Elon Musk, a new Wall Street oracle?

Elon Musk, a new Wall Street oracle?
With his social media prognostications about Bitcoin or GameStop, Elon Musk has been venturing further away from his own businesses and becoming more like a Wall Street heavyweight who can move markets with just a few words. (AFP)
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Updated 02 February 2021

Elon Musk, a new Wall Street oracle?

Elon Musk, a new Wall Street oracle?
  • When he changed his Twitter profile to read simply “#bitcoin” on Friday, the cryptocurrency’s price temporarily skyrocketed by around 20 percent

NEW YORK: With social media prognostications about Bitcoin or GameStop, Elon Musk has ventured further away from his own businesses and become more like a Wall Street heavyweight who can move markets with just a few words.
In his latest foray, the Tesla and SpaceX founder appeared on Clubhouse — a social network accessible only by invitation — to interview the head of online broker Robinhood, in the hot seat for his management of the GameStop affair, a chain of video game stores whose share price recently rocketed and is shaking hedge funds.
After discussing his ambitions for the colonization of Mars, as well as cryptocurrencies and artificial intelligence, Musk spoke with Vlad Tenev for 14 minutes, offering him the opportunity to respond to his detractors.
Robinhood has been limiting transactions on GameStop shares for several days.
But the gaming company, in fragile financial health, is being propped up by an army of small traders in a crusade against giant Wall Street hedge funds betting on its demise.
“Spill the beans, man,” Musk said. “What happened last week? Why can’t people buy the GameStop shares? People demand an answer and want to know the details and the truth.”
Musk, who last month became the richest man in the world on paper thanks to a Tesla stock market boom, has nearly 45 million followers on Twitter.
Swept on by the success of his companies Tesla and SpaceX, as well as by interest in the electric cars and rockets they manufacture, he is considered by many fans to be a visionary, his slightest word enough to sway some investors.
When he changed his Twitter profile to read simply “#bitcoin” on Friday, the cryptocurrency’s price temporarily skyrocketed by around 20 percent.
And the mere mention of the Polish publisher of video game CD Projekt, or the e-commerce platform Shopify or the craft market Etsy — which apparently delighted Musk with a hand-knitted hat for his dog — caused their stocks to soar.
The business giant, who has expressed his contempt for investors betting on a decline in a company’s shares, waded in on the GameStop affair by tweeting a link to the Reddit group WallStreetBets, which helped stock of the video game specialist take off.
Influential figures jostling the fate of companies is nothing new, said Aswath Damodaran, a professor of finance at New York University.
Comments by banker John Pierpont Morgan more than 100 years ago, or Chrysler boss Lee Iacocca in the 1980s, could move markets. And the pronouncements of investment guru Warren Buffett are still scrutinized by many traders, earning Buffett the nickname “the Oracle of Omaha,” the city where he lives.

“The fact that Twitter and Clubhouse have replaced traditional media is more a reflection of media than it is of markets,” said Damodaran.
But Musk has been “very intentional about creating kind of an outlaw, outsider persona,” said Christopher Smith, professor of communications at the University of Southern California.
“And that resonates with the tech bro culture,” he said.
In a highly fragmented media landscape, Musk has mastered the art of using new technologies “to really stoke excitement,” he said.
Other giants like Amazon founder Jeff Bezos rely on their business portfolio to do the talking, “but Elon Musk is probably more of an attention-seeking narcissist, he’s much more of a showman,” added Smith.
Musk often uses his personal Twitter account to impart news about his various companies.
But his presence on the website has caused him some headaches, too. Musk had a serious run-in with the US Securities and Exchange Commission, which accused him in 2018 of misleading investors by tweeting about a possible withdrawal of Tesla from the stock exchange.
The tweet forced him to step down as chairman of the automaker’s board.
Perhaps aware of his Twitter account’s continued power to move markets — and the legal issues that might follow — the billionaire on Tuesday announced he was taking a break from the platform.
“Off Twitter for a while,” Musk said — on Twitter, naturally.


