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No.3 of the Federal Reserve: There is no need to further tighten the policy, and interest rates will be cut later this year.
According to media reports, Williams, the No.3 member of the Federal Reserve, the FOMC Permanent Voter Committee and the President of the Federal Reserve of new york, said in the fireside chats at the annual party of new york Citizen Budget Committee on Thursday night local time that there is no need for the Federal Reserve to further tighten its policy, and it may raise interest rates later this year. As the chairman of the Federal Reserve Bank of new york, Williams has the same permanent voting rights as the members of the Federal Reserve, so he is also regarded as the "third person" of the Federal Reserve. Williams said: "I expect that we will cut interest rates later this year." "We will restore interest rates to a more normal level." In his speech, Williams admitted that inflation has dropped from the high point in decades, but still stressed that officials hope that inflation will drop to 2% and continue. Just the day before, Williams also said at the economic briefing organized by the Long Island Association that there is still a long way to go to achieve the 2% inflation target, and he thought that cutting interest rates three times during the year was "a suitable starting point". In addition, Williams also predicted in his speech at the economic briefing that the year-on-year growth rate of PCE price index will drop by 2% to 2.25% by the end of this year, and will drop to 2% by 2025. The core PCE in January announced on Thursday rebounded to 0.4% month-on-month, the largest increase in nearly a year, indicating that the road to anti-inflation is still bumpy. Considering the potential upward risk of inflation and the resilience of the labor market, many senior Fed officials, including Powell, have been "hawking" intensively recently. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
Goldman Sachs technical analyst: there is no sign that US stocks have peaked.
According to media reports, Scott Rubner, a technical expert at Goldman Sachs, said that the current booming US stock market is unlikely to peak. Since the strong rebound at the end of last year, US stocks have continued to strengthen. At the beginning of this year, the financial reports published intensively by technology companies headed by NVIDIA once again supported the gains, and there was no sign of a serious correction. Rubner said in a report to clients that the influx of retail investors stimulated the stock market rebound, which coincided with the "Goldilocks" market and prompted analysts to raise the year-end target of US stocks. Previously, Rubner predicted that the US stock market would pull back in late February according to the seasonal pattern. "Goldilocks" refers to the coexistence of high growth and low inflation in the economy, and the economy is neither too hot nor too cold. Rubner wrote: "March is now' overcrowded' and the rebound is' tired', but there is no potential selling catalyst." Despite the large number of retail investors, Rubner said that there will be no risk factors such as YOLO action in the stock market in February. YOLO is a shorthand for the phrase "you only live once", which is an investment philosophy held by a new generation of American retail investors. Similar to the gambler spirit, Yolo often drives retail investors to make high-risk bets, such as joint speculation to push up the stock price. Rubner said: "'‘YOLO Return' is not on my February Bingo card." "I wake up every morning to see which stock will rise to 50% by Friday." Bank of America strategist Michael Hartnett also pointed out that the stock market often tests several tops before a sharp correction. On the contrary, the rebound from the bottom is often relatively fast. Hartnett thinks: "Because fear in human nature is easier to stop than greed." Goldman Sachs also released a report earlier this week, pointing out that the market is still full of confidence in technology stocks. Relevant data show that the "bearish/bullish bias", which is usually used to measure the degree of investor panic, has gone down. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
Goldman Sachs CEO warns that the market is too optimistic about the
David Solomon, CEO of Goldman Sachs, warned investors not to be too confident that the Fed can achieve a "soft landing" for the US economy in the fight against inflation. According to media reports, Solomon said at a UBS conference on Tuesday that "the world is moving towards a soft landing", but "the uncertainty is higher" because there are still inflationary pressures and geopolitical risks in the economy. "The market's expectations for a soft landing are too high. When you look back on the reality of the past three or four years, I find it hard to think that it would be so simple, "Solomon said. Solomon went on to say, "When I was interviewed on TV in Davos a month ago, the consensus at that time was to cut interest rates seven times. I said,' God, I really don't understand this'." Since then, the market has lowered its expectations, and it is now expected to cut interest rates four times this year instead of six or seven times. Solomon said that the United States "has been very strong in the first half of the economy", but consumer spending of low-income groups is slowing down. According to the data released by the World Federation of Large Enterprises on Tuesday, the consumer confidence index dropped to 106.7, which was lower than the downward revision of 110.9 in the previous month and failed to meet the expectation of a slight increase. "Some business leaders told him that the consumption of' Moonlight Family' has become tight while prices are still high." Solomon said. "I think that in the past few months, you have seen these behavior patterns tighten, which means that the second half of the economy is slightly weaker." Solomon's comments on the trajectory of economic development are more pessimistic than those he made in September last year, when he said that "the possibility of a soft landing of the economy is greatly increased now". Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
Re-pricing interest rate cut expectations! Investors abandoned short-term US debt and poured into medium-term US debt ETFs.
