Archive for Opinions – Page 50

06 Jun

AI plus gene editing promises to shift biotech into high gear

By Marc Zimmer, Connecticut College 

During her chemistry Nobel Prize lecture in 2018, Frances Arnold said, “Today we can for all practical purposes read, write and edit any sequence of DNA, but we cannot compose it.” That isn’t true anymore.

Since then, science and technology have progressed so much that artificial intelligence has learned to compose DNA, and with genetically modified bacteria, scientists are on their way to designing and making bespoke proteins.

The goal is that with AI’s designing talents and gene editing’s engineering abilities, scientists can modify bacteria to act as mini factories producing new proteins that can reduce greenhouse gases, digest plastics or act as species-specific pesticides.

As a chemistry professor and computational chemist who studies molecular science and environmental chemistry, I believe that advances in AI and gene editing make this a realistic possibility.

Gene sequencing – reading life’s recipes

All living things contain genetic materials – DNA and RNA – that provide the hereditary information needed to replicate themselves and make proteins. Proteins constitute 75% of human dry weight. They make up muscles, enzymes, hormones, blood, hair and cartilage. Understanding proteins means understanding much of biology. The order of nucleotide bases in DNA, or RNA in some viruses, encodes this information, and genomic sequencing technologies identify the order of these bases.

The Human Genome Project was an international effort that sequenced the entire human genome from 1990 to 2003. Thanks to rapidly improving technologies, it took seven years to sequence the first 1% of the genome and another seven years for the remaining 99%. By 2003, scientists had the complete sequence of the 3 billion nucleotide base pairs coding for 20,000 to 25,000 genes in the human genome.

However, understanding the functions of most proteins and correcting their malfunctions remained a challenge.

AI learns proteins

Each protein’s shape is critical to its function and is determined by the sequence of its amino acids, which is in turn determined by the gene’s nucleotide sequence. Misfolded proteins have the wrong shape and can cause illnesses such as neurodegenerative diseases, cystic fibrosis and Type 2 diabetes. Understanding these diseases and developing treatments requires knowledge of protein shapes.

Before 2016, the only way to determine the shape of a protein was through X-ray crystallography, a laboratory technique that uses the diffraction of X-rays by single crystals to determine the precise arrangement of atoms and molecules in three dimensions in a molecule. At that time, the structure of about 200,000 proteins had been determined by crystallography, costing billions of dollars.

AlphaFold, a machine learning program, used these crystal structures as a training set to determine the shape of the proteins from their nucleotide sequences. And in less than a year, the program calculated the protein structures of all 214 million genes that have been sequenced and published. The protein structures AlphaFold determined have all been released in a freely available database.

To effectively address noninfectious diseases and design new drugs, scientists need more detailed knowledge of how proteins, especially enzymes, bind small molecules. Enzymes are protein catalysts that enable and regulate biochemical reactions.

AI system AlphaFold3 allows scientists to make intricately detailed models of life’s molecular machinery.

AlphaFold3, released May 8, 2024, can predict protein shapes and the locations where small molecules can bind to these proteins. In rational drug design, drugs are designed to bind proteins involved in a pathway related to the disease being treated. The small molecule drugs bind to the protein binding site and modulate its activity, thereby influencing the disease path. By being able to predict protein binding sites, AlphaFold3 will enhance researchers’ drug development capabilities.

AI + CRISPR = composing new proteins

Around 2015, the development of CRISPR technology revolutionized gene editing. CRISPR can be used to find a specific part of a gene, change or delete it, make the cell express more or less of its gene product, or even add an utterly foreign gene in its place.

In 2020, Jennifer Doudna and Emmanuelle Charpentier received the Nobel Prize in chemistry “for the development of a method (CRISPR) for genome editing.” With CRISPR, gene editing, which once took years and was species specific, costly and laborious, can now be done in days and for a fraction of the cost.

AI and genetic engineering are advancing rapidly. What was once complicated and expensive is now routine. Looking ahead, the dream is of bespoke proteins designed and produced by a combination of machine learning and CRISPR-modified bacteria. AI would design the proteins, and bacteria altered using CRISPR would produce the proteins. Enzymes produced this way could potentially breathe in carbon dioxide and methane while exhaling organic feedstocks, or break down plastics into substitutes for concrete.

I believe that these ambitions are not unrealistic, given that genetically modified organisms already account for 2% of the U.S. economy in agriculture and pharmaceuticals.

Two groups have made functioning enzymes from scratch that were designed by differing AI systems. David Baker’s Institute for Protein Design at the University of Washington devised a new deep-learning-based protein design strategy it named “family-wide hallucination,” which they used to make a unique light-emitting enzyme. Meanwhile, biotech startup Profluent, has used an AI trained from the sum of all CRISPR-Cas knowledge to design new functioning genome editors.

If AI can learn to make new CRISPR systems as well as bioluminescent enzymes that work and have never been seen on Earth, there is hope that pairing CRISPR with AI can be used to design other new bespoke enzymes. Although the CRISPR-AI combination is still in its infancy, once it matures it is likely to be highly beneficial and could even help the world tackle climate change.

It’s important to remember, however, that the more powerful a technology is, the greater the risks it poses. Also, humans have not been very successful at engineering nature due to the complexity and interconnectedness of natural systems, which often leads to unintended consequences.The Conversation

About the Author:

Marc Zimmer, Professor of Chemistry, Connecticut College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
06 Jun

Job figures are coming out, and here’s my prediction: The markets will overreact to the headlines

By Jeffrey Hart, Auburn University 

As the saying goes, “There are lies, damn lies and statistics.”

And on the first Friday of every month, the American public gets a ton of new statistics to peruse. That’s when the U.S. Bureau of Labor Statistics releases its latest jobs figures. Within minutes of the data drop, news organizations send out push alerts, pundits start opining, and the headlines — and headline numbers — coagulate into a simple narrative, often along the lines of “Jobs are up; the economy is saved” or “Jobs are down; we’re all doomed.”

These narratives consistently influence investors and financial markets.

As a professor of finance, I think these simple storylines aren’t helpful to investors. In fact, they’re actually harmful. Initial narratives stick even when underlying statistics contradict the numbers that make the headlines. So on June 7, 2024, when the latest jobs data will be released, I predict that financial markets will overreact to the headlines.

I get it: There’s so much information in the two job reports the Bureau of Labor Statistics releases each month that you can pick and choose the data you find important. But ignoring nuance isn’t a good investment strategy. And it turns out that economic reality is too complex to fit neatly into a headline. For proof, consider how markets responded to the past two months of jobs data.

Dig into the data

Let’s start with the April jobs numbers, which came out on May 3.

The headline numbers were worse than expected: The unemployment rate ticked up to 3.9% from 3.8% the previous month, and both nonfarm payrolls and private nonfarm payrolls were lower than anticipated.