Bitcoin slips from record high as ETF mania subsides

Bitcoin slips from record high as ETF mania subsides
Updated 22 October 2021

Bitcoin slips from record high as ETF mania subsides

Bitcoin slips from record high as ETF mania subsides
  • JPMorgan analysts doubted whether the ETF will attract much new money into bitcoin

RIYADH: Cryptocurrencies declined on Friday following an ETF-fueled rally that saw it reach a record $67,016 on Wednesday, as investors questioned whether the new investment vehicle will attract as much new money to the assets as some have speculated.

Bitcoin, the world’s largest cryptocurrency, was trading at $63,498.16 as of 3:36 p.m. in Riyadh, a drop of 2.5 percent over the previous 24 hours. Ethereum, was 2.0 percent lower at $4,125.40 after approaching its all-time high of $4,380 from May.

Bitcoin’s recent rally — six-months after its previous top of $64,895 — was fueled by the debut of the ProShares Bitcoin Strategy ETF.

A dozen other futures-based bitcoin ETFs could launch in the coming months, with The Valkyrie Bitcoin Strategy ETF set to begin trading on Friday under the ticker BTF. The VanEck Bitcoin Strategy ETF expected to begin trading next week under the ticker XBTF.

Investors have bet the long-awaited launch of bitcoin ETFs will lead to greater investment from both retail and institutional investors, but analysts at JPMorgan suggested in a note that the ProShares ETF could have limited effect on investment volumes because there are so many options for investors already.

The ProShares ETF has created a significant shift in the balance of power among cryptocurrency exchanges. The Chicago Mercantile Exchange (CME), host to the ETF, has replaced Binance as the world’s biggest bitcoin futures platform this week.

As of 2 p.m. Riyadh time, the CME accounted for 22 percent, or $5.68 billion, of the total global futures open interest of $25.7 billion, while Binance contributed $5.66 billion, CoinDesk reported.

The value of funds held in CME-based futures contracts have tripled this month, with more than $1.5 billion flowing into the market after ProShares’ bitcoin ETF went live on Tuesday, CoinDesk said.

Elsewhere in the cryptoverse, Worldcoin said yesterday it raised $25 million from investors including Andreessen Horowitz, CoinBase Ventures and Digital Currency Group, valuing it at $1 billion.

The rather unique proposition is that coins are distributed in exchange for staring into an orb, which takes a scan of your retinas.

Based in Berlin, Worldcoin was founded by former Y Combinator President Sam Altman. It currently has 70 employees and 30 orbs, which it takes out into the world to offer worldcoins. It plans to ramp up orb production to 4,000 per month from November.

So far, about 130,000 people have stared into the orb, has a cap of 10 billion coins with the aim of giving one to every person on earth with the remaining 2 billion set aside for the Worldcoin Foundation and investors.


Oil stays near $85 a barrel, Brent set for seventh weekly gain

Oil stays near $85 a barrel, Brent set for seventh weekly gain
Image: Shutterstock
Updated 22 October 2021

Oil stays near $85 a barrel, Brent set for seventh weekly gain

Oil stays near $85 a barrel, Brent set for seventh weekly gain
  • Prices have been boosted by worries about coal and gas shortages in China, India and Europe

Oil prices stayed near multi-year highs on Friday, erasing some earlier losses in Asian trading hours, with concerns about tight supply and stockpiles fuelling bullish sentiment.


Brent crude futures rose 23 cents, or 0.3 percent, to $84.84 a barrel at 0933 GMT, after Thursday's three-year high of $86.10. The benchmark is set for its seventh weekly gain.


U.S. West Texas Intermediate (WTI) crude futures gained 20 cents, or 0.2%, to reach $82.70 a barrel, not far off a seven-year high hit this week.


Prices have been boosted by worries about coal and gas shortages in China, India and Europe, spurring some power generators to switch from gas to fuel oil and diesel.


Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration forecast.


"Crude oil's sharp rise may make it vulnerable to profit taking, however, a substantial correction may not happen unless global energy crisis subsides," said Ravindra Rao, vice president for commodities at Kotak Securities.


"Global gas and coal prices have eased but concerns persist with tighter market and higher demand winter season around the corner."


U.S. crude found support this week as investors eyed low crude stocks at the U.S. storage hub in Cushing, Oklahoma.