As the expectation of interest rate cuts cooled down, investors withdrew from short-term debt and poured into medium-term US debt ETFs. The pioneer medium-term US debt ETF(VGIT), which tracks medium-term bonds (maturing in the next 3-10 years), absorbed 1.7 billion US dollars last week, setting the largest inflow of funds since its establishment in 2009. In addition, last week, Schwab's short-term U.S. debt ETF outflow was $508 million, Pioneer's short-term U.S. debt ETF outflow was $397 million, and Ishares' 20+-year U.S. debt ETF outflow was about $284 million. Why did this turn occur? In January, CPI and PPI data rebounded more than expected, while GDP data showed that the US economy was still resilient, pushing up the yield of 10-year US bonds to a high point in the year last week. Therefore, traders' demand for medium-term bonds begins to increase, because medium-term bonds face less interest rate risk than long-term bonds and have higher coupon than short-term bonds. Lindsay Rosner, head of multi-sector fixed income investment at Goldman Sachs Asset Management, said: "The middle part of the yield curve began to become more interesting, partly because the interest rate complex responded to the decline in the possibility of the Fed cutting interest rates faster." "In addition, the large fluctuation of ETF may be related to the rebalancing of asset allocation." At present, traders expect the Fed to cut interest rates three times this year, each time by about 25 basis points, which is about half of what was expected at the end of 2023. Goldman Sachs has lowered its interest rate cut forecast twice in a row this month, postponing the Fed's expectation of the first interest rate cut from May to June, and lowering its expectation of the number of interest rate cuts during the year from five to four. Federal Reserve officials were also "hawking" intensively last week, and Federal Reserve Governor Waller said that more evidence of falling inflation was needed to support interest rate cuts. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
"We need more confidence in falling inflation before we can cut interest rates." Many Fed officials are "hawking"
Fed officials have voiced intensively, warning that there are risks in cutting interest rates too quickly. On Thursday, February 22nd, local time, Lisa Cook, the governor of the Federal Reserve, said at the Macrofinance Conference of Princeton University, "Before starting to cut interest rates, I hope to have more confidence that the inflation rate is approaching 2%. I think the final interest rate cut is to adjust the policy to reflect the changes in the risk balance. " Cook said that the risks faced by the Fed to achieve the dual goals of price stability and maximum employment are now more balanced, rather than being more inclined to inflation as in the past few years. She also pointed out that achieving the 2% inflation target may still be a tortuous process. "The 12-month core personal consumption expenditure (PCE) inflation rate, which converges to our 2% target over time, still seems to be a reasonable baseline outlook." She said. PCE inflation rate is the favorite inflation indicator of the Federal Reserve. "As we receive more data, we should continue to be cautious and maintain the necessary degree of policy restrictions to sustainably restore price stability while keeping the economy on a good track." She said. Also on Thursday, Christopher Waller, the governor of the Federal Reserve, said in a policy speech in Minneapolis that he needed to see more evidence of cooling inflation before he could support a rate cut, but he still expected to start cutting interest rates later this year. Waller said: "The strength of the economy and the inflation data we have recently received mean that patience, caution, organization and deliberation are appropriate-choose your favorite synonym." "No matter what words you choose, they can all be translated into one meaning: What's the hurry?" Cook and Waller's remarks echoed the recent views of several Fed officials, who suggested that although the Fed's next policy action may be to cut interest rates, the Fed is not in a hurry to start easing policies. As mentioned in the previous article on Wall Street, Philip Jefferson, vice chairman of the Federal Reserve, said on Thursday that the Fed needs to be alert to excessive interest rate cuts due to falling inflation, so as not to undermine the ultimate goal of achieving price stability. He said: "We always need to keep in mind the danger of excessive easing due to the improvement of inflation. Excessive easing may lead to stagnation or reversal of the process of restoring price stability. " Patrick Harker, president of Philadelphia Federal Reserve, who did not have the right to vote at the FOMC meeting of the Federal Reserve's Monetary Policy Committee this year, also said that this year may be suitable for interest rate cuts, but stressed the risk of too fast easing, saying that too fast action may offset the progress made in inflation. "We have time to get things done." He will closely monitor the data and verify the downward trend of prices. Just the day before the four people spoke, the Federal Reserve released the minutes of the monetary policy meeting at the end of last month on Wednesday, which wrote: "some participants pointed out that the progress of price stability may stagnate, especially if the total demand increases or the supply-side recovery is slower than expected. Participants emphasized the uncertainty of how long the restrictive monetary policy stance needs to be maintained. Most participants pointed out the risk of relaxing policy stance too quickly, and stressed the importance of judging whether inflation can be reduced to 2% sustainably by carefully evaluating future data. However, two (a couple of) participants pointed out that maintaining an excessively restrictive position for a long time will bring downside risks to the economy. " Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
Minutes of the Fed meeting: Officials are worried about cutting interest rates too quickly and that inflation will stagnate.