The stock market rallied on this seemingly bad news because it saw the disappointing jobs reports as a sign that inflation might be slowing. That, in turn, could encourage the Federal Reserve to put interest rate cuts back on the table for 2024 – or at least investors had hoped.

But things look a little more complex when you dig into the data.

The unemployment rate did get worse, rising one-tenth of a percentage point with virtually no change in the labor force participation rate. On its surface, that doesn’t look so good: It seems the unemployment rate has increased by 10 basis points. But that’s because the bureau calculates the unemployment rate only out to one decimal place. But what if you go out to two decimal places?

To do that, you need to crunch some numbers yourself.

You can do that by going to the the bureau’s Current Employment Statistics news release, navigating various rows and columns, and then getting the calculator out to work out a figure for the month that goes one decimal place further than what’s released to the media. Then you have to repeat the process for last month’s data.

When you do that, you can see that the unemployment rate barely budged in April: It rose from 3.83% in March to 3.86%, an increase of just .03%, or 3 basis points. This suggests those seemingly disappointing official unemployment numbers weren’t actually that disappointing after all.

Good headlines, bad news

You’ll see something similar if you look at the March jobs figures, which came out on April 5.

The headline numbers came in much better than expected, and financial markets celebrated. Total nonfarm payrolls came in way above expectations, at 303,000 jobs created, as did private nonfarm payrolls. The official unemployment rate dipped to 3.8%. On its surface, all great news.

But you would get a different perspective if you dig deeper into the data — especially the figures showing how many jobs were created in government and in manufacturing. You have to scroll a few pages into the Current Employment Statistics news release to find the relevant data – in “Employment Situation Summary Table B” – but it’s all there.

If you look at the March statistics, you’ll see that positions in government make up more than 20% of new jobs added. What’s more, the data shows that zero manufacturing jobs were created in March.

This data suggests the March headline numbers — which suggested a very robust job market — may have been deceptively sunny. Too many jobs were created in government, and too few in manufacturing. That’s not a very healthy jobs market.

When pundits and the public ponder the job statistics that come out on the first Friday of each month, they should be be careful not to simply accept the headlines as the entire story.

When it comes to the economy, simple narratives can be misleading.The Conversation

About the Author:

Jeffrey Hart, Senior Lecturer of Finance, Auburn University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
05 Jun

Bitcoin: Breaks $71k ahead of US NFP

By ForexTime 

  • Bitcoin ↑ 5% this week
  • Roughly 4% away from all-time high
  • Over past year NFP triggered moves of ↑ 2.5% & ↓ 1%
  • Key level of interest – $72,000

Are Bitcoin bulls gearing up for another charge higher?

Well, the world’s largest cryptocurrency has jumped almost 5% this week, trading around $71,000 as of writing.

Bitcoin along with other cryptocurrencies seem to be supported by the prospect of lower US interest rates in 2024. But another major factor is the monster inflows into exchange-traded funds holding the tokens.

According to data from Coinglass among other sources, Bitcoin ETFs saw a whopping $886.6 million inflows on Tuesday!

Source: Coinglass 

This was the best day of inflows since mid-March and the second-largest amount since spot ETFs launched this year. These bullish forces may keep the “OG” crypto buoyed ahead of Friday’s US jobs data.

As covered in our trade of the week, the incoming NFP report is likely to influence bets around when the Fed cuts rates in 2024.

Traders are currently pricing in a 75% probability of a 25-basis point Fed cut in November with a move fully priced in by December.

Any changes to these expectations may influence cryptocurrencies which have shown sensitivity to interest rates.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 2.5% or declines of 1% in a 6-hour window post-release.

 

What does this mean?

Bitcoin is trading roughly 4% away from its all-time high at $73850.

So essentially, a disappointing jobs report that fuels rate cut bets could push prices closer to all-time highs.

Just to be clear, past price movements do not guarantee future results but can be used to highlight how Bitcoin has reacted to the US jobs report.

It’s not only Bitcoin that may experience big moves on Friday…

  • AVALANCH: ↑ 4.0 % or ↓ 2.0%
  • CARDANO: ↑ 3.4% or ↓ 1.6%
  • SOLANA: ↑ 3.2 % or ↓ 2.7%
  • CHAINLINK: ↑ 3.0 % or ↓ 1.2%
  • DOGECOIN: ↑ 2.8 % or ↓ 1.1%
  • LITECOIN: ↑ 2.2 % or ↓ 1.0%
  • BITCOINC: ↑ 2.0 % or ↓ 1.7%
  • ETHEREUM: ↑ 2.0% or ↓ 1.3%
  • POLYGON: ↑ 1.7% or ↓ 1.5%
  • RIPPLE: ↑ 1.7% or ↓ 1.1%

All 10 cryptos listed above are offered by FXTM as Crypto CFD’s.

Technical outlook…

Bitcoin remains trapped within a range on the weekly charts with bulls approaching the $72,000 resistance.

Prices have turned bullish on the daily charts after the breakout above $70,000. The upside momentum may take the crypto towards the $72,000 resistance level in the short term.

  • A solid breakout above $72,000 could open a path toward the all-time high at $73850.
  • Should prices fall back below $70,000, bears may target $67,000.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
03 Jun

Alibaba’s (BABA) Secret Weapon for Future Growth

By The Ino.com Team

Amid challenging regulatory pressures, economic headwinds, and fierce market competition, Alibaba Group Holding Limited (BABA) has showcased a resilient performance, as evidenced by its latest quarterly results. Shares of the Chinese e-commerce giant have gained more than 7% over the past three months. Moreover, the stock is trading above its 50-day and 200-day moving averages of $76.20 and $78.79, respectively, reflecting a solid momentum.

Alibaba’s diverse business portfolio continues to be a driving force behind its steady financial performance. For the fourth quarter that ended March 31, 2024, BABA’s revenue increased 7% year-over-year to $30.73 billion, beating the analysts’ estimate of $30.42 billion. The growth was driven by robust performances across its core e-commerce and cloud computing segments.

BABA’s strategic investments in Alibaba Cloud infrastructure and its domestic and international e-commerce platforms have spurred double-digit growth in key metrics such as gross merchandise value (GMV). Yet, the company’s income from operations dipped 3% from the prior-year quarter to $2.05 billion.

Navigating through cautious consumer spending in China, Alibaba has observed early signs of recovery in its primary e-commerce operations. Revenue from the Taobao and Tmall Group increased 4% year-over-year to $12.91 billion, while customer management revenue grew 5%, rebounding from a previously flat quarter. Also, revenue from the Alibaba International Digital Commerce Group (AIDC) surged 45% year-over-year to $3.80 billion.

BABA’s CEO Eddie Wu’s commitment to ‘reignite’ growth through further investments is beginning to yield results, as he noted the strategies were “working and we are returning to growth.”

But What’s Behind This Robust Growth?

