>>> US Close Dow +0.43% S&P +0.39% Nasdaq +0.20% Russell

losing Stock Market Summary
The major indices traded in mixed fashion in the early going. The lackluster price action was due in part to ongoing consolidation efforts and a wait-and-see mentality ahead of a busy week that features the November Consumer Price Index on Tuesday, the FOMC meeting on Wednesday, and the November Retail Sales Report on Thursday. In addition, the ECB and Bank of England have their own policy meetings on Thursday.

Market participants were also hesitant in front of the two Treasury note sales today. The $50 billion 3-yr note auction and $37 billion 10-yr note auction were both met with weak demand, but Treasuries settled off their lows despite the results. The 2-yr note yield fell one basis point to 4.73% after hitting 4.77% earlier and the 10-yr note yield declined one basis point to 4.24% after hitting 4.28% earlier.

Treasuries moving off their intraday high yields coincided with an uptick in buying activity in the stock market. The major indices all settled into a steady climb around 1:00 p.m. ET that left stocks near their best levels at the close.

The equal-weighted S&P 500 closed with a 0.9% gain while the market-cap weighted S&P 500 logged a 0.4% gain, due in part to relative weakness in the mega cap space. The Vanguard Mega Cap Growth ETF (MGK) declined 0.2%.

Semiconductor equipment stocks had a strong showing today following a Wall Street Journal report that New York is joining with semiconductor companies to invest in a research facility at the University of Albany. The Philadelphia Semiconductor Index jumped 3.4%.

Only one of the S&P 500 sectors registered a decline -- communication services (-1.0%) -- while the consumer staples (+1.0%) and industrial (+0.9%) sectors saw the biggest gains.

There was no U.S. economic data of note today.
  • Nasdaq Composite: +37.9%
  • S&P 500: +20.4%
  • Dow Jones industrial Average: +9.8%
  • S&P Midcap 400: +8.9%
  • Russell 2000: +7.0%

Tuesday's economic calendar features:
  • 6:00 ET: November NFIB Small Business Optimism (prior 90.7)
  • 8:30 ET: November CPI ( consensus 0.0%; prior 0.0%) and Core CPI (consensus 0.1%; prior 0.2%)
  • 14:00 ET: November Treasury Budget (prior -$66.6 bln)

>>> US After Hours Summary: TARO +9.2% up big on M&A news; DFS +1.6% edges highe

After Hours Summary: TARO +9.2% up big on M&A news; DFS +1.6% edges higher after naming a new CEO; ORCL -7.6%, CASY -0.2% both down following quarterly results

After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: BLBD +7.8%
Companies trading higher in after hours in reaction to news: TARO +9.2% (agrees in principle to be acquired for $43.00/share), OLPX +2.4% (appoints new CEO), DFS +1.6% (names new CEO), PRU +1.3% (authorizes $1.0 bln repurchase program), GERN +1% (Phase 3 presentation), AB +0.5% (reports month-end AUM), SBLK +0.5% (combining with Eagle Bulk Shipping), F +0.4% (cutting F-150 Lightning production in half, according to Automotive News), APAM +0.3% (reports month-end AUM), KKR +0.2% (nearing buying stake in Cotiviti, according to WSJ), BMY +0.1% (strategic collaboration with SystImmune), IBP +0.1% (acquiring Combee Insulation of Florida), CNS +0.1% (reports month-end AUM)

After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ORCL -7.6%, CASY -0.2%
Companies trading lower in after hours in reaction to news: KNTK -6% (stock offering), SBOW -5.7% (stock offering), SNCY -4.2% (stock offering), HAS -4.1% (to reduce workforce by nearly 20%), LCID -3% (CFO departing), MAT -3% (trading in sympathy with HAS), GPOR -2% (stock offering), IVZ -1.9% (reports month-end AUM), LPTX -0.8% (to present new data), RMD -0.3% (secures victory in patent fight), AMZN -0.2% (drone delivery head of safety departing, according to CNBC), WTS -0.1% (to acquire Josam Company)

WSJ : Netflix to Serve Up Live Tennis, Featuring Nadal and Alcaraz

Netflix to Serve Up Live Tennis, Featuring Nadal and Alcaraz
The streaming company’s latest live sports event features two big names in tennis

Netflix will stream a one-night tennis exhibition match featuring Rafael Nadal and Carlos Alcaraz in the streaming company’s latest foray into live sports.

Nadal, winner of 22 Grand Slam men’s singles titles, and Alcaraz, the current No. 2 ranked men’s player, will face off in a match next year, the company said Monday.

