As Newsquawk writes in its Fed minutes preview, at its May meeting, the FOMC left rates unchanged at 5.25-5.50%, as expected, and announced a higher-than-expected tapering of its QT program, where the monthly cap on Treasury runoffs will be reduced from USD 60bln to USD 25bln (exp. 30bln), while the monthly redemption cap on agency debt and agency MBS was maintained at USD 35bln.

While it continues to note that inflation has eased over the past year, it now acknowledges that in recent months, “there has been a lack of further progress” towards its inflation objective.

Still, Chair Powell ruled out the prospect of near term rate hikes, instead suggesting that the Committee could keep rates at current levels for as long as needed to bring inflation back down.

Elsewhere, the statement said that “risks to achieving its employment and inflation goals have moved toward better balance,” a slight tweak from the previous “moving into better balance,” which analysts said could reflect some growing concerns of an employment downturn. The statement also kept its guidance that the Fed does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.

Powell suggested that Fed remains satisfied with its current policy rate, and future rate moves remained skewed towards rate cuts, even though cuts have been delayed and the bar has been raised. Powell also said when the Fed gets confidence on inflation, rate cuts will be in its scope, but he does not have great confidence either way on whether there will be rate cuts this year.

The Fed Chair reiterated that a rate hike was unlikely, alleviating some hawkish risks that traders harboured heading into the meeting. Powell did not put too much weight on the hot Employment Cost Index data in Q1, and even drew attention to some dovish data points, like the soft JOLTS job openings figures, which he said showed that policy was restrictive.

Since the meeting, PPI and CPI data have signaled that core PCE, the Fed’s preferred gauge of inflation, will ease in April. That said, officials still want to see several months of constructive inflation readings before any change in policy stance can be endorsed.

* * *

In its preview of the Minutes, Goldman’s trading desk writes that the May FOMC meeting was “mostly uneventful but dovish overall” and we saw two takeaways from Chair Powell’s press conference.

• First, Powell pushed backed strongly against the possibility of rate hikes and emphasized that he is confident that the current policy stance is restrictive.
• Second, Powell offered no major clues on the timing of a rate cut but struck a consistently dovish tone on inflation. Consistent with Goldman’s views, he said he took little signal from the inflation uptick in Q1.

As a result, Goldman left its forecast unchanged and continues to expect two rate cuts this year in July and November

* * *

Finally, in its preview, JPM’s trader Andrew Tyler, agrees with Goldman and writes that his main takeaways are that

• Rate hikes are off the table – gives support to the hypothesis that we have seen the peak in yields in this hiking cycle with 10Y just shy of 5% in Oct 2023 and YTD high is 4.70%;
• The Fed still expects growth without inflation – this Goldilocks outlook should help Equity investors gain comfort on the macro picture despite some signs of weakening (24Q1 GDP miss, Retail Sales print, and earnings from MCD, SBUX, and YUM);
• The Fed remains focused on shelter inflation – with Core Services and Super Core Services remaining problematic, disinflation in the shelter component would assuage many concerns in Equity markets.

Overall, while yields are likely to fluctuate it is generally a spike in Rates vol and/or yields making new highs that are problematic for Equities. As a result, according to JPM the latest Fedspeak suggests that, in the near-term, neither of those outcomes is likely so bond yields will not be a headwind for stocks. 

Authored by Joshua Marks via The Gatestone Institute,

Close to three-fourths of the humanitarian aid transported from a new $320 million floating pier built by the U.S. military off the Gaza coast was stolen on Saturday en route to a U.N. warehouse, Reuters reported on Tuesday.

Eleven trucks “were cleaned out by Palestinians” on the journey to the World Food Programme warehouse in Deir El Balah in the central Strip, with only five truckloads making it to the destination.

“They’ve not seen trucks for a while,” a U.N. official told Reuters.

“They just basically mounted on the trucks and helped themselves to some of the food parcels.”