According to the minutes of the meeting, at the Federal Reserve's monetary policy meeting at the end of last month, Fed policymakers generally thought that the current policy interest rate may have reached the peak of this week's interest rate hike cycle, acknowledging that the risk of inflation continuing to rise is reduced, but they are wary of future interest rate cuts, emphasizing that they are not sure how long they will raise interest rates. Most Fed officials also mentioned the risk of cutting interest rates too fast. The Fed's interest rate meeting at the end of January continued to keep high interest rates unchanged. After the meeting, the resolution statement deleted the wording suggesting further interest rate hikes in the future and opened the door to interest rate cuts, but hinted that it would not act soon, saying that the Fed expected that it was not suitable to cut interest rates until it had more confidence in reducing inflation to the target. After the release of the meeting, Federal Reserve Chairman Powell said that the Federal Reserve is open to interest rate cuts, but it is not in a hurry to act and does not think it is possible to cut interest rates in March. The minutes of this meeting did not release the signal that the Fed intends to cut interest rates soon. After the minutes were released, Nick Timiraos, a journalist known as the "New Fed News Agency", wrote that at last month's meeting, most Fed officials hinted that the premature interest rate cut and price pressure became entrenched, rather than the excessive interest rate remained for too long. Only two officials emphasized the risk of maintaining high interest rates for a long time. Policy interest rate may be at its peak, and it is not suitable to cut interest rates before inflation is more confident. According to the minutes of the meeting released on Wednesday, February 21st, EDT, in terms of interest rate prospects, Fed officials attending the meeting in January thought that "the policy interest rate may be at the peak of this tightening cycle", while in the last meeting in December last year, "participants thought that the policy interest rate may be at or near the peak of this tightening cycle". Participants pointed out that the decline in inflation in 2023 and more and more signs that the supply and demand of products and labor markets tend to be balanced all prove that interest rates may be at the peak. Like the statement of the meeting, the minutes mentioned that the Fed officials attending the meeting "generally pointed out that they did not think it appropriate to reduce the target range of the federal funds rate until they were more confident that inflation would continue to move towards 2%". Many participants said that the FOMC's past policy actions and the continuous improvement of the supply environment are working together to make the supply and demand more balanced. Participants pointed out that the future trend of policy interest rate will depend on the upcoming data, changing prospects and risk balance. Several participants emphasized the importance of continuing to communicate clearly about how to rely on data. Most officials stressed the importance of evaluating data to judge inflation, and the two pointed out that long-term austerity would bring downside risks to the economy. In terms of risk management, the minutes stated that the participants indicated that the risks of achieving full employment and reducing inflation are tending to be better balanced, "but they are still highly concerned about inflation risks". In particular, they believe that the upward risk of inflation has weakened, but inflation is still higher than FOMC's long-term goal of 2%. Wall Street has noticed that the minutes of the December meeting mentioned that A number of participants stressed that there is uncertainty about how long the restrictive monetary policy stance will last, and pointed out that excessively restrictive stance may bring downside risks to the economy. The minutes of January also mentioned these two issues, and added the risk of cutting interest rates too quickly. The minutes wrote: "some participants pointed out that the progress of price stability may stagnate, especially if the total demand increases or the supply-side recovery is slower than expected. Participants emphasized the uncertainty of how long the restrictive monetary policy stance needs to be maintained. Most participants pointed out the risk of relaxing policy stance too quickly, and stressed the importance of judging whether inflation can be reduced to 2% sustainably by carefully evaluating future data. However, two (a couple of) participants pointed out that maintaining an excessively restrictive position for a long time will bring downside risks to the economy. " It is suggested that the next meeting should discuss in depth that slowing down the balance sheet contraction may be helpful for the transition to an adequate reserve level. In terms of reducing the balance sheet, the minutes write that the Fed officials attending the meeting pointed out that the ongoing process of reducing the balance sheet is an important part of FOMC's method of achieving macroeconomic goals, and the reduction of the balance sheet has progressed smoothly so far. In view of the decreasing use of the overnight reverse repo (ON RRP) tool by market participants, many officials attending the meeting thought it was appropriate to start in-depth discussion on the balance sheet at the next FOMC meeting, so as to guide the final decision to slow down the reduction of the balance sheet. Some participants said that, considering the uncertainty about which level belongs to the ample level of reserves, slowing down the contraction may help to make a smooth transition to the ample level of reserves, or