A 'hole' 30 times Earth's size has spread across the sun, blasting solar winds that'll hit our planet by end of this week
- The sun is sporting a giant coronal hole that could fit 20-30 Earths across, back-to-back.
- Coronal holes blast rapid solar winds into space that travel 500-800 kilometers per second.
- The winds are relatively harmless and should reach Earth by Friday for a more stunning aurora.
A giant, black region of the sun — called a coronal hole — was spotted on Monday by NASA's Solar Dynamics Observatory.
Despite the name, however, this isn't a physical hole in the solar surface; coronal holes are cooler in temperature, so they don't glow as bright as other areas of the sun and therefore look black.
"The current coronal hole, the big one right now, is about 300,000 to 400,000 kilometers across," Alex Young, the associate director for science at NASA Goddard's Heliophysics Science Division, told Insider over email. "That is about 20-30 Earths lined up back-to-back."
Coronal holes are common; there is "nothing unusual here," Scott McIntosh, a solar physicist and the deputy director of the National Center for Atmospheric Research, told Insider in an email.
Holes like this are part of the sun's normal activity, but McIntosh said that they are "not well understood" and called these events "the 'dark side' of solar activity."
Coronal holes are the source of rapid solar winds, which reach speeds of about 500-800 km per second, Young wrote. The solar winds from this coronal hole are scheduled to reach Earth by the end of this week.
"We will probably start seeing the effects of the high-speed wind on March 24," Young added. "When the high-speed wind reaches Earth, the particles and the magnetic field it carries will interact with Earth's magnetic field, effectively rattling it or like ringing a bell."
More powerful magnetic fields, like from a coronal mass ejection, could cause electrical blackouts or disrupt communication technology. But coronal holes — even large ones like this — are far less violent. So the main effect to look forward to this Friday is a more vibrant aurora borealis.
However, we are entering a new phase of increasing solar activity where coronal holes will be less frequent, and coronal mass ejections and powerful solar flares will become more common, Young said.
That can be a concern since the powerful magnetic fields from coronal mass ejections and solar flares have been known to surge power grids and fry satellites — however, these events are infrequent.
Young said that for him and other solar scientists, "it's gonna get more and more exciting and interesting" as solar activity increases.
Commodity profits hit record in 2022, say trading house finance chiefs
Companies set high-water mark unlikely to be repeated in 2023
The finance heads of the world’s largest commodity trading houses said 2022 was a record year for profits, setting a high-water mark for the industry that is unlikely to be repeated in 2023.
Trafigura, Vitol, Gunvor, Mercuria and CCI told the FT Commodities Global Summit profitability would probably be lower this year as commodity markets have returned closer to normal levels of volatility.
The biggest commodity traders reaped bumper profits in 2022 driven by extreme volatility in energy markets, including a tenfold increase in European gas prices after Russia cut supplies to Europe following the Ukraine invasion.
“The magnitude of that is something that I don’t think any energy market has seen,” said Jeff Webster, group chief financial officer at Swiss-based Gunvor.
Jeff Dellapina, chief financial officer of Vitol — the world’s largest independent energy trader — said that this year would likely see “volatility compression” in commodity markets.
Vitol disclosed this week that its turnover nearly doubled in 2022 to $505bn, up from $279bn the previous year.
Vitol has not disclosed its 2022 profit, but several market participants believe its net income more than doubled from already record levels in 2021 to rise above $10bn last year, though its accounts are still being finalised. The company declined to comment.
The larger trading houses benefited from their access to capital last year, allowing them to keep trading even in extremely volatile markets when capital requirements increased.
“[Last year] was an opportunity to take advantage of decent margins. I think that is all changing a bit now,” Dellapina said. “Last year was probably a cyclical high.”
Webster agreed, saying “that was probably a peak last year in terms of extremities of volatility and then likely for profitability as well”.
Richard Dolcetti, who runs finances at US-based CCI, said: “At times when there’s volatility in the market and there’s extreme supply and demand imbalances, it’s our role to step in.” When you can successfully do that, “you’re going to make money”, he added.
While some of the volatility in commodity markets has cooled, Christophe Salmon, chief financial officer at Trafigura, said he expected a return to more wild trading patterns in the years ahead.
“I believe that volatility in commodity markets is here to stay,” he said. “Not only are we talking about Russia, but also China. I’m talking about the energy transition, which intrinsically will trigger more volatility in a number of markets.”
Guillaume Vermersch, group chief financial officer at Mercuria, added that “intrinsic volatility remains” and “the fundamental problems are not solved”.
Most of the private trading houses keep their financial results close to their chest, but the few numbers disclosed so far are all record-breaking.
Trafigura, the only large private trading house to publish its results, made a record quarterly profit of $3.5bn in the quarter ended in December, on top of $7.1bn net profit in the financial year ending in October, an annual record.
Mercuria, which is based in Switzerland and registered in Cyprus, reported net income of $3bn in the 2022 year, up from $1.25bn the previous year, on turnover of $174bn.