Alibaba’s secret weapon lies in its digital technology and intelligence arm, Alibaba’s Cloud Intelligence Group, which stood as the company’s second-largest revenue generator last year. Revenue from this segment rose 3% year-over-year to $3.54 billion, driven by the double-digit growth of its public cloud business. Core offerings like elastic computing, databases, and AI products led to a notable triple-digit growth in AI-related revenue in the fourth quarter alone. This surge in demand for advanced AI solutions positions the company to capitalize on the burgeoning AI market.

To foster long-term growth and attract startups and small businesses, Alibaba aggressively slashed prices on over 100 core public cloud products (including Elastic Compute Service (ECS), Object Storage Service, and database product categories) in China. This initiative was later extended globally in April with a 23% average price reduction. Customers ordering through Alibaba’s official website can now enjoy discounts of up to 59% on computing, storage, network, database, and big data products.

“Cloud infrastructure is poised to be the key cornerstone for the future of AI, and our commitment lies in making sure that the foundation for AI development remains affordable,” said Selina Yuan, President of the International Business of Alibaba Cloud Intelligence.

Moreover, Alibaba Cloud’s AI capabilities have rapidly gained traction, with over 90,000 enterprises adopting the Qwen large language model (LLM) within a year of its debut and more than 7 million downloads on open-source platforms like Github. Alibaba Cloud introduced Qwen2.5, the latest addition to its Qwen model family, to meet the growing demand for AI solutions.

Furthermore, Alibaba Cloud recently launched a service to help companies customize and scale generative AI models, from consolidating multiple models to optimizing underlying infrastructure resources. The PAI-Lingjun Intelligent Computing Service, an AI computing platform tailored for high-performance computing tasks, also expanded its reach to Singapore for the first time this year.

Also, the group’s strategic focus on public cloud and operational efficiency resulted in an impressive 49% year-over-year increase in adjusted EBITDA to $848 million in fiscal year 2024. Such growth figures solidify Alibaba Cloud’s role as a crucial driver of the company’s future growth.

Is Price Cuts a Strategic Initiative or a Race to the Bottom?

Alibaba’s recent move to reduce prices across its cloud services has stirred the market. Some say it’s a smart move to attract more customers (especially with the growing demand for AI services), while others fear it could hurt profits in the long run.

With enterprises’ expenditure on generative AI services expected to reach $143 billion in 2027 globally, the timing of BABA’s price adjustments appears strategic, positioning the company to tap into this growing market.

Meanwhile, BABA’s price cuts have sparked a price war among Chinese tech giants, with Baidu Cloud and ByteDance quickly following suit with their competitive offerings. While these cuts benefit consumers, Alibaba’s footing in the global marketplace is tenuous. Despite holding over 30% of China’s Infrastructure as a Service market, Alibaba still trails behind AWS in the broader Asia Pacific region. Alibaba Cloud commands only a small fraction of the global cloud computing market, where AWS, Microsoft Azure, and Google Cloud dominate the landscape.

Making headway against these industry giants is not easy, especially considering their strong foothold in Western markets. While the price cuts may attract budget-conscious customers and bolster Alibaba’s presence in emerging markets, success hinges on maintaining high-quality service and innovation in the long run. Only time will tell if Alibaba’s gamble pays off.

Bottom Line

BABA reported a beat in revenue in the fourth quarter of fiscal 2024; however, the e-commerce giant’s earnings plunged. Despite a weak bottom line, CFO Toby Xu expressed confidence in the company’s business outlook, citing early positive results from strategic investments and partnerships. Alibaba sees AI as a significant driver of innovation and value creation within its ecosystem.

During the March quarter, AI-related revenue delivered “triple-digit growth year-over-year.” The revenue was generated from foundational model companies and internet companies, as well as customers from the financial services and automotive industries.

Analysts expect BABA’s revenue for the first quarter (ending June 2024) to increase 5.1% year-over-year to $34.10 billion. However, its EPS for the ongoing quarter is expected to decline by 15.6% year-over-year to $2.03. Further, for the fiscal year 2025, Alibaba’s revenue is forecasted to reach $140.92 billion (up 8.3% year-over-year), while the consensus EPS estimate of $8.23 indicates a 4.4% decline from the prior year.

In terms of forward non-GAAP P/E, BABA is trading at 9.61x, 39.5% lower than the industry average of 15.88x. Similarly, the stock’s forward EV/EBITDA and Price/Book multiples of 5.94 and 1.31 are 39% and 45.3% lower than the industry averages of 9.73 and 2.40, respectively.

In response to its low valuation, Alibaba’s management repurchased $4.8 billion worth of shares during the fourth quarter. Moreover, earlier this year, the company bolstered its share buyback program by an additional $25 billion, extending it through the end of March 2027.

In further demonstrating its commitment to returning value to shareholders, BABA approved a two-part dividend plan totaling $4 billion. This plan includes a regular cash dividend of $0.125 per ordinary share or $1 per ADS in FY24 and a one-time extraordinary cash dividend of $0.0825 per ordinary share or $0.66 per ADS. Both dividends will be paid out in U.S. dollars to holders of ordinary shares and ADS holders as of the close of business on June 13, 2024.

While the impact of price reductions on Alibaba’s bottom line remains to be seen, achieving double-digit revenue growth across its specific segments amid strategic pricing adjustments underscores the company’s resilience and adaptability in an ever-evolving market landscape.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Alibaba’s (BABA) Secret Weapon for Future Growth

Opinions Stock Market News
02 Jun

GBP and Euro Speculator bets rise for multiple weeks

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday May 28th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by British Pound & EuroFX

The COT currency market speculator bets were higher this week as nine out of the eleven currency markets we cover had higher positioning while the other two markets had lower speculator contracts.

Leading the gains for the currency markets was the British Pound (24,349 contracts), the EuroFX (16,097 contracts), the Australian Dollar (6,317 contracts), Canadian Dollar (4,239 contracts), New Zealand Dollar (3,416 contracts), Mexican Peso (3,027 contracts), the Brazilian Real (1,076 contracts), the US Dollar Index (656 contracts) and with Bitcoin (134 contracts) also having a positive week.

The currencies seeing declines in speculator bets on the week were the Japanese Yen (-11,672 contracts) and the Swiss Franc (-3,721 contracts).

GBP and Euro Speculator bets rise for multiple weeks

To start this week’s COT currency roundup, the Euro positions have continued to improve after the speculator contracts dropped into a bearish position in late-April. This was the first time since September of 2022 that Euro bets had fallen into negative territory. Since then, the Euro speculative bets have risen for five straight weeks and by a total of +67,561 contracts in that period. Euro bets, currently at +57,572 contracts, have now climbed back to the best level in the past eleven weeks, dating back to March 12th. The EURUSD exchange rate still has some work to do as it remains below the 1.10 major resistance area.

