Five Key Charts to Watch in Global Commodity Markets This Week
(Bloomberg) — Holdings in exchange-traded funds backed by gold are taking a beating following Donald Trump’s US election win. The global appetite for more chicken is giving poultry producers a lift. And as the United Nations’ COP29 climate summit enters its second week, European data shows we’re losing the fight to limit global warming.
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Here are five notable charts to consider in global commodity markets as the week gets underway.
Gold
Gold tumbled after Trump’s election victory, with the outcome removing political uncertainty in the US and reducing haven demand for the metal. That triggered a rotation from bullion to Bitcoin, bolstered by speculation that the incoming administration will back crypto-friendly policies. SPDR Gold Shares, the world’s largest gold-backed ETF, had it biggest weekly outflow in more than two years during election week. BlackRock Inc.’s iShares Bitcoin Trust ETF saw a record daily net inflow on Nov. 7. Bloomberg Intelligence expects US spot Bitcoin ETF assets could be triple those of gold ETFs in three to five years.
Poultry
The world is eating more chicken, and that’s helping fuel earnings at poultry producers. The latest round of quarterly results by companies including Tyson Foods Inc. and Brazilian giants BRF SA and JBS SA showed profit margins at significantly higher levels than a year ago. The producers have taken advantage of the bonanza to pay down debt and return capital to shareholders. BRF and JBS, which controls poultry suppliers Pilgrim’s Pride Corp. and Seara SA, are also signaling more capital spending for next year.
Oil
US Gulf Coast refineries are on fire. The region — one of the world’s largest refinery hubs — boosted processing for the sixth straight week to 9.31 million barrels a day, according to the latest weekly report from the US Energy Information Administration. That marks a seasonal record in EIA data going back to 1992. Meanwhile, nationwide oil processing in the US is at the highest since 2018 on a seasonal basis. The surge comes as profit margins to make fuels are healthy amid low inventories of both gasoline and diesel.
Renewables
With power demand surging, companies are lining up deals to lock in electricity supplies at a record pace, according to BloombergNEF. The global volume of deals signed in the first 10 months of this year reached 33.9 gigawatts, on track to surpass last year’s record high. The US is the world’s top market for corporate power-purchase deals, accounting for 116 gigawatts since 2015. A gigawatt is enough to supply more than 850,000 average US households.
Asian Stocks Weaken as Fed Policy Doubts Simmer: Markets Wrap
(Bloomberg) — Asian stocks dipped early Monday as traders reined in expectations of Federal Reserve interest rate cuts following fresh signs of US economic resilience.
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Japanese and Australian shares fell. South Korea’s benchmark bucked the trend, led by Samsung Electronics Co.’s rally after it announced a stock buyback plan. US futures gained, after the S&P 500 slid 1.3% on Friday to erase more than half of its gains following the US election.
A soft start risks extending last week’s global selloff as investors price the prospect of Donald Trump’s tariffs and tax cuts potentially reigniting inflation in an already robust US economy. A report Friday on October US retail sales that included large upside revisions also aided bets that the Fed may pause its easing cycle in 2025, with the odds of a rate cut next month now seen as less than a coin toss.
“Another Fed cut is still likely in December but it’s now a close call,” Shane Oliver, chief economist at AMP Ltd. in Sydney, wrote in a note to clients. “A slower pace of easing is likely next year, particularly given that Trump’s policies regarding tariffs and more tax cuts provide some upside threats to inflation on a one-to-three year view.”
The dollar was slightly weaker after climbing 1.4% last week, a seventh straight weekly gain as Treasury yields surged on reduced expectations for Fed policy. The moves, coupled with concerns over Chinese growth, have ravaged everything from the Australian dollar to emerging market bonds. Asian stocks slumped 3.9% last week, their worst sell-off in about six months.
In commodities, oil held a weekly decline on concerns over plentiful supply and weaker demand from top crude importer China. Ukraine’s allies are pushing Volodymyr Zelenskiy to consider new ways to end the war with Russia as the US mulls a final decision to lift some restrictions of western-made weapons to strike limited military targets in Russia.
Later on Monday, traders will be watching a speech and media briefing by Bank of Japan Governor Kazuo Ueda for indications of the central bank’s next policy move after officials raised concerns over the rapid weakening of the yen.