U.S. Energy Information Administration data on Wednesday showed crude stocks at Cushing fell to 31.2 million barrels, their lowest level since October 2018.


"America’s gasoline demand appears to be experiencing an Indian summer," PVM analysts said in a note, pointing to the highest implied demand for this time of year since 2007 despite high pump prices.

 

 

 


Equities eye third week of gains after tech boost, S&P 500 hits new record

Equities eye third week of gains after tech boost, S&P 500 hits new record
Image: Shutterstock
Updated 22 October 2021

Equities eye third week of gains after tech boost, S&P 500 hits new record

Equities eye third week of gains after tech boost, S&P 500 hits new record

Global shares were on course for their third straight week of gains on Friday, buoyed by tech stocks in Asia overnight, while the dollar dipped and oil prices held steady.


MSCI's broadest gauge of global shares was up 0.1 percent in early European trade, 1.4 percent higher on the week and just 0.8 percent off its all-time high.

Germany's DAX gained 0.4 percent to 15,535.16. In Paris, the CAC 40 jumped 1.1 percent to 6,759.46, while Britain's FTSE 100 added 0.4 percent to 7,220.57.

The future for the S&P 500 was nearly unchanged while the future for the Dow industrials gained less than 0.1 percent.


On Thursday, the S&P 500 rose 0.3 percent to 4,549.78, its seventh straight gain. That eclipsed the record high it set on Sept. 2. 


That followed gains in Asia, where equity bulls were also comforted by news that heavily indebted Chinese property firm China Evergrande Group had made a surprise interest payment, averting a default for now.


Japan's Nikkei advanced 0.3 percent, led by the technology sector, while energy and basic materials shares were the biggest drags as coal futures extended their losses after Beijing signalled it would intervene to cool surging prices that contributed to the country's electricity shortage.


More broadly, investors have become increasingly concerned that persistent inflation could force central bankers to tighten monetary policy at a point where global economic growth remains fragile.


Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, said in a note to clients that equities could still move higher, despite growing concerns around the impact of inflation and the potential for central banks to tighten policy.


"With current issues still appearing more temporary than structural, we believe equity markets will continue to move higher," Haefele said.


"Indeed, small increases in inflation expectations can be positive for markets if it helps to banish fears of deflation. Furthermore, by our assessment, global growth remains strong, supply chain challenges should recede into 2022, and corporate earnings should continue to grow."


U.S. stock futures point to a 0.1 percent lower open, after the cash index posted a record closing high overnight, led by surging tech shares.


Next week, Facebook, Apple, Amazon, and Google-owner Alphabet all report, with bulls hoping they can follow forecast-beating earnings this week from Netflix.


Meanwhile, yields on benchmark 10-year Treasury notes were at 1.6828 percent, easing back from a five-month high of 1.7050 percent reached overnight.


The dollar index, which gauges the greenback against six major rivals, was down 0.1 percent to 93.639 on Friday, despite initially bouncing off recent lows after U.S. jobless claims fell to a 19-month low, pointing to a tighter labor market.


The Fed has signalled it could start to taper stimulus as soon as next month, with rate hikes to follow late next year. Full employment is among the Fed's stated requirements for rates lift-off.


Fed Chair Jerome Powell speaks later on Friday in a panel discussion.


Across commodities, oil was flat with Brent crude set for its first losing week in seven and West Texas Intermediate its first in nine.


Gold was up 0.5 percent on the back of the weaker dollar, on course for its second week of gains.


STV eyes $1 billion for second Middle East tech fund

STV eyes $1 billion for second Middle East tech fund
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Updated 22 October 2021

STV eyes $1 billion for second Middle East tech fund

STV eyes $1 billion for second Middle East tech fund
  • Interest in the technology industry in the Middle East has increased the past few years as governments seek to diversify their energy-dependent economies

RIYADH: STV, the venture capital arm of Saudi Telecom founded by ex-Google executive Abdulrahman Tarabzouni, is looking to raise at least $1 billion for its second Middle East technology investment fund, making it potentially the biggest fund of its kind in the region.

The company, which was formed in 2017, has started talks with other potential backers, including Middle East sovereign wealth funds and international pension funds and endowments, Bloomberg reported, citing people familiar with the matter.