According to the United Nations, no aid was delivered to the warehouse from the U.S. military’s pier on Sunday and Monday.

The United Nations said that 10 truckloads of food aid from the pier arrived at the warehouse on Friday, its first day of operation. It was transported by U.N. contractors.

“We need to make sure that the necessary security and logistical arrangements are in place before we proceed,” said the U.N. official.

According to Israeli estimates, Hamas has been stealing up to 60% of the aid entering the Gaza Strip, and a Channel 12 report last week revealed that the terrorist organization has made at least $500 million in profit off humanitarian aid since the start of the war on Oct. 7.

The pier was pre-assembled at the Israeli port of Ashdod before being anchored to a beach in the coastal enclave on Thursday. No American troops went ashore during the installation of the pier, according to U.S. Central Command (CENTCOM). Some 1,000 U.S. soldiers and sailors helped build the floating pier.

The Israel Defense Ministry’s Coordinator of Government Activities in the Territories (COGAT) unit announced on Saturday that “hundreds of pallets of humanitarian aid” and more than 160,000 liters of fuel had entered via the pier.

Vice Admiral Brad Cooper, deputy commander of CENTCOM, said that the goal is for 500 tons of humanitarian aid, or 90 trucks, to pass into Gaza through the pier daily, eventually increasing to 150 trucks a day.

CENTCOM tweeted early Tuesday that over 569 metric tons of humanitarian assistance has been unloaded from the pier so far.

Reuters also reported that “food and medicine for Palestinians in Gaza are piling up in Egypt because the Rafah crossing remains closed.”

Israel took operational control of the crossing weeks ago, but Cairo so far has refused to cooperate with Israeli authorities to facilitate the entry of aid through Rafah. The Israeli government wants to allow aid into Gaza through the crossing but is unable to do so without Egyptian cooperation.

Israeli Foreign Minister Israel Katz last week placed the responsibility for averting a humanitarian crisis in the Gaza Strip squarely on the shoulders of Egypt.

Katz said he had spoken with his British and German counterparts “about the need to persuade Egypt to reopen the Rafah Crossing to allow the continued delivery of international humanitarian aid to Gaza.”

While the world places the responsibility for Gaza’s humanitarian situation on Israel, he added, “the key to preventing a humanitarian crisis in Gaza is now in the hands of our Egyptian friends.”

Meanwhile, COGAT on Thursday approved the resumption of commercial trade between Israel and the Gaza Strip, with truck deliveries starting the following morning, Israel’s Walla! News outlet reported on Sunday.

According to the report, 150 trucks loaded with produce from Israel—not aid—crossed into Gaza, intended for merchants who purchased the produce, which is “intended for Hamas members and the civilian population.”

In the world of content streaming, Netflix and Amazon Prime are two of the largest heavyweights in the arena. And a new look into both businesses by Invezz reveals that while Netflix may be winning in subscriber numbers, Amazon Prime has a leg up in revenue generation. 

To gauge the top streaming service, one can look at market share, notably subscriber counts, and profit. As of July 2023, according to a Statista report by Julia Stoll, Amazon Prime surpassed Netflix in U.S. market share.

However, clarity on subscriber numbers remains ambiguous, particularly with Apple not updating its Apple TV+ subscriber figures since 2022.

But recent financial results have provided more data, the report notes.

Netflix reported 269.6 million global subscribers as of March 2024, with its shareholder letter stating nearly 270 million households worldwide subscribe. Meanwhile, Amazon Prime Video claimed over 200 million subscribers by April 2024, despite a 2% drop in its subscriber base last quarter.

Despite Netflix possibly reclaiming the lead in subscriber count from Amazon Prime since July 2023, the revenue battle tells a different story. Amazon’s Q1 2024 earnings showed $10.48 billion from subscription services alone, surpassing Netflix’s $9.37 billion in total net income for the same period.

Thus, while Netflix leads in subscriber numbers, Amazon Prime Video generates more revenue, a gap that may widen with its new ad initiatives.