The event, called “The Netflix Slam,” will take place in Las Vegas on March 3 and stream live. Other tennis players and matchups will be announced later, Netflix said.
Streaming companies have been adding sports events to their platforms because it is one of the rare types of programming people watch live. That is appealing to advertisers, who want their ads in front of viewers who are watching for hours.

Amazon.com’s Prime Video and Alphabet’s YouTube have paid hefty prices to stream live National Football League games. Comcast’s Peacock streams Premier League soccer and carries Big Ten football.

Netflix executives have largely resisted the live-sports trend because of the escalating costs of sports rights.

Last month, Netflix streamed its first live sporting event, “The Netflix Cup,” a golf tournament with athletes from “Drive to Survive,” its Formula One documentary, and “Full Swing,” its show about professional golfers.

Netflix has also had discussions about airing a live boxing match, The Wall Street Journal reported last month.

Streaming live sports could bolster Netflix’s new ad business, which has grown slowly. The company launched a plan with ads a year ago that’s cheaper than its other service tiers.

The tennis match between the two Spanish players—one a tennis legend nearing the end of his career, the other a young player bringing new energy to the sport—will air in English and Spanish.

They have faced each other three times, with Nadal winning twice.

Nadal, 37, has been battling injuries. He is expected to return at the Australian Open in January after a year away. Both he and Alcaraz, 20, said in statements that they’re looking forward to playing each other.

“I am sure it will be a fantastic night of tennis,” Nadal said.

FT : Italian court acquits former Monte dei Paschi bosses in derivatives case

Italian court acquits former Monte dei Paschi bosses in derivatives case
Milan appeals court says the state-owned bank’s former bosses committed no crime

An Italian court has reversed convictions for market manipulation and false accounting against Monte dei Paschi di Siena’s former top management, dealing a blow to the prosecution of one of the most high profile financial crime cases.

On Monday the Milanese appeals court ruled that no crime was committed, overturning a 2020 ruling. Shares rose as much as 4 per cent in Milan after the ruling.

Three years ago Alessandro Profumo, the bank’s chair between 2012 and 2015, and its former chief executive Fabrizio Viola, were found guilty of booking derivatives transactions structured by their predecessors as “repurchase agreements.”

Monday’s ruling brings relief to the state-owned bank, which set aside billions for potential damage claims in connection to this case and another one involving the institutions and executives that initially structured the transactions. It also paves the way for a more lucrative privatisation than anticipated.

The Italian government bailed MPS out in 2017 after the bank failed to raise capital as losses on the derivatives deals piled up due to the country’s sovereign debt crisis. The lender is due to be privatised by the end of next year as part of an agreement with the European Commission for approving the state-led rescue.

Last month Rome sold a 25 per cent stake in the lender, after a turnaround plan led by chief executive Luigi Lovaglio resulted in an upgrade of its credit ratings.

In 2013 MPS restated its accounts after it emerged that the transactions — known as Alexandria and Santorini — were used by Profumo and Viola’s predecessors to mask losses linked to its exposure to the country’s government bonds at the height of sovereign debt crisis. 

Two years later, Consob, the national financial regulator, requested that the lender amend how it had booked the transactions on its balance sheet to reflect that they were derivatives.

But in October Italy’s supreme court upheld a ruling acquitting Viola’s and Profumo’s predecessors as well as other former executives at Deutsche Bank and Nomura, who had first structured the transactions between 2008 and 2012.

The bank subsequently reduced its estimates for legal claims and said the risk linked to some of those claims, previously considered “possible”, had become “remote”.

FT : The ‘cocaine bear’ ETF keeps on huffing

The ‘cocaine bear’ ETF keeps on huffing
Everyone loves duration again

This summer we wrote about the closest thing that the bond market has to a meme stock — Direxion’s triple-leveraged long-maturity Treasury ETF.

The “cocaine bear energy” of TMF has since then cranked up several notches, as people have kept betting that the bond market nadir is in. Just last Friday the $4bn ETF took in a record $205mn!


That means that TMF has seen almost $2.5bn of net inflows and roughly doubled in size since FT Alphaville wrote about it on June 1 — despite what can kindly be described as a bad run.

While it has climbed almost 50 per cent since its October low, the ETF has still done comically badly since going bananas back in the early-2020 Treasury market rally.


Of course, leveraged ETFs like TMF are overwhelmingly just trading tools for Reddit bros. You’d be mad to buy and hold it, given both the ongoing management fees and the cost of the embedded leverage (some people have timed it pretty well though).

However, you can also see the appetite to time the bond market bottom mimicked in its staid, unleveraged big brother, BlackRock’s iShares 20+ Year Treasury Bond ETF, or TLT.

