Category: Observation

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Tesla to lay off over 10% of global workforce

Tesla charge EV point

The company intends to reduce its global workforce by over 10%, amounting to roughly 14,000 employees

As of December, Tesla had a total of 140,473 employees worldwide.

This decision is believed to be a response to the obstacles Tesla is encountering with slowing growth and operational effectiveness and cheaper competition.

In an internal memo, billionaire owner Elon Musk addressed the layoffs, acknowledging that it was a difficult decision but necessary for the company’s future. He emphasized the need to streamline operations and prepare for the next phase of growth. 

The layoffs have already begun and also include some key executives. 

Why?

Analysts offer diverse interpretations of the layoffs. Some perceive them as indicative of cost pressures stemming from Tesla’s investments in new models and artificial intelligence (AI).

The company’s delay in updating its aging vehicle lineup, coupled with high interest rates, has weakened consumer demand. Moreover, the influx of affordable electric vehicles, especially from China, such as BYD, has intensified the competition.

Efficiency drive?

While the layoffs indicate challenges, they also highlight Tesla’s dedication to adaptability and efficiency. As the electric vehicle (EV) industry progresses, Tesla strives to stay lean, innovative, and strategically positioned for ongoing growth. The company is scheduled to announce its quarterly earnings later this month, which analysts will scrutinize in the context of the recent workforce reductions.

In summary, Tesla’s layoffs are indicative of the intricate dynamics within the automotive sector, where innovation, cost control, and market forces converge.

The company’s capacity to steer through these complexities will determine its future prosperity.

Tesla share price year-to-date (April 2024)

Tesla share price year-to-date (April 2024)
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Gold is at an all-time high and recently crossed $2400 – is it now vulnerable to a pullback?

Gold all-time high!

Gold at all-time high above $2,400

Technical analysis indicates that the risk trends towards the upside, with indicators showing overbought conditions and prices rising above moving averages.

However, it’s crucial to remember that markets are subject to change and can be affected by various factors, including geopolitical risks and economic data.

Recent figures indicate that the U.S. Producer Price Index (PPI) increased less than anticipated, which may influence monetary policy decisions and, as a result, the price of gold. Furthermore, the European Central Bank’s (ECB) choice to keep its monetary policy unchanged could lead to a rate reduction next summer, potentially affecting gold prices as well.

Although the present technical perspective suggests a possible continued rise, market fluctuations can occur due to unexpected events or changes in investor sentiment. Consequently, while gold may not face an immediate decline, it is advisable for investors to remain informed and take into account both technical and fundamental aspects when evaluating market trends.

Gold price one month chart

Gold price one month chart
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Is there an AI bubble in the stock market and if so – will it burst any time soon?

AI bubble about to burst?

The recent surge of interest in artificial intelligence (AI) has ignited a significant rally in technology stocks.

Firms engaged in AI development, such as semiconductor producers crucial to AI technology and cloud service providers offering the necessary computing infrastructure, have experienced significant returns.

The stock market is abuzz with excitement over artificial intelligence (AI). With technology stocks on the rise, some investors are questioning whether this signifies an AI bubble that could eventually pop.

The AI Rally Early Winners

In recent months, a select group of large U.S. companies has spearheaded advancements. These pioneers include semiconductor manufacturers critical for AI technology and cloud service providers equipped to commercialise it. The financial returns have been remarkable.

Not Your Typical Bubble 

Despite the rally, experts argue that we’re not in a traditional bubble.

  • Market Concentration: The market rally has shown a high level of concentration. A mere 15 companies have contributed to more than 90% of the returns in the S&P 500 Index from January to June. Given that these frontrunners are predominantly large corporations, the equity market has experienced an exceptional concentration of returns.
  • Valuations and Balance Sheets: Contrary to previous bubbles, such as the internet bubble of 2000, the valuations of today’s leading technology stocks are not overly inflated. These firms have strong balance sheets and deliver significant returns on investment. It’s probable that we are still in the initial phases of a new technological cycle, which may result in continued superior performance.
  • U.S. vs European Tech: Valuations in the U.S. technology sector have garnered an unusual premium compared to European tech companies. This highlights the significance of the AI narrative, considering that the majority of leading AI companies are based in the U.S.
  • Future Growth Assumptions: Investors seem to expect much higher future growth for these tech giants, despite rising rates.

The AI Bubble Debate 

Although tech stock valuations are high compared to historical standards, this doesn’t automatically indicate a bubble. The present price-to-earnings (P/E) ratio for the U.S. tech sector is indeed high, but context is key. The top seven US companies at the forefront of the generative AI industry have an average P/E ratio of 25.

Conclusion

The AI market has not reached bubble status as of now, but careful monitoring is essential. Staying vigilant about valuations, market dominance, and growth projections is important as we venture through this dynamic technological terrain, distinguishing genuine potential from mere speculation.

AI is here to stay, and this is just the beginning of a new ever powerful revolution.

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GEN AI – The AI ‘generation’

AI Generation

The Generation AI: How the next wave of young innovators will shape the future

Artificial intelligence (AI) is not only a technology that is transforming the world, but also a culture that is inspiring the next generation of young innovators.

The Generation AI is a term that refers to the children and teenagers who are growing up with AI as a natural part of their lives, and who are using it to express their creativity, solve problems, and pursue their passions. 

Generation AI is different from the previous generations in many ways. They are more diverse, more connected, more curious, and more entrepreneurial. GEN AI are also more aware of the social and ethical implications of AI, and more eager to use it for good. They are not just passive consumers of AI, but active creators and collaborators. 

The Generation AI is already making an impact in a variety of domains and industries.