the contraction may last longer. In addition, some (a few) participants pointed out that even after FOMC began to cut interest rates, the table shrinkage may continue for some time. Financial environment risk and geopolitical risk As for the financial environment, when discussing the uncertainty of economic prospects, several participants mentioned the risk that the financial environment has become or may become unsuitable, and this risk of insufficient restrictions may unnecessarily strengthen aggregate demand and lead to the stagnation of inflation. Participants also mentioned geopolitical risks. For example, among the downside risks of inflation and economic activities, there are geopolitical risks that may lead to a sharp drop in demand, negative spillover effects that may be caused by the slowdown of growth in some foreign economies, risks that the financial environment may remain restrictive for a long time, or weak household balance sheets may lead to faster and slower consumption than expected. Staff believe that asset valuation is higher than the fundamentals, and commercial real estate prices have not fully reflected the weaker fundamentals. The minutes show that the staff of the Federal Reserve are somewhat worried about the financial situation when assessing the financial situation. According to the minutes, the staff believe that the pressure of asset valuation is still significant, because the valuation of a series of markets is higher than the fundamentals. Although the underwriting standard is still strict, the house price has risen to the upper limit of the historical range relative to the rent and the yield of government bonds. The staff pointed out that the price of commercial real estate continued to fall, especially in the multi-family residential and office areas. The low transaction level in the office area may indicate that the price has not fully reflected the weaker fundamentals of the industry. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
Chen Maobo: Multi-fund managers in Hong Kong are deployed in great numbers.
Photo: With the promotion of a series of positive factors, Hong Kong's financial industry will usher in more development opportunities this year. The 2024 year of the loong Chinese New Year party in Hong Kong's financial services sector was held at the Hong Kong Stock Exchange yesterday, attended by many political and business people, wishing Hong Kong a "golden stock" and a "dragon" in year of the loong. The Financial Secretary, Chen Maobo, said at the ceremony that some fund managers are considering redeploying their investments in the Hong Kong market and are negotiating with the Mainland to launch treasury bonds futures. Shi Meilun, chairman of HKEx, predicted that the Hong Kong market will have better development opportunities this year. Li Weihong, a member of the financial services sector of the Legislative Council, pointed out that the financial services sector needs to explore new markets and continue to reform in order to overcome difficulties and reach new heights. Guests attending the Spring Festival group worship included Yin Zonghua, Deputy Director of the Liaison Office of the Central Government in Hong Kong; Andrew Leung, President of the Legislative Council; Xu Zhengyu, Director of the Finance Bureau; Liang Fengyi, Chief Executive Officer of the Hong Kong Securities Regulatory Commission; Ou Guansheng, Chief Executive Officer of the Hong Kong Stock Exchange; and many legislators and people from the financial services sector. "The dragon is a symbol of good luck, full of energy and good at flexibility. Chen Maobo said that referring to the past performance of year of the loong market, the Hang Seng Index rose by 15% in 2012, and even more than 33% in 1988. I believe the market has expectations for year of the loong today. Chen Maobo believes that the market already has relatively favorable conditions, for example, the peripheral interest rate has peaked. Even though the market may not agree on the time and speed of interest rate reduction, the general direction is clear and definite. Some fund managers are already thinking about how to make corresponding arrangements and invest in the local market. In addition, the stable and positive economy in the Mainland is also a positive factor. "Although geopolitics continues to bring challenges, the new situation and new challenges remind and inspire us to understand and grasp new opportunities in the midst of change. Chen Maobo said that in the future, it is necessary to develop new products, attract new funds and open up new markets. Promote the listing of Hong Kong stock ETFs in the Middle East This year marks the 10th anniversary of the implementation of Shanghai-Hong Kong Stock Connect. Chen Maobo pointed out that the continuous incremental expansion and implementation of interconnection have brought more mainland and international investors to Hong Kong and brought greater capital flows to the market. Chen Maobo revealed that he is currently discussing with the mainland regulatory authorities to further deepen the interconnection between the two markets, including launching treasury bonds futures, joining RMB trading counters in Southbound Connect, and bringing more international enterprises into the target scope of Southbound Connect. In terms of international funds, Chen Maobo said that the Hong Kong Stock Exchange had incorporated the Saudi Arabian and Indonesian stock exchanges into the recognized exchanges last year, so as to facilitate the listed companies of the other side to make a second listing in Hong Kong. At present, we are also making every effort to promote the listing of exchange traded funds (ETFs) tracking the Hong Kong market in the Middle East market, so as to attract more overseas funds to Hong