At publicly listed Glencore, the earnings before interest and tax in its trading division rose to $6.4bn last year, up 73 per cent from the year before.
Bill Gates just put his thoughts on AI and its use for humans in a letter; Here's what he said
Gates has already expressed his enthusiasm for the potential of AI in a variety of fields, including education and healthcare.
Amid the ongoing AI hype, everyone is outlining their thoughts on the technology and how it can be a bane or boon to society in the long run. From industry experts to Twitter users, everyone has their thoughts. But now there's this new trend of the makers of AI products coming forward to put their vision on what they think AI is, how they perceive it to be, and what they intend it to do for humankind.
Recently, Elon Musk has been quite vocal about OpenAI's closed approach to ChatGPT as being profit-centric, and OpenAI CEO Sam Altman himself gave an interview on how he thinks AI is and why he sometimes feels 'scared' of it. Now Microsoft co-founder Bill Gates has been thinking a lot about AI, and he's put those thoughts in a letter.
The co-founder of Microsoft released a seven-page letter on Tuesday called "The Age of AI Has Begun." A lot of his predictions about the development of AI were discussed there. As he put it, creating AI is as fundamental as the creation of the microprocessor, the personal computer, the internet, and the mobile phone.
Coincident with the letter's arrival was the launch of Bard, Google's artificial intelligence chatbot, which competes with Microsoft's Bing. That also occurred a week after the creators of ChatGPT, OpenAI, revealed the next iteration of their AI model, GPT-4. As AI technology improves over time, the billionaire expressed concern about the risk of abuse and the development of "strong" AI that may define its own goal in his letter.
In the letter, Gates went into more detail about these ideas by talking about how he thinks AI can be used as a tool to make people more productive and also to help fix global inequalities in the workplace, in health care, and in education.
Gate’s thoughts on AI as a boon to workplace, healthcare, and education
In his letter, Gates expands on a concept he first broached in February about using artificial intelligence in the workplace as a "digital personal assistant" to boost worker productivity. As Gate noted in his article, AI may be useful for managing and composing emails if it were integrated into digital work products like Microsoft Office. He argued that these artificially intelligent "personal agents," complete with extensive information about the organization and the industry, could act as resources for employees to consult.
According to Gates, AI might relieve healthcare staff of administrative duties like insurance claim processing, paperwork, and note-taking.
In developing nations, where "many people in those countries never get to see a doctor," Gates argued that artificial intelligence could help doctors use their time more efficiently with the patients they do see. In his article, Gates suggested that AI might also help treat patients who don't have easy access to hospitals.
Gates said that AI is being used in healthcare to analyze data and develop new treatments, but the next generation of AI tools might detect adverse effects and determine dosage.
Five to ten years from now, according to Gates's prediction, AI will have a profound impact on the educational system by delivering content that is optimal for each student's unique learning style and by discovering what stimulates and disengages them in the classroom.
To further aid educators, AI has the potential to aid in lesson planning and evaluating students' understanding of the material covered in class.
Gates said that in order to fully realize the potential of this new technology, we must take precautions to avoid its potential downsides while also making its potential advantages available to the widest possible audience.
Online auto retailer Carvana to attempt restructuring of $9bn debt load
Company trying to drum up support for bondholders for move that would reduce interest bill
Carvana, the online used auto retailer, is trying to drum up support from its creditors for a restructuring of its $9bn debt load as it attempts to stay afloat at a time of declining vehicle sales.
The restructuring is the latest attempt to put Carvana on a surer footing after breakneck growth and soaring sales during the coronavirus pandemic were cut short by rising interest rates and a decrease in demand.
If fully subscribed, the exchange offer to existing creditors would reduce the face value of its outstanding $5.7bn of unsecured bond debt by $1.3bn and its annual cash interest bill by roughly $100mn.
Carvana’s market capitalisation soared to nearly $50bn in 2021 after customers flush with stimulus cash flocked to its website and vending machines when a global chip shortage and supply chain problems had resulted in a dearth of new vehicles. It sold 425,000 cars that year, up from 245,000 in 2020.
But heavy spending on growth initiatives meant that by 2022 it was ill prepared for rising interest rates. It recorded its first decline in sales, which slipped to 412,000 vehicles last year. Its market value now stands at less than $2bn while its bonds trade between 40 cents and 55 cents on the dollar.
The terms of the transaction, to be launched later on Wednesday, offer between 63 cents and 81 cents on the dollar to holders of five tranches of outstanding bonds maturing between 2025 and 2030.
The bondholders would have a second priority claim, behind lender Ally Financial, on vehicle inventory and intellectual property including Carvana’s brand. The bonds would mature in 2028 and carry a cash interest rate of 9 per cent per annum, versus 5 per cent and 10 per cent for the existing bonds. The company could also elect to pay up to 12 per cent interest under a “payment in kind” arrangement.
The Financial Times has previously reported that at least six prominent credit investment firms have joined forces to negotiate with Carvana. According to a person familiar with the situation, there has not been much interaction between the company and its bondholders.