Education

Generation AI is learning with and from AI, using it to enhance their learning experiences, personalise their curricula, and access global resources. They are also teaching AI, using it to share their knowledge, mentor their peers, and build their portfolios. For example, CodeGPT is a platform that allows students to learn coding with AI, and to create their own AI projects. 

Healthcare

The Generation AI is improving their health and well-being with AI, using it to monitor their fitness, nutrition, and mental health, and to access reliable and personalized health information and services. They are also contributing to the health of others, using AI to support health research, diagnosis, and treatment. For example, Cureskin is an app that uses AI to detect and treat skin conditions. 

Entertainment

The Generation AI is enjoying and creating entertainment with AI, using it to discover and consume content that suits their tastes, preferences, and moods, and to generate their own content, such as music, art, games, and stories. They are also engaging and interacting with AI, using it to play, chat, and socialise with others.

For example, OpenART, Microsoft Copilot, Stable Diffusion or PopAI and OpenAI’s ChatGPT are just a small selection of generative AI systems that can create realistic and diverse images from text descriptions.  The Generation AI is not only the future of AI, but also the future of humanity.

They are the ones who will shape the direction and impact of AI, and who will benefit from its opportunities and challenges. They are the ones who will unleash the full potential of AI, and who will make the world a better place a discerned use of AI.

Note: apps mentioned in this article are not recommendations. They are just for reference only.

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Ripple CEO predicts crypto market will reach $5 trillion in 2024

Ripple

Ripple CEO Brad Garlinghouse anticipates the total value of the cryptocurrency market will double this year.

He references the launch of the first U.S. Bitcoin exchange-traded fund (ETF) and the forthcoming Bitcoin halving event as key factors.

“The overall market capitalization of the cryptocurrency industry is expected to double by the end of this year, influenced by a range of macroeconomic factors,” Garlinghouse reportedly said.

He also considers the potential for favorable regulatory changes in the United States as another catalyst for the market’s growth.

SNAPSHOT: Cryptocurrency market value as of 8th April 2024

Let’s check in on the prediction at the end of the year and see where the crypto market is.

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Tesla’s robot-taxi is coming!

Robot Taxi

The CEO of Tesla, Elon Musk recently made an announcement regarding the company’s robotaxi.

According to his social media post on X, Tesla will unveil its robotaxi product on 8th August 2024. This project has been a topic of discussion for several years and could potentially represent a significant new business venture for Tesla. 

The robotaxi initiative aims to allow Tesla vehicles to use self-driving technology for autonomous ride-hailing services, picking up passengers without human intervention.

Previous predictions

Elon Musk has made bold predictions regarding the timeline for robotaxis. In 2019, he anticipated having over a million robotaxis in operation by 2020. Currently, Tesla’s advanced driver-assistance systems, such as Autopilot and the premium Full Self-Driving option, still necessitate human oversight.

Nonetheless, amidst the competitive landscape of autonomous vehicles, Tesla remains steadfast in its pursuit of a fully autonomous future.

Tesla One year Chart

Tesla one year chart

Mass production?

Musk stated that a robotaxi model lacking a steering wheel or pedals is expected to enter mass production by 2024. The aim is to make the cost of a journey in the Tesla robotaxi lower than that of a public bus or underground train ticket.

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Mumbai surpasses Beijing as the billionaire capital of Asia

Billionaires

Mumbai, India’s bustling financial hub, has achieved a remarkable milestone: it now reigns as Asia’s billionaire capital, surpassing Beijing for the first time

According to the Hurun Research Institute’s global rich list, Mumbai boasts 92 billionaires with a combined wealth of $445 billion. This historic feat marks the first time that India’s most populous city has claimed the top spot in Asia.

While New York (with 119 billionaires) and London (with 97 billionaires) lead the global rich list for cities, Mumbai’s ascent is a testament to its thriving energy and pharmaceutical sectors. The city’s entrepreneurial spirit and economic dynamism have propelled it to the forefront of wealth creation in the region.

Beijing, which previously held this distinction, now trails closely behind with 91 billionaires, followed by Shanghai with 87 billionaires. The competition among these financial powerhouses reflects the shifting landscape of global wealth distribution.

Globally, there are currently 3,279 billionaires, representing a 5% increase from 2023. China remains at the helm with 814 billionaires, despite a loss of 155 billionaires over the past year. The United States follows closely with 800 billionaires, while India claims the third spot with 271 billionaires.

Mumbai’s skyline, ever-changing, now reflects its title as Asia’s billionaire capital, highlighting the city’s resilience, innovation, and steadfast quest for prosperity.

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The unexpected global gas glut

Gas

The world’s energy landscape is experiencing an unexpected twist: an oversupply of natural gas.

As economies grapple with the aftermath of the pandemic, the gas market finds itself in a paradoxical situation.

The Glut Unveiled

  • Abundant Supply: The global gas glut stems from a surge in production. Countries like the United States, Russia, and Qatar have ramped up their natural gas output, flooding the market.
  • LNG Boom: Liquefied natural gas (LNG) projects have proliferated, adding to the surplus. New terminals and pipelines facilitate the movement of LNG across continents.

Demand Dilemma

  • Warmer Winters: Milder winters in key consuming regions such as Europe, the U.S., and Asia, have suppressed demand for heating. Gas storage facilities are brimming, leaving suppliers with excess inventory.
  • Geopolitical Tensions: Europe’s reliance on Russian gas has prompted diversification efforts. LNG imports from the United States, Australia, and other sources provide an alternative. However, the North Sea’s production limitations persist.

Price Plunge

  • Price Disparities: While wholesale gas prices in Europe and Asia have tumbled, mainland Europe still faces higher prices due to supply constraints. The U.S. market, despite its glut, operates differently.
  • Investment Paradox: Ironically, this glut coincides with record investments in LNG infrastructure. The mismatch between supply growth and demand dynamics baffles analysts.