The British pound sterling speculator contracts rose again this week and has jumped by over +20,000 contracts for the second consecutive week. Overall, the GBP bet have now improved for four straight weeks with a gain of +54,392 contracts in the past four weeks. The speculator standing has now come out of a four-week bearish position (April 23rd to May 14th) and is at the highest level since April. The GBPUSD exchange rate has recently hit its highest level since March and is trading around 1.2600 currently. On a trade-weighted basis, Reuters notes that the GBP is near the highest since Brexit.

The Australian dollar speculator bets rose this week for a second consecutive week and have now improved in eight out of the past ten weeks. The AUD position has gained a total of +57,622 contracts over the past ten weeks and has brought the level from a record bearish position of -107,538 contracts on March 19th to a total of -49,916 contracts this week. The current standing is the least bearish level in the past nineteen weeks, dating back to January 16th.

The US dollar index positions increased slightly again this week and have now risen for eight consecutive weeks. The speculator standing had fallen into a bearish position from March 26th to April 30th before coming back over to a bullish level in these past four weeks. That bearish level had marked the first time the USD index bets had been negative since 2021.

The New Zealand dollar speculator position gained for a second straight week and came out of a bearish level into a bullish position this week. The NZD bets had been bearish or negative for the past ten weeks with a recent bearish high of -12,047 contracts taking place on April 23rd. The NZD positioning has been on a rollercoaster of ups and (mostly) downs since 2021 while the NZDUSD exchange had been on the defensive over that time. However, the exchange rate for the NZD versus the USD has started to see higher lows on the weekly charts and is challenging the downward sloping trendline that started in 2021 – pointing to a possible breakout scenerio.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Mexican Peso & British Pound

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Mexican Peso (91 percent) and the British Pound (70 percent) lead the currency markets this week. The New Zealand Dollar (66 percent), Australian Dollar (59 percent) and the Bitcoin (55 percent) come in as the next highest in the weekly strength scores.

On the downside, the Swiss Franc (0 percent), the Brazilian Real (2 percent), the Canadian Dollar (3 percent), the US Dollar Index (14 percent) and the Japanese Yen (14.9 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (13.7 percent) vs US Dollar Index previous week (12.3 percent)
EuroFX (44.8 percent) vs EuroFX previous week (38.0 percent)
British Pound Sterling (70.1 percent) vs British Pound Sterling previous week (54.0 percent)
Japanese Yen (14.9 percent) vs Japanese Yen previous week (22.2 percent)
Swiss Franc (0.0 percent) vs Swiss Franc previous week (6.4 percent)
Canadian Dollar (3.1 percent) vs Canadian Dollar previous week (0.0 percent)
Australian Dollar (58.7 percent) vs Australian Dollar previous week (52.3 percent)
New Zealand Dollar (66.2 percent) vs New Zealand Dollar previous week (56.5 percent)
Mexican Peso (90.8 percent) vs Mexican Peso previous week (89.3 percent)
Brazilian Real (1.9 percent) vs Brazilian Real previous week (0.7 percent)
Bitcoin (55.0 percent) vs Bitcoin previous week (53.0 percent)

Australian Dollar & New Zealand Dollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Australian Dollar (52 percent) and the New Zealand Dollar (39 percent) lead the past six weeks trends for the currencies. The EuroFX (19 percent), the US Dollar Index (11 percent) and the British Pound (11 percent) are the next highest positive movers in the latest trends data.

The Brazilian Real (-42 percent) leads the downside trend scores currently with the Swiss Franc (-14 percent), Bitcoin (-6 percent) and the Mexican Peso (-3 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (10.8 percent) vs US Dollar Index previous week (9.8 percent)
EuroFX (19.3 percent) vs EuroFX previous week (3.7 percent)
British Pound Sterling (11.1 percent) vs British Pound Sterling previous week (-18.0 percent)
Japanese Yen (6.0 percent) vs Japanese Yen previous week (11.1 percent)
Swiss Franc (-14.1 percent) vs Swiss Franc previous week (-15.3 percent)
Canadian Dollar (-2.8 percent) vs Canadian Dollar previous week (-27.4 percent)
Australian Dollar (52.2 percent) vs Australian Dollar previous week (36.8 percent)
New Zealand Dollar (39.1 percent) vs New Zealand Dollar previous week (34.6 percent)
Mexican Peso (-3.3 percent) vs Mexican Peso previous week (-10.7 percent)
Brazilian Real (-42.2 percent) vs Brazilian Real previous week (-39.5 percent)
Bitcoin (-5.9 percent) vs Bitcoin previous week (-11.1 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week reached a net position of 4,174 contracts in the data reported through Tuesday. This was a weekly increase of 656 contracts from the previous week which had a total of 3,518 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 13.7 percent. The commercials are Bullish-Extreme with a score of 89.2 percent and the small traders (not shown in chart) are Bearish with a score of 25.9 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:70.617.59.0
– Percent of Open Interest Shorts:60.231.15.9
– Net Position:4,174-5,4361,262
– Gross Longs:28,3257,0263,621
– Gross Shorts:24,15112,4622,359
– Long to Short Ratio:1.2 to 10.6 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):13.789.225.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:10.8-8.7-11.4

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week reached a net position of 57,572 contracts in the data reported through Tuesday. This was a weekly gain of 16,097 contracts from the previous week which had a total of 41,475 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 44.8 percent. The commercials are Bullish with a score of 57.5 percent and the small traders (not shown in chart) are Bearish with a score of 22.4 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.857.212.0
– Percent of Open Interest Shorts:19.169.97.9
– Net Position:57,572-84,65227,080
– Gross Longs:184,656380,22479,849
– Gross Shorts:127,084464,87652,769
– Long to Short Ratio:1.5 to 10.8 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):44.857.522.4
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:19.3-21.017.1

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week reached a net position of 25,402 contracts in the data reported through Tuesday. This was a weekly increase of 24,349 contracts from the previous week which had a total of 1,053 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 70.1 percent. The commercials are Bearish with a score of 27.7 percent and the small traders (not shown in chart) are Bullish with a score of 76.4 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:34.643.912.5
– Percent of Open Interest Shorts:25.255.910.0
– Net Position:25,402-32,1736,771
– Gross Longs:93,041118,10933,632
– Gross Shorts:67,639150,28226,861
– Long to Short Ratio:1.4 to 10.8 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):70.127.776.4
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:11.1-19.738.6

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week reached a net position of -156,039 contracts in the data reported through Tuesday. This was a weekly decrease of -11,672 contracts from the previous week which had a total of -144,367 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 14.9 percent. The commercials are Bullish-Extreme with a score of 92.0 percent and the small traders (not shown in chart) are Bullish with a score of 50.9 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:8.875.913.0
– Percent of Open Interest Shorts:56.824.816.1
– Net Position:-156,039166,122-10,083
– Gross Longs:28,565246,91142,324
– Gross Shorts:184,60480,78952,407
– Long to Short Ratio:0.2 to 13.1 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):14.992.050.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:6.0-1.0-25.0