The people chose to remain anonymous as the details of the fund remain private. STV declined to comment.

Interest in technology has grown significantly with most governments within the region seeking to diversify away from dependency on oil and investors seeking long-term opportunities.

IPOs in the region have also recently taken prominence with Adnoc Drilling coming to the market as the largest IPO on the Abu Dhabi stock market.

STV was an early investor in Careem, which was acquired by Uber in early 2020, and also invested in communications platform Unifonic, which received a $125 million infusion led by SoftBank Group’s Vision Fund 2 in September.

STV took part in 30 percent of all start-up funding rounds in Saudi Arabia and 20 percent in the wider Middle East in recent years, its CEO Abdelrahman Tarabzouni said in June.

Founded in 2017, it invested in 12 funding rounds in Saudi Arabia and the Middle East during the previous nine months, compared with seven rounds during the previous two years, Tarabzouni said.

The venture capital firm, which has a portfolio of $500 million, is considering launching a second fund to invest in the growth of emerging companies and lead advanced rounds in them, he said.

Studies conducted by STV showed that there is an opportunity to create 40 unicorn companies in the Middle East and North Africa (MENA) and Saudi Arabia will have the lion’s share of these companies.


China coal prices dive as govt plans intervention to ease power crunch

China coal prices dive as govt plans intervention to ease power crunch
Updated 22 October 2021

China coal prices dive as govt plans intervention to ease power crunch

China coal prices dive as govt plans intervention to ease power crunch
  • China thermal coal prices plunge 12.8 percent

BEIJING: China’s thermal coal futures sank about 13 percent on Friday, extending their losses since Tuesday when Beijing said it would intervene to cool surging prices https://www.reuters.com/world/china/china-liberalize-thermal-power-pricing-tackle-energy-crisis-2021-10-12 of the commodity to help electricity producers out of a widespread power crunch.
The most-active thermal coal futures on Zhengzhou Commodity Exchange, for delivery in January, tumbled to 1,384 yuan per ton by 1130 Beijing time (0329 GMT) — down more than 30 percent since Tuesday’s all-time peak of 1,982 yuan per ton.
Coking coal was down 9.91 percent and coke futures fell 7.42 percent on the Dalian Commodity Exchange in morning trade, having fallen by the maximum 12 percent in day-time trade on Thursday.
A widening power crisis in China caused by shortages of coal led to record high fuel prices amid booming post-pandemic industrial demand as the country shifts to greener fuels.
China has halted production at factories which has dragged on factory gate inflation.
China is pushing miners to ramp up coal production and increasing imports so that power stations can rebuild stockpiles before the winter heating season, but analysts say shortages are likely to persist for at least another few months.
“We’re now seeing the fruits of China’s supply response, as the government has given miners carte blanche to produce at full tilt — even permitting the relaxation of safety inspections in some cases,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
“The parabolic pricing action largely represented the fear of buyers being unable to source sufficient volumes to feed power plants and coke ovens,” Widnell said.
“Therefore, we can expect prices to fall almost as fast as they’ve risen now that a wave of supply is inbound,” he added.

MEASURES TO TAME RUNAWAY PRICES
China’s state planner, the National Development and Reform Commission (NDRC), said this week that it was studying ways to lower coal prices and would take all necessary steps to bring them into a reasonable range.
The NDRC said on Friday it would send teams of inspectors to major coal producing regions to probe the costs of coal production and circulation.
It added that it had met with the China Coal Industry Association and key firms, and was looking at steps to prevent coal companies from seeking excessive profits.
China’s securities regulator has said it would ask futures exchanges to raise fees, restrict trading quotas and crack down on speculation in response to high coal prices.
The NDRC “has concluded that the unbridled soaring of coal prices is partly driven by those hoping to hit the jackpot by taking advantage of the power supply falling short of actual need,” Chinese state media outlet China Daily wrote on Thursday.
There should be “zero tolerance to the hoarding of coal,” the newspaper added. “It is of the utmost importance to rein in coal prices as they will pose a threat to people’s daily lives when winter sets in.”
Due to cold winds and rain, temperatures in most parts of central and eastern China are currently lower than normal, the National Meteorological Center said.