“Ueda’s press conference should be the biggest focus of this week in gauging the timing of the BOJ’s next rate hike,” Barclays strategists led by Themistoklis Fiotakis wrote in a note to clients. “USD/JPY could remain under upward pressure in the short term due to the Trump and yen carry trades, but will likely rise more slowly as it approaches 160 on FX intervention concerns and positioning for faster rate hikes.”
Nvidia Faces New Chip Server Design Snag, the Information Says
(Bloomberg) — Nvidia Corp. has in recent months asked suppliers to change the design of the server racks for its new Blackwell graphics processing unit due to an overheating problem, leading to worries about delays, the Information reported, citing company employees, customers and suppliers who weren’t identified.
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The changes to the Blackwell racks have come late in the production process, according to the technology-focused publication. Nvidia hasn’t notified customers of a delay.
A spokesperson for Nvidia declined to comment to the Information on whether the company has finalized the Blackwell rack designs.
The company already hit engineering snags in the development of its Blackwell chip lineup, slowing the release by at least a quarter.
Nvidia, the world’s most valuable company by market capitalization, releases quarterly earnings on Nov. 20.
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Trump's First 100 Days: Smart Money Is Watching These 3 Stocks
With Trump having secured a historic victory in the U.S. Presidential election, investors are now racing to position themselves for a new America.
Dramatic shifts in geopolitical, financial, and trade policies are going to transform the market, with trillions of dollars at stake.
And nowhere is the anxiety more acute than among strategic companies, with Trump’s victory poised to give a boost to big banks and send defense sector stocks soaring.
Meanwhile, the tech industry is a mixed bag and the oil and gas industry is set to do well under Trump.
While readers might expect Tesla (NASDAQ:TSLA) to be among the biggest ‘Trump Trades’, the “Magnificent Seven” in general aren’t on our list.
Our Top 3 picks are highly strategic and focused on the biggest elephant in the room: national security, defense, and heavy industry.
Trump’s spending policies are expected to inject significant momentum into the defense industry, starting first with key manufacturers such as Lockheed Martin, General Dynamics, and Northrop Grumman. With a Trump victory, there will be a decidedly hawkish undertone to budget amounts for defense.
With the Middle East threatening to explode into a wider regional conflict, with enough external actors to turn this into a world war, and with the Russia-Ukraine war still going strong and expanding into venues as far away as Africa, national defense has become a mainstream issue that captures voter sentiment more than it did the last time around.
Lockheed Martin manufactures F-35 fighter aircraft, and it is already outperforming its peers and enjoying its share of the Pentagon’s recent $12-billion budget bonanza. In these times of geopolitical escalation, Lockheed is likely a buy under any president, but Trump could push it over the edge.
Antimony is the “most important metal you’ve never heard of”, as Forbes has perfectly described it. It’s the national defense kingmaker, and Military Metals Corp. is uniquely positioned to supply what could be the most significant metal of our time.
According to the Center for Strategic & International Studies (CSIS), antimony is a highly critical element for the defense industry. It’s necessary for armor-piercing ammunition, infrared sensors, bullets, precision optics, nuclear weapons, semiconductors, cables, and batteries.
Antimony prices exploded this year, rising well over 200% after Beijing slapped export restrictions on antimony, with the explicit intention of restricting global shipments to shore up China’s own natural security. This move has sent shockwaves through the tech and defense industries. Antimony is currently trading at over $35,000 a ton.
Apollo Opens Seoul Office and Names Jay Hyun Lee Head of Korea as Part of Continued APAC Expansion
NEW YORK, Nov. 17, 2024 (GLOBE NEWSWIRE) — Apollo APO today announced it has opened an office in Seoul and that Jay Hyun Lee has joined the firm as a Partner and Head of Korea to help execute and build on its growth plans in the market.
Apollo has established a successful track record over more than 15 years in Asia Pacific, providing capital and retirement solutions to assist, support and partner with institutions across various geographies, including South Korea. The firm has grown its operational presence across Tokyo, Sydney, Hong Kong, Mumbai and Singapore since 2006.
As Head of Korea, Lee will help drive Apollo’s capital formation strategy, institutional relationships and team growth in the country. He brings 25 years of financial services experience to the role, having most recently served as Senior Executive Vice President for Samsung Securities where he led the integration and management of the firm’s M&A, securities underwriting and corporate investment functions.
“Korea is a leading financial hub where we see a tremendous opportunity to serve investors and retirees across the risk-return spectrum and meet businesses’ growing demand for flexible, creative capital solutions,” said Scott Kleinman, Co-President of Apollo Asset Management. “We are thrilled to welcome Jay Hyun as we continue to strengthen our presence across Asia Pacific and execute our global growth strategy.”