Kong. On the other hand, the chairman of HKEx, Shi Meilun, pointed out that although the recent external environment has put pressure on the Hong Kong market, the market has shown a very strong side thanks to the concerted efforts of Qi Xin in the industry. With the promotion of a series of positive factors, Hong Kong's financial industry will usher in more development opportunities this year. Shi Meilun: Continue to promote new products to attract foreign investment. Smellen also said that in the future, more capital will be attracted to participate in the local market, and the HKEx will continue to introduce new products to enhance the market mechanism and consolidate Hong Kong's attractiveness and competitiveness as an international financial center. Li Weihong, a member of the Legislative Council's financial services sector, pointed out that the financial services sector, facing challenges, needs to start from three aspects: exploring new markets, continuing reforms and promoting diversified development, so as to overcome difficulties and reach new heights. Li Weihong pointed out that as a member of Guangdong-Hong Kong-Macao Greater Bay Area, the total economic scale of the whole region is close to the tenth largest economy in the world, and it has huge financial development potential. As a "super value-added person" connecting the country with the world, Hong Kong is believed to attract different overseas funds such as the Belt and Road Initiative, the Middle East and ASEAN to revitalize the market.Details+
The US stock market is closed, the Pan European stock index has hit a new two-year high, Germany and France have temporarily halted their gains, and crude oil has hit a new high for three consecutive months
Monday is President's Day holiday and the US financial markets are closed. Blue chip stocks AstraZeneca and Novo Nordisk in the medical sector led the way in supporting the continued rise of the Pan European stock index, while mining stocks led the decline and technology stocks fell, all of which suppressed the overall upward trend due to the decline of various basic metals such as iron ore and copper. Among commodities, international crude oil continues to hit a three-month high. Commentary suggests that geopolitical tensions have overwhelmed market concerns about demand and continue to fuel oil prices. On Monday, the tense situation in the Red Sea escalated, with Hussain militants claiming to attack two American ships and the British cargo ship "Ruby" completely sinking. German stocks have fallen to record highs, with Novo Nordisk hitting a new historical high in five consecutive days The Pan European stock index rose for four consecutive trading days. The European Stoxx 600 index closed up nearly 0.2%, hitting its closing high since January 5, 2022 for three consecutive trading days. The performance of major European stock indices varies. German and Italian stocks, which have been rising for three consecutive days, have fallen back. German stocks are temporarily breaking away from the historical closing high they set for two consecutive days, while the Spanish stock index has fallen for two consecutive days. French stocks have closed slightly higher and roughly flat, breaking new historical closing highs for three consecutive trading days, while British stocks have risen for four consecutive days. Among the various sectors of Stoke 600, medical revenue rose by over 0.9%, benefiting from the approval of its star anti-cancer drug Tagriso combined with chemotherapy to treat lung cancer by the US FDA. UK listed pharmaceutical company AstraZeneca rose by 3.2%, supporting the rise of the UK stock market. In addition, Danish listed European pharmaceutical company Novo Nordisk rose by 0.8%, reaching a new closing high for five consecutive trading days, helping the Danish stock index reach a new closing high for four consecutive days; The underlying resources of mining stocks led the decline by about 1%, while the technology sector fell by more than 0.8%. Among its constituent stocks, ASML, the highest market value chip stock in Europe listed in the Netherlands, closed 1.7% lower, taking back all gains from last Friday and failing to continue approaching the historical closing high set on Monday. Among other stocks, after announcing a new stock repurchase plan of 1.57 billion euros and increasing dividends by about 50%, Spain's largest bank Santander rose 1.8%, supporting a rebound in the Spanish stock index; After announcing plans to open an ammunition factory locally with Ukrainian partners, German military enterprise Rheinmetall rose 4.1%; JD.com stated that Curries, a UK listed electronics retailer, surged 36.4% after evaluating a possible acquisition offer. The yield of 10-year German bonds is close to a high of over two months When the US market was closed, the prices of European treasury bond bonds that had fallen for two days in a row showed different performances. The yield of British bonds rose and fell, while the yield of 10-year German bonds kept rising. By the end of the bond market, the yield of the benchmark 10-year British treasury bond was about 4.11%, roughly unchanged from the level of last Friday, approaching 4.13% when it hit a new high, which was still far from the high since December 4, 2023 when it hit 4.17% after the US CPI was announced last Tuesday; The yield of the 2-year UK bond was approximately 4.60%, a decrease of about 1 basis point within the day, breaking the daily high and breaking through 4.67%, not approaching the high since the end of November 2023 that broke through 4.71% last Tuesday. By the end of the bond market, the yield of benchmark 10-year German treasury bond was about 2.41%, up about 1 basis point within the day, close to the high since December 1 when the US PPI broke 