Environmental Implications

  • Balancing Act: As gas prices dip, affordability improves for consumers. However, environmental concerns remain. Natural gas, though cleaner than coal, still contributes to greenhouse gas emissions.
  • Policy Challenges: Policymakers must navigate this delicate balance—ensuring energy security while transitioning to cleaner alternatives.

Conclusion

The global gas glut is a paradox: abundant supply alongside record investments. As we navigate this downward super cycle, energy markets remain unpredictable and interconnected globally.

Remember, while gas prices dip, the implications for our planet and energy policies are far-reaching. It’s a delicate balance between affordability and sustainability.

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Clean energy gold rush for natural hydrogen

Natural hydrogen

The natural hydrogen gold rush is captivating attention worldwide as a potential game-changer in the quest for cost-effective, low-carbon energy sources.

Countries such as the U.S., Canada, Australia, France, Spain, Colombia, and South Korea are actively engaged in exploratory efforts for geological hydrogen.

What Is Natural Hydrogen?

Natural hydrogen, also referred to as white or gold hydrogen, is hydrogen gas that occurs naturally beneath the Earth’s surface. It is thought to form from high-temperature reactions between water and minerals rich in iron.

Unlike current hydrogen production, which is mainly produced using fossil fuel, natural hydrogen holds promise as a cleaner option.

Why the Hype?

Hydrogen is often reported as a potential energy source for transitioning away from fossil fuels. Yet, the methods used to produce it frequently result in substantial greenhouse gas emissions.

Green hydrogen, produced by splitting water into hydrogen and oxygen using renewable electricity, is an exception. Unfortunately, its development has been hindered by high costs and economic challenges.

Geologic hydrogen is a ‘natural’ hydrogen. Companies are now actively exploring this untapped resource. Countries like Australia, France, Spain, U.S., Canada, Colombia, and South Korea.

Research by Rystad Energy reportedly suggests that forty companies were actively searching for geologic hydrogen deposits by the end 2023. That’s up from just 10 in 2020. The term ‘white gold rush’ has emerged from this surge in interest.

Potential Impact

Advocates hope that natural hydrogen could be a gamechanger in the clean energy transition.

Although it’s not an entirely novel concept, interest in geologic hydrogen is gaining traction. Both researchers and corporations are eager to explore its possibilities.

As the exploration unfolds, the world looks on with eager anticipation. Hopefully natural hydrogen will play a significant role in shaping a more sustainable energy future.

The natural hydrogen will have to be mined and that in itself may bring environmental issues. Remember the concerns fracking created?

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UK recession confirmed but early signs of green shoots of recovery have been seen

UK recovery

The Office for National Statistics (ONS) has released updated UK GDP figures, confirming that the UK entered a technical recession in the last six months of the previous year.

The new data shows the economy contracted by 0.1% in the three months from June to August 2023, with a further decline of 0.3% in the subsequent financial quarter from September to December 2023. The overall economy grew by 0.1% throughout 2023.

However, early signs suggest that the UK began to recover in January 2024, with initial data indicating some growth, and surveys suggesting this trend may have gained momentum into February and March 2024.

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What if the Federal Reserve decided to hold interest rates in 2024?

The Fed

The Fed in March 2024, indicated for the markets to expect three interest rate cuts by the end of 2024 – but what if this didn’t happen?

The Federal Reserve’s decision to maintain interest rates in 2024 could have significant implications for the U.S. economy.

Fed cred – credibility would be the first to go!

The cost of borrowing would remain unchanged. This could discourage businesses from taking out loans for expansion or investment, potentially slowing economic growth. Consumers may also be less inclined to take on debt for major purchases, such as homes or cars, which could impact sectors reliant on consumer spending.

Value of the U.S. dollar could strengthen relative to other currencies. A higher interest rate typically attracts foreign investors seeking better returns, increasing demand for the dollar. While a strong dollar can benefit consumers by making imports cheaper, it can hurt exporters whose goods become more expensive for foreign buyers.

The decision could signal the Fed’s confidence in the economy’s health. By not lowering rates, the Fed may be indicating that it believes the economy can withstand higher borrowing costs without slipping into recession. This could boost investor confidence and potentially lead to increased market activity.

However, the decision could also exacerbate wealth inequality. Those with investments tend to benefit from higher interest rates, as they can earn more from savings and bonds. Conversely, those living paycheck to paycheck may not see any immediate benefit and could face higher costs if they need to borrow.

In conclusion, should the Federal Reserve decide to maintain interest rates in 2024 this could have a mixed impact on the U.S. economy.

The effects would likely be felt across various sectors, influencing everything from business investment and consumer spending, credit to the strength of the dollar and wealth inequality. As always, the actual outcome would depend on a multitude of factors, including the overall health of the global economy and domestic fiscal policy decisions.

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Cocoa prices have soared to record levels

Cocoa prices at extreme highs!

The cocoa futures price for May 2024 delivery surged to an all-time intraday high of $10,080 per metric tonne Tuesday 26th March 2024

Cocoa prices have soared, hitting unprecedented highs. This dramatic increase has profound consequences for both consumers and the chocolate industry.

Chocolate enthusiasts might have to prepare for increased prices or changes in product sizes (or both), due to the persistent challenges in the cocoa market.

Historic Supply Deficit

The world is experiencing the most significant cocoa supply shortfall in over six decades. In West Africa, a key region for cocoa production, farmers are struggling with adverse weather conditions, diseases, and aging trees. These persistent problems have resulted in a critical reduction of cocoa supplies, and there appear to be no simple resolutions on the horizon.