Harsh Vardhan, Editor in Chief at Invezz, concluded: “In the battle for streaming supremacy, it’s clear that while Netflix may hold a slight edge in subscriber numbers, Amazon Prime Video’s dominance in revenue generation cannot be overlooked.”

Vardhan said: “This financial muscle not only underscores Amazon’s robust growth strategy but also highlights its potential to innovate and expand its content offerings more aggressively. As the landscape continues to evolve, the true victor will be the one who can most effectively balance subscriber growth with sustainable profitability.”

Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Some winners from the artificial intelligence (AI) and electric vehicles (EV) boom are easy to spot. For instance, shares of Nvidia, Microsoft, Tesla, and other companies have posted significant gains, anticipating a surge in future revenue and profits.

The development of AI data centers and the continued growth of EVs will benefit industries and companies that are not yet as closely followed. As a result, the stock prices of some companies in these industries may have some catching up with those mentioned above.

This article focuses on the potential beneficiaries of the significant investment necessary to upgrade, expand, and run the nation’s power grid to accommodate AI data centers and the continued growth of EVs. We follow up with Parts Two and Three to drill down to the industries and companies that may benefit most from the coming changes to the power grid. 

To help appreciate the power grid expansion needed to run AI data centers, consider the following comment from Lal Karsanbhai, CEO of Emerson Electric.

AI data center racks consume significantly more power than traditional data centers with a search on ChatGPT consuming 6 to 10 times the power of a traditional search on Google.

A Lesson From Levi Strauss

Before revealing the lesser-appreciated beneficiaries of the AI and EV booms, we share the genius of Levi Strauss. Born in 1829, Levi Strauss opened a branch of his family’s dry goods business in San Francisco during the gold rush. Gold miners were flocking to the region and stocking up on goods. They needed items like pickaxes, food, and clothing to help them in their quest to make fortunes.

In 1873, Levi invented a more durable brand of pants for miners, made of denim and using metal rivets. Today, these pants go by the name of blue jeans. Levi smartly realized that handsome returns could be had by supplying the miners. Therefore, one needn’t risk their fortunes or life and limb to profit from a game of chance like gold mining.

Levi profited dearly from the gold rush. But, unlike most gold miners, his profits were consistent and lasting. His ingenuity still pays big dividends to his descendants.

Let’s uncover the next Levi Strauss of the AI/EV rush. These not-so-obvious companies serve as critical lynchpins to maximize AI and EVs’ value via the power grid.

Status of the Power Grid

We start with a brief summary of the power grid from the EIA.

Electricity generated at power plants moves through a complex network of electricity substations, power lines, and distribution transformers before it reaches customers. In the United States, the power system consists of more than 7,300 power plants, nearly 160,000 miles of high-voltage power lines, and millions of low-voltage power lines and distribution transformers, which connect 145 million customers.

Local electricity grids are interconnected to form larger networks for reliability and commercial purposes. At the highest level, the United States power system in the Lower 48 states is made up of three main interconnections, which operate largely independently from each other with limited transfers of power between them.

The EIA estimates the US generated 4,178 billion kilowatt-hours (kWH) of electricity in 2023. Fossil fuels account for 60% of the total, with natural gas and coal being the two largest. Nuclear and renewable sources account for most of the remaining 40%.

In the future, not only will the power grid need to be modernized and expanded to supply more power, but the political and public pressure to make it environmentally cleaner will likely be more powerful. The EIA expects global power-generating capacity to increase by 30% to 76% by 2050.

Given the size of the US economy and the number of US-domiciled companies leading the global AI and EV industries, a good portion of the increased global power needs will likely occur on US soil.  

Starting From Behind

As many of you can attest, the power grid increasingly exhibits outages due to extreme temperatures. The problem is multifaceted. As renewable energy resources become a larger share of the electric generation resource base, the system grows inherently more sensitive to extreme weather events. Traditional resources that are ill-prepared for new extremes are also showing vulnerabilities. Consequently, expanding the power grid requires utility companies to also invest in significant upgrades. For example, among these upgrades are new federal regulations requiring additional cold weather preparations for electric generators.

