time. Separately, oil prices rose amid fears that supply would be disrupted after the Wagner Group’s attempted insurrection in Russia.

    Rebellion in Russia
    On Saturday, Wagner Group mercenaries took control of Rostov, a southern city in Russia, and marched toward Moscow. Less than 24 hours after that, Wagner leader Yevgeny Prigozhin declared his rebellion over. U.S. Secretary of State Antony Blinken said the events revealed “cracks” in Russia that “weren’t there before.” As for Prigozhin, Ian Bremmer, president of Eurasia Group, called him “a dead man walking.”

    Debts, defaults and distress
    There have been 41 corporate defaults in the U.S. so far — the most globally and more than double during the same period last year, according to Moody’s Investors Service. Troublingly, Moody’s expects the global default rate to rise to 5% by April 2024, compared with the long-term average of 4.1%. Analysts blame high interest rates for this tumult.

    High demand, low supply
    Bitcoin’s price has jumped over the past week and is comfortably hovering above the $30,000 barrier, its highest in two months. Market watchers think it’s pushed up by news that BlackRock is planning to launch a spot bitcoin exchange-traded fund. But CNBC found it’s more likely because large institutional investors are buying bitcoin as liquidity remains low.

    [PRO] Markets on an even footing
    Markets may have declined last week, but CNBC Pro’s Michael Santoli thinks there’s still a “favorable underlying market trend.” Despite worries about a banking crisis, narrow rallies and speculative stocks, the S&P 500 is still nearly up 15% for the year — which points to a market on even footing, ready to climb further.

    The bottom line

    Last week wasn’t pretty for U.S. stocks — but that’s not necessarily a bad thing.

    On Friday, all major indexes fell and closed lower for the week. On a weekly basis, the S&P 500 was down 1.4%, its first week-over-week loss after five consecutive weeks of gains. The Dow Jones Industrial Average fell almost 1.7% to snap its three-week positive run. The Nasdaq Composite slipped 1.4%, ending an eight-week winning streak to post its worst weekly performance since March.

    Those figures may sound disappointing, but Art Hogan, chief market strategist at B. Riley Wealth Management, thinks it’s just the markets finding their balance after being overbought, meaning that stocks have been trading above what they were worth. As Barclays strategist Venu Krishna notes, “the broader Tech sector appears frothy.” That is to say, even though the S&P technology sector has rallied nearly 40% this year, the rest of the index has remained flat.

    Going by both those analysts’ logic, the dip in markets last week, then, may be a positive sign that some of the froth around tech is being skimmed off. (Indeed, Nvidia shares lost 1.9%, Microsoft slipped 1.38% and Tesla sank 3.03% Friday.) Investors, then, can focus again on what’s beneath the froth: The financial health of companies amid inflation and interest rates. Compared with excitement over artificial intelligence, that’s a much better indication of stocks’ long-term trajectory.

    On that note, the core personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation, comes out Friday, and will give a clearer picture of whether the Fed will continue hiking rates after leaving them unchanged in June. Froth is, by nature, hollow: A slight increase in heat will cause it to melt completely.

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  • CNBC Daily Open: Skim off the froth

    CNBC Daily Open: Skim off the froth

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    Traders work on the floor of the New York Stock Exchange (NYSE) on June 01, 2023 in New York City.

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Oh, snap
    Major U.S. indexes     fell across the board Friday and snapped their multiweek winning streaks. Stock markets in Europe traded lower too. The pan-European Stoxx 600 dipped 0.34%, weighed down by Siemens Energy’s 26.22% plunge after the company warned technical problems in wind turbine components could affect the broader sector.

    Black skies for Goldman
    Goldman Sachs may have to absorb a large write-down on its attempted sale of GreenSky, CNBC has learned. In September 2021, the investment bank, under CEO David Solomon, bought the fintech lender for $2.24 billion as part of its push into consumer finance. But just 18 months later, Solomon said he’s selling the business amid stumbles in Goldman’s consumer ambitions.

    Debts, defaults and distress
    There have been 41 corporate defaults in the U.S. so far — the most globally and more than double during the same period last year, according to Moody’s Investors Service. Troublingly, Moody’s expects the global default rate to rise to 5% by April 2024, compared with the long-term average of 4.1%. Analysts blame high interest rates for this tumult.

    Rebellion in Russia
    On Saturday, Wagner Group mercenaries took control of Rostov, a southern city in Russia, and marched toward Moscow. Less than 24 hours after that, Wagner leader Yevgeny Prigozhin declared his rebellion over, in a deal brokered by Belarusian President Alexander Lukashenko. U.S. Secretary of State Antony Blinken said the events revealed “cracks” in Russia that “weren’t there before.”

    [PRO] Markets on an even footing
    Markets may have declined last week, but CNBC Pro’s Michael Santoli thinks there’s still a “favorable underlying market trend.” Despite worries about a banking crisis, narrow rallies and speculative stocks, the S&P 500 is still nearly up 15% for the year — which points to a market on even footing, ready to climb further.

    The bottom line

    Last week wasn’t pretty for U.S. stocks — but that’s not necessarily a bad thing.

    On Friday, all major indexes fell and closed lower for the week. On a weekly basis, the S&P 500 was down 1.4%, its first week-over-week loss after five consecutive weeks of gains. The Dow Jones Industrial Average fell almost 1.7% to snap its three-week positive run. The Nasdaq Composite slipped 1.4%, ending an eight-week winning streak to post its worst weekly performance since March.

    Those figures may sound disappointing, but Art Hogan, chief market strategist at B. Riley Wealth Management, thinks it’s just the markets finding their balance after being overbought, meaning that stocks have been trading above what they were worth. As Barclays strategist Venu Krishna notes, “the broader Tech sector appears frothy.” That is to say, even though the S&P technology sector has rallied nearly 40% this year, the rest of the index has remained flat.

    Going by both those analysts’ logic, the dip in markets last week, then, may be a positive sign that some of the froth around tech is being skimmed off. (Indeed, Nvidia shares lost 1.9%, Microsoft slipped 1.38% and Tesla sank 3.03% Friday.) Investors, then, can focus again on what’s beneath the froth: The financial health of companies amid inflation and interest rates. Compared with excitement over artificial intelligence, that’s a much better indication of stocks’ long-term trajectory.

    On that note, the core personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation, comes out Friday, and will give a clearer picture of whether the Fed will continue hiking rates after leaving them unchanged in June. Froth is, by nature, hollow: A slight increase in heat will cause it to melt completely.

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