Price Volatility

Recently, cocoa futures contracts for May 2024 delivery reached a record intraday peak of $10,080 per metric tonne. In the past year, cocoa prices have more than tripled, with a 129% surge in 2024 alone. Major chocolate producers have implemented hedging strategies to cope with price volatility and prevent the direct transfer of increased costs to consumers.

Impact on Consumers

Large chocolate companies, well-hedged last year, are reaching the limit of cost absorption. As cocoa prices rise, consumers might begin to feel the impact. The National Confectioners Association is collaborating with retailers to reduce costs and maintain chocolate affordability. Nonetheless, there’s a finite extent to which the impact of escalating cocoa prices can be lessened.

Future Outlook

The International Cocoa Organization predicts a supply shortfall of 374,000 tonnes for the 2023/2024 season, marking a substantial rise from the previous season’s 74,000-ton deficit. Experts caution that ‘the worst is yet to come,’ suggesting that cocoa prices may stay high due to persistent market challenges lacking swift solutions.

Possible Consumer Impact

With the ongoing surge in cocoa prices, consumers may encounter higher costs or “shrinkflation,” resulting in smaller chocolate bars. Manufacturers might alter their recipes to include less cocoa. Dark chocolate, known for its high cocoa content, could be most affected.

In summary, a mix of supply shortages, fluctuating prices, and industry limitations is pushing cocoa prices to record levels.

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The World’s largest pension fund explores Bitcoin as an investment option

Japan and Bitcoin

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, is reportedly considering Bitcoin as a potential investment.

With an impressive $1.4 trillion in assets under management, the GPIF’s exploration of Bitcoin represents a notable departure from its conventional investment approach.

This development occurs during a significant increase in Bitcoin’s value, showcasing its potential as a profitable asset, despite its volatility. The GPIF is gathering information on Bitcoin, seeking academic research, analytical tools, and examples of investments. This inquiry demonstrates the GPIF’s willingness to consider innovative financial tools.

It is important to appreciate that although the GPIF is researching Bitcoin, it is not certain that they will invest in it. The decision will likely hinge on various elements, such as risk evaluation, market fluctuations, and regulatory factors.

The GPIF’s actions may influence other institutional investors to contemplate including cryptocurrencies in their portfolios. This event could significantly impact the global financial scene. With the world’s largest pension fund examining Bitcoin, the debate over cryptocurrencies as valid investments continues.

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EU launches probe into Meta, Apple and Alphabet

EU flag

On Monday, 25th March 2024, the European Union initiated its first investigation under the new Digital Markets Act, targeting Apple, Alphabet, and Meta for potential tech legislation breaches.

Statement

“Today, the Commission has opened non-compliance investigations under the Digital Markets Act (DMA) into Alphabet’s rules on steering in Google Play and self-preferencing on Google Search, Apple’s rules on steering in the App Store and the choice screen for Safari and Meta’s ‘pay or consent model” – the Commission said in a statement.

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New guidelines from China reportedly blocks U.S. chips in government computers

U.S. China trade microchip trade battle

China has reportedly prohibited the use of U.S. processors from both AMD and Intel in government computers and servers. The directive is designed to encourage the use of domestic alternatives.

Chinese government agencies are now required to choose ‘safe and reliable’ domestic alternatives for these chips. The sanctioned list features processors from Huawei and the state supported firm Phytium, both of which face bans in the U.S.

In addition to processors, China is now also restricting Microsoft Windows on government devices, opting instead for domestically produced operating systems.

These guidelines are part of a broader tech trade battles between China and the U.S. While the impact on Intel and AMD remains to be seen, it’s clear that China is taking aggressive steps to reduce reliance on U.S. built technology.

The global tech landscape continues to evolve, and these decisions have far-reaching implications for both countries and the industry as a whole.

U.S. and China trade tensions are unlikely to recede anytime soon.

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Tyre companies love electric vehicles

EV tyres

The tyre industry is marked by fierce competition, static growth, and slim profit margins. But that is about to change.

In recent years, the total market value has consistently hovered around $50 billion, with an annual growth rate of approximately 2%, according to research. However, the advent of electric vehicles (EVs) is creating new possibilities.

Due to their substantial weight and rapid acceleration, EVs typically wear out tires around 20% quicker than vehicles with internal combustion engines, research suggests. Additionally, the cost of these tyres is roughly 50% higher.

Additional technical challenges encompass mitigating tyre noise, which becomes significantly more discernible inside of an otherwise quiet electric vehicle (EV) and enhancing an EV’s driving range. Research conducted by Michelin reportedly indicates that tyre selection can influence an EV’s range by 10% to 15%.

Summary Electric Vehicle (EV) Tyre Wear

Weight and Acceleration: EVs are heavier due to their batteries, and they often have quick acceleration.

Wear Rate: On average, EV tyres tend to wear down about 20% faster than internal combustion engine (ICE) vehicle tyres.

Cost: EV-specific tyres can be more expensive, costing approximately 50% more than regular tyres.

EV tyres are more expensive, and you get less use from them – remember to factor this into your purchasing decision.

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Bitcoin volatility continues as it slumps below $63000 after reaching a record $73000

Bitcoin

Bitcoin extended its slide on Tuesday 19th March 2024, dropping more than $10,000 from its all-time high last week.

The cryptocurrency went below $63000. Last week it climbed to a record $73679.

The move helped drag other cryptocurrencies lower. Ether lost more than 5% and was recently trading at $3,287.58 after topping $4,000 last week for – a drop some analysts predicted following the network’s *Dencun upgrade. The token tied to Solana fell 8%, Dogecoin lost 7% and XRP slipped 2%.

*Dencun introduces a scaling technology called proto-danksharding. This feature aims to drastically reduce transaction fees on Layer 2 (L2) rollups like Pontem’s SuperLumio, Optimism, and Arbitrum. By efficiently managing large data chunks, *proto-danksharding streamlines transaction processing, particularly for L2 solutions.