Per the WSJ–

A report last year by the American Society of Civil Engineers found that 70% of transmission and distribution lines are well into the second half of their expected 50-year lifespans. Utilities across the country are ramping up spending on line maintenance and upgrades. Still, the ASCE report anticipates that by 2029, the US will face a gap of about $200 billion in funding to strengthen the grid and meet renewable energy goals.

The article estimates that the investment shortfall could accumulate to $338 billion by 2039. That estimate will, unfortunately, prove to be too low. The article was written in February 2022, before the massive energy demands for AI data centers were fully appreciated.

The bottom line is that utility companies, other power distributors, and municipalities must invest hundreds of billions of dollars over the next decade to modernize and expand our power grids.

The Impact of EVs and AI Data Centers on the Power Grid

EVs

Assuming the acceptance growth rate of EVs continues, the electricity demand will increase substantially. The EIA estimates that US EV sales could surpass 3.5 million in 2025. That number could rise to over 8 million by 2030. Furthermore, if improvements to EV batteries to boost the driving range per charge and the number of charging stations increase rapidly, the EIA 2030 estimate could fall well short of reality.

On a side note, as we wrote in Is Toyota The Next Tesla, solid-state batteries, expected to be produced by Toyota as early as 2027, could be a game changer that dramatically boosts demand for EVs.

For context, EV sales increased from 1 million in 2022 to 1.6 million in 2023 (per MarketWatch). Edmunds estimates there are about 3.3 million EVs in the US, accounting for only 1% of the total vehicles. 

Estimates suggest that if EVs were to replace a significant portion of internal combustion engine vehicles, electricity demand could increase by 20% to 40% over the next few decades. Based on the quote below, that may be a gross underestimation.  

“PG&E expects system demand to increase up to 70% over the next two decades as more EVs are added.” – Utility Dive

Not only is more electricity needed, but the power grid must also be upgraded to account for the timing of EV-related energy demands. EV charging, mainly if done simultaneously during peak hours, like early evenings, can lead to higher than current peak loads.

AI Data Centers

AI data centers alone are expected to add about 323 terawatt hours of electricity demand in the US by 2030, according to Wells Fargo. The forecast power demand from AI alone is seven times greater than New York City’s current annual electricity consumption of 48 terawatt hours. Goldman Sachs projects that data centers will represent 8% of total US electricity consumption by the end of the decade. – CNBC

From the same article comes the following quote from Robert Blue, CEO of Dominion Energy

“Economic growth, electrification, accelerating data center expansion are driving the most significant demand growth in our company’s history, and they show no signs of abating,”

Dominion Energy projects that demand from data centers in Virginia will more than double by 2030. Northern Virginia hosts the largest number of data centers in the country.

While researching this article, we came across many forecasts and comments like the ones above. The bottom line is that AI data center growth will be explosive. Consequently, the power demand will grow substantially.

Summary

AI and EVs can potentially increase the nation’s productivity growth, which would go a long way toward boosting economic growth. However, with the potential benefits come significant investments. Some companies have already made massive investments in those industries. Others, like those involving the power grid, are just getting started.

We will follow this article with two more focusing on the industries and some stocks best situated to benefit from the modernization and expansion of the power grid and those that can help the utilities meet environmental goals.

Shares of BuzzFeed, a notorious slideshow clickbait farm and propaganda disseminator – which recently fired its entire “news” division – soared early Wednesday after multi-millionaire and former US presidential candidate Vivek Ramaswamy reported a stake in the online media company and asked for talks with the board.