Apollo Partner and Head of Asia Pacific Matt Michelini added, “As we grow our franchise in Korea, we are excited to work alongside pensions, insurers and other institutions as a scaled provider of excess return. We expect our reach will extend across the region’s retirement ecosystem, where we also aim to deliver yield-oriented solutions to individuals and savers seeking duration-matched income products.”
“Apollo has an incredible platform delivering private capital and retirement solutions to clients globally and I am excited to lead their efforts on the ground in Korea. I look forward to working with Matt and the team across Asia Pacific and the globe to build upon the strong momentum in the region,” added Jay Hyun Lee, Apollo Partner and Head of Korea.
Prior to Samsung Securities, Lee served as Managing Director, Head of Korea in Private Equity and Growth Equity for Goldman Sachs. Previously, he held roles as Head of Korea Investment Banking for BNP Paribas, Executive Director of Investment Banking at Goldman Sachs and additional roles at J.P. Morgan, KPMG Korea and Korea Long Term Credit Bank. Lee received his DBA from Hong Kong Polytechnic University, his MBA from the University of Pennsylvania’s Wharton School of Business and his BA from Seoul National University.
In addition to Lee, the firm has appointed Dr. Sam Young Chung, Professor at Yonsei University and Head of AIF APAC, as an Academic Advisor in Asia Pacific to apply his academic expertise to the firm’s work at the intersection of retirement solutions and alternative assets.
About Apollo
Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade credit to private equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of September 30, 2024, Apollo had approximately $733 billion of assets under management. To learn more, please visit www.apollo.com.
Contacts
Noah Gunn
Global Head of Investor Relations
Apollo Global Management, Inc.
(212) 822-0540
IR@apollo.com
Joanna Rose
Global Head of Corporate Communications
Apollo Global Management, Inc.
(212) 822-0491
communications@apollo.com
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Palantir Reaches Huge Milestone: Here's What Could Happen Next
It finally happened. After seeing its stock appreciate by more than 250% just this year, Palantir (NYSE: PLTR) has now surpassed legendary defense contractor Lockheed Martin in market capitalization. The software and artificial intelligence (AI) provider for the government, military, and big business is posting strong revenue growth and inflecting profits. It just reported Q3 earnings, which has propelled the stock up 40% in the past month.
Investors are getting increasingly bullish on Palantir stock. But should they be? Here’s what might come next for this hypergrowth momentum stock.
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At a market cap of $136 billion, Palantir is now one of the world’s largest defense contractors. The aforementioned Lockheed Martin has a market cap of $134 billion, with competitors, such as RTX Corporation, now one of the few stocks with larger valuations than Palantir.
How did it get here? With modern software solutions for the United States military and government agencies. This disrupted the legacy systems (or where no systems existed at all), as the U.S. government is looking for best-in-class software to maintain its edge. Government contracts are large and can expand over time, which is why Palantir’s U.S. government revenue keeps growing at a quick pace. Last quarter, U.S. government revenue grew 40% year over year.
But Palantir isn’t only selling to the U.S. government. In recent years, it has expanded to bring its software and AI solutions to large enterprises with much success. Even though the U.S. government can spend a lot of money, it is truly just one customer at the end of the day. Hundreds of corporations could utilize Palantir’s advanced analytical tools, and they are now starting to do so.
Accelerating demand from the U.S. government, as well as U.S. corporations, has enabled Palantir to accelerate its revenue growth. Last quarter, U.S. commercial revenue grew 54% year over year to $179 million. With the addition of the steady growth from government contracts and a slight headwind from international sales, overall revenue grew 30% year over year in the third quarter to $726 million.
Customer acquisition is growing even quicker. Total customers grew 39% year over year in Q3 and 6% from the second quarter to 629. That may seem like a small number, but remember, Palantir only targets the largest companies looking for custom-built software. The acceleration after Q3 seems to be continuing. Palantir closed 104 deals in the quarter worth over $1 million, which should turn into new revenue-generating customers in future years. Given the long-term nature of these contracts, the most important key performance metric for investors to track is customer count. If the customer count keeps rising, revenue growth will follow.
Super Micro Computer Stock Collapse: Is the Worst Over?
