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Latest UK pay growth and unemployment data

UK jobs

The latest figures on UK pay growth and unemployment present a complex picture of the country’s labour market.

The unemployment rate has seen a slight uptick to 4.2%, a rise from the previous 3.9%. This increase, which is more than anticipated, suggests a softening in the labour market.

Conversely, wage growth appears to be resilient in the face of rising unemployment. Although core wage growth has decelerated, it remains in the region of 6%. This could indicate that employers are maintaining competitive wages to attract and retain skilled workers, even amidst a slowing labour market.

Employment dipped according to the ONS

The ONS said employment rate dipped to 74.5% between December and February and the percentage of 16 to 64 year-olds defined as economically inactive rose from 21.8% to 22.2%, which equates to 9.4 million people.

In February 2024, the average weekly earnings were estimated at £677 for total earnings and £633 for regular earnings. This equates to an annual growth in regular earnings (excluding bonuses) of 6.0%, and annual growth in employees’ average total earnings (including bonuses) of 5.6%.

Adjusting for inflation using CPIH

However, when adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), the real terms growth for regular pay was 1.9%, and for total pay was 1.6%. This implies that while nominal wages are increasing, the real purchasing power of these wages may not be keeping up with inflation.

Bank of England

The Bank of England will likely approach this data with caution. The combination of increasing unemployment and slowing wage growth could be indicative of a weakening economy, potentially prompting the Bank to contemplate rate cuts.

The response of the Bank of England to these trends will be pivotal in the forthcoming months.

Summary

In summary, the UK labour market is exhibiting signs of cooling with an increase in unemployment and a slowdown in wage growth. However, wages continue to grow at a relatively high rate. The real impact on workers will hinge on how these wage increases stack up against inflation.

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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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China’s economy expanded by 5.3% in Q1

On a quarter-by-quarter basis, China’s GDP grew 1.6% in the first quarter, compared to analysts’ expectations of around expectations of 1.4%.

Beijing’s growth target for 2024 is around 5%.

China’s growth was driven in part by external demand, as export volume grew by 14% year on year.

Industrial output for March grew 4.5% year on year, missing expectations of 6%.

Retail sales grew 3.1% year on year, lower than expectations of 4.6%.

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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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U.S. Supercore inflation measure indicates Fed may have a problem

Markets have fretted about core inflation recently, now analysts are concerned about a highly specific price gauge within the data – ‘supercore’ inflation.

This measure tracks services inflation, excluding food, energy, and housing, which has recently surged, rising 4.8% year-over-year in March 2024 and over 8% on a three-month annualised basis.

The situation is further complicated as some of the most persistent elements of services inflation include essential household expenses such as car and housing insurance, along with property taxes. Wall Street was unsettled by a recent consumer price index report that exceeded expectations, yet the focus is on the ‘supercore’ inflation reading within the data.

Economists also analysed the core CPI, which omits the volatile prices of food and energy, to discern the true inflation trend. The ‘supercore’ gauge goes a step further by also removing shelter and rent costs from its services calculation.

Federal Reserve officials find this measure particularly useful in the current environment, viewing the spike in housing inflation as a transient issue rather than a reliable indicator of underlying price trends.

Supercore inflation accelerated to a 4.8% pace year over year in March 2024, the highest in 11 months.

Sticky inflation problem

Adding complexity to the situation is the declining consumer savings rate coupled with rising borrowing costs, which may compel the central bank to maintain a restrictive monetary policy “until something breaks,” according to Fitzpatrick.

Analysts warn that the Federal Reserve may struggle to reduce inflation through additional rate hikes, as the prevailing factors are more persistent and less responsive to stringent monetary policy.

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U.S. markets unfazed by hot CPI data

U.S. Flag

Despite the recent surge in the Consumer Price Index (CPI), and better than expected PPI data, markets have shrugged off any concern… for now

Fickle

On Wednesday 10th April 2024 the CPI data announcement pushed the markets down and on Thursday 11th the markets recovered after the PPI data was better than expected.

CPI Report for March 2024

  • Both headline and core CPI rose by 0.4%, surpassing forecasts.
  • Bond markets are now cautious about potential rate cuts, shifting from a floor of three cuts to a possible ceiling.
  • Groceries’ inflation has eased, but housing costs remain a pressure point.
  • Fed policymakers closely monitor Supercore services inflation.
  • Solid wage gains continue to impact prices.

Producer Price Index (PPI)

PPI increased by 0.6% in February 2024. Expectations persist for June rate cuts by the Federal Reserve.