2.42% after the announcement on Friday; The yield of the 2-year German bond is about 2.81%, which is basically the same as last Friday's level, and is not far from the high since December 1st, when the US PPI was released last Friday and was close to a refresh of 2.84%. The US dollar index stabilized, and the offshore RMB rose above 7.21 during trading, but fell by over 100 points at one point The ICE US dollar index (DXY), which tracks the prices of a basket of six major currencies including the US dollar against the euro, hit a new low of 104.14 before European stock trading, falling more than 0.1% during the day. It continued to rebound, and continued to rise after turning higher in the previous US stock trading session. In the early morning session, the US stock market was close to a new high of 104.40 to 104.373, and rose nearly 0.1% during the day. It has not yet approached the high since November 14, 2023, which was hit by 105.00 on Wednesday. By the usual Monday closing of the US stock market, the US dollar index was above 104.20, with a slight decline during the day and two consecutive trading days of slight decline, failing to completely reverse the continuous decline trend of last Wednesday and Thursday; The Bloomberg US dollar spot index, which tracks the exchange rate of the US dollar against ten other currencies, fell slightly and stabilized after stopping two consecutive declines last Friday. Among non US currencies, the Japanese yen, which fell last Friday, rebounded slightly. After falling below 150.00 in the early Asian market, the US dollar against the Japanese yen fell below 149.90, with a intraday decline of over 0.2%. The majority of the decline gradually narrowed during European and American trading hours; The euro against the US dollar was close to a daily low of 1.0760 during the usual morning session of the US stock market, falling more than 0.1% within the day, and then slightly rising, not close to the low since November 14, 2023 where it broke below 1.0700 last Wednesday; The pound against the US dollar has fallen below a daily low of 1.2590 since the European stock market turned lower, and is still far from the low since December 23rd, which broke through 1.2520 on Monday, February 5th. The offshore Chinese yuan (CNH) rose to 7.2040 against the US dollar in the early trading session of the Asian market. After reaching a new intraday high since February 9th last Friday, it hit a new intraday high on February 8th and continued to decline. European stocks fell from 7.21 in the early trading session and then fell to 7.2162, down 122 points from their daily high, before rebounding. At 5:59 am Beijing time on February 20th, the offshore RMB/USD was at 7.2114 yuan, up 14 points from last Friday's late trading in New York, for four consecutive trading days. Bitcoin (BTC) hit a new daily high of $52400 before the European stock market, but then fluctuated and fell back. As usual, the US stock market fell below $52000 to below $51700 by midday, falling more than $800 or more than 1% from its daily high. After falling more than 1% in the oil market, it turned higher for three consecutive days and rose for two consecutive days, reaching a new high for three months International crude oil futures rose during the trading session. When European stocks hit a daily low in the morning, US WTI crude oil fell below $78.70, down nearly 0.7% for the day, Brent crude oil fell below $82.60, down 1.1% for the day, and the usual US stock market continued to rise after turning up. When the US stock market hit a daily high in the morning, US oil rose above $79.70, up 0.7% for the day, and crude oil rose to $83.60, up nearly 0.2% for the day. In the end, Brent's April crude oil futures rose by $0.09, or nearly 0.11%, to $83.56 per barrel, rising for three consecutive trading days and hitting a high since November 6, 2023 for two consecutive trading days. If the US oil company, which had no closing price on Monday due to holidays, maintains its upward trend, it will also rise for three consecutive days on Tuesday, and is expected to continue to hit a new closing high since November 6, 2023. Lunxi fell 2%, Luncopper fell to a two-week high, Lunaluminum fell three times in a row, and gold continued to rise London base metal futures mostly fell on Monday. Lunxi, which led the decline, fell by about 2% for four consecutive trading days, breaking the one week low set last Friday. Lun lead fell by about 1%, bidding farewell to the over a week high set by three consecutive days of gains. Lun Aluminum fell nearly 1%, falling for three consecutive days and hitting a low since late January for two consecutive days. Last Friday, London Copper, which rose more than 2% and led the way, fell to a two-day high since February 1st, but failed to close close close to $8500. Last Friday, the London nickel rebounded to its highest level since the end of January and slightly declined. And Lun Zinc rose for three consecutive days, continuing to reach a new high of over a week. New York gold futures continued the rebound momentum from last Friday on Monday. COMEX April gold futures, which had no closing price due to holidays on Monday, rose to $2034.30 in early Asian trading, breaking the intraday high since last Tuesday on February 13th, with a 0.5% intraday increase. If the trend continues to rise until the close on Tuesday, futures will continue to rise for three consecutive trading days, expected to reach a new closing high since February 12, far from the closing low since December 13, 2023, which was refreshed by consecutive declines on Wednesday and Friday last week. Spot gold rose above $2023 before the European stock market on Monday, up nearly 0.5% on the day and hitting a new intraday high since February 13th.Details+
How did NVIDIA invest?