*Proto-Danksharding, also known as EIP-4844, is an intermediate step toward achieving a truly scalable Ethereum blockchain. Proto-Danksharding aims to make transactions on Layer 2 as cheap as possible for users and ultimately scale Ethereum to handle over 100,000 transactions per second. It serves as a precursor to full Danksharding.

In summary, Proto-Danksharding paves the way for more efficient and cost-effective Layer 2 solutions, enhancing Ethereum’s scalability and usability.

Bitcoin volatile pullback – profit taking

Bitcoin’s decline started last week when traders began to capitalize on profits following its approximately 70% surge from the beginning of the year to its peak last Wednesday. Data from CryptoQuant indicates a significant increase in investors liquidating their Bitcoin holdings for profit on 12th March 2024.

CoinMarketCap chart demonstrating Bitcoin volatility over 7-day period dropping below $63000

CoinMarketCap chart demonstrating Bitcoin volatility over 7-day period dropping below $63000

Moreover, the act of securing profits resulted in a surge of long position liquidations for leveraged Bitcoin investments. Centralised exchanges witnessed approximately $122 million in long position liquidations on Monday, as per analysis from Bitcoin exchanges.

The previous week saw nearly $372 million worth of long liquidations over the span of three days.

Bitcoin ETFs

The introduction of spot Bitcoin ETFs in the U.S. earlier this year has significantly contributed to the rally of Bitcoin. This surge began even before the ETFs were officially launched, spurred by the anticipation of their regulatory approval. Concurrently, growing interest from investors and a higher demand for Bitcoin have led to increased leverage and amplified volatility.

Investors and analysts caution that traders ought to proceed with care in March due to the anticipated volatile price movements and a surge in trading volumes, which could result in a deviation from Bitcoin’s sustained upward trend.

Tread with extreme care – or DON’T TREAD AT ALL! Bitcoin is an extremely volatile asset and too unpredictable to trade for my liking.

RESEARCH! RESEARCH! RESEARCH!

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Bank of Japan ends negative rates: a seismic shift in monetary policy

The flag of Japan

In a move that reverberated across global financial markets, the Bank of Japan (BOJ) recently bid farewell to its negative interest rate policy – the last of its kind in the world. This decision marks a pivotal moment in the realm of central banking and has far-reaching implications for economies and investors worldwide.

The Negative Interest Rate Saga

To understand the significance of this shift, let’s rewind the clock. Japan, grappling with deflation for years, embarked on an ambitious economic experiment known as ‘Abenomics’ in 2013. The strategy combined massive government spending with unconventional monetary measures. The BOJ, under the leadership of then-Prime Minister Shinzo Abe, injected liquidity into the system by purchasing bonds and other assets. The goal? Achieve a 2% inflation target and kickstart growth.

Among these measures was the adoption of negative interest rates. The idea was simple: discourage banks from hoarding excess reserves and encourage lending. However, the path to higher inflation proved elusive, and the BOJ found itself navigating uncharted waters.

The Change

Fast forward to 2024. Japan’s economy has experienced a moderate recovery, prompting policymakers to reassess their strategic options. The Bank of Japan (BOJ) has elevated its short-term interest rate from minus 0.1% to a range between zero and 0.1%. This adjustment marks the first increase in rates since 2007, representing a significant, even a ‘seismic’ policy shift.

The Effect

  1. Policy Pivot: The BOJ acknowledges that negative rates have played their part. With improving wages and corporate profits, the time is ripe for a change. The new rate range signals a departure from the era of ultra-accommodative policies.
  2. Global Implications: Japan now stands as the last central bank to exit negative rates. For years, central bankers worldwide wielded cheap money and unconventional tools. Now, the tide turns. The era of negative rates draws to a close, and other central banks take note.
  3. Market Response: Tokyo’s Nikkei 225 index responded positively, gaining 0.7%. The Japanese yen weakened against the dollar. Investors recalibrate their strategies, adjusting to a world where negative rates are no longer the norm. The Nikkei is sitting close to or at its all-time high!

Nikkei 225 3 month chart at: 40003 – close to its recent new all-time high of 40109

Nikkei 225 3 month chart at: 40003 – close to its recent new all-time high of 40109

The future?

As the BOJ takes its first step toward policy normalization, questions abound. Will further rate adjustments follow? How will markets adapt? And what does this mean for global liquidity?

One thing is certain: The decision of the Bank of Japan resonates beyond the confines of the nation. It heralds the beginning of a new era in which central banks adjust their strategies, economies establish stability, and investors once more chart a course through unfamiliar territory.

Within the chronicles of monetary history, the cessation of negative rates at the Bank of Japan will be marked as a pivotal moment. As the final details of this policy transition are solidified, the global community observes, prepared for the forthcoming developments.

Disclaimer: The views expressed in this article do not constitute financial advice. Readers are encouraged to consult professional advisors before making any investment decisions.

Remember to always do your own research

RESEARCH! RESEARCH! RESEARCH!

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Why is Byju’s, India’s most valuable start-up once valued at $22 billion, fighting for survival?

Online teaching

In 2018, Byju Raveendran’s edtech company, Byju’s, was the darling of India’s start-up scene.

It was valued at a staggering $22 billion. However, recent times have seen its fortunes take a dramatic downturn.

Financial Crisis and Valuation Plunge

Once India’s leading privately-held company, Byju’s is now regarded as a cautionary tale. Investment company BlackRock recently slashed its valuation to a mere $1 billion.

The company faced mounting debt, unhappy investors, and lawsuits by lenders. Its valuation plummeted.