One prominent member of the group, Apollo Global Management, which had bought $800mn in bonds issued by Carvana in 2022 at par, would take a significant loss should it decide to participate in the restructuring.
Participation is voluntary and Carvana says that for the deal to close, at least $500mn of new debt will have to be issued. The kind of restructuring the company is proposing can often serve as a prelude to the renegotiation terms or an entirely different agreement.
Carvana is expected to release preliminary first-quarter results alongside the terms of the exchange, which are likely to show that a cost-cutting plan — including a reduction in headcount from 21,000 to 17,000 over the past year — is starting to bear fruit.
The results are also expected to show that sales volumes dropped by as much as a quarter during the first three months of the year compared with the same period of 2022 but that the company’s closely watched gross profit per unit jumped to more than $4,000 versus $3,000.
In January, chief executive Ernest Garcia told analysts the cost-cutting was resulting in a “more efficient company” and said it was not planning to raise cash by issuing additional debt.
However, on Wednesday Carvana is expected to designate its auction division, Adesa, as a so-called unrestricted subsidiary, a legal manoeuvre that leaves bondholders without a direct claim to the business while potentially paving the way for Carvana to raise new secured debt.
The move is often unpopular with debtholders, although some credit analysts had predicted Carvana would make it because it has the legal flexibility to do so.
At the end of 2022, Carvana had $400mn of cash and the ability to raise more than $3bn through credit lines and real estate that has not been pledged as collateral.
Research Calls
- Upgrades:
- Banco Santander (SAN) upgraded to Outperform from Neutral at Exane BNP Paribas
- DoubleVerify (DV) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $30
- Enphase Energy (ENPH) upgraded to Positive from Neutral at Susquehanna; tgt $275
- Knight-Swift (KNX) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $65
- Krispy Kreme, Inc. (DNUT) upgraded to Buy from Hold at Truist; tgt raised to $20
- Meta Platforms (META) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; tgt $240
- NIKE (NKE) upgraded to Overweight from Equal Weight at Barclays; tgt raised to $154
- PulteGroup (PHM) upgraded to Outperform from Peer Perform at Wolfe Research; tgt $64
- Rentokil (RTO) upgraded to Neutral from Underperform at Exane BNP Paribas
- Roper (ROP) upgraded to Neutral from Underweight at JP Morgan; tgt raised to $420
- Ross Stores (ROST) upgraded to Buy from Hold at Loop Capital; tgt raised to $115
- Semtech (SMTC) upgraded to Buy from Neutral at B. Riley Securities; tgt raised to $52
- So-Young International (SY) upgraded to Buy from Neutral at Citigroup; tgt raised to $3
- Spotify (SPOT) upgraded to Buy from Neutral at Guggenheim; tgt raised to $155
- Transocean (RIG) upgraded to Buy from Neutral at Compass Point; tgt $7.50
- Warner Music Group (WMG) upgraded to Buy from Neutral at Guggenheim; tgt raised to $36
- Downgrades:
- Altimmune (ALT) downgraded to Neutral from Buy at Goldman; tgt lowered to $6
- Antero Resources (AR) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $28
- Apple Hospitality REIT (APLE) downgraded to Neutral from Buy at Compass Point; tgt lowered to $17
- Con Edison ((ED) upgraded to Buy from Hold at Argus; tgt $104
- Cyxtera Technologies (CYXT) downgraded to Mkt Perform from Outperform at Raymond James
- D.R. Horton (DHI) downgraded to Peer Perform from Outperform at Wolfe Research
- Host Hotels (HST) downgraded to Neutral from Buy at Compass Point; tgt lowered to $18
- Invitation Homes (INVH) downgraded to Neutral from Buy at Mizuho; tgt lowered to $32
- Luminar Technologies (LAZR) downgraded to Sell from Neutral at Goldman; tgt $5
- Sunstone Hotel (SHO) downgraded to Sell from Neutral at Compass Point; tgt lowered to $9
- Wipro (WIT) downgraded to Underperform from Mkt Perform at Bernstein; tgt lowered to $3.90
- Others:
- Academy Sports + Outdoors (ASO) initiated with an Outperform at Robert W. Baird; tgt $80
- ChargePoint (CHPT) resumed with a Neutral at Goldman; tgt $10
- EPR Properties (EPR) initiated with a Mkt Perform at JMP Securities
- Live Nation (LYV) initiated with a Neutral at ROTH MKM
- MoonLake Immunotherapeutics (MLTX) initiated with an Outperform at Wedbush; tgt $33
- New York Community (NYCB) resumed with a Strong Buy at Raymond James; tgt $13
- Open Text (OTEX) resumed with an Equal Weight at Barclays; tgt $41
- Procore Technologies (PCOR) initiated with a Buy at DA Davidson; tgt $72
- Tricon Residential (TCN) initiated with a Buy at Mizuho; tgt $9
- Verrica Pharmaceuticals (VRCA) initiated with a Buy at Jefferies; tgt $10