Ramaswamy, who ended his candidacy in January and threw his support behind Donald Trump, has taken a 7.7% stake in BuzzFeed, worth about $6.81 million. The tiny purchase makes Ramaswamy the fourth largest shareholder in BuzzFeed, trailing Comcast, NEA Management and Hearst Communications, all of whom invested in the nearly insolvent company at a time when its valuation was orders of magnitude higher.

In a filing with the Securities and Exchange Commission, Ramaswamy said he seeks to “engage in a dialogue with board or management about numerous operational and strategic opportunities to maximize shareholder value, including a shift in the company’s strategy.”

The stock surged as much as 55% to $3.94 in premarket trading in New York; it was the biggest one-day gain since February.

BuzzFeed, best known for publishing the salacious and fake Trump dossier, but has since refocused on its core competency of online quizzes, lists of “bests,” and AI-written tabloid articles on pop culture, has imploded in recent years due to cutbacks in internet advertising. Last year, the company eliminated its news division amid broader layoffs, and has long been on the verge of collapse.

Ramaswamy founded pharmaceutical company Roivant in 2014, and co-founded Strive Asset Management in 2022. He stepped away from the asset management firm last year to focus on his presidential run and has said he isn’t returning; instead it now appears he is hoping to become a media baron. Ramaswamy’s position in BuzzFeed marks his latest move since ending his political campaign.

Five potential spot Ether exchange-traded fund (ETF) issuers have submitted amended 19b-4 filings after receiving last-minute feedback from the United States Securities and Exchange Commission (SEC).

Several filings show changes from asset managers Fidelity, VanEck and Franklin Templeton, along with joint applications from Galaxy and Invesco, and ARK Invest and 21Shares.

Ether prices have soared in the last few days…

And net inflows to BTC ETFs has also reignited…

As Brayden Lindrea reports via CoinTelegraph, the amendments saw Fidelity, Franklin Templeton and ARK 21Shares remove provisions for Ether staking.

“Neither the Trust, nor the Sponsor, nor the Custodian, nor any other person associated with the Trust will, directly or indirectly, engage in action where any portion of the Trust’s ETH becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ETH or generate income or other earnings,” Fidelity’s amended 19b-4 filing read.

The other Chicago Board Options Exchange (CBOE)-sponsored applicants used similar language.

Grayscale also scrapped staking, according to a proxy statement.

However, Adam Cochran, partner at venture capital firm Cinneamhain Ventures, claimed that an approved spot Ether ETF without the staking element would actually boost staking returns.

“ETFs without staking provide the same crucial boost to Ethereum’s legitimacy while avoiding ETF tail risk and diluting my yield,” added Ryan Berckmans, Ethereum community member and investor.

All five CBOE filings came in the 25 minutes between 9:35 pm and 10:00 pm UTC on May 21, according to Bloomberg ETF analyst James Seyffart.

The approved 19b-4 filings will need to be accompanied by signed-off S-1 registration statements for the ETFs to launch, Seyffart iterated.

“Still a potentially long way from a launch. But these filings prove that all of the rumors and speculation and chatter have been accurate,” he added.

Source: James Seyffart

The SEC must decide on VanEck’s application by May 23. However, industry pundits tip the regulator to decide on all or most applicants, similar to how it handled spot Bitcoin ETF applications in January.

Fox Business reporter Eleanor Terrett noted that VanEck’s Ether ETF bid was added to the Depository Trust and Clearing Corporation’s (DTCC) website.

Listing of VanEck’s spot Ether ETF on DTCC’s website. Source: DTCC

The DTCC website often lists securities eligible for trading and settlement within its systems, including ETFs that have completed particular registration or compliance processes. However, this doesn’t indicate that the securities will be approved by the SEC.

BlackRock and Hashdex are the other two spot Ether ETF applicants vying for SEC approval.

It comes as the SEC reportedly started asking applicants to accelerate their 19b-4 filings on May 20.

The sudden change resulted in Seyffart and fellow Bloomberg ETF analyst Eric Balchunas raising their spot Ether ETF approval odds from 25% to 75%.