Things have gone from bad to worse for Super Micro Computer (NASDAQ: SMCI). After a scathing short report highlighted questionable accounting practices, the company’s auditor resigned, and it has not been able to file its annual report at its expected due date. The once-loved artificial intelligence (AI) stock is showing red flag after red flag with its business practices. Investors are acting rationally and exiting their positions.
As of this writing, Super Micro Computer stock is down 82% from highs set earlier this year, wiping out billions of dollars in shareholder value. Is the worst over for this stock? Or is the company facing potential accounting fraud?
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Super Micro Computer stock peaked back in March. It traded slightly lower to flat for a few months, which looked like a normal price correction after zooming up 250% in just a few short months. Proclaimed a winner of the AI spending boom, the company was posting gangbuster revenue growth as a builder of data centers for third parties. Other companies would come to Super Micro Computer to build efficient data centers with advanced computer chips from the likes of Nvidia.
Now, some of this revenue growth is being put into question. Allegations began on Aug. 27 when famous short-seller Hindenburg Research put out a short report alleging accounting manipulation, self-dealing with executive family members, and evading U.S. foreign sanctions by selling to restricted countries. Given Hindenburg’s strong track record, Super Micro Computer’s stock fell on this news.
The stock treaded water until the end of October. Then, its auditor, Ernst & Young, resigned, stating that it was unwilling to associate itself with management’s prepared financial statements. A public statement from an auditor like this is rare and damning. One could argue that auditors are typically too lenient with management teams. For example, the same auditor still validated Wirecard‘s financial statements, which ended up having Russian spies as a part of its fraud. Now, Super Micro Computer has delayed its quarterly filing with the Securities and Exchange Commission (SEC), which is driving the stock even lower.
With no SEC filings, Super Micro Computer is now at risk of getting delisted from the Nasdaq exchange. The company has 180 days to file its annual report past the due date once it formulates a plan with the Nasdaq regulators. If it doesn’t, the stock will get dropped from the exchange.
Dollar sitting pretty, yen bears wary of BOJ hawks
By Wayne Cole
SYDNEY (Reuters) – The dollar was looking to extend its bull run on Monday as lofty Treasury yields and a more restrained outlook for U.S. rate cuts burnished its attractiveness, though the risk of intervention had caused a pullback against the yen.
Yen bears were tense in case Bank of Japan Governor Kazuo Ueda used a speech later Monday to flag a possible rate hike in December, in part due to the weakness of the currency.
Ueda will deliver a speech at 0100 GMT, followed by a media conference at 0445-0515 GMT. It will be his first opportunity to speak directly on monetary policy since Donald Trump’s victory in the U.S. presidential election on Nov. 5.
Markets imply around a 55% chance of a quarter-point rate hike to 0.5% when the BOJ meets on Dec. 19.
Japanese Finance Minister Katsunobu Kato on Friday put the market on warning of possible intervention if the yen fell too far and fast, sending the dollar down 1.3% to 154.30 yen. Support now lies at 153.86, with resistance at last week’s peak of 156.76.
That pullback helped steady the euro for the moment at $1.0530, though that was still uncomfortably close to the recent one-year trough of $1.0496.
Against a basket of currencies the dollar held at 106.730, having touched a one-year top of 107.07 on Friday. The index climbed 1.6% over the week, marking six weeks of gains in the last seven.
The rally has coincided with a savage swing in 10-year Treasury yields, which have climbed 70 basis points since the start of October, fuelling a 5.4% rise in the U.S. dollar index.
PRICING US EXCEPTIONALISM
“While a period of consolidation looks likely in the near term, we have revised up our forecasts for the dollar and now project a further 5% appreciation by the end of 2025,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.
“That is based primarily on a view that Trump will push ahead with the core tariff policies he proposed on the campaign trail and that the U.S. economy will continue to outperform its major peers.”
Markets are eager to hear who Trump will pick as Treasury Secretary, with Howard Lutnick, the CEO of Cantor Fitzgerald, and investor Scott Bessent top candidates for the job.
Analysts generally assume Trump’s touted policies of tariffs, reduced immigration and debt-funded tax cuts will be inflationary, so limiting the scope for further rate cuts by the Federal Reserve.
Futures imply a 60% chance of the Fed easing by a quarter-point in December and have only 77 basis points of cuts priced in by late 2025, compared with more than 100 a few weeks ago.
The Fed interrupted the stock market’s Trump rally. What comes next?