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week reached a net position of -44,366 contracts in the data reported through Tuesday. This was a weekly lowering of -3,721 contracts from the previous week which had a total of -40,645 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 99.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:8.980.79.5
– Percent of Open Interest Shorts:53.123.023.0
– Net Position:-44,36657,936-13,570
– Gross Longs:8,94380,9989,553
– Gross Shorts:53,30923,06223,123
– Long to Short Ratio:0.2 to 13.5 to 10.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.099.515.5
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-14.17.514.4

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week reached a net position of -86,585 contracts in the data reported through Tuesday. This was a weekly boost of 4,239 contracts from the previous week which had a total of -90,824 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.1 percent. The commercials are Bullish-Extreme with a score of 99.1 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.4 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.171.811.1
– Percent of Open Interest Shorts:46.937.612.5
– Net Position:-86,58590,353-3,768
– Gross Longs:37,299189,74529,401
– Gross Shorts:123,88499,39233,169
– Long to Short Ratio:0.3 to 11.9 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):3.199.115.4
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-2.8-0.711.8

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week reached a net position of -49,916 contracts in the data reported through Tuesday. This was a weekly rise of 6,317 contracts from the previous week which had a total of -56,233 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 58.7 percent. The commercials are Bearish with a score of 44.0 percent and the small traders (not shown in chart) are Bullish with a score of 60.1 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: New Buy – Long Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.857.912.6
– Percent of Open Interest Shorts:53.632.512.3
– Net Position:-49,91649,360556
– Gross Longs:53,892112,20924,416
– Gross Shorts:103,80862,84923,860
– Long to Short Ratio:0.5 to 11.8 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):58.744.060.1
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:52.2-55.043.1

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week reached a net position of 2,046 contracts in the data reported through Tuesday. This was a weekly lift of 3,416 contracts from the previous week which had a total of -1,370 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 66.2 percent. The commercials are Bearish with a score of 36.3 percent and the small traders (not shown in chart) are Bullish with a score of 50.7 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.843.56.4
– Percent of Open Interest Shorts:43.246.66.9
– Net Position:2,046-1,779-267
– Gross Longs:26,91625,0133,687
– Gross Shorts:24,87026,7923,954
– Long to Short Ratio:1.1 to 10.9 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):66.236.350.7
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:39.1-39.933.2

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week reached a net position of 120,919 contracts in the data reported through Tuesday. This was a weekly gain of 3,027 contracts from the previous week which had a total of 117,892 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 90.8 percent. The commercials are Bearish-Extreme with a score of 9.4 percent and the small traders (not shown in chart) are Bearish with a score of 35.3 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:56.539.82.7
– Percent of Open Interest Shorts:11.486.31.2
– Net Position:120,919-124,6983,779
– Gross Longs:151,468106,7427,111
– Gross Shorts:30,549231,4403,332
– Long to Short Ratio:5.0 to 10.5 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):90.89.435.3
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-3.33.5-3.9

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week reached a net position of -36,582 contracts in the data reported through Tuesday. This was a weekly rise of 1,076 contracts from the previous week which had a total of -37,658 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 1.9 percent. The commercials are Bullish-Extreme with a score of 99.0 percent and the small traders (not shown in chart) are Bearish with a score of 27.7 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:9.279.12.9
– Percent of Open Interest Shorts:57.829.63.9
– Net Position:-36,58237,302-720
– Gross Longs:6,94059,6012,182
– Gross Shorts:43,52222,2992,902
– Long to Short Ratio:0.2 to 12.7 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):1.999.027.7
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-42.242.8-13.3

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week reached a net position of -756 contracts in the data reported through Tuesday. This was a weekly gain of 134 contracts from the previous week which had a total of -890 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 55.0 percent. The commercials are Bullish with a score of 60.9 percent and the small traders (not shown in chart) are Bearish with a score of 33.5 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:75.24.05.8
– Percent of Open Interest Shorts:77.74.52.8
– Net Position:-756-148904
– Gross Longs:22,7611,2141,763
– Gross Shorts:23,5171,362859
– Long to Short Ratio:1.0 to 10.9 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):55.060.933.5
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-5.94.25.2

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
02 Jun

Speculator Extremes: US Treasury Bond, Silver lead weekly Bullish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on May 28th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

US Treasury Bond


The US Treasury Bond speculator position comes in as the most bullish extreme standing this week. The US Treasury Bond speculator level is currently at a 98.8 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 20.8 this week. The overall net speculator position was a total of 43,836 net contracts this week with a gain of 29,660 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Silver


The Silver speculator position comes next in the extreme standings this week. The Silver speculator level is now at a 96.6 percent score of its 3-year range.

The six-week trend for the percent strength score was 5.3 this week. The speculator position registered 57,183 net contracts this week with a weekly decline of -2,461 contracts in speculator bets.

Copper


The Copper speculator position comes in third this week in the extreme standings. The Copper speculator level resides at a 94.3 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 16.7 this week. The overall speculator position was 65,522 net contracts this week with a decrease of -6,172 contracts in the weekly speculator bets.

Platinum


The Platinum speculator position comes up number four in the extreme standings this week. The Platinum speculator level is at a 91.6 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 24.9 this week. The overall speculator position was 27,567 net contracts this week with a dip by -82 contracts in the speculator bets.

Mexican Peso


The Mexican Peso speculator position rounds out the top five in this week’s bullish extreme standings. The Mexican Peso speculator level sits at a 90.8 percent score of its 3-year range. The six-week trend for the speculator strength score was -3.3 this week.

The speculator position was 120,919 net contracts this week with an increase of 3,027 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Sugar


The Sugar speculator position comes in as the most bearish extreme standing this week. The Sugar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -19.3 this week. The overall speculator position was 5,105 net contracts this week with a reduction by-3,316 contracts in the speculator bets.

Swiss Franc


The Swiss Franc speculator position comes in next for the most bearish extreme standing on the week. The Swiss Franc speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.1 this week. The speculator position was -44,366 net contracts this week with a decline of -3,721 contracts in the weekly speculator bets.

Brazil Real


The Brazil Real speculator position comes in as third most bearish extreme standing of the week. The Brazil Real speculator level resides at a 1.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -42.2 this week. The overall speculator position was -36,582 net contracts this week with a rise of 1,076 contracts in the speculator bets.

Canadian Dollar


The Canadian Dollar speculator position comes in as this week’s fourth most bearish extreme standing. The Canadian Dollar speculator level is at a 3.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -2.8 this week. The speculator position was -86,585 net contracts this week with a boost of 4,239 contracts in the weekly speculator bets.

5-Year Bond


Finally, the 5-Year Bond speculator position comes in as the fifth most bearish extreme standing for this week. The 5-Year Bond speculator level is at a 5.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -11.7 this week. The speculator position was -1,377,117 net contracts this week with an increase of 45,688 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Metals Opinions
31 May

What New York City’s Art Auctions Tell You About the Stock Market — and Social Mood

By Peter Kendall | Chief Analyst for U.S. Markets and Cultural Trends

The fall and spring auctions in New York City are the art market’s bellwether sales events. And according to The New York Times, the results from the City’s spring art auction season “tell a story of a masterpiece market come down to earth.” The article notes that the spring sales at Christie’s, Sotheby’s and Phillips delivered $1.4 billion — a 22 percent decrease from total earnings of $1.8 billion in 2023.