Leadership Turmoil

In February, many shareholders voted to remove Byju Raveendran as CEO during an extraordinary general meeting (EGM). Reportedly, allegations of ‘management failures’ led to this decision.

Raveendran and his family dispute the allegations, challenging the vote’s validity in court. The High Court temporarily halted the implementation of the resolutions passed in the EGM.

Legal and Financial Crises

Byju’s has been struggling with a growing number of legal and financial challenges. These include: investigations by India’s financial crimes agency, layoffs, delayed salaries, and a liquidity crisis.

Customers have reportedly accused the company of pressure selling, coercing parents into buying courses they couldn’t afford.

Missed Financial Deadlines

In January, Byju’s reported a consolidated loss of around 82 billion rupees ($1 billion) for 2022. The company is yet to present its audited accounts for 2023.

The company’s struggle to pay salaries due to a lack of funds has further exacerbated its woes.

Global Expansion and Acquisitions

Byju’s expanded globally, acquiring other edtech start-ups and firms. However, these ambitious moves came at a cost.

Initially focused on online tutoring for schoolchildren and competitive exam preparation in India, Byju’s later introduced learning apps in various Indian languages.

Rights Issue and Cash Crunch

The current standoff between Byju’s and its investors revolves around a rights issue. Byju’s proposed raising up to $200 million through this issue, inviting existing shareholders to purchase additional new shares in the company.

The pandemic darling became infected

Through the pandemic, as schools were forced to close, the business kept growing and expanding – until it all started to unravel.

It used to be India’s top private firm with a $22bn (£17.38bn) valuation, but now some see it as a warning for local start-ups, after investment firm BlackRock cut its worth to $1bn.

Byju’s, once a rising star, now faces a massive task and fight back to regain its former glory.

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More than 20% of UK adults not seeking work

Not working

More than a fifth of working-age adults in the UK are currently not actively seeking employment, according to recent figures.

The economic inactivity rate during the period from November 2023 to January 2024 stood at 21.8%, a slight increase compared to the previous year. This means that approximately 9.2 million people aged between 16 and 64 are neither employed nor actively searching for jobs. The total figure has risen by over 700,000 since before the onset of the coronavirus pandemic.

Several factors contribute to this problem

Long-Term Illness: Approximately one-third of the working-age population not participating in the labour force cite long-term illness as the primary reason for their inactivity. Health-related issues have kept a significant portion of the population away from work.

The pandemic: of 2020 caused work flight. 700,000 extra out of the workplace since the coronavirus pandemic Covid 19 hit the UK in 2020.

Students and Education: Students pursuing education are often classified as economically inactive. Their focus on studies and lack of job-seeking activity contribute to this category.

Care Responsibilities: Individuals who care for family members or manage household responsibilities fall into this bracket. Caring duties can be time-consuming and prevent active job hunting.

People with Disabilities: Those with disabilities may face barriers in accessing employment opportunities. Accommodations and inclusive policies are essential to address this issue.

Early Retirement: Some adults choose early retirement, and once retired, they rarely express a desire to return to work. This group contributes significantly to the inactive population.

Discouraged Workers: Individuals who have given up on job searches due to discouragement or lack of suitable opportunities are also part of this category.

Gender Gap: Historically, more women have been classified as economically inactive compared to men. However, this gap has narrowed over the years as more women have entered the workforce.

Age Trends: Recent data indicates that while the number of economically inactive individuals due to illness has decreased, there has been an increase among those aged 16 to 34. Mental health issues are believed to be a contributing factor in this age group.

Persistently high level

The persistently high level of economic inactivity poses challenges for the UK economy. As the country emerges from the pandemic, addressing workforce shortages becomes crucial. Measures such as reducing National Insurance Contributions and extending free childcare services aim to encourage people to seek employment or increase their working hours. 

More effort is needed to further incentivise workforce participation, if not, the UK economy will suffer for many more years than would otherwise be necessary.

Office for national statistics

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AI will be smarter than entire humanity by 2029 according to Elon Musk

Artificial intelligence

Elon Musk sparked intense debate on the trajectory of artificial intelligence (AI) after he shared a clip from the Joe Rogan Experience podcast via his X account. 

In the video, futurist Raymond Kurzweil explored the future of artificial intelligence (AI), proposing that it might soon outstrip human intellect.

Elon Musk, noted for his candid opinions on AI, echoed Kurzweil’s forecast by stating, ‘AI will likely be more intelligent than any individual human by next year.’ Furthermore, he speculated that by 2029, AI could surpass the combined intelligence of all humanity.

Screen capture of Elon Musk’s post on X

Artificial General Intelligence

Artificial General Intelligence (AGI), capable of outperforming human intelligence, has recently drawn widespread attention from technology leaders worldwide, especially with the advent of sophisticated AI systems such as ChatGPT, Bing AI, and Gemini. Despite its increasing prominence, a unified definition of AGI remains elusive. Typically, AGI is understood to be a phase in AI evolution where the system can undertake any human task, potentially excelling beyond human expertise in certain domains.”

In the realm of technology leadership, a broad range of views exists on the feasibility and consequences of Artificial General Intelligence (AGI). While some leaders speculate about the timeline for AGI’s realization, others doubt its eventual occurrence. Opinions also differ on whether AGI will lead to beneficial progress or present risks to human society. Comprehending the varied stances of tech leaders sheds light on the active debate regarding AGI and its prospective influence on society.

Musk’s choice to disseminate the podcast excerpt has intensified the discourse on AI advancement’s ramifications. His use of his platform to broadcast Kurzweil’s insights has sparked additional discussion and contemplation about artificial intelligence’s revolutionary capabilities.

His tweet has ignited wider conversations concerning the swift advancement of technology and its significant consequences for the future of humanity.