ETH is up 20.6% to around $3,800 since the SEC’s reported U-turn, according to CoinGecko.

Finally, CoinTelegraph reports that Bitcoin and Ethereum-based exchange-traded products (ETPs) are set to debut on the London Stock Exchange (LSE) following approval by the Financial Conduct Authority (FCA) on May 22.

WidomTree’s physical Bitcoin ETP with ticker symbol WBTC and the physical Ethereum ETP (WETH) will be among the first set of crypto ETPs to be listed in the United Kingdom and are expected to begin trading on May 28, reported ETF Stream.

The physical ETPs will only be available to professional and institutional investors as the retail ban on crypto trading and sale of crypto derivatives and ETPs was enacted in January 2021. The listing of WisdomTree’s two ETPs comes nearly two months after the LSE’s public notice.

Alexis Marinof, head of Europe at WisdomTree, said that the FCA approval of their crypto ETPs’ prospectus will make it easier for the UK-based professional investors to invest in crypto-backed products which currently access crypto ETPs via overseas exchanges,

In a public announcement on March 25, LSE notified that applications for the cryptocurrency ETPs are open until April 8; accepted funds will be listed the following month, subject to clearance by the nation’s financial regulator, thFCA.

To gain FCA approval, the crypto ETPs should only be denominated in Bitcoin or Ether, be physically backed, and be non-leveraged. The issuers must also partner with an Anti-Money Laundering licensed custodian in the United States, the United Kingdom, or the European Union and hold the underlying assets in cold storage.

The approval of Bitcoin ETFs by the United States Securities and Exchange Commission and its subsequent success, which saw billions flow into these ETFs weekly, have prompted several other governments around the globe to offer crypto accessibility to investors.

Apart from the U.K., Hong Kong was another region to approve the listing of Bitcoin and Ether ETFs. These spot cryptocurrency ETFs from Hong Kong were regarded as a significant improvement over their U.S. counterparts due to features like in-kind transfers and denominations in three fiat currencies. Investors can instantly purchase and redeem ETF units using Bitcoin or Ether.

Despite having been targeted by the most powerful, pro-Israel political organization operating in America, libertarian-minded Kentucky Congressman Thomas Massie stomped his two Republican primary challengers on Tuesday — and then used social media to mock his Israel-first detractors. 

Massie cruised to victory, amassing 76% of the vote, while his two would-be vanquishers roughly split the difference, with Michael McGinnis edging Eric Deters by about 1%. With no Democratic opponent even bothering to take on Massie in November, he’s set up for a six term representing Kentucky’s 4th congressional district, which stretches all along the northernmost part of the state.  

“Tonight’s victory is a referendum on thousands of independent votes I have cast in Washington DC on behalf of Kentucky’s 4th District,” said Massie.

“I’ve consistently upheld the Constitution by voting for and sponsoring legislation to support the right to keep and bear arms, the right to free speech, freedom of religion and the right to privacy. I’ve also fought against endless foreign wars, foreign aid and inflationary policies, regardless of who is in the White House.

Earlier this month, the independent campaign-spending arm of the American Israel Public Affairs Committee (AIPAC) announced that it was pouring $300,000 into advertisements on Fox television affiliates across the Bluegrass State. The over-the-top ads said, “Israel, the Holy Land [are] under attack by Iran, Hamas, Hezbollah…and Congressman Tom Massie.” 

Massie has repeatedly stood out as one of the very few Republicans willing to defy the wishes of the potent pro-Israel lobby. In recent months, he voted against the Antisemitism Awareness Act, which would make universities tolerating unacceptable statements about Israel targets of federal civil rights-based punishments. He also voted against the latest, $14.3 billion aid package, noting that “Israel has a lower debt-to-GDP ratio than the United States.” 

After Massie’s lopsided win was apparent, AIPAC tried to downplay the outcome, saying that, rather than trying to beat oust him in the primary, the group wanted to damage him statewide — clearly in anticipation of a possible Massie 2026 Senate run to take the seat of retiring Senate Majority Leader and quintessential establishment swamp creature Mitch McConnell.   