Despite getting brutalised for most of the past two years this bad boy has taken in another $21bn in 2023, lifting its size to $48bn. That means it is now the fourth-biggest bond ETF, and 29th on the overall rankings.

So is this the right time to dive back into duration? Maybe, if the ca 130 bps of rate cuts that markets are now pricing in actually materialise. But as mainFT reported today, central bank officials have been quite aggressive in telling investors that expectations for interest rate trims already in early 2024 are very premature.

Deutsche Bank’s analysts therefore warn that this week’s Fed meeting could shake the bond market rally we’ve seen over the past month.

Rates expectations have changed sharply since then and going into next week’s FOMC meeting the market is already pricing in aggressive and early rate cuts for next year. In our reading this suggests asymmetric risk as the Fed can at best validate market pricing while any push back will raise rates and rates vol.

As our US economists write, they expect the Fed to signal a soft tightening bias and the dot plot to point to 50bps of rate cuts in 2024, which would be a challenge to market expectations. This could be a catalyst for discretionary investors to cut back elevated positioning. Presently, S&P 500 vol priced for next Wednesday’s FOMC day is still muted. Indeed, the market looks to have been more concerned going into today’s payrolls report than it is with the Fed meeting. But as we have seen previously around several calendar event risk days, vol could start to rise as we get closer.

FT : Nvidia emerges as leading investor in AI companies

Nvidia emerges as leading investor in AI companies
US chipmaker takes stakes in groups that are also its customers in effort to ‘lock up the market’

Nvidia, the world’s most valuable chipmaker, has become one of the most prolific investors in artificial intelligence start-ups this year, seeking to capitalise on its position as the dominant provider of AI processors.

Silicon Valley-based Nvidia said on Monday it had invested in “more than two dozen” companies this year, from big new AI platforms valued in the billions of dollars to smaller start-ups applying AI to industries such as healthcare or energy.

According to estimates by Dealroom, which tracks venture capital investments, Nvidia participated in 35 deals in 2023, almost six times more than last year.

That made the chipmaker the most active large-scale investor in AI in a banner year for dealmaking in the sector, outstripping Silicon Valley’s largest venture firms such as Andreessen Horowitz and Sequoia, according to Dealroom, excluding small-scale accelerator funds such as Y Combinator that place many smaller bets.

“Broadly, for Nvidia, the number one criteria [for making start-up investments] is relevancy,” Mohamed Siddeek, head of its dedicated venture arm NVentures, told the Financial Times.

“Companies that use our technology, who depend on our technology, who build their businesses on our technology . . . I can’t think of a situation where we’ve invested in a company that did not use Nvidia products.”

Between NVentures and its corporate development team, Nvidia’s portfolio now includes Inflection AI and Cohere, two of the biggest rivals to ChatGPT maker OpenAI.

Other investments are in Hugging Face, a provider of data and tools for AI developers that was valued at $4.5bn in August, and CoreWeave, a cloud infrastructure company focused on high-performance computing applications that rely on chips such as Nvidia’s graphics processing units.

Its most recent investment was in Mistral, the Paris-based AI start-up that was valued at €2bn this month.

The one thing the companies have in common is that they are all Nvidia customers, whether using its GPU chips or its software.

Nvidia’s H100 GPU has become one of the most sought-after products in Silicon Valley this year. The powerful processor helps creators of “large language models” — the underlying platform that powers “generative AI” services such as ChatGPT — to train their systems much more quickly than using traditional server chips.

Nvidia invests from its own balance sheet, writing cheques running to tens of millions of dollars. NVentures looked to “generate healthy returns” from its investments, while its corporate development team could invest for more strategic purposes, Siddeek said. It both leads rounds itself and invests alongside venture capital firms.

Some start-ups hope that accepting investment from Nvidia will offer a closer relationship with the group. “They’re obviously a very strategic partner; you want to be a priority for them as they roll out new chips,” said one VC who shares investments with Nvidia.

Another investor added: “It’s the smartest go-to-market strategy to really lock up the market . . . [Nvidia] know the money will come back eventually.”

Nvidia denied that it sought special terms with start-ups to ensure they used its chips. “We try to be as investee-friendly as possible,” said Siddeek. “We don’t have any conditions per se.”

Inflection AI — which in June announced a $1.3bn fundraising round jointly led by Nvidia, Microsoft, Bill Gates and others — boasts that it has access to 22,000 H100 GPUs, thanks to its alliances with the chipmaker and CoreWeave. Late last year, CoreWeave said it was among the first companies to receive H100 shipments, alongside cloud giants Amazon, Google, Microsoft and Oracle.

Siddeek denied the group’s portfolio companies receive preferential access to its chips. “We don’t help anybody jump the queue,” he said.