Raymond Kurzweil

Raymond Kurzweil, born 1948, is an American computer scientist, author, inventor, and futurist renowned for his contributions to various fields, including optical character recognition (OCR), text-to-speech synthesis, speech recognition technology, and electronic keyboard instruments.

Through his comprehensive body of work, Kurzweil has researched a variety of subjects including health, artificial intelligence (AI), transhumanism, the technological singularity, and futurism.

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Gold futures rise above $2125 to highest level ever

Gold at record high

Gold futures for April settled at $2126 per ounce, the highest-level going back to the *contract’s creation in 1974.

Analysts suggest that, adjusting for inflation, gold set an all-time high of approximately $3200 in 1980 and bodes well for big gold increases to come in the future.

Why is gold going up?

The outlook for interest rates. The Federal Reserve is expected to cut rates in 2024 to further stimulate the economy as the inflation fight comes to an end. Lower interest rates make gold more attractive as an alternative asset that does not pay any income.

The geopolitical and economic uncertainty. The U.S.-China trade and political tensions, the conflicts in the Middle East, the Russia/Ukraine war, other conflicts around the world and the upcoming U.S. presidential election are all sources of risk and volatility for the global markets. Investors seek gold as a safe haven asset that can preserve wealth and hedge against inflation.

The supply and demand dynamics. The demand for gold has been rising from central banks, investors, and consumers, especially in China and India, the world’s largest gold consumers. The supply of gold, on the other hand, has been constrained by the pandemic-related disruptions, environmental regulations, and declining ore grades.

Gold price as at 08:20 GMT 5th March 2024 in U.S. dollars per ounce

Gold price per ounce as at 08:20 GMT 5th March 2024 in U.S. dollars

The above are some of the reasons why the price of gold is climbing to touch an all-time high. However, the future performance of gold may depend on how the economic and political situation evolves, as well as the market sentiment and expectations.

Gold is a complex and dynamic asset that can be influenced by many factors, both fundamental and psychological.

*Gold contract creation 1974

The gold futures contract for April 1974 was the first gold contract to be traded on the U.S. futures market, and it settled at $126.30 per ounce on its first day of trading. The contract was created after the U.S. ended the gold standard in 1971 and allowed the price of gold to fluctuate according to markets.

Remember: always do your research!

RESEARCH! REASEARCH! RESEARCH!

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Is it acceptable to use the North Sea as a dumping ground for carbon waste?

Carbon waste

Norway has a long history of carbon management. For nearly 30 years, it has captured and reinjected carbon from gas production into seabed formations on the Norwegian continental shelf.

Norway’s government wants to show the world it is possible to safely inject and store carbon waste under the seabed, saying the North Sea could soon become a ‘central storage camp’ for polluting industries across Europe.

Norway’s carbon management projects (Sleipner and Snøhvit) have been in operation since 1996 and 2008, respectively, and are often held up as proof of the technology’s viability. These facilities separate carbon from their respective produced gas, then compress and pipe the carbon and reinject it underground.

Carbon capture storage – nothing new

Offshore carbon capture and storage (CCS) refers to a range of technologies that seek to capture carbon from high-emitting activities, transport it to a storage site and ‘lock’ it away indefinitely under the seabed.

Norway is currently a leading pioneer in carbon capture and storage (CCS), a technology that aims to reduce greenhouse gas emissions by trapping carbon dioxide from industrial sources and injecting it into underground reservoirs. Norway has been operating CCS projects in the North Sea since 1996, using depleted oil and gas fields as storage sites.

Norway’s ambitious plan to expand CCS is called Project Longship, which involves building a full-scale CCS value system that can serve as a model for other countries and industries. The project consists of two parts: a capture facility in Brevik that will process emissions from a cement factory, and a transport and storage system that will ship the captured CO2 by ship to an offshore terminal and inject it into a permanent storage location in the North Sea. 

Project Longship is expected to be completed by 2024, with a reported capacity to store 1.5 million tonnes of CO2 per year. The project has a total cost of 1.7 billion euros, of which the Norwegian government will cover 80%. The project is also supported by the European Union, which sees CCS as a key climate solution. 

Norway’s current Energy minister (2004) reportedly said that the project will prove to the world that CCS is possible and necessary to meet the Paris Agreement goals. He also said that the North Sea could become a ‘central storage camp’ for CO2 from other countries and industries, as it has the potential to store up to 1.25 billion tonnes of CO2. That’s a real concern to me.

Long-term safety concerns

However, not everyone is convinced by Norway’s CCS vision. Some critics have raised concerns about the long-term safety and environmental impacts of storing CO2 under the seabed, as well as the ethical and moral implications of using the North Sea as a dumping site for carbon waste.

Norway’s CCS project is a controversial and complex undertaking that will test the feasibility and acceptability of this technology.

Whether it will succeed or fail remains to be seen, but it will certainly have a significant impact on the future of climate action.

Is it safe or wise to pump waste into and hide it under the sea? Humankind doesn’t have a very good track record when it comes to clearing up after itself, does it? Go look at the rubbish in space!

Is it safe or wise to pump waste into and hide it under the sea? Humankind doesn’t have a very good track record when it comes to clearing up after itself, does it? Go look at the rubbish in space!

Only time will tell?

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Is AI driving a market bubble or is there so much more yet to come?

Tech bubble

As tech giant Nvidia soars on hype around artificial intelligence (AI), and as global stock indexes claim record highs, debate has grown about whether the stock market has entered a ‘bubble.’

An AI bubble of boom

We are reminded of the dotcom bubble where investment was rife in anything tech – so, are we now potentially facing a new tech bubble – an AI bubble of boom?

That’s generally seen as a period in which asset prices inflate rapidly, potentially beyond their core value; and risk crashing just as fast.