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UK economy grew by 0.1% in February 2024

UK economy

One tenth of 1% is very little but we can at least hope the UK is on it’s on way out of recession

Let’s blame the weather

The economy grew by 0.1%, figures show, boosted by production and manufacturing in areas such as the car sector. The Office for National Statistics (ONS) said that construction was dampened by wet weather.

The official ONS statistics also revised its previous estimate for January 2024 from 0.2% growth up to 0.3%.

Hunt is happy with 0.1% growth…?

Chancellor Jeremy Hunt reportedly suggested that the new figures were a “welcome sign that the economy is turning a corner”. “We can build on this progress if we stick to our plan,” he added.

That’s good then Jeremy – well done you, nice plan!

UK growth February 2024 at 0.1%

UK growth February 2024 at 0.1%
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Nvidia enters correction territory as stock falls from all-time high

AI

Nvidia, manufacturer of one of the most advanced graphics processing units (GPUs), has significantly benefited from the artificial intelligence (AI) surge due to the high demand for its microchips.

The company’s shares have fallen 10% from their recent all-time high, which was over $950. On Tuesday, 9th April 2024, the stock closed at $853.54, but it saw a slight recovery on Wednesday 10th April 2024, to $870.39.

Nvidia Corporation share price off recent all time high

Nvidia Corporation share price off recent all time high

On Tuesday, 9th April 2024, Intel, a competitor in the chipmaking industry, introduced a new AI chip named Gaudi 3. This chip is designed to drive large language models and stands as a contender against Nvidia’s most sophisticated chips.

U.S. inflation data coming in higher than expected along with a climb in treasuries has led to doubts of a Fed rate cut anytime soon.

These concerns combined together, pushed Nvidia and some other tech stocks lower.

The Nasdaq Composite drifted lower on the day

The Nasdaq Composite drifted lower
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U.S. inflation data for March 2024 came in higher than expected

U.S. Inflation up slightly

The headline inflation rate registered at 3.5% year-on-year, surpassing the 3.4% economists had anticipated in a Dow Jones survey and marking a 0.3% increase from February 2024.

The core CPI experienced a 0.4% rise on a monthly basis and a 3.8% increase from the previous year, both exceeding expectations. U.S. stocks also dropped on the announcement.

Recent monthly readings have likely diminished any residual expectations for a Federal Reserve rate cut as early as May, according to some analysts.

Markets remain hopeful for a rate cut this summer; however, the Federal Reserve is seeking consistent signs of disinflation in the upcoming months before deciding.

Treasury yields have risen as stocks declined following the headline news.

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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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Does the U.S. jobs boom raise doubts about rate cuts?

U.S. job creation vs inflation and interest rates

The U.S. economy is on a rip, with employers adding around 303,000 jobs in March 2024 – the largest increase in almost a year.

As the world’s largest economy continues to surge, questions arise about the Federal Reserve’s next move regarding interest rates.

Stronger-than-expected Job Growth

The unemployment rate fell to 3.8%, indicating strong job growth in several sectors such as health care, construction, and government. While economists had predicted job gains of approximately 200,000, the actual numbers have easily exceeded those expectations.

The labour market’s surprising resilience has caught analysts off guard, leading to speculation about the timing of interest rate cuts.

Fed’s Dilemma

The Federal Reserve has held interest rates in a range of 5.25%-5.5%, the highest level in over two decades. Initially, the Fed raised rates sharply in 2022 to curb inflationary pressures. However, the subsequent cooling of price inflation (down to 3.2% in February) without a significant spike in unemployment has complicated matters. The central bank now faces a delicate balancing act.

Delayed Rate Cuts?

The significant increase of 303,000 in non-farm payrolls for March 2024 reinforces the Federal Reserve’s stance that the robustness of the economy permits a gradual approach to interest rate reductions.

The Fed had been expected to initiate rate cuts this year to mitigate the impact of high borrowing costs. However, the stronger-than-anticipated economic performance suggests that rate cuts may not occur until the second half of this year.

Labour Market Dynamics

U.S. government spending in areas like high-tech manufacturing and infrastructure has bolstered the labor market. Additionally, an influx of more than three million immigrants last year has expanded the workforce, potentially keeping wage pressures in check. In March, average hourly pay rose by 4.1% year-on-year, consistent with expectations and near a three-year low.

America’s Comeback

President Joe Biden hailed the latest job figures as a “milestone in America’s comeback.” However, some market analysts argue that the strong jobs growth could complicate efforts to return inflation to the Fed’s 2% target. Some analysts even speculate that rate cuts may not materialize until 2025.

Global Implications

Higher U.S. interest rates have ripple effects worldwide, enticing investors to shift capital toward America. While the Fed’s in-tray still has some warnings, the delay in rate cuts reflects the economy’s underlying strength.