While auction experts called it a “respectable finish,” the general art market nervousness is a bad sign for the next major auction season in November. It’s “a momentum-based market,” said one expert about the art industry. “There can be a little bit of a herd mentality.”

We agree wholeheartedly, save for the “a little bit” part. The art scene, like any speculative, freely-traded market, is very much driven by herd mentality. And as such, it often closely tracks the stock market, because both are driven — higher or lower — by waves of social mood. Positive social mood impels demand for fine art and stocks, whereas negative social mood decreases demand.

Signs of weakness in the art market were apparent before this spring auction season. The message of last November’s bidding was decidedly mixed. “While the figures from the fortnight of sales looked impressive, there were still several significant indicators of an art market in flux,” reported Artsy.com. “Each auction house held a sale that cumulatively fell beneath their low estimates,” and there were lots of withdrawals. Sotheby’s modern evening sale, for instance, was reduced to 33 lots from an original 40.

Pablo Picasso

“A notable clutch of works by blue chip artists failed to achieve their low estimates. Works by Jeff Koons, Andy Warhol, Pablo Picasso, and Salvador Dali all hammered below their low targets.”

“Despite a Sagging Art Market,” The New York Times reported that this Picasso from August 1932 did bring a winning bid of $139.4 million, the highest price paid for a work of art in 2023.

“The sale of ‘Femme a’ la montre’ not only cements its status as a masterpiece, but also underscores the enduring fascination and value of Picasso’s work.”

Interestingly, Picasso started the painting at the bottom of a massive decline in the Dow Jones Industrial Average and the start of a multi-decade rally.

With the painting’s record price aligning closely with what we believe is the end of a long upward wave in the stock market, we suspect that the sale will mark a peak for Picasso and many other artists and artworks of “enduring fascination.” The fascination should yield to bafflement at the artistry as well as the prices that were paid for it.

Follow along via our free EWI newsletter and I’ll send you occasional updates like this.

This article was syndicated by Elliott Wave International and was originally published under the headline What New York City’s Art Auctions Tell You About the Stock Market — and Social Mood. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Economics & Fundamentals Opinions
31 May

Why Nvidia’s Stock Surge Could Translate to Higher Dividends

By The Ino.com Team

With a $2.35 trillion market cap, NVIDIA Corporation (NVDA) has had an exceptional year so far. Following a stellar 2023, NVDA’s stock has already surged nearly 92% since January. Moreover, the stock has gained over 200% in the past year.

This surge in NVIDIA has been fueled by its explosive growth in the AI and data center markets, making it one of the most talked-about and desirable stocks. With a high of just under $955 in yesterday’s session, expectations are mounting for the stock to hit four digits soon.

Ahead of Nvidia’s earnings, Stifel analyst Ruben Roy increased his price target on the stock from $910 to $1,085, citing that he expects Nvidia to again surpass expectations on the top and bottom lines and raise its guidance for the next quarter.

The company’s results have been bolstered by solid demand for its chips from hyperscalers, including Amazon (AMZN), Alphabet Inc. (GOOGL), Meta Platforms, Inc. (META), Microsoft Corporation (MSFT), and others. As a result, the first-quarter earnings report will serve as a crucial gauge of the industry’s appetite for further AI investment.

Also, Bank of America analyst Vivek Arya raised his price target on NVDA stock from $925 to $1100 while maintaining a “Buy” rating.

Let’s analyze how Nvidia’s stock price appreciation could lead to higher dividend payouts.

Dominance in AI and Data Center Markets

The U.S., led by NVIDIA, dominates the generative AI (GenAI) tech market. With the launch of ChatGPT in November 2022, the rise of GenAI gained substantial momentum.

From consumer-facing applications, foundational technology such as large language models (LLMs), cloud infrastructure, and semiconductors crucial for operations, U.S. companies hold a market share ranging from 70% to an impressive 90% across several segments of the generative AI landscape.

According to Statista, the global generative AI market is expected to reach $36.06 billion in 2024. Further, the market is projected to grow at a CAGR of 46.5%, resulting in a market volume of $356.10 billion by 2030. In global comparison, the U.S. is estimated to have the largest market share, totaling $11.66 billion this year.

Moreover, NVDA, a leading tech player, commands a market share of around 92% in the data center GPU market for GenAI applications.

Nvidia’s success extends beyond its cutting-edge semiconductor performance, owing to its software capabilities. The widely adopted CUDA development platform, introduced in 2006, has become a fundamental tool for AI development, amassing a user base of more than 4 million developers.

The company’s chips are essential in powering technology like Google’s Gemini and OpenAI’s ChatGPT. Also, META has placed a sizable order of 350,000 H100 GPU graphics cards from Nvidia. In line, MSFT has spent billions of dollars buying chips from the chipmaker.

Unveiled New Generation AI Graphics Processors

In March 2024, NVDA announced its next-generation chip architecture named Blackwell and related products, including its latest AI chip, B200. The latest GPUs are expected to dramatically boost developers’ ability to build advanced AI models.

The new GPU platform succeeds the company’s Hopper architecture, which was launched two years earlier and helped send NVDA’s business and stock surging.

Blackwell GPUs, containing 208 billion transistors, can enable AI models to scale up to 10 trillion parameters. It will be incorporated in Nvidia’s GB200 Grace Blackwell Superchip, which connects two B200 Blackwell GPUs to a Grace CPU.

The new AI chips are expected to ship later this year.

“Generative AI is the defining technology of our time,” said Nvidia CEO Jensen Huang during a keynote address at the company’s developers conference in San Jose, California. “Blackwell GPUs are the engine to power this new industrial revolution. Working with the most dynamic companies in the world, we will realize the promise of AI for every industry.”

With Blackwell’s superior performance, the chipmaker aims to solidify its dominance in the data center GPU market.

Outstanding Fourth-Quarter Financials

For the fourth quarter that ended January 28, 2024, NVDA’s revenue increased 265.3% year-over-year to $22.10 billion. That exceeded analysts’ expectations of $20.55 billion. It reported a record revenue from the Data Center segment of $18.40 billion, up 409% from the prior year’s period.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang.

He added, “Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries — led by auto, financial services and healthcare — are now at a multibillion-dollar level.

The chipmaker’s gross profit was $16.79 billion, an increase of 338.1% year-over-year. Its non-GAAP operating income rose 563.2% year-over-year to $14.75 billion. Its non-GAAP net income grew 490.6% from the previous year’s quarter to $12.84 billion.