As a global leader in GPU technology, NVIDIA not only limited its vision to the hardware field, but also set up a venture capital department, NvAdventures, to enter the venture capital market and deepen its influence in the AI industry. Nventures was established in early 2022, and its investment scope covers many fields such as health, enterprise and logistics. Among them, NVIDIA focused on investing in top start-ups in the AI field (such as Cohere, etc.), and thus stood out among a number of technology giants. NVIDIA has incomparable advantages over traditional venture capital companies. It not only provides funds for start-ups, but also pays more attention to technical support and resource sharing, including high-performance computing resources, technical expertise and in-depth understanding of the AI field, so as to build the long-term strategic value of enterprises. In addition, NVIDIA CEO Huang Renxun's personal participation and guidance became the "bright spot" of his venture capital. Analysts believe that although NVIDIA is currently in a leading position in the technology industry, in Silicon Valley, industry change is the norm. Once brilliant companies such as Yahoo, MySpace and even AMD, the former employer of NVIDIA CEO Huang Renxun, were once giants in the technology industry. However, over time, they have been surpassed by emerging technologies and competitors. If NVIDIA's GPU is no longer dominant in the future, NVIDIA may think that investing in start-ups is a forward-looking investment strategy, so as to diversify its business and maintain its competitiveness. The three founders of Nventures Portfolio Company told the media that they thought NVIDIA's investment strategy might be based on such considerations. NVIDIA surpasses the advantages of traditional venture capital. 1) Technical support and resource sharing: NVIDIA's investment strategy is not only to provide funds, but also to pay attention to technical support and resource sharing. Due to its deep accumulation of technology and leading position in AI field, NVIDIA can provide technical support, professional knowledge sharing, market orientation, strategic planning and connection with NVIDIA's extensive technology and business ecosystem for investment companies. These are the incomparable advantages of traditional venture capital companies. Such cooperation enables start-ups (such as Terray Therapeutics) to make direct use of high-performance computing resources in NVIDIA, get in touch with technical experts in NVIDIA, and get direct guidance from CEO Huang Renxun and important brand endorsement. Sid Siddeek, vice president of NVIDIA and head of Nventures, stressed in an interview with the media that NVIDIA's investment strategy is diversified, aiming at promoting the growth of start-ups by providing financial, technical and professional support. Siddeek also pointed out that another major goal is to ensure that these investments can bring positive financial returns to NVIDIA. 2) NVIDIA CEO Huang Renxun's personal participation and guidance is very attractive to start-ups. NVIDIA's internal corporate culture emphasizes efficiency and cooperation. This culture is reflected in the support for internal projects and portfolio companies. It is reported that the founders of NVIDIA's portfolio companies mentioned that they could get the answer to the problem quickly from NVIDIA. For example, Outlider is a company that focuses on automated freight and logistics. Bob Hall, Chief Technology Officer of Outlider, pointed out that the internal staff in NVIDIA responded very quickly to the help request of the Nventures team, which greatly promoted the development of their company. Besides responding very quickly, Huang Renxun's direct guidance also helps enterprises to make rapid progress. For some companies, such as Imbue and Utilidata, Huang Renxun participated in the solicitation process and personally met the founders. Qiu, CEO of Imbue, said that Huang Renxun has been easy to contact since then. She once sent an email to Huang Renxun asking how the company should set the salary for its senior management team, and Huang Renxun responded quickly. Huang Renxun's participation not only reflects NVIDIA's emphasis on investment projects, but also sends a strong signal to start-ups, that is, they will be able to directly benefit from the experience and insights of NVIDIA's leadership. However, this opportunity is not equally available to all portfolio companies. Some founders of portfolio companies said that they had never met Huang Renxun. Siddeek mentioned that Huang Renxun is very busy, but he still leads the investment committee that approves every transaction. According to media reports, when asked about Huang Renxun's criteria for meeting with the founder during the transaction, NVIDIA chose not to comment. NVIDIA's investment covers top AI startups. 1) Scope of investment: Siddeek mentioned that NVENTERES has made a number of investments in the new year, and the NVENTERES website has been launched recently, which indicates that NVIDIA has formally and actively participated in the field of venture capital. According to public information, since the beginning of 2023, NVIDIA has announced 14 investments, covering many fields such as health, enterprise and logistics. NVIDIA not only pays attention to AI technology itself, but also applies AI technology to many industries to solve specific problems. Among them, NVIDIA has invested in top start-ups in the AI field, such as Cohere, Hugging Face and Influence. NVIDIA is an emerging player in the field of venture capital. It stands out among the technology giants such as Alphabet, Microsoft and Salesforce by investing in top AI startups in a short time. 2) Fair and transparent cooperative relationship: Although start-ups may expect special preferential treatment, NVIDIA treats all customers and portfolio companies equally and does