The U.S. jobs boom presents a conundrum for policymakers. Balancing economic vitality with inflation control remains a delicate task, and the Fed’s decisions will reverberate far beyond its borders.

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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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Generative AI: A New Frontier of Creativity and Innovation

AI generated art

Generative Artificial Intelligence

Artificial intelligence (AI) is not only a powerful tool for solving problems but is also a source of creativity and innovation.

Generative AI is a type of AI that can create new and realistic content, such as images, text, music, software, and product designs, by learning from existing data and generating novel outputs that reflect the characteristics of the training data but do not repeat it. 

Gen AI uses various techniques, such as deep neural networks, transformers, and generative adversarial networks, to model the complex patterns and structure of the input data and produce diverse and high-quality outputs.  Generative AI can also respond to natural language prompts, allowing users to interact with the system and specify their desired outcomes. 

Generative AI has many potential applications across different domains and industries.

Software development

GAI (Generative AI) can help developers write code faster and easier by generating suggestions, corrections, or completions based on the context and the user’s intent. For example, Copilot is a generative AI system that can assist developers with coding tasks by learning from billions of lines of code. 

Healthcare

Generative AI can help researchers discover new drugs, treatments, or vaccines by generating novel molecules, proteins, or antibodies that have the desired properties and functions. For example, Insilico Medicine is a company that uses generative AI to design new drugs for aging and age-related diseases.

Entertainment

Generative AI can help artists, musicians, writers, or filmmakers create original and engaging content by generating images, sounds, text, or video that match their style and preferences. For example, Stable Diffusion is a generative AI system that can create realistic and diverse images from text descriptions.

Customer service

Generative AI can help businesses provide better and more personalised service to their customers by generating natural and human-like responses, recommendations, or solutions based on the customer’s needs and preferences. For example, ChatGPT is a generative AI chatbot that can have very human-seeming interactions with users.

Unlocking potential or unleashing the ‘genie’?

Generative AI is a new frontier of creativity and innovation that can unlock new possibilities and opportunities for humans and machines.

Unlocking potential or unleashing the ‘genie’?

However, generative AI also poses some challenges and risks, such as ethical, legal, social, and security issues, that need to be addressed and regulated. Therefore, it is important to develop and use generative AI responsibly and ethically, with respect for human values and dignity. 

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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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Tech giant Samsung expects profits to jump by more than 900%

Semiconductor

Samsung Electronics anticipates its profits for the first quarter of 2024 to surge more than tenfold compared to the previous year.

This projection is due to the recovery in chip prices following a post-pandemic decline and a surge in demand for artificial intelligence (AI) related products.

As the world’s leading manufacturer of memory microchips, smartphones, and televisions, the South Korea-based Samsung reportedly plans to publish a comprehensive financial report on 30th April 2024.

Projected profit

The tech giant has projected that its operating profit for the January-March 2024 quarter soared to 6.6 trillion won ($4.9bn; £3.9bn), marking a 931% increase from the same period in 2023, surpassing analysts’ forecasts of approximately 5.7 trillion won.

Rebound in microchip prices

A rebound in global semiconductor prices, following a significant downturn the previous year, is expected to bolster its earnings. Over the past year, global memory microchip prices have reportedly increased by about 20%. The semiconductor division of Samsung typically generates the most revenue for the company.

The demand for semiconductors is projected to stay robust throughout the year, fueled by the expansion in AI technologies. Furthermore, the earthquake that struck Taiwan on 3rd April 2024 could potentially constrict the worldwide chip supply, possibly enabling Samsung to further elevate its prices.

Taiwan a key player

Taiwan houses several key chipmakers, including TSMC, which supplies Apple and Nvidia. Despite TSMC reporting minimal impact on its production from the earthquake, it did experience some operational disruptions.

Additionally, Samsung is poised to benefit from the sales of its newly launched flagship Galaxy S24 smartphones, introduced in January.

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Is Apple planning to build an AI robot?

Robotics

Reports indicate that Apple is delving into AI-powered robotics, aiming to innovate within the home robotics sector. A Bloomberg article reveals that the tech titan is exploring two fascinating initiatives.

Mobile Robot

Apple is reportedly exploring the development of a robot that can accompany its owner. Envision a congenial AI companion that travels with you.

Robotic Display

The project aims to develop a robotic mechanism capable of moving displays. Despite being periodically removed and reinstated on Apple’s roadmap; it is still in the preliminary research stage.

The projects are spearheaded by Matt Costello, Apple’s VP of Hardware Engineering, and Brian Lynch, the Senior Director of Home Hardware Engineering. Moreover, Apple’s AI team is developing algorithms to enable robots to navigate homes, potentially linking to the mobile robot initiative.