The U.S. stock market’s post-election rally hit a speed bump. It was probably due for a pullback after surging in the wake of Donald Trump’s Nov. 5 presidential election victory, the only question was what would be the catalyst.
Up stepped Federal Reserve Chair Jerome Powell in a Thursday appearance in Dallas.
Powell reminded investors that the Fed wasn’t in a rush to deliver the next interest rate cut in the face of a resilient economy, singing much the same tune he warbled after the Fed’s Nov. 7 rate cut — a 25-basis-point reduction that followed October’s 50-basis-point cut.
But it seemed to land differently on the ears of investors, absent the immediate postelection euphoria, raising concerns about the pace of future Fed rate cuts and the path ahead for market interest rates. Those considerations and how they intersect with Trump’s economic plans are likely to call the tune for markets in the weeks ahead.
Major stock indexes extended modest losses after Powell’s remarks on Thursday. They took a leg sharply lower Friday, leaving the Dow Jones Industrial Average DJIA with a weekly loss of 1.3%, the S&P 500 SPX down 2.2%, and the tech-heavy Nasdaq Composite COMP off 3.3% after all three ended at records Monday. The small-cap Russell 2000 RUT, a prime beneficiary of so-called Trump trades, suffered a weekly drop of more than 4%.
The pullback follows the best week of 2024 for U.S. stocks. Since the market close on Election Day, the S&P 500 holds a gain of 1.5%, the Dow is up 2.9% and the Nasdaq up 1.3%. The small-cap Russell has added 1.9% over that stretch.
Powell’s remarks also followed U.S. inflation data that remained a bit firmer than expected earlier in the week. They also came alongside comments from other Fed officials who made clear a December rate cut isn’t baked in the cake. Cue a rise in Treasury yields, which had already accelerated their upswing in the wake of Trump’s victory, and stocks were soon feeling the heat.
“Up until now, the markets have looked past the rise in rates — with the S&P 500 up 6% since 10-year yields bottomed two months ago. However, if the 10-year Treasury yield breaches the 4.5% level, the equity market could come under pressure and lead to a near-term pullback,” said Larry Adam, chief investment officer at Raymond James, in a Friday note.
Asian Stocks Eye Soft Start as Fed Doubts Simmer: Markets Wrap
(Bloomberg) — Most Asian stocks are set to fall early Monday as traders rein in expectations of Federal Reserve easing and come to terms with the cost of President-elect Donald Trump’s proposed fiscal and trade policies.
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Equity futures in Australia, Japan and mainland China point to losses, while contracts in Hong Kong edged higher. US stocks slid 1.3% on Friday to erase more than half of their gain following the US election.
A soft start risks extending last week’s global selloff as investors price the prospect of Trump’s tariffs and tax cuts potentially reigniting inflation in an already robust US economy. Views are emerging that the Fed may pause its easing cycle in 2025, with the odds of a rate cut next month now seen as less than a coin toss.
“Another Fed cut is still likely in December but it’s now a close call,” Shane Oliver, chief economist at AMP Ltd. in Sydney, wrote in a note to clients. “A slower pace of easing is likely next year, particularly given that Trump’s policies regarding tariffs and more tax cuts provide some upside threats to inflation on a one-to-three year view.”
The dollar was steady against major peers in early trading after climbing 1.4% last week, a seventh straight weekly gain as Treasury yields surged on slashed expectations for Fed policy. The moves, coupled with concerns over Chinese growth, have ravaged everything from the Australian dollar to emerging market bonds. Asian stocks slumped 3.9% last week, their worst sell-off in about six months.
In Asia on Monday, traders will be watching a speech and media briefing by Bank of Japan Governor Kazuo Ueda for indications of the central bank’s next policy move after officials raised concerns over the rapid weakening of the yen. Markets are pricing about 14 basis points of rate hikes in December, according to swaps data compiled by Bloomberg, ahead of inflation data this week.
“Ueda’s press conference should be the biggest focus of this week in gauging the timing of the BOJ’s next rate hike,” Barclays strategists led by Themistoklis Fiotakis wrote in a note to clients. “USD/JPY could remain under upward pressure in the short term due to the Trump and yen carry trades, but will likely rise more slowly as it approaches 160 on FX intervention concerns and positioning for faster rate hikes.”
Elsewhere this week, China’s banks are expected to keep their loan prime rates unchanged after a cut in October. Bank Indonesia will deliver a policy decision as the rupiah neared 16,000 per dollar on Friday, a key psychological level for a central bank focused on currency stability.