Massie said AIPAC was guilty of “election campaign malpractice.” Referring to the $400,000 total that AIPAC had spent against him recently, he told McClatchy DC, “I’m laughing because it has the same effect as lighting it on fire and burning it…What it could do is up my name ID statewide, but two years from now nobody’s going to remember what the ad was about.”

He also deftly turned AIPAC’s announcement of its attack-blitz into a fundraising opportunity. As word of AIPAC’s  campaign spread on social media and via ZeroHedge and other outlets, more than 1,200 people contributed $101,000 to his coffers in just four days.    

On Tuesday evening, Massie seized on AIPAC’s defensive tweet, drawing attention to the fact that it had been “ratio’d” by the Twitterverse.

🇺🇸 FIRST. After spending $400k+ smearing me, and watching me get 75%+ in the race tonight, they claim they weren’t playing in the race. They deserve the ratio here: https://t.co/ULaQYOcXmU

— Thomas Massie (@RepThomasMassie) May 22, 2024

“Ratio” refers to a tweet that garners more replies than likes and retweets, which almost always indicates mass ridicule has been dished out. That was definitely the case here:  

Massie is the most America first congressman. This means you are anti America first.

— DV (@DV2O24) May 22, 2024

True integrity prevails because it is priceless. Plus, he represents Kentucky — not Israel.

— Brian J. Pfail (@brian_pfail) May 22, 2024

Not wanting money stolen from Americans to be sent to Israeli is not the same as being “anti-Israel.”

You want money? Earn it in the market. Voluntarily.

— Jack V Lloyd (@jackvlloyd) May 22, 2024

God forbid a representative from Kentucky hold the belief that Kentucky > Israel.

— Antonio (@antonio00o_o) May 22, 2024

You have no right to demand that American taxpayers be forced to fund your wars

He votes against all foreign aid. You know this. You smear him because you can’t argue against his principles.

You should be ashamed

— Clint Russell (@LibertyLockPod) May 22, 2024

Kentuckians told AIPAC tonight that we are AMERICANS First!

— Terry Van Loon (@terrybythebay) May 22, 2024

He owes no loyalty to any country except the one he represents, and that’s the United States of America. You won’t unseat him. You’ll only waste your donor money.

— Les Vegetables (@OPRfan) May 22, 2024

I support Israel strongly and I support Rep. Thomas Massie strongly.

He is solidly America First.

I might have some differences with him on the level of Israel support, but honestly I wish we had hundreds more Thomas Massies in Congress.
He is principled.

— $8 Bartemy (@BartemyS) May 22, 2024

By Michael Msika, Bloomberg Markets Live reporter and strategist

Falling volumes, crushed volatilities and record highs, equity markets seem to price nothing but a rosy outlook. While much has gone right for investors this year, some risks can’t be ignored and deserve attention.

It seems no one wants to be short in this market. Bears are falling like dominoes and positioning is increasing, leaving the market very much one-sided ahead of the Fed minutes and European PMI data, along with the results of the world’s most important stock Nvidia.

Goldman Sachs’ proprietary risk appetite indicator hit its highest level since 2021, which is indicative of lower returns in the medium term, according to strategists including Andrea Ferrario. Volatility structure suggests markets are pricing less risk of a sustained drawdown from here but are worried about temporary spikes in volatility – with high market concentration, idiosyncratic events can also matter, such as Nvidia’s results, they add.

Looking at the volatility curve, very short dated implied volatilities are now trading at the sub-10 point level, a significant decline at the front end. This suggests market is pricing nothing but calm over the coming days.

“As equity vol approaches post-Covid lows, investors may be wondering how far we are from a return to 2017‘s record low vol regime,” say Bank of America derivatives strategists including Vittoria Volta. “Structurally higher idiosyncratic risk today vs 2017, a market arguably at risk of disappointment by the pace of ECB cuts anticipated for the second half of the year, coupled with spillover from US megacap tech fragility, could keep EU stock vol supported through the summer.”