Apple’s foray into AI-driven home robots comes after shelving its electric vehicle project, marking an intriguing development. The company is exploring the integration of AI into AirPods and the possibility of creating smart glasses. Despite not launching generative AI tools as swiftly as some rivals, Apple is set to introduce some later this year.

In the realm of robotics, Apple enters a field with established entities like Amazon, Roomba, and Unitree, which have already introduced home robotics products.

Therefore, it’s worth watching for upcoming Apple AI products in the future!

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Tesla losing market share to Chinese EV makers

EV

Chinese EV manufacturers such as BYD and smartphone maker Xiaomi are starting to inflict some damage to Tesla’s EV market.

Xiaomi has launched its first electric vehicle (EV) and started taking orders.

The company reportedly announced that the standard SU7 model would be priced at 215,900 yuan ($29,872; £23,663), while the Max version would be available for 299,900 yuan.

Xiaomi boasted over 50,000 orders within the first 27 minutes of sales.

Xiaomi’s foray into the electric vehicle market occurs amid a global slowdown in sales growth, sparking a pricing war.

This strategy positions the tech company against EV competitors such as Tesla and BYD. In China, the entry-level price for Tesla’s Model 3 stands at 245,900 yuan.

It was reported that the SU7 would have a minimum range of 700km (435 miles), beating the Tesla Model 3’s 567km.

The company is optimistic that the SU7’s unified operating system, which is compatible with its phones, laptops, and other devices, will attract current customers.

Xiaomi ranks as the world’s third-largest smartphone seller, holding approximately a 12% market share.

Numerous global EV manufacturers, including BMW, Audi, Nissan, and Hyundai, are encroaching on Tesla’s market share. Additionally, Chinese EV producers are entering the market with increasingly affordable alternatives.

How will Tesla respond?

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Gold goes higher again as it breaks through $2,300

Gold bars

The precious metal has reached consecutive record highs this year, including a peak on Thursday 4th April 2024.

The gold price surpassed $2,300 before slightly retracting. By early Friday, it was trading at approximately $2,278 per ounce.

According to some analysts, geopolitical and structural factors are setting gold on a trajectory to reach $2,600 per ounce within the next year.

The catalysts for its ascent and the potential for further increases in the near to medium term are widely debated among investors, particularly as the stock market continues to post strong gains.

Gold price over three months 2024

Gold price over three months 2024

The anticipation of interest rate reductions and central bank acquisitions has been instrumental in propelling the rally in recent months.

If the Fed were to indicate higher interest rates in its latest FOMC meeting, then gold and other assets will likely fall.

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Euro zone inflation unexpectedly falls to 2.4% in March 2024

EU inflation

Eurozone inflation eased to 2.4% in March 2024, as indicated by preliminary figures released on Wednesday 3rd April 2024.

This decrease has increased expectations that interest rate cuts may start in the summer 2024.

Market analysts anticipate that the central bank will commence reductions in interest rates starting in June 2024, reflecting recent communications from the ECB.

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Fed Chair Powell stresses the importance of additional proof that inflation is subsiding before cutting interest rates

Powell

Federal Reserve Chairman Jerome Powell stated on Wednesday 3rd April 2024 that policymakers will need time to assess the current inflation situation, leaving the schedule for potential interest rate reductions unclear.

Referring to the stronger-than-anticipated price pressures at the year’s onset, Powell reportedly stated that he and his colleagues are not in a hurry to relax monetary policy.

Market expectations are leaning towards the FOMC initiating policy easing this year, although adjustments to the anticipated timing and scale of reductions have been necessary due to persistently high inflation.

Meanwhile, other economic indicators, especially in the U.S. labour market and consumer spending sectors, remain robust, affording the Fed the opportunity to evaluate the prevailing situation prior to taking action.

The target rate is 2%.

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Intel shares fall after $7 billion operating loss revealed in foundry business

Microchip manufacture

Intel’s stock dropped by 4% during extended trading on Tuesday 2nd April 2024, following the disclosure of long-anticipated financial details for its semiconductor manufacturing division, often referred to as the foundry business, in a filing with the SEC.

The company reportedly disclosed that its foundry business incurred an operating loss of $7 billion in 2023, against sales of $18.9 billion. This represents a greater loss compared to the $5.2 billion operating loss reported by Intel for its foundry business in 2022, which had sales of $27.5 billion.

This is the first time that Intel has disclosed revenue totals for its foundry business separately. Historically, Intel has both designed its own chips as well as its own manufacturing and reported microchip sales to investors.

Other American semiconductor companies such as Nvidia and AMD design their microchips but send them off to Asian factories such as Taiwan’s TSMC for manufacturing.

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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.