not provide special access rights. NvAdNventuress, a venture capital department in NVIDIA, made it clear to the media that it would not provide priority access to GPUs because of its investment relationship. In the current field of artificial intelligence, companies are competing to develop the most powerful AI model, which makes GPUs a new "currency". Nevertheless, NVIDIA does not provide a special way to acquire chips just because the company has an investment relationship with it. Jorge Torres, CEO of MindsDB, a startup company, mentioned that although being a member of NVIDIA's portfolio does not mean getting any special preferential treatment (so-called "VIP pass"), this cooperative relationship does bring positive effects to MindsDB, such as improving brand awareness, obtaining technical guidance or broadening business network. In addition, the founders of NVIDIA and its portfolio companies all said that for start-ups, there is no requirement or designation that they must use their investment capital to buy chips or other products in NVIDIA. NVIDIA's investment is more based on the trust in the technology and business potential of the invested company, rather than to promote its own products or services. 3) Financial strength supports investment activities According to Omdia, a research company, NVIDIA accounts for over 70% of the AI chip sales market, and NVIDIA's strong financial strength provides a solid foundation for its investment activities. The company's revenue in the first three quarters reached $38.82 billion, especially in the third quarter, its sales increased by more than 200% year-on-year. NVIDIA's market value also rose rapidly to $1.79 trillion, making it the third largest company in the US stock market. This enables Nvidia to use its own funds to invest in start-ups. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.Details+
March Drama is getting closer! The balance of reverse repurchase by the Federal Reserve has fallen below the $500 billion mark
The balance of the Federal Reserve's reverse repo has fallen below the $500 billion mark for the first time in over two years, and market liquidity has once again lit up a red light. The risk of a liquidity crisis erupting in March is increasing. The latest data released by the Federal Reserve shows that on February 15th local time, the balance of overnight reverse repurchase (RRP) by the Federal Reserve decreased by $82 billion to $493 billion from the previous day, marking the first time since June 2021 that it has fallen below $500 billion. This is also the largest non month end decline since October last year, which is quite shocking because the use of reverse repo has been relatively stable recently. As Curvature analyst Scott ED Skyrm pointed out: Considering the loose financial situation, this is even more surprising. When the repurchase rate is at a low level, the usage of reverse repurchase often decreases less, as a 5.3% reverse repurchase rate is more competitive compared to market rates. Wall Street has previously mentioned in an article that reverse repurchase may be completely depleted by March this year. At the same time, some people expect the reverse repurchase balance to remain at a "sustained low level" of $200-300 billion. Is there a big play in March? It is worth noting that the depletion of reverse repurchase may only be one part of the "March drama" play. The repurchase rate has jumped several times since the fourth quarter of last year, releasing a price signal of liquidity pressure. In addition, the Bank Term Financing Program (BTFP), an emergency rescue tool launched by the Federal Reserve during last year's banking crisis, will expire in March and will no longer be renewed, forcing banks to fund their $160 billion shortfall through a discount window. This suggests that liquidity risk may erupt in March. At that time, the Federal Reserve will be forced to stand at a crossroads again. What choices will it make in response to the crisis? Is it a rate cut? End QT? Even enable QE? Dallas Fed Chairman Logan pointed out as early as January that as reverse repurchase balances approached lower levels, the Fed should slow down the pace of QT. In the same month, Bill Gross, known as the "old debt king," said that if he were the Chairman of the Federal Reserve, he would stop QT now and start cutting interest rates in the coming months to avoid an economic recession. Some Wall Street strategists have previously hinted that the Federal Reserve should completely stop QT before the reverse repo balance approaches zero. Some analysts also believe that it was too late for the Federal Reserve to stop quantitative tightening at that time, and it was impossible to avoid violent fluctuations in the treasury bond bond market. Hedge funds would become the "fuse" to rapidly reduce market liquidity. The Federal Reserve would end QT and restart QE in the next few months even at the risk of inflation resurgence. However, QE may not be a benchmark option. Although liquidity risk is gathering, it is currently difficult to determine whether and when it will erupt. Despite the depletion of RRP and the expiration of BTFP, the Federal Reserve still has two policy tools, the Domestic Standing Repurchase Facility (SRF) and the International Repurchase Facility (FIMA), to improve the "interest rate corridor" mechanism and prevent overnight interest rates from frequently breaking the interest rate ceiling during the process of tightening liquidity. In addition, Federal Reserve officials have publicly encouraged lending institutions to freely use the central bank's discount window for financing, and hope to use this financing tool as an important tool for maintaining financial stability and monetary policy. Therefore, the volatility of repurchase rates and the significance of BTFP should not be overly exaggerated.Details+
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