The strategists note that Euro Stoxx 50 skew is flat versus post-Covid history but not quite at 2017 extremes, term structure is steep but not ‘2017 steep’. Meanwhile, 3-month realized index correlation is at 2017 record-low but single stock realized vol is still relatively far. Finally, volatility tends to be supported into the fall during low vol years, they say.

Index future positioning ahead of these events has continued to increase, especially on US equities, as exposure to Europe was already hovering at extreme levels and was slightly trimmed, according to Citigroup data. Separately, Goldman’s derivatives desk points out that single stock put/call skew suggests positioning is 9.5 out of 10, while Deutsche Bank strategists estimate CTAs’ exposure to global stocks are in the 91st percentile. CTA, also known as trend followers, are future funds chasing momentum and can flip positions fast, which can spur volatility episodes.

“Bullish positioning levels continue to rise for the S&P and Nasdaq,” say Citi quantitative strategists including Chris Montagu. “Last week’s activity was led by increased new risk flows. This leaves the S&P extended and almost exclusively one-sided.”

Nvidia’s results are going to be interesting and likely have an impact on the overall market. Expectations are high after a nearly 550% surge in share price and earnings forecasts since the start of 2023. The stock has accounted for about a quarter of the S&P 500’s 11% returns this year and boosted sentiment for tech globally. Tech is the second best performing sector in Europe and has the largest weight in the euro-area benchmark Euro Stoxx index at 15%.

“We note the Stoxx 600 has been flirting around short-term overbought territory of late with five sectors — banks, telecoms, personal care, staples and energy — currently screening that way,” says Carl Dooley, head of EMEA trading at TD Rowen. “That, combined with a lighter volume tape to start the week contributing to what feels like a buyer’s pause.”

Authored by Savannah Fortis via CoinTelegraph.com,

Ethereum co-founder Vitalik Butertin has shared his take on “superintelligent” artificial intelligence, calling it “risky” in response to ongoing leadership changes at OpenAI. 

On May 19, Cointelegraph reported that OpenAI’s former head of alignment, Jan Leike, resigned after saying he had reached a “breaking point” with management on the company’s core priorities.

Leike alleged that “safety culture and processes have taken a backseat to shiny products” at OpenAI, with many pointing toward developments around artificial general intelligence (AGI).

AGI is anticipated to be a type of AI equal to or surpassing human cognitive capabilities — the thought of which has already begun to worry industry experts, who say the world isn’t properly equipped to manage such superintelligent AI systems.

This sentiment seems to align with Buterin’s views. In a post on X, he shared his thoughts on the topic, emphasizing that people should not rush into action or push back against those who try. 

Source: Vitalik Buterin 

Buterin stressed open models that run on consumer hardware as a “hedge” against a future where a small conglomerate of companies would be able to then read and mediate most human thought. 

“Such models are also much lower in terms of doom risk than both corporate megalomania and militaries.”

This is his second comment in the last week on AI and its increasing capabilities.

On May 16, Buterin argued that OpenAI’s GPT-4 model has passed the Turing test, which determines the “humanness” of an AI model. He cited new research that claims most humans can’t determine when they talking to a machine.

However, Buterin is not the first to express this concern. The United Kingdom’s government also recently scrutinized Big Tech’s increasing involvement in the AI sector, raising issues related to competition and market dominance.

Groups like 6079 are already emerging across the internet, advocating for decentralized AI to ensure it remains more democratized and not dominated by Big Tech.

Source: 6079

This follows the departure of another senior member of OpenAI’s leadership team on May 14, when Ilya Sutskever, co-founder and chief scientist, announced his resignation.

Sutskever did not mention any concerns about AGI. However, in a post on X, he expressed confidence that OpenAI will develop an AGI that is “safe and beneficial.”