Other AI stocks are chasing the dream too adding to the hype. However, some are in the slow lane playing catch-up and this may suggest there is much, much more to come.

The likes of AMD, Intel, Amazon, OpenAI, Arm and a myriad of other tech companies big and small have much more AI to bring to the tech table.

Let’s use Nvidia as an example of a potential stock bubble

If we look at the valuation of Nvidia, justifiably it is actually very high, too high even – that’s the first sign of a potential problem, valuation. The second issue is investor positioning – whenever you have a market bubble, investors are very clustered or very concentrated, either in one market or in one sector as a whole.

Nvidia one year chart as of 29th February 2024. Price 791

Nvidia one year chart as of 29th February 2024. Price 791

Sectors

It doesn’t matter which markets you look at – the U.S., Europe or Asia markets – the problem is the same. We now have an historic valuation between the tech sector, the AI sub-sector of the tech sector, and the rest of the market.

Investors are very clustered in this tech sector. However, some leading commentators say of tech that this is not hype – this is real. It most probably is, for now, and with much more to come from the smaller tech and AI companies that have yet to show their true AI value. But all bubbles burst in the end.

Pop!

There is certainly plenty of room for AI to grow – it’s in its infancy – but the question is: ‘how and when will the bubble burst? Because, in my humble opinion, it most certainly will.

We may not see a dramatic market crash like 1999-2000 or 2007/2008, but an investor rotation out of areas of concentration into the broader market will likely happen.

If you look at the bubbles of 1999-2000, and then in 2007/2008, one key characteristic was investor leverage. And we had, whether it was retail investors or institutional investors, a very high level of leverage, and that was either through borrowings or it was through derivatives.

The AI tech boom has legs but there will almost inevitably be a rotation from AI to other sectors – that will then adjust the overvalued AI sector. And it could pullback quite hard.

Be ready!

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Water scarcity and its impact on semiconductor production

Water scarcity

Water scarcity is a pressing global issue and has far-reaching consequences across various industries. One sector significantly affected is semiconductor manufacturing.

How does water scarcity pose a threat to the production of essential microchips.

Water in Semiconductor Manufacturing

Ultra-pure water is a critical resource in semiconductor fabrication plants (fabs). It is used for cleaning, cooling, and various processing steps during chip production.

Microchips power our devices—computers, smartphones, sensors, and LEDs—all of which rely on water-intensive manufacturing processes.

Global Water Scarcity

Freshwater availability is unevenly distributed worldwide. While oceans contain 97% of water (mostly saline), accessible freshwater constitutes only a small fraction.

Approximately four billion people experience severe water scarcity for at least one month annually, and half a billion face it year-round.

Taiwan’s Drought and Chip Production

Taiwan, a semiconductor manufacturing hub, faces a severe drought. Over 20% of global microchips are produced there.

Water shortages threaten supply chains, potentially impacting chip production.

Cost and Sustainability

Creating fully self-sufficient local supply chains would cost $1 trillion. Such self-reliance could increase semiconductor costs by up to 65%.

Urgent action is needed to ensure sustainable water management in fabs, as chips control everything from cars to appliances.

In conclusion, water scarcity poses a real danger to semiconductor production. Addressing this challenge requires strategic planning, conservation efforts, and global cooperation.

AI a problem or a solution?

Will the problem of water scarcity exacerbate the uneven distribution of water around the world as the rich have easier access to the precious resource.

Will the explosion of AI tech push the imbalance – water is a basic necessity to maintain human life. Will AI have a hand in controlling the distribution of water – even for its own needs?

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Google’s woke AI needs fixing!

Chatbot learning

Google’s ‘Woke’ AI Problem needs attention

In recent days, Google’s artificial intelligence (AI) tool, Gemini, has faced intense criticism online. As the tech giant’s answer to the OpenAI/Microsoft chatbot ChatGPT, Gemini can respond to text queries and even generate images based on prompts. However, its journey has been far from smooth.

The AI answer is wrong

The issues began when Gemini’s image generator inaccurately portrayed historical figures. For instance, it depicted the U.S. Founding Fathers with a black man, and German World War II soldiers included both a black man and an Asian woman.

AI answer from Google’s Gemini Chatbot

Google swiftly apologized and paused the tool, acknowledging that it had “missed the mark.”

It gets worse

But the controversy didn’t end there. Gemini’s text responses veered into over-political correctness. When asked whether Elon Musk posting memes was worse than Hitler’s atrocities, it replied that there was “no right or wrong answer.” In another instance, it refused to misgender high-profile trans woman Caitlin Jenner, even if it meant preventing nuclear apocalypse. Elon Musk himself found these responses “extremely alarming.”

Nuance

The root cause lies in the vast amounts of data AI tools are trained on. Publicly available internet data contains biases, leading to embarrassing mistakes. Google attempted to counter this by instructing Gemini not to make assumptions, but it backfired. Human history and culture are nuanced, and machines struggle to grasp these complexities.

Political bias

Google now faces the challenge of striking a balance: addressing bias without becoming absurdly politically correct. As Gemini evolves, finding this equilibrium will be crucial for its survival.

After all, it’s not just about AI, is it? It’s about navigating the delicate intersection of technology, culture, and ethics.

Definition of nuance – I asked ChatGPT for its definition…

Nuance refers to the subtle, intricate, or delicate aspects of something. It encompasses the fine distinctions, shades of meaning, and context-specific interpretations that add depth and complexity to a situation, conversation, or piece of art. In essence, nuance recognizes that not everything can be neatly categorized or expressed in black-and-white terms; rather, it acknowledges the richness and variability of human experiences and ideas. Whether in literature, politics, or everyday interactions, appreciating nuance allows us to navigate the complexities of life with greater understanding and empathy.