Also, Nvidia posted non-GAAP earnings per share of $5.16, compared to the analysts’ estimate of $4.63, and up 486% year-over-year.

NVDA’s non-GAAP free cash flow was $11.22 billion, up 546.1% from the previous year’s period. The company’s total current assets were $44.35 billion as of January 28, 2024, compared to $23.07 billion as of January 29, 2023.

“Fundamentally, the conditions are excellent for continued growth” in 2025 and beyond, Huang told analysts. He noted that the robust demand for the company’s GPUs is expected to persist, fueled by the adoption of generative AI and an industry-wide shift from central processors to Nvidia’s accelerators.

Further, NVIDIA predicts revenue of $24 billion for the first quarter of fiscal 2025. The company’s non-GAAP gross margin is anticipated to be 77%.

Potential for Increased Dividend Payouts

As Nvidia’s revenue and profits soar significantly, the company will likely consider increasing its dividend payouts, benefiting long-term investors. NVIDIA paid its quarterly cash dividend of $0.04 per share on March 27 to shareholders of record on March 6. The company’s annual dividend of $0.16 translates to a yield of 0.02% at the current share price.

Currently, Nvidia’s dividend yield is modest compared to its tech peers, but its substantial cash flow and strong balance sheet provide ample room for growth. By increasing dividends, the company can attract a broader base of income-focused investors, further supporting its stock price.

Bottom Line

NVDA’s remarkable rise so far this year can be attributed to its dominance in the AI and data center markets, fueled by the growing demand for its chips from tech giants such as Amazon, Google, Meta, Microsoft, and more.

Moreover, Nvidia’s recent announcement of its next-generation chip architecture, Blackwell, and related products demonstrates its commitment to innovation and maintaining its competitive edge. With Blackwell’s superior performance, Nvidia aims to consolidate its dominance in the data center GPU market.

Analysts are highly optimistic about the chipmaker’s prospects. Analysts expect NVDA’s revenue and EPS for the fiscal 2025 first quarter (ended April 2024) to increase 242% and 411.9%year-over-year to $24.59 billion and $5.58, respectively. Also, the company topped consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

As NVDA continues to expand its market share and generate higher revenue and profit, the company naturally accumulates more cash reserves. With ample cash in hand, it can increase its dividend payouts without compromising its ability to fund ongoing operations or invest in future growth opportunities.

Increased dividends will be a positive signal to the market, reflecting Nvidia’s confidence in its long-term prospects and its commitment to returning value to shareholders. This move can also enhance investor sentiment, particularly among those looking for stable income streams in addition to capital appreciation.

In conclusion, NVDA stands at the forefront of the tech industry, driving innovation and shaping the future of AI. Given its outstanding financial performance, technological leadership, and potential for dividend growth, Nvidia is an attractive investment opportunity for long-term investors.

By The Ino.com Team – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Why Nvidia’s Stock Surge Could Translate to Higher Dividends

Opinions Stock Market News
31 May
Real Estate Investing

Colorado takes a new – and likely more effective – approach to the housing crisis

By Brian J. Connolly, University of Michigan 

In recent years, Colorado has been a poster child for the U.S. housing crisis. Previously a relatively affordable state, it has seen home prices increase nearly sixfold over the past three decades, outstripping even Florida and California.

Once a problem confined to coastal cities, unaffordable housing has increasingly become an issue in the nation’s heartland.

Like elsewhere, there’s no single reason why real estate has become so expensive in Colorado. Instead, there are several: Demand is rising among millennials, seniors are remaining in their houses longer, investors are buying second homes and short-term rentals, and housing construction has failed to keep up. Then there are supply-chain disruptions and labor shortages.

The result? Colorado has been experiencing declining population growth, increasing homelessness and hiring challenges for employers.

But new legislation may change that.

This year, Colorado’s General Assembly passed several laws that, from my perspective as an expert on real estate and land use, will make Colorado a national leader in expanding housing affordability.

On May 13, 2024, Colorado Gov. Jared Polis signed a bill requiring local governments to plan and zone for more apartments and condominiums near transit stations. On the same day, the governor signed a law allowing accessory dwelling units – small apartments located on the same lot as a single-family house – to be constructed in large cities and towns. These bills followed others that eliminated minimum vehicle parking requirements for apartments and preempted local rules prohibiting people from living with roommates. These changes will make housing more affordable by allowing developers to build more – and more diverse – housing at a lower cost.

Even more legislation, including a bill that would give local governments a right to purchase existing homes in order to preserve affordability, will soon reach the governor’s desk. Each of these actions aims to hold down housing costs for developers and home seekers.

Restricting new housing causes problems

To end the housing crisis, governments need to get rid of rules that prevent developers from building new homes.

For decades, economists have observed that restrictive zoning laws in some of the nation’s wealthiest cities are a major factor blocking new development.

Under the law of supply and demand, limiting housing supply increases housing prices.

That doesn’t just mean it’s hard to buy a home in Boulder or Vail. Unaffordable housing in prosperous U.S. cities has far-reaching effects. It increases the household wealth gap between existing, higher-income homeowners and renters. It reduces workforce dynamism, as workers can’t afford to move to places where they might find better-paying, more productive jobs. This, in turn, hurts national economic growth. Unaffordable housing also aggravates racial inequity and accelerates gentrification and displacement in lower-income neighborhoods.

The housing affordability crisis even makes climate change worse. As people seek cheaper housing farther from employment centers, their commutes produce more greenhouse gas emissions.

Colorado is addressing issues head-on

Colorado’s transit-oriented housing law is intended to address these issues. And, as my forthcoming research suggests, it may prove more effective than other states’ interventions to make housing more affordable.

Beginning with Oregon in 2019, several states attacked single-family zoning by overruling local zoning laws that only allow one detached home per parcel. Many cities have passed similar changes.

Advocates herald these reforms, but eliminating single-family zoning has produced little new housing.

Bolstered by my experience as a land-use lawyer, my research demonstrates some of the issues with well-intentioned single-family zoning reforms: It is too expensive and difficult to finance projects that add just one or two additional units to properties sporadically. What’s more, small projects like these don’t attract experienced developers.

Allowing higher-density housing, reducing development fees and speeding up permitting time frames will result in more homes being built more quickly, my research shows.

Colorado’s legislation does a better job of harnessing market forces. The state’s new transit-oriented development law requires 31 cities to plan and zone for housing at an average density of 40 dwelling units per acre within a half-mile of a fixed-rail transit station or high-frequency bus corridor. That’s roughly equivalent to a three- or four-story apartment building.

It’s impossible to predict exactly how many new housing units this law will create. But the Denver region’s transit agency has 77 light-rail stations, and the law will force local governments to plan and zone for approximately 60,000 housing units around those stations alone. That number of units would help to close Colorado’s 101,000-unit housing shortage. And that’s not counting the units that will be allowed to be built along bus lines.

The new law builds on experiments in Massachusetts and California, where state governments have begun to require towns to zone for and eliminate red tape on moderate-density housing near transit. However, Colorado’s law goes further by allowing much denser development, mirroring locally adopted and highly effective transit-oriented development laws in Minneapolis and Los Angeles.

Colorado’s law hits a sweet spot for developers. Mid-rise projects are the most profitable type of new multi-family housing construction, according to the University of California Berkeley’s Terner Center for Housing Innovation. That’s because they can be built with inexpensive materials such as wood and don’t require specialized building-safety components that go into high-rise construction.

Developers can spread costs in these projects across more units than in, say, a duplex or triplex. Under proper market conditions or with modest incentives, larger projects make it more feasible for developers to set aside affordable units for below-market-rate affordable prices if local governments require it.

By design, residents of these new homes will have easy access to public transit, which should ease Colorado’s air-quality issues and reduce its carbon footprint. As a result, a broad coalition of housing, transportation and environmental advocates supported the bill.

Colorado’s transit-oriented law also addresses a common argument against state intervention in land-use regulation. Opponents argue that state laws governing land use eat away at local communities’ right to govern themselves.

Local control is political, if not legal, dogma in many states. Honoring Colorado’s strong home rule tradition, the transit-oriented development bill allows cities to determine where in their transit areas to permit multi-family housing. A town could spread the required units throughout its transit areas, for example, or concentrate them in a particular location. But they can’t opt out from building them in the first place.The Conversation

About the Author:

Brian J. Connolly, Assistant Professor of Business Law, Ross School of Business, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Opinions Real Estate
30 May

Why the US government is trying to break up Live Nation Entertainment – a music industry scholar explains

By David Arditi, University of Texas at Arlington 

The U.S. Justice Department, along with 29 states and the District of Columbia, have filed an antitrust lawsuit against Live Nation Entertainment, the parent company of Ticketmaster.

The lawsuit alleges that Live Nation “engaged in a variety of tactics to eliminate competition and monopolize markets,” which, according to U.S. Attorney General Merrick Garland, has allowed the entertainment giant to “suffocate the competition” through its control of ticket prices, venues and concert promotion.

In response, Live Nation said that the antitrust suit “ignores everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity, to 24/7 online ticket scalping that reveals the public’s willingness to pay far more than primary tickets cost.”

The Conversation U.S. asked David Arditi, a University of Texas at Arlington sociologist and former professional drummer who has researched the livelihoods of musicians, to explain what’s behind the government’s decision to intervene in the ticket-selling business.

What is the government accusing the company of doing?

The government alleges that Live Nation Entertainment’s sprawling business model is choking off competition and that the company is punishing venues that rely on other ticketing services.

Live Nation, the country’s largest concert promoter, and Ticketmaster, the nation’s biggest ticket seller, had long been major players in the music industry. After the Justice Department approved a merger in 2010 between the two enterprises, the new company, Live Nation Entertainment, became far more powerful.

Live Nation Entertainment now controls many of the functions associated with putting on a concert: It owns venues, promotes concerts, books acts, produces shows, manages artists, sells tickets, and more.

Why is the Biden administration doing this?

After winning the 2020 presidential election, President Joe Biden promised to use the Justice Department’s antitrust division to break up monopolies, and that’s exactly what the government is trying to do with Live Nation Entertainment.

The government has been investigating Live Nation Entertainment for decades. But after a botched Ticketmaster presale for Taylor Swift’s Eras Tour in late 2022 – which made it nearly impossible for fans to buy tickets at face value – government scrutiny intensified.

After that fiasco, fans started contacting their lawmakers, and the U.S. Senate even held a hearing on the issue. In May 2024, the governor of Minnesota, Tim Walz, signed a bill into law that will require all ticket sellers in the state to disclose their fees up front.

How did Ticketmaster change the ticket-buying experience?

For much of the 20th century, buying tickets to a show or sporting event required traveling to the venue’s box office.

In 1976, Albert Leffler, who worked at Arizona State University’s performing arts center, and Peter Gadwa, an IT staffer on the same campus, founded Ticketmaster with businessman Gordon Gunn III. The enterprise began to sell tickets a year later. As the company developed, it incorporated new technology to facilitate ticket sales at a growing list of locations outside of the venue where a show would be performed.

Ticketmaster ultimately acquired Ticketron, its predecessor and rival.

As a teen in the 1990s, I remember waiting in line at a local grocery store in Williamsburg, Virginia, to buy tickets to a Dave Matthews Band show at the Virginia Beach Amphitheater. I had to be at the grocery store at 9 a.m. to purchase the tickets, but because it was a local Ticketmaster vendor, it saved me an hourlong trip to the venue.

A couple of years later, Ticketmaster introduced the technology required to give concertgoers the opportunity to purchase tickets online. In 2008, the company permitted paperless entry.

However, that convenience comes with hidden fees. Suddenly, the cost of your US$25 ticket can balloon to $40, with that extra $15 relatively opaque until checkout. These fees used to be a matter of convenience; there wasn’t a fee when you went to the venue to buy a ticket.

Now, the fees are unavoidable and multiplying: There can be a service fee, an order processing charge, a facility charge and a delivery fee.

How has Live Nation affected artists’ ability to make a living?

In my research and my personal experience, I’ve observed a sea change in the roles that live music and recorded music are playing.

From the 1970s to the 1990s, recording artists with medium-sized and large fan bases toured to promote their albums. During that time, these musicians assumed that they would take a loss on their tours; the payoff would come from their ability to sell more albums. Less prominent musicians, meanwhile, have always relied on playing at small venues to earn any income at all.

With the advent of file-sharing services, which later gave way to streaming, recording artists began to rely more on touring revenue to supplement their income, as money earned from album sales fell.

With even the most popular musicians increasingly relying on income from touring, they count more on making sure they earn what is owed to them. Fans feel like they have a close relationship with their favorite musicians and are willing to support them financially.

But when Live Nation Entertainment adds fees or pressures musicians to take a smaller cut of concert revenue, it becomes apparent to fans that they and their favorite musicians are getting a raw deal.

What will happen moving forward?

The government will seek a jury trial to determine if Live Nation Entertainment is a monopoly. If the company is found to be violating the Sherman Anti-Trust Act, Live Nation Entertainment would be forced to restructure, or even split into two or more separate companies.

Of course, lawsuits take time to resolve, even if the parties settle before entering a courtroom. And any potential ruling could have to go through an appeals process. I believe it’s likely that this dispute won’t be resolved for several years.

Aside from the lawsuit, the Biden administration is working on banning so-called “junk fees.” Eliminating exorbitant or hidden fees on concert tickets would address some of these problems.

Unfortunately, no matter what happens to Live Nation Entertainment, the music industry as a whole – whether it’s the record labels, streaming services, music publishers or music venues – is trending toward more consolidation and monopolistic behavior.The Conversation

About the Author:

David Arditi, Associate Professor of Sociology, University